CHAPTER 17 THE SEATTLE MINISTERIAL CONFERENCE

The third WTO Ministerial Conference was held last year from November 30 to December 3 in Seattle, United States. The focus of the Conference was to be a decision on launching of the so-called “New Rounds,” which would be the next round of negotiations to follow the Uruguay Round, and corresponding decision on the scope and modalities of the new round.

Article IV:1 of the Marrakesh Agreement Establishing the World Trade Organization (hereinafter, “WTO Agreement”) stipulates that “there shall be a Ministerial Conference composed of representatives of all the Members, which shall meet at least once every two years.” The first Ministerial Conference was held in Singapore in December 1996; the second, in Geneva, Switzerland in May 1998. The 1999 Conference was the third one.

The four-day meeting did not reach a conclusion. At the same time, the launching of the new round was frozen and the Ministerial Declaration was not issued. It was decided that the discussion was suspended and will resume. This chapter contains an outline of the major developments regarding the new round of negotiations since the conclusion of the Uruguay Round, and brief comments on the preparation process for the Ministerial Conference and the discussions in Seattle.

1. Developments since the Conclusion on the Uruguay Round

(1) First Ministerial Conference in Singapore (December 9-13, 1996)

This was the first Ministerial Conference following the conclusion of the Uruguay Round in Marrakesh on April 15, 1994 and the transition from the GATT to the WTO in January 1995. The Ministerial Conference decided: 1) to undertake a comprehensive study of the implementation of the WTO Agreements, and 2) to establish working groups to study new areas such as trade and investment, trade and competition, and transparency of government procurement. The members agreed that the working groups should report back to the General Council in two years, and to begin study and analysis related to trade facilitation.

Concerning the sectoral liberalization, the Conference reached a basic agreement on elimination of tariffs in the area of information technology, and decided to continue negotiations on the service sectors for which negotiations had not been completed during the Uruguay Round (basic telecommunication services, financial services.) (The Conference also decided to discuss maritime transportation in the next round of service negotiation.)

(2) Second Ministerial Conference in Geneva (May 18-20, 1998)

This Ministerial Conference was held in conjunction with events commemorating the fiftieth anniversary of the GATT. The agenda had two main items: 1) implementation of the Agreement during the Uruguay Round, and 2) the future work program. The Ministerial Declaration adopted calls for starting the preparatory process for a decision on a work program for the next round of negotiations during the third Ministerial Conference. Paragraph 9 of the Ministerial Declaration contains specific items to be included in the work program:

345 (a) recommendations concerning: (i) the issues, including those brought forward by Members, relating to implementation of existing agreements and decisions; (ii) the negotiations already mandated at Marrakesh, to ensure that such negotiations begin on schedule; (iii) future work already provided for under other existing agreements and decisions take at Marrakesh; (b) recommendations concerning other possible future work on the basis of the work programme initiated at Singapore; (c) recommendations on the follow-up to the High-Level Meeting of Least-Developed Countries; and (d) recommendations arising from consideration of other matters proposed and agreed to by Members concerning their multilateral trade relations.

More specifically, item (a)(i) refers specifically to issues that were included in the WTO Agreements and also were subsequently agreed on in the WTO, asking whether these have been faithfully implemented and, if not, what can be done about it. Item (a)(ii) covers areas like agriculture negotiations and services negotiations that respective WTO agreements designate for future negotiations. Item (a)(iii) refers to work that has already been stipulated in the WTO Agreement, for example, the review of the TRIPS Agreement. Item (b) looks at the areas that were decided on during the Singapore Ministerial Conference: trade and investment, trade and competition, and trade liberalization. Item (c) is a response to the High- Level Meeting on Least-Developed Countries held in October 1997 and asks how developmental aid will be implemented.

The Geneva Ministerial Conference also adopted a Declaration on Global Electronic Commerce, which called for a standstill on not imposing customs duties on electronic transmission and initiated discussions in the WTO.

2. Preparation Process for the Third Ministerial Conference

In September 1998, Members began the preparation process for the Seattle Ministerial Conference in Geneva.

(1) Phase 1 (Starting September 1998: Confirmation of the Issues)

At the end of September 1998, a Special Session of the General Council was held as called for in the Geneva Ministerial Declaration. The Council decided to confirm the issues listed in Paragraph 9 of the Ministerial Declaration, by February 1999.

Informal Sessions of the General Council were held at a pace of about once a month beginning October to discuss respective topics. These were summarized at the Special Session of the General Council in February 1999.

