A Round By Any Other Name: The WTO Agenda After Doha

Transcription

1 Development Policy Review, 2002, 20 (1): A Round By Any Other Name: The WTO Agenda After Doha Sam Laird The WTO agenda decided at Doha in November 2001 has all the hallmarks of a new trade round, although the word round has been carefully avoided. To the already mandated negotiations on agriculture and services, Doha added negotiations on industrial products and the environment as well as reviews of the operation of WTO rules in several areas. Negotiations are also to begin on the highly contentious areas of investment and competition policy. Developing countries have been reluctant to contemplate such wider commitments, arguing that much still remains to be done on implementation of the Uruguay Round, and in this they received a degree of satisfaction. In the work ahead, however, much needs to be done to take account of their needs. Introduction While the World Trade Organization s Third Ministerial Meeting in Seattle in late 1999 failed to launch a new trade round, thus generating a crisis in the multilateral trade system, it succeeded in highlighting the concerns of the developing countries about implementation of the results of the Uruguay Round and in ensuring that the development dimension became a key feature of the work programme agreed for the WTO at the Fourth Ministerial Meeting in Doha, Qatar, in November Prior to the meeting there was widespread agreement among WTO Members on the need for a success at Doha, particularly in the light of the current economic situation, exacerbated by the events of 11 September in the United States. However, there were divisions on how to deal with contentious issues, such as investment and competition policy, and these were not fully resolved at Doha. The divisions were not solely along North-South lines. Developing countries interests in new trade negotiations must be seen in the light of the extensive autonomous trade policy reforms of the last years, supported by the World Bank-IMF. 1 These reforms appear to have produced broad benefits, although they have also created some vulnerability to external events and caused some serious adjustment problems, 2 but they have largely held up despite the recent crises (WTO, Chief, Research Section, Division for International Trade, UNCTAD, Visiting Professor Sciences-Po, Paris and Special Professor of International Economics, University of Nottingham. The views expressed here are those of the author and do not necessarily represent the views of UNCTAD or its Member States. 1. See Drabek and Laird (1998) for a review. They note that, despite the recent reforms, much remains to be done. Tariff peaks and escalation, anti-dumping procedures, licensing systems, local content plans and technical barriers are still being used to protect certain sectors at the expense of other parts of the host economies. 2. See, for example, Sachs and Warner (1995). For a more sceptical view, see Mosley (2000). Overseas Development Institute, Published by Blackwell Publishers, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA.

2 42 Sam Laird 1998a). Commitments in the WTO and in regional trade agreements (RTAs), such as NAFTA or the EU s Association Agreements, have also helped governments resist protectionist pressures, and it may well be that the structural changes under the reforms have also helped in the recovery process. There has been a substantial reappraisal of the Washington Consensus since the Asian, Russian and Brazilian crises of , with greater emphasis now being placed on institutional issues, in particular good governance (Stiglitz, 1998). Rodrik (1999), in particular, has emphasised governance over openness per se, although perhaps too much is made of the distinction. 3 Good governance may be seen as helping to attract foreign direct investment, with concomitant gains in productivity and international competitiveness. While autonomous reforms are beneficial in this respect, there is a greater perception of stability and credibility associated with locking in the reforms through multilateral commitments: governance is also a key idea in the WTO system of rights and obligations. Whatever the evaluation of the key elements of the reforms openness or governance a relatively broad-based trade agenda would seem to be in the interests of the developing countries, although there is disagreement among them about the pace of further change and its coverage. Some place greater emphasis on the multilateral route, which they see as affording greater credibility and more security against arbitrary actions by the larger trading countries. Others feel more comfortable in pursuing selfpaced autonomous reforms. It may well yet be that liberalisation and some of the wider issues will be pursued further through regional trade agreements (RTAs) than in the WTO, despite the Doha work programme. Much depends on the fulfilment of the development promises in that programme. The next section of this article provides a broad overview of the so-called implementation issues, that is, concerns expressed by developing countries that they had not received the benefits promised at the end of the Uruguay Round. It explains the negative attitude of many of them about calls for a new comprehensive trade round, beyond the Built-In Agenda. The third section then looks at the coverage of the builtin agenda essentially agriculture and services and the progress made on these issues. It also discusses the issues related to other elements of the work programme agreed at Doha. The final section tries to give an overall appraisal of the new WTO agenda and its development implications. The promised land? In recent years developing countries have been complaining that, despite having been promised all sorts of gains as a result of the Uruguay Round, this Promised Land has not materialised. On the one hand, gains in market access and the application of rules in their favour have not been forthcoming. On the other hand, they also complained about the heavy costs they faced in meeting their own obligations, under the Single 3. At the extremes: Could a well-governed autarchy provide a satisfactory development model? Or, could an economy without import restrictions but with totally corrupt officials and legal processes serve as a model?

