Doc. 9295

18 December 2001

Managing globalisation: the role of the World Trade Organisation in the world economy

Report

Committee on Economic Affairs and Development

Rapporteur: Mr Mikko Elo, Finland, Socialist Group

Summary

The agreement reached in November 2001 at the WTO Summit in Doha, Qatar, for new negotiations to start on a wide range of topics is welcome news, especially at a time when the world economy is showing signs of slowing down considerably.

It is particularly heartening, continues the report, that the interests of developing countries are given particular attention in the agreement and that China is now joining the WTO - presumably soon to be followed by others, such as Russia.

The report also stresses the importance of continued good transatlantic trade relations and calls for environmental protection and core labour standards to form integral parts of world economic development.

I.        Draft resolution

1.       The Assembly notes with satisfaction the major achievements reached by the World Trade Organisation (WTO) since its establishment in 1995 and since the Assembly’s last statement on WTO activities in its Resolution 1101 (1996). Even though implementation of the Uruguay Round, launched in 1995, has on the whole proceeded satisfactorily, the failure to inaugurate a new Round at Seattle in 1999 dealt a serious blow to the world’s efforts to strengthen and adapt the global trading system on a basis of greater openness and universally shared principles.

2.        The Assembly welcomes the agreement reached in Doha (Qatar) in November 2001 for the pursuit of new WTO negotiations on a broad range of subjects related to international trade and investment. The ‘Doha Development Agenda’ is especially important in order to instil new confidence in a world economy seriously affected by the terrorist attacks against the United States on 11 September.

3.        The new negotiations are all the more necessary as world trade grew by only 2% in 2001 from the year before, down from a 12% increase in 2000. Although European trade still shows comparatively healthy growth, especially in central and eastern Europe and in Russia, this situation cannot be expected to continue in the absence of a strong, worldwide economic recovery. The latter can only come about if rapid progress is reached in the new negotiations and if earlier Uruguay Round commitments are fully realised.

4.        The Assembly notes with concern the violent protests that have marred many recent international conferences, including the Seattle WTO Summit in 1999. While recognising the widely felt anxiety about globalisation and calling for intensified dialogue between all parties concerned, the Assembly nevertheless condemns violence in all its forms and holds the right to peaceful reunion, as enshrined in the European Convention on Human Rights and Fundamental Freedoms, to be sacrosanct and requiring of full respect also by the opponents of globalisation.

5.       Developing countries, many of which have made important economic progress thanks to more open, rule-based trade made possible by the WTO, are the first to suffer from any slowdown in world trade such as that observed in 2001. To avoid being marginalised in the world economy, especially through a widening “digital gap” in information and communication technologies (ICTs), they must enjoy better, indeed often privileged, access to the markets of richer countries across the whole range of products and services. Furthermore, Council of Europe member states should increase their funding for WTO efforts to help developing countries implement, at administrative level, their various WTO commitments.

6.        The Assembly notes with satisfaction the emphasis given in the Qatar agreement to the interests and concerns of developing countries, and in particular the provisions made to permit these countries better access to patented drugs needed to fight epidemics such as HIV/AIDS.

7.        The Assembly welcomes China’s membership of the WTO, as well as that of Chinese Taipei (Taiwan), as from 1 January 2002 and considers this event a milestone in world economic and political development. It also welcomes the recent joining of the WTO by Council of Europe member states Albania, Croatia, Georgia, Lithuania and Moldova. It hopes that Russia, with its major population and rapid economic development, will, along with other European countries not yet members, similarly be able to join the WTO in the near future.

8.        The Assembly recalls its Resolution 1225 (2000) on prospects for a new transatlantic trade relationship, in which it called it “vital that this relationship [between Europe and North America] be maintained and strengthened, for the economic, political and security benefit of both continents and by implication for the world at large”. Given the present more difficult world economic situation, the Assembly in this context stresses the need for all WTO members fully to respect the WTO’s Dispute Settlement Mechanism and, as far as possible, to reach friendly settlement of disputes outside that mechanism in order to avoid overburdening it.

9.        Finally, the Assembly notes its longstanding concern to have environmental protection and core labour standards form an integral part of world economic development. It therefore welcomes the conviction expressed in the Qatar agreement that “protection of the environment and the promotion of sustainable development can and must be mutually supportive”. It is also important that the agreements on core labour standards established within the International Labour Organisation be ratified and respected by all WTO members.

II. Explanatory Memorandum by the Rapporteur

Contents

I.       Introduction

II.       The Long and Winding Road: From Uruguay over Seattle to Qatar

The WTO Summit in Qatar, November 2001

A much reduced growth in world trade in 2001

III.       Are trade, environment and social agendas necessarily antagonistic?

A fairer world trade?

IV.        The WTO’s contribution to the development of worldwide trade and development in Information and Communications Technologies (ICTS)

V.        Globalisation and its opponents

VI.       China joins the WTO: A historic event

VII.       Concluding remarks

I.       Introduction

1. When, in 1996, the Parliamentary Assembly adopted its Resolution 1101 on the World Trade Organization and the implementation of the Uruguay Round Agreements1, little did it realise the difficulties lying ahead for the WTO, established only a year earlier, and for world trade negotiations in general. The prospects then were for rapid further liberalisation of world trade, a wider negotiating agenda and a broader membership (which has indeed come true). Five years and a failed Seattle Summit later, a new sense of realism has set in – sentiment which is only moderately tempered by the agreement reached in Qatar in November 2001 for the launching of a new WTO Round.

2. Returning to Seattle, what had been advertised as the possible launch of a new Millennium Round did not materialise due to too widely diverging views among WTO members. Matters were not helped when violent demonstrators took to the streets forcefully to challenge the globalisation process in general, and the WTO’s perceived role in it in particular. In the months to come, the “Seattle syndrome” was felt most acutely in Prague, where the World Bank and the IMF held their World Economic Forum in September 2000, in Porto Alegre in January 2001, where opponents against globalisation aired vociferous and indiscriminate concern about such issues as the state of the global environment, labour standards, genetically-modified plants, accountability of international bodies and democratic deficits of various kinds. The EU Summit in Gothenburg in Sweden in June 2001 and in Genoa, Italy, the following month saw mayhem wreaked by thousand of rioters on these cities, leaving them partly destroyed. Only in the wake of the terrorist attacks against the United States on 11 September does a certain temperance seem to have entered demonstrators’ mood, as the prospect of a real shutdown of the world economy may have given some of them pause in reflecting on even more serious issues at stake – an issue to which we shall return in the following.

3. In its Resolution 1101 (1996), the Assembly expressed its support for the WTO in its mission to “maintain an open, multilateral, worldwide trading system […] as a major vehicle for peace and prosperity among all nations, and in particular for allowing developing countries and countries which are in transition to partake of global economic growth”. It also encouraged WTO to “assure liberalisation in fields […] such as services, telecommunications, maritime transport services and agriculture; and to tackle resolutely new areas such as the relationship between trade and the environment, trade and investment, […] and trade and social standards”. Five years later, this support is still there and the Assembly remains convinced that world trade should not be made to suffer from the 1999 crisis in the WTO negotiation process, but that it must instead be made to benefit from the Qatar agreement.

4. One purpose of this report is precisely to draw lessons from the Seattle failure – as mitigated by Qatar - to point to prospects for and challenges to free trade, help see the new negotiations resulting from Qatar through their early stages and ensure a much needed deeper parliamentary involvement in the Organisation’s work. Your Rapporteur will try to outline future roles for the WTO in this process and how it may fulfil this function even better than in the past. He will suggest how it could broaden its scope so as to better reconcile its mandate with the need for greater transparency and an intensified social dialogue that many have called for lately.

5. For this report, the Rapporteur has drawn on the very fruitful meeting he and his colleagues on the Sub-Committee of Economic International Relations held in Geneva in February 2001 with Mr. Mike Moore, Secretary General of the WTO, and his senior staff, as well as on an audition the European Parliament held with the WTO in April in that year. In June 2001 the Rapporteur’s Committee colleagues Mrs Stepova and Mr Frey participated in a conference organised by the Inter-Parliamentary Union in Geneva on the role of parliamentarians in shaping world trade and he is most grateful to them for the information they brought back to him. And the Committee of Economic Affairs and Development as a whole held a very lively discussion in Seville in May 2001 on the Rapporteur’s first draft.

