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QUAD PACKAGE, A "CONFIDENCE-BREAKING" DEVELOPMENT

by Chakravarthi Raghavan


Geneva, 11 Apr 2000 -- The proposals of the Quad members (Canada, EC, Japan, US) for a post-Seattle rapid action work programme, including implementation issues and improved market access for the least developed countries, met with some cool and hostile reception Monday at an informal General Council of the World Trade Organization.

The proposals of the Quad on the LDC market access questions and on the implementation issues was seen by several delegations as going back even on the limited progress achieved in the consultations at Seattle.

The Quad proposals, several developing countries made clear at the General Council, could neither constitute a package of confidence-building measures nor be taken as a basis for consultations and evolving a consensus around them. They could only be one of the inputs, and other countries should and would be free to put forward their own proposals. The ensuing consultations should then help form a consensus.

Privately, several of the developing countries viewed it as an attempt by the Quad to create divisions between the LDCs and other developing countries -- by themselves not making any meaningful concessions to the least developed in terms of market access (by using phrases aimed at excluding textiles and clothing and agricultural exports) and on top asking other developing countries to contribute to the LDC package.

Moore in his report to the informal meeting Monday reiterated the points of immediate priority identified by him at the 7 February Council meeting: measures favouring the LDCs; reinforcement of technical cooperation and funding; transition periods and implementation issues in general; and internal transparency and effective participation of Members. Moore repeated that these should be seen as "confidence-building" measures and not as a 'mini-round' nor a substitute for a round. They were not also a package where trade-offs were possible among elements and progress in one would induce progress in others. There should be no artificial expectations that decisions could be reached on all of them by the 3 May General Council meeting.

The WTO head said there was wide agreement to improve market access opportunities for LDCs and in that context indirectly referred to the Quad package ("a number of major traders", as he put it) prepared to provide tariff- and quota-free access consistent with domestic requirements and international agreements for "essentially all" originating in LDCs. Other members, industrial and developing, had also indicated their willingness to enhance LDC access to their markets, Moore said. In some trenchant remarks, Pakistan's Amb. Munir Akram commented: "We thought we were engaged in a confidence-building exercise. What has transpired amounts to a confidence-breaking development.."

Earlier, the US said there were no conditions attached to the ideas in the Quad package. As for the LDC market access, the US had several vehicles - the its GSP schemes, the Caribbean Basin initiative (CBI) and the Africa bill -- that would provide improved market access. But the US might need WTO waivers for the use of these.

In comments that followed that of the US, several developing countries were critical of the Quad package and its contents as well as the way it was being promoted. The comments suggested that far from the Moore consultations since February producing a convergence towards "confidence-building", there were now more differences.

And the Quad proposals far from becoming a point of departure in looking to the future helped to refocus attention on the proposals of developing countries before Seattle, that were part of the 19 October text of proposals that the General Council chairman had formulated, and remained the only official document before the Seattle meeting.

In giving the proposals to Moore, but not agreeing to have them circulated officially as their own proposals, the Quad countries had apparently felt that by doing so, others would be encouraged to put counter-proposals and the WTO would be back to where it was before Seattle. But if they had hoped that their informal paper would be used as a basis for reaching a consensus, the Quad got a set-back.

Members, individually or in groups, are now to put in their own proposals and comments covering confidence building measures in five areas, identified at the 7 Feb meeting of the General Council, and consultations to find a consensus would be on the basis of these proposals and the statements at the informal General Council.

The Quad members who had formulated a package in discussions among themselves in the last week of March, had given it to the Director-General last week, presenting it as proposals or a package to convince the developing and least developed countries that their needs were being addressed. However, the Quad did not want Moore to circulate it as an official document from them, but had clearly hoped he would use it as a basis in consultations and build a consensus around them.

The proposals dealt with implementation issues, the market access measures favouring the least developed countries, technical assistance and measures to improve internal and external transparency.

The issues of internal transparency and participation in decision-making had been addressed at an informal General Council meeting on 27 March.

