TWN Info Service on WTO and Trade Issues (June08/19)
28 June 2008
Third World Network

Trade: Brazil signals pessimistic outlook for Doha talks
Published in SUNS #6502 dated 24 June 2008

Geneva, 23 Jun (Martin Khor) -- The prospects of a WTO mini-Ministerial meeting to make a deal on "modalities" in agriculture and non-agricultural market access seem to have dimmed considerably with Brazil and the G20 developing countries expressing deep pessimism on the lack of the conditions required for such a deal.

Brazil has been the main developing country pushing for progress in the Doha talks, and the fact that its chief negotiator from the capital has shifted tone from hopeful optimism to clear pessimism may signal a change in the dynamics of the Doha negotiations.

At the same time, the G20 developing countries held a meeting, following which they issued a statement on the current status of the negotiations (See separate article).

At an informal meeting with journalists at the Brazilian Mission on 20 June, Roberto Azevedo, Director of Trade at the Brazilian Foreign Ministry who has led the negotiations for his country, outlined what he saw as unreasonable demands made by major developed countries on developing countries in NAMA, while insisting on even more flexibilities for themselves in agriculture.

"Given this scenario, it's difficult to say we are optimistic with the rhythm or progress of the negotiations," he said. "We are disappointed there is no progress in agriculture and even more disappointed by the attempt of some countries to paint a rosy picture in agriculture in order to portray that the problem is in NAMA.

"We don't agree with the assessment that agriculture has gone far enough and that we have a well defined landing zone there and that what we need is progress in NAMA. In fact, we have had progress in NAMA... We hoped this would trigger progress in agriculture but we are disappointed the progress in NAMA is not matched in agriculture."

Asked if he thought there would be progress in a few weeks, Azevedo said: "We did intensify the work more recently. We believed that given the time frame and the possible July Ministerial, we could see results by intensifying the efforts. But none of this materialized. We did get senior officials here from capital but we didn't see progress in the last few weeks."

On the meetings on NAMA held among 12 delegations (dubbed the G12) at the United States Mission, Azevedo said the discussions were useful but unfortunately, they were not productive. It was useful in that we understand each other better but we haven't agreed, he said. If there is no progress at the next G12 meeting on NAMA, "we will have to take stock and think what to do next."

On the chances of having a mini-Ministerial in July, Azevedo said that it was not useful to look at probabilities. Before this week, he had been more optimistic.

On the G12 NAMA talks, he said that the problem is that there is no agreement on a single issue and time is running out. There would be another meeting to see if there can be common ground, but he was "not optimistic."

Elaborating on the issues in NAMA, Azevedo said that what is sought is a balance between the use of the formula and the flexibilities for developing countries. "We won't accept the attempt to have disciplines to remove the flexibilities - which are provided for in the mandate - through different types of mechanisms."

Regarding the developed countries' proposal to have an anti-concentration condition to limit the use of flexibilities, he said that this is opposed very vocally by a large majority of developing countries, "especially the way it is sought, which is very aggressive and removes the developing countries' ability to use the flexibilities in any meaningful way."

Azevedo was also of the view that if there is no progress in the NAMA talks in a few days, maybe they would be called off. At some time, we have to decide not to continue anymore. And when the talks resume, the problem is the need to know how to resume again, whether the same papers are on the table, or maybe it may have to be on a different basis, to start over again.

Earlier, Azevedo said that the negotiations were at a critical juncture. At the end of a week where a lot of work was developed in NAMA and agriculture, there is need for stocktaking.

He was unhappy with statements in the media by some WTO members that claimed that the agriculture issue is solved and the key to the Round now lies in the contribution of emerging developing countries to "give" in NAMA.

Referring to the G20 meeting and statement, Azevedo said that agriculture is still the engine of the Round and its progress will dictate the chances of success of the Round.

Yet, many issues in agriculture were not yet resolved. In the past weeks, there was no progress on these issues.

For example, said Azevedo, on domestic support, "there has been no indication whatsoever of what are the contributions of the main subsidisers." Progress on this issue is crucial because food prices are now high. There is a food shortage due to the concentration of food production by a few subsidising countries, and it is very important now that the subsidies be brought down.

Azevedo also cited the 2008 US Farm Bill as a discouraging signal. On cotton, "we have no solution in sight as the main players do not indicate what they will do. There is no progress on the Green Box, although it is for this Round to ensure that we must avoid the transfer of disguised subsidy to this box."

In the market access pillar, there is a worse situation, added Azevedo. The ambition for tariff cuts is reduced even more each day due to new methodologies or by the ever increasing flexibilities and exemptions by particular players, and the issue whether to have tariff capping is still not agreed on.

Azevedo said that the developing countries face having to reduce their tariffs in NAMA to the low 20s whereas the developed countries could continue to have tariffs of up to 700% in agriculture. And on the tariff simplification issue, all tariffs in NAMA are on an ad valorem basis, but in agriculture there are specific duties, matrixes, many ways to have taxes on agriculture without transparency and with unnecessary and excessive protection.

Azevedo added that on special safeguards for developed countries (i. e. whether they should continue), there is no solution, as developed countries want a certain number (of products to continue to be eligible for use of the safeguard) which would retain another layer of protection. On sensitive products, there is a possibility for creating new tariff rate quotas, which is opposed by the G20.

In summary, many topics are still open in agriculture. "We haven't seen any progress on any of these issues in recent times," said Azevedo. "Our negotiators from capital are here but there is no progress."

Overall, the Brazilian official gave the impression that the talks had reached an impasse and that the prospects to overcome it were dim.

A similarly pessimistic view was also given by a senior Argentinian negotiator, Nestor Stancanelli, director of international economic negotiations at the Foreign Ministry.

Coming out of a G20 meeting at the Brazilian Mission, Stancanelli said that the major problem in the current negotiations is a lack of leadership among the major countries - the US, Japan and the EU. They are always putting new conditions that consolidate a stalemate and not allowing a breakthrough. Although there are good proposals from the G20 and from the NAMA-11, the majors are always asking for more, so it is impossible to have a breakthrough.

Stancanelli said that the developing countries need a strong multilateral trading system, but one that guarantees us our fair share, thus the need for ambitious but balanced results. We have some issues still pending in agriculture, but in NAMA, there is a "total imbalance", he said.

"If there is no change in the conditions, it is very hard to have an agreement," said Stancanelli. And yet while present conditions remain, new conditions have been put, he added, citing the anti-concentration proposal (that developing countries using flexibilities in NAMA cannot have more than a certain number of products from the same category), the non-acceptance of the flexibilities for Mercosur countries, and the insistence on the ranges for the coefficients, which was unacceptable to Argentina.

"We hope there will be a change in the next few weeks, but if there is no political will from the majors, it is impossible to have an agreement," he stressed. "Argentina and many other developing countries have made it clear that we need fair conditions for an agreement."

It is a pity that they do not recognize the contributions of the NAMA-11 and G20 for the success of the Round, he added. There is a lack of vision (among the majors). It is a pity as it is the first time that developing countries have put forward more ambitious proposals compared to the developed countries in the previous Round.

As to whether there will be a mini-Ministerial, Stancanelli said "If conditions change, yes, but so far there is no possibility of a Ministerial meeting if there is no leadership by the majors."

On the anti-concentration condition insisted on by the developed countries, Stancanelli asked whether the US and EU are in the position to apply the same anti-concentration condition that they want developing countries to adhere to, to their sensitive products in agriculture. "Their money should be where their mouth is."

On whether he saw progress in the NAMA talks, he said that there was progress only on the fringes. But on the main issues of flexibilities for developing countries and the formula cuts, "not at all." +