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Kieler Diskussionsbeiträge 304
The World Trade Organization's (WTO) Singapore Ministerial Conference in December, 1996, represented the first review of where the WTO was almost two years after the Marrakech signing. Unfortunately, neither in implementing Marrakech agreements nor in dealing with new issues is the post-Singapore state of the world trading system fundamentally better off than before. Nothing was done to correct the "sham liberalization" in the phasing out of market access restrictions in textiles and clothing. By backloading liberalization of the most sensitive clothing products to the latest possible time, an impasse is being created which could well cause but yet another delay in eliminating these quantitative restrictions, which are very costly in terms of allocative efficiency. The core of market access was seemingly brushed over to make room for an agreement on free trade in information technology products, which is flawed for two reasons. First, it excludes highly protected consumer electronics and second, it expanded the international marketing "cartel" for semiconductors to include the EU and Korea (plus founding members US and Japan). Anti-dumping measures (ADMs), the essence of so-called contingent protection, have continued to play a major role in trying to reduce competition, but the Ministerial widely ignored this fact. Though their use by industrialized countries has slowed down noticeably, developing countries pose a new threat by enacting ADMs all the more, particularly against other developing countries. The Singapore Ministerial failed to clearly set the stage for fulfilling the WTO's brief as a universal institution. No clear guidelines were established to quickly and effectively bring Russia and China into the WTO. Instead, the status quo of enforcing unilateral actions against a state-trading economy still appeals to industrialized countries, probably for mainly non-economic reasons. In perhaps one of its most important decisions, the Singapore Ministerial set up a working group to examine competition policies. Yet the key question is whether trade liberalization and GATT/WTO discipline will be best served by adding to the trading system a global codex, harmonizing national competition policies ex ante, or by mutually recognizing well-functioning national competition policies. While sound economic arguments support the latter, prevailing country-of-destination principles conjure up concerns that the former will dictate the approach. Finally, it may be too early to extrapolate the current success of the dispute settlement mechanism (DSM). It still remains to be seen whether Contracting Parties will really accept decisions against their expressed interests in issues of critical importance, or where national security arguments are invoked. So far, however, the success of the DSM has exceeded expectations.
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