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TWN Info Service on WTO Issues (May04/4)

Third World Network

31 May 2004

Dear friends and colleagues

 

AFRICAN MINISTERIAL MEETING ON WTO WELCOME DROPPING THREE SINGAPORE ISSUES FROM WORK PROGRAMME

 

The African Trade Ministers’ meeting in Kigali (Rwanda) on 27-28 May has ended with the adoption of a Kigali Consensus on the WTO Post Cancun Doha Work Programme annexed to the Kigali Declaration.

Among the highlights of the Kigali Consensus were:

·        welcoming the emerging consensus to drop from the work programme the three Singapore issues of investment, competition and transparency in government procurement.

·        affirming that on trade facilitation (the fourth Singapore issue), “before any agreement on negotiating modalities by explicit consensus, a number of issues should be clarified first.”   

·        A criticism of the Derbez text relating to Non-Agricultural Market Access (NAMA), which the Ministers said would further deepen the crisis of de-industrialisation, unemployment and poverty crisis in African economies. 

·        A concern with the “blended formula” for tariff-cutting proposed in the Derbez text on agriculture and a call for developing countries to be provided with the flexibility to self-select tariff lines as special products, and with the use of a special agricultural safeguard mechanism.

Below is a report of the Kigali Ministerial meeting by Tetteh Hormeku of the Third World Network Africa secretariat, who represented TWN at the meeting.

With best wishes

Martin Khor

TWN

 

 

AFRICAN MINISTERS CALL FOR THREE SINGAPORE ISSUES TO DROP FROM WORK PROGRAMME

Report on the African Union Trade Ministers’ meeting in Kigali 27-28 May 2004, by Tetteh Hormeku, Third World Network Africa

 

African Trade Ministers meeting on 27-28 May in Kigali, Rwanda, have issued a “Kigali Consensus” on the World Trade Organisation welcoming the emerging consensus to drop from the work programme the three Singapore issues of investment, competition and transparency in government procurement.

They stressed that they “have been consistently concerned with the potential serious implications of the Singapore issues on African economies,” but that they had remained engaged in the discussions.

They also affirmed that on trade facilitation (the fourth Singapore issue), “before any agreement on negotiating modalities by explicit consensus, a number of issues should be clarified first.”    These include the need to address developing countries’ resource and capacity constraints, the costs of implementing the new rules and how and by whom the costs will be met, and the need for clarity on the applicability to the dispute settlement mechanism and whether the new rules will be binding or not.

The Kigali Consensus also criticised the Derbez text relating to Non-Agricultural Market Access (NAMA), which contradicted the principle of less than full reciprocity and would further deepen the crisis of de-industrialisation and accentuate the unemployment and poverty crisis in African economies.  The Ministers criticised the proposed “non-linear approach” in tariff-cuttting formula and the sectoral approach (of eliminating tariffs in seleceted sectors).

On agriculture, the African Ministers expressed concern with the “blended formula” for tariff-cutting proposed in the Derbez text, and also called for developing countries to be provided with the flexibility to self-select tariff lines as special products, and with the use of a special agricultural safeguard mechanism.

The Kigali Consensus on the Post-Cancun Doha Work programme is an annex to the (political) Kigali Declaration on the Doha Work Programme which was adopted at the end of the second ordinary session of the African Union Ministers of Trade, Customs and Immigration, which took place on May 27-28. 

The Kigali Ministerial meeting saw the African delegations engaged in making important strategic choices in the exact wording on the “dropping” of the three Singapore issues.

In adopting their final position on the issues of investment, competition policy and government procurement, the Ministers revised an earlier formulation which had stated that the ministers “welcome the emerging consensus to drop from the Doha Work Programme” the issues relating to investment, competition policy and government procurement.  This was the formulation proposed to the Ministers by the meeting of experts which took place from the 24 - 26 of May.

