TWN Info Service on WTO and Trade Issues (Aug10/02)
6 August 2010
Third World Network

"Widespread schizophrenia" in Doha Round - Indian envoy
Published in SUNS #6978 dated 2 August 2010

Geneva, 30 Jul (Kanaga Raja) -- There is clearly a "widespread schizophrenia" among Members of the World Trade Organization (WTO) on the issue of "ambition" in the context of the Doha Round of trade negotiations, outgoing Ambassador Ujal Singh Bhatia of India told a meeting of the General Council Thursday.

In his final intervention at the General Council meeting before returning to capital, the Indian envoy, one of the key participants in the various formats of the Doha talks, believed that the most important reason why Members are at an impasse in the Doha Round is that they "have different perceptions about the level of ambition that is likely to emerge in areas of interest to them."

Discussions on this issue in the past have made it clear that "ambition" means different things to different people, he said, noting that what compounds the problem is that often there is no logical consistency in individual Members' perceptions of "ambition".

In this context, he pointed to some Members being seen to demand high ambition in (cutting) tariffs on non-agricultural (industrial) products but "retreating deep into their trenches" when it comes to discussions on agriculture and on non-tariff barriers (NTBs) in non-agricultural products. Similarly, Members have been seen to demand ambitious outcomes in market access in services but taking out their red flags when it comes to equally ambitious outcomes in domestic regulations or services subsidies.

"Clearly, there is a widespread schizophrenia among members on this issue," he said.

Citing the classic film "Rashomon" by Akiro Kurosawa, which he said very eloquently portrayed the problem of different perceptions of reality, Ambassador Bhatia noted that Rashomon was a somber and tragic film.

"We cannot allow the Doha Round to go that way," he said, stressing that it is essential therefore that Members have an informed fact-based dialogue in the WTO about what "ambition" means in the context of the Doha Round (see details of his statement below).

According to trade officials, Brazil and Venezuela were among those that supported the Indian statement.

The annual end-July General Council meeting before Members break for the summer recess followed from an informal meeting of the Trade Negotiations Committee (TNC) that took place two days earlier, in which Members while welcoming the so-called "new dynamism" in the Doha process involving small group meetings in variable geometry, stressed the centrality of the multilateral process, in particular of the negotiating groups (see SUNS #6976 dated 29 July).

A highlight of the General Council meeting was the agreement by Members to hold a symposium to discuss the trade effects of stimulus programmes undertaken by Members in response to the financial and economic crisis.

Trade officials said that the symposium, whose date is yet to be agreed, will be conducted as a special session of the Trade Policy Review Body (see separate article).

Under the agenda item of the report by the Director-General in his capacity as Chair of the TNC, Pascal Lamy said: "Looking ahead to our work after the summer break and the challenges in the last quarter of 2010, I detected energy in the membership and a belief that the various processes in place in Geneva can lead to moving from process to tackle substantive issues."

"As I said on Tuesday (at the informal TNC meeting) and in keeping with the cocktail analogy, I believe we have the ingredients for our drink of choice. The mood music has become a bit more upbeat. It is time we start shaking the cocktail."

The Director-General also said that work on Aid for Trade is advancing well and Members need to ensure that they sustain these efforts. On the Enhanced Integrated Framework, which is the special Aid for Trade vehicle for LDCs, he said that this is also now up and running and focusing on concrete deliverables on the ground.

Noting that two months from now, there will be a gathering in New York for the United Nations Summit on the Millennium Development Goals, to look at progress achieved in combating poverty, he said: "The strengthening of the multilateral trading system through the conclusion of the DDA (Doha Development Agenda) and Aid for Trade are the contributions that the WTO has to make to this goal."

Several delegations spoke following the report by the Chair of the TNC.

According to trade officials, several delegations including Zambia (for the Least Developed Countries), the European Union, Brazil, Burkina Faso (for the Cotton-4) and Pakistan asked for their statements made at the informal TNC meeting on Tuesday to be read into the record of the General Council meeting.

In his final intervention at the General Council, Ambassador Ujal Singh Bhatia of India spoke on what he referred to as an "unusual issue", the issue of "ambition".

Pointing out that the most important reason why Members are at an impasse in the Doha Round is that they have different perceptions about the level of ambition that is likely to emerge in areas of interest to them, Ambassador Bhatia said that discussions on this issue in the past have made it clear that ambition mean different things to different people.