3 A Round By Any Other Name: The WTO Agenda After Doha 43 Undertaking, whereby all members countries accepted the full set of WTO rights and obligations. 4 Complaints about the benefits that developing countries feel were their due relate in part to forecasts made at the end of the Uruguay Round about the welfare impact of the agreed outcome. As noted in Safadi and Laird (1996), a number of economists had computed that implementation would yield global welfare gains variously estimated to range between $212 billion and $510 billion, while the estimated gains for developing countries range between $86 billion and $122 billion. However, these estimated welfare gains were largely proportionate to each country s own liberalisation efforts, and the newly bound tariff rates of many developing countries remained higher than their existing rates. Thus, little real tariff liberalisation took place in a number of these countries, and few or no direct gains could result. Developing countries point out that there was also a back-loading of liberalisation in the textiles and clothing sector, so that the main export gains for many of them are expected from liberalisation that has yet to take place as import barriers are dismantled in the period through to 2005 (Laird, 2002a). Moreover, even where there has been liberalisation, this has been offset by the use of special safeguards, anti-dumping measures, more restrictive rules of origin, the introduction of specific rates of duty, and even tariff increases within bound levels. It has also been argued that, in agriculture, the procedures used in the Uruguay Round for converting non-tariff barriers to tariffs, computing the aggregate measure of support on which to base cuts in domestic subsidies and the base year chosen for export-subsidy reductions produced little real liberalisation. Developing countries have argued, furthermore, that a number of commitments to take special account of their needs, for example, in the application of the Anti-dumping Agreement, were in the form of best endeavours, without legal force, and have simply not been applied in practice. On the other side of the implementation debate, there has been the concern about the difficulties and costs to the developing countries of meeting their obligations under the WTO Agreements. This point was given some force by Finger and Schuler (2000) who computed that implementation of the WTO Agreement on Custom Valuation would cost as much as some countries annual development budget. The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPs) is another example of an agreement that is both expensive and complicated to implement properly. While transition periods, typically of five years, were available to developing countries (longer periods for the least developed) to implement these agreements, some have found these periods insufficient and, under procedures agreed in 2000, have been able to obtain extensions on a case-by-case basis in the specialised committees of the WTO. Technical assistance has also been made available for this purpose, but this is subject to relatively tight budget and staff constraints. Another area of concern to the developing countries relates to the new burdens and new barriers associated with the application of the Agreements on Technical Barriers to Trade (TBT) and on Sanitary and Phytosanitary Measures (SPS). These agreements recognise that countries have the right to introduce measures necessary to protect 4. In the Tokyo Round, many developing countries opted not to adhere to certain agreements, notably on subsidies and anti-dumping, thereby creating a two-tier system of rights and obligations.

4 44 Sam Laird human, animal and plant life. These measures are not to be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between WTO Members where the same conditions prevail or as a disguised restriction on trade, but the tuna/dolphins case, the shrimp/turtle case, the beef hormone case, the concerns about the effects of Genetically Modified Organisms, and so on have raised questions about the legitimacy of some of these, while also alarming environmentalists and other NGOs. Developing countries argue that international standards, set in the ISO and the Codex Alimentarius Commission, are largely established by and for developed countries, mutual recognition agreements between whom are also seen as effectively increasing barriers to imports from third countries, mainly in the developing world. Developing countries have little expertise to participate effectively in the standardsetting processes. They also need help in meeting international and sometimes higher national standards if they are to have any success with their exports. If many of the WTO Agreements required new legislation, setting up administrative machinery, training officials and installing computer systems, the Agreement on Traderelated Investment Measures (TRIMs) falls into a somewhat different category, requiring substantial structural adjustment in a number of developing economies. The TRIMs Agreement essentially covers local-content plans and export-balancing requirements that are almost exclusively applied in the automotive industry, where assembly and the production of parts and components are among the largest employers in a number of developing countries. While developing countries were given five years to dismantle their TRIMs, little was done in this time, and, under pressure from their domestic firms, the governments of these countries have been seeking an extension of the transition periods for the implementation of the TRIMs Agreement. Obtaining such an extension is complicated for five WTO Members that failed to notify their TRIMs in 1995, a condition for use of the initial five-year transition period. For this reason, these countries are seeking a blanket extension that does not look at specific cases, and there were proposals for an extension of two years (from 2000), with the possibility of an extension of a further two years. At Seattle and in the run-up to Doha, the developing countries insisted that their implementation concerns needed to be addressed before they would be willing to contemplate any new round. They argue that they should not be asked to take on new obligations while there are still unfulfilled promises and they continue to have difficulties in meeting their existing obligations. In order to address these concerns a special mechanism was established in May 2000 under the WTO s General Council (Laird, 2001). A number of pending dispute settlement mechanism cases against developing countries use of TRIMs were put on hold pending the resolution of this issue. Substantial clarification of the issues had been achieved, and a number of specific matters were referred to and resolved in various WTO bodies. However, many developing countries demands remained to be resolved at Doha, and some insisted that resolution of their concerns would condition their attitude to demands for a new round. It may be noted that, since 1995, very few DSM cases have arisen in connection with implementation concerns. This is mainly because such concerns often relate to non-compliance with the spirit of the agreements rather than to strict legal requirements.