II.       The Long and Winding Road: From Uruguay over Seattle to Qatar

6. The Uruguay Round - which culminated in the signing, in April 1994, of several agreements - was one of the most complete sets of negotiations of the 47-year old GATT (General Agreement on Tariffs and Trade). Apart from the core agenda on the dismantling of tariff barriers, the Round concluded a series of novel agreements: the GATS (General Agreement on Trade of Services), TRIPS (Trade Related Aspects of Intellectual Property Rights), a new deal replacing the Multifibre Agreement of 1974, and the TRIMS (Trade Related Investment Measures). The last Agreement, of a more general scope, led to the former GATT giving birth to the current WTO as from 1995. GATT had, over almost 50 years, done much to create the more structured open trade system that the WTO would henceforth manage.

7. If GATT dealt mainly with promoting freer trade and dismantling tariff barriers, the WTO, while continuing with these tasks, also has taken on new ones. Its mandate is to ensure the implementation of the Uruguay Round as well as agreements with fewer signatories; to set up a new framework for current and future multilateral negotiations; to take regular stock of trade policies in member States; and to establish a settlement mechanism for disputes. What had hitherto been an unofficial – though officially respected - forum for negotiations was now a formal international institution, with a secretariat in Geneva and equipped with a proper Dispute Settlement Body (DSB). For the first time world trade enjoyed an internationally recognised structure for its functioning, including a dispute settlement mechanism.

8. The earlier GATT procedure for dispute settlement was strengthened under the WTO. In the new system, the DSB sets up a panel of three experts, who are given six months to submit their report. This report is automatically adopted unless there is unanimity to reject it. This considerably speeds up the settling of many disputes. DSB has an appellate body, with which any of the parties can lodge an appeal. The DSB follows the decision of the appellate body, unless there is unanimity against it. The DSB is then entrusted with having the decision executed. Should any of the parties to the dispute choose not to conform to the decision, the DSB can allow the country or countries that stand to lose from this to apply compensating measures.

9. The setting up of the DSB, plus the WTO’s proceeding to regular stocktaking of trade policies in member States, raised fears that the WTO might become a globally ruling organization with a say over national policies - a fear which, added to the increasing globalisation and the ‘built-in’ agenda for ongoing negotiations on sometimes controversial issues – helps explain why many parties perhaps went to Seattle in a somewhat uptight mood.

10. In line with these changes in the negotiation framework, the first WTO Ministerial Conference, held in Singapore in December 1996, broadened the agenda by launching work in entirely new fields. They included links between international trade and the environment; the link between FDI (Foreign Direct Investment) and trade; the possible introduction of a ‘social clause’ in trade agreements; and links between competition policies and trade policies. The Singapore conference also concluded an agreement on the liberalization of trade in information technology. However, the four new fields opened up for continuous negotiations in Geneva - forming part of the so-called "Built-In Agenda" – also contained many seeds of conflict, such as divergent views on the part of developed and developing countries as regards the need for environment and ‘social clauses’.

11. If the above to some extent helps explain the Seattle setback some years later, a few other considerations should be added. For one thing, during the time of the GATT and up until and including Marrakech, a new Round would start when all countries felt ready for it. Seattle, on the other hand, was supposed to be the first date-set Round, since the Uruguay Round agreement foresaw, in 1994, that new multilateral negotiations should start by December 1999 at the latest. However, at this date the US was already in a pre-electoral mood, making any support by Washington for a new Round more difficult to mobilise. By all accounts, therefore, there were some hesitations and doubts in the air as negotiators gathered in Seattle, to which should be added a lack of preparation of various subject files and logistical difficulties on the spot making negotiations more cumbersome. In sum, negotiators had hoped that a ‘miracle of compromise’ could be found in Seattle. Alas, in the world of trade negotiations, miracles only happen if they are well prepared.

12. The Seattle Summit held out hopes of continued liberalisation of world trade, both because of an, in the meantime, even wider WTO membership and because of the broader range of issues to be covered. Developed countries intended to tackle the environmental impact of trade, whilst developing countries were against their inclusion, as they opposed any ‘social clauses’ which they felt would be difficult to fulfil and might place them at a competitive disadvantage. Various countries came with highly different ideas in the agricultural and intellectual property fields. Meanwhile, the Uruguay Round, the results of which had generally been hailed, had left many developing countries disappointed, also because they often did not have the administrative and other resources to implement them.

13. It is still too early to measure the full and final impact of the Uruguay Round. Latin-American countries may, in time, greatly benefit from it, while African economies, especially in Sub-Saharan Africa, seem not to have been doing so well out of it so far, perhaps for reasons unrelated to the agreement itself. While the inclusion of the textile industry and agriculture in the WTO mandate was supposed to favour developing countries, this is not yet quite the case.

14. It is worth remembering that the Parliamentary Assembly, in its Resolution 1101 (1996), called for a speedy implementation of the Uruguay Round, so that the widest number of member States – especially the least developed and transition countries - could share in its benefits and world trade undergo further liberalisation. The failure at Seattle made it all the more imperative to get a new Round going as soon as possible.

15. Depending on one’s perspective Seattle may be seen as either a major failure following two preceding years of largely stagnant trade talks, or as a mere incident within a long-term trend toward an ever more open and rule-based world trade system. The immediate disappointment was deep and general, all the more so since the Conference had been advertised as the Millennium Round and the massive presence of NGO and rioters was unforeseen. The truth is that a Round can be launched only when the major players in particular feel that they need it more than they fear it, and when there is a sufficient mass of unsatisfied demands from all sides and on all issues that will permit package deal compromises.

16. One main lesson to be drawn from the Seattle events is the danger of overlooking adverse political omens. In every other sector of politics, civil society has been given a better hearing. However, in the world trade talks this major stakeholder had so far been largely ignored. Up until Seattle, it could be argued that trade is a highly specific, indeed technical, field where each government is supposed to fend for itself before submitting the result to parliament. In transforming GATT into a formal structure, the WTO - and in giving it wider jurisdictional powers, notably through the Dispute Settlement Body – parts of civil society began to demand an interlocutor that could be held accountable for collective decisions on a supranational basis. Civil society also got a convenient scapegoat for globalisation’s alleged excesses. It is difficult to know whether NGOs chose to turn the newly created WTO into an adversary in order to gain a worldwide audience, and whether the organisation is indeed the right interlocutor for a civil society eager to voice its concerns.

17. The reform of the GATT process leading to the WTO stemmed from a recognition a) that world economic relations are much broader than simply trade in products and b) that there are wider implications for society at large as world trade is not only a vector for added prosperity but may also, for some, mean a potential loss in living standards. Some may believe that the message of Seattle was for the WTO to go back to its core function, namely simple tariff barrier dismantling, as was indeed argued in the aftermath of the short-lived conference. However, another reading would be that Seattle showed the need to address trade issues within a broader framework - one that would tackle also possible less positive consequences of freer trade. In trade as in other aspects of economy and society, good governance, human rights, social issues and transparency are growing in importance.

The WTO Summit in Qatar, November 2001

18. As representatives of the 142 WTO member states gathered in November 2001 in Doha, Qatar, for the fourth Summit in the WTO’s existence, they knew there was a high price to pay if they failed to reach an agreement. In Seattle in December 1999, everybody had had the feeling that the world economy was humming along just nicely and that a new world trade Round was perhaps not absolutely necessary. By contrast, the Qatar Summit was held against the background of the 11 September terrorist attacks against the United States and in a world economy which had begun to slow down in worrying fashion even before that fateful date.

19. Still it took delegations twenty hours of extra negotiating time, beyond the official deadline of midnight 13 November, to agree on terms for the launching of a new WTO set of negotiations to further trade liberalisation. (The term ‘Qatar Round’ is apparently not to be used for the time being, which is why some officials instead took to talking about a ‘Doha Development Agenda’). The Qatar achievement was nevertheless an impressive demonstration of resolve against terrorism and a commitment to rule-based multi-lateralism in world trade - at a time when regional and bilateral agreements are on the rise and even protectionist measures are in vogue. Qatar also welcomed, as from the end of 2001, China and Chinese Taipei (Taiwan) as new members.

20. Even though the text (see Appendix) does not contain as much as this Rapporteur and, he believes, the Parliamentary Assembly might have hoped, it will nevertheless permit the WTO process to go forward. This is so in spite of many deliberately vague and even ambivalent formulations that leave much room for different interpretations and therefore may give greater latitude in forthcoming negotiations.

