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SUNS Report at conclusion of July Package negotiations

Below please find a report immediately after the conclusion of the WTO Geneva Negotiations, by Chakravarthi Raghavan, Chief Editor of the South-North Development Monitor (SUNS).  It was published on 3 August 2004 and is reproduced here with the permission of SUNS.

Permission to reproduce this document should be sought from sunstwn@bluewin.ch.

More reports in the SUNS series on the July package will also be circulated in future TWN Infos.

 

With best wishes

Martin Khor

TWN

 

 

WTO agrees on framework package on Doha talks

By Chakravarthi Raghavan, Chief Editor, SUNS

Published in South-North Development Monitor (SUNS) No. 5628, 3 August 2004

Geneva, 2 August (Chakravarthi Raghavan) - After a week of almost day and night meetings and small and ‘green rooms’ negotiations, the WTO General Council adopted a decision after midnight on 31 July with a package of accords in annexes that would enable the Doha negotiations to continue beyond end-2004, but with no new date set, for completing the detailed work and negotiations to conclude the talks.

There were many metaphors and allegories being thrown around in several media briefings and remarks on the sidelines from some of the key personalities to imply that the WTO and the talks are back in swing, after the collapse at Cancun.

The Doha negotiations are still to recover from the collapse at Cancun, and it is not at all clear whether the negotiations and the WTO have secured a new lease on life or still in intensive care and need a long period of convalescence, with no certainty that the patient can come back and resume active life. Very much depends on the willingness of the majors.

A few dates are mentioned in the decision, including one for the next 6th ministerial meeting in December 2005 at Hong Kong, but an institution that has missed so many deadlines (including the GC chair’s “drop dead” deadline of 30 July to complete the work at the General Council) saw no credibility left for itself to set new dates.

To use a different metaphor, the Doha negotiations launched (in the shadow of 9/11 events, with Zoellick and Lamy quickly joining hands to use it to launch a new round of trade negotiations and meet in Qatar), never got off the ground.

It was just kept marking time in Geneva, while on the initiative of the majors, limited consultations and mini-ministerials were held around the world, for the WTO to steam-roller its way through, as in the past.

This did not really succeed, and the provocative US-EC framework on agriculture, just on the eve of Cancun, presented almost in a take-it-or-leave-it basis, brought together the G20 alliance which, with other developing country groupings stood firm at Cancun.

And unable to get their way through on agriculture, the US and EC collapsed that meeting and, after a few months when its reverberations had died down, worked in parallel to divide the developing world and the coalitions.

They could not break the G20, and only partially made some headway with the G90.  After the elections in India, they again made overtures, but new government and its trade minister, who just ran for elections and was elected (and a political weight in his own right inside the Congress-led United Progressive Alliance) and not an appointee minister (like Zoellick or Lamy), came out stronger behind the G20. And India also succeeded at Geneva to bring about some coordination among the coordinators of various groups - G20, G33, LDCs, African Group, the ACP and the somewhat amorphous G90.

In the efforts to restart the talks, and get their way on agriculture, the US and EC were forced to recognize that without talking directly with Brazil and India (for the G20) the WTO talks would not move forward.

And in the talks (at Sao Paulo, Paris and Geneva), it became clear that the key developing countries would rather have no deal than a bad deal, and would be quite willing to walk away. But with their own terms soon ending, Zoellick and Lamy needed accords to ensure that they did not lay down office with another disaster.

If they had not compromised, the Geneva talks would have collapsed like the ones at Seattle and then Cancun (since India and Brazil would have been willing to walk away from the talks); and Lamy and Zoellick in their journey from Geneva would have faced, not another shipwreck or train derailment, but the equivalent of an air crash which with modern highspeed planes often doesn’t leave survivors.

India and Brazil, so to say, gave them a safe journey back home, perhaps through revolving doors into some lucrative private sector jobs.

Despite all the hype about the Geneva General Council decision and accords, the real negotiations and their completion are a long way off, and none of the principals USTR Robert Zoellick, EC Commissioners concerned, Pascal Lamy and Franz Fischler would be in office after a few months. And the WTO head also is due to demit office on 31 August 2005.

No one can seriously believe that the talks can restart in September, perhaps not even till about middle of next year; in this scenario, the completion of the negotiations and the start of implementation could, with the best of good intentions, may at best be towards end of the decade.

Any event, it is clear that real further work even on the frameworks has to await the outcome of the US elections and the change-over at Brussels. And in Agriculture at least, no change or start of a new implementation period is possible until 2007.

Trade negotiations and multilateral talks are not held in isolation, uninfluenced by many other elements. The WTO talks face several uncertainties related to the US elections, change of guard at Brussels (where the new EU commission and commissioners are to take charge by November), and even more the many uncertainties and imponderables in the world’s political economy, related but not solely to the situation in Iraq and its effects, on political and security questions, and economic ones too via energy prices.

