Report of the Third Ministerial Meeting of WTO


As was expected thousands of protestors gathered on the streets of down town Seattle from the eve of the Ministerial Conference against the non-transparent style of functioning of the World Trade Organisation (WTO), the super powerful global trade body. The demonstrators were mainly from labour, consumer, farm and environmental groups, mostly from the US. The first day of the conference, including opening ceremony was paralysed by the demonstrators forming a “human chain” outside the Seattle Trade and Convention Centre building, where the Conference was to be held as well as the Seattle Sheraton, where most of the delegates and WTO staff were housed.

The demonstrators turned violent when the Seattle Police fired tear gas shells to disperse the crowd and make it possible for the delegates to enter the convention centre. Finally, the Mayor of Seattle had to impose curfew in down town Seattle. The demonstrators wanted the inclusion of environment and labour standards within the jurisdiction of WTO and wanted to see that the agriculture sector is adequately liberalised. (???)

The NGOs had gathered in and around Renaissance Madison Hotel in the downtown Seattle at the walking distance from the Convention Centre and engaged all sorts of meeting to influence the agenda of the Ministerial Conference. Some of the key issues discussed at the NGO meetings were the TRIPs Agreement including patenting of life forms; food and agriculture; linkages between trade and labour standards and trade and environmental standards; social impact of globalisation; and anti-dumping and dispute settlement.

The process

While the process of drafting the Ministerial Declaration was blocked only hours before the Conference started, many delegates were holding informal consultations. Among those, the European Union was preparing to propose a new version of the ministerial declaration with the support of such countries as Switzerland, Japan and Korea, as well as Central and Eastern European WTO Members. However, nobody knew until the end that the conference was going to end in a deadlock.

The Cairns group of agriculture-exporting nations had expressed confidence that they were as strong as they had ever been in their commitment to pursue “real and meaningful progress” on dismantling barriers to trade in agriculture. Emerging from a meeting with U.S. Agriculture Secretary Dan Glickman, one official from the group stated that “the U.S. is virtually totally on the side with the Cairns group, and wants the elimination of export subsidies.” However, EU, Japan and Korea had a diametrically opposite position.

Despite claims by U.S Trade Representative Charlene Barshefsky that she was not aware of dissent from developing countries over WTO negotiating process, ministers of the several developing countries voiced their concern over their exclusion from the process.

“We are very much disappointed over the fact that coming from small economies we ended up with a situation where we are totally marganalised in a process that has been virtually hijacked by the more wealthier developed countries” remarked Clement Rohee, Guyana’s minister of foreign affairs. In fact minister Rohee, who entered the ‘green room’ discussion on agriculture was given dirty looks by the people inside the room, mainly negotiators from the developed world and few advanced developing countries.

‘Green room’ is a place where the delegates from a limited number of countries having substantial negotiating interest can join. As a rule, this room cannot exclude the countries without any negotiating interest. Further ‘mini green rooms’ were also created.

Working Groups

Description of the working groups formed during the conference and their proceedings are summarised below:

Agriculture: In the agriculture working group, an earlier draft submitted by the Cairns Group of agriculture-exporting countries and the U.S. emerged with added text that reflected traditional EU and developing country demands. These included listing the multifunctional role of agriculture under non-trade concerns and a text bracket outlining reduction–as opposed to elimination–of all forms of assistance to exports under the section on Export Subsidies. The section on special and differential treatment for developing countries also contained a large amount of bracketed text, apparently distilled from India’s submission to the 19 October draft Ministerial Declaration. However, these development issues–including food security, rural development, poverty eradication, and technical assistance–were not discussed on 1 December.

Market access: Market Access discussions were somewhat less polarised than Agriculture and Implementation, and many observers were confident that a consensus could be reached by week’s end. The text released on 1 December reflected U.S. demands in areas such as forestry and fisheries liberalisation and expanding market access to cover all goods, rather than only non-agricultural products. The EU, U.S., India and South Africa were all pushing for a short text, while Bangladesh was calling for all LDCs to receive bound duty-free access.

