What is the GATT / WTO?

GATT was set up after World War II as an international contract that set rules for world trade. It was a landmark agreement bringing trade into a multilateral context, rather than having trade between countries remaining the business of the two or more countries involved. In its first forty years of existence, GATT s prime emphasis was on the expansion of trade through the reduction of tariffs. !eriodically, the GATT signatories would meet and negotiate tariff and "uota rules for trade in products. #y the $%&'s, some other issues were included in the GATT. These came in the form of (odes. #ut the (odes were mostly subscribed to by developed countries. )ery few developing countries *oined in as they found the new disciplines too severe or did not perceive enough benefit accruing to them. +owever, things changed radically with the advent of the ,ruguay -ound in $%./, and the subse"uent setting up of the WT0 in $%%1. At the start of the ,ruguay -ound, developed countries decided that several areas other than trade in goods had assumed great significance in their economies. They therefore proposed these sub*ects for a new round of negotiations in the GATT. These were services, investment, and intellectual property rights. They were successful in the ,ruguay -ound to introduce disciplines in two of these areas 2 intellectual property rights and services. 3ust within a year after the completion of the ,ruguay -ound, the ma*or developed countries have already tried to bring further new sub*ects into the agenda of the WT0. These have been

investment 4again5, labour standards, transparency in government procurement and competition policy. The WT0 is a much stronger institution than the GATT. 0ne main reason is that it has a dispute settlement system so that countries can take their trade grievances to the *udicial court there. #ased on this promise of ensuring that rules of fair trade are carried out, the ma*ority of countries in the world 2 developing and developed 2 are members of the WT0. ,nfortunately, despite these noble ob*ectives, the power play between the strong and weak economies that take place in bilateral trade relations also prevail in the WT0, and in fact are institutionalised in the WT0. The rules of the WT0 remain imbalanced and biased in favour of the developed countries, and more specifically, in favour of the corporate interests of developed countries. This is a simplistic, but visual analogy of the WT06 (ountry members are called to a game of soccer. +owever, in this soccer game, unlike the usual soccer game, there are 7 teams, not 8. The age range of members are also very different. 0ne team of players are 8' years of age. The other team, ten years of age and the last team 1 years of age. The rules of the game are mostly determined by the oldest and most experienced team 2 the 8' year olds. And often, in this soccer game, the team members come up with more and more new rules for which all the teams must abide by. They sometimes call themselves the 9,A: 4coalition of ,;, <,, 3apan and (anada5.
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The younger teams are given some concessions 2 the $' year olds have a few concessions and the 1 year olds a couple more concessions. =or example, these two teams are given a few more turns at having the ball. Apart from which, however, all players are treated e"ually and all 7 teams play together. It is found that the older team scores most of the goals 2 % out of $' goals. 0ften the oldest team also plays a dirty game 2 team members push and shove the younger players when they are not supposed to. 0ccasionally, the younger team points this out to the referee and the younger team is compensated, but this is rare. >ore often, the bullying continues but the younger teams are threatened to keep silent, otherwise they would be beaten up in the changing room. In fact, often, the older team complains about the unruly behaviour of the younger team and are compensated. The other dimension in this game is that the experienced players have huge reserves of manpower and they change their players fre"uently, so that the players are not tired out and can play well. In contrast, the youngest team have only a small group of players, have no reserves for back2up and have to take part in this soccer game that 4unlike real soccer5, does not end 2 it goes on and on and on. The outcome of the game? 0f course almost all the goals are scored by the oldest team. The $' year olds very occasionally makes a couple of scores, but end up loosing out as well. The youngest team is completely defeated. This is over2simplified, but gives the gist of the power politics at the WT0 today and the bleak picture for developing countries.

