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TWN Info Service on WTO Issues (July04/27)

30 July 2004

Third World Network

 

Critical comments on revised text by developing countries

By Goh Chien Yen, Tetteh Hormeku and Martin Khor

An informal meeting of the heads of delegations was held on morning of Friday 30 July for delegations to give initial reactions to the revised July package.

In opening the meeting, the General Council chairperson Ambassador Shotaro Oshima said the meeting was to get initial reactions from members.  The agriculture negotiations chair, Tim Groser, said the revision reflected points where members felt changes were needed, including what delegates saw as an imbalance between the amount of detail in provisions for developed and developing countries.  Oshima said his consultations the previous day on NAMA had proved inconclusive, and the solution was to add a “headnote” to Annex B. 

The meeting heard criticisms of the text from many developing countries.

The revised text was issued in hard copy in the morning and most delegates saw it only at 8.30 am or later when they came to WTO.

Among the common criticisms were:  

(1)  The process, especially the fact that there is little time for the delegations to read and react to the text and to send it to their capitals and get instructions; 

(2)  The NAMA text, including the content of the so-called “vehicle” (new paragraph qualifying the Annex B of NAMA) and also the uncertain nature of this “vehicle” which was placed at the top (but not as part of) Annex B; 

(3)  In the new agriculture text, complaints about:  (a) the new blue box being retained (although the meeting of the Five Interested Parties was supposed to have agreed to it was supposed to postpone a decision on this for a later stage);  (b) the non exemption of developing countries from reduction of de minimis  domestic support;  (c) the proposal to discuss differential export taxes (para 49 of annex);  (c) the inadequate treatment of special products (especially the removal of exemption for SPs from expansion of tariff rate quota, which had been given in the first draft);  (d) the double standards in the text pandering to the demands of developed countries (including new demands) whilst the developing countries’ demands were not met and they are told to show ‘flexibility.’  

(4)  Other issues:  the need to improve on trade facilitation text;  the inadequate treatment of implementation issues.

 

The following is a report of what some of the developing countries brought up at the HOD meeting.

Brazil said that further revision of the text is needed.  The agriculture text misses crucial points. The NAMA vehicle, which was now in ‘no man’s land’ had substantive problems.  On the implementation issue, there are problems of interpretation.

India said this text is very far from the most balanced approximation of interests.  (It was responding to a previous speaker who had said the text was a balanced approximation of interests).  There was an improvement in services.  However, on agriculture, there is imbalance between specifics and generalities especially with regards to para 13-15 on the blue box.  The implementation language needs change.   De minimis support is is very important for developing countries and it is vital that de minims in developing countries is not subject to reduction commitment.  NAMA is not yet resolved and more work is needed.

Nigeria, on behalf of Africa Group, said the Group would need time to come back with substantive comments.  The initial comment is that there are problems in sections on agriculture, NAMA, implementation and LDCs. The NAMA vehicle should find a proper place in the text with a legally meaningful  status, either in para 1c or within the body of Annex B.

Kenya said there is no appropriate level of comfort as yet.   Under agriculture, our concerns have been ignored or included in inappropriate way.  On NAMA we have to think what to do with the ‘hanging language’ (of the vehicle) which has no parentage.  We should open the text to amend it.  Failing that, we must amend para 1c to reflect the correct status of annex B. There is need for a paragraph on the commodities issue (which Kenya and a few other Africa countries had championed.  There is need to improve the language on implementation, so that the TNC can report to the General Council by a certain date, and in turn report to the next Ministerial about the progress.  Trade Facilitation merits a closer look

Indonesia said it fully supported the statement made by the Minister of Argentina.  In our statement on the 19th of July, we stressed that for the July Package to be acceptable for Indonesia the text must be fair, do not undermine the Doha mandate particularly on S and D, as well as not prejudging the outcome of the negotiation. As is currently stands, the revised text has not fulfilled our modest expectation. For this reason, we will have great difficulties to accept a General Council decision based on this text. Our many concerns remain in agriculture (particularly de minimis and special products);  the vehicle for NAMA; trade facilitation and language on development issues.

We also have been asked by many members of the Group of 33 to flag the G33’s disappointment with the continuing unfairness of the treatment of special products is receiving in the revised text. The group will provide substantive comments in due course.

