Foreign Minister Knut Vollebæk

Statement to the Storting on the forthcoming WTO negotiations on 25 May 1999

Oslo 25 May 1999

Mr. President,

The World Trade Organization (WTO) is getting ready to embark on a new round of negotiations. In my statement here this evening I intend to give the Storting an account of the status of these preparations and the Government's view of how our interests can best be safeguarded. The results of the negotiations will have consequences for the basic framework under which major Norwegian industries operate. The Norwegian Government will give priority not only to industries, but also to the qualitative aspects of trade, such as health, the environment, consumer protection and regional considerations, and will take account of the interests of the developing countries.

Mr. President,

I would like to begin with a brief review of the history of the WTO. The General Agreement on Tariffs and Trade (GATT) entered into force on 1 January 1948. Twenty-three countries took part from the beginning, one of which was Norway. Through a series of eight rounds of negotiations, world trade has been gradually liberalized, and a system of comprehensive, binding rules governing international trade has been developed. The rules do not prescribe free trade, but trade based on a set of global rules under which all countries are on an equal footing, regardless of their size. The rules are based on the principles of non-discrimination and transparency.

Norway has participated actively in all of the negotiating rounds. This shows the importance the Norwegian Government has attributed, and continues to attribute, to the multilateral trading system as a central framework for our external trade. The existence of binding rules for international trade is very important to a country like Norway, with its relatively small, but very open economy. It ensures, for example, that Norwegian products are not discriminated against in foreign markets and that the markets are not steered by the principle of "might is right".

The WTO was established on 1 January 1995 as a result of what was termed the Uruguay Round. This round of negotiations, the eighth in the series, lasted from 1986 to 1993. With the establishment of the WTO as an independent organization, the multilateral trading system now had a new, permanent structure. The WTO agreements are legally binding on the members. The WTO Agreement includes provisions for trade in goods and services and trade-related aspects of intellectual property rights, as well as a more effective system for resolving trade disputes between the members. The agreements concerning trade in agricultural products, services and intellectual property rights were the most important new elements in relation to the GATT rules. The Storting gave its consent to the agreement in November 1994.

The dispute settlement system has proved to be effective. In the course of the four years the WTO has been in existence, 168 disputes have been dealt with. Some of these cases have, of course, attracted more attention than others. This is true, for example, of the well known banana dispute between the EU and the USA, which has demonstrated that the system can stand up to considerable strain.

In many ways the dispute settlement system serves as a guarantee against trade becoming subject to unilateralism or arbitrary action. We are therefore especially interested in supporting the system. An increasing number of developing countries are making use of, and recognize the value of, a strong dispute settlement system. A number of decisions have been in the developing countries' favour. In order to ensure that the developing countries are able to safeguard their interests as well as possible, Norway and several other WTO member states have collaborated in suggesting the establishiment an independent legal advisory centre to give developing countries real access to the WTO's dispute settlement mechanism.

The WTO currently has 134 members, while 32 countries, including important trading nations such as China and Russia, are still involved in membership negotiations. By far the majority of WTO members are developing countries. Many of the least-developed countries are members or have applied for membership. Having grown from the 23 original contracting parties to GATT, to the current 134 members making up the WTO and 32 applicant countries, the WTO is virtually a global organization on a par with the UN and the Bretton Woods institutions. The Government supports the membership applications of China and Russia, among others, and advocates that the accession negotiations for the applicant countries be concluded as soon as possible.

Mr. President,

As set out in the Voksenåsen Declaration, the Government will seek to further develop and improve the WTO Agreement so that it takes greater account of social, environmental policy, health and consumer protection considerations. The WTO must take the responsibility within its sphere of activity for contributing to sustainable development. Norway will play a pro-active role in this connection. Economic development and social welfare must go hand-in-hand with environmental protection and the sustainable use of natural resources.

