Report of World Trade Organization (WTO) Ministerial Conference
in Seattle, WA
November 30 to December 4, 1999

Details on Principal Issue Areas ó POST- SEATTLE

Agriculture

  • The 1994 WTO Agreement on Agriculture stipulates that negotiations to achieve further "substantial progressive reductions in support and protection" of agricultural trade must be launched by the end of 1999. These negotiations are intended to address reductions in tariff levels, export subsidies and domestic support programs. The EU and U.S. agricultural systems are particular targets for these reductions.
  • There is strong disagreement between the EU and Japan on the one hand, and the Cairns Group of agriculture exporting countries (Argentina, Australia, Brazil, Canada, Chile, Colombia, Fiji, Indonesia, Malaysia, New Zealand, Paraguay, Philippines, South Africa, Thailand and Uruguay) and the Association of Southeast Asian Nations (ASEAN) on the other. The EU and Japan are demanding the inclusion in any agreement of the concept of "multifunctionality of agriculture", i.e. the role agriculture plays in rural development, the environment and food security. The U.S., Cairns countries and ASEAN members argue that the EU and Japan are using multifunctionality as a shield to protect their agricultural support programs, that no agricultural products should be excluded from the negotiations and that the sector should be approached in the same manner as industrial goods. The U.S. is targeting structures like marketing boards and state trading enterprises including the Canadian Wheat Board, saying that they hide subsidies and fix prices. Developing countries are insisting on greater access to northern markets for their agricultural products.
  • The Canadian governmentís objective is to eliminate export subsidies and reduce domestic supports for agriculture. It will attempt to achieve improvements in market access for our agricultural and agri-food products, while maintaining our marketing board systems.
  • The Seattle talks on agriculture broke down and were one of the principal reasons for the failure to agree on an overall ministerial declaration. The European Commission rejected proposed language on the elimination of export subsidies. It also wanted more progress on other issues (esp. investment and market access) before agreeing to a text on agriculture. Though the text contained references to "non-trade concerns", Japan is reported to be unhappy with abandoning wording on "multifunctionality".
  • Negotiations on agriculture are to begin as soon as January 2000. There is no deadline for this negotiation. (The December 3 draft ministerial declaration proposed December 15, 2002 as a deadline, with offers to be submitted by countries by January 31, 2002). In the request-offer style of negotiation, countries first put forward requests for further liberalization of markets; this is followed by a phase where countries respond to the requests with offers for opening their markets to the goods and services of others.

Services

  • The existing General Agreement on Trade in Services (GATS) calls for new services negotiations toward "a progressively higher level of liberalization" by January 2000. Countries will be under pressure to make commitments to liberalize in new service sectors and to remove restrictions on those they have already listed. Negotiations will take place on the architecture of the agreement (i.e. what mix of "bottom-up," "top-down," or "horizontal" approaches should be used), on the rights of governments to regulate in areas they have agreed to cover by GATS, on criteria for the qualification of service providers, on the nomenclature of services, safeguards, government procurement of services and subsidies to service sectors.
  • The U.S., EU and Japan are pressing for the request-offer (bottom-up) approach to be supplemented by alternative negotiating approaches, including "horizontal approaches" (which would apply automatically to all sectors and modes of delivery). Japan and EU are cool to a sectoral approach, preferring global negotiations, whereas the U.S. appears to want to focus on certain priority sectors.
  • The U.S. Coalition on Services Industries and U.S. Trade Representative Charlene Barshefsky have stated that gaining greater access to other countriesí service sectors, including health, education and environmental services, is one of the U.S.ís priorities. The U.S. wants expanded country participation in GATS, rules to cover the development of new technologies and increased participation from countries in the Basic Telecommunications and Financial Services Agreements.
  • Developing countries want the right to open fewer service sectors and to open them more slowly than developed countries. They want developed countries to fulfill previous commitments to facilitate the movement of natural persons (i.e. immigration rules) in supplying services. They also want more access to technology to develop their services, and to technical assistance.
  • The Canadian government objective in services is to "continue to liberalize trade in services, while respecting national policy objectives and the level of development of individual members". Trade Minister Pettigrew is giving public assurances that "we do not intend to renounce our right to regulate in the sectors of health and education and the environment", but he has said that opening markets for Canadian health and education services (e.g. telemedicine and distance education) is a Canadian priority.
  • Despite the above-mentioned differences amongst countries on services, in Seattle services was the least controversial area of discussion. Negotiations on services are to begin as soon as January 2000, based on the existing Uruguay Round GATS text. The December 2 draft text on services produced in Seattle calls for countries to submit their requests or proposals on specific commitments by November 1, 2000 and initial offers by November 1, 2001. No service sector or mode of supply is to be excluded a priori. There is no deadline for the completion of this negotiation.