The folly of such negotiations, and evolving texts that are to be quickly scrutinised and adopted was shown Saturday night when, after the draft decision and annexes for an informal Heads of Delegation meeting, and then formal General Council adoption, two serious errors (omitting detailed changes made in the agricultural text) were discovered, and the start of the night session held up until corrigenda could be issued before the meeting began.

If an alert Indian negotiator had not spotted it in time for a corrigendum to be issued, “all hell would have broken loose” - as he put it.

This is the result of loose and last minute drafting forced on ministers and delegations, most of whom even now have no legal experts with drafting experience by their side. Such loose language has been made use of by the WTO’s Star Chamber (DSU) in many rulings to supply ‘negotiating context’ or ‘intent’, and hand down new rules, claiming some rights as socalled ‘treaty interpreters’ (a role the Marrakesh Treaty specifically reserves exclusively to the Ministerial Conferences)!

A saving grace is the para 3 of the General Council decision: “The General Council agrees that this decision and its Annexes shall not be used in any dispute settlement proceedings under the DSU and shall not be used for interpreting the existing WTO Agreements.”

This provision was agreed at the meeting of the ministers of the five interested parties (FIPs) negotiating the agriculture text, to ensure that those who have succeeded before panels are not thwarted of this (by a panel or appellate body using it as indicating the conduct of parties subsequent to the accord to show their intent and meaning). At the suggestion of Pascal Lamy himself it was agreed to carry over this general rider into the entire General Council decision.

Under the Marrakesh treaty and its Agreement on Agriculture, the implementation period expired in end 1999, and even continuance of the reform at the same level would have meant a second implementation period of 2000-2004. This has been missed, and in fact there has been some augmentation of subsidy and support.

Since Seattle, “we have lost an entire implementation period of five years, and we will lose another 4-5 before any new reforms can take shape and bite”, one of the G20 negotiators commented.

A new reform process, being promised in the General Council decision, cannot really start before 2007 (the US Farm bill is up for renewal in 2006, and all the enhanced agriculture support under the present law will continue till then) and the CAP reform and changes cannot come before 2007.

Overall in Agriculture, the developing countries have managed to resist the attempts of the rich nations to set even more uneven and unjust obligations on developing countries and force the opening of the developing country markets, while the rich nations increase under one guise or another their domestic and export subsidies while shielding their producers from import competition. The developing world has not won this fight, but can continue the fight, provided they remain united.

However, in industrial goods sector (the NAMA negotiations), developing countries have lost considerably, with the Cancun Derbez text incorporated as the framework for modalities. Only a last minute political solidarity support from India to the African group (who themselves at an early stage seemed divided) in the green room on Saturday, forced a change in the Annex B (which the US, EC and the WTO secretariat had earlier refused to change), with a first paragraph enabling further negotiations, though on the specifics, of the various elements of a non-linear harmonising approach.

The entire neo-liberal, socalled ‘free trade’ approach in NAMA for a relatively low tariff (5-10 percent is often mentioned) is pushed as a key to benefits of free trade. But, there is now a wealth of empirical evidence to show that such a kind of liberalisation does not work but de-industrializes a developing country, and only a measured and controlled pace of liberalisation after establishing capacity will bring benefits.

It is perhaps time for trade establishments and negotiators (and perhaps even the media and alternate media in developing countries) to recognize that the WTO is not about free trade or freer trade or fair trade; it is a neo-mercantalist trading system, where the powerful can try to enforce their will or at least resist giving ground.

In services, there has been some advance and focus. However, the developing countries will have to carefully formulate and put their offers on the table (for the request/offer negotiations ahead), coupled with demands for real market opening and capacity-building for themselves in the two modes where they have some comparative advantages (movement of natural persons and cross-border supply through internet etc). Otherwise, they may throw away their advantage. They need to eschew any rosy-eyed views about benefits of liberalisation and not buy the doctrines of financial liberalisation (where invariably developing countries have been destabilised).

The General Council decision has provided some hortatory and declaratory comfort to the developing countries (like India, Brazil, and several African countries) who have been raising the Implementation issues, as well as the Special and Differential Treatment (S&DT) issues, and the overall umbrella issue of Development.

However, there is no clear and focussed activity to realise these promises and commitments of Doha.

On S&DT, the Committee on Trade and Development in Special Sessions has been asked to expeditiously complete the review of all Agreement specific outstanding issues and come up with clear recommendations by July 2005.

On Implementation, para 12 of the Doha mandate has been reiterated and a road-map of sorts set. The DG has been asked to intensify his consultations on all issues in para 12 (b) of the Doha Mandate, including on issues relating to extension of protection of geographical indications of origin. He is asked to appoint the chairpersons of WTO bodies, as his ‘Friends’ and/or hold dedicated consultations and report to the TNC and the General Council by May 2005.