The relationship between the multilateral trading system and the environment has been the subject of discussion in a number of fora for quite some time, and is now on the WTO agenda. It is important to underline that it is in the respective international environmental agreements and at national level that concrete environmental policy, i.e. aims and measures, is laid down. With respect to the WTO, we are concerned to ensure that trade developments and environmental considerations are complementary. An extensive analysis of the link between trade and the environment has been made in the WTO. The organization held an international symposium on the subject in mid-March. The subject is, however, a controversial one. Not only most of the developing countries, but also a number of developed countries are opposed to amending the WTO rules so that they take greater account of environmental considerations because they fear that they will be used for protectionist purposes.

It is vital that environmental considerations be assessed and integrated into all areas to be negotiated in the WTO, whether it is a matter of liberalization or the development of new rules. The Government will also work to ensure that environmental principles such as the precautionary principle and the "polluter pays" principle are taken into account in the forthcoming negotiations. The Government also wishes to ensure that the trading system provides the necessary flexibility for decision-makers on the environment side and predictability for all actors as regards the use of trade measures in international environmental agreements. It is also important that incentives for the production and use of environmentally friendly goods and services are developed within the WTO. The establishment of non-binding disciplines for voluntary environmental labelling arrangements will be an important initiative in this respect.

Health and consumer protection considerations are safeguarded primarily by developing internationally recognized standards for products, production methods and services. The multilateral trading system is to a large degree based on the fact that members apply such standards, but it is not responsible for developing them. Countries can also, subject to certain conditions, make use of rules that provide a higher level of protection than that achieved through measures based on international standards. In the view of the Government, it is important that Norway participates actively in the various international standardization bodies in order to safeguard considerations of health, the environment and consumer protection.

In the Voksenåsen Declaration the Government also confirmed the importance of making allowances for the special needs of poor developing countries in the further development of the WTO Agreement. Even though a number of developing countries have experienced a considerable improvement in standards of living during the past 15 years, the wealth gap between the developed countries and many developing countries, especially the least-developed countries, is widening. It will be important to bear in mind the needs of these countries within the trading system when determining Norway's position on the various issues. Possible measures might be improved market access for exports from developing countries, effective and well-coordinated assistance in developing resources and building capacity, helping to ensure that the developing countries are able to make use of the dispute settlement system, and special and differential treatment of developing countries, especially the least-developed countries, under the multilateral trading system. Norway emphasizes the importance of enabling the poorest countries to participate in the work being done within the WTO.

The multilateral trading system is also facing other challenges. Globalization means that capital, goods and services are moving back and forth across frontiers in increasing quantities and with increasing speed. Trade over electronic networks, such as the Internet, is an obvious example of these trends. The multilateral trading system must meet the challenges posed by this trend.

The closeness implied by globalization has also led to greater vulnerability. Through the worldwide foreign exchange markets, the financial crisis in Asia soon had repercussions for the rest of the world.

Another major challenge is the increasing proliferation of regional trade agreements. We must make sure that such agreements, whether they concern customs unions or free trade agreements, are drawn up in such a way that they constructively support, rather than conflict with, the multilateral trading system.

The Prime Minister has taken the initiative for a high-level seminar on globalization, in order to discuss how we can achieve better political control of the globalization process and prevent further marginalization of the developing countries. The seminar will be held in Oslo at the beginning of July, and will be attended by leading political figures from a number of countries, heads of international organizations and financial institutions and key representatives of international business and industry.

Mr. President,

The new round of negotiations in the WTO will start at the beginning of next year. A formal decision on the mandate for the negotiations will be taken during the third WTO Ministerial Conference in Seattle, which is scheduled for 30 November - 3 December this year.

Preparations for the forthcoming negotiations have been started in Geneva. In principle, no subject will be excluded. The Marrakesh agreement on the establishment of the WTO requires us to continue negotiations on agriculture, services and certain aspects of trade-related intellectual property rights. This is what is known as the WTO's "built-in" agenda. What other topics should be included in the negotiations is also being discussed in the WTO. The most obvious areas seem to be market access for industrial products, multilateral rules for transparency in government procurement, common disciplines for electronic commerce, a multilateral competition policy discipline, trade and environment, trade and investment, and various adjustments to the existing rules.

