A Broad South African Approach
to New Multilateral Trade Negotiations in the World
Trade Organisation
Introduction
Multilateralism promises to be the appropriate
institutional policy response to globalisation and
the growing interdependence of national economies.
The marginalisation of many countries in the global
economy, particularly those in Africa, and the question
of coherence in global economic policy-making between
the IMF, the World Bank, and the WTO, constitutes
key challenges confronting the international community,
in the context of an integrating global economy.
In this context, the WTO has moved to centre stage
in an evolving system of global economic governance.
Meeting the challenges of global governance is at
the heart of the ensuring the progressive development
of the global economy as a whole.
The establishment of the WTO marks the emergence
of a strengthened rules-based international trading
system that provides enhanced certainty and security
for market access. The WTO reduces the scope for
unilateral trade measures and aims to ensure the
economic interactions, including the resolution
of disputes, are governed by a system of rules,
and not solely by the interplay of economic power.
This is the essential contribution of the WTO to
the creation of a system of clear, transparent and
predictable global economic governance.
The disciplines that emerged from the Uruguay Round
Agreements are extensive and have an intrusive impact
on all aspects of Members trade and economic
policies. The prospect that new negotiations would
seek re-negotiation of existing agreements and broaden
the ambit of WTO competence into new areas, with
further inroads into domestic policy formulation,
indicates the WTOs growing centrality to international
trade relations.
Notwithstanding the advances made in the Uruguay
Round, including the establishment of the WTO, the
outcome of those negotiations respond to - a large
extent - to the concerns and interests of developed
countries the leading trading nations. From
the perspective of developing countries, WTO agreements
exhibit a range of imbalances and deficiencies that
are prejudicial to their trade and development interests.
Further, the Agreements reflect the concerns of
sophisticated economies and presuppose an institutional,
human and financial base that is often lacking in
developing countries.
Globalisation and rapid technological development
are establishing new dynamics for trade and investment
not foreseen or well understood during the Uruguay
Round. These present new challenges to the multilateral
trading system and require a further strengthening
of global economic governance to manage the diverse
consequences of globalisation.
Developing countries have a clear interest in strengthening
the system in a manner that promotes their development.
In many respects, multilateral rules need to be
designed and re-designed to become
more responsive to the trade and development interests
of developing countries and to achieve equitable
objectives.
For the developing countries, the key challenge
confronting the multilateral trading system is to
ensure that issues of development are addressed
adequately and decisively. Meeting this challenge
will serve to strengthen the multilateral, rules-based
trading system, enhance its legitimacy and create
the basis for a new round of world economic growth
from which all WTO member must benefit.
Strategic Objectives for WTO Negotiations
In our view, the key to sustained global economic
growth lies in unlocking the growth and development
potential of developing countries. To achieve this,
developing countries must pursue industrialization
by processing their natural and utilizing their
human resources where they possess comparative advantage.
However, realising the full potential of these advantages
has been frustrated by projectionist interests in
some of the developed countries under various national
policy regimes, and buttressed by multilaterally
negotiated disciplines in the WTO.
The strategic objective in the new negotiations
is, therefore, for developed countries to undergo
far reaching structural adjustment in their economies.
Such restructuring requires reducing a range of
protective and support measures to inefficient "grandfather"
industries and sectors in the economies of the developed
countries, and thereby allows a relocation of production
and investment to developing countries, which process
comparative advantages in these areas. This existence
of a large "overhang" of capital in the
developed economies is the basis for such a resource
transfer if production possibilities are opened
in the developing countries. Such structural adjustment
would boost investment, production and trade in
developing countries, promote industrialization
and development, exchange North-South and South-South
trade and provide an impetus to a new round of global
economic growth.
This understanding has informed our approach to
future trade negotiations in the WTO. We would seek
to ensure the WTO Agreements facilitate not
frustrate such processes of structural adjustment
in the North. In sum, our strategic objectives should
be to:
Contribute to structural change in the geographic
allocation of global production;
Establish disciplines that level the playing field,
address concerns and imbalances in existing multilateral
agreements;
Extend and elaborate more effective provisions on
special and differential treatment; and
Extent disciplines to new forms and dimensions of
trade in recognition of the increasingly integrated
nature of the global economy;
These broad objectives are translated into more
specific proposals under the various elements of
the WTOs ongoing work programme and negotiations,
as spelt out below.
