TWN Info Service on WTO and Trade Issues (Nov07/18)

13 November 2007

Postponement of new texts dims prospects of a December Doha deal

The postponement of the issuing of the revised modalities drafts on agriculture and non-agricultural market access (NAMA) has further dimmed prospects that the WTO can reach agreement on the modalities on these two key issues by December.

Below is an article on the current state of play of the Doha negotiations.  It was published in the SUNS on 8 Nov 2007.  It is reproduced here with permission of the SUNS.  Any reproduction requires permission of SUNS (

With best wishes
Martin Khor

Postponement of new texts dims prospects of a December Doha deal
Published in SUNS #6361 dated 8 November 2007
By Martin Khor, Geneva, 7 Nov 2007

The postponement of the issuing of the revised modalities drafts on agriculture and non-agricultural market access (NAMA) has further dimmed prospects that the World Trade Organisation members can reach agreement on the modalities on these two key issues by December.

The drafts were to have been issued by the chairs of the negotiations on agriculture (Ambassador Crawford Falconer of New Zealand) and on NAMA (Ambassador Don Stephenson of Canada) in mid-November.

Towards the end of October, Falconer quietly let diplomats and journalists know that he was targeting his paper for 19 November. And since the NAMA paper is meant to be issued at the same time, there was expectation that 19 November would be the key date to receive both Chairs' drafts containing the revised modalities.

There was some speculation about the timing - that the papers seemed to be timed to come out just on the eve of the Aid For Trade global review to be held at the WTO on 20-21 November.

Since many Ministers are expected to come for this event, one scenario that some diplomats had envisioned (or rather feared) was that a mini-Ministerial might be planned (perhaps by Director General Pascal Lamy) for selected Ministers to look at the new papers and to give instructions to the diplomats for their acceptance, or at least for their being accepted as the basis for further negotiations.

Or if a "big" mini-Ministerial of 30 members may not be feasible, perhaps a meeting of Ministers of the G12, or the G6, or even the G4, might be held in the margins of the aid-for-trade event, to try to achieve a breakthrough on the basis of the mid-November texts.

Now that there will not be any new texts in mid-November, the aid-for-trade review is not expected to be the opportunity for a breakthrough on Doha modalities on the sidelines of the event.

On 31 October, Brazil's Foreign Minister Celso Amorim held a briefing in Geneva and announced that a G20 Ministerial would be held on 15 November in Geneva, so that the group could make its views known and thus influence the agriculture revised text. At that time, it was widely believed that the draft would be issued on 19 November.

Then on 2 November, Falconer told an open-ended agriculture meeting at the WTO that he needed more time to undertake consultations and that more Room E discussions would be held on sensitive products and export competition in the week starting 12 November.

Unofficially, it was made known that the mid-November deadline for his paper would be missed, and that the new expected date was the end of November or even the beginning of December.

Last week, many problems also emerged during Room E discussions on special products (SP) and special safeguard mechanism, with the G33 members making clear that they could not accept new concepts that Falconer had put forward on SP or some of his ideas on SSM (See SUNS #6359 dated 6 November 2007).

The many unresolved issues in agriculture may have persuaded Falconer to postpone his paper. He told journalists that it was more important to carry on with the process (with opportunity to get more agreement) than to meet a deadline.

On 5 November, it was Stephenson's turn to announce that his revised NAMA text would also be postponed, for a couple of weeks, since the NAMA and agriculture papers would have to come out together.

At the NAMA meeting of 5 November, there was no sign of convergence on the two issues discussed (LDCs and countries with low level of tariff bindings). Other issues are also being discussed this week, and few expect any progress especially in the contentious areas of coefficients for the tariff-reduction formula and flexibilities for developing countries.

While there has been no movement from existing positions on the coefficients, with many developing countries insisting that the Chair's proposed ranges are biased against them and contrary to the less than full reciprocity principle, a new debate has begun on whether developing countries affected by the formula and belonging to customs unions can be eligible for more flexible treatment because deep formula cuts would also similarly affect LDCs and small and vulnerable economies belonging to the same customs unions.

When Brazil, Argentina and other Mercosur countries put forward a proposal that flexibilities should apply to 16 instead of 10 per cent of products for Mercosur members, and that the flexibilities should not be restricted by a percentage of the value of imports (as they are now so restricted under the present proposals), there was strong opposition from the developed country members.

In short, there are many problems still in the agriculture and NAMA negotiations and they are unlikely to be resolved by this month. Even if revised texts were to come out at the end of November or the beginning of December, it is more likely that they will contain several proposals that many WTO members will consider contentious.

Some years ago, it was possible to issue a Chair's text and so long as the major developed countries agree to it, methods could be, and would be, found and implemented to get the developing countries to go along and "join the consensus."

