TWN Info Service on WTO and Trade Issues (Dec11/14)
22 December 2011
Third World Network

MC8 gets underway
Published in SUNS #7284 dated 19 December 2011

Geneva, 16 Dec (Kanaga Raja) - The World Trade Organisation's (WTO) eighth Ministerial Conference (MC8) got under way here Thursday afternoon, with the Chair of the conference expressing hope that by the end of the conference, "we will have demonstrated to the world not only that the WTO is alive but that it is also fully capable of delivering results that matter to people everywhere."

The conference, scheduled to begin at 3.00 pm, commenced some one hour or so later on account of some technical problems with the audio system at the venue, said trade officials.

The conference, from 15-17 December, is chaired by Mr Olusegun Olutoyin Aganga of Nigeria, with Mr Johann Schneider-Ammann of Switzerland, Mr Mustapa Mohamed of Malaysia, and Mr Stephen Cadiz of Trinidad and Tobago as vice-chairs.

Very shortly before MC8 got underway, the 42 parties (represented by ministers) to the plurilateral Government Procurement Agreement (GPA), reached agreement on a revision of the pact.

According to trade officials, some 80 Ministers (as of 15 December) are attending the ministerial conference, with some 230 non-governmental organisations (in all some 380 participants) and 364 journalists being registered for the event.

According to the WTO, apart from the plenary sessions where ministers are expected to make statements, there will also be three working sessions (on 16-17 December) taking up three themes, namely, the importance of the multilateral trading system and the WTO, trade and development, and the Doha Development Agenda (DDA).

In addition to the accessions of the Russian Federation, Samoa and Montenegro, the MC8 will also be adopting several decisions (on 17 December) relating to the extension of the work programme on small and vulnerable economies, TRIPS non-violation complaints, E-Commerce, the extension of the transition period for Least Developed Countries (LDCs) under TRIPS, LDC accession, an LDC services waiver, and on the Trade Policy Review Mechanism.

According to the WTO, the conference is expected to conclude on 17 December (evening) with a Chairman's Statement in two parts - a consensus statement on elements for political guidance, and a summary of the main points heard in the Ministerial discussions.

Following the opening of the conference Thursday afternoon and the beginning of the plenary session which heard statements from ministers, one trade observer told SUNS that the majority of developing countries want to maintain the development mandate of the Doha Round and the regular work including the development aspects of this work.

But many developed countries want to abandon the development aspects of the Round and are instead emphasising issues such as trade facilitation, and trying to open up new issues outside of the round such as the "Singapore issues", climate change and energy, he said.

The Ministerial Conference was preceded on Wednesday by ministerial meetings of the G-20 and G-33 country groupings at the WTO, both of which went on to issue their communiques for MC8. The BRICS countries (Brazil, India, China, Russia and South Africa) also held their ministerial meeting on the same day and issued a ministerial declaration for MC8. (See SUNS #7283 dated 16 December 2011.)

Just before MC8 got underway on Thursday, the ministers of the African Union, the African, Caribbean and Pacific (ACP) group, the Least Developed Countries (LDCs), the Small Vulnerable Economies (SVEs), Argentina, Brazil, China, Ecuador, India, Paraguay, Uruguay and Venezuela, encompassing more than 100 developing countries, met and issued a ministerial declaration of the "Friends of Development" in which they stressed the development mandate of the Doha Round and rejected any plurilateral approach to concluding the Round or parts of it.

A press conference organized by these countries was held at the WTO rather than down the road at the conference venue, with some NGO observers blaming the WTO secretariat for its usual "shenanigans" in not advertising it properly, and for allocating a room for the meeting somewhere deep in the bowels of the WTO building, with even veteran journalists covering the WTO, not knowing where it was.

In their Ministerial Declaration, the more than 100 developing countries said that the Doha Round needs to be concluded, "bearing fully in mind the membership's commitment to the core principles of the DDA, viz. the development mandate, single undertaking, decision making based on multilateral consensus and progress made and a bottom up approach that is inclusive and transparent."

