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TWN Info Service on WTO Issues (July04/2)

6 July 2004

Third World Network

Dear friends and colleagues,

 

WRANGLE CONTINUES ON THE SINGAPORE ISSUES AT TWO WTO MEETINGS ON 30 JUNE AND 1 JULY 

How the Singapore Issues are to be treated has become one of the most challenging and important aspects of the discussions towards reaching a “framework agreement” in the WTO by the end of July.

The Singapore issues (investment, competition, transparency in government procurement and trade facilitation) were among the key subjects discussed at two recent WTO meetings, of the Trade Negotiations Committee (on 30 June) and of the Heads of Delegation (on 1 July).

The two main contentious questions are:  (1) What to do with trade facilitation (whether to decide in July to begin negotiations towards an agreement, or to continue clarifying the issue), and (2) How to treat the remaining three issues (whether to drop them from the WTO agenda altogether, or re-activate some level of discussions on them, while agreeing that negotiations for rules should not start).

Below is a TWN report on the discussions on the Singapore issues, and the state of play on them.  The report is written by Tetteh Hormeku, the Programme Coordinator of TWN-Africa and the Coordinator of the African Trade Network.

With best wishes,

Martin Khor

TWN

 

____________________________________

 

  

WRANGLE CONTINUES ON THE SINGAPORE ISSUES

TNC and HOD Meetings Debate What To Do About Trade Facilitation, And How To Treat The Other Three Issues

TWN Report by Tetteh Hormeku, Geneva, 5 July 2004

 

Introduction

The overall picture emerging from two key meetings of the WTO in Geneva on June 30 and on July 1 shows that WTO members are nowhere near bridging fundamental divides over the fate of the Singapore issues as they prepare for the July meeting of the General Council which is expected to be decisive for the post-Cancun work on the Doha work programme.

At both the meeting of the Trade Negotiating Committee (TNC) on June 30 and the informal meeting of the Heads of Delegation (HOD) on July 1, countries on each side of the divide stuck to their positions on the issues, even as language was generally deployed suggesting flexibility and even subtle shifts.  

WTO General Council Chairman Amb. Shotaro Oshima of Japan elaborated on this picture when he briefed delegates at the beginning of the HOD meeting on the conclusions of his consultations with delegates over the issues prior to the meetings.  He reported that although his consultations have been positive and have brought more clarity, they “have also revealed that Members remain far apart on a number of key questions, and that a decisive momentum for an agreement in July has yet to be built.”   He added this has been confirmed by interventions by delegates which touched on Singapore issues at the TNC meeting the previous day.

Amb. Oshima stated that “while my consultations have led me to believe that there is a certain flexibility on at least some of these issues, I must confess that I have also sensed a gap between those expressions of willingness to compromise, and a translation of this commitment into actual positions that would enable us to effectively establish the critical mass we need for an agreement on this part of the July package to materialize”. 

The two main points of contention:  what to do with trade facilitation, and the other three issues

The two main sticking points with regard to the Singapore issues are firstly, whether or not to launch negotiations in July on the issue of trade facilitation; and secondly how to treat the three other issues - investment, competition, and transparency in government procurement.

On the issue of trade facilitation, the majority of developing countries are not prepared to launch negotiations in July.  For these countries, negotiations on trade facilitation may be embarked upon, if at all, only following the completion of two prior steps:  (1) the clarification of some key questions, including the cost of implementation and compliance of an agreement (and who will pay for it and how ) and the applicability or otherwise of the trade-sanction based dispute settlement mechanism;    (2) a decision taken by explicit consensus on the modalities of negotiations.  

In contrast, the European Union, the main proponents of the Singapore issues in the WTO, want negotiations to be launched on trade facilitation as part of the July package.  It is supported by some other developed countries.

On the second question, regarding the rest of the Singapore issues, the developing countries, following up on the offer of the EU in Cancun to drop those issues from the WTO work programme, want the issues to be taken out of the WTO altogether.  This implies that  the three issues will not be negotiated, and (importantly) they would also no longer be discussed in the working groups.  In fact, a number of developing countries have linked their willingness to continue discussing trade facilitation to a decision to drop the other three issues entirely.

The EU by contrast has agreed to the three issues to be taken out of the package of agreements to be adopted at the end of the current round of negotiations, but want them to be kept in the WTO programme in one way or another;  presumably this means that the working groups will re-start their work.   Other developed countries also support the EU view.

Trade facilitation: launch negotiations in July, or continue to clarify the issue?

These differences were re-affirmed forcefully in the course of the two days, starting with the TNC meeting.   Speaking at the TNC, Amb. Carlo Trojan of the European Commission argued that, in the view of the European Union, continued debate over the Singapore issues should no longer be necessary, suggesting that there is sufficient clarity on the sticking problems in relation to trade facilitation as well as the other three issues.