Modalities for New Multilateral Trade Negotiations
New negotiations must be based on a broad and balanced
agenda that accommodates the concerns and interests
of all WTO Members. Broad-based negotiations, which
would permit trade-offs among issues, would, in
our view, best serve developing countries
interests. We support the principle of a "single
undertaking" through which the results of negotiations
an all issues are adopted by all members in their
entirety.
This framework constitutes the only guarantee that
results of negotiations would strike a balance acceptable
to all Members. Plurilateral approaches would, by
contrast, threaten a further fragmentation of the
international trading system and undermine the principles
of inclusiveness and universality that are the cornerstones
of multilateralism.
The Ministerial Meeting in Seattle has provided
lessons that should not be forgotten when launching
a New Round. Issues related tot he internal governance
of the WTO must be addressed. Developing and developed
countries must pursue the democratic future of the
WTO as embodied in the "one country, one vote"
system of operation of the Organisation. This principle,
however, must not be allowed to affect the efficiency
and effectiveness of the negotiating process. Both
formal and informal solutions must be found to guarantee
the "ownership" of the WTO growth and
evolution process by developing countries. Parallel
to negotiations of substance, discussions on means
of avoiding the marginalisation of many developing
countries in decision making must take place.
Scope of new Multilateral Trade Negotiations
Implementation Issues
We have a range of concerns under existing WTO
Agreements that we seek to address. These are the
so-called implementation issues, as identified during
the preparatory period leading to Seattle and as
delineated in the Chairmans text of 19 October
1999. While some concerns may be addressed through
a clarification of existing provisions, others may
require re-negotiation.
We seek to strengthen the anti-dumping agreement
in a manner, which reduces its scope and potential
for abuse and harassment from narrowly projectionist
interests. While it is necessary, politically and
for genuine dumping reasons, to retain anti-dumping
as an instrument of trade policy, current multilateral
provisions provide undue scope for trade harassment
and protectionism against competitive imports and,
thereby, reverse efficiency and welfare gains associated
with a more open international trading regime.
The subsidies agreement is highly prejudicial to
the interests of developing countries. While subsidies
for R&D, environmental upgrading and regional
development, commonly used by developed countries
have been categorized as non-actionable, those required
developing countries to support their industrialization
and development- and which were previously utilised
by the now industrialised countries are prohibited
and actionable subsidies under the WTO. We seek
to reintroduce and broadened scope of non-actionable
subsidies to include measures aimed at achieving,
in a fiscally responsible manner, legitimate development
goals. We seek to reintroduce the concept of non-actionable
subsidies with the aim of partially redressing the
current inequities suffered by developing countries
under the SCM Agreement. In view of the investment
finance inequities (and associated risk premiums)
which developing and least-developed countries face
on international financial markets, we feel that
a review of the appropriate Uruguay Round Agreements
should be undertaken to redress this inequity.
Under the TRIPs Agreement, we would seek
to ensure that the benefits of intellectual property
regimes are equitably shared between the innovators/owners
and users/consumers of technology. We seek to ensure
that intellectual property protection encourages
innovation and technological development in a manner
that is also conducive to meeting public and social
policy objectives and that strikes a balance between
intellectual property protection and maintaining
a competitive international trading environment.
The TRIPs agreement should be clarified to
ensure, amongst other things, the protection of
bio-diversity, food security, and access to essential
drugs. We seek a precise definition of the scope
and modalities for non-violation complaints. The
protection of geographic indications should not
undermine the benefits of a more open and competitive
international trading environment.
In the context of a more open international trading
environment, the proliferation of standards to protect
health and safety can become obstacles to the exports
of developing countries: where they lack the resource
requirements necessary to meet new standards; where
they do not participate in the creation of standards;
and where standards are designed with projectionist
intent. To meet the requirements of legitimate standards
for the protection of health and safety, developing
countries require considerable technical, human
and financial support to upgrade their production
for export.
Mandated Negotiations
The Uruguay Round Agreements contain an in-built
agenda for negotiations in agriculture and services.
These commenced in January 2000. Services negotiations
currently involve the development of new horizontal
rules and will lay the basis for further market
access negotiations in areas of financial, telecommunications,
tourism, transport, energy, and environmental sectors,
amongst others; under the four modes of supply.
In our view, services negotiations hold great potential
for economic development, in terms of the growing
direct contribution of services to the economy (GDP),
its indirect contribution as an input into other
sectors (manufacturing) and, generally, in improving
overall economic efficiency and competitiveness.
