GATT Newsletter

NO. 107 SPECIAL ISSUE May 1994

Marrakesh Ministerial Meeting The WTO is born

ffirming that "the establishment of Athe World Trade Organization (WTO) ushers in a new era of global economic cooperation, reflecting the widespread desire to operate in a fairer and more open multilateral trading system for the benefit and welfare of their peoples," more than a hundred ministers, in the ancient trading crossroads of Mar­ rakesh on 15 April, signed the Final Act of the Uruguay Round and made deci­ sions ensuring a running start for the WTO on 1 January 1995. In the ornate Salle Royale of the Palais des Congrès, the ministers, one by one, signed the Final Act containing 28 agree­ ments and appended to by some 26,000 pages of national tariff and sen ices sche­ dules, which GATT economists estimate will add some USS755 billion to world exports and raise incomes by some S235 billion annually. Several ministers also signed the new Government Procurement Code that was negotiated in parallel with the Uruguay Round and three other plurilateral agree­ ments: on dairy products, bovine meat and civil aircraft.The four-hour ceremony ef­ fectively marked the start of the transition from GATT to the WTO. In the Marrakesh Declaration they had adopted just hours earlier, the Ministers had saluted as "a historic achievement" the conclusion of the Round, which would "strengthen the world economy, lead to more trade, investment, employment and income growth throughout the world." They had also expressed their determina­ tion to "resist protectionist pressures of all kinds." In this regard, they pledged, with immediate effect and until the estab­ lishment of the WTO, not to "take any trade measures that would undermine or GATT Director-General Peter Sutherland proudly displays the Final Act of the Uruguay Round before the start of the signing ceremonies on 15 April. Not seen in the photo are Continued on page 2 26,000 additional pages of national schedules on goods and services. (Reuters) GATT FOCUS

Marrakesh

(Continued from page 1) adversely affect the results of the Uruguay Round negotiations or their implementa­ tion." Finally, they thanked His Majesty King Hassan II "for his personal contribution tot he success of this Ministerial Meeting, and to his Government and the people of Morocco for their warm hospitality and the excellent organization they have pro­ vided." l l Ministerial Decisions It «_ à The establishment of a Preparatory Com­ mittee for the WTO was one of the four Decisions taken by ministers on 14 April. The other three were: the Decision on Marrakesh ' Palais des Congrès, site of the Ministerial Conference. (Photos courtesy of Acceptance of and Accession to the Morocco's Ministry of Information). Agreement Establishing the World Trade Organization; the Decision on Trade and ments. "We must therefore strengthen our Environment; and the Decision on Organ­ determination to honour the commitments izational and Financial Consequences which we will assume with the signature flowing from Implementation of the of the Final Act," he said. Minister Abreau Agreement Establishing the WTO (see added: "Behind each signature, there are texts on pages 8-10). millions of workers, farmers, industrial­ ists, professionals and businessmen who The Preparatory Committee, to be harbour the hope that the results of the headed by Mr. Peter Sutherland in his Round will create new horizons for trade, personal capacity, will be in charge of employment and investment and offer ensuring an orderly transition from the better possibilities of tackling poverty and GATT to the WTO. Its remit is to ensure recession, thus paving the way for the the efficient operation of the WTO imme­ economic and social development of na­ diately as of the date of its establishment. tions." Thus, it will convene and prepare the Im­ plementation Conference, which will de­ cide formally on the date of entry into Sutherland's report force of the WTO Agreement. The Pre­ "Few trading caravans can have viewed paratory Committee will also convene the this beautiful city with as much pleasure - first meeting of General Council of WTO and as much relief - as ours does. But then (see What is WTO on page 11). His Royal Highness the Crown Prince very few trading caravans were on the Sidi Mohammed welcomes delegations at road for more than seven years, and none the start of the meeting on 12 April. Opening ceremonies carried such a priceless cargo. This week "Our meeting here in Marrakesh takes you as Ministers will sign the greatest place at the close of the most ambitious trade agreement in history, one whose trade negotiations in world economic his­ benefits span entire continents and a wide tory - we should be proud of this stride range of trade sectors alike," the TNC towards a more open world which will be, Chairman at Officials Level, GATT Di­ through the dynamism of exchanges be­ rector-General Peter Sutherland said. tween nations and the lifting of barriers Mr. Sutherland reported that the work and protectionist regulations, a source of of the TNC since the successful conclu­ prosperity and welfare for the peoples sion of the Uruguay Round negotiations worldwide," said His Royal Highness the on 15 December 1993 had been focused Crown Prince Sidi Mohammed at the on the preparations for the Marrakesh opening of the Ministerial Meeting on 12 Meeting. First, the Final Act Embodying April. He stressed that "we all are witness­ the Results of the Uruguay Round of ing here in Marrakesh what will be the Multilateral Trade Negotiations was legal and institutional pillar of interna­ legally rectified, agreed and circulated to tional trade in the twenty-first century." all participants. Secondly, the schedules The TNC Chairman at Ministerial of market access commitments in goods level, Minister Sergio Abreau Bonilla and services and the MFN exemption lists (Uruguay), opened the Ministerial Meet­ in services were multilaterally verified for The EC Trade Commissioner, Sir Leon ing by reminding participants that the real attachment to the Marrakesh Protocol. Brittan, is welcomed by TNC Chairman effectiveness of the new trade rules Thus, the Final Act, rectified and com­ Sergio Abreau Bonilla and Mr. Suther­ depended on the political will of govern- pleted by the verified schedules, was now land. GATT FOCUS

ready for signature by Ministers. Simulta­ neously, the TNC at official level had approved for adoption by Ministers four Decisions (see above) and the Marrakesh Declaration. The GATT Director-General said that "the signature ceremony will be a just cause for celebration not only because its represents signing-off on the Uruguay Round, but because it will be a signing-on to the work of putting the results into effect and ensuring that their potential is used to the fullest." Early ratification urged Many Ministers underlined the urgency of ratifying the Uruguay Round agreements Malaysia 's Minister of International Trade and Industry, Dato ' Seri Rafidah Aziz, signs to enable the World Trade Organization the Final Act with Mr. Sutherland (right) looking on. She had called the Uruguay Round to be fully operational by 1 January 1995. an "important milestone in international economic cooperation. " EC Commissioner Sir Leon Brittan em­ phasized that: "each of us, by our signa­ ture at Marrakesh, pledges himself or herself to submit the results of the Uru­ guay Round for formal approval in ac­ cordance with our domestic laws and, equally important, to proceed without delay to implement in our domestic laws, the commitments we made during the negotiations." He said one proof of the quality of those commitments was "the ever-lengthening queue of candidates for accession to the GATT and to the WTO." The EC Commissioner suggested that the WTO tackle the following issues: ensur­ ing intensive cooperation between the WTO and the IMF and the World Bank; addressing urgently the interface between trade and the environment; working with the International Labour Office and other organizations, the WTO must address problems such as child exploitation, Japan's Depîity Prime Minister and Minister for Foreign Affairs (now Prime Minister), forced labour or the denial to workers of Mr. Tsutomu Hata, signs the Final Act. TNC Chairman Abreau is at far right. free speech or free association; and distor­ tion of trade which can be caused by dif­ ferent standards of competition law and practice in different countries. Japan's Deputy Prime Minister and Minister for Foreign Affairs (now Prime Minister), Mr. Tsutomu Hata, underlined the importance of the Round's conclusion "in securing confidence in the world eco­ nomic order." He recalled that his country had made significant contributions to the Round, including acceptance of the Agreement on Agriculture and cutting average tariffs on industrial and mining products by 61 per cent to rates as low as 1.5 per cent. "As a result of the Uruguay Round, the Japanese market offers greater opportunities for success by foreign ex­ porters depending upon their efforts," he added. Minister Hata expressed strong support for the early entry into force of the US Trade Representative Mickey Kantor. Earlier, he stressed that "our vision of the WTO Agreement, and suggested that the trading system must be dynamic and able to meet the emerging challenges to our WTO consider additional issues closely collective economic growth. " (Photos above by Editor) related to trade, including regionalism as GATT FOCUS