Nevertheless, the reality is that neither the US nor the EC, nor the WTO secretariat can be depended on to push these issues; and the statements of Dr.  Supachai and his top officials on these issues leave some doubt as to how far their heart is in it. Any event the US and EC don’t favour it, and would rather they continue to remain buried.

In agriculture, the framework accord in Annex A, of principles and objectives, with many operative details to be negotiated provides a lever which the developing countries can use. Those with defensive interests (like India, Indonesia, China etc) can use it to safeguard the livelihood and interests of millions of poor and marginalised farmers and tackle rural poverty and deprivation (provided they also have the political will to do it through domestic policies).

And those with efficient and competitive farming sectors (like Argentina, Brazil etc) though they too have large marginalised or landless rural poor that they need to tackle, could also use the framework to forge modalities that would give them a more level playing field in international trade.

On cotton, despite all the claims made at the end by the WTO officials and the high visibility given for supposed prioritisation of this issue inside the agricultural talks, the US has clearly won over the four west African cotton producers (for what real quid pro quo is not clear). The language of the agriculture annex is such that while product specific AMS support (Aggregate Measure of Support plus permitted de minimise plus the Blue box payments) is to be capped in aggregate, and reduced in overall terms, there is no requirement for advance payment on US cotton subsidy, by cuts at product level of these supports.

When the talks are concluded, then there is to be first instalment of the overall cut of 20% , and this it claimed (fourth indent of para 9) “will result in reductions of some product specific support”. It is at best a hope or prediction and only for “some” products.

In fact the many loopholes provided, coupled with the new blue box for the US - though subject to negotiations over the four criteria mentioned in para 13 of the agriculture annex, and additional criteria - would still enable the US to shift most of its counter-cyclical payments on commodities and those now ruled to be ‘trade-distorting’, and stave off any cuts until the talks end with an agreement and end date.

The reality of power that still prevails, though somewhat checkmated by the alliance of the G20, is that in agriculture no real change or reform or reduction of subsidy and support can be possible in the US, even if the administration supports it, before the Farm bill comes up for renewal in 2006.  And in the EC, the CAP reforms are set in place and can’t be changed until at least beginning of 2007.

And both the US and EC will still attempt to carry out any changes, needed in their domestic interests and needs, and then try to write it into the WTO and gain some benefits in return from the developing countries.

While the developing countries, and their new actors, can justly claim credit for staving off the attacks from the US and the EC, they still have a long battle ahead, and the hype coming out of some of the capitals and media may be premature.

As Mr.B.L.Das, former Indian Ambassador to GATT, puts it, the developing countries have been engaged in hectic activities during the last three months, from May to July. They spent a lot of their energy and resources, including financial resources.

The best that can be said of the final result is that they have been able to stall the forceful moves of the developed countries to deepen the foundations of their domestic support in agriculture, while at the same time forcing open the markets of the developing countries in agriculture and industry.

Thus the developing countries have been successful to some extent in defensive moves and strategies. But they have not been able to make any headway in the areas of their priority. The ‘special products’ in agriculture and ‘special safeguard mechanism’ for the developing countries have no doubt been recognized formally in the WTO and that may give some comfort.

But ‘sensitive products’ for the developed countries have also been formally recognized and that is a pernicious seed for further deepening and extending the protectionist policies and practices in the developed countries.

In the industrial products area, the elements that may prise open the markets of the developing countries have been explicitly defined in Annex B. All that the developing countries have succeeded in is introducing a stipulation that the specifics of some of these elements will have to be negotiated further.

Their intense effort for the last few months and their resolute moves during the last few days have in this manner resulted in preventing the developed countries from putting their ideas in Annex B as fully accepted. But they have not been able to bring in their own priorities and concepts in an explicit and specific manner in Annex B.

The three Singapore issues have been removed from the negotiations during the work on the Doha negotiating agenda. But negotiations on trade facilitations have been started. All these four were on the agenda of the major developed countries and had been opposed strongly by the developing countries.

The developing countries have succeeded to some extent in stopping the steam roller of the major developed countries. The developed countries had raised their claims high and fought hard with all sorts of strategies at their command as in the past.

They thus made the developing countries spend their energy and effort in lowering these claims rather than in pursuing their own interests and priorities.

It leads us to ponder over the ethics of negotiations of the major developed countries. They just put their demands high and resort to various strategies, both political and economic, to beat the opposition of the developing countries.

Thus the developing countries have to spend all their resources merely to make the developed countries come down somewhat from their peaks of demand. This leaves very little opportunity and chance for the developing countries to pursue with their own positive interests in these multilateral negotiations. - SUNS5628

[c] 2004, SUNS - All rights reserved. May not be reproduced, reprinted or posted to any system or service without specific permission from SUNS. This limitation includes incorporation into a database, distribution via Usenet News, bulletin board systems, mailing lists, print media or broadcast. For information about reproduction or multi-user subscriptions please contact: sunstwn@bluewin.ch

 


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