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WTO SINGAPORE AGREEMENT

INTRODUCTION:

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize

international trade. The organization officially commenced on 1 January 1995 under theMarrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which

commenced in 1948.[5] The organization deals with regulation of trade between participating

countries; it provides a framework for negotiating and formalizing trade agreements, and a

dispute resolution process aimed at enforcing participant's adherence to WTO agreements, which

are signed by representatives of member governments[6]:fol.9 – 10 and ratified by their 

 parliaments.[7] Most of the issues that the WTO focuses on derive from previous trade

negotiations, especially from the Uruguay Round (1986 – 1994).

The organization is attempting to complete negotiations on the Doha Development Round, which

was launched in 2001 with an explicit focus on addressing the needs of developing countries. Asof June 2012, the future of the Doha Round remained uncertain: the work programme lists 21

subjects in which the original deadline of 1 January 2005 was missed, and the round is still

incomplete.[8] The conflict between free trade on industrial goods and services but retention of 

 protectionism on farm subsidies to domestic agricultural sector (requested by developed

countries) and the substantiation of the international liberalization of fair trade on agricultural

 products (requested by developing countries) remain the major obstacles. These points of 

contention have hindered any progress to launch new WTO negotiations beyond the Doha

Development Round. As a result of this impasse, there has been an increasing number of 

 bilateral free trade agreements signed.[9] As of July 2012, there were various negotiation groups

in the WTO system for the current agricultural trade negotiation which is in the condition of stalemate.[10]

WTO's current Director-General is Roberto Azevêdo,[11][12] who leads a staff of over 600

 people in Geneva, Switzerland.[13]

HISTORY:

The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established

after World War II in the wake of other new multilateral institutions dedicated to international

economic cooperation  –  notably the Bretton Woods institutions known as the World Bank and

the International Monetary Fund. A comparable international institution for trade, named

theInternational Trade Organization was successfully negotiated. The ITO was to be a United

 Nations specialized agency and would address not only trade barriers but other issues indirectly

related to trade, including employment, investment, restrictive business practices, and

commodity agreements. But the ITO treaty was not approved by the U.S. and a few other 

signatories and never went into effect.[15][16][17]

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In the absence of an international organization for trade, the GATT would over the years

"transform itself" into a de facto international organization.[18]

GATT rounds of negotiations[edit] 

See also: General Agreement on Tariffs and Trade

The GATT was the only multilateral instrument governing international trade from 1946 until

the WTO was established on 1 January 1995.[19] Despite attempts in the mid-1950s and 1960s

to create some form of institutional mechanism for international trade, the GATT continued to

operate for almost half a century as a semi-institutionalized multilateral treaty regime on a

 provisional basis.[20]

From Geneva to Tokyo[edit] 

Seven rounds of negotiations occurred under GATT. The first real GATT trade rounds

concentrated on further reducing tariffs. Then, the Kennedy Round in the mid-sixties broughtabout a GATTanti-dumping Agreement and a section on development. The Tokyo Round during

the seventies was the first major attempt to tackle trade barriers that do not take the form of 

tariffs, and to improve the system, adopting a series of agreements on non-tariff barriers, which

in some cases interpreted existing GATT rules, and in others broke entirely new ground. Because

theseplurilateral agreements were not accepted by the full GATT membership, they were often

informally called "codes". Several of these codes were amended in the Uruguay Round, and

turned into multilateral commitments accepted by all WTO members. Only four remained

 plurilateral (those on government procurement, bovine meat, civil aircraft and dairy products),

 but in 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving

only two.[19]

Uruguay Round

Well before GATT's 40th anniversary, its members concluded that the GATT system was

straining to adapt to a new globalizing world economy.[23][24] In response to the problems

identified in the 1982 Ministerial Declaration (structural deficiencies, spill-over impacts of 

certain countries' policies on world trade GATT could not manage etc.), the eighth GATT round

 –  known as the Uruguay Round  –  was launched in September 1986, in Punta del Este, 

Uruguay.[23]

It was the biggest negotiating mandate on trade ever agreed: the talks were going to extend the

trading system into several new areas, notably trade in services and intellectual property, and to

reform trade in the sensitive sectors of agriculture and textiles; all the original GATT articles

were up for review.[24] The Final Act concluding the Uruguay Round and officially establishing

the WTO regime was signed 15 April 1994, during the ministerial meeting at Marrakesh, 

Morocco, and hence is known as the Marrakesh Agreement.[25]

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The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the

Uruguay Round negotiations (a distinction is made between GATT 1994, the updated parts of 

GATT, and GATT 1947, the original agreement which is still the heart of GATT

1994).[23] GATT 1994 is not however the only legally binding agreement included via the Final

Act at Marrakesh; a long list of about 60 agreements, annexes, decisions and understandings was

adopted. The agreements fall into a structure with six main parts:

The Agreement Establishing the WTO

Goods and investment  –  the Multilateral Agreements on Trade in Goods including the GATT

1994 and the Trade Related Investment Measures (TRIMS)

Services — the General Agreement on Trade in Services

Intellectual property  –  the Agreement on Trade-Related Aspects of Intellectual Property

Rights (TRIPS)

Dispute settlement (DSU)

Reviews of governments' trade policies (TPRM)[26]

In terms of the WTO's principle relating to tariff "ceiling-binding" (No. 3), the Uruguay Round

has been successful in increasing binding commitments by both developed and developing

countries, as may be seen in the percentages of tariffs bound before and after the 1986 – 1994

talks.[27]

Ministerial conferences

The highest decision-making body of the WTO is the Ministerial Conference, which usually

meets every two years. It brings together all members of the WTO, all of which are countries or 

customs unions. The Ministerial Conference can take decisions on all matters under any of the

multilateral trade agreements. The inaugural ministerial conference was held in Singapore in

1996. Disagreements between largely developed and developing economies emerged during this

conference over four issues initiated by this conference, which led to them being collectively

referred to as the "Singapore issues". The second ministerial conference was held in Geneva in

Switzerland. The third conference in Seattle, Washington ended in failure, with massive

demonstrations and police and National Guard crowd-control efforts drawing worldwide

attention. The fourth ministerial conference was held in Doha in the Persian Gulf nation of Qatar. The Doha Development Round was launched at the conference. The conference also approved

the joining of China, which became the 143rd member to join. The fifth ministerial

conference was held inCancún, Mexico, aiming at forging agreement on the Doha round. An

alliance of 22 southern states, the G20 developing nations (led by India,

China,[28] Brazil, ASEAN led by the Philippines), resisted demands from the North for 

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agreements on the so-called "Singapore issues" and called for an end to agricultural

subsidies within the EU and the US. The talks broke down without progress.

The sixth WTO ministerial conference was held in Hong Kong from 13 – 18 December 2005. It

was considered vital if the four-year-old Doha Development Round negotiations were to move

forward sufficiently to conclude the round in 2006. In this meeting, countries agreed to phase outall their agricultural export subsidies by the end of 2013, and terminate any cotton export

subsidies by the end of 2006. Further concessions to developing countries included an agreement

to introduce duty free, tariff free access for goods from the Least Developed Countries, following

the Everything but Arms initiative of the European Union —  but with up to 3% of tariff lines

exempted. Other major issues were left for further negotiation to be completed by the end of 

2010. The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial

conference session in Geneva from 30 November-3 December 2009. A statement by chairman

Amb. Mario Matus acknowledged that the prime purpose was to remedy a breach of protocol

requiring two-yearly "regular" meetings, which had lapsed with the Doha Round failure in 2005,

and that the "scaled-down" meeting would not be a negotiating session, but "emphasis will be on

transparency and open discussion rather than on small group processes and informal negotiating

structures". The general theme for discussion was "The WTO, the Multilateral Trading System

and the Current Global Economic Environment"[29]

Doha Round (Doha Agenda)

The WTO launched the current round of negotiations, the Doha Development Round, at the

fourth ministerial conference in Doha, Qatar in November 2001. This was to be an ambitious

effort to make globalization more inclusive and help the world's poor, particularly by slashing

 barriers and subsidies in farming.[30] The initial agenda comprised both further tradeliberalization and new rule-making, underpinned by commitments to strengthen substantial

assistance to developing countries.[31]

The negotiations have been highly contentious. Disagreements still continue over several key

areas including agriculture subsidies, which emerged as critical in July 2006.[32] According to

a European Unionstatement, "The 2008 Ministerial meeting broke down over a disagreement

 between exporters of agricultural bulk commodities and countries with large numbers of 

subsistence farmers on the precise terms of a 'special safeguard measure' to protect farmers from

surges in imports."[33] The position of the European Commission is that "The successful

conclusion of the Doha negotiations would confirm the central role of multilateral liberalisationand rule-making. It would confirm the WTO as a powerful shield against protectionist

 backsliding."[31] An impasse remains and, as of August 2013, agreement has not been reached,

despite intense negotiations at several ministerial conferences and at other sessions. On 27 March

2013, the chairman of agriculture talks announced "a proposal to loosen price support disciplines

for developing countries’ public stocks and domestic food aid." He added: ―...we are not yet

close to agreement —in fact, the substantive discussion of the proposal is only beginning.‖[34]

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GATT and WTO trade rounds[35]

 Name Start Duration Countries Subjects covered Achievements

Geneva April 19477

months23 Tariffs

Signing of GATT, 45,000 tariff 

concessions affecting $10

 billion of trade

Annecy April 19495

months13 Tariffs

Countries exchanged some

5,000 tariff concessions

TorquaySeptember 

1950

8

months38 Tariffs

Countries exchanged some

8,700 tariff concessions, cutting

the 1948 tariff levels by 25%

Geneva

II

January

1956

5

months26

Tariffs, admission

of Japan$2.5 billion in tariff reductions

DillonSeptember 

1960

11

months26 Tariffs

Tariff concessions worth $4.9

 billion of world trade

Kennedy May 196437

months

62Tariffs, Anti-

dumping

Tariff concessions worth $40

 billion of world trade

TokyoSeptember 

1973

74

months102

Tariffs, non-tariff 

measures,

"framework"

agreements

Tariff reductions worth more

than $300 billion dollars

achieved

UruguaySeptember 

1986

87

months123

Tariffs, non-tariff 

measures, rules,

services, intellectual property, dispute

settlement, textiles,

agriculture, creation

of WTO, etc

The round led to the creation of 

WTO, and extended the range

of trade negotiations, leading

to major reductions in tariffs(about 40%) and agricultural

subsidies, an agreement to

allow full access for 

Textiles and clothing from

developing countries, and an

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extension of intellectual

 property rights.

