WORLD TRADE
ORGANIZATIONWT/MIN(98)/ST/20/Rev.1*
20 May 1998
(98-2206)
MINISTERIAL CONFERENCE
Second Session
Geneva, 18 and 20 May 1998Original:  English
SOUTH CENTRE
Statement Circulated by Mr. Branislav Gosovic,
Principal Officer
(As An Observer)
Revision
The South Centre is grateful to the WTO membership for granting it the observer status at this
second Ministerial Conference of the Organization.  South Centre, as an intergovernmental
organization of developing countries, believes that the multilateral trading system will benefit from
the effective participation in the work of the WTO of its entire membership.  Because of limited staff
resources and backup analytical support, many developing countries find themselves at a considerabledisadvantage in coping with the increasing scope and depth of the WTO work programme, a situation
well recognized by the WTO itself.  The South Centre, through a pilot project, aims to help the
developing countries overcome this handicap.  the South Centre, therefore, looks forward to a
continuing relationship between our two organizations beyond the Ministerial Conference.
Fifty years ago, 23 countries including 12 from the developing world, agreed to a multilateral
framework to exchange tariff concessions on selected industrial products.  This was the beginning of
the rule-based multilateral trading system - a system that was widened and strengthened through
successive rounds of trade negotiations and, finally, led to the establishment of the World Trade
Organization.  The WTO, today, has 132 Members and another 31 are in the process of accession.  Of
the present membership, 98 are from the developing world, almost three quarters of the total.  Recent
decades have also been characterized by a rapid grow th in the volume of international trade which has
greatly outpaced the growth in world output and benefited many developing countries.
These are significant achievements of the multilateral trading system.
The present occasion is not only an opportunity to celebrate achievements, it is also an
opportunity to analyse the shortcomings, as only a balanced approach can ensure consolidation of the
system.  It is therefore an appropriate time for all of us to dispassionately assess the past achievements
and shortcomings of the trading system and, based on this assessment, elaborate the broad contours ofa system that reflects the aspirations and takes into account the concerns of its membership.
Firstly, promoting economic growth and developm ent should be the focus of the multilateral
trading system.  It was recognized in the Preamble to the GATT 1947 that "... relations in the field of
trade and economic endeavour should be conducted with a view to raising standards of living,
ensuring full employment and a large and steadily growing volume of real income and effective
                                                     
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demand, developing the full use of the resources of the world and expanding the production and
exchange of goods."  The Preamble to the Marrakesh Agreement Establishing the WTO reaffirmed
this basic objective and went on to add, "... there is need for positive efforts designed to ensure that
developing countries, and especially the least developed among them, secure a share in the growth in
international trade commensurate with the needs of their economic development ... ."  Similarly, this
objective of facilitating and promoting economic development of developing countries has beenreiterated at a number of places in various Uruguay Round Agreements.  We should take the present
opportunity to reaffirm our commitment to this crucial objective and ensure that the WTO focuses on
achieving sustained economic growth and sustainable development for all, particularly the developing
countries.
Secondly, the rule-based nature of the multilateral trading system should be unambiguously
reaffirmed by full and faithful implementation of the existing Agreements.  On 1 January 1995 the
WTO came into being and, with it, a multilateral trading system that is very different from and much
more comprehensive than its precursor, the General Agreement on Tariffs and Trade (GATT).  It was
the first time that the multilateral system included, in addition to tariff bindings on industrial products,market access commitments for trade in services and trade in agricultural products, provisions to
protect intellectual property rights, rules to conduct international trade that covered such diverse areas
as customs valuation, anti-dumping, subsidies, preshipment inspection, technical and sanitary
standards etc., and mechanism for binding dispute settlement - all as part of a single undertaking.
It was also the first time that a large number of developing countries, by signing on the single
undertaking, assumed equal obligations in these areas.  In return, the developing countries were
promised some benefits in areas of interest to them e.g., better market access for clothing and textiles,
and tropical and agricultural products.   Also there were provisions within the Agreements for special
and differential treatment for developing countries, and commitments for financial and technicalassistance etc.
While many developing countries are still struggling under the costs of massive adjustments
required of them under the existing Agreements, the implementation by the developed countries in the
few areas of interested to the developing countries by the Uruguay Round leaves much to be desired.
For example, quota restrictions on only 3 per cent of the restrained textiles and clothing
exports will be removed by the major importers in the first five years of implementation.  During thesame period the developing countries are required to implement all their obligations under most of the
Agreements including those relating to the new ar eas covered in the Uruguay Round.  Market access
for agricultural exports of developing countries in the developed country markets has not expanded
but the import bills of net-food importing developing countries for basic foodstuffs are mounting.
And extremely modest commitments in respect of movement of natural persons have been given by
the developed countries whereas substantial concessions in the areas of basic telecommunications and
financial services have been obtained from the developing countries.
