TWN Info Service on WTO and Trade Issues (May08/06)
13 May 2008
Third World Network

UNCTAD XII:  Breakthrough in GSTP talks, agreement on broad modalities
Published in SUNS #6462 dated 24 April 2008

By Martin Khor, Accra, 23 April 2008

Countries participating in the Global System of Trade Preferences among Developing Countries (GSTP) have agreed on a line-by-line 20 to 40 percent cut on tariffs, with the coverage to be at least 70% of their dutiable tariff lines.

This was seen by officials and diplomats as a breakthrough in the GSTP talks, which have been taking place at a slow pace since the launching of the third round of GSTP at Sao Paulo in July 2004.

An announcement of the breakthrough was made at the GSTP Ministerial meeting taking place on the sidelines of UNCTAD XII.

The Ministerial meeting agreed that the current third round of the GSTP negotiations will conclude by the end of 2008.

The GSTP talks are widely seen as the centerpiece of South-South cooperation in trade. The UNCTAD Secretary-General Dr Supachai Panitchpakdi has said on various occasions that a successful end to the GSTP Round is a test of South-South cooperation.

While the broad terms of modalities have been decided on, the follow-up negotiations in Geneva will have to decide on the figure within the range of 20-40 percent of tariff cuts, as well as the coverage of products (now worded as "at least" 70%).

"I am confident that the negotiations can proceed to conclusion by the end by December," said Swashpawan Singh, India's Ambassador in Geneva. "The realistic approach now being taken should lead us to quick progress."

Agreement on the broad modalities was reached at a meeting of senior officials of the GSTP Negotiating Committee held on 21 April in Accra at the sidelines of the UNCTAD XII conference.

The breakthrough in modalities was the highlight of a report presented by the GSTP Negotiating Committee to a special Ministerial session of the GSTP Committee of Participants held on 22 April.

Argentina's Ambassador in Geneva, Alberto Dumont, who chairs the Negotiating Committee and who has led the negotiations, reported that on the basic approach of the negotiations, the Participants agreed to carry out negotiations on the basis of across-the-board, line-by-line, linear cut of 20 to 40 percent on dutiable tariff lines, to be combined with request-and-offer and/or sectoral negotiations. They also agreed to assume commitments on at least 70% of their dutiable tariff lines.

Dumont's report also covers the work programme up to November 2008. It said that to conclude the Third Round by the end of 2008, the Negotiating Committee would need to consider the following:

(a) Further develop modalities on market access.

(b) Carry out focused discussions to complete resolution of outstanding issues: (I) date of application of tariff concessions and with respect to the Draft Arrangement on Certification Procedures and Administrative Cooperation; (ii) the nature of the Issuing Authority in para (m) of Article 1 on definitions; (iii) "Importations by Installment" and lowering of the "minimum local content" threshold under the rules of origin of the agreement.

( c) Participants will submit their offers by way of draft schedules of tariff concessions by a specified date in 2008 in a format to be developed by the GSTP secretariat.

(d) Participants will notify the GSTP secretariat at a specified date of their finalized schedules.

At the end of the Ministerial meeting, the President of the Committee of Participants, who is from Indonesia, said that the meeting agreed to conclude the third round of the GSTP by the end of 2008, and that the Geneva representatives are being asked to implement this. "The work will not be easy but with their skill, they can overcome the problems," he said.

The GSTP Ministerial meeting also adopted a Joint Communique. It recalled at the launching of the Round in June 2004, a package of substantial trade liberalization commitments on the basis of mutuality of advantages to benefit equitably all GSTP participants.

It also recalled the Sao Paulo Declaration's pledge to develop concrete measures in favour of LDC Participants. "We instruct our officials to enter into close consultations with the LDCs bilaterally and plurilaterally."

The Communique also said that recent developments point to imminent slowdown in major developed countries. Developments such as these validate the GSTP's aim of diversifying export market destinations and import market sources across the developing world.

"For this reason, we must act quickly to conclude the negotiations. Through the GSTP, we seek to enhance the capacity of our economies to withstand possible downturns in the world economy. We aspire to sustain the emergence of our economies as a dynamic force in the growth of the world economy and trade."

According to trade officials, the current third Round of GSTP has 43 participating countries, with 32 among them being more active. The second Round was launched in 1992 and it concluded in 1998, with the request and offer method of negotiations. However, it is considered a failure as only 24 of the 43 participating countries gave concessions, thus raising the problem of "free riders." The countries did not ratify the agreement because of this problem.

After a study was done on the past failures, the view emerged that a request-and-offer approach was not enough and a formula of some kind was necessary to ensure participation in the commitments by all parties.

The Sao Paulo Round, known also as GSTP3, was launched at the sidelines of UNCTAD XI in June 2004. The talks have proceeded at a meandering pace, mainly because of inability to agree on the modalities, with some countries wanting a higher level of ambition (i. e. deeper tariff cuts over a high coverage of goods), while others were not in favour of this.

The special treatment for LDC participants in terms of beneficial preferential access and lower tariff reduction commitments has also been an issue. The modalities agreed to in Accra did not deal with this issue, but the GSTP Ministerial meeting of 22 April pledged that the officials will closely consult with LDCs on this topic.

"The modalities agreed to in Accra are a breakthrough for the talks and also significant in terms for market access, when compared with the previous Round when some countries only offered one or six items in the first Round or when many countries did not offer anything in the second Round," said a trade official who has been involved in the GSTP negotiations.

The new modalities ask participating countries to cut their tariffs by 20-40 percent (the actual figure to be decided on) and with at least 70% coverage, which is a significant advance compared to the previous two Rounds, added the official. +