Doha  

 November 

2001? 159

Tariffs, non-tariff 

measures,

agriculture, labor 

standards,

environment,

competition,

investment,

transparency,

 patents etc

The round is not yet concluded.

Functions

Among the various functions of the WTO, these are regarded by analysts as the most important:

It oversees the implementation, administration and operation of the covered agreements.[36][37]

It provides a forum for negotiations and for settling disputes.[38][39]

Additionally, it is the WTO's duty to review and propagate the national trade policies, and to

ensure the coherence and transparency of trade policies through surveillance in global economic

 policy-making.[37][39] Another priority of the WTO is the assistance of developing, least-

developed and low-income countries in transition to adjust to WTO rules and disciplines through

technical cooperation and training.[40]

The WTO is also a center of economic research and analysis: regular assessments of the global

trade picture in its annual publications and research reports on specific topics are produced by

the organization.[41] Finally, the WTO cooperates closely with the two other components of the

Bretton Woods system, the IMF and the World Bank .[38]

Principles of the trading system

The WTO establishes a framework for trade policies; it does not define or specify outcomes.

That is, it is concerned with setting the rules of the trade policy games.[42] Five principles are of 

 particular importance in understanding both the pre-1994 GATT and the WTO:

 Non-discrimination. It has two major components: the most favoured nation (MFN) rule, and

the national treatment policy. Both are embedded in the main WTO rules on goods, services, and

intellectual property, but their precise scope and nature differ across these areas. The MFN rule

requires that a WTO member must apply the same conditions on all trade with other WTO

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members, i.e. a WTO member has to grant the most favorable conditions under which it allows

trade in a certain product type to all other WTO members.[42] "Grant someone a special favour 

and you have to do the same for all other WTO members."[27] National treatment means that

imported goods should be treated no less favorably than domestically produced goods (at least

after the foreign goods have entered the market) and was introduced to tackle non-tariff barriers

to trade (e.g. technical standards, security standards et al. discriminating against imported

goods).[42]

Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the

MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a

nation to negotiate, it is necessary that the gain from doing so be greater than the gain available

from unilateral liberalization; reciprocal concessions intend to ensure that such gains will

materialise.[43]

Binding and enforceable commitments. The tariff commitments made by WTO members in a

multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions.These schedules establish "ceiling bindings": a country can change its bindings, but only after 

negotiating with its trading partners, which could mean compensating them for loss of trade. If 

satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement

 procedures.[27][43]

Transparency. The WTO members are required to publish their trade regulations, to maintain

institutions allowing for the review of administrative decisions affecting trade, to respond to

requests for information by other members, and to notify changes in trade policies to the WTO.

These internal transparency requirements are supplemented and facilitated by periodic country-

specific reports (trade policy reviews) through the Trade Policy Review Mechanism(TPRM).[44] The WTO system tries also to improve predictability and stability, discouraging the

use of quotas and other measures used to set limits on quantities of imports.[27]

Safety valves. In specific circumstances, governments are able to restrict trade. The WTO's

agreements permit members to take measures to protect not only the environment but also public

health, animal health and plant health.[45]

There are three types of provision in this direction:

articles allowing for the use of trade measures to attain non-economic objectives;

articles aimed at ensuring "fair competition"; members must not use environmental protection

measures as a means of disguising protectionist policies.[45]

 provisions permitting intervention in trade for economic reasons.[44]

Exceptions to the MFN principle also allow for preferential treatment of developing countries, 

regional free trade areas and customs unions.[6]:fol.93

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Organizational structure

The General Council has the following subsidiary bodies which oversee committees in different

areas:

Council for Trade in Goods

There are 11 committees under the jurisdiction of the Goods Council each with a specific task.

All members of the WTO participate in the committees. The Textiles Monitoring Body is

separate from the other committees but still under the jurisdiction of Goods Council. The body

has its own chairman and only 10 members. The body also has several groups relating to

textiles.[46]

Council for Trade-Related Aspects of Intellectual Property Rights

Information on intellectual property in the WTO, news and official records of the activities of the

TRIPS Council, and details of the WTO's work with other international organizations in thefield.[47]

Council for Trade in Services

The Council for Trade in Services operates under the guidance of the General Council and is

responsible for overseeing the functioning of the General Agreement on Trade in

Services (GATS). It is open to all WTO members, and can create subsidiary bodies as

required.[48]

Trade Negotiations Committee

The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks

round. The chair is WTO's director-general. As of June 2012 the committee was tasked with

the Doha Development Round.[49]

The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS

rules and specific commitments.[46] The General council has several different committees,

working groups, and working parties.[50] There are committees on the following: Trade and

Environment; Trade and Development (Subcommittee on Least-Developed Countries); Regional

Trade Agreements; Balance of Payments Restrictions; and Budget, Finance and Administration.

There are working parties on the following: Accession. There are working groups on thefollowing: Trade, debt and finance; and Trade and technology transfer.

Decision-making

The WTO describes itself as "a rules-based, member-driven organization  —  all decisions are

made by the member governments, and the rules are the outcome of negotiations among

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members". The WTO Agreement foresees votes where consensus cannot be reached, but the

 practice of consensus dominates the process of decision-making.[52]

Richard Harold Steinberg (2002) argues that although the WTO's consensus governance model

 provides law-based initial bargaining, trading rounds close through power-based bargaining

favouring Europe and the U.S., and may not lead to Pareto improvement.[53]

Dispute settlement

In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing

the Settlement of Disputes (DSU) annexed to the "Final Act" signed in Marrakesh in

1994.[54] Dispute settlement is regarded by the WTO as the central pillar of the multilateral

trading system, and as a "unique contribution to the stability of the global economy".[55] WTO

members have agreed that, if they believe fellow-members are violating trade rules, they will use

the multilateral system of settling disputes instead of taking action unilaterally.[56]

The operation of the WTO dispute settlement process involves the DSB panels, the Appellate

Body, the WTO Secretariat, arbitrators, independent experts and several specialized

institutions.[57] Bodies involved in the dispute settlement process, World Trade Organization.

Accession and membership

The process of becoming a WTO member is unique to each applicant country, and the terms of 

accession are dependent upon the country's stage of economic development and current trade

regime.[58] The process takes about five years, on average, but it can last more if the country is

less than fully committed to the process or if political issues interfere. The shortest accession

negotiation was that of the Kyrgyz Republic, while the longest was that of Russia, which, havingfirst applied to join GATT in 1993, was approved for membership in December 2011 and

 became a WTO member on 22 August 2012.[59] The second longest was that of Vanuatu, whose

Working Party on the Accession of Vanuatu was established on 11 July 1995. After a final

meeting of the Working Party in October 2001, Vanuatu requested more time to consider its

accession terms. In 2008, it indicated its interest to resume and conclude its WTO accession. The

Working Party on the Accession of Vanuatu was reconvened informally on 4 April 2011 to

discuss Vanuatu's future WTO membership. The re-convened Working Party completed its

mandate on 2 May 2011. The General Council formally approved the Accession Package of 

Vanuatu on 26 October 2011. On 24 August 2012, the WTO welcomed Vanuatu as its 157th

member .[60] An offer of accession is only given once consensus is reached among interested

 parties.[61]

Accession process

A country wishing to accede to the WTO submits an application to the General Council, and has

to describe all aspects of its trade and economic policies that have a bearing on WTO

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agreements.[62] The application is submitted to the WTO in a memorandum which is examined

 by a working party open to all interested WTO Members.[61]

After all necessary background information has been acquired, the working party focuses on

issues of discrepancy between the WTO rules and the applicant's international and domestic

trade policies and laws. The working party determines the terms and conditions of entry into theWTO for the applicant nation, and may consider transitional periods to allow countries some

leeway in complying with the WTO rules.[58]

The final phase of accession involves bilateral negotiations between the applicant nation and

other working party members regarding the concessions and commitments on tariff levels and

market access for goods and services. The new member's commitments are to apply equally to

all WTO members under normal non-discrimination rules, even though they are negotiated

 bilaterally.[62]

When the bilateral talks conclude, the working party sends to the general council or ministerialconference an accession package, which includes a summary of all the working party meetings,

the Protocol of Accession (a draft membership treaty), and lists ("schedules") of the member-to-

 be's commitments. Once the general council or ministerial conference approves of the terms of 

accession, the applicant's parliament must ratify the Protocol of Accession before it can become

a member .[63]

Members and observers

The WTO has 159 members and 25 observer governments.[64] In addition to states, theEuropean Union is a member. WTO members do not have to be ful lsovereign nation-members.

