TWN Info Service on Trade and WTO Issues (July08/51)
30 July 2008
Third World Network

Trade: WTO talks near collapse as delegates ponder what comes next
Published in SUNS #6528 dated 30 July 2008

Geneva, 29 July (Martin Khor) -- The WTO talks were heading for a collapse in the early evening of Tuesday, as the G7 failed to reach agreement on the issue of special safeguard mechanism (SSM) for agriculture in developing countries. This issue had become the center of the negotiations in the past three days.

The United States reportedly insisted that on an extra trigger of 140% or more before developing countries can use the SSM to raise the duty above the pre-Doha levels (i. e. the present rates set at the Uruguay Round or during accession to the WTO).

This continued to be unacceptable to India in the G7 meeting this morning. The Indian position has been backed by about 100 developing countries in the G33, African, ACP, LDC and SVE groups, which on Monday circulated their joint statement on SSM and Special Products at the Trade Negotiations Committee.

Many Ministers involved in the "Green Room" have been expressing frustration at the slow rate of progress of the G7 talks, as they have had to wait in their hotels day after day, as the WTO meeting went beyond its allocated six days. (It was scheduled to end last Saturday).

Many of the 30 to 40 Ministers whom Lamy had invited for the mini-Ministerial had already decided to go back, as they found little role for themselves for most of their week here, while those remaining had reached the limits of their patience. "I have a government to run back home," said one Trade Minister, as he left the WTO for the last time, three days ago.

At a Green Room meeting this morning, the diminishing number of Ministers was noticeable, according to one diplomat. "It has become a mini Mini-Ministerial," he said. The inability to keep these other Green Room Ministers waiting for another day, even if the G7 Ministers were willing to carry on, may have set the ultimate deadline for the talks to succeed or fail today.

The special safeguard had become the big cause on which a majority of developing countries gathered around, and the G33-ACP-Africa-LDC-SVE joint statement detailing their positions on SP and SSM had changed the dynamics of the overall negotiations.

The United States had tried to portray India as the country that was stalling the G7 talks. For a little while the media went along and painted Kamal Nath, the Indian Commerce Minister, as the one person holding back progress, due to what was portrayed as his stubborn and intractable position on SP and especially SSM.

The joint developing-countries statement articulated the deeply-felt concerns that import liberalization had already led to import surges and threats to local agriculture, and that a an effective and easy-to-use SSM was essential to prevent further farmers' dislocation.

The SSM became a symbol and a rallying call for these countries. "And a SSM alone is not enough. It has to be an effective SSM that we can use" said an African official, whose words were echoed by many in the past few days.

On Monday morning, an unexpected and strong attack by the US on China and India at the Trade Negotiations Committee soured the atmosphere, and increased the level of tension.

On Monday night, Lamy put forward a new one-page draft on SSM which was vastly different from the text in the agriculture Chair's text of 10 July or his own draft of last Friday. Kamal Nath on Friday night told journalists he could accept a lot of the new SSM text, and he called on the United States to also accept it as the basis for discussion.

The Lamy text did away with triggers altogether and with figures on the remedy (or by how much extra duties can be imposed to counter lower import prices or higher import volumes).

A major operational paragraph is that "The level and duration of the measure shall be proportionate to the harm in question, and shall not exceed what is necessary to facilitate adjustment. The duration of the measure shall not exceed the calendar year."

Kamal Nath said that the new Lamy text made the SSM more simple to use as there were no triggers. He indicated it could be the basis for a solution.

Some G33 officials who saw the text later also welcomed the simplicity and possible effectiveness of the paragraph above. However, they were against some parts of the text, in particular that the SSM could be used when a product is imported "in such quantities or price and under such conditions so as to cause demonstrable harm to its food security, livelihood security and rural development needs."

The condition to show "demonstrable harm" is similar to the WTO's Agreement on Safeguards, in which serious injury to local producers is a condition for the use of the "normal safeguard." It is because the special needs of agriculture and farmers require prevention of harm or injury rather than action only after serious injury, that a special safeguard for agriculture is needed.

Also the condition that all three criteria must be satisfied is more restrictive than the one condition in the normal safeguard, i. e. injury to local producers.

And the provision in the Lamy text that other members can ask for a review of the SSM action through a permanent group of experts whose decision will be made in 60 days and is binding and not subject to appeal, is also procedurally much more difficult and could be a disincentive for affected countries to take SSM action.

Nevertheless the positive aspects of the text made India accept it as basis for a possible solution. The United States, however, refused to use this new text for negotiations. It continued to insist on the new and major point in the previous Lamy text (of 25 July), that if a country wants to use the SSM to raise duties above the pre-Doha levels, it has first to satisfy the condition of a 40% volume trigger (i. e. that the import of the product has increased by 40% or more), and that the price of that product has also declined.

The special trigger for SSM use for duties above the pre-Doha bound rates became a "must have" for the US, while India and the G33 and other developing country groupings could not accept this special trigger, which had been introduced so late in the day by Lamy in his 25 July draft.

On Tuesday, other alternatives were explored by officials of the G7 officials, but none could become the basis of an agreement on SSM.

At a Green Room meeting on Tuesday morning, the G7 deadlock on SSM was revealed to the Ministers, while progress in other areas was also detailed. Many Green Room Ministers reportedly spoke of their frustration in waiting for the G7 to produce results, thus increasing the atmosphere that time was now really running out in the WTO's July process.

At 6 pm on Tuesday, the US Trade Representative Susan Schwab appeared before journalists and said that last Friday night, "we were so close to agreement" but unfortunately things had moved apart.

Asked if the Round had collapsed, she said: "No, I am not saying the Round is over. We continue to be committed to the Round."

But her brief and somber appearance more or less confirmed that the real negotiations had collapsed.

The next hours and the next day at the WTO will be preoccupied with what to do next, how to treat the various texts and proposals on the table, whether any of them would have a higher status than others, and whether the Doha negotiations would continue after the summer break in September, or would be "suspended", and if so how and when they might be revived. +