What type of Development is Implicit in the WTO Agenda? Why do I paint such a gloomy picture of the WT0? I do so because the development model implicit in the WT0 s agenda, is one that has already been tried in many parts of the developing world, including our region 2 with disastrous results. And the WT0 in fact is taking it even further than what has already been pushed on developing countries. The ground work for the WT0 had already been laid in most developing countries. These countries in the &'s, .'s and up till today are either strongly encouraged or arm twisted into taking on board certain policy options. The policies typically included6 $5 the removal of protective tariffs which directly endangers local industry 85 the removal of rules controlling foreign investment, which ushers in the foreign domination of local industry 75 the conversion of self2sufficient, small2scale diverse agriculture to corporate export2oriented monocultures, which severely threatens the food security of local populations @5 the elimination of price controls 15 the drastic reduction in social and health services /5 the aggressive privatisation of government agencies which renders social services inaccessible to the poor &5 the ending of popular Aimport substitution programmes that encouraged local people toward diverse local production and self2sufficiency.
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Bet me elaborate on some of the characteristics of this development model6 $5 <mphasis is placed on the export sector. If a country opens up its borders, there will be a flood of goods coming in from abroad. It will in turn have to pay for these goods through its exports. +owever, what happens is that developing countries largely become producers of low2value industrial goods or simply export raw materials. +ow does this happen? To a large extent, it is due to the presence of tariff escalation for industrial and also agricultural products. Tariff escalation is put in place by protectionist policies of the developed countries. Tariffs on semi2processed products are higher than those on raw materials, and those on finished products are even higher. This locks developing countries into exporting raw materials or low2value goods. It discourages diversification to more processed products since the market openings are not available. 85 <mphasis is placed on the urban industrial sector, and few resources are channeled to the rural sector so that even though growth rates may be increasing, the agricultural sector is really being impoverished, with serious conse"uences for large sectors of the rural population. The result often is that there is very une"ual development between the rural and urban sectors. And we are deceived by the apparently high growth rates 2 many people may be getting rich 2 but there are even more people getting poor. This has been the case in Thailand and Indonesia even before the financial crisis. 75 -ural communities whose traditional livelihoods are based on the subsistence economy find that their resources 4land, forest, fish, water etc.5 are taken away and are channeled towards industrial development or for export. =rom surviving on a non2monetised economy, these
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communities are forced to enter the monetised economy. =rom being able to pick fruit and fodder from the forest, people now have to buy what they need from the market. Their dependence on the money economy grows, yet they may not necessarily have more access to the money they now need for their basic survival. @5 There will no doubt be a trend towards rural2urban migration as resources from the rural sector are taken away. This has led to many cities in developing countries being overcrowded by s"uatters and an increasing number of urban poor, since the cities are largely unable to absorb the burgeoning numbers that arrive in search of *obs. 15 In the area of agricultural production, self2sufficiency is eroded as export crops are promoted. >any developing countries 2 particularly low2income countries find that even though the ma*ority of their population may be engaged in agriculture for export, food shortage remains a fact of life. The well2being of the population would be better ensured, if people are instead given the land to farm for their own subsistence. <ven in the hey2day of the Asian tigers, where growth rates were high and businesses were booming, poverty and environmental degradation was present and on the increase. Co attention was given to these because people felt that it was an exception to the rule. #ut no, poverty and environmental degradation, especially the impoverishment of women, was a direct conse"uence of the high growth rates. A very clear example is of Thailand 2 as the urban sector grew by $'2$8D, the rural sector was struggling along at 7D growth rate on average. In fact, in parts of Thailand, the farmers are heavily in debt and face harsh conditions and food shortages themselves.
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And with the devaluation of the baht and the financial crisis 2 it is as if the wool has been pulled off our eyes, and we see with clarity, the fragility upon which wealth had been built. The poverty that had already existed before the crisis, is of course now further aggravated with the devalued currencies and widespread unemployment. This economic model that is promoted is bringing about the Achampagne glass civiliEation , where the gap between the rich and poor is widening. Today, the rich are really the corporations and a minority of people who benefit from this corporate and profit2driven globalised economy. In this champagne glass civiliEation, Athe top 8' per cent of humanity, controls .7 per cent of the world s income, and the bottom 8' per cent survives on only $.@ per cent. The gap in the distribution is growing... 4An ,nwanted (hild Grows ,p $%%1F 775. ;eventy per cent of global trade is controlled by *ust 1'' corporationsF and a mere $D of the TC(s own half the stock of foreign direct investment. The new trade agreements can only greatly accelerate corporate concentration and increase corporate power in relation to nation states. As an analyst has commented, AThis is one of Afree trade s main purpose . +ow is this development agenda sold to the developing world? +ow is it people have bought into it? Amongst the many reasons, one crucial argument that has gained wide currency is the G:! argument. When countries focus on industrial development and on exports rather than production for their own subsistence and self2sufficiency, G:! increases. The logic is that when G:! increases, wealth increases and this wealth will trickle down to the average person on the street.
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While, let me tell you that G:! does not increase wealth. In fact G:! is a measure of how fast we are destroying our resources 2 especially our environmental resources, and also our labour resources. When we sell our trees 2 we increase our G:!. #ut if we leave our trees to stand in the forest, to provide our food and fodder, to clean and maintain our environment and to prevent floods, G:! is not increased. When we take part in a Athrow away culture 2 by using disposable goods instead of recycling, G:! is increased. When I drive up the road in my car, G:! increases, but not when I walk up the road. When women work at home engaged in productive work6 bearing and looking after children, cooking and cleaning, G:! does not increase. +owever, when they take on a double load, when they enter the free trade Eones and work there in the day, then to go home to look after the children and cook and clean, G:! increases. ;o do not be taken in. G:! does not measure wealth. In fact, it measures how fast we are destroying our environment and our people, including our women.

Various WTO Agreements: Issues of oncern $5 Textiles and (lothing This area is of crucial interest to developing countries. At the time of the ,ruguay -ound, liberalisation of this sector was cited as the area developing countries would benefit most from. ;ome even estimated that the earnings of textile exporting countries would increase by over ,;G7'' billion. The ,; and <, are the main parties that have to liberalise in this sector. In the first 8 years of liberalisation, no progress has been made even though they were supposed to liberalise by $/D. They are re"uired to open up by $&D in the second phase, which started in 3an. $ $%%.. It is expected, however, that the <, will liberalise only 7./D of imports and the ,; $.7D. ;o instead of the developing countries increasing their exports in this area compared to the developed countries, the reverse is true. Textile exports in developing countries have risen only @.7 per cent over the past @ years, while exports from developed countries have risen by % per cent in the same period. What developed countries have done is that they have abided by their technical commitments 2 they have Aliberalised but have included in their Aliberalisation , those products which were not in the first place protected. If this present trend continues, only about 8' per cent of items under the textile and clothing agreement would be liberalised in the $' year transition period, leaving .' per cent to be Aintegrated right at the very end.
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85 Anti2:umping 0ver the last $128' years, anti2dumping has been used by the developed countries as an important instrument of protectionism. :eveloped countries have persistently initiated investigations regarding the same products exported by developing countries. In doing so, they have demanded information that is difficult and expensive for developing countries to furnish. =urthermore, when a case is taken against a developing country, even if the developing country is found not to be in the wrong, the country pays heavily since it suffers the sudden loss of a market. Albeit this is only for a few weeks while a challenge is considered, it can be devastating for fragile industries, or for countries that are heavily dependent on a few export products. It is also difficult for most developing countries to take on the developed countries in this area. =irstly, they need to prove that the other party has caused significant in*ury. :etailed and highly technical information need to be collected to prove this in*ury. ;imilar to the dispute settlement system, the process is very costly. 75 The Agreement on ;ubsidies >ost types of subsidies applied in developed countries such as those relating to research and development, adaptation of environmental standards etc, have been non2actionable, whereas, the subsidies normally used by developing countries for their industrial development and export development have not been given this treatment. ;imilar to the anti2dumping agreement, to lodge a case re"uires highly technical information and costly legal expertise. These processes should really be simplified and there should be ade"uate

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legal and advisory services available in the WT0 to ensure that developing countries are able to use the system. @5 Trade -elated Investment >easures 4T-I>;5 In this area, the agreement specifically prohibits enforcing domestic content re"uirement, as that is contrary to the obligations of the national treatment principle. +owever, this is vital for developing countries as it encourages6 a5 the use of domestic raw materials, hence saving scarce foreign exchange b5 the creation of additional domestic employment c5 the growth of general domestic economic activity 15 Agriculture The Agreement on Agriculture has really been about selective deregualation of agricultural products, so that the large exporting countries, particularly the <, and ,; are still able to maintain their high levels of subsidies while the developing countries are prohibited from increasing their minimal levels of subisidies or from introducing new ones. The Agreement works out to favour the corporate agribussinesses of the developed countries. It is gradually s"eeEing and pricing out the small2holder famers in developing countries from agricultural production because of the continued high levels of subsidies provided by developed country governments in con*unction with the forced lowering of tariff barriers in developing countries. The 0<(:, for example, provided subsidies to the tune of ,;G8.' billion in $%%& alone.

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The conse"uences are detrimental to the food security of developing countries, since local production to support local food needs are severely at risk and many low2income countries and people will not have sufficient financial resources to purchase even the basic foods they re"uire. :eveloping countries in turn are being strongly advised by the international financial institutions to venture into the export markets 2 in cash crops, luxury fruit and vegetables, cut flowers etc. This type of crop conversation especially to luxury items has met with tremendous problems. It has led to many farmers being left with large debts since it re"uires large capital outlay. /5 Intellectual !roperty T-I!; introduced sweeping and overwhelming opening of the patenting of life forms that brought the world in line with ,;2style patenting system. This system has allowed corporations to patent the natural biological resources of many communities and countries. Co compensation is paid to the indigenous population which may have nurtured these species for a long time. #ecause of the action of CG0s such as Third World Cetwork at the time of the ,ruguay -ound, Article 8&.7 4b5 was included into T-I!; to allow local communities to use their own systems of protecting their seeds, plant varieties etc. #ut this Asui generis article is now being reviewed and local systems of intellectual property rights protection are seriously being threatened. The ,; government, this year, is working to get local control eliminated. &5 ;ervices The motive for including services into the GATT and now WT0 is so that the businesses of the developed countries can have legal permission to take over the service sectors in developing countries 2 insurance, movies, shipping, banking, airlines, telecommunications etc. The opening
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up of our service sectors will deprive developing countries economies the opportunity to naturally evolve and gain strength in these areas. It will deprive developing countries of the right to diversify and strengthen their economies. =ollowing the ,ruguay round, the following issues under the services sector were on the tables for discussion. These included the movement of natural persons, financial services, maritime transport services, basic telecommunications etc. The area of greatest interest to the developing countries 2 the movement of natural persons as a means of providing services concluded in 3uly $%%1, but with insignificant results for developing countries. +owever, negotiations on financial services and basic telecommunications have since been concluded. :eveloping countries do not stand to gain from these agreements. They have no export interest in financial or telecommunications services. +owever, they have been pressurised into making concessions in these areas, by allowing the entry of these services into their countries. .5 <lectronic (ommerce The :eclaration prohibits >embers from imposing an entry tax on commercial transactions conducted across borders by electronic means. =or the moment, it does not affect developing countries since most developing countries do not conduct their trade through electronic means. +owever, it is likely that this is an area will be expanding and in time, it will be a commonly used mode of trade especially by developed countries. #y that time, developing countries would be deprived the right to collect taxes and increase their much needed government revenues.

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%5 Government !rocurement >ost governments give preference to buying from local suppliers. In fact, using tax dollars to purchase goods and services from local companies is, in most countries, a key governmental policy tool aimed at strengthening the local economy or industry. As much as @'21'D of GC! 4if we factor in schools and services5 come from government procurement. #ringing government procurement into the WT0 means forcing governments to abandon the practice of buying from local sources. It means allowing much greater penetration of developed country s corporations into our economies. Governments will have to allow e"ual treatment of domestic and international companies for providing the government goods and services. It means giving up control and the ability to nurture and strengthen local enterprises. The flip side of the coin6 developing country companies will not be poised, on the contrary, to enter the developed countries and provide the re"uired supplies for government procurement contracts there. $'5 =orestry This is the newest issue that may be added to the WT0. There was an attempt at the last A!<( meeting to push for near total liberalisation of the forestry sector. 3apan resisted and the issue is likely to be shifted to the WT0. Apparently, negotiations in the area have already commenced. The countries pushing for it, especially the ,;, want it completed by :ecember $%%%. $$5 Investment

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As a result of strong citiEen activism, the >AI negotiations were stopped from being passed in the 0<(:. #ut the >AI was then moved to the WT0. The >AI is about corporations being given national treatment 2 that is, they must be treated the same way local companies are treated. This will be highly detrimental to the economies of the developing countries, which would be literally taken over by developed countries corporations. In ;ingapore, many developing countries were strongly against the inclusion of investment into the WT0. +owever, India, which was a lead opposition country buckled under and agreed to the setting up of a study2group on investment. It would be interesting to find out what went on behind the scenes before India changed her position. $85 :ispute settlement system The dispute settlement system has been acclaimed as one of the most significant achievements of the ,ruguay -ound. +owever, since $%%1, it has been used mainly by the developed countries. There have been about $1' cases since $%%1. The ,; alone is responsible for initiating about 1' cases and all the developing countries, together, have initiated about @'. And while developing countries have won some of these cases, the fact remains that the system is weighted heavily against developing countries. 0ne of the main reasons being that the procedure is very costly. :eveloping countries do not usually have the legal expertise to handle the cases on their own and would have to incur heavy expenses in hiring legal expertise from abroad. They therefore need to weigh whether it is wise to even take the matter to the dispute settlement process.

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As mentioned earlier, the other area working against developing countries is that if the country in the wrong does not take the necessary corrective measures, countries have the right to take retaliatory measures e"uivalent to the losses which the country has suffered. =or small developing countries, this bottom line of retaliation, is impractical, politically and economically.

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!" WTO and developing countries #"!" Introduction As the :oha -ound trade talks floundered, there have been increasing criticisms of the behavior of the rich and powerful countries during the numerous series of negotiations. ;everal influential countries were accused of trying to manipulate other weaker contracting parties to go along with their proposals. There are also increasing concerns by some developing countries that due to the asymmetric economic, political and diplomatic powers between the powerful parties and the relatively powerless members, the world trading system as coordinated and implemented by the World Trade 0rganiEation 4WT05 is fundamentally unfair. 0ut of frustrations, some analysts and researchers even suggest that developing countries may actually be better off without the WT0. These views are often reinforced by pronouncements by non2governmental organiEations 4CG0s5 in developed as well as in developing economies that the WT0 and the :oha -ound negotiations facilitate a global trading system that exploits the poor, particularly the poor in the relatively weak economies. While the focuses of the barrage of criticisms of the global trading system from CG0s and from the developing countries are often very diverse, ranging from unfairness and exploitations to issues concerning the environment, labor and human rights, one common theme is that the WT0 as an organiEation that mediates the global multilateral trading system is increasingly acting as a forum used by the rich and powerful to exploit and harm the poor and the weaker members.

