TWN Info Service on WTO and Trade Issues (Oct11/03)
31 October 2011
Third World Network

"Smaller steps" to move stalled Doha talks forward - WTO DG
Published in SUNS #7246 dated 25 October 2011

Geneva, 24 Oct (Kanaga Raja) - Noting that the Doha Round of trade negotiations are at an impasse, and that it was unlikely that negotiations on all elements of the Doha agenda can be concluded in the near future, the Chair of the WTO Trade Negotiations Committee (TNC) said he sensed some convergence emerging around the idea of advancing the talks in areas where progress can be achieved by reaching agreements on specific issues ahead of delivering on the full Doha single undertaking.

This was one of the main themes that TNC Chair Pascal Lamy, who is also the WTO Director-General, said he had been hearing from members during his consultations on the Doha negotiations.

Lamy's remarks came at an informal meeting of the TNC on 21 October, where he reported to the full membership on his recent consultations over the next steps in the Doha Round negotiations.

According to trade officials, while none of the delegations that spoke at the informal meeting rejected any of the basic elements cited by the TNC Chair following his consultations, there was however some divergence on the question of what can be harvested early with respect to Paragraph 47 of the Doha Declaration.

(Paragraph 47 of the Doha Declaration states: "With the exception of the improvements and clarifications of the Dispute Settlement Understanding, the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking. However, agreements reached at an early stage may be implemented on a provisional or a definitive basis. Early agreements shall be taken into account in assessing the overall balance of the negotiations.")

According to trade officials, some developing countries, including the African Group, said at the informal TNC that they want a clear roadmap for the negotiations. They want a Ministerial Declaration at the upcoming Eighth Ministerial Conference (MC8, 15-17 December) where Ministers will state that they will conclude the Doha Round, or will make progress, by 2012.

Other delegations such as the European Union and Japan mentioned some specific issues that they would like to see taken up. The EU has differentiated between the Doha negotiating agenda, but also on the need to take up new issues that are relevant to the trade situation in the 21st century, said trade officials.

At the informal meeting, the EU indicated that the upcoming MC8 should launch a work programme to look at the interaction of issues such as investment, competition, energy, food security and currencies and the existing WTO rule-book.

Also speaking at the informal meeting, Egypt noted that new 21st century issues are being proposed while urgent 20th century issues are being ignored. Saudi Arabia, on behalf of the Arab Group, said it is not supportive of the inclusion of contentious new issues which will only introduce more complexity.

Trade officials said that a number of other delegations said that they do not want a specific roadmap, as it would be setting the membership up for failure. They were also not in favour of a pre-selected list of issues. They said that there is a way to introduce issues apart from the Doha mandate and this is through the relevant committees.

In his opening remarks at the meeting, Lamy said that the purpose of the meeting was to report to the membership on the outcome of the consultations that he had been conducting since September on the next steps in the Doha Development Agenda (DDA) talks.

The TNC Chair said that the informal meeting is taking place at a time when yet again the outlook for the global economy is gloomy and increasingly uncertain. Stronger than expected "headwinds" in developed countries, especially increasing concerns about debt in the US and euro-zone, have weighed down economic activity and trade.

According to Lamy, the WTO's forecast for global exports in merchandise has been cut from an estimated 6.5% to 5.8%. Disappointing output and employment data have damaged business and consumer confidence and contributed to the recent turmoil in financial markets.

"While the outlook remains overall more positive for developing countries, a number of them are reporting slower growth as a weakening global recovery erodes demand and there is a double threat to growth from the impact of recent floods. Even those economies with strong fundamentals may find themselves coming under strain if the global economy continues to deteriorate."

"This sombre backdrop therefore gives added importance and urgency to our work in contributing to provide a stable trade anchor to the world economy," he said.

On his consultations, Lamy said that with respect to the upcoming ministerial conference, he sensed "a shared desire to have MC8 deliver a clear signal that our Organization is one that keeps moving forward. The challenge before us is to convert the prevailing negative mood into something positive - a signal on forward movement. This does not have to be a big leap forward or an entirely revamped agenda. Instead, we could take smaller steps which nevertheless move the organization forward."

The focus now, as it should be, is "What Next" in the DDA negotiations, particularly the path forward for the Doha Round that Ministers will want to map out in December. Of course, the DDA is not the only area of rule-making in the WTO and there are other areas of rule-making outside the mandate of the DDA where progress has been made and will need to be reviewed, such as the on-going negotiations under the government procurement agreement. But clear political guidance on the DDA in December is necessary, added the TNC Chair.

