Journal of Economic Cooperation 21 , 2 (2000) 45-66 THIRD MINISTERIAL CONFERENCE OF THE WTO AND IMPORTANCE OF AGRICULTURE IN TRADE TALKS ∗ Oker Gürler The report starts with a brief review of the developments within the framework of the World Trade Organisation (WTO). Then, it takes up the preparations for the Third Ministerial Conference of the WTO. In this context, it concentrates on the content and related disputes regarding the draft declaration which would be issued at the end of the Ministerial Conference at Seattle. Then, it evaluates the rules governing international trade in agriculture since new trade talks on agriculture should start this year. After assessing briefly the problems of the developing countries relating to the implementation of the WTO Agreement, it concludes that the OIC Member States should increase co- operation amongst themselves in all areas in relation to the implementation of the WTO Agreement and the new multilateral trade talks. 1. INTRODUCTION The Second Session of the WTO Ministerial Conference was convened in Geneva from 18 to 20 May 1998. On that occasion, the World Trade Organisation (WTO) also celebrated the 50 th anniversary of the multilateral trading system. However, 1998 was also a year dominated by the global financial crisis, of which the damaging and destabilising effects are still being felt. The global financial crisis, originating from the South East Asian Countries, influenced the Russian Federation in Europe and Brazil in Latin America, and spread around the globe. The crisis has significantly affected the world output. The world output growth slowed down from 4.2 per cent in 1997 to 2.5 per cent in 1998. Growth in the newly industrialised Asian economies was negative, -2.9 per cent in 1998, while GDP growth in the developing world fell sharply from 5.7 per cent in 1997 to 3.3 per cent in 1998. ∗ Senior Economist, Director of Research Department at the SESRTCIC. 46 Journal of Economic Cooperation The decline in world output also resulted in a decline in the global trade volume, particularly the export side, from 10.5 per cent in 1997 to 3.5 per cent in 1998. Against this negative environment in the global economy, the WTO Members agreed that the countries must keep their markets open in order to avoid a further deterioration in the global economic situation, when the General Council met in July 1998. In 1998, a number of countries, the Asian Countries, in particular, continued to implement their trade liberalisation programmes. Countries like Indonesia and the Philippines are implementing medium-term tariff reduction programmes that go well beyond their commitments within the framework of the WTO agreement. South Korea has made significant moves towards financial service liberalisation. Last year, several other countries including Bolivia, Canada, Chile, Egypt, Mexico, and Turkey also carried out unilateral MFN tariff cuts. However, recently there has been some increase in the use of anti- dumping measures as compared to 1995 and 1996, in particular by certain major trading countries on certain products such as textiles and clothing, footwear and leather goods, and iron and steel. Industrial countries impose countervailing tariffs on such exports of developing countries. The talks on financial services, which had been interrupted in July 1995, were resumed with the Meeting of the Committee on Trade in Financial Services on 10 April 1997. The financial services agreement entered into force on 1 March 1999, as agreed by the representatives of 52 countries 1, accounting for more than 90 per cent of the global 1 Bahrain; Canada; Chile; Colombia; Cyprus; Czech Rep.; Ecuador; Egypt; EC and their Member States (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Portugal, The Kingdom of the Netherlands, Spain, Sweden, United Kingdom); Hong Kong, China; Hungary; Iceland; India; Indonesia; Israel; Japan; Korea, Rep. of; Kuwait; Macau; Malaysia; Malta; Mauritius; Mexico; New Zealand; Norway; Pakistan; Peru; Romania; Senegal; Singapore; Slovak Republic; South Africa; Sri Lanka; Switzerland; Thailand; Tunisia; Turkey; United States and Venezuela. Third Ministerial Conference of the WTO 47 financial services in banking, insurance, securities and financial information. Furthermore, the WTO’s Council for Trade in Services decided to extend the deadline for accepting the protocol until 15 June 1999 in order to allow another 18 governments 2 more time to complete their domestic ratification procedures. The combined commitments of the 70 governments cover more than the estimated 95 per cent of the world’s financial service activity and eliminate or relax current restrictions on foreign financial services suppliers. The commitments cover major financial services like banking, securities and insurance. This agreement provides a base for improving financial practices and for enlarging the foreign capital available to businesses and consumers 3. Recently, the number of WTO member countries reached 134, including the Kyrgyz Republic, Latvia and Estonia as new members. 