Basic tasks for WTO
Setting the final agenda for the first ministerial meeting of the World Trade Organization in Singapore in December could be derailed if the 120 member countries remain embroiled debating contentious issues and do not steer their attention back to the basics of liberalizing trade, opening markets and fostering greater transparency in business.
Singapore's Minister of Trade and Industry Yeo Cheow Tong pinpointed the risk of overloading the WTO with many potentially divisive issues and of detracting the December conference from its core tasks. True, as Yeo told the World Trade Congress in Singapore last week, the WTO needs to address emerging issues to keep from becoming irrelevant and ineffective in the global market reality. Nonetheless, dumping any issue seemingly related to trade on the world forum risks leading the WTO into endless acrimonious debates at the expense of its basic mission.
Take, for example, the issue of corruption brought forward by the United States and a multilateral agreement on investment rules and competition policy proposed by mainly the industrialized nations -- two of the most contentious issues between the developing and developed countries within the WTO. Nobody denies that corruption affects competition by increasing costs, but simply defining corruption is an uphill task, and formulating legally binding multilateral rules akin to scaling Everest. In many developing countries, for instance, where commercial laws are understandably still inadequate and law enforcement weak and often not transparent, corruption extends much further than bribe taking. Corruption take numerous forms, which sometimes -- due to political, social and cultural systems -- are never questioned but which distort market competitiveness just the same.
It would therefore be more effective to address the issue with the code of rules for government procurements now under negotiation in the WTO. After all, corruption in its most basic sense and most flagrant form is related to the way governments award business contracts. Other forms of malfeasance can be addressed through the WTO agreement on trade-related investment measures (TRIMs).
It would be futile and counterproductive to extend the TRIMs with a multilateral agreement on investment rules, as called for by the developed nations. Neither is it realistic to demand equal treatment of foreign and domestic investments. Such a demand amounts to the creation of a global corporate citizenship which, to a certain extent, asks for a global citizenship at the demise of nation-states.
The proponents of national treatment of all investments should realize that businesses in developed nations have a head start on those in developing countries. It is therefore completely unfair to subject both classes of businesses to the same rules. Moreover, no government is so insensitive to its national interests as to open its economy to foreign investors without restrictions, however strapped it might be for additional capital from overseas. Sovereignty over natural resources shall remain under governments and so will the manner in which the resources are developed.
The WTO ministerial meeting in December, besides reviewing its progress and taking stock of its already agreed on, yet unfinished business, should focus on trade facilitation. It should look at simplifying and modernizing customs procedures, and establishing clear-cut rules on fair business practices and preventing the abuse of market dominance.
Most of the problems which the developed nations intend to tackle through corruption issues and national treatment of investment can be addressed through a comprehensive set of competition rules. Negotiating these issues would be much smoother because both the developed and developing nations already share common views of these problems. Most importantly, the possibility of achieving concrete results -- crucial to building confidence to cope with more complex issues -- is much greater at this level.