South Asia Watch on Trade, Economics & Environment (SAWTEE)

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Future of Singapore issues
Published: The Kathmandu Post, 28 May 2004
By: Ratnakar Adhikari

When the fifth Ministerial Conference of the World Trade Organisation (WTO) collapsed in September at Cancun, everyone wanted to know more about Singapore Issues. Such tendency was natural given the assertions that these issues were the main culprits for the Cancun fiasco. Now there is little interest, if any, among the various stakeholders to keep track of what is happening at the WTO and the dynamics that have been emerging over the past eight months on these issues. However, one has to take cognisance of the fact that Singapore Issues will make or break the future round of trade negotiations at the WTO. Therefore, it is dangerous to brush them aside.

Ever since the period of General Agreement on Tariffs and Trade (GATT) – the predecessor of the WTO – the developed countries wanted to include issues like investment and government procurement within the multilateral trading system. During the Uruguay Round of multilateral trade negotiations (1986-1993), they managed to include a minimalist text on investment through the Agreement Trade Related Investment Measures (TRIMS). They also managed to include Government Procurement Agreement (GPA) as a plurilateral agreement, to which most developing countries have no commitment.

Once the WTO came into being in 1995, the developed countries intensified their efforts to include the issues of competition policy as well as trade facilitation within the WTO. During the first Ministerial Conference of the WTO held in Singapore in December 1996, they managed to include all the four contentious issues – investment, competition policy, transparency in government procurement and trade facilitation in the WTO proscenium. From that date, these issues are collectively known as Singapore Issues.

The mandate provided by the trade ministers during the Singapore Ministerial Conference was merely to study the relationship of these issues with the WTO. However, the study process went too far – with the developed countries insisting that these issues should be negotiated as a package in the WTO.

In the run up to the fourth Ministerial Conference of the WTO, which was held in Doha in November 2001, the principle demandeurs, notably the European Union (EU), Japan and Korea hardened their positions on these issues. They wanted these four issues to be included in the WTO's negotiating agenda during the Ministerial.

Finally, through intense lobbying, arm-twisting, cajoling and coercive practices, EU-Japan-Korea and Co. managed to incorporate some of the most controversial texts in the Doha Declaration. As per these texts, negotiations on these issues should have taken place after the fifth Ministerial Conference of the WTO, provided there was an 'explicit consensus' on 'modalities of negotiations'. The Doha Declaration, known as Doha Development Agenda (DDA), also promised some benefits to the developing countries. It is a different issue that they never got materialised.

Since a group of countries, which incidentally represent a majority in WTO membership, comprising Africa, Caribbean and Pacific (ACP) countries, least developed countries (LDCs) and African Unity (AU) countries, opposed the inclusion of Singapore Issues for negotiation throughout the Cancun Ministerial Conference, the Conference collapsed.

Even during the Ministerial Conference, when this issue was being discussed in a 'green room' (an informal forum where countries having substantial interests on negotiations on a particular subject participate), different dynamics occurred. Reacting to the proposal of the above mentioned group, EU commissioner, Pascal Lamy had mentioned that he would be willing to drop two issues – investment and competition – from the WTO remit altogether and take up only two other issues – trade facilitation and transparency in government procurement – for negotiations.

However, Japan and Korea insisted that they wanted the negotiations to be conducted on all four issues. But the group mentioned above was not prepared to discuss any Singapore Issues unless and until their genuine concerns on implementation, special and differential treatment and cotton subsidies were addressed. The Chairperson of the meeting did not see any possibility of breaking the logjam and hence declared the collapse of the Cancun Ministerial.

In the immediate aftermath of the Cancun Ministerial, the EU was mentioning that the commitments to drop two issues – competition and investment – made during the green room discussion were not binding on them. However, of late, the EU slightly softened its stance and apparently with the objective of reviving the stalled Doha Round, mentioned that it would show the flexibility and would only insist on negotiating trade facilitation. It also mentioned that other three issues shall be negotiated as plurilateral agreements – thus absolving the developing countries of the responsibility to make any commitment in these areas.

On the face of it, the proposal does not look bad because the developing countries have the option not to join these agreements. This means that these plurilateral agreements could be signed only by the developed countries. This also means that the standards of these agreements would be fairly high. At a later date, it is inevitable that the developed countries would like to bring these agreements within the multilateral framework, or because of the political economy factors at the time, the developing countries might also be interested to join them. When the developing countries would like to join them, they would be asked to accede to them, like in the case of WTO accession, under the terms and conditions imposed on them by the original signatories to these agreements. As the WTO accession experience of many developing and least developed countries has shown, acceding to these agreements could be a fatal blow to them.

Given this scenario, developing countries should play their cards well. The choice appears to be between devil (these agreements being signed as multilateral agreements) and deep sea (these agreements being signed as plurilateral agreements). They would be left with choosing one of the two – both of which are detrimental to their interests.

Having been caught into such a Catch 22 situation, what should the developing countries do? Rather than agreeing to any of the above proposals, they should propose to have minimalist agreements on less controversial areas such as trade facilitation and transparency in government procurement within the multilateral framework in return for the developed countries (particularly the EU) agreeing: a) to drop both competition and investment issues once and for all; b) not to make use of these agreements as tools for ratcheting market access; c) to commit technical assistance to help implement the commitments; and d) to sincerely negotiate other outstanding issues mandated by the DDA.

The recently adopted 'Dakar Declaration' at the LDC trade ministers' meeting (4-5 May 2004) roughly reflects these suggestions. It also proposes that LDCs be exempted from dispute settlement actions, which non-fulfillment of obligations will inevitability invite. Nepal as an LDC would do well to pursue these issues on the same line.

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