Info Service on Trade and WTO Issues (July08/50)
29 July 2008
Lamy draft faces opposition from many at TNC
SUNS #6527 dated 29 July 2008
28 July (Kanaga Raja) -- At a meeting of all WTO members on Saturday
(26 July) morning, many developing countries indicated opposition to
critical parts of the one-page draft that WTO Director-General Pascal
Lamy had given to the Green Room of about 30 Ministers the previous
informal meeting of the Trade Negotiations Committee on 26 July was
the first chance that the whole WTO membership got to respond to the
delegations accepted the Lamy package as acceptable, or an acceptable
starting point for further negotiation, but some others had more serious
reservations, ranging from problems with individual parts of the package
to complaints that the agriculture and non-agricultural proposals are
unbalanced. Especially critical were Argentina,
South Africa, Venezuela,
Indonesia, India and Bolivia, according to some trade diplomats.
of the issues of most concern was the new special safeguard mechanism
for developing countries, particularly when this raises tariffs above
pre-Doha Round (or Uruguay Round) legally bound maximums. Another area
of contention was the NAMA part of the draft.
a media briefing following the informal TNC meeting, WTO Spokesman Keith
Rockwell said that Lamy told the TNC that the group of 7 members and
the larger Green Room meeting had shown leadership and made compromises,
and that the package of elements he circulated represents their contribution.
said that the various elements of this package are linked in one way
or another as part of a whole and should be seen as such. This is not
a final product, he said, but one around which to build convergence.
There are elements in this package with which many at this stage are
uncomfortable, to a larger or lesser degree, including some who have
expressed specific reservations. The package will remain on the table
as a contribution, but there remain many elements not in this package
which need to be tackled urgently in order to find the overall political
is, said the Director-General, no such thing as partial modalities.
The next step in the consultative process is to address other issues,
including cotton, preference erosion, tropical products, bound in-quota
tariffs, tariff simplification, tariff quota administration, and developing
country sensitive products. In NAMA, the focus of work needs to be on
issues such as preference erosion, the issue involving Venezuela,
and the question of recently acceded members.
Jonas Store of Norway, who has
been conducting consultations on the three TRIPS-related issues (GI
register, GI extension and TRIPS/CBD), said that positions on some key
issues are diametrically opposed and he believed that it is important
not to allow these difficulties to put in jeopardy the success of this
meeting. He has therefore been exploring a way forward which would not
prejudice members' positions on the most contentious points such as
the relationship to the single undertaking of the Doha
negotiations and the legal form of any outcome. Store said that he hoped
that he would nevertheless give sufficient satisfaction to all members
and enable work to move ahead positively. He said that the consultations
have so far been constructive but have not yet reached a point where
he is in a position to put forward specific proposals.
specific reservations expressed over the proposed package of elements,
Rockwell said that the principle reservation pertains to the special
safeguard mechanism (SSM). He explained that the principle problem that
members have focussed on is the threshold of 140% (the proposed text
says that for use of SSM above bound rate, the trigger is 140% of base
said many countries expressed concerns about the threshold of 140% on
either side - those who believe that the trigger is set too high and
those who believe enabling countries to breach the Uruguay Round bound
tariff would mean less trade liberalization. There was very strong views
expressed on either side.
the meeting, India said that
the numbers circulated by the Director-General provide a basis for discussion
in many areas in agriculture and NAMA. However, "we have serious
concerns regarding the numbers in some of the areas." India said that on special products,
it can accept the one-tier approach. But coverage at 12% is inadequate.
It is at the lower end of the 10-18% range that the Chair had provided.
"We will need at least 15%." The average cut of 11% is too
high as it includes the zero-cut lines and would result in an average
cut of 19% on the non-zero lines. This needs to be reduced to 9%.
have even more serious concerns on the numbers in the SSM," said
India, adding that the above bound
rate trigger of 140% is simply not acceptable. "We cannot go home
with a provision which would ask us to wait for an import surge 40%
before we can take remedial action. By that time, the import surge would
have wreaked havoc on the livelihoods of the most vulnerable farmers.
me repeat, this is simply not acceptable," said India. The G33 had agreed with the
structure proposed by the Chair in para 124. It was clear that this
structure would apply to above bound rate triggers also. A reversal
of this understanding tilts the balance against developing countries
very significantly, said India.
