TWN Info Service on WTO Issues (June04/2)
8 June 2004
Third World Network
Dear friends and colleagues
G90 MINI MINISTERIAL IN GUYANA HIGHLIGHTS PLIGHT OF SMALL AND POOR COUNTRIES:
Also: G90 and G20 Pledge to work together
The Group of 90 developing countries (comprising the LDC Group, the ACP Group and the African Union) held a “mini-Ministerial” meeting in Georgetown, Guyana on 3-4 June 2004.
There were 50 participants from 18 of the G90 countries, as well as representatives from international and regional agencies, and special guests.
The meeting was held to as part of the G90’s preparations for the end-July General Council meeting of the WTO. It highlighted the problems and plight of poor, small and vulnerable economies.
Below is a report of the opening session of the meeting.
Another report, on the documents adopted by the meeting (the Georgetown Communique and the Georgetown Consensus), will be sent to you soon.
With best wishes,
G90 MINI MINISTERIAL HIGHLIGHTS PLIGHT OF SMALL AND POOR DEVELOPING COUNTRIES
G90 and G20 Leaders also pledge to work together
TWN Report on the G90 meeting of Ministerial Representatives,
Georgetown, Guyana, 3-4 June 2004
The Group of 90 meeting of Ministerial representatives saw the leaders of the G90 and the Group of 20 affirming the need of these two important groupings of developing countries in the World Trade Organisation to work in solidarity for their common cause.
“We absolutely need a partnership between the G90 and the G20,” said the President of Guyana, Bharrat Jagdeo, at the opening session of the G90 “mini-Ministerial” which was held on 3-4 June, and attended by Ministers and senior officials from 18 of the G90 countries.
In return, Brazil’s Foreign Affairs Minister, Celson Amorim, who coordinates the G20, said: “We have great expectation of dialogue between the G20 and the G90. We have to join forces to achieve our objectives of an equitable trading system.”
Jagdeo eloquently highlighted the plight of small developing countries that depend on commodity exports, are vulnerable to low prices and the erosion or ending of trade preferences, and whose interests had been neglected by the WTO.
The session also saw an interesting impromptu clash of views between the President of Guyana and the European Union representative on whether the developing countries take trade seriously enough.
Besides President Jagdeo and Amorim, the session speakers included Guyana Foreign Trade Minister Clement Rohee, head of the European Commission delegation to Guyana, Per Eklund, ACP Secretary-General Jean-Robert Goulongana, and the WTO director general’s chief of cabinet Stuart Harbinson.
The session gave interesting indications of the positions of various players and groupings at the present stage of negotiations seven weeks before the deadline for reaching “framework agreements” targeted for adoption at the WTO General Council meeting at the end of July.
Differences in perceptions on the way the trading system affects developing countries were most clearly highlighted in the exchange between Per Eklund and President Jagdeo on whether developing countries lack the political will to mainstream trade in their development agendas.
The session also saw the EC repeating is offer to exempt “essentially the G90 group” from tariff reductions, and a warning from the Brazilian Minister to beware of proposals aimed at splitting the developing countries.
Eklund reiterated the proposal of EC trade commissioner Pascal Lamy that the poorest and weakest WTO members -“essentially the G90 group” - need not make tariff reduction commitments. But in non-agriculture market access, such countries would be asked to bind “the existing tariffs.” And bigger developing countries “can and should make a real contribution.”
Amorim, in turn, apparently referring to the EC proposal, warned the G90 of attempts to distract the developing countries and splitting their unity. The proposals may at first appear tempting but would create permanent discrimination between full participants and relegate others to be secondary members.
In his speech, Eklund said that the EU considered trade related assistance as an absolute priority, but “we feel that what is missing sometimes is the real political commitment to mainstream trade by recipient countries themselves. We would therefore welcome calls for better mainstreaming of trade in national development agendas. This is a key way to further the fight against poverty.”
President Jagdeo took issue with Eklund on this point. He said: “I want to convey to the EU, it is not because of the absence of political will that developing countries are reluctant to mainstream trade in their development agenda. It’s the fear of the type of trading arrangements that they will mainstream, which does not benefit small developing economies.
“For example, how can you tell the Prime Minister of Dominica who because of the banana regime at the WTO has lost a significant part of his economy, his country has lost thousands of jobs and one third of its foreign exchange earnings, how can you tell him to mainstream this kind of trade into his national development agenda?
“It is not the lack of political will that is the problem, it is that we have a fear of the type of trade system that we are supposed to mainstream.”
Apparently responding to the calls by Eklund (to match the EC’s level of ambition and flexibility) and by Harbinson to the G90 and others to show flexibility in the negotiations, Jagdeo said: “Flexibility is fine but a flexibility exercise of a developed country is one leading to a shift in its trade policy that causes a few people to lose their jobs, and they can move to other jobs or be taken care of by their social security system.
