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TWN Info Service on WTO and Trade Issues (Jun13/09)
20 June 2013
Third World Network  

South stress on food security, S&D, LDC issues for Bali
Published in SUNS #7599 dated 6 June 2013
 
Geneva, 5 Jun (Kanaga Raja) -- Developing countries, at an informal meeting of the WTO Trade Negotiations Committee (TNC) earlier this week, have stressed the importance of any potential package for the ninth Ministerial Conference (MC9) in Bali this December to have at its core the issue of food security, and Least Developed Country (LDC) and development issues.
 
They also underlined that more progress was needed on Section II of the draft consolidated negotiating text on trade facilitation (on special and differential treatment - S&D - provisions for developing country and least-developed country Members), and that the developed countries needed to demonstrate more flexibility on this front.
 
Developing countries voiced these views in their statements at the informal TNC, following a report by Director-General Pascal Lamy, in his capacity as TNC Chair.
 
(According to information posted on the WTO's website, the General Council, at its meeting on 4 June, decided that Indonesia's Trade Minister Gita Irawan Wirjawan will chair MC9, to be held from 3-6 December. At its next meeting in July, the General Council will formally elect the full slate of officers, including the vice-chairs, the WTO said in its post.)
 
In his statement at the informal TNC meeting on 3 June, Lamy had urged Members to make substantive advances before the end of July if they are to have any chance of successfully delivering at Bali and preparing a post-Bali roadmap (see SUNS #7597 dated 4 June 2013).
 
A number of delegations spoke following the report by the TNC Chair.
 
According to trade diplomats, while the US, EU and other developed countries wanted a new agreement, the so-called Trade Facilitation (TF) agreement, with new mandatory obligations on Members to be negotiated, and signed and sealed at Bali and to be annexed to the WTO, they were not willing to engage in any serious negotiations on issues of importance to developing countries, arguing somewhat speciously that the food security and other issues, though already part of the 2008 draft agriculture modalities text and thus before them for five years, would involve changes to the Agreement on Agriculture (AoA) and thus the balance of rights and obligations signed on to at Marrakesh.
 
In fact, one Third World diplomat noted, under the guise of the TF, what is being sought to be done are changes and interpretations of GATT Articles V, VIII and X, and the imposition of procedures and practices of some major developed countries on others. There was an element of facetiousness in their argument that since developing countries were already voluntarily undertaking trade facilitation measures, the demandeurs (the US and EU) need not pay a price for what would in any event fall into their lap in 5-10 years. It is a double standard to advance the neo-mercantalist greed of the Transnational Corporations.
 
According to trade officials, in the interventions at the TNC, Morocco (on behalf of the African Group) said that there were some signs of hope, and that it saw an urgent need to press ahead. The credibility of the WTO as a forum for negotiations is at stake, and that forty days (to the end of July) is not much time. Some Members are showing indications of flexibility and it hoped that these flexibilities will be translated soon into progress on the ground, it added.
 
On trade facilitation, it said that this is something on which there must be agreement in Bali and that it sees this as something than can stimulate the world economy, but Members must be careful that they do not prejudge any outcomes. While some square brackets have been removed (from the draft negotiating text), not enough has been removed. There needs to be an adequate amount of progress in Section II of the draft text (on special and differential treatment provisions for developing country and least-developed country members), and that more flexibility needs to be seen on this front from the industrial countries, it said.
 
On agriculture, the African Group said that the question of food security was extremely important as well, and this should be a part of the Bali package. Also, the development issues must be at the core of any agreement, and any Bali package must include Duty-Free Quota-Free (DFQF) market access for LDC products and cotton. Also of importance is the extension of the transition period for LDCs under the TRIPS Agreement.
 
Nepal (on behalf of the Least Developed Countries) referred to the proposal that it had submitted on 31 May, saying that while most developed countries have already come forward and are now offering 100% DFQF, there are still some that do not. Rules of Origin are inextricably linked to the whole question of market access and there is need for greater simplicity on that issue, it added.
 