Instead, they must be a customs territory with full autonomy in the conduct of their external

commercial relations. Thus Hong Kong has been a member since 1995 (as "Hong Kong, China"

since 1997) predating the People's Republic of China, which joined in 2001 after 15 years of 

negotiations. The Republic of China (Taiwan) acceded to the WTO in 2002 as "Separate

Customs Territory of Taiwan, Penghu, Kinmen and Matsu" (Chinese Taipei) despite its disputed

status.[65] The WTO Secretariat omits the official titles (such as Counselor, First Secretary,

Second Secretary and Third Secretary) of the members of Chinese Taipei's Permanent Mission to

the WTO, except for the titles of the Permanent Representative and the Deputy Permanent

Representative.[66]

Iran is the biggest economy outside the WTO.[67] With the exception of the Holy See, observers

must start accession negotiations within five years of becoming observers. A number of 

international intergovernmental organizations have also been granted observer status to WTO

 bodies.[68] 14 states and two territories so far have no official interaction with the WTO.

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Agreements

The WTO oversees about 60 different agreements which have the status of international legal

texts. Member countries must sign and ratify all WTO agreements on accession.[69] Adiscussion of some of the most important agreements follows. The Agreement on

Agriculture came into effect with the establishment of the WTO at the beginning of 1995. The

AoA has three central concepts, or "pillars": domestic support, market access and export

subsidies. The General Agreement on Trade in Services was created to extend the multilateral

trading system to service sector, in the same way as the General Agreement on Tariffs and Trade

(GATT) provided such a system for merchandise trade. The agreement entered into force in

January 1995. The Agreement on Trade-Related Aspects of Intellectual Property Rights sets

down minimum standards for many forms of intellectual property (IP) regulation. It was

negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade

(GATT) in 1994.[70]

The Agreement on the Application of Sanitary and Phytosanitary Measures — also known as the

SPS Agreement — was negotiated during the Uruguay Round of GATT, and entered into force

with the establishment of the WTO at the beginning of 1995. Under the SPS agreement, the

WTO sets constraints on members' policies relating to food safety (bacterial contaminants,

 pesticides, inspection and labelling) as well as animal and plant health (imported pests and

diseases). The Agreement on Technical Barriers to Trade is an international treaty of the World

Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on

Tariffs and Trade, and entered into force with the establishment of the WTO at the end of 1994.

The object ensures that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade".[71] The Agreement on Customs

Valuation, formally known as the Agreement on Implementation of Article VII of GATT,

 prescribes methods of customs valuation that Members are to follow. Chiefly, it adopts the

"transaction value" approach.

Office of director-general

The procedures for the appointment of the WTO director-general were published in January

2003.[72] Additionally, there are four deputy directors-general. As of September 2013, these

were: Alejandro Jara, Valentine Sendanyoye Rugwabiza, Harsha Vardhana Singh and Rufus H.

Yerxa.[73] They are scheduled to be replaced on 1 October 2013 by Yi Xiaozhun of China, Karl-

Ernst Brauner of Germany, Yonov Frederick Agah of Nigeria and David Shark of the United

States.[74]

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SINGAPORE MINISTERIAL DECLARATION

Purpose

1. We, the Ministers, have met in Singapore from 9 to 13 December 1996 for the first regular 

 biennial meeting of the WTO at Ministerial level, as called for in Article IV of the AgreementEstablishing the World Trade Organization, to further strengthen the WTO as a forum for 

negotiation, the continuing liberalization of trade within a rule-based system, and the multilateral

review and assessment of trade policies, and in particular to:

  assess the implementation of our commitments under the WTO Agreements and

decisions;

  review the ongoing negotiations and Work Programme;

  examine developments in world trade; and

  address the challenges of an evolving world economy.

Trade and Economic Growth back to top

2. For nearly 50 years Members have sought to fulfil, first in the GATT and now in the WTO,

the objectives reflected in the preamble to the WTO Agreement of conducting our trade relations

with a view to raising standards of living worldwide. The rise in global trade facilitated by trade

liberalization within the rules-based system has created more and better-paid jobs in many

countries. The achievements of the WTO during its first two years bear witness to our desire towork together to make the most of the possibilities that the multilateral system provides to

 promote sustainable growth and development while contributing to a more stable and secure

climate in international relations.

Integration of Economies; Opportunities and Challenges back to top

3. We believe that the scope and pace of change in the international economy, including the

growth in trade in services and direct investment, and the increasing integration of economies

offer unprecedented opportunities for improved growth, job creation, and development. Thesedevelopments require adjustment by economies and societies. They also pose challenges to the

trading system. We commit ourselves to address these challenges.

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Core Labour Standards back to top

4. We renew our commitment to the observance of internationally recognized core labour 

standards. The International Labour Organization (ILO) is the competent body to set and deal

with these standards, and we affirm our support for its work in promoting them. We believe that

economic growth and development fostered by increased trade and further trade liberalizationcontribute to the promotion of these standards. We reject the use of labour standards for 

 protectionist purposes, and agree that the comparative advantage of countries, particularly low-

wage developing countries, must in no way be put into question. In this regard, we note that the

WTO and ILO Secretariats will continue their existing collaboration.

Marginalization back to top

5. We commit ourselves to address the problem of marginalization for least-developed countries,

and the risk of it for certain developing countries. We will also continue to work for greater 

coherence in international economic policy-making and for improved coordination between theWTO and other agencies in providing technical assistance.

Role of WTO back to top

6. In pursuit of the goal of sustainable growth and development for the common good, we

envisage a world where trade flows freely. To this end we renew our commitment to:

  a fair, equitable and more open rule-based system;

   progressive liberalization and elimination of tariff and non-tariff barriers to trade in

goods;

   progressive liberalization of trade in services;  rejection of all forms of protectionism;

  elimination of discriminatory treatment in international trade relations;

  integration of developing and least-developed countries and economies in transition into

the multilateral system; and

  the maximum possible level of transparency.

Regional Agreements back to top

7. We note that trade relations of WTO Members are being increasingly influenced by regional

trade agreements, which have expanded vastly in number, scope and coverage. Such initiatives

can promote further liberalization and may assist least-developed, developing and transition

economies in integrating into the international trading system. In this context, we note the

importance of existing regional arrangements involving developing and least-developed

countries. The expansion and extent of regional trade agreements make it important to analyse

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whether the system of WTO rights and obligations as it relates to regional trade agreements

needs to be further clarified. We reaffirm the primacy of the multilateral trading system, which

includes a framework for the development of regional trade agreements, and we renew our 

commitment to ensure that regional trade agreements are complementary to it and consistent

with its rules. In this regard, we welcome the establishment and endorse the work of the new

Committee on Regional Trade Agreements. We shall continue to work through progressive

liberalization in the WTO as we are committed in the WTO Agreement and Decisions adopted at

Marrakesh, and in so doing facilitate mutually supportive processes of global and regional trade

liberalization.

Accessions

8. It is important that the 28 applicants now negotiating accession contribute to completing the

accession process by accepting the WTO rules and by offering meaningful market access

commitments. We will work to bring these applicants expeditiously into the WTO system.

Dispute Settlement

9. The Dispute Settlement Understanding (DSU) offers a means for the settlement of disputes

among Members that is unique in international agreements. We consider its impartial and

transparent operation to be of fundamental importance in assuring the resolution of trade

disputes, and in fostering the implementation and application of the WTO agreements. The

Understanding, with its predictable procedures, including the possibility of appeal of panel

decisions to an Appellate Body and provisions on implementation of recommendations, has

improved Members' means of resolving their differences. We believe that the DSU has worked

effectively during its first two years. We also note the role that several WTO bodies have playedin helping to avoid disputes. We renew our determination to abide by the rules and procedures of 

the DSU and other WTO agreements in the conduct of our trade relations and the settlement of 

disputes. We are confident that longer experience with the DSU, including the implementation of 

 panel and appellate recommendations, will further enhance the effectiveness and credibility of 

the dispute settlement system.

Implementation

10. We attach high priority to full and effective implementation of the WTO Agreement in a

manner consistent with the goal of trade liberalization. Implementation thus far has been

generally satisfactory, although some Members have expressed dissatisfaction with certain

aspects. It is clear that further effort in this area is required, as indicated by the relevant WTO

 bodies in their reports. Implementation of the specific commitments scheduled by Members with

respect to market access in industrial goods and trade in services appears to be proceeding

smoothly. With respect to industrial market access, monitoring of implementation would be

enhanced by the timely availability of trade and tariff data. Progress has been made also in

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advancing the WTO reform programme in agriculture, including in implementation of agreed

market access concessions and domestic subsidy and export subsidy commitments.

 Notifications and Legislation

11. Compliance with notification requirements has not been fully satisfactory. Because the WTOsystem relies on mutual monitoring as a means to assess implementation, those Members which

have not submitted notifications in a timely manner, or whose notifications are not complete,

should renew their efforts. At the same time, the relevant bodies should take appropriate steps to

 promote full compliance while considering practical proposals for simplifying the notification

 process.