“For a Third World developing country leader, the choice often is for him to pursue a policy leading to many persons not having something to eat. For one country, it may mean more people depending on social security, for other countries it means losing jobs and the ability to eat. We can be flexible, but you should bear this difference in mind, and allow for different levels of flexibility.”
In a response to the speech by Amorim (who also coordinates the Group of 20), President Jagdeo said: “We absolutely need a partnership between the G90 and the G20. I hope Minister Amorim will speak to his colleagues (in the G20) and convince them it is not because of an addiction to preferences that we pursue this path, but because of real vulnerabilities.
“We don’t want a free ride, but we want participation in a trading arrangement that allows us to have a decent standard of living.”
He added that solidarity among the G90 countries is absolutely necessary. It was solidarity that “held us together in Cancun and will do so in future.” He repeated that the aim is “not for us to have a free ride, but to secure a future.”
He added that a new G90 platform would “give hope to millions in our countries, add political and moral strength to our cause, send the right message to our trading partners and sustain us in the tough negotiations in the months and years ahead.”
Earlier, President Jagdeo said the people in Guyana, like in other G90 countries, are concerned with developments arising out of trade negotiations. They are worried about the uncertainties regarding the outcome and direction of the WTO negotiations, as they live in a small economy heavily dependent on a few basic commodities.
“They have seen how the WTO decision on bananas severely impacted on the Caribbean region, and they wonder what would emerge from the present legal assault on sugar in the WTO, the impending sugar reform in the EU and the general threat from other sources to commodity arrangements that we have lived under for almost half a century.”
Jagdeo added: “We have tried hard over the years to convince our trading partners of our plight as commodity producers, yet our cries keep falling on deaf ears and many nations continue to remain highly insensitive to our plight.
“Yet vulnerable economies as ours are called upon to make further commitments in the WTO, when we are already overstretched with our Uruguay Round obligations, many of which require substantial and unavailable budgetary support to implement.”
Jagdeo reaffirmed a firm belief in multilateralism, and hoped the meeting would help build a more development-friendly multilateralism in which rules are flexible and “we are permitted to enjoy the policy space necessary to advance our development.”
He added: “We cannot afford to meet the many obligations for tariff reduction that are being requested of us. As developing countries we do not have an array of border instruments to defend our agriculture and industry.
“We cannot afford to use contingency measures such as anti-dumping and countervailing duties which are costly and invite retaliation. Emergency trade remedies are also not available as they require considerable administrative work and put us in the firing line of retaliation and calls for compensation.
“We cannot also afford the subsidies of rich nations. We are thus left with our bound tariffs as the only practical means of defending our agriculture and industry. To demand further concessions from us on this is to leave us defenceless in a world characterized by large agricultural and industrial producers whose scale can quickly swamp our production and wipe out our producers overnight.
“We have tried in the WTO under the small economies programme and under special and differential treatment to convince our partners to take into account the well documented vulnerabilities of small developing countries, but we have had limited success so far. We are still trying to persuade them of the need to address these vulnerabilities.”
“For us to benefit from the evolving trading arrangements, we require more binding commitments on our long-standing preferences. Without the current preferential margins and tariff quota access we now enjoy on our commodities, we will be wiped off the map by the large and more competitive producers.” The assurances they had sought in Cancun on long-standing preference have remained elusive.
Guyana’s Foreign Trade Minister, Clement Rohee, who chaired the meeting, said the G90 had a historic responsibility as it now had a profile as a force to be reckoned with.
The G90, which functioned effectively in Cancun, had been able to maintain its solidarity since Cancun. “It has gained further recognition from other groups and is called upon to be a valid interlocutor in inter-group negotiations. Its constituent members, the ACP Group, the LDC Group and the African Union, continue to carry forward G90 positions that are complementary and add to the strength of the umbrella group.”
Rohee said the meeting brought together the principal constituents of the G90 to deal with elements of the framework agreement to be adopted by the WTO General Council at the end of July, so that the G90 can strategically position itself to influence that outcome. The G90 should develop a common set of proposals on agriculture, market access, development issues, the Singapore issues ands cotton.
He concluded: “The G90 is in fact a movement. As we gather momentum, others will no doubt seek to strike common cause with us especially if they conclude that history is on our side.
“There is already reference to a wider G90 that may include LDCs, small economies, landlocked developing countries and commodity dependent countries that are particularly weak and vulnerable.”
In his speech, Celso Amorim stressed the importance of dialogue between the G90 and the G20 which together constitute the bulk of WTO membership and share common interests, and whose access to benefits in trade is yet to be ensured.
He said in Cancun, for the first time, developing countries refused to be cast as supporting actors, and separately, but with a shared sense that the aspirations of the majority of the world could no longer be ignored, the G90 and the G20 constituted an alliance for fair and balanced results.