[The LDC submission, outlined in document TN/C/W/63, proposes a decision on the implementation of the DFQF Decision taken by Members at the Hong Kong Ministerial Conference in 2005, adoption of simple and flexible preferential rules of origin criteria to further enhance exports from LDCs, a submission in the area of cotton, covering both trade and development assistance aspects, and a submission on the operationalisation of the LDC Services waiver. (A footnote in the LDC proposal noted that two LDC Members had expressed reservation on the proposed draft decision on implementation of DFQF).]
 
On the services waiver for LDCs, Nepal said that even though it was agreed in principle at the ministerial conference in 2011 to extend this waiver, this has still not been operationalised, and it would like to see a ‘signalling conference' whereby governments could indicate those areas where they could extend preferential treatment to LDC services providers.
 
It also said that the S&D monitoring mechanism and the Agreement-specific proposals are of great importance to the LDCs, as is the question of LDC accessions. It further called for the extension of the transition period for LDCs under TRIPS. Without a package that would address LDC interests, it will be impossible to have a credible Bali outcome, which is essential for the credibility of the WTO, Nepal stressed.
 
Indonesia (on behalf of the G-33), referred to its proposal on food security and said that it would like something "meaningful, operational and useable" by all developing country Members. The G-33 hopes to address some of the concerns of those who have a problem with this proposal as it is currently drafted. It said that it is prepared to show flexibility, and expressed hope that others can also show flexibility so that there can be an outcome in Bali. It is critical to ensure food security in developing countries and there is need to deliver on this issue and on the rest of the development dimension in Bali and beyond.
 
Australia (on behalf of the Cairns Group of agricultural exporters) said that agreement on the issues of transparency in Tariff Rate Quota (TRQ) administration, food security and export competition should be possible at Bali if pragmatic and flexible positions are put forward. A solution should be able to be found for all these issues, and that there is need to intensify efforts to bring about convergence.
 
Speaking for itself, Australia said that there is need for a balanced package in Bali across these three issues, as well as the need for a substantive outcome. Something less than that would not be good for the credibility of the system. We cannot put forward an agreement lacking substance without expecting that the post-Bali work will be adversely affected, it added.
 
There are trade-offs between agriculture and trade facilitation, it said, adding that it thought that this would be something that should be able to be agreed. It welcomed the LDC proposal. What we need to start doing is to start testing possible solutions, and to identify the landing zones, and we need to move as quickly as we can, it added.
 
It said that progress on trade facilitation is not going fast enough, and there is need for some engagement on this issue very soon. It was impressed by the fact that in Paris, it was widely acknowledged that food security is an important issue and this could be a way to find some kind of solution.
 
Oman (on behalf of the Arab Group) said that in order for any package to be credible, the development dimension must be included. It is also important that the accession of Yemen be completed as soon as possible. In July, a discussion should begin on the post-Bali process, which is as important as any Bali package, it added.
 
Brazil (on behalf of the G-20) said that its proposal on export competition should not be seen as a surprise, in that this was something that was included in the Hong Kong Ministerial Declaration (of 2005). The deadline for (elimination of export subsidies) was meant to be 2013 and that was why it was important to get something this year.
 
The deadline for eliminating all forms of trade-distorting export competition would be missed, it noted, adding that therefore it has shown a great deal of flexibility by putting forward this proposal, which calls for a portion of the subsidies to be cut as a down-payment. Its proposal addresses export subsidies and export financing and this is fundamentally less ambitious than the final fourth revision of the draft agriculture modalities text. The objective is to send a strong signal from Bali that this is an important down-payment, and then the issues of State Trading Enterprises and food aid can be tackled.
 
Noting that the issue applies to the fifteen developed countries that subsidise their exports and not the ten developing countries that do, Brazil said that in any event the developed countries have subsidies that are five times higher than those of the developing countries. It is working on language that would deal with cuts for developing countries and their subsidisation of agricultural exports. Referring to countries that lay down a red-line on this issue ahead of any discussion, it said that this does not seem to be a credible way forward. It was pleased with the reception that was given to its TRQ administration proposal.
 
On behalf of itself, Brazil said that there is need for a balanced package in Bali that includes trade facilitation, agriculture, and the development/LDC issues. It is important that there is balance between Sections I (on commitments) and II (on S&D) of the draft negotiating text on trade facilitation. On export subsidies, it said that we cannot let 2013 pass in silence on this question. It also welcomed the LDC proposal.
 
