TWN Info Service on WTO and Trade Issues (May 07/10)

29 May 2007

"EU, US differences narrowing, but not fast enough", warns Lamy

There is a narrowing of differences between the United States and the European Union, but this is happening at too slow a pace given the time constraints that WTO members face, according to the WTO Director-General Pascal Lamy.

Lamy was speaking at a media briefing on 9 May following a meeting of the WTO General Council.

Below is a report of the Lamy briefing and the Council meeting.

It was published in SUNS on 10 May.

With best wishes
Martin Khor

"EU, US differences narrowing, but not fast enough", warns Lamy

By Kanaga Raja (SUNS), Geneva 9 May 2007 

While there is a narrowing of differences between the United States and the European Union, this is happening at too slow a pace given the time constraints that WTO members face, according to the WTO Director-General Pascal Lamy.

This view was expressed by Lamy in response to a question at a media briefing on 9 May following the conclusion of a meeting of the WTO General Council.

Asked as to whether the US and the EU were narrowing their differences on the issue of farm subsidies, Lamy told journalists that the US and EU are converging on their agenda, but the problem is whether they are doing this fast enough to meet the time constraints that members have.

It is not only about farm subsidies but also about market access and tariffs, Lamy said, adding that the reason why the US and the EU are having trouble converging is due to these two elements. ''Its not only about farm subsidies, it is also about market access.''

Asked as to where he sees this convergence between the US and the EU, Lamy however said that he was giving a diagnosis of the level of activity in the WTO where he saw a lot of engagement that has been unprecedented for some time now.

The one-day General Council meeting took up some regular agenda items including Lamy's report as Chair of the Trade Negotiations Committee, reports by the chairs on the work programme on small and vulnerable economies and on special and differential treatment.

At the media briefing, Lamy responded to another question by saying that he did not intend to put forward a paper (presumably his own), except in an extreme situation.

He did not elaborate what the extreme situation would likely be. He said the respective Chairs would be submitting documents and as long as the process moves forward, there is no need "to take another option that would be risky."

Asked whether a Mini-Ministerial would be convened in June or July, Lamy said the real question is whether ministers would be needed to clinch the modalities on agriculture and NAMA and deal with other issues. Whether ministers would be needed (to clinch the modalities) is unclear at this stage.

Asked about the prospects of getting a deal given the US fast track situation, Lamy said the fast track has already disappeared. ''We have been living for some time without Trade Promotion Authority (TPA). That is the reality of today.''

Lamy said that TPA is undoubtedly needed to conclude the Doha Round. He was also of the view that TPA renewal would be helpful, because this would be a sign of engagement on the part of the US.

With respect to the Doha Round, Lamy said that there is a commitment to re-balance previous rules of the multilateral trading system in favour of developing countries, since the rules are imbalanced in favour of developed countries. This Round will have to result in a re-balancing, and developing countries are adamant that this should happen.

Asked about the NAMA negotiations, Lamy said that the currency that is used in the WTO negotiations is 'bound rates', and there is a parallel with subsidies (agricultural) ceilings, as well as with services where negotiations are done with respect to bound commitments.

There is however an economic reality which is real or applied rates, said Lamy. Inevitably, these two cannot be totally separated, as the difference between bound and applied rates is extremely different between country-to-country and sector-to-sector.

The question whether developing countries with a 'lot of water' (difference between bound and applied rates) should have some of the reductions bite into applied rates and what would be the influence of the flexibilities that they have, remains to be seen.

Meanwhile, in his report to the General Council, Lamy referred to the last informal meeting of the TNC on 20 April where the commitment made by the major players to a successful outcome of the negotiations by the end of this year was welcomed.

However, said Lamy, there are no illusions about the challenges that it represents. ''All of us here in Geneva are well aware of the sequence of necessary steps which will be needed to conclude the Round and the severe time pressure that sequence now imposes upon us.''

According to Lamy, the first step in that sequence is to establish modalities in agriculture and NAMA, which will then be reflected in the schedules that participants will elaborate in the next step. ''It will also be necessary to bring the work in the other areas of negotiation to a commensurate level of maturity if we are to have the whole package agreed by the end of this year.''

To be able to meet this challenge, said Lamy, ''we urgently need serious substantive engagement by all partners in the multilateral process here in Geneva, under the guidance of the Negotiating Group Chairs.''

The multilateral negotiations can no longer be made to wait for contributions from other processes in or outside Geneva, Lamy stressed. ''We can all acknowledge that such processes are potentially useful, hence important, but they must feed into the multilateral one, which is the core of our business and which must now move on rapidly.''

Lamy said the engagement at Monday's meeting to discuss the "Challenge paper" of the Chair of the agriculture negotiations was encouraging.

Lamy also reported on preparations for three regional Aid-for-Trade reviews - the first to take place in Lima on 5-7 September for the Latin America/Caribbean region; the second in Manila on 19-20 September for the Asian region; and the third in Tanzania on 27-28 September for the Africa region. All these would lead to the monitoring and evaluation event that will take place in Geneva on 20-21 November, Lamy said.

Lamy underlined his belief that a successful outcome to the Round is possible, even in the small amount of time remaining until the end of this year. He had warned governments that if they do not compromise soon, they will be forced to confront the unpleasant reality of failure.

According to trade officials, most of the delegations that spoke at the Council meeting requested that the statements they made at the informal TNC meeting on 20 April to be put on the record.

Paraguay, on behalf of the informal group of developing countries, welcomed the agriculture Chair's paper, saying that it would stimulate the multilateral process in agriculture. This is the right way to negotiate as it would give greater transparency.

It said that the principle role of the Doha Development Agenda is to give developing countries the tools to make trade a driving force in their development. Transparency and inclusiveness are very important principles with respect to this.

Zambia, on behalf of the LDCs, said duty-free, quota-free market access for the LDCs is a key issue and must be included in any agriculture package. The Special Safeguard Mechanism (in the agriculture negotiations) is also important for the LDCs, and should not be linked to any market access provisions. On food aid, Zambia called for a 'safe box' so that in the event of a catasthrophy, there would be a guarantee of food supply.

The LDCs should be included in any discussion on tariff-reduction formulae pertaining to cuts in industrial product imports because their interests need to be taken into account as well.

On services, the LDCs have not been able to benefit from autonomous commitments largely due to capacity constraints, said Zambia. It urged greater commitments on trade-related technical assistance.

Nigeria said that the big agricultural subsidizers need to make greater commitments. There needs to be a balance across the three pillars. While market access is important, so is the issue of flexibility for developing countries - through special and differential treatment and 'less-than-full-reciprocity'.

Cuba welcomed the resumption of the multilateral process and said that the round is not about realism but about development. Development is here to stay and it is a number-one priority in all international organizations.