TWN Info Service on WTO and Trade Issues (Aug11/02)
3 August 2011
Third World Network

From LDC, to LDCplus, to LDCminus, to DDA post-MC8?
Published in SUNS #7199 dated 27 July 2011

Geneva, 26 Jul (Kanaga Raja) -- It now appears that a Least Developed Country plus (LDCplus) package as envisaged in May for the upcoming eighth WTO Ministerial Conference (MC8) in December is no longer doable, with Director-General Pascal Lamy acknowledging that it "is not taking shape as we would have wished".

This assessment emerged in Lamy's report at an informal meeting of the Trade Negotiations Committee (TNC) on 26 July, at which the Director-General, who is also the TNC Chair, suggested that in light of the current political environment, the most realistic and practical way forward is to work on the two tracks of non-Doha Development Agenda (DDA) issues and the DDA agenda post-MC8.

In parallel, Lamy proposed that Members should also keep working on "MC8 possible DDA deliverables that could respond to the aspirations of LDCs."

According to trade officials, while all Members support these two tracks being intensified, they however differ on whether or not it will be possible to do an LDC stand-alone deal on the core LDC issues (namely, Duty-Free Quota-Free market access for LDC products, simplified rules of origin, a services waiver for LDCs, and a "step forward" on cotton.)

In a statement at the TNC following the Director-General's remarks, Ambassador Michael Punke of the US said the "discussions have foundered against redlines and cross-conditionalities involving a broad range of Members. This proved to be the case both for the ‘LDC issues' and the so-called ‘plus' issues."

"I understand instinctively the temptation to say ‘let's keep trying'. We would certainly be ready to do that if we saw some prospect that entrenched positions would change - but we do not. And continuing our efforts for an Early Harvest without prospect of success comes at a significant cost, crowding out essential work on preparations for the ministerial," the US envoy added.

"There is a widely shared view that an absolutely essential element of MC8 will be a discussion of where we go from here on Doha. We urgently need to work together and to engage in that discussion. We do not believe that we will succeed by continuing our current discussions of an Early Harvest package built on the elements we've been considering, but we are certainly open to a creative discussion of development issues," said Ambassador Punke.

At an informal meeting of the TNC on 22 June, Lamy had proposed five indicative issues in an LDCplus package for a Doha early harvest for the forthcoming eighth Ministerial Conference in December, these being trade facilitation, export competition in agriculture, special and differential treatment (S&D) monitoring mechanism, and a "step forward" on fisheries subsidies and on environmental goods and services.

However, several interventions at that TNC meeting, and in Lamy's Green Room the previous day, had made clear that such an approach would fail to produce an accord. (See SUNS #7176 dated 24 June 2011 for details of the 22 June TNC meeting).

The WTO Director-General, at an earlier meeting of the TNC on 31 May, had proposed that LDC-specific issues be put on the "fast track" for a Doha outcome at the upcoming eighth Ministerial Conference in December.

The LDC-specific issues, as formulated by Lamy, are Duty-Free Quota-Free (DFQF) market access for LDC products, simplified rules of origin, a services waiver for LDCs, and a "step forward" on cotton.

The WTO head had also pointed to the need for an "LDC-plus" outcome, with these issues making up the middle lane. Moving into the "slow lane" would be issues of market access in agriculture, non-agricultural market access and services, trade remedies and TRIPS issues.

While developing countries and their several groupings were fully behind an early harvest package of benefits to the LDCs, several of the items in the LDCplus package involving market access outcomes being pushed in the Doha Round by the US and the EU so as to balance the benefits they would provide in an LDC package, were seen as unbalanced and unlikely to reach any accord.

Meanwhile, Lamy held consultations on 4-7 July on elements of the LDCplus package.

According to a news report in the "WTO Reporter" dated 11 July 2011, discussions were held on trade facilitation, environmental goods and services, and export competition (in agriculture).

According to the "WTO Reporter", Lamy held consultations with amongst others the "G7" (Brazil, China, India, Australia, Japan, the European Union and the US), as well as developing-country groupings and the LDCs.

The "WTO Reporter" said that no progress was made in bridging the differences on the three issues.

The informal TNC meeting on Tuesday was preceded by a Green Room meeting on Monday afternoon.

According to a participant in the Green Room meeting, Lamy reported that the LDCplus package is no longer doable. Members will continue to pursue what can be done on LDC deliverables, said the trade diplomat.

Another participant told SUNS that the LDCplus package was not what members had expected and is not there anymore. Members will now try to discuss more on the LDC package, to see what deliverables there are for the LDCs.

Members will also have to discuss what to do with the Doha Round in the next year, said the trade diplomat.

"It's clear everyone likes to conclude the Doha Round, the problem is we do not know how to do that," the trade diplomat added.

Trade officials, referring to the four core LDC issues and the five issues supplementing these issues in an LDCplus package, said that what has become clear is that however way these nine elements are analysed, it has created "serious red-lines" for any combination of members.

In recent days, added trade officials, some prominent delegations have said that the notion of getting this LDCplus package for December is simply not doable. The way in which these discussions are progressing will not lead to agreement, they added.

Trade officials stressed that there will not be an LDCplus package as envisaged up to this point.

What has emerged is how to proceed, trade officials said, noting that one thing on which everyone agrees is that much greater attention must be given to two other tracks -- one being dealing with non-DDA issues in the run-up to MC8, the other being determining the road-map for the entire Doha package.

According to trade officials, everyone supports these two tracks being intensified, but they differ on whether or not it will be possible to do an LDC stand-alone deal on those core LDC issues.

On developing-country senior official told SUNS that he was of the view that even LDC deliverables may not be possible. It is a question of implementation and such implementation has not taken place, he added, calling for a candid stock-taking.