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The World Trade 0rganiEation 4WT05 has become an important instrument of globaliEation in the world today. The ma*or developed countries have put their full weight behind it. They have already used the multilateral financial institutions, viE., the World #ank and the International >onetary =und 4I>=5, to influence the economic policies of the developing countries in the past. These two organiEations have considerable clout as a large number of the developing countries have to depend on them for financial support for development and for tiding over their foreign exchange problems. These institutions are mainly guided by the developed countries in the formulation of their policies and prescriptions, since the decision2making therein is through a weighted system of voting, in which the countries with higher financial contributions have been assigned more votes. The system of decision2making in the WT0, however, is different. +ere each country has one vote, and there is a provision for decision2making by ma*ority voting if it is not possible to reach consensus. The developing countries outnumber the developed countries in the WT0 by nearly four to one. And yet, despite all this, it is the developed countries which are the main engines of the work in the WT0, while the developing countries are almost always on the margins. The developed countries initiate the sub*ects for negotiation and take the lead and initiative in the course of negotiations. The developing countries, on the other hand, are almost always on the defensive, trying to minimiEe the damage arising from the negotiated agreements. It is important for the developing countries to reverse this process, lest their progress on the development path continues to be constrained. They have to be particularly careful now, in the context of the pressures being exerted to launch a new round of negotiations in the WT0. The main driving force behind the ma*or developed countries in the WT0 is their interest in
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expanding the space for their economic entities, particularly in the developing countries. The doors are already "uite open in the developed countriesF hence they do not have to worry about entry there. #ut the developing countries which present vast opportunities are still very much untapped. +ence these areas are sought to be pried open for their operation. The economic entities in the ma*or developed countries exert considerable pressure on their governments to take effective steps in this direction. And the WT0 is considered to be the natural instrument for this purpose. The ma*or developed countries have found, through their experience, that they can conveniently achieve their ob*ectives in the WT0. >oreover, the organiEation has an effective enforcement mechanism in the form of its integrated dispute settlement system, within which perceived obligations under the various WT0 agreements can be enforced with the threat of restrictions on the import of goods. This is an effective threat to the developing countries as such punitive moves can disrupt their exports in the few sectors where they are competitive. The main reason why the developed countries are able to get the desired results in the WT0 is that they are clear about their ob*ectives, have good coordination among them to achieve those ob*ectives and use their full strength in this process. The political and economic clout of their governments as well as the technological and economic muscle of their firms *oin together to push ahead to get the benefits they seek. :ifferences do sometimes arise among themselves on some issues, but when it comes to getting concessions from the developing countries, the ma*or developed countries always combine together. The ,ruguay -ound of negotiations is an important recent example, where the ma*or developed countries moved together and gained big concessions from the developing countries, despite there being mutual differences among themselves on some issues. The latest example of their *oint pressure is the current call for a new round of negotiations, under which they expect to start negotiations on new sub*ects with the main aim of
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obtaining further concessions from the developing countries, as will be explained in some detail later. Two decades ago, the developing countries were not exposed too much risk from the developed countries acting as the prime movers in the General Agreement on Tariffs and Trade 4GATT5 forum, which was the predecessor of the WT0. The developed countries did not expect many concessions from the developing countries in those daysF the negotiations were mainly about concessions among the developed countries. #ut the discussions and negotiations during the last two decades have been focused mainly on getting concessions from the developing countries.