12. Where legislation is needed to implement WTO rules, Members are mindful of their 

obligations to complete their domestic legislative process without further delay. Those Members

entitled to transition periods are urged to take steps as they deem necessary to ensure timely

implementation of obligations as they come into effect. Each Member should carefully review allits existing or proposed legislation, programmes and measures to ensure their full compatibility

with the WTO obligations, and should carefully consider points made during review in the

relevant WTO bodies regarding the WTO consistency of legislation, programmes and measures,

and make appropriate changes where necessary.

Developing Countries back to top

13. The integration of developing countries in the multilateral trading system is important for 

their economic development and for global trade expansion. In this connection, we recall that the

WTO Agreement embodies provisions conferring differential and more favourable treatment for 

developing countries, including special attention to the particular situation of least-developed

countries. We acknowledge the fact that developing country Members have undertaken

significant new commitments, both substantive and procedural, and we recognize the range and

complexity of the efforts that they are making to comply with them. In order to assist them in

these efforts, including those with respect to notification and legislative requirements, we will

improve the availability of technical assistance under the agreed guidelines. We have also agreed

to recommendations relative to the decision we took at Marrakesh concerning the possible

negative effects of the agricultural reform programme on least-developed and net food-importing

developing countries.

Least-Developed Countries back to top

14. We remain concerned by the problems of the least-developed countries and have agreed to:

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a Plan of Action, including provision for taking positive measures, for example duty-free access,

on an autonomous basis, aimed at improving their overall capacity to respond to the

opportunities offered by the trading system;

seek to give operational content to the Plan of Action, for example, by enhancing conditions for 

investment and providing predictable and favourable market access conditions for LLDCs' products, to foster the expansion and diversification of their exports to the markets of all

developed countries; and in the case of relevant developing countries in the context of the Global

System of Trade Preferences; and

organize a meeting with UNCTAD and the International Trade Centre as soon as possible in

1997, with the participation of aid agencies, multilateral financial institutions and least-

developed countries to foster an integrated approach to assisting these countries in enhancing

their trading opportunities.

Textiles and Clothing

15. We confirm our commitment to full and faithful implementation of the provisions of the

Agreement on Textiles and Clothing (ATC). We stress the importance of the integration of 

textile products, as provided for in the ATC, into GATT 1994 under its strengthened rules and

disciplines because of its systemic significance for the rule-based, non-discriminatory trading

system and its contribution to the increase in export earnings of developing countries. We attach

importance to the implementation of this Agreement so as to ensure an effective transition to

GATT 1994 by way of integration which is progressive in character. The use of safeguard

measures in accordance with ATC provisions should be as sparing as possible. We note concerns

regarding the use of other trade distortive measures and circumvention. We reiterate theimportance of fully implementing the provisions of the ATC relating to small suppliers, new

entrants and least-developed country Members, as well as those relating to cotton-producing

exporting Members. We recognize the importance of wool products for some developing country

Members. We reaffirm that as part of the integration process and with reference to the specific

commitments undertaken by the Members as a result of the Uruguay Round, all Members shall

take such action as may be necessary to abide by GATT 1994 rules and disciplines so as to

achieve improved market access for textiles and clothing products. We agree that, keeping in

view its quasi-judicial nature, the Textiles Monitoring Body (TMB) should achieve transparency

in providing rationale for its findings and recommendations. We expect that the TMB shall make

findings and recommendations whenever called upon to do so under the Agreement. Weemphasize the responsibility of the Goods Council in overseeing, in accordance with Article IV:5

of the WTO Agreement and Article 8 of the ATC, the functioning of the ATC, whose

implementation is being supervised by the TMB.

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Trade and Environment

16. The Committee on Trade and Environment has made an important contribution towards

fulfilling its Work Programme. The Committee has been examining and will continue to

examine, inter alia, the scope of the complementarities between trade liberalization, economic

development and environmental protection. Full implementation of the WTO Agreements willmake an important contribution to achieving the objectives of sustainable development. The

work of the Committee has underlined the importance of policy coordination at the national level

in the area of trade and environment. In this connection, the work of the Committee has been

enriched by the participation of environmental as well as trade experts from Member 

governments and the further participation of such experts in the Committee's deliberations would

 be welcomed. The breadth and complexity of the issues covered by the Committee's Work 

Programme shows that further work needs to be undertaken on all items of its agenda, as

contained in its report. We intend to build on the work accomplished thus far, and therefore

direct the Committee to carry out its work, reporting to the General Council, under its existing

terms of reference.

Services Negotiations

The fulfilment of the objectives agreed at Marrakesh for negotiations on the improvement of 

market access in services - in financial services, movement of natural persons, maritime transport

services and basic telecommunications - has proved to be difficult. The results have been below

expectations. In three areas, it has been necessary to prolong negotiations beyond the original

deadlines. We are determined to obtain a progressively higher level of liberalization in services

on a mutually advantageous basis with appropriate flexibility for individual developing country

Members, as envisaged in the Agreement, in the continuing negotiations and those scheduled to begin no later than 1 January 2000. In this context, we look forward to full MFN agreements

 based on improved market access commitments and national treatment. Accordingly, we

will:achieve a successful conclusion to the negotiations on basic telecommunications in February

1997; and resume financial services negotiations in April 1997 with the aim of achieving

significantly improved market access commitments with a broader level of participation in the

agreed time frame.

With the same broad objectives in mind, we also look forward to a successful conclusion of the

negotiations on Maritime Transport Services in the next round of negotiations on services

liberalization.

In professional services, we shall aim at completing the work on the accountancy sector by the

end of 1997, and will continue to develop multilateral disciplines and guidelines. In this

connection, we encourage the successful completion of international standards in the

accountancy sector by IFAC, IASC, and IOSCO. With respect to GATS rules, we shall

undertake the necessary work with a view to completing the negotiations on safeguards by the

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end of 1997. We also note that more analytical work will be needed on emergency safeguards

measures, government procurement in services and subsidies.

ITA and Pharmaceuticals back to top

18. Taking note that a number of Members have agreed on a Declaration on Trade in InformationTechnology Products, we welcome the initiative taken by a number of WTO Members and other 

States or separate customs territories which have applied to accede to the WTO, who have agreed

to tariff elimination for trade in information technology products on an MFN basis as well as the

addition by a number of Members of over 400 products to their lists of tariff-free products in

 pharmaceuticals.

Work Programme and Built-in Agenda back to top

19. Bearing in mind that an important aspect of WTO activities is a continuous overseeing of the

implementation of various agreements, a periodic examination and updating of the WTO Work 

Programme is a key to enable the WTO to fulfil its objectives. In this context, we endorse the

reports of the various WTO bodies. A major share of the Work Programme stems from the WTO

Agreement and decisions adopted at Marrakesh. As part of these Agreements and decisions we

agreed to a number of provisions calling for future negotiations on Agriculture, Services and

aspects of TRIPS, or reviews and other work on Anti-Dumping, Customs Valuation, Dispute

Settlement Understanding, Import Licensing, Preshipment Inspection, Rules of Origin, Sanitary

and Phyto-Sanitary Measures, Safeguards, Subsidies and Countervailing Measures, Technical

Barriers to Trade, Textiles and Clothing, Trade Policy Review Mechanism, Trade-Related

Aspects of Intellectual Property Rights and Trade-Related Investment Measures. We agree to a

 process of analysis and exchange of information, where provided for in the conclusions andrecommendations of the relevant WTO bodies, on the Built-in Agenda issues, to allow Members

to better understand the issues involved and identify their interests before undertaking the agreed

negotiations and reviews. We agree that:

  the time frames established in the Agreements will be respected in each case;

  the work undertaken shall not prejudge the scope of future negotiations where such

negotiations are called for; and

  the work undertaken shall not prejudice the nature of the activity agreed upon (i.e.

negotiation or review).

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Investment and Competition

20. Having regard to the existing WTO provisions on matters related to investment and

competition policy and the built-in agenda in these areas, including under the TRIMs Agreement,and on the understanding that the work undertaken shall not prejudge whether negotiations will

 be initiated in the future, we also agree to:

  establish a working group to examine the relationship between trade and investment; and

  establish a working group to study issues raised by Members relating to the interaction

 between trade and competition policy, including anti-competitive practices, in order to

identify any areas that may merit further consideration in the WTO framework.

These groups shall draw upon each other's work if necessary and also draw upon and be without prejudice to the work in UNCTAD and other appropriate intergovernmental fora. As regards

UNCTAD, we welcome the work under way as provided for in the Midrand Declaration and the

contribution it can make to the understanding of issues. In the conduct of the work of the

working groups, we encourage cooperation with the above organizations to make the best use of 

available resources and to ensure that the development dimension is taken fully into account. The

General Council will keep the work of each body under review, and will determine after two

years how the work of each body should proceed. It is clearly understood that future

negotiations, if any, regarding multilateral disciplines in these areas, will take place only after an

explicit consensus decision is taken among WTO Members regarding such negotiations.

Transparency in Government Procurement

21. We further agree to:

establish a working group to conduct a study on transparency in government procurement

 practices, taking into account national policies, and, based on this study, to develop elements for 

inclusion in an appropriate agreement; and

direct the Council for Trade in Goods to undertake exploratory and analytical work, drawing on

the work of other relevant international organizations, on the simplification of trade procedures

in order to assess the scope for WTO rules in this area.

