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John Audley, Carnegie senior associate and director of the Trade, Equity, and Development Project, moderated the event. Dr. Audley set the stage for discussion by noting that the conclusion of the WTO Doha Ministerial in November 2001 - which launched a new round of trade negotiations under the so-called "Doha Development Round Declaration" - was only a first step toward creating a genuine trade and development agenda. Dr. Audley invited meeting participants to consider WTO progress in the areas of trade and environment, trade and labor standards, and issues of particular concern to developing nations, including market access for agricultural products, TRIPS and access to medicine, technical assistance and capacity building, and the implementation of special and differential (S&D) treatment.
The International Trade
Arena Today
Ambassador Sergio Marchi offered several observations upon the state of the
international trade arena after the pivotal launch of the Doha Round. While
he emphasized that the broad issues on the current agenda will require hard
work and commitment, he anticipates a successful conclusion that will permit
the advancement of considerable economic prospects.
- Ambassador Marchi remarked that the Doha Round encompasses a broad negotiating mandate, a "buffet" of agenda options reflecting the various aspirations around the WTO table. Central issues include: liberalization of goods and services; significant agricultural reform; clarification of rules on antidumping, countervailing duties, and subsidies; trade and environment issues; intellectual property rights; dispute settlement reform; and the possible inclusion of the "Singapore issues" of investment, competition, trade facilitation, and transparency in government procurement.
- After 15 years of negotiations, China is now a member of the WTO. As the Ambassador pointed out, this places 97 percent of world trade under the auspices of the WTO, and signals great prospects for exporters in the Chinese market.
- Ambassador Marchi characterized the Doha agenda as an attempt by the WTO community to bridge the "development divide," or to recognize that the benefits of trade have not been equally and equitably shared. According to Marchi, considerable progress has been made; for example, the negotiating structure and groups are working, and the WTO raised twice the amount expected to support technical assistance and capacity building efforts. Yet, significant challenges also exist. Given the round's ambitious timelines, Ambassador Marchi asserted that the pace of negotiations must quicken, which will be especially difficult for small countries. Moreover, Marchi posed the questions of how to maintain the trust and enthusiasm of developing countries, which represent ¾ of the WTO membership, and how to avoid backlogging too many difficult issues for negotiation at the Cancun Ministerial.
- While recognizing that the U.S. and the E.U. can not dictate the Doha agenda, Ambassador Marchi emphasized that the partnership of these two most powerful WTO members was essential to launching the round, and will be essential to successfully closing it.
- Marchi called for a sense of symmetry and balance between multilateral efforts to liberalize trade and the proliferation of over 250 regional and bilateral trade deals. He characterized regional and bilateral trade negotiations as positive, but also warned that due to a finite amount of energy, they could come at the expense of progress in the multilateral arena.
- Ambassador Marchi described a need to build up greater public support for the institution of the WTO, which he asserted tries to lower trade barriers in a transparent, rules-based manner that - given a world of increasing economic interdependence - helps to reduce uncertainty and gaps between rich and poor. According to Marchi, the WTO is not perfect and should not be criticism-proof; but beyond the loudest critics, it requires additional voices willing to work toward improving the institution.
Trade and Environment
Carnegie visiting scholar Scott Vaughan opened the discussion of trade and environment with three questions. Vaughan observed that investment, one of the Singapore issues, has become a lighting rod of concern for the trade and environment community in the context of Chapter 11 of the North American Free Trade Agreement (NAFTA). He asked whether any lessons have been learned from NAFTA, and if they are in turn providing guidance to discussions on investment in Geneva. Vaughan further inquired about whether Doha's inclusion of trade and environment as a negotiating mandate - for the first time in ten years - has changed the traditional rift between the North and the South on this issue. Finally, he remarked that the Cancun Ministerial is a focal point for many NGOs, and asked whether WTO ministers would be able to bring to Cancun any signs of tangible progress on the environment agenda. In a follow-up question, a representative from an international environmental organization asked Ambassador Marchi to comment upon the commitment of the U.S. and the E.U. to progress on trade and environment.
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Ambassador Marchi stated that from a Canadian perspective, definite lessons have been taken away from the NAFTA experience, as well from the negotiation of the Multilateral Agreement on Investment (MAI). Specifically, he noted that many asked why the MAI was negotiated at the "rich-country club" of the Organization for Economic Cooperation and Development (OECD), rather than at the WTO.
