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News Release

Institute Study Calls for New Approach and Early Launch of Global Trade Talks

September 17, 1998

Contact:    Jeffrey J. Schott    (202) 328-9000

Washington, DC—The first ministerial conference of the new World Trade Organization, to be held in Singapore in December, should adopt three sets of initiatives to set the course for the global trading system for the next few years:

  • specific liberalization measures, notably an Information Technology Agreement and other tariff cuts, to demonstrate the members' commitment to further trade expansion;
  • procedural steps to "tee up" a series of major trade problems (including investment, competition policy and labor standards) for the next round of multilateral negotiations; and
  • preparation to adopt a bold vision for the future, such as the elimination of all border barriers by a fixed date in the early twenty-first century, including through appointment of an eminent persons group to develop such a concept.

The new Institute study, WTO 2000: Setting the Course for World Trade by Jeffrey J. Schott, recommends a far- reaching negotiating agenda for the WTO over the next few years. The built-in agenda already mandated by the Uruguay Round commits countries to new talks on services, agriculture, government procurement and other issues. It now needs to be supplemented by additional tariff reductions and new negotiations in areas such as investment and trade-related environmental issues.

Schott argues that WTO members must link their talks on traditional topics, such as tariffs and agriculture, with new issues such as investment to craft a reciprocal package that will attract widespread interest. This is necessary to avoid the incomplete results of recent sectoral negotiations on financial services and basic telecommunications, which have been pursued in isolation. Periodic "roundups" of outstanding issues will be needed to achieve progress, whether or not the succeeding sets of negotiations are called "rounds" as in the past.

At Singapore, WTO members first need to undertake specific initiatives that demonstrate their commitment to expanding global trade and investment in goods and services. In particular, Schott recommends they commit to:

  • rapidly accelerate implementation of their Uruguay Round trade reforms;
  • eliminate all tariffs of 2 percent or less (nuisance tariffs); and
  • launch new negotiations on investment by the end of 1997 and establish immediately a working group to develop the terms of reference for those talks. To help WTO members prepare to address the most pressing problems facing the trading system in the near future, Schott also suggests that Ministers commission at the Singapore meeting:
  • an eminent persons group, similar to the Leutwiler Commission created by the GATT in the 1980s, to develop a vision by late 1997 for the goals that the WTO should aim to achieve over the longer term;
  • a group of experts to examine the issues raised by Chinese accession to the WTO, that would report its findings and recommendations to the WTO General Council by June 1997;
  • a joint task force of staff from the WTO and the International Labor Organization (ILO) to examine domestic economic initiatives that could promote the adoption and enforcement of higher labor standards, which would introduce the issue without committing members to new WTO negotiations or raise the specter of trade sanctions; and
  • a working group on competition policy to study the trade implications of national policies in that area and to develop competition-oriented criteria to guide the application of antidumping practices.

If the proposed Singapore initiatives are undertaken, WTO members should be able to agree on a long-run vision for the trading system in time for the 50th anniversary of the GATT/WTO in late 1997 or early 1998. WTO members should then agree to the elimination of all tariffs and other border restrictions by a fixed date in the early twenty-first century, and commence negotiations to begin working toward those goals. At that point, the outlines of the first WTO "roundup" should begin to take shape:

  • Countries could undertake new trade liberalization initiatives, including 50 percent cuts in peak tariffs and accelerated implementation of Uruguay Round textile reforms. These steps could be linked to developing-country participation in WTO reforms on services, investment and government procurement.
  • Major developed and developing countries could commit to extensive new liberalization of barriers to trade in basic telecommunications and financial services.
  • WTO members could agree to new guidelines for participation in regional arrangements, especially to ban or sharply limit the use of industry- or sector-specific rules of origin in new pacts.
  • Drawing on the work of the WTO's Committee on Trade and the Environment, countries could examine the use of domestic subsidies in the farm and energy sectors and negotiate, if necessary, amendments to the WTO Agreement on Subsidies to promote sound environmental practices.