Order Code RS20387
Updated November 19, 1999
CRS Report for Congress
Received through the CRS Web
The World Trade Organization (WTO)
Seattle Ministerial Conference
(name redacted)
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade
Summary
On November 30th to December 3rd, the highest decision-making body of the World
Trade Organization (WTO), called the Ministerial Conference, will meet in Seattle to
make broad policy decisions. The key issue for the trade ministers attending the meeting
will be to decide on the structure and topics for the agenda of a new round of multilateral
trade negotiations. The new round will begin after the Ministerial and might continue for
three years. Countries have committed to discuss agriculture and services trade in the
new round. Other items that have been proposed for inclusion in the new round or for
earlier consideration include tariff reductions, concessions for developing countries, labor
issues and the environment, and the WTO decision-making process. Major labor,
environmental, and consumer interest groups are expected to be present in Seattle to
argue for more consideration of workers' rights and the environment within the WTO.
This report provides a summary background on preparations for the Ministerial and
related issues of congressional interest. It will be updated regularly. For more from
CRS, see the
Guide to CRS Products under “Trade.”
On November 30-December 3rd of this year, trade ministers from the member
countries of the World Trade Organization (WTO) will meet in Seattle to make broad
policy decisions and establish an agenda for a new round of multilateral trade negotiations.
Regular meetings of national representatives are required under the agreement that
established the WTO. That agreement, reached during the Uruguay Round of multilateral
trade negotiations (1986-1994), states that a Ministerial Conference composed of
representatives of all members shall meet at least once every two years. The Ministerial
Conference “shall have the authority to take decisions on all matters under any of the
Multilateral Trade Agreements.” The Seattle Ministerial will be the third such meeting
since the WTO went into effect on January 1, 1995.
Congressional Research Service ˜
The Library of Congress
CRS-2
Previous Ministerials
The first Ministerial meeting was held in Singapore on December 9-13, 1996. At that
meeting, trade ministers discussed the functioning of the WTO since it went into effect,
implementation of the Uruguay Round agreements, and other issues. The meeting resulted
in three working groups on topics considered “new issues”: (1) the relationship between
trade and investment; (2) the interaction between trade and competition policy (e.g.,
antitrust policies); and (3) transparency (availability of information) in government
procurement. Trade ministers directed that the WTO Council for Trade in Goods (which
reports to the chief administrative body, the General Council) undertake further work on
the simplification of trade procedures (“trade facilitation”). They also agreed to a plan of
action to improve the capacity of least-developed countries to respond to trade
opportunities (“capacity-building”). They recognized the International Labor Organization
as the competent body to establish and deal with labor standards. Further, a large number
of participants signed a declaration to reduce barriers to trade in information technology
products.
The second Ministerial was held in Geneva on May 18th and 20th, 1998, and coincided
with the 50th anniversary of the establishment of the modern multilateral trading system.
The WTO’s precursor, the General Agreement on Tariffs and Trade (GATT), had been
established in 1948. At the second Ministerial, participants directed the General Council
to prepare a work program for the WTO, with recommendations for consideration at the
third Ministerial. The communique at the end of the Ministerial stated that the General
Council’s recommendations could cover implementation of the Uruguay Round, the future
agenda of talks that were mandated by the Uruguay Round agreements (the “built-in
agenda”), future work on the basis of the Singapore program, follow-up to the program
on least-developed countries, or any other matters. Trade ministers also directed the
General Council to prepare a work program on global electronic commerce and report on
the progress of the work program and any recommendations for action at the third
Ministerial. They agreed that countries continue the practice of not imposing tariffs on
electronic transmissions.
Issues for the Seattle Ministerial
When trade ministers meet in Seattle at the end of this month, the leading topic will
be an agenda for a new round of multilateral trade negotiations.1 The core of this agenda
will be the so-called “built-in agenda,” which was mandated under the agreements reached
during the Uruguay Round. The most important topics of the built-in agenda are
agricultural trade and trade in services. The Uruguay Round agreement on agriculture
states that talks on continuing “substantial progressive reductions in support and
protection resulting in fundamental reform” should begin by January 1, 2000. The
agreement on trade in services calls for negotiations on services “with a view to achieving
a progressively higher level of liberalization” that should begin by the same date. These
negotiations on agriculture, services, and any other topics mandated by the Uruguay
1 For further information on the new round of negotiations, see CRS Report RL30270,
The World
Trade Organization: Future Negotiations, by Arlene Wilson.
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Round agreements are considered the backbone of a new round of multilateral trade
negotiations that will begin after the Ministerial.