5 A Round By Any Other Name: The WTO Agenda After Doha 45 The built-in agenda plus Doha At the conclusion of the Uruguay Round in 1994, it was already agreed that there would be new negotiations, starting in 2000, in the areas of agriculture and services. This is the core of what is called the Built-in Agenda. Several developing countries considered that certain aspects of intellectual property were also included, but other countries disputed that. In addition, there have been reviews of the operation of most of the individual agreements, but these did not imply any revision of legal texts unless recommended to the General Council and Ministerial Sessions by the relevant committee. It was proposed at Seattle that negotiations be extended to other topics to make up a package that would constitute a new round, the Millennium Round, also to be a development round with its emphasis on development issues. Seattle failed for a variety of reasons (Laird, 2001), not least because developing countries felt that yet more was being asked of them while they remained concerned about the implementation of the Uruguay Round, and considerable efforts were made to guarantee success at Doha. This was given an increased sense of urgency in the light of the economic downturn that began in 2001 and was exacerbated by the events of 11 September in New York. This section looks at the built-in agenda items, the main elements of the work programme and other decisions taken at Doha. It is emphasised that, apart from the built-in agenda on which work began early in 2000 and the discussions on implementation, Doha is essentially the start of a process that entails an immediate extension of the negotiations and discussions intended to lead to yet further negotiations. Agriculture After more than a year of preparation, new multilateral negotiations in agriculture were launched in early 2000, as foreshadowed by Article 20 of the WTO Agreement on Agriculture. At the end of the Uruguay Round some studies, focusing on large-volume, temperate zone commodities, suggested that there had been little real liberalisation. 5 These studies largely ignored the substantial tariff cuts for a wide variety of fruits, vegetable and tropical products. There was also a switch to less production-distorting subsidies in favour of income-support schemes, and the commitments on export subsidies seem also to have had a greater impact than forecast in However, for agricultural exporters the main achievement was bringing agriculture under the main GATT disciplines and the promise in the agreement of future, progressive liberalisation of trade in the sector. Under Article 20 of the WTO Agreement on Agriculture, the new negotiations are to take account of: (a) the experience to that date from implementing the reduction commitments; (b) the effects of the reduction commitments on world trade in agriculture; (c) non-trade concerns, special and differential treatment for developing country Members, the objective to establish a fair and market-oriented agricultural trading system, and the other objectives and concerns mentioned in the preamble to this Agreement; and (d) what further commitments are necessary to achieve the long-term 5. Discussed in Laird (2002b).

6 46 Sam Laird objective of substantial progressive reductions in support and protection resulting in fundamental reform. In the early discussions under the new negotiating framework, based on experience with the implementation of the Uruguay Round commitments, the key issues are again those of market access, domestic supports and export subsidies, state trading, the environment and sanitary and phytosanitary controls (in particular, application of the precautionary principle). Importers, notably the European Union and Japan, are stressing the non-trade concerns or multifunctionality of agriculture. Developing countries would like greater latitude to apply subsidies for development purposes. Agricultural exporters would like major reductions if not the complete elimination of export subsidies. While food security remains a concern for importers, there seems to be a greater interest in reduced levels of intervention to tackle this issue. Good progress was made in the first year of the new negotiations, but all of the earlier issues remain as important in the new negotiations as in the last round (see Matthews in this volume). 6 At Doha, these issues again were central, and in return for some concessions on its concerns on environment, health and safety, the EU conceded the objective of elimination of export subsidies, although no time frame was mentioned (WTO document WT/MIN(01)/Dec/1 of 20 November 2001). Developing countries did not get a commitment on a development box but the mention of special and differential treatment leaves room for some such measures to be negotiated. Services Services was a new subject that, along with rules on intellectual property, marked the main difference in the changeover from the GATT to the WTO. New negotiations on services, to start in 2000, were also envisaged by Article XIX of the General Agreement on Trade in Services (GATS), and good progress has already been made in this area, with an agreement in early 2001 on a framework for the negotiations. The negotiations are largely concerned with the widening and deepening of specific commitments on market access and national treatment. Negotiations are also mandated in areas such as most-favoured-nation exemptions, which were, in principle, to last no longer than ten years, maritime transport, and air transport (potential extensions of the GATS to areas not already covered). The absence of customs tariffs or easily quantifiable non-tariff measures makes it difficult to negotiate on expanded market access through the progressive reduction of intervention in services trade by means of any general negotiating formulas or other model approaches which would promote broad-based liberalisation across Members, sectors and modes of supply. This is why, beyond discussion of how GATT concepts of MFN and national treatment could be applied to trade in services, the Uruguay Round and subsequent sectoral negotiations focused on intra-sectoral reciprocity (Hoekman and Kostecki, 1995). There has been some interest in a formula approach which would allow for economies of scale, benchmarking and increased clarity of schedules, as well as a broader balance of concessions, although it is not clear whether this will garner sufficient support or how it would work. One possibility for advancing the negotiations would be to start with the 6. An extensive list of background documentation on the negotiations is now available on the WTO web-site:

