Global Policy Forum

By Rashid S. Kaukab

The World Trade Organisation, with 142 member governments, is a house divided as it prepares for its next Ministerial Conference scheduled for 9-13 November. Compounding its internal divisions are the extraneous "risk" factors for some in going ahead with Doha as the venue. Most developing countries are disappointed with the progress on the "implementation" issues, which relate to the actual working of agreements signed during the Uruguay Round. It is a "breach" of understanding reached within the WTO by consensus, they say. As a developing country senior diplomat recently pointed out, there can be little achieved if "the mentality of the GATT continues to haunt the WTO". In the following article, Rashid S. Kaukab, who heads the South Centre's programme on WTO, takes a snapshot of the implementation concerns at this crucial juncture.

Developing countries now comprise three quarters of the WTO membership. The Single Under-taking and consensus-based system of decision making imply that they are at least equal partners in the multilateral trading system and the WTO should equitably reflect their interests and concerns. Yet, their efforts to be heard and to seek redress to their genuine grievances so far seem to have fallen on deaf ears. It has been more than five years since they took up their concerns relating to the Uruguay Round agreements under the rubric of implementation issues but without much avail.

To be precise, developing countries first raised these concerns in 1996 during the preparatory process for the 1st WTO Ministerial Conference. They faced an uphill battle to get these reflected in the Declaration that was adopted by the Ministerial Conference on 13 December 1996 at Singapore which only noted in paragraph 10 that "... some Members have expressed dissatisfaction with certain aspects"(of implementation) and that, "It is clear that further effort in this area is required..." .

As expected, this did not lead to any resolution and by the time of the 2nd Ministerial Conference in May 1998 in Geneva, implementation issues had become the major concern and demand of developing countries. The issue could not be ignored, at least politically, any further. Paragraph 8 of Geneva Ministerial Declaration, adopted on 20 May, 1998 acknowledged that "Full and faithful implementation of the WTO Agreements and Ministerial Decisions is imperative for the credibility of the Multilateral trading system..." Ministers also committed that "When we meet at the Third Session we shall further pursue our evaluation of the implementation of individual agreements and the realization of their objectives." For this purpose, the Ministers agreed that a process will be established under the General Council to prepare and submit recommendations to the Third Session of the Ministerial Conference.

The preparatory process for the Third Ministerial Conference witnessed large scale participation by developing countries who made a number of concrete proposals regarding implementation issues. These were reflected in paragraphs 21 (for action at the Third Ministerial Conference) and 22 (for action within one year after that) of the famous Draft Ministerial Declaration of 19 October 1999, prepared by the Chairman of the General Council, Ambassador Ali Mchumo of Tanzania. The Third Ministerial Conference held in Seattle in early November 1999 failed and one major reason of the failure was the lack of any meaningful progress on implementation issues that frustrated and angered a large number of developing countries.

Seattle experience came as an eye-opener for many. There was a realization that developing country concerns could not be wished away; that gaining the confidence of developing countries was essential to restore the credibility of the multilateral trading system and to put the WTO back on track. The Director General of the WTO, in the period immediately after Seattle, emphasized the importance of action for confidence-building measures which included resolution of implementation issues. After another round of debate, the General Council on 3 May 2000 finally decided to establish an Implementation Review Mechanism, i.e., to meet in Special Sessions to "address outstanding implementation issues and concerns, particularly those raised during the preparations for the Third Session of the Ministerial Conference." The General Council also resolved that this "process should be completed not later than the Fourth Session of the Ministerial Conference." .

Since then, the General Council has held a number of Special Sessions. Both the Chairman of the General Council and the Director General of the WTO also held numerous smaller group consultations. Of course, developing countries have continued to press for the resolution of these issues and have invested a lot of their time and limited resources in patiently preparing and substantively arguing their case. The outcome of this long and sometimes painful exercise is the Draft Decision on Implementation-Related Issues and Concerns, presented on 26 September 2001 by the Chairman of the General Council and the DG of the WTO. The Draft Decision suggests immediate action on some issues (given in its Annex I) and decision on some other issues by the Ministers at Doha (given in its Annex II), while leaving the rest to be dealt with "in the course of the future work programme of the WTO"..

This is not what developing countries had expected or strived for. It is not even a question of the glass being half empty or half full. As one developing country ambassador had earlier pointed out, "there is hardly any water in the glass." Before Seattle, developing countries had identified a total of 93 implementation issues and concerns, including 54 in paragraph 21 for action at Seattle and 39 in paragraph 22 for action within one year after Seattle. While the present Draft Decision of 26 September 2001 seems to address about half of these concerns - 24 in Annex I for immediate action and 27 in Annex II for action at Doha - the real picture is quite different. For example, the Draft Decision also includes actions such as further examination and consideration by various subsidiary bodies of the WTO (in 15 cases), confirmation, reaffirmation or endorsement of existing provisions without creating appropriate implementation mechanism - which had given rise to the implementation complaints by developing countries in the first place - (in 9 cases), and urges or requests (not command) the Members or the DG for some action (in 8 cases). The proposed action in the remaining 19 cases too is often not what developing countries had sought.

The frustration of developing countries with this kind of "progress" is therefore quite understandable. Many are openly wondering as to what more needs to be done to convince their developed country partners to take the required actions that will solve developing country problems and make them equal stakeholders in the multilateral trading system.

The general response of developed countries to implementation issues raised by developing countries has been of two kinds. One was famously summarised by the former US Trade Representative when she told developing countries "You implement your obligations, we will implement ours." The real meaning of this "logical" statement is: while developed countries should be free to implement their obligations in the narrowest legal sense - go no further than textiles and clothing where 80% of quotas are still to be liberalized by major developed countries - developing countries should not attempt to use even the existing flexibilities, like those under the Agreement on TRIPS.

The other response is typified by the European Union. The EU has been more forthcoming in acknowledging some of the implementation concerns. But the only way to solve these, in the EU view, is through a new round of trade negotiations that will include new issues like trade and investment, trade and competition policy, transparency in government procurement, trade facilitation and environment etc. Developing countries have been advised that this is the only way they can hope to rectify the imbalances in the existing Uruguay Round Agreements. This amounts to asking that developing countries should pay twice, for the same concession. It is somewhat like two partners entering into a business agreement which is supposed to be based on mutuality of benefits for both of them. However, after sometime, they realize that some parts of this business agreement are actually creating problems for one of them. This partner would rightly demand that necessary corrections be made in the agreement so that he is also able to get all the benefits originally envisaged. But, while the other partner agrees that problems exist as a result of imbalances in the present agreement, he suggests that these can be rectified only if the partner facing problems sells his remaining property and invests the amount in the joint business so that it can be expanded into new lines of business of his liking. Not a fair suggestion, to say the least. But this is exactly what the EU and some others seem to be suggesting to developing countries.

The painful saga of implementation issues is continuing. These are problems relating to the existing agreements and their resolution will consolidate and strengthen the multilateral trading system. By any standard, this should be the priority for all WTO Members. Logic and true commitment to the system demand that the foundations be strengthened before adding extra floors to the building. This is what developing countries are asking for and they are still expecting that ultimately better sense will prevail among their developed country partners. Let us hope that Doha realizes this expectation.

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