Positions unchanged on public stockholding, SSM, HOD told

Member states are still far apart on the issues to be prioritized in the run-up to the WTO’s Ministerial Conference this December, as revealed by deliberations at an 8 May meeting of heads of delegation.

by Kanaga Raja

GENEVA: An informal meeting of heads of delegation (HOD) at the WTO on 8 May showed that members remain sharply divided on the key issues and possible deliverables at the eleventh Ministerial Conference (MC11) in Buenos Aires this December, with a large majority of developing countries insisting that the focus should be based on the Doha Work Programme and Nairobi ministerial decisions, and not on any new issues like e-commerce or investment facilitation.

Reports at the HOD meeting by the chairpersons of the various WTO negotiating groups on their recent consultations have revealed continued differences among the membership on the key issues, in particular on public stockholding for food security purposes and on the special safeguard mechanism (SSM), which are of crucial importance to developing countries.

The meeting also heard the WTO Director-General Roberto Azevedo offering his assessment of the state of play in the negotiations to date.

A number of delegations intervened following the reports by the DG and the various chairs, highlighting their priorities for possible outcomes at MC11.

According to trade officials, in his assessment, the Director-General said that time is running short with respect to the preparations for MC11. It is important for members to avoid staying in their comfort zones and repeating old positions, he said.

In his comments as posted on the WTO website, Azevedo said: “Members have been very active in recent weeks. They have been exploring different areas and in some of them they are beginning to move towards higher levels of specificity. The Doha negotiating groups have been continuing their work, and some have been particularly active.

“We have seen a number of new papers and ideas being put forward – covering issues such as domestic regulation, trade remedies, services facilitation and investment facilitation. I am informed that other papers and ideas are in the pipeline in areas such as special and differential treatment and SMEs [small and medium-sized enterprises].”

Azevedo added: “My hope is that we can sustain this prevailing momentum and positive engagement,” he said. “Of course this should include steps on development and in support of LDCs [least-developed countries] – as well as steps in those areas where action is mandated at MC11, such as public stockholding. The forthcoming Aid for Trade Global Review will help to put a very welcome spotlight on some of these issues. Time is passing very quickly. By the summer our preparations for Buenos Aires should be advancing with a much greater sense of clarity and purpose.”

“As I have said before, proponents have a particular responsibility here to build momentum behind their ideas. The Chairs and I will do our part to keep the entire membership on board for any progress that you can collectively achieve,” said Azevedo.

Reports by negotiating chairs

The chairs of the various Doha negotiating groups then reported on their recent consultations.

According to trade officials, the new chair of the Committee on Agriculture in Special Session, Ambassador Stephen Karau of Kenya, reported that he has held 20 consultations including with coordinators of various country groupings. In these consultations, he asked the delegations about their priorities for MC11 and what process would lead to an outcome that they would like to see. On the prospects, he asked members about the main difficulties that might make it difficult for an agreed outcome.

Karau voiced encouragement over the level of engagement of most delegations. The discussions on process are more advanced than on the others.

On the question of priorities, while there are diverging views on what can be achieved on domestic support by MC11, a large number of delegations said that this is one of their priority issues. There are some contextual differences and several countries did put forward what they said were red lines on this issue. Members are more positively ready to identify potential deliverables before the summer break, said the chair.

On domestic support on cotton, the overwhelming majority of members support meaningful outcomes on this issue.

On the issue of public stockholding for food security purposes, the chair said all members are cognizant of the mandate to find a permanent solution by MC11 but positions have not evolved, most notably on the point of who should suggest ways to address the concerns of the non-proponents.

The chair reported that there has been very little action on the issue of agricultural market access. Some members would like to see an outcome in this area, but others have said that it is very difficult to see an outcome by MC11.

On the SSM, the chair said that there is recognition on the need to pursue negotiations, but there are divergent opinions on what the outcome would be.

The chair also highlighted the issue of export restrictions.

On the way forward, the chair said that he would hold an open-ended meeting on 1 June, with dedicated sessions on public stockholding and the SSM.

The chair of the Negotiating Group on Rules, Ambassador Wayne McCook of Jamaica, said that there has been a lot of action on fisheries subsidies, with five proposals being tabled to date. All of them refer to Sustainable Development Goal (SDG) target 14.6. Members have begun to talk about specific topics and the idea is to deepen technical discussions on these issues. The chair also noted that China has put forward a new proposal on trade remedies.

The chair of the Council for Trade in Services in Special Session, Ambassador Hector Marcelo Cima of Argentina, reported that the areas of discussion have been domestic regulation, trade facilitation in services, market access and e-commerce.

He maintained that a good number of members have shown an interest in market access and e-commerce but concrete proposals are needed in order to take these issues up. Members are reflecting on what to do but there are currently no proposals on the table, which are needed very soon.

