TWN Info Service on WTO and Trade Issues (Dec08/15)
15 December 2008
Third World Network

Trade: Lamy recommends no WTO Ministerial meeting by year-end
Published in SUNS #6610 dated 15 December 2008

Geneva, 12 Dec (Kanaga Raja) -- In what appears to be another major setback to the Doha Round of trade negotiations, and his own efforts to clinch an agriculture and non-agricultural market access modalities accord this year, WTO Director-General Pascal Lamy recommended on Friday that unless there are dramatic changes in the next 48 hours, "we do not convene ministers to finalize modalities (in agriculture and non-agricultural market access) by the end of the year."

The Director-General made this recommendation at an informal meeting of the Trade Negotiations Committee (TNC) at the level of heads of delegation, following a Green Room meeting of some thirty delegations earlier in the day.

Long-time trade observers said the net effect would be to put the Doha talks in deep freeze, at a minimum well into the next year or two, even as an entire change of paradigm is taking place in the global scene as the US and other leading nations grapple with ways to overcome the crisis.

Lamy told the informal TNC meeting that his assessment and that of the Chairs (of the agriculture and non-agricultural market access (NAMA) negotiations) is that on sectors and Special Safeguard Mechanism (SSM), there continues to be a lack of political will to accommodate the demands from others, or to give comfort to those who cannot accommodate them.

"The bottom line is that I have not detected the political drive, from my interlocutors, to make the moves which would give the final push to the establishment of modalities on these two issues," said Lamy.

"My assessment today is that the chances of success in the establishment of modalities in a Ministerial meeting are not greater than they were when I started these consultations on Monday."

"In my view, therefore, calling Ministers to try to finalise modalities by the end of the year would be running an unacceptably high risk of failure which could damage not only the Round but also the WTO system as a whole," said Lamy.

"Given the late time of the year, the political agenda in some parts of the world in the next weeks, and -- I repeat -- my conclusions from all the hours of consultations I have held -- I do not think calling a Ