The Decision-making Process And The Single Undertaking

16 June, 2003
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The Decision-making Process and the Single Undertaking
Presentation by Shefali Sharma, Institute for Agriculture and Trade Policy (IATP)
WTO Symposium, June 17, 2003
- "Investment in the WTO? Myths and Realities" Panel

Though this is the last subject on the panel, it is perhaps one of the most important subjects given that we have discussed some very serious implications of investment in the WTO. We have also discussed how BITs (Bilateral Investment Treaties) are a serious concern and that a multilateral framework in investment is not going to reduce their scope or their number. We have also talked about how there is not even a remote sense of consensus on any aspects of these negotiations much less an agreement on the clarification exercise. Given this, why is the decision-making process so crucial to discuss in the run up to Cancun?

Today, we are 55 working days till Cancun. While the preparatory process began a month ago, today there is still no clarity as to what exactly this process entails. Will there be a declaration? A communiqué? A series of sheets of paper going to Cancun? Will there be a Ministerial draft text for Cancun and in what form? This will not be explicit until at least July 24th—the ONLY real General Council meeting scheduled during the entire preparatory process.

After July, there will only be about 15 working days before September, meaning before the whole process moves to the capitals. 15 days. How are governments, especially resource strapped ones, but ALL governments supposed to practically handle inputs into this process? How are they to ensure that the proceedings here are not only filtering to capital ministries, but also receiving feedback from citizens at home?

Does this process facilitate inclusiveness and transparency? Especially--- especially since the list of outstanding and unresolved issues is long and complicated. There are currently a series of important issues at stake: agriculture, implementation, special and differential treatment, TRIPs and health, tariff liberalization in industrial products (which is another key area for developing countries), services and the four important decisions on the Singapore Issues. And all of these negotiations are in a state of deadlock! Nor is this an exhaustive list; there are a series of other decisions that Ministers are expected to take in Cancun.

Is this process more transparent, more predictable, more inclusive since Seattle? No. How do we judge this? For the following reasons:

  1. The entire process is informal. Apart from the July 24 General Council meeting, there are two forms of meetings taking place. The first is the open ended Heads of Delegations or HOD Meetings (the ambassador plus one other person from the mission) where no minutes are taken and where meetings are “open” for all members. The entire process is informal. The second will be in the form of small group consultations or "green rooms." If any briefings of the small group consultations are to take place, they will be done in the HODs format. This means that there will be no formal records at all for most of the preparatory process. As the process escalates and momentum builds towards Cancun, it will become unclear how many meetings will be taking place simultaneously and it is even less likely that Ambassadors will be able to attend all "open-ended" HODs.
  2. The process is squeezed into a shorter time than the preparatory process for Doha, though more issues are on the table. Currently, members are dealing with 17 issue areas (this does not even count the subsidiary issues in each of these areas). But the process started much earlier for Doha.
  3. The process is unclear. As mentioned, we do not know what kind of concrete paper will be produced for the Ministerial, or what role "friends of the Chair" might play, etc. In this case, these “friends” are helping the chair move the process towards Cancun. In other cases, the term “friends” in the WTO could mean a group of countries interested in the same issue or supportive of it i.e. “friends of investment.”
  4. The process is entirely "chair-driven." This dangerous practice of reverse consensus has become habitual in the WTO. By "reverse consensus," I mean that normally in most UN bodies and as was supposed to be the norm at the WTO, consensus is achieved through a series of drafts that put forth a variety of positions that are then discussed openly (at the UN, they even project the draft onto a screen in the meeting room whereby members can see the changes being proposed). Consensus is then attempted collectively. The reverse consensus process (as I am defining it) at the WTO starts with a clean text i.e. differences in views are not reflected by the use of brackets in the text or are limited to very few brackets. The text is prepared by the Chair based on his or her understanding of where consensus lies, based on informal consultations and “on his own responsibility.” This process of reverse consensus requires enormous political or economic clout to alter language. Unless you have political clout or you are a member of a large coalition of countries that propose changes, amending the text is difficult.

Dr. Supachai, last February 2002 at the Intellectual Property Rights Commission meeting in London pledged that he would address decision-making issues at the WTO when he became Director General.

But discussions on the issue of transparency and rules of procedure are also in a state of deadlock. The most recent draft regarding internal transparency is dated December 2002. Why? because a number of influential countries refuse to provide clarity on important demands from developing countries. For example, here are some of the basic proposals made by the Like Minded Group of developing countries that need a response:

  1. Facilitators must be chosen in Geneva through a transparent process and must not be demandeurs of the issue they are chairing. For example, a Cairns member would not be eligible to chair the agricultural negotiations
  2. Meetings at the ministerial should be announced at least a few hours ahead so that all interested parties can attend
  3. Late night marathon meetings should be avoided
  4. It should be clear which country is proposing any draft proposal that is circulated during the Ministerial
  5. Delegations have the right to decide who speaks in meetings and should be allowed at least two representatives
  6. The most important issue in their proposal was that differences of position must be clearly reflected in Ministerial texts.
    These are very basic demands and result from the fact that none of these basic procedures were followed in Doha.