Brunei (on behalf of ASEAN) said that it is disappointed that substantial progress has remained elusive. There is need for a credible package before August, and that convergence needs to be seen well before the Bali ministerial conference.
 
Benin (on behalf of the Cotton-4), agreed with the African and LDC Group statements, and said that it will soon be putting forward its proposal and that it is currently engaged with its partners in discussion. There needs to be progress on cotton, and that this is a key subject for the work. It is also looking for a balanced approach. It did not think that a package can be done in Bali without something on cotton.
 
The European Union said that "Bali is widely seen in fact as our last chance to salvage the DDA [Doha Development Agenda]. If we fail, it will then be extremely challenging to bring the negotiating function of the WTO back on track ... This is not the time for tactical games; we need to negotiate in goodwill and with the common objective of making substantial progress so that texts, with the necessary level of technical maturity in the three negotiation pillars, can actually be put forward to Ministers as soon as possible."
 
Regarding the specific negotiating areas, the EU said that a lot remains to be done and "we have little time to do it". Noting that in the recent meeting of the Negotiating Group on Trade Facilitation, Members were not able to make the progress that they would have liked to see, although removing a little more than 50 brackets could be considered a start, it said: "We should however not fool ourselves into thinking that minor drafting changes can replace a serious negotiation on the key issues in the text. A serious engagement has so far been lacking. I hope this will change in the coming days and few weeks."
 
Resolving Section II (in the draft text on trade facilitation) remains a priority and it is clear that there will not be any Trade Facilitation agreement without a proper Section II, said the EU, adding however that there cannot be an agreement either without a robust and properly ambitious Section I (on commitments) - otherwise, the Trade Facilitation negotiations would not make sense and the agreement would not bring about the benefits that we all expect.
 
"The overall impasse that we have witnessed during these last weeks seems to be directly associated with the difficulty to define the pace of progress between Trade Facilitation and the G-33 proposal. It is clear that both of these issues will need to be resolved, if MC9 is to be a success."
 
The EU said it remains concerned by the situation and particularly by the decision of some Members to add what it said is one more difficult element to the puzzle, which is very seriously overloading the boat to Bali and could easily sink it. The G-20 proposal on Export Competition comes at a very bad time and it is extraordinarily unbalanced in a way that is difficult to comprehend, it added. It however remains ready to explore ways of emphasising at MC9 the importance of addressing Export Competition issues in the broader framework of agriculture negotiations.
 
Regarding the S&D issues, the EU said that there is need to make sure that these issues can be resolved quickly once the political will is found to complete a package for MC9. On the LDC issues, it noted that the LDCs have circulated a new paper outlining a few possible requests for deliverables for MC9. It welcomed it and said that it is ready to start the necessary discussions quickly.
 
According to the EU, the core message on the current situation is very clear: the Bali package consisting of the already agreed three pillars (trade facilitation, agriculture and S&D/LDC issues) remains possible. However, time is short and significant progress is needed in all areas in the next weeks, in fact by the end of July.
 
Uruguay supported the G-20 and Cairns Group statements.
 
China, associating itself with the statements of the G-20, G-33 and the Asian Group of developing members, and supporting the intervention of the LDC Group, said that "Members' collective sense is that the limited progress achieved in all three pillars was far below our expectation for a successful Bali ministerial and we have only eight weeks left before the summer break. Bearing this in mind, we have no choice but to redouble our efforts to push forward the negotiations. Everyone must engage and demonstrate flexibilities."
 
On agriculture, it's clear that the G-33 proposal on food security is a gateway issue for the Bali package, it said, adding that it is pleased to note that the Paris ministerial has shed some light on the possible path towards its solution. It called upon all Members, major developed stakeholders in particular, to be pragmatic and creative in working together with the G-33 for a landing zone acceptable to all so that the legitimate concerns of the G-33 will be somehow accommodated. It also remained open to discuss both the proposals of the G-20.
 
It believed that trade facilitation is another important component of the Bali package. While it was encouraged at the 60 square brackets that was removed recently, it was concerned that there are still more than 500 brackets left, and with this slow pace, "we will not be able to clinch the deal by MC9. We hope that the text-based negotiation on trade facilitation could progress at an expedited pace and substantially reduce brackets in the next few weeks."
 
