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Issues Note - Gomi Tharaka Senadhira ,Ambassador of Sri Lanka to the WTO -Chair of the Committee on Trade and Development World Trade Organization (WTO), Geneva - 07th June 2005

* The author is the Permanent representative of Sri Lanka to the WTO. However the views expressed in this paper are personal to the author and should not be necessarily attributed to the Government of Sri Lanka.

1. Political support for the WTO approach to a rule-structured world trade in an environment of growing bilateral and regional trade agreements.

In an environment where growing bilateral and regional trade agreements are increasing rapidly in numbers and significance, prevailing trends indicate, that the political support for the multilateral trading system and the WTO is not adequate enough. Though both Developed and Developing Countries are actively pursuing bilateral and regional arrangements, the major threat to the multilateralism stems from the initiatives undertaken by the Developed Countries, particularly by the two major trading powers.

The Southerland report recognizes that the implications of the preferential arrangements on the principle of non-discrimination have reached a point where the Most Favored-Nation (MFN) has become the Least Favored-Nation treatment. Though the report states that only nine trading partners, all of whom are high-income countries, pay full MFN tariff in the European Union (EU), some developing countries receive even lower level of access to the EU. The situation in the United States also is becoming similar to that of the European Union. This is serious concern to those countries, particularly for small and vulnerable countries, which face discriminatory treatment, in their main markets as a result of these arrangements.

In a multilateral trading environment, in which a number of developing countries are discriminated in their market access to developed country markets, in an environment where gains of multilateral negotiations these developing countries obtained in the developed country markets are diluted through regional and bilateral preferential arrangements and through the preferential rules of origin, it is difficult for developing countries to become the main supporters of the WTO and the multilateral system. Some of these countries have become marginalized from the multilateral system due to distortions in the multilateral trading system.

2. Participation of smaller and poor developing countries in the WTO negotiations.

The participation of the smaller and weaker developing countries in the multilateral trade negotiations, has improved substantially since the conclusion of the Uruguay Round, but remains far from been sufficient. Many small developing countries do not have representatives in Geneva. Even when there is a mission in Geneva, such missions are not adequately staffed. However, the presence in Geneva, though critical for the participation in the negotiations, alone will not ensure the sufficient participation in WTO negotiations.

The main need for many developing countries is to strengthen national trade negotiating capabilities. This requires capacity building for trade policy formulation, in relation to its development strategies. At the national level this entails the strengthening of the interagency coordination for trade negotiations at bilateral, regional and multilateral levels, with the involvement of all the stakeholders, government agencies, the private sector, academic institutions and the civil society.

Then there is the need to strengthen the cooperation among developing countries, while recognizing the diversity among them. In some regions, small countries can do this at regional level, when commonality of interest is involved.

However, even the Geneva based delegations, of smaller countries, with relatively good support from the capitals, some times do not get to participate sufficiently due to inherent weakness of the system. This is particularly true if you are not a member of large group.

Finally there is the need to address the supply-side constraints that limits the participation of some of the developing countries in the world trade. It is meaningless to spend your limited resources to participate in the WTO negotiations, when your participation in the multilateral trade is limited.
3. The social effects of WTO agreements

Trade liberalization can sometimes result in adverse implications on women and poor sections of the population. Various studies have pointed out that the on-going process of trade liberalization may result in adverse implications on some developing countries. These would mainly result from preference erosion, higher food import bill for Net Food Importing Developing Countries and from the expiration of the Agreement on Textiles and Clothing (ATC).

The results from the quota phase-out are already becoming clear in the countries that were most vulnerable to the quota phase out. The reports indicate that in some countries this has led to substantial job loses and more job losses will take place within this year in few more countries. The impact of these losses will be most strong in the poorer sections of the society, particularly in women and may lead to serious political and social consequences. However, the WTO so far has failed even to discuss this issue, as some major exporting countries, which benefited from the phase-out, oppose even placing this issue on the agenda.

It is possible to envisage a number of areas in the Doha Development Agenda (DDA), which would result in adverse implications on many developing countries. These include preference erosion, impact on the net food importing developing countries and food aid. These are the issues which need to be carefully analyzed if we are to minimize the adverse implications of trade liberalization on most vulnerable members. The prevailing trends in the negotiations indicate that these issues may not be addressed adequately.

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