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TWN Info Service on WTO and Trade Issues (Aug15/05)
10 August 2015
Third World Network  

South stress on developmental outcomes for Nairobi MC10
Published in SUNS #8076 dated 5 August 2015

Geneva, 4 Aug (Kanaga Raja) - A number of developing countries, at a formal meeting of the WTO Trade Negotiations Committee (TNC) on 31 July, have underlined that the upcoming Nairobi Ministerial Conference (MC10), taking place for the first time on the African continent, must deliver on development outcomes, in particular for the African and least-developed countries.

In statements following the report by the Chair of the TNC and the Chairs of the various Doha negotiating bodies, the African Group, for instance, said that the Nairobi Ministerial, taking place on the most marginalised continent, presents an opportunity for the WTO to deliver development outcomes.

The ACP Group said that any final development outcome at the Nairobi MC must be of benefit to developing countries and in particular, Africa.

At the formal TNC meeting on 31 July, Director-General Roberto Azevedo and Chairs of the Doha negotiating bodies had reported that a continued lack of convergence among the membership had resulted in missing the 31 July deadline on delivering on the post-Bali work programme on the remaining Doha Development Agenda (DDA) issues (see SUNS #8075 dated 4 August 2015).

Following the report of the D-G and Chairs of the negotiating groups, developing countries who spoke at the TNC, either in group statements or on their own, generally continued to stress that the Rev. 4 draft agriculture modalities text and the Rev. 3 draft NAMA text should be the basis for the negotiations.

They underlined that the issues of Special Products (SP) and Special Safeguard Mechanism (SSM) are 'must haves' for MC10, and that the LDC package, cotton and development outcomes are also essential for a successful outcome at MC10.

The issues of S&D and less than full reciprocity were also highlighted by the developing countries. They stressed that all mandates including the 2001 Doha Ministerial Declaration, the July 2004 Framework Agreement, the 2005 Hong Kong Ministerial Declaration and the 2013 Bali Ministerial Declaration remain valid.

The G-20 underlined that agriculture would define the level of ambition for all other areas, and that re-calibration cannot compromise the important reforms that were to be made in agriculture under Rev. 4.

India highlighted amongst others the centrality of the 'development dimension' as enshrined in all the Ministerial Decisions starting with the Doha Declaration, and that less than full reciprocity and special and differential treatment (S&D) within and across all negotiating areas are non-negotiable.

India also underlined that a permanent solution on public stockholding for food security purposes is an essential deliverable at Nairobi (see below).

According to trade officials, Barbados, on behalf of the African, Caribbean and Pacific (ACP) group, said that all mandates including the 2001 Doha Ministerial Declaration, the July 2004 Framework Agreement, the 2005 Hong Kong Ministerial Declaration and the 2013 Bali Ministerial Declaration remain valid.

There is need for members to continue the work. Referring to the paper that the ACP group had put forward, Barbados said that elements in that paper could lead to bridging differences.

(The ACP paper is on bridging gaps on the remaining DDA issues and development outcomes for MC10.)

Barbados stressed the importance of cotton and underlined that the Rev. 4 draft agriculture modalities text should be the basis for any kind of market access in agriculture. It is very important that the flexibilities be preserved for LDCs and the Small and Vulnerable Economies (SVEs).

It also stressed the need for a substantive outcome in domestic support (in agriculture). It said that the issues of SP and SSM, tropical products, and tariff escalation need to be addressed.

On non-agricultural market access (NAMA), it said that flexibilities made available to LDCs and SVEs in the Rev. 3 draft modalities text need to be preserved. On Non-Tariff Barriers (NTBs), Barbados said it is looking to see perhaps a Working Group set up, similar to that on Trade, Debt and Finance, or on Transfer of Technology.

On services, Barbados noted that there are 60 proposals on the table. Annex C of the Hong Kong Ministerial Declaration should be the basis for the negotiations.

It would like to see the qualification standards that are being applied to services professionals by many developed countries be relaxed or eliminated. This would facilitate greater mode 4 access.

Since MC10 will be taking place in Africa for the first time, any final development outcome must be beneficial for developing countries and Africa, in particular. This would mean some kind of firm agreement on cotton, and an outcome on specific proposals on S&D.

With only 14 working weeks left, after the summer break, members will need to increase the level of intensity, said Barbados.

Bangladesh, on behalf of the LDCs, said that the ACP and G-90 (on textual suggestions on S&D) papers are important contributions. Members cannot shift from the emphasis on the implementation of the Bali decisions, particularly the four that pertain to the LDCs.

The LDCs would like to see substantive reductions in overall trade-distorting domestic support (OTDS) by the major subsidisers but that the LDCs should be exempt from any reduction commitments.

On NAMA, the issue of preference erosion needs to be addressed, as well as NTBs. And there is need to bind the Duty Free Quota Free (DFQF) provisions into the schedules of the developed countries.