"We are disappointed at the impasse in the Doha Round. We are willing to look at different approaches that are constructive to resolving the impasse. However, we do not support the adoption of a plurilateral approach to concluding the Round or parts of it, because it goes against the principles of multilateralism and inclusiveness. Therefore, any fresh approach has to be a multilateral consensus-based one, firmly anchored within the Doha Mandate."

They acknowledged that Members should try to explore making progress on elements of the Doha Declaration that allow them to reach provisional or definitive agreements based on consensus, but the first priority must be to issues of interest to the Least Developed Countries (LDCs), such as the full implementation of Decision 36 of Annex F of the Hong Kong Ministerial Declaration, cotton, agreement specific proposals and other development issues like Special and Differential Treatment (S&DT) in different areas, the Monitoring Mechanism, implementation-related issues and concerns, and agriculture.

"Development has to remain at the centre of any approach not only for an early harvest programme, but across all areas of the Doha Round negotiations and other WTO work. In this context, we reaffirm the need to strengthen the functioning of the Committee on Trade and Development (CTD) so as to enable it to conduct a Development Review of all S&D provisions in the WTO Agreements," they said.

"We firmly stand against the rise of protectionism and remain committed to resist it in all forms, provided there is full recognition of a Member's ability to use WTO consistent measures to achieve its legitimate objectives of growth, development and stability," they concluded.

The Ministerial Conference also saw five developing countries, members of the ALBA group, dissociating themselves from the political guidance document, which was sent by the General Council Chair to MC8 on 1 December for it to be included in the first part of the MC8's Chair's Statement. It was not very clear whether the "dissociation" was less than blocking a consensus, or what its effect is.

In their communication (WT/MIN(11)/W/4) dated 15 December, Bolivia, Cuba, Ecuador, Nicaragua and Venezuela said that they noted that "increasingly sophisticated methods are used to prevent the participation of all Members and to give the appearance of an inclusive and consensual process."

They said that the "Elements for Political Guidance" document contains elements that "intentionally undermine the fundamental principles of the Doha Ministerial Declaration; it deliberately fails to identify the causes of the impasse in the Round, and fails to point out the lack of political will to overcome them."

They reaffirmed the crucial importance of the development dimension in all WTO work and the importance of continuing the Doha Development Round with a view to reaching a conclusion that ensures that developing countries secure a share of growth in international trade commensurate with the needs of their economic development.

To this end, they said that it is essential to preserve multilateralism and the single undertaking, without the inclusion of new topics, plurilateral initiatives or reinterpretations of the mandate of the "Doha Development Agenda."

The five countries considered that the political guidance document "represents only the opinion of some Members and we therefore dissociate ourselves from the consensus..." They considered that the political guidance document "is void of any legally binding effect for the Members, given the fact that it has been presented under the sole responsibility of the Chairman of the General Council."

In his opening address at the Ministerial Conference, Chairman Minister Aganga of Nigeria said that the Ministerial meeting once again takes place against the backdrop of a challenging global economic climate, which has worsened in recent months. These are tough times for the world economy and there is no early end in sight, he added.

"Debt levels and the volatility of financial markets are rising and low growth levels persist. There is a slowdown in trade and a drop in foreign direct investment flows, volatility in food and fuel prices and high unemployment levels also persist. The economic crisis is further aggravated by perceptions that the political responses of governments have so far been insufficient to convince markets about credible exit strategies. In short, we must recognise that the world has changed. The socio-economic and political environment in 2001 when Doha was launched is very different from what we have today in 2011."

He further said: "It is usually in a challenging economic environment like this that there is greater political pressure to halt or even reverse the process of economic reform and trade liberalization. We all know that some protectionist signs have been apparent in many parts of the world. To bow to such pressure would be the worst response to the present challenge."

