TWN Info Service on WTO Issues (Nov03/1)
3 November 2003
Third World Network
Dear friends and colleagues,
CONCLUSIONS ON UNCTAD DISCUSSION ON CANCUN AND WTO
On the final day of UNCTAD’s Trade and Development Board session on 17 October, the President of the Board (the Ambassador of China to the UN), presented his Chairman’s Summary on the discussion in the Board on the outcome of Cancun and on the WTO.
Below is a report on the Chairman’s Summary, which is an excellent summary of the views of delegations as presented at UNCTAD.
Since there has not been a similar wide-ranging discussion at the WTO itself, the Chairman’s summary of the UNCTAD discussion can be taken as the perspectives of the various governments on the Cancun outcome.
With best wishes
REPORT ON CHAIRMAN’S SUMMARY OF UNCTAD DISCUSSION ON THE WTO CANCUN MINISTERIAL
TWN Report by Martin Khor, Geneva, 20 October 2003
The Trade and Development Board (TDB) of the UN Conference on Trade and Development (UNCTAD) concluded its two-week 50th session on 17 October by approving several agreed conclusions, Chairperson’s summaries and reports of the various meetings.
The highlight of this TDB meeting has been the discussion on the outcome of the WTO’s Cancun Ministerial conference, which attracted 47 delegations to speak in a frank and very lively debate. A Chairperson’s Summary on the discussion was approved by the TDB.
The TDB session also saw the kicking off of preparations for UNCTAD-XI, and discussions on the commodities problem (based on an eminent persons’ report), Africa’s trade performance, and implementation of the LDC action programme.
Coming after the failure of the WTO’s Cancun talks last month, the TDB session was the first opportunity for delegations to conduct a post-mortem and look ahead, in an inter-governmental forum.
At the closing session on 17 October, the TDB president, China’s Ambassador to the UN, Mr. Sha Zukang, presented a Chairperson’s Summary of the Board’s review of developments in the post-Doha work programme and the outcome of the WTO’s Fifth Ministerial Conference.
Introducing his Summary, Mr Sha said that his report focused on forward-looking issues. The members reaffirmed the importance of the multilateral trading system, assessed what happened in Cancun generally and from the viewpoint of substance and process, and also reaffirmed the role of UNCTAD. As president of the TDB, he will present a report on this review to the UN General Assembly on 3 November.
The Chairman’s Summary itself, which was adopted by the Board, is an interesting nine-page document that summarises the discussions on the Cancun Ministerial that heard 47 statements over two days, i.e. on 8 and 14 October.
This contrasted with the near-silence that characterised the WTO’s first post-Cancun meeting, at heads-of-delegation level, held on 14 October, where only five delegations spoke. The TDB had thus become a forum where delegations felt more inclined to air their views on what happened in Cancun and its significance.
According to the Summary, it was generally agreed that there is no better alternative than the multilateral trading system (MTS) in promoting the Millennium Declaration’s objective of an “open, equitable, rule-based, predictable and non-discriminatory multilateral trading system” in pursuit of development and poverty eradication.
While all countries are committed to achieving this goal, trade and trade negotiations must not be treated as a panacea for the global economy and thereby shift attention from key problems outside the trade field. Trade is not an end in itself but a means to a balanced, equitable and sustained development.
The Summary added that emphasis was placed on international political will and effort to address the inherent limitations that developing countries face in the MTS. Indeed, all the recent major international meetings promised to address the imbalances and inequities in globalization, of which trade is the most visible manifestation.
It noted that a fair share of benefits from the MTS has so far failed to accrue to developing countries, notwithstanding that they have undertaken significant liberalization unilaterally, regionally, multilaterally and through structural adjustment programmes. Developing countries have made a significant contribution to multilateral trade liberalization and rule-making at considerable cost to themselves and are not, therefore, free-riders in any sense of the term.
The Summary added that the Doha Ministerial Conference was a milestone in the evolution of the MTS, incorporating an explicit pledge to place development at the heart of the Doha Work Programme (DWP). The opportunity to evolve a development-oriented MTS must not be missed.
The developed countries need the MTS as much as the developing countries do. Realising the core agenda of the DWP with development-friendly results is in the shared interest of all. Development-friendly arrangements and policies need to be addressed through practical, operational and mandatory measures.
Developing countries hold high expectations regarding the development promise of the DWP and have actively participated in negotiations, including by tabling numerous proposals. They have had not only a defensive agenda but also a positive agenda on trade reform and liberalization, particularly in areas such as agriculture, textiles and Mode 4 of GATS.
Multilateral trade norms and disciplines need to support and actively promote development, including by facilitating national policies that respond to developing countries’ needs. In this context, some countries stated that ‘beyond-the-border issues’ which were integrated into the MTS at the conclusion of the Uruguay Round have eroded policy space for economic decision-making and overloaded the MTS.
Some countries noted that, with very few exceptions, today’s developed countries practised and benefited from policies that are now being curtailed for developing countries through the MTS. It should be acknowledged that developing countries cannot liberalize at the same speed as developed countries if they are to achieve the potential gains.