Nevertheless, given the structural imbalances in
the development of the services sectors between
developing and developed countries, and the resulting
discrepancies in shares of international trade in
services, developing countries will not, in the
main, be demanders in the negotiations. They would,
therefore, seek trade offs in other sectors
such as agriculture for concessions made
in services.
In Agriculture, our objectives are to achieve a
substantial improvement of market access opportunities
for all its agricultural products with export potential;
to improve fair trade conditions on agricultural
products imported or exported; and to ensure that
the rural development objectives of developing countries
are accommodated within the allowable range of WTO
disciplines. We seek:
i) Tariff reductions; viable market access quotas;
the reduction in tariffs from bound rates;
ii) Further substantial reductions of domestic
and export support by major developed countries,
while retaining an adequate space for such support
for developing countries;
iii) Commitments to cap and reduce production-related
support measures;
iv) Special and Differential treatment for developing
countries;
v) The elimination of export subsidies and any
subsidization as part of export credits; and
vi) To develop transparent and coherent disciplines
for export credits.
Trade in agriculture has been hitherto characterised
by the use of a range of non-tariff instruments
by developed countries (such as tariff quotas, seasonal
entry thresholds, entry prices, variable specific
duties). Developing countries will seek an umbrella
agreement providing for the precise definition of
such instruments, regulating their use, and establishing
the necessary parameters for limiting their trade
disrupting and trade restricting impact on developing
countries exports in agriculture.
Industrial Tariffs
We favor a comprehensive approach to multilateral
trade negotiations that includes Industrial Tariff
negotiations. Our objective, among other things,
is to ensure the reduction and elimination of tariff
peaks and tariff escalation on products of export
interest and in value adding sectors that offer
to build upon the comparative advantages of the
developing countries.
While the average MFN tariff rate in the major
advanced industrial countries are low, the level
and the frequency of tariffs remain a matter of
concern in a number of key sectors of direct interest
to developing countries. Frequent tariff peaks and
significant tariff escalation still apply on agricultural
products, clothing and textile sectors, footwear,
leather and leather goods, and some capital-intensive
goods.
Although tariff escalation has decreased as a result
of the Uruguay Round, rising tariffs from raw materials
to intermediate products and sometimes peaking for
finished industrial products restrict export opportunities
and hamper vertical diversification and industrialization
in developing countries. In general, the growth
of exports of developing countries to industrial
countries is inversely related to the degree of
tariff protection in the latter.
New Issues
27. So-called New issues, as stated
in the Singapore, Geneva and draft Seattle Declarations,
include: trade and competition policy, transparency
in government procurement, trade and investment,
electronic commerce, and trade facilitation. Our
general approach is that any new disciplines to
be negotiated should contribute positively to development,
equity and consistency in the international trading
system, and not merely provide advantage to one
group of economies over another.
28. Any consensus to negotiate new disciplines
will depend, critically, on clarifying the level
of ambition sought in these new areas. We would
need to establish clear parameters, some key elements
and principles that will govern the negotiations
in order to build a sufficient degree of comfort
for all Members. An over-ambitious or open-ended
agenda for the New Round would constitute, in our
opinion, a recipe for an impasse.
29. In preparing for a scenario that Trade and
Investment is included in future negotiations, the
manner in which foreign direct investment is addressed
become crucial. A key element for developing countries
would be the ability to prevent disruptive investment
patterns in the economy as a whole or in particular
sectors that would be detrimental to development.
Such measures will have to work within the disciplines
of the market while setting clear and transparent
operational parameters for the market. The current
development of competition policy in many jurisdictions
is the type of regulatory structure that should
be explored. In addition, a GATS-type framework,
which sets out a positive-list of investment commitments,
is most appropriate. An investment agreement could
be constructed in a development-friendly manner
that, among other things:
i) Assures transparency;
ii) Provides for investor protection through intergovernmental
dispute settlement procedures;
iii) Allows for flexibility by permitting countries
to place limits and conditions on the right of establishment,
MFN, market access, and national treatment within
the framework indicated above;
iv) Permits appropriate performance requirements;
and
v) Disciplines incentives that distort investment
flows among member countries.
30. We recognize the importance of exploring the
interaction between Trade and Competition policies.
Processes of globalisation are leading to growing
concerns about the international and multi-jurisdictional
effects of Restrictive Business Practices. Developing
countries suffer from such practices by trans-national
corporations and foreign companies, in general.
We are also concerned about the implication of the
rapid growth of mergers and acquisitions for the
concentration of economic power in the world economy.