WTO: rule of law in economic relations is Majesty King Hassan II reminded hundreds of participants, at the closing Hceremony on 15 April held at spacious courtyard of the Marrakesh Royal Palace, of their historic accomplishment that day. He said: By bringing into being the World Trade Organization today, we are enshrining the rule of law in international economic and trade relations, thus setting universal rides and disciplines over the temptations of unilateralism and the law of the jungle. This collective profession of faith actually marks the end of the Colonial Pact and embodies genuine interdependence. Regardless of the size of our economies, from now on we shall all enjoy the same rights and be subject to the same obligations. We share the same goals and must meet the same challenges: tackling the scourge of unemploy­ ment, redressing the problem of social exclusion, or finding appropriate ways of responding to our environmental and other concerns. The King of Morocco, noting the world-wide trend for economic reform as indicated by the recent accession of many countries into the GATT, said that "the reason why many developing countries have courageously restructured their econ­ US Vice-President Al Gore tells partici­ omies in order to integrate themselves better into the international economy is that pants on 14 April that the Uruguay Round they are convinced of the virtues of financial discipline and of the need to cushion the package was "truly momentous". He ensuring transitional social cost." In turn, this called for "a counterpart from the stressed the US Administration's commit­ developed countries in the form of corresponding adjustments favouring market ment for a quick ratification of the Uru­ access and transparent conditions of fair competition." The King said that Africa guay Round results, and urged that the deserved special attention, and that the time was perhaps ripe for a new Marshall Plan WTO address the environment and labour for the continent. standards. Looking ahead to the functioning of the global economy in the next century, the King proposed the establishment of an intergovernmental group to study new mech­ the relationship between immigration anisms for international economic negotiations with a view to: policies and international trade. • improved coordination of action by the IMF, the World Bank and the WTO; Bangladesh' Minister for Commerce, • a greater contribution by developing countries to concerted implementation of a Mr. M. Shamsul Islam, speaking on be­ strategy to give the global economy a new impetus so as to come up with the half of the least-developed countries, appropriate response to "the scourge of the 21st century, which will be unemploy­ hoped that "in the implementation of the ment". Uruguay Round Agreements, the interna­ In closing, he said all should "welcome (this) gigantic step forward towards broader tional community will be more responsive and more intensive international cooperation: this progress towards the international to the needs of the most disadvantaged solidarity which we hope will be the hallmark of the next century." O group of nations." He urged a compre­ hensive assessment of the Uruguay Round results with "any imbalances ... to well as trade and investment. practice justifying some form of action - be redressed through appropriate action Reflecting on the successful conclusion new issues can become a vehicle for new including additional trade preferences, of the negotiations, US Trade Repre­ protectionism." Minister MacLaren development assistance and debt relief." sentative Michael Kantor said he was stressed that "to fall victim in the World Minister Islam pointed to the "need by "struck by the thin line that separates suc­ Trade Organization to the narrow interest LLDCS for substantial technical assist­ cess and failure...(but) we succeeded be­ groups who favour trade sanctions as the ance in the implementation of the results cause the ties that bind us together are instrument of choice to force nations to of the Round. On new issues, he sup­ strong than the forces seeking to pull us comply with the policies of other would ported the consideration of the relation­ apart." He stressed that "our vision of the be to abandon some of the most fun­ ship between movements of natural trading system must be dynamic and able damental gains we have made." persons and international trade in the Pre­ to meet the emerging challenges to our paratory Committee. collective global economic growth." Development goals Zimbabwe's Minister of Industry and Thus, "increasingly, we will address Commerce, Dr. H. Murerwa, said that his issues related to each other's internal India's Minister of Commerce, Mr. Pra- nab Mukherjee, warned that the acute dif­ country's preliminary evaluation of the policies, such as competition policy and Uruguay Round results suggested gains other domestic regulatory policies, as well ferences between levels of development and incomes among nations have "enough for certain products, stand-still position as environmental protection and labour for others and potential losses for some standards." latent heat to melt down the most elabor­ ately engineered structures." Thus, "the products as a result of erosion of EC trade Canada's Trade Minister, Mr. Roy long-term survival of the multilateral preferences. However, he believed that MacLaren, emphasized that when WTO trading system will depend upon reducing "the process of liberalization will in the is asked to tackle new trade policy issues, the present inequities." Regarding new long-run strengthen the global trading it should proceed in a manner consistent issues, Minister Mukherjee said while system and benefit the peoples of both the with its competence and mandate. He India was strongly committed to interna­ developed and developing countries." warned that "when examining new issues, tionally-recognized labour standards, it Minister Murerwa said the challenge fac­ we must, for example be wary of being could not see any merit in linking this ing the developing countries is "to expand seduced by the argument that differing subject to international trade. On the other and diversify our export capabilities as approaches to issues such as environmen­ hand, he attached importance to an exam­ well as strengthening the international tal protection constitute an unfair train ination in the Preparatory Committee of competitiveness of our products." Re- GATT FOCUS

of the environment and workers' rights must go hand in hand with efforts to lib­ eralize world trade, for progress in lib­ eralization generates resources and opportunities to improve the environment and the well-being of workers," but warned against these subjects being used as pretexts for "disguised trade protec­ tionism." Brazil's Minister of External Relations, Mr. Celso Amorim, said that the Uruguay Round "will be remembered as the first one in which developing countries had an active participation in the course of the whole negotiating process." He under­ lined that "We, the developing countries, have bet on trade liberalization and on the multilateral trading system... Even though our organization does not bear the word The Press Centre at the Hotel Atlas-Asni was a constant beehive of activity as more than development in its name, it will lose much 700 journalists descended on Marrakesh to cover the Ministerial Meeting. The press of its purpose if its rules and disciplines contingent included 16 journalists, mostly from Africa, whose trip was sponsored by the do not contribute to freeing hundreds of following governments: Hong Kong, Japan, Sweden and Switzerland. millions of human beings from poverty and misery." The Czech Republic's Minister of In­ dustry and Trade, Mr. Vladimir Dlouhy, highlighted the importance his country attached to "the full integration of the economies in transition into the multilat­ eral trading system." Pointing to these countries' need for better access to mar­ kets and fair application of trade and com­ petition rules, he urged that the "the role of the multilateral trading system in this process should be made more effective and more visible." Singapore's Minister for Trade and In­ dustry, Mr. Yeo Cheow Tong, said "the signing of the Final Act does not mean the end... the challenge now is to see through the successful establishment of the WTO and the implementation of the agree­ ments." Minister Yeo said that Singapore fully supported the WTO because it "has Moroccan hostesses manning the information desk at the lobby of Palais des Congres. long recognized that the free market sys­ Many young Moroccan men and women provided enthusiastic backup to the GATT tem is the way to economic growth and Secretariat in ensuring an efficiently-run meeting. prosperity for our people." In line with this, he extended his country's invitation garding the WTO. he viewed "Marrakesh the interdependence that is binding us to host the first Ministerial Meeting of the as the staging platform which will put in ever more closely together." He noted WTO. "This will be the first time a major place a strong rule-based multilateral trad­ with special satisfaction the confirmation global trade meeting will be held in Asia, ing system that should safeguard the inter­ in the Marrakesh Declaration of the "need and will complete the circle of Uruguay est of all nations, weak and strong." for positive measures on behalf of the Round meetings that began in South The Swiss Minister of Public Econ­ developing countries, and especially of America in Uruguay, then moved on to omy, Mr. J.-P. Delamuraz, pointed out the least developed among them, as well North America, to Europe and today in that "by concluding the Uruguay Round, as the desirability of possible additional Marrakesh. Africa," he added. we have taken a decisive step towards the measures for their benefit." adaptation of the multilateral trading sys­ Mexico's Secretary for Trade and In­ Conclusion tem to contemporary economic realities." dustrial Development, Mr. Jaime Serra This had meant for many participant "sub­ Puche. lauded the result of the Round as At the conclusion of the Ministerial Meet­ stantial adjustments" in domestic eco­ signifying "recognition" of the adjust­ ing on 15 April, Minister Abreau noted nomic policy, and for Switzerland ment measures that have been taken up by that many of the one hundred ministers reforms in its agricultural policy. "We many developing countries to open their who have spoken had stressed that "not­ have added a number of stones to the economies. He believed that the results withstanding the tumultuous economic foundations of a system of multilateral "will further the creation of new jobs and and political events of the past seven-and- management of the world economy," said growth in the wage levels of our workers." Mr. Delamuraz, "we have also recognized Secretary Puche stressed that "protection Continued on page 8 GATT FOCUS a-half years, all participants have under­ taken at the meeting was the convening of tion between trade policies and policies taken considerable efforts to improve an Implementation Conference later in the relating to financial and monetary mat­ conditions of market access." Noteworthy year. ters, including debt and commodity mar­ too had been "the engagement of the de­ In the course of the meeting, the TNC kets; international trade and company veloping and least-developed countries in Chairman said ministers had stressed the law; the establishment of a mechanism for the process of contributing their share to importance they attached to the examin­ compensation for the erosion of pref­ the global effort to reduce trade barriers." ation in the Preparatory Committee of the erences; the link between trade, develop­ Another major theme was "the role that following subjects for inclusion in the ment, political stability and the alleviation multilateral cooperation must play as the WTO agenda: the relationship between of poverty; and unilateral or extraterritor­ foundation for trade relations amongst na­ the trading system and internationally rec­ ial trade measures. tions." Min. Abreau said that to imple­ ognized labour standards; the relationship Minister Abreau said that all had taken ment this principle on a permanent basis, between immigration policies and inter­ note of the kind invitation of Singapore to "all had agreed that the results of the nego­ national trade ;trade and competition pol­ host the first WTO Ministerial Con­ tiations constituted a single undertaking, icy, including rules on export financing ference. The final meeting of the TNC based on the WTO as a new international and restrictive business practices: trade ended with delegates rising to applaud the institution." He added that one Decision and investment; regionalism: the interac­ success of the Uruguay Round. LJ

