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TWN Info Service on WTO and Trade Issues (May11/07)
18 May 2011
Third World Network

WTO DG to consult on way ahead for stalled Doha talks
Published SUNS #7140 dated 2 May 2011

Geneva, 29 Apr (Kanaga Raja) -- The Doha Round of trade negotiations is once more on "the brink of failure", the Director-General of the World Trade Organization (WTO), Mr Pascal Lamy, said Friday and proposed that he would pursue a process of consultations with the membership in various configurations and at various levels, in order to try to find a way out of the current impasse.

Lamy's proposal came at an informal meeting of the Trade Negotiations Committee (TNC), whose underlying theme, according to trade officials, was to discuss the next steps ahead in respect of the Doha negotiations.

In a news announcement on its website, the WTO press office said that "WTO ambassadors endorsed on 29 April 2011 Director-General Pascal Lamy's plan to consult delegations in Geneva and ministers around the world in the search for a different way of achieving a breakthrough in the Doha Development Agenda negotiations."

In the context of his own "briefings" to some of the WTO "friendly media" last week, and the extensive pre-TNC meeting media buildup by his spin-doctors since the release on 21 April of the compendium of reports of Chairs of the Doha negotiating groups, with Lamy's own note of the current unbridgeable gap, his statement to the TNC and his proposed extensive consultation process came as an anti-climax of sorts.

In his statement at the TNC, the WTO head, who is also the Chair of the TNC, said that he had already started and intended to carry out his process of consultations with groups and individual Members in various configurations, at various levels, including at Ministerial level at the upcoming APEC Trade Ministers' meeting (18-21 May in Montana, USA) and the trade ministers' meeting on the margins of the OECD Ministerial in Paris on 26 May. He proposed to report back to the TNC on 31 May (see below).

A non-paper by the European Union proposing a possible compromise in the NAMA sectoral negotiations also featured at the informal TNC meeting (see below).

The original roadmap proposed earlier this year was for concluding the Doha talks this year, with all negotiating groups producing texts by Easter (late April), an outline Doha package by around July and finalizing the legal texts and scheduling exercise during the rest of the year.

However, on 29 March, Lamy reported to the TNC that the Doha talks had reached an impasse particularly over the sectoral initiative in non-agricultural market access (NAMA). (See SUNS #7120 dated 31 March 2011).

The Chairs of the negotiating groups subsequently issued their documents on 21 April, with the WTO head, in his cover note to the compendium of documents, reporting that members are confronted with a clear political gap vis-a-vis the NAMA framework currently on the table, which as things stand, "is not bridgeable today". (See SUNS #7136 dated 26 April 2011).

The informal TNC meeting on Friday was preceded by a "Green Room" meeting on Thursday.

Speaking of that meeting, trade officials said that there was a lot of discussion on the next steps but no decisions were taken. Officials said there was a "sober recognition" at that meeting of the state-of-play in the negotiations, and agreement with the Director-General's assessment of the current situation.

While acknowledging that the deadline for concluding the Doha talks in 2011 would be difficult to meet, trade officials however said that there was no decision taken in the Green Room with regards to this.

There was also not any sort of recognition at the meeting that this could not be done in 2011, they added, noting that everyone however accepted that this will be extremely difficult to do.

Everyone accepted that "we can't have 'business-as-usual', and that we don't want to throw away ten years of hard work," said trade officials. It's a very early stage of the process, in that members are examining where they are from a political perspective and beginning to discuss where they should go, trade officials said. "And we are at the beginning of that conversation," they added.

A participant in the Green Room meeting told SUNS that the Director-General again reported that the gaps are unbridgeable and that there is need for a serious discussion about the next steps.

The EU presented a proposal in the form of a non-paper on the sectoral negotiations, as a basis for discussion, said the trade diplomat.

[The EU non-paper says that negotiations on sectoral tariff liberalisation are at this moment the biggest obstacle to an agreement in the Doha Round. Negotiations on sectorals, the EU paper claimed, are a mandated part of the Doha undertaking. (The Doha Declaration and work programme of 2001 does not mention sectoral negotiations at all, while the Hong Kong Ministerial Declaration of 2005 brought up the issue for the first time, though making clear that participation in this is to be voluntary. - SUNS)

[According to the EU non-paper, "tariff elimination" was part of the initial Doha mandate. The Hong Kong declaration confirmed sectorals would be part of the package, but also specified they would be voluntary in nature, or "non-mandatory". However, the concept of voluntary participation combined with the critical mass concept has led to a situation of blockage in the Round, the EU non-paper argued. In practice, no sectoral can come into force without the participation of major world traders, such as EU, US, China and Japan, but also needs the participation of a number of other Members, developed and developing, in order to reach the threshold. So far, no sectoral proposal has gathered enough support to come into force, with even the more successful proposals stuck at around 60% of world trade, said the EU non-paper.