Government Procurement

  • Discussion in Seattle on this topic concerned the development of an Agreement on Transparency in Government Procurement of goods and services. Such an agreement would establish procedures for immediate and clear international notification by governments of their procurement rules and tendering of contracts, and for adherence to due process. It could also include provisions to allow future negotiations regarding increased access to procurement markets.
  • It should be noted that the scheduled negotiations on services (GATS) already include a provision for negotiation on procurement of government services.
  • Canada is part of a like-minded group of countries (with the U.S., EU, Japan, Australia and others) which support an agreement on transparency. The EU proposes that such an agreement apply to all levels of government. Japan, India and other developing countries want it to apply only to national governments. Canada has not pronounced on this. Developing countries are resisting an agreement on transparency unless industrialized countries are willing to offer concessions in other areas. They want to study the issue further by prolonging the mandate of the WTO Working Group on Transparency in Government Procurement.
  • The issue of dispute settlement procedures is controversial. The U.S. wants enforcement handled by an international body like the WTO while others prefer recourse to domestic legal systems. Japan and the EU want to use WTO systems only after domestic procedures have been exhausted.
  • The draft ministerial text calls for negotiation of an agreement on transparency in procurement, to be adopted by the next ministerial in two years. The status of this text, however, is still in doubt.

Accelerated Tariff Liberalization ATL

  • The was a U.S.-sponsored initiative to achieve an "early harvest" of tariff reductions in eight sectors, including forestry, fisheries, environmental goods and services, energy and medical and scientific equipment. It was not agreed by ministers in Seattle.
  • The EU and Japan opposed the idea of an early harvest. They want discussion on all industrial tariffs on the table at the same time, linked to all the other items up for negotiation. Environmentalists opposed rapid elimination of tariffs for forest products. In their view it would lead to rapid deforestation.
  • It is unclear whether, coming out of Seattle, this issue is alive or dead.
  • The draft ministerial text proposes market access negotiations of all non-agricultural products without any a priori exclusions.

Anti-dumping and Subsidies

  • On anti-dumping, the key issue was whether to initiate a negotiation to amend the rules in order to put further restraints on the use of anti-dumping duties. Of major concern is the permitted practice of imposing duties when the dumping is caused by weak market conditions which necessarily results in below cost pricing. Most nations including Canada supported launching negotiations on these issues but the U.S. was opposed. Ultimately, the U.S. was alone in its opposition and blocked the move to put these issues into the negotiating agenda. As anti-dumping is not part of the "built-in" agenda, it is likely that this issue will remain stalled.
  • In the subsidy/countervailing duty area, the immediate issue confronting the WTO was whether key sections (Art. 6.1, 8 & 9) of the Subsidies & Countervailing Measures (SCM) agreement, which expired at the end 1999, would be extended. These provisions, part of the built-in agenda, describe two types of subsidies. Article 6.1 recognizes that certain subsidies may cause "serious prejudice" to the interests of other parties, who may then take action to seek their removal. By contrast, Articles 8 and 9 establish exemptions for certain subsidies, such as those for the environment, research and development and for disadvantaged regions, ensuring that these subsidies are permitted and may not be countervailed. Generally, the developed countries (including Canada) liked these provisions and supported their renewal, but developing countries were neutral or negative on extending them and were looking for concessions in other areas as the price of their assent. Canada also wanted to include the SCM in the broader agenda as a way at getting at other areas needing refinement. Ultimately, the failure to put anti-dumping reform on the agenda spilled over into the subsidy negotiations which then floundered. In the near term it is anticipated that efforts will be committed to extending these sections of the SCM. The draft ministerial text proposes an extension for two years, until the next ministerial.

Competition Policy

  • Again, the Ministerial was to decide if competition policy should be added to the WTO negotiating agenda for the up-coming round.
  • The EU, Japan and Canada, to varying degrees support the investigation of linkages between competition policy and trade. In particular they want to ensure that countries develop domestic competition policy laws, that there be co-operation/co-ordination amongst countries, and transparency and information exchange regarding competition policy laws and experience. The U.S. expressed serious concerns about the inclusion of competition policy on the WTO negotiating agenda, as it believes that this could lead to competition policy rules being "pushed" as a replacement for countervail and dumping actions.
  • The draft ministerial text indicates support for the continuation of educational and analytical work on the linkages between competition policy rules and trade and suggests that the next ministerial meeting should decide if negotiations on this topic are warranted.

