TWN Info Service on WTO and Trade Issues (Dec05/15)

15 Dec 2005

More finger pointing, less negotiation, as Ministerial gets under way

Hong Kong, 14 December (Martin Khor) -- No progress seems to have been made in negotiations on market access issues of agriculture, NAMA and services after two days of the Ministerial.

Delegations are holding to the positions they had before Hong Kong.  "It's too early yet to expect anyone to move away from their known views," said one veteran trade analyst who has been to almost all the previous WTO Ministerials.

But this Conference has been marked by an unusual degree of finger-pointing and blame-making.  It is as if some of the major players already know that there will be no progress in Hong Kong in agriculture, and it is best to prepare the ground early to ensure someone else takes or at least shares the blame.  In particular, the EU Trade Commissioner Peter Mandelson, seems to have decided on an aggressive stance towards its partners in the so-called G4 (comprising US, EU, Brazil and India).

Throughout the day, some delegations were holding "confessionals" (a strange WTO jargon for private meetings at which frank talk is supposed to be held) with the facilitators appointed to the chosen subjects – agriculture, NAMA, services and rules.

In the late afternoon, the first "heads of delegation" (HOD) meeting was held, in which all members can participate.  Tonight, starting 10.30 pm, the second session of the "Green Room" (to which about 30 members are invited) will be held, and it may kick off the "real negotiations" as it will discuss development issues with agriculture and NAMA next and services.  The first Green Room meeting, on Tuesday night, discussed mainly procedural matters.

Similar to the practice in past WTO Conferences, the status of the Green Room meetings lies in the shadowy territory of happening and not happening.  Its existence was not mentioned at the opening ceremony, and officially no one confirms it is taking place nor who has been invited.

At a WTO media briefing this evening, three journalists asked about the Green Room, whether it would be held that night, and who would attend the meeting.  The WTO official was careful in his answers.  "Should the Green Room exist, it will be held at that time."   "In meetings such as this, should they exist, each group with be represented."

At this afternoon's HOD meeting, chaired by Hong Kong's Commerce Secretary, John Tsang, three of the facilitators (appointed by Tsang to assist in informal consultations) reported on their work till then.

The facilitator for agriculture, Kenya’s Trade and Industry Minister Mukhisa Kituyi,
said there was no advance so far but members he met were willing to make progress, according to a trade official.  He added that many want to see an end date for export subsidies.  Views were also given on market access, trade-distorting domestic support, special products, special safeguard mechanism and sensitive products. On cotton, Kituyi reported that all want to address this problem, but differences remain on how to do that.  A large number of Africa countries are interested in this issue.

The facilitator for NAMA, Pakistan Commerce Minister Humayun Khan, reported that from the consultations he gauged that there were differences among members on the level of ambition and on the relation between flexibility and ambition.  Members are still holding to maximalist positions.  Members have to move now, otherwise there would be a more difficult task later.

Trade Minister of Guyana, Clement Rohee, the facilitator for development specific issues, said there was interest to focus on the LDC related special and differential treatment proposals in Annex F of the draft text.  Of these, the main focus has been on the proposal for duty and quota free market access for products from LDCs.   Though many matters raised were related to his mandate, some were more related to NAMA and agriculture (referring in particular to preference erosion, a very divisive issue) which he could not deal with.  He said that from the discussions, he concluded that a breakthrough on the issue of duty and quota free access for LDCs can come only at the highest political level.  Members have certain sensitivities.  There is need for progress but there are also legal difficulties to resolve, to achieve secure access.

Earlier, in the morning, the first agriculture meeting open to all members was held.  It discussed what members considered to be the tasks for ministers. Because members had different positions, they came up with conflicting suggestions. Kituyi reported that he had already met the US, EU, four cotton proponents, G-10, G-20, Cairns Group and Japan and that he would meet others. He said now it is for ministers to show leadership and take responsibility and calculated risks.  He urged members to negotiate among themselves because they do not want attempted compromises to be imposed on them.

During the discussion, many issues and suggestions were made.  These include the need to now focus on flexibilities in market access particularly for developing countries; to fix the end date for export subsidies and deal with the ambition level for market access and domestic support; to find a balance between flexibilities and ambition, and  "parallelism" in eliminating export subsidies and disciplining other export measures; and developing countries' issues such as cotton, and market access for tropical products and crops produced as alternatives to narcotics.

Some countries (including Pakistan, Grenada, Uganda, Uruguay, Argentina, Costa Rica) wanted an agreement on an end date for export subsidies with the understanding that disciplines on export credit, food aid and exporting state trading enterprises would also have to be agreed eventually.  