On the main themes that he has been hearing from Members on the DDA negotiations, Lamy said: "On substance, the starting point is pretty consensual. Despite the intensified efforts that Members have been engaged in since MC7 [the seventh WTO Ministerial Conference in 2009], the reality is that we are at an impasse in the DDA negotiations. As a consequence, it is unlikely that we will conclude the negotiations on all elements of the Doha agenda in the near future as we had originally intended."

"I have heard a number of reasons and different causes about why we are where we are today. Some of the reasons advanced are that the geopolitical and macroeconomic environments have particularly made progress on the Round challenging. But, I have not heard any signals or proposals to give up the objectives we set ourselves at Doha. All Members remain committed to working to deliver on the Doha mandate."

"But it is also clear that in order to get to that point, we will need to explore different approaches from the ones we have employed before. I seem to sense some convergence emerging around the idea that Members should pragmatically advance the negotiations in areas where progress can be achieved, by reaching agreements on specific issues - whether provisionally or on a definitive basis - ahead of delivering on the full Doha single undertaking. In other words, I sense a readiness to operationalise paragraph 47 of the Doha mandate, it being understood that this would be a step towards delivering on the entire Doha agenda," said Lamy.

The TNC Chair said that in his consultations, "Members have also indicated that in order for this new path to be credible, we need to intensify our efforts in devising a path which allows us to look into areas where this shorter term progress is more complicated, that is, where substantial differences remain. I also believe that there is emerging consensus that work should continue on the basis of progress achieved to date and that development should remain as a central theme of any outcome."

He added: "I believe that our foremost challenge over the next seven weeks or so left before MC8 is to take our preparatory engagement to a higher gear. I hope that we will also benefit from the discussions at the Cannes G-20 summit at the beginning of next month where leaders will review the progress made since their previous meetings and discuss further actions to assure a sound, smooth and sustainable recovery from the current turbulent global financial and economic situation."

The TNC Chair sounded a word of caution about the functioning of the regular bodies. "Whenever a member has a concern over any issue, the rule is not just to block progress. The rule is to air the concern, explain the difficulty and engage into a good faith exercise to resolve it. We cannot sustain blockage for the pleasure of blockage. I hope we will all contribute to the smooth functioning of the work and work programmes in the regular committees."

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

According to trade officials, Bangladesh, on behalf of the Least Developed Countries (LDCs), said that it did not want the Doha Round to fail. As the LDCs need it the most, a failure of the Doha Development Agenda (DDA) would hurt the LDCs the most. It noted that there is a lot of chess and tactical things being played here and it is the LDCs that are the losers in the game of the big players playing chess here.

It said that the LDCs' share of exports continues to hover at around 1% (of global trade) and that minerals and oil comprise 60% of LDC exports, while manufactures trade is on the slide. Because of the commodity-dependent export base, the LDCs are vulnerable to price fluctuations. It also said that the LDCs' share of services exports is a dismal 0.51%. There is however a silver lining in that a number of industrial countries have granted almost 100% duty-free quota-free (DFQF) market access for LDC products. A number of others such as China and India have suggested greater clarity on this issue.

According to Bangladesh, there are three LDC-specific proposals that it is going to propose under an early harvest package. MC8 could yet be an opportunity to deliver on this. The LDC deliverables at MC8 would be a litmus test for the legitimacy of Paragraph 47 of the Doha Declaration, it added.

Egypt said that the Doha impasse has been brought about by differences on (Non-Agricultural Market Access) sectorals, and today "some have taken an unguided theme and this is taking us off our GPS system". The dreams of developing countries are being shattered. It noted that there has been some talk of development deliverables but this has only been a sort of scholarly pastime. New 21st century issues are being proposed while urgent 20th century issues are being ignored. Despite all of this, it said that some are confident that a Doha failure would have only small consequences for the WTO.

For Egypt, the development dimension remains supreme and it finds it frustrating that yardsticks are being moved during the course of the game. Without a Doha Development Agenda, the credibility of the WTO is at stake. Much in the world has changed both economically and politically but these are changes that have largely not been driven by the majority of developing countries.