A number of delegations, in private comments on the Quad package and discussions on them at the General Council, noted that unlike on the transparency and decision-making issue where all members were first able to express their views in the informal General Council, the way the Quad had formulated their proposals and publicised it and then sought discussions in the General Council suggested an attempt to go back to the old ways of decision-making that contributed to the Seattle debacle.

Pakistan's Akram in comments (a text of which was later made available to the media) said his delegation, along with several others, thought the General Council process was on the basis of the agreements reached at the 7-8 February General Council meeting, namely, that the DG and the secretariat were consulting members on the elements of five issues identified by Moore, and that these would lead to plurilateral consultations that would ultimately culminate in the finalization of a package on the five issues as part of the (post-Seattle) confidence-building exercise.

In the current process, Pakistan and other delegations had made submissions on the "transition period", "implementation issue" and "internal transparency and effective participation of all Members." Pakistan had also given some informal submissions to the secretariat, and Pakistan would now circulate them among members. These covered the general implementation issues on TRIMS, TRIPS, deadline issues, were made under the original presumption that the DG and Secretariat were consulting Members to evolve a consensus to finalise the package of five issues.

In response to an earlier suggestion, several members including Pakistan had also put forward their views on the issue of internal transparency. Though Pakistan had made some general comments earlier on other issues, they had not put forward detailed submissions in the belief that (as on transparency) such submissions would be sought.

"Unfortunately, we may all have been wasting our time" Akram said caustically. The members were now faced with a different situation where some delegations had presented papers or proposals on all five issues. Pakistan and other delegations would need an opportunity to make similar comprehensive presentations and put across views and proposals on these issues. They would do so over the next few days, singly or as a group.

Pakistan, Akram said, was deeply disappointed with the contents of the Quad paper. These proposals did not respond to the expectations and requirements of members, but reflected not only "a reaffirmation of known minimalist positions" of the concerned delegations on such issues as LDC market access, and a "regression" on implementation and transition issues - at least from the indications of a positive and plausible approach received from these countries in the aftermath of the collapse at Seattle.

The market access held out for LDCs, with use of qualifying words such as on "essentially all products", and terms like "consistent with domestic requirements and international agreements" reflected a huge gap.

From the consultations and discussions over the last two months, it had been Pakistan's understanding that progress would be made for a solution of transition issues within a multilateral framework. Similarly, Pakistan had thought that the idea of a special negotiating mechanism under the General Council to address other implementation issues was generally acceptable to the WTO membership.

But it seemed all these hopes and expectations for developing countries, generated in several informal consultations, bilateral and plurilateral with the DG, were "illusions". The position presented now confirmed their fears that the major players were "essentially locked into positions they had taken before Seattle."

What they all had thought was a confidence-building exercise now amounted to a "confidence-breaking" development.

Pakistan would make a detailed presentation on each of the five elements identified by Moore in February, and make detailed comments on proposals of others, Akram said. In any event all WTO members should have the time and opportunity to express their views on all the five issues, and through written submissions if they wished. Only after this was done, and these had been discussed, would the members be able to discuss what could constitute an acceptable basis for consensus decision, and hopefully one that could be reached at the 3 May General Council. In an obvious reference to the Quad paper, Pakistan made clear it could not agree to make the paper a basis for a possible consensus.

And since they were now committed to an "open-ended consultation" rather than plurilateral discussions, the General Council chair and the WTO DG should enable all members to make their submissions on all five issues in the confidence-building measures package. After that another informal General Council meeting should be convened to identify the elements of a possible consensus, and then entrust the General Council chair to formulate a draft of a decision on the package.

Following upon Pakistan, Brazil's Amb. Celso Amorim said that it was for the LDCs to evaluate the Quad proposals. However, when words such as "emanating from LDCs" were used, its effects on products emanating from the least developed areas of developing countries, and whether the proposals would be trade creating or trade diverting had to be assessed.

The question of developing countries opening up their markets to the LDCs was a completely different commitment.

