TWN Info Service on WTO and Trade Issues (Nov09/01)
3 November 2009
Third World Network

WTO Members voice "frustration" over lack of transparency in talks
Published in SUNS #6798 dated 22 October 2009

Geneva, 21 Oct (Kanaga Raja) -- The WTO's General Council at its meeting Tuesday heard complaints and voices of frustration from a number of Members over the lack of transparency in the current negotiating process in Geneva involving bilateral and small-group meetings.

The complaints and frustration surfaced in the statements of several Members following the first agenda item of the Council concerning a report by Director-General Pascal Lamy, in his capacity as Chair of the Trade Negotiations Committee (TNC).

According to trade officials, the Members that expressed a great deal of frustration over the lack of transparency in the process included Colombia, Hong Kong-China, Norway, Chinese Taipei, Pakistan, Burkina Faso, Korea, Uruguay, Turkey, Bangladesh, Egypt, Costa Rica and Switzerland.

(According to trade officials, the EU held a meeting this week outside the WTO of senior officials of some 14 countries that included the US, India, China, Brazil, Australia, Malaysia, South Africa, Indonesia, Japan, and Egypt.)

According to a developing-country trade diplomat, countries including Colombia, Hong Kong-China, Costa Rica, Uruguay, Turkey and Norway expressed frustration over the issue of lack of transparency in the Geneva negotiating process.

Members also expressed frustration over the lack of real engagement in the negotiations, the trade diplomat added.

The common denominator in the interventions in the General Council was that technical progress is not enough and that there was need for accelerating and increasing engagement, said the trade diplomat, adding that the political commitments that had been made are not being translated on the ground in Geneva.

In other discussions, the General Council considered some of the preparatory work for the forthcoming seventh Ministerial Conference and the organisation of its work. Also before the Council were two other proposals, one for the Ministerial Conference and another for the General Council.

The proposal for the Ministerial Conference by India and several other leading delegations calls for an appropriate deliberative process by the General Council to review the WTO's functioning, efficiency and transparency, and consider possible improvements, in order to maintain the effective functioning of the rules- based WTO multilateral trading system.

A second proposal by Argentina and Ecuador is on the financial and economic crisis, and the various state aids and subsidies being given. The proposal calls for a process of consultation by the President of the General Council to give Members an opportunity to discuss the methodology to be applied by the Secretariat in analytical work and periodic reports to the membership.

According to trade officials, in the discussions over the report of the TNC Chair, Egypt, on behalf of the African Group, shared the frustration expressed by Norway, Pakistan, Turkey and others. There is need to follow the mandate of the Hong Kong Ministerial Declaration and the agriculture and non-agricultural market access (NAMA) modalities of December. Bilateral meetings are useful but they are no substitute for the multilateral process. For the African Group, a development outcome remains the raison d'etre of the Doha Round, Egypt said.

In his report to the Council as TNC Chair, Lamy said that "it will be difficult to get to 2010 without a serious acceleration of the pace. We need to see real negotiations emerge, not only informal consultations and discussions, but real exchanges among members.

"We need to do so in a manner which is inclusive and leaves no interest behind. We need to ensure greater transparency over bilateral discussions so that every member feels it is part of an overall process," he added.

Lamy told Members that in addition to Chairs' consultations and small group meetings taking place this week, he will also hold consultations on the key issues of agriculture, NAMA and services together with the respective Chairs, in variable geometry, with a view to providing members with avenues for engagement.

He also informed Members that an informal TNC meeting will be held on Friday for the purposes of transparency and inclusiveness.

"When this week is over, I hope we will have a better sense of the work ahead of us in November, so that the next week of negotiations benefiting from the presence of senior officials in Geneva in November can register a qualitative change in the negotiating dynamics and progress on substance."

Lamy also updated Members on his consultations on the issues of GI (geographical indications) extension and the relationship between the TRIPS Agreement and the Convention on Biological Diversity.

Referring to his consultations on 8 October with a group of delegations, he said that on TRIPS-CBD, the discussion centred around the legal character of misappropriation and the measures, other than the disclosure requirement, to address misappropriation and benefit sharing. On GI extension, the discussion centred on the differences between protection under Article 22 and Article 23 as well as on the effects on higher protection to additional products.

The discussion was highly technical and detailed, he said, adding however that differences still remain on the substance.

Looking ahead to the next 41 days before the opening session of the WTO's 7th Ministerial Conference, Lamy pointed out that this Ministerial Conference will be a different sort of gathering of ministers compared to large-scale and week-long events that have taken place since 1998. "For a start, this ministerial meeting, as we established a long time ago, is on a separate track from the on-going Doha Round negotiations."