21. Qatar foresees the continuation of ongoing negotiations aiming at greater liberalisation in agriculture and services. It also heralds the start of new negotiations to lower tariffs generally. Furthermore, negotiations are to start on the creation of an international register to determine the geographical origin of wines and spirits. (Efforts by some countries – both industrialised and developed - to have similar labelling of origin for other food products were not successful.)

22. Qatar in many ways represented the rise of developing countries as a cohesive negotiating group (indeed one forming the majority of WTO members). They were determined to gain better access to the markets of richer countries for their non-agricultural exports and to make the entire WTO system more amenable to their concerns. This was reflected in the final declaration, which also gave developing countries at least partial satisfaction when it came to the loosening up of patent protection where public health concerns are involved, such as access to western drugs at preferential conditions in fighting, for example, HIV/AIDS. Considerable attention is also given in the Declaration to the difficulties facing many developing countries as they try to implement the already existing Uruguay Round results.

23. Finally, developing countries ceded relatively little in areas of great priority to the richer countries, such as transparency in public procurement and the protection of intellectual property. While these areas are briefly mentioned in non-committal language, any decision to take up formal negotiations on most of them will have to await the next WTO Ministerial Conference at the end of 2003. In addition, they will then also have to be agreed on “by explicit consensus”. The ‘trade and environment’ issue can now be expected to continue to languish within an WTO committee already in existence for some time, without there being any objective to establish any firmer norms. As for minimum core labour norms, they will continue to be discussed at snail’s pace within the ILO, and it is, unfortunately, questionable whether they will be incorporated into the WTO framework any time soon.

A much reduced growth in world trade in 2001

24. The Qatar breakthrough is all the more important in view of the depressed situation as regards world trade. In October 2001 the WTO published its “International Trade Statistics 2001”. The report shows that the global trade in goods increased by a mere 2% in 2001 from the year before. This should be compared with the record increase of 12% in 2000.

25. The WTO is surprised at the suddenness of the slowdown, the worst the world economy has experienced since the second oil crisis of 1982. The reason is to be found mainly in the crisis in the information technology sector. Whereas this sector grew by 20% in 2000, in 2001 it registered a trade contraction. Trade in semi-conductors suffered a 30% reduction in trade. The countries in south-east Asia – traditionally large IT exporters – suffered especially, with for instance Taiwan registering a 40% decrease in IT exports. China managed to escape any major damage, largely due to solid domestic demand.

26. The Council of European area has also managed to avoid the worst of the overall trade slowdown. Especially central and eastern Europe benefited from the economic recovery in Russia, where domestic demand rose by 20% in the first half of 2001.

27. The slowdown in 2001 is particularly tragic for the poorest developing countries, since they very much depend on the global economic health. In 2000 the 49 poorest countries in the world managed to increase their exports by 28% in value terms (even though it must be remembered that the group is highly heterogeneous and that some countries increased their trade much more than others). Their figures for 2001 risk being much worse. Therefore, those who argue against globalisation must keep in mind that the poorer countries – and especially the poorer people in the poorer countries – are the first to suffer from any halt in the process of trade liberalisation as achieved through the WTO.

28. In June 2001, two members of the Committee on Economic Affairs and Development, Mrs Stepova and Mr Frey, participated in an Inter-Parliamentary Union conference in Geneva on the role of parliaments in the shaping of the world trade agenda. The conference gathered some 350 parliamentary representatives from all over the world.

29. The event was valuable in that it permitted the WTO – as represented by its Director General Mike Moore and leading officials - to learn more about parliamentary concerns over the direction globalisation and world trade are taking. Similarly, it allowed parliamentarians to get know the WTO better and to see it - not as some Machiavellian mechanism conspiring to have world trade benefit only the already rich - but rather as an intergovernmental intermediary for world trade talks, with a mission very much also to assist the weaker, developing countries in world trade negotiations.

30. The Assembly’s representatives felt immediately that momentum was building to make sure that the Qatar Summit should not be allowed to be a repetition of Seattle, and that countries would have to come much better prepared. The Uruguay Round was felt to be less and less able to accommodate a rapidly evolving world economy. In order for Qatar to succeed, it would be essential that all the major groups of countries – developed, emerging and developing – should come with enough new requests and old dissatisfactions, in order to allow compromises to be found as part of larger ‘package deals’.

31. The main thrust of Mr Moore’s message was that globalisation has been going on for centuries. It is a process, not a man-made policy, and it is driven by new technology and new means of communication and transport. Even if one were to do away with the WTO, he seemed to argue, globalisation would continue unabated. Indeed, without the WTO, globalisation would be infinitely more chaotic and disadvantageous to the weaker countries and to the more vulnerable parts of populations also in the richer countries.

32. The WTO, he said, is more than willing to pursue a dialogue with parliamentary instances. However, he went on, the WTO is, after all, a purely intergovernmental organisation, which explains why only governments can in principle sit at the negotiating table. It was therefore up to each national parliament to give a proper negotiating mandate to its government, and subsequently check whether the government had done all in its power to realise it. The WTO did everything it could to assist poorer countries in tackling an extremely complicated trade agenda. In the absence of a new Round, world trade risked stagnating, with devastating consequences for all.

33. Mr Moore went on to say that if the international community could reduce just the worst forms of protectionism, then yearly economic gains the size of the Canadian economy would be added to world output. If all tariffs were dismantled, the overall economic gain would correspond to the addition of two economies the size of China to that of the world. Finally, he said, if all industrial tariffs could be scrapped, three-quarters of the gains would go to developing countries.

34. He concluded by saying that the multilateral trading system could not be taken for granted. The system would not be able to ‘look after itself’ but would soon risk degenerating into a chaos of bilateral deals. The multilateral system above all served to protect the weak. Developing countries shunning globalisation would face marginalisation. In the absence of the WTO, world trade would be ruled by the force of the stronger, rather than by transparent rules to be respected by all. Trade itself did not cause poverty, he said; insufficient trade did. Finally, he argued, while environmental, social, cultural and labour considerations rightly belonged on the trade agenda, they also risked overburdening it and thereby prevent agreement. One solution could be to have, say, the ILO take care of core labour standards.

35. Mr Moore’s frank speech – and his subsequent participation in a very rich question and answer period– were well received, not least by parliamentarians who seemed less well informed about the organisation. However, there was no mistaking the fact that the audience, especially that from developing countries, perceived the present world trade system as a inherently inimical to the interests of developing countries and felt there was a strong need for a greater parliamentary role in world trade negotiations to improve the situation.

36. The IPU President, Mrs Jajma Heptulla, President of the IPU Council, for her part argued that poorer countries must at last obtain “democratic empowerment” and that national parliaments and international parliamentary bodies must given a greater say.

37. Our representatives, in their statements to the conference, drew attention to the role of the Parliamentary Assembly of the Council of Europe in making the parliaments of our 43 member states more aware of WTO developments, not least through our debates on “OECD and the World Economy”, where WTO matters are dealt with prominently, and on the WTO itself. They also underlined the value of the annual visits to WTO headquarters in Geneva of the Sub-Committee on International Economic Relations (of our Committee on Economic Affairs and Developments).

38. The IPU now looks likely to become an at least unofficial parliamentary partner of the WTO. In this context our representatives made clear our Assembly’s wish to serve as an active regional partner - on behalf of the wider parliamentary Europe (and our observer and Special Guest parliaments) - to the IPU with its worldwide membership (and the European Parliament with its more restricted membership). As for our Assembly’s direct relations with the WTO, we are not a priori seeking any more formalised relationship, but rather occasional (though regular) debates on WTO matters, especially when the world trade situation require them.

III.       Are trade, environment and social agendas necessarily antagonistic?

39. Apart from the US/EU traditional sources of dispute – such as the tax status of foreign subsidiaries, food safety, culture and agriculture - a good part of the ‘built-in’ agenda’ failed to find a consensus among key players in Seattle.2 Developed countries were ready to tackle such issues as the environment, intellectual property and the so-called “social clauses”. Developing countries, on the other hand, felt that the environmental and social chapters might lead to competitive disadvantages for them and strongly opposed their inclusion. They also felt that they were lacking in power in the WTO ensemble and that their widely differing national situations and stages of development made it impractical to include these issues.

40. Some WTO members for their part argue that dealing with environmental issues – which are normally outside its negotiating mandate - is fine as long as agreements do not lead to discrimination in trade practices, a key concern for the Organisation. WTO is in an even more awkward position due to the existence of various regional, pluri- or bilateral agreements sometimes concluded with countries not members of the WTO.