In a delicate balancing act aimed at providing their representatives in Geneva maximum negotiating room, African Union trade ministers meeting in Kigali, Rwanda, decided that their demands on the three most contentious Singapore issues should not be limited to these issues being dropped only from the Doha agenda.  Instead, they allowed themselves the option of the issues being dropped from the WTO work programme as a whole.  In relation to trade facilitation, they decided not only that any agreement on negotiating this issue must be on the basis of explicit consensus, but also that it must be preceded by the clarification of a number of key issues.

In the ‘Kigali Consensus,’ the Ministers stated that: “We have been consistently concerned with the potential serious implications of the Singapore issues on African economies.  However, we have remained engaged in the discussions”.

The paragraph continued: “We note that there is increasing convergence of views, amongst the WTO Membership, regarding the development of a more precise and focussed work programme on the issue of trade facilitation.  Before any agreement on negotiating modalities by explicit consensus, a number of issues should be clarified first.  These include, inter alia, the need to address the resource and capacity constraints of developing countries, the costs of implementing the new rules and how and by whom the costs will be met.  It is also necessary to have clarity on its applicability to the dispute settlement mechanism and whether the new rules will be binding or not.”

It concluded: “ We welcome the emerging consensus to drop from the work programme the issues relating to trade and investment, trade and competition policy and transparency in government procurement”.

In adopting this position on the issues of investment, competition policy and government procurement, the Ministers revised an earlier formulation which had stated that the ministers “welcome the emerging consensus to drop from the Doha Work Programme” the issues relating to investment, competition policy and government procurement.  This was the formulation proposed to the Ministers by the meeting of experts which took place from the 24 - 26 of May.

The decision to delete the word ‘Doha’ from the original statement relating to the three Singapore issues was taken just before the Kigali consensus document was finally adopted.  The proponents of the decision explained that this was in line with the general attitude expressed throughout the meeting on the need to give flexibility to the negotiators in Geneva.  Delegates who supported the view stressed that Ministers needed to give themselves and their negotiators a wide enough latitude, so as to be able to determine on the basis of the ensuing discussions the option to dropping the Singapore issues which best suited their purposes. 

Indeed, some delegations argued for the replacement of word ‘Doha’ by ‘WTO’.  In support of this, it was argued that, strictly speaking, the Singapore issues are no longer part of the Doha programme.  This was because in the Doha declaration, decision on further work on the Singapore issues was to be taken by explicit consensus at the fifth WTO Ministerial Conference in Cancun.  The failure to reach consensus in Cancun meant that, those issues could now be discussed only within the broad WTO programme, and a convergence to drop them could only be by reference to the WTO programme.

However, other delegates were of the view this would complicate the developments that seemed  to have emerged on the Singaopore issues.  Others were concerned that the change being suggested would lead to opening up, at that late stage in the meeting, the  entire document which had been the result of compromises in different areas.

The final decision not to limit the demand on dropping the issues to the Doha agenda but include the option of dropping them from WTO work programme as whole contrasted sharply with the views urged on the  Ministers by the WTO Director-General, Dr Supachai Panitchpakdi, as well as by Jeremy Lester, Head of Delegation of the European Union, Rwanda.

In his speech at the opening of the meeting, the Director-General of the WTO Dr. Supachai Panitchpadki, told the Ministers that the European Union, which was one of the main proponents on the Singapore issues, had substantially modified its position.  He stated that “it is now clear in Geneva that the emerging consensus combines a decision to negotiate ... on trade facilitation, and an agreement keep the other three issues in the WTO’s work programme but clearly outside the DDA negotiations.”    He added that this was a compromise that would involve a major move by the proponents towards the developing countries, and was surely deserving of constructive response from Africa. 

In reference to the declaration adopted by the LDC ministers in Dakar in May, Dr Supachai added further: “Flexibility was shown by the LDC Ministers in taking this into consideration during their meeting in Senegal.  I hope similar flexibility will also emerge from this meeting.”