It is therefore imperative to ensure adherence by all to the rule-based nature of the system that
all the provisions and Agreements, particularly in areas of interest to developing countries, are
promptly and faithfully implemented.  This may require establishing operational modalities,especially regarding many provisions on special and differential treatment, and effective monitoring
mechanisms.
Thirdly, the multilateral trading system should be fair and equitable.  This requires that the
WTO agenda reflect the balance of interests of the developed and the developing countries;  that the
imbalances in the present Agreements are rectified;  and that the benefits of the system accrue to allmembers in relation to their needs and not in proportio n to their share in international trade.  This also
requires recognition of the serious limitations of the principle of reciprocity as an instrument for
mutually advantageous trading arrangements when the participating countries have very different
levels of development.ST/MIN(98)/ST/20/Rev.1
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The reciprocity principle of "getting more by giving more" is bound to enhance the disparity
between those who can give and those who cannot or ve ry little.  The widening of this cycle of giving
and getting will bring ever increasing benefit to the strong parties while the weaker ones are
increasingly marginalized.  This is what has happened in successive rounds of multilateral trade
negotiations when, on the one hand, the multilateral agenda continuously expanded to take into
account the widening interests of the major developed countries and, on the other, the benefit of tradeliberalization accrued unevenly to different groups of countries.  The average tariff reduction in tariff
rates, for example, has been steeper for products generally exported by developed countries than for
products of interest to developing countries.  Moreover, the escalation of tariffs in developed
countries in respect of processed products exported by developing countries continues to exist.
To remove the present shortcomings and to ensure that the benefits of a fair multilateral
trading system are equitably distributed among all the participants, the principle of reciprocity needs
to be reconsidered to take into account the capacity of countries according to their levels of economicdevelopment.
Fourthly, every effort should be made to achieve the universality of the multilateral trading
system.  This will be achieved by facilitating the accession of new members and by ensuring
participation of all members, as equal partners, in different activities and decision making.  It should
be a matter of principle for the present membership of the WTO that all accession proceedings areconducted expeditiously and fairly, including the prompt establishment of an accession working party
upon application for membership by a country;  that adequate technical assistance be provided to the
applicants, especially the least developed among them, to better cope with the substantial technical
requirements of the accession process;  and that applicants be allowed to accede on terms
commensurate with their level of development.
The participation of all the membership in different WTO activities including decision
making also needs to be improved.  Admittedly, the involvement of a large number of countries, with
different interests and capacities, in any process of decision making is not easy.  But this is absolutely
necessary, not least because of the contractual nature of the WTO where decisions are part of a legal
system of rights and obligations and binding on all Members.  This is also necessary to ensure thecontinue and whole-hearted participation of developing countries in the multilateral trading system.
Fifthly, there is a need to ensure that the WTO contributes effectively to achieving greater and
positive coherence in global economic policy making taking into account the interests of all
countries - developing as well as developed.  The relevant Marrakesh Ministerial Decision recognizes
that "the interlinkages  between the different aspects of economic policy require that the internationalinstitutions with responsibilities in each of these areas follow consistent and mutually supportive
policies".  This Decision also refers to the positive contribution that greater exchange stability and
further efforts to address debt problems of developing countries can make towards the expansion of
trade, and economic growth and development.
The requirement now is to work towards better coordination arrangements among
international institutions including the relevant organizations of the UN system, the Bretton Woods
institutions and the WTO to find coherent solutions to global problems impeding economic growthand development.  Two such problems requiring immediate attention are:  (i)  the volatility in
international financial markets that has resulted in frequent financial crises, most recently in East
Asia, and has exacted heavy price from the affected countries; and (ii) the excessive and unsustainable
debt burdens under which many poor countries continue to suffer.
Sixthly, there should be a clear recognition of what is not in the competence of the
multilateral trading system as embodied in the WTO.  The success of the system in promoting tradeWT/MIN(98)ST/20/Rev.1
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liberalization and its binding dispute settlement mechanism may tempt some to use it for achieving
other objectives in social and environmental fields which are laudable but not central to the WTO
work.  Obviously the WTO cannot solve these issues which governments have not been able to
address satisfactorily in other specialized fora.  It could in fact do great harm to the multilateral
trading system by providing a tool to the protectioni st lobbies.  To quote the Director-General of the
WTO, "the WTO is not - and has no intention of becoming - a supranational body with the power todetermine values and standards for the internat ional community - especially in the absence of
internationally agreed standards and rules".
In conclusion, widespread and equitably shared economic growth and development resulting
from a rule-based and fair multilateral trading system will benefit all.  In fact, the developed countries
will be important beneficiaries of the economic growth and development of developing countries
which will provide larger markets and better opportunities, respectively, for their products and
investment.  This will also lead to global peace and prosperity ensuring a truly stable framework forinternational relations based on mutuality of benefits.
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