Although most countries recognize their obligations to address the topics of the built-
in agenda, they are far from agreement on how these topics should be addressed. On
agriculture, for example, the United States and other members of the Cairns Group, a
group of agricultural exporters, advocate the reduction or elimination of agricultural
export subsidies and other assistance. In testimony before the House Agriculture
Committee on October 20, 1999, U.S. Trade Representative (USTR) Charlene Barshefsky
said that U.S. proposals in agriculture for the new round are (1) elimination of export
subsidies; (2) substantial reduction of trade-distorting supports; (3) lower and bound tariff
rates; (4) better administration of tariff-rate quotas; (5) stronger disciplines on state trading
enterprises; (6) improved market access for least-developed WTO members; and (7) trade
in biotechnology products based on transparent, predictable, and timely processes.2 The
conflict between the United States and the European Union (EU) on agriculture that
dominated the Uruguay Round is continuing in the preparations for the Ministerial. For
example, the United States has charged that the EU is pushing a comprehensive agenda
for the new round to take attention away from agriculture. The United States also
opposes the EU position on the “multifunctionality” of agriculture, which means the use
of agriculture for rural development and other purposes aside from food production. The
United States has a conflict with Canada over state-trading enterprises. Although Canada
and the United States share many objectives on agricultural trade, Canada insists on
maintaining its marketing boards, including the Wheat Board. U.S. farmers want
disciplines on Canada’s Wheat Board and claim that the promotional efforts of the Wheat
Board give an unfair advantage to Canadian farmers.
Countries are far from agreement as well on how trade in services should be
addressed in the new round. U.S. objectives mentioned by Deputy USTR Susan Esserman
during testimony before the Senate Finance Subcommittee on Trade on October 21, 1999,
include: (1) liberalized restrictions on a broad range of services; (2) increased participation
in telecommunications and financial services agreements; (3) rules for new technologies;
and (4) no discrimination against certain modes of delivering services.
Countries disagree over whether the scope of the new round should be limited to the
built-in agenda or expanded for more comprehensive talks, and trade ministers will address
this question in Seattle. Developing countries argue for a more narrow agenda, saying that
the developed countries have not yet implemented the commitments made under the
Uruguay Round. Developing countries are insisting on time extensions to the
commitments they made during the Uruguay Round before they agree to significant,
additional commitments. The EU and Japan are promoting a broad agenda. The EU has
proposed that the round include the built-in agenda items of agriculture and services, as
well as investment, trade facilitation, competition, trade and environment, technical
barriers to trade, and government procurement.3 In testimony before the Senate Finance
Committee on September 29, 1999, USTR Barshefsky said that, “The core of the Round
should address market access concerns,” and the round’s agenda should be
2 For further information on agriculture in the new round, see CRS Report 98-254,
Agriculture in
the Next Round of Multilateral Trade Negotiations, by (name redacted).
3 For EU policies on the new round, see [http://europa.eu.int/comm/dg01/dg1newround.htm].
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“complemented and balanced by a forward work-program” to address areas where
consensus does not yet exist. In other words, the United States does not support the
broad agenda of the EU and Japan.
Another issue related to the scope of the new round is whether countries should sign
agreements as they are reached (“early harvest”) or wait for an overall agreement that
includes tradeoffs among many topics (“single undertaking”). This question also is
expected to be decided by the end of the Ministerial.
As countries prepare for the Seattle meeting, they will face the question of whether
or not to expand the new round to include social issues. At a conference in mid-August,
the G-15 developing countries announced that they opposed linking social clauses, such
as labor issues, with trade and protested attempts by developed countries to add items that
would impede market access to developing countries.4 The EU wants these items on the
agenda. The United States proposes further study of most of these issues but wants a
work program established on trade and labor. In her September 29 testimony, USTR
Barshefsky noted that the United States already submitted a proposal in the WTO for
establishment of a work-program to address trade issues relating to labor standards. She
also stated that the United States will seek enhanced links between the WTO and the
International Labor Organization through mutual observer status.
Other topics that have been mentioned as possible items on the agenda for the new
round include “trade facilitation” to make customs procedures simpler and more
understandable, the three topics for the working groups that were established at the first
Ministerial in Singapore (investment, competition, and government procurement), and the
environment. A controversial topic is antidumping: the United States is adamant that this
topic not be included in future negotiations, but a large number of other countries,
including Japan, are pushing to have it added.
Many other issues will be considered in Seattle either as part of the discussion on the
new round or separately. One issue is special treatment for less-developed countries. On
November 18, 1999, the Chairman of the WTO General Council circulated working papers
for a WTO Ministerial Declaration.5 The papers showed that WTO members concurred
on very little, but they did agree that the principles of the new round should include
development objectives, such as economic development and eradication of poverty, and
special and differential treatment for developing countries.
Another proposed topic for the Seattle meeting is market access for non-agricultural
products. Sectoral negotiations began as the Early Voluntary Sectoral Liberalization
program under the Asia Pacific Economic Cooperation (APEC) forum, and talks on eight
of those sectors moved to the WTO as the Accelerated Tariff Liberalization (ATL).6 The
4
Washington Trade Daily. August 19 and 20, 1999.
5 Earlier draft texts for the Declaration were released on October 7 and on October 19, 1999.
6 The eight sectors being considered under the Accelerated Tariff Liberalization (ATL) initiative
are: chemicals, energy equipment, environmental goods, fish and fishery products, forest products,
gems and jewelry, medical equipment and instruments, and toys. See CRS Report RL30286,
Asia
(continued...)