On services, Bangladesh said that with respect to the LDC services waiver, it needs to see a much larger number of notifications coming from the rich countries.

The LDCs should not be required to make any kind of commitments, and there is need for trade-related technical assistance.

Bangladesh stressed that an LDC package must emerge from Nairobi. This is essential and the major players need to show leadership to get us there, it added.

Lesotho, on behalf of the African Group, said that there is need for an outcome to emerge in the coming weeks that would enable members to achieve a meaningful outcome in Nairobi.

We do not need a new mandate for the negotiations, Lesotho said, noting that the DDA mandate is already there. There are no other guidelines for these negotiations.

The Nairobi Ministerial, taking place on the most marginalised continent, presents an opportunity for the WTO to deliver development outcomes.

There is need for agreement in agriculture, NAMA and services. There is also need for all the three pillars in agriculture (market access, domestic support and export competition) to be addressed.

There must be an outcome on domestic support in agriculture, the African Group underlined. The Rev. 4 draft agriculture modalities text is a good basis for the negotiations, it said, highlighting also the importance of SP and SSM.

There must also be a solution for cotton, based on the 2004 framework and the 2005 Hong Kong Ministerial Declaration. The needs of net-food importing developing countries must be maintained.

On NAMA, the African Group said that the Rev. 3 draft modalities text is the basis for the negotiations. There must be S&D and less than full reciprocity.

Switzerland, on behalf of the "Friends of the System" group comprising about 50 developed and developing members, said that it shared the concerns about the state of the DDA. There is need for results for MC10. It was disappointed at not being able to agree on a work programme.

It is determined to develop a package of credible outcomes for MC10. There must be an outcome that is realistic. It called on the larger members to show leadership to make sure that MC10 is a success.

On behalf of the G-10, Switzerland said that the group is ready to make a contribution but there must be a balance in terms of the areas that are of interest to the G-10. It cannot accept tariff capping.

On its own behalf, Switzerland expressed appreciation for the G-90 and ACP proposals.

The WTO is at a crossroads. Are members really intent on concluding the Doha Round, or are they prepared to see the negotiations on the DDA continue as a kind of negotiating 'zombie', it asked.

According to Switzerland, an ambitious package is not possible, but a minimalist package is not viable either. It highlighted the need (for outcomes in) agriculture, NAMA and services, as well as all three pillars of agriculture.

Indonesia, on behalf of the G-33, said that the Rev. 4 draft agriculture modalities text must be the basis for the negotiations. The SP and SSM are 'must haves' for success at MC10.

There is also need for action on the issue of public stockholding for food security purposes, it said.

On its own behalf, Indonesia said that it wants the process to go forward in a transparent and inclusive manner. Members need to be open-minded and that re-calibration should not be an occasion to cherry-pick issues.

Brazil, on behalf of the G-20, said that all the mandates must be respected. S&D and less than full reciprocity are the key. All three pillars are essential. The Rev. 4 text is the point from which members should be negotiating. It is a step in the direction of reforming agriculture.

Brazil underlined that agriculture would define the level of ambition for all other areas. Re-calibration cannot compromise the important reforms that were to be made in agriculture under Rev. 4.

Speaking for itself, Brazil said that there is need to revise the concepts of "realism" and "doability."

There is no possibility of our concluding an agreement without the three pillars of agriculture, especially with respect to subsidy reductions in domestic support. This is something that cannot be done in any other forum and it must be done here, it said.

There cannot be any outcome that indicates a lack of balance between agriculture, NAMA and services, said Brazil, adding that it will reject upfront any proposal that would maintain or worsen the disadvantaged position of agriculture in the WTO.

Australia, on behalf of the Cairns Group, said that a meaningful outcome is needed on all three pillars. It is difficult to believe that any member could sell domestically any conclusion to the Doha Round that is devoid of meaningful results.

It noted that the major players are very far apart. The outcome of the meetings that have been held is disappointing, but an agreement is still possible.

There is need to advance the reform process in agriculture and remove the barriers and imbalances inherited from the Uruguay Round, it said.

On domestic support, it said that there is scope for major subsidy reductions by the major subsidisers which would still retain their policy space. An outcome on market access in agriculture would only be acceptable if it supports progress in the reform process.

On export competition, it said that it is important to fulfil the mandate set by the Hong Kong and Bali Ministerial Declarations.

On behalf of itself, Australia said that members need to come back in September and define specific elements in concrete detail.

Chinese Taipei, on behalf of the Recently Acceded Members (RAMs), voiced disappointment over the failure to reach agreement on the work programme. This was not ever the objective in of itself. The objective was to reach something important in Nairobi.