On development, for China, a modest outcome encompassing the (S&D) Monitoring Mechanism and Cancun (Agreement-specific) proposals, among others, is absolutely doable. It also welcomed the LDC proposal and remained constantly supportive of their legitimate concerns.
 
It said that as its ministerial representative had stated in Paris, "despite the challenges in front of us, China does not believe that there is a ‘Plan B' for this organisation, and actually we have no route of retreat. We all know what is at stake here: the negotiating function of this organisation, the confidence of outside world in this system and, most importantly, the interests of each and every [one] of us, particularly the weak ones."
 
South Africa referred to its Minister Rob Davies' attendance at the informal ministerial in Paris last week, saying that he had re-affirmed South Africa's commitment to work for a small package of deliverables in Bali. He, however, cautioned that there is still insufficient progress on the three pillars.
 
On trade facilitation (TF), South Africa said that whilst there was still about 550 brackets left in the next draft of the TF text, Minister Davies believed that a deal on TF is doable. The issue at stake however is the level of ambition of the text. He argued that there are still a number of provisions that do not belong to the text and many where the proponents are seeking a level of ambition that is inappropriate. He argued that there are still areas where some Members are simply seeking to impose their system of customs administration on others without any consideration of what is systemically appropriate.
 
South Africa said it has worked hard this past 19 years to modernise its customs and made many reforms that will enable it to comply with a relatively high level of ambition. However, most of its neighbours in Africa will require a significant calibration of the level of ambition in Section I to allow all to participate in the new disciplines. Furthermore, whilst South Africa sees some real value in a TF agreement, it recognises that the benefits of such an agreement are not even.
 
It noted that Minister Davies therefore had emphasised the need for balance within and between all three pillars. It stressed that agriculture must remain a core element of the package for Bali, noting that there are currently three proposals on the table. Of these, the most harmful to developing countries and the greatest distortion in trade remains that of export subsidies.
 
"And what is more, we all agreed to eliminate export subsidies this year - 2013 - in Hong Kong in December 2005. The G20 proposal does not call for the full implementation of this promise but only a step forward. This is the least we can do," said South Africa.
 
It further underlined that development and the LDC pillar is a litmus test for the multilateral trading system. "We cannot return from Bali without any meaningful delivery to the poorest members of this organisation."
 
It also said that Bali is clearly not the end of the road. "In Bali, we will need to put in place the conditions for the full implementation of the Doha Development Mandate and put this institution back on the tracks of multilateralism - fairness, balanced rules, inclusiveness and its development orientation. This is our Ambition for Bali."
 
According to trade officials, Korea said that Members are behind in terms of the Bali process. There is need to begin a horizontal process of looking across the issues, it said, adding that time is of the essence.
 
Colombia said that Members are facing an impasse that needs to be got around. There is need for the biggest players to sit down very soon and start talking about these issues horizontally.
 
Japan said that there is need to abandon ‘hostage-taking' and the need to re-double efforts and accelerate the negotiations in trade facilitation to clean up the text. There is also need to start showing real commitment to the negotiations.
 
Bangladesh, supporting the LDC statement, said that there was broad convergence at the Paris mini-ministerial on the LDC issues. It said that these issues are not new and that they come from the Hong Kong Ministerial Declaration (of 2005). It also called for the LDC accession process to be intensified.
 
Argentina, endorsing the G-20 and Cairns Group statements, said that it had shown flexibility in Section I (on commitments) of the trade facilitation negotiations, adding that it needs to see developed countries showing flexibility on Section II (on S&D). There needs to be a discussion on Sections I and II taking place at the same time. On development issues, it is willing to support anything that will help integration into the global trading system.
 
Noting that agriculture issues have always lagged behind, it said that both it and the G-20 are prepared to be flexible. It is also prepared to be flexible on export competition, despite some having said that the introduction of the G-20 proposal might jeopardise the Bali outcome. What would really jeopardise the credibility of the organisation is if we let 2013 slip by without doing something on the question of export competition, it stressed.
 