41. In the light of the Seattle failure and the rather incoherent set of concerns and demands voiced by demonstrators, many people are now confusing globalisation (a phenomenon largely brought about by technical progress) and new issues raised in the ambit of the trade-oriented WTO (i.e. new problems brought about by globalisation itself!). They may therefore jump to the conclusion that WTO itself is being disavowed and that WTO agreements are no longer the best way to progress, especially since other types of arrangements have been multiplying in the years between the Uruguay Round and Seattle. The WTO rightly maintains that global trade agreements and regional trade pacts that are in conformity with WTO principles can indeed co-exist.

42. Around 220 regional agreements have been notified to the GATT and the WTO since the inception of the former in 1948. Roughly half of them have been implemented. The first decade shows few regional agreements, followed by a multitude of pacts notified in the 1960s (concerning mainly Europe, Latin America and Africa). There was a peak in the 1968-1978 period, followed first by fifteen years of less activity and then a feverish period from 1993 onwards - mostly in reaction to the collapse of communism in central and Eastern Europe. (However, a great many of the some 150 agreements notified in this last period lie dormant.) Over 90% of them concern Europe, the Mediterranean and the former Soviet Union area. Among major recently signed or currently negotiated free trade agreements, that between Mexico and the EU and the planned FTAA (Free Trade Area of the Americas), to be implemented by 2005, deserve mention.

43. These regional, pluri- or bilateral agreements can coexist with broader-based ones signed within the GATT/WTO framework by virtue of Article XXIV of GATT, Articlev V of the GATS and Article XXV on waivers, although the Uruguay Round limits the possibility of resorting to plurilateral agreements. Some of them at times provide for more open trade than those of the WTO. Some also include environmental and labour standards that have so far not found their way into WTO agreements.

44. The very existence of these exceptions to WTO rules would seem to belie any accusation that the Organisation is hegemonistic. It is often easier to reach consensus on a regional basis among more like-minded partners than in a worldwide body such as the WTO, with its over 130 members. On the other hand, the length of WTO Rounds also allows for differences in national positions to be smoothed out over time.

45. There is a certain shift in power in society from ‘shareholders’ (that is, those who hold a legal lien on something) to ‘stakeholders’ (that is, those who hold a moral, ethical or other kind of right to something). This trend is also felt in the WTO. Some of the bitterest trade disputes in the framework of WTO were initially waged on the grounds of the right of ordinary people to stand up against agreements, which were entered into by their countries as WTO members but which are seen as conflicting with rights upheld in other fora (such as cultural rights, the ‘precaution principle’ in new foods, the waiving of WTO’s agreements in case of public health concerns, especially in developing countries).

46. The recent AIDS drug dispute is a case in point. A South African law allowed the import, licensing or production of patented AIDS treatment at a cheap price through a “waiver” to WTO’s TRIPS agreement. The drug companies concerned argued that this practice would deprive them of lawful patent revenues and jeopardize future research and development of new drugs. After countries hosting these companies initially considered resorting to the WTO’s Settlement of Dispute Body to defend intellectual property rights, the pressure from various NGOs worldwide was such that major pharmaceutical multinationals eventually decided against asking their governments to pursue action. One could also mention the decade-old US-EU conflict over food safety, or that over genetically modified seeds, where the EU opposes the US on the grounds of the ‘precaution principle’.

47. In all these instances, the general interest increasingly permeates trade concerns. In other words, while our economies are more and more intertwined through trade, the political sphere, under pressure of civil society, increasingly defines the guiding principles which trade has to respect. For example, the OCDE – often a forum for trade considerations of issues later surfacing in the WTO – has recently issued guidelines for multinationals which look more like an extended good governance Code of Conduct than a set of ‘regulations’. We are thus in a new situation, where the world trading system - after a spell of national interventionism followed by a period of strong deregulation – may need to assume wider responsibilities and be held accountable to the primary expression of people power, namely parliamentarians.

48. An example of the relationship between trade and the environment is provided by the rapid deforestation currently under way across the tropics. Indonesia, for instance, lost some 20 million hectares between 1985 and 1987, with a possible additional 5 million ha lost by 2001. The World Bank predicts that if current deforestation trends continue, lowland rain forests will become extinct in the island of Sumatra by 2005. If the Indonesian tropical forest goes, so will the orang-utan. Fifty years ago there were hundreds of thousands of orang-utans living in their primary forest habitat in that country. Today, the population is estimated at less than 30,000, mostly as a result of logging and forest conversion for plantations.

The WTO, the ILO and the issue of “core labour standards”

49. For several years, “core labour standards” have been a priority issue for industrialised countries within the WTO. And for years all efforts to include them in WTO negotiations have been vehemently rejected by developing countries, which fear that their exports will be excluded from industrialised country markets on the grounds that they do not respect such core labour standards.

50. Fortunately, in this situation we have the International Labour Organisation. In June 2001, it set up a committee which will have as its task to examine the social dimensions of globalisation. Representatives of the WTO, the World Bank, the International Monetary Fund and other UN specialised agencies are to participate in this work. And even if no firm agreement on “core labour standards” is likely to result even in the long term, the issue has at least been removed from the immediate agenda of the WTO, thereby paving the way for the success at Qatar.

A fairer world trade?

51. The WTO is often accused by its detractors of lacking in transparency. Developing countries resent the fact that they do not get to participate to the so-called “Green Room negotiations”. (In Seattle, only 25 member countries were represented in these negotiations, but then there are also a maximum number of parties to any meaningful negotiations. As Parkinson observed in his “Parkinson’s Law”: “A committee of more than 20 members is dead”). Many member States also resent what they see as an excessive power and influence of the US Congress (and that of various lobbies) on US trade policy. Outside opponents of the WTO, on the other hand, do not like the opacity which they say surrounds negotiations, nor their length or shifting agendas.

52. Access to the Dispute Settlement Body is another thorny issue for developing countries, since they feel they cannot make good use of it for lack of technical expertise and the heavy costs involved. Indeed, only 20 developing countries have made use of this body so far. They also feel it is clogged with work on transatlantic disputes. The increasing number of disputes initiated is also a matter of concern, also because they could set precedents which these countries will have to accept without having participated, or because they may alter WTO principles.

53. Developing countries have over the years made major sacrifices in liberalising their economies. Meanwhile, many industrialized countries, while advocating free access to markets, have privileged special agreements and restricted access to their markets for exports from developing countries. It is not surprising, therefore, that many developing countries wish the new negotiations resulting from Qatar to be more understanding of their concerns. As one delegate put it at a meeting convened among developing countries to coordinate action for the Qatar Summit: “Before, we knew what we didn’t want, but not what we wanted. Today, we know what we want and we are coordinated enough to get it.”

IV.        The WTO’s contribution to the development of worldwide trade and development in Information and Communications Technologies (ICTS).

54. We are all expecting rapid capacity increases of our computers and rapidly falling prices. However, we do not always realise that much of this has been made possible through efforts undertaken within the WTO. Given the Assembly’s strong interest in the ‘New Economy’ – a subject indeed under present study by our Committee on Economic Affairs and Development – the Rapporteur feels it appropriate to deal with it in some detail.

55. Firstly, the WTO’s Information Technology Agreement (ITA), signed in 1997, permits duty- free international trade in much of the computer hardware business. By 2004, the ITA will have eliminated tariffs on some $600 billion a year in trade in semi-conductors, computers, telecom equipment, integrated circuits and other computer hardware.

56. We also expect the cost of telecommunications and services to come down steadily. This has been made possible through a major WTO agreement reached in 1997. The Basic Telecommunications Agreement is bringing down the cost of telecommunications services on which the whole of the internet phenomenon depends. It involves 85 countries, accounting for more than 90% of world telecommunication revenues. The Agreement permits foreign companies to operate in domestic markets, leading to the rapid fall of monopolies. Thanks to the WTO’s General Agreement on Trade in Services, the GATS, the use of the internet is also becoming cheaper. Furthermore, the WTO’s Trips Agreement commits member governments to ensuring intellectual property rights for copyrights, patents and trademark laws. This encourages exports, since it reduces the fear held by exporters that their intellectual rights will be disregarded.

57. But much more needs to be done if the ‘new economy’ is to be of benefit not only to the rich countries but also to the poor. Fortunately, the Qatar agreement of November 2001 foresees continued negotiations to make it easier for foreign service providers in the ICT industry to work abroad – permitting, for instance, European software firms to employ more, say, Indian programmers.

