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TWN Info Service on WTO and Trade Issues (Jul15/15)
21 July 2015
Third World Network

 
Azevedo striving to show progress in DSU talks, conclude ITA-2
Published in SUNS #8064 dated 16 July 2015
 
Geneva, 15 Jul (D. Ravi Kanth) -- The WTO Director-General, Mr. Roberto Azevedo, is making a concerted effort to show progress in negotiations at the WTO on improvements and clarifications to the Dispute Settlement Understanding (DSU) and on a deal on ITA-2, to expand the coverage of products of the existing Information Technology Agreement (ITA), in order to complete and conclude them in time for the Nairobi Ministerial Conference, according to several trade envoys.
 
Mr. Azevedo is engaged in some frantic efforts on this front to show success by the end of this month, despite the glaring failure to finalize the post-Bali work program with precise benchmarks to conclude the Doha Development Round (DDR) talks, several trade envoys told the SUNS.
 
The mandate for the DSU talks is in para 30 of the Doha Ministerial Declaration, whose para 47 makes clear that the DSU negotiations are not part of the Doha Single Undertaking.
 
The ITA-2 exercise does not figure in the DDR Declaration at all.
 
[The 1994 Ministerial Conference at Marrakesh, that concluded the Uruguay Round Negotiations, with members adopting the WTO Treaty and its annexes, in a Ministerial Decision, mandated the Ministerial Conference of the WTO, when it came into being, to take up and "complete a full review of the dispute settlement rules and procedures of the WTO within four years of entry into force" of the WTO Treaty, and "to take a decision on the occasion of its first meeting after the completion of the review, whether to continue, modify or terminate such rules and procedures." (Legal texts, p 465).
 
[This subject was on the agenda of the 1999 Seattle Ministerial Conference that collapsed in shambles, and in para 30 of the Doha Ministerial Declaration, the Ministers agreed to take up for negotiations the DSU review, but separating it from the Single Undertaking. This DSU review negotiation has been going on since then, but is confined mainly to a few technical procedural questions, and not much progress. SUNS]
 
Since the WTO's General Council meeting in December 2014, Azevedo has repeatedly claimed that a post-Bali work program will be finalized by end-July 2015, for concluding the DDA negotiations at the tenth ministerial conference in Nairobi, Kenya, in December this year.
 
In this post-Bali work program process, the Director-General has also coined more recently new terms such as "doability" and "re-calibration" to persuade countries to move away from their positions based on the previous Doha ministerial mandates.
 
He said, for example, the 2008 revised draft modalities is not cast in stone and has gone on tweaking all the benchmarks.
 
Azevedo secured solid support from major developed countries, particularly the United States and the European Union, and some developing countries for a mid-course correction of the level of ambition so as to ensure that the Doha Round is concluded without much effort.
 
But a large majority of developing and the poorest countries have refused to accept the proposed changes suggested by the Director-General.
 
The developing countries have repeatedly demanded that the work program be based on the 2004 July Framework Agreement, the 2005 Hong Kong Ministerial Declaration, and the 2008 revised draft modalities in agriculture and industrial goods.
 
Consequently, the Director-General has more or less given up on the work program by the end of the month.
 
However, he is now trying desperately to show that there is progress in two areas such as the improvements in the Dispute Settlement Understanding and the ITA-II negotiations.
 
Although the DSU negotiations are outside the Doha Single Undertaking, an attempt is now being made to issue a statement that there is progress in the DSU negotiations.
 
The chair for the negotiations for improving provisions in the DSU, former Ambassador Ronald Saborio Soto of Costa Rica, has suggested that certain minor issues are sufficiently mature to be part of the final outcome.
 
These ‘minor issues' include modalities for third party participation in consultations, the time-frame for expressing third party interests at the panel stage, enhanced "passive" third party rights in panel proceedings, panellist expertise, improved notification of mutually agreed solutions, and notification of retaliatory measures.
 
In a restricted document issued to members on July 13, the chair has acknowledged that there is little progress in outstanding issues like the third party rights, transparency, sequencing and post-retaliation, effective compliance, and flexibility and member control.
 
The chair said "my assessment on certain outstanding areas in particular:
 
(i) In respect of third party rights, there is willingness to consider the possibility of allowing third parties to be joined on appeal, provided that reassurance can be found about how this would be managed;
 
(ii) In respect of transparency, both in terms of open hearings and publicity of submissions, my sense is that there is some margin to continue exploring solutions that would provide a meaningful improvement on current practices while not exceeding the comfort level of those who require some flexibility. We may need a little more "creative thinking" in order to find the right balance;
 
(iii) In respect of post-adoption procedures, my sense is that there is recognition of the potential usefulness of clarifying procedural issues such as sequencing and post-retaliation, in the context of an overall package. In respect of post-retaliation, I think it would be very important that remaining questions about the elements that would be part of a solution be ironed out, including the questions of initiation of the proceedings and burden of proof;
 
