Welcome to Seattle: Ministerial Meeting Debates the World Trade Organization's Agenda for the 21st Century

by Robert Weissman

Mike Moore, the new director-general of the World Trade Organization (WTO), feels besieged and defensive. With the WTO's Third Ministerial Conference set for Seattle from November 29 to December 3, he is witnessing highly contentious negotiations among the WTO members over the Seattle agenda -- a conflict which threatens to throw a wrench in plans to launch a Seattle Round (also called a Millennium Round) of negotiations to expand the WTO's power and authority. And he is fearful of the large-scale protests expected in Seattle, and their potential to shape public and media conceptions of the trade debate.

"I make no apologies for what we seek to achieve with our multilateral trading system -- all I want to do is better," he told the National Conference on the Millennium Round in Italy in November. "One hundred thousand people may be demonstrating against us at Seattle. But remember too, that 1.5 billion people and more than 30 countries want to join the WTO." (The inflated population figure includes China, which reached agreement with the United States on terms for joining the world trade agency after Moore's speech.)

A more studied politician than Mike Moore, Bill Clinton, has dealt with the protest expectations more deftly. "I don't think it is such a bad thing that all these people are coming to Seattle to demonstrate," Clinton said in October. "I'm sympathetic with all of these negative feelings. But one of the things that spawns these kind of negative feelings is, these folks feel like they've been shut out. They think the WTO is some rich guys' club where people get in and talk in funny language, and use words nobody understands, and make a bunch of rules that help the people that already have and stick it to the people that have not." He added, "If we're going to change their perception, we've got to listen to their protests, and bring them into the tent, and go forward taking these concerns into account."

Protesters will clog the streets in Seattle, but it remains to be seen if their chants can effectively drown out the voices of trade negotiators feverishly working to come to terms on a Ministerial Declaration that could form the basis for a new round of WTO negotiations.

For while the protesters voice their demand for "No new round -- turnaround," government officials from the WTO's 134 members will be trying to cut deals over a complicated series of trade issues. As the Seattle meeting approaches, there are more than the usual number of rifts among countries, and the entire exercise could conceivably fail. On the other hand, complex negotiations over trade issues often appear on the verge of collapse before a final agreement is sealed. And powerful corporate interests are eager to see the talks proceed.

What follows below is a brief guide to some of the core issues on the bargaining table at Seattle, along with divisions among the three major groupings in the pre-negotiation phase: the United States, the European Union and the Third World. At stake is what kinds of new agreements, or revisions to existing agreements will be placed on the agenda of the Seattle Round. Adoption of proposals in these areas would place them under the control of the powerful WTO dispute settlement process -- an enforcement mechanism that relies on adjudication of disputes through the WTO's secretive tribunals and levies costly sanctions against countries that refuse to comply with tribunal rulings.

Framework of Debate

In general, the United States and Europe agree on the importance of driving the WTO process forward by expanding the scope of existing agreements or adding new areas to the WTO's competence. But beneath this very general level of accord are sharp differences over how the WTO should expand, and how bold the agenda for the Seattle Round should be. The U.S. position is that Seattle Round negotiations should be delimited to no more than three years, and therefore should be limited to a list of U.S. priorities. The European Union wants a broader negotiating agenda -- a comprehensive round -- and is seeking agreements in the new areas of investments and competition.

As intense as their differences are, however, the United States and Europe are essentially operating out of the same framework, with the possible exception of disagreements over agriculture. Both parties want to deepen the process of globalization, and keep the WTO on its present course while expanding its powers and authorities.

Many Third World countries have taken a different perspective. The Third World is not completely united, but is functioning with a much higher degree of coordination than in the last round of global trade negotiations, the Uruguay Round that gave birth to the WTO. Third World countries, frequently led by a "Like-Minded Group" of Pakistan, Cuba, the Dominican Republic, Egypt, Honduras, India, Indonesia and Malaysia, plus El Salvador, Honduras, Nigeria, Sri Lanka and Uganda, and at other times led by groups of Latin American or African nations, are demanding that the process of applying WTO obligations to poor countries be slowed or frozen, are seeking greater access to industrialized country markets and oppose the expansion of WTO authority into new areas, at least as regards their economies.

When the chair of the WTO General Council released a draft version of the Ministerial Declaration which will set the agenda for the Seattle Round, Third World countries vociferously denounced the document, which was rumored to have been rewritten by U.S. negotiators. Their protests led to an addendum which included many Third World demands -- leaving highly uncertain how the overall negotiations would evolve.

Agriculture

The WTO agriculture agreement is up for an automatic renegotiation. The U.S. goal, Deputy U.S. Trade Representative Susan Esserman told a House of Representatives committee, is "ensuring the broadest possible supplies of food at market prices." In other words, the United States is seeking to continue its drive on behalf of the giant food-trading companies for an unregulated global agricultural market, devoid of price supports and limitations on imports. Key elements of the U.S. agenda, shared by other agricultural exporters, are:

• Eliminating all export subsidies for agriculture;
• Substantially reducing all domestic agricultural subsidies;
• Slashing tariffs on agricultural goods; and
• Imposing stronger "disciplines" on state-owned food-trading enterprises.