58. Furthermore, it is of capital importance that the ‘digital divide’ between rich and poor be narrowed. True, Kenyan tea planters can now, for instance, use the internet to check to future’s prices of their crop. However, only one in twenty people in the world has access to the internet. Singapore has more Internet connections than all of Africa. Governments in rich countries urgently need to devote more attention to this problem. Meanwhile, governments in developing countries can, in fact, help themselves by committing, within the WTO, to freeing up their telecoms market. Developing countries indeed are in greater fear of their own marginalisation in the world economy, than of globalisation.

V.        Globalisation and its opponents

59. Since the Second World War the international exchange of goods, services and capital has become infinitely easier. The average tariff on goods in 1945 was about 50%, while today it is only 5%. As from the 1980s, many countries also relaxed their capital controls, thereby facilitating for companies to produce their goods and services at the most advantageous location, whether at home or abroad.

60. This is the first focus of criticism of many opponents of globalisation, who argue that it has led to a situation where companies engage in a “race to the bottom”, in moving production to countries where taxation of business and wages of workers are the lowest, and where environmental and labour standards are the most neglected.

61. Opponents of globalisation go on to say that taxes in richer countries in this situation have to be raised for activities and production factors that cannot move so easily, such as consumption and labour. Again in the richer countries, highly qualified workers receive much higher salaries, whereas the less qualified receive less, leading to a widening income gap in, say, Europe. The detractors of globalisation thus consider the majority of people in the richer countries as ‘victims of the neo-liberal offensive’ and call for a new ‘internationalism at European level’, through which ‘social dumping’ can be kept at bay via a new or revised Council of Europe Social Charter. They are particularly concerned about the fate of employees in the public sector, such as in education and public health.

62. Financial markets are considered as being out of control and are made responsible for various international financial crises. Many anti-globalisers wish to see the introduction of a tax on international currency transactions, such as that proposed by the economist James Tobin in 1978. Such a tax - suggested at something between 0.1% and 0.5% of the value of international transactions - is meant to reduce short-term currency speculation, and thereby encourage longer-term investments in host countries which are indeed to be taxed at a lower rate. The tax income, presumably amounting to hundreds of billions of dollars, would be spent on development in poor countries, environment protection and the like.

63. As was mentioned at the beginning of this report, violent demonstrations in Seattle in December 1999 seriously disturbed the WTO Summit in that city and negatively influenced the organisation’s efforts to ensure a more open, multilateral and rules-based trading system. Since Seattle, other cities where WTO or other international organisations have held conferences, have also suffered violent anti-globalisation demonstrations.

64. The Economic Committee in its discussions of the present report clearly recognised the widely felt anxiety about globalisation and believes that there is a need for intensified dialogue between all parties concerned. The Committee at the same time condemns violence in all its forms and holds the right to peaceful reunion – as enshrined in the European Convention on Human Rights and Fundamental Freedoms – to be sacrosanct and requiring of full respect also by the opponents of globalisation.

65. In the wake of the terrorist attacks on the United States on 11 September 2001, the anti-globalisation movement has been less vocal. Suddenly globalisation seems to have been stopped in its tracks, as important economies show worrying signs of contraction, world trade slows and international investors sit on their money, with developing countries the first to lose out. This situation should lead both opponents of globalisation and its proponents to abandon their hardened fronts and seek renewed dialogue.

VI.        China joins the WTO: A historic event

66. China is to join the WTO at the beginning of 2002, leading to major changes both for that country and for the world economy. China will have to radically open its markets to foreign competition. She will also have to provide equal treatment to foreign and domestic companies and make a final farewell to the planned economy. Finally, she will have to accept foreign influence in its domestic policies, through the WTO dispute settlement mechanism.

67. A first challenge for China will be to reduce her highly complex system of subsidies, price controls, protectionism at regional level and other forms of government interference in the economy. On the other hand, foreign direct investment will increase radically, as will trade in goods and ideas.

68. WTO membership will thus bring about major political and social changes for the one-fifth of mankind that are citizens of China. If the Chinese government has nevertheless chosen to take up this wager, it is because it reasons that the country’s domestic economy will only be able to survive if it reaches international competitiveness, and that the only way to do this is through WTO membership. Many Chinese companies will go under in the new competition, especially in the automotive, chemical, machinery, energy, services, agriculture and retail sectors. Social peace will be at risk as millions lose their jobs.

69. The Chinese light industry, on the other hand, is highly competitive internationally. Chinese refrigerators, washing machines and colour TVs can be found around the world, and the same holds for computers. The Chinese textile industry is likewise highly competitive, indeed so much so that many industrialised countries have asked for recourse to special protective rules in the event that Chinese textile exports were to overwhelm their domestic markets.

70. The picture is much more difficult for China when it comes to agriculture. China’s request to be considered a developing country in the agricultural context was not accepted by WTO members. Out of around 1.3 billion Chinese, around 900 million live in the countryside. Perhaps 400 million are directly employed in agriculture, and perhaps 150 million people are at direct risk in the event of major agriculture imports from abroad. The compromise reached with the WTO therefore foresees a gradual and partial opening of the Chinese market for food.

71. All in all then, the Chinese government believes that the long-term advantages for the country are bigger than the drawbacks and the inevitable social tensions that will result from WTO membership. The world economy has every interest both in the gradual opening of the Chinese market and in preventing any political and social instability that could follow from it.

VII.       Concluding remarks

72. Seattle at least temporarily seriously affected the credibility of the WTO, leaving it for some time with mainly just one field where countries actively sought its contribution, namely to settle disputes. If this situation had been allowed to persist, it would, in your Rapporteur’s opinion, have led to a severe imbalance within the WTO and in the world trading system in general. For settling disputes – in essence arbitrating over ‘what is’ - can over time not realistically substitute for adapting to a rapidly changing reality – that is, changing in line with ‘what is becoming’. The WTO as an institution – or rather as an ‘honest broker and a Secretariat, for that is essentially what it is - is raring to help along the new Round launched in Qatar, if only authorised to do so by its members. The achievements of GATT were reached mainly thanks to its efficient role as a facilitator at global level. The WTO now has to be given a new chance to prove it can fulfil this role as efficiently.

73. The Bretton Wood institutions and WTO - the pillars of the post World War II order together with the UN - have all gone through rough times recently. Whilst there is a general consensus about the need for reform, the way to go about it leads to heated debate and much controversy. While it is too early at the present stage to advocate any more precise directions for reform, it is worth recalling that – in its last Resolution 1101 (1996) on the WTO (well before Seattle) - our Parliamentary Assembly called on the member States of the Council of Europe to “ensure that in the realization of its objectives, the WTO be guided by the Council of Europe’s Convention on Human Rights and Fundamental Freedoms and its European Charter, as well as other Council of Europe conventions in fields such as nature conservation and animal welfare.” It is interesting to note in this regard that the pan-American summit held in Quebec in May 2001 to prepare the Free Trade Area of the Americas (FTAA), by 2005 actually included a ”democracy clause”, according to which any FTAA country must have a democratically elected government – to be verified by the Organisation of American States.

74. It is in the interest of us all to draw the right lessons from the Seattle and Qatar events. This means building on the achievements of almost fifty years of GATT achievements and seven years of hard WTO work, but also paying more attention to social, labour, environmental and development concerns insofar as they relate to trade. This should be done regardless of whether they are taken up directly by the WTO or, as in the case of core labour standards, by e.g. the ILO.

75. Parliamentarians can certainly help the process. Passing laws flowing from the Uruguay Round, we are entitled to background knowledge. As representatives of our citizens, we have a duty to convey the totality of their concerns. As the WTO, with our help, daily gives more body to the Uruguay Round and new negotiations resulting from Qatar, not least in implementing the ‘built-in agenda’, we must do our utmost to ensure that such issues as development, social issues, environmental and labour standards are given their due weight. We are committed not only to promoting further liberalisation in trade, but also to ensuring that such trade be fairer to all.

APPENDIX

MINISTERIAL DECLARATION3

1.       The multilateral trading system embodied in the World Trade Organization has contributed significantly to economic growth, development and employment throughout the past fifty years. We are determined, particularly in the light of the global economic slowdown, to maintain the process of reform and liberalization of trade policies, thus ensuring that the system plays its full part in promoting recovery, growth and development. We therefore strongly reaffirm the principles and objectives set out in the Marrakech Agreement Establishing the World Trade Organization, and pledge to reject the use of protectionism.