"We have frequently seen some members demanding high ambition in NAMA tariffs and retreating deep into their trenches when it comes to discussions on agriculture and even on NTBs in NAMA. We have seen members demanding ambitious outcomes in Services market access but taking out their red flags when it comes to an equally ambitious outcome in domestic regulations or Services subsidies."

"Clearly, there is a widespread schizophrenia among members on this issue," he said.

"In the absence of a clear, fact-based discussion on this issue, the debate on ambition in the Doha Round has veered off at a tangent, with various vocal constituencies articulating their largely negative views based on a narrow understanding of the results that we are likely to achieve. There also seems to be a strange cohabitation between such constituencies and some think tanks, each feeding the other's apprehensions," he added.

Stressing the need for an informed fact-based dialogue in the WTO about what ambition means in the context of the Doha Round, Ambassador Bhatia said that the essential test for an outcome of the Round is whether it has contributed significantly to liberalization in the global trading system. In this context, he added, it is clearly simplistic to view market access as a function of tariff levels alone. Such a view is uni-dimensional and ignores the complexity of business in the real world.

The issues of liberalization and market access need to be viewed in a larger framework involving a number of elements in the negotiating agenda of the Doha Development Agenda, he said.

The Indian envoy listed several such elements.

He said that the removal of distortions in agriculture through reduction or elimination of subsidies both domestic and export, as well as through simplification of tariff structures, will have a significant impact on market access in agriculture.

He also said that NTBs in various market access areas of agriculture and NAMA are arguably a bigger impediment in world trade today than tariffs. A strong outcome in this area can substantially improve the conditions of market access.

"Yet, we continue to avoid a discussion on horizontal elements of NTBs aimed at building upon TBT-SPS (technical barriers to trade and sanitary and phytosanitary measures) disciplines across the board, and are instead focusing on a limited number of sectoral NTB issues. A discussion on NTBs without a discussion on strengthening international standard setting is like a performance of Hamlet without the Prince of Denmark. Yet, this issue continues to be given short shrift," said Ambassador Bhatia.

Citing another element, Ambassador Bhatia said that the single most important area for improving market access conditions is Trade Facilitation. Various studies have established that this is the area which will provide the maximum gains from the Round.

"It is really unfortunate to see that members are steadily inundating the text with more and more square brackets designed to further reduce the already modest ambition that remains. We need to preserve and enhance the ambition in the Trade Facilitation negotiations and work on a methodology to quantify the outcome in terms of market access gains."

The issue of predictability is a major element of market access, said Ambassador Bhatia. The substantial reduction of water in tariffs, especially in developing countries, will be a major outcome of the Round. This needs to be acknowledged as an important outcome in a quantitatively robust manner.

He stressed that the improvement and tightening of disciplines is yet another important contributor to trade liberalization and market access. A substantial outcome in areas like domestic regulations in services, anti-dumping, RTAs (regional trade agreements), etc can bring about a sea change in market access conditions.

According to Ambassador Bhatia, all these issues are amenable to quantification in a properly designed analytical framework.

"Such a framework will enable an informed and fact-based discussion on what we can expect from the Doha Round. It is too late in the day for me to get into a debate of how we might take up such an exercise. I would only urge members to reflect on this."

"Separately, now that there is a broad agreement among members to get into brainstorming mode, it is important that these considerations are kept firmly in mind while we look for solutions in various formats," Ambassador Bhatia concluded.

According to trade officials, Zambia, on behalf of the Least Developed Countries (LDCs), asked for its statement made at the informal TNC meeting to be read into the record.

Gabon, on behalf of the African Group, said that the small group meetings in variable geometry are important and are needed. It stressed however that it is important that this activity respects the principles of transparency and inclusiveness, and that anything that comes out of the smaller groups feeds into the multilateral process. Development is at the heart of the negotiations, it said, stressing also on the key issues of cotton, special and differential treatment and aid for trade.

Morocco, on behalf of the Arab Group, also stressed the issue of transparency and inclusiveness and said that development must be at the heart of the negotiations. The issue of cotton is of great importance to the Arab Group, many of whose members are African, Morocco added.

The European Union asked for its TNC statement to be put on the record.

Brazil supported the Indian statement, and asked for its own TNC statement to be put on the record.

