An Official Submission to the Australian
Department of Foreign Affairs and Trade
on an Approach to the WTO's Seattle Ministerial

by Brian Jenkins

 

30 April, 1999

Mr Steve Moran
Director, Trade Policy Section
Department of Foreign Affairs and Trade
R.G. Casey Building
BARTON ACT 2600

Dear Mr Moran

Australia's approach to Further Multilateral Trade Negotiations

I believe it is the duty of Australia's negotiators to represent the interests of all citizens, not merely the class of Australians who invest overseas--and certainly not merely those of foreigners investing within Australia.

It is clear from a study of the Lalumière advice provided to the French Government in 1998 (leading to the collapse of negotiation of the OECD's MAI) that it is no longer acceptable nor viable for such agreements to be negotiated in defiance of non-investor interests.

At the Second World Trade Organisation (WTO) Ministerial Conference in May, 1998, it was decided to start preparations for a new round of negotiations on trade liberalisation. Final decisions regarding the initiation of a new round, including which issues would be placed on the agenda, will be made at the Conference in November-December, 1999. It has been made clear, eg, by UK Trade Minister Brian Wilson in public statements, that the European Union and other participants will be seeking to use the WTO forum to continue negotiations towards a MAI similar to those which lapsed last year in the OECD.

Urgent Need to Democratise the WTO

At a recent High-Level Meeting of the WTO on Trade and Development, there was an unfortunate incident when the chairman of the first panel session on 17 March made some insulting remarks directed at African countries and developing countries, as well as NGOs. As a result, many NGO representatives who were present issued a joint statement which resulted in a (post-conference) apology from the chairman. This incident demonstrated a tendency for insufficient attention to be paid to the viewpoints of civil society, and third-world societies in particular.

Historically, trade liberalisation negotiations in GATT have been marked by secretiveness, and this tradition has continued in WTO. But in the course of including a larger number of products and wider range of problems in the WTO agreements, it has now become more necessary to involve world-wide civil society in the decision making processes.

The WTO Secretariat has recently begun to exhibit a welcome increase in transparency and to recognise the necessity of consulting with sectors other than government and investment. It appears to remain, however, that WTO documents are restricted until the case in question is closed. This applies among other things to agendas, proposals for decisions, background notes, and meeting minutes. It is an unacceptable basis for conducting negotiations supposedly in the universal public interest.

The secretiveness results in a lack of independent, critical scrutiny of data and analyses on which the negotiations are based. Australia should therefore work for:

* publication of provisional agendas well in advance of meetings.

* derestriction of proposals from member countries and background notes from the WTO secretariat as soon as they are submitted

* acceptance of written contributions by NGOs at WTO meetings.

* participation of NGO representatives in WTO deliberations.

* inclusion in the minutes of information about national positions; and the derestriction of minutes as soon as they are approved.

* derestriction of conclusions from WTO panels and organs of appeal as soon as they are formulated.

* convening of regular consultations with NGOs by chairpersons and other government representatives on TO councils and committees.

In addition, the Federal Joint-House Standing Committee on Treaties must be expected to maintain a permanent inquiry into ongoing trade agreement negotiations to which Australia is a party.

The Sustainable Development Objective

At the Uruguay Round, sustainable development was included as one of the objectives of the WTO. Until now, this has not led to any decisive consequences: It seems very difficult to integrate environmental concerns into WTO trade rules and regulations; issues regarding development needs of the Third World are still given very low priority, and the WTO fails to take into account the fact that trade liberalisation can have varying and unpredictable effects on the economy and, hence, on the employment prospects and lives of citizens.

If the WTO is serious about its objective of sustainable development, the coming round of negotiations must not focus narrowly on trade liberalisation per se but should strongly emphasise the need for increased international trade regulation in which development and environmental concerns are integrated.

An Acceptable Multilateral Agreement on Investment

Since the mid-1980s, cross-border investment has assumed markedly increased importance in the world economy. Whereas trade between countries was formerly the chief manner by which foreign markets purchased goods and services, this function has now been dramatically overtaken by foreign direct investment (FDI). Moreover, a great preponderance of foreign investment is no longer related to goods and services but is speculative in nature and often very short-term.

The rights of investors are typically secured by the signing of bilateral investment agreements between the investor's country of origin and recipient countries. International cooperation in the investment field may be facilitated by entering a multilateral agreement on investment (MAI) in order to replace or supplement the numerous bilateral agreements. At the same time, such an agreement should provide equal and equitable rights to nations with weak and strong economies.

Along with rapid increase in foreign investments, a rapid transnationalisation of private companies has taken place. The need for regulation of transnational companies and their international investments has thus become very urgent. A multilateral agreement on investment must comprehensively address not only the rights of investors, but also their responsibilities and obligations.

In principle, the UN system with its broader and more democratic composition would be the ideal framework for the negotiation of a multilateral agreement on investment. However, realistically, trade negotiations should take place and an agreement be made under the auspices of WTO. This is partly due to the fact that WTO is the premier organisation for international cooperation in the macro economic area, and partly because the WTO operates with binding rules, a dispute settlement system, and possibilities for sanctions.

In other words, Australia should work for including negotiations on a multilateral agreement on investments in the coming WTO round. However, an unsatisfactory multilateral investment agreement would be a worse outcome than no agreement. The content of the agreement is extremely important. What is needed is a multilateral agreement on investment which secures
democratic regulation of investments internationally and promotes global sustainable development. The basic requirements for such an agreement must include the following:

* respect for the ILO conventions covering basic workers' rights and the OECD guidelines for multinational enterprises.

* primacy of the UN Human Rights Declaration and conventions including international environmental conventions.

* extension of the basic WTO principle, national treatment, to prohibit preferential treatment of foreign investors, which too often results in neglect of rules governing environmental and employee protection.

* mandatory application of environmental and social impact assessments and consultation with local populations prior to development of major new resource and other industrial development projects.

* due enforcement of regional and/or national regulation processes, eg, those relating to planning, environmental impact, the workplace, consumer protection, taxation, cultural and multicultural social policies.

* ability of developing countries to prescribe special conditions, eg, a local workforce, reinvestment of profits, and partial national ownership.

*  ability for developing countries to regulate the transfer of capital abroad.

* non-preclusion of measures to impede or regulate currency speculation, eg, by limiting or taxing short term capital flows.

* greater openness and transparency in the dispute resolution process.

* limitation of the agreement to matters which are expressly specified in the agreement, and avoidance of 'standstill' and 'roll-back' injunctions.

* ability for individual countries to decide which areas and sectors the agreement shall cover, and/or to register durable exceptions.

In the light of the serious shortcomings exposed by the JSCOT inquiry into the OECD's MAI, the Australian negotiators and their advisers must adopt greater transparency, must address the concerns of the whole of society, and must accept full accountability to the Parliament and people of Australia. It is for this reason, as well as the WTO's explicit recognition of civil society, that the Parliament should be expected to provide to the Joint Standing Committee on Treaties a renewed reference to scrutinise and regularly report on the relevant negotiations.

Yours faithfully

BRIAN J. JENKINS