When
it comes to the crunch, countries always blame their competitors
for not doing enough to free up global markets
To give is harder than to receive
Somporn Thapanachai
Progress toward global free trade
took faltering, acrimonous steps in the past year.
National, regional and sector interests posed vigorous resistance
to ''unfair'' conditions, amid all too familiar allegations of
pre-determined agendas, divisions between developed and developing
countries, and between the Cairns group of farming nations and
major trading power blocs.
Ultimately, members of the World Trade Organisation, a forum
intended to craft a smooth path for trade liberalisation, could
not even agree on what should be discussed at the WTO's third
ministerial conference, leading to stalemate in Seattle.
Deadlock was very much the theme of the year, starting with the
dispute over who would take the helm of the WTO. Members were
almost evenly divided between Thailand's Supachai Panitchpakdi
and New Zealand's Mike Moore. With neither side budging and the
row threatening to undermine the 135-member WTO, a draw was declared
with
Mr Moore, a former NZ premier, taking the post for the next three
years, followed by Dr Supachai for a similar term.
Thailand saw the decision as recognition of its role in the multilateral
trade arena.
Mr Moore was strongly backed by the United States, which perceived
him as the more likely of the contenders to back free trade _
or, as critics suggested, at least the American agenda.
The division reflected the splits that were to unfold later in
the year, with developing countries increasingly asserting that
they stood to lose rather than gain from the liberal agenda favoured
by many developed nations. On the issue of the WTO director-general,
Thailand won support from Japan, Australia and Asean members.
The scene was set for Seattle where, during talks from Nov 30
to Dec 3, WTO members were meant to reach consensus on a new round
of trade negotiations, dubbed by President Bill Clinton as the
''millennium round''.
US Trade Representative Charlene Barshefsky said the negotiations
failed due to the complexity of the issues that could not be resolved
in a short period. She called for more transparency.
However,
the outcome had been predicted by more than a few observers. The
talks concluded with hundreds of bracketed points requiring further
negotiation. Mr Moore, who took office only two months earlier,
was unable to resolve the multitude of differences.
A Thai trade envoy in Geneva said many members distrusted the
agenda for the Seattle meeting, claiming that it had been drafted
to favour the United States. Unless the schedule was changed,
there would be no progress.
One contentious issue is the linkage of working conditions with
trade. Many developing countries see this as a means to erect
trade barriers against their products, while advocates of workers'
rights claim they are simply worried about exploitation in the
Third World.
However, the underlying issue is that cheaper products from developing
countries are more price competitive than similar ones made in
developed nations. Hence, the suspicion that many western nations
are selective in their concern about workers' rights.
The meeting took place against a backdrop of protests by those
claiming that free trade is an uneven playing field that has damaged
many economies; there are losers as well as winners.
Washington's insistence on linking trade and labour issues was
like ''throwing a stone into a beehive'', according to Karun Kittisataporn,
director-general of Business Economics Department, one of Thailand's
negotiators.
The Group of 77 developing countries said the working group on
the issue, as proposed by the US, was not properly constituted
and ran counter to the decision at the first ministerial conference
held in Singapore in 1996. That meeting required labour issues
to be discussed under the auspices of the International Labour
Organisation (ILO).
The US later described its move as merely seeking an ''informal
consultation''. Some observers suggested the US stand was an attempt
by the US administration to bolster its public image before the
next presidential election. As well, the European Union proposed
a meeting on labour issues under the WTO.
Thailand tried to mediate, suggesting that high-level representatives
of the WTO and ILO hold a non-binding meeting under a neutral
party such as the United Nations Conference on Trade and Development.
However, the EU still favours a standing committee on the issue.
Mr Karun is highly critical of the preparations for the Seattle
meeting, as an apparent lack of groundwoprk led to more than 500
bracketed items on the agenda _ in other words points of contention.
Negotiating procedures were unclear until the last minute, with
delegations kept waiting in conference rooms for meetings that
never took place, or being called at 5 a.m. to meetings scheduled
to start in 30 minutes.
Apart from labour-trade links, the most contentious issues were
investment flows and trade in agricultural products.
The 18-member Cairns group of farm exporting countries _ comprising
developed and developing nations _ wants further liberalisation
and elimination of subsidies, but the European Union, Japan and
South Korea want to keep protecting their farmers. However, during
a working group discussion chaired by Singapore, WTO members almost
agreed on all agricultural issues except the elimination of export
subsidies.
Lawless in Seattle ... protests, some violent, rocked
the WTO meet
They agreed in principle to further reform of trade in agriculture
for all farm products, as well as to a reduction of trade-distorting
domestic subsidies.
