AFTER THE "BATTLE OF SEATTLE"
Developing Countries Press for WTO Reforms

The World Trade Organisation's Ministerial Conference in Seattle was a turning point in the organisation's history. For the first time, developing countries stopped the major industrial powers from "stacking the deck" of trade negotiations in favour of their own interests. This update examines the origins of the World Trade Organisation and the Seattle conference's implications for development, global trade policy and institutional reform.

History of the WTO and GATT

The General Agreement on Tariffs and Trade (GATT) was the primary instrument regulating international trade after 1948. The agreement was designed to discourage the protectionist trade restrictions thought to have contributed to the global economic crisis that set the stage for the Second World War. It aimed to stimulate trade between participating nations by lowering tariffs (taxes on imported goods), thereby discouraging discrimination between domestically-produced and imported goods. Parties to the agreement (initially 23 countries) were required to grant "Most Favoured Nation" status to other signatories, ensuring that trade among signatories would be subject to fewer restrictions than trade with non-signatories.

Many aspects of the agreement were subsequently rewritten during a series of negotiating "rounds". The last set of talks--the "Uruguay Round"--began in Uruguay in 1986 and concluded with the signing of the Marrakesh Accord in 1994. This established the World Trade Organisation (WTO) as a successor to GATT structures with effect from 1 January 1995. It also further revised the original GATT accord and made this part of the rules for WTO members.

In theory, decisions of the WTO are by a consensus of the entire membership--currently 135 nations. Where a consensus cannot be achieved, most decisions can be made by a majority vote, with each member having one vote. The highest decision-making body is the Ministerial Conference, which meets every two years. This consists of the trade ministers of all member countries. A General Council, composed of ambassadors or heads of trade, oversees the implementation of agreements and meets as the Dispute Mechanism Committee to arbitrate disputes between nations.

The most recent Ministerial Conference was held in Seattle, USA, from 30 November to 3 December 1999. That meeting exposed many of the failings of the WTO structure and underscored the need for reforms.

Before Seattle

In the run-up to the Seattle conference, even the agenda was hotly contested. The United States (USA), the European Union (EU) and other industrialised powers proposed a new round of negotiations to consider trade issues that have emerged over the last three years with increased globalization, the spread of information technology and growing use of genetical engineering in food production. These included policies on government procurement, competition, genetically-modified organisms, and electronic commerce. Meanwhile, most developing countries called for a review and assessment of the Marrakesh Accord. They argued for a thorough assessment of the multilateral trading system's impact on economic and social development in poor countries. Civil society organisations also joined the fray, criticising the lack of transparency and democracy within the WTO and raising concerns about the impact of trade on the environment and jobs.

At Seattle

The Ministerial Conference in Seattle, Washington started with demonstrations and ended with demonstrations. The Conference failed to reach agreement on an agenda, a new round of negotiations, a final declaration, or even a joint statement of thanks to the host nation. Three key factors contributed to this outcome: civil society protests, the objections of developing countries to the non-transparent nature of the meeting and the impasse between the USA and the EU.

Civil Society Protests: Thousands of protesters from around the world went to Seattle to demand an end to trade policies that favour the interests of transnational corporations over those of developing countries, the poor, the environment, workers and consumers. Their message was loud and clear: "No New Round, Turn Around". The opening ceremony of the conference was cancelled when demonstrators prevented delegates from entering the convention centre. The largely peaceful protests brought together activists from many sectors--the labour movement, environmentalists, human rights groups, churches, peasant and farmers' organisations, development workers, and regional advocacy campaigns. Demonstrators highlighted how "free" trade policies frequently promote the exploitation of workers and resources in the developing world while stripping industrialised nations of jobs.

Undemocratic Tactics: The tactics of the industrial powers also frustrated progress. In an effort to orchestrate the outcome of the conference, the major developed countries held informal "green room" meetings. Through these sub-caucuses, they sought to resolve their disputes privately and agree on a joint agenda for the next round of talks. They then hoped to bully the conference into incorporating their agenda into the final declaration. A few influential developing countries were invited to take part in these discussions as their support was considered pivotal to the strategy's success. But the vast majority of nations were excluded from these backroom debates.

These secretive and undemocratic methods prompted the African Ministers to draft a statement in which they declared that they would not "be able to join the consensus required to meet the objectives of this Ministerial Conference". The Carribean Community Ministers and some Latin American Ministers issued similar statements threatening to withhold their votes. In light of these statements and the general level of dissatisfaction with the WTO process, US Trade Representative Charlene Barshefsky and WTO Director-General Mike Moore decided not to propose a declaration on the last day of the conference. They feared developing countries would reject the declaration, further discrediting the WTO and exposing the manipulative tactics of its most enthusiastic supporters.

Disagreement between EU and USA: The conference's collapse can also be attributed in large part to unresolved disagreements between the EU and the USA. The EU and the USA tried to form a pact in which the EU would agree to significantly reduce their agricultural subsidies in exchange for an agreement from the USA to negotiate on new issues like investment and competition policies. The EU environmental ministers also objected to an agreement between the European Commission and the USA to form a working group on biotechnology without the consent of the ministers.

Beyond Seattle

In many respects, the failure of the Seattle Ministerial Conference was a victory for developing countries. They managed to prevent the industrial powers from making their issues, rather than those of the developing world, the priorities of the WTO agenda for the foreseeable future. The question is: Will Seattle be more than a temporary obstacle to rich nations as they seek to entrench a legal framework for global trade that protects their interests? Or will developing countries be able to take advantage of the impasse to ensure that their concerns are given serious and fair consideration?

Already the industrial powers have shown that they intend to reassert firm control over trade negotiations. At the close of the Conference, both Barshefsky and her EU counterpart, Pascal Lamy, announced that the responsibility for steering the post-meeting negotiating process would be delegated to the WTO Director General, rather than to the more representative General Council. In March, Moore told EU Trade Ministers that he would like to see a new round of talks before the US presidential election in November. It remains to be seen if developing countries will permit this.

The Southern and Eastern African Trade Information and Negotiations Initiative (SEATINI) convened a workshop for trade policy officials, non-governmental organisations representatives, and businesspeople from twenty countries at the end of March to identify steps that countries in the region could take to prepare for future negotiations. These included:

• Facilitate consultation between governments, the private sector and civil society;
• Develop alternative trade policies that address the interests of developing countries;
• Analyse the implications of the new issues being raised by the industrial powers;
• Identify amendments to the WTO agreements that would strengthen their capacity to stimulate trade and development in developing countries;
• Assess the impact of import liberalisation on developing countries and prepare policy recommendations in light of this analysis; and
• Continue to identify market access opportunities and obstacles to the use of these opportunities, and implement strategies relating to productive capacities and supply side constraints that will enable them to take advantage of these opportunities.

Participants also agreed to call for far-reaching institutional reforms at the WTO, including:

• re-examining the "single undertaking" concept requiring WTO member states to implement all components of the Uruguay Round agreements;
• addressing structural imbalances and deficiencies in the WTO system and agreements;
• reviewing the appropriateness of the scope of the WTO's mandate;
• rationalising working procedures and meeting schedules to ensure that stake holders in each country have sufficient time to consider proposals before they are discussed in WTO bodies;
• ensuring full transparency and opportunity for full participation by all developing countries at all stages of negotiations; and
• requiring equitable geographical representation in the WTO Secretariat.

Rev. Malcolm Damon, Co-ordinator of the SACC Public Policy Liaison Office, attended the WTO Ministerial Conference in Seattle as a representative of the Economic Justice Network of the Fellowship of Christian Councils in Southern Africa (FOCCISA).