According to Egypt, the TNC needs to send the message that the developing countries and the LDCs are not throwing in the towel on these issues. After ten years of hard work nobody should accept that developing countries and LDCs are prepared to restart the process. Whatever the outcome is, it must be one that is based on the texts reflected in the April package, and there is need to ensure that the development dimension, including the Net Food Importing Developing Countries (NFIDCs), monitoring and surveillance and enhanced participation of intergovernmental organisations in the multilateral trading system, are raised and dealt with.

By 15 December, said Egypt, a roadmap for the DDA should be agreed by consensus. Any provisional deliverables should be of a development nature. If some are in the habit of picking and choosing what it is that they would like to see on the Christmas tree, they should remember that many countries cannot afford to celebrate Christmas. Food security is crucial, and there is need to ensure that there is a work programme to address many of the issues, including price volatility and the food security of NFIDCs.

Australia, on behalf of the Cairns Group of agricultural exporters, gave a report of the group's recent ministerial meeting, and said that it stands ready to engage. It is open to consider ways to move forward.

On behalf of itself, Australia said that it needs to see a set of outcomes for the development dimension especially as it pertains to LDCs. There needs to be a recognition of the very serious economic situation and there needs to be a warning of the dangers of protectionism. There is need to explore new ways to move the process ahead but we need to avoid running into dead-ends. Australia said it can support the Director-General's outline, but there needs to be greater specificity. There also needs to be a strong Ministerial endorsement on the Doha Round and the need to strengthen the multilateral trading system.

According to trade officials, Kenya, on behalf of the African Group, said that it was very disappointed that the ministerial conference is not likely to deliver anything of substance on the DDA, not even for the poorest and most vulnerable. At the ministerial conference, it wants to see a Ministerial Declaration on the DDA to give direction. There is need to reaffirm the commitment to conclude the DDA and the need to have a clear indication that development is at the heart of the work programme. There is also need to have a commitment to intensify the efforts to conclude as soon as possible and that 2012 should be a year of significantly advancing the negotiations on the basis of the April 2011 texts.

The African Group also said that there needs to be negotiating progress made on implementation and special and differential treatment (SDT) issues and the priority should be for LDCs. There needs to be agreement on the appropriate delivery channels for trade-related technical assistance and capacity-building to help with the implementation of WTO agreements including the SPS (sanitary and phytosanitary) agreement.

It said that the meeting of African ministers in Ghana (in November) will not forget cotton. It is important that we deliver on the 2004 framework agreement that cotton subsidies would be reduced ambitiously, specifically and expeditiously. It said that it is not asking too much that industrial countries eliminate their trade-distorting subsidies. There is need as well to fulfil the objectives that special and differential treatment should be strengthened and made operational across all areas of the work.

Indonesia, on behalf of the G33, said that under the economic circumstances that members are in, the WTO needs to prove itself that it can increase trade flows and can keep protectionism in check. Any future work programme should have special and differential treatment for developing countries especially for the LDCs. We need to build on the progress so far.

On behalf of ASEAN (Association of South-East Asian Nations), it hoped that engagement by members in various formats will result in progress being made. We can't have a business-as-usual approach. It welcomed the general tone of the Director-General's message. It is the responsibility of every member to search for new ways to deliver an outcome based on previous work. It said that ASEAN is not in a position to determine definitively this outcome. It can be supportive but it wants to ensure that the big players play their role and it is important as well that the monitoring and surveillance of the trading environment by the WTO be strengthened.

The European Union said that it shared the Director-General's assessment. The current state of play has raised many doubts and it is not clear what kinds of solutions will come out of the ministerial conference. The WTO needs to be able to adapt its rule-book to a changing world. We need to look for new approaches to advance the Round. It said that it is open to all new negotiating approaches within the Doha mandate. If we want MC8 to be successful, general statements will not be enough. We need to urgently identify specific issues on which ministers can provide guidance. We need a more productive path forward. We must agree on a specific roadmap, which should provide time-lines and an orientation for process. Some areas can be agreed on irrespective of other more difficult issues such as NAMA (non-agricultural market access).

According to trade officials, it believed that trade facilitation with SDT and capacity-building would represent a win-win situation, an outcome that would help developing countries as well as developed countries. It believed that removing NTBs (non-tariff barriers) and improving the dispute settlement mechanism would also benefit the multilateral trading system.

With respect to the LDCs, the EU said it continues to believe that implementing the Hong Kong mandate should be a priority without payment. Although they are unable to agree on some specific areas of trade opening, there are some areas where if we use a system similar to the ITA (the plurilateral Information Technology Agreement), we could deliver benefits that would go to both developed and developing countries. With respect to sectoral issues, health care, forestry, gems and jewellery, for example, could be issues that could be looked at. On the services side, the EU mentioned information and communication services, supply chain-related services and environmental services.