2.       International trade can play a major role in the promotion of economic development and the alleviation of poverty. We recognize the need for all our peoples to benefit from the increased opportunities and welfare gains that the multilateral trading system generates. The majority of WTO Members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration. Recalling the Preamble to the Marrakech Agreement, we shall continue to make positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development. In this context, enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building programmes have important roles to play.

3.       We recognize the particular vulnerability of the least-developed countries and the special structural difficulties they face in the global economy. We are committed to addressing the marginalisation of least-developed countries in international trade and to improving their effective participation in the multilateral trading system. We recall the commitments made by Ministers at our meetings in Marrakech, Singapore and Geneva, and by the international community at the Third UN Conference on Least-Developed Countries in Brussels, to help least-developed countries secure beneficial and meaningful integration into the multilateral trading system and the global economy. We are determined that the WTO will play its part in building effectively on these commitments under the Work Programme we are establishing.

4.       We stress our commitment to the WTO as the unique forum for global trade rule-making and liberalization, while also recognizing that regional trade agreements can play an important role in promoting the liberalization and expansion of trade and in fostering development.

5.       We are aware that the challenges Members face in a rapidly changing international environment cannot be addressed through measures taken in the trade field alone. We shall continue to work with the Bretton Woods institutions for greater coherence in global economic policy-making.

6.       We strongly reaffirm our commitment to the objective of sustainable development, as stated in the Preamble to the Marrakech Agreement. We are convinced that the aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, and acting for the protection of the environment and the promotion of sustainable development can and must be mutually supportive. We take note of the efforts by Members to conduct national environmental assessments of trade policies on a voluntary basis. We recognize that under WTO rules no country should be prevented from taking measures for the protection of human, animal or plant life or health, or of the environment at the levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, and are otherwise in accordance with the provisions of the WTO Agreements. We welcome the WTO´s continued cooperation with UNEP and other inter-governmental environmental organizations. We encourage efforts to promote cooperation between the WTO and relevant international environmental and developmental organizations, especially in the lead-up to the World Summit on Sustainable Development to be held in Johannesburg, South Africa, in September 2002.

7.       We reaffirm the right of Members under the General Agreement on Trade in Services to regulate, and to introduce new regulations on, the supply of services.

8.       We reaffirm our declaration made at the Singapore Ministerial Conference regarding internationally recognized core labour standards. We take note of work under way in the International Labour Organization (ILO) on the social dimension of globalisation.

9.       We note with particular satisfaction that this Conference has completed the WTO accession procedures for China and Chinese Taipei. We also welcome the accession as new Members, since our last Session, of Albania, Croatia, Georgia, Jordan, Lithuania, Moldova and Oman, and note the extensive market-access commitments already made by these countries on accession. These accessions will greatly strengthen the multilateral trading system, as will those of the 28 countries now negotiating their accession. We therefore attach great importance to concluding accession proceedings as quickly as possible. In particular, we are committed to accelerating the accession of least-developed countries.

10.       Recognizing the challenges posed by an expanding WTO membership, we confirm our collective responsibility to ensure internal transparency and the effective participation of all Members. While emphasizing the intergovernmental character of the organization, we are committed to making the WTO’s operations more transparent, including through more effective and prompt dissemination of information, and to improve dialogue with the public. We shall therefore at the national and multilateral levels continue to promote a better public understanding of the WTO and to communicate the benefits of a liberal, rules-based multilateral trading system.

11.       In view of these considerations, we hereby agree to undertake the broad and balanced Work Programme set out below. This incorporates both an expanded negotiating agenda and other important decisions and activities necessary to address the challenges facing the multilateral trading system.

WORK PROGRAMME

Implementation-Related Issues and Concerns

12.       We attach the utmost importance to the implementation-related issues and concerns raised by Members and are determined to find appropriate solutions to them. In this connection, and having regard to the General Council Decisions of 3 May and 15 December 2000, we further adopt the Decision on Implementation-Related Issues and Concerns in document WT/MIN(01)/W/10 to address a number of implementation problems faced by Members. We agree that negotiations on outstanding implementation issues shall be an integral part of the Work Programme we are establishing, and that agreements reached at an early stage in these negotiations shall be treated in accordance with the provisions of paragraph 47 below. In this regard, we shall proceed as follows: (a) where we provide a specific negotiating mandate in this Declaration, the relevant implementation issues shall be addressed under that mandate; (b) the other outstanding implementation issues shall be addressed as a matter of priority by the relevant WTO bodies, which shall report to the Trade Negotiations Committee, established under paragraph 46 below, by the end of 2002 for appropriate action.

Agriculture

13.       We recognize the work already undertaken in the negotiations initiated in early 2000 under Article 20 of the Agreement on Agriculture, including the large number of negotiating proposals submitted on behalf of a total of 121 Members. We recall the long-term objective referred to in the Agreement to establish a fair and market-oriented trading system through a programme of fundamental reform encompassing strengthened rules and specific commitments on support and protection in order to correct and prevent restrictions and distortions in world agricultural markets. We reconfirm our commitment to this programme. Building on the work carried out to date and without prejudging the outcome of the negotiations we commit ourselves to comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support. We agree that special and differential treatment for developing countries shall be an integral part of all elements of the negotiations and shall be embodied in the Schedules of concessions and commitments and as appropriate in the rules and disciplines to be negotiated, so as to be operationally effective and to enable developing countries to effectively take account of their development needs, including food security and rural development. We take note of the non-trade concerns reflected in the negotiating proposals submitted by Members and confirm that non-trade concerns will be taken into account in the negotiations as provided for in the Agreement on Agriculture.

14.       Modalities for the further commitments, including provisions for special and differential treatment, shall be established no later than 31 March 2003. Participants shall submit their comprehensive draft Schedules based on these modalities no later than the date of the Fifth Session of the Ministerial Conference. The negotiations, including with respect to rules and disciplines and related legal texts, shall be concluded as part and at the date of conclusion of the negotiating agenda as a whole.

Services

15.       The negotiations on trade in services shall be conducted with a view to promoting the economic growth of all trading partners and the development of developing and least-developed countries. We recognize the work already undertaken in the negotiations, initiated in January 2000 under Article XIX of the General Agreement on Trade in Services, and the large number of proposals submitted by Members on a wide range of sectors and several horizontal issues, as well as on movement of natural persons. We reaffirm 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, with a view to achieving the objectives of the General Agreement on Trade in Services, as stipulated in the Preamble, Article IV and Article XIX of that Agreement. Participants shall submit initial requests for specific commitments by 30 June 2002 and initial offers by 31 March 2003.

Market Access for Non-agricultural Products

16.       We agree to negotiations which shall aim, by modalities to be agreed, to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. Product coverage shall be comprehensive and without a priori exclusions. The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments, in accordance with the relevant provisions of Article XXVIII bis of GATT 1994 and the provisions cited in paragraph 50 below. To this end, the modalities to be agreed will include appropriate studies and capacity-building measures to assist least-developed countries to participate effectively in the negotiations.

Trade-Related Aspects of Intellectual Property Rights

17.       We stress the importance we attach to implementation and interpretation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) in a manner supportive of public health, by promoting both access to existing medicines and research and development into new medicines and, in this connection, are adopting a separate Declaration.

18.       With a view to completing the work started in the Council for Trade-Related Aspects of Intellectual Property Rights (Council for TRIPS) on the implementation of Article 23.4, we agree to negotiate the establishment of a multilateral system of notification and registration of geographical indications for wines and spirits by the Fifth Session of the Ministerial Conference. We note that issues related to the extension of the protection of geographical indications provided for in Article 23 to products other than wines and spirits will be addressed in the Council for TRIPS pursuant to paragraph 12 of this Declaration.

19.       We instruct the Council for TRIPS, in pursuing its work programme including under the review of Article 27.3(b), the review of the implementation of the TRIPS Agreement under Article 71.1 and the work foreseen pursuant to paragraph 12 of this Declaration, 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 71.1. In undertaking this work, the TRIPS Council shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement and shall take fully into account the development dimension.

Relationship between Trade and Investment

20.       Recognizing the case for a multilateral framework to secure transparent, stable and predictable conditions for long-term cross-border investment, particularly foreign direct investment, that will contribute to the expansion of trade, and the need for enhanced technical assistance and capacity-building in this area as referred to in paragraph 21, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations.