On the market access issue, some countries (New Zealand, the US) stressed the priority they give to market access, and some wanted the level of ambition (the tariff reduction formula) settled before the flexibilities are addressed.  However, this view was opposed by many other countries (including Venezuela, Canada, Kenya, Grenada, the Philippines, Uganda, India).  They stressed the need to focus on flexibilities first, so that countries can be confident about making ambitious commitments more generally, or because they see flexibilities as important for developing countries.

A group of a dozen Latin American countries (represented by Bolivia and Costa Rica) called on developed countries to give duty-free and quota-free market access to tropical products and alternatives to narcotics from developing countries. The EU stressed the need for balance (the tariff reduction formula and flexibilities are linked and should be discussed together); and parallelism (the end date for export subsidies cannot be agreed before the issues of export credit, food aid and exporting state trading enterprises are settled).

Meanwhile, a war of words continued between some major delegations, with an eye to avoiding blame if the Ministerial is found to be a failure. The EU Trade Commissioner continued his aggressive finger-pointing at a morning press conference.   Obviously answering to charges that the EU’s poor offer on market access in agriculture is mainly to blame for holding back progress, Peter Mandelson said the EU had made substantial offer in agriculture, and called on others to engage seriously with the EU on its offer.

"I'm sorry for the brinkmanship of the large agricultural exporters, who are standing away from serious dialogue with us.  In these negotiations, there is not enough on the table to negotiate about."  Mandelson said there was an insistence during the previous night's Green Room that there should be focus only on agriculture.  "Let's realise unless we negotiate across the board, we'll go no further in agriculture.  We need to know what we're getting out of the Round for what we're putting in."

He also highlighted the "development package", saying that the LDC package is now in some trouble, as there is resistance among some members on the scope of "duty and quota free", coverage of eligible countries and product coverage, and the issue of making access legally binding.  [According to diplomatic sources, some developed countries are reluctant or unable to accept duty free rice and textiles from certain Asian LDCs].

At a meeting with NGOs, Brazil's WTO Ambassador, Clodoaldo Hugueney, said that the G20 had not seen movement in agriculture from its partners, so it was not justified for the G20 to move.  Asked to comment on the charge by Mandelson that large agricultural exporting countries were posturing rather than negotiating, Hugueney said that the proposals from the EU and US would not result in cuts in their real levels of total trade-distorting domestic support.  "We must see real cuts in domestic support in this Round.  The question is whether they want to negotiate, or just posture and spin.  For two years we have insisted on negotiations in agriculture.  Instead of considering our position seriously, they make speeches and declarations."    

The issue of food aid in the context of the export competition pillar of the agriculture negotiations has become a hot issue in Hong Kong, and a flashpoint in the blame game as to why the Conference is unable to come up with an end-date for export subsidies.

This issue became more controversial after the publication by the Financial Times on the opening day of the Conference of an advertisement placed by the World Food Programme on how the creation of disciplines on food aid by the WTO would adversely affect the situation of world hunger.  This drew negative comments from many diplomats, which said that a UN agency should not be so publicly and directly involved in lobbying on a sensitive WTO negotiating issue.

The EC, on the defensive for not agreeing to name an end date for export subsidies, continued to press the US on the use of its food aid as an export subsidy, saying that dumping of surpluses under the cover of food aid is an abuse of the concept.  In a "fact sheet", it suggested that a WTO discipline be introduced so that food aid be donated only in "untied" cash for free procurement.

The EU fact sheet charged that the US donated $2.6 billion of food aid in 2003, all procured on the US market and provided with US logistics as "in-kind" food aid.  With this kind of tied food aid, up to 60% of the budget stays in the donor country (going to agribusiness companies, logistics and shipping companies).   According to the EC, for the US, food aid accounts for 20% of wheat exports and over 50% of skimmed milk powder exports, and the US proposed to exempt over 85% of global food aid from future WTO disciplines.  "The EU will not talk about end dates for phasing out export refunds without parallel commitments from others," said the fact sheet.

On its part, the USTR office came out with its own fact sheet arguing against the EC's "cash only" proposal, which it said would lead to a decline in food aid.  Taking a swipe at the EU, it said that overall EU food aid in cash and in kind declined after the Commission and member states moved to "cash only" food aid in 1996.  It quoted OECD data that the EU and its members normally provided 2 to 5 million tons of cereal aid in 1970-96, but that EU food aid rarely exceeded 2 million tons after 1996, and that in 2002 EU food aid was 1 million tons.