Uruguay Round results to expand trade by $755 billion he GATT economists' provisional analysis of the Uruguay on industrial products, from 6.3 to 3.9 per cent; TRound results on market access for goods portends world • a jump from 20 to 43 per cent, in the value of imported income gains of US$235 billion annually, and trade gains of industrial products that receive duty-free treatment in de­ $755 billion annually, by 2002. These figures should increase veloped countries, together with a decline from 7 to 5 per cent substantially when gains from increased trade in services, in the proportion of imports subject to peak tariffs; strengthened rules and dynamic effects are allowed for. High­ • considerable progress in reducing "tariff escalation" which lights from the GATT analysis include: should benefit developing economies seeking to export more • a major increase in market access security through higher processed versions of primary products; levels of tariff bindings (on industrial products, from 78% to 99% in developed countries and from 22% to 72% in develo­ • above average tariff cuts for many products of export interest ping countries); to developing economies; and because of tariffication and bindings, 100 per cent security for • a significant number of commitments in services area includ­ agricultural products; ing, especially, tourism and travel, and business and financial a 38 per cent overall reduction in developed countries' tariffs services. LJ

Effects ot the Uruguay Round

GATT'» estimate of the impact of the Uruguay Round in 2005 Scope of bindings for industrial products (ex. petroleum) 1992 USS billions Percentage of tan ft tines

Developed econ Developing econo Transition econ

Average industrial tariff of developed countries

Tf GATT FOCUS

The Marrakesh Declaration

Ministers, representing the 124 Governments and the Euro­ reform and autonomous trade liberalization were implemented pean Communities participating in the Uruguay Round in many developing countries and formerly centrally planned adopted the following declaration on 15 April 1994: economies. Ministers recall that the results of the negotiations embody inisters salute the historic achievement represented by provisions conferring differential and more favourable treat­ Mthe conclusion of the Round, which they believe will ment for developing economies, including special attention to strengthen the world economy and lead to more trade, invest­ the particular situation of least-developed countries. Ministers ment, employment and income growth throughout the world. recognize the importance of the implementation of these pro­ In particular, they welcome: visions for the least-developed countries and declare their • the stronger and clearer legal framework they have adopted intention to continue to assist and facilitate the expansion of for the conduct of international trade, including a more their trade and investment opportunities. They agree to keep effective and reliable dispute settlement mechanism, under regular review by the Ministerial Conference and the • the global reduction appropriate organs of by 40 per cent of ta­ the WTO the impact of riffs and wider mar- the results of the ket-opening Round on the least-de­ agreements on veloped countries as goods, and the in­ well as on the net-food creased predict­ importing developing ability and security countries, with a view represented by a to fostering positive major expansion in measures to enable the scope of tariff them to achieve their commitments, and development objec­ • the establishment of tives. Ministers recog­ a multilateral frame­ nize the need for work of disciplines strengthening the ca­ for trade in services pability of the GATT and for the protec­ and the WTO to pro­ tion of trade-related vide increased techni­ intellectual property cal assistance in their rights, as well as the areas of competence, and in particular to reinforced multilat­ Mr. Sutherland thanks His Majesty King Hassan IIfor hosting the Ministerial substantially expand eral trade provisions Meeting at the closing ceremony held in the Royal Palace. The King under­ its provision to the in agriculture and in lined the role WTO will play in promoting economic development all over the least-developed coun­ textiles and cloth­ world. (Photo courtesy of Morocco's Ministry of Information) _ ing. tries. Ministers affirm Ministers declare that the establishment of the World Trade Organization (WTO) that their signature of the "Final Act Embodying the Results ushers in anew era of global economic cooperation, reflecting of the Uruguay Round of Multilateral Trade Negotiations" and the widespread desire to operate in a fairer and more open their adoption of associated Ministerial Decisions initiates the multilateral trading system for the benefit and welfare of their transition from the GATT to the WTO. They have in particular peoples. Ministers express their determination to resist protec­ established a Preparatory Committee to lay the ground for the tionist pressures of all kinds. They believe that the trade entry into force of the WTO Agreement and commit them­ liberalization and strengthened rules achieved in the Uruguay selves to seek to complete all steps necessary to ratify the WTO Round will lead to a progressively more open world trading Agreement so that it can enter into force by 1 January 1995 or environment. Ministers undertake, with immediate effect and as early as possible thereafter. Ministers have furthermore until the entry into force of the WTO, not to take any trade adopted a Decision on Trade and Environment. measures that would undermine or adversely affect the results Ministers express their sincere gratitude to His Majesty of the Uruguay Round negotiations or their implementation. King Hassan II for his personal contribution to the success of Ministers confirm their resolution to strive for greater global this Ministerial Meeting, and to his Government and the people coherence of policies in the fields of trade, money and finance, of Morocco for their warm hospitality and the excellent organ­ including cooperation between the WTO. the IMF and the ization they have provided. The fact that this final Ministerial World Bank for that purpose. Meeting of the Uruguay Round has been held at Marrakesh is Ministers welcome the fact that participation in the Uruguay an additional manifestation of Morocco's commitment to an Round was considerably wider than in any previous multilat­ open world trading system and to its fullest integration to the eral trade negotiation and, in particular, that developing coun­ global economy. tries played a notably active rôle in it. This has marked a With the adoption and signature of the Final Act and the historic step towards a more balanced and integrated global opening for acceptance of the WTO Agreement, Ministers trade partnership. Ministers note that during the period these declare the work of the Trade Negotiations Committee to be negotiations were underway significant measures of economic complete and the Uruguay Round formally concluded. LJ GATT FOCUS

