| |
Rocky
road for WTO at Cancun
By Chee Yoke Heong
KUALA LUMPUR - As the Cancun round of World Trade Organization (WTO) talks
draws closer, developing nations including Bangladesh, India, Indonesia,
Malaysia and Pakistan are growing increasingly suspicious that Japan, the
United States and the European Union are going to use the talks as a pretext to
help multinationals break into their economies.
The WTO talks are named for Cancun, Mexico, where they are supposed to take
place September 10-14 to discuss progress of the Doha Development Round, held
last year. The 12 objecting nations are raising concerns over a set of issues
revolving around investment, competition policy, transparency in government
procurement and trade facilitation. The 12 say discussion of the issues, known
as the "Singapore issues", named after the city in which they were adopted in
1996, cannot be raised until certain "modalities" are cleared up on how the
discussions should take place.
During the same meeting, the African, Caribbean and Pacific (ACP) states, a
group of 78 mostly Least Developed Countries (LDCs), are determined to urge
rich countries to pull down agricultural trade barriers, eliminate subsidies
for agricultural exports and strengthen provisions that allow poorer countries
to shield their markets from multinational competition. The call was made at
the sixth meeting of ACP trade ministers last week in Brussels, attended by top
EU officials such as Trade Commissioner Pascal Lamy, who committed to making
sure the poorest countries and landlocked and island states will be heard.
The EU resolved to work hand-in-hand to ensure due attention to the Doha Round
development objectives by striking the right balance between tighter global
trade rules and market liberalization, and taking the particular situation
facing ACP states given their level of development and problems they encounter
in meeting their WTO obligations.
The Singapore issues have been discussed in WTO working groups since 1996. The
major industrialized countries, led by the EU, want a decision in Cancun to
launch negotiations on the issues. They are pushing for the right of foreign
companies to compete equally with local firms in local markets. Under the new
rules, governments would be prohibited from giving preferences or assistance to
local firms. They invoke the WTO's non-discrimination principle to make this
argument.
This means that any attempt by governments to assist and promote local firms so
that they can survive, be viable and develop despite their present relative
weakness would be deemed against WTO rules and thus be subject to trade
retaliation.
"Even if a WTO competition agreement were to deal substantively only with
hardcore cartels, it would also require all members to adopt a national
competition law and policy, in which the national treatment principle would
apply, not only to hardcore cartels but also to all other elements in the
national law," said Martin Khor of the Third World Network, an international
non-governmental organization based in Penang, Malaysia.
At a trade and competition working group meeting recently, India, Malaysia,
Pakistan and Egypt said they see no need for a WTO competition agreement,
saying such an agreement would burden developing countries more. Moreover, they
pointed out, many developing countries still do not have a competition law
regime and thus are not ready for a WTO competition agreement.
Malaysia said that so-called hardcore cartels are a developed-country
phenomenon that has burdened developing countries with excessive costs, but
that it is not convinced a multilateral agreement on competition is the only
way to deal with the problem. India and Indonesia, among others, added that
they remain unconvinced about the benefits of a WTO competition agreement.
Meanwhile, Ajit Singh, a Cambridge University professor, said multilateral
competition policy proposed by the EU is "neither suitable from the perspective
of developing countries nor from the world economy as a whole". While for
developing countries the policy goes too far in instituting homogenization of
competition policy and thus deprives them of what they feel are important
developmental instruments, from an international perspective it is too feeble
to deal with the challenges posed by large multinational corporations intent on
monopolizing world markets.
Both the European Commission's proposals on competition policy and on foreign
direct investment seem more concerned to provide transnational corporations
with additional tools to give them unfettered access to developing countries
and undermine their ability to control the economy and foster their own
domestic companies and national economic development, Ajit Singh said.
Similar differences in view are also expressed over the investment issue, with
divergent opinions having emerged even among its proponents. There is as yet no
decision on whether investment should include both foreign direct investment
and portfolio investment. Some developing countries have demanded that the
definition be kept narrow. Given the experience of these countries with
financial instability, a very broad definition of foreign investment could lead
to financial difficulties in these economies.
Some analysts and delegations have raised the question as to whether a
multilateral framework on investment is at all needed as such an agreement does
not guarantee increased investment flows. Foreign investments are attracted
more to factors such as political stability and market size, and the existence
of an investment agreement made little difference.
A Malaysian delegate in Geneva reiterated the importance of policy space in the
area of investment for many developing countries, and said the costs would
outweigh the benefits for these countries in a multilateral investment
framework. This view is shared by Thailand, which said that while it is keeping
an open mind about the negotiations, it was disappointed by the provisions put
on the table. It wants special provisions for developing countries built into
the agreement and said that countries should be allowed to attach conditions to
investments.
There are divergent opinions on some of the crucial issues of scope and
definition. Some countries such as India, Pakistan and China have proposed that
the discussions should cover the obligations of foreign investors and their
home governments, but this has been rejected by some industrialized countries
on the basis that this is not part of the clarification process.
Discussions are also bogged down on transparency in government procurement and
trade facilitation - due to opposing views between the proponents and those who
are concerned over the proposals put forth and are generally against new
binding agreements.
The EC (largely supported by Japan, South Korea, Canada, Switzerland and some
Eastern European countries) believes that a multilateral agreement on
transparency on government procurement would bring the benefits of more
efficiency and innovation as public procurement is applied transparently with a
clear set of rules which allow tendering companies from all countries to foster
enhanced competition. It thinks an agreement would also reduce corruption or
bribery to officials and politicians during the tendering process due to the
principles of transparency.
But questions were raised as to what is meant by transparency, and some
countries are sensitive to the EC's insistence that the agreement should cover
all levels of government - federal, sub-federal and municipal levels of
government - regarding it as an encroachment on their sovereignty.
Although there is broad understanding that measures leading to improved trade
facilitation would be positive, there is disagreement on what is required to
bring about the improvements, particularly whether binding multilateral rules
are appropriate or whether international cooperation and domestic initiatives
are better options.
As consensus seems farther and farther away and as Cancun draws nearer, a new
process has began outside the working-group consultations to forge consensus on
modalities that some delegates see as a neat sidestepping of the problem of
divergent views. But as one delegate said, "The important matter is not finding
a consensus on modalities but whether we should launch talks on the new issues
at all."
(Copyright 2003 Asia Times Online Co, Ltd. All rights reserved. Please contact
content@atimes.com for information on our
sales and syndication policies.)
|
| |
|
|
 |
|
