WTO issues dominate Bangkok's ASEM agenda

WTO issues dominate Bangkok's ASEM agenda

By Jeerawat Na Thalang

BANGKOK: There are no permanent friends -- or foes -- in politics. That axiom aptly described the relationship between Asians and Europeans during the Uruguay Round of multilateral trade talks.

European Union members and Asians were good partners during the negotiations on financial services, joining forces and isolating the U.S. from the interim agreement of the World Trade Organization (WTO). But when it came to farm subsidy cuts, some Asian nations sided with the Americans to undermine the EU's determination to protect home-grown commodities.

At the first-ever Asia Europe Meeting, European and Asia leader will again find the WTO agenda on the negotiating table. GATT (General Agreement on Tariffs and Trade) members concluded most of the deals in 1993, but there is still some unfinished business to be dealt wit. They have yet to agree on three sectors, all of which are limited by a short time-frame.

Firstly, the members will have to conclude the agreement on the telecommunications sector this April. Then, they are scheduled to review talks on maritime transport in June. GATT members will also have to find a solution for the financial services deadlock, because the interim agreement on the financial sector will expire by the end of next year.

Daniel Descoutures, charge d'affaires for the European Commission in Bangkok, said, "That's why the ASEM needs to set priorities on the multilateral forum. The summit will have to act together to lead in the preparations for the first ministerial meeting of the World Trade Organization (WTO)."

The first WTO ministerial meeting, to be held in Singapore in December, will see how fat its members have gone to comply with the trade liberalization requirements of GATT. The WTO meeting will also deal with some outstanding matters and discuss the future agenda of the WTO.

The EU hopes the Asia-Europe Meeting, scheduled to be held from March 1-2, will put the Union an equal footing in the world's most dynamic market with the United States, which has tried to exert its economic dominance through the Asia Pacific Economic Cooperation (APEC). The Europeans and Asians believe the first leadership meeting will create the necessary political momentum to bind the two regions with follow-up action later on.

The U.S. and East Asian countries already have a link via APEC. The EU and North America are connected by trans-Atlantic institutions. The EU also had signed a land-mark framework accord to foster free trade with South America's four-country Common Market of the South (Mercosur).

Despite the lack of a formal link between the EU and Asia, European and Asia countries become well acquainted with each during the GATT trade talks.

ASEAN countries stood in an opposite corner to the European Union on the farm issue. ASEAN and the Americans were opposed to EU actions to weaken the farm subsidy reduction requirement of the GATT.

After the round was concluded in 1993, the EU and ASEAN countries, however, turned out to be cooperative partners on issues relating to the financial services deal.

In July last year, there was a major risk that financial services might not be a part of the GATT deal. The Americans refused to participate in the deal, saying that the offers from some countries did not go far enough for them to accept the multilateral agreement on the most-favored-nation clause.

"It was the ASEAN countries which first came to see Sir Leon Brittan, vice-president of the European Commission, and asked the EU not to remove the deal. The ASEAN initiative enabled the EU to convince Japan not to withdraw the deal from the MFN clause. It is the major achievement of the GATT," said Descoutures.

But as the agreement is about to expire, the EU is likely to urge Asians to improve their liberalization offers to convince the U.S. to sign the new agreement in 1997.

Thailand, meanwhile, is prepared to raise the issue relating to the use of anti-dumping laws and countervailing duties with the EU.

The new WTO agreement provides for tougher and quicker action to resolve disputes over the use of anti-dumping laws, invoked by the U.S. and Europe to impose penalties on foreign producers who are alleged to sell goods abroad at low cost.

Some Asian exporters, however, have complained that the lack of a transparent investigation procedure into the alleged anti- dumping cases by EU officials has hurt their business.

European Commission and Asian leader may also raise the future agenda of the WTO, and in particular, the issue of competition policy, which relates to one country's ability to have real access to the markets of its trading partners. The EU has been irritated by the allegedly unfair business alliance system in Japan. The system, they charge, has created an unseen barrier against foreign competitors.

A European diplomat said the European Commission viewed effective the European Commission viewed effective enforcement of the anti-trust law as a basic feature of a market economy and as important a guarantor of access as a low bound import tariff.

The most ambitious on the agenda would be a EU proposal to create an investment code similar to the one being discussed by members of the Organization for Economic Co-operation and Development (OECD).

The 25-members of OECD took up the initiative to create a set of international rules on foreign direct investment beyond what had already been agreed on by the GATT. It is based on the principle of treating foreign-owned businesses like local ones. In addition to removing obstacles to inward investors, such a move would clarify some of the ambiguity that surrounds their status and safe-guard them against political and legal discrimination.

However, a Thai official said the commission's authority to negotiate on investment and services is legally unclear. He said he understood the Commission would only represent the EU in trade matters. Asians therefore might have to deal with the investment issue separately with individual countries of the EU.

Descoutures, nonetheless, noted that the OECD investment code was only a part of the dialogue. He said the message from the EU was simply to ask," Are you (Asians) prepared to have a dialogue leading to set a rule at the WTO?"

The Thai official said Asians might also want to raise the same question when they meet the EU officials.

Asians have offered to open their markets to foreigners on the Most Favored Nation basis to APEC. But he asked why the EU had treated members differently from non-members.

-- The Nation