Decisions Adopted by Ministers in Marrakesh

to establish a schedule to GATT 1994 and the GATS for Acceptance of and Accession to the inclusion in the Final Act. and Agreement Establishing the World any State or separate customs territory Trade Organization • which becomes a contracting party to the GATT 1947 between 15 April 1994 and the date of entry into force of the WTO Agreement Decision of 14 April 1994 may submit to the Preparatory Committee for its examination and Ministers. approval a schedule of concessions and commitments to GATT Noting that Articles XI and XIV of the Agreement Establishing 1994 and a schedule of specific commitments to the GATS. the World Trade Organization (hereinafter referred to as "WTO (b) The WTO Agreement shall be open for acceptance in Agreement'*) provide that only contracting parties to the GATT accordance w ith Article XIV of that Agreement by contracting 1947 as of the entry into force of the WTO Agreement for which parties to GATT 1947 the schedules of which have been so schedules of concessions and commitments are annexed to GATT submitted and approved before the entry into force of the WTO 1994 and for which schedules of specific commitments are an­ Agreement. nexed to the General Agreement on Trade in Services (hereinafter (c) The provisions of subparagraphs (a) and (b) of this para­ referred to as "GATS") may accept the WTO Agreement; graph shall be without prejudice to the right of the least-de­ Noting further that paragraph 5 of the Final Act Embodying veloped countries to submit their schedules within one year from the Results of the Uruguay Round of Multilateral Trade Negotia­ 15 April 1994. tions (hereinafter referred to as "Final Act" and "Uruguay 2. (a) Any State or separate customs territory may request the Round" respectively) provides that the schedules of participants Preparatory Committee to propose for approval by the Minis­ which are not contracting parties to GATT 1947 as of the date of terial Conference of the WTO the terms of its accession to the the Final Act are not definitive and shall be subsequently com­ WTO Agreement in accordance with Article XII of that Agree­ pleted for the purpose of their accession to GATT 1947 and their ment. If such a request is made by a State or separate customs acceptance of the WTO Agreement; territory which is in the process of acceding to GATT 1947, the Having regard to paragraph 1 of the Decision on Measures in Preparatory Committee shall, to the extent practicable, examine Favour of Least-Developed Countries which provides that the the request jointly with the Working Party established by the least-developed countries shall be given an additional time of one CONTRACTING PARTIES to GATT 1947 to examine the ac­ year from 15 April 1994 to submit their schedules as required in cession of that State or separate customs territory. Article XI of the WTO Agreement; (b) The Preparatory Committee shall submit to the Ministerial Recognizing that certain participants in the Uruguay Round Conference a report on its examination of the request. The report which had applied GATT 1947 on a de facto basis and became may include a protocol of accession, including a schedule of contracting parties under Article XXVI:5(c) of the GATT 1947 concessions and commitments to GATT 1994 and a schedule of were not in a position to submit schedules to GATT 1994 and the specific commitments for the GATS, for approval by the Minis­ GATS; terial Conference. The report of the Preparatory Committee shall Recognizing further that some States or separate customs ter­ be taken into account by the Ministerial Conference in its con­ ritories which were not participants in the Uruguay Round may sideration of any application by the State or separate customs become contracting parties to GATT 1947 before the entry into territory concerned to accede to the WTO Agreement. force of the WTO Agreement and that States or customs terri­ tories should be given the opportunity to negotiate schedules to GATT 1994 and the GATS so as to enable them to accept the WTO Agreement; Trade and Environment Taking into account that some States or separate customs territories which cannot complete the process of accession to Decision of 14 April 1994 GATT 1947 before the entry into force of the WTO Agreement or which do not intend to become contracting parties to GATT Ministers, meeting on the occasion of signing the Final Act 1947 may wish to initiate the process of their accession to the embodying the results of the Uruguay Round of Multilateral WTO before the entry into force of the WTO Agreement; Trade Negotiations at Marrakesh on 15 April 1994, Recognizing that the WTO Agreement does not distinguish in Recalling the preamble of the Agreement establishing the any way between WTO Members which accepted that Agreement World Trade Organization (WTO), which states that members' in accordance with its Articles XI and XIV and WTO Members "relations in the field of trade and economic endeavour should be which acceded to it in accordance with its Article XII and wishing conducted with a view to raising standards of living, ensuring full to ensure that the procedures for accession of the States and employment and a large and steadily growing volume of real separate customs territories which have not become contracting income and effective demand, and expanding the production of parties to the GATT 1947 as of the date of entry into force of the and trade in goods and services, while allowing for the optimal WTO Agreement are such as to avoid any unnecessary disadvant­ use of the world's resources in accordance with the objective of age or delay for these States and separate customs territories; sustainable development, seeking both to protect and preserve the Decide that: environment and to enhance the means for doing so in a manner 1 .(a) Any Signatory of the Final Act consistent with their respective needs and concerns at different • to which paragraph 5 of the Final Act applies, or levels of economic development," • to which paragraph 1 of the Decision on Measures in Favour Noting: of Least-Developed Countries applies, or • the Rio Declaration on Environment and Development, • which became a contracting party under Article XXVI:5(c) of Agenda 21, and its follow-up in GATT, as reflected in the the GATT 1947 before 15 April 1994 and was not in a position statement of the Chairman of the Council of Representatives to GATT FOCUS

the CONTRACTING PARTIES at their 48th Session in De­ (b) requirements for environmental purposes relating to pro­ cember 1992, as well as the work of the Group on Environmen­ ducts, including standards and technical regulations, packaging, tal Measures and International Trade, the Committee on Trade labelling and recycling; and Development, and the Council of Representatives; • the provisions of the multilateral trading system with respect • the work programme envisaged in the Decision on Trade in to the transparency of trade measures used for environmental Services and the Environment; and purposes and environmental measures and requirements which • the relevant provisions of the Agreement on Trade-Related have significant trade effects; Aspects of Intellectual Property Rights, • the relationship between the dispute settlement mechanisms in Considering that there should not be, nor need be, any policy the multilateral trading system and those found in multilateral contradiction between upholding and safeguarding an open, non­ environmental agreements; discriminatory and equitable multilateral trading system on the • the effect of environmental measures on market access, espe­ one hand, and acting for the protection of the environment, and cially in relation to developing countries, in particular to the the promotion of sustainable development on the other, least developed among them, and environmental benefits of Desiring to coordinate the policies in the field of trade and removing trade restrictions and distortions; environment, and this without exceeding the competence of the • the issue of exports of domestically prohibited goods, multilateral trading system, which is limited to trade policies and • that the Committee on Trade and Environment will consider those trade-related aspects of environmental policies which may the work programme envisaged in the Decision on Trade in result in significant trade effects for its members, Services and the Environment and the relevant provisions of Decide: the Agreement on Trade-Related Aspects of Intellectual • to direct the first meeting of the General Council of the WTO Property Rights as an integral part of its work, within the above to establish a Committee on Trade and Environment open to all terms of reference, members of the WTO to report to the first biennial meeting of • that, pending the first meeting of the General Council of the the Ministerial Conference after the entry into force of the WTO, the work of the Committee on Trade and Environment WTO when the work and terms of reference of the Committee should be carried out by a Sub-Committee of the Preparatory will be reviewed, in the light of recommendations of the Committee of the World Trade Organization (PCWTO), open Committee, to all members of the PCWTO, • that the TNC Decision of 15 December 1993 which reads, in • to invite the Sub-Committee of the Preparatory Committee, and part, as follows: the Committee on Trade and Environment when it is estab­ "(a) to identify the relationship between trade measures and lished, to provide input to the relevant bodies in respect of environmental measures, in order to promote sustainable devel­ appropriate arrangements for relations with inter-governmental opment; and non-governmental organizations referred to in Article V of (b) to make appropriate recommendations on whether any the WTO. modifications of the provisions of the multilateral trading system are required, compatible with the open, equitable and non-dis­ criminatory nature of the system, as regards, in particular: • the need for rules to enhance positive interaction between trade Organizational and Financial and environmental measures, for the promotion of sustainable development, with special consideration to the needs of develo­ Consequences flowing from ping countries, in particular those of the least developed among Implementation of the Agreement them: and • the avoidance of protectionist trade measures, and the ad­ Establishing the World Trade herence to effective multilateral disciplines to ensure respon­ Organization siveness of the multilateral trading system to environmental objectives set forth in Agenda 21 and the Rio Declaration, in Decision of 14 April 1994 particular Principle 12; and • surveillance of trade measures used for environmental pur­ Ministers. poses, of trade-related aspects of environmental measures Recognizing the importance of the rôle and contribution to which have significant trade effects, and of effective im­ international trade of the World Trade Organization (hereinafter plementation of the multilateral disciplines governing those referred to as the WTO), measures: Desiring to ensure the efficient functioning of the WTO Sec­ constitutes, along with the preambular language above, the terms retariat. of reference of the Committee on Trade and Environment. Recognizing that implementation of the results of the Urugua\ • that, within these terms of reference, and with the aim of Round will expand the scope and complexity of the duties of the making international trade and environmental policies mu­ Secretariat and that the resource implications thereof need to be tually supportive, the Committee will initially address the studied. following matters, in relation to which any relevant issue may Recalling the statements made by previous Chairmen of the be raised: GATT CONTRACTING PARTIES and the GATT Council • the relationship between the provisions of the multilateral drawing attention to the need to improve the terms and conditions trading system and trade measures for environmental purposes, of service, including salaries and pensions, for the professional including those pursuant to multilateral environmental agree­ staff of the Secretariat, ments; Mindful of the need for the WTO to be competitive in the • the relationship between environmental policies relevant to conditions of service it w ill offer to its professional staff so as to trade and environmental measures w ith significant trade effects attract the required expertise, and the provisions of the multilateral trading system; Noting the proposal of the Director-General that, in setting • the relationship between the provisions of the multilateral WTO staff conditions of services, including salaries and pen­ trading system and: sions, due account be taken of those of the International Monetary (a) charges and taxes for environmental purposes Fund and the World Bank, GATT FOCUS