(2) Phase 2 (Starting March 1999: Proposal Process)

During Phase 2, individual items in Paragraph 9 of the Geneva Ministerial Declaration were discussed based on specific proposals submitted by Members. The deadline for submitting proposals was the end of July. Proposals began to come in from Members at the end of March, and each proposal was discussed. However, this process coincided with the

346 selection of the next Director-General and so the process tended to move more slowly than was initially anticipated. During June and July, specific proposals were received from the EU on such key topics as agriculture, services, industrial tariffs, investment, and competition.

Between June and August, Japan submitted proposals for thirteen areas: regional integration, agriculture, forestry and fishing products, investment, anti-dumping, TBT (standards and certification), TRIPS (intellectual property rights), industrial tariffs, services, electronic commerce, trade facilitation, organization and management of work plans, and competition. During Phase 3, Japan submitted proposals on GMO (biotechnology), implementation.

Phase 2 was initially scheduled to conclude at the end of July, but proposals continued to come in from many Members. By the time this phase was finally concluded at the end of November, a total of approximately 260 proposals had been received (counting joint proposals by multiple Members and amendments/additions to proposals as one proposal.) (See Attachment 17-1: “Proposals Submitted by Major Members.”)

(3) Phase 3 (Starting September 1999: Drafting of the Ministerial Declaration)

General Outline (September 8)

The outline contained only a list of the elements to be included in the Ministerial Declaration.

General Council Chairman’s Text (Draft Ministerial Declaration) (October 7)

This draft emphasized the importance of market access in agriculture and services, however, failed to include balanced language on rule issues. This led to criticism from some countries that it was somewhat one-sided towards the arguments of the United States and the Cairns Group, and failed to provide a balanced presentation of the discussions among the Members to that point.

Revised Draft (October 19)

The Chairman revised the text to reflect a large number of comments by Members. However, the Chairman did not make great effort to adjust conflicting proposals, opting instead to present both sides of the argument. This resulted in substantial increase in the text for each area, and an overall draft in excess of thirty pages.

Discussions continued in Geneva based on this draft, and some adjustments were made in the text. But Members were unable to reach any conclusions at the official level, so the discussion, still lacking focus, was deferred to the Seattle Ministerial Conference.

Japan, the EU, and many other countries, which advocated “comprehensive negotiations”, formulated a text that would accelerate the adjustments of the preparatory process prior to the Ministerial Conference. This text was notable for its attempt to reflect the original Chairman’s draft and subsequent discussions in Geneva, while also reducing the volume (to eighteen pages) by omitting minor differences of opinion, avoiding mere presentation of both sides of arguments, and eliminating brackets wherever possible. Work on the text began at the end of October and was completed during the Seattle Ministerial

347 Conference, with the document submitted to WTO Director-General Mike Moore and Conference Chairman Charlene Barshefsky.

3. Results from the Seattle Ministerial Conference

The Ministerial Conference included plenary sessions and the Committee of the Whole, as well as four working groups on special topics (Agriculture, Market Access, Singapore Agenda and Other Issues, and Implementation and Rules) and a Group on Systemic Issues. Discussions proceeded in parallel. Working groups were run by chairman as listed below, and for particularly difficult issues, intensive discussions were chaired by Chairman Barshefsky (the so-called “Green Room” sessions).

Ministerial Working Groups and Chairmen

Agriculture: Chair: Minister George Yeo (Singapore) Market Access: Chair: Minister Mopho Malie (Lesotho) Implementation and Rules: Chair: Minister Pierre Pettigrew (Canada) Co-Chair: Minister Anthony Hylton (Jamaica) Singapore Agenda and Chair: Minister Lockwood Smith (New Zealand) Other Issues: Systemic Issues: Chair: Minister Juan Gabriel Valdes (Chile) Co-Chair: Minister Anup Kumar (Fiji)

In the end, the Conference was unable to launch the new round of negotiations, nor was a Ministerial Declaration adopted. During the Plenary Session, Chairman Barshefsky summarized the meeting as follows:

- The issues before us are diverse, complex, and often novel. - We needed a process which had a greater degree of internal transparency and inclusion to accommodate a larger and more diverse membership. - It would be best to take a time out, consult with one another, and find creative means to finish the job. - Ministers have agreed to suspend the work of the Ministerial. - The Director-General can consult with delegations and discuss creative ways in which we might bridge the remaining areas in which consensus does not yet exist, develop an improved process which is both efficient and fully inclusive, and prepare the way for successful conclusion. - We understand that negotiations on agriculture and services will begin on schedule in 2000.

No decision was made on the time or location of the next Ministerial Conference. Many points of contention remain for individual areas. These differences are summarized below.