[The EU non-paper said that the core of a compromise on sectorals will have to consist of the three biggest, commercially most important sectors: chemicals, machinery and electronics. The following modalities are proposed for these sectors. On Chemicals and Machinery (a combination of 0/0 and 0/X): developed countries move to 0 across the board. Developing countries are also expected to participate in a 0 basket for some products, in particular where sectoral arrangements are already in place (for machinery: construction and agricultural machinery). A 0/0 basket in chemicals could cover at least the existing 0/0 arrangement (pharmaceuticals). For other products, Developing countries would have access to additional Special & Differential Treatment by applying X, where X equals the result following the application of the Swiss formula cut plus a further reduction of a fixed percentage point. This modality takes into account the fact that tariff levels are generally already lower in developed countries than in developing ones. It also recognises that to fully eliminate tariffs, Members with relatively high protection after the application of the Swiss formula would have to do a very large effort. X for developing members would be calibrated in a way that delivers significant liberalisation, proportionate tariff reductions and efforts commensurate with those of developed members. The contribution of developing countries will be equivalent, but not the same; end rates would be different, depending on the base level after formula.

[According to the EU non-paper, for Chemicals, tariff reductions should lead at least to the existing Chemicals Tariff Harmonisation Agreement (CTHA) levels for all developing country participants. Those developing Members already applying the levels of the CTHA should reduce their tariffs by the Swiss formula cut plus a fixed percentage point cut, with new end rates ending up between the CTHA levels and 0. On Electronics & Electrical Machinery (0/0): in this sector, the overwhelming majority of world exports come from developing countries. Therefore, it seems reasonable to expect that those developing countries with a strong export performance in the sector join the effort of developed countries and eliminate tariffs in the sector. This also corresponds to current practice in the ITA, which covers a large number of products in this sector. However, recognising the sensitivities in the audiovisual sector in several Members, the audiovisual sector should be excluded from the sectoral.

[The EU non-paper further said that other sectors could also be considered, but progress would first have to be made on the three biggest sectors. For all other sectors, more limited in scope and coverage, and more similar to the original sectorals from the Uruguay Round, the only meaningful modality would be 0/0.]

According to the trade diplomat, Lamy told the Green Room meeting that he had been consulting with many delegations on the next steps and that he will continue with those discussions in order to come up with a consensus-based solution.

There was some conversation around the table about a "Plan B" etc but that did not go much further, said the trade diplomat, adding that many delegations said that we need to stick to Plan A and conclude the Round this year.

While the Least Developed and some African countries mentioned the issue of an "early harvest", nobody talked about this, as Members want the full harvest, the trade diplomat remarked.

[In briefings to some of the newsmen, Lamy and some of his aides appear to have promoted the idea of an "early harvest" with a "trade facilitation agreement" and rules on fisheries, but no mention of any of the items of interest to the LDCs and the African countries, like "cotton".]

The trade diplomat was of the view that the Director-General seems to be playing for time and is relying on the upcoming ministerial meetings of the APEC, OECD and the G8.

According to another participant in Thursday's Green Room meeting, the next steps forward is something that the membership is going to find out collectively. All the options are open, the trade diplomat added.

There are a number of Members who believe that the Doha Round can still be concluded in 2011, while some others believe that maybe at this stage the round cannot be concluded, he said.

Pointing to the big gaps among some Members in the negotiations that have not been able to be closed, the trade diplomat said "we will continue looking for solutions... We will continue working, and we will continue consulting among ourselves... This is not over, that's important," he stressed.

Another participant in the Green Room meeting told SUNS that the Director-General is going to ask the Members on what should be the way forward for the Doha talks.

According to trade officials, there was a political discussion at the informal TNC meeting on Friday in which Members expressed their concern and the need to look at things from a different perspective.

Trade officials said there were two issues on which the membership is in accord, namely, that they cannot continue with "business as usual", meaning that the current approach or format to try to resolve the outstanding differences needs to be re-examined; and that ten years of work since the launch of the Doha Round cannot be washed out to sea.

In terms of the next steps, which trade officials said was the underlying theme of this meeting, there was not at this point, any concrete discussion about what is to follow. A number of key Members said that there was need to make an assessment relatively quickly as to whether the whole notion of "Plan A" (taken to mean as concluding the round this year) will work. How exactly Plan A can be defined and what Plan B, C, or D might be was not discussed in the TNC meeting, trade officials added.

No decisions were taken on these issues at the TNC meeting, said trade officials, noting that another meeting of the TNC will be held on 31 May, and that between now and then, a meeting of trade ministers of APEC will be held on 18 May and a meeting of some trade ministers on the margins of the OECD ministerial the following week. Following these meetings, the Director-General will have another discussion with the membership, added trade officials.