Implementation: The Implementation working group released its own bracketed text, though it represented little drastic change on the proposed language in the last (19 October) version of the draft Ministerial Declaration. The text did reflect a possibility that many of the implementation demands from developing countries would be contained in one or two annexes, though the areas outlined continued to cover the ‘traditional’ range of implementation demands (including anti-dumping, subsidies, safeguards, SPS, TBT, TRIMs and TRIPs). Among the issues discussed were the prospects for longer transition periods, more exceptions for developing countries, and renegotiation of certain agreements (notably subsidies, textiles and anti-dumping). Japan and Korea expressed their desire to have a review of the anti-dumping agreement worked into the next round, while Iceland, backed by the U.S., proposed negotiations to remove fisheries subsidies, a suggestion which met with little enthusiasm from the EU.

New issues: On New Issues, Members discussed Investment and Competition, and while some Members (such as the EU) argued for the inclusion of these areas in the Declaration, Members remained far apart on agreement, such that one WTO official noted that there was “substantial opposition to going forward with this issue.”

Systemic issues: On 2 December, WTO Members met in their fifth working group, on Systemic Issues, which include WTO rules and procedures and WTO-civil society relations. US Trade Representative Charlene Barshefsky expressed optimism that there would be progress on transparency. “The key [for pushing transparency forward] is acceptance of the principle that openness and transparency aren’t antithetical to an open trade system,” she said.

Other efforts

Speaking at a conference organised by the International Confederation of Free Trade Unions in Seattle, U.S. Trade Representative Charlene Barshefsky and EU Trade Commissioner Pascal Lamy both confirmed their position vis-à-vis trade and labour standards: the United States advocated the establishment of a Working Group within the WTO to study the interaction between trade, employment and social safety nets, while the EU was proposing to set up a Joint ILO/WTO Standing Working Forum on Trade, Globalisation and Labour.

Though USA and Canada, the members of the so called “Miami Group” had pushed for the inclusion of the talk on “Biotechnology” during the Ministerial Conference and Japan echoed the same concern towards the end, EU had been opposing the inclusion of the subject there and was receiving support from developing countries for such a stand. However, by the end of the first day of the Conference EU took the developing countries by surprise when it suddenly shifted its position and agreed for the formation of Biotechnology Working Group.

According to European Commission officials, the EU’s goal was to inject the ‘real concerns’ of consumers and environmentalists into the debate, while the US sought a much narrower mandate focused on securing timely, science-based and transparent approval processes. EU officials also stressed that the European Council of Ministers would not agree to anything that would undermine EU norms or jeopardise the “early and successful conclusion” of the Biosafety Protocol. Apparently, EU commissioner changed the position without consulting its member countries.

Once this news was flashed, there was a huge uproar in the NGO community. During the EU briefing with the NGOs held on December 1, NGOs from EU not only questioned the mandate of EU commissioner, but also asked the EU delegates as to what was the ‘trade off’ they received from US to change the position. Meanwhile, environment ministers of the UK, France, Denmark, Italy and Belgium issued a statement opposing the establishment of the working group. Biotechnology issues should be addressed within the framework of the Biosafety Protocol, the ministers said. As per them having a discussion on the issue of biotechnology within the WTO platform would undermine the Biosafety Protocol.

Northern and Southern NGOs had increasingly insisted that the WTO was not the right venue to enhance coherence between trade policy and sound management of genetic resources. On December 1, the Expert Panel on Trade and Sustainable Development also expressed a preference for dealing with biotechnology through a strengthening of multilateral environmental agreements such as the Convention on Biological Diversity, and in particular through broad-based negotiation of the Biosafety Protocol, due to resume in January. In light of the lack of public trust and the reaction against the use of genetically-modified organisms (GMOs), the panel strongly supported the incorporation of the Rio Declaration precautionary principle into the WTO in order to enhance coherence between trade rules and the Biosafety Protocol.

Least-developed countries were the object of particular attention in the opening statements of the Seattle Ministerial Conference. The European Union, France, the UK, the United States and Canada all emphasised their wish to help least-developed countries (LDCs) “use the multilateral trading system to their advantage” and provide them with technical assistance so that they can fulfil their WTO obligations. Many observers, particularly in developing countries, questioned the motives of this attitude towards LDCs in the tense context surrounding the launch of the conference. Some viewed it as an attempt to divide the Group of 77 and certain regional groups, such as the African group. Indeed, by the second day of the Conference some form of defection in the African unity had already taken place, when a delegate from Uganda reportedly said that his delegation was not in Seattle to speak on behalf of Africa, but on behalf of Uganda alone.