“Now we have to go a step further. We have to join forces, work out common understandings, build bridges where different perceptions exist, and this will provide us with necessary leverage to achieve our objectives of an equitable trading system capable of fostering development and social well being throughout the globe.”
Amorim said that at Cancun the G90 articulated a mature and consistent view on the Singapore issues, and its resistance to embark on negotiations on new onerous obligations within the WTO system helped streamline the agenda and concentrate on essentials. “The perception that we should first resolve key unfinished business such as implementation, S and D and agriculture, prior to setting up additional burdens on poor countries, found sympathy, support and understanding among most WTO members.”
For its part, the G20 focused on agriculture, engaging developed countries on better market access, eliminating billionaire subsidies to production and export and preserving foods security and agricultural livelihoods.
He said the “development deficit” is particularly evident in agriculture, which is yet to be really integrated into the trade system and where there is “special and differential treatment in reverse” for developed countries, which allows them to distort markets.
Unless there is a broad based coalition of developing co0untries, the Round will be hindered by interest groups in developed countries.
“Small groups of producers in rich nations benefit from enormous financial support from their treasuries, depressing prices, unduly inc raising their market share and compromising the food security and livelihood of farmers in many developing countries.”
The G20 saw great merits in the cotton initiative by four African countries and had included cotton in its negotiating proposal. The G20 also supported the African proposals to address the deterioration of commodity prices, and took on board problems of recently acceded members.
He also recognized the need to address and find equitable solutions to the question of preferences erosion, but also quoted from an eminent African who said developing countries should find ways to free ourselves from “addiction to preferences” which perpetuate economic and political dependence.
He added the G20 is committed to support special products and special safeguard mechanisms, and to accommodate different concerns by various groupings of developing and least developed countries.
Amorim also spoke of the importance of expanding South-South trade, within the context of the General System of Trade Preferences (GSTP), a scheme in which developing countries give preferences to one another, without extending these to developed countries. He invited all developing counties to join the GSTP and take part in the Committee of Participants meeting in Sao Paulo during UNCTAD XI where a new round of GSTP negotiations would be launched.
Besides the GSTP, there are other innovative ways to unlock South-South trade, such as free trade and preferential agreements. He cited how Mercosur gave an good example in negotiating with Andean countries by developing additional modalities of S and D in relation to smaller and weaker economies, and said this kind of formulation could be applied also in dealings with G90 countries.
Amorim also warned of risks posed by attempts to distract the developing countries, “aimed at making us lose sight of our commonalities, and at splitting natural allies.” [He was apparently indirectly referring to recent initiatives by the European Commission to offer the G90 countries special exemptions from obligations in the WTO, in exchange for accepting some of the EU’s proposals on various issues].
“We should be on guard in the face of proposals that, although tempting at first sight, might create permanent discrimination between full participants and other members relegated to a secondary role. No one disputes that developing counties should contribute to the negotiations in proportion to their capacity to take up obligations.
“I already mentioned the question of preference erosions., I also agree that LDCs, for example, should be exempt from assuming any reduction commitments. Other specific vulnerabilities must be taken into account. But not at he price of exclusion from full participation in the system and its decision-making mechanisms.
Another aspect of these proposals is that while their authors defend exemption for some developing countries from obligations in the WTO, they require equivalent or even higher levels of concessions in free trade or partnership arrangements, without offering a meaningful degree of participation in the development of multilateral rules.
And we should have no doubt about the primacy of such rules, the only ones that can assure developing countries a modicum of fair treatment un international trade. We would never have something similar in regional or other forms of partnership agreements.”
He added: “Developing countries have a rare window of opportunity,” he said. “There is so much that unites us. Let’s work out our small differences in perception. Let’s continue to build up a common front.” He invited the G90 coordinator to the G20 ministerial meeting in Sao Paulo.
In his speech, Harbinson said the 27 July meeting of the General Council was a real deadline. If it does not get the WTO talks back on track, “we will not be able to make any significant progress for the remainder of the year” and 2004 would be a “wasted year.”
Worse than that, he said, “we do not know if and when we could get the negotiations going again in 2005...If at that time there is an impression that the Doha Development Agenda is floundering, without any real sense of direction or purpose, it is difficult to foresee which Members would take the initiative to get things going again, and even on what basis.”
He added that the following needed to be achieved by 27 July: the frameworks for modalities on agriculture, agreement on treatment of the cotton initiative and Singapore subjects. Without movement on them, there will be no movement at all.
Harbinson added “there is also a growing body of opinion among the WTO membership that favours in the July package the important work to make existing SDT more precise, effective and operational.” He notably did not mention implementation issues in this context.
