TWN Info Service on WTO and Trade Issues (Nov07/28)

30 November 2007

Trade: Doha deadlines are unravelling as TPA issue emerges

Published in SUNS #6369 dated 20 November 2007
By Martin Khor, Geneva, 18 Nov 2007

The Doha negotiations have got mired in more difficulties as divisions between major players have evidently become more wide rather than narrowing.

And new "deadlines" are now being talked about as it became obvious that no breakthrough or meetings of major substance will be held in December.

The new hope is that a modalities deal in agriculture and non-agricultural market access (NAMA) can be done in March 2008. But even that is looking too optimistic. Brazilian Foreign Minister Celso Amorim spoke disapprovingly last week in Geneva of "rumours" of (unnamed) people talking of a new deadline in June.

Deadlines still seem to mainly refer to the United States' domestic political agenda, in particular, the US Presidential elections, the campaign before, and the new President taking office.

This all ties in with the uncertainty faced by other countries in negotiating with a US administration that does not have Presidential fast-track authority.

Last week, the G20 leaders Amorim and Indian Commerce Minister Kamal Nath both raised the trade promotion authority (TPA) issue following the G20 Ministerial meeting. It was the first time that developing countries have publicly and directly pointed to the lack of TPA in the US as a major hindrance to the negotiations, although privately, many diplomats have wondered at the futility of having talks with the US government whose positions may later be contradicted by Congress.

"The major uncertainty centres around the TPA in the United States, we call on the US to tell us when this can be expected," said Nath at the press conference. Amorim said that what was worrying is if WTO members negotiate a deal agreed to by the US administration but in the end parts of it are rejected by the US Congress.

Both called on the US to provide a "roadmap" on when a new TPA will be available.

But it looks as if the US administration will not be able to say with any degree of certainty when, if ever, a new TPA is going to be enacted. The TPA will have to be passed by Congress, and few members are in the mood to think about it when the election campaigns are hotting up.

Responding to the comments of Amorim and Nath, US Trade Representative office spokesman Sean Spicer said that Congress has made clear that "if we have a Doha deal which offers strong market access results, then they will provide TPA for us." He accused those raising concerns about the TPA as wanting to divert from the real issue of whether developing countries are willing to be flexible to conclude the agriculture and NAMA modalities.

He said that the US had shown a "road map" towards the Round's successful outcome by agreeing to negotiate on the basis of the texts of the chairs of agriculture and NAMA, and that is what the developing countries should focus on.

The "blame game" has reached a new phase, as the negotiations remain stuck. The US is blaming the developing countries (or at least the major ones) for not offering enough market access and by implication for delaying the obtaining of a new TPA.

Most of the developing countries have argued that there is an imbalance between the two texts as well as imbalances within the texts and that the developed countries have to be more respectful of the development goals of the Round. And India and Brazil for the first time are saying that the uncertainties over the TPA is the major roadblock to further progress, and that the US has to now give a clear and honest picture of the prospects of a new TPA and when this can be expected.

According to some developing country diplomats, the US is reluctant to have a "mini Ministerial" anytime soon, because the US Trade Representative may not be able to make any offers or take any firm positions, probably due to the uncertainties of the TPA, the Farm Bill and the relations between the President (and administration) and the Congress.

This could be the main reason why a fortnight ago it became clear that any plans for a December deal on modalities - which has to be endorsed or concluded by a mini-Ministerial - are off.

The diplomats believe that it is partly because of this that the US is now embarking on an even more aggressive course at the Doha talks, and in this it is joined by the EU.

Amorim already some time ago (at the failed Potsdam G4 Ministerial in June) claimed that the US and EU had decided to get together, agreed to lower agriculture ambitions with regard to each other, and teamed up to extract more concessions from developing countries.

Now at the WTO, the two majors are coordinating their further assault on developing countries in NAMA and services.

According to some diplomats, the US and EU are preparing a joint NAMA paper, aimed at pressuring the major developing countries to give in, while showing some sympathy for smaller developing countries.

One version of this paper, obtained by a developing country diplomat, has 11 bullet points. They include that the NAMA outcome must have real market access gains and refers to the APEC declaration on an ambitious outcome. The paper accepts the existing Paragraph 8 flexibilities in the Chair's paper, and supports the Chair's numbers on coefficients.

It argues that the less than full reciprocity principle is being achieved through a reduction of tariff peaks and by the number of dutiable applied tariff lines that are to be cut, in participation in sectorals, a longer period of implementation for developing countries, and because flexibilities for developing countries shield their high tariffs.

The paper also rejects the proposal that members of customs unions in developing countries can get extra flexibilities, as this raises serious systemic concerns.

As for other developing countries, there is to be no tariff reduction by LDCs; the Chair's text on small and vulnerable economies and "Para 6 countries" can be adjusted; the Chair's text on recently acceded members is acceptable; and there can be discussions to resolve specific problems of particular developing countries.

Also, there can be a trade-off for developing countries between the coefficient to be applied and the extent to which they make use of the para 8 flexibilities.

The US and EU were expected to table their NAMA joint paper last week, but by the end of the week no such tabling had been done. There has even been a strong US denial in the media that such a paper exists.

A diplomat, who has a copy of the draft, speculated that the paper may have been withheld for the time being due to the unfavourable reference made to the paper by some of the G20 Ministers at their meeting.

The developed countries have also gone on the offensive in services. The EU and US first pushed that there be a services text to be produced to accompany the texts on agriculture and NAMA.

Many developing countries were initially against developing such a text, arguing that a services text already exists in Annex C of the Hong Kong Ministerial Declaration. In spite of their initial reluctance, the developing countries went along with the proposal that the Chair of the services negotiations, Ambassador Fernando de Mateo of Mexico, could hold consultations on such a services text.

The consultations are now turning into a negotiating process, with the US producing a detailed outline paper on "Elements for a Services Text: Revision" dated 12 November.

One of the US proposals is that a "Guidance" be included in a services text which instructs Members to respond positively to bilateral and plurilateral requests with a view to achieving a progressively higher level of liberalization, and to offer commitments that: (a) reflect current levels of market access and national treatment, with limited exceptions to binding current levels; (b) provide new market access in sectors where trade impediments remain.

Meanwhile, ten developing countries (including Argentina, Brazil, China, India, Philippines, South Africa, and Thailand) have also put forward their own Possible Elements of a Services Text, which stresses improved commitments in sectors and modes of interest to developing countries, especially Mode 4. It stresses the need to be faithful to Annex C and to the development flexibilities of GATS.

In another development, the Chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand, has also told diplomats his latest plan - that there be a break in his consultations this week, to be followed by three more weeks of discussions.

This implies that there will not be a revised agriculture text at the end of November or the start of December. The new paper may thus come out only in mid-December.

Some diplomats are now predicting that the agriculture and NAMA papers may only appear in the new year.

"The talks seem to be unravelling," said a diplomat of a developing country. "Or at least the deadlines are all unravelling." +