TWN Info Service on WTO and Trade Issues (June06/28)

29 June 2006

Lamy outlines process for 'mini-Ministerial' this week

At a WTO meeting on 28 June, Pascal Lamy outlined the process, and substantive issues that are to be tackled at a 'mini-Ministerial' that begins on Friday (30 June).

Lamy, who is also the WTO Director-General, also gave a listing of issues for Ministers to focus on in sequence.

At a press briefing later he also outlined his views that the stress will be on market access and "real trade flows" in reaching an agreement.

He highlighted the figure 20 as being crucial----20 coefficient for developing countries in NAMA, the G20 proposal on market access in agriculture, and to go below US$20 billion for the agricultural domestic support of the US.

Below is a report on the meeting and the press briefing

With best wishes
Martin Khor


Lamy outlines process for 'mini-Ministerial' this week

By Kanaga Raja (SUNS), Geneva, 28 June 2006

The Chair of the WTO's Trade Negotiations Committee (TNC) Pascal Lamy, at an informal Heads of Delegation meeting Wednesday, outlined to WTO members the process, and substantive issues that are to be tackled at a 'mini-Ministerial' that begins on Friday (30 June).

Some Ministers have begun gathering in Geneva for a scheduled three-days of intense negotiations towards establishing modalities in agriculture and non-agriculture market access (NAMA).

Lamy, who is also the WTO Director-General, also gave a listing of issues for Ministers to focus on in sequence.

Lamy said that he intends the 'consultative process' to take place in various formats, with open-ended informal TNC meetings at its core. These informal meetings are to be held frequently and will culminate in a formal TNC meeting convened initially for Saturday (1 July) and which could be continued on subsequent days as necessary.

On Friday morning, he will begin small-group consultations involving a number of Ministers and their representatives. This will be followed by an informal TNC meeting (open to all) at HOD level later in the morning.

On Friday evening, the "Ministerial consultative group" will reconvene. The composition of the Ministerial consultative group will be along the lines of the group that met in Hong Kong last December.

Lamy said these meetings would help build bridges on "key outstanding issues" which will allow members to move formally to establishing the modalities in agriculture and NAMA. He added that on Saturday and Sunday, further meetings of the Ministerial consultative group as well as informal open-ended HODs may be organized.

Most afternoons will be left free to allow delegations to meet among themselves and in groupings, and he and the Chairs would meet with individual delegations and Ministers.

Lamy said that he could not over-emphasize the urgency of members' task. Modalities in agriculture and NAMA are two "vital operational decisions" that need to be taken now, in order to unlock other areas of the negotiations, provide the parameters to allow each of the members to draft schedules and to enable them to conclude the Round on time.

On the substantive issues, Lamy reported that there is an understanding among the delegations that he consulted that Ministerial discussion should be focussed, in the first instance, on a number of issues considered to be key in both agriculture and NAMA. This is only intended to pave the way for a second round on other issues and that all topics contained in the two draft texts are important to one constituency or another and will all have to be addressed, Lamy said.

In agriculture, initial discussions should concentrate on market access, including the formula for tariff reduction, the number and treatment of sensitive and special products and the SSM; on domestic support, initial discussions should concentrate on the overall reduction of trade distorting support, reduction in AMS, Blue Box and de minimis, disciplines in AMS and Blue Box and cotton. These topics should be followed by export competition, tariff capping, special agriculture safeguard, tropical products, preference erosion, recently acceded members and LDCs in market access, and Green Box in domestic support.

In NAMA, initial discussions would concentrate on formula and coefficients, the treatment of unbound tariffs and flexibilities for developing Members subject to the formula. This would be followed by LDCs duty-free and quota-free, flexibilities for developing Members with low binding coverage, small and vulnerable economies, recently acceded members, non reciprocal preferences and implementation period, Lamy said.

At a press briefing following the informal HOD meeting, Lamy said that modalities are a stage in the negotiating process that is about stabilizing basic figures and formulas to move to the next stage of scheduling commitments.