On the issue of domestic regulation, the chair said that there are proposals to deal with the administration of measures, transparency, development issues and technical standards. According to the chair, there is a wide level of acceptance that these issues can go forward. He said that the next steps will be a complete set of proposals on the table before the summer break.

The chair said that there has been a good level of discussion on India’s proposal on trade facilitation in services (at the Working Party on Domestic Regulation, the Council for Trade in Services and the Special Session of the Council for Trade in Services). According to trade officials, the chair maintained that members’ views differ on this, but there is strong support and there have been positive statements in terms of members’ reactions to India’s proposal.

The chair of the negotiating group on non-agricultural market access (NAMA), Ambassador Didier Chambovey of Switzerland, said that nothing has changed since the HOD meeting in December 2016. There has been no movement at all on the issue of tariff cutting. There are those who do not want to cut tariffs in any way, shape or form, those who link the issue to agriculture, those who believe a multilateral approach to tariff cutting is not going to work and prefer a plurilateral approach, and those who say that a tariff cut is not feasible and that the focus should instead be on increasing tariff bindings and reducing “water” in members’ tariff schedules. Some members have said that they are keen to cut tariffs but no new proposals have been forthcoming, said the chair.

On non-tariff barriers, the chair said the situation is a little more encouraging but no new proposals have come forward.

The chair of the Committee on Trade and Environment in Special Session, Ambassador Syed Tauqir Shah of Pakistan, said that he has held a series of bilaterals. There is support among the membership but he has not detected any change in positions. No one has come forward with any concrete proposal. Some delegations say that fisheries subsidies should be considered as an environmental contribution as it has a very strong trade and environment dimension. Others would like to see the negotiations restarted on the Environmental Goods Agreement (EGA).

WTO Deputy Director-General David Shark of the United States, on behalf of the chair of the Committee on Trade and Development in Special Session, said that with respect to the proposals on special and differential treatment (SDT), the LDC group and the African Group are looking to shorten the list of proposals and will put forward something very soon.

Fellow Deputy DG Yi Xiaozhun of China, on behalf of the chair of the TRIPS Council in Special Session, said that the situation has not advanced since December 2016. There are differences in substance and scope. Delegations that support moving forward consider that there will be little likelihood of any kind of an agreement on the register of geographical indications (GI) for wines and spirits, as well as an extension of the GI register beyond wines and spirits, he said.

Deputy DG Shark, on behalf of the new chair of the Dispute Settlement Body in Special Session, said that the chair will follow the approach set out by his predecessor. He will be looking at 12 issues that have been identified and will try to find convergence among them. The idea is to do a stocktaking just before or just after the summer break.

Issues of priority

Following the reports by the DG and the negotiating chairs, a number of member state delegations put forward their views in their respective interventions.

According to trade officials, Cambodia, on behalf of the LDCs, highlighted the issues of priority to the LDC group, namely trade-distorting domestic support in agriculture, public stockholding for food security purposes, SDT and the SSM.

It would like to see an agreement on fisheries subsidies by MC11 covering illegal, unreported and unregulated (IUU) fishing, reduction in subsidies and greater disciplines on fisheries practices that lead to overcapacity and overfishing.

It would also like to see full implementation of decisions on rules of origin and the services waiver for LDCs that came out of the Nairobi Ministerial Conference in 2015, as well as on duty-free and quota-free market access for LDC products.

On e-commerce, the LDCs would like members to stick to the 1998 mandate.

Rwanda, on behalf of the African Group, pointed out that agriculture is key. It would like to see trade-distorting domestic support eliminated. It would also like to see an agreement reached on cotton as well as on public stockholding and the SSM.

The African Group would like to see a multilateral outcome on fisheries subsidies. It highlighted elimination of subsidies for IUU fishing, and disciplines on those subsidies that contribute to overfishing.

The African Group pointed out that SDT is an integral part of all multilateral agreements.

On the issue of domestic regulation in services, the African Group suggested that this seems to be an attempt to narrow developing countries’ policy space and impinges on the right to regulate.

Guyana, on behalf of the African, Caribbean and Pacific (ACP) Group, said that the WTO is at a critical point. There is a need for outcomes on the key Doha Development Agenda (DDA) objectives by MC11.

It would like to see the unfulfilled areas of the Nairobi Ministerial Declaration be a priority. It also believes that the issue of fisheries subsidies is critically important, such as banning IUU fishing. It also wants to ensure that artisanal and small-scale fishing fleets are excluded. It would like to see delivery on this issue as a contribution of the WTO to SDG target 14.6.

On agriculture, it wants to see a substantial reduction in trade-distorting domestic support. It also wants something on cotton, public stockholding and the SSM. It further highlighted the importance of SDT.

On services, it said that the ACP Group is in the process of reviewing the proposals that have been made on domestic regulation. It pointed out that e-commerce is not a DDA initiative and should not replace DDA initiatives.