7 A Round By Any Other Name: The WTO Agenda After Doha 47 generally more extensive commitments undertaken by countries that have acceded to the WTO since its establishment, but in early 2001 much of the discussion was on the flexibility that the GATS afforded developing countries (not to make commitments). A sectoral approach to the negotiations has the advantage of encouraging WTO Members to make offers to liberalise in order to obtain at world prices services, including in the form of establishment, that are inputs to the production, transport and marketing of their goods exports. On the other hand, the sectoral approach puts the emphasis on reciprocal liberalisation in key markets (comparable to the zero-for-zero negotiation in manufactures), and it may be difficult to achieve a balance in such narrowly defined sectors. Moreover, certain developing countries are particularly concerned about the perceived effects of fully opening up to foreign direct investment, the principal mode of supply for many services (Hoekman and Kostecki, 1995), and, initially, did not even want services to be included in the Uruguay Round. As a result, the specific commitments leave most trade in services unbound even where it is already liberalised. Another area for negotiation in services concerns GATS rules (e.g., safeguards, subsidies and government procurement), disciplines for domestic regulation and Article XXI procedures (modification of schedules). Some developing countries would like to see a general safeguard mechanism for services, without which their ability or willingness to make concessions would be limited. However, the inclusion of such a safeguard mechanism could facilitate making commitments on Mode 4 (allowing the movement of natural persons to provide services in a foreign country). While getting greater access under Mode 4 is a developing country objective, the use of safeguards could weaken any such commitment (parallel to anti-dumping after tariff cuts in manufactures). If developing countries are unable to obtain a wider liberalisation under Mode 4 (beyond professional services), then they may use this as an excuse not to take on new commitments in other areas of the services negotiations, since Article XIX:2 of the GATS grants appropriate flexibility for individual developing countries for opening fewer sectors, liberalising fewer types of transactions, progressively extending market access in line with their development situation and, when making access to their markets available to foreign service suppliers, attaching to it conditions aimed at achieving the objectives referred to in Article IV (of increasing participation of the developing countries in world trade). Thus, persuading them to lock in any commitments through binding offers will be difficult if they perceive that they are being offered little by way of improved market access for their exports of services, and they can use Article XIX:2 to limit their offers. Because of the progress already made in the services negotiations, services was a relatively uncontroversial issue at Doha, with the Ministers reaffirming the Guidelines and Procedures for the Negotiations adopted by the Council for Trade in Services on 28 March 2001 as the basis for continuing the negotiations. Intellectual property As noted earlier, there is a contested view that the built-in agenda also encompasses certain aspects of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). The TRIPs Agreement developed rules on minimum standards

8 48 Sam Laird of protection in the areas of copyright, trademarks, geographical indications, industrial design, patents, layout designs of integrated circuits, and protection of undisclosed information. Specific points that proponents consider to be covered by the built-in agenda are noted in the 1996 Report of the Council for TRIPs (WTO document IP/C/8 of 6 November 1996). These relate to: geographical indications (Articles 23.4, 24.1 and 24.2 of the TRIPs Agreement); the question of certain exceptions to patentability (Article 27.3(b); an examination of certain aspects of GATT 1994 provisions on dispute settlement (Article 64.3); and a review of the implementation of the Agreement (Article 71.1). Article 24.1 refers to an agreement to enter negotiations aimed at increasing the protection of individual geographical indications under Article 23, of which Article 23.4 refers to negotiations intended to lead to the establishment of a multilateral system of notification and registration of geographical indications for wines, and such negotiations were agreed at Doha. In this regard, it has become evident in WTO discussions that some developing countries have an interest in the protection of traditional names, such as basmati and tequila (Croome, 1998), and this issue is to be examined by the TRIPs Council following the decision by Ministers at Doha. The review of Article 27.3(b) of the Agreement concerns the patentability of plants, animals and biotechnological processes, but not in respect of micro-organisms, micro-biological processes and nonbiological processes for the production of plants or animals. At Doha, Ministers instructed the TRIPs Council to examine, inter alia, the relationship between the TRIPs Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, and other relevant new developments raised by Members pursuant to Article Full account is to be taken of the development dimension. Perhaps the most contentious issue surrounding the TRIPs Agreement is the conflict between patent protection and the need for access to drugs to cope with major health problems such as AIDS. The issue came to a head in 2001 with South Africa s plans to manufacture drugs to combat AIDS, while Canada and the United States later threatened to manufacture a drug to combat anthrax. While the granting of a limited monopoly through patent protection is said to encourage the development of new drugs, there is concern that a lack of access to such drugs at affordable prices in developing countries would make it difficult to tackle serious humanitarian crises, such as the AIDS epidemic. The provisions for compulsory licensing would seem to go some way to addressing this question, but this is an area where a wider approach, for example in the United Nations or the World Health Organisation, could usefully be pursued. 7 This issue became the subject of a separate Ministerial Decision at Doha, clarifying the right of WTO Members to grant compulsory licensing to manufacture patented drugs in a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency (WT/MIN(01)/DEC/2 of 20 November 2001). Further work is to be done on parallel imports where the home country, lacking manufacturing capacity, may import from a third country. This decision was important in changing the dynamics 7. To put the issue into perspective, it should be noted that only about 9% of drugs are under patent protection and hardly any essential drugs.

