Sustainable Developments Daily Update #1 | Curtain Raiser

9 December 1996

The World Trade Organization's (WTO) first Ministerial Conference (MC) will meet in Singapore from 9-13 December 1996. Delegates will take stock of the operation of the rule-based multilateral trading system, address issues regarding implementation and determine the future course of activities of the WTO. Reports from 26 WTO bodies, which were approved by the General Council in November, are expected to be adopted. Members worked up until the eve of the MC in an informal process on a draft Ministerial Declaration (MD). A report has been forwarded to the Chair of the MC outlining the draft and highlighting points of contention to be discussed during the MC. Differences remain in a number of areas including textiles and agriculture, and new issues including investment, competition policy, labour and government procurement. Delegations also have discussed an Information Technology Agreement that is expected to be agreed at the MC.

The origins of the WTO

The WTO was established on 1 January 1995. It is the successor to the General Agreement on Tariffs and Trade (GATT) and is the institutional embodiment of the results of the Uruguay Round of negotiations conducted by the GATT Contracting Parties from 1986-1994. The WTO objectives are: predictable and growing access to markets; promotion of fair competition; and encouragement of development and economic reform. As of December 1996, 126 countries are WTO Members. Twenty-eight countries are in the process of joining.

Sustainable development-related issues

Many of the issues to be discussed at the MC are directly or indirectly related to environment and sustainable development, including agriculture, textiles, investment and labour. Consideration of these issues has been based, in most cases on discussion in various WTO bodies. The following sections highlight the relevant committee discussions and identify related text in the 29 November version of the draft MD.

TRADE AND ENVIRONMENT: The Committee on Trade and Environment's (CTE) work programme included ten agenda items. The Committee considered Items 1 (trade measures for environmental purposes, including those pursuant to multilateral environmental agreements (MEAs)) and 5 (dispute settlement mechanisms in MEAs and the multilateral trading system) together. Discussions centred on the application of unilateral trade measures to address environmental problems occurring extra-jurisdictionally and on consistency between MEAs and the WTO. The report: recommends that the WTO continue to cooperate with MEA Secretariats; calls for favourable consideration of MEAs' requests for observer status; and suggests that if a dispute arises between WTO Members or Parties to an MEA over the use of trade measures pursuant to the MEA, they should consider resolving it through the dispute settlement mechanisms of the MEA. Members were unable to reach consensus on how to deal with disputes brought against Parties to an MEA by non-Parties.

A major portion of the CTE's work thus far has focused on Item 3(b) (environmental requirements relating to products, including standards and technical regulations, packaging, labelling and recycling). These discussions have focused on voluntary eco-labelling schemes and their relationship to the WTO Agreement on Technical Barriers to Trade (TBT), in particular those that attempt to address process and production methods. The Committee concluded that increased transparency in the development and operation of schemes can help alleviate trade concerns regarding eco-labelling and can ensure provision of accurate information to consumers and recommended further work and cooperation with the TBT Committee and relevant international fora.

On Item 4 (transparency of trade measures used for environmental purposes and trade-related environmental measures (TREMs)), the CTE recommended that: no modifications of WTO rules are necessary to ensure adequate transparency for existing TREMs, although the CTE should monitor the adequacy of existing transparency provisions; and the WTO Secretariat should compile a database of all notifications of TREMs.

Discussions on Item 6 (effect of environmental measures on market access, especially in relation to developing countries, and environmental benefits of removing trade restrictions and distortions) centred on how the WTO can contribute to making international trade and environmental policies mutually supportive through trade liberalization. The CTE recommended that discussion on this issue be broadened to include sectors other than agriculture.

On Item 7 (exports of domestically prohibited goods (DPGs)), the Committee recommended: that the Secretariat determine what information is available on restrictions or bans on domestic sales or use of exported products; and provision of technical assistance to strengthen developing countries' capacity to monitor and, where necessary, control imports of DPGs.

The Committee's consideration of Item 8 (Trade-Related Aspects of Intellectual Property Rights (TRIPs) and the environment) focused on the ability of the TRIPs Agreement to facilitate the generation of, access to and transfer of environmentally-sound technology and products (EST&Ps), environmentally-unsound technologies, and IPR and indigenous knowledge provisions of the Convention on Biological Diversity. The report recommended further work on developing an appreciation of the relationship of TRIPs to environmental protection and sustainable development.

On Item 10 (appropriate arrangements for relations with NGOs and transparency of documentation), the Committee: encouraged Members to derestrict all papers and non-papers submitted to the CTE; recommended that the Secretariat continue to interact with NGOs; and called for favourable consideration of MEA Secretariats' requests for observer status to WTO bodies as appropriate.

The CTE conducted preliminary discussions on Items 2 (the relationship between environmental policies relevant to trade and environmental measures with significant trade effects), 3(a) (environ-mental taxes and charges) and 9 (services and the environment) and concluded that further examination of these issues is required.

The report recommends that the CTE continue to operate beyond its original two year mandate. The draft MD highlights the importance of policy coordination at the national level in the area of trade and environment. It states that due to the breadth and complexity of the issues covered by the Committee, further work is required on all items of its agenda.