#"#" $AD %&'%(I%) % O* D%V%+O'I)G O,)T(I%$

#ecause of extreme pressures exerted by the developed countries, the ,ruguay -ound ended with highly imbalanced results, with the developing countries making most of the concessions and the developed countries hardly making any significant concessions to them. It is by now "uite clear that the WT0 agreements, which came out of the ,ruguay -ound, are full of imbalances, ine"uities and deficiencies. The developing countries have repeatedly been drawing attention to these adverse features over the last four to five years . Grave Disappointment in $ome Areas The most positive features of the WT0 agreements for the developing countries appeared to be in the areas of agriculture, textiles and dispute settlement. >any developing countries were persuaded to accept the agreements mainly because of the presumed benefits in these areas. +owever, these expectations have not been realised in practice, nor is there any hope of much
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benefit flowing to the developing countries in these areas in the near future. In fact, in the areas of agriculture and textiles, the developing countries have good reason to feel cheated. In agriculture, the developing countries had expected that their market access prospects would improve. #ut the ,ruguay -ound commitments and their implementation by the developed countries have belied all such hope. The developed countries put prohibitive tariffs on many products and enhanced their domestic subsidies. <ven in their export subsidies, there was only a small reduction, even though these subsidies directly distort international agricultural trade in a big way. It is useful to go into some detail as to how this situation has come about. The WT0 Agreement on Agriculture re"uired all countries to remove their non2tariff barriers, for example direct "uantitative restrictions on imports, and enabled the countries to convert them into e"uivalent tariffs. The developed countries utilised this provision to have very high tariffs on a number of items. ;ome studies have shown that many of them imposed tariffs at levels much higher than would have been re"uired by the e"uivalence with their non2tariff measures. Another facility which they obtained was the ability of a country taking to such conversion to apply Hspecial safeguard measuresI to protect its farmers. This has enabled them to apply restrictive measures when imports exceed a certain limit or the import price falls below a particular level. What is important here is that the determination of in*ury to domestic production would not be a precondition for applying such safeguard measures, unlike the re"uirement under the general safeguard provision of the WT0. Cow the developing countries, save for a very few exceptions, did not have such non2tariff measures earlier which could be converted to e"uivalent tariffs. +ence they were denied the twin facility of applying high e"uivalent tariffs and protecting their farmers in a comparatively easier way. Thus, it is those that were distorting agricultural trade which were given these benefits, benefits denied to those that were not
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distorting the agriculture trade, like the developing countries. The story of domestic agricultural subsidies is even more striking. The subsidies were broadly categorised into two groups. The subsidies in one group were together re"uired to be reduced over a given period of time, whereas those in the other group were not sub*ect to the reduction re"uirement. While the ma*or developed countries fulfilled their commitment of reducing the reducible subsidies, they also cleverly raised the other type of subsidy by a huge margin. As a result, the total level of domestic subsidies was actually increased rather than reduced. Thus, the Agriculture Agreement and its manner of implementation have in fact led to enhanced distortion of agriculture trade by the ma*or developed countries. In textiles, the picture is a similar one. The ma*or developed countries have technically fulfilled their obligation to liberalise their imports, but in effect they have really not liberaliEed except to a small extent. ,nder a regime introduced in derogation of GATT to provide protection to the textile industry of the ma*or developed countries, a large number of developing2country textile products have been under import restraint in these countries. The WT0 Agreement on Textiles and (lothing stipulated that the developed countries would progressively liberalise, in increasing percentages, these imports in stages. In actual practice, however, the liberalisation of the restricted products has been to a much lesser extent. This has happened because the base for the calculation of these percentages is a list of products included as an annex to the agreement. This list contains a large number of items which were never in fact under restraint. It is mostly these unrestricted items that have been included by the developed countries in their liberalisation programme. Thus, the restricted items, except for a small percentage, still remain restricted. The developing countries, which were the sole targets of the import restrictions, continue to be the victims of trade discrimination in this sector. In the area of anti2dumping, the developing countries had been the victims of
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harassment for a long time. It was expected that with the tightening of the rules in the WT0 Anti2:umping Agreement, the situation would improve. #ut the harassment of the developing countries through anti2dumping actions on their exports has continued in some ma*or developed countries, sometimes through repeated actions on the same or similar products. An area of great hope for developing countries was the WT0 s enforcement mechanism, i.e., the dispute settlement system. It has provided some relief to the developing countries against unilateral action and harassment, when they have been able to raise a dispute and pursue it through the panel and appeal process. #ut they are considerably handicapped because of the high cost involved, both in raising a dispute and in defending one. They do not have domestic expertise on this matter and have to depend almost entirely on the legal services of experts from the ma*or developed2country centers. What has been particularly disappointing to the developing countries, moreover, is that the panel and appeal processes have been almost totally ignoring their grave concerns on important procedural matters and have also been giving interpretations which are substantially modifying the rights and obligations contained in the WT0 agreements.

Ongoing 'rocess of onstraining -ar.et Access Another concern of the developing countries has been the formulation of standards which may affect their market2access prospects on a continuing basis. !roduct standards are being fixed by the International ;tandards 0rganisation, and, in respect of sanitary and phytosanitary matters, by the (odex Alimentarius. These were generally voluntary standards in the past. Cow the WT0 agreements give primacy to these standards, in so far as a country has to *ustify its standards if they are different from those set by these bodies. Thus, there is a degree of obligation involved for countries in respect of these standards. :eveloping countries are worried about these new
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obligations, which have arisen without their effective participation in the standard2setting process in these organisations. The developed countries and transnational corporations have a generally good presence in these bodies, but the developing countries are mostly left out as they do not have the ade"uate financial and human resources to be involved in the process of standard setting there. Thus, they have no effective say in this process. (onse"uently, the standards set by these organisations do not generally take into account the experience of the developing countries and the special situations of these countries as producers and consumers of the products. The standards may sometimes be too stringent from their point of viewF in that case, their market2 access prospects in other countries may be undermined. This apprehension is further enhanced by the enthusiasm in many developed countries for the use of standards as a protectionist instrument.

ostly Implementation Jet another point of concern in the developing countries is the complexity and difficulty in implementing the various WT0 agreements. ;ome agreements re"uire the formulation of legislation and regulations as well as the establishment of mechanisms for various purposes. >any developing countries do not have ade"uate skill and financial resources in this regard. ;ome calculations have shown that it is a very costly process. =urthermore, there are some obligations, like the prohibition, under the Agreement on Trade2-elated Investment >easures 4T-I>s5, of the domestic2 content re"uirement, which have serious adverse implications for the development process of the developing countries. These countries are finding it difficult to adhere to the time frame for undertaking such obligations, and stand the risk of trade retaliation for non2fulfillment. In respect of many obligations, the actions re"uired for implementation have
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to be taken at various levels in a country. Thus, not only the central government, but also the regional governments and local bodies, have to adhere to the disciplines of the WT0 agreements. If they are not able to do so, the central government is held responsible in the WT0 for the default, and it may have to pay a price through the dispute settlement route if a complaint is raised. The ability of the developing countries to train the officials of the regional and local administrations is limited. Also, it is very difficult for them to collect information from the widely dispersed centers of these authorities, which is necessary to enforce the implementation of the obligations.