The senior official further said that the Doha Round should not have been launched at all, given an already crowded agenda. After its launch following the September 2001 terrorist attacks in the US, it had become a spaghetti bowl of compromises and trade-offs on new issues.

Another trade diplomat told SUNS that all countries support a package of deliverables for the LDCs but one main member does not (an apparent reference to the United States).

In his remarks at the TNC on Tuesday, Lamy told the membership that it would be useful to review, before the General Council meeting on Wednesday, where Members are in the Doha Development Agenda negotiations and consider the road ahead for the work after the summer break.

He said that since the last TNC meeting (in June), he had continued to meet with a range of Members, individually and in groups, in variable geometry, to explore the possibility of an LDCplus package by the end of the year.

He added that he also had held a Green Room meeting on Monday and, prior to that, a preparatory meeting with the G-7 and G-90 co-ordinators and Chairs of negotiating groups to further assess the state of play.

"As you are all aware, the overall framework under which we are operating to take forward our preparatory work for the December Ministerial meeting and beyond 2011 has been through three separate, but closely inter-related, tracks:

"The First Track consists of the consultations that the GC [General Council] Chairman has been undertaking on our regular working programme. The Chairman will report in more detail during tomorrow's [Wednesday's] General Council meeting.

"The Second Track is the DDA action plan after MC8, where I have recently started consultations with a number of delegations.

"The Third Track is the LDC Plus package as from last May."

"Our starting point is that after Easter there was consensus that the full DDA package would not be possible by the end of the year. In light of this, we embarked on a process aimed at delivering on a smaller package by MC8 on the basis of paragraph 47 of the Doha Ministerial Declaration," said the TNC Chair.

"We all knew that this was not going to be the final package, but rather, a step forward to demonstrate that we could deliver some results on the Doha Development Agenda, while waiting to finalize the full DDA package. It was also clear from the start that LDC issues were a priority. However, some of you felt that the LDC component alone would not address their constituency requirements and that there had to be a ‘plus' element in addition to the LDC part of the package."

"At the last TNC, we agreed to explore the LDCplus package to test its feasibility for December," said Lamy.

"As you will all recall, these issues included implementation of the Hong Kong DFQF [Duty-Free Quota-Free market access] Decision, simpler Rules of Origin, a Services Waiver and a step forward on Cotton. On the ‘plus side' were, trade facilitation, S&D [special and differential treatment] monitoring mechanism, export competition, a step forward on environmental goods and services, and, a step forward on fishery subsidies."

"Over the last few weeks, Ambassadors have worked intensively including in my consultations on these issues. However, I have to share with all of you what I sense is a collective assessment that the LDCplus package as we framed it in May is not taking shape as we would have wished."

"Unfortunate and frustrating as this situation may be, the question on all of your minds, then, is what next? In my consultations, I have detected two different positions:

"The first position is of those who believe that we should now concentrate on preparing the non-DDA part of the Ministerial and a broader discussion about how to deal with the DDA post MC8, and abandon the pursuit of a small package by December. They argue that keeping on working for such a package would suck oxygen from the other two tracks and would endanger the preparations for the ministerial. They also argue that maintaining expectations for an LDCplus package that does not look doable by MC8 would put the credibility of the organization at risk.

"The second position is of those who believe that, in addition to focusing on these two issues, we should also keep a focus on exploring DDA LDC deliverables at MC8. They argue that priority to DDA LDC issues should remain a focus for MC8 and that we should at this stage not foreclose the possibility of having some LDC deliverables."

Lamy said he would like to offer his own views after all that he had heard so far.

"In light of the current political environment, it appears that the most realistic and practical way forward is to work on the two tracks of non-DDA issues and the DDA agenda post-MC8. For both of these tracks, we already have the necessary structures - the process by the Chairman of the General Council on non-DDA issues and my consultations on DDA work post-MC8, which I have already started with some of you and with the Chairs of Negotiating Bodies. In parallel, we should also keep working on MC8 possible DDA deliverables that could respond to the aspirations of LDCs."

Lamy also suggested that Chairs of Negotiating Groups continue work in their respective areas where in their judgement they deem it feasible that progress can be made.

The TNC Chair said that his aim after the summer break is to intensify his consultations on DDA work post-MC8.

"In pursuing these tracks, I believe that we should keep in mind the strong feeling among many members that the development focus should continue to receive priority. I therefore urge you all to use the period of your summer break to reflect seriously and soberly about what is at stake here and to consult amongst yourselves and with your capitals."

Lamy further said: "We started this meeting on a sombre note. I do not think the conclusion looks much better. What we are seeing today is the paralysis in the negotiating function of the WTO, whether it is on market access or on the rule-making. What we are facing is the inability of the WTO to adapt and adjust to emerging global trade priorities, those you cannot solve through bilateral deals."

This risks overshadowing the achievements in other parts of the WTO functions, such as monitoring, surveillance, dispute settlement or even Aid for Trade, said Lamy.

"There is, therefore, an urgent need to develop a shared diagnosis over the current impasse and what went wrong as a means to prepare a discussion over possible solutions as well as over emerging issues."

Lamy urged Members to use the summer break to reflect and come prepared to fully engage in an "adult conversation" over "what next".

"I intend to conduct these conversation[s] on a ‘without prejudice basis', slowly building a shared platform from which the Ministers could have a well prepared discussion at MC8. A discussion that would clarify what Members expect from this organization. Moving, so to say, from the ‘negative list' of what you cannot do, to a ‘positive list' of what you intend to do," he concluded.

A number of delegations spoke following the remarks by the Director-General. +