Investment

  • The Seattle Ministerial was to decide if investment was to be included in the new negotiating round, and in what form.
  • The EU and Japan wanted an investment agreement as part of a comprehensive negotiating round. The U.S. wanted "horizontal" integration of investment into several of the WTO agreements. Developing countries like India, Egypt, Pakistan and Bangladesh want no negotiations on investment.
  • Though during the MAI debate Canada supported an investment agreement within the WTO, it is now less clear in its public statements. Canada has not stated its support for a WTO investment agreement but does seek protection for Canadian investors abroad, while retaining "the right to regulate in the public interest"..
  • In Seattle, the chair of the WTO group on new issues proposed that negotiation on investment be considered at the next ministerial in two years and that an expanded working group on trade and investment prepare the ground for those negotiations. Among other things, the working groupís continuing analytical work, according to the chairís proposal, would be based on consideration of a "bottom-up" approach and dispute settlement provisions that exclude an investor-state mechanism. The EU, Japan, Costa Rica and Switzerland pressed for launching of negotiations on investment earlier than the next ministerial, at mid-point in the new round. India, Pakistan and Bangladesh continue to oppose any negotiation. Next steps on this issue are unclear.
  • It should be noted that scheduled negotiations on services (GATS) include a component on investment.
  • The Working Group on Implementation agreed to instruct the WTOís Council for Trade in Goods to consider an extension to the transition period during which developing countries must eliminate trade related investment measures (TRIMS Article 5.2), but the lack of an agreed ministerial declaration precludes action on this measure.

Intellectual Property Rights

  • Controversy surrounded negotiations in the area of trade-related aspects of intellectual property rights (TRIPS) both before and during the Seattle Ministerial. Reasons for this controversy include: the increasing importance of technology to maintaining competitive advantages in world trade; the existing disparity in the capacity of WTO members to create and commercialize new technologies; and the view held by a number of members that the present focus of intellectual property rights on new technologies substantially undervalues existing stocks of knowledge and information. Patenting of life forms is especially contentious, as is the possibility of re-opening the TRIPS agreement to add coverage of biotechnology issues.
  • Developed countries are generally against opening TRIPS to new negotiations, recommending that WTO members focus on the implementation of existing commitments and guard against backsliding from the existing rules. In particular, the U.S. wants effective implementation and enforcement of TRIPS among developing countries. They believe changes to the agreement could be proposed after the upcoming mandated TRIPS review.
  • A number of developing members urged the Seattle Ministerial to initiate negotiations that take into account their specific interests, toward a rebalancing of the Agreement. Many developing countries want an extension of the transition period for their implementation of TRIPS commitments for an extra two years beyond the January 1, 2000 deadline set out in TRIPS. Some express concerns about the incompatibility of TRIPS with other international agreements, including the Biological Diversity Convention being negotiated under the auspices of the United Nations. Some object to the patenting of life forms, "biopiracy" of their genetic patrimony and non-recognition of their "indigenous knowledge".
  • Canadaís goals in the TRIPs area were to: extend the moratorium on application of an article that could impose penalties if a governmentís action does not violate a TRIPS provision but has the effect of doing so (this is called the "nullification and impairment" clause; the moratorium ended Dec. 31, 1999); ensure full and timely TRIPS implementation; and to participate in ongoing work at the WTO and the World Intellectual Property Organization (WIPO) aimed at improving the international intellectual property framework.
  • The Council for TRIPs is to review the implementation of the Agreement at least every two years and may modify or amend the agreement in light of new developments. Furthermore, three areas in TRIPS will receive more consideration by the Council, including: geographical indications of origin, termination or continuation of the moratorium on nullification and impairment, and rules applicable to the protection of plant varieties.
  • The TRIPS Council is currently reviewing Article 27.3b of the agreement, which concerns plant variety inventions. This provision allows members to exempt from patentability plants and animals (other than micro-organisms) and essentially biological processes for the production of plants and animals. However, the provision requires members to provide protection for plant varieties either through patents or unique legislation. The debate on patentability of life forms is far from over.