"As it did over the last two years, the WTO System with its rules and commitments continues to help us avoid a protectionist spiral similar to the one experienced as a result of the crisis in the 1930s. This is an important message to send to the world. But what is even more important is that you, Ministers responsible for Trade, send out a message that trade openness is particularly important during such challenging economic times."

According to the Chair of MC8: "This Ministerial meeting is an occasion for us to review the entire breadth of WTO work. It is also a chance for you, Ministers, to provide political guidance on the future work of the organization in all its pillars. We all know that significant progress has been made in the Doha negotiations but the negotiations are currently at an impasse. It is however my firm belief that we should not give up on the objectives we set for ourselves ten years ago in Doha. We believed then, and I hope we still believe today, that trade is the engine of growth, job creation, and it must work for development."

"But we also know that the WTO is more than the Doha Round. This Ministerial is therefore also an opportunity for us Ministers to review all aspects of the regular functioning of this Organization and to exchange ideas to help us keep our Organization and its rules up to date so that it remains the centre of the international trading system."

Noting that today the WTO has 153 Members, he said that he was delighted to say that "one of the positive outcomes from this Conference will be the expansion of our membership when we welcome four new Members - Vanuatu, Samoa, the Russian Federation and Montenegro. This will make our Organization more universal and inclusive and confirm that accessions are an important contribution to strengthening the multilateral trading system. The more global the membership of the WTO, the stronger and more credible our Organization becomes."

"My hope is that by the end of this conference, we will have demonstrated to the world not only that the WTO is alive but that it is also fully capable of delivering results that matter to people everywhere. Results that create economic growth and deliver development, and results that create wealth and jobs for our people," he concluded.

In his address, WTO Director-General Pascal Lamy announced that in 2012 he will be convening a "panel of multi-stakeholders" of the WTO to analyse various elements and "equip the WTO with XXI century software."

Earlier, Mr. Lamy said that the year 2011 will be remembered for its turbulence and instability. "When we thought we had turned the corner from the 2009 economic crisis, the outlook for the world economy seriously worsened. High volatility in financial markets and sovereign debt concerns have damaged business and consumer confidence. Global growth is stuttering across nations and, as a result, trade is slowing down. Unemployment remains at unacceptably high levels. The development gains made in recent years are disappearing. In the midst of this tempest citizens from across the globe have taken to the streets to demand stability, fairness, accountability. They are demanding solutions to address the challenges of our interconnected world."

As trade has contracted, he added, the multilateral trading system has provided an anchor for national trade policies. "It has helped moor them to our values of openness, non-discrimination, transparency and rule of law. But the strong storm waves are loosening the anchor and now risk dislodging it. This would be very bad news. The cost to the world economy of high intensity protectionism would be in the order of $800 billion, the estimated value of space or ‘water' in WTO commitments today."

"By improving the credibility of the WTO, by ensuring it keeps moving forward, you have a contribution to make towards restoring global stability and predictability. A freer, fairer and more development friendly trading system is part of the solution. Exiting the crisis will be easier if it is done in the spirit of global co-operation. Going-it-alone will make it more painful and longer."

He noted that this week will mark the arrival of four new Members of the WTO family, taking us to 157: Russia, Montenegro and two LDC Pacific Islands - Vanuatu and Samoa. It shows that adherence to multilateralism and its values remains high. These accessions also bring the WTO closer to universality.

Lamy said: "A large number of highly complex disputes are being resolved peacefully, without resorting to uncontrolled retaliation, reminding us of the uniqueness and value of the WTO Dispute Settlement System. But, so far, you have failed in your endeavours to amend the WTO rule-book to make global trade fairer and more open. The Doha Development Round is at an impasse. At the same time the number of bilateral and plurilateral trade agreements keeps rising, demonstrating that the benefits of trade opening are not in question. How do we explain this paradox?"