The EU had already announced that it would modify its General System of Preferences to allow LDC exports into the Union duty-free within five years. The EU and Japan also announced their initiative to provide duty-free access to ‘essentially all products’ from LDCs by the end of the Seattle Round. EU officials seemed confident that the U.S. and Canada would join the initiative shortly. ‘Essentially all products’ is understood to cover 98-99 percent of LDC exports.

At a briefing for NGOs on November 30, Robert Madelin of the European Commission said that, in spite of slightly different approaches, on the substance of labour and environmental issues the EU and the U.S. saw ‘eye-to-eye’ but admitted that it was difficult to ‘get developing countries on board’.

The EU also talked to number of key developing countries in an effort to drum up support for its proposals to launch negotiations on investment and competition policy. While there was resistance, Mr Madelin said there was not ‘as yet a definite yes or no’ to the issues. Japan, Korea and EU supported the launch of negotiations on investment and competition policy.

According to Mr Madelin, the EU was willing to go a ‘long way’ towards meeting developing countries’ demands both with regard to adjusting the current framework and with negotiating changes to existing Agreements, such as the Anti-dumping and Subsidies Agreements. With regard to agriculture, implementation problems was to be dealt with within the new round

A signing ceremony was held on December 2, 1999 on the Advisory Centre on WTO Law, set up by a group of developed and developing WTO Members to assist developing countries in defending and bringing cases to the dispute settlement system. The Centre responds to the need of developing countries to reduce the cost of litigation while maintaining access to legal expertise.

Failed efforts

The WTO Secretariat came out with the text of the draft ministerial declaration in the morning of December 3, 1999. This was followed by extensive negotiations within the member countries on the text, so as to get the consensus on the declaration by the end of the day. Developing countries, however, were irritated by US President Bill Clinton’s threatening remark that unless ministers accepted core labour standards as integral to world trade, the US might be tempted to take unilateral action, including trade sanctions.

Another contentious issue was that of agriculture. While EU, Japan and South Korea due to pressure from their domestic lobby, did not want to open their agriculture sector, Cairns Group and US wanted to liberalise this sector at any cost. Reportedly six consecutive drafts of the agriculture text came out during the meeting. The last draft text that came out at 2:20 P.M on December 3, 1999 contained a number of eye-washing elements without mentioning clearly as to what should be modalities to be adopted by the member countries. For example the second para of the text on agriculture mentions : “special and differential treatment for developing and least developed countries, as provided for in relevant WTO provisions, shall constitute an integral and effective part of the results of the negotiations”.

The demand for the inclusion of labour and environmental standard in the WTO discipline was the pivotal theme around which the demonstrators had gathered in downtown Seattle. Most of them wearing the mask of turtle were chanting slogans that they loved their turtles and that WTO had no right to kill them, as if WTO would take a pleasure in killing them. But this was the sweeping misconception across the entire crowd.

Similarly, poster and slogans aimed at attracting the attention of delegates and media alike towards the plight of child labour galore. There were such messages like “we want abolition of child labour”. The central theme was that the “humanity” was concerned about the use of child labour in developing countries and WTO should have a sanction mechanism in place to punish the countries which allow the use of child labour. “If WTO cannot do it, we don’t want WTO” shouted a group of “activists” close to the Convention Centre, little realising that child labour in developing countries is a compulsion for the parents and that the cost of displacing them is US $ 18 billion per year in one country (India, for example) alone.

Transparency has been a key issue for the opposition of the WTO. In Seattle as well this was the centre theme of opposition among the demonstrators as well as other NGOs alike. Such slogans as “we want no secret deal” were commonplace. The attack on non-transparent style of functioning of WTO is not unfounded. Firstly, WTO does not provide any role to civil society to play in terms of participation in the decision making process, except for the filing of amicus brief in the dispute settlement process. Similarly, the dispute settlement body holds in hearing “in camera”. So much so that the ruling of the panel is also released after a considerable delay.

“I clearly don’t see any logic for this practice to continue” remarked Gary Horlick, a noted US trade lawyer speaking at a seminar on Anti Dumping and Dispute Settlement organised by the Kathmandu based South Asia Watch on Trade, Economics and Environment (SAWTEE) and Jaipur based Consumer Unity and Trust Society (CUTS) in Seattle on December 2, 1999. There are pressures from all the corners on WTO forcing it to open up. The US government has clearly indicated a support for this proposal. Surprisingly, however, developing countries like Mexico and India are opposing any move towards enhanced transparency in the WTO system, with the apprehension that this will go against them.

