TWN Info Service on WTO Issues (May04/01)

19 May 2004

Third World Network

Dear friends and colleagues,



Report on WTO General Council Meeting of 17 May 2004

The WTO General General Council held a meeting on 17 May 2004.  Trade officials, including the WTO director general and the WTO General Council chairman, reported a state of optimism, but also cautioned that time was running out on a narrow window of opportunity to reach a “framework agreement” by the deadline of late July.

Differences remain within the membership on the key issues of agriculture, Singapore issues and non-agriculture market access (NAMA), whilst the “development issues” (special and differential treatment and implementation problems) have quite disappeared.

Below is a TWN report of the Council meeting.

With best wishes

Martin Khor




TWN Report by Martin Khor, Geneva 18 May 2004

The WTO’s General Council met on 17 May in an atmosphere described by trade officials as “harmonious”, with some members expressing optimism that talks are moving ahead ahead, but with also signals that disagreements on difficult issues remain that may prevent a so-called framework agreement by the end-July deadline. 

Trade officials said that the sense of movement has emerged from recent events and meetings held outside WTO, in particular the letter of European Commissioners Pascal Lamy and Franz Fischler to WTO members and the Paris meeting of OECD ministers, to which some non-OECD countries were invited.

However, it was clear that important differences remain, especially on North-South lines, in key issues such as agriculture, Singapore issues, non-agriculture market access (NAMA) and the so-called development issues.

The WTO directrior-general Supachai Panitchpakdi reminded the Council that only a “narrow window of opportunity” is available before July (the target date for the General Council to approve “framework agreements” that were missed at the Cancun Ministerial conference last September).   “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 indications of a “growing convergence”.  He was encouraged that even on the most difficult areas in agriculture, discussions among Ministers produced a new sense of determination.    

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”.

He was discussing with delegations the nature and scope of the July outcome, especially on agriculture and NAMA.  On Singapore issues, he reported on a heads-of-delegation (HOD) meeting in April which he had opened by stating there is not yet a convergence of any of the possible scenarios; and specifically which of the issues, if any, should be within the single undertaking, and what should be done with those issues to be put outside the single undertaking were yet to be resolved.

He added that since then there were significant initiatives at political level at Ministerial meetings outside Geneva, such as the LDC meeting in Dakar and the Paris OECD meetings, where he said flexibility was demonstrated.

Despite these expressions of optimism by trade officials and some delegations, discussions in and outside of the General Council point to the wide divisions that still exist between members, and the enormity of the challenges to bridge them in any meaningful way in the next two months.

In agriculture, the Group of 20 have rejected the US-EU “blended formula”,  and it is becoming clear that this blended approach cannot be the basis for consensus.  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 NAMA, many developing countries are opposed to a non-linear tariff-reduction formula and accelerated tariff elimination in some sectors.  However, at the Conucil meeting, developed countries, such as the US, kept pressing for steep tariff cuts based on a non-linear formula.    

On Singapore issues, it is becoming clearer that there is general support for the continuation of work on 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.

The fate of the other three Singapore issues is unclear.  There is an “emerging sense”  (in the words of the General Council chairman) that they should remain “outside of the single undertaking”.   But it is unclear at this stage whether discussions on them will cease altogether (at least for the duration of the rest of the Doha work programme) 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, and given the complexity of the issues in the Doha programme,  the new government would need some time to study the issues.  He said the Indian delegation  would continue to remain deeply engaged, but would need to know the views of the new government before making firm commitments.

The Brazilian Ambassador, Luiz Felipe Seixas Correa, referring to India’s statement, said it is important to realize that a member of the G20 had a new government and WTO members had to take account of this, and show some understanding for India’s situation. 

He said there was no change in Brazil’s position.   He was encouraged by recent events, and it was important that recent indications by the EU and US are underscored in the Council.  He said the G20 would try to put forward a proposal on a formula for agriculture market access by the 2-4 June meeting on agriculture.

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 NAMA 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.  On NAMA, what would happen to the 5 percent of tariff lines that can remain unbound?  Malaysia also had difficulty with the European Commissioners’ proposal (in their letter) to give special exemption to the G90 countries.

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.

Kenya said it appreciated that members were more committed to the Doha programme, with encouraging signs of progress in agriculture.  On NAMA, it was important that an approach is taken that does not undermine African industrial development.  Kenya added that any decision on negotiations in trade facilitation must be on the basis of explicit consensus on modalities.

On the IMF’s trade integration mechanism, Kenya said there is a need to address the negative effects of trade liberalization but it was not convinced the IMF can do a better job of that than the WTO.

The US said work in recent weeks was very encouraging.  The aim should be to have agreement on agriculture, NAMA, services, trade facilitation negotiations, with development issues suffused throughout.  The US was happy with the Lamy letter to WTO members.  It was ready to eliminate the concession aspect of export credits. 

The US said it wanted the G20 and Cairns Group to come up with their formula for market access, and this was the most important task in the next ten days.  On NAMA, a non-linear formula is important.  So too are sectoral negotiations with a critical mass of countries participating, as with the Information technology agreement.  On services, more offers should be made.  On trade facilitation, the US wanted negotiations launched in July.  

The EC ambassador, Carlo Trojan, said it was not easy to achieve an agreement as there was a onflict between “ambition and sensitivity.”  The talks were about a framework only and not the “last stop.”   Market access for agriculture must be integrated with the other issues, and non-trade concerns must be taken into account.  The “parallelism” approach in export subsidies must be spelt out.

The EC said that the talks on NAMA and Singapore issues would fall into place once agriculture moves sufficiently.  More work is needed on the NAMA formula.  Clear assurance should be given to the G90 countries that they are not burdened with excessive demands and that they should know this upfront.

Japan said it was important that the political will shown in the Paris OECD meeting is eflected 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.

New Zealand Ambassador Tim Grosser, speaking in his role as chair of agriculture negotiations, said that in achieving agreement on the framework, there would not be numbers (eg for tariff reduction).  On the balance between the pillars, there were differences of views.  On subsidy, the outline of the outcome is there but the devil is in the details.

On process, he said a balance between efficiency and transparency is needed. All members must be kept up to speed, and ownership is as important as substance.  Negotiators must know what they are committing themselves to.

At the end of the meeting, Supachai said the programmes of capitals and Geneva delegations were converging.  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.