The European Union, which has both maintained policies more supportive of family farmers -- meaning it provides much larger subsidies to small farmers -- and heavily subsidizes agricultural exports, resists the U.S. thrust. It emphasizes the importance of maintaining existing rules in the agricultural agreement, and echoes some Third World positions on food security.

The Third World position is to demand that meaning be given to the concept of "special and differential treatment" of developing countries in agricultural trade.

"Developing countries with predominantly rural agrarian economies shall have sufficient flexibility," asserted an October "communication" (the means of formally issuing a position in WTO negotiations) from India on behalf of the Like-Minded Group, "to adequately address their non-trade concerns, such as food security and rural employment." Specific demands include a right for developing countries to maintain internal price supports and higher tariffs than richer nations.

The Third World countries are very unhappy with a perceived refusal by the rich countries to open their markets to Third World agricultural goods, and at ongoing export subsidies that lead to "dumping" of food products in the Third World. Low-priced dumping displaces local farmers who cannot compete with the subsidized goods (and who may not even be able to compete with unsubsidized imports).

Services

The services agreement is another which is up for mandatory review due to a "built-in agenda." For the United States, with its more targeted agenda, aggressively expanding the scope of the services agreement and increasing the number of countries that agree to its terms are top priorities. With the United States a global leader in service provisions, the U.S. government and industry associations such as the Coalition of Service Industries are eager to bring as many different kinds of services into the agreement as possible.

The breadth of U.S. service aspirations are impressive. In testimony given repeatedly in Congress, USTR officials have said they hope to include: telecommunications and finance, plus distribution, audiovisual, construction, travel and tourism, the professions, education and training, health, express delivery, energy and environmental services.

Each sector raises special issues, and the United States is willing to accept unequal rates of liberalization in these different areas -- as long as some liberalization occurs in all of them. Liberalization generally means lower or no tariffs. It may also effectively mean a right of investment for services that require some kind of physical presence for delivery; for example, Federal Express may seek the right to operate distribution centers and trucks in countries around the world. And liberalization may involve non-tariff matters, such as credentialing rules for medical, legal and other professionals.

The Third World is fearful of industrialized country corporations overriding their fragile service sectors.

To these concerns, the United States offered the following reassuring words in a negotiating statement: "The primary means of accomplishing these objectives [strengthening domestic services capacity, efficiency and competitiveness] is to ensure that consumers in developing countries -- service suppliers, manufacturers and farmers, as well as individuals -- have access to affordable, high-quality innovative services that meet their needs and budgets." That is, developing countries should address their concerns about foreign companies trouncing domestic firms by opening up their market to foreign companies.

Because trade in services is fundamentally different in many ways from trade in goods, it poses unexpected quandaries, and raises issues associated with investment agreements (again, because of the need for in-country investments in order to deliver some services).

Education International, an affiliate of the international labor confederation Public Services International, has highlighted a series of concerns about free trade in "education services." A top concern is that, if a country permits both public and private schooling, that "subsidies" for public schools -- that is, taxpayer support for free schools -- may be conceived as discriminating against foreign educational service providers. Even if such an extreme scenario does not play out, Education International sees the services agreement as a force for privatization of schools.

And, as the organization explains in a report, "The WTO and the Millennium Round: What is at Stake for Public Education?" there may be sound reasons for discriminating against foreign, private educational companies. Opening markets could lead to "increased dependence on foreign educational resources, acculturation -- in many countries -- caused by the use of a foreign language for teaching, a tendency for the standardization of education and, lastly, a certain curtailment of sovereignty."

Investment and Competition

This agenda is a slimmed down version of the controversial Multilateral Agreement on Investment (MAI). The MAI, which had been negotiated in the Organization of Economic Cooperation and Development (OECD, made up of the world's rich countries), had a more ambitious agenda, and would have covered "portfolio investment" (investments in stock and other financial instruments) as well as direct investment. The MAI effort collapsed earlier this year amid disagreements among negotiating countries and a massive outpouring of citizen opposition.

Many nongovernmental organizations (NGOs) and Third World governments strongly oppose the EU's investment proposal both in its own right and also out of a belief that over time an investment agreement will evolve into something resembling the more comprehensive and powerful MAI proposals. One critical element of the MAI would have been that, following a provision of NAFTA, it would have given investors the right to sue governments for money damages due to violation of its terms. Under WTO rules, only countries can sue other countries for violating the terms of the WTO agreements.

The United States, which had strongly backed the MAI, generally opposes broadening the Seattle negotiating issues to include investments.