For instance in Doha, there were all night green room consultations, during hich LDCs and the Africa Group were persuaded to reverse their positions. In the last plenary session, Barbados (not India) demanded an amendment on paragraphs referring to negotiations on the Singapore issues, followed by several other countries. However, they were ignored.

They had to settle for a chairman’s text that clarified that negotiations could not begin unless there was agreement on modalities. After Doha, the WTO was quick to state on its website that the Chair’s text was not part of the official Ministerial texts, though the chair read out his statement before the final gavel.

The Doha story is a repeat of the Singapore Ministerial, with added drama because India was portrayed as the only dissenting voice. But in Singapore also, the decision to adopt the four Singapore issues was taken by 30 countries (of the then over 120 members) in a green room. The Singapore Issues were then put on the WTO agenda in spite of opposition by many developing countries. The Singapore text states, “it is clearly understood that future negotiations, if any, regarding multilateral disciplines in these areas, will take place only after an explicit consensus.” Doha was a repeat of Singapore, only now members have included the term ‘modalities,’ Meaning countries have to agree on the terms of negotiations before accepting to negotiate.

Are WTO members courageous enough to define “explicit consensus?” Allow me to define it for you as the following: Unless people state an approval to negotiate, there is no explicit consensus.

But when asked in the WTO what explicit consensus means, it is said, “it means the same as consensus.” And consensus in the WTO is “passive consensus,” which means that unless you object, you agree. This means that if you are not present in the room, you agree.

As momentum builds to Cancun, pressure is building to put the Singapore Issues on “fast track.” This means that countries must decide yes or no to negotiate without having agreed to the elements of the negotiations-- a “yes or no” decision, despite the fact that the WGTI (Working Group on Trade and Investment) shows no sign of any agreement in the clarification exercise.

This fast track approach is essentially signing a blank check to negotiate. We need to remember the TRIPs negotiations in the Uruguay Round where we started with talks about counterfeiting and ended up with 20 year monopoly rights. As a result, today there is deadlock on the TRIPs and health negotiation and the US Trade Representative suggests that governments should negotiate with their pharmaceutical companies to get a solution. Can we afford a similar process on four complex issues in the WTO?

The Indian Prime Minister said on November 10, 2001, while Ministers met in Doha:

“For most developing countries, the Uruguay Round had done little for economic growth, while poverty levels and income gaps have worsened…This is also why we have argued strongly that implementation issues should first be resolved before we try to widen the WTO agenda further. Our public is unwilling to accept another post-dated cheque, when an earlier one has bounced. »

Now, hopes are pinned on Agriculture. But the US is hiding behind the EC criticism on CAP reform while it’s own farmbill continues to allow dumping onto the world market and the EU cap reform will do nothing but shift support from one box to another. European NGOs say, the « The EU’s current proposal would in effect not commit the EU to do more than it is already doing. » And we all know that there will be no real change until after 2013.

Yet, both the US and the EU continue their quest for market access in Services, in Industrial products, in Agriculture from developing countries. In exchange for what? The Singapore Issues?

Norway’s State Secretary of Trade said yesterday in the opening of the Symposium, « It took 50 years to negotiate industrial tariffs. Agriculture has just started. These things take time. This is a real challenge to us due to our climate conditions and the special role of agriculture. »

The question to ask Norway, then, (who is also a proponent of investment) : Is Norway willing to support LDCs, most African countries, Caribbean countries and many Asian countries who are saying we need more time to assess development implications of these issues in the WTO arena ? There is a special role for investment in developing countries, and they should have the right to decide in which fora and at what pace they should handle investment. We should first deal with the problems at hand with existing agreements.

A final note on technical assistance (TA), since it is often used as an excuse to introduce the Singapore issues at the WTO and within the trade departments of member state governments. According to the WTO Technical Cooperation Audit report handed to member states on the evaluation of such technical assistance activities for 2002, « “The current evaluation system does not provide evidence of the sustainability of the results since it stops where the TA ends. Indeed, sustainability can only be verified through ex-post evaluations taking place one-two years after the completion of the TA. Such evaluations may generate valuable information, but cannot be carried out without additional resources. In any case, there is little point in measuring the sustainability of individual activities, which are too short and specialized to have much long-term impact; that is not even their aim normally. »

WTO documents further admit that the Technical Assistance is quantity based and not on quality : “The emphasis in the prevailing approach to TA in the WTO is on quantity. This is perhaps not surprising given the demand-driven notion. But within this there is a need to focus also on the quality of the capacity-building. Squeezing complex issues into 2-3 days when they need five, not providing an administrative assistant for regional seminars, reinventing presentations with each resource person who deals with a given subject, and omitting to make reference to local/regional issues, all detract from quality. »

For all of the reasons we have heard today and the fact that the process leading up to Cancun is extremely untransparent and problematic, we must oppose a fast track approach to modalties for the Singapore Issues in Cancun. It is imperative for democracies everywhere.

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