Noting Article VI of the Agreement establishing the WTO, in of the date of its establishment, including the functions set out particular paragraph 3 thereof empowering the Director-General below: to appoint the staff of the Secretariat to determine their duties and (a)Administrative. budgetary and financial matters: conditions of service in accordance with regulations adopted by To prepare recommendations for the consideration of the com­ the Ministerial Conference, petent body of the WTO, or, to the extent necessary, take deci­ Recalling that the mandate of the Preparatory Committee sions or, as appropriate, provisional decisions in advance of the requires it to perform such functions as may be necessary to establishment of the WTO. with respect to the recommendations ensure the efficient operation of the WTO immediately as of the date of its establishment, including the preparation of recommen­ dations for the consideration of the competent body of the WTO. The Committee shall perform such functions as or to the extent necessary, the taking of decisions or. as appropri­ may be necessary to ensure the efficient operation ate, provisional decisions with respect to administrative, budge­ tary and financial matters assisted by proposals from the of the WTO immediately as of the date of its Secretariat, establishment... Hereby agree that the Preparatory Committee shall consider the organizational changes, resource requirements and staff con­ ditions of service proposed in connection with the establishment submitted to it by the Chairman of the Sub-Committee on Budget, of the WTO and the implementation of the Uruguay Round Finance and Administration referred to in paragragh 3 above, in agreements and prepare recommendations and take decisions, to cooperation with the Chairman of the GATT Committee on the extent necessary, on the adjustments required. Budget. Finance and Administration, assisted by proposals from the Secretariat on: (i) the headquarters agreement provided for in Article VIIL5 of the WTO Agreement: Decision on the Establishment of the (ii) financial regulations, including guidelines for the assess­ ment of WTO members' budget contributions, in accordance Preparatory Committee for with the criteria set out in Article VII of the WTO Agreement; the World Trade Organization (iii) the budget estimates for the first vear of operation of the WTO; Decision of 14 April 1994 (iv) the transfer of the property, including financial assets, of the ICITO/GATT to the WTO; (v) the transfer and the terms and conditions of the transfer of Ministers, the GATT staff to the WTO Secretariat; and Having regard to the Agreement Establishing the World Trade (vi) the relationship between the International Trade Centre Organization (hereinafter referred to as "WTO Agreement" and and the WTO. "WTO"), and (b) Institutional, procedural and legal matters: Mindful of the desirability of ensuring an orderly transition to (i) To carry out the examination of and approve the schedules the WTO and the efficient operation of the WTO as of the date submitted to it in accordance with the "Decision on Acceptance of entry into force, of and Accession to the Agreement Establishing the World Trade hereby agree as follows: Organization" and to propose terms of accession in accordance 1. A Preparatory Committee for the WTO (hereinafter referred to with paragraph 2 of that Decision; as "Committee") is hereby established. Mr. P.D. Sutherland in (ii) To make proposals concerning terms of reference for the his personal capacity is appointed Chairman of the Committee. bodies of the WTO, in particular those established in Article IV 2. The Committee shall be open for membership to all Signatories of the WTO Agreement, and the rules of procedure which they of the Final Act of the Uruguay Round of Multilateral Trade are called upon to establish for themselves, bearing in mind Negotiations and to any contracting party eligible to become an paragraph 1 of Article XVI; original member of the WTO in accordance with Article XI of the WTO Agreement. (iii) To make recommendations to the General Council of the WTO concerning the appropriate arrangements with respect to 3. A Sub-Committee on Budget, Finance and Administration, to relations with other organizations referred to in Article V of the be chaired by the Chairman of the GATT CONTRACTING PARTIES, and a Sub-Committee on Services responsible for WTO Agreement; and preparatory work on GATS matters are also established. The (iv) To prepare and submit a report on its activities to the WTO. Committee may establish additional sub-committees as appropri­ (ci Matters related to the entry into force of the WTO Agreement ate. Membership of the Sub-Committees shall be open to all and to the activities of the WTO within its scope and functions: members of the Committee. The Committee shall establish its (i) To convene and prepare the Implementation Conference; own procedures and those of its sub-committees. (ii) To initiate the work programme arising from the Uruguay 4. The Committee will make all its decisions by consensus. Round results as set out in the Final Act, such as overseeing, in 5. Only those members of the Committee that are GATT contract­ the Sub-Committee on Services referred to in paragragh 3 above, ing parties eligible to become original Members of the WTO in negotiations in specific services sectors, and also to undertake accordance with Articles XI and XIV of the WTO Agreement work resulting from Decisions of the Marrakesh meeting; may participate in the decision-making of the Committee. (iii) To discuss suggestions for the inclusion of additional items 6. The Committee and its sub-committees shall be serviced by the on the agenda of the WTO's work programme; GATT Secretariat. (iv) To make proposals concerning the composition of the 7. The Committee shall cease to exist upon the entry into force Textiles Monitoring Body in accordance with the criteria set out of the WTO Agreement, at which time it will forward its records in Article 8 of the Agreement on Textiles and Clothing; and and recommendations to the WTO. (v) To convene the first meeting of the Ministerial Conference 8. The Committee shall perform such functions as may be necess­ or the General Council of the WTO, whichever meets first, and ary to ensure the efficient operation of the WTO immediately as to prepare the provisional agenda thereof. LJ GATT FOCUS

WTO Briefing What is the WTO? he World Trade Organization (WTO) (justification, time-limits, possibility of munities similar to those accorded to the Twill facilitate the implementation and recourse to dispute settlement). specialized agencies of the United Na­ operation of all the agreements and legal Any member of the WTO may submit tions. The status of the GATT was rela­ instruments negotiated in connection with a proposal to amend the provisions of the tively ambiguous because of the failure to the Uruguay Round, including the Pluri­ Agreements to the Ministerial Conference set up an International Trade Organiza­ lateral Trade Agreements (trade in civil and the General Council. The quorum tion in 1947. Formally, the GATT is a aircraft, government procurement, trade necessary to implement changes will de­ multilateral treaty administered by an In­ in dairy products and bovine meat); it will pend on the nature of the amendment: terim Committee. provide a forum for all negotiations; and • amendments relating to general prin­ The establishment of the World Trade it will administer the Understanding on ciples such as MFN treatment, must be Organization will reinforce the status and Rules and Procedures Governing the Set­ approved by all members; the image of the principal institution with tlement of Disputes and the Trade Policy Review Mechanism (TPRM). It will co­ operate with the International Monetary Structure of the WTO Fund and the International Bank for Rec­ onstruction and Development with a view to achieving greater coherence in global MINISTERIAL CONFERENCE economic policy-making. (every two years) In its Preamble, the Agreement estab­ lishing a World Trade Organization reit­ erates the objectives of the GATT, namely Settlement of disputes GENERAL COUNCIL Trade Policy Review raising standards of living and incomes, ensuring full employment, expanding production and trade, and optimal use of Committee on Trade the world's resources, while at the same and Development time extending them to services and mak­ ing them more precise: • it introduces the idea of "sustainable COUNCIL COUNCIL TRIPS development" in relation to the optimal Committee on Balance FOR FOR COUNCIL use of the world's resources, and the of Payments SERVICES GOODS (intell. prop.) need to protect and preserve the envi­ ronment in a manner consistent with the various levels of national economic de­ • •• Committee on Budget nan nnn velopment; • it recognizes that there is a need for positive efforts designed to ensure that developing countries, and especially the least-developed among them, se­ cure a better share of the growth in LJ Commirtes set up to administer the various arrangements. international trade. • for all other amendments only a two- responsibility for international trade, by Decision-making thirds majority is required. placing it on the same footing as the IMF The WTO will continue the decision­ and the World Bank. making practice followed under the Original and new members The Director-General of the WTO will be appointed by the Ministerial Con­ GATT: decision by consensus which is The member countries of the GATT as of deemed to exist if no member formally ference which will also adopt regulations the date of entry into force of the WTO setting up his powers and duties. objects. Recourse to voting, where a deci­ Agreement will become original mem­ sion cannot be reached by consensus, is The financial regulations relating to the bers of the WTO. However, the least-de­ scale of contributions and the budget will institutionalized, whereas previously it veloped countries recognized as such by was exceptional.Decisions will still be be based on the rules and practices of the the United Nations will only be required GATT. taken by a majority of the votes cast, on to undertake commitments and con­ the basis of "one country, one vote". cessions to the extent consistent with their Entry into force However, in two cases - interpretation individual development. of the provisions of the agreements and The accession procedures and the ma­ The Agreement was opened for accept­ waiver of a member's obligations - condi­ jority of two thirds of the members re­ ance by signature at Marrakesh and will tions imposed by the Agreement and more quired remain the same as under the enter into force by 1 January 1995 or as severe. The majority required is then three GATT early as possible thereafter; the precise quarters of the members, whereas under date will be fixed by a ministerial con­ the GATT it was only two thirds of the ference when most countries are in a po­ votes cast representing at least half of the Status and budget sition to give a commitment with respect members. Moreover, the granting of The WTO will have legal personality and to their date of ratification. waivers will be more strictly controlled will be accorded privileges and im- An original member accepting the GATT FOCUS

