TWN Info Service on WTO Issues (July04/20)
28 July 2004
Third World Network
Dear friend and colleagues
UPDATE ON GENEVA SITUATION 27 JULY 2004: PROCESS AND ISSUES
Below is an informal report on the situation in Geneva as on the night of 27 July, which is the first day of the General Council meeting.
The report gives a brief update on the process, when the text is expected, etc.
It then gives a brief listing of aspects of the main issues which are outstanding and where there is considerable divergence of views among the WTO members.
With best wishes
UPDATE ON WTO GENEVA SITUATION REGARDING PROCESS AND ISSUES
By Martin Khor (TWN), Geneva, 28 July 2004
Here is a quick update on the Geneva situation. The General Council met formally for only a few hours on Tuesday 27 July morning to consider its regular items like setting up a working group for accession for Libya. Then it was suspended.
There were no formal meetings where all delegates could attend. There were informal meetings on a Green Room basis, on various topics like NAMA and trade facilitation.
Green Room meetings on agriculture have been suspended, as everyone is awaiting the results of the meeting of the Ministers of the FIP (five interested parties), namely US, EU, Brazil, India, Australia. This started reportedly at 430pm at the US Mission. It is expected to go on to late at night.
Before that meeting, the Ministers and officials of the G20 met to consolidate their own positions.
Because of the lateness of the FIP meeting, it is expected that drafting of the 2nd draft of the July package will be done only on Wednesday 28 July. The drafting on agriculture is to be done by the chairperson of the agriculture negotiations Tim Groser of New Zealand. The 2nd draft of the whole July package is now expected to come out late (night) on Wed 28 July or even on the morning of Thurs 29 July. This gives very little time for delegates to prepare their comments and possible amendments, and to send back to their capitals and get instructions and feedback.
It is also not known whether changes to the text of a substantive nature (and not just a cosmetic nature) will be allowed to the text. Or whether there will be a third and final draft.
It is expected that intense consultations, meetings, etc wil be held to consider the draft on Thursday and Friday, and possibly a Green Room would be held of some countries to consider the draft as a whole (as what happened in Doha and Cancun). And that an “informal” heads-of-delegation meeting will be held on Friday probably at late afternoon or evening for last comments and agreement to adopt.
There isn’t much optimism among the delegates of developing countries about an agreement being reached by Friday, because (1) there are still so many basic differences especially in agriculture, NAMA, trade facilitation, and even the three other Singapore issues (the last has not even been discussed in detail); (2) time is fast running out and there will be little time to consult with capitals; to consult with one another within the groupings like Africa Group, LDCs, G20, G33 etc; or to carry out final negotiations.
B. OUTSTANDING ISSUES
The following is a summary of some of the key outstanding issues and areas of differences.
(a) The detailed and generous treatment given to sensitive products of developed countries;
(b) the general and inadequate treatment given to special products of developing countries, which is especially adverse when compared with sensitive products of the rich countries;
(c) the new blue box in domestic support, to suit US needs;
(d) whether developing countries have to reduce their de minimis domestic support;
(e) adequacy or otherwise of S and D for developing countries;
(f) the “parallelism” in export competition, eg is the EU offer to drop export subsidies being adequately matched by other developed countries in export credits, state trading enterprises, etc.
(g) the demand by developed countries (especially the US) that developing countries significantly open their markets (through tariff reduction and through weak mechanisms for their special products and special safeguard) versus the insistence by many developing countries that they have to defend their small farmers, whose livelihood and survival needs are vital.
2. NAMA: The following aspects of the NAMA annex is very problematic for most developing countries:
(a) the “non-linear” formula for tariff reduction, in which there would be very steep cuts, especially for high tariffs;
(b) the requirement that developing countries would have to bind almost all their tariffs, and that the unbound tariffs be set at twice the applied rate, which means that these tariffs would be bound at relatively low levels;
(c) the sectoral tariff component, ie. that about 7 sectors are earmarked for fast-track tariff elimination. The text indicates that all countries have to take part, but developing countries want the scheme to be voluntary.
Most developing countries have expressed their unhappiness and indignation that the heavily criticised Derbez text has been recycled to Annex B of the July package. However the US, EU, Japan and other developed countries are insistent that Annex B be retained unchanged. Their only concession is that a “vehicle” be created to indicate that more work needs to be done on some of the elements of the Annex. The language for such a “vehicle” has not been agreed on, nor has the location of such a vehicle or statement (whether in the text or outside, for example as a chairman’s statement accompanying the July package) has not been agreed on, nor its legal status, so the developing countries are skeptical of the “vehicle” idea. They prefer to amend the Annex or para 1c of the main text to make clear that the many aspects of the Annex are not agreed on.
3. TRADE FACILITATION: The developed countries are very keen to launch negotiations. Developing countries in principle now accept negotiations can start, but they are insistent that this is done only if certain conditions are met. The battle is now over Annex D on modalities for negotiations. A group of developing countries (including Africa Group, LDC Group, India, Malaysia, Jamaica, Indonesia, Philippines, Trinidad and Tobago) have submitted a proposal to amend Annex D. The proposal includes the following modalities:
(a) Provision (by developed countries) of financial and technical assistance and capacity building including infrastructure development, shall be a a priori condition for developing countries to implement the results of negotiations;
(b) The issue of whether the Dispute Settlement System of WTO will apply shall be addressed in negotiations;
(c) The results will not come into effect earlier than the date of the harmonised non preferential rules of origin under the agreement on rules of origin.
(d) The developing countries also want to delete language that an agreement will be established, preferring that the negotiations will clarify and improve existing rules. The developed countries are generally not in favour of these proposals. Negotiations are still going on.
4. OTHER SINGAPORE ISSUES.
The text says that no work towards negotiations on the other three Singapore issues (investment, competition, transparency in government procurement) will be undertaken during the Doha Round. This implies that regular work will continue in the working groups even during the Doha period, and that negotiations could be initiated after the Doha period. Several developing countries want to change the language so that all further discussion on the three issues are dropped from the WTO altogether. This is likely to be staunchly resisted by the EU, Japan and others.
5. COTTON. The African countries had wanted a stand-alone treatment of cotton, but have now agreed that cotton would be treated within the agriculture negotiations. However the African proposal is that the cotton issue have its own measures and time-table and thus would not merely be subjected to what happens generally to agriculture. Among the African proposals are that:
(a) all forms of cotton export subsidies are eliminated by date of implementation of the Doha results;
(b) more than average reductions in domestic support on cotton, and complete elimination of all forms of trade distorting support on cotton by a specific year;
(c) a cotton agreement shall be implemented on an early harvest basis starting in 2005, and a date for total elimination of cotton subsidies shall be determined by the next Ministerial irrespective of progress in the rest of agriculture negotiations;
(d) technical and financial assistance to meet the needs of cotton developing-country producers
(e) a working group on cotton to be established.
However, most of these African demands are not acceptable to developed countries, particularly the US.
6. DEVELOPMENT ISSUES. A large part of the discussions have been over the July package draft language that the concerns of “small, vulnerable economies shall be taken into account, without creating a sub-category of Members.” Some developing countries were concerned that this would indeed create new definitions of developing countries which would enjoy special treatment whilst others would be left out. According to reports, this issue is now mainly settled. However, the text provides only weak treatment of and profile to the two major development issues --- S and D treatment and implementation issues. It is likely that the already unfavourable treatment to these “development issues” will remain or worsen.