This issue has all the makings of a deal-breaker. "We need serious
reconsideration of this proposal." Similarly, said India, the ceiling
on the remedy at 15% or 15 ad valorem points is way too low and would
need to be revised upwards. That is also true of the limitation of 2.5%
tariff lines. The proposal for a cross-check mechanism is contrary to
the mandate for separate price and volume triggers and, therefore, would
need to be removed.
NAMA, India said that
on the anti-concentration issue, it had signalled its willingness to
negotiate reasonable numbers. This is a major concession given the concerns
that important sections of Indian industry have on this proposal. "Our
understanding is that the two numbers (20% of tariff lines, 9% value)
are either/or numbers and not cumulative. "This has to be confirmed."
The language on the sectorals is too prescriptive and goes beyond the
understanding that we reached a few days back before the text was released,
said India, adding that the voluntary nature
of participation has to remain the main element. "We would need
to negotiate the language based on this understanding."
yesterday's proposals certainly mark progress in the negotiations, we
have many more issues to address before we conclude the modalities,"
said India, adding that issues such as cotton, preferences, bananas,
duty free quota free, tariff simplification remain to be negotiated
and incorporated in the modalities. Results of the negotiations on some
of these issues like tariff simplification can significantly tilt the
balance against developing countries. "We can only assess the balance
including under para 24 of HKMD (Hong Kong Ministerial Declaration)
once we know the outcome on these issues."
the services signalling conference, India said that it has tabled very
ambitious proposals on services and it would expect its major trading
partners to also reciprocate rather than only keep taking and not giving.
Argentina said that new ideas are
valuable if they contribute to change and correct the trend that has
been overhanging the negotiations. "Regretfully, this is not so
with the informal paper presented this morning. Without significant
changes to it, I am afraid it would be impossible to reach a positive
outcome for the modalities." The ideas floated this morning are
poor in agriculture and substantially unbalanced in NAMA, Argentina added.
agriculture, Argentina said that the OTDS of the US would remain
at $14.5 billion, $7.5 billion, or 100% above its lowest historical
level and the probable current applied level. This means that they are
keeping 100% water; a 70% cut for a tariff of 85% is equivalent to a
Swiss Formula coefficient of 36. For a higher tariff of 150%, the 70%
cut represents a Swiss coefficient of 64; there is no tariff capping,
just a poor "compensation" for its absence; 4% tariff lines
of sensitive products capture most of our exports to developed members;
4% domestic consumption of TRQ expansion is not even the middle point
of Falconer's range. Anyway, the reduction of ambition is mainly caused
by the partial designation methodology.
Argentina said that it recognised
the elimination of the Special Safeguard in developed members, but this
was agreed in the Uruguay Round: Paragraph 9 of Article 5 says that
it is a transitory measure. "We already paid for that in the Uruguay
rest of the agriculture text also causes concern to us, said Argentina,
adding that some difficult issues for developed members have been brushed
aside from the discussion, including some that are in brackets in the
Chairman's text. Argentina
cited as examples the flexibilization of the green box for developed
members; cotton; the transparency loopholes in the base of expansion
for sensitive products; the partial designation floor; no creation of
new TRQs; tariff simplification in ad valorem terms.
NAMA, Argentina said
that "what we have from the ideas floated is more of the same.
We had rejected the Chairman's text already and the numbers in the new
paper do not change an iota from this text." What is being thus
proposed is against the principles of Less Than Full Reciprocity and
Special and Differential Treatment for developing countries. A Swiss
Formula coefficient of 8 for the US and the EU represents a cut slightly over 42%,
while a coefficient of 20 for Argentina, including flexibilities
means a cut of 60% on the same basis. "As you see, it is a two
thirds cut lower for developed countries than for developing countries.
