TWN Info Service on WTO and Trade Issues (Mar08/07)
7 March 2008
Third World Network

Trade: In WTO's corridors, questions abound on "what next"?
Published in SUNS #6429 dated 6 March 2008

By Martin Khor, Geneva, 5 Mar 2008

The Doha negotiations at the WTO are moving into a new stage. This kind of statement is of course not new. For the past two to three years, it has been common for the leaders of the Doha negotiations to sound the alarm bells that the time for making decisions has come, or that the last chance to finish the Round has come, and that "time is running out."

There is a feeling, however, that the next one to three months are now "really" the make-or-break period. Either the key modalities are completed in this time, or else the Round will have to be put in some kind of "cold storage", to be re-opened in two years or so, or to stay frozen forever.

The thinking is that the Doha deal as a whole must be completed by the end of this year, because President George W. Bush leaves office after that, and there is a genuine fear that the next President will not be interested in taking over and completing the Doha Round on the present framework.

Moreover, the EU Trade Commissioner Peter Mandelson, won't be around after 2009. The WTO Director General Pascal Lamy's term also ends in 2009 and it is not known if he will seek another term. Other important personalities associated with the Round, such as the Brazilian Foreign Minister Celso Amorim and the Indian Commerce Minister Kamal Nath may or may not be around in their same posts after 2009.

According to several observers and diplomats of the WTO scene, there is thus an urgency among some key players, especially Lamy, Mandelson and Amorim, to wrap up the agriculture and NAMA modalities in the next month, so that other issues can also be dealt with and the scheduling of tariffs can be done, to have a complete Doha agreement ready for signing in December.

The deadline for finishing the two sets of modalities was set by Lamy and a few Ministers at a brief meeting at Davos in January. This deadline was before, at or just after Easter (which falls on 23 March), which means that a mini-Ministerial "Green Room" has to be held at that time.

With the slow progress (or, as some would have it, non-progress) in the past two months, this deadline is now impossible to keep. So April is now talked about. But when in April? There is the UNCTAD XII session in Accra in 20-25 April. So the Ministers have to meet at the WTO by mid-April, to enable some of them to go to Accra.

If that mid-April deadline also cannot be met, then the beginning of May looks like the next best bet (since the Ministers who go to Accra have to go home first before switching their bags and thinking hats for the Geneva meeting).

According to some sources, the UNCTAD XII meeting could also shape up to be the venue for several sideline meetings of some Ministers to discuss the outstanding Doha issues. In UNCTAD XI in Sao Paulo in mid-2004, there were Ministerial meetings of the G4, the G20, G33, etc.

There may be even more intense meetings of Ministers in various configurations in Accra. Unfortunately, if this happens, this may take attention and energy away from the UNCTAD XII itself.

Before that, however, the whole process issue has to be settled in Geneva in the next few weeks. Most delegations, at least those from developing countries, do not seem to know what is being planned, although they know that some things are being planned by the powers-that-be in the WTO. Even who the powers-that-be are exactly is not known for sure.

What is known is that the work of the agriculture and NAMA negotiating groups is not completed. After the two Chairs issued their revised modalities texts on 8 February, there was hope and some expectations that the differences in many of the outstanding issues would be narrowed.

But after a series of Room E meetings on both areas, it became clear at the open-ended meetings to report on the situation on agriculture (held last Friday 29 Feb) and on NAMA (held on Monday 3 March) that there has instead been little or no progress.

Indeed, in some ways the gaps or differences have widened. For example, the EC reported in a Room E agriculture meeting that they are unable to make better "offers" because of the position taken by 20 EU members states led by France.

[These countries reportedly told Mandelson that they disagreed with the 8 February agriculture paper, he had reached the limits of his negotiating mandate in agriculture and he could not be more flexible.]

Diplomats involved in Room E have reported that the EC had hardened its position in several areas, and the G10 had also maintained a hard-line stance. For example, they rejected the 54% average tariff cut for developed countries that the agriculture Chair, Ambassador Crawford Falconer, had put forward in his paper.