Probably this is still the preferred method where the developed countries are concerned. They are trying to convince the media, the world public and developing countries that everyone must accept the present two drafts (issued in July) as the basis for negotiations.

The United States has argued that since it has accepted the ranges on domestic support in the Chair's agriculture text as something it can negotiate, therefore, the developing countries must agree to negotiate within the ranges and figures in the NAMA text.

Developing countries have countered that the figures proposed in the NAMA text would lead to an imbalanced and unfair outcome within NAMA itself, violating the less than full reciprocity mandate, and they would also not meet the second mandate of balance in the ambition levels between agriculture and NAMA.

Following the developed countries' line of argument on the first set of draft modalities, they may now demand that the developing countries agree to adopt the second set of modalities, with only minor changes.

Fear of being blamed if the talks collapse or are suspended is perhaps now the major driving force behind the attitude and positioning of many countries, both developed and developing, but especially the developing countries.

There may be intense pressure on the developing countries to accept and to live with the two revised texts when they finally come out, and to have an agreement on modalities in December. The General Council meeting of 19-20 December is the milestone that could be set for this.

However, if the texts contain proposals that developing countries and their groupings cannot accept simply to conclude the process, then they are likely to ask for the negotiations to continue.

That will push the talks towards next year.

This is not something that is liked by developed countries, or by Lamy, who are worried that the United States will by then be distracted by the Presidential elections.

On 6 November, Lamy said at a business event in Zurich that the Doha talks should not be pushed into next year. "I am under no illusion as to the very tight time pressure we operate under at this juncture," he was quoted by Reuters as saying. "Pushing this negotiation into next year would most likely complicate (things) from a political point of view and most of the WTO members today share this wisdom."

Lamy also said that talk of imminent failure in the talks was unfounded. "While we are certainly in a very critical stage of current negotiations, the impending implosion of this negotiation is much exaggerated."

Actually, there have already been many deadlines set, and missed, for the Doha talks, supposedly to fit into the US domestic political schedule. The deadline to conclude the Round was set for several months before the end of the President's fast track authority. But that deadline has passed, with the President no longer having this trade authority.

Then it was said that if the modalities are concluded quickly, there would be a chance to have the trade authority re-installed. But the prospects for that are now almost nil.

The United States' partners are now negotiating with it, knowing that whatever the US administration is proposing may not be supported or endorsed by the Congress, and that a Doha deal may be seriously amended or killed on the floor of the Congress.

It has also become clear that the US Congress, controlled by the Democrats, will not give a new fast track authority to President Bush. A new authority may only be established under a new President.

Moreover, the new US Farm Bill, now being debated in the Senate, seems likely to continue with the same system of domestic subsidies and at similar levels of support to farms, as the previous Farm Bill.

It is even unclear at this stage whether the proposals that the US has put forward and will put forward at the WTO are consistent with the new Farm Bill, since the Bill has not yet been adopted and may even be ready only next year. And even then President Bush has threatened to veto the Bill.

With all these uncertainties regarding the US domestic scene, its administration is still sticking to the line that the developing countries must make big concessions in the Doha talks so that the benefits are so significant to the US that a Doha deal can be sold to the Congress.

An AFP agency report of 6 November quotes the US' WTO Ambassador Peter Allgeier as warning that the administration will have a hard task in "selling" any trade deal to Congress if developing countries do not give more ground on industrial tariffs.

Given next year's looming presidential elections, "we are going to have to make a very demonstrably strong case that we're going to benefit from the Doha round" in order for domestic politicians to approve any deal, Allgeier told AFP in an interview.

To this end, developing countries and especially emerging economic powers such as China, Brazil and India, must show more flexibility on industrial tariffs and other forms of non-agricultural market access, he said. "If China, Brazil, South Africa, Argentina, India and others are not making reasonable contributions, then we won't be able to make that demonstration," Allgeier warned.

These statements are a sign of the US attempt to get developing countries to make serious concessions on the ground that otherwise Congress will not accept a deal.

But the reality is that even if developing countries make the sought-after concessions, Congress may still not endorse a deal that the Administration has concluded. And the Congress, aided by the Administration, may then make further demands on the developing countries.

This was the case when the bilateral Free Trade Agreements concluded by the US Trade Representative under the old fast-track authority were sent to Congress. The Congress demanded changes, and even now it is uncertain whether some of these agreements (such as the one with South Korea or Columbia) will be passed.

And these were agreements concluded when President Bush still had his fast track-authority. Now that this authority is gone, the situation is even more uncertain and difficult with regard to agreements that are now concluded by the US, such as a Doha deal.

Especially under such uncertain conditions, the developing countries would find it extremely difficult to agree to the new texts of the two Chairs, if these texts do not reflect their interests, simply to allow an end-of-year deadline to be met, or simply out of a motivation to avoid being targeted in a blame game.