35 WTO members are OIC members. (A list of OIC members in the WTO is attached as Annex I). 32 other candidates, all developing and transition economies, are negotiating to become members of the WTO. Former Director General of the WTO, Renato Ruggiero of Italy, completed his term as scheduled on 30 April 1999 after four years in office. However, the efforts to appoint a new Director General ended in a deadlock in April 1999. The WTO council could not reach an agreement on this issue: The United States and the developed countries were insisting on the former New Zealand Premier Mike Moore and the developing countries were supporting Thai Deputy Prime Minister Supachai Panitchpakdi. The deadlock could only be solved towards the end of the summer, and the new WTO Director General Mike Moore was able to assume his post on September 1 st , 1999. 2 Australia, Bolivia, Brazil, Bulgaria, Costa Rica, Dominican Republic, Luxembourg, El Salvador, Ghana, Honduras, Jamaica, Kenya, Nicaragua, Nigeria, Philippines, Poland, Slovenia, and Uruguay. 3 Gurler, Oker, “Recent Developments within the Framework of the WTO: From Singapore to Geneva 1998”, Journal of Economic Co-operation among Islamic Countries, Vol. 19, No.4, October 1998, pp.59-82. 48 Journal of Economic Cooperation The new WTO Director General, Mike Moore, puts forward his priorities as follows: - To help achieve a balanced outcome for all countries, from which the more vulnerable economies will benefit; - To advocate the advantages of a more open trading system which will pave the way for better living standards and a more prosperous and safer world; - To strengthen the WTO and its system and rules within the framework of integrity and fairness and to reshape the organisation to reflect the new reality of its membership and their needs. The WTO General Council nominated chairpersons for the various WTO bodies on 16 February 1999. The General Council will be chaired by H.E. Ambassador Ali Said Mchumo (Tanzania), the Dispute Settlement Body by H.E. Ambassador Nobutoshi Akao (Japan), and the Trade Policy Review Body by H.E. Ambassador Jean-Marie Noirfalisse (Belgium). (The names of the chairpersons of the other WTO bodies are attached as Annex II). 2. THIRD MINISTERIAL CONFERENCE OF THE WTO The Third Ministerial Conference of the WTO was held in Seattle, Washington , from 30 November to 3 December 1999. The US, together with Pakistan, Burkina Faso, and Colombia as the other Office Members chaired this session. Ministers and senior officials from more than 150 countries attended this important meeting at the Washington State Convention and Trade Centre in Seattle. However, the outcome was quite a disappointment against the basic expectation that this Conference would launch another round of multilateral trade negotiations in order to further liberalise markets in goods, particularly in agricultural commodities, services, and investment activities. The Conference ended without an agreement. The talks have already commenced to break this deadlock. However, the future of the trade negotiations seems to be dim at the moment with only two exceptions. New trade talks on agriculture and services will resume at the beginning of 2000, as the WTO Members have already agreed and written into the Agreement on Agriculture and Third Ministerial Conference of the WTO 49 the General Agreement on Trade in Services (GATS). These two topics will constitute the major agenda items of the new trade talks in Geneva. Then, whether the WTO members will want to add other topics or complete the agenda that was under discussion in Seattle remains to be seen. The US Government is very well aware of the global trade benefits that are reaped by the US economy. The American economy has experienced the longest and the strongest economic expansion in the US history and the lowest unemployment rate since 1957. Trade and participation in the world economy have played a fundamental role in this development. Such a long recovery and economic strength reinforced the leadership of the US in the global economy and in world politics. In this process, the impact of the Uruguay Round cannot be neglected to open markets and expand business opportunities for American citizens and companies around the world. Being aware of the benefits of the liberalisation of trade and investment activities around the globe, the US had volunteered to host the Third Ministerial Conference of the WTO. Comment [SS1]: The US government attaches great importance to the Third Ministerial Meeting. According to the The ambitious and demanding US initiatives at the Second Session United States Trade Representative Charlene Barshefsky, “This will be the of the WTO Ministerial Conference in Geneva in May 1998 and the US largest trade event ever held in the proposal to hold the third session in the US were signals of the utmost United States and it will inaugurate global negotiations which will shape importance attached by the US government to the Third Session.