Members differ in their views on the scope of the negotiations and on which topics should be included. Many developing countries are sceptical of an agenda that goes beyond the built-in agenda and adjustments to existing rules. The least-developed countries in particular argue that they are having enough problems implementing the results of the Uruguay Round. They point out that the existing rules must be adjusted in order to restore the balance of rights and obligations and give the developing countries the opportunity to take full advantage of the multilateral trading system. However, the developing countries are not a homogeneous group either, and their interests in connection with the forthcoming negotiations also differ considerably. The OECD countries advocate what is termed a comprehensive agenda for the negotiations, although what priority should be given to the different sectors varies from country to country.

Mr. President,

Last year the Government initiated a general survey of Norwegian interests in connection with the negotiations. The survey, which comprised a review of the various areas, was conducted in interministerial working groups made up of representatives from the relevant ministries and headed by a committee of state secretaries. The results of the survey are set out in a report which has been made public, via the Internet and elsewhere.

In connection with the survey, the working groups have had contact with the social partners and other organizations concerned. The input of these organizations has been very valuable.

I would now like to say a few words about the various areas that will be dealt with in the negotiations. I will begin with those areas that are part of the WTO's built-in agenda.

In the Uruguay Round the agricultural sector was integrated into the multilateral trading system by means of a separate agreement on agriculture. Article 20 of this agreement refers on the one hand to the long-term objective of substantial progressive reductions in support and protection. On the other, it states that in the negotiations account shall also be taken of the experience gained from implementing the existing agreement and what are termed non-trade concerns. This includes food security and the need to protect the environment.

The long-term objective does not have to be reached during the forthcoming negotiations. Nor are the parties bound to undertake specific commitments as regards the results of the negotiations or when they are to be concluded. Nonetheless, the parties must be expected to go beyond the existing commitments.

During the preparatory process in Geneva, Norway has pointed out that the agricultural sector has functions that go beyond the production of food. We have made an active effort to illustrate the multifunctional nature of agriculture as a supplier of collective goods that are related to settlement patterns in outlying districts, food security, viable rural communities and environmental quality such as biological diversity, a living cultural landscape and human, animal and plant life and health. Japan, Korea, Switzerland, Iceland and the EU also emphasize the importance of agriculture's multifunctional role.

The active policy pursued by the Government is in keeping with the priorities put forward by the Brundtland Government during the previous round of negotiations. In connection with the Mid-term Review of the Uruguay Round in 1989, Norway stated: "With regard to the long-term part we must on the Norwegian side stress again the importance which we attach to the non-trading concerns or the non-economic factors. These are central elements in our agricultural policies and extend not only to food security, but comprise also elements such as environment, regional policies and social aspects. Within a broader context they are vital to us."

The USA and other countries that export agricultural products, such as Australia, New Zealand, Brazil, Argentina, Canada and South Africa, have high expectations that this round will lead to a considerable liberalization of trade in these products. A number of developing countries are also interested in increased market access for their agricultural products. Thus, the agricultural negotiations will be difficult.

The Government will make an active effort to ensure that the next round of negotiations results in an agricultural agreement that ensures that the individual country continues to have room for manoeuvre in developing its domestic agricultural policy, including the measures considered necessary to maintain a viable agricultural sector.

Mr. President,

The Uruguay Round resulted in a framework agreement on trade in services which is based on the principle of non-discrimination. The agreement involves commitments in various areas related to market access and national treatment. The most important result in real terms was that the members undertook not to make their rules more restrictive. Subsequently sectoral negotiations on liberalization were conducted, inter alia in the areas of the movement of persons, trade in financial services and trade in basic telecommunications services.

There were also sectoral negotiations on trade in maritime transport services following the Uruguay Round. These negotiations did not yield the desired results. The commitments under the agreement on services in the shipping area are, therefore, fairly modest, despite the fact that all countries generally pursue a liberal policy as regards international shipping. The resistance on the part of the US to committing itself is probably the most important reason for this result. Therefore, one important objective in the forthcoming negotiations will be to ensure that as many member states as possible undertake commitments on the broadest possible basis.