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Trade Facilitation

22. In the organization of the work referred to in paragraphs 20 and 21, careful attention will be

given to minimizing the burdens on delegations, especially those with more limited resources,

and to coordinating meetings with those of relevant UNCTAD bodies. The technical cooperation

 programme of the Secretariat will be available to developing and, in particular, least-developedcountry Members to facilitate their participation in this work.

23. Noting that the 50th anniversary of the multilateral trading system will occur early in 1998,

we instruct the General Council to consider how this historic event can best be commemorated.

Finally, we express our warmest thanks to the Chairman of the Ministerial Conference, Mr. Yeo

Cheow Tong, for his personal contribution to the success of this Ministerial Conference. We also

want to express our sincere gratitude to Prime Minister Goh Chok Tong, his colleagues in the

Government of Singapore and the people of Singapore for their warm hospitality and the

excellent organization they have provided. The fact that this first Ministerial Conference of theWTO has been held at Singapore is an additional manifestation of Singapore's commitment to an

open world trading system.

Singapore issues

Four issues introduced to the WTO agenda at the December 1996 Ministerial Conference in

Singapore: trade and investment, trade and competition policy, transparency in government

 procurement, and trade facilitation. Four working groups set up during the World Trade

Organization Ministerial Conference of 1996 in Singapore. These groups are tasked with these

issues: transparency in government procurement, trade facilitation (customs

issues), trade and investment, and trade and competition. These issues were pushed at successive

Ministerials by the European Union, Japan and Korea, and opposed by most developing

countries. The United States was lukewarm about the inclusion of these issues, indicating that it

could accept some or all of them at various times, but preferring to focus on market

access.[1][2] Disagreements between largely developed and developing economies prevented a

resolution in these issues, despite repeated attempts to revisit them, notably during the 2003

Ministerial Conference in Cancún, Mexico, whereby no progress was made.[2]

Since, some progress has been achieved in the area of trade facilitation. In July 2004, WTO

Members formally agreed to launch negotiations. Under the mandate of the so-called ―July

 package‖, Members are directed to clarify and improve GATT Article V (Freedom of Transit),

Article VIII (Fees and Formalities connected with Importation and Exportation), and Article X

(Publication and Administration of Trade Regulations). The negotiations also aim to enhance

technical assistance and capacity building in this area and to improve effective cooperation

 between customs and other appropriate authorities on trade facilitation and customs compliance

issues.

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To date, Members have submitted a great number of proposals under the mandate which provide

the basis for the on-going negotiations. The negotiations should be completed under the

overall Doha Development Agenda timeline.

Initiation and Evolution of the Singapore Issues in the WTO

Before and at the Singapore Ministerial (1996)

BEFORE the establishment of the WTO, there had already been attempts tointroduce one of the

Singapore issues, i.e., investment, as the subject of abinding agreement as part of the rules of the

multilateral trading system. Inthe Uruguay Round trade negotiations, major developed countries

such asthe United States attempted to have full-blown rules for investment per se within the

agreement being negotiated on Trade-Related Investment Measures(TRIMs). The US had

 proposed that the TRIMs Agreement incorporate rules not only on investment measures, but also

on the right to establishment and national treatment for foreign investors. These proposals on

investment per se were, however, successfully rejected by many developing countries.The scopeof the TRIMs Agreement, which, like the other Uruguay Round agreements, became part of the

WTO rules, was thus restricted to traderelated investment measures. However, the agreement, in

Article 9, mandates that within five years of its entry into force, a review of the operation of the

agreement be undertaken, with proposals to be made for amendments. In the course of the

review, the WTO’s Council for Trade in Goods ―shall consider whether the Agreement should be

complemented with provisions on investment policy and competition policy.‖In 1995 itself,

 barely after the WTO had been set up, the European Commission (EC, which represents the

European Union in the WTO) started consulting developing countries on launching negotiations

for a WTO investment agreement. The pressure for this built up during 1996, in the preparatory

 process for the first WTO Ministerial in Singapore in December 1996.

Major Features and Development Implications of the Singapore Issues

WHEN the Singapore issues were first proposed by the major developed countries for introduction in the WTO, the developing-country delegations were not clear what the contents of the proposals and their implications were. As the discussions progressed through the years, these became clearer. This chapter provides an interpretation of the main features of the proposals andobjectives of the proponents of the issues, and a summary of the implications for developmentand policy space of developing countries if the issues had become the subject of binding rules inthe WTO along the lines desired by the proponents.

The common themes of the proposals for three of the issues (investment, competition,government procurement) were: the expansion and maximisation of the rights of foreignenterprises to have access to developing countries’ markets through their products and

investment; the reduction to a minimum of the rights of the host government to regulate foreigninvestors; and the prohibition against governments taking measures that support or encourage local enterprises. A major device used by the major developed countries was to arguefor the application of the ―WTO principle‖ of ―national treatment‖ to the three issues. It couldthen be more easily argued by them

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that foreign goods, investors and traders should be given equal (or better) rights as locals,including access to markets and investments, and that governments should be prevented fromgiving preferences or advantages to local investors and firms.

These are major objectives, with serious implications for development. If the proposedagreements come into the WTO, developing countries would find it increasingly difficult todevise their own development policies, including for building the capacity and competitivenessof local enterprises.Developing countries would no longer be allowed to support their local industries. Many localcompanies and farms may not be able to survive the unbridled competition unleashed by suchagreements.An important question is whether these issues belong in the WTO in the first place. They are notdirectly trade issues. The developed countries had planned to place them in the WTO because of the relative ease with which it could be argued that the ―WTO principles‖ should apply to these

issues, and because the WTO’s trade sanctions mechanism would ensure that the rules to be established could be enforced.An increasing number of developing countries realised the inappropriateness of negotiating theseissues in the WTO or lodging new agreements on these subjects in the WTO. They becameaware that the outcome would be very damaging. The application of national treatment to theseissues is inappropriate as it would prevent or hinder governments from adopting policies and measures needed for development and other national and socioeconomicgoals such as nation-building and supporting disadvantaged communities.In the WTO, the term ―negotiation‖, especially when applied to ―new issues‖, implies that a

commitment has been made to establish new rules or agreements. The historical record showsthat once a decision is taken to begin negotiations, it would be difficult to prevent new rules or treaties from being established. Moreover, during the negotiations, the developed countrieshave tremendous advantages in shaping the agenda, principles and provisions of the issue and theagreement, and the final outcome is likely to be against the interests of developing countries. It isthus important for the developing countries to prevent issues that are not appropriate from becoming subject to a decision to start negotiations or even to begin a ―study process‖. Below is a summary and analysis of the proposals of the developed countries on each of theSingapore issues.

Relationship between Trade and Investment

BackgroundAt the Singapore Ministerial in 1996, Ministers agreed to form a working group to study therelationship between trade and investment. It was explicitly stated that there was no commitmentto negotiate an agreement. For the next five years (1997-2001) the WTO Working Group on the

Relationship between Trade and Investment held several discussions. Major developed countries pressed very hard to have the working group transformed into a negotiating group that wouldnegotiate an investment agreement in the WTO. However, the majority of developing countrieswere extremely reluctant to agree to this. Some of these countries were strongly opposed. Thereasons included: the inappropriateness of an investment regime in a trade organisation; the lossof policy autonomy over investment policy would damage development options; the lack of understanding of the issues and their implications for development; harmful effects of newobligations; and diversion of time and human resources from other vital work in the WTO.

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They wanted the study process to continue, and were adamant that negotiations for an agreementshould not start. As a result of the 2001 Doha mandate, the working group in 2002-2003discussed the following issues which the Doha Declaration (in paragraph 22) identified assubjects for ―clarification‖, i.e., scope and definition, transparency, non-discrimination,modalities for pre-establishment commitments based on a GATS-type, positive list approach,

development provisions, exceptions and balance-of-payments safeguards, consultation andthe settlement of disputes. Paragraph 22 also stated that any investment framework should reflectin a balanced way the interests of home and host countries, and take account of development policies and objectives of host governments and their right to regulate in the public interest.There was mention also that the special needs of developing countries should be takeninto account; due regard should be paid to other relevant WTO provisions; and account should betaken of existing bilateral and regional investment arrangements.

A reading of the 2002 and 2003 reports of the working group clearly reveals that there was noconsensus among the members on the various issues discussed. Even in relation to the WTO as aforum, some members had doubts regarding the propriety of the WTO being the right forum for 

the discussion of an issue whose relationship with trade is tenuous. On scope and definition,there was a major split between countries like the US that wanted a comprehensive coverage,including portfolio investment, and most other countries, which wanted to restrict the discussionto foreign direct investment. There were many points of disagreement regarding development provisions, with many developing countries wanting maximum flexibility for development policies whilst developed countries wanted a much more restrictive approach. On non-discrimination, the developed countries insisted this was a core principle, but several developingcountries doubted its appropriateness in relation to investment. On investor and home-countryobligations, some countries insisted this issue must be included for the sake of having some balance, whilst others did not think it even belonged in an investment framework. The lack of consensus on the investment issue became very obvious before the Cancun meeting. The thenchairman of the investment consultations, the Brazilian Ambassador Luiz Felipe Seixas Correa,himself concluded at a heads-of-delegation meeting on investment in August 2003, on the eve of Cancun, that there was no consensus on the modalities for negotiations. After Doha, the EU andJapan became the main developed economies seeking to upgrade the study process intonegotiations for an agreement. Since many developing countries were opposed to introducing aninvestment agreement in the WTO, the EU and Japan attempted to portray their aim as being to produce a development-friendly investment agreement. However, a large number of developingcountries remained opposed or reluctant to move into negotiations.Main Design and Strategic Aim of Proponents 

The main features of an international investment agreement as advocated by the major developedcountries are rather well known and have remained constant over the years, although there may be differences in some of the details. Among these main features are the following: • The right to entry and establishment: Foreign investors would beprovided the right to entry andestablishment in member countries of the agreement without (or with minimal) conditions andregulations and the right to operate in the host countries without most conditionsnow existing.• ―Non-discrimination‖ princi ple: National treatment and MFN status would be given to foreigninvestors and investments. This would apply at the pre- and post-establishment phases.