According to trade officials, in addition to setting out guidelines for the DDA, the EU said that MC8 should also be an opportunity to look at areas that may not necessarily be in the WTO rule-book now - investment, competition, energy, food security and currencies. The membership cannot avoid discussions on these issues. These cannot be discussed as though it is a North-South issue. It is a challenge for everybody. MC8 should launch a work programme to look at the interaction of these issues and the existing WTO rule-book. But it recognised the problems of others, and said that this does not supercede the priority of the existing negotiating mandate.

Brazil said that as far as it can tell, the elements that the Director-General has read out are in line with what members have agreed in various formats. It is not Brazil's favourite path, but at the moment, it is prepared to work along these parameters. The guidance for MC8 should be based on two key principles - telling the truth to the outside world and setting goals that are credible. There are those who would like to engage in a process but members have not shown an inclination to try and find common ground. A Ministerial Declaration would send a much stronger message to the outside world than would a Chairman's statement, but again without this inclination, it would be difficult.

If there are to be any decisions on the specifics, Brazil said they should be made later. It said that it is not very enthusiastic on the various approaches for Paragraph 47. If there is to be any kind of movement in this area, it needs to come out of the negotiating groups and any early outcome has to deliver for the LDCs. As far as Brazil is concerned, it has to deliver on agriculture.

Brazil said it would discourage specific roadmaps or specific issues. Any issue that wants to be included has to be tested through the process that is outlined. We need to have truth and realism and it has to be obvious that we have a process where the development dimension is at the heart of the matter. On trade and development and the regular work, we have to look hard at the proposals on trade and development. It said it looked forward to seeing these proposals. We need to strengthen our work on surveillance and monitoring and we need to make sure that the WTO remains a forum for discussion of issues relevant for our day.

Norway said that it is not a very ambitious or a concrete series of measures that the Director-General has laid out but it is probably the best we can do at the moment. It is difficult for countries to give up their priorities. Everybody has redlines and things they want but no one is going to get everything they want, especially not at MC8. We cannot continue with business-as-usual, and we have to do something different, but we can't agree on what we should be doing differently. So, we should not be pushing for detailed guidelines or a specific list of issues. Let us put the appropriate level of ambition for MC8. Let us not shut the doors on what we can do in the future, it added.

According to trade officials, Mexico said that it does not appear possible to conclude all the elements (of the Doha negotiations) in the near future. We need to show commitment to concluding the Doha Round. Some like the EU want to identify a list of issues before MC8, while Brazil has a very different idea. The complicated economic situation makes it ever more important that we speak out against protectionism.

Barbados, on behalf of the Small Vulnerable Economies (SVEs), supported the LDC statement. It said that it is disappointed by the lack of outcomes, but there is need to use the days ahead to work as best as we can. The WTO remains of fundamental importance. We need to see if we can capture any elements that are important, and we need to ensure that we remain dedicated to a development focus.

Saudi Arabia, on behalf of the Arab Group, said that there is need to make sure that we move forward in an atmosphere of transparency and inclusiveness. We need to assess precisely where we stand. It agreed with the Director-General's suggested elements. We need to have a single undertaking with the development dimension at the heart of the negotiations. The Arab Group said it is not supportive of the inclusion of contentious new issues which it said will only introduce more complexity.

Chinese Taipei said that it is concerned about the situation in the global economy and it hoped that the major players can show the necessary leadership. It supported the Director-General's approach. The current mandate cannot be reopened and the single undertaking must be maintained. The work we have accomplished must be preserved and serve as the basis for our future work.

Japan said that it is determined to play a leading role in resisting protectionism. We must reinforce this at MC8, otherwise the credibility of the WTO could be adversely affected. It supports the Director-General's plan. It said that there can be an early harvest when there is meaningful progress that can be achieved. It agreed that the development dimension particularly with respect to the LDCs and SVEs is quite important.

Chile said it is true that we are at an impasse and we are not going to conclude in the near future. This means we need to try and look at the situation from a different perspective. Perhaps, we can consider sequencing issues. We can focus on areas or sub-areas were we all believe that progress is possible, and that means we believe the other side can accept a deal in this area.