The issue of anti-dumping was no less problematic. Anti-dumping dutiy is something that is levied by the importing countries on specific firms, if the country has a reason to believe that the exporter was involved in ‘dumping’ its product, i.e. sellin its goods below the domestic price.Developed countries, especially, EU and the US have been the principal user of this practice, little realising that their consumers have to pay dearly for their protectionist policies. Moreover, levying of anti-dumping duty has no economic basis and it is a contingent protection measure which is both risky and unpredictable. Use of such measures discourages establishment of large scale operations in the exporting countries which ultimately results in less-than-optimal use of resources.

On December 3, 1999, the final day of the Conference, the green room process was intensified to help the delegates conclude the ministerial declaration. However, sharp difference on a number of key issues including agriculture, transparency, implementation concerns, special and differential treatment, labour, environment and biotechnology was persisting till the end. Finally, at 8:30 P.M it was “unofficially” announced by some of the delegates from the developing countries that the negotiation ended in a deadlock.

We also had a chance to meet the ambassador of Mauritius, one of advocates of developing countries’ concerns. He ascribed the failure to the arrogant behaviour of the host country and their assumption that developing countries were as naïve as they were at the time of signing of Uruguay Round text. “Developing countries have shown that they are well prepared this time”, he remarked. “They should realise that they dare not take us for granted”, he added. Echoing the same concerns other delegates from developing countries also felt that the host country had an attitude of take, take and take but no give worth the name.

One corner of the southern civil society also felt that entire demonstration was stage-managed. There is some valid basis behind this suspicion. Firstly, the main priority of the US was to get labour and environmental standard included within the platform of WTO followed by opening up of the agriculture sector. The demonstrators were mainly from these groups. Secondly, the government showed soft attitude towards the demonstrators until the end of the first day of the Conference, despite the fact that they had violated the “freedom of movement” of delegates, which is considered so fundamental to US democracy, by forming human chain. Thirdly, US President had not only mentioned that one should listen to the demonstrators, but also threatened the unilateral sanction if labour agenda were not included in the WTO. Fourthly, as some view it, democratic presidential candidate of the US Al Gore is banking on the support of organised labour to win the forthcoming presidential elections.

It was evident from the tug-of-war at the time of appointment of the Director General of the WTO last September that developing countries have a critical role to play in the WTO decision making process. Developed countries had to succumb to the pressure of developing countries to split the Director General’s tenure into 3 year each and appoint Mike Moore of New Zealand for the first half and Supachai Panitchapakdi of Thailand for the second half. Now there is a strong possibility that the system will have to reform itself due to the pressure from developing countries.

Winners and losers

Delegates involved in the negotiations expressed contradictory views on the balance of winners and losers from this outcome. Many regretted the missed opportunity to insert issues which had practically gained consensual support such as the connections of the WTO regime with globalisation, technology transfer, and strong support and guidance for a real technical cooperation programme. Issues such as a commitment to deal with the problematic effects of subsidies and other trade policy measures and fisheries management, both of which appeared in the latest drafts, were put on hold. The biggest concerns expressed by developing countries referred to lost or delayed opportunities for the opening of markets of critical interest for their growth strategies.

Negotiations are scheduled to continue now in Geneva once the Director General’s attempts to build on the ‘progress’ achieved in Seattle yield the necessary conditions. Review and further liberalisation in Agriculture and Services as mandated in the Uruguay Round’s built-in agenda will commence in January.

The NGO community which was impatiently waiting for the result of the negotiation was extremely jubilant over the failure of the Conference at they felt that there would be no new round of trade negotiations for the moment and contentious issues were laid off the table. However, there is no reason for them to be complacent, given the fact that postponement of the Conference means USA will have more time to twist the arms of the developing countries. If the next meeting is to be held before the November election of the US, the result is bound to be worse.

However, one needs to understand the fact that it was not solely due to the demonstration in downtown Seattle that led to the failure of negotiations. It is also perilous to consider the failure of the Ministerial Conference as the victory of people over multilateral trading system. The real issue is to make the system work for the betterment of the people.

It is not in the interest of anybody to shut down WTO as a rule based system is always better than a jungle raj, where unilateral and irrational measures could become the order of the day. It is now the responsibility of the developing and least developed countries to intensify the battle so as to ensure that WTO is reformed and fine-tuned to suit the requirement of every nation.