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TWN Info Service on WTO Issues (Oct03/1)

1 October 2003

Dear friends and colleagues

C. RAGHAVAN’S ARTICLES ON POST-CANCUN SITUATION:

(1)  NO EASY ANSWERS ON HOW TO PROCEED AFTER CANCUN

Mr. Chakravarthi Raghavan, Chief Editor of the South-North Development Monitor (SUNS), has written a number of incisive articles on the post-Cancun situation in Geneva.

Below is one of the articles, “No easy answers on how to proceed after Cancun.”

It was published in the SUNS No. 5427 of 26 September 2003.

We are reproducing it with the kind permission of the SUNS.  Republishing or reproduction requires persmission of Mr Raghavan, who can be contacted at sunstwn@bluewin.ch.

With best wishes

Martin Khor

TWN

 

No easy answers for WTO on how to proceed after Cancun

Published in: South-North Development Monitor (SUNS) No. 5427 of 26 Sept 2003

 

The top leadership of the World Trade Organization, which saw its ‘game plan’ (to promote the US-EC views and agendas) thwarted at the Cancun Fifth Ministerial Conference, is expected to start ‘consultations’ on how to proceed on the basis of the Ministerial Statement out of Cancun.

A number of meetings and ‘special sessions’ on the various parts of the Doha ‘development’ agenda had been scheduled (before the Cancun meeting), but in the belief of the WTO leadership that they will come back from Cancun with a revised or politically reinforced mandate.

Among the meetings scheduled in terms of the Doha work programme, of the Trade Negotiations Committee (TNC) and the bodies established by it, are special sessions (negotiating sessions) on Services,  Agriculture and Rules in the week of 6 October, Negotiating Group on Market Access (NAMA) on non-agricultural products in the week of 23 October as also meetings of the Negotiating Group on Rules, Special Sessions of the Committee on Trade and Environment and so on through November and December.

Also scheduled is the regular quarterly meeting of the General Council on 21-22 October.

However, some of the chairman of negotiating bodies are cancelling scheduled meetings set before Cancun - one on Rules for example. In others, where both the chairs and the secretariat officials believe they are not in the eye of the storm and can carry on as before (and deliver for the majors) are still set as before.  However, say many trade diplomats, the meetings will not move forward.  No senior or capital based officials, for example, are expected at the meetings of the Special Sessions on Services - neither from key developing countries nor from even close-by Brussels.

As per the plan envisaged before Cancun, the senior trade officials had expected that on return from Cancun  negotiations will start on Agriculture, Non-agricultural market access (NAMA), Services, Rules etc, with some ‘question marks’ over Singapore issues and other parts of the Doha work programme. Even the conclusion of the Cancun meeting did not go according to a secretariat fall-back position of resuming the negotiations and moving them forward.

But the Cancun meeting did not go according to the ‘game plan’, where the General Council chairman’s draft ministerial declaration and annexes, was to  provide the basis for the Ministerial meeting and talks and operational decisions (behind which a kind of revised mandate could be pushed through, as at Doha).

Even the plan for a fall-back position of Cancun being a ‘review meeting’, with trade negotiators coming back and starting at full speed on work already set did not go through.

Instead, the 5th Ministerial has concluded (and not adjourned ala the 1988 Montreal Ministerial meeting of the Uruguay Round), nor is there a mandate for the TNC chair as happened after the 1990 Brussels Ministerial meeting.

The only mandate out of Cancun is a six-para final Ministerial Statement that is at best ambiguous, and open to several interpretations, legal and political.

The operative parts of the Cancun final ministerial statement, put forward by the Conference Chair, Mexican Minister Luis Ernesto Derbez Bautista at the informal HOD meeting on 14 September, asking delegates not to amend or negotiate it, and then presented to the final plenary meeting of the Conference closing session, lies in paragraphs 4, 5 and 6 of the Ministerial Statement:

“4. We therefore instruct our officials to continue working on outstanding issues with a renewed sense of urgency and purpose and taking fully into account all the views we have expressed in this Conference. We ask the Chairman of the General Council, working in close co-operation with the Director-General to coordinate this work and to convene a meeting of the General Council at Senior Officials level no later than 15 December 2003 to take the action necessary at that stage to enable us to move forward to a successful and timely conclusion of the negotiations. We shall continue to exercise close personal supervision of this process.

“5.  We will bring with us into this new phase all the valuable work that has been done at this Conference. In those areas where we have reached a high level of convergence on texts, we undertake to maintain this convergence while working for an acceptable overall outcome.

“6. Notwithstanding this setback, we reaffirm all our Doha Declarations and Decisions and recommit ourselves to working to implement them fully and faithfully.”

The three paragraphs, and the way they have been worded and phrased, and sequenced, sound more like the Delphic oracle and its predictions of the future that the Ancient Greeks consulted (in Greek mythology), excepting that in the process to Cancun and at Cancun itself, the chairman of the General Council and the DG who is also the TNC chair, and some of his senior officials and advisors, have shot themselves in the foot, and have to build bridges with the large number of key developing countries whom they alienated and (whose ministers at Cancun got a taste of the functioning of the secretariat).

In strict WTO legal terms, the General Council, in between ministerial conferences, can do all that ministerial can do: it can change and abandon parts of the Doha work programme.