Agreement after its entry into force will Countries which have accepted the WTO tered into force. It will be assisted by a have to implement those concessions and agreements without at the same time with­ sub-committee on services, responsible obligations that are to be implemented drawing from the GATT will continue to for initiating the programme of work de­ over a period of time as if it had accepted apply two different sets of legal rules. cided upon in connection with the nego­ the Agreement on the date of its entry into Several countries (in particular the United tiations in specific service sectors, and a force. States and the European Community) sub-committee on budget, finance and ad­ have already stated that they would no ministration (see story on page 16). Transitional provisions longer apply the GATT 1947. and other In particular, the Committee will be The amended "GATT 1944" is legally countries are expected to follow suit. responsible for questions relating to the distinct from the General Agreement on In order to ensure a smooth transition Tariffs and Trade of 1947. to the implementation of the WTO. a implementation of the Agreement estab­ However, the World Trade Organiza­ WTO Preparatory Committee was estab­ lishing the WTO. such as the preparation tion will not "succeed", in the legal sense lished by the Ministers in Marrakesh. and convening of the Ministerial Im­ attributed to the term by the Vienna Con­ Naturally, the Committee will cease to plementation Conference and the first ference, the General Agreement of 1947. exist once the WTO Agreement has en­ Ministerial Conference of the WTO. \Z\

WTO Briefing The WTO dispute settlement mechanism he Uruguay Round's new dispute set­ rent GATT, under which dispute settle­ identification of the measure at issue and Ttlement mechanism represents the ment is fragmented between the Council the legal basis for the complaint. new teeth of the World Trade Organiza­ and the various Tokyo Round Commit­ In consultations fail, and if both parties tion (WTO). "The dispute settlement sys­ tees. so agree, the case at this stage can be tem of the WTO is a central element in Other important new features distin­ brought to the WTO Director-General, providing security and predictability to guish the WTO mechanism from that of who, acting in an ex officio capacity, will the multilateral trading system", states the GATT. In the WTO, there has to be a be ready to offer good offices, concilia­ Understanding on Rules and Procedures consensus against the establishment of tion or mediation to settle the dispute. Governing the Settlement of Disputes. panels or adoption of panel reports for In the Final Act, WTO members have these decisions not to be made whereas 2. Establishment of panels the reverse is true for the current system. committed themselves not to take unilat­ If the member concerned do not re­ Thus, parties to the dispute in the new eral action against perceived violations of spond to a request for consultations within system can no longer block these deci­ the trade rules. Instead, they have pledged 10 days or if the consultations fail to arrive sions. Another new feature is the possi­ to seek recourse in the new dispute-settle­ at a solution after 60 days, the complain­ bility of appealing panel decisions to a ment system, and abide by its rules and ant can ask the DSB to establish a panel standing Appellate Body. And, in line procedures. to examine the case. The Understanding emphasizes that with the new integrated nature of the WTO mechanism, complainants, as a last The establishment of a panel is almost prompt settlement of disputes is essential automatic. The procedures require that the to the effective functioning of the WTO. resort, may take retaliatory action - sus­ pend concessions - under an agreement DSB should establish a panel no later than Thus, it sets out in great detail (27 sections the second time it considers the panel totalling 143 paragraphs plus four appen­ different from the one covering the dis­ pute against a member that has not im­ request, unless there is a consensus dices) the procedures and the timetable to against the decision. This means that the be followed in resolving disputes - in con­ plemented adopted panel recommendations. government which is the subject of the trast with the current GATT whose dis­ complaint cannot block the establishment pute-settlement provisions are contained The following are the various stages of the panel. in just two Articles (XXII and XXIII). The involved in settling disputes in the WTO: The determination of the panel's terms existing GATT procedures have been of reference as well as its composition is built up over time through the evolution 1. Consultations also straightforward. The Understanding of customary practice, and later codified The aim of the WTO dispute-settlement provides for standard terms of reference in decisions by GATT contracting parties mechanism is "to secure a positive solu­ that mandate the panel to examine the - notably the 1979 Understanding and a tion to a dispute". Thus, developing a complaint in the light of the agreement provisional streamlining of the system in mutually-acceptable solution consistent cited, and to make findings that will assist the 1989 Improvements following the with WTO provisions to a problem be­ the DSB in making recommendations or Mid-Term Review of the Round. tween members is encouraged throughout in giving rulings provided for in that Under the WTO, there will be one Dis­ the dispute-settlement process. agreement. The panel may operate under pute Settlement Body (DSB) dealing with The first stage of settling disputes is the different terms of reference, if the parties disputes arising from any agreement con­ holding of consultations between the concerned so agree. tained in the Final Act. Thus, the DSB will members concerned. Any member should The panel is to be constituted within 30 have the sole authority to establish panels, reply promptly (within 10 days) to a re­ days of its establishment. The WTO Sec­ adopt panel and appellate reports, main­ quest for consultations, and enter into retariat will suggest the names of three tain surveillance of implementation of rul­ consultations within 30 days from the date potential panellists to the parties to the ings and recommendations, and authorize of the request. To ensure transparency, dispute, drawing as necessary on a list of retaliatory measures in cases of non-im­ any request for consultations should be qualified persons (including, for example, plementation of recommendations. This is notified to the DSB in writing, providing those who have previously participated in a significant improvement over the cur­ the reasons for the request, including panel proceedings, or have been repre- GATT FOCUS