9 A Round By Any Other Name: The WTO Agenda After Doha 49 of the Doha process, and securing the support of the developing countries for the new work programme. Overall, developing country experience with the implementation of the TRIPs Agreement is still limited since they and certain economies in transition were given a five-year transition period (except for the national treatment and MFN commitments), compared to one year for the developed countries, whose legislation has now been reviewed. Least developed countries have a transition period of 11 years (i.e. to 2006) and an even longer period may be allowed. The process of review of the developing countries legislation has begun in the WTO and is likely to continue for several years. Benefits through increased foreign investment and technology transfer were expected to accrue to developing countries that have already started to develop and export technology-intensive products and services. However, for developing countries that have less scope for attracting technology-intensive investments or exporting technology-intensive products and services, or whose market size precludes such benefits from protection of intellectual property, there could be increased prices for products with a significant intellectual property component (Safadi and Laird, 1996). One advantage of the TRIPs Agreement is that disputes need to be pursued multilaterally, affording the greater protection of WTO legal procedures than would otherwise be available in bilateral talks with major powers. Dispute settlement On the operational side, there was perhaps no greater change between the GATT and the WTO than the Dispute Settlement Mechanism (DSM), but some aspects are of particular concern to developing countries. The WTO DSM unified the sometimes parallel processes in various GATT Committees, strengthened the legal rigour of the system, and allowed for review by an Appellate Body. Under the new system a consensus is required to reject the findings of a panel, whereas previously a party to a dispute could block the adoption of a panel report that went against it (Hudec, 1999). Developing countries are now major users of the DSM, and there has been a very substantial increase in cases against developing countries, many by other developing countries. However, they have also won some important cases against developed countries. Despite their increased use of the DSM, a problem for developing countries is that it is expensive and requires considerable expertise to pursue a dispute settlement case. To tackle this problem, a number of developed and developing countries established an Advisory Centre on WTO Law to provide advice to developing countries in relation to dispute settlement cases. Another problem is the use of the existing process to delay implementation of panel findings, for example by changing practices through minor modifications which again have to be challenged, offering compensation or allowing the withdrawal of equivalent concessions, thereby delaying implementation of panel findings. This was highlighted in the infamous bananas case. Ways of further streamlining the DSM to accelerate the procedures and enforce results, as well as US proposals to increase the transparency of panel proceedings, are under consideration, and this process is to be completed by 2003.

10 50 Sam Laird Anti-dumping and non-agricultural subsidies Among the various questions related to existing WTO rules where there is a sizeable number of countries which would like to see further negotiations, probably none is as sensitive as anti-dumping (AD). In the Uruguay Round, securing agreement on revision of the rules on anti-dumping was one of the most difficult areas and contributed to the four-year delay in completing the round. Pressures for further revision of the AD rules are coming mainly from Japan and developing countries that have often been the target of such actions. The EU has indicated a reluctant willingness to discuss the issue, but opening up the agreement is likely to provoke a strong negative reaction in the US Congress. The WTO Agreement on Implementation of Article VI of the GATT 1994 (the Anti-dumping Agreement) sought to clarify provisions on the computation of dumping margins, injury determination, the definition of domestic industry, investigation procedures, standards of evidence, and de minimis provisions for the termination of cases where the margin of dumping is less than 2% or the market share of particular exporters lies below 3% (or, cumulatively, 7% among exporters supplying less than a 3% share). It also required greater transparency in relation to the conduct of antidumping procedures. Anti-dumping duties must be terminated after five years unless a new review demonstrates that the removal of duty would be likely to lead to continuation of dumping and injury. The Agreement did not include any provisions for anti-circumvention measures, but a Ministerial Declaration on Anti-Circumvention recognised the need to develop appropriate rules in this area. Developing countries were to be given special consideration, although there is little indication of such treatment. Indeed, Miranda, Torres and Ruiz (1998) indicate that developing countries are more targeted by developed countries than other countries; moreover, they are often the target of such actions by other developing countries (Table 1). They also show resurgence in AD actions after 1995, particularly by developing countries, but they argue that the problems relate to the lack of appropriate implementation rather than to the Agreement itself, and suggest the problems may be corrected by dispute settlement panels. However, this increase in the number of cases underlines the risk that gains achieved through unilateral negotiations and in the market access negotiations may be subverted by anti-dumping actions. Thus, countries most affected by AD actions (e.g., Japan, Hong Kong, China, etc.) are seeking a strengthening of the rules to prevent abuse, while users if they can be persuaded to talk about the issue will probably try to tighten the anti-circumvention rules. At Doha, the United States put up most resistance to even talking about anti-dumping, but finally agreed to put discussion on the new agenda. While even this concession may cause problems for the Administration in securing fast-track negotiating authority, the outcome of such talks cannot be prejudged. In effect, anti-dumping procedures have become a general form of contingency protection, as evidenced by their increased use when economic conditions are difficult or imports increase following exchange-rate appreciations. Some form of legalised backsliding may well be necessary in the WTO system. The revised safeguards provisions, intended to facilitate adjustment to import surges (and countervailing measures), are little used, but there is some sign of resurgent voluntary export restraints

