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