TRADE AND DEVELOPMENT: The Committee on Trade and Development (CTD) identified four priorities. Regarding the implementation of provisions in favour of developing countries, there was concern as to whether developing countries have been drawing full benefits from such provisions when they are adopted. Considerable priority was attached to drafting guidelines for WTO technical cooperation with a focus on capacity-building. Member States drew divergent conclusions from a CTD report on why some developing countries have done better than others in integrating into the multilateral trading system. Some stressed domestic restraints, others pointed to trade barriers. Technical cooperation was recommended for LDCs unable to take advantage of initiatives in trade and investment.

Particular attention was given to the deteriorating economic situation facing LDCs. The report recommended technical cooperation aimed at institutional and human capacity-building and a WTO Plan of Action. The General Council was also asked to invite Ministers in Singapore to convene a high-level meeting with UNCTAD and the International Trade Centre. The future work programme of the CTD will, inter alia, explore ways of ensuring greater disclosure of the application of the Uruguay Round provisions in favour of developing and least-developed countries.

The draft MD highlights: the adoption of Guidelines for Technical Cooperation; the need to increase awareness of special provisions for developing countries; and the adoption of the Plan of Action. It also calls for the high-level meeting in Geneva in 1997.

TEXTILES: The Council for Trade in Goods discussed the implementation of the Agreement on Textiles and Clothing (ATC) and related matters. The discussion was based on written contributions by Pakistan on behalf of the ASEAN Members of the WTO. Key issues included: integration programmes; use of transitional safeguards; bilaterally agreed arrangements; functioning of the Textiles Monitoring Body (TMB); treatment of small suppliers and least developed countries; interests of cotton-producing countries; rules of origin; use of trade measures for non-trade purposes; market access; rules and disciplines; and circumvention. Some Members expressed concern that the first stage of integration had not meaningfully improved access to the markets of certain importing Members. Views diverged regarding recommendations.

The Council also considered the TMB report. Some Members stated that the TMB was supposed to rely on additional and supplementary information, and in certain cases had not done so. The Council annexed the TMB report to their report to the General Council and agreed to take action regarding three TMB recommendations: recall the importance of adhering to ATC notification requirements; resume consultations regarding the ad personam status of TMB's members at an appropriate time; and give consideration to the TMB schedule in the WTO's overall schedule of meetings.

The draft MD resolves to ensure faithful implementation of all aspects of the ATC. Members agree that the TMB should achieve greater transparency in providing the rationale for its findings and recommendations and emphasize the responsibility of the Goods Council in overseeing the functioning of the ATC.

AGRICULTURE: The Report of the Committee on Trade in Agriculture addresses implementation of the Agreement on Trade in Agriculture and the notification procedures specified in the Agreement. While the report expresses general satisfaction with the notification performance of most Members, the attached annex highlights some problems. For example, a third of the countries required to notify on their domestic support measures have done so, and notifications on export subsidies are at 36%.

The Committee recommends continued work to explore possible scope for further improving the quality of implementation generally and to developing guidelines or other solutions as appropriate. Dissatisfaction with the manner in which some countries have implemented the Uruguay Round commitments has led to the inclusion of a reference to agriculture in draft MD, in a discussion of implementation.

INVESTMENT: One of the most contentious of the new issues being considered for the WTO agenda is investment. The OECD is in the process of drafting a Multilateral Agreement on Investment (MAI) that protects the rights of foreign investors in various ways and sets up a dispute settlement mechanism. It is based on core trade principles that, for example, accord similar treatment to foreign and national investors. Some countries would like to see a similar agreement concluded in the broader WTO forum and have called for a working group to examine the relationship between trade and investment.

A number of non-OECD countries object, fearing that the end result will be the negotiation of a binding agreement whose final shape will have been substantially determined in a forum to which they had no input. Many also object on substantive grounds, arguing that restrictions on the terms of investment are a necessary tool for development. Some of those opposed have called for a moratorium on the discussion of investment issues in the WTO until UNCTAD has completed its work on the subject.

The draft MD calls for establishment of a WTO working group that, after examining the relationship between trade and investment, would report to the General Council.

LABOUR: Whether and how the WTO might address labour issues is another divisive issue facing delegates in Singapore. Those who want mention of labour in the MD want to strengthen international observance of core labour standards such as rights of association and collective bargaining, and the prohibition of child labour, forced labour and discrimination in employment, all the subjects of International Labour Organization (ILO) Conventions. Those who oppose bringing labour into the WTO Agenda feel that the issue should be left to the ILO. Many fear that such standards will be used as a new form of protectionism.

The draft MD sets out an approach on which there is still no consensus. It envisions an undefined mode of cooperation between the WTO and the ILO to see that the positive effects of trade liberalization on job creation and labour standards are more clearly understood and seen to be mutually supportive. It includes a prescription against the use of trade restrictive measures to enforce such standards.

Some would like to see the WTO establish a Working Party to deal with the issue. A number of countries have no objections to the current formulation, which does not mention a Working Party. Others are opposed to including any mention of labour in the Declaration.

Things to look for today

PLENARY: The Plenary will meet during the morning and afternoon in the Suntec Centre.

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