Nepal expressed support for the LDC statement. It wants to see members build on decisions taken on the LDCs in the Hong Kong, Bali and Nairobi Ministerial Conferences. It was of the view that issues like e-commerce, micro, small and medium-sized enterprises (MSMEs), trade facilitation in services, and domestic regulation are outside of the existing negotiating mandates.

The Philippines, on behalf of the Association of Southeast Asian Nations (ASEAN), said it is in favour of moving ahead on e-commerce and MSMEs.

Respecting mandates

According to trade officials, India recalled that at the last HOD meeting, it had raised some important issues and challenges for the WTO in terms of process and substance. Those concerns remain valid, it said, adding that the notion of mandates is something that members need to respect. It pointed out that many of the proposals put forward do not have an existing mandate. While some members are identifying these issues, these mandates do not exist and there is no consensus on going forward with a multilateral negotiation for e-commerce, MSMEs or investment facilitation. These are highly problematic in terms of any rule-making, it said.

Moreover, said India, the policy implications of these particular proposals have not been fully understood, and it seems as though the principal result of these policies would be to constrain policy space in developing countries.

India noted that there are major divergences on the mandate. A large percentage of the members look to the Doha mandate. Some of the standalone proposals do not provide any kind of balance as the Doha mandate does.

When talking about trade, the question to consider is trade for whose benefit, India said. It is very interesting to contemplate what the impact of these kinds of proposals might be on developing countries. India recognized that many developing countries are supportive of these proposals, but it does not believe that there has been an effort to try and understand what the impact of such an agreement might actually be.

India expressed much support for both the public stockholding and SSM proposals, saying that these will level the playing field and aid millions of people in the developing world. It pointed out that there is a deadline of 2017 for public stockholding.

On e-commerce, it said that there is no problem with exploring and discussing the issue, but it will not agree to any rule-making in this area.

On the issue of trade facilitation in services, India is looking at members’ comments made in various fora. It will assess these and then decide what to do next.

On the issues of investment facilitation and MSMEs, India underlined that this is completely outside the responsibility of the WTO.

Costa Rica, on behalf of the group of Friends of E-commerce for Development (FED), was of the view that e-commerce is very important for development. It can help bring together the trade, digital and development agendas. It said that the FED has a roadmap recognizing seven key topics. It is convinced that MC11 will be a tipping point for this issue and can lead to more in-depth discussions on e-commerce.

Japan said that collectively there is a need to show that the WTO system is working and addressing challenges for all, including the LDCs and MSMEs. MC11 is an important moment to try and give evidence of this.

There should be different approaches to issues and also to modalities of outcomes, Japan said. If a multilateral approach is not possible, then members can go through a plurilateral approach.

Japan said it is prepared to talk about all the issues including agriculture. It said that the issue of domestic support should be discussed as a whole, taking into account as well the proposal on trade facilitation in services put forward by India.

Japan took note of the proposal by New Zealand, Iceland and Pakistan on fisheries subsidies. It wants a fact-based discussion that focuses on all considerations including resource management.

It said it is very important to have a discussion on investment facilitation. It is not yet time to discuss the balance of any package but there should continue to be in-depth, proposal-driven discussions till the summer break, and after that to consider specific modalities for each outcome, and at that point try and assess what the picture may be, said Japan.

Ecuador said that SDT is extremely important. It also highlighted adherence to the 1998 mandate on e-commerce and said that the issue should be dealt with in the context of the existing mandate.

On the issue of domestic regulation in services, it said that while it is important to discuss it, it should not in any way impinge on members’ right to regulate.

China said that with respect to its proposal on trade remedies, there is a need to clarify and improve the existing rules. Transparency and due process are key elements.

On fisheries subsidies, China took note of the proposal by New Zealand, Iceland and Pakistan. It believes that fisheries are very important to people’s livelihood, but there is a need to make sure that account is taken of fishery management practices.

Trade remedies and fisheries subsidies are both within the framework of rules, China said. It hopes that both can receive equal treatment and move forward in tandem.

Cuba underlined that the DDA is still relevant and there is a need to focus on its core issues. None of these issues have been advanced in the way that it would like.

Agriculture is the yardstick for assessing the overall level of ambition in the negotiations, it said. It also supported the 1998 work programme on e-commerce.

In terms of the way forward, Cuba said there must be a transparent and inclusive process with a bottom-up approach.

The European Union said the issues of fisheries subsidies and domestic regulation are where the most advanced discussions have been taking place.

On domestic regulation in services, it said that all of the building blocks for a consolidated text are already on the table.

On trade facilitation in services, it took note of the Indian proposal and would like to see this taken up as part of the overall discussion on services.

It also supported the FED and would like to see the issue of e-contracts and authorization taken up, as well as consumer protection.