Regarding Cancun, the Summary said that many emphasized that it must be seen in perspective. It was meant to be a mid-term review of the DWP, a stocktaking with the possibility of providing political direction on key issues of the Doha agenda. Since the necessary political compromises were not forthcoming, when specific, time-bound and detailed commitments were called for, there was an impasse.
Disappointment was expressed with the Cancun impasse and concerns expressed that the Ministerial Conferences are becoming prone to such setbacks, said the Summary. It was also pointed out that such impasse scenarios have been played out before, where failure to reach consensus did not preclude subsequent revival of the negotiations. Trying to apportion blame between developed and developing countries serves little purpose and is misleading, since the priority of the hour is to listen and appreciate the concerns of all and to find multilaterally acceptable solutions.
“Concern was expressed that the Cancun setback could undermine commitment to multilateralism and play into the hands of protectionist and partisan interests. It could also speed up the vigorous pursuit of unilateralism, bilateralism and regionalism. Other views expressed doubt that multilateralism will be undermined and that regionalism will relegate or replace the primacy of the WTO, since all countries understand its value and utility and need it to serve their own interests.
“It was also avowed that the choice between multilateralism and regionalism is a false one because the two processes have already been ongoing for some time and are complementary since they mutually reinforce the goal of bringing about liberalization in international trade.”
The Chairperson’s Summary said that in assessing the consequences of Cancun and learning lessons, emphasis was placed on both the process and substance of WTO negotiations.
Regarding process-related issues, many countries stated that, leading up to and at Cancun, process-related infirmities became rather pronounced.
The Summary said: “Process-related difficulties included assessments about the timing of issues and their maturity for resolution, procedures relating to keeping and dissemination of records and the preparation and transmission of texts, when and how to reflect alternative views of members, how to select officers, and how to ensure the inclusiveness of the process at all times.
“Cumulatively, these issues, if not addressed, could affect the long-term effectiveness and vitality of the WTO. There was also a view that it would be better to resolve most matters at the technical level in Geneva instead of relying on last minute compromises and decision-making at the political level in Ministerial meetings, which, with the best of intentions, may not be able to deliver given the short time available and the unwieldiness of the exercise.
“The Cancun agenda also appeared to have been overloaded with expectations of a result involving a positive sum agreement on all accounts. The linkages, balances, sequencing and perceived costs and benefits were rather too complex to handle. A manageable agenda based on what could be realistically achieved and what the WTO membership felt comfortable with would have been more appropriate.
“In this light, the time had come to prioritize the negotiating process and separate the issues that make for genuine trade liberalization and deliver development from the rest.”
The Summary also noted that in the review it was stated that the WTO negotiating paradigm has changed, with developing countries demanding to be heard and to be taken into confidence before decisions that could have a far-reaching impact on them are taken. The MTS is increasingly perceived as an international public good. Consequently, it has to take into account the interests and concerns of all participants, regardless of their level of development, size or share of world trade.
It added that the formation and dynamics of the issue-based alliances, for example the Group of twenty-plus and ACP/AU/LDCs, was a matter of significance, redressing the imbalances in the negotiating leverage of developing countries. They point to a greater assertiveness of developing countries and their groupings within the WTO, which have made their voices heard. Caution was, however, expressed about avoidance of a relapse into North-South rhetoric or confrontation, since North-South relations have become more complex and diverse.
“Decision-making processes in WTO have become more complex and difficult, not only because of the enlargement of the membership and the scope of the agenda, but also because a large number of democracies participate,” said the Summary.
“Like their developed country counterparts, developing country Governments have to factor in political, social and economic interests and considerations involving their people and constituencies, as well as critical development and survival issues. The more prominent role and interest of both Northern and Southern civil society and private sector organizations, as well as Parliamentarians, have to be seen in this context.
“A view was expressed that there is need for reform of the decision-making process of the WTO to make it more efficient. It was stated that the WTO follows a rudimentary decision-making process, while it has a very effective enforcement system. This is a possible source of imbalance in the MTS when it relies more on the modern dispute settlement mechanism than on rules to address trade issues.
“Other views cautioned that an examination of reforms in the WTO would divert attention from real issues facing the MTS, particularly market access and development issues. Yet others encouraged further democratization of the decision-making process of the WTO.”
Regarding substantive issues, the Chairperson’s Summary said that the seeds of the Cancun setback were sown through missed deadlines, lack of treatment of development issues, unfinished business and imbalances from the Uruguay Round, as well as the slow pace of agricultural reform in developed countries.
“The lack of a substantive outcome highlighted a lack of consensus on key areas of negotiations, in particular special and differential treatment, implementation issues, agriculture, and non-agriculture market access negotiations. Many expressed the view that the proposed package at Cancun was disappointing in terms of its development content, leaving many to believe that Doha may have been only a rhetorical rather than a substantive promise.”
Note was taken of some positive developments, including the Decision on para 6 of TRIPS and Public Health, the modalities on special treatment for LDCs in services negotiations, the adoption of guidelines on accession of LDCs, and the acceptance of the accession of Cambodia and Nepal.
