The WTO tug of war

World trade Organisation always reminds me of what some clever economist said a long time ago. The world, he said, is divided into three groups of countries:

• those that make things happen
• those that see things happening, and
• those that wonder what happened

And the first major obstacle at the WTO is that its members are drawn from all three groups: hence the imbalance and the endless controversy -- and the recent failure at Cancun.

It was said of a famous French economist of the last century (Comte de Saint Simon) that in order to give daily stimulus to inventive economic thought, he instructed his valet to awaken him each morning with the stirring words: "Wake up, Monsieure le Comte -- remember, you have great things to do!"

In this subcontinent the people of India, Pakistan and Bangladesh, have been woken up from the slumber of centuries, not by servants or personal attendants, but by strong nationalist sentiment.

We are now wide awake, and increasingly conscious of our potential to do great things -- and ready to make things happen. But we have been left behind. Countries in Asia producing fewer products and services have leapt ahead, developed greater expertise and built up a large capital base. Taiwan, Korea, Hong Kong and Singapore: the Four Asian Dragons.

But no matter. We like to say -- "Brains and creative abilities are an incredible substitute for capital": a reaction somewhat similar to that of that Texan billionaire Mr Ross Perot. Some years ago he stood as candidate for president of the US. People said he stood too late. Late? said Perot:

"In a boxing match, you can lose the first fourteen rounds. All you have to do is nail your opponent in the last seconds of the 15th round and you're the world heavy weight champion!"

But Perot did lose. World trade is not like a boxing match -- you simply cannot afford to lose the first fourteen rounds: not if you are a member of the WTO.

In fact, WTO resembles, more than any other world body, a game we used to play at annual College Day functions: two teams lined up on either side, each pulling at a long rope in opposite directions.

The net result of such a contest always was that the stronger side pulled over the weaker: so it has been with WTO. The economically stronger, more developed, country invariably wins. Not only that -- the more proficient, the better informed, the better equipped, also wins.

Hence the need, not only for improved rules of the game and the specificity of rules of procedure ensuring a level playing field and an effective independent dispute resolution mechanism but above all a crying need for greater awareness, to know what is happening in other countries -- the developed world -- and to be as proficient, as well-equipped as them.

I recall an UNCTAD meeting in Geneva to which I was invited in the autumn of the year 2000. Ambassador Ruben Ricupero, Secretary-General, welcomed us and stressed the need for building the capacity for expertise in trade and anti dumping measure in every single country -- particularly in the developing countries -- so that each of such countries could assist their respective ambassadors in Geneva.

He made a very interesting comment: He said that when he went to Washington in the summer of that year and travelled from the Dulles National Airport into the city, he saw an enormous building nearly as large and as sprawling as the Pentagon. It is called the Ronald Reagan Trade Centre.

On making inquiries he found that it was a centre for training experts in trade law and on anti-dumping measures around the world; he was told that working in them were 600 to 700 extremely competent and highly trained personnel who not only operated on the Internet, but sent missions abroad to inspect books, papers, firms, companies which, it was thought, had indulged in anti-WTO trade practices, practices adverse to the interests of the United States: the documentation that this Trade Centre has now built up, (he said), was simply phenomenal; in contrast, in Brazil from where Ricupero hailed -- he was then its trade minister -- there were only two-and-a-half persons in the Trade Office at Brazilia: the half-person was himself, since he was also looking after another ministry!

This homely example stresses the need for acquiring greater expertise in fields way beyond trade and commerce and, particularly since the revolutionary decision of the WTO's Appellate Body in what is known as the Shrimp/Turtle case: in June 2001.

India, Malaysia, Pakistan and Thailand had complained in October 1996 about a US ban on imports of shrimps and shrimp products from countries not certified pursuant to a US statute -- Section 609 of Public Law 101-162 (1989).

Imports of shrimps into the US were prohibited from other States if the trawlers, which caught them did not have "turtle excluder devices" (which allowed sea-turtles to escape from fishing-nets): this was said to be a measure of marine turtle conservation -- related to the environment and therefore a trade restriction permitted by GATT 1994 (annexed to the WTO Agreement).

The Regan Trade Center in Washington had assiduously collected data and photographs of South Asian Trawlers in the Indian Ocean -- they did not have these devices.

But India and Malaysia argued that the US concern for sea-turtles, though touching, was not really with a view to their conservation but to restrict imports -- trade restrictions in support of "over riding public policies" though permitted under the GATT 1994 would avail only if they were not "disguised restrictions on international trade".

If the US was really concerned for the environment, as it professed it would have adhered to the Kyoto Protocol -- designed to save not only sea-turtles but also all living things against the dangers of global warning.

But the US had upto now refused to ratify the Kyoto Protocol -- even after signing it.  But the Appellate Authority of WTO said that all these arguments were political, not relevant. What was relevant was that international trade law was not to be considered "in clinical isolation" from the rest of international law.

It simply refused to see through the "disguise". Unlike earlier panels, under both GATT 1947 and 1994, the appellate body said that WTO must act in accordance with general public international law.

In a decisive shift in perspective WTO's appellate body has now declared that trade liberalisation is not the only "object and purpose" of WTO -- the preamble to the WTO Agreement makes it clear that protection of the environment, conservation of natural resources and achieving sustainable development, are also purposes to be served by WTO.

All of this goes to illustrate the imperative need for developing nations to be better informed about a whole host of things -- not merely trade, the need for a closer study of all parts of what goes by the generic name of "international law". We now have to equip ourselves better to meet new challenges posed by the recent decision -- trade law is no longer a single item dealt with in the WTO Dispute Resolution Mechanism.

Of course, the real weakness of the WTO Dispute Settlement system is that members of the WTO are independent, sovereign states. And independent, sovereign states act too often like billiard balls, which collide, and do not cooperate.

In the foreword to a book published a few years ago commemorating the 50th anniversary of the International Court of Justice (the world's highest, but least effective court) its then President wrote about the court's infirmities.

He said that the ICJ as an institution carries "a genetic heritage rendered vulnerable by the chromosomes of state sovereignty and is therefore by its very nature seldom spared by the crises convulsions and maladies, which affect inter-state relations". The WTO, as an institution, carries with it the same genetic heritage.

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