TWN Info Service on WTO and Trade Issues (Jul05/9)

15 July 2005

These negotiations are in trouble', warns Supachai

On 8 July, there was an informal heads of delegation (HOD) meeting at the WTO, at which the WTO Director-General Supachai Panitchpakdi warned that that "progress is nowhere near sufficient in terms of our critical path to Hong Kong," and that "these negotiations are in trouble."

In a separate statement, the General Council Chair Ambassador Amina Mohammad of Kenya said that it is unlikely that members will have agreed elements of text by the end of July in any of the main areas of the negotiations, or in other areas of the Doha Work programme.

Below is a report on the HOD meeting. It was published in the SUNS (South- North Development Monitor) on 12 July.

With best wishes
Martin Khor


WTO Director General warns the negotiations are in trouble

By Kanaga Raja, South-North Development Monitor, 12 July 2005

-- The WTO Director-General Supachai Panitchpakdi warned members at an informal Heads-of-Delegation (HOD) meeting Friday that "progress is nowhere near sufficient in terms of our critical path to Hong Kong," and that "these negotiations are in trouble."

In his assessment of the state of play in the negotiations on the Doha work programme so far, Supachai said that there is still a "slender chance of averting a crisis, but every hour must be made to count."

Expressing regret that progress up until today remains far from sufficient, Supachai called on members to immediately change gears in the trade negotiations.

In a separate statement to the HOD meeting following the Director-General's assessment, the General Council Chair Ambassador Amina Mohammad of Kenya said that it is unlikely that members will have agreed elements of text by the end of July in any of the main areas of the negotiations, or in other areas of the Doha Work programme (see SUNS #5839).

Meanwhile, trade officials also confirmed that the General Council meeting starting 27 July would only assess the state of the negotiations. Ministers are not expected to attend the meeting, unlike the situation in the July 2004 General Council meeting.

In his statement at the HOD meeting, the Director-General first gave his impressions of the G8 summit in Gleneagles (6-8 July) that he had attended, saying that the leaders there put much emphasis on the vital role of trade in development, especially in Africa.

"Frankly, it is sobering to pass from the high level of expectations and hopes that I have encountered in Scotland to the reality of the negotiating process here in Geneva," he said.

Against this background, he recalled the numerous warnings that he issued at successive TNC meetings about the state of play in the negotiations since the beginning of the year.

In March, he sounded a note of caution - that "we were not yet in a crisis mode, but that we certainly needed more sense of urgency". This message did not seem to be heeded, he said, adding that in April, he warned that "we were very close to a crisis".

"I said that, at the current pace, we were not going to make it by July, and possibly not by December. I said I was still not pushing the alarm button, but that my finger was hovering over it. I asked you all to prove me wrong."

While the May TNC meeting took place against a somewhat brighter background, substantive progress continued to be rather limited. Supachai said that this was still not good enough, and stressed that members absolutely had to make concrete progress across the board.

"So, where have we got to since then? Has the picture improved? I regret to say that the progress up until today remains far from sufficient, and I regret even more that my earlier warnings seem more valid than ever," Supachai said.

Supachai went on to briefly review the state of progress in some key negotiating areas:

* In Agriculture, some progress has been made. While the AVE (ad valorem equivalents) issue has been unblocked, this has not yet sufficiently galvanized the negotiations on the most fundamental element of the market access package, the tiered formula for tariff cuts, although some progress has just been made on other aspects of the market access pillar. Some progress has also been made on domestic support and, to a lesser extent, on export competition. Of course, it remains important to advance work on all three pillars, although some sequencing is necessary for that to happen.

* In the NAMA (non-agricultural market access) negotiations, there were some hopeful signs in June, but now positions appear to be hardening. "I fear that the obvious constraint here is still the lack of progress on Agriculture."

* In the Services negotiations, while the situation has improved since the May TNC in terms of numbers of initial and revised offers, the quality of the offers continues to be poor. It remains for the membership to see how to take these negotiations forward to Hong Kong.

* In the Rules areas, including Trade Facilitation, "we still need to consolidate the wide range of ideas on the table to prepare the ground for further progress in most areas. That said, some useful progress has recently been made on Trade Facilitation and in the RTAs (regional trade agreements) track in the Rules Group."

* In the work on S&D (special and differential treatment), there is some hope that progress is possible on the Agreement-specific proposals, starting with those submitted by the LDCs, and "I certainly hope that some can be harvested soon."

"It is true that some progress has been made in certain areas of the negotiations. But let us be clear: this progress is nowhere near sufficient in terms of our critical path to Hong Kong, and it is not being seen in the key issues which would help unblock progress across the board," Supachai said.

"Overall, there seems to be a renewed sense of blockage and frustration. We are also seeing a resurgence of sterile debate about process, rather than negotiations on substance."

"I am afraid we have to face the facts. These negotiations are in trouble," Supachai warned, noting that very little of the political support which has been shown at successive Ministerial meetings has been turned into concrete progress in the negotiating groups. Everyone has a generalized commitment to progress, but when it comes to the specifics, the familiar defensive positions take over.

However, Supachai said that there remain some limited but important possibilities of renewing the momentum this month. The Chair of the Agriculture group has produced a paper which clarifies the areas where movement is needed, and the Chair of the NAMA group was also expected to issue a similar paper on Friday.