The EU was of the view that progress needs to be made on the issue of trade-distorting domestic support, and that this could probably go hand in hand with an agreement on public stockholding. A very broad segment of the membership is supportive of this, it maintained.

Bolivia stressed the importance of the DDA.

African industrialization

Uganda pointed out that Africa’s share of trade has fallen to below 3% of the global total, and 80% of African exports are raw commodities. Only 20% are finished goods. Africa needs to use trade policy instruments to give Africans the industrialization momentum that they need, because they need to add value to their exports. Manufacturing through industrialization could create as many as 5 million new jobs each year.

On the issue of domestic regulation, Uganda said that this is seen as a means of constraining developing-country policy space.

On process, it said that the Nairobi Ministerial Conference was imposed on the membership by a small group and this is to be avoided. There needs to be a discussion involving the entire membership through a bottom-up approach.

Brazil said that there has been a lot of discussion, but there is no common set of goals or even landing zones at the moment. It is essential that development is at the centre of the work that is being done.

It expressed readiness to discuss everything on the table including the new issues. After the summer break, members can begin to discuss the issue of balance.

Agriculture is of paramount importance, it said, adding that the overall level of ambition will be set by what happens in agriculture.

Trade-distorting domestic support is a key issue for Brazil. It is prepared to discuss domestic regulation and trade facilitation in services. E-commerce would be a positive outcome for Buenos Aires if some progress can be made here.

Korea supported the G33 proposals on agriculture. Agriculture is a gateway and public stockholding, the SSM and domestic support are key, it said.

Pakistan said that non-tariff barriers are a key issue. Agriculture is also extremely important – 93% of farmers in Pakistan are subsistence farmers. Domestic support continues to cause trade distortions and must be addressed.

It voiced commitment to public stockholding for food security. It understands that this is important and worthy of consideration but it is important that no food security programme of one member affects negatively the food security programmes of another. It should not lead to trade distortion.

It also favours a solid agreement on fisheries subsidies. There is a need to address the issue of e-commerce at MC11 in a meaningful manner.

Indonesia, on behalf of the G33, said that time is very short and there is a need to deliver on the mandates from the Nairobi Ministerial Conference on public stockholding and the SSM. If negotiations commence on agricultural market access, it would like to see special products as part of that.

On behalf of itself, Indonesia said that fisheries subsidies and domestic regulation may be two issues which are most likely to result in deliverables in Buenos Aires. But special and differential treatment must be an integral part of any outcome.

Mali, on behalf of the Cotton-4 group, said that trade-distorting domestic support is still a problem affecting the region, and affecting cotton in particular. It will soon submit a proposal which would deal with the question of trade-distorting domestic support.

Bangladesh said that there is a need to focus on the issues of importance to the LDCs including duty-free, quota-free market access for LDC products. It also called for decisions on an SSM and public stockholding for food security, which could be used for new programmes, as the current text is limited to existing programmes.

Venezuela noted that there are some proposals being put forward by members which are not in line with the Nairobi Ministerial Declaration. No new topic can be discussed at the expense of the Doha issues, it stressed.

It also highlighted the importance of public stockholding and the SSM.

What is being proposed on domestic regulation would limit policy space, while on e-commerce, what is being proposed goes beyond the existing mandate. There is no mandate on investment facilitation, it said.

Fiji stressed the importance of the issues of agriculture, fisheries subsidies and SDT.

South Africa voiced agreement with the African Group and the ACP Group. It is clear that the difficulties and divergences have not disappeared, it said. Many members support the DDA mandate. Others that oppose it have not offered an approach which is unanimously acceptable to the members. So there is a problem with the issue of mandate.

It believes that while e-commerce is of critical importance, this should be addressed within the existing non-negotiating mandate.

Morocco endorsed the African Group statement. It is important to adhere to the DDA mandate, it said.

The United States said that it adheres to the same views that it had expressed at the last meeting in February. It cautioned against raising expectations for MC11, saying that those views have been reinforced in the past two months by what it has seen, which indicates that there is no significant progress anywhere.

Norway said that there are very clear divergences and very hard work ahead of members. It said that fisheries subsidies, trade-distorting domestic support, public stockholding and domestic regulation are deliverables, with the development dimension also being of critical importance.

Nigeria said that it would like to see disciplines on fisheries subsidies, particularly with respect to IUU fishing and overfishing. It is also very much in favour of building on the Bali and Nairobi mandates on public stockholding and the SSM.

Saudi Arabia, on behalf of the Arab Group, stressed on the centrality of the development dimension.

Kenya supported the ACP Group and African Group statements. It stressed the importance of the principle of “less than full reciprocity”, and the issues of SDT, public stockholding, the SSM and trade-distorting domestic support. (SUNS8459/8460)                                 

Third World Economics, Issue No. 638, 1-15 April 2017, pp10-13