It further said that there is need to bring fresh air to the discussion, but it needs to be relevant. We cannot ignore key issues. We cannot reject the Doha mandate, but these issues can be taken up in regular bodies and if we do not take them up here, they will be taken up somewhere else and that would be to our detriment. We need to look at the economic situation. We need members to agree on a freeze on restrictions on the free flow of trade, i.e. a standstill. Without this, we will probably have a ministerial conference without ministers.

China said that it is encouraged that in spite of the current difficulties, nobody has the intention to give up. Instead, various ideas have been put forward with a view to finding a way out of the woods. "China is open to any approach that may bring us closer to a successful multilateral conclusion of the round. But in order to have tangible results at MC8 and to avoid unnecessary twists and turns post-December, China believes that the deliberations should be based on some common understandings."

First, it has to be ensured that the Doha Mandate as well as the basic principles and modality elements agreed upon over the past ten years must not be unravelled. "I wish to stress that respecting what is on the table is not equivalent to business-as-usual, while doing the opposite would be no different from stop-and-reboot, which is another non-option as indicated in your [Director-General's] Easter Report."

Second, said China, development should remain at the center of the round. It noted that the relevance of paragraph 47 has been brought up as a possible way forward. In order for the round to live up to its banner of "Doha Development Agenda", Ministers should reaffirm that if they decide to proceed on that path, priority should be given to addressing the concerns of developing Members. This is essential for the discussions under paragraph 47, whether in deciding the negotiating subjects or in defining such criteria.

Third, China believed that Ministers should continue to work out something tangible for the LDCs. And China will try its best to contribute. For example, on the issue of duty-free-quota-free treatment which the LDCs are most concerned with, China said it has been trying hard all along to expand the DFQF coverage for the LDCs.

"So far, we are able to accomplish a level of 60% of the total tariff lines... In addition, although it is not without political difficulties, we have declared to increase the product coverage to 95%. Mr. Chairman, in order to honour our commitments at Hong Kong, I would like to further declare here that China will cut the phase-in period from 5 years to 2 years. That is to say, we will complete the process by MC9."

Last but not the least, said China, the main negotiations should take place in the multilateral process as part of the single-undertaking in the long run. In so doing, the principles of transparency, inclusiveness and bottom-up should still be followed.

According to trade officials, India said that it is in general agreement with the Director-General, but that the devil is in the details. The Paragraph 47 approach cannot be a panacea. It was intended as an early harvest for the LDC issues and we should not be pinning all our hopes on Paragraph 47. There are differences between an early implementation of an agreement: is it going to be a definitive or a provisional outcome? The LDC and development issue has to take overriding priority in any Paragraph 47 exercise.

For issues not related to the development dimension, India said that there can be no pre-selection or short-circuiting of the process. It has to happen in a multilateral way through the negotiating groups. This can happen pre- or post-MC8. But if the attempt is to try and push this thing through, it will not work.

On issues such as trade facilitation, NTBs or the dispute settlement understanding, India said that it is sceptical if members can succeed in getting agreement on these. What might happen instead is that it will succeed in bringing into sharp focus differences among members.

On non-DDA issues, India said that there is a well defined system of introducing these issues, and any attempt to jump ahead to a work programme on issues like competition, investment or climate change was unlikely to go down with the larger membership.

Ambassador Michael Punke for the US said: "We agree with the general themes he [the Director-General] has picked up in his consultations. While this progress in identifying possible core elements of convergence is important, we should not pretend that it is more or less than it is.

"While each of us can probably think of improvements we would want, we can't escape the fact that the disagreements that have stood in the way of progress are substantive and fundamental. What Pascal has put before us is a reflection of that. So we need to keep working - but our immediate focus should be on building a consensus around the elements outlined by the Director-General."

Ambassador Punke added: "We also need to avoid getting lost in platitudes. We can all choose to have a contest over who can profess their love for the Doha Development Agenda (DDA) most emphatically. But that won't accomplish anything. What we need are concrete substantive ideas - new ideas - that will help us to find a way forward.

"I've heard suggestions that we should develop some type of work plan - and I'm extremely skeptical. Frankly, to me it sounds like trying to solve a substantive problem with a process solution. We've tried that - in dozens of permutations - and it hasn't work[ed]. The United States will not support business as usual.

"Between now and the Ministerial, I suspect there will be a lot of talk about the credibility of the WTO. Well, the foundation of credibility is honesty. And the truth is that we face difficult issues for which there are no simple solutions. Let's do what we can to find common ground for the Ministerial Conference, and move forward pragmatically from there," he added.