TWN Info Service on WTO and Trade Issues (May13/01)
2 May  2013
Third World Network  

Current pace of work insufficient to deliver in Bali, warns Lamy
Published in SUNS #7564 dated 12 April 2013 

Geneva, 11 Apr (Kanaga Raja) - There has been "limited progress" on substance on potential deliverables in trade facilitation, agriculture, and special and differential treatment (S&D)/Least Developed Country (LDC) issues for the ninth ministerial conference in Bali this December, according to the Chair of the WTO Trade Negotiations Committee (TNC).

In his statement at an informal TNC meeting on Thursday, TNC Chair, Pascal Lamy, who is also the WTO Director-General, told the membership that "the stark reality is that the current pace of work is largely insufficient to deliver successfully in Bali. This means that without rapid acceleration and real negotiations, it is highly probable that you will not see the deliverables you desire in Bali."

"But, more than changing the pace of work, we need a change in mind-set. We need to move from ‘exploring', ‘understanding' and ‘discussing' issues to negotiating to closing gaps. We need to move from identifying what does not work to finding alternative solutions to gather consensus," he added.

At this stage, Lamy stressed, "it would not be responsible to start pointing fingers at others as the source of the problem."

"Those of you who are tempted to engage in blame game at this point, do it at your own peril. Rather it is time to have a hard look at where flexibilities can be found to address the three issues on the Bali menu. It is time to check with capitals that they are ready to spend the necessary political energy, to provide additional flexibility to generate convergence across all three areas."

Referring to the trade figures that the WTO had released on Wednesday, Lamy said that the forecast does not paint a rosy picture for international trade in 2013. This year looks to be a near repeat of 2012 with both world trade and output forecast to expand slowly and below historical trends and averages.

World trade is forecast to grow by 3.3 per cent in 2013. Although this is higher than the 2 per cent growth in 2012, it is still below the 20-year average of around 5 per cent. In addition, downside risks persist, leaving the global economy fragile and the trading system facing the risk of protectionism. The world economy remains in a fragile situation, he said.

"Against this uncertain backdrop, the stakes for Bali are high. And this is why for the first time since 2008, there is political consensus that the Ministerial meeting in Bali should be about deliverables in trade facilitation, agriculture and S&D/LDC issues," he said.

With about 27 working weeks to the Bali Conference, "are we on track on our three potential DDA [Doha Development Agenda] deliverables for Bali or not?"

On all three deliverables, there has been a lot of activity resulting in limited progress on substance, he said, going on to provide a summary of where Members are on the issues.

On trade facilitation, Lamy noted that the Chair (of the Negotiating Group) has restructured the negotiating process with the support of his four Friends of the Chair, following widespread recognition at the last negotiating group meeting that a draft agreement would not have been ready for Bali without more intensive work to find consensus on the text.

The Friends of the Chair have begun their consultations on their respective portfolios, Lamy reported, adding that in parallel with the negotiations on the text of the draft agreement, many developing countries and LDCs are conducting new needs assessments.

"These will provide an up-to-date documentary basis for those Members to start developing the partnership with donor Members and organisations that they will need in order to access resources for building capacity to implement new trade facilitation commitments."

Lamy said he saw two major substantive questions that Members need to answer collectively:

* One, what is the shared level of ambition in beefing up the trade facilitation-related GATT articles: high, medium or low? What is clear is that it cannot be "high for others" and "low for me".

* Two, is there enough confidence that the necessary capacity-building means will be available to trigger commitment to new disciplines by poorer countries?

"We also know that the scope of a new Trade Facilitation agreement will extend well beyond the traditional areas of responsibility of ministries of trade and commerce, both in terms of disciplines on border management and in terms of the new approach Members are designing to link development assistance with implementation. It is therefore imperative that capitals ensure close coordination among all relevant ministries that will be needed to bring these negotiations to closure in time for Bali."

On agriculture, the TNC Chair reported that intensive consultations have continued on the proposals tabled for decision at Bali, particularly on the G-33 proposal concerning public stockholding for food security and domestic food aid.

The Chair of the Special Session launched on 15 February a technical process related to the G-33 proposal. This process was led by Mr Jonas Skei of Norway as facilitator and was seen as useful and informative, he added.

Building on the knowledge acquired from the technical meetings, Ambassador Adank (the Chair of the Special Session) has subsequently held informal consultations with different groupings of Members in a 1+1 format to seek further feedback from delegations on the proposal itself and explore possible ways forward.

According to Lamy, Ambassador Adank's take from these consultations, as reported to an informal meeting of the Special Session on 27 March, is that there is a willingness to engage on means to address the concerns expressed by the G-33. However, it is clear that very significant divergences remain on how to achieve this.

"The substantive issue on this proposal seems to me to be: is there a way to accommodate the proponents' problem of purchases for stockpiling within the existing disciplines on domestic support, without destabilising the rest of the agricultural disciplines," said Lamy.

