TWN Info Service on WTO and Trade Issues (Nov09/12)
25 November 2009
Third World Network

General Council meets just before upcoming Ministerial Conference
Published in SUNS #6818 Thursday 19 November 2009

Geneva, 18 Nov (Kanaga Raja) -- The WTO General Council, meeting some thirteen days before the seventh Ministerial Conference gets underway, heard a brief review from the Director-General of the year's progress in the various negotiating areas of the Doha Round, and approved two decisions, one on TRIPS non-violation complaints and the second on E-Commerce, to be forwarded to the Ministerial Conference.

The Conference meets here from 30 November to 2 December.

The two decisions that have been approved by the General Council relate to the current moratoriums on TRIPS non-violation complaints and E-Commerce duties, which have been extended until 2011 (see below).

The General Council also sent on reports of several WTO bodies to the Ministerial Conference for review. These include amongst others reports of the Dispute Settlement Body, the Trade Policy Review Body, Sectoral Councils, the Working Groups on Trade, Debt and Finance, and Trade and Transfer of Technology, as well as reports of several WTO Committees.

Director-General Pascal Lamy, in his capacity as Chair of the Trade Negotiations Committee (TNC), reported to the General Council on the state-of-play and the outlook of the various negotiating groups.

Referring to two weeks' of senior official engagement that Members still have before the end of the year, he said: "What is clear is that if we are to conclude this Round in 2010 as you have pledged to, we will need to take a hard look at where things stand early in the new year and map the road that would lead us to a successful result."

In a brief overview of the negotiations, Lamy said that in agriculture, work is proceeding with the support of members on a two-track approach.

He explained that one track, template work, is advancing well, with substantive contributions from members. Step 1 of this template work concerns the identification of base date and appropriate tables; it is expected to conclude this month, with Step 2 then to start, namely, the preparation of templates to be used for scheduling. This technical work will continue with every prospect that it can conclude early in the new year.

The other track of work in agriculture is the Chair's informal consultations on the bracketed and otherwise annotated issues in the draft modalities and associated documentation. There have been discussions on domestic support - where again it is clear that a solution on cotton is fundamental - and on market access issues, including useful work on sensitive products, tariff cap, TRQ (tariff rate quota) expansion and tariff simplification, said Lamy.

He noted that starting this week, the Chair's consultations will branch the S&D (special and differential treatment) issues in the modalities with an opportunity in December and early in the new year to return to some of these matters.

"In sum, the work on agriculture is engaged, has the support of Members and holds the prospect, given political will, of moving towards agreed modalities in the new year," he said.

Turning to the area of non-agricultural market access (NAMA), Lamy said that the NAMA Group has spent a substantive amount of time during the year on non-tariff barriers (NTBs). During the course of the four NTB dedicated sessions held this year, members were able to deepen their understanding of the NTB proposals through questions and answer sessions, and discussion.

Lamy also noted that the Negotiating Group has spent time this year on the technical exercise of scheduling, adding that "scheduling" is now a regular component of all NAMA-related technical assistance programmes.

On the issue of the sectoral initiative, the Director-General pointed out that during the year, the sponsors of the initiatives in the sectoral negotiation have undertaken technical work which has then been used in outreach activities. However, he said, "at this stage, I think it would be fair to say that results are 'subliminal', to borrow an expression used by a Minister at the recent APEC meeting."

Lamy said that there has been only incremental progress in the services negotiations during 2009. Members agreed early in the year to continue work on the basis of the roadmap contained in the July 2008 services text, and held several negotiating clusters to further those objectives. On the market access side, work has concentrated on technical discussions, in small groups and bilaterals, largely aimed at clarifying signals made at the July Ministerial gathering.

He further noted that with respect to GATS rules, progress has been minimal in the three areas of subsidies, emergency safeguards, and government procurement. In domestic regulation, negotiations have continued on the basis of a Chair draft. On the implementation of LDC modalities, a small group of members has been discussing a draft text of a waiver.

Lamy summarised that the services negotiations can only proceed in tandem with those in the other areas of the Doha Development Agenda. Progress will therefore depend on the extent that progress is achieved in agriculture and NAMA. There is also a need for balance within the services negotiations, between market access and rule making. On market access, there is clear room for offers to be improved, while in rule making, further progress needs to be made, especially with respect to the text on domestic regulation presently under discussion.

In his view, members should be able to make headway on the issue of the implementation of LDC modalities soon.