On the North/South rift over environment, Ambassador Marchi cautioned against neatly categorizing countries; developing countries do not have homogenous interests. He recognized, though, that because it is a consensus-based organization, the WTO can be frustrating. Moreover, Marchi observed that even as many developing countries have found their voice and common interests within the WTO, they still tend not to speak out against one another on more controversial issues. As WTO membership expands, Marchi feels the institution eventually will have to address questions of governance in its decision-making process.
Regarding progress on environmental issues, Ambassador Marchi outlined the three pillars of the WTO agenda: (1) to clarify the relationship between WTO rules and Multilateral Environment Agreements (MEAs), (2) to clarify the relationship between the WTO and the respective MEA secretariats, and (3) to "unleash" environmental goods and services by lowering tariffs and eliminating barriers to their trade. He then expressed a frustration with the ongoing struggle over observership at the WTO, which has prevented WTO members from having effective, consistent discussions with representatives from the MEAs. The Ambassador voiced his hope that this problem would be resolved soon, either by granting MEAs "observer" status or by facilitating their involvement through another means.
With the disclaimer that he was not in the position to speak for either member, Ambassador Marchi expressed his belief that the U.S. and the E.U. share a genuine commitment to trade and environment issues. The E.U. was one of the leading demandeurs on environment at Doha, where it was supported by the U.S., Canada, and Australia. Conversely, developing countries posed the biggest obstacle, largely due to their suspicion that environment would be used as a disguised form of trade protectionism. Ambassador Malachi stressed the need for WTO members to stick closely to the established trade and environment agenda; veering toward protectionism in this round could prevent the inclusion of environment for many years to come.
NGOs and External Transparency
A meeting participant who worked with a DC-based NGO remarked
that many developing countries suspicious about the inclusion of environment
into the trade agenda are also very suspicious about the involvement of non-governmental
organizations (NGOs). She asked if there were ways that NGOs could work to lessen
this suspicion, and to make countries more amenable to their input. Later in
the discussion, a development advocate noted that her organization has found
that it can go far when working with developing countries on issues of common
interest.
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Ambassador Marchi agreed that civil society involvement in the WTO is a going concern. While the WTO is trying hard to improve its internal transparency, he explained that as a Canadian Ambassador, he is equally frustrated by the constraints placed on external transparency. According to Marchi, this reality results from a clash between different cultures of how trade policy is developed. Developing countries usually feel that external transparency is not the business of the WTO as an institution, but rather is a domestic concern of each country. Ambassador Marchi, however, argued that though national level outreach and consultations remain the first priority, the WTO should complement these efforts because (1) it is an international institution that should be reflecting best practices, and (2) it can help to compensate if countries don't address transparency well.
Ambassador Marchi then addressed the tendency for developing country governments to resent NGOs that they view as making illegitimate claims to speak on behalf of their citizens. He suggested that former WTO Director-General Mike Moore took important steps toward breaking down such animosity by creating an advisory board and by holding two public symposiums. He noted that such opportunities for constructive engagement with members of civil society give developing country governments the chance to see that there are NGOs who believe in trade and who have valuable contributions to make. Ambassador Marchi encouraged NGOs to visit Geneva to create additional opportunities for constructive dialogue, which in turn would help countries like Canada advocate for greater external transparency.
Later, Ambassador Marchi noted that many developing countries are selective about praising NGOs when its convenient for them to do so. For example, they point to NGO positions on TRIPS and health, agriculture, and S&D treatment. But according to Marchi, labor and external transparency remain non-starter issues for dialogue. He presented the challenge of moving from convenient partnerships to systematically engaging and recognizing NGOs and their contributions.
Trade and Labor
Carnegie senior associate Sandra Polaski said her assignment to frame the discussion of labor as a trade issue appeared difficult, because labor is not on the WTO's negotiating agenda. Labor has been discussed within the WTO many times - at the Singapore Ministerial, at Seattle, and at Doha - but the member countries have consistently failed to reach consensus for its inclusion on the multilateral agenda. But despite being excluded from multilateral negotiations, Ms. Polaski pointed out that labor is on the agenda of many bilateral and regional trade negotiations. The United States has negotiated labor provisions into every free trade agreement since the 1993 NAFTA Labor Side Agreement. The E.U. also has begun to include promotion of labor standards in its trade agreements, though it has not yet sought to make such commitments enforceable. Canada has negotiated labor commitments into its bilateral trade agreements, including enforceability provisions that are stronger than the EU approach but weaker than those in U.S. agreements.