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• Scope and definition: The original definition of investment has been very broad. For example,

the coverage of the proposed OECD Multilateral Agreement on Investment (MAI) spannedforeign direct investment, portfolio investment, credit, intellectual property rights andeven non-commercial organisations, and all sectors except security and defence. According tothe Doha Declaration, cross-border FDI is mentioned as an issue for clarification. However, in

the discussions, some countries, notably the US, proposed a broad definition of investment andinvestor, one that would include portfolio investment.• Performance requirements imposed by host-country governments (e.g., regulations on limitsand conditions on equity, obligations for technology transfer, measures for using local materialsand for increasing exports or limiting imports) would be prohibited or disciplined.• Investors’ rights and funds transfer: Host governments would be obliged to allow free mobility

of funds into and out of the country; regulations/ controls on funds transfer would thus berestricted or prohibited.• Investors’ rights and expropriation: There would also be strict standards of protection for investors’ rights in relation to ―expropriation‖ of property. A broad definition was given to

expropriation in the proposed MAI model; it included ―creeping expropriation‖. The North

American Free Trade Agreement (NAFTA) experience is very pertinent. The UShas advocated that both direct and indirect expropriation be covered; the latter includes the lossof goodwill and future revenue/profits of a company or an investor as a result of a governmentmeasure or policy.• It is advocated that the investment agreement be legally binding, with a dispute settlementsystem. In NAFTA and the proposed OECD-MAI, the dispute settlement system would alsoenable investors to bring cases against a state (i.e., investor-to-state dispute). Most of theelements above were in the original EU paper (1995) proposing an international investmentagreement in the WTO, or in the OECD draft of the MAI, or in NAFTA. Although several of theabove elements were not directly mentioned in the Doha Declaration as issues for clarification,some of them entered the discussion in the working group under one item or another. Thedeveloped countries had tried to ensure that all these elements, and some more, would be part of the negotiations and the outcome. Due to the unpopularity of this extreme model,including among developedcountry citizens that had successfully opposed the OECD-MAI, someof the major proponents put forward watered-down versions. These versions would not be soextreme, and would not enable the proponents to reach their ultimate goals immediately. Instead,step-by-step or stage-by-stage approaches were proposed, whereby members of the WTO wouldagree to negotiate an investment agreement, and in the agreement they could have the choice of which sectors and how fast to liberalise. (This is presumably what the ―GATStype‖ approach

referred to; see below.) The approach adopted was to first persuade developing countries to agreeto the concept that investment rules belong in the mandate of the WTO; to then draw them intonegotiations for an agreement which appears not to be so harmful and where there is some spaceto make choices (especially when compared to the original models) and only later on exert pressure on them to undertake increasing commitments for liberalisation in more sectors andobligations in a wider range of policy measures.

To make an investment agreement appear more acceptable, a GATS-type approach was mooted.Though in theory GATS (the WTO’s General Agreement on Trade in Services) allows eachcountry to choose the timing, sectors and degree of liberalisation, in reality there is pressure toaccelerate the pace and depth of liberalisation in many (services) sectors. Also, countries

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that have made a commitment would be unable to ―roll back‖ or backtrack without providing

compensation. Moreover, the services agreement also has general rules that apply across allservices sectors (whether or not they are on the schedule for liberalisation) and these rules are being expanded. Presumably the proposed investment framework would also have had generalrules that apply, irrespective of what the countries have committed on a sectoral basis.For its

 part, the US was advocating a ―higher -standard‖ investment agreement,and this could be closer to the MAI or NAFTA models. So it was probablethat if negotiations had commenced in theWTO, the US (and possibly othercountries) would have advocated for the elements, scope andhigh standardsof the extreme models.

Potential Ef fects of an I nvestment Agreement 

Foreign investment is a complex phenomenon with many aspects. Its relationship withdevelopment is such that there can be positive as well as negative aspects. There is an importantneed for government and government policy to regulate investments so that the positive benefits are derived whilethe adverse effectsare minimised or controlled. The experience of countries shows that governments havetraditionally made use of a wide range of policy instruments in the formulation of investment policy and in the management of investment. It is crucial that developing countries continue tohave the policy space and flexibility to exercise their right to such policies and policyinstruments. Due to its particular features, foreign investment can have the tendency to bring about adverse effects on the host country or trends that require carefulmanagement. These include:

(a) possible contribution to financial fragility due to the movements of funds into and out of thecountry, and due to some types of financially destabilising activities;(b) possible effects on the country’s balance of payments (especially through increased imports

and outflow of investment income, which have to be balanced by export earnings and newcapital inflows; if the balance is not attained naturally, it may have to be attained or attemptedthrough regulation);(c) possible effects on the competitiveness and viability of local enterprises;(d) possible effects on the balance between local and foreign ownershipand participation in the economy;(e) possible effect on the balance of ownership and participation amonglocal communities in the society.On the other hand, foreign investment can make positive contributions, suchas:(a) use of modern technology and technological spillovers to local firms;(b) global marketing network;

(c) contribution to capital funds and export earnings;(d) increased employment.In order that these potential benefits be realised, and that a good balance isattained between the negative and positive effects so that there is an overallnet positive effect, there is a crucial role for governments to play in managinga sophisticated set of investment and development policies.An investment agreement of the type envisaged by the developed countrieswould make it much more difficult to achieve a positive balance as it would

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severely constrain the space and flexibility for investment and development policies.Such an agreement is ultimately designed to maximise foreign investors’ rights whilst minimising the authority, rights and policy space of governmentsand developing countries. This has serious consequences in terms of policymaking

in economic, social and political spheres, affecting the ability to plan in relation to local participation and ownership, balancing of equityshares between foreigners and locals and between local communities, theability to build capacity of local firms and entrepreneurs, etc. It would alsoweaken the position of government vis-à-vis foreign investors (including portfolio investors) in such areas as choice of investments and investors,transfer of funds, performance requirements aimed at development objectivessuch as technology transfer, protecting the balance of payments, and theformulation of social and environmental regulations.It is argued by proponents that an investment agreement will attract moreFDI to developing countries. There is no evidence of this. FDI flows to

countries that are already quite developed, or where there are resources andinfrastructure, or where there is a sizable market.A move towards a binding investment agreement is therefore dangerous asit would threaten options for development, social policies and nation-buildingstrategies. It is thus proposed that the strategy to be adopted should be to prevent the investment issue from entering the mode of ―negotiations‖. 

Conclusions 

Investment is not a trade issue, and thus bringing it within the ambit of theWTO would be an aberration and could cause distortion to the trade system.The principles of the WTO (including national treatment and MFN) thatapply to trade in goods are inappropriate when applied to investment. Instead,their application would be damaging to the development interests of developing countries. Traditionally developing countries have had thefreedom and right to regulate the entry and conditions of establishment and

operation of foreign investments; restricting their rights would cause adverserepercussions. An agreement in the WTO is likely to be of the type proposed by developed countries. It would be profoundly anti-development.Whilst the Doha Declaration recognised the case for a multilateral framework on investment, it can be argued that it can also be recognised that there is acase against a multilateral framework, depending on what the framework islike. If the framework is located in the WTO, with the elements and

obligations proposed by the advocates, it would be an imbalanced one andthus should not be accepted. A more appropriate framework must be a balanced one, with the main aim of regulating corporations (instead of regulating governments); it could be one that is not legally binding; and itcould be one that is located in the United Nations and not the WTO.The WTO agenda is already over-crowded, with delegations unable to cope.Introducing investment and other Singapore issues on the negotiating agendawould divert the time and resources of the members from the urgent

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uncompleted tasks, including the implementation and other developmentissues that members had pledged to give priority to but on which thedeveloped countries have so far not shown a commitment to make progress.The establishment of an investment agreement which gives unprecedentedrights to foreign investors would cause the already imbalanced WTO system

to become much more imbalanced. Since most international investmentsare owned by firms from the developed countries, they will obtain theoverwhelming share of the benefits, whilst developing countries as a wholewould bear the costs, including the loss of flexibility in framing development policy. The proposed investment framework would thus not be reciprocal inthe distribution of benefits.For these reasons, an investment agreement should not be negotiated or evenfurther discussed in the WTO. The issue has been a divisive one and has for too long diverted the attention of the WTO membership from the real issuesof trade and development. The issue should be dropped altogether, and notonly for the duration of the Doha work programme.