21.       We recognize the needs of developing and least-developed countries for enhanced support for technical assistance and capacity building in this area, including policy analysis and development so that they may better evaluate the implications of closer multilateral cooperation for their development policies and objectives, and human and institutional development. To this end, we shall work in cooperation with other relevant intergovernmental organisations, including UNCTAD, and through appropriate regional and bilateral channels, to provide strengthened and adequately resourced assistance to respond to these needs.

22.       In the period until the Fifth Session, further work in the Working Group on the Relationship Between Trade and Investment will 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. Any framework should reflect in a balanced manner the interests of home and host countries, and take due account of the development policies and objectives of host governments as well as their right to regulate in the public interest. 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. Due regard should be paid to other relevant WTO provisions. Account should be taken, as appropriate, of existing bilateral and regional arrangements on investment.

Interaction between Trade and Competition Policy

23.       Recognizing the case for a multilateral framework to enhance the contribution of competition policy to international trade and development, and the need for enhanced technical assistance and capacity-building in this area as referred to in paragraph 24, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations.

24.       We recognize the needs of developing and least-developed countries for enhanced support for technical assistance and capacity building in this area, including policy analysis and development so that they may better evaluate the implications of closer multilateral cooperation for their development policies and objectives, and human and institutional development. To this end, we shall work in cooperation with other relevant intergovernmental organisations, including UNCTAD, and through appropriate regional and bilateral channels, to provide strengthened and adequately resourced assistance to respond to these needs.

25.       In the period until the Fifth Session, further work in the Working Group on the Interaction between Trade and Competition Policy will focus on the clarification of: core principles, including transparency, non-discrimination and procedural fairness, and provisions on hardcore cartels; modalities for voluntary cooperation; and support for progressive reinforcement of competition institutions in developing countries through capacity building. Full account shall be taken of the needs of developing and least-developed country participants and appropriate flexibility provided to address them.

Transparency in Government Procurement

26.       Recognizing the case for a multilateral agreement on transparency in government procurement and the need for enhanced technical assistance and capacity building in this area, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations. These negotiations will build on the progress made in the Working Group on Transparency in Government Procurement by that time and take into account participants' development priorities, especially those of least-developed country participants. Negotiations shall be limited to the transparency aspects and therefore will not restrict the scope for countries to give preferences to domestic supplies and suppliers. We commit ourselves to ensuring adequate technical assistance and support for capacity building both during the negotiations and after their conclusion.

Trade Facilitation

27.       Recognizing the case for further expediting the movement, release and clearance of goods, including goods in transit, and the need for enhanced technical assistance and capacity building in this area, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations. In the period until the Fifth Session, the Council for Trade in Goods shall review and as appropriate, clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 and identify the trade facilitation needs and priorities of Members, in particular developing and least-developed countries. We commit ourselves to ensuring adequate technical assistance and support for capacity building in this area.

WTO Rules

28.       In the light of experience and of the increasing application of these instruments by Members, we agree to negotiations aimed at clarifying and improving disciplines under the Agreements on Implementation of Article VI of the GATT 1994 and on Subsidies and Countervailing Measures, while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives, and taking into account the needs of developing and least-developed participants. In the initial phase of the negotiations, participants will indicate the provisions, including disciplines on trade distorting practices, that they seek to clarify and improve in the subsequent phase. In the context of these negotiations, participants shall also aim to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries. We note that fisheries subsidies are also referred to in paragraph 31.

29.       We also agree to negotiations aimed at clarifying and improving disciplines and procedures under the existing WTO provisions applying to regional trade agreements. The negotiations shall take into account the developmental aspects of regional trade agreements.

Dispute Settlement Understanding

30.       We agree to negotiations on improvements and clarifications of the Dispute Settlement Understanding. The negotiations should be based on the work done thus far as well as any additional proposals by Members, and aim to agree on improvements and clarifications not later than May 2003, at which time we will take steps to ensure that the results enter into force as soon as possible thereafter.

Trade and Environment

31.       With a view to enhancing the mutual supportiveness of trade and environment, we agree to negotiations, without prejudging their outcome, on:

We note that fisheries subsidies form part of the negotiations provided for in paragraph 28.

32.       We instruct the Committee on Trade and Environment, in pursuing work on all items on its agenda within its current terms of reference, to give particular attention to:

Work on these issues should include the identification of any need to clarify relevant WTO rules. The Committee shall report to the Fifth Session of the Ministerial Conference, and make recommendations, where appropriate, with respect to future action, including the desirability of negotiations. The outcome of this work as well as the negotiations carried out under paragraph 31(i) and (ii) shall be compatible with the open and non-discriminatory nature of the multilateral trading system, shall not add to or diminish the rights and obligations of Members under existing WTO agreements, in particular the Agreement on the Application of Sanitary and Phytosanitary Measures, nor alter the balance of these rights and obligations, and will take into account the needs of developing and least-developed countries.

33.       We recognize the importance of technical assistance and capacity building in the field of trade and environment to developing countries, in particular the least-developed among them. We also encourage that expertise and experience be shared with Members wishing to perform environmental reviews at the national level. A report shall be prepared on these activities for the Fifth Session.

Electronic Commerce

34.       We take note of the work which has been done in the General Council and other relevant bodies since the Ministerial Declaration of 20 May 1998 and agree to continue the Work Programme on Electronic Commerce. The work to date demonstrates that electronic commerce creates new challenges and opportunities for trade for Members at all stages of development, and we recognize the importance of creating and maintaining an environment which is favourable to the future development of electronic commerce. We instruct the General Council to consider the most appropriate institutional arrangements for handling the Work Programme, and to report on further progress to the Fifth Session of the Ministerial Conference. We declare that Members will maintain their current practice of not imposing customs duties on electronic transmissions until the Fifth Session.

Small Economies

35.       We agree to a work programme, under the auspices of the General Council, to examine issues relating to the trade of small economies. The objective of this work is to frame responses to the trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system, and not to create a sub-category of WTO Members. The General Council shall review the work programme and make recommendations for action to the Fifth Session of the Ministerial Conference.

Trade, Debt and Finance

36.       We agree to an examination, in a Working Group under the auspices of the General Council, of the relationship between trade, debt and finance, and of any possible recommendations on steps that might be taken within the mandate and competence of the WTO to enhance the capacity of the multilateral trading system to contribute to a durable solution to the problem of external indebtedness of developing and least-developed countries, and to strengthen the coherence of international trade and financial policies, with a view to safeguarding the multilateral trading system from the effects of financial and monetary instability. The General Council shall report to the Fifth Session of the Ministerial Conference on progress in the examination.

Trade and Transfer of Technology

37.       We agree to an examination, in a Working Group under the auspices of the General Council, of the relationship between trade and transfer of technology, and of any possible recommendations on steps that might be taken within the mandate of the WTO to increase flows of technology to developing countries. The General Council shall report to the Fifth Session of the Ministerial Conference on progress in the examination.

Technical Cooperation and Capacity Building

38.       We confirm that technical cooperation and capacity building are core elements of the development dimension of the multilateral trading system, and we welcome and endorse the New Strategy for WTO Technical Cooperation for Capacity Building, Growth and Integration. We instruct the Secretariat, in coordination with other relevant agencies, to support domestic efforts for mainstreaming trade into national plans for economic development and strategies for poverty reduction. The delivery of WTO technical assistance shall be designed to assist developing and least-developed countries and low-income countries in transition to adjust to WTO rules and disciplines, implement obligations and exercise the rights of membership, including drawing on the benefits of an open, rules-based multilateral trading system. Priority shall also be accorded to small, vulnerable, and transition economies, as well as to Members and Observers without representation in Geneva. We reaffirm our support for the valuable work of the International Trade Centre, which should be enhanced.

39.       We underscore the urgent necessity for the effective coordinated delivery of technical assistance with bilateral donors, in the OECD Development Assistance Committee and relevant international and regional intergovernmental institutions, within a coherent policy framework and timetable. In the coordinated delivery of technical assistance, we instruct the Director-General to consult with the relevant agencies, bilateral donors and beneficiaries, to identify ways of enhancing and rationalizing the Integrated Framework for Trade-Related Technical Assistance to Least-Developed Countries and the Joint Integrated Technical Assistance Programme (JITAP).

40.       We agree that there is a need for technical assistance to benefit from secure and predictable funding. We therefore instruct the Committee on Budget, Finance and Administration to develop a plan for adoption by the General Council in December 2001 that will ensure long-term funding for WTO technical assistance at an overall level no lower than that of the current year and commensurate with the activities outlined above.