According to the agreement on trade in services, negotiations are to be resumed on a broad basis at the beginning of next year. The survey has revealed active Norwegian interests in a number of service sectors, especially shipping and related offshore services, telecommunication services, IT-related services and environmental services. It is also in Norway's interests that other countries offer conditions of competition that are as favourable to Norwegian suppliers of services as those enjoyed by foreign suppliers in Norway.

The Government is of the view that the Norwegian objective of further liberalization in the field of services can best be achieved if the negotiations are conducted on the broadest possible basis. Therefore, the Government advocates that no service sector should, a priori, be excluded from the negotiations.

Mr. President,

The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) was negotiated during the Uruguay Round and constitutes a new area in the multilateral trading system. It establishes a global minimum level of protection for most types of intellectual property rights, such as copyright, trademarks, geographical indications and patents. The developed countries have been applying the agreement since 1996. So far the agreement has only had a limited effect since a number of countries, e.g. those with transition economies and developing countries, have transitional arrangements until 2000 and 2005-2006, respectively.

According to the TRIPS Agreement, negotiations concerning geographical indications, the parties' right to prohibit patents on biological inventions and increased access to the dispute settlement mechanism are to commence at the beginning of next year. During the preparations for the forthcoming negotiations, it will be decided whether additional areas should be included in the TRIPs negotiations.

The Government gives high priority to active efforts to ensure the broadest possible implementation of the WTO rules in this field. The patentability of biotechnological inventions is a controversial issue, and one on which WTO member states differ. For Norway, an overall assessment implies that we will advocate maintaining the status quo, i.e. we advocate retaining the right to exclude animals, plants and processes for the production of plants or animals from patentability. This is also one of the major demands being put forward by the developing countries. These countries also emphasize the need for flexibility in the protection of plant varieties under TRIPS, a position Norway supports.

Mr. President,

The negotiations on market access for industrial products have been the most important component of previous GATT negotiations. Unlike the agricultural, service and TRIPS areas, there is no formal obligation to enter into negotiations on market access. None of the WTO member states have, however, objected to such negotiations. Therefore, it seems highly likely that these negotiations will commence at the beginning of next year.

Norway has gradually reduced tariff rates for trade in goods either on a unilateral basis or on the basis of bilateral, regional or multilateral agreements. Further reductions in such rates would therefore have relatively little significance for the competitive situation of Norwegian firms in the Norwegian market. On the other hand, tariff reductions under the auspices of the multilateral trading system would be of particular interest with regard to markets outside Europe and with regard to Norwegian goods that encounter customs barriers in the majority of markets. This applies especially to fish, fish products and textiles. Fish and fish products are subject to trade restrictions in a very large number of countries. The fisheries industry will be of particular importance when drawing up positions for the WTO negotiations.

Reduced tariff barriers will be important for Norway, since they will help to give Norwegian business and industry favourable conditions in international markets. This will in turn enhance wealth creation in Norway, secure existing Norwegian jobs, and create new ones. In addition to the tariff negotiations, however, it will be important to look more closely at the non-tariff barriers that affect trade in goods. The efforts to simplify border controls and other trade-related procedures are important in this context.

In order to ensure a balanced result, the Government has, in connection with the drafting of the mandate, advocated that the tariff negotiations should in principle cover all types of industrial products.

Trade via electronic networks has increased dramatically in recent years and in many respects this will revolutionize traditional trade and business practices. The extensive use of the Internet by the Norwegian private sector is considerably improving the competitive situation of Norwegian firms.

In the Government’s view, trade via electronic networks must be regulated by common, non-discriminatory rules in the WTO. An extensive survey is now being conducted by the WTO to determine whether trade via electronic networks is covered by the existing rules, or whether new provisions are needed. Norway participates actively in this work.

Further development of the rules for government procurement of goods and services is on the WTO agenda. The existing WTO Agreement on government procurement has only been ratified by a limited number of members and is thus not binding on all WTO member states. The developing countries are in general more sceptical than the other members to the development of a common, binding set of rules in this area.