Members also agreed to take non-trade concerns such as the environment,
food security, food safety including biotechnological issues,
and rural development, as matters for negotiation.
Mr Karun believes agricultural issues could be resolved but members
were holding back, seeking bargaining chips. However, the suspension
of negotiations as a whole could cause members to dig in further,
creating difficulties for negotiations in 2000 that are intended
to build on the conclusion of the previous Uruguay Round in 1994.
In Seattle, members issued draft texts on opening markets to
non-farm goods, covering tariff reduction, non-tariff barriers,
flexibility for developing countries and sector-based liberalisation
for some products, as proposed by the Asia Pacific Economic Co-operation
forum. But they still did not reach any agreement. Some members,
such as Australia, wanted negotiation on market access for industrial
products to cover all items without exclusion, copying the treatment
of farm products.
Even so, implementation of existing agreements was still tardy,
with developing countries wanting some developed members to ease
their anti-dumping measures, or to treat the trade in textiles
and garments on a global basis, removing protectionism.
Issues needing further negotiation include sanitary and phyto-sanitary
regulations, intellectual property protection, special treatment
for developing countries, and regional arrangements.
Ministers have yet to decide whether new issues including investment,
competition policy, government purchases and trade facilitation
will be included in the negotiations.
Negotiating procedures under the so-called ''green room'' system
did not make for transparency. Under the arrangement, 20-25 countries
held closed negotiations, while more than 100 small countries
waited for the outcome.
''It was a pity for developing countries that waited outside
and were later asked to commit themselves -- without a say --
to the results,'' Mr Karun said. Thailand was a participant in
the talks.
Mr Moore was asked to work out new forms for negotiations to
follow. While the size of the WTO makes consensus difficult to
achieve, there are too many loopholes currently.
The system should be able to accommodate small countries in negotiations,
according to Mr Karun, who concedes it would be difficult to hear
every country. However, if continuous negotiations were held on
issues, there might not be any need for a comprehensive round.
Mr Karun warned that repeated failure of negotiations would discredit
the credibility of the WTO and members might turn to protectionism.
Although the meeting failed to open a new trade round, Thailand
was not directly affected as talks are set for 2000 on its major
issue, agriculture.
The official launch of farm negotiations is likely next year
but substantive results cannot be expected until 2001, after the
next US presidential election, when the new president will have
''fast-track'' authority to negotiate.
''In the run-up it is crucial for the WTO to resist protectionism
and to support the survival of the WTO. Flexibility in the US
position may help launch the new round,'' Mr Karun said.
However, Thailand and Malaysia remain under pressure to open
their information technology sectors to competition, their position
weakened by India's reversal and decision to join the second IT
Agreement.
Thailand rejected the agreement, saying that the second pact
placed too much emphasis on consumer electronic goods, unlike
the first which focused on information technology products.
Despite the Seattle shambles, prospects look brighter among regional
trade groups. The 21-member Asia Pacific Economic Co-operation
(Apec) forum and the Asean Free Trade Area moved at a quicker
pace -- albeit a crawl -- toward trade liberalisation.
Apec laid stress on liberalisation of 15 groups of products,
acknowledging that a group effort would be needed to make progress
through the WTO.
Given the failure of the Seattle meeting, Apec members will probably
have to look implementing their own agenda for trade and investment
liberalisation in 2000, according to Vitun Tulyanond, deputy director-general
of the Business Economics Department.
Apec members declared they would liberalise trade and investment
in 2010 for developed members and 2020 for developing members.
Some years ago, each member submitted its own individual action
plan for liberalisation -- moves later overshadowed by the US
pressure since 1996 for the freeing up of the IT sector.
Some members want faster liberalisation by creating smaller forums
under the Apec umbrella. Those countries include Thailand with
South Korea, Singapore with Japan, and the ''Pacific five'' --
the US, Australia, New Zealand, Chile and Singapore.
Meanwhile, although Asean members agree in principle to create
the Asean Free Trade Area in 2003, with tariffs for intra-Asean
trade cut to 0-5%, there are difficulties.
Malaysia delayed its tariff reduction programme for automobiles
to protect its fledgling industry. In return, it agreed that other
members could raise similar sensitive issues.
Thailand is cutting its tariffs and, by the end of 2,000, those
on intra-Asean trade will slightly exceed 7% on average, less
than half the average rate applied to non-Asean members.
Meanwhile, the 10 Asean members have built stronger ties with
China, Japan and South Korea. The issue for the 13 countries is
whether or not they have the collective clout to balance the US
and the EU in the global economy.
However,
the outcome had been predicted by more than a few observers. The
talks concluded with hundreds of bracketed points requiring further
negotiation. Mr Moore, who took office only two months earlier,
was unable to resolve the multitude of differences.