Regarding rules, Lamy reported that the Chairman (of the Rules Group) circulated new draft texts on anti-dumping and subsidies, as well as a roadmap on fisheries subsidies, in late December 2008. Thus, the Negotiating Group has focused its efforts in 2009 on working through these documents.

He noted that the Group is likely to have completed its first review of the horizontal subsidies text by its December meeting, immediately after the Ministerial, and to be near completion of its review of the anti-dumping text. On fisheries subsidies, it will complete discussion of the roadmap in December and begin consideration of new proposals by members.

He said that while there has been some progress on technical issues, and the Group has advanced on some of the preparatory work necessary for conclusion of the Round, there has not been any signs of significant convergence on major political issues. To the contrary, the level of engagement to seek convergence on such issues has been limited. As in other areas of the negotiations, a renewed level of commitment by all members will be necessary if members are to bring their work to a successful conclusion.

With respect to Regional Trade Agreements (RTAs), Lamy underlined that the Negotiating Group has not met since early 2007, although there have been small group meetings among interested members and between interested members and the Chair.

The Negotiating Group has already produced a good result in this area with the adoption of the new Transparency Mechanism on RTAs which has been operating successfully. It now remains for the Group to review it and agree to make it into a permanent WTO instrument, he added.

Lamy said that negotiations on systemic issues of RTAs have unfortunately not progressed and he understands that the Chair intends to discuss ways of reinvigorating these negotiations with Senior Officials meeting next week.

"One cannot but be perplexed by the limited focus by members over this major systemic issue for the multilateral trading system, especially if one compares it to the flurry of academic activity on this same topic," stressed Lamy.

Turning to the two TRIPS issues on which he has been mandated to pursue consultations as Director-General - the relationship between TRIPS and the CBD (Convention on Biological Diversity) and the extension of Article 23 GI protection - Lamy reported continued progress in working through the substantive issues, "although we are plainly not on the verge of a breakthrough either on the modalities of how we are to take forward these issues beyond the consultation process nor on the content of what a substantive outcome would look like."

"As for all participants on both issues, I sense that we have a clearer grasp of the central policy issues and legal options, and the concerns and interests that drive members' positions in these sensitive policy areas," he said.

Speaking on the upcoming seventh Ministerial Conference, Lamy said: "We have all agreed that this regular Ministerial Conference will not be a negotiating session and that the DDA (Doha Development Agenda) is on its own, separate track. At the same time, I think we agree that what is needed more than anything in the current economic situation is a platform for ministers to review the functioning of this house in its entirety and to renew their commitment to a strong, well functioning multilateral trading system. The DDA clearly ranks among such issues."

He added: "I see the upcoming Ministerial Conference as a unique occasion for the WTO membership to send a number of strong signals to the world with respect to the entire WTO waterfront of issues - from monitoring and surveillance to disputes, accessions, Aid for Trade, technical assistance and international governance."

Several countries spoke following the Director-General's report to the General Council.

Tanzania, on behalf of the Least Developed Countries (LDCs), said that it is hoped that the political goodwill garnered from the world leaders is going to be translated by the coming Ministerial Conference into real actions in a manner that will assist the Geneva process reach an early conclusion.

Concluding the DDA (Doha Development Agenda) negotiations would deliver the needed contribution to economic recovery and demonstrate the benefits of the multilateral trading system where LDCs continue to be marginalised, said Tanzania.

The situation, Tanzania added, has worsened after the global economic and financial crisis as a result of which, as the world economy struggles to recover from its vagaries, the LDCs continue to face major challenges.

"It is important to note, however, that concluding this round should not come at the expense of the developmental components of the Round, which ensure the integration of developing countries, and particularly the LDCs, in a fair, development-friendly multilateral trading system."

The LDC Group still believes that the negotiating process must remain multilateral and fully transparent, with a bottom-up approach. Bilateral and plurilateral consultations may be useful in enhancing mutual understanding, but should not replace the multilateral negotiations, nor should they affect the consensus reached within the multilateral context.

Tanzania said that there are concerns that bilateral and plurilateral consultations may be used to selectively reopen stabilized elements of the negotiations, or to compromise the interests of developing countries, particularly the LDCs.

The Group reiterated its call for an early harvest in areas where consensus has been achieved for LDC specific issues.

In view of the burden and heavy cost which the LDCs have had to bear as a result of the protraction to the DDA negotiations, the Group once again called for operationalisation of duty-free, quota-free (DFQF) market access for LDCs, provision of a services waiver, implementation of special and differential treatment provisions, and ambitious and expeditious implementation of the decision regarding the cotton initiative as mandated in the Hong Kong Ministerial Declaration.