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United States wanted to complete the ATL talks before the Seattle meeting, but according
to some reports, completion by the Ministerial might be unlikely. In addition to sectoral
negotiations, talks have been underway in the WTO on information technology products,
and the United States is pushing for a second agreement on these products, to follow on
an agreement reached a few years ago. Further, the 1998 Ministerial in Geneva called for
work on electronic commerce, and Ambassador Esserman testified on August 5th before
the House Ways and Means Committee that the “top immediate [U.S.] priority [at the
Seattle Ministerial] is to ensure that cyber-space remains duty-free.” The EU has
questioned whether such electronic commerce should fall under the trade in services (not
goods) agreement. A temporary extension of the duty-free treatment on electronic
commerce that was reached at the second Ministerial and a proposal to study the issue
further are under consideration.
An important proposal that has had little discussion in the past is how to make the
WTO decision-making process (including dispute procedures) more open to non-
governmental organizations and others affected by the outcome of WTO decisions. Both
the United States and the EU have taken the position that the WTO needs to better
address the concerns of its “constituents.” The United States also supports institutional
reforms to make the WTO more transparent and more understandable to the public. The
U.S. proposals on WTO “transparency” (openness), however, has not received broad
support from other countries.
Many groups that oppose the WTO’s decision-making process or its trade rules are
expected to be in Seattle to voice their positions. The National Wildlife Federation
(NWF), for example, is calling for a “balance” of economic and environmental concerns
in U.S. trade policy, reform of the WTO to reflect environmental priorities, more “open,
democratic procedures,” and WTO trade rules that are “consistent with environmental
protection goals.”7 The AFL-CIO wants WTO rules changed to incorporate workers’
rights, address how trade liberalization affects incomes, and make proceedings more open
and visible.8 These and other non-governmental organizations will try to influence the
agenda for the upcoming WTO talks.
In the time before the Ministerial starts, WTO officials are trying to build a consensus
on the topics for discussion in Seattle. The November 18th working papers by the
Chairman of the WTO General Counsel was one step toward that end. The papers,
however, show that countries are still wide apart on a large number of major issues. The
time remaining before the Ministerial is seriously limited. WTO officials had hoped to
have a more refined draft text for trade ministers to consider. What is not resolved before
the Seattle meeting, which appears to be extensive, will be brought to the table for trade
ministers to resolve.
6 (...continued)
Pacific Economic Cooperation (APEC) and the 1999 Summit in New Zealand, by (name r edacted).
7 NWF web site at [http://www.nwf.org/nwf/international/trade/wto/actionnow.html].
8 The AFL-CIO web page includes a call for workers to join a march and rally on November 30th
in Seattle. See [http://www.aflcio.org/wto/index.htm]. A number of environmental groups are also
expected to join the protests.
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Issues for Congress
Since the Ministerial is expected to focus on the agenda for the new round of
multilateral trade talks, an important legislative issue is what kind of authority, if any,
Congress should grant to the executive branch for the new round. In the past, Congress
gave a “go-ahead” in the form of fast-track negotiating authority, which assured a timely
up-or-down vote on an agreement, on the condition that trade officials consulted
adequately with Congress during the entire process. Currently, there is no fast-track trade
negotiating authority, and Congress has not approved a set of objectives for the new WTO
round. So, U.S. trade officials will attend the meeting in Seattle without a mandate from
Congress.
What does the absence of fast-track authority mean for the upcoming WTO talks?
Some trade observers point out that President Reagan did not have fast-track authority
when the Uruguay Round trade negotiations began in 1986. At that time, proposals to
grant fast-track authority were under consideration in Congress, and fast-track authority
was eventually approved in 1988. These observers suggest that a delay in granting fast-
track authority will not prevent the new round from moving forward.
However, other observers believe the situation then was more supportive of the
round of negotiations. If this round begins, and while it is underway Congress grants fast-
track negotiating authority to finish it, then the negotiating process might not be disrupted.
But if the round begins, and Congress grants no fast-track authority or grants authority
that would require a major change in the U.S. position, then the consequences might be
significantly different. Without fast-track authority, any legislation needed to implement
agreements would be subject to the normal legislative process, which means that
implementing legislation could be amended (possibly requiring renegotiation) or might not
be brought up for a vote.
Beyond fast-track, there are other perspectives to the Seattle Ministerial. One
perspective is that the fate of the Seattle Ministerial should not be viewed as a referendum
on U.S. support for open trade. While there remains understanding that increased trade
and lower trade barriers raise a country’s standard of living over time, there is much debate
within the United States about the distribution of benefits both among trading partners and
within countries.
A second perspective is the leadership role of the United States in world trade. For
most of this decade, the United States was the chief proponent of multilateral trade
negotiations to reduce trade barriers. Now, however, there is widespread public debate
about the U.S. commitment to open trade and whether the United States needs to
negotiate with other countries to achieve an optimum trade policy. If the United States
is reluctant to continue as a leader in world trade talks, then serious questions arise.
Where do we go from here? If the new round fails to get off the ground, will the world
trading system slip toward protectionism? Should open markets no longer be the main
objective of commercial talks, but instead be only one element along with other issues such
as social normalization? Should new alliances be formed among countries and a new
leadership evolve?
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