11 A Round By Any Other Name: The WTO Agenda After Doha 51 in automobiles, aluminium, etc., albeit under other guises. Although it has been suggested that anti-dumping be replaced with rules on competition (as within the European Communities, in the European Economic Area, in the Canada-Chile FTA and ANZCERTA), the United States would likely find this approach unacceptable. Any reexamination of anti-dumping by itself could well be a sterile replay of the Uruguay Round negotiations. It may be useful to re-examine the whole area of anti-dumping, countervailing and safeguards, including special safeguards, as a single package. Table 1: Anti-dumping investigations by groups of reporting countries and countries investigated, Reporting country group Affected country group Developed Developing Economies in transition Total Developed ,501 Developing Economies in transition Total ,196 Source: Miranda et al. (1998). Although the Agreement on Subsidies and Countervailing Measures (the SCM Agreement) is somewhat less contentious than anti-dumping, there have been important dispute settlement cases in this area, notably the cross-case of Canada and Brazil on aircraft subsidies. Brazil and other developing countries would like the SCM Agreement to be modified to allow the state to provide loans above LIBOR but below market rates exempt from possible countervailing measures. Others would like generally greater flexibility for developing countries to apply export subsidies. Another controversial area is the use of export credits under the SCM and Agriculture Agreements, with developing countries, notably Brazil, arguing that provisions are stacked in favour of OECD countries. Some developing countries sought to be able to use export subsidies by re-entering the list of exempt countries in Annex VII of the SCM Agreement when their per capita incomes fall below the $1,000 threshold, instead of being excluded permanently when incomes rise above that level, and this was agreed at Doha in the Ministerial Decision on Implementation-related Issues and Concerns (WTO document WT/MIN(01)/17 of 20 November 2001). Also, Annex VII countries income must exceed $1,000 per capita a year in constant 1990 US dollars for three years before they are excluded from the right to use export subsidies. It was agreed in a separate decision to extend the transition period for the phasing out of export subsidies by developing countries to 2007 (WTO document G/SCM/39 of 20 November).

12 52 Sam Laird Government procurement Since the end of the Uruguay Round there has been considerable work in the WTO on transparency in government procurement, and developed countries would like to see at least negotiation of a code on transparency, even if they are unable to persuade developing countries to adhere fully to the Government Procurement Agreement (GPA), one of the two plurilateral agreements that are not covered by the Single Undertaking of the Uruguay Round (the other is on civil aircraft). The agreement does not reduce market access restrictions as such (tariffs, etc.), but MFN treatment must be applied between third country suppliers and national treatment must also be applied to third countries vis-à-vis domestic firms. Goods other than those for defence contracting are covered by negative lists, specific to each country, while defence procuring services are specifically identified on a positive list. In areas covered by the GPA, thresholds and procurement procedures have been established, with open tendering being the preferred method. A number of provisions are intended to foster transparency (Article IX) and to ensure that technical specifications do not create unnecessary obstacles to trade (Article VI). While developing countries should have an interest in making public purchases of goods and services at the best possible prices, Hoekman and Mavroidis (1997) explain that they have not acceded to the GPA in order to avoid the costs of information and contract compliance associated with international tendering procedures under the GPA. Again, large foreign companies may be able to use their market power to drive out local firms before hiking their prices, similar to predatory dumping. Domestic firms may also be urging their governments not to adhere (and corrupt officials may fear losses under more transparent international tendering). There may also be little pressure on some countries to adhere to the GPA because their markets are of minor importance and contracts are often tied to foreign aid. On the other hand, developing countries may believe that they have little chance of winning export contracts for which they would be able to tender if they were members of the agreement. In the pre-doha discussions, a number of developing countries resisted pressure even to accept negotiations on a transparency agreement, of which the European Union was one of the major proponents. In the Doha Ministerial decision it was agreed to hold further discussions on the issue with a view to beginning negotiations on a multilateral agreement in this area in 2003 on the basis of explicit consensus on the modalities. Regional trade agreements (RTAs) There was remarkably little discussion of RTAs in the run-up to Seattle and very little discussion in the pre-doha process. Instead, much of the debate has taken place in the WTO Committee on Regional Trade Agreements (CRTA), where some countries are seeking clarification of WTO rules on RTAs, which have been spreading rapidly in the 1990s. Although the process of examining RTAs has been streamlined since the creation of the WTO, the examination process is effectively bogged down over certain systemic issues. The meaning of key terms in the WTO provisions, such as the requirement that RTAs cover substantially all the trade (goods) or substantial sectoral coverage (services), is subject to interpretation. Requirements that other restrictive regulations of