Saudi Arabia, on behalf of the Arab Group, said that members are at a critical juncture. The credibility of the WTO is at stake. The inability to get a work programme creates doubts that the WTO can have a successful ministerial in Nairobi and conclude the Doha Round.

There is need for an approach that is more focused but no outcome will be credible without taking into account S&D and less than full reciprocity.

Mali, on behalf of the Cotton-4, said that an ambitious outcome in cotton is critical and the group will put forward a new proposal in September.

Guatemala, on behalf of the SVEs, said that it is important that the flexibilities for the SVEs is preserved in the agriculture, NAMA, and fisheries subsidies texts. If there is a lower level of ambition, then the contribution of the SVEs should be revised downwards.

Turkey voiced frustration at having missed another deadline, but in light of the breakthroughs that members have had in the last couple of years that came through at the last minute, it remained hopeful that MC10 can produce some meaningful results.

Members have to stop negotiating from static positions. There is need for a fair outcome. If members fail to deliver at the WTO, the result is going to be an unbalanced outcome for many (in apparent reference to bilateral and regional agreements). A no outcome in Nairobi would result in a diminished role for the WTO, it said.

Chile said that it does not have a great deal of hope that members will have a robust package in Nairobi. It said that members have been engaging but they have not yet reached a point where they are actually seeing convergence.

We will need positive results in Nairobi. We should not negotiate from entrenched and static positions. If we do not get a successful outcome in Nairobi, it will leave the Doha Round in a permanent 'zombified' state, it said.

India (represented by Ambassador Anjali Prasad) associated itself with the G-33 and G-20 statements. It said that this semester has indeed been a critical and active phase in the negotiations owing to sincere efforts to keep a sustained dialogue going among Members in different formats.

Several new ideas and alternative approaches were floated in a bid to find landing zones although not with the precision required for serious discussion, nor always in the form of concrete, self-contained proposals from Members. As such, the discussions have had to be largely conceptual and on "without prejudice" basis.

India said that there is no common understanding yet on what re-calibration, simplification or lowering of ambition mean in practical terms or on the alternative approaches.

"Despite intensive engagement, the stark reality is that we do not have a clearly-defined post-Bali work program as mandated, which is disappointing. The consequence is that we neither have a narrowed down list of issues central to the conclusion of Doha nor a direction for further negotiations."

Going forward, India fully endorsed the view that there is no option but to redouble efforts when members resume work in September and focus on substance so that the outcome is not lop-sided, especially from the perspective of developing countries and least developed countries, for whom the development dimension of this round is not merely a matter of scoring debating points at the WTO.

India reiterated certain important parameters that it believes should continue to form the bedrock of the work:

* First, we should not lose sight of the centrality of the 'development dimension' as enshrined in all the Ministerial Decisions starting with the Doha Declaration.

* Second, less than full reciprocity and special and differential treatment within and across all negotiating areas are non-negotiable.

* Third, we need to respect all Ministerial mandates and Decisions relating to the DDA, and not ignore the work done by Members at various stages since the Round was launched. Relying on mandates where convenient and disregarding them, where not, would not be the way to go.

* Fourth, agriculture remains central to any outcome in the Round. It would be the bellwether in calibrating the level of ambition across all negotiating areas. Front-loading of discussion on all its three pillars with equal priority is therefore necessary to move us forward and ensure balanced outcomes in all other areas of negotiations.

* Fifth, we believe that Rev. 3 and Rev. 4 provide a good basis for further work in NAMA and agriculture. We have been open to looking at new ideas and alternative approaches but do not see the possibility of a breakthrough unless there are clear and actionable proposals.

* Sixth, re-calibration with a lowering of ambition cannot happen if it leads to dilution of the development quotient and is not symmetrical across all areas of the negotiations. Retention of ambition or even raising it in some areas while lowering it in others would not be helpful.

* Seventh, doability and realism cannot imply the dropping of issues and elements. All issues must remain on the table. Cherry picking of issues has to be avoided.

* Eighth, we should avoid bringing in issues that may be divisive and counter-productive in our search for credible outcomes.

Here, India referred to suggestions made by some members that question the existing WTO legal framework of treating developing countries as a homogenous category.

* Ninth, it is important that we maintain transparency and inclusiveness in the run-up to the Ministerial Conference, and follow a member-driven and bottom-up approach. It should be our collective endeavour to complete work on Nairobi outcomes in Geneva itself.

* Lastly, we do not subscribe to a Nairobi 'make it or break it' narrative or conclusion of the Round at any cost or in any manner whatsoever. India believes that the Round cannot be completed without a credible outcome on the development dimension.

India highlighted some specific concerns it had with the report of the Chair of the agriculture negotiations.