WTO Dispute Settlement Flow Chart 4. Adoption of panel reports The WTO procedures provide that a Consultations panel report is to be adopted by the DSB (Members may request panel if no solution found within 60 days) within 60 days of issuance, unless one party notifies its decision to appeal or a Good offices, conciliation or consensus emerges against the adoption mediation by Director-General of the report. DSB establishes panel The DSB cannot consider the adoption (No later than at 2nd DSB meeting) of a panel report earlier than 20 days after it has been circulated to members. Mem­ I bers which have objections to the report Terms of reference are required to state their reasons in writ­ (Standard terms unless special terms agreed within 20 days) ing, for circulation before the DSB meet­ Composition ing at which the panel report will be (To be agreed within 20 days or decided by Director-General) considered. \ Panel examination Expert 5. Appellate review (In general not to exceed 6 months, 3 months in cases of urgency) Review A new feature of the WTO dispute set­ Meetings Meeting Group tlement mechanism gives the possibility with parties with 3rd parties of appeal to either party in a panel pro­ ceeding. However, any appeal shall be limited to issues of law covered in the Panel submits reports to parties panel report and the legal interpretation developed by the panel. Interim Review All appeals will be heard by a standing i Appellate Body to be established by the DSB. This Appellate Body will be com­ Panel circulates report to DSB posed of seven persons - broadly repre­ sentative of the WTO membership - who \ will serve four-year terms. They are to be persons of recognized standing in the field DSB adopts panel report Appellate Review of law and international trade, and not ( Within 60 days unless appealed) (Not to exceed 90 days) affiliated with any government. Three members of the Appellate Body sit at any one time to hear appeals. They DSB adopts Appellate Report (Within 30days) can uphold, modify or reverse the legal findings and conclusions of the panel. As a general rule, the appeal proceedings are DSB monitors implementation of adopted not to exceed 60 days but in no case shall panel/Appellate Body recommendations they exceed 90 days. (To be implemented within defined "reasonable period of time " ) Thirty days after issuance, the Appel­ late Body report is to be adopted by the DSB and unconditionally accepted by the Parties negotiate compensation DSB authorizes retaliation pending parties to the dispute - unless there is a pending full implementation full implementation consensus against its adoption. (60 days after expiry of "reasonable period of time ") 6. Implementation The Understanding stresses that "prompt compliance with recommenda­ sentatives to GATT, or have taught inter­ examination of the case - that is. from the tions or rulings of the DSB is essential in national trade law). If the parties cannot time the terms of reference and composi­ order to ensure effective resolution of dis­ putes to the benefit of all Members." agree on the panellists within 20 days tion of the panel are agreed to the time the from the establishment of the panel, at the panel's final report is given to the parties At a DSB meeting held within 30 days of the adoption of the panel or appellate request of either party, the Director- to the dispute - should not exceed six report, the party concerned must state its General, in consultations with the DSB months. In cases of urgency, including intentions in respect of the implementa­ Chairman and the Chairman of the rele­ those relating to perishable goods, the vant Committee or Council, will appoint tion of the recommendations. If it is im­ timeframe is shortened to three months. the panellists. The panellists will serve in practical to comply immediately, the In no case should the period from the their individual capacities and will not be member will be given a "reasonable establishment of the panel to the circula­ subject to government instructions. period of time" - to be set by the DSB - tion of the report to the Members exceed to do so. If it fails to act within this period, 3. Panel procedures nine months. it is obliged to enter into negotiations with Detailed working procedures for the the complainant in order to determine a The Understanding provides that the panel are set out in the Understanding (see mutually-acceptable compensation. period in which the panel conducts its chart). If after 20 days, no satisfactory com- GATT FOCUS

pensation is agreed, the complainant may pointed by the WTO Director-General. in the panel case. If this is not practicable request authorization from the DSB to Arbitration should be completed within or effective, the suspension can be made suspend concessions or obligations 60 days of the expiry of the "reasonable in a different sector of the same agree­ against the other party. The procedures period of time", and the resulting decision ment. In turn, if this is not effective or provide that the DSB should grant this should be accepted by the parties con­ practicable and if the circumstances are authorization within 30 days of the expiry cerned as final and not subject to another serious enough, the suspension of con­ of the "reasonable period of time" unless arbitration. The DSB, upon request, then cessions may be made under another there is a consensus against the request. authorizes the suspension of concessions agreement. If the member concerned objects to the consistent with the findings of the arbitra­ In any case, the DSB will keep under level of suspension, the matter will be tor, unless there is a consensus to reject surveillance the implementation of referred to arbitration. This will be carried the request. adopted recommendations or rulings, and out by the original panel members, and if In principle, concessions should be sus­ any outstanding case will remain on its this is not possible, by an arbitrator ap­ pended in the same sector as that in issue agenda until the issue is resolved. CD

WTO Briefing The General Agreement on Trade in Services his agreement is the first set of multi- duration. nate the adverse effects of measures on Tlaterally-agreed and legally-enforce­ d ) Transparency requirements include trade in services, and to increase the able rules and disciplines ever negotiated publication of all relevant laws and regu­ general level of specific commitments to cover international trade in services. lations. Since domestic regulations, in the undertaken by governments. The agreement contains three elements: absence of tariffs, provide the most signi­ • a framework of general rules and dis­ ficant means of influence or control over The annexes ciplines; services trade, provisions spell out that all The annex on the movement of natural • annexes addressing special conditions such measures should be administered in persons permits the governments to nego­ relating to individual sectors; a reasonable, objective and impartial tiate specific commitments applying to • national schedules of initial liberaliza­ manner. Governments are also required to the temporary stay of people for the pur­ tion commitments. establish the means for prompt review of administrative decisions relating to the pose of providing a service. It does not supply of services. apply to persons seeking permanent em­ The framework ployment or residence in a country. e) Recognition requirements for the The framework consists of 29 articles and The annex on financial services estab­ purpose of securing authorizations, contains the following basic obligations: lishes the right of governments to take licenses or certification of service sup­ a) Total coverage: the scope of the prudential measures, such as those for the pliers are encouraged through harmoniza­ agreement will cover all internationally- protection of investors, depositors and tion and the development of traded services, however they are de­ policy holders, and to ensure the integrity internationally-agreed criteria. livered - specifically, services supplied and stability of the financial system. f) International payments and transfers from one country to another; services sup­ The annex on telecommunications rec­ for current transactions relating to specific plied in the territory of one country to the ognizes this sector's dual rôle as a distinct commitments under the agreement shall consumers of any other (e.g. tourism); sector of economic activity and as the not be restricted, except in the event of services provided through the presence of underlying transport means of other eco­ balance-of-payments difficulties where a commercial entity of one country in the nomic activities. It requires that the gov­ such restrictions will be limited, tempor­ territory of any other (e.g. banking); and ernment should provide the foreign ary and subject to conditions. services provided by nationals of one service supplier non-discriminatory ac­ country in the territory of any other (e.g. g) Market access and national treat­ cess to the public telecommunications construction projects or consultancies). ment commitments are recorded in na­ networks. tional schedules. Thus, for market access, b) National treatment: in the sectors The annex on air transport services each government shall accord services recorded in its schedule, and subject to excludes from the GATS' coverage traffic and service providers of other govern­ any conditions indicated there, each gov­ rights and directly related activities. ments treatment no less favourable than ernment shall treat foreign services and However, the annex establishes that the that agreed and recorded in its schedule. service suppliers no less favourably than GATS will apply to aircraft repair and Similarly, any exception to the national its own like services and service suppliers. maintenance services, marketing of air treatment provision to treat foreign sup­ c) Most-favoured-nation (MFN): a transport services and computer-reserva­ pliers no less favourably than domestic government must not discriminate be­ tion services. tween services or service suppliers of suppliers must be recorded in the national other members, but must accord to ser­ schedule. These commitments can be vices and service providers of all member- modified only for the better, not for the The schedules s treatment no less favourable than that worse, through future negotiations, As a result of bilateral negotiations, each which it accords to like services and ser­ though commitments can be withdrawn or government has recorded in its national vice providers of any other members. modified in return for negotiated compen­ schedule its initial market access commit­ However, governments may indicate spe­ sation. ments and the limitations it wishes to cific MFN exemptions in a separate list h) Progressive liberalization through maintain to the basic principles of total which will be reviewed after 5 years, with future negotiations will take place at five- coverage of all (eleven broad) services a normal limitation of 10 years on their year intervals in order to reduce or elimi­ sectors and national treatment - i.e. the GATT FOCUS