On trade facilitation, he stated that, “we should work hard to give some additional comfort on such issues as costs and DSU aspects.  This should be doable, enabling us to adopt modalities and launch negotiations.”

Predictably this was rejected by developing countries.  At the TNC, the group of least developed countries re-affirmed their opposition to launching negotiations in July. In a statement made on their behalf, the Ambassador of Bangladesh, (who spoke on the request of the Ambassador of Tanzania, the current coordinator  who was then out of Geneva) stated that “despite all our efforts, we are yet to see clarification of the mandate for negotiations that may be adopted by explicit consensus”.  He continued, “No delegation can go into any negotiations without an explicit mandate, as our partners will appreciate.”

Also at the TNC, Kenya stated that it is guided by the Kigali Consensus document, adopted in May this year by the African Union Ministers of Trade meeting in Rwanda, and which has been circulated as a document of the WTO.  Kenya reminded the meeting that the Kigali consensus document calls for clarification of some issues on trade facilitation before an agreement can be made to launch negotiations by explicit consensus.  [Among the issues mentioned in the Kigali Consensus that have to be clarified beforehand are the costs of implementation, who will bear the costs, and the applicability of the dispute settlement mechanism].

Amplifying its position at the informal meeting of the Heads of Delegation the following day, Kenya stated that to start negotiations on trade facilitation without clarifying those questions was tantamount to launching negotiations on a blank slate, since it was not possible to start negotiations on a subject whose main contents have not been clarified.  In addition, Kenya questioned the suggestion that is was possible to achieve consensus on these issues in the short time left before the July deadline, given that there is still a  lack of clarity on trade facilitation, and in light of the difficulty still plaguing WTO members in their attempts to adopt modalities on issues where there is already more clarity, such as agriculture and non-industrial market access.  Indeed, in the view of Kenya, the pressure to launch negotiations on trade facilitation as part of the July package introduces an imbalance in the negotiations.  This is because the issue of trade facilitation would be leap-frogged over areas of priority concern to developing countries such as NAMA and agriculture in which there were issues still to be resolved.  In addition, while in NAMA and agriculture, the discussions are aiming only to adopt a framework which only later on would be turned into negotiating modalities, those on trade facilitation are being pursued at the level of establishing detailed modalities for negotiations to begin.

On behalf of the Africa group, Nigeria, speaking at the HOD, also expressed the Group’s  opposition to launching negotiations on trade facilitation as part of the July package.

In stating these positions, the developing countries were reflecting political mandates adopted at the political level by their Ministers, such as the declarations adopted in Kigali in June by the African Ministers of Trade, by Ministers of Trade of the Least Developed Countries meeting in May in Dakar, and by the Guyana meeting of the Ministerial representatives of the Group of 90 countries.

General Council Chair. Amb. Oshima confirmed the differences in relation to trade facilitation when he stated in his report to the HOD, that there are “divergent opinions as to the existence of a basis for moving into negotiations by July, and the requirements for such an exercise to commence.”  He added that while he felt that the consultations had enabled more understanding of the parameters of the way forward, the consultations “have also showed that some Members still have open questions they wish to see addressed before moving ahead”.

However, he seemed to have narrowed these ‘divergences’ and ‘open questions’ to the “precise scope of the negotiations as well as the implications of such an undertaking, especially on the implementation side.”  In this connection, in contrast to the opposition stated by majority of the countries (some of which have been referred to above) to launching negotiations in July, Amb. Oshima stated: “I believe it is clear that a large number of delegations consider it essential to launch negotiations as part of the July package, and I am convinced that this is still achievable.” 

His proposal then was for members to “work intensively at both the political and technical level to resolve our remaining differences.”  Judging from the clear opposition by so many of the developing countries to launching the negotiations in July, it remains to be seen what kind of intensive political and technical work Amb. Oshima had in mind as a way of resolving these differences in time for July.

The three other Singapore issues:  dropping from Doha only, or from WTO altogether?

Differences among WTO members also remained deep in relation to the other main sticking point: what should be done with the three other Singapore issues.   At the TNC meeting, Amb. Trojan of the European Commission stated, as part of his argument that there was no need for further debate on the Singapore issues, that “three out of the four will be no longer part of the Single Undertaking and consequently no longer part of the DDA and of no relevance whatsoever for the Round”

To some observers, Amb. Trojan’s  statement represented a shift in the EU’s position. Hitherto, the EU has only talked about dropping the 3 issues outside the single undertaking, but since there has been confusion as to the precise definition of the single undertaking, it has not been clear as to what the EU intended should happen to the issues during the period of the Doha programme.  By linking the Single Undertaking to the DDA, and stating further that therefore the issues have no relevance to the round, the observers believe that the EU is now resigned that these issues would no longer be the subject of any negotiations (towards new rules) during the Doha period.