Interaction between Trade and Competition PolicyAt the Singapore Ministerial, Ministers decided to set up a working groupon the interaction between trade and competition policy. There was a specificmention that this did not commit members to negotiating an agreement inthe WTO on competition. As in the case of the investment issue, mostdeveloping countries voiced reluctance or opposition to the establishmentof a WTO agreement on competition policy.However, with the developing countries’ views not adequately represented  in the drafts of the Doha Declaration, a work programme for clarifying certaintopics (with a view to reaching consensus on modalities) was ultimatelyestablished at Doha. The Doha Declaration (paragraph 25) mandated that inthe period until the Fifth Ministerial, the Working Group on the Interaction between Trade and Competition Policy would focus on the clarification of:(a) core principles, including transparency, non-discrimination and proceduralfairness, and provisions on hardcore cartels; (b) modalities for voluntarycooperation; and (c) support for progressive reinforcement of competitioninstitutions in developing countries through capacity building. Full accountshall be taken of the needs of developing and least developed countries andappropriate flexibility provided to address them.At the time of the Doha meeting, there was hardly any commonunderstanding, let alone agreement, among countries on what the competitionconcept and issue meant in the WTO context, especially in terms of its―interaction‖ with trade and its relationship with development. The whole set of issues of competition, competition law and competition policy andtheir relation to trade and to development is extremely complex. The proposalof the proponents of a WTO agreement was to have multilateral rules thatdiscipline members to establish national competition law and policy.According to them, these laws/policies should incorporate the ―core principles of the WTO‖, defined as transparency and non-discrimination (MFN andnational treatment). Thus, the location of the competition issue and agreement

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within the WTO would bias the manner in which the subject and theagreement were to be treated. In this case, the ―core WTO principles‖ would  be applied to competition.

This interpretation and aim seemed to have been endorsed by the DohaDeclaration, as the first item for clarification included ―core principles, including transparency, non-discrimination and procedural fairness‖. This is most controversial. It can be questioned whether the principle of nondiscriminationis appropriate if applied to competition law and policy indeveloping countries.Competition law and policy, in appropriate forms, is beneficial, including todeveloping countries. It can be a valuable instrument to prevent or reducemonopolistic abuses. However, each country should have full flexibility tochoose a competition law and policy model which is suitable for itself andwhich can also change over time to suit changing conditions. Having anappropriate model is especially important in the context of globalisation andliberalisation where local firms are already facing intense foreign competition.In particular, developing countries should be allowed the flexibility to choosethe paradigm of competition and competition policy/law that is deemed to be more suitable to their level of development and their development interests. Developed Countries’ Framework  

After the end of the Singapore Ministerial Conference in 1996, the heads of the delegations of the US (Charlene Barshefsky) and the EU (Leon Brittan)made it clear at separate press conferences that for them the objective of having a competition agreement in the WTO was to gain greater access for their corporations to the markets of developing countries.A subsequent paper by the EU on the application of core WTO principles tocompetition (issued in 1999) explains this ―market access framework‖ more clearly: a competition policy framework in the WTO should provide ―effective equality of opportunity for competition‖ in the local market for foreign firms. This framework of applying the WTO ―core principles‖ (particularly nondiscrimination and national treatment) to competition law/policy would affectthe flexibility the country needs to be able to choose its own appropriatemodel or models of competition law/policy.

The EU paper’s approach would look unfavourably on domestic laws or  practices in developing countries that favour local firms, on the ground thatthese are against free competition. The EU argues that what it considers to be the core principles of the WTO (national treatment and non-discrimination)

should be applied through WTO rules on competition policy. Through anagreement on competition in the WTO, it could eventually be compulsoryfor developing countries to establish domestic competition policies and lawsof a certain type. Government policies or practices that favour local firmsand investors could be called into question, as could private sector practicesthat favour local firms. For example, if there are policies that give importingor distribution rights (or more favourable rights) to local firms (includinggovernment agencies or enterprises), or if there are practices among local

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firms that give them superior marketing channels, these are likely to be calledinto question and disciplines may be imposed on them.The developed countries argue that policies or practices that give an advantageto local firms create a barrier to foreign products or firms, which should beallowed to compete on equal terms as locals, in the name of free competition.

Such pro-local practices and policies would be targeted for phaseout or elimination in negotiations for a competition agreement.Towards a Development Fr amework on Competi tion for Developing 

Countries 

The developed countries’ conceptual framework can be challenged through a different framework that looks at competition through the lens of development. Developing countries can argue that only if local firms andagencies are given certain advantages can they remain viable. If these smaller enterprises are treated on par with the huge foreign conglomerates, most of them would not be able to survive. Perhaps some would remain becauseover the years (or generations) they have built up distribution systems basedon their intimate knowledge of the local scene that give them an edge over the better-endowed foreign firms. But the operation of such local distributionchannels could also come under attack from a competition policy in theWTO, as the developed countries are likely to pressure the local firms toalso open their marketing channels to their foreign competitors.

At present, many developing countries would argue that giving favourabletreatment to locals is in fact pro-competitive, in that the smaller local firmsare given some advantages to withstand the might of foreign giants, whichotherwise would monopolise the local market. Providing the giantinternational firms equal rights would overwhelm the local enterprises whichare small and medium-sized in global terms.

However, such arguments may not be accepted by the developed countries,which are likely to insist that their giant firms be provided a ―level playing field‖ to compete ―equally‖ with the smaller local firms. They would like their own interpretation of ―competition‖ (which, ironically, would likely lead to foreign monopolisation of developing-country markets) to beenshrined in WTO law.Competition can be viewed from many perspectives. From the developingcountries’ perspective, it is important to curb the corporate mega-mergersand acquisitions taking place which threaten the competitive position of localfirms in developing countries. Also, the abuse of anti-dumping actions inthe developed countries is anti-competitive as it adversely and often unfairly

affects the products of developing countries. The restrictive business practicesof large firms also hinder competition. Intellectual property rights laws thatare biased towards rights holders vis-à-vis the public interest by unduly providing for exclusive and monopolistic positions can also be anticompetitive.However, these issues (and this type of interpretation of competition policy) are unlikely to find favour with the major developedcountries, which for example would like to continue to be able to use antidumpingactions as protectionist devices.

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If negotiations begin in the WTO, the EU interpretation of competition, i.e.,that foreign firms should enjoy national treatment and have a ―free competition environment‖ in the host country, could well prevail, especially given the unequal negotiating strength among WTO members which worksagainst the developing countries. The likely result is that developing countries

would have to establish national competition laws and policies that are

inappropriate for their conditions. This would curb the right of governmentsto provide advantages to local firms, and local firms themselves may berestricted from having recourse to practices which are to their advantage.What is required, instead, is a paradigm to view competition from adevelopment perspective. Competition law/policy should complement other national objectives and policies (such as industrial policy) and meet the needfor local firms and sectors to be able to successfully compete, including inthe context of increased liberalisation. From a development perspective, acompetition and development framework requires that local industrial andservices firms and agricultural farms must build up the capacity to becomemore and more capable of competing successfully, starting with the localmarket and then, if possible, internationally. This requires a long time frameand cannot be done over a short period. The state should also play a vitalrole in nurturing, subsidising and encouraging the local firms. The build-upof local competitive capacity also requires protection from the ―free‖ and full force of the world market for the time it takes for the local capacity todevelop. This means that development strategy has to be at the centre, andan appropriate approach should be taken for competition and competition policy that is consistent with the central development needs and strategy.Therefore some of the conventional models of competition may not beappropriate for a developing country. Other models may be more appropriate, but their adoption may be hindered or prohibited by a future WTO agreementon competition that is based on the ―core principles of the WTO.‖ For  example, the Cambridge University economist Ajit Singh has pointed outthat the US and European models of competition law and policy areinappropriate and can cause harm to the development efforts of developingcountries. More suitable is the Japanese model of the 1950s and 1960s,when Japan was at its developmental stage. The Japanese government enactedcompetition law as a tool to prevent the intrusion of large foreign firms andtheir products, whilst at the same time using industrial policy to nurture andstrengthen Japanese firms so that they could develop and eventuallysuccessfully compete with the giant foreign companies. The kind of model

represented by the Japanese example, in which competition policy iscomplemented by and indeed subsumed under industrial policy, would not

 be allowed in the kind of competition agreement propounded by the EU.Indeed, the EU-advocated framework would precisely seek to outlaw theJapanese-style model that developing countries may find consistent withtheir development needs.There is not a convincing case for a multilateral set of binding rules to govern

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the competition policies and laws of countries. Moreover, there are justifiedgrounds for serious concern if such an agreement were to be located withinthe WTO, as it is likely to be skewed against the development interests of developing countries as a result of the attempt by proponents to apply the―core  principles‖ of the WTO to the issue and to the agreement. 

If a multilateral approach is needed, there are other venues that are moresuitable, for example, the UN Conference on Trade and Development(UNCTAD) which already has a Set of Multilaterally Agreed EquitablePrinciples and Rules for the Control of Restrictive Business Practices, and acommittee that deals with competition law and policy. Moreover, if theobjective is to arrange for cooperation among competition authorities of countries, then it is unnecessary and inappropriate for the WTO to be thevenue.