(iv) I think significant questions remain about some aspects of "effective compliance", which is very important for a number of Members. It seems to me that there is interest in reinforcing the surveillance mechanisms of the DSB, which could take various forms, including some form of administrative measures. I think the level of potential convergence beyond this is still unclear. So we need to continue to work on this issue;
 
Similarly, in respect of flexibility and Member-control, my sense remains that the level of potential convergence varies significantly: there is willingness to consider favourably the suspension of panel or even Appellate Body proceedings in the interest of assisting the parties in finding a mutually agreed solution; and
 
There could also be willingness to explore the possibility of a DSB decision that would clarify or confirm certain practices, provided that this is not seen as an intrusion on the adjudicator's ability to address the claims before it with the required independence;
 
(v) I think there is still much more difficulty with other aspects of the flexibility and Member control proposals, insofar as they are seen as directly affecting the adjudicator's exercise of its adjudication function.
 
(vi) In respect of developing country interests, we have seen positive engagement in respect of capacity building and support to the ACWL (Advisory Centre on WTO Law), in the context of an overall package. I think on other aspects, the level of comfort still varies somewhat and needs to be confirmed, so this is an area that I think also requires some further work.
 
At our last meeting, continued interest was also expressed in introducing a remand procedure. I think an important requirement here too is that there would need to be a high level of clarity on the type of procedure that is envisaged, including convergence on the key elements of initiation of the remand proceedings and adoption of the original and remand recommendations and rulings."
 
There is "some" progress at the conceptual level, but there is need to think creatively about alternative solutions on "systemic" issues, Ambassador Soto has argued.
 
The chair held meetings with the United States, the European Union, China, India, Brazil, Japan, Singapore, and Russia among others last month to discuss the state of play in the DSU negotiations.
 
The chair sought to know whether he could issue a report on progress made on minor issues at this juncture, while continuing to work on major "systemic" issues.
 
The United States, for example, had proposed "flexibility and Member-control" during the ongoing DSU negotiations.
 
The US wants suspension of the panel and Appellate Body (AB) proceedings for finding agreed solution by the parties, partial deletion of findings in the panel and AB reports, and an interim review of the AB reports before issuing the final report, according to participants familiar with the DSU negotiations.
 
The chair has acknowledged that "there is willingness to consider favourably the suspension of panel or even Appellate Body proceedings in the interest of assisting the parties in finding a mutually agreed solution."
 
Members, he said, are "ready to explore the possibility of a DSB decision that would clarify or confirm certain practices, provided that this is not seen as an intrusion on the adjudicator's ability to address the claims before it with the required independence."
 
But on other aspects of flexibility and Member control proposals, the chair notes, there is still much more difficulty as "they are seen as directly affecting the adjudicator's exercise of its adjudication function."
 
A group of developing countries led by India have demanded binding outcomes involving capacity building and "effective compliance."
 
In response, the chair stated that "it seems to me that there is still interest in reinforcing the surveillance mechanisms of the DSB, which could take various forms, including some form of administrative measures... I think the level of potential convergence beyond this is still unclear."
 
But developing countries conveyed to the chair that he should not issue a report suggesting that there is progress in the negotiations, when there is little convergence on all outstanding issues, including the demands made by the poorest countries for special and differential treatment flexibilities in the DSU provisions.
 
The chair is however under pressure to issue a favourable report, said a trade official familiar with the negotiations.
 
On a separate track, the European Union is being persuaded to host the stalled negotiations to expand the coverage of products in the Information Technology Agreement (ITA) which was concluded in 1996.
 
The DG made a strong pitch for concluding the second generation Information Technology Agreement (ITA-II) by the end of the week.
 
The ITA-II remains stalled since December 2014, due to continued differences between China on one side, and Korea on the other, over the inclusion of around a dozen products, particularly the liquid crystal display panels and several hardware items used in mobile phones.
 
In an attempt to announce a breakthrough in the stalled ITA-II talks before the end of the month, Azevedo urged the ITA-II participants to conclude the negotiations by the end of the week.
 
Azevedo said the ITA-II participants must not miss this opportunity to conclude the agreement by showing flexibility on the limited number of outstanding issues, said a participant familiar with the meeting.
 
Azevedo yesterday made a strong pitch for concluding (ITA-II) by the end of the week.
 
In short, the DG who promised to hold round-the-clock meetings for finalizing the post-Bali Doha work program, now wants to demonstrate that he is a successful achiever on issues of interest to the major industrialized countries as in his successful conclusion of the Trade Facilitation Agreement.
 
Azevedo, the former Brazilian trade envoy, is not unduly worried about the stalled Doha Development Agenda negotiations as it is not of interest to major developed countries, said an African trade envoy. +

 


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