13 A Round By Any Other Name: The WTO Agenda After Doha 53 commerce be eliminated on trade between RTA members, while other regulations of commerce not be increased against third countries (and how rules of origin are to be considered in this schema), are also vague. Any clarification of these terms would have an effect on the examination of specific agreements, so participants in existing RTAs seem unlikely to accept clarifications that would require modifications to their agreements, unless these were grand-fathered, but such a solution is unlikely to be acceptable to third countries. It is not clear how this impasse will be resolved, unless perhaps through a shift in the emphasis towards periodic examinations to monitor developments in RTAs similar to the Trade Policies Review Mechanism (Laird, 1999a). Any review might usefully look at clarifying preferential rules of origin, which is not covered by existing WTO work programmes. A proposal to look at the question of RTAs was included in the first draft Ministerial Declaration but was dropped from the final text, so that the process seems doomed to continue in the Committee on RTAs. Market access for industrial products Support for negotiations on market access for industrial products, essentially tariff negotiations, grew up to and beyond Seattle, leading ultimately to the decision at Doha to begin negotiations immediately in this area. This support seems to have been based on the realisation that inclusion of industrial products would permit some cross-sectoral trade-offs with the built-in market access negotiations on agriculture and services. There was also a realisation that developing countries have much to gain in this area, as tariffs are particularly high on their exports and there are welfare gains to be obtained from further liberalisation. On the other hand, some developing countries are concerned that making further concessions could limit their scope for industrial development programmes. Overall, industrial tariffs are now modest, with the trade-weighted average tariff on industrial goods in the developed countries standing at some 3.5% at the end of However, this does not take account of the fact that these low averages conceal high tariff peaks and escalation with stages of processing (Laird, 1999b). Moreover, these high rates, in both developed and developing country markets, are often concentrated in products of export interest to the developing countries. Developing countries tariffs affecting imports of manufactures are substantially higher than such tariffs applied in the developed countries. Table 2 shows that, on average, developing countries ( All Low and Middle-income Countries ) bound MFN tariffs on industrial products will be some 20% after the implementation of the Uruguay Round results. On the other hand, there is a substantial margin between the bound and applied rates in a number of developing countries, and operational rates may be even lower in practice because of regional preferential schemes. It is clear from these data that developing countries have much to gain from the inclusion of manufactures in a new round of negotiations, both in terms of gaining improved access and security of access to each other s (and developed country) markets and in terms of the welfare gains from their own liberalisation. Overall, it has been estimated that a 40% reduction in industrial tariffs would lead to a global welfare gain of some $70 billion, almost identical to that from a similar reduction in agriculture (Hertel et al., 1999). Of this, about half of the gains from liberalisation of trade in

14 54 Sam Laird manufactures would accrue to the developing countries from global liberalisation in the sector, mostly from their own liberalisation (Hertel and Martin, 1999). Table 2: Trade-weighted industrial tariffs in the post Uruguay Round period Region MFN bound MFN applied MFN applied weighted by imports from low & middleincome countries High-income economies All low & middleincome countries East Asia & Pacific Eastern Europe Latin America North Africa South Asia Sub-Saharan Africa Source: Finger et al. (1996). One issue of concern to developing countries is the possible erosion of tariff preferences such as those granted under the Generalised System of Preferences. On the basis of partial equilibrium, comparative static analysis, it is possible to compute putative, small, net negative effects for FTA members, ACP countries and least developed countries (Safadi and Laird, 1996). This can lead beneficiaries of preferences, including under regional trade agreements, to oppose any reduction in MFN rates. However, this has to be compared with the overall dynamic effects on the world economy through the implementation of the results of multilateral negotiations, which are likely to benefit all countries. In such negotiations, developing countries may also be expected to gain from the erosion in intra-industrial country preferences, e.g. intra-eu trade, EU-EFTA, Canada-US trade, etc. A number of complex technical questions to be resolved in relation to tariff negotiations are reviewed in Laird (1999b). As part of a broader market access package, the European Communities also suggested establishing legal obligations around a core of simplified trade procedures, trade facilitation, and at Doha it was decided to begin negotiations in this area in two years time on the basis of consensus on modalities yet to be agreed. As discussed by some of the proponents, such an agreement would essentially take the form of giving some teeth to the Kyoto Convention on Simplification and Harmonisation of Customs

