TWN Info Service on WTO and Trade Issues (Dec05/25)

19 December 2005

Below is a report on the meeting of the heads of delegation (HOD) on the afternoon and night of 17 December, which discussed a revised draft of the Ministerial Declaration.   On 18 December, another draft was issued and a final HOD meeting was held.

We are sending this report to you as a reference on the events of the Ministerial. It was published in TWN Hong Kong Update No. 6 during the Ministerial.

With best wishes
Martin Khor

Heads of Delegation meeting, 17 December: Developing countries voiced disappointment over revised draft

Hong Kong, 17 December (TWN)  - At a long heads-of delegation meeting on Saturday starting in the late afternoon and ending only at midnight, many developing countries voiced their disappointment overall with the revised draft Ministerial Declaration, which was issued before 2 p.m.

The developing countries expressed many concerns and pointed out many shortcomings in the text. They felt that there was too little development in the text and too little real SDT elements, according to a delegate who was present at the meeting. Some felt that development only appeared as a token, as an attempt to disguise the offensive demands of the rich countries, and disarm them so that they could accept the parts of the text that were problematic to them.

On agriculture, almost all speakers (from developing and developed countries) stressed the need for an end-date for export subsidies, many said this should be 2010.  Some advocated a linear cut within the market access tiers of the formula.  Many developing countries (including Africa) said the SDT provisions are not clear enough (Africa).

On NAMA, many developing countries (Africa in particular) said there was too little development in the section. The ACP Group disagreed with the mention of the Swiss formula in para 14 and wanted that paragraph bracketed.  On the para 8 flexibilities, many developing countries (such as Brazil, India, Africa) wanted more clarity in the text that these must stand alone and not be a trade-off with the formula.  

The Africa Group also demanded that para 6 (of NAMA July framework) countries should be exempt from tariff reductions (Africa) and brackets on para 18 and 19 of the Hong Kong text should be removed.

On services, some developing countries still felt that there was too little development in the text and that the annex was still a threat to the national objectives of developing countries. Some countries also rejected the text because of the way it had come into existence and been brought to Hong Kong.  Several developing countries said (some strongly) that the text must still be improved and that the brackets in paragraph 25 of the main text (on services) should to be maintained.  However, several countries were ready to .accept the new Annex C and drop the brackets (Australia, Peru, Canada, Japan, Korea, India, Hong Kong, Taiwan, Panama)

Brazil spoke second on behalf of the G20.  It stressed the need for removal of distortions in agriculture and considered the progress insufficient. The G20 made a positive contribution to the negotiations in substance and process. The G20 position is balanced and covers the middle ground. In Hong Kong, the G20, G33, ACP, LDC, Africa and small economies want to intensify dialogue  and ensure that this round is about development. Efforts to divide and separate developing countries will come to nothing.

Our expectations were not high, but we have come to make progress. Brazil said the new text is a marginal improvement. There is need for a 4th band for developing countries in domestic subsidies and a need for SDT in market access.  It said agriculture is the engine of this Round, but it is losing steam. We want something concrete, something we thought we had already paid for twice already.  It said export subsidies have to go by 2010.

Brazil then continued on its own behalf: it is concerned that NAMA and GATS should not go further than agriculture, that para 8 of NAMA must be stand alone and that the services text should reflect concerns of smaller countries. Brazil is in full solidarity with the LDCs.  India hoped there would be further movement on agriculture, cotton and sugar. On agriculture, India felt that a simple linear cut within the tiers would be easier. On NAMA, para 8 should stand alone.  India wanted its proposal on the TRIPS-CBD relation to be incorporated, as the imbalances of TRIPS are remaining. India is in solidarity with the LDCs and the cotton countries.

Egypt on behalf of the Africa Group stressed the need for more balance.  In agriculture, there must be a date on export subsidies; the SDT aspects are not concrete enough; more needs to be done on cotton as the main issue is domestic support; on NAMA there is a lack of development content; Para 8 flexibilities should be independent; para 6 countries should be exempt from tariff reductions; and brackets in Paras 18 and 19 of the Hong Kong text should be removed.  On services, Annex C can still be improved. On aid for trade, this must be new funds, in grant form and without conditionality.

Zambia, forcefully speaking on behalf of the LDCs, said that development is at a deadlock. The  text is not positive enough for the LDCs.  The G110 countries are shocked at the best endeavor rhetoric. It said that we need trade justice. The language for the LDCs means nothing. There are 700 million people living in the LDCs and they represent less than 1% of world trade. How can progress for the LDCs be delayed?  It also said that cotton needs a better solution.