services, and the activities within those time ago that governments would not be come into effect 6 months after the WTO sectors, which it has negotiated to open up expected to offer commitments in this comes into force. to foreign competition, together with any Round, essentially because of the com­ There are six more issues identified limitations, either on market access or on plex issues of privatisation of government throughout the agreement on which nego­ national treatment. monopolies arising in many countries. tiations have to take place: subsidies; gov­ Exceptions to the MFN principle are Sophisticated value-added telecommuni­ ernment procurement; safeguard also recorded. So, for example, if a gov­ cations services, which are more com­ measures; professional services; qualifi­ ernment already has a preferential bilat­ monly provided on a private basis, are cations, standards and licensing; and ser­ eral agreement which it wishes to already included in the schedules. Nego­ vices trade and the environment. The maintain, then this MFN exemption is tiations started on 6 May and end in April governments have agreed to set up work­ recorded in a separate list. 1996, and will produce commitments and ing parties on: The schedules and MFN exemption a set of basic rules for liberalization. a) Trade in Services and the Environ­ lists, therefore, contain the negotiated and Maritime transport negotiations ment to examine and report, with recom­ guaranteed conditions under which inter­ started on 5 May and end in June 1996, mendations, on the relationship between national trade in services is conducted. and will improve on commitments al­ services trade and the environment, in­ These recorded conditions cannot be ready included in the schedules covering cluding the issue of sustainable develop­ changed for the worse; they can only be the three main areas in this sector: access ment, with reference to measures improved through future negotiations. to and use of port facilities; auxiliary ser­ necessary to protect the environment And the GATS contains the legal basis for vices; and ocean transport. which may conflict with the GATS. on-going liberalization. Movement of natural persons relates b) Professional Services to examine to the entry and temporary stay of persons and report, with recommendations, on the On-going work programme for the purpose of providing a service. It disciplines necessary to ensure that At the end of the negotiations on 15 De­ does not relate to persons seeking perma­ measures relating to qualifications re­ cember 1993, the governments decided on nent employment or residence in a quirements and procedures, technical a work programme to continue negotia­ country. Negotiations to improve com­ standards and licensing requirements in tions in 4 areas: basic telecommunica­ mitments started on 4 May and will end 6 the field of professional services do not tions, maritime transport, movement of months after the WTO comes into force. constitute unnecessary barriers to trade. It natural persons, and financial services. Financial services is another area is agreed that in this work priority will be Basic telecommunications sen ices is where there will be further negotiations to given to the development of multilateral an area where negotiators agreed some improve commitments. The results will disciplines in the accountancy sector. D

WTO Briefing Trade and environment he Marrakesh Ministerial Decision on to trade. The second is that if problems of functioning of the multilateral trading TTrade and Environment (see text on policy coordination to protect the envi­ system and better environmental protec­ page 8) ensures that the linkages betw een ronment and promote sustainable de\el- tion and the promotion of sustainable de­ trade policies, environmental policies and opment are identified through the velopment has developed quickly over the sustainable development will be taken up Committee, they are to be resolved in a past three years. When the matter was first as a priority in the WTO. At its first meet­ way that upholds and safeguards the prin­ raised at the Uruguay Round Ministerial ing, the WTO General Council will estab­ ciples of the multilateral trading system. meeting in Brussels in December 1990. lish a new Committee on Trade and The Committee's initial programme is there was considerable hesitancy on the Environment, with terms of reference and set out in seven areas of work, within part of many GATT members both over an extensive work programme that have which any relevant issue may be raised. extending the work of GATT in this direc­ been agreed on already in the Decision. These have been drawn up on the basis of tion, given that it is an organisation which Pending its establishment, work will get collective insights gained during GATT's has focused almost exclusively on techni­ underway at once in the Preparatory Com­ work over the past three years on trade and cal trade matters, and over the risk they mittee of the WTO. environment and matters raised by indi­ perceived of environmental concerns The Committee's terms of reference vidual governments as being of particular being used to disguise underlying protec­ provide it with a broad-based remit cover­ concern to them in this area. No prejudge­ tionist motives and measures. Many de­ ing all areas of the multilateral trading ments are implied by the work pro­ veloping countries in particular feared system - goods, services, and intellectual gramme and no issues are taboo, but it is their trade interests might be placed in property. It is given both analytical and clear that any recommendations deriving serious jeopardy by efforts of their indus­ prescriptive functions: to identify the re­ from the Committee's work will need to trialized country trading partners to raise lationship between trade measures and en­ command the broad support of members. and enforce worldwide environmental vironmental measures in order to promote One particular task with which the standards which they could not afford. sustainable development, and to make ap­ Committee is charged is to provide input Following the Brussels meeting, con­ propriate recommendations on whether to the WTO system-wide process of mak­ sultations continued in Geneva throug­ any modifications of the provisions of the ing appropriate arrangements for relations hout 1991 on finding an acceptable basis multilateral trading system are required. with inter-governmental and non-govern­ upon which to convene the long-dormant Two important parameters will guide its mental organisations. GATT Group on Environmental work. One is that WTO competence for Recognition by governments of the im­ Continued on page 8 policy coordination in this area is limited portance of the relationship between the GATT FOCUS

Signatories to the Final Act of the Uruguay Round WTO PrepCom holds 15 April 1994, Marrakesh first meeting Angola Gabon Niger he Preparatory Committee for the Algeria Germany Nigeria TWorld Trade Organization met for Antigua and Barbuda Ghana Norway the first time on 29 April, under the Chairmanship of Mr. Peter Sutherland. Argentina Greece Pakistan The Committee discussed various or­ Australia Guatemala Paraguay Austria Guinea Bissau ganizational matters including the es- Peru tablishment of the following Bahrain Honduras Philippines Bangladesh Hong Kong sub-committees: Poland Barbados Hungary • Budget. Finance and Administra­ Portugal Belgium Iceland tion, Chairman: Ambassador An- Qatar Belize India drâs Szepesi (Hungary) Romania Benin Indonesia • Services, Chairman: Ambassador Bolivia Ireland Saint Lucia Christer Manhusen (Sweden) Senegal Botswana Israel • Trade and Environment, Chair­ Singapore Brazil Italy man: Ambassador Luiz Felipe Lam- Slovak Republic Brunei Darussalam Jamaica preia (Brazil). Burundi Japan South Africa The Committee also decided to es­ Cameroon Kenya Spain tablish a fourth sub-committee on In­ Canada Korea, Rep. of Sri Lanka stitutional, Procedural and Legal Central African Rep. Kuwait Suriname Matters, the Chairmanship of which Chile Liechtenstein Sweden will be subject to further consultations. Colombia Luxembourg Switzerland • Congo Macau Tanzania Costa Rica Madagascar Thailand Côte d'Ivoire Malawi Trinidad and Tobago CALENDAR Cuba Malaysia Tunisia Cyprus Mali Turkey The following is a tentative schedule Czech Republic Malta Uganda of meetings in GATT: Denmark Mauritius United Arab Emirates Dominican Rep. Mexico May Egypt Morocco United Kingdom El Salvador Mozambique United States 10-11 GATT Council European Myanmar Uruguay 17 Committee on Customs Communities Namibia Venezuela Valuation Fiji Netherlands Zaïre 17-20 Working Party on Accession New Zealand Zambia Finland of Chinese Taipei France Nicaragua Zimbabwe 19 Committee on Civil Aircraft 24 Working Party on Accession Trade and environment The consultations on trade and environ­ of Mongolia (Continued from page 15) ment in GATT were concluded towards 31 Textiles Surveillance Body the end of 1991 with the convening of the JUNE Measures and International Trade. Those Group on Environmental Measures and consultations were influenced by several International Trade and with a long- 1 Textiles Surveillance Body factors. One was recognition that govern­ awaited contribution from GATT to the 15-16 GATT Council ments were including trade provisions in preparatory work for the UNCED. The international environmental agreements 20-21 Committees on Milk Powders, UNCED in Rio de Janeiro in 1992 cap­ (e.g. CITES, the Montreal Protocol, the Milk Fat and Cheeses tured well the view of GATT members Basle Convention). Another was the in­ that liberal trading conditions, along with 21-22 BOP Committee: consultations creased use in industrialized countries of with Tunisia and Poland environmental measures, such as eco- financial and technological resource Trade Policy Review: Tunisia packaging and eco-labelling require­ transfers, held the key to accelerating sus­ 22-23 ments, whose trade effects were tainable development and that conclusion becoming of increasing significance to of the Round was the most important con­ GATT FOCUS many exporters. Also at this time, a GATT tribution governments could make in im- Newsletter published 10 times a year in dispute panel reported its findings on an plementating UNCED results. English, French and Spanish by the In­ embargo imposed by the United States for Without the confidence-building and environmental reasons against imports of learning process in the EMIT Group dur­ formation and Media Relations Divi­ tunafish from Mexico, raising to pro­ ing the past two years, many contracting sion of GATT. minence a debate both within and outside parties at their 49th Session in January, Centre William Rappard, 154 rue de GATT over the use of trade measures by stressed that the substantial decisions of Lausanne, 1211 Geneva 21, Switzer­ one country to try to change environmen­ the Round on environmental concerns land. Tel. 739 5111 Fax: 7395458 ISSN 0256-0119 tal policies in another. would never have taken place. LJ