41.       We have established firm commitments on technical cooperation and capacity building in various paragraphs in this Ministerial Declaration. We reaffirm these specific commitments contained in paragraphs 16, 22, 25-27, 33, 38-40, 42 and 43, and also reaffirm the understanding in paragraph 2 on the important role of sustainably financed technical assistance and capacity-building programmes. We instruct the Director-General to report to the Fifth Session of the Ministerial Conference, with an interim report to the General Council in December 2002 on the implementation and adequacy of these commitments in the identified paragraphs.

Least-Developed Countries

42.       We acknowledge the seriousness of the concerns expressed by the least-developed countries (LDCs) in the Zanzibar Declaration adopted by their Ministers in July 2001. We recognize that the integration of the LDCs into the multilateral trading system requires meaningful market access, support for the diversification of their production and export base, and trade-related technical assistance and capacity building. We agree that the meaningful integration of LDCs into the trading system and the global economy will involve efforts by all WTO Members. We commit ourselves to the objective of duty-free, quota-free market access for products originating from LDCs. In this regard, we welcome the significant market access improvements by WTO Members in advance of the Third UN Conference on LDCs (LDC-III), in Brussels, May 2001. We further commit ourselves to consider additional measures for progressive improvements in market access for LDCs. Accession of LDCs remains a priority for the Membership. We agree to work to facilitate and accelerate negotiations with acceding LDCs. We instruct the Secretariat to reflect the priority we attach to LDCs' accessions in the annual plans for technical assistance. We reaffirm the commitments we undertook at LDC-III, and agree that the WTO should take into account, in designing its work programme for LDCs, the trade-related elements of the Brussels Declaration and Programme of Action, consistent with the WTO's mandate, adopted at LDC-III. We instruct the Sub-Committee for Least-Developed Countries to design such a work programme and to report on the agreed work programme to the General Council at its first meeting in 2002.

43.       We endorse the Integrated Framework for Trade-Related Technical Assistance to Least-Developed Countries (IF) as a viable model for LDCs' trade development. We urge development partners to significantly increase contributions to the IF Trust Fund and WTO extra-budgetary trust funds in favour of LDCs. We urge the core agencies, in coordination with development partners, to explore the enhancement of the IF with a view to addressing the supply-side constraints of LDCs and the extension of the model to all LDCs, following the review of the IF and the appraisal of the ongoing Pilot Scheme in selected LDCs. We request the Director-General, following coordination with heads of the other agencies, to provide an interim report to the General Council in December 2002 and a full report to the Fifth Session of the Ministerial Conference on all issues affecting LDCs.

Special and Differential Treatment

44.       We reaffirm that provisions for special and differential treatment are an integral part of the WTO Agreements. We note the concerns expressed regarding their operation in addressing specific constraints faced by developing countries, particularly least-developed countries. In that connection, we also note that some Members have proposed a Framework Agreement on Special and Differential Treatment (WT/GC/W/442). We therefore agree that all special and differential treatment provisions shall be reviewed with a view to strengthening them and making them more precise, effective and operational. In this connection, we endorse the work programme on special and differential treatment set out in the Decision on Implementation-Related Issues and Concerns.

ORGANIZATION AND MANAGEMENT OF THE WORK PROGRAMME

45.       The negotiations to be pursued under the terms of this Declaration shall be concluded not later than 1 January 2005. The Fifth Session of the Ministerial Conference will take stock of progress in the negotiations, provide any necessary political guidance, and take decisions as necessary. When the results of the negotiations in all areas have been established, a Special Session of the Ministerial Conference will be held to take decisions regarding the adoption and implementation of those results.

46.       The overall conduct of the negotiations shall be supervised by a Trade Negotiations Committee under the authority of the General Council. The Trade Negotiations Committee shall hold its first meeting not later than 31 January 2002. It shall establish appropriate negotiating mechanisms as required and supervise the progress of the negotiations.

47.       With the exception of the improvements and clarifications of the Dispute Settlement Understanding, the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking. However, agreements reached at an early stage may be implemented on a provisional or a definitive basis. Early agreements shall be taken into account in assessing the overall balance of the negotiations.

48.       Negotiations shall be open to:

Decisions on the outcomes of the negotiations shall be taken only by WTO Members.

49.       The negotiations shall be conducted in a transparent manner among participants, in order to facilitate the effective participation of all. They shall be conducted with a view to ensuring benefits to all participants and to achieving an overall balance in the outcome of the negotiations.

50.       The negotiations and the other aspects of the Work Programme shall take fully into account the principle of special and differential treatment for developing and least-developed countries embodied in: Part IV of the GATT 1994; the Decision of 28 November 1979 on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries; the Uruguay Round Decision on Measures in Favour of Least-Developed Countries; and all other relevant WTO provisions.

51.       The Committee on Trade and Development and the Committee on Trade and Environment shall, within their respective mandates, each act as a forum to identify and debate developmental and environmental aspects of the negotiations, in order to help achieve the objective of having sustainable development appropriately reflected.

52.       Those elements of the Work Programme which do not involve negotiations are also accorded a high priority. They shall be pursued under the overall supervision of the General Council, which shall report on progress to the Fifth Session of the Ministerial Conference.

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Reporting committee: Committee on Economic Affairs and Development

Reference to committee: Doc. 8641et Reference No. 2482 of 3 April 2000

Draft resolution unanimously adopted by the committee on 4 December 2001

Members of the committee: Mrs Zapfl-Helbling (Chairperson), Mrs Stepova (Vice-chairperson), Mr Kirilov, Mr Blaauw (Vice-chairmen), Mr Adam, Mr Agius, Mr Agramunt, Mrs Akgönenç, Mr Aliyev, Mr Anusz, Mr Arnau, Mr Aylward, Mr Berceanu, Mr Billing, Mrs Blattmann, Mr Braun, Mr Brunhart, Mr Budin, Mr Budisa, Mrs Burbiené, Mrs Calner, Mr Cerrahoglu, Mr Cosarciuc, Mr Crema, Mr Elo, Mr Eyskens, Mr Felici, Mrs Freyberg, Mr Galoyan, Mr Gülek, Mr Gusenbauer, Mr Haupert, Mrs Hoffmann, Mr Hrebenciuc, Mr Jung, Mr Kacin, Mrs Kestelijn-Sierens, Mr Kosakivsky, Mr Leers, Mr Liapis, Mr Lotz, Mr Makhachev, Mr Mateju, Mr Mitterrand, Mrs Mortensen, Mr Naumov, Mr Palis, Mrs Patarkalishvili, Mr Pavlidis, Mr Pereira Coelho (Alternate: Mr Cesário), Mrs Pericleous-Papadopoulos, Mrs Pintat Rossel, Mr Popa, Mr Popescu, Mr Popovski, Mr Prokes, Mr Puche, Mrs Ragnarsdottir, Mr Ramponi, Mr Reimann, Mr Rivolta, Mr Schmitz, Mrs Schoettel-Delacher, Mr Schreiner, Mr Seyidov, Mr Stefanov, Mr Suslov, Mr Tallo, Mr Texeira de Melo, Mr Ustiugov, Mr Valleix (Alternate: Mariot), Mr Wielowieyski, ZZ .. (Alternate: Etherington), ZZ .. (Alternate: Djupedal).

Head of Secretariat: Mr Torbiörn

Co-Secretaries to the committee: M. Bertozzi, Ms Ramanauskaite and Ms Kopaçi-Di Michele

1 Resolution adopted on September, 25, 1996 (see Doc. 7618, report by the Committee of Economic Affairs and Development, Rapporteurs : M. Demiralp and Mrs Verspaget).

2 More recently, a new US-EU trade hurdle has arisen. In the summer of 2001, the WTO ruled that tax breaks for US exporters via offshore subsidiaries are illegal. The organisation therefore permitted the EU to put prohibitive tariffs on as much as $ 4 billion in US exports if the United States failed to comply. The US argues that its tax breaks for US exporters are necessary to compensate for the alleged advantages enjoyed by EU exporters as these do not have to pay VAT on their sales abroad. While it is unlikely that the EU would fully implement the prohibitive tariffs the WTO authorises it to impose (since it would also hurt EU economies), it can still be used as a threat against the US in any future trade conflict. At the moment of writing, it is unclear how the two sides will react. It can only be hoped that the disagreement will not cause any major damage to transatlantic trade.

3 Ministerial Declaration adopted by the WTO Ministerial Summit, Doha, Qatar, November 2001