"In other words, this meeting is not a DDA (Doha Development Agenda) negotiating meeting. It is our hope that ministers will come to Geneva to address and interact on a few key themes, regarding the WTO and the multilateral trading system, the 'big picture' so to say," said Lamy.

However, and there seems to be some confusion on this point, this does not mean that ministers' statements or indeed their discussions cannot address the issue of the Doha Round or indeed specific negotiations, Lamy stressed.

On the contrary, he added, it would seem rather odd if the elephant in the room remained nameless. This is why discussion of the Doha Round is specifically foreseen in themes for the Working Sessions.

"And in this specific context I think that the 7th Ministerial Conference represents an important platform for ministers to send a strong signal of commitment to concluding the Doha Development Round," the Director-General concluded.

Under another agenda item, the Council discussed a communication from Argentina and Ecuador on the financial and economic crisis and the role of the WTO (WT/GC/W/609), which contained a draft decision for action by the Council.

According to the communication, the extent and impact of the current global financial and economic crisis have a negative effect on the growth of international trade, placing the multilateral system in an unprecedented situation.

Noting that the Director-General had submitted three reports to the Trade Policy Review Body (TPRB) on the financial and economic crisis and trade-related developments, the communication said that those reports identified measures such as State aids and subsidies (through fiscal stimulus as well as industry and financial support programmes) given to manufacturing industries (e. g. loans, grants, tax reliefs and "buy local") and financial institutions (e. g. takeovers, recapitalization, and government guarantees, rescue packages and bailout), adopted by some Members as a response to the crisis.

According to the communication, the Director-General has indicated that as these measures: "... are often attached informally, and are of a political rather than contractual nature, it is very hard to know of their existence and how they are being implemented". Fiscal stimulus and financial support programmes "... have the potential to impact seriously and negatively on foreign producers who specialize in activities that are the target of government support in other countries ... [and] they have the potential to create deep and long-lasting distortions to global markets ...".

In the third report, he added: "The programmes will benefit international trade to the extent that they succeed in achieving their systemic objectives (...) however, such large injections of public money into the economy, and of government influence over how it is to be spent, do have the potential also to distort markets and competition".

The data contained in the reports as well as any new information and data on those measures need to be evaluated through a comprehensive, specific, systematized and periodic analysis performed by the WTO Secretariat.

The communication said that the draft decision envisages a process of consultations conducted by the President of the General Council in order to give Members an opportunity to discuss the methodology to be applied by the Secretariat in that analytical work.

The Draft Decision proposed by the communication states the General Council decides as follows:

"1. The President of the General Council with the assistance of the Director-General and the WTO Secretariat shall undertake extensive and transparent consultations with Members including, when appropriate, relevant international governmental bodies on the methodology for the analysis of the fiscal stimulus and financial support programmes adopted as a response to the crisis, and identified in the Director-General reports to the Trade Policy Review Body (TPRB) on the financial and economic crisis and trade-related developments.

2. During the consultations the President of the General Council shall take into account that the analysis referred above should:

* cover all goods and services;

* include information and statistical estimations of the trade impact of these measures;

* distinguish between horizontal stimulus measures and those intended for a particular sector, and provide details on the individual measures according to their potential trade-restricting or distorting impact;

* facilitate the monitoring by Members on a regular basis.

3. The President of the General Council will report its findings and conclusions to the first session of the General Council in 2010."

According to trade officials, there was wide support for the Argentina-Ecuador proposal. The EU and the US however said that a separate mechanism was not required for this and that these discussions could be taken up by existing WTO bodies.

Speaking to SUNS, Argentina's senior negotiator Nestor Stancanelli said that the reaction to the communication was positive. Practically all the delegations that intervened in the meeting supported the proposal. The EU and the US suggested that the Trade Policy Review Mechanism may suffice for this.

He said that Argentina believed that there is need for substantially deeper analysis of all the stimulus packages and measures adopted in order to face the crisis. There is no mechanism in the WTO to deal with this. It is important to have a systemic analysis of all these packages, he added.

There is agreement to keep this issue on the agenda of the General Council, he said.

Under a separate agenda item, Gabon spoke on behalf of the informal group of developing countries concerning the issue of accession of developing countries.

According to trade officials, this is an effort to establish a mechanism for communication by accession candidates on how their accession is progressing. Trade officials said that this was embraced by a wide section of the membership. Those that were not supportive of the proposal were the US, the EU and Japan. They were of the view amongst others that each accession is on the basis of its own merits and that the process is already transparent in the working groups.

Supporting the proposal, the developing countries said that very often they face political barriers to entry and face something that goes beyond the standard rules that apply to developing countries in the WTO.

Another agenda item in the day-long Council meeting addressed the upcoming seventh session of the WTO Ministerial Conference to be held in Geneva from 30 November to 2 December.