Meanwhile, speaking to journalists after the informal TNC meeting Friday, Ambassador Michael Punke of the United States said that the report by the Director-General "was pretty sobering", and had highlighted that "the gaps are very large". And that was the basis of the Director-General's conclusion following his "confessionals", and was also the basis of the conclusions that a lot of Members drew from reading the texts (issued on 21 April).

On the ways forward in the coming weeks, he said that the key point that the US made (in the meeting) is that "we remain very committed to Doha, but at the same time, we collectively face some very hard choices."

"And I think one of the points that we've tried to very much emphasize is that we can't fall into the trap of deciding through indecision. And I think what's going to have to happen in the days and weeks ahead is that collectively we're going to have to determine the most productive path for moving forward," the US envoy added.

"I certainly think its true that we've been down a lot of paths already, and I think after having worked very closely with our negotiating partners over the course of the last 18 months, we know each others' positions very well... I agree with Director-General Lamy's assessment that the gaps that we face right now are political, they're not about process," said Ambassador Punke.

Over the weeks ahead, there will be opportunities for ministers to speak directly to each other, he noted, adding that all of those different forms of interaction are very important to the process.

"The key remains our collective ability to decide if there is a productive path forward, and I think what we're all doing and what you hear members struggling with in their statements is trying to evaluate - is the current path going to get us to the finish line. If it is, then all of us need to jump in and do the work. If it's not, then all of us need to consider what other possible pathways might be," he said.

On the EU's proposal on the sectoral negotiations, he said that the US is studying the EU proposal very closely.

"The key question to us is whether the EU proposal can catalyse new give-and-take between the members, because that's what is lacking right now is give-and-take among the members. And so, that's how we'll be evaluating over the days ahead," said Ambassador Punke, elaborating that from the US perspective, the threshold question of whether it can catalyse negotiations is one that all of the key members can reach very quickly.

"We can't know what the outcome of those negotiations might be, but we can certainly know very quickly whether or not they can catalyse the negotiations, and so I think all of us coming to that determination is something that needs to happen very quickly," he added.

On the question of a "Plan B" or an "early harvest", the US envoy said that those ideas were referred to by some members in general terms. "And clearly, that's part of the broader discussion of next steps."

(In his statement at the informal TNC meeting, the US envoy said that the fundamental gap in expectations is not limited to NAMA. "We do not agree with the suggestion in the report (of the Director-General) that if we could work out our differences in NAMA, then other areas of the negotiations would simply fall into place. As we pointed out at the last TNC meeting, fundamental differences also exist with respect to agriculture and services," he said.)

Also speaking after the informal TNC meeting, a developing country trade diplomat pointed to the "very important" thirty days ahead. "It's a period for reflection, at which the next steps for the Doha Round should be decided."

He noted that a meeting of the TNC has been scheduled for 31 May, "at which the concrete next steps should be discussed - and all towards the objective of fulfilling the mandate of concluding the Round."

On the EU non-paper on the sectorals, the trade diplomat told SUNS that it is a compromise approach on sectorals. The major players in these negotiations said that they are still studying the proposal.

In his statement at the TNC, the WTO head said: "Today's meeting will be significant - not because we expect to see any miracles - but because it is a very necessary occasion for us to come together in a sober and responsible way, in order to be able to consider collectively the next steps in the negotiations."

He said that the draft texts and reports that the Negotiating Group Chairs and he circulated on 21 April contained no surprises. "They show the magnitude of what has been achieved in nearly ten years of hard work, and also the issues that still separate us from a successful outcome. As I indicated in my message to you last week: this Round, as it was mandated, cannot be completed without these issues being solved. To be sure, there are still many areas of these texts where differences exist and need to be resolved through a further hard bargaining."

"But my frank assessment is that under the right conditions of temperature and pressure a deal would be doable, bearing in mind that ‘nothing is agreed until everything is agreed', were it not for NAMA (non-agricultural market access), where the magnitude of the gaps among the major players is effectively blocking progress in other areas and is putting into serious doubt the conclusion of the DDA (Doha Development Agenda) this year. This Round is, once more, on the brink of failure," said Lamy.

Lamy noted that in recent days observers and commentators have advanced many reasons and explanations for the current impasse in the negotiations. For some, the launch of this Round was not well prepared. It was more the product of history, a hasty, even if well intentioned political response to the 9/11 events, rather than the result of a well thought, shared consensus in favour of further economic reforms. Some have argued that the increase in the WTO membership and its diversity has rendered the task of building consensus too cumbersome and complicated. 153 vastly different Members have a harder time agreeing than the original 23 GATT signatories.

For others, said the WTO head, the negotiated agenda was overloaded. They argue that the inclusion of highly controversial issues such as agriculture reform or fisheries subsidies have created huge resistance to a successful conclusion of the Round. They also argue that the single undertaking is a systemic handicap to bring together regulatory disciplines and market opening which cannot be traded off. For others still, the agenda is out-dated: it focuses too much on classic trade issues such as tariffs and subsidies, and disregards important issues in today's trade such as export restrictions, energy or investment, just to name a few.