Transparency in Government ProcurementThe Singapore Ministerial agreed ―to establish a working group to conduct a study on transparency in government procurement practices, taking into

account national policies, and based on this study, to develop elements for inclusion in an appropriate agreement‖. The decision did not specify that an agreement must result; it only committed members to set up a workinggroup to study the subject of transparency in government procurement and, based on this study, to develop the elements to include in an appropriate

agreement. It is thus important to discuss what an appropriate agreement, if any, should be like, from the perspective of the interests of developingcountries and their need for policy-making flexibility.Before and at Doha, many developing countries put forward the view thatthey were not ready to negotiate an agreement on transparency in government

 procurement. However, these views were not adequately reflected in theDoha Declaration. As with the other Singapore issues, the Declaration(paragraph 26) stated that negotiations would take place after the FifthMinisterial on the basis of a decision to be taken by explicit consensus onmodalities of negotiations. The Declaration also stated (in paragraph 26)that negotiations would build on progress made in the Working Group onTransparency in Government Procurement and take into account participants’ development priorities. Negotiations shall be limited to the transparencyaspects and therefore would not restrict the scope for countries to give preferences to domestic supplies and suppliers.The study in the working group, and the agreement, was only mandated tocover transparency in government procurement (and not the practicesthemselves), and this limited scope was reaffirmed by the Doha Declaration.However, the major developed countries advocating this issue had madeclear their ultimate goal to fully integrate the large worldwide government procurement market into the WTO rules and system. (At present, WTOmembers are allowed to exempt government procurement from WTO marketaccessrules. The exceptions are those members which have joined the WTO’s  plurilateral agreement on government procurement. However, hardly anydeveloping country is a member of this plurilateral agreement.)

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Since developing countries have found it unacceptable to integrategovernment procurement and its market-access aspect into the WTO, themajor developed countries devised the tactic of a two-stage process: firstly,to draw all members into an agreement on transparency; and secondly, tothen extend the scope from transparency to other areas (for example, due

 process) and ultimately to the areas of market access, MFN and nationaltreatment for foreign firms. This was clear from various papers submitted by the US and EU to the WTO.If the integration of government procurement into the WTO eventually takes place (as is clearly the aim of the major developed countries), governmentsin future will not be allowed to give preferences to local companies in decidingon the supply of goods and services and the granting of concessions for implementing projects. The effects on developing countries would be severe.

Government procurement and policies related to it have very importanteconomic, social and even political roles in developing countries:• The level of expenditure on government procurement, and the attemptto direct the expenditure to locally produced materials, is a major macroeconomic instrument, especially during recessionary periods, tocounter economic downturn.• There can be national policies to give preference to local firms, suppliers and contractors in order to boost the domestic economy and the participation of locals in economic development.• There can be specification that certain groups or communities, especially those that are under-represented in economic standing, be given preference.• For procurement or concessions where foreign firms are invited to bid, there could be a preference to give the award to firms from particular countries, e.g., other developing countries or particular developedcountries with which there is a special commercial or politicalrelationship.Should the government procurement market be opened up through applicationof the national treatment and MFN principles, the scope and space for agovernment to use procurement as an instrument for development would beseverely curtailed. For example:• If the foreign share increases, there would be a ―leakage‖ in government attempts to boost the economy through increased spending during adownturn.• The ability to assist local companies and particular socio-economic

groups or ethnic communities would be seriously curtailed.• The ability to give preferences to certain foreign countries would similarly be curtailed.

Given the great importance of government procurement policy as a tool for economic and social development and nation-building, it is imperative thatdeveloping countries retain the right to have full autonomy and flexibilityover their procurement policy. The attempts to draw this issue into the WTO

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are thus of grave concern.Given the ambitions of the major developed countries, it is realistic toanticipate that if there is an agreement on transparency, strong pressureswould then build up to extend its scope to cover market access or the rightsof foreign companies to compete on a ―national treatment‖ basis for the 

 procurement business. Thus, discussions on ―transparency‖ and on a ―transparency agreement‖ should be seen in the light of the strategic objective of the developed countries to draw the developing countries into the realgoal of market access and full integration of procurement practices. Thereforeif there is an agreement on transparency, it is likely to be the start of a slipperyslope that could lead, in years ahead, to a full market-access agreement.

Trade FacilitationThe Doha Declaration (paragraph 27) stated that until the Fifth Ministerialthe WTO Council for Trade in Goods shall review and, as appropriate, clarifyand improve relevant aspects of Articles V, VIII and X of the GeneralAgreement on Tariffs and Trade (GATT) 1994 and identify the tradefacilitation needs and priorities of members, particularly developing and leastdeveloped countries. (Article V is on freedom of transit, Article VIII is onfees and formalities connected with import and export, and Article X is on publication and administration of trade regulations.)After Doha, developing countries continued to voice concerns that newmultilateral obligations on trade facilitation may be unsuitable as well ascostly to implement, especially if the developing country has other budgetary priorities.Although the term ―trade facilitation‖ may seem innocuous, the establishment  of multilateral rules in this area may be disadvantageous to developingcountries as they may find it difficult to adhere to the standards or procedures

envisaged. According to trade expert Bhagirath Lal Das: ―[T]here are grave dangers involved in potential agreements in this area if the proposals of the proponents are incorporated in the form of binding commitments. The mainobjective of the proponents is to have the developing countries adopt rulesand procedures in this area which are similar to theirs. It ignores the widedifference in the level of administrative, financial and human resources between the developed countries and developing countries. Also it does notgive weightage to the wide difference in social and working environments.‖ (Bhagirath Lal Das (2003), WTO: The Doha Agenda – The New Negotiationson World Trade, London and New York: Zed Books and Penang: Third World

 Network) For example, it may be proposed that physical examination of goods by customs authorities should only be conducted in a small number of cases selected on a random basis, in order to improve the flow of goodsthrough the customs barrier. But this increases the risk of avoidance of  payment of adequate customs duties. This practice may be appropriate for the major developed countries where the chances of such leakage arenegligible, but it may not be appropriate for the developing countries whereleakage is higher.

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Das adds that clarification and improvement of the rules in this area will addto the commitments of the developing countries in the WTO, bringing aboutnew burdens and possible adverse implications too. Negotiators at the WTOshould obtain the input of the trade and customs administrative machineryso as to know the possible problems and adverse effects of proposals being

tabled. Developing countries should put forward the view that improvementsin trade facilitation should be made through national efforts aided by technicalassistance, rather than through imposing additional obligations in the WTO.If the consideration of the problems in these areas results in some solutions,these should, at best, be adopted only as guiding principles or as flexible best-endeavour provisions not enforceable through the WTO disputesettlement process.The developing countries maintained their opposition to launchingnegotiations on trade facilitation at Cancun. After Cancun, however, theywere more open to considering negotiations, provided the other threeSingapore issues were dropped from the negotiating agenda and provided

their concerns were addressed, particularly that they should not be obligedto implement new trade facilitation rules if they do not have adequate financialresources to do so.After several rounds of intense discussions, the developing countries wereable to sign on, in the July Package, to a text that commences negotiationson trade facilitation on the basis of modalities that they believed addressedtheir concerns.In the modalities agreed to in the July Package, the main operational part is paragraph 1 (of Annex D of the July Package) which states that ―negotiations shall aim to clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 with a view to further expediting the movement, release andclearance of goods, including goods in transit.‖ The negotiations shall also aim at enhancing technical assistance and support for capacity building inthis area. The negotiations shall further aim at provisions for effectivecooperation between customs or any other appropriate authorities on tradefacilitation and customs compliance issues.Many of the subsequent paragraphs of the modalities specify the ―safeguards‖ for developing countries in meeting new obligations that may arise from thenegotiations. Paragraph 2 states that the results of the negotiations shalltake fully into account the principle of special and differential treatment(SDT) for developing and least developed countries, and that this shouldextend beyond the transition periods for implementing commitments. ―In 

 particular, the extent and the timing of entering into commitments shall berelated to the implementation capacities of developing and least-developedMembers. It is further agreed that those Members would not be obliged toundertake investments in infrastructure projects beyond their means.‖ This  paragraph establishes a strong SDT provision, including that commitmentswill be related to implementation capacity, and moreover there is no obligationto implement infrastructure projects for countries that do not have the financialresources to do so.

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A further safeguard for LDCs is provided in paragraph 3. The extent of their commitments is limited to what is consistent with their individual

development, financial and trade needs or their administrative and institutionalcapabilities.The cost implications for developing countries of proposed measures arealso to be addressed by members as a part of the negotiations (paragraph 4).Provision of technical assistance and support for capacity building isrecognised as vital for developing and least developed countries, anddeveloped countries in particular commit themselves to adequately ensuresuch support and assistance during the negotiations (paragraph 5).Provision of aid for implementation of commitments resulting from thenegotiations is covered in some detail in paragraph 6. According to this paragraph, support and assistance should be provided to help developingcountries implement the commitments. Implementation of somecommitments by developing countries will require support for infrastructuredevelopment on the part of some members. In these limited cases, developedcountrymembers will make every effort to ensure support and assistancedirectly related to the nature and scope of the commitments in order to allowimplementation. It is understood, however, that in cases where requiredsupport and assistance for such infrastructure is not forthcoming, and wherea developing or least developed member continues to lack the necessarycapacity, implementation will not be required.A review of the effectiveness of the support and assistance provided and itsability to support the implementation is also provided for in paragraph 7.With these ―safeguards‖, the developing countries hope that they are equipped to limit their commitments only to measures that they are able to pay for or obtain aid for implementing. It remains to be seen how this ―special and differential treatment‖ will work out during and after the negotiations. 

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