The WTO Director-General had hoped to follow his opening remarks with a further statement during the actual business session of the meeting, when the ministers were to begin discussing their positions.  However, his request to address the meeting at that stage was not received kindly by some delegates, who saw this as interference in their deliberations.  It was pointed out that Mr Supachai had already stated his views in his earlier presentation, and that whatever further information Ministers needed could be provided by their ambassadors from Geneva who were present at the meeting.  Others, however, were prepared to give him a brief hearing, after which he had to leave ministers alone to deliberate.  By the time the debate had settled, Supachai himself was not available, and it was left to his representative to make a general statement repeating Supachai’s earlier call for flexibility on the part of the African ministers.

On his part, Jeremy Lester sought to convince the African ministers on two points: the need to negotiate binding rules on trade facilitation, and to keep the 3 other issues within the WTO programme.  He stated that there was now consensus among WTO members to treat each of the Singapore issues on its own merit.  He  continued: “our view is clear: trade facilitation is clearly is a win-win area for developing countries and we are ready to take on board your concerns over costs, capacity and aid.   But at the same time these new rules to be effective will need to  be binding”.  Regarding the other 3 issues, he added, “we can go along with dropping them from the Single Undertaking but in our view they should remain somewhere part of the WTO Work Programme.”

As their final decision made clear, however, the African ministers were not convinced that rules on trade facilitation, if at all negotiated, should be binding and subject to the trade-sanctioned based dispute settlement mechanism of the WTO.  Nor were they prepared to accept Mr Lester’s view that the other three issues should necessarily remain within the WTO work programme.

In his statement to the Ministers, Mr Lester said that in order for the declaration they were about to adopt to contribute constructively to reaching an agreement in Geneva in July, it was “important that it is flexible enough to provide the right latitude to the negotiators in Geneva to actually pursue their work”.  In this regard, he complained that draft document prepared for the consideration of the ministers by their officials was too detailed and left “too little room of manoeuvre to those engaged in the negotiations in Geneva”.  He added:  “that is why my main message and advice (italics in the original) is to ensure that the adoption of a Ministerial statement does not constrain your negotiators in Geneva...”

At least Mr Lester could be pleased that the Ministers took his message and decided to give more room to their negotiators.  Whether his was equally pleased with the direction of that decision that is, including the option of taking the three controversial Singapore issues out of the WTO work programme, is another matter.  Many African officials, however, were satisfied that the Minister’s decision had given them just the “right latitude” they needed in Geneva.

The ‘Kigali Consensus’ document also contained the positions of the African Ministers on other questions, including Agriculture, the Sectoral initiative on cotton, Non-agricultural Market Access (NAMA), TRIPS, Services and WTO Rules.  Other subjects included were Special and Differential Treatment, Implementation Issues, the Working Groups on Trade and Transfer of Technology, and on Trade, Debt and Finance, Dispute Settlement Understanding, Commodities.  There were also  positions on Small Economies, Coherence, Accession, Observer Status for the African Union in the WTO, and Technical Cooperation.

Agriculture was the other main issue on which discussions were protracted. The Ministers adopted the following as guiding principles and position of AU Member states on the three pillars of the Agreement on Agriculture.  They include:

·        “that further reform of agriculture should aim to attain the objectives set out in the Doha mandate.  Each Round of agriculture negotiations should take into account the need for appropriate policy space that would allow African countries to pursue agricultural policies that are supportive of their development goals, poverty reduction strategies, food security and livelihood concerns”;

·        “that the “Framework”, and associated Modalities to be agreed upon, should address themselves fully on all three pillars, in a balanced and equitable manner”;

·        “that, in accordance with the Doha mandate, binding, precise and effective S&D is an integral part of all elements of the negotiations on agriculture.”

On market access, the Ministers stressed “the need for participants to undertake to take into account of the importance of preferential access for developing countries” .  Ministers also stated that “African countries remained concerned with the use of the blended formula as is currently set out in the Derbez text.  Any tariff reduction formula to be agreed upon should fully take into account African needs and development concerns; that “developed countries shall provide bound duty- free and quota-free market access for all products originating from LDCs with realistic, flexible and simplified rules of origin.