The WTO is now examining the possibility of drafting a new agreement on transparency with regard to government procurement that will be binding on all WTO member states. The international market for government procurement is considerable, and accounts for about 15 per cent of GDP worldwide. The Norwegian private sector has proved competitive with regard to consultancy services, technical planning, hydroelectric development and information technology. Moreover, Norway has an open government procurement system because of the EEA Agreement. Norwegian firms would benefit from the further opening of the markets for government procurement within the multilateral trading system. Greater transparency with regard to government procurement would also help to reduce corruption and improve efficiency, which would result in considerable socio-economic savings.

The Government therefore advocates binding multilateral solutions in the forthcoming negotiations, which should also help to strengthen WTO rules in this area. At the same time, in the drafting of such multilateral rules emphasis must be placed on environmental considerations and the special needs of the developing countries.

Mr. President,

In the view of the Government, the forthcoming negotiations should include the development of multilateral framework conditions in the field of competition policy. This is clearly in Norway's interests, particularly in sectors such as fertilizers and chemicals, where we are competing with industries in countries that do not have well-developed rules on competition. In the long term a WTO framework in the field of competition could lead to more equal conditions for business and industry in international markets. Our aim is that this will eventually make it less necessary for other countries to employ anti-dumping measures to protect themselves against what they perceive as being unreasonable competition.

Mr. President,

Norway has long been an active champion of human rights, including core labour standards. We participate actively in the ILO and have ratified all the major conventions relating to labour standards. Labour standards also occupy a central place in our bilateral and multilateral development cooperation. During the Ministerial Conference in Singapore in 1996, the WTO confirmed that the ILO was the competent body to set and deal with core labour standards.

In recent years Norway has sought to promote a dialogue within the WTO on core labour standards. The aim is to promote the view that the WTO members' trading regime must be based to a greater degree on such fundamental rights. Norway's views on this subject are shared by a number of other countries, including the USA, Denmark, Sweden, Belgium and France.

Attempts to initiate a dialogue in the WTO on labour standards have met with considerable resistance. All developing countries and most developed countries are opposed to developing a set of rules for core labour standards in the WTO. It is argued, for example, that the WTO is a rule-based system which provides for trade sanctions when member states step out of line, and that trade sanctions are not the way to promote core labour standards. The developing countries are afraid that rules governing labour standards would constitute a form of hidden protectionism whereby a number of WTO member states would be seeking to put an end to the comparative advantage given to many developing countries through low labour costs.

Like the Jagland Government, the present Government will continue the effort to get core labour standards put on the WTO agenda. In this endeavour, the Government will maintain close contact with the social partners and with other like-minded countries. The Government has also endorsed the efforts of the Norwegian Confederation of Trade Unions to promote trade union rights in developing countries and has supported these efforts financially.

Mr. President,

Trade and investment are closely interconnected. Today the international flow of investment is regulated by some 1,800 agreements, and there are no multilateral rules in this area. Although the multilateral trading system already includes provisions relating to investment, the WTO does not have a coherent set of rules governing investment.

In 1996 a comprehensive study was initiated under the auspices of the WTO to determine the connection between investment and trade. The study will provide a basis on which the member states can assess the need for a multilateral investment regime in the WTO. After the OECD negotiations on a Multilateral Agreement on Investment, the so-called MAI negotiations, failed to achieve results, there has been a stronger focus on the WTO as a possible forum for a multilateral investment agreement. However, the WTO member states have different views on the desirability of multilateral rules. Several developing countries, primarily countries like India, Pakistan and Egypt, are sceptical about the development of such rules, and some have even rejected the idea outright. Other developing countries, such as Mexico, Brazil, Costa Rica and South Africa, are in favour of developing multilateral investment rules in the WTO. The OECD countries differ as to the choice of forum for such negotiations.

We must take account of the experience gained from the MAI negotiations, the considerable scepticism expressed by a number of developing countries and the difficulty of achieving an agreement of sufficiently high standard to safeguard industrial interests and at the same time takes sufficient account of the environment, health, labour standards and the needs of the poor developing countries. Therefore, the Government will not at the outset actively advocate that investment be a separate subject for negotation. If there is to be a multilateral investment agreement in the WTO, the above-mentioned considerations must be taken into account in an adequate manner.

