TWN Info Service on WTO and Trade Issues (Oct08/11)
22 October 2008
Third World Network

Trade: Doha must redress North's distortions in agriculture - G20
Published in SUNS #6568 Wednesday 15 October 2008

Geneva, 14 Oct (Kanaga Raja) -- The G20 developing countries, at a meeting of the WTO General Council on Tuesday, stressed that the Doha Round must redress the fundamental distortions in international trade rules, and thus, unleash the potential for development. It said that these distortions are mainly in agriculture and linked to developed-country levels of subsidies and layers of market protection.

The G20, represented by Ambassador Ujal Singh Bhatia of India, expressed concern about the continuous reduction of the level of ambition in agriculture, particularly on market access and domestic support. It said that more and more layers of exception are being asked by the developed countries, while disproportionate efforts in agriculture and non-agricultural market access (NAMA) are demanded from developing countries.

Several countries supported the G20 statement at the General Council meeting.

Also at the General Council meeting, WTO Director-General Pascal Lamy announced that he has "constituted a Task Force within the Secretariat to follow up the effects of [the] financial crisis on our different areas of work."

He said that if there are indications that the financial situation could be having serious implications more generally for trade or the trading system, he shall consult with the General Council Chair on the possibility of convening a General Council meeting under the coherence mandate.

Under the agenda item of "other business", the General Council Chairman made an announcement regarding the process for the appointment of the next Director-General under the Procedures adopted in December 2002. Director-General Lamy's present term of office comes to an end on 31 August 2009. The appointment process begins on 1 December this year.

According to WTO spokesman Keith Rockwell, while the discussions at the General Council were similar to the one that took place at the Trade Negotiations Committee last Friday (see SUNS #6566 dated 13 October 2008), the mood was lifted by the rally in the major stock exchanges around the world yesterday. But there was very much a feeling that even if the prospects of a massive financial meltdown had receded, there is already evidence of this financial crisis seeping into the real economy.

There was an acknowledgment among members that it would be the developing countries that would be the hardest hit, and on the importance of concluding the Doha Round and of agreeing the agriculture and NAMA modalities as soon as possible. According to Rockwell, some believed that it could be achieved by the end of the year, but most suggested that it be done as soon as possible.

The importance of the development dimension was also stressed by members. The return to the multilateral process in the negotiating groups was welcomed, and there was acknowledgment that the 10 July texts should be the basis for negotiations. Where members disagreed was on the extent to which things that happened over the course of the July ministerial meeting should also be a basis for negotiations, or to which extent they should be ruled out, said Rockwell.

In its intervention at the General Council, Argentina rejected all the elements that came out of the process involving the G7, arguing that it was not in its interest, as well as the manner that these particular elements were constructed - in a smaller group and through a top-down approach.

In his report as Chair of the TNC, Lamy said: "Although it is clear that the Round will not be concluded this year, I believe it is still possible to reach agreement on modalities and the Ministers with whom I have spoken are all determined to push ahead. As underlined by many of you, considerable progress has been made, in July and earlier, and I believe a renewed effort could bring us to the point where agreement on modalities is possible."

He noted that all the Negotiating Groups have programmes of meetings and consultations over the coming weeks, in particular Agriculture and NAMA which remain key to further progress across the board. Any ministerial involvement which might become necessary will take place when the moment is right.

Lamy also said that he has reconvened major providers of trade finance to a meeting on 12 November to examine this issue and find ways to alleviate the situation if it was to deteriorate.

"One third of the world economy, mainly in emerging countries, still has a big growth potential and we must try and make sure that this engine can work through trade."

"Finally, yesterday, trade took centre stage with the award of the Nobel economics prize to an economist who has spent a great part of his life trying to better understand trade and its economic underpinnings, the relationship between trade and inequality or the relationship between multilateralism and regionalism. I see this as an encouraging signal to all of us," said Lamy.