A number of Ministers will be meeting informally in China (12-13 July), and they will be faced with some key questions, Supachai said, adding, "we look to them for clear guidance on crucial political issues, although we are all aware that it is only here, in a fully inclusive forum, that real convergence can be reached."

He said that he has not given up hope of substantive progress in areas such as Agriculture and NAMA by the end of this month, though clearly "we should not expect a package of formal decisions like last July." At the very least, there is a need to establish a good base for the intensive work that will surely have to be done in the last quarter of the year.

Supachai stressed that it is important to keep in mind that the Hong Kong Ministerial is not far away in that from the beginning of September, members will have 13 weeks to prepare it.

Ambitions remain high for significant results across a broad range of issues by then, and this is necessary if members are to have a chance of finishing the Round in good time, Supachai said, adding, "Hong Kong must take us into the last lap of the negotiations. This in turn means that Ministers have to be presented with a manageable set of key decisions to consider there. If we go to Hong Kong with a Christmas tree, no-one will be happy with what they get."

"So, we need to change gear in the negotiations, but even more to change our mindset and our approach," Supachai emphasized, noting that the time is long overdue to pass from identifying to solving problems; from the technical to the political level; and from generalities to specifics.

"The crisis that threatens is all the more menacing because it is not a crisis of dramatic divergences or headline-grabbing conflict - it is a crisis of immobility. I think there is still a slender chance of averting it, but every hour must be made to count," he concluded.

In her statement at the HOD meeting, Ambassador Amina Mohammad, referring that it is unlikely that there would be agreed texts at the July General Council meeting, said, "This situation is most regrettable".

Although July has been seen as an important marker leading up to Hong Kong, "our main focus must remain on the Ministerial Conference itself," she said.

Between now and the 27 July General Council meeting, she envisaged that work will continue intensively.

The Director-General and herself will continue to meet with delegations in various formats and also be in contact with Chairs of negotiating groups and other bodies.

The 27 July meeting will take stock and register progress on the basis of all work done since July 2004 and of the reports from various bodies - including from the chairs of the negotiating groups, she said.

At that meeting, the Director-General will provide a further assessment on the progress of the negotiations in his regular report as Chair of the TNC, taking into account individual reports from Chairs of negotiating groups which will be submitted to the meeting of the TNC to be held prior to the General Council.

The Council will also receive a report from the Director-General on his consultative process on all outstanding implementation issues under paragraph 12(b) of the Doha Ministerial Declaration.

It will also receive reports on the Work Programme on special and differential treatment from both the Chair of the Special Session of the Committee on Trade and Development and from the Chairs of subsidiary bodies to whom a number of S&D issues were referred in 2003. Also, the Chair of the Dedicated Session of the Committee on Trade and Development will report on progress in the Work Programme on Small Economies. The Council will, in addition, receive a report from the Chair of the TRIPS Council on the implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health.

"Our objectives for Hong Kong are clear. We must agree to modalities in the key areas of the negotiations, if we are to close the round in 2006," the General Council Chair stressed.

She added that it is essential that members work towards an ambitious and balanced outcome at Hong Kong. This must include not only negotiating modalities for Agriculture and NAMA, but also real progress on substance and process for market access and rule making in Services, significant and substantial progress in Rules and Trade Facilitation, and tangible development gains in accordance with the mandate of the DDA.

At the same time, she said, members mustn't forget other elements of the Doha work programme on which there must be concrete progress by Hong Kong.

These issues range from the Work Programme on Small Economies to the Working Groups on Trade, Debt and Finance and on Transfer of Technology, and from TRIPS and Electronic Commerce to the work on environment in the regular Committee on Trade and Environment, as well as the commitments members undertook in respect of least-developed countries.

"Although developing countries have thus far been very forthcoming in agreeing that attention should be focused initially on what many consider to be the key areas for the negotiations as a whole, they have put us on notice that they wish to see progress on these other elements by Hong Kong. We must ensure that the development dimension of the negotiations yields concrete results in accordance with our mandate."

"I would also like to recall that last July we extended the Doha moratoria on TRIPS non-violation complaints and e-commerce duties until the Hong Kong Ministerial, and we will need to take these issues also into account in the preparation of any text or texts in the autumn," she added.

The General Council Chair reiterated that members have 13 weeks from the beginning of September until 1 December, which is the scheduled date of the final General Council meeting prior to the Ministerial, by which time "we should aim to have a broadly agreed text to present to Ministers."

"Let me emphasize that we are all now looking to conclude the negotiations in 2006, using the Hong Kong Ministerial as a platform to take us into the endgame. Failure to get there will be a major setback for growth, development and the multilateral system. You, the Members, will have to decide whether that is an option," she stressed.

According to trade officials, several African countries including Benin, Rwanda, Zambia, Djibouti and Uganda spoke following the statements by the Director-General and the General Council Chair.

These countries said that for them, a successful outcome to the negotiations is essential and that they cannot afford a failure. They stressed that it was important that political intentions be turned into concrete progress.

Benin voiced concerns that the issues of development and cotton were not making the progress that was needed to be made.

Trade officials also said that they did not expect many ministers to attend the General Council meeting on 27 July. They said that the situation was not similar to last year when about forty trade ministers attended the July General Council meeting that culminated with a binding General Council Decision.

They also indicated that the 27 July meeting would be more of an assessment of where members stand, identifying where the areas of convergences and divergences lie and what work programme should be undertaken to bring about greater convergence on the issues.