According to trade officials, the United States said that one of the themes of the Paris mini-ministerial was that Members should not delude themselves into questioning whether or not there would be trade facilitation. Most Members are already doing this autonomously, bilaterally, or regionally. The only question is whether the WTO will contribute to this and whether it will be done multilaterally. To do it in this way (multilaterally) is more efficient, and it also means that Members would be able to marshal multilateral resources to help with technical assistance contributions, it added.
 
There were a number of interesting proposals that have come forward, to clear away what the US viewed as the "under-brush". It was concerned that some brackets have been re-introduced in the draft text (on trade facilitation), and this was a step backwards. It had seen the least progress on some issues like customs cooperation and transit.
 
It was of the view that agriculture is an issue that is appropriate to be taken up and that this has already been given an enhanced place in the negotiations, in a way that non-agricultural market access (NAMA) and services are not, and that they are not part of the discussions for either the short-term or for an interim agreement.
 
The US said it is prepared to deal with things that are doable, and that is why it was prepared to engage on the G-20's TRQ administration proposal. But there are other issues that would fundamentally disturb the balance of the Single Undertaking, and this is the problem with the G-20's export competition proposal. It would cut into the balance in the Agreement on Agriculture and would affect those negotiations. It would also have an impact and cause disequilibrium vis-a-vis NAMA and the services negotiations, said the US.
 
On the G-33's food stockholding proposal, it said that it would be the same thing here too. It would not be balanced as it was initially proposed, but the US had seen some helpful indications in Paris as to how this particular provision could be addressed.
 
It thanked the LDC Group for its proposal, saying that it has always seen the issue of DFQF as an element of the Single Undertaking, a broader Doha outcome. It said it is also trying to discern what the degree of support within the LDC Group is for this proposal because it is not a consensus proposal. The US claimed that many African countries have said that DFQF being offered to Asian LDCs would have a devastating impact on sub-Saharan Africa's textile and clothing industry.
 
According to trade officials, India, supporting the G-20, G-33 and LDC statements, said that time is limited. There is need for progress in the three areas as well as the need to work on all pillars. The message from the Paris mini-ministerial was that Members need to intensify work across all these areas of negotiations. Members need to get down to negotiating solutions without prejudice or they will never get there by Bali. One possible solution would be to go to a horizontal process soon, and this can be in very small groups and be done in a modest manner, but we need to get people sitting down and start talking horizontally.
 
It also said that without getting Bali right, the post-Bali process will be lacking in any real meaning, and to defer these issues post-Bali would be an admission of failure.
 
Switzerland said that it is prepared to engage on the LDC proposal. It sees engagement on the G-33 proposal and the fact that there is an acknowledgement of the importance of food security across the membership. It however does not see a re-writing of the Agreement on Agriculture in time for Bali.
 
According to trade officials, Haiti expressed surprise at the DFQF proposal from the LDC Group, saying that there was not a consensus on this. It was impossible for Haiti to support this proposal in its current state. It would see its textile and clothing industry wiped out.
 
Canada said that time is remarkably short. On trade facilitation, it said that we know that this is a development issue and there are studies that show that if we get an agreement along the lines of what is being suggested here in the WTO, this could add 15% to the GDP of developing countries. Moreover, agriculture and development issues are also development in nature, so the overall package is a development package, it added.
 
Mauritius, supporting the African Group and G-33 statements, said that any proposal that erodes preferences will be considered by it to be a red-line.
 
Paraguay supported a trade facilitation deal as a land-locked country.
 
Egypt supported the African Group, Arab Group, Cotton-4 and LDC statements. It said that the trade facilitation negotiations are unbalanced with too much emphasis being placed on Section I (on commitments) of the draft negotiating text.
 
Barbados supported the African Group statement.
 
Cuba said that the picture that is emerging is not very encouraging, adding that agriculture must be part of a Bali package. On trade facilitation, it is concerned when people say that Section II will only be applicable if binding commitments are seen in Section I. Any attempt to subsidise Section II in this way will lead to failure in Bali, it cautioned.
 
Lesotho, while endorsing the other elements of the LDC proposal, said that it could not join the consensus on DFQF.
 
Tanzania supported the LDC statement.
 
Jamaica (on behalf of the ACP Group) said that it wanted a deal across the three pillars. It was important to find an ambitious agricultural result in Bali, it added.

 


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