15 A Round By Any Other Name: The WTO Agenda After Doha 55 Procedures, administered by the World Customs Organisation. It would be aimed at cutting red tape and bureaucratic formalities, thus reducing delays and the costs of doing business. A number of countries have introduced simplified clearance systems for exports, for example one-stop shops or single windows for documentation, but less effort has been made on the import side, despite the fact that imports are often inputs into exports and lower-cost imports can improve the real income of consumers. Trade facilitation has already had some attention at the WTO, mainly based on assessing the extensive work undertaken in other international organisations, such as UNCTAD, the Economic Commission for Europe and the International Chamber of Commerce. Any agreement would most likely require technical assistance to the developing countries in relation to implementation. Another issue decided at Doha is to continue existing work within the WTO on electronic commerce. Electronic commerce was first raised by the United States in the WTO s General Council and subsequently at the Second Ministerial Meeting in Geneva in May The rapid growth of such trade is essentially taking place outside the traditional framework of rules, and the US has proposed that this trade continue without taxation or regulation. As a result, at the Second Ministerial Meeting Ministers agreed that the WTO should study all trade-related issues relating to global commerce, taking account of the economic, financial and development needs of the developing countries, and make recommendations to the next Ministerial Meeting in Seattle (WTO document WT/MIN(98)/DEC/2). In the meantime, Ministers agreed on a standstill on the imposition of any duties on electronic transmissions, and this was extended at Doha. However, a number of developing countries do not wish to foreclose the option of imposing duties on this kind of commerce whether for revenue or other reasons (see WTO, 1998b). Investment A number of new topics were first broached at the First Ministerial Meeting of the WTO in Singapore in 1996: investment, competition policy, the environment, and labour standards. All of these are already covered in a limited fashion in the GATT and in various WTO Agreements, but some Members would like to see more systematic treatment, clarifying relations with other organisations, or making a linkage to trade issues so that enforcement of rules in these areas would become subject to the WTO s enhanced dispute settlement process. The issue of the treatment of foreign direct investment (commercial presence) is much less emotive than it was some years ago, with many developing countries now actively promoting FDI to capture associated technology gains and market access, and thus accelerate their own development and integration into the world economy. However, a number of countries, developed and developing, still place great emphasis on being able to impose conditions on inward foreign direct investment and the provision of support for investment by domestic firms (see Morrissey in this volume). Taking this view, certain developing countries (Malaysia, India, Egypt, etc.) were strongly opposed to proposals for adopting a comprehensive framework for international investment. It should be noted that this issue is already on the WTO agenda in the context of the negotiations over trade in services where investment (commercial presence) is one of the main modes of supply, in relation to the

16 56 Sam Laird implementation of the TRIMs Agreement, and under TRIPs, to give some key examples. In what was probably the most difficult issue at Doha, Ministers agreed that, in the period up to the Fifth Ministerial meeting in 2003, work in the Working Group on the Relationship between Trade and Investment would focus on the clarification of: scope and definition; transparency; non-discrimination; modalities for pre-establishment commitments based on a GATS-type, positive list approach; development provisions; exceptions and balance-of-payments safeguards; consultation and the settlement of disputes between Members. It was agreed that the special development, trade and financial needs of developing and least-developed countries should be taken into account as an integral part of any framework, which should enable Members to undertake obligations and commitments commensurate with their individual needs and circumstances. It was further agreed that formal negotiations would begin in this area in 2003 on the basis of explicit consensus on modalities. However, the Chairman of the Ministerial Conference, in response to concerns expressed by India, made it clear that failure to agree on modalities would block negotiations. Competition policy The WTO Working Group on the Interaction between Trade and Competition Policy has been examining submissions from governments and other organisations for more than five years (since the Singapore Ministerial meeting). It has also been working closely with other organisations, particularly UNCTAD and the World Bank with which it organised two special symposia. However, despite the large amount of work carried out thus far, it is not clear that the competition issue is yet ripe for negotiation. The idea of an international framework of competition rules has been pressed by the European Communities (WTO document WT/WGTCP/W/1) and is supported by a number of Latin American countries, which would tend to see a multilateral agreement as strengthening the domestic constituency for reform. The United States (WTO document WT/WGTCP/W/6) and some developing countries supported a continuation of the study programme. The outcome at Doha was to maintain the existing work programme for two more years and then to engage in substantive negotiations, again using the formulation on the basis of explicit consensus on modalities. In recent discussions, some countries have highlighted the linkage between competition policy and WTO rules on anti-dumping. For example, Hong Kong, China made a written contribution (WTO document WT/WGTCP/W/50) to the Working Group for a discussion of the link between WTO provisions for trade remedies and competition and the liberalisation of trade. However, the United States takes a negative view of this proposal. Korea, supporting Hong Kong, China, noted that the WTO Anti- Dumping Agreement did not make any distinction between monopolistic and nonmonopolistic price discrimination; the latter could be of benefit to consumers. Overall, research suggests that open and functioning competitive markets are the most conducive to economic development (WTO, 1997), and therefore developing countries should be supportive of work that would facilitate the functioning of markets (see Morrissey in this volume). Different market structures may require different competition or regulatory approaches. Thus, the precise regulatory framework needs to be tailored to each country s institutional capability. For example, if the market appears