"Some say that bilateral deals provide a faster route to trade opening as they allow participants to omit the most politically difficult issues such as agriculture and fisheries subsidies, anti-dumping rules or tariff peaks. Some argue it is easier to conclude deals when you can pick and choose your partners. For others, this proliferation is more driven by geopolitics than by economics. Be that as it may, it is time Members of the WTO face up to the reality of this growing contradiction. We can no longer bury our head in the sand. We need to understand the root causes of our inability to advance multilateral trade opening and a regulatory agenda, and to build a collective response. Blaming others will not help."

The WTO Director-General stressed: "You will need to address the essential question behind the current impasse: different views as to what constitutes a fair balance of rights and obligations within the trading system, among Members with different levels of development. What is the right share in the contributions and aspirations of advanced economies and emerging markets. What is the right combination of reciprocity among trade partners with similar levels of development and flexibility, which would provide weaker Members with space to adjust to greater competition. It is clear that progress in multilateral trade negotiations, as in climate change negotiations, will require a political response to this political question."

"All of you believe that this should be done step-by-step, gradually moving forward the parts of the Doha Round which are mature, and re-thinking those where greater differences remain. But to be credible, this needs to be translated, sooner rather than later, into an operational work plan. But in my view this is not enough. We also need to look at the real drivers of today's and tomorrow's world trade, at today's and tomorrow's obstacles to trade, at today's and tomorrow's trade patterns, at how to keep transforming trade into development, growth, jobs and poverty alleviation. In sum, we must equip the WTO with XXI century software."

In order to facilitate this discussion, Lamy said that in 2012 he will be convening a "panel of multi-stakeholders of the WTO" to analyse all these elements and report to the entire Membership by the end of next year. "I believe this can provide a useful contribution to your own reflections in what is, and should remain, a Member-driven Organization."

"My call today is for all of us to stand up for the values of multilateralism. For major players to exercise leadership and to muster political courage to act together for greater trade opening and reform. To place the interests and needs of developing countries and, in particular, those of the poorest, at its heart. And to start thinking seriously about the dire consequences of not doing so in the midst of a worsening crisis. To act now in favour of a stronger multilateral trading system tomorrow," he concluded.

Trade observers said that by throwing in various issues, present (and a future that some of the developed nations seek), and setting up on his own "a multi-stakeholder process", Mr. Lamy appears to be attempting a feinting exercise of sorts to disarm any criticism, and replicate what former GATT Director-General Arthur Dunkel had attempted through the Leitweiler report (which ironically could never be brought formally before the General Council and considered, with the Council treating it as Dunkel's expert consultant, and not a GATT body).

Speaking at the plenary session, Indian Commerce and Industry Minister Anand Sharma said that in the challenging backdrop of global economic downturn, all countries must eschew protectionism which can only be counterproductive as it will deepen the recession and delay recovery. The need of the hour is enhanced economic engagement and free flow of trade.

The Minister said that India welcomes the LDC related decisions for adoption at this Ministerial. "While this is less than what we have strived for over the last several months, these decisions will send out a positive signal about WTO's commitment to the Development Agenda."

He stressed that India is concerned at the current impasse in the DDA negotiations. "While the last few years of the Round have been disappointing, we cannot cast aside the mandate that was so arduously negotiated. Nor can we abandon the processes that make the WTO a uniquely democratic institution."

The WTO negotiations have always used a combination of approaches but always within the principles of transparency, inclusiveness and multilateral consensus-based agreement, he said, adding: "We must not deviate from these tried and tested principles."

The negotiations must take place in accordance with the mandate of the Doha Development Agenda, which means that decisions have to necessarily be based on multilateral consensus, regardless of the format in which negotiations take place.

"I have heard suggestions for negotiating issues amongst a critical mass of members. This path is fraught with risk. Plurilateral agreements are a throwback to the days when decisions taken by a few determined the future of the rest. They also lack the in-built checks and balances of a multilateral forum."

He noted that "the DDA mandate offers us the flexibility to implement agreements reached at an early stage on a provisional or a definitive basis. However, in practice that can be a difficult exercise as we have learnt from the efforts to put together first, an LDC-package and then an ‘LDC plus' package. There are lessons to be learnt from these attempts. It is a path on which we must proceed with caution, not for a moment forgetting that this is a development round. Therefore, development issues, those particularly of interest to LDCs such as DFQF [duty-free quota-free market access for LDC products], Cotton, should be the foremost priority in any early harvest."