When Falconer suggested that the range of figures (in brackets) in the tiered formula to cut tariffs, and on the number of sensitive products and the treatment of these products, be "split in the middle" (i. e. that the mid-points of these ranges be agreed to), this was found unacceptable to the EC and to G10 countries. On tariff simplification, the Falconer proposal that 90% of tariff lines should be on an ad valorem basis, this was also not agreed to.

The G10 also rejected the notion of capping for developed countries' tariffs, or of compensating for having more than a certain percentage (eg 4%) of tariffs above a certain level (eg 100%) through expansion of the tariff rate quota.

On special products and special safeguard mechanism, there was also no agreement, and many sticky issues are outstanding.

And on the key question of whether the US can offer anything better in reducing its maximum level of overall trade distorting domestic support (OTDS), this was not even brought up or discussed in Room E nor in the open-ended meeting.

With the US Presidential candidates, at least on the Democratic ticket, appearing to take an anti-trade deal position, and with Congress seemingly to be in no mood to offer Bush a new trade promotion act, most observers think that the US is unable to offer anything better than what they already have done a year ago.

In NAMA, the key questions of coefficients for the Swiss formula and the flexibilities for developing countries remain stuck. To complicate matters, the NAMA group chair, Ambassador Don Stephenson has at this late stage proposed a set of 8 options for flexibilities, which will take significant time for members to assess, let alone discuss.

At both the agriculture and NAMA open-ended meetings, delegations said the work of the groups still had a significant way to go. And they expressed misgivings about closing the work of the groups, and starting a "horizontal process" (the WTO new jargon for a Green Room type of process in which selected countries discuss issues together, so that trade-offs can be made across the issues).

Another complication is that while agriculture and services have been at the center of the negotiations, services has made a grand entrance, with the US and EU in particular insisting that (1) there be a multilateral text that commits countries to lock in their existing level of market access and national treatment of countries, (2) commits countries to increase their market access, and (3) affirms that the level of ambition in services be comparable to that in agriculture and NAMA.

There is also a developed-country push for a "signalling services conference" at which Ministers will inform what new offers in services market access they are willing to pledge. The developed countries want this conference to be held at the same time as the Ministerial for the agriculture and NAMA horizontal.

The major developed countries are also insisting that they know what the developing countries are willing to commit in services before the talks in agriculture and NAMA take place in earnest.

Diplomats say that the time-table for the next few weeks is based on these demands and developments.

There will be a meeting on services this Friday, at which the issues of a text and a signalling conference will be discussed.

Starting on Monday (10 March), senior officials from some countries will hold meetings on services, as a preparation for the expected signalling conference. During the week, the developed countries will be able to gauge whether or to what extent their demands to developing countries are going to be met.

Also on Monday, Falconer will convene an open-ended agriculture meeting for him to report on any progress in the past week, and for members to discuss what next should be done in agriculture.

A week of meetings starting 17 March is expected to be convened to kick off the horizontal process on agriculture and NAMA, so the corridor talk goes. Senior officials from capitals are expected to be present for these talks. This first round will presumably end on Good Friday (21 March). It will be chaired by Lamy.

Whether the senior officials will re-convene after the Easter break is not clear. Nor are the time lines and road map after that.

There are many sticky questions in this scenario. What if the Chair and/or members of the agriculture group decide that their Room E process is not yet mature to be transformed into the horizontal process? What if the NAMA group also decides the same?

Will the horizontal meeting go on in any case?

Moreover, some diplomats are asking who will take the decisions regarding the horizontal process, such as when it should start, which countries are invited to it, and whether countries that are not on the short list can request attendance.

How will countries that are not part of the Green Room get to know what happened within it? And are the rest of the members expected to adopt what is agreed to by the Green Room?

In the corridors, these questions on process and time lines and who gets to be invited are intensely being talked about. So far they remain questions that are unanswered. +