Labour and Human Rights

  • The issue of whether labour and human rights have a place in WTO agreements became very contentious at the Seattle meeting. The United States attempted to place environment and labour/human rights on the WTO agenda. President Clinton made several powerful speeches supporting the protesters (particularly organized labour) and insisting that the issues raised by the protesters have to be addressed in order to give the WTO legitimacy. He mentioned the possibility of using trade sanctions to enforce labour provisions. It is likely that the U.S. position on these matters arose out of a concern for domestic politics. In the Administrationís view a failed deal was better than one that would have alienated their core constituency. The U.S. position was soundly rejected by less developed nations as protectionist and a majority of WTO members rejected the creation of a working group. EU Commissioner Lamy stressed that the EU did not believe, unlike the U.S., that trade sanctions were an appropriate means of promoting respect for core labour standards. The U.S. has tried to reassure developing countries that including sanction-backed labour provisions in the WTO was only a long-term policy goal.
  • It is possible that a way ahead post-Seattle could lie with the EUís proposal for a joint International Labour Organization (ILO)/WTO Standing Forum on Trade, Globalization and Labour to examine a broad range of issues related to trade and labour. The major gulf to overcome is the developing nationís fears that entrenched labour rights in the WTO will be another protectionist weapon developed nations can utilize against them.
  • Canadaís position has been to strengthen the linkage between the ILO and the WTO, and to urge global compliance with the ILOís instruments on child labour and worker rights.
  • There is no mention of labour and human rights in the draft ministerial text. Future developments on this issue are uncertain.

Environment And Trade

  • At issue is whether environmental provisions in trade agreements should be strengthened. There also needs to be work on the relationship between WTO agreements and multilateral environmental agreements (MEAs), some of which contain trade-related disciplines. (The Basel Convention on toxic substances is an example of an MEA.)
  • While the U.S. and the EU have proposed linking trade and the environment, this position has been strongly rejected by developing countries who view this potential linkage as protectionist. The EU supports the use of the precautionary principle for environmental protection.
  • Canadaís position is to ensure that all negotiating groups take environmental considerations fully into account such that there is consistency between trade and environmental policies. This extends to clarifying the relationship between WTO rules and trade measures in MEAs. Canada supports the continued work of the WTO Committee on Trade and the Environment (CTE).
  • Despite the huge presence of NGOs and protesters from environmental movements, the environment received scant attention in Seattle. The draft ministerial text supported the continuation of the CTE and included "sustainable development" amongst its objectives. Many in the WTO view the tackling of environmental issues as important if the organization is to overcome its bad public image.

Biotechnology

  • With the rapid development of biotechnology products, and the heated disputes over market access for hormone-treated beef and genetically modified (GM) products, the issue at the WTO is whether biotechnology discoveries and products should be covered under trade agreements, or elsewhere.
  • Canada proposed a working group on biotechnology to examine existing agreements to determine if they adequately protect trade in biotechnology products. The U.S. proposed a group simply to examine and advance procedures for approval of biotechnology products by member countries. The EU, some Asian and Latin American countries are opposed to a working group on biotechnology, saying biotechnology should come under the Biosafety Protocol (part of the Convention on Biological Diversity) and that handling it at the WTO would undermine efforts to negotiate this protocol.
  • Canada seeks to maintain leadership in the marketing of biotechnology products. It supports voluntary labelling of genetically modified products.

Culture

  • The debate on the Multilateral Agreement on Investment (MAI) in 1998 and the split-run magazines case under the North American Free Trade Agreement (NAFTA) in early 1999 dramatically raised the profile of protection of culture under trade and investment agreements.
  • The U.S. sees culture like any other business and wants trade agreements to provide access to the cultural markets of others. Canada, France and Belgium have been the main opponents of this view, though the EUís approach in Seattle was much less ambitious, urging only protection for audiovisual services.
  • Canada seeks recognition in the WTO of the importance of preserving and promoting cultural diversity and proposed specific language in the ministerial statement for a "new international instrument" on culture, outside the WTO.
  • There is little evidence that "culture" was a focus at any of the negotiating tables in Seattle. Canada did manage to insert four words into the preamble of the draft ministerial statement. This reference, while modest, at least raises the "culture" issue. It is unknown what will become of the proposal for a "new international instrument".