Some also argue that, with the passing of time, the original exchange rate between agriculture concessions and those in industry have become obsolete, that the current high prices of commodities make binding concessions on agricultural tariffs or subsidies less relevant. Some advance that the economic crisis has aggravated latent protectionist pressures that it has led to inward-looking, isolationist policies, that it has weakened the ability of big WTO members to provide the necessary leadership.

"In sum, the multilateral trading system which has so well served Members for 60 years, contained a major outbreak of protectionism in these last couple of years, is falling victim of its own success. If it ain't broken, why fix it?"

Finally, said Lamy, some go as far as to say that the inability to conclude the Doha Round is nothing but the reflection of a wider malaise: it is part of the general questioning of globalisation. The world, according to this view, has lost appetite for further trade opening. Even more, the current trend would be part of a general retreat from multilateralism, which has already contaminated other international negotiations, be it climate change, the international monetary system, macro-economic coordination or even disarmament.

And yet, closure on the remaining open issues is blocked because of a classic mercantilist issue: tariffs on industrial products, the bread and butter of WTO negotiations since their inception. The matter over which trade negotiators have haggled for more than 60 years and on which they have always been able to find a compromise, using a mix of imagination, determination and spirit of compromise. It is therefore deeply disappointing that no ground for compromise has been found on the issue of industrial tariffs yet.

And yet, he added, what emerges from the consultations he has had so far is that simply keeping the status quo in the Doha Round is dangerous. Of course, short-term, the WTO machinery will continue to deliver on its monitoring functions in the many committees which keep overseeing the implementation by Members of their commitments. The WTO will also continue to settle the disputes brought by its Members. The Secretariat will continue to provide technical assistance to build trade capacity in developing countries and to help improving Aid for Trade.

"But we need to be lucid and realistic: failure of the WTO to deliver on its legislative function, failure of the WTO to update the rules governing international trade - last updated in 1995 - by adapting them to the evolving needs of its Members, failure of the WTO to harness our growing economic interdependence in a cooperative manner risks a slow, silent weakening of the multilateral trading system in the longer term. And with this, a loss of interest by political leaders in many quarters, an erosion of the rules-based multilateral trading system, a creeping return to the law of the jungle."

The Director-General noted that since the GATT was signed in 1948, successive trade rounds have gradually reduced trade barriers and built a stock of rules addressing evolving needs of international trade. Up until the Kennedy Round, the major focus was on reducing tariffs. The Tokyo Round in 1979 resulted in a major update of WTO rules with new agreements on TBT (technical barriers to trade), anti-dumping, subsidies and countervailing measures, import licensing, and customs valuation. Government procurement was brought into the GATT for the first time. The Uruguay Round in 1995 improved previous agreements and added new rules on SPS (Sanitary and Phytosanitary measures). But it was a lot more besides, with the addition of services and intellectual property, a revamped dispute settlement understanding, a first step towards the inclusion of agriculture into the rules of global trade, and of course the re-booting of the GATT and its transformation into the WTO.

"The Doha Development Round," Lamy claimed, "is a further step in this long journey. It is a means to keep adapting our rules to the trading realities of today, addressing the needs of global production chains as well as SMEs, addressing sustainability issues related to trade, i. e. greater disciplines on agriculture, trade facilitation, rules to discipline fishery subsidies which contribute to depleting our oceans, rules addressing non-tariff measures, to name a few."

"Completing this task is urgent today, since there are already new issues in the horizon which require our attention. It is difficult to see these new issues being tackled multilaterally if we are not capable of finding a solution to the issues within the Doha Round. In sum, today's stalemate over the Doha Development Round risks damaging the capacity of the WTO to deliver trade opening for the benefit of all, which is its core mission," Lamy added.

"Today we must begin a process of serious, active reflection on how to build upon the product of our ten years' work and on how to keep alive the principles and the commitments that lie at the heart of the Doha agreements. In doing so, I believe three options will not work: Option 1 ‘business as usual' will not work. Option 2 ‘stopping and starting from scratch' will not work, since the issues blocking progress today will be the same ones on the agenda tomorrow. Option 3 ‘drifting away' by wishing the issue would simply disappear will not work either."

"The question we are confronting today is: what do we do next, and how do we do it? Like all of you, I have heard a wide range of possibilities canvassed. We are not going to decide among these possibilities today. In fact, I strongly suggest we do not rush into any judgment today. These are questions to be approached collectively and in an inclusive manner. Throughout this Round we have placed a high premium on operating in a ‘bottom up' way, and I think we should continue to do so."

"Today and in the meanwhile, the Negotiating Groups should continue their work wherever their Chairs judge it to be productive, and what you found in the Easter package shows that there is useful work ahead, some of which has already been planned by Chairs," he concluded.

A number of delegations spoke following the statement by the TNC Chair.