Using the analogy of the construction of a Gothic building to refer to the modalities, Lamy said that one needed to start with solid columns on which are placed ''pointed arches... and loads of pinnacles and inventive structural details.''

The three main columns, following his analogy, were agriculture (domestic) subsidies, and agriculture and NAMA tariffs. Other elements that need to be placed included export subsidies, erosion of preferences, treatment of small and vulnerable economies, newly acceded members and so on.

The perimeter within which this edifice will be built is quite precisely determined now, Lamy said, by "real cuts in subsidies and new trade flows in agriculture and NAMA."

Proposals, numbers, and suggestions which are outside this perimeter, in his view, ''do not stand a chance of being kept on the table.'' The question now is not whether the numbers have to result in real cuts, or not whether the numbers have to result in new trade flows, but how much of that. He hoped the negotiations this week will concentrate on how much.

Continuing with his analogy, Lamy said that the three columns need to have similar height and width. On top of that, the contribution of developing countries need to be proportionate. He added that members know that LDCs, SVEs and those with high unbound tariffs have problems. They also know that developing countries in general must be treated in a fair way as compared to developed countries.

The three columns are not high enough, Lamy said, pointing out that the column on farm tariffs needs to be topped up by the EU. The domestic support column needs to be topped up with further cuts in domestic support by the US. The column on NAMA tariffs needs to be topped up by "a number of developing countries in a position to do so."

He expressed hope that the ''main builders'' have come to Geneva with a fairly precise idea of the improved numbers they can put on the table, because this is what is needed now. There are three days to do that.

His suggestion to Ministers is not to talk anymore about plans or the project but to decide on the size and the numbers of what had to be done now, and that the decision for this is the end of June.

''It is the moment of truth. I do not think we can postpone any longer this decision. If we were to do that, we can put the entire project at risk,'' he said, adding: ''I strongly believe that postponing decisions on cuts in subsidies and tariffs and size to later in the year is a recipe for failure, and I would not recommend it.''

In response to a question, Lamy said that the three columns are already there and they all need to be topped up. The key question is by how much this top-up needs to be done, and that is for the Ministers to decide.

Lamy said that his own intuition for a magic number would be around the number 20 - in reference to the G20 proposal on agriculture (presumably on market access), the coefficient 20 for the Swiss formula for developing countries in NAMA, and below $20 billion for the US in overall trade-distorting domestic support.

He added that however, the ambition in agriculture, NAMA and domestic support is not a simple matter of numbers that would do the trick. There are levels of ambition and flexibilities as well, and the details of the flexibilities are vitally important; for instance, how many sensitive products would have a serious impact on market access...

Lamy was asked to comment on the statement that "No deal is better than a bad deal" that some US congress members had made. Is the magic 20 a good enough deal?

He replied that the idea that no deal is better than a bad deal is shared widely both within and outside the WTO, such as members of the US Congress and the "anti-trade NGOs."

"I agree with that, if a bad deal means that it is not ambitious enough. I can understand the members of the Congress to want more real trade flows. However, what's on the table is already higher than the cathedral that was built 12 years ago. If we look at domestic subsidies and tariffs, it's a higher column. We are looking at a Swiss and banded formula for making tariff cuts, which eliminates tariff peaks, which we know are the main barriers to trade. So, it is already more ambitious than the previous round. The question is how much more ambitious."

Lamy said that even the lowest proposal right now is better than the most ambitious in the Uruguay Round. "We are talking about capping, reviewing the green box, even the G20 proposal of 36% tariff cuts for developing countries in agriculture, and the application of the formula in NAMA and the banded approach in agriculture -- it hits high tariffs and peaks..."

Lamy added that the important thing is for ministers to be aware that later is not possible. "We operate under the constraint of the single undertaking. There are anti-dumping, trade facilitation, fisheries, and other issues." If the modalities are deferred these issues cannot be dealt with by the end of the year.

What was needed is to establish the modalities to allow members to draft schedules. Postponing the stage of drafting schedules of commitments would make the whole thing become technically impossible.

(* With inputs from Goh Chien Yen.)