On the competition issue, the European Union is seeking a deal that would establish global norms for what is called antitrust policy in the United States. For what appears to be a mix of concern about making the agenda too broad and possibly weakening U.S. antitrust rules, the United States opposes entering negotiations on a competition deal. Third World countries are suspicious that an agreement will end up focusing not on international cartels and corporate monopolies, but on their right to maintain state monopolies or subsidies and preferential treatment for state enterprises.

Biotechnology

One of the most controversial of the cross-cutting issues in the negotiations over a Seattle Round is biotechnology. The United States is aggressively seeking to ensure that as few restrictions as possible are placed on the sale of biotechnology products, and also that no limitations are placed on the operations of biotechnology firms. The EU and the Third World both deeply oppose these efforts.

For U.S. negotiators, it is an article of faith that biotechnology applied to foods has been proven safe. European skepticism over the position -- embodied in a moratorium on agricultural biotech foods and mandatory labeling of biotech foods as genetically engineered -- is dismissed with a scoff. "Curiously, most of this clamor [over the hazards of biotech] seems to be coming from our friends in Europe," Under Secretary for International Trade at the U.S. Department of Commerce David Aaron told a Senate subcommittee, "It is ironic, because Europe has historically been the hot-house of scientific advancement and rational thought."

The Europeans take quite a different view on matters, and do not appear ready to back down in the face of U.S. pressure. European experience with Mad Cow disease, dioxin contamination of poultry and other food disasters has created a powerful consumer constituency for safe food measures. Japan too has supported biotech labeling proposals.

Meanwhile, the Third World is challenging the U.S. biotech agenda from a different angle. Third World countries have focused on the intellectual property agreement (TRIPS, Trade-Related Aspects of Intellectual Property Rights) and biotech issues.

They complain first about "biopiracy" -- the appropriation of indigenous technologies and seeds by foreign multinationals, which then patent them directly or modify them slightly before patenting them -- and demand reforms to TRIPS to end biopiracy. "The entire modern evolution of intellectual property has been framed by principles and systems which have tended to leave aside a large sector of human creativity, namely the traditional knowledge possessed by local and indigenous communities," explains a communication from Bolivia, Columbia, Ecuador, Nicaragua and Peru. They call for "international recognition of traditional knowledge as protectable subject matter," so as to give indigenous groups the power to obtain "enforcement of their rights outside their own countries" and to reduce the "misappropriation and unauthorized exploitation of such knowledge and [to] diminish the risk of erosion or destruction of these intangible goods and of the cultures that generated them."

A related, aggressive African proposal calls for a rollback of patents on life forms.

Third World countries have also focused on conflicts between the global biodiversity treaty and TRIPS. "It is widely agreed that the TRIPS Agreement is incompatible with the Convention on Biodiversity," asserted India on behalf of the Like-Minded Group in its October communication. An overriding concern is that multinational seed corporations will use their patented biotech products to prevent seed saving and local innovation, and to push towards homogenized food crops. The developing countries call for non-enforcement of TRIPS provisions that would undermine biodiversity, as well as a general TRIPS review.

Other U.S. Concerns

In addition to its primary concern to expand and deepen the agricultural and services agreements, the United States has several other priority goals:

• As part of a services agreement or elsewhere, the United States wants to maintain a deregulated global regime for e-commerce. It has made a priority of maintaining zero tariffs on e-commerce, and also opposes regulations -- including privacy regulations supported by the EU -- that might in any way impede the growth of e-commerce.
• The United States wants to see a general acceleration of tariff reduction for industrial products, and has enraged environmentalists by calling for accelerated tariff reduction for forest products.
• The United States is pushing for immediate adoption of a "transparency" agreement on government procurement, which would not force governments to open their procurement process to foreign contractors but would require open disclosure of specifications, bidding processes, etc. Many Third World nations oppose such a move as the first step toward removing their ability to favor domestic contractors in the procurement process.

Other Third World agenda items

In addition to fending off efforts by the rich countries to expand the WTO's powers, the Third World has put forward its own positive agenda, much of which involves restricting the application of WTO agreements. In addition to its positions on biotech and agriculture, the Third World is seeking:

• The widespread application of "special and differential" treatment to developing countries, so that WTO rules are not rigidly applied to them.
• More rapid tariff cuts by rich countries, especially for agriculture and textiles.
• Reforms to anti-dumping rules, which rich countries have used against developing nations for purportedly exporting products at below-market cost.
• The exclusion of essential drugs from the intellectual property rules of the TRIPS agreement.

Seattle surprise

The period immediately prior to the Seattle Ministerial is swirling with intrigue and suspense. Although the United States has historically won most battles at the WTO and similar international fora, it is not certain that the U.S. position will prevail at Seattle, or in what partial ways it may ultimately concede to competing factions. Vitriol at the pre-negotiations in Geneva is running high, especially on the part of the Third World nations who are resisting industrialized country demands.

And there remains the great unanswered question of how hordes of demonstrators on Seattle streets -- with their demands to limit the WTO's power, review its performance and repair its flaws -- may affect the negotiators in conference hall suites.