Forum calls for new WTO round

But much work remains, Bergsten tells IIE-KKC symposium


WASHINGTON — Despite the failure of last year’s World Trade Organization meeting in Seattle, panelists and participants at a recent symposium in Washington remain hopeful that a new round of multilateral trade talks will be launched before the end of next year.

Entitled “The WTO After Seattle,” the symposium was organized by the International Institute of Economics with the cooperation of Keizai Koho Center’s Washington Office. The symposium, held July 27, attracted several hundred scholars, diplomats and U.S. government officials, as well as Japanese businessmen and bureaucrats.

Coming hard on the heels of the Group of Eight Summit in Okinawa, IIE Director C. Fred Bergsten welcomed the G8’s call for the launch of a new WTO round before the end of this year, but cautioned that much work remains to be done.

“There is a desire to move to a new round, but not agreement,” Bergsten said in his opening remarks.

The symposium was also the occasion for the launch of a new book by IIE Senior Fellow Jeffrey Schott. Entitled “The WTO After Seattle,” the book, Schott said, was an analysis of why the Seattle meeting failed and a series of proposals as to how to get things moving again.

“The WTO ended the old millennium in disarray. It enters the new one with some uncertainties,” Schott said.

Although international media attention focused on the antiglobalization protesters who disrupted the meeting, Schott said they were not the reason the WTO conference failed.

“Ultimately, the WTO fell victim not to the protesters on the street, but to the differences in the hall. Developed countries were reluctant to address their own trade barriers, but demanded developing countries address theirs,” Schott said.

Schott proposed a series of broad initiatives for the rest of this year and early next year which, he said, could lay the foundation for a new WTO round.

First, he said the WTO’s dispute settlement procedures must be improved. In particular, compliance provisions need to be fixed to ensure countries that are in violation of their obligations bring those practices more quickly into conformity with WTO rules.

Second, a better system be created to manage the WTO’s decision-making process among its large membership.

Third is a recommendation to strengthen the WTO’s ties to other international organizations, particularly the World Bank and the International Monetary Fund.

Finally, Schott recommends that a report to the WTO Council be commissioned, and that a small group of distinguished statesmen and experts in international trade be appointed to offer initiatives to promote world trade and sustainable economic development, reform the WTO’s operations and strengthen public support in the trading system.

“Their recommendations could lead to the launching of a new trade round next year, possibly in Geneva in September 2001,” Schott said.

In his opening remarks before Schott, Yoshio Nakamura, managing director of the Japan Federation of Economic Organizations (Keidanren), spoke on Japan’s efforts to launch a new round.

Responding to an earlier comment by Bergsten that the failure of the Seattle meeting was a manifestation of the backlash against globalization, Nakamura said, “The key challenge will be to create international rules which ensure that globalization brings equal benefit and opportunity to all participants.”

Nakamura cited three lessons that could be learned from Seattle.

“The primary reason for the Seattle debacle was the failure to resolve the differences in developed nations’ views on agriculture, antidumping and other elements of the negotiation agenda,” Nakamura said. “Member nations cannot approach agenda-setting for the next round simply by insisting on their own interests and demanding compromise from other nations.

“The second reason that the Seattle Ministerial proved a failure is the lack of interest evidenced by developing countries in the next round,” he added. “Steps need to be taken to ensure that developing countries, too, receive their share of the fruits of liberalization.”

Finally, Nakamura called on the participants to make more of an effort to inform the public of the benefits of globalization, noting that Keidanren participated in NGO talks in Seattle.

Nakamura also called on the U.S. to review its antidumping policy. Rules on antidumping measures were one of the contentious issues at the Seattle meeting.

“It will be vital to strengthen antidumping disciplines,” he said. “Developing countries perceive that market-opening measures taken by developed countries are being undermined by the protectionist application of antidumping measures.

During a panel discussion that followed Nakamura’s remarks, Susan Esserman, deputy USTR, responded to criticism from Japan and the European Union by saying that Washington does not believe it is appropriate for the WTO to create rules on antidumping measures.

Much of the discussion at the symposium focused on the special needs of developing countries. Jayashree Watal, a former director of the Indian Ministry of Commerce and one of the panelists, asked some fundamental questions about the role of the WTO, even as she emphasized that developing countries need a new round of trade talks.

“What should the agenda for the new round be? Just agriculture and services? And we talk about putting a human face on negotiations — whose face should we put on? That of American workers?,” she asked.

However, Watal conceded that developing countries should be prepared to open their markets further.

“We need to create a new agenda, as the credibility of the WTO is under question,” Watal said.

Discussion between the panelists focused on several issues of controversy, including genetic foods and antidumping. Bergsten began the discussion by asking the panelists about the feasibility of starting a new WTO round when trade disputes, especially over agriculture, exist between the U.S. and the EU.

“Basically, we should treat the trade disputes between the EU and the U.S. as a separate issue. It should not affect the establishment of a new round,” answered Hugo Paeman, former EU ambassador to the U.S.

Paeman had begun his presentation by noting that there three pieces of good news to report.

“The first is that, despite what happened in Seattle, we have a functioning WTO. The authority of the WTO is accepted by governments and economists. International trade proceeds on the premise that such trade will be in accord with WTO regulations,” Paeman said.

“The second piece of good news is that it is functioning as a system to handle disputes, and deals with a variety of trade areas. The third thing is that, globally, international trade and investment continue to expand,” he said.

However, with all good news comes bad news, and Paeman identified three developments about which WTO supporters should be concerned.

The first begins with the fight between developed and developing countries over who should head the WTO.

“This was the main reason why Seattle failed,” he said.

The result of the Seattle meeting has been a backlash against globalization, and some multilateral organizations such as the International Monetary Fund.

“The WTO has been identified with the negative aspects of globalization, like the IMF. This is because the IMF went beyond its original mandate.

“At any rate, it is going to take a lot of effort to change the perception that the WTO is part of the solution, not the problem,” Paeman said.

Susan Esserman, deputy U.S. trade representative, also touched on Seattle in her presentation.

“What was clear in Seattle was that some people in the developed countries were dissatisfied and disappointed at the structure of the WTO,” she said.

Since then, Esserman said, the USTR has been working in four areas.

“First, we have pursued market opening talks in agriculture and services, discussions which began at the WTO in February.

“Next, we’re looking to expand the WTO by adding new members. Third, we are promoting full integration. Finally, we are pushing for institutional reforms,” she said.

The last point is particularly important with a U.S. congress that has heavily criticized the nature of the WTO.

“The U.S. has proposed practical reforms. The WTO needs to be more open and accountable to the public,” Esserman said.

Perhaps the most contentious issue among WTO members is antidumping. Mitsuo Matsushita, former WTO Appellate Panel member and a professor emeritus of the University of Tokyo, said that one of the first steps to reaching agreement is to determine whether or not antidumping agreements are working.

“Are the current antidumping agreements effective? The number of cases brought before the WTO so far are too small to say, as only two or three antidumping disputes have reached the WTO. The negotiators have to indicate where, exactly, the problems are, and point out the shortcomings of the current agreements before changes can be made,” Matsushita said.

Esserman, however, disagreed.

“The position of the American government is that negotiations about revising the antidumping agreement are not necessary. The antidumping agreement was greatly revised during the (GATT) Uruguay Round, and it would be inappropriate to negotiate further,” she said.

“We in the EU thought that this problem should be on the agenda for discussion. If you are discussing global standards, and start eliminating topics, then discussions get reduced too much to be effective,” said Paeman.