He stressed that the July meeting was only aiming at agreeing to frameworks in agriculture and NAMA, and it was not necessary to specify figures for reduction commitments. “We should resist any temptation to try to pre-empt or pre-determine the final outcome.”
He said that on agriculture, the market access pillar is the most difficult, as domestic support and export competition now seem less difficult to resolve. The recent Lamy-Fischler letter represented a very significant shift in the EU position on export subsidies and deserves a positive response from WTO members.
On NAMA, more effort should be focused on achieving in the July text an acceptable trade-off between the level of ambition in tariff reductions and flexibilities.
He said it is already clear from the negotiations so far, especially in agriculture and NASMA, that WTO members are ready to accommodate the different capacities of developing countries. “There is increased understanding that we should not overload the weaker and more vulnerable members.
He added the text at Cancun on agriculture indicated LDCs should be exempt from tariff reduction commitments; on NAMA that LDCs should not be required to apply the tariff-reduction formula or take part in sectoral approach; and in both areas the need to address preference erosion was recognised.
“Furthermore, recent signals from major players have given new indications of their relatively modest levels of expectation from the smaller and poorer developing countries in market access.”
Harbinson said that on cotton, the greater part of the WTO membership would like to address it as part of agriculture negotiations, whilst proponent countries are concerned that cotton might get lost within agriculture. It should be possible to reconcile the issues, whereby cotton has a significant place within agriculture. “This scenario could encompass specific treatment for cotton when the results of the Round are implemented.”
On Singapore issues, Harbinson said there were encouraging developments. The EU, the main proponent of all four issues, has now substantially modified its position.
“It is clear in Geneva that many now would like to combine a decision to negotiate (with appropriate SDT) on trade facilitation, with an agreement not to negotiate but to keep discussing the other three issues in the WTO’s general work programme but clearly outside the singe undertaking.
“If we think back to what has been the position of the proponents since the Singapore Ministerial Conference in 1996, this clearly represents a major scaling down. After nearly 8 years oif bickering, the concerns continually expressed by many developing countries have at last had their effect. You must judge how to respond.”
Harbinson called on the meeting to acknowledge the flexibility others are showing and react positively to it, and to instruct their negotiators to take account of the need of all members to respond in a timely way and with appropriate flexibility in Geneva between now and late July.
In his speech, Eklund said the EU is committed to development, as reflected in our proposal that on agriculture and NAMA (non-agricultural market access), the LDCs and other weak or vulnerable developing countries in a similar situation should not have to open their markets beyond their existing commitments, but should benefit from increased market access offered by all other countries.
“All we ask is that you countries should increase their tariff bindings to a reasonable level, which would increase predictability.”
He reiterated three main points of the Lamy-Fischler letter to WTO ministers: that EU is ready to put on the table all export subsidies, provided the EU gets full parallelism and a balanced overall package in agriculoture; that the EU has new flexibility on Singapore issues; and the EU proposed that the WYO agree a package of concessions for the “poorest and weakest” WTO members, essentially the G90 group.
He echoed Lamy’s call for other WTO members to “match this level of ambition ad flexibility”.
On agriculture, in market access, the EU is ready to make meaningful reductions but any approach must maintain some protection for particularly sensitive products, whether of developed or developing countries. On domestic support, the EU can reduce considerably trade-distorting support but cannot accept considerable cuts on non-trade distorting support, i.e. the Green Box.
The cotton issue must be integrated in agriculture negotiations; “I would go so far as to say that only if cotton is part of agriculture negotiations can a real breakthrough there be possible.”
On NAMA, “we need a basic understanding of the nature of contributions that WTO members must make, corresponding to their capacity, size of market and level of development.
“It is clear we should not ask for much tariff reduction from the LDCs and other weak and vulnerable developing countries, who make up a majority of the G90 group. Such countries should however be asked to bind in the WTO the existing tariffs. But it is equally clear that bigger developing countries in addition to the developed countries can and should make a real contribution.”
[It is not clear what Eklund meant by “bind the existing tariffs.” Some participants took it to refer to binding unbound tariffs at the existing applied rates].
He added that preference erosion problems need recognizing but cautioned that the G90 should not “give so much emphasis to preferences that it runs into a brick wall in Geneva. It risks doing so.” He said the texts in Geneva already call for the problems to be taken into account and this is enough for now; after July, flesh can be pit in this concept.
On Singapore issues, there is now consensus that we have to treat each issue on its own merits. On trade facilitation, the EU is “ready to take on board your concerns over costs, capacity and aid but these rules to be effective will need to be binding.”
He said EU retained the hope that the G90 will agree to negotiate rules on transparency in government procurement and is ready to include additional guarantees that this negotiation would not lead to market access, if that is what is holding negotiations back.
On investment and competition, “we can go along with dropping them from the single undertaking but in our view they must remain somewhere part of the WTO work programme.”