TWN Info Service on WTO and Trade Issues (June06/27)

29 June 2006

Concerns on process and on 'real trade flows' on eve of Ministerial

As many Ministers arrived in Geneva, speculation was still rife on how the "Ministerial Green Room" would be run, what issues would Lamy really want to focus on (and what issues may thus be left out), and what the Ministers who are not invited to the Green Room would be doing.

Among the concerns are (1) The process: that most developing countries will be left out of the real decision-making, that they will only receive information and are asked to endorse the Green Room decisions.

(2) The stress that Lamy is now making on Market Access, as if it is the goal itself, while development concerns are discarded. The latest phrase is "Real Trade Flows". At a briefing, Lamy has said that only proposals that result in real trade flows will be taken seriously. Real trade flows is a code for cutting teh country's bound tariffs to below the applied rate.

Below is a report on some of these concerns on the even of the "Ministerial meetings." It was published in the SUNS of 29 June.

With best wishes
Martin Khor


Concerns on process and on 'real trade flows' on eve of Ministerial

By Martin Khor (TWN) Geneva, 28 June 2006

As many Ministers and senior officials arrived today in Geneva for several days of WTO meetings, speculation was still rife on how the "Ministerial Green Room" would be run, what issues would the Director General Pascal Lamy really want to focus on (and what issues may thus be left out), and what the Ministers and officials who are not invited to the Green Room would be doing.

At an informal WTO meeting today, Lamy tried to tell WTO members who were hungry for information what plans he had laid out. There would be meetings of the "Ministerial Consultative Group" (the new term now for the Green Room participants), but also informal meetings of the Trade Negotiations Committee to which everyone is invited. And time off in the afternoons for regional and bilateral meetings, and there will be this mixture everyday, including Saturday, Sunday, possibly Monday (See separate article on the meeting and press briefing).

Lamy also told members of the list of issues which would form the "sequence" of the Green Room meeting. He stressed this was only a sequence and not a listing of priorities, and all issues would eventually be covered.

But looking at the long list of agriculture and NAMA issues in the index, and at the papers on both issues (with the hundreds of square brackets) produced by the Chairs of the negotiations, no one really believes that the two or three day mini-Ministerial can cover the whole ground.

At the WTO meeting today, several members (including the Africa Group, some Latin American countries, and a representative of the small economies grouping) raised concerns of two types: the lack of transparency and participation (and thus legitimacy) of the process; and the fear that only "partial modalities" would be dealt with, instead of "full modalities."

The two concerns are linked. Most delegations fear that the "real talks" will be in the Green Room of 30 selected delegations, or even more, in the "smaller Green Room" of the G6. There will be many more delegations whose Ministers and Vice Ministers have come, and they will have the TNC as a venue to make statements, but it is widely accepted that this would be only a side-show.

The larger membership and their Ministers and officials may be informed of what is going on in the Green Room through information sessions, but there is not much scope for them to really take part. And if there is a deal at the end of the 4 or 5 days, this larger group will be expected to formally endorse what the Green Room has decided.

Those countries left out of the Green Room are not satisfied with this "second fiddle" role, and some raised their concerns today.

The second issue is whether a fair hearing will be given to the topics of great concern to members, since the Green Room is expected to address only the "core issues" as defined by Lamy and his "sequencing."

At a press briefing today, Lamy went back to the theme of his famous three key issues to resolve, only this time he did not use the triangle but the three pillars of a Gothic building as analogy - agriculture domestic support, agriculture market access, NAMA formula cut.

This time he added something new - that "the parameters of this edifice are quite precisely determined. They are what real cuts need to be made in domestic support and the new trade flows in agriculture and industrial products. Proposals outside these parameters do no stand a chance to be considered. Proposals need to be within these parameters. It is not whether the numbers will result in real cuts in domestic support and new trade flows, but by how much...."

The EU column on farm tariffs need to be topped up, the domestic subsidies column needs to be topped up by the US and the industrial tariff column needs to be topped up by some developing countries which are able to do.

"New trade flows" is a code for members having to cut their bound tariffs to below the applied rates. Lamy has turned market access and "new trade flows" into goals by themselves, and not the means to another end.

By doing so, the Development Agenda is sidelined or is contradicted. Whatever happened to the main Doha mandate, that the interests of developing countries would be at the centre of the work programme?

That "new trade flows" should be the main criterion for success assumes that if a country were to expand its imports it is to the good of everyone. However, if commitments are made that cut into the applied rates of developing countries in both NAMA and agriculture, many of them will be swamped with imports that will displace local industries and farmers.

The result of "real trade flows" in the form of such increased imports will be counter to development goals. The stress on market access and real trade flows is not in the Doha mandate, it instead could run counter to it.

True, developing countries can also gain if they get "real trade flows" of their exports into the developed countries. However, due to supply constraints, few developing countries are expecting to enjoy benefits from increased opportunities.

For a large number of countries, the unenviable prospect that faces them is that they have to make commitments to slash their import tariffs (to the level where they will result in "real trade flows" (i. e. increase in imports), with all the adverse effects for the local sectors and for government revenue; while at the same time this cannot be offset by benefits because they do not have the supply capacity, or because there is no real expansion of market access for their products.

For developing countries, what counts is that trade rules that are to be developed contribute to development and poverty reduction, and these trade rules have to take into account the need of their domestic industries and farmers to survive and beyond that to grow.

If the new rules lead to beneficial expansion of export earnings (and not just export volume), that is a bonus to cheer about. For the majority of countries, however, the major concern is that the domestic economy is not damaged by having to over-commit to liberalise imports.

The stress on market access and "real trade flows" does not give any comfort in this regard.