Furthermore, Ministers stated that “developing countries shall be provided with the flexibility to self-select tariff lines as special products”; that “a special agricultural safeguard mechanism (SSM) shall be established for use by developing countries”; and that “the use and duration of the special safeguard for developed countries remains to be negotiated”

Ministers also stressed the importance of enhancing market access by addressing tariff peaks and tariff escalation, particularly in the markets of developed WTO Members for products of export interest to Africa.  In addressing this issue, the interests of preference receiving countries shall be fully taken into consideration.  Finally, the ministers stressed “the imperative to develop more simplified and transparent quota regimes that provide improved and measurable market access benefits to African countries.”

On domestic support, the Ministers stated, among others, that “all forms of trade-distorting domestic support measures by developed countries to be substantially reduced”; that “developed countries should eliminate the 5% de minimis domestic support”; and that “S&D provisions should allow additional flexibilities for African countries”.

On the amber box, Ministers called for the “substantial reduction in the Amber Box measures with a view of their phasing out”. They also called for the “substantial reduction in the current Blue Box measures with a view of their phasing out”.  The ministers called for “the review of trade-distorting elements of Green Box suppport measures provided by developed countries and the development of tighter disciplines for the elements of the Green Box through inter alia notification, surveillance and monitoring”.  At the same time, “domestic support measures consistent with Annex 2 of the Agriculture agreement shall be enhanced for developing countries.”  Finally, “members agree to establish a permanent mechanism/modalities as part of the overall framework/modalities to prevent Members from transferring subsidies between and within boxes”.

On export competition, the African ministers stated that  “a commitment to phase out all forms of export subsidization by a certain date should be an integral part of the Proposed Framework on Agriculture; the specific date will be negotiated”. 

Apart from the above, Ministers, among others, urged expeditious action on the Marrakech Decision on Measures in favour of least-developed and net-food importing developing countries; stressed the need to ensure that State Trading Enterprises from developing countries are exempted from additional disciplines taking into account the role they play in promoting national development goals and objectives; and the importance for developing countries to continue benefit from the special and differential provisions of article 9.4 of the agriculture agreement.

The Kigali meeting also addressed the  Sectoral Initiative on Cotton.   In this regard, Ministers endorsed the proposals submitted by the sponsors of the cotton initiative, and called upon WTO members to urgently adopt the elements of those proposals,  in particular, the total elimination of the export subsidies over a three year period starting from 1st January, 2005, as well as the establishment of a support fund to support the cotton sector.  Ministers furthermore called on their development partners “to provide, in the framework to be achieved by July 2004, a clear commitment to speedily and substantially address both the trade-related aspects of the initiative, and their development-related counterparts, in a ‘fast track’ process.  Only in such a process can the dire situation of African farmers be faithfully and fairly addressed”.

With regards to Non-Agricultural Market Access (NAMA).  Ministers stated that they “are concerned that the proposals contained in the Derbez Text and its annex on NAMA are contradiction with the principle of less than full reciprocity as enshrined in the Doha mandate and as such would further deepen the crisis of de-industrialisation and accentuate the unemployment and poverty crisis in our economies.  In this regard, we welcome the recent initiative in favour of weak and vulnerable economies. It is therefore imperative that the agreed Framework provides policy space and flexibility to allow African countries to undertake industrial policy and national development objectives.”  

To this end, Ministers stated, among others, that the formula to be agreed should allow the operationalisation of meaningful and binding S&D provisions, including the principle of less than full reciprocity.  “In this respect, it should be emphasised that the non-linear approach does not provide the basis for equitable results.  African countries need flexibility for the development and industrial objectives”.    A further call that solutions to the questions of preferences should be obtained within the WTO negotiations.  “In this respect, a sectoral approach would be detrimental to African preferences in major export markets.  A suitable carve-out should be made in favour of African economies/exports”, stressing that the work on preference erosion should not be outsourced to other multilateral institutions.

On the issue of tariff bindings, Ministers stated that this issue “should be approached in a way that creates incentives to those countries that have not bound their tariffs to do so.  In this regard, the binding of tariffs should be acknowledged as the main contribution to this round by those countries that decide to do so”.

 


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