(A report on the interventions of various delegations at the meeting will appear in a future issue of the SUNS.) +

Trade: WTO DG to consult on way ahead for stalled Doha talks

Geneva, 29 Apr (Kanaga Raja) -- The Doha Round of trade negotiations is once more on "the brink of failure", the Director-General of the World Trade Organization (WTO), Mr Pascal Lamy, said Friday and proposed that he would pursue a process of consultations with the membership in various configurations and at various levels, in order to try to find a way out of the current impasse.

Lamy's proposal came at an informal meeting of the Trade Negotiations Committee (TNC), whose underlying theme, according to trade officials, was to discuss the next steps ahead in respect of the Doha negotiations.

In a news announcement on its website, the WTO press office said that "WTO ambassadors endorsed on 29 April 2011 Director-General Pascal Lamy's plan to consult delegations in Geneva and ministers around the world in the search for a different way of achieving a breakthrough in the Doha Development Agenda negotiations."

In the context of his own "briefings" to some of the WTO "friendly media" last week, and the extensive pre-TNC meeting media buildup by his spin-doctors since the release on 21 April of the compendium of reports of Chairs of the Doha negotiating groups, with Lamy's own note of the current unbridgeable gap, his statement to the TNC and his proposed extensive consultation process came as an anti-climax of sorts.

In his statement at the TNC, the WTO head, who is also the Chair of the TNC, said that he had already started and intended to carry out his process of consultations with groups and individual Members in various configurations, at various levels, including at Ministerial level at the upcoming APEC Trade Ministers' meeting (18-21 May in Montana, USA) and the trade ministers' meeting on the margins of the OECD Ministerial in Paris on 26 May. He proposed to report back to the TNC on 31 May (see below).

A non-paper by the European Union proposing a possible compromise in the NAMA sectoral negotiations also featured at the informal TNC meeting (see below).

The original roadmap proposed earlier this year was for concluding the Doha talks this year, with all negotiating groups producing texts by Easter (late April), an outline Doha package by around July and finalizing the legal texts and scheduling exercise during the rest of the year.

However, on 29 March, Lamy reported to the TNC that the Doha talks had reached an impasse particularly over the sectoral initiative in non-agricultural market access (NAMA). (See SUNS #7120 dated 31 March 2011).

The Chairs of the negotiating groups subsequently issued their documents on 21 April, with the WTO head, in his cover note to the compendium of documents, reporting that members are confronted with a clear political gap vis-a-vis the NAMA framework currently on the table, which as things stand, "is not bridgeable today". (See SUNS #7136 dated 26 April 2011).

The informal TNC meeting on Friday was preceded by a "Green Room" meeting on Thursday.

Speaking of that meeting, trade officials said that there was a lot of discussion on the next steps but no decisions were taken. Officials said there was a "sober recognition" at that meeting of the state-of-play in the negotiations, and agreement with the Director-General's assessment of the current situation.

While acknowledging that the deadline for concluding the Doha talks in 2011 would be difficult to meet, trade officials however said that there was no decision taken in the Green Room with regards to this.

There was also not any sort of recognition at the meeting that this could not be done in 2011, they added, noting that everyone however accepted that this will be extremely difficult to do.

Everyone accepted that "we can't have 'business-as-usual', and that we don't want to throw away ten years of hard work," said trade officials. It's a very early stage of the process, in that members are examining where they are from a political perspective and beginning to discuss where they should go, trade officials said. "And we are at the beginning of that conversation," they added.

A participant in the Green Room meeting told SUNS that the Director-General again reported that the gaps are unbridgeable and that there is need for a serious discussion about the next steps.

The EU presented a proposal in the form of a non-paper on the sectoral negotiations, as a basis for discussion, said the trade diplomat.

[The EU non-paper says that negotiations on sectoral tariff liberalisation are at this moment the biggest obstacle to an agreement in the Doha Round. Negotiations on sectorals, the EU paper claimed, are a mandated part of the Doha undertaking. (The Doha Declaration and work programme of 2001 does not mention sectoral negotiations at all, while the Hong Kong Ministerial Declaration of 2005 brought up the issue for the first time, though making clear that participation in this is to be voluntary. - SUNS)

[According to the EU non-paper, "tariff elimination" was part of the initial Doha mandate. The Hong Kong declaration confirmed sectorals would be part of the package, but also specified they would be voluntary in nature, or "non-mandatory". However, the concept of voluntary participation combined with the critical mass concept has led to a situation of blockage in the Round, the EU non-paper argued. In practice, no sectoral can come into force without the participation of major world traders, such as EU, US, China and Japan, but also needs the participation of a number of other Members, developed and developing, in order to reach the threshold. So far, no sectoral proposal has gathered enough support to come into force, with even the more successful proposals stuck at around 60% of world trade, said the EU non-paper.