(In the Hong Kong Ministerial Declaration of 2005, Ministers recalled the mandate given by the Members in the Decision adopted by the General Council on 1 August 2004 to address cotton ambitiously, expeditiously and specifically, within the agriculture negotiations in relation to all trade-distorting policies affecting the sector in all three pillars of market access, domestic support and export competition, as specified in the Doha text and the July 2004 Framework text.

(Ministers reaffirmed their commitment to ensure having an explicit decision on cotton within the agriculture negotiations and through the Sub-Committee on Cotton ambitiously, expeditiously and specifically as follows: all forms of export subsidies for cotton will be eliminated by developed countries in 2006; on market access, developed countries will give duty and quota free access for cotton exports from least developed countries (LDCs) from the commencement of the implementation period; and Members agree that the objective is that, as an outcome for the negotiations, trade distorting domestic subsidies for cotton production be reduced more ambitiously than under whatever general formula is agreed and that it should be implemented over a shorter period of time than generally applicable.)

The LDC Group re-emphasized that recently, the Trade Ministers in Dar es Salaam took the position that there can be no conclusion of the DDA if the cotton issue is not resolved.

Tanzania stressed that another issue of serious concern to the LDCs is the cumbersome accession procedures.

The Group reiterated its call for the implementation of the Guidelines for Accession adopted by the General Council in 2002 in letter and spirit and urged the establishment and adoption of an effective mechanism for fast-tracking the accession process for LDCs, in the context of the principle of special and differential treatment.

Egypt, on behalf of the African Group, referring to the African Trade Ministers' meeting in Cairo on 27-29 October, said that African Ministers reiterated that the early and successful conclusion of the Doha Development Round, with the developmental component at its core, has become imperative as a stimulus for the growth of African economies, especially in light of the two-fold effect of the economic and financial crisis on African economic growth and national developmental plans, recalling in this regard the African Development Bank's estimates that losses in export revenues for the African continent will reach $251 billion in 2009, and $277 billion in 2010.

Ministers had called upon the major players, particularly the developed countries, to show the required leadership to move the negotiations forward, on the basis of the agreed mandates.

They have cautioned in this regard against attempts to re-interpret existing mandates and deviate from agreed principles, and opposed any form of selective re-sequencing of issues, or re-opening of the stabilized parts of modalities, stressing that the negotiations should preserve and build on progress achieved so far, and that the negotiating process must remain multilateral and fully transparent.

Highlighting their concern that no significant progress has been achieved in key issues of interest to Africa, said Egypt, "our Ministers called upon WTO Members to achieve an 'early harvest' of an ambitious, expeditious and specific outcome for cotton, and give the necessary priority to issues of importance to African and LDC Members."

Egypt said that Ministers have furthermore showed solidarity with African and LDC Members that are negotiating accession, and urged all WTO Members to facilitate and accelerate the process, underscoring that African countries should not be required to make concessions that go beyond their level of development and current WTO rules.

Underscoring the importance of Aid for Trade in addressing the supply side capacity and trade-related infrastructure, the African Ministers stressed the need to maintain the momentum in securing additional, predictable and sustainable resources, and reiterated the importance of ensuring that the offer matches the demand, and the need for improving the aid supply mechanism, while strengthening its monitoring and assessment in order to maximize Aid for Trade effectiveness and impact, said Egypt.

Egypt said that the African Group would like to stress once again that for Africa, development outcomes in each of the negotiating areas remain the raison d'etre of the Round and Africa will join consensus only if the Round delivers on concrete development deliverables.

According to trade officials, Mauritius and Singapore recapped what happened at the ACP and APEC Ministerial meetings, respectively.

Under the agenda item of report by the Director-General on the development assistance aspects of cotton, Lamy reported that development assistance specific to cotton stands at $564 million. If a broader framework is used involving agriculture and infrastructure related support, the figure comes to $2.8 billion.

(According to trade officials, the Director-General's report amongst others notes that since the first half of 2008, the price of cotton has fluctuated on futures markets between some 68 US cents per pound to 90 cents per pound. The production of cotton in cotton mills fell 13% in 2007-2008, at 23 million tons. It represents the biggest decline in 60 years.

(The output of LDCs has fallen from 1.4 million tons in 2004-2005 to 800,000 tons in 2008-2009. For Africa, the figures for the two corresponding periods are 2.0 million tons in 2004-2005 and 1.1 million tons in 2008-2009. The price of cotton from the 1970s through the 1990s averaged 74 US cents per pound. Since 1999, the average has been about 58 cents per pound.)