(Lamy was referring to the award of the Nobel Prize in Economics to Prof. Paul Krugman of Princeton University. However, trade observers noted that the award cited Krugman's trade theory contribution of three decades ago on economies of scale and trade geography; but Krugman, a neo-Keynesian with a capacity to present in simple English complex economic issues, is now much more known as the columnist of the New York Times providing a steady, trenchant critique of the Bush administration and its neo-liberal economic policies, and the Washington Consensus.)

Following the report of the Director-General in his capacity as Chairman of the TNC, a number of countries spoke at the General Council meeting.

India, on behalf of the G20, said that in uncertain times for the world economy, the WTO should give an unequivocal contribution through the reform and the strengthening of the rules-based multilateral trading system.

Ambassador Ujal Singh Bhatia of India said that the G20 remains of the view that this Round must redress fundamental distortions in international trade rules, and thus, unleash the potential for development. These distortions are mainly in agriculture and linked to developed-country levels of subsidies and layers of market protection. "In this sense, we remain convinced that agriculture is at the heart of the Round and the level of ambition in agriculture will determine the level of ambition in other areas, particularly in light of Paragraph 24 of the Hong Kong Ministerial Declaration."

The group welcomed the resumption of the multilateral discussions under the chairmanship of Ambassador Crawford Falconer. The G20 remained concerned about the continuous reduction of the level of ambition in agriculture, particularly on market access and domestic support. More and more layers of exception are asked by developed countries -- in increasing the number of sensitive products, in avoiding tariff simplification and tariff capping, in creating new TRQ -- while disproportionate efforts in agriculture and NAMA are demanded from developing countries. The central numbers in domestic support remain open -- OTDS, product specific disciplines and cotton.

"We must avoid a race to the bottom on the level of ambition in agriculture. Developed countries must show whether they are prepared to live up to the Mandate for substantial reductions in trade-distorting domestic support; for substantial improvements in market access, and the elimination of all export subsidies."

The group said that Chairman Falconer's July 2008 Draft Modalities is the only basis for negotiations. Any new revision of that text must be the product of a multilateral, transparent and bottom-up process.

"We remain convinced that substance must take precedence over timing. We believe that it is possible to achieve modalities in agriculture consistent with the level of ambition in the Mandate and a final outcome to the DDA that preserves the balance with other areas of the negotiations, particularly NAMA, and the appropriate flexibilities for developing countries."

India, speaking for itself, was pleased that the multilateral process has recommenced. It said that there was serious engagement in agriculture over the last two weeks. While convergence is some distance away, these fruitful negotiations have been able to underscore clearly what the positions of governments are.

The financial turmoil is already affecting the real economy and no country is insulated from this problem. A Doha deal could send the message that we are prepared to find global solutions to global problems. India welcomed the 12 November meeting on trade finance. It is time for further strengthening and widening of multilateral engagement. There should be no artificial deadlines set with respect to the Doha Round.

There is no reason to keep issues other than agriculture and NAMA on hold. India would like to see expedited negotiations on trade facilitation where an ambitious outcome would help all.

On TRIPS, India said that the last months have witnessed a significant shift in dynamics with about 110 Members agreeing to the inclusion of the issues of TRIPS disclosure requirement, GI Register and GI Extension as part of the horizontal process. The joint submission (TN/C/W/52, July 17, 2008) clearly highlights the expectation of a vast majority of the membership that the three issues must receive clear guidance from the Ministers.

In India's view, the joint submission (TN/C/W/52) provides a sound basis for further work. The political importance of these issues for the Membership has to be recognized and it is essential that whenever Ministers meet next, they provide clear instructions on key parameters for intensive negotiations on the three TRIPS issues as a part of the Single Undertaking, said India.

Cote d'Ivoire, on behalf of the African Group, asked for their statement made at the TNC to be read into the record. It welcomed the response of the financial markets to the rescue plans of the US and EU. It said that it is not only important for depositors in the US and EU but many developing-country depositors are at risk as well.