[The EU non-paper said that the core of a compromise on sectorals will have to consist of the three biggest, commercially most important sectors: chemicals, machinery and electronics. The following modalities are proposed for these sectors. On Chemicals and Machinery (a combination of 0/0 and 0/X): developed countries move to 0 across the board. Developing countries are also expected to participate in a 0 basket for some products, in particular where sectoral arrangements are already in place (for machinery: construction and agricultural machinery). A 0/0 basket in chemicals could cover at least the existing 0/0 arrangement (pharmaceuticals). For other products, Developing countries would have access to additional Special & Differential Treatment by applying X, where X equals the result following the application of the Swiss formula cut plus a further reduction of a fixed percentage point. This modality takes into account the fact that tariff levels are generally already lower in developed countries than in developing ones. It also recognises that to fully eliminate tariffs, Members with relatively high protection after the application of the Swiss formula would have to do a very large effort. X for developing members would be calibrated in a way that delivers significant liberalisation, proportionate tariff reductions and efforts commensurate with those of developed members. The contribution of developing countries will be equivalent, but not the same; end rates would be different, depending on the base level after formula.

[According to the EU non-paper, for Chemicals, tariff reductions should lead at least to the existing Chemicals Tariff Harmonisation Agreement (CTHA) levels for all developing country participants. Those developing Members already applying the levels of the CTHA should reduce their tariffs by the Swiss formula cut plus a fixed percentage point cut, with new end rates ending up between the CTHA levels and 0. On Electronics & Electrical Machinery (0/0): in this sector, the overwhelming majority of world exports come from developing countries. Therefore, it seems reasonable to expect that those developing countries with a strong export performance in the sector join the effort of developed countries and eliminate tariffs in the sector. This also corresponds to current practice in the ITA, which covers a large number of products in this sector. However, recognising the sensitivities in the audiovisual sector in several Members, the audiovisual sector should be excluded from the sectoral.

[The EU non-paper further said that other sectors could also be considered, but progress would first have to be made on the three biggest sectors. For all other sectors, more limited in scope and coverage, and more similar to the original sectorals from the Uruguay Round, the only meaningful modality would be 0/0.]

According to the trade diplomat, Lamy told the Green Room meeting that he had been consulting with many delegations on the next steps and that he will continue with those discussions in order to come up with a consensus-based solution.

There was some conversation around the table about a "Plan B" etc but that did not go much further, said the trade diplomat, adding that many delegations said that we need to stick to Plan A and conclude the Round this year.

While the Least Developed and some African countries mentioned the issue of an "early harvest", nobody talked about this, as Members want the full harvest, the trade diplomat remarked.

[In briefings to some of the newsmen, Lamy and some of his aides appear to have promoted the idea of an "early harvest" with a "trade facilitation agreement" and rules on fisheries, but no mention of any of the items of interest to the LDCs and the African countries, like "cotton".]

The trade diplomat was of the view that the Director-General seems to be playing for time and is relying on the upcoming ministerial meetings of the APEC, OECD and the G8.

According to another participant in Thursday's Green Room meeting, the next steps forward is something that the membership is going to find out collectively. All the options are open, the trade diplomat added.

There are a number of Members who believe that the Doha Round can still be concluded in 2011, while some others believe that maybe at this stage the round cannot be concluded, he said.

Pointing to the big gaps among some Members in the negotiations that have not been able to be closed, the trade diplomat said "we will continue looking for solutions... We will continue working, and we will continue consulting among ourselves... This is not over, that's important," he stressed.

Another participant in the Green Room meeting told SUNS that the Director-General is going to ask the Members on what should be the way forward for the Doha talks.

According to trade officials, there was a political discussion at the informal TNC meeting on Friday in which Members expressed their concern and the need to look at things from a different perspective.

Trade officials said there were two issues on which the membership is in accord, namely, that they cannot continue with "business as usual", meaning that the current approach or format to try to resolve the outstanding differences needs to be re-examined; and that ten years of work since the launch of the Doha Round cannot be washed out to sea.

In terms of the next steps, which trade officials said was the underlying theme of this meeting, there was not at this point, any concrete discussion about what is to follow. A number of key Members said that there was need to make an assessment relatively quickly as to whether the whole notion of "Plan A" (taken to mean as concluding the round this year) will work. How exactly Plan A can be defined and what Plan B, C, or D might be was not discussed in the TNC meeting, trade officials added.

No decisions were taken on these issues at the TNC meeting, said trade officials, noting that another meeting of the TNC will be held on 31 May, and that between now and then, a meeting of trade ministers of APEC will be held on 18 May and a meeting of some trade ministers on the margins of the OECD ministerial the following week. Following these meetings, the Director-General will have another discussion with the membership, added trade officials.

Meanwhile, speaking to journalists after the informal TNC meeting Friday, Ambassador Michael Punke of the United States said that the report by the Director-General "was pretty sobering", and had highlighted that "the gaps are very large". And that was the basis of the Director-General's conclusion following his "confessionals", and was also the basis of the conclusions that a lot of Members drew from reading the texts (issued on 21 April).