Electronic Commerce

  • Three key areas were discussed:
  1. Extension of the moratorium on new taxes on e-commerce transactions - the two year extension being promoted by the U.S. looks likely, however the EU has tied it to the classification issue (see item 3 below). Canada supports the extension.
  2. That existing market access for services be maintained for e-commerce services - the EU is proposing that there be no "backsliding" in commitments already made to liberalize trade in services simply because a service is now being offered via the Internet. The existing coverage should apply regardless of the mode of provision of the service.
  3. Classification of e-commerce transmissions - the EU is proposing that all electronic transmissions be classified as a service, which would make e-commerce subject to less stringent trade rules and allow an exclusion for audiovisual services for cultural reasons. The U.S. put off making a decision.
  • While Canada supports an extension of the moratorium, it believes other issues need to be negotiated together rather than as individual components. Developed nations, including Canada, support recognition of the need to promote developing countriesí access to and use of infrastructure needed to support electronic commerce.
  • Work will continue on e-commerce. A decision on the moratorium on duties for transactions could be made by the WTO General Council.

WTO Transparency

  • Well before the Seattle meeting, there were calls for more transparency in the WTO, both internal and external. Internally, developing countries were very upset, and vocal, about the "Green Room" model used before and at Seattle (small groups of "key" countries - usually excluding developing ones - negotiate text wording behind closed doors). African, Caribbean and Latin American countries joined together to denounce their exclusion from key debates. Externally, civil society groups charge the WTO with only allowing participation of groups that stand to benefit economically from liberalization and ignoring other societal interests.
  • Most developed countries have made statements that for the next round of negotiations to work, developing countries must be consulted and integrated. Yet the discontent of developing countries on transparency contributed powerfully to the failure of the Seattle talks. On the inclusion of civil society, there is more division, with the EU, U.S. and Canada leading for limited inclusion of civil society groups, while Japan is less enthusiastic and many developing countries, especially Mexico, are emphatically opposed.
  • Canadaís stated position is that citizensí groups have a role in trade and must be fully informed and consulted. The WTO must be opened to improve access by non-governmental groups and must release its documents more broadly and rapidly. The official Canadian delegation included provincial and NGO representatives.
  • The Seattle meetingís draft ministerial text (Dec. 3) contains paragraphs (#13 and #21) on increasing both external and internal WTO transparency. The Director General is requested to consult with countries and present his recommendations by July 2000. Though this text was not agreed by ministers, post mortems on Seattle all recognize the seriousness of the transparency crisis and that the success of further negotiations depend in part on changes to WTO rules to better include developing countries and other interests.

Developing countries

  • Now the majority in the WTO, developing countries are seeking significant movement on their issues in any new round of trade negotiations. Many feel they have not received the benefits promised by the existing Uruguay Round agreements and want to review progress on these before negotiating on any new issues. For many, the problem is lack of trained human resources and technical ability to deal simultaneously with many agreements. They require technical assistance and budget support to cope more effectively.
  • Specifically, developing countries want increased and earlier access to northern markets for their agricultural products and textiles. They want an extension of implementation periods in several agreements, like the Agreement on Trade Related Investments Measures (TRIMS) and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). They want a review of WTO rules on anti-dumping, used by developed countries to keep out their exports. Many want to assure access to lower cost pharmaceuticals.
  • There is broad recognition amongst developed countries that more needs to be done to integrate developing countries. Several made specific commitments before and in Seattle, e.g. EU and Japan will grant most LDC exports duty-free access by the end of the Seattle round. Several EU countries committed funds for technical assistance. Japan and Korea support developing countries on a review of anti-dumping. The U.S. is opposed to changing the rules on anti-dumping and to extension of the TRIPS deadline for protecting plant varieties under patents or other systems.
  • Canada is a strong supporter of the integration of developing countries into the international trading system. It has committed significant resources to technical assistance and proposed that this function be integrated within the WTO regular budget. Canada supports differential treatment in the trade agreements and a review of anti-dumping rules.
  • The Seattle draft declaration of December 3 contained many references that attempted to help developing countries to enter a more liberalized trading regime. Most specifically, texts on technical cooperation and on Action in Favour of Least-Developed Countries (LDCs), for immediate decision, were worked out. They would provide increased technical assistance for capacity building, longer transition periods, accelerated accession for LDCs to the WTO and a new Committee on LDCs. In addition, much of a long annex on implementation, addressing everything from anti-dumping to special and differential treatment, contains measures designed to accommodate developing countries. Still, Inside U.S. Trade reports that the Dec. 3 draft ministerial text "reflects few of the priorities that had been sought by developing countries", specifically in the area of access for textiles and for protection of their intellectual property.
  • All these texts remain suspended along with talks on new negotiations.

source: WTO, Last Updated February 22, 2001

 

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