WTO urged to address corruption

By Vincent Lingga

SINGAPORE (JP)): Business leaders and senior trade officials from the developed countries suggested yesterday that the first ministerial meeting of the World Trade Organization (WTO) here in December address the issues of corruption, competition and investment, as they are closely related to trade facilitation.

The businessmen and officials, who are attending the two-day World Trade Congress which opened at the Shangri-La Hotel here yesterday, wish to include those issues among its most important future agenda for WTO.

WTO's Director General, Renato Ruggiero, also touched upon those issues in his speech during the first session of the World Trade Congress, which was opened by Singapore's Prime Minister Goh Chok Tong and was attended by around 500 business leaders and officials, including 20 ministers and academicians from around the world.

Ruggiero said the United States had proposed that corruption be taken up at the WTO's first ministerial meeting in Singapore in December as one of the trade-related issues.

"There hasn't been any real discussion about this. But I am not implying that the issue is unimportant," Ruggiero later told a news conference after his address.

He added that it would be hard to deny that this is a concern which is at least worth serious consideration.

The Paris-based International Chamber of Commerce (ICC) also urged that the forthcoming WTO ministerial meeting launch a thorough study to evaluate the global impact of corrupt practices on distorting international competition and cross-border trade.

"The ICC recently updated its 1977 report on extortion and bribery in international business transactions, which proposes guidelines for concerted actions by governments and businesses to curb corruption in international commerce," the business organization said in a statement to the conference here.

The main point of view of the proponents of corruption as a trade-related issue is that bribery and graft have been undermining efforts to liberalize trade and to open world markets.

They argue that if left unchecked, corruption and bribery can negate the market access gained through tariff reductions and other measures taken under WTO.

Leon Brittan, Vice President of the European Commission, said the best way to address the corruption issue is through negotiations at WTO about rules on government procurements.

The two-day World Trade Congress, organized by the Singapore Trade Development Board and the International Herald Tribune newspaper, is designed to collect workable initiatives on a diverse range of pending trade issues to be taken up by the first WTO ministerial meeting here in December.

Ruggiero recognized the hesitation on the part of several of the 120 members of WTO to negotiate investment rules under WTO, but he also stressed the crucial role of foreign direct investments to further strengthen the economic interdependence between the developed and developing countries.

However, he also stressed the need for countries to attract foreign investments and to ensure their basic security in a credible way.

"It is hard to see how this can be done effectively or equitably outside the multilateral trading system," Ruggiero said in emphasizing the importance for developing countries to take part in shaping decisions on any future international agreements on investment.

The International Chamber of Commerce suggested yesterday that WTO start work shortly on a truly global framework of rules and disciplines to govern cross-border direct investments.

Ruggiero also agreed that international rules on business competition should be part of WTO agenda.

Brittan concurred that stronger multilateral rules for investments are required.

"Recent cases of trade friction in the areas of automobiles and photographic film show that the perceived inadequacy of the rules of competition around the world is becoming a source of friction," Brittan noted.

Moreover, Brittan added, such rules are needed to ensure that multinational companies, once allowed to invest, will not abuse their dominant positions in the emerging markets.

The main argument of the proponents of the competition policy is that a market is not really open until foreign firms enjoy the same opportunities for producing and marketing goods and services as those given to domestic firms in that particular market.

The issue of labor standards, which in the past had often been raised by the U.S. and the EC as a major trade-related issue did not appear as a contentious issue at the meeting yesterday.

Ruggiero noted that both the U.S. and EC delegations have finally agreed that any WTO discussions must not have as an objective the enforcement of core labor standards through trade sanctions, nor put into question the comparative advantage of low-wage countries.

Brittan said yesterday that the issue of labor standards should be addressed through the Geneva-based International Labor Organization.

"We don't regard low wages as an unfair trading practice, but as the natural comparative advantage of a country," Brittan said, in referring to the new attitude on the part of the EC on what has been called social dumping.

Brittan also said that the EC would not in any way seek coercive trade measures on labor standards. (vin)PB

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