TWN Info Service on WTO and Trade Issues (May06/05)

5 May 2006

Positions and problems become clearer as WTO talks set to intensify

Below is a report on the positions being voiced by different countries and groupings at the WTO this week, which point to varying perceptions of the way the talks are going, and some important emerging problems.

This was published in the SUNS on 3 May.

With best wishes
Martin Khor


Positions and problems become clearer as WTO talks set to intensify

By Martin Khor, Geneva, 2 May 2006

The WTO's Trade Negotiations Committee meeting on 1 May and statements made by some Trade Ministers visiting the WTO have further clarified positions of some key members and groupings and some of the major differences among them that need to be resolved if the Doha talks are to progress fast enough.

The Brazilian Foreign Minister Celso Amorim told a press briefing on Tuesday that there was need to combine two aspects - ambition and realism - for the Round to succeed.

He reiterated that the G20 position in agriculture was in the "neighbourhood area" around which agreement could be reached. He again stressed that agriculture was the centrepiece of the Round and indicated that the terms of agreement on NAMA would fall in place once the parameters of the agriculture solution are in place.

Amorim also struck a rather optimistic note, remarking that the presence of a few Ministers in Geneva would have a catalytic role and send a signal that there was Ministerial involvement in the talks.

In some Geneva circles, it appears that a new deadline, although only implicit, is being talked about for finalising the agriculture and non-agricultural market access (NAMA) modalities, and that is mid-June or in any case before the end of June.

At a press briefing on Monday, Japan's Agriculture Minister Shoichi Nakagawa and the WTO Director General Pascal Lamy said the talks must enter crucial stages in June if they are to conclude by December.

The EU's Ambassador Carlo Trojan, at the TNC meeting, said a breakthrough on modalities must come by mid-June and sufficient progress on issues other than agriculture and NAMA.

Lamy had told some journalists last week that the modalities had to be agreed on by mid-June, to allow negotiations on other topics like services which had separate deadlines of end-July.

In his speech to the TNC, Lamy said "we really have no time to spare" and "we will now have to be on call on a permanent basis", with the focus on text-based negotiations, "solidly anchored in Geneva." He did not however mention the mid-June date.

Most developing countries were waiting to see if there was anything concretely new from the US and EU. The two major countries' TNC statements assured members that they were very committed to finding solutions, but did not provide any new offers or indications.

The EU's Trojan used more colourful language to make its same point, saying "much needs to be done to find the right exchange rate between market access in agriculture and NAMA."

US Ambassador Peter Allgeier stressed that the US was looking for "significant improvements from the actual conditions that currently exist in the markets, not just cuts on paper," implying that there must be reductions in applied tariffs, and services commitments that do more than confirm existing liberalization.

The US Trade Representative Rob Portman and his successor Susan Schwab, in an article in the Wall Street Journal, published as they were arriving in Geneva, affirmed the US commitment to an ambitious agreement, rejecting "Doha Lite", or "half-measures."

They stressed again that agriculture is the main engine, and the US offers on tariffs and domestic support cannot be kept on the table unless others reciprocate.

The two US officials are having bilateral meetings in Geneva with some members and groupings at which they will stress a "seamless transition" in the US trade office's leadership, and continued US priority to the WTO and the round.

At the TNC meeting, developing-country groupings emphasized their particular priority issues and concerns. Some key groupings and countries gave out strong signals of unhappiness and anxiety over recent developments affecting their particular interests.

The NAMA-11 warned that the developing countries were being shortchanged as they were pressed by "ultra-ambitious" proposals on formulae and coefficients, while the developed countries themselves were not offering anything worthwhile in agriculture. They said that they would refuse to make the sacrifice of the pig as compared to the chicken in contributing to the bacon-and-eggs breakfast, in a colourful analogy presented to the TNC.

Invoking paragraph 24 of the Hong Kong Declaration (which links the ambition levels for agriculture and NAMA), the NAMA-11 said the biggest adjustments must come in agriculture, and also the less than full reciprocity and SDT principles must apply in NAMA, meaning that developed countries must bear a larger burden of adjustment than developing countries.

In making their NAMA offers, the NAMA-11 said "we will be weighing these against the value to our economies of proposals both in agriculture and the reduction of tariff peaks and escalations on industrial products of export interest to developing countries in developed country markets.

"In regard to the first aspect, our benchmark will be the G20 proposals on agriculture. We will judge all offers by the degree to which they deliver on the proposals and will tailor our own offers on NAMA accordingly."

This implies that for this influential group, the level of ambition in NAMA can be set only when the developed countries' eventual offers in agriculture are known.

The developing countries with defensive agriculture interests, grouped under the G33, showed their dissatisfaction at the TNC at how others have recently attempted to restrict or undermine the usefulness of their concepts and instruments of special products and special safeguard mechanism.

Indonesia, the G33 coordinator, warned again that the group would not join a consensus on modalities if it did not give "adequate comfort" on SP and SSM, and India ( a leading G33 member) warned that the focus of the agriculture talks had shifted from developed countries provising market access to opening the developing countries' markets. If this continues, it won't need an astrologer to predict the outcome, said Ambassador Ujal Singh Bhatia.

With the G33 determined to have their strong flexibilities and safeguard to protect their small farmers, but with agriculture exporters from developed and developing countries also determined not to be deprived of market openings in the G33 countries, the scene is set for continuing fierce battles in the weeks ahead.

The problems facing preference-receiving countries were flagged strongly by the ACP Group, represented by Mauritius, as well as some individual countries like Kenya. The Group wants the modalities in both agriculture and NAMA to provide serious treatment for this issue, but so far this has been elusive.

The Group said it was "seriously concerned" that the preference issue is still "divisive" and its members could not support modalities without a satisfactory solution that allows affected countries to manage the transition.

The G20, represented by Brazil, reaffirmed its principles and specific positions on agriculture. It said developing countries enjoy more comparative advantage in agriculture, and substantial reduction in distortions in agriculture trade and substantial improvement in market access - while recognizing rural development, livelihood and food security needs of developing countries - are essential elements to realize the Round's ambitious and balanced outcome.

On domestic support, reduction must lead to effective and substantial cuts in all forms and in overall levels of trade-distorting domestic support, complemented by disciplines on the Blue Box and the Green Box.

On market access, the tariff reduction formula is key while the number and treatment of sensitive products must allow for substantial improvement in market access for all products. The G20 is prepared to discuss a hybrid approach on this.

The G20 also reiterated that SDT is an integral part of all three pillars. It reminded that the G20 had proposed that developing countries' commitments in market access would be less than two-thirds of the cut by developed countries, and it welcomed the G33 contribution on SP and SSM.

In export contribution, as agreed, all forms of export subsidies will be eliminated by 2013 with a substantial part by the end of the first half of the implementation period. The G20 said that the next step is to work on their elimination as scheduled and on disciplines which can meet the requirement of parallelism.

From its statement, it is clear that the G20 is determined to remain a central player not only in agriculture but in the negotiations as a whole, and that it is holding on to its level of ambition in cutting away at subsidies and high tariffs in developed countries.

There is however a tension within the Group between the offensive and defensive interests. A test of the Group's cohesion will be whether it can agree on the tariff reductions to be undertaken by developing countries, as well as the special and differential treatment, especially with regards to SP and SSM.

Many G20 countries have mainly defensive interests and want strong SP and SSM mechanisms. But some G20 countries have strong offensive interests and would also like market openings in their fellow G20 countries.