In November 1999 talks to start a new round of trade negotiations at the World Trade Organisation broke down. The pause which has followed the breakdown of talks has provided a window of opportunity for civil society to purposefully engage in trade issues. This document is a response to this opportunity.

Following the breakdown of the WTO negotiations in Seattle it has become clear that the structures of the WTO are neither equitable nor transparent. This document is the result of a collaboration between a number of different Irish agencies including Comhlámh, Concern, Oxfam Ireland, Trócaire, and VOICE [Voice of Irish Concern for the Environment] who share the common concern that reform of the institutional structure of the WTO is an urgent necessity. It is hoped that this paper will make a real contribution to the ongoing debate on reform of the WTO and will lead to positive change in the Irish and European policy perspectives.

This document contains proposals which we anticipate would help bring about the following:

• the productive participation of developing countries in agenda setting, common negotiation, and implementation of WTO agreements.
• a WTO which is consistent with the pursuit of the eradication of poverty in developing countries.
• a rules-based world trading system / WTO which is part of the family of international law – and does not take precedence.

Recommended measures regarding the following areas are detailed below:

1. WTO Democratisation.
2. Capacity building.
3. Transparency and accountability.
4. Coherence between the WTO and other multilateral institutions and agreements.
5. The dispute settlement mechanisms.
6. Special and differential treatment for least developed countries.
7. Impact assessment mechanisms.

Rationale

Currently the WTO functions neither democratically or efficiently. As the breakdown of the Seattle talks has shown the broad disparities in access to decision-making of member states has led to the marginalisation of many members to such an extent that the WTO is unable to function effectively. Thus, reform of its structures is much needed.

Guiding Principle

All members should be able to have their say on any issue in the WTO system. The WTO should be an intergovernmental body committed to promoting equitable development enabling all countries identify those issues in which they have a stake and to enabling them to deal effectively with those issues. Any future reforms of the WTO must be in line with this.

Recommendations:

1.1. All binding decisions should be taken in the General Council or other formal bodies.
1.2. Every member should retain its veto.
1.3. The size of Government delegations to WTO summits and meetings must be capped in order to maximise equity in representation.
1.4. In deciding the scope of negotiations, and of the agreements which result from them, WTO members should ensure a balance between the interests of high-, middle- and low-income countries.
1.5. The number of meetings held each week should be limited to the number that the smallest delegations can feasibly attend, or be represented at.
1.6. Meetings on similar subjects should be scheduled together, and timed to coincide with relevant meetings in other institutions in Geneva.
1.7. All members should be informed in advance of the occurrence of all formal meetings e.g. Green Room meetings.
1.8. No members should be excluded from such formal meetings if they express a wish to attend.
1.9. Feedback from all formal meetings should be to all members.

Rationale

The institutional structure of the the WTO is only part of the democratic deficit. The lack of resources of many member states has led to their marginalisation. Thus, it is a necessity to have an effective capacity building programme to enable all member countries to participate and have their voices and interests included in the future of the organisation.

Guiding principle

All members of the WTO should have the capacity to engage effectively in the business of the WTO.

Recommendations:

2.1. There should be an assessment of the current state of trade capacity-building initiatives across the major multilateral agencies – WTO, IMF, World Bank, and UNCTAD. These should be mapped and assessed under two primary areas – impact on technical capacity to implement trade policy and impact on the capacity to assess, formulate, and negotiate trade policy .
2.2. The Advisory Centre on WTO Law must be fully funded through binding annual commitments by WTO members weighted according to GDP, with LDCs exempt from such payments.
2.3. Capacity building must concentrate on institutional capacity building which covers support for governmental, parliamentary and civil society bodies.
2.4. Multilateral capacity-building programmes must go beyond focussing on the capacity to implement trade policy and must concentrate on enhancing capacity for trade policy analysis.
2.5. Commitments by OECD states and regional groupings to include greater support for trade institutional capacity building in their aid flows should be made.
2.6. There should be a common fund within the WTO to resource LDC delegations.
2.7. Capacity building across the multilateral agencies should be coordinated by inter-organisational panels chaired by UNCTAD meeting on a quarterly basis.

Rationale

The WTO is thought by many to lack accountability and transparency. Documents can take six months to be de-restricted, the extent of lobbying by interest groups, business or otherwise is unknown, representation at Green Room meetings is likewise unknown, and consultation with civil society is sporadic.

