Global Trends by Martin Khor
Monday 24 May 2004
A “harmonious” meeting at WTO, but differences remain
Last week, the World Trade Organisation held its latest General Council meeting, with many officials and diplomats expressing optimism that this phase of the talks can meet its new July deadline. It will however be an uphill battle, since many differences remain among governments on key subjects such as agriculture, industrial goods and the Singapore issues.
“Harmonious” was how a spokesman of the World Trade Organisation described the atmosphere of its latest General Council meeting on 17 May.
“That’s news I suppose, as there hasn’t been that much harmony the past few months,” he quipped.
Indeed, these days there are several officials and governments expressing optimism that talks are moving ahead ahead. But beneath the veneer, disagreements remain.
After the failed Ministerial conference last September in Cancun, the WTO members have set a new deadline of the end of July to complete what the Cancun meeting could not.
It’s anybody’s guess whether that target of reaching an agreement on “frameworks” will be met, or will pass without success, like so many other recent WTO deadlines.
The sense of “movement” in the talks has arisen from recent events held outside WTO, in particular the Paris meeting of some 30 Ministers from the developed countries in the OECD grouping, plus Ministers from a few developing countries.
The WTO director-general Supachai Panitchpakdi reminded the General Council that only a “narrow window of opportunity” is available before July. “We have a window, but it is small and closing rapidly,” he warned.
Supachai said there was a new level of political will to make progress, and was encouraged by a new sense of determination by Ministers.
The Council chairman, Japanese ambassador Shotaro Oshima, shared Supachai’s “cautious optimism”, saying there are now “unmistakable signs of momentum from the highest political levels”.
Despite these expressions of optimism, there are still wide divisions among members, especially on North-South lines, in key issues such as agriculture, the so-called Singapore issues, industrial tariffs, non-agriculture and the development issues.
Diplomats from several developing countries say they don’t want to be blamed by the rich countries, if an agreement is not reached by July. This may be a reason why some of them proclaim their optimism publicly with more conviction than they feel privately.
In agriculture, the Group of 20 developing countries led by Brazil and India have rejected a joint US-EU “blended formula” for cutting tariffs. This formula would not allow developing countries to increase their sales to the rich countries, but would force the developing countries to open their markets and this may cause their small farmkers to lose out to cheap imports.
The G20 have agreed to try to present their own alternative proposal or formula by early June, when the next agriculture meeting is held.
On industrial goods, many developing countries are opposed to a formula that would slash their import duties and threaten their local industries. They also oppose a proposal that tariffs be eliminated quickly in seven sectors, as their local firms cannot compete with imports.
However, at the Conucil meeting, developed countries, led by the US, kept pressing for steep tariff cuts in developing countries, based on the formula.
There is also a tension on what will happen to the proposal to negotiate four new agreements, known as the Singapore issues -- inbvestment, competition, transparency in government procurement and trade facilitation.
These issues are unpopular with most developing countries, which wish they would disappear from the WTO. The EU and other rich countries are now coming to the view that they should abandon any hopes to begin negotiations on three of the issues, and that they should try to start negotiations for only one issue, trade facilitation.
Developed countries are pressing that the July meeting decide to immediately start negotiations on this subject. But several developing countries state that any decision to begin negotiations must be on the basis of explicit consensus on the “modalities” of negotiations.
The fate of the other three Singapore issues is unclear. There is an “emerging sense” (in the words of the General Council chairman) that it is impossible to negotiate new treaties on them. But it is unclear whether discussions on them will cease altogether (at least for the next few years until the present round of talks finish) or whether they will re-start and if so what the discussions will be about.
An important new element has been the recent change of government in India. India’s Ambassador Chandrasekhar informed the Council that with the change of government, he would need to wait for the views of the new government before making firm commitments.
The Brazilian Ambassador, Luiz Felipe Seixas Correa, referring to India’s statement, said the WTO should show some understanding for India’s situation.
He said there was no change in Brazil’s position. He was encouraged by recent events, and the G20 would try to put forward a proposal on a tariff-cutting formula for agriculture by early June.
China’s Ambassador Sun Zhenyu said that in agriculture, distorting elements should be removed from subsidies whilst negotiations in market access should take into account levels of development, LDCs, newly acceded members and special products. On industrial goods and services, whilst more progress is needed, the needs of developing countries must be taken into account. Development issues must also be prominent in any package.
Malaysia said there was a need for more clarity on the Singapore issues, especially on what would happen to the three issues that would not be negotiated. What was the meaning of putting them “on the back burner”, as had been mentioned by the EC?, asked Malaysia. Malaysia also had difficulty with the European Commission proposal to give special exemption to a group of countries known as the Group of 90.
Argentina said the climate of optimism must be translated into real progress at the WTO. On agriculture, balance is needed. The cotton issue cannot be sidestepped.
The US said work in recent weeks was very encouraging. It wanted the G20 and Cairns Group of agriculture exporting countries to come up with their formula.
Despite the opposition by developing countries, the US insisted it wanted to apply a “non-linear” formula to cut tariffs in industrial products. In such a formula, the developing countries that have higher tariffs would have to cut them down very shaprly.
The EC ambassador, Carlo Trojan, said it was not easy to achieve an agreement as there was a conflict between “ambition and sensitivity.” The EC was willing to cut its subsidies, but only to the extent there is a parallel cut in the subsidy element of export credit by other countries.
Japan said it was important that the political will shown in the Paris OECD meeting is reflected in the Geneva process. On Singapore issues, Tokyo is taking a pragmatic approach and looking for a solution that can be agreed to by all.
Canada said there should be high ambition in agriculture market access, with high tariffs cut more than low tariffs. On trade facilitation, negotiations can be launched in July.
At the end of the meeting, Supachai said the devil is in the details, but not all the details can be ready by the end of July. This is the time for compromises, and if we wait too long, failure will emerge.
General Council Chair, Shotaro Oshima, said there was an emerging consensus on the shape of the overall package. On Singapore issues, he said there was an emerging sense that there can be negotiations in trade facilitation, and that the other three issues are not part of the single undertaking or the work programme, but what to do with them would have to be decided in July.