Polaski said the result is that an international web of free trade agreements that include labor provisions is gradually being created. She argued that as the multilateral system moves closer to full free trade, a convergence of forces would eventually push labor onto the WTO agenda. In the U.S. - and probably in the E.U. and Canada - it will not be politically viable to supercede a bilateral or regional agreement that includes enforceable labor provisions with a multilateral agreement that would abrogate those provisions. In the developing world, she maintained, countries that have agreed to labor provisions in trade agreements have found those commitments to be reasonable and even to provide utility for their governments as they deal with domestic constituencies and international investors. These countries will not want other developing nations to be able to weaken their labor laws in order to gain a competitive edge.
Given her contention that the WTO eventually will have to deal with labor,
Polaski asked Ambassador Marchi if he saw ways in which the WTO can begin doing
constructive work to demystify these issues and set the stage for the day when
countries can reach agreement on them. She then invited questions from the audience.
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A representative from a U.S. trade union reflected on whether more developing countries would agree to labor conditions in the multilateral sphere if they were demanded as condition for an agreement, and maintained that the U.S. public may not completely trust its governments' commitment to trade and environment issues.
Another meeting participant proposed that with China entering the WTO, movement
on the labor issue may evolve if developing countries become more conscience
of the South/ South aspects of the issue. She also pointed out an opportunity
to have a discussion on labor rights within the WTO Services negotiations, in
terms of negotiations to liberalize the movement of persons. She suggested inviting
the International Labor Organization (ILO) to provide technical comments on
what Services negotiations might mean to workers rights and labor markets, at
least to help WTO members realize that the ILO has a useful contribution to
make.
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Ambassador Marchi agreed that Ms. Polaski had provided a convincing and coherent picture of trade and labor issues. He cautioned, though, that labor remains the most contentious issue among some developing country ministers, who view enforceable provisions on labor as northern protectionism and an attempt to remove southern comparative advantages. The lighting-rod nature of the issue in Seattle made preparations for Doha very difficult. Because labor was a non-starter for most developing countries and some developed countries, the most that demandeurs on labor could accomplish was to include a cross-reference in the Doha Declaration to the ILO Task Force on the Social Dimensions of Globalization.
The best route moving forward, Marchi speculated, might be to work through
regional and bilateral agreements to build up best practices, to provide positive
experiences and ideas, and to help dispel the suspicion evident among some developing
countries on this issue. He agreed that China's accession to the WTO would change
the institution on a number of fronts. But, he maintained that there is a difference
between striking a deal on labor with those countries that have proven willing
to date (e.g. Jordan, Chile, Singapore), compared with those countries who supply
the chief resistance to WTO negotiations on labor. He repeated his belief that
the U.S. is genuine in its pursuit of labor and environment issues at the WTO.
TRIPS and Health
John Audley closed the discussion by asking the Ambassador to comment on the status of negotiations on TRIPS and public health.
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Ambassador Marchi expressed his disappointment over the missed deadline on TRIPS and health, but maintained that the failure to reach consensus was a collective responsibility, which stemmed in part from the mixing of commercial issues and humanitarian concerns. He asserted that the negotiations had gotten away from their original intention to allow the poorest countries - especially in Africa - to efficiently provide affordable drugs to treat serious epidemics in the most expedient way. As the scope of diseases proposed for inclusion expanded, U.S. fears grew, and the U.S. ultimately did not agree to the compromise agreement supported by the rest of the WTO membership.
Ambassador Marchi expressed his optimism that the WTO will still reach a solution
on this important issue, as well as his belief that it ultimately will pay more
dearly for it. He felt that it was still too early to get a sense of the collective
reaction either to the American moratorium or to the new EU compromise proposal,
which includes a plan to consult with the World Health Organization. Finally,
he hoped that the missed deadline on TRIPS and health would not cause WTO members
to slow down negotiations in other areas on the Doha Development Agenda.
Event summary by Vanessa Ulmer, Junior Fellow, Carnegie Endowment for International Peace