We recognize that competition policy and law in
developing countries form part of a broader policy
framework, including meeting public policy objectives.
31. As these considerations raise a complex set
of issues, we attach great importance to the ongoing
educational process underway in the
Working Group on Trade and Competition Policy. We
need to intensify work in this area, with a particular
focus on its developmental dimensions, and we need
to examine fully the financial, human, institutional
and juridical implications of competition policy
and law both at national and multilateral levels.
32. As far as Transparency in Government Procurement
is concerned, we believe that commitments to transparency
will add to the financial, institutional and administrative
burdens of developing countries, and that
therefore the provision of adequate technical
and financial support should be built into disciplines
in a meaningful application of special and differential
treatment. Measures to improve transparency should
not constitute efforts to achieve market access
goals nor impinge on practices to address domestic
development concerns. Any multilateral arrangement
in this area should be in the form of non-binding
guidelines, that are not subject to the dispute
settlement mechanism. Domestic or regional review
mechanisms should be employed for any dispute which
may arise.
33. On Trade Facilitation, there is agreement that
the simplification of trade procedures has potential
for considerable savings in time, money, human and
other resources and could result in substantial
benefits for all economies. Efforts to improve the
security and predictability for traders, including
through trade facilitation are welcome, but the
realities of trade impediments in many developing
regions (underdeveloped and poor customs administration
procedures, documentation and infrastructure etc.)
are not best addressed by binding commitments in
the WTO subject to dispute settlement. What is required
is a comprehensive and integrated effort in technical
cooperation, financial support and human and institutional
capacity building.
34. Electronic Commerce, largely a GATS issue,
has greatly enhanced the relevance of the cross-border
mode of supply of services and has underlined the
importance of implementing the commitment to provide
developing countries with improved access to technology
and information networks to underpin their increased
participation in world trade in services. We support
the continuation of the work programme on electronic
commerce and calls for technical assistance for
training and the development of infrastructure to
enable developing countries to participate and benefit
from electronic commerce. Extension of the standstill
on the non-imposition of customs duties on electronic
transmissions should be accompanied by the availability
of technical assistance. Infrastructure and capacity
constraints, connectivity, and access to hardware
and software are critical issues for developing
countries.
Other Issues
35. Some developed country Members would like to
also include trade and environment, and trade and
labour standards on a future negotiating agenda.
We attach great importance to the ongoing discussions
in the Committee on Trade and Environment with a
view to resolving the issues related to interface
between trade and environment policies. Given the
complexity of the issues and the concerns raised
by many Members, we believe it is premature to include
the issue of trade and environment in the forthcoming
negotiations where prospects for a positive outcome
are minimal and will undermine progress on all other
issues.
36. We endorse the principle of core labour standards
as enshrined in the I.L.O. conventions. Like others,
we reject the use of labour standards for projectionist
purposes. These views were recognised at the Singapore
Conference where it was agreed that the ILO was
the competent body to set, deal and promote core
multilaterally negotiated labour standards. It was
also agreed that the ILO and WTO Secretariats should
continue their collaboration.
37. In our view, efforts to bring labour standards
under WTO disciplines, where it would actionable
under the DSU, would fatally undermine any multilateral
progress not only on the issue of labour standards
themselves, but also on every other issue under
consideration in the WTO. In this light, labour
standards must not form part of the proposed negotiating
agenda for the New Round.
Department of Trade and Industry, South Africa
June 2001
So-called New issues, as stated in
the Singapore, Geneva and draft Seattle Declarations,
include: trade and competition policy, transparency
in government procurement, trade and investment,
electronic commerce, and trade facilitation. Our
general approach is that any new disciplines to
be negotiated should contribute positively to development,
equity and consistency in the international trading
system, and not merely provide advantage to one
group of economies over another.
Any consensus to negotiate new disciplines will
depend, critically, on clarifying the level of ambition
sought in these new areas. We would need to establish
clear parameters, some key elements and principles
that will govern the negotiations in order to build
a sufficient degree of comfort for all Members.
An over-ambitious or open-ended agenda for the New
Round would constitute, in our opinion, a recipe
for an impasse.
In preparing for a scenario that Trade and Investment
is included in future negotiations, the manner in
which foreign direct investment is addressed become
crucial. A key element for developing countries
would be the ability to prevent disruptive investment
patterns in the economy as a whole or in particular
sectors that would be detrimental to development.