$pecial Interests Ignored The developing countries are disturbed that the special provisions in some agreements incorporating their interests to some extent have not been given due attention. In particular, the General Agreement on Trade in ;ervices has the ob*ective of expanding the services supply capacity in the developing countries. It also has a stipulation that the developing countries may liberaliEe fewer sectors and fewer transactions in services. #ut these provisions have not been ade"uately implemented in actual practice. In fact, there has been insistence that some developing countries accept far more onerous obligations in some sectors, particularly financial services, than they were prepared to undertake. Bikewise, the Agreement on Trade2-elated Aspects of Intellectual !roperty -ights 4T-I!;5 has the ob*ective of encouraging the technological development of the developing countries. #ut steps to realiEe this ob*ective have not materialiEed in any concrete form in the policies or actions of the developed countries. The main reason for not putting these principles and ob*ectives into actual practice is that there are no direct and specific obligations in the agreements on the
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developed countries to take some specific measures in this regard. Thus, there is no specific enforceable provision which can be

#"/" *A I)G T0% 0A++%)G%$ I) T0% )%A( *,T,(%

hanged Approach of Developing ountries ;igns have already emerged that the developing countries are starting to change their approach in the WT0. The year $%%% was the watershed. :eparting from their earlier stance of merely responding and reacting to the proposals of the ma*or developed countries, they decided to be proactive. They gave deep thought to the deficiencies, imbalances and ine"uities in the WT0 agreements and their implementation, and decided to take the initiative to correct the situation. They coordinated among themselves and prepared well. =inally they came up with a large number of proposals under the general heading of Himplementation issuesI. This was an important input to the preparatory process for the ;eattle >inisterial meeting of the WT0 in :ecember $%%%. In the final stages in the run2up to ;eattle, attempts were made by some "uarters to ignore these proposals by keeping them out of the text to be submitted to the meeting. #ut the developing countries determinedly persisted and got their proposals included in the text. It was a significant achievement, considering their passive and defensive role in the past. ,p till now, however, the ma*or developed countries are not prepared to work on these proposalsF they say that these would entail amending some agreements, which should rightly only be taken up in the course of a new round of negotiations. In this manner, they are trying to strengthen their case for
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launching a new round, which has been pursued by them for more than a year. They forget that ma*or new commitments have been taken in the WT0 at their instance in the last few years as mentioned above, without a new round having been launched. The developed countries would like to address a few of the Aeasier implementation issues in a superficial manner and then sweep this matter off the WT0 table. #ut the developing countries are very much united on pursuing these proposals. It has become their common platform. They also have the moral *ustification in insisting on correcting the deficiencies, imbalances and ine"uities in the current agreements on a priority basis before embarking on any new negotiations. 0ne visible effect of these proposals is that the momentum of the new issues has slowed down, though there may be other reasons for it too. The developing countries are aware of the importance of their proposals and have been consistently pressing for decisive and meaningful consideration thereof as a priority.

Agenda of Developed ountries The agenda of the ma*or developed countries is to launch a new HcomprehensiveI round of negotiations in the WT0, which means that the new sub*ects proposed by them at the >inisterial meetings of ;ingapore 4$%%/5 and Geneva 4$%%.5 should be taken up for negotiation. These sub*ects include6 investment, competition policy, government procurement, electronic commerce and labour standards. 0f course, there are varying degrees of intent among the ma*or developed countries on these issues. The ,; is not keen on taking up the sub*ect of competition, while it is the main champion of the sub*ect of electronic commerce. The <, is keen on the former, though not "uite so keen on the latter. #ut both of them would like to have investment, government procurement and labour standards on the agenda of new negotiations, though the ,; appears to
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be less enthusiastic about investment. The developing countries generally are opposed to the launching of a new round. Their main concern is that it will involve negotiations in new areas, which will put their own priority sub*ect of improving the existing agreements on the backburner. Their case is that their proposals have been placed on the basis of their experience of the workings of the agreements for the last six years and must have priority over consideration of the new sub*ects. They also argue that sub*ects like investment and labour standards do not belong in the WT0 and as such should not be covered by negotiations in this organisation. There is, of course, a more basic reason behind the developing countries opposition to the new sub*ects. They apprehend that through each of these sub*ects, the developed countries will be pushing ahead with their interests, curtailing the discretion and constraining the development efforts of the developing countries and using new tools to restrain exports from the developing countries.