On domestic support, India emphasized that the availability of policy space cannot be a metric for undertaking commitments which, as has been the practice in WTO, is based on bound levels. Moreover, it is anomalous to equate the policy space of developing countries - the need for which is recognized by the relevant S&D provisions of WTO law - and that of developed countries. The report also appears to equate the elements of market access such as tariff peaks, escalation etc. with Special and Differential treatment.

India stressed that S&D is an abiding principle that informs all elements and pillars of the negotiations and is not to be treated as just another element.

Another concern that India has is the linkage that is sought to be established between approaches to tariff reduction and the SSM.

As it has repeatedly pointed out with the support of several developing countries, the inclusion of SSM is a given that flows from the mandate. It is only its design that is the subject matter of further work and negotiations. In other words, the inclusion of SSM in the final package is not contingent upon the type of tariff reduction modalities that are adopted and is a stand-alone.

India also disagreed with the Chair's assessment of potential solutions to the issue of Public Stockholding for Food Security in as much as there is no convergence on devising a permanent solution on the basis of elements from the Bali decision. The only proposal on the table is that submitted by the G-33.

India was deeply concerned that Members are not engaging meaningfully on that proposal and instead are asking for alternatives to be explored. As India has repeatedly pointed out, a permanent solution to this problem is an essential deliverable at Nairobi.

On the NAMA Chair's report, India said it does not share the perception that the division of substance into smaller bits would facilitate progress as the NAMA elements enumerated by the Chair are closely interlinked. In India's view, it is only on the basis of wholesome proposals covering all elements that meaningful discussions are possible.

India is ready to engage in the negotiations in a constructive and creative manner to achieve a credible and balanced outcome at Nairobi. Needless to say, such an outcome should level the playing field for developing countries, address existing inequities in the system, and advance trade and development goals of the entire membership.

The European Union said that despite the positive spirit that filled this organisation after MC9 and in particular after the resolution of last year's stalemate on the Trade Facilitation Agreement, members have not been able to advance as much as they would have liked on the DDA.

"While we were slowly, for several months, moving away from old ideas that didn't work in the past and starting to consider promising ideas on a without prejudice basis, the most recent debate in the negotiating groups showed that some Members have hardened their views. We will need to find the right ways to recover quickly after the summer break the progress that we had achieved and move forward."

The numerous discussions the EU has had over the last few months have clearly showed a change of approach was needed to reach an acceptable compromise. Although this may be difficult for some to hear and even more difficult to accept, the lessons from this exercise have been clear: if any deal is to be reached, then the ambition has to be lower than in 2008, and this adjustment needs to take place across all negotiating areas, said the EU.

The discussion on domestic support and market access clearly showed what is and what isn't possible. Those who shut their eyes to this reality and demand high levels of ambition on the one hand, yet coupled with flexibility regarding their concessions on the other, are merely pushing this organisation toward another failure.

According to the EU, there is a need to target a different level of ambition than in 2008; to accept that no Member will give concessions requiring major reforms of its trade and agricultural policies; to ensure proportionate contributions within and across all areas by all key WTO Members, in line with their roles in international trade, while of course bearing in mind the development orientation of this round.

"This recipe is the best hope to advance. Unfortunately, it has not yet been sufficiently accepted by all."

The EU said it is deeply worried that there are also more fundamental differences with regard to the interpretation of the significance of MC10.

For some, including the EU, the Nairobi Ministerial is the last stop to have a meaningful and full DDA outcome. At the same time, some others seem to consider that a partial outcome could be pursued in Nairobi and that the DDA process could then continue levitating unharmed for many more years.

"While some mini deliverables may have contributed to maintain a certain momentum in the past, this is no longer a valid option at this juncture. Already today, the negotiating function of this organisation is not delivering on the issues and at the pace expected by the world's traders. MC9 provided us all with a bit of breathing space, but if we do not use this chance to advance on the DDA, the attention will entirely move elsewhere."

While it is undisputable that agriculture is the central element of this round and will need to be resolved in order to get any feasible deal, all issues need to advance in parallel. Otherwise, in fact, all of the individual issues will remain blocked as all are somehow interlinked.

Domestic support is clearly the ambition setter of what can be achieved in the DDA. However, discussions have proven that the only realistic way forward is to focus on an outcome which respects Members' current policies, but also restrains trade-distorting support by introducing constraints and eliminating loopholes so as to encourage further reform. Focusing on OTDS may in fact be the only way to advance.

Market access needs to be adjusted to today's reality and needs to be considered horizontally in the sense that similar re-calibration must occur both in Agriculture Market Access and NAMA. They involve re-calibration by a certain factor, simplification, and flexibility for all Members in implementation (i.e. an 'average tariff cut' approach). In this approach, there is no room for unrealistic expectations, such as on TRQs.

The EU said there is willingness to advance toward a good outcome on export competition, but only as part of a broader DDA package. Export competition has to be part of any DDA deal; but, it cannot be the only element of an outcome.

 


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