Mauritius, on behalf of the ACP, said that the financial crisis means that the small and vulnerable economies have to brace themselves more than anyone else, and they will be the hardest hit. Developing countries stand to lose much of the development gains they have achieved in recent decades. There is fear that the current crisis may give rise to trade protectionism and may also affect the aid-for-trade agenda. The July texts and the convergence that has emerged in the July negotiations should be the basis for negotiations. We should stabilize and consolidate the convergence that has come out of the discussions.

It called for leadership and flexibility from all players on issues of importance to it including cotton, Special Safeguard Mechanism, and duty-free, quota-free market access for LDCs. It would also like to see a solution to the question of TRIPS/CBD.

Argentina said that agriculture and NAMA are key and supported the consultation process of the agriculture Chair. It hoped that the new NAMA Chair's process will be more fruitful than that of the previous Chair. It endorsed the G20 statement on agriculture. With respect talk that the discussions at the July Ministerial gathering should be consolidated and constitute part of the basis for negotiations, Argentina said that it is not prepared to join on any of the elements coming out of the July package. It does not reflect the interest of Argentina and the way in which it came about.

The EU said that the recent financial crisis has made it all the more urgent to get the Doha Round concluded. The developing countries will face greater hardships. It welcomed the 12 November meeting on trade finance. Agriculture and NAMA are key but this does not mean that other things should be pulled off the table. The EU mentioned that Baroness Catherine Ashton has become the new trade commissioner. This was a matter of internal EU politics, not an indication of any sort of flagging enthusiasm for the EU on the Doha Round.

Bangladesh asked for its statement at the TNC to be read into the record.

China supported the G20 and Mauritius statements. The failure to deliver on a development round would be a big blow, not only to the multilateral trading system but also to the credibility of global governance in general. We need progress as soon as possible. The Doha Round is a development round. There must be a process that is transparent, inclusive and bottom-up. The agriculture and NAMA modalities are central. It expressed hope that there can be some agreement by the end of the year. There should be no more artificial deadlines.

Switzerland said that the financial crisis makes the Doha Round even more crucial. It welcomed the return to the negotiating groups.

Turkey said that it is important to get back to the multilateral process. SSM in agriculture is unfairly under the spotlight. There are other issues as well. It wanted to use the July texts as the basis for negotiating agriculture and NAMA modalities.

The US said that it is keenly aware of the challenging financial and broader economic circumstances. A successful conclusion of the Doha Development Agenda is more important than ever. It is important to make as much progress as possible this year. Agriculture and NAMA modalities are possible this year. The
10 July texts should be the starting point, but also should include work that had been done in July and at the senior officials' meeting in September. There must be an ambitious outcome in NAMA, it said, pointing to significant participation by major players, both developed countries and emerging large economies in the sectoral negotiations.

Chinese Taipei said that it is important to make progress.

Brazil supported the G20 statement. On rules, Brazil said that progress must be made on all three areas -- anti-dumping, subsidies, and fisheries subsidies.

Senegal welcomed the trade finance meeting of 12 November. There must be an assessment of the financial crisis on least developed countries, who will suffer more than others.

Japan said that against the backdrop of global uncertainty, a successful conclusion to the Doha Development Agenda is more important than ever. It welcomed the resumption of the negotiating groups.

Pakistan said that while the Doha Round cannot be concluded this year, progress can be made. It wanted to see a development outcome. A multilateral bottom-up approach is also needed, as well as a serious stocktaking.

Indonesia, on behalf of the G33, asked for its statement at the TNC to be read into the record. It said that there is need to prioritize issues, and give priority to the millions of poor farmers. Negotiations should be based on the Rev. 3 texts. It is not only a question of the SSM, but also of tariff rate quota creation, cotton and sensitive products.

Mexico said that the basis for the agriculture and NAMA negotiations should be the July texts, but we must not reject the progress made during the course of the July meetings.

Bolivia supported the G20 and G33 statements. +