Benin speaking on cotton on behalf of the Cotton 4 countries and G90, said that the outcomes for export subsidies and market access are alright, but most of the problems related to domestic subsidies which are not adequately treated. It proposed that 60% of domestic subsidies be ended by 2007, a further 20% in 2009 and the remainder in 2010.

Mauritius on behalf of the ACP said the preference erosion issue is not dealt with enough; the ACP support Benin on cotton;  on NAMA, the brackets on para 18-19 need to go; para 14 (Swiss formula) and para 22 (NAMA/agriculture balance) should be bracketed. There is not enough on policy space and too little to address the concerns of tariff dependent countries. The ACP supports the LDCs.  On aid for trade, there should be no conditionality; there is a need for new funds for production capacity and technology transfer, institutional capacity building and infrastructure. The task force must be created expeditiously with representation of developing countries. It should be operational by July 2006.

Indonesia on behalf of the G33 said it could agree with the self designation of SPs, but there is no balance between SPs and sensitive products; the trigger on safeguards is OK, but the word "simpler" should be added. Speaking for itself, Indonesia said there has to be an end-date for agriculture export subsidies, the services annex C is not improved enough and it should take on board its suggestions on paras 1, 2, 7.   The NAMA text needs to be improved.  China joined the G20 and G33 statements. There needs to be an end-date for export subsidies; the CBD and TRIPS issue must be taken seriously; the cotton text must be improved.

Philippines, on services, said that it wanted further changes in Annex C, for example,  "maximum extent" must be deleted in para 1; in para 2 the reference to the footnote needs to be dropped; and in para 7 it continued to support the G90 proposal. Otherwise it cannot support annex C.    Malawi on behalf of the G90 on services said that the amendments in Annex C only reflect partly what we said needs to be improved.   South Africa on behalf of the "NAMA 11" countries said we are not ready to agree on the reference to the formula, especially as there is so little development outcome in agriculture.

The EC said it had mixed feelings about the text. We need a platform to move forward. We still have a problem with the ambition and the lack of balance between agriculture, services and NAMA. This new draft creates problems. On agriculture, it had difficulties with domestic support (it should recognize our efforts); the export competition text has reached our red line; the parallelism must be real; what is meant by "commensurate" in para 22? There is a general lack of ambition and we cannot understand why.  There is no "plus" in NAMA;  the Duty Free Quota Free commitment to LDCs is not good enough.

USA said that the text falls short of our aspirations, but we see it as the minimal acceptable. On agriculture it needed an end-date for export subsidies.  The reference to food aid must allow continuation to deliver in emergencies. On cotton, it did not see the text as a basis for agreement. On NAMA it agreed with the Swiss formula but wanted more clarity, to state that there are 2 coefficients. There can be a link between NAMA and agriculture, but that doesn't mean it should be mathematically proportional.

Australia was unhappy that there was no clear end-date on export subsidies, and nothing on how sensitive products will be selected and implemented; there is need for a straight linear cut in the tiers without flexibility.

Switzerland on behalf of the G10 had three concerns:  not enough parallelism in export subsidies; on sensitive products, there is not enough language; para 22 on agriculture/NAMA balance is misleading and must be deleted.  

Japan agreed with the reference to the NAMA formula, the Services annex C, and the paragraphs on trade facilitation and rules.

Jamaica for G90 on NAMA, said there is not enough development in the text, there is not enough on flexibility. Para 8 needs to be addressed with numbers; para 6 countries have not received any comfort; brackets around HK para 18 and 19 must be dropped; we must ensure more SDT; we will offer specific proposals. Jamaica for Caricom, said that on agriculture, we should be exempt from de minimis reductions; we need progress on special products and SSM, preference erosion and small economies. On services, our concerns have not been met by the current draft; we still have fundamental differences; we consider the plurilateral approach not only as harmful but dangerous for our resource-constrained countries.

Barbados on behalf of small and vulnerable countries: all brackets on articles related to small and vulnerable countries should be removed. Saint Lucia on behalf of the Caribbean said the text is unsatisfactory, it lacks a clear development focus; the demandeurs have focused more on their own interests than on development. This text can mean the difference between whether there is food on the table of our families or not, education or not, health care or not. The text on services needs to be improved, our proposals were balanced. Annex C must be improved.

Venezuela said the annex on agriculture does not represent a negotiated text and should not be there; there is too little for developing countries and LDCs.  The para on SDT is rhetorical, it does not meet the needs of developing countries; a review of SDT was promised as an early harvest, it did not come.

Zimbabwe said that someone [referring to the EC comment earlier] said we needed a platform.  "We hope it will not propel us into a pond full of crocodiles," said Zimbabwe.  The meeting ended on that note as Zimbabwe was the last speaker.