On the ways forward in the coming weeks, he said that the key point that the US made (in the meeting) is that "we remain very committed to Doha, but at the same time, we collectively face some very hard choices."

"And I think one of the points that we've tried to very much emphasize is that we can't fall into the trap of deciding through indecision. And I think what's going to have to happen in the days and weeks ahead is that collectively we're going to have to determine the most productive path for moving forward," the US envoy added.

"I certainly think its true that we've been down a lot of paths already, and I think after having worked very closely with our negotiating partners over the course of the last 18 months, we know each others' positions very well... I agree with Director-General Lamy's assessment that the gaps that we face right now are political, they're not about process," said Ambassador Punke.

Over the weeks ahead, there will be opportunities for ministers to speak directly to each other, he noted, adding that all of those different forms of interaction are very important to the process.

"The key remains our collective ability to decide if there is a productive path forward, and I think what we're all doing and what you hear members struggling with in their statements is trying to evaluate - is the current path going to get us to the finish line. If it is, then all of us need to jump in and do the work. If it's not, then all of us need to consider what other possible pathways might be," he said.

On the EU's proposal on the sectoral negotiations, he said that the US is studying the EU proposal very closely.

"The key question to us is whether the EU proposal can catalyse new give-and-take between the members, because that's what is lacking right now is give-and-take among the members. And so, that's how we'll be evaluating over the days ahead," said Ambassador Punke, elaborating that from the US perspective, the threshold question of whether it can catalyse negotiations is one that all of the key members can reach very quickly.

"We can't know what the outcome of those negotiations might be, but we can certainly know very quickly whether or not they can catalyse the negotiations, and so I think all of us coming to that determination is something that needs to happen very quickly," he added.

On the question of a "Plan B" or an "early harvest", the US envoy said that those ideas were referred to by some members in general terms. "And clearly, that's part of the broader discussion of next steps."

(In his statement at the informal TNC meeting, the US envoy said that the fundamental gap in expectations is not limited to NAMA. "We do not agree with the suggestion in the report (of the Director-General) that if we could work out our differences in NAMA, then other areas of the negotiations would simply fall into place. As we pointed out at the last TNC meeting, fundamental differences also exist with respect to agriculture and services," he said.)

Also speaking after the informal TNC meeting, a developing country trade diplomat pointed to the "very important" thirty days ahead. "It's a period for reflection, at which the next steps for the Doha Round should be decided."

He noted that a meeting of the TNC has been scheduled for 31 May, "at which the concrete next steps should be discussed - and all towards the objective of fulfilling the mandate of concluding the Round."

On the EU non-paper on the sectorals, the trade diplomat told SUNS that it is a compromise approach on sectorals. The major players in these negotiations said that they are still studying the proposal.

In his statement at the TNC, the WTO head said: "Today's meeting will be significant - not because we expect to see any miracles - but because it is a very necessary occasion for us to come together in a sober and responsible way, in order to be able to consider collectively the next steps in the negotiations."

He said that the draft texts and reports that the Negotiating Group Chairs and he circulated on 21 April contained no surprises. "They show the magnitude of what has been achieved in nearly ten years of hard work, and also the issues that still separate us from a successful outcome. As I indicated in my message to you last week: this Round, as it was mandated, cannot be completed without these issues being solved. To be sure, there are still many areas of these texts where differences exist and need to be resolved through a further hard bargaining."

"But my frank assessment is that under the right conditions of temperature and pressure a deal would be doable, bearing in mind that ‘nothing is agreed until everything is agreed', were it not for NAMA (non-agricultural market access), where the magnitude of the gaps among the major players is effectively blocking progress in other areas and is putting into serious doubt the conclusion of the DDA (Doha Development Agenda) this year. This Round is, once more, on the brink of failure," said Lamy.

Lamy noted that in recent days observers and commentators have advanced many reasons and explanations for the current impasse in the negotiations. For some, the launch of this Round was not well prepared. It was more the product of history, a hasty, even if well intentioned political response to the 9/11 events, rather than the result of a well thought, shared consensus in favour of further economic reforms. Some have argued that the increase in the WTO membership and its diversity has rendered the task of building consensus too cumbersome and complicated. 153 vastly different Members have a harder time agreeing than the original 23 GATT signatories.

For others, said the WTO head, the negotiated agenda was overloaded. They argue that the inclusion of highly controversial issues such as agriculture reform or fisheries subsidies have created huge resistance to a successful conclusion of the Round. They also argue that the single undertaking is a systemic handicap to bring together regulatory disciplines and market opening which cannot be traded off. For others still, the agenda is out-dated: it focuses too much on classic trade issues such as tariffs and subsidies, and disregards important issues in today's trade such as export restrictions, energy or investment, just to name a few.