Such measures will have to work within the disciplines
of the market while setting clear and transparent
operational parameters for the market. The current
development of competition policy in many jurisdictions
is the type of regulatory structure that should
be explored. In addition, a GATS-type framework,
which sets out a positive-list of investment commitments,
is most appropriate. An investment agreement could
be constructed in a development-friendly manner
that, among other things:
i) Assures transparency;
ii) Provides for investor protection through intergovernmental
dispute settlement procedures;
iii) Allows for flexibility by permitting countries
to place limits and conditions on the right of establishment,
MFN, market access, and national treatment within
the framework indicated above;
iv) Permits appropriate performance requirements;
and
v) Disciplines incentives that distort investment
flows among member countries.
We recognize the importance of exploring the interaction
between Trade and Competition policies. Processes
of globalisation are leading to growing concerns
about the international and multi-jurisdictional
effects of Restrictive Business Practices. Developing
countries suffer from such practices by trans-national
corporations and foreign companies, in general.
We are also concerned about the implication of the
rapid growth of mergers and acquisitions for the
concentration of economic power in the world economy.
We recognize that competition policy and law in
developing countries form part of a broader policy
framework, including meeting public policy objectives.
As these considerations raise a complex set of
issues, we attach great importance to the ongoing
educational process underway in the
Working Group on Trade and Competition Policy. We
need to intensify work in this area, with a particular
focus on its developmental dimensions, and we need
to examine fully the financial, human, institutional
and juridical implications of competition policy
and law both at national and multilateral levels.
As far as Transparency in Government Procurement
is concerned, we believe that commitments to transparency
will add to the financial, institutional and administrative
burdens of developing countries, and that
therefore the provision of adequate technical
and financial support should be built into disciplines
in a meaningful application of special and differential
treatment. Measures to improve transparency should
not constitute efforts to achieve market access
goals nor impinge on practices to address domestic
development concerns. Any multilateral arrangement
in this area should be in the form of non-binding
guidelines, that are not subject to the dispute
settlement mechanism. Domestic or regional review
mechanisms should be employed for any dispute which
may arise.
On Trade Facilitation, there is agreement that
the simplification of trade procedures has potential
for considerable savings in time, money, human and
other resources and could result in substantial
benefits for all economies. Efforts to improve the
security and predictability for traders, including
through trade facilitation are welcome, but the
realities of trade impediments in many developing
regions (underdeveloped and poor customs administration
procedures, documentation and infrastructure etc.)
are not best addressed by binding commitments in
the WTO subject to dispute settlement. What is required
is a comprehensive and integrated effort in technical
cooperation, financial support and human and institutional
capacity building.
Electronic Commerce, largely a GATS issue, has
greatly enhanced the relevance of the cross-border
mode of supply of services and has underlined the
importance of implementing the commitment to provide
developing countries with improved access to technology
and information networks to underpin their increased
participation in world trade in services. We support
the continuation of the work programme on electronic
commerce and calls for technical assistance for
training and the development of infrastructure to
enable developing countries to participate and benefit
from electronic commerce. Extension of the standstill
on the non-imposition of customs duties on electronic
transmissions should be accompanied by the availability
of technical assistance. Infrastructure and capacity
constraints, connectivity, and access to hardware
and software are critical issues for developing
countries.
Other Issues
Some developed country Members would like to also
include trade and environment, and trade and labour
standards on a future negotiating agenda. We attach
great importance to the ongoing discussions in the
Committee on Trade and Environment with a view to
resolving the issues related to interface between
trade and environment policies. Given the complexity
of the issues and the concerns raised by many Members,
we believe it is premature to include the issue
of trade and environment in the forthcoming negotiations
where prospects for a positive outcome are minimal
and will undermine progress on all other issues.
We endorse the principle of core labour standards
as enshrined in the I.L.O. conventions. Like others,
we reject the use of labour standards for projectionist
purposes. These views were recognised at the Singapore
Conference where it was agreed that the ILO was
the competent body to set, deal and promote core
multilaterally negotiated labour standards. It was
also agreed that the ILO and WTO Secretariats should
continue their collaboration.
In our view, efforts to bring labour standards
under WTO disciplines, where it would actionable
under the DSU, would fatally undermine any multilateral
progress not only on the issue of labour standards
themselves, but also on every other issue under
consideration in the WTO. In this light, labour
standards must not form part of the proposed negotiating
agenda for the New Round.
Department of Trade and Industry, South Africa
June 2001