Framework for Negotiation

Japan, the EU, and many other countries support the “comprehensive negotiations” framework (the inclusion of industrial tariffs, investment, anti-dumping, and a wide range of other areas of interest to Members in addition to the built-in agenda items of agriculture and services) because all Members participating in negotiations should share the benefits and burden’s. However, the United States places more emphasis on the build-in agenda

348 (agriculture and services) and labour, while India and some other developing countries are steadfastly opposed to the launching of a new round. It was therefore impossible to form a consensus on comprehensive negotiations. (See Attachment 17-2: “Areas to be Negotiated.”)

Agriculture

The Ministerial Working Group produced a chairman’s text, but it was not adopted because of the difference between the United States, the Cairns Group, and the EU about the elimination of export subsidies, and the substantial reduction of domestic supports.

Labour

Developing countries were strongly opposed to the US proposal to create a forum within the WTO for centralized discussion of labour standards (bans on child labour and the like). Coordination and adjustment in this area was further hampered by an articles on December 2 in the major newspaper that President Clinton planned to link labour standards and trade sanctions.

Anti-dumping

A large number of Members, particularly among the developing countries, support the strengthening of the disciplines in the Anti-dumping Agreement. This item was included in the Chairman’s text of the Ministerial Working Group, but was strongly opposed by the United States.

Investment

This area was strongly opposed by India, Malaysia, and other developing countries. The United States also remained cautious because of the failure of the OECD to negotiate the MAI (Multilateral Agreement on Investment).

Implementation

Developing countries argued that the priority should be on resolution of “implementation” problems for the results of the Uruguay Round, but there was insufficient time to fully discuss this issue. In the end, there was no Ministerial Declaration adopted, nor was any agreement reached on extension of transitional periods for the TRIPS and TRIMs Agreements, and other measures desired by developing countries.

Other Issues

Differences remain on competition, electronic commerce, biotechnology, and other issues. The standstill on not imposing customs duties on electronic transmission that was adopted by the Geneva Ministerial Conference was not renewed.

Many factors contributed to this disappointing outcome from Seattle Ministerial Conference. Below are some of the major ones.

349 Differing Viewpoints on Major Issues and Delayed Preparations

The primary reason why the Seattle Ministerial Conference was unable to agree on the launching of a new round was that it was unable to bridge the differing viewpoints on the issues described above. The delays seen in the preparatory process were also a significant factor. The preparation process in Geneva faltered because of conflicts of opinion between the leading countries, including conflicts between the developed countries themselves. It was therefore doubtful from the beginning that the next round would get under way smoothly. Demonstrations also created disruptions within Seattle that further time constrained the available and prevented sufficient discussion at the official and ministerial levels.

Anti-Globalism

Non-Governmental Organizations (“NGOs”), labour unions and others conducted a massive campaign against liberalization and globalism and for greater emphasis on labour and environmental issues. This campaign was far larger than was initially anticipated. Obviously, NGOs and labour unions were not direct players in the Ministerial Conference, but they still had a significant indirect impact on the discussions.

Developing Countries

The weight of developing countries within the WTO organization has increased. Many perceive the Uruguay Round negotiations as having been unbalanced from the perspective of developing countries and are dissatisfied with the WTO system for failing to provide sufficient sharing of the benefits and costs. The WTO has, as an organization, been unable to sufficiently respond to these concerns.

There were also closed meeting for a small number of countries (the “Green Room” sessions attended by approximated 20 countries) that attempted to build momentum for the meeting as a whole. Many developing countries that were unable to participate in these sessions expressed strong dissatisfaction with this method of running things. Some suggested that this was a problem with the particular procedures for this Conference, but the fact remains that developing countries continue to have many reservations about the efficiency and transparency of the WTO decision-making process.

Other Factors

Some are also of the opinion that chair country of the meeting, the United States, failed to exert sufficient leadership, and that some countries were too uncompromising in the discussions of the Ministerial Declaration.

4. Launching the Next Round

Since the end of last year, discussions have continued to be held in Geneva towards the launching of the next round. The General Council meeting on February 7 agreed on the organization of negotiations to further liberalize services and agriculture. The services talks will take place in special sessions of the Council for Trade in Services, the first of which will be held in the fourth week of February. The Agriculture Committee will hold similar special sessions, the first in the week beginning 20 March. (A Special Session of the Council for Trade in Services was held on February 25.) The details of the negotiation schedule were not

350 yet decided and require further discussions. In addition, the framework of the negotiation would be discussed again at a later stage.

Japan views the launching of the next round as being of the utmost importance to restoring and strengthening confidence in the WTO-led multilateral trading system. We recognize the need to fully coordinate with other interested countries and the WTO secretariat so that comprehensive negotiations can be launched as quickly as possible.

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