Further noting that the decision on duty-free quota-free market access to LDCs requires full implementation, the Indian minister said: "Despite our domestic sensitivities, India was the first developing country to extend duty free quota free access to all LDCs in line with the WTO's Hong Kong Ministerial mandate. India's Duty Free Tariff Preference Scheme for LDCs came into effect in August 2008 with tariff reductions spread over five years. This Scheme covers about 92.5% of global exports of all LDCs and provides duty free and preferential tariff access on 94% of India's tariff lines. We now propose to expand the coverage of the scheme further in line with the mandate."

"What we have on the table today reflects years and years of hard work and a delicate balance of trade-offs. We must build on the progress already achieved and persevere in our efforts to reach a fair, balanced and equitable outcome to the Round. While we continue these efforts, let us not forget that the WTO is much more than the Doha Round. The work that goes on from day to day in its regular committees and bodies is the grease that keeps the wheels of the multilateral system turning smoothly. It is important to ensure that this work goes on smoothly and in as efficient a manner as possible," he added.

Meanwhile, on the evening of the first day of the ministerial, some 22 countries and the European Union, unveiled a "pledge against protectionism", in which they made the pledge to fight all forms of protectionism in the strongest terms.

The countries are Australia, Brunei, Canada, Chile, Colombia, Costa Rica, the European Union, Georgia, Hong Kong-China, Israel, Japan, Korea, Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Peru, Singapore, Switzerland, Separate Customs Territory of Taiwan Penghu Kinmen and Matsu, Thailand, and the United States.

Trade observers noted that while thus couched, the real thrust appeared to be for a "standstill" on applied tariffs by all members (something that the developed countries have been attempting in the Doha Round), as well as against even legitimate trade measures authorized by the WTO.

In a joint ministerial press statement, the proponents of the initiative said that they are concerned with the current heightened levels of global economic uncertainty and the prospect that this could result in increased trade protectionism.

They said that they wished "to support the anti-protectionism messages" articulated at the eighth Ministerial Conference "with an additional pledge to fight all forms of protectionism in the strongest terms."

"We therefore commit to refrain from raising new barriers to trade in goods and services, imposing new export restrictions, or implementing WTO-inconsistent measures in all areas, including those that stimulate exports. We also reaffirm our undertaking to comply with WTO agreements, as well as to continue to ensure transparency and predictability in implementing measures that impact on trade."

"In addition," they said, "we commit to taking steps to roll back any protectionist measures introduced since the start of the global financial crisis in 2008. Furthermore, we will continue to exercise maximum restraint in implementing measures that may be considered to be consistent with WTO provisions if they have a significant protectionist effect and promptly rectify such measures where implemented."

They called on other interested WTO members to join them in making this pledge which they said can be reviewed, and further strengthened if necessary, at the WTO ninth Ministerial Conference.

Asked about the standstill commitment at a media briefing, Australian Trade Minister Craig Emerson, who chaired the briefing, said that if countries were to deploy protectionism under the guise of policy space, "then that is headed in the wrong direction."

Commenting on the pledge against protectionism, one trade observer told SUNS that if the proponents of this initiative were more sincere, they would include agriculture subsidies, as they are the most trade-distorting aspect of the trading system.

Also commenting on the pledge, Esther Busser of the International Trade Union Confederation (ITUC) said: "What is being described as ‘anti-protectionism' is really a position that is anti-development."

"By locking in measures that go well beyond current WTO provisions and commitments, the result would be to restrict the flexibility of countries to address their specific development needs, and to hamper governments from using all the tools at their disposal to respond to the economic crisis. Given the urgent need for governments to create decent work, to invest in public services, and to build a sustainable economic recovery, the statement is absolutely unacceptable," she added.