TWN Info Service on Trade and WTO Issues (July08/37)
25 July 2008
Third World Network

Trade: G7 battle to make progress as TNC revolts over the process
Published in SUNS #6525 dated 25 July 2008

Geneva, 24 July (Martin Khor) -- The atmosphere at the WTO on this fourth day of its scheduled week-long week of decision became noticeably more tense as Ministers of seven WTO members battled to see if they could come closer to agreement on a range of issues, while those outside this small group protested at being excluded from the new decision-making body and cast a shadow over the legitimacy of the exercise.

The situation had the sense of having become critical as the G7 gathered to meet again at 4 pm on Thursday, following a 12-hour session on Wednesday afternoon and night which reportedly did not produce any breakthrough.

The seven members (the US, EU, Japan, Australia, Brazil, India and China) had been convened by WTO Director General Pascal Lamy into the new G7 power-house in whose hands the fate of this week's meetings have been placed.

Ministers of 30 to 40 countries are at the WTO for this week's "mini-Ministerial process", and on Monday and Tuesday they had been invited to the Green Room meetings. However, on Wednesday most of them were left on their own, unless they were in the G7, and some were waiting to see if they would get invited into the G7.

By Thursday morning, at the TNC meeting, several showed their frustration and anger at being left out of what was clearly the core decision-making group. Switzerland, the host country of WTO, started the ball rolling when its Minister criticized Lamy for calling them to the meeting and leaving them in the waiting room, which was unacceptable.

It was followed by Ministers and officials from Indonesia -- who complained about countries kept waiting in the dark in the waiting room -- and Kenya (who insisted that African countries must be part of the process), Mauritius (for the ACP Group), Egypt, Argentina and other countries.

It was really the revolt of the Green Room against the G7 process. Those Ministers who flew to Geneva to be in the exclusive Green Room found themselves waiting to be informed of what is happening in the even more exclusive G7. Most were as much in the dark as the journalists gathered in the press centre.

Some delegations that were not invited even to the Green Room privately said that the privileged Green Room participants could now feel the frustration that they had been having, of being kept out of the process.

The G7's first meeting was held from 3 pm Wednesday to 3.30 am Thursday, after two days of a Green Room meeting of 30-40 delegations saw countries reiterating their positions but not narrowing gaps. The new US offer of $15 billion for its allowable overall trade-distorting domestic support (OTDS) elicited responses of being welcome but not good enough.

The G7 members reportedly agreed not to talk to the media about what transpired at their first day's meeting; thus information is scarce on the details of the negotiations. Ministers coming out of the meeting at break time and at the end were unusually tight lipped.

Early on Thursday morning, Indian Minister Kamal Nath and EU Trade Commissioner Peter Mandelson said there had been some progress, and they mentioned this was in the area of sensitive products (number allowed and the expansion of tariff rate quotas linked to the products).

Journalists noted that Celso Amorim, the Brazilian Foreign Minister, and a key player in the whole Round, looked "very serious" and even glum, instead of his usual eloquent and jovial self, and took this as a sign that the talks were tense and not going that well.

Diplomatic sources said that the first day of the G7 meeting focused on the NAMA issues of formula and flexibilities, anti-concentration, and sectorals, and the agriculture issues of sensitive products, special products (SPs) and special safeguard mechanism (SSM).

An official who has knowledge of the meeting said that the developed countries had not relaxed their demands on the developing countries on anti-concentration and sectorals and that developing countries could not accept this position.

On SSM, the US was reportedly insisting that if developing countries want to use the mechanism to raise duties above the Uruguay Round rates, then the "trigger" or threshold that enables the SSM to come into effect would have to be very high, such as 150%, for those products exceeding the Uruguay Round levels.

Another official of a country in the Green Room but not the G7 said that the developed countries had asked developing countries to accept a pivotal set of NAMA numbers, of coefficient 20 coupled with 13% of tariff lines having flexibilities from the full formula cut, or 22 coefficient coupled with 13% flexibility. This was unacceptable to his country, said the official.

On the choice of issues on which to start the G7 negotiations, the official was of the view that this was unfair to the developing countries, because the issues were those that the developed countries wanted to pressure developing countries to maximize the opening up of their markets.

At an impromptu briefing for NGOs and the media just before the G7 meeting began at 4 pm, Indian Minister Kamal Nath said that India had already made a lot of concessions in NAMA. The developed countries had pocketed these concessions and then asked for more, at each stage.

He cited various stages in which India had made these concessions. India had said it would not accept the Swiss formula, and then in July 2004 it accepted it. India then advocated multiple coefficients but then in Hong Kong it agreed to two coefficients. These were pocketed by developed countries which then asked for more.

Nath added that in Hong Kong the less than full reciprocity (LTFR) principle had been reaffirmed. After that, he had then said that whatever the developed countries are willing to reduce (in tariff cuts), India could do with ten percentage points less (in line with LTFR).

For example, if they cut by 40%, India would reduce by 30%. However, said Nath, they now say that this would not help. "Every movement I make, they pocket and ask me for more," he said.

On the negotiations on SSM, Nath said that there is the intention of the SSM and the language (in the text). If the intention is to address the livelihood concerns of farmers, then the language in the text must meet the intention. The text should not be such as to dilute the effectiveness of the SSM so that it cannot meet its objective.

To a question on the frustration felt by Ministers of countries that are not part of the G7, Nath said the process is decided by the Director General and not by the G7 members. "I myself said this group should be expanded. We don't represent all members' interests. There has to be a transparent process."

At the end of Thursday afternoon, there were unconfirmed reports that Lamy will convene a brief Green Room meeting (for 30-40 delegations). It is not known what the agenda is, but diplomats were speculating that it will be to provide more information to the countries' Ministers and officials, in response to the strong criticisms in the morning that they had been left out of the process.

Some senior diplomats are also of the view that if the G7 meeting does not make any significant progress by Thursday night, then various options would have to be considered, including either closing the meeting altogether, or have another day of meetings for the G7, or a possible offer by Lamy (or a call to him) to produce a revised text (which could be "frozen" until talks resume several months or even a few years later), or even to ask Ministers to come back in a week which is considered unlikely).

By the end of Thursday, the question uppermost in the minds of Ministers, capital-based officials, journalists and NGOs alike, was "when will the meeting end?"

This is because those who live outside Geneva had booked their flights home with the expectation that the formal TNC meeting that will conclude this week's events would be on Saturday.

Since the negotiations have not reached the convergence stage, and there is still a services signaling conference (now planned for Saturday), the final TNC meeting looks as if it will be postponed to Sunday or days later.

On the other hand if the G7 meeting hits a wall on Thursday night, the week's events may come to an abrupt end, and people can then leave on time.

The difficulty of planning and rescheduling flights out of Geneva is one of the concrete uncertainties in this week at the WTO. +