Guiding Principle

Trade negotiations should be transparent and accountable, to negotiating members, competent bodies, and to civil society.

Recommendations:

3.1. Article V of the agreement establishing the WTO should be revisited to allow automatic derestriction of all documents unless there are reasons for maintaining confidentiality. Clear, objective criteria should be established for exclusions to disclosure and these criteria should be made public.
3.2. Representation and advice from all sources, both on a formal and informal basis, should be disclosed. Written documents and schedules of all meetings between delegates and private sector bodies, industry, Trade Unions, NGOs and any other groups should be made public.
3.3. An ethics panel should be established to oversee matters such as:

• Benefits and payments received by delegations or officials.
• Conflicts of interest when WTO staff or negotiating teams move into other employment.

3.4. Recognised international bodies, e.g. WHO, UNCTAD, or the International Panel on Climate Change, should have the right make submissions at all ongoing negotiations. Similarly WTO bodies should have the right to seek submissions and advice.
3.5. A system of accreditation of NGOs and other civil society groups as observers to Committee and Council Meetings and DSM proceedings should be put in place. Due to the financial constraints faced by civil society in many developing countries, assistance should be available to enable accredited NGOs from these countries to act as observers at the above meetings and proceedings.
3.6. Guidelines should be developed by the WTO for national consultation with civil society, and the establishment of national contact points for dissemination of WTO documents, including records of decisions taken at national level regarding trade policy.
3.7. The Trade Policy Review Mechanism should include an evaluation of how trade policy is formulated at national/regional level including evaluation of consultation with civil society and government.

Rationale:

Multilateral rules can be used to supplement national policies in achieving a wider dispersion of benefits from trade. Currently, the primacy attached to the enforcement of WTO rules, which focus almost exclusively on trade liberalisation, override other equally important goals including poverty reduction and sustainable development. Measures to support trade should instead operate within the globally agreed objectives of other international agreements. Poverty reduction objectives of other multilateral institutions, such as the UN and World Bank, along with national policies in pursuit of poverty eradication, for example, PRSPs and Comprehensive Development Frameworks (CDFs), which would presumably include food security, citizens’ health and environmental objectives need to be honoured in trade rules.

Guiding Principle

Trade agreements must not take precedence over multilateral agreements promoting poverty reduction, basic rights and sustainable development.

Recommendations:

4.1. The WTO works within the framework of global agreements on poverty reduction and sustainable development. Trade agreements do not take precedence over multilateral agreements promoting poverty reduction, basic rights and sustainable development.

4.2. Establishment of an independent arbitration mechanism when WTO rules conflict with other multilateral agreements. Such a superior referral body would be mandated to resolve disputes between trade law, multilateral agreements and international customary law.

4.3. The WTO should be brought more formally within the UN family and the referral body mentioned above in 4.2 could be developed within the UN.

4.4. In order to improve the balance between national economic strategies and international trade rules greater recognition and use of special and differential treatment provisions for developing countries in WTO rules.

Rationale

Certain WTO dispute panel and appellate body rulings have led to concern in civil society about the apparent supremacy of trade over non trade concerns. The areas where this has arisen include the inadequate standing of the principle of taking certain restrictive trade measures as precaution in the case of health concerns; the inability of countries to extend environmental standards to imports; and the unresolved question over the legality in WTO terms to impose sanctions against another state, for example, Myanmar (Burma). The Dispute Settlement Mechanism (DSM) has been criticised as outdated in respect of non participation of civil society within its proceedings.

More specifically in relation to developing countries, there are several areas of concern around the dispute settlement procedure. Firstly, there are considerable prohibitory legal and research costs involved in taking a case. Secondly, the DSM process can take up to two and a half years and the adverse effects of measures discriminating against developing countries can be disproportionately harsh. Thirdly, in terms of taking action against an offending country, if it is slow to implement recommended changes, the scope for remedial action by a developing country is limited or non-existent. The so-called trade retaliation measures can be very damaging to the economy of the developing country when they are instigated, but in reversed circumstances, do not amount to any significant impact on the developed country. To start redressing the in-built distortions and to democratise the DSM, it is necessary to bring in some rule changes and sharing of jurisdiction with other intergovernmental bodies with relevant policy mandates.

Guiding Principle

To lend legitimacy to the DSM it is necessary to make it more open; to increase and improve access to it by LDCs and civil society; and to contextualise it in the broader framework of international standards.

