The ‘Free Rider’ Issue and the advocacy of a ‘ level playing field’
Among the reasons put forward for the launch of the Uruguay Round (UR) and of SU as a device to link disparate issues on the agenda as a single set of negotiations) was the concern with ‘free riders’ i.e. developing countries benefiting from Most Favoured Nation (MFN), non-reciprocity and Special and Differentiated (S&D) measures (see SEATINI Factsheet 19) for developing countries. According to developed countries, this creates a multi-layered and fragmented range of rights and obligations. Against this background, the concept of SU provided a neat instrument to sanitize the trading system of ‘free riders’ and establish a level playing field, a one-size-fits-all trading regime. In support of these views, Bhagwati states ‘The Uruguay Round also must be credited with having brought about a Single Undertaking, with common rules and obligations for all members, with exceptions largely reduced to transitional periods for developing countries. We thus have a WTO, which aims to have a single set of rules to govern world trade.’

SU and the Uruguay Round (UR)
The concept of SU first emerged in the preparatory process at the initiative of the European Community: it was a camouflage to protect its core interests in agriculture. But it also received support from a number other countries, albeit for different reasons. The developing countries, notably in Latin America, considered it as an instrument that ensured that the issue of agriculture in particular was not sidetracked in the UR. SU therefore became an important tool for them to safeguard their concerns in the UR and ensure the ‘globality’ of the agenda. At the conclusion of the major part of the negotiations in 1991, the Draft Final Act (the Dunkel text) imposed an interpretation of single undertaking that in effect, required each member to accept the text on each and every subject covered therein. The Director General of the General Agreement on Trade & Tariffs (GATT) characterised it as offering ‘a concrete and comprehensive representation of the final global package of the results of the Uruguay Round’ (italics added) and that ‘No single element of the Draft Final Act can be considered as agreed till the total package is agreed’ (Paragraph (d) of the ‘understanding’.
Between December 1991 and the adoption of the Final Act of the UR in December 1993, the key remaining features of the agreements and their institutional underpinning - the creation of WTO endowed with a comprehensive dispute settlement permitting cross retaliation - was settled between the Quad countries (US, EU, Japan and Canada) and enforced on the developing countries through the instrumentality of a SU. Developing countries’ participation in these decisions was marginalised and their role one of spectators.
Since its introduction in the UR, the scope of SU has been defined and interpreted in a variety of ways. As a political construct, it has been the subject of a variety of meanings and varying interpretations. Assuredly, it is neither ‘a new regime principle’ nor a legal norm. It is context-specific: in the absence of an all-embracing agenda covering a multiplicity of issues, areas and sectors, it has little or no relevance. Between the UR and Doha, negotiations took place under the built-in agenda, and other issues such as information technology were introduced without the requirements of a SU. (See Table)

SU and Doha
Its resurrection in the Doha Work Programme can be considered as circumscribed in a number of ways. First, by excluding a number of issues outside its scope; secondly, by providing for early agreements to be ‘…implemented on a provisional or definitive basis….’; thirdly, Para 47 conditions SU to ‘…conduct, conclusion and entry into force of the outcome of the negotiations’ which are defined as ‘.. a part of single undertaking; fourthly, in providing for the conduct of the negotiations to be transparent in order to facilitate ‘effective participation of all..’, Para 49 suggests that application of SU will require, at the very least, determination of ‘… an overall balance in the outcome of the negotiations’.
Exactly how such an assessment of balance is undertaken will remain a major challenge for developing countries and one that will have to be undertaken at the national level, before decisions concerning a negotiated package are taken. Decisions concerning adoption and implementation will perforce have to be taken at a political level and for which paragraph 45 has provided for a Special Session of Ministers. This also provides a further opportunity at the political level to determine how the SU requirement is applied regarding the adoption and implementation of agreed results.
Doha commitments concerning SU must be viewed in their broader meaning and context: the application of SU is conditional upon a satisfactory conduct of the negotiations. This means full involvement and participation by developing countries in the shaping of the Doha Work Programme, the design of the negotiated package and determination of its balance. Developments in the negotiations so far, suggest that few if any, of these conditions have been met. As argued earlier, conduct of the negotiations is an integral component of SU: as such, each country’s parliament, other organs of the Government and the civil society, must be fully satisfied that the processes leading to the design of a final package, have been transparent and permitted full participation by each country’s negotiating authorities. The more active involvement of developing countries and their civil society in the current process may help ensure that the experience of the UR is not repeated.

Way Forward
Evaluation of balance in the outcome of the negotiations must be undertaken at the level of each country prior to any decisions being taken regarding the treatment of the package and the application of SU. Such an evaluation must address the substance of the outcome and all the national stakeholders must be fully engaged. The substantial direct and indirect costs entailed in assuming new obligations provides sufficient justification for national legislatures in particular, to closely examine the implications of such costs: in conditions of extreme fiscal constraints in most developing countries, a full audit of the financial implications, including an assessment of the development implications of new obligations, must inform Ministerial decisions.
Finally, such an evaluation at the national level should involve all the organs of the Government, the concerned public sector agencies, and the broadest range of civil society organisations. In practice, this means that each country’s parliament or similar forum, must play a pro-active role in evaluating the balance before Ministers make commitments to tie national policies.

Evolution of GATT/WTO Negotiations since the Tokyo Round

AGENDA/THEME ROUND STRUCTURE/FORM

Negotiations on tariffs, non-tariff, systemic and sectoral issues Tokyo Round
(1973-1979) Agreements adopted on tariff and non-tariff issues based on ‘code reciprocity’ permitting opt-in/opt-out
Part I: Goods
Part II: Services

NB: Part I covered most Tokyo Round issues and several new ones notably agriculture, intellectual property and investment. Uruguay Round
(1986-1994) Single undertaking (SU) for Part I (Trade in Goods);
Provision for ‘early harvest’;
Dunkel Draft (1991) extends SU to all results of all negotiations to all countries.
Built-in, unfinished and new agenda:
Negotiations on services, agriculture, information technology, e-commerce etc Marrakech- Doha
(1995-2001) Single undertaking replaced by sector-specific, negotiations permitting, opt-in/opt-out, ’Stand alone’ agreements and ‘critical mass’ approach
The so-called development agenda includes agriculture, industrial tariffs, services and environment.

Consideration of Singapore issues to be decided upon at the Cancun Ministerial meeting. Doha Round
(2002-2005) SU except for review of Dispute Settlement Understanding;
Provision for ‘early harvest’.

Question: Does SU also cover 1) Singapore issues 2) All implementation issues 3) Aspects of TRIPS.