According to trade officials, in his statement, the General Council Chair Mario Matus of Chile proposed that the Ministerial Conference be chaired by the Minister of the Member country currently providing the General Council Chair (in this case, the trade minister of Chile).

The Chair cited several principles with regards to the organization of the Conference, namely, that the whole approach is based on "FIT" (full participation, inclusiveness and transparency); it is a regular Conference that is not structured around the Doha Round negotiation process; it is important not to overload the Conference agenda; preparatory work for this Conference should not divert energy and attention away from the Doha Development Agenda; any action or decision by Ministers that is proposed by Members should be developed in line with the normal consensus principle; and any issue for action or decision should be agreed well in advance of the Conference.

On the structure of the Ministerial Conference, the General Council Chair mentioned the holding of plenary sessions and two working sessions that will run concurrently. The two sub-themes of the working sessions are review of WTO activities including the Doha Work Programme, and the WTO's contribution to recovery, growth and development.

The General Council Chair also drew attention to the slate of officers of the Conference comprising the Chair, and three Vice-Chairs. The Chair held consultations on this, and the Members then agreed that the Chair of the Ministerial Conference would be Mr Andres Velasco, the trade minister of Chile. The Vice-Chairs are Ms Doris Leuthard of Switzerland, Ms Mari Pangestu of Indonesia and Mr Rachid Mohamed Rachid of Egypt.

As to the attendance of observers at the Conference, the General Council Chair proposed that all those that were observers at the Hong Kong Ministerial Conference in 2005 be invited to attend this time. The Members also agreed to this.

The Chair further said that the outcome of the Ministerial Conference will be a Chair's Summary which will be factual and balanced.

According to trade officials, the Chair said that there is a wide range of convergence on these issues and that there is need to finalize this very quickly.

He also highlighted two issues for possible action, the first involving complaints of non-violation regarding the TRIPS Agreement and the second, a moratorium on duties on e-commerce transactions (these issues had been rolled over at subsequent Ministerial Conferences dating back to the Geneva Ministerial Conference in 1998).

According to the Chair, there is a consensus on placing these issues before the Ministerial Conference.

An issue that has been suggested for the agenda of the Conference is a proposal by 18 Members on strengthening the WTO, which has been put forward by India.

The 18 countries are Australia, Brazil, Canada, China, Hong Kong-China, European Communities, India, Japan, Korea, Malaysia, Mauritius, Mexico, Norway, South Africa, Switzerland, Turkey, the United States, and Uruguay.

The proposal (WT/MIN(09)/W/1) contains text for inclusion in the outcome document of the seventh Ministerial Conference.

On the issue of systemic improvements to the WTO, the communication proposes the following text for inclusion in the Chair's summary to be issued at the conclusion of the 7th Ministerial Conference:

"The rapid change in the global economic environment requires the WTO to be agile and responsive in order to preserve its central role in the global trading system. With a view to maintaining the effective functioning of the rules based multilateral trading system, the WTO needs to periodically engage in a process of review of its functioning, efficiency and transparency and consider systemic improvements, as appropriate. Ministers have invited the General Council therefore, to establish an appropriate deliberative process to review the organization's functioning, efficiency and transparency and consider possible improvements, while bearing in mind the high priority we attach to the successful conclusion of the DDA negotiations. We look forward to reviewing the progress in this regard in our next meeting."

In a statement at the General Council, India said that it had held wide consultations with Members on the proposal and it is clear that the large majority of Members support the proposal.

"We consider the WTO to be an efficient multilateral organization which provides useful services to its Members and to the global trading community. However, trading conditions in the world continue to change rapidly. MFN trade, for instance, is becoming an exception rather than the rule," said India.

"We believe that in order to remain relevant to the global trading system, the WTO's procedures must continue to evolve. We can no longer cite our continuing preoccupation with the Doha Round as an excuse for ignoring the many challenges that threaten to erode the WTO's relevance."

The limited objective of this proposal is to establish a process to discuss, and hopefully, to address these challenges, said India.

"Thoughtful deliberation and dialogue are the lifeblood of an organization like the WTO. Our failure to engage in such a process of renewal can cost us dearly in the future. I, therefore, hope that we can soon start discussing these issues in an orderly and constructive manner," said India.

Speaking to journalists, Ambassador Ujal Singh Bhatia of India said that everybody agrees that it is a good idea but some feel that there is need for more consultations. His personal view is that "these ideas are now fully embedded in the WTO."

At the moment however, he could not predict whether they will come up in the WTO Ministerial, or the General Council, or in other committees. "At least now the debate has started."

He believed that the General Council Chair will be holding consultations on this issue. +