Recommendations:

5.1. Ensure that resources are adequate and sufficient to provide the necessary legal assistance to developing countries. Developing countries should be financially compensated for the costs of bringing a case if they win against a developed country.
5.2. Compensation in the form of trade concessions should be awarded to the developing country where it wins a case against a developed country for damages incurred during the dispute period.
5.3. Restrictions to the anti dumping agreement in the DSM should be totally eliminated and this area should be brought under the normal dispute settlement process.
5.4. A more interdisciplinary DSM panel with expertise in relevant international agreements is needed. It should include specialists with varied backgrounds (covering trade, environment and development).
5.5. Where WTO rules conflict in any sense with multilateral environmental agreements, the WTO must collaborate with and share or yield its jurisdiction to those agreements.
5.6. There should be a prescribed role for competent international bodies, for example, the UNEP, UNCTAD and WHO on environment, development and health-related trade disputes, respectively.
5.7. The proceedings of the DSM should be open to the public. Submissions, panel reports and reports produced by the Appellate body should be available to the public in a timely manner. Clear criteria should be established where parties may be granted permission for confidentiality or for temporary restriction of documents, for example in extreme cases of commercial sensitivity.
5.8. A facility for submissions and direct participation for relevant civil society stakeholders in a dispute needs to be established according to agreed criteria.

Background

The inadequacy of the current Special and Differential Measures for LDCs has been particularly evident since the Uruguay Round. Most LDCs experienced institutional, financial and political difficulties in fulfilling Uruguay Round commitments. The impact of many of the commitments would have been negative upon their development had they applied them. The World Bank estimated the average cost to each developing country of implementing just three of the agreements in the Uruguay Round was $150 million. Here we refer to mechanisms to assist Least Developed Countries. Selected provisions should be extended to all developing countries.

Recommendations

6.1. That instead of longer time periods for implementation, human development indicators be added to current economic indicators to be used to determine when LDCs are obliged to implement provisions.
‘Balanced Growth in Trade’ measure: Trade liberalisation, without a medium term balance in the value of imports and exports, tends to widen deficits in the balance of trade and the balance of payments, and worsens a country’s debt burden. LDCs should not be required to liberalise at such a rate as to cause an increase in the cost of imports that is not matched by increases in earnings from exports.
6.2. Food Security: That where an LDC views that its food security is threatened by commitments being negotiated among WTO members, it may appeal to a Food Security Panel established jointly with the FAO– for exemption, blockage of the measure, or compensation.
6.3. Patent Free Zones for TRIPs: That LDCs be exempt from the medical and food crop provisions of the TRIPs agreement.
6.4. That a system of trade credits be implemented whereby recognition is received by developing countries for the concessions which they enacted unilaterally either as part of their IMF conditionality for structural adjustment and HIPC, or otherwise.
6.5. Technology Transfer: That the Uruguay Round commitments by developed countries to assist developing countries in technology transfer be specified along with deadlines for their implementation..
6.6. The Generalised System of Preferences should be expanded to cover not only tariff preferences but also other areas of liberalisation such as non-tariff barriers.
6.7. Special mechanisms should be included in all future negotiations, including the In-built Agenda.

Rationale

There is widespread concern among civil society groups internationally that the proposed Millennium Round was being undertaken without an independent assessment of the impact of the Uruguay Round, and particularly its impact upon developing countries.

Guiding Principle

The impact of the provisions of the WTO should be regularly assessed and forecast. Such impact measures should include not only trade impact, but also their social, economic, political, cultural and environmental impacts. If found to be having a significant negative effect on the people of a developing country, provisions should be changed.

Recommendations:

7.1. Impact Assessment Body: That an Independent Impact Assessment Body (which sets its own agenda) monitor the impact of agreements upon LDCs. The Body would have a formal link with UNCTAD. That the Body will give special consideration to cases where an LDC has a high dependency upon a limited number of sectors. That the Body hear submissions by UN bodies, states and civil society actors. That its findings may

• Require provisions of the agreements to be rescinded
• direct the agenda of further rounds
• be admissible by LDCs in defence at the DSM

7.1. Advance Impact Assessment: That the Impact Assessment Body may on its own initiative, or at the request of an LDC, undertake a prior assessment of the anticipated impact of any WTO provisions upon LDCs. That during such assessment the measures under review not be binding. (There is need to have some filtering mechanism so only bona fide appeals go through this process).

7.1. Implementation of the Special Measures for LDCs should be monitored.