The Dominican Republic gave a lengthy account of the history of compromises and flexibilities shown by developing countries in their fight for special products, in contrast to the speedy way in which the developed countries’ needs were accommodated.  It said there is a long historical basis for special products and special safeguard measures. The G33 suggestions are very important and we have been working on this since 1997.  It started as a concept of a development box with a positive list approach for developing countries and this was then changed to a negative list approach upon requests on us for flexibility. The development box then became a list of products of strategic importance, then this changed to special products, on requests for flexibility.

This text totally weakens the S and D principles of the Doha mandate. Suggestions from developed countries from a few weeks ago on sensitive products and the blue box have been included and we cannot support it.  The first text stated that special products are not required to have expansion of TRQs but this has disappeared (in the new text). Who was consulted on this? The G33 proposal was taken out, we were not consulted. Are we still to be more flexible given that we have given in to flexibility already?  The main aim of the Doha mandate was to have a substantial reduction of domestic support. Aren’t we supposed to stop unfair trade practices? Why should we accept new measures that distort trade? Why are developed countries’ concerns answered even as development concerns are ignored?  This is unbalanced and immoral. This whole process is a dialogue between the deaf, only a few are heard.  Within a few weeks, the interests of a minority have been prioritised. We cannot support this in its current state.  There are more than a hundred developing countries in the WTO.

Argentina made a statement, on behalf also of Bangladesh, China, Brazil, India, Indonesia, Kenya, Malaysia, South Africa and the Philippines.  It was in reference to the inclusion of “differential export taxes” in a list of issues to be addressed (in para 49 of annex).  It said that export taxes and differential export taxes are essential policy instruments and nine out of ten Members applying these instruments are developing countries.  There are at least three main reasons why this is so:  First, because export duties constitute an important and reliable source of revenue.  It is also an instrument which can easily be invoked and administered.  Second, to reduce dependence on the export of commodities which are subject to volatile price fluctuations that have a direct impact on the income and livelihood of farmers and rural population.  Also it helps to promote downstream processing industries in a context of tariff escalation applied by maj0r importing countries. Third, for food security reasons, to prevent shortages of primary products and to address unfair redistribution of rents in cases of exchange rate distortions.

Within the rules of the WTO, export taxes and differential export taxes are legitimate policy instruments.  This clear fact was recently confirmed by a Panel in a ruling which established that such instruments do not imply fiscal contributions or revenue foregone by governments.  They cannot be considered as subsidies as defined under Art. 1.1(a) of the Subsidies and Countervailing Measures Agreement, nor, consequently,  as any form of export subsidies.

Considering that any change in the WTO rules on such a sensitive question would have required an explicit mandate by our Ministers in Doha and that such mandate does not exist, our delegations are not in a position to accept any inclusion of the question of differential export taxes in the negotiating process.  We maintain that export taxes and differential export taxes must continue to be legitimate instruments,  as any attempt to dilute the present rules would be detrimental to developing countries and incompatible with the Doha Mandate.

Malaysia said the agriculture text needed improvement.  It had difficulty with para 49 on export and differential taxes.  On NAMA there is room for improvement, we need to find a parking place for the vehicle and the passengers need to change.  It also found some problem with Para 1g on Singapore issues.

Cuba said it had concerns with the text.  There are positive aspects, for example the  services para.  However, the text on agriculture was not satisfactory.  The treatment of SPs does not take into account G33 requirements.  On NAMA there is a legal void on the vehicle and it should be in adequate language.   It supported Argentina on export and differential taxes.  Export taxes cannot be considered as a subsidy to export.

China recognized some improvements.  However it had some concerns.  First, the blue box and sensitive products cast doubts on meeting the mandate for reducing trade distorting measures and improved market access in negotiations.  Second, developing countries should not have to reduce their de minimis support. Third, the text on SPs is a step backward.  It also associated itself with Argentina on export taxes

Philippines said the ambiguity in para 41 on SPs, contrasts with the new para 31 on sensitive products where self-selection is defined; it is a pronounced contrast, and a backward move,  The requirement that developing countries also have to reduce their de minimis support is also a backward move. It was concerned about the text on the blue box. On NAMA, we need to be reassured on the vehicle.  It agreed with Argentina on export taxes.

At the end of the meeting, the General Council chairperson, Ambassador Oshima, said he was concerned about the sheer number of issues raised at the meeting.  Unless there was cooperation by the delegations, the negotiations could run out of time, he warned.

 


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