Following the Director-General's report on the cotton issue, Tanzania, on behalf of the LDCs, said that the negotiations on cotton have so far not yet attained any solution since the Hong Kong Ministerial meeting despite its particular importance to LDCs.

It called upon WTO Members to achieve an "early harvest" of an ambitious, expeditious and specific outcome for cotton trade-related aspects, on the basis of the approach advocated by the Chair of the Special Session of the Committee on Agriculture contained in document TN/AG/W/4/Rev. 4 dated 6 December 2008.

Tanzania said that the LDCs continue to push for a solution of this long-standing issue to find a lasting outcome for cotton trade-related aspects, in particular, the elimination of trade-distorting domestic support measures and export subsidies, and the granting of duty-free and quota-free market access for cotton and cotton by-products originating from LDCs.

The Group believed that cotton trade-related solutions are more important than the development aspect of cotton and for all African LDCs.

With regard to development assistance aspects of cotton, the LDC group hoped that the mandate contained in Paragraph 12 of the Hong Kong Declaration will be renewed. It urged for continued support from all Members of the Director-General's ongoing consultative framework mechanism on cotton. It also urged the Director-General to report to the next General Council and the subsequent eighth Ministerial Conference.

(Paragraph 12 relates to development assistance aspects of cotton where Ministers amongst others welcomed the consultative framework process initiated by the Director-General. Ministers also took note of his periodic reports and urged him to further intensify his consultative efforts with bilateral donors and with multilateral and regional institutions, with emphasis on improved coherence, coordination and enhanced implementation and to explore the possibility of establishing through such institutions a mechanism to deal with income declines in the cotton sector until the end of subsidies.)

According to trade officials, Benin, on behalf of the Cotton-4 (Benin, Burkina Faso, Chad and Mali), said the Director-General must keep the General Council and the Ministerial Conference appraised of the issue. The Director-General must also continue his work in this respect.

Brazil supported the LDCs and the Cotton-4.

The EU said that it has heard the criticisms of the lack of progress on this issue. It said that the EU, thanks to its internal reforms, has already put into place a specific, expeditious and ambitious outcome for cotton.

According to trade officials, India said that progress in cotton is a critical litmus test of the development dimension of the Doha Round. It also supported the Cotton-4.

Trade officials said that the US did not speak on this agenda item.

Under an agenda item relating to the upcoming seventh Ministerial Conference, Members approved the decisions in relation to extending the moratoriums on TRIPS non-violation complaints and on E-Commerce duties.

With regards to the TRIPS non-violation complaints issue, the TRIPS Council, at its meeting on 6 November, agreed to recommend that the seventh session of the Ministerial Conference decide as follows:

"We take note of the work done by the Council for Trade-Related Aspects of Intellectual Property Rights pursuant to paragraph 11.1 of the Doha Decision on Implementation-Related Issues and Concerns and paragraph 45 of the Hong Kong Ministerial Declaration, and direct it to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1 (b) and 1 ( c) of Article XXIII of GATT 1994 and make recommendations to our next Session, which we have decided to hold in 2011. It is agreed that, in the meantime, Members will not initiate such complaints under the TRIPS Agreement."

In relation to E-Commerce, through dedicated discussions under the auspices of the General Council, Members had agreed that the following text should be sent to the General Council for forwarding to Ministers:

"We take note of the reports from the General Council and subsidiary bodies on the Work Programme on Electronic Commerce and express our concern that the examination of issues under the Work Programme is not yet complete. We decide to intensively reinvigorate that work, based on the Work Programme and guidelines given in the General Council Decision of 25 September 1998.

We instruct the General Council to hold periodic reviews of the progress on the Work Programme in its sessions of July 2010, December 2010 and July 2011. The reports of these reviews, including any recommendations for action, would be taken into consideration during our next session, which we have decided to hold in 2011, for decisions under this item.

The Work Programme shall include development-related issues, basic WTO principles including among others non-discrimination, predictability and transparency, and discussions on the trade treatment, inter alia, of electronically delivered software. We agree to maintain the current institutional arrangements for the Work Programme.

We decide that Members will maintain their current practice of not imposing customs duties on electronic transmissions until our next session, which we have decided to hold in 2011."

Under a separate agenda item, the General Council approved a request by Palestine for observer status at the seventh Ministerial Conference. +