However, developing countries are not willing to pay a price to the EC or the US for abandoning any of their agendas (like the Singapore issues). In the days of the cold war, and East-West arms and other negotiations, each side would put the most outrageous demands on the other, and then after exchange of harsh words, one or the other will offer to take off some demand or the other in exchange for concessions. The post-Iraq war and the post-Cancun situation does not allow for such an approach nor would, with approaching elections in major countries next year, any one want to create a further domestic issue over trade negotiations.

One thing seems fairly clear: whatever else happens or does not, there is no way the Doha talks and its single undertaking can be completed by 1 January 2005 unless major parts of it are abandoned.

When the Cancun meeting ended as it did, even the normally pro-WTO, pro-Brussels and pro-USTR media put the blame on the two majors (US and the EC) and their refusal to do anything on agriculture subsidies. The USTR Robert Zoellick and his arrogant ways were blamed, without mincing words, for the stand the US took on  the cotton issue, and the ‘shameful’ way that stand was echoed in the Derbez revised draft ministerial text (issued on 13 afternoon at Cancun).

The US which spends $3 billion in supporting its cotton farmers, told the West African cotton growers to diversify out of cotton - and work for a sectoral solution (for the entire textiles and clothing sector) to increase demand for cotton. And this found it way into the draft ministerial text at Cancun.

The EC Trade Commissioner Pascal Lamy too got the full blame for the way he was promoting the Singapore issues - with a view to delay and block basic agriculture reforms, including the capping and disciplining of the ‘green box’ and the ‘blue box’ agriculture subsidies.

Since then though, there has been the portrayal of Africa being the big loser, and an attempt to shift the blame on the ‘poor African countries’ who did not understand what is in their interest, and agree to do a deal on the Singapore issues in the final Green Room process on 14 September - presumably to compromise on agriculture, cotton etc.

The non-governmental development and advocacy groups of the South and the North, who provided technical analysis and advice (to developing country delegations that sought their help, in the face of pro-US-EC advices from the international secretariats) have also been blamed, with Zoellick turning his full ire also on Brazil and India.

Mr. Pascal Lamy has been talking of the ‘medieval’ decision-making process of the WTO, and Mr. Franz Fischler (the Agriculture Commissioner) has been louder in insisting that the decision-making process at the WTO must first be set right and changed before even discussing agriculture!

This is hardly the kind of atmosphere in which talks can be resumed and concluded successfully.

There is some renewal of the idea of an ‘economic security council’ at the WTO. But the UN Security Council’s remit is confined to issues of peace and international security. On anything else, any decision or recommendation at the UN is binding only on those accepting it. And in international law, amendments to treaties apply only to those agreeing to it, not others parties to the original treaty.

If the WTO and its obligations are treated not only as a single undertaking for everyone to accept and carry out, but bundled together in the dispute process, any new obligation has to be acceptable to everyone - and apart from the consensus decision-making, every member has to be involved.

Developing countries, big and small, are quite clear that the consultation process, must be transparent, and the chairs of various WTO bodies cannot draw up and issue texts, based not on open discussions or consultations even in informal meetings where everyone is present, but on small meetings of invitees, and on ‘confessionals’, meetings of the Chairs with some individual countries where no one knows what was said by whom.

Developing countries seem to be neither in a mood to push the various substantive questions aside, to get dragged into protracted discussions and negotiations on procedures for a grand architecture, nor allow business-as-usual of consultations and decision-making, or ministers going every two years for meetings and waiting around not knowing what 15 or 20, even if it is a  representative group, at closed meetings try to cook up solutions, which others have to await and take.

Already there have been noises from the EC (and even the US) about the extension of the peace clause, for a short period until the negotiations are over. This requires change to the Agreement on Agriculture and/or a decision (which any member or group) can block by denying consensus.

The majors cannot expect the other WTO members to agree   and there is much opposition to it from many developing countries - without paying a price.

There is talk again of the EC ‘negotiating’ in Geneva to take investment off the agenda. However, no one is willing to pay a price for the EC taking off the WTO/Doha agenda any of the Singapore issues. Though paragraph 6 of the Cancun Ministerial statement reaffirms the Doha Declaration and Decisions, the Cancun Ministerial meeting (the 5th ministerial) has concluded. The Doha mandate provided for work on clarifications until the 5th Ministerial and (under paras 20, 23, 26 and 27) for negotiations to commence after the 5th ministerial on the basis of explicit consensus. The Cancun meeting has not provided for negotiations based on such an explicit consensus.

And in the areas under negotiations, the developing countries are not without some leverage. The peace clause in agriculture is ending at the end of 2003, and all the agricultural protectionist developed countries, who are exporting and dumping their surpluses, can be dragged into disputes for violations of obligations over a range of other WTO agreements.  The dispute process is uncertain and costly, not less because the process is subject to some manipulation by the secretariat.

Nevertheless the fact there is no peace clause means that the US and EC agri-business trade will take place in an area of uncertainty - over disputes, countries levying counter-vailing duties and other trade remedies.

The attempt to project the G-22 (which began in Geneva in August as G-17 as a counter to the US-EC effort to stich up an agriculture deal, became 22 at Cancun, lost one member, El Salvador, under US pressures, but gained another, Indonesia) as an alliance confined to agriculture - as the USTR, the EU Commission and western media are doing - is a misreading. It has a core group of countries of the South, who are also building up an alliance on other issues on the trade agenda.

 


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