The "gap" between developing countries and the LDCs, Amorim said, was much smaller than that between developing countries and the industrialized world. Accepting the Quad proposals would involve taking "multilateral decisions" on some thing that members did not know much about. The proposals provided no details of the tariff lines, tariffs and preferential margins and trade diversion involved.

Amorim noted that several developing countries had vast areas and populations whose conditions were not very different from those in the LDCs, and the products from these regions might be affected, in terms of the GSP margins and/or whether they would be covered by waivers. If a waiver was to be sought and given, then all members must know the exact details.

The implementation issues was an extremely important one and Brazil wanted a credible multilateral mechanism for the examination of such proposals. The Quad paper lacked such a mechanism. As for the transition period issues, Brazil favoured a multilateral approach. Many developing countries had now legislation on TRIPS and these were being reviewed by the TRIPS Council. Brazil expected some agreement on exercise of due restraint in raising disputes.

Morocco wondered whether the Quad paper was a proposal or a discussion paper. Morocco did not believe it would be possible on this basis to arrive at a decision by 3 May. Morocco favoured a mechanism for review of implementation issues.

In other comments, New Zealand said it would put forward later its own detailed proposals on LDC market access. New Zealand also favoured a special General Council mechanism on implementation issues.

Bangladesh said the position of the LDCs on market access was very clear: they favoured a duty- and quota-free access to markets in all countries at a stage of development higher than that of the LDCs, and particularly in the industrialized countries, and these should be bound. The share of LDC exports in the imports of the industrialized world was so small that even a manifold jump would not affect the markets in any way. Bangladesh recognized that the preferences might result in some trade diversion, but felt that this was a price "they would have to pay".

Trade officials said that Bangladesh did not say who were the "they", but it appeared to be a response to Brazil and implied that other developing countries should be willing to pay this price.

The Quad paper, Bangladesh said, fell short of the LDC expectations. So long as the market access was not bound, and did not cover all products, the proposals would have very serious weaknesses.

Cuba agreed with Pakistan, while Haiti (an LDC) said that not much progress had been made on the issue and there was not much detail in the Quad proposals. And as far as the LDCs were concerned, their problem was whether they had anything to export.

The EC endorsed and supported the United States, and was ready to encourage the US initiatives on the CBI and the Africa Bill. The EC's improved market access for LDCs may not require a WTO waiver, as it would be covered by the GSP and other such preferences.

The EC denied that the implementation proposals in the package was a "regression".

The Dominican Republic agreed with Pakistan, while Mexico said the Quad proposals could not be a negotiating package. Mexico also made the point, similar to Brazil, about the trade-creating or trade-distorting effects of the LDC package. The trade-distortive effect was not an obstacle for Mexico, but it had to know whether it was so and by how much.

Mexico, as also a number of other developing countries that followed, also made the point that as far as developing countries providing market access to LDCs, the developing countries had their own mechanism for this - a reference to the Global System of Trade Preferences among developing countries.

India said that while pragmatism and realism must temper their expectations, it was equally important that anything finally presented as a decision, either in the 3 May meeting of the General Council or subsequently, must be "really substantive and constructive". Only then would it achieve the objective of building confidence among the large majority of members.

India agreed with Moore that the proposals on the five issues should not be seen as a package nor should Members be expected to make trade-offs among the various elements of the package.

At the same time, India added, it was in some ways a package "since we hope to see progress in all elements, particularly since different Members attached different priorities to various elements of the package."

In terms of the process, India noted that it might be useful to reflect on the progress made on internal transparency as compared to other issues. The interventions now in the informal General Council showed that there were "distinct and discernible" difference of opinion on most areas - except perhaps on internal transparency where there was far greater convergence than on other issues. The reason for this was not just because of the substance of the issue, but the kind of process adopted in eliciting views of members on the issue. The opportunity given to members to present inputs on the issue as also the focused discussion on it in the Council, made possible by devoting a full day of informal consultations, had no doubt helped in generating a convergence.