-ain *ears of Developing ountries All the sub*ects proposed by the ma*or developed countries for negotiations cause grave fear among the developing countries. =or example, they apprehend that negotiations on investment will be geared towards ensuring unrestrained entry and operation of developed2country investors in the developing countries. The current WT0 agreements have already ensured expanded opportunities for the farmers, manufacturers, exporters, service providers and technology providers of the developed countries in the developing countries. The proposed negotiation and agreement on investment is aimed at extending the benefit to their investors. It is feared that the agreement will constrain the flexibility of the developing countries in guiding and channeling foreign investments in the interests of attaining their development ob*ectives. ;imilarly, it is
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feared that the proposed negotiation on labor standards is meant to effect the enforcement of these standards through the WT0 dispute settlement mechanism. This will provide a new tool of protectionism to the developed countries, whereby the exports of developing countries may get constrained under the pretext of safeguarding labour standards. <ven the proposed negotiations on competition and government procurement give serious grounds for concern. Cegotiations on the former may end up curtailing the flexibility of the developing countries to protect their firms against the onslaught of big foreign firms. And negotiations on the latter may expose their government purchases to international competition, thereby prohibiting the developing2country governments from giving preference to particular sources of supply, including their domestic suppliers. The past experience of the developing countries *ustifies such fears. Cew areas were included for negotiations in the ,ruguay -ound against the stiff opposition of the developing countries. :uring the course of the negotiations, the scope was expanded, e.g., in the area of intellectual property rights 4I!-s5 although the developing countries had not earlier agreed to negotiate I!-s standards. Also, the initial agreement to keep the new sub*ects, like services and I!-s, separate from the traditional area of GATT 4trade in goods5 was ignored. All these areas were *oined together through the integrated enforcement mechanism of the dispute settlement process, which provides for cross2retaliation among these areas 4i.e., retaliation for a country s non2conformity with an obligation in one area, e.g., I!-s, by imposing restrictions on the country in another area, e.g., goods5. What has disturbed most of the developing countries is the steamrollering techni"ue of the ma*or developed countries. :ecisions are taken in small groups and then the results are placed before the other countries for acceptance. A vast ma*ority of the developing countries are thus not able to participate in the Areal decision2making process, and yet they get saddled with the new obligations inherent in the new decisions. Theoretically, they
29

can block a decision even in the last minute, but this is not a practical course of action. Any developing country will find it difficult to take the blame for blocking a consensus at the final formal meeting to approve a decision. The developing countries have lately been voicing their concern loudly and clearly about the lack of transparency and lack of participation in the decision2making process.

)e1t *e2 3ears There will be a hard struggle ahead for the developing countries in the next few years. Intense pressures will be put on them to accept the launch of a new round of WT0 negotiations that encompasses the new sub*ects. In the process, some assurances may be given that their development interests will be kept in view. There may also be promises dangled of special and differential treatment of the developing countries. ;ome safeguards may be suggested in terms of holding out the possibility that a developing country need not *oin a new agreement if it so decides, i.e. something like the route of HplurilateralI agreements. >ore concrete steps may be taken by the developed countries in respect of the least developed countries, by allowing the latter some improved market access up front. All these inducements will be designed to blunt the sharp opposition of the developing countries to the launching of a new round and the inclusion of new sub*ects in it. 0nce the negotiations get underway, however, the past picture may emerge again. The new sub*ects, who are of great interest to the ma*or developed countries, may receive full attention, while the sub*ects of interest to the developing countries may get relegated to the background. =inally the developing countries may end up making further concessions
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$/ that add to their already heavy burden. And perhaps they will be doing all this for no real gain in return in terms of better market access abroad or better protection for their domestic production. The developing countries have to keep in mind the recent experiences of the ,ruguay -ound, discussed briefly above. They should know that promises, assurances and expressions of benign intentions, principles and ob*ectives do not count for much in the WT0 setup. It is only the concrete and enforceable obligations of individual countries that have real value in this organisation. Also, they should recall that the developed countries never make a concession without getting at least a commensurate reciprocal concession in return. The developing countries response to the pressures of the developed countries should be guided by these factors. =irst and foremost, they should not allow those sub*ects that are not within the current GATTKWT0 framework, e.g., investment and labour standards, to be included in negotiations. If they have to yield on this matter 4as happened in the ,ruguay -ound in respect of services and I!-s5, they must ask for consideration for the mere entry into the negotiating agenda of the sub*ect, and make sure they receive it before the sub*ect is included. The Aprice could be in the form of concrete and enforceable concessions from the sub*ect s demanders which could be of immediate and also long2term utility to the developing countries. Also, they should ensure inclusion of the points of their interest in the agenda of negotiations in these areas if negotiations are to be undertaken. In the areas which are within the framework of GATTKWT0, they should put all the matters of their interest on the negotiating table. They should continue to insist on consideration of the Himplementation issuesI on a priority basis. In fact, they could insist on agreements on some of the important issues before agreeing to the initiation of negotiations in the new areas, even new
31

areas which are within the current GATTKWT0 framework. The other Himplementation issuesI should be accorded unambiguous priority in the negotiating programme. The developing countries have to realiEe that they can achieve their ob*ectives in the WT0 only if they work together. There is a great need for consolidation of their positions and mutual cooperation and support in the preparation process.

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