Regarding the G-20 proposal for an understanding on TRQ (Tariff Rate Quota) administration, the consultations to date have highlighted that Members continue to see this as a useful one to explore for possible decision in Bali, even though there are sensitivities in relation to some aspects of the proposal that Members have not yet settled. Some of these sensitivities, as well as differing views, were recalled at the Special Session on 27 March. The consultative process will need to return to this proposal in due course.

On the request for studies on the export competition pillar as well as on export restrictions, Lamy noted that the Secretariat studies on export competition (TN/AG/S/27) and export restrictions (TN/AG/S/28) were circulated to the Members on 21 March 2013.

It was confirmed on 27 March that the G-20 is working on a proposal concerning export competition, which should be submitted soon. Contrasting views emerged on the suitability of this area as a subject for decision at Bali, and also on export restrictions, he said.

"To conclude, we have in agriculture an active engaged process but we are still a long way from agreement in these important areas."

On the work being done in the Special Session of the Committee on Trade and Development, Lamy reported that the Chair has continued with his text-based meetings on the three clusters of work, namely, the 28 Cancun Agreement-specific proposals, the Monitoring Mechanism and the six Agreement-specific proposals relating to the Agreements on SPS (Sanitary and Phytosanitary Measures) and Import Licensing Procedures. These meetings have been complemented by some specific issue-based "informal informals".

"While some progress has been made in all three areas, there is an urgent need to re-double our efforts and close the gaps, in what are key elements of the developmental component of our on-going work," stressed Lamy, adding that the substantive question on this issue is "whether there is a way to allow for a regular review of S&D provisions in our disciplines across the board and more importantly, what would be the operational consequences of such peer review."

On the LDC specific issues - preferential treatment to services of LDCs, DFQF (Duty-Free Quota-Free market access for LDC products), ROO (Rules of Origin) and cotton - Lamy said: "we are still awaiting proposals from the LDCs so that work can commence on them."

In this respect, he said that he has been requested by the LDC group to appoint a facilitator to address the LDC component for Bali. "They have expressed their wish to see Ambassador Steffen Smidt (Denmark) appointed as Facilitator. I would like to inform you that as TNC Chair, I will appoint Ambassador Smidt to act as my facilitator, as soon as he receives the green light from his capital."

"And since we are on LDC issues, let me stress the importance of reaching agreement on the matter of the extension of the TRIPS transition period for LDCs, which is currently set to expire in July, in view of the TRIPS Council meeting scheduled for 11-12 June which is fast approaching."

The TNC Chair went on to stress that work on substance needs to urgently accelerate in negotiating groups.

"It is substance that drives the process and on which progress is gauged. Therefore, written proposals, language and textual suggestions around which to build consensus have to begin to emerge very soon. And here I would caution about over-engineering solutions. There is no time left to ‘over-engineer'. The process in negotiating groups should be Chair-led. But, I must also stress that the primary responsibility for negotiation rests with you."

Lamy said that as an insurance policy for all Members that tactical linkages across the three areas are preserved, "it will be necessary to have a horizontal review of our progress across the three issues. The TNC will be central in this. Coupled with a number of green rooms and small groups in variable geometry."

As Chair, he said he intends to convene ‘green room' meetings every fortnight to look horizontally at progress in the three areas and engage in negotiating substance. "I intend to convene the first of these green rooms on 1 May and then on 14 May. As usual, these will be followed by TNC meetings to ensure full transparency and inclusiveness. I can already announce that the next TNC should take place on 31 May."

"But, let me be clear, for any horizontal review process to be useful and productive, real negotiations within the negotiating groups need to take place and remain at the heart of your activities. There can be no substitute for a meaningful negotiating group process," the TNC Chair stressed.

"We also know that there are other areas connected to the WTO agenda that some of you are actively engaged in which could also be ready in time for Bali, including ITA [Information Technology Agreement] expansion and GPA [Government Procurement Agreement]. In addition, the results of the Global Aid for Trade review in July will also have to form part of the Bali deliverables."

As for post-Bali, the TNC Chair said that he is continuing his consultations under the two assumptions that (i) Bali delivers, and (ii) the consultations do not distract from the main goal of delivering in Bali.

"It is clear that the Bali Conference has to instruct on the post-Bali process. However, my view is that this conversation has to continue before we can arrive at a shared understanding of what the post-Bali agenda will entail."

To conclude, Lamy said: "we are working on Plan A - delivering successfully in Bali on the three areas of trade facilitation, agriculture and S&D/LDC issues. Although the odds are not bright today, they are still good enough to warrant a major effort. But, to succeed, you need to urgently change course, to be more flexible in your negotiating attitude, to accelerate your substantive work and to refrain from throwing bricks at each other. These are the ingredients to avoid hitting a wall with undesirable consequences not only for Bali, but importantly, for the credibility of the multilateral trading system."