On the post-Cancun phase, movement towards convergence will require political will from all parties, renewed cooperation and consensus. Added the Summary: “Cancun should serve as a wake-up call for the international community to build mutual trust and bridge differences to restart negotiations in good faith and in a forward-looking manner. All countries agreed that efforts must be made to put the DWP back on track.
“In this respect, it is important to concentrate on the Doha mandate and on core issues: a balanced outcome both within and across the spectrum of negotiating areas; the development agenda; inclusiveness, transparency and democracy of negotiating processes, procedures and decision-making so that the views and interest of all are captured in negotiated outcomes; the basics of trade liberalization and the border measures agenda and completion of the unfinished business of the previous rounds, especially in agriculture, textiles and Mode 4 in services; implementation issues; and special and differential treatment.
“There is need to address the legitimate concerns of developing countries on new and complicated issues on which no consensus exists for new WTO disciplines.”
There is also need to address coherence and consistency between trade, financial, monetary and technological policies in support of development. Several countries emphasized the need for further and more in-depth work on small economies; trade, debt and finance; and trade and transfer of technology.
It was stressed that implementation issues and special and differential treatment are particularly significant in enhancing the confidence of developing countries in actively participating in the MTS.
These issues should be tackled seriously with priority, greater political will and flexibility.
Trade negotiations and the implementation will involve considerable costs for developing countries. Future negotiations should take this into account and provide for it in a systematic manner. Synergy and proper sequencing - in the light of the capacities of developing countries, the level of obligations they are to take on, and the costs of implementation - and the adequacy of financial and technical resources available to them have to be ensured.
Developing countries should be provided with concrete assistance to build supply capacity and safety nets, help cushion possible erosion of trade preferences and meet adjustment costs.
The special needs of LDCs should be adequately addressed. Stress was placed on binding duty-free and quota-free access for products of LDCs, along with improvements in preferential schemes and rules, which should match LDCs’ industrial capacity, and the removal of non-tariff barriers and avoidance of safeguard and contingency measures on their products. Guidelines for accession of LDCs could be improved, e.g. through a time-bound accession process (such as a three-year period or three working party meetings), a realistic adjustment period based on objective criteria consistent with their capacities.
Several countries stressed that fundamental reform of agricultural trade could bring important gains for developing and developed countries. The Summary said: “The elimination of all forms of export subsidies and a substantial reduction in trade-distorting domestic support for agricultural trade would promote development in developing countries and significantly contribute to poverty alleviation.
“The convergence of positions on the reform of agricultural trade is possible through renewed cooperation and constructive engagement by all parties,. In addition, market access must be coupled with effective special and differential treatment, special products, special safeguard mechanisms, specific measures for small economies, food security, rural development and adequate measures for net food-importing developing countries and LDCs.”
Some stated that the issue of commodities needs to be addressed in the MTS, given that the concrete interests of a large number of poor and small countries are linked to commodities. Many countries attached importance to addressing the Cotton Initiative proposed by some African countries.
Services were identified as a growth area for developing countries. Increasing participation of developing countries in trade in services would require implementation of GATS Articles IV and XIX.2, particularly in terms of effective market access in sectors and modes of interest to developing countries. It was pointed out that liberalization of services should be at the time and pace convenient to the country concerned. Concern was expressed about the quality of offers on Mode 4, and the need for commercially meaningful offers was stressed, given the potential gains for all countries.
The Summary added: “Developing countries expressed support for reduction commitments in non-agricultural market access (NAMA) consistent with their capacities and development objectives, and considered that they should be accorded less than full reciprocity, as provided in the Doha Ministerial Declaration. They found that the level of ambition on NAMA was too high compared to agriculture.
“They stressed that sectoral proposals should be on a voluntary basis and that tariff peaks and escalation need to be addressed. It was pointed out that the framework for NAMA should allow a balanced outcome in terms of the reduction or elimination of tariffs and non-tariff barriers.”
With respect to the Singapore Issues, the Summary said that “most developing countries indicated that they are not yet convinced of the potential gains to them from WTO disciplines on these issues. In the interest of manageability and prioritization in the DWP, it might be better to concentrate on substantive and core trade issues for the present, and some suggested that it would be timely to drop these issues from the WTO work programme.
“It was pointed out that some proponents have shown flexibility in terms of removing most of these issues from the WTO agenda and therefore any future consideration of this matter should take this into account. Meanwhile, other organizations, like UNCTAD, could be asked to continue work to build confidence, clarify their development implications and provide for substantive treatment of these issues.”
The Summary also noted UNCTAD’s important contribution to developing countries. UNCTAD can act as a facilitator for the fuller and beneficial integration of developing countries in the trading system. It should continue to play such a supportive role through research and policy analysis, intergovernmental consensus building, and technical assistance and capacity generation activities targeted at developing countries. UNCTAD can also provide a forum for consensus building and maturing and ripening of negotiating areas for further treatment in WTO, and in this way contribute to putting the DWP back on track.
UNCTAD should continue to monitor developments in the MTS, work on the development dimension, and assist countries in trade negotiations and in mainstreaming development into trade policies. UNCTAD-XI should contribute to reinvigorating the multilateral trading system and providing the right impetus for the beneficial integration of developing countries into the trading system.