Burkina Faso, voicing support for the African Group statement, asked for its TNC statement to be put on the record.

The Dominican Republic, on behalf of the informal group of developing countries, pointed to two concerns. The first is the slow pace of the negotiations overall and the fact that there seems to be little political engagement at this moment.

The second is that Members should not forget that the Doha Round is a Development Round, it said, adding that the group's members would like to recall that development issues must remain at the centre of all the negotiations, as was clearly stated in both the Doha Declaration of 2001 and in Hong Kong in 2005.

Members must not lose sight of the concept under which these negotiations were launched, which is that of a "development" oriented round. The developmental adjustments offered have been extremely modest, whilst the price requested in return is excessive, it said.

Cuba said that the development dimension needs to be at the heart of the negotiations.

Ecuador supported the statement made by Chinese Taipei on behalf of the Recently Acceded Members at the informal TNC meeting on Tuesday. It also highlighted the principle of transparency and inclusiveness.

Argentina said that decisions should be taken in the multilateral context. The development dimension should not be swept aside by a mercantile tide. Agriculture will determine the level of ambition for the Doha Round. It also called for an early harvest for the LDCs.

According to trade officials, South Africa said that while the small group process has been heartening, it is too early to tell if this will lead to any kind of political decision-making that might lead to convergence. The Ambassadors are now central to the process.

Pakistan asked for its statement made at the TNC meeting to be put on the record.

Venezuela, voicing agreement with the Indian statement, said that the development outcome is the raison d'etre of the Doha negotiations.

On the agenda item of transparency for preferential trade arrangements (PTAs), a draft proposal has been put forward by Brazil, China, India and the United States.

According to the proposal, the transparency mechanism shall apply to PTAs falling under paragraph 2 of the Decision of 28 November 1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries (the Enabling Clause), with the exception of regional trade agreements under paragraph 2 ( c) as described in the General Council Decision of 14 December 2006 (the Transparency Mechanism for Regional Trade Agreements); PTAs taking the form of preferential treatment accorded by any Member to products of least-developed countries; and any other non-reciprocal preferential treatment authorized under the WTO Agreement.

The proposal says that the required notification of a new or renewed PTA shall take place as early as possible, and that it will occur when practicable before the application of preferential treatment by the notifying Member and at the latest, three months after the PTA is in force.

Other issues covered by the proposal are on procedures to enhance transparency, subsequent notification and reporting, as well as reappraisal of the mechanism.

According to trade officials, the view of the Chair of the Committee on Trade and Development (where the proposal was tabled) is that the proposal put forward by the four proponents has a very good chance of being approved.

Meanwhile, on the waiver (pursuant to Article IX: 4 of the WTO Agreement) in respect of the US Andean Trade Preference Act (ATPA), which was granted on 27 May 2009 until 31 December 2014, Bolivia voiced its concerns at the General Council meeting at being excluded from the preference scheme.

According to a US communication to the General Council, the ATPA authorizes the US President to provide duty-free or other preferential treatment to products from four Andean countries - Bolivia, Colombia, Ecuador and Peru. The purpose of the scheme is to enable the beneficiary countries to develop alternatives to coca cultivation and cocaine production.

The ATPA was subsequently amended by the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which allows duty-free treatment for certain products that were previously excluded under ATPA. The US has cited these as including certain textile and apparel articles, footwear, tuna packaged in foil or other flexible packages, petroleum and petroleum derivatives, watches and watch parts, and certain leather goods.

Bolivia was suspended as a beneficiary country under ATPA, effective from 15 December 2008.

According to trade officials, Bolivia said that it has eradicated over 3,000 hectares of coca production, and that the country represents only 19% of the overall production of coca. It has also increased the number of seizures of coca, cocaine etc.

These need to be acknowledged and there is also need for a fact-based discussion, it said, adding that by being excluded from the US preference scheme, it is being hurt by not getting the preferential benefits.

According to trade officials, as a result of this, pointed out Bolivia, one-third of the
19,000 jobs created in the textile industry have been lost, at an overall cost of sales of some $89 million. Thirty percent of jobs in the leather industry have been lost as well.

According to trade officials, Ecuador, Brazil, Cuba, Chile, Venezuela, Argentina, Nicaragua, and Colombia supported Bolivia. +