It is less than full reciprocity inversely applied for the benefit of
the main trading partners."
Argentina noted that it has repeatedly
said this is not acceptable. The proposal is against Less Than Full
Reciprocity and paragraph 24 of the Hong Kong Ministerial Declaration.
The numbers in NAMA should substantially change and the conditions attached
eliminated so as to have a go towards an agreement. Developing countries
are the locomotive of the world economy. If this is a development round,
their interests should not be neglected; on the contrary, should be
clearly taken on board for the sake of the international trading system
and the benefit of the world society, said Argentina.
Venezuela said that in recent days,
it had insisted that we did not want any surprises. It was thus surprised
by the draft, which is a clear step back in terms of the process, because
it arose from only one small group (the G7) in order to impose NAMA
and Agriculture texts and give the impression to the public that there
is an agreement.
Venezuela will continue to reject
a process developed in those restricted groups, because they are not
representative nor binding for the whole of the Membership. Moreover,
the majority of the sensitivities in the paper are provided to developed
countries. "We refuse the circulated text in its totality,"
said the 12% of tariff lines proposed for special products in agriculture
is not even the middle point of the range put on the table, nor is it
the 20% that many countries and alliances asked for. This contrasts
with what Lamy did on the OTDS of the US,
where the middle point of the range in the paper was selected. Additionally,
the suggestion of only one tier for the treatment of Special Products,
goes against the mandate of flexibility for SPS.
respect of SSM, Venezuela reiterated
that there should not exist limits on the remedies, and the right to
overlap the bindings, they should be clearly defined and available for
all the developing countries. The SSM presented in the text, is totally
restrictive and loses the sense of the application of a safeguard, first,
because it is almost impossible to apply it, second, because it has
limitations in the application of remedies on top of the bindings, said
to journalists after the meeting, Deputy Trade Minister of South Africa
Mr. Rob Davies said that the numbers on NAMA (in the proposed Lamy package)
"were not developed with our concurrence. We weren't part of the
consultations." He added, "we had no mandate to agree on anything
on anti-concentration clauses or on compulsory sectorals."
remarked: "If they are asking us to stretch beyond our red-lines,
then first of all, we are going to have to do it in consultation with
all of our other groups, and secondly, we'll need in general to be assured
that this is going to be a development outcome, it's got to meet some
tests." He pointed to the principle of less than full reciprocity,
and paragraph 24 (of the Hong Kong Ministerial Declaration). "At
the moment, it doesn't look like that."
there is no 'water' (difference between bound and applied rates),"
he said, and in South Africa's
most sensitive product tariff lines, there is very little between bound
and applied rates. "So, once you start applying the Swiss formula,
we start cutting deeply, deeply into our applied tariffs," he said,
adding that hundreds of thousands of jobs in the clothing industry and
important strategic sectors like automobiles in the South African economy
are threatened. "We can't let this all go for the sake of being
nice to in a multilateral forum. We can't."
noted the understanding that South Africa will
get between 1-6 additional points. "We said to them, actually what
we asked for was 6 and more. And the 6 was based on a coefficient of
35. If the coefficient is going to be 22, then we need many more than
6 extra points."
the conclusion of the Green Room meeting Friday evening, US Trade Representative
Susan Schwab said: "We have a tentative agreement on a path forward.
There are a number of significant issues to be resolved. I think the
biggest concern we have is that a handful of large emerging markets
threaten this round for the rest of us."
Foreign Minister Celso Amorim said that "I am encouraged. I think
we made progress. No one's totally happy."
speaking at a media briefing Saturday, EU Trade Commissioner Peter Mandelson
said that he has the backing of EU member states to work on this emerging
deal. The package has the potential to offer something close to the
balance needed, between agriculture and industrial goods, within industrial
goods negotiations, and between developed and developing countries.
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