Others have pointed out, however, that the perceived shift, if any, is only tactical.  In their view, the statement represents no shift in the basic strategy of the European Union since Cancun, which has been to claw back from its now famous Cancun offer to drop up to three issues out of the WTO work programme altogether.  It is now desperately seeking a mandate from WTO members to affirm the need to retain these issues in one form or another in the WTO, so that they remain issues for discussion for the time being, and can possibly be upgraded in a later round to negotiations for binding WTO agreements.      

Interestingly, Amb. Trojan’s statement was silent on the EU’s earlier  controversial suggestion for a plurilateral approach to be adopted in relation to the three Singapore issues. [Observers point out however that “removal from the single undertaking” can be a code for pushing for plurilateral negotiations and agreements].  It was equally silent on  the demands by the many other countries that these issues should be taken out of the WTO.

For most of the developing countries, the position on the three Singapore issues, as expressed in many fora within and outside the WTO, is for these issues to be taken out of the WTO completely.  These positions were restated at the both the TNC and HOD meetings.  In their statement, the LDC Group said that “as for the other three issues, we believe there is broad support for dropping them from the WTO work programme, and a clear understanding is required in the July package to this effect”.  Kenya also stated at the TNC meeting that “the other three issues should be dropped from the WTO agenda”.  The same position was expressed by Nigeria on behalf of the African group the following day at the HOD meeting. 

It is well known that several Asian countries, including Malaysia, India and Indonesia, also want all further work to be stopped in the WTO on the three issues.  The strength of feeling by developing countries on this position was underlined in the statement by Indonesia to the TNC meeting, which linked further discussion even of trade facilitation to a clear decision to drop the three issues from the WTO.  “On Singapore issues, we believe that to make progress, the July package must address these issues in totality.  We would have difficulties to undertake further work on one particular issue, while not making clear what will happen to the other three issues.  For Indonesia this would mean that Investment, Competition policy and government procurement would not just be out of the Doha Work Program, but would also be out of the WTO work program.  Only then can we contemplate undertaking negotiations on trade facilitation based on a consensus on the modalities.”

At the meeting of the TNC, Brazil proposed that in relation to the three Singapore issues, that “we make a formal statement to the effect that those issues not only will not be taken up in negotiations of the Doha Round in any form, but also that they will not be the object of any plurilateral approach in the regular programme of the WTO.”  This position against the plurilateral approach was reportedly supported by other countries such as Chile and Uruguay. 

Speaking to journalists later in the day, Amb Seixas Correa of Brazil explained that while Brazil may not have the same difficulties over the Singapore issues as other developing countries, it is committed to joining the position adopted by these countries on these issues.

The chairman’s statement and the future

General Council Chair Amb Oshima confirmed this persistence of  divergence among member countries on the three Singapore issues, when he spoke at the HOD meeting.  “As regards the remaining three Singapore issues, my consultations as well as the interventions yesterday, reveal the persistence of different views among Members concerbing their treatment,” he said.

“Fundamentally, some delegations argue for these issues to be retained on the work programme, for example, for further clarification, while others appear to be arguing in favour of eliminating these issues entirely from the WTO agenda.  My consultations have shown little, if any, movement in these positions.  While my consultations have led me to believe that there is a certain flexibility on at least some of these issues, I must confess that I have also sensed a gap between expressions of willingness to compromise, and a translation of this commitment into actual positions that would enable us to effectively establish the critical mass we need for an agreement on this part of the July package to materialize.

“Despite the very real time pressure we are under in all the areas of the July package, I believe that more work will be required to bridge the remaining differences, and to accommodate each others’ concerns on Trade Facilitation and the other Singapore Issues.”   To this end, he expressed the hope “that we will be able to build on the understanding already achieved in our previous work ... and that I will see increasing pragmatism on all sides”.

A measure of the time pressure mentioned above can be gleaned from the schedule towards the July General Council meeting outlined by Amb. Oshima.  He indicated that  he intended to circulate the first overall draft of the July text in two weeks (i.e. by 14 July).   Once the draft has been circulated, he and  WTO Director-General, Dr Supachai intend to organize an “intensive process of consultations in order to facilitate your efforts to resolve the outstanding issues and move towards agreement on the final text, leading up to the TNC and General Council meetings towards the end of the month”.

It remains to be seen whether the understanding hoped for by Amb. Oshima will emerge in time to support this schedule.  However, by the end of the HOD meeting which closed the two days of high level meetings, it was evident that the differences remained among the members on the two sticking points of what to do about trade facilitation, and how to treat the other three Singapore issues.

 


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