Other areas too may emerge as potential subjects for negotiation. This applies to issues such as the simplification of trade procedures, anti-dumping, dispute settlement, technical barriers to trade, subsidies, rules of origin and the relationship between regional trade agreements and the multilateral trading system. Norwegian interests in these various areas will be continually assessed.

Mr. President,

In view of the importance of safeguarding extensive Norwegian interests and promoting the qualitative aspects of trade, the Government is now advocating, on the basis of the current studies, that the WTO initiate a comprehensive round of negotiations based on the adoption of the negotiating results as a single undertaking. This view coincides with that taken by other OECD countries and a number of major developing countries. The Government is also of the view that a broad-based round of negotiations will be the best means of guaranteeing that the trading system keeps pace with developments in world trade, while at the same time providing an opportunity to achieve a result that strikes a balance between the interests of developing and developed countries.

The breadth and scope of Norwegian interests could pose a difficult challenge and will require careful consideration. This is the case, for example, with the desire to safeguard Norwegian interests in the agricultural field and the desire to lay the best possible groundwork for improved market access for products from developing countries. It is true that Norway does not compete to any appreciable degree with the developing countries as regards production of agricultural products. At the same time, however, export of agricultural products represents an important development potential for the developing countries.

Safeguarding the qualitative aspects of trade and discussing labour standards within the multilateral trading system also pose a difficult challenge. These are problems we will encounter in the negotiations and that will require careful consideration at a later stage in the process.

Mr. President,

The preparations in Geneva are now in the second phase, which runs from February to the end of July. During this phase, member states are to submit concrete proposals for areas they wish to have included in the mandate for the negotiations, which is to be adopted at the Ministerial Conference in Seattle. The proposals are not only supposed to be substantive in the sense that they specify the topics the member states feel should be included, but they should also indicate how the various topics should be dealt with. At the same time the members are expected to submit proposals as to how the negotiations should be organized.

So far a number of proposals concerning substance have been submitted. The short time allotted for my statement today does not allow me to describe these proposals in any detail, but it seems as if most of the topics I have mentioned will be included in the negotiations. The Government is, however, assessing the proposals as they are submitted. Norway has so far submitted proposals related to trade and environment and a paper on market access. The Government is also considering submitting proposals related to, inter alia, agriculture and services. The proposals are available to the public, both via the Internet and elsewhere, and are in keeping with the views I have expressed here this evening. In my view we are on schedule in the preparatory process.

The question of how the forthcoming negotiations should be organized has not been formally dealt with as yet, but it will be on the WTO agenda in June and July. The Government notes, however, that there seems to be increasing support among the members for limiting the forthcoming round to three or four years. The Government supports this view.

In the preparatory process the Government attaches considerable importance to maintaining close contact with like-minded member states. In this connection active participation in relevant informal fora which set the premises for decisions in the WTO is vital.

Phase III of the preparations will begin in September and will last until the Ministerial Conference at the end of November. During this final phase we will try to reach agreement on the mandate for the negotiations so that it can be set out in the Ministerial Declaration from the Seattle meeting. However, the possibility that the WTO members will seek to achieve concrete results in certain areas during the run-up to the Ministerial Conference cannot be excluded. Chinese membership, an increase in the number of products covered by the Agreement on Information Technology and revision of the Dispute Settlement Agreement are possible topics. The APEC has also proposed the elimination of tariffs for certain product categories. Here I would note that the Government hopes that the current debate on the next director general will not affect the preparations for the Ministerial Conference in Seattle.

The Government will keep the Storting informed about the results of the negotiations on the mandate and the plans for the forthcoming negotiations.

Mr. President,

For a small country like Norway, it is very important that international trade is governed by binding rules.

In connection with the forthcoming negotiations, the Government will seek both to provide favourable conditions for growth and wealth creation in the Norwegian private sector and to further develop a trading system that takes account of the situation of the developing countries and of the qualitative aspects of trade, such as the environment, health, consumer protection and regional policy.