As far as the current process was concerned, India agreed with the views expressed by Pakistan that Members must be given an opportunity to make similar comprehensive presentations on other issues under consideration. It was only after Members had such an opportunity and these had been discussed in the General Council would it be opportune to consider what could constitute an acceptable basis for consensus decision.

As for the substance of the issues, in India's view the implementation issue and the redressal of implementation concerns constituted the most important element of the confidence-building measures for developing countries, including the LDCs. The implementation issue had two elements: need to ensure immediate redressal of some more pressing and time-bound implementational concerns, including those related to expiry of transition periods, and secondly need to ensure the setting up of a standing mechanism to address the implementation concerns.

India and other developing countries had put forward their implementation concerns, in fair detail, in the preparatory process (for Seattle) and these had evolved into a consolidated and comprehensive set of implementation concerns contained in the draft ministerial text that went from Geneva to Seattle. Only this and this alone could form the basis for further discussion.

As for the Quad package, India shared the disappointment of a number of other developing countries on the lack of purposeful endeavour to resolve the implementation concerns. Though claimed to be a step towards addressing certain technical and procedural issues, in reality the proposal did not address any of the implementation concerns, but merely reiterated the existing provisions in some of the agreements.

The proposal (of the Quad) on TRIMS best illustrated the point. The Quad had suggested that consideration of requests for extension would be done on a case by case basis and in accord with the relevant provisions of the WTO. But Art. 5.3 of the TRIMS already provided for this, and therefore it was not clear to India what additional steps or additional flexibilities were being proposed.

For India, the constitution of a standing mechanism to address the implementation concerns that could not be addressed immediately, was an extremely important and integral part of the whole issue of implementation, since India was realistic enough to accept that not all implementational concerns could be immediately addressed. Hence India's stress on a standing mechanism to address remaining implementational concerns. India was disappointed that the Quad package completely ignored this basic thrust of the initiative of developing countries.

Relaying these implementation issues to existing bodies and programmes of the WTO, and without any specified timeframe, "shows a lack of empathy with the concerns and sentiments of developing countries," India said. They were particularly surprised since in the period just before Seattle, all delegations in Geneva had agreed to at least set up a standing mechanism to address implementational concerns. "We therefore cannot accept any proposal other than of a special mechanism in the General Council to consider these issues and to this extent we are pleased to note in the DG's statement of the growing acceptance of this principle".

As for the market access package for LDCs, as previous interventions had shown this was likely to have somewhat complementary reactions - one from LDCs and other from developing countries other than LDCs. Both these were extremely important since they reflected views of members that constituted a large majority of the organization.

India shared the concerns expressed by Bangladesh and some of the LDCs on their perception of the proposed package. It was important to address these concerns so that the proposed package provided effective market access to them.

As for the non-LDC developing country responses, India entirely shared the views of Brazil whose ambassador had made a particularly important statement, specially in view of the fear that when developing countries other than LDCs express their views in this, they always run the risk of being misunderstood.

"We share all the concerns that Brazil had expressed, specially relating to the categorisation and implicit differentiation, where very little exist between the developing and least developed countries. We also share the concerns which they had expressed on the formulation in the Quad package to the onus being thrust upon developing countries and the proposed notification obligations."

A number of other developing countries from the Latin American region also intervened to raise their concerns on the differentiations and the impact that any waiver could have on their own trade and trade-diversion involved. Colombia, Paraguay and Chile were among these countries, and they also raised concerns over the idea of a case-by-case approach in dealing with extensions of transition periods. "We don't want to faced with or put in a position of facing all members as in a Trade Policy Review exercise," Colombia said.

Trade officials said that no decisions were taken nor were any conclusions reached, given the format of the informal meeting. All members who wished to make contributions or proposals were however invited to do so, and/or formulate their statements in writing.

On this basis, there is expected to be more informal Council discussions and the General Council chair and the WTO head holding further consultations on possible consensus decisions. (SUNS4646)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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