Some also argue that, with the passing of time, the original exchange rate between agriculture concessions and those in industry have become obsolete, that the current high prices of commodities make binding concessions on agricultural tariffs or subsidies less relevant. Some advance that the economic crisis has aggravated latent protectionist pressures that it has led to inward-looking, isolationist policies, that it has weakened the ability of big WTO members to provide the necessary leadership.

"In sum, the multilateral trading system which has so well served Members for 60 years, contained a major outbreak of protectionism in these last couple of years, is falling victim of its own success. If it ain't broken, why fix it?"

Finally, said Lamy, some go as far as to say that the inability to conclude the Doha Round is nothing but the reflection of a wider malaise: it is part of the general questioning of globalisation. The world, according to this view, has lost appetite for further trade opening. Even more, the current trend would be part of a general retreat from multilateralism, which has already contaminated other international negotiations, be it climate change, the international monetary system, macro-economic coordination or even disarmament.

And yet, closure on the remaining open issues is blocked because of a classic mercantilist issue: tariffs on industrial products, the bread and butter of WTO negotiations since their inception. The matter over which trade negotiators have haggled for more than 60 years and on which they have always been able to find a compromise, using a mix of imagination, determination and spirit of compromise. It is therefore deeply disappointing that no ground for compromise has been found on the issue of industrial tariffs yet.

And yet, he added, what emerges from the consultations he has had so far is that simply keeping the status quo in the Doha Round is dangerous. Of course, short-term, the WTO machinery will continue to deliver on its monitoring functions in the many committees which keep overseeing the implementation by Members of their commitments. The WTO will also continue to settle the disputes brought by its Members. The Secretariat will continue to provide technical assistance to build trade capacity in developing countries and to help improving Aid for Trade.

"But we need to be lucid and realistic: failure of the WTO to deliver on its legislative function, failure of the WTO to update the rules governing international trade - last updated in 1995 - by adapting them to the evolving needs of its Members, failure of the WTO to harness our growing economic interdependence in a cooperative manner risks a slow, silent weakening of the multilateral trading system in the longer term. And with this, a loss of interest by political leaders in many quarters, an erosion of the rules-based multilateral trading system, a creeping return to the law of the jungle."

The Director-General noted that since the GATT was signed in 1948, successive trade rounds have gradually reduced trade barriers and built a stock of rules addressing evolving needs of international trade. Up until the Kennedy Round, the major focus was on reducing tariffs. The Tokyo Round in 1979 resulted in a major update of WTO rules with new agreements on TBT (technical barriers to trade), anti-dumping, subsidies and countervailing measures, import licensing, and customs valuation. Government procurement was brought into the GATT for the first time. The Uruguay Round in 1995 improved previous agreements and added new rules on SPS (Sanitary and Phytosanitary measures). But it was a lot more besides, with the addition of services and intellectual property, a revamped dispute settlement understanding, a first step towards the inclusion of agriculture into the rules of global trade, and of course the re-booting of the GATT and its transformation into the WTO.

"The Doha Development Round," Lamy claimed, "is a further step in this long journey. It is a means to keep adapting our rules to the trading realities of today, addressing the needs of global production chains as well as SMEs, addressing sustainability issues related to trade, i. e. greater disciplines on agriculture, trade facilitation, rules to discipline fishery subsidies which contribute to depleting our oceans, rules addressing non-tariff measures, to name a few."

"Completing this task is urgent today, since there are already new issues in the horizon which require our attention. It is difficult to see these new issues being tackled multilaterally if we are not capable of finding a solution to the issues within the Doha Round. In sum, today's stalemate over the Doha Development Round risks damaging the capacity of the WTO to deliver trade opening for the benefit of all, which is its core mission," Lamy added.

"Today we must begin a process of serious, active reflection on how to build upon the product of our ten years' work and on how to keep alive the principles and the commitments that lie at the heart of the Doha agreements. In doing so, I believe three options will not work: Option 1 ‘business as usual' will not work. Option 2 ‘stopping and starting from scratch' will not work, since the issues blocking progress today will be the same ones on the agenda tomorrow. Option 3 ‘drifting away' by wishing the issue would simply disappear will not work either."

"The question we are confronting today is: what do we do next, and how do we do it? Like all of you, I have heard a wide range of possibilities canvassed. We are not going to decide among these possibilities today. In fact, I strongly suggest we do not rush into any judgment today. These are questions to be approached collectively and in an inclusive manner. Throughout this Round we have placed a high premium on operating in a ‘bottom up' way, and I think we should continue to do so."

"Today and in the meanwhile, the Negotiating Groups should continue their work wherever their Chairs judge it to be productive, and what you found in the Easter package shows that there is useful work ahead, some of which has already been planned by Chairs," he concluded.

A number of delegations spoke following the statement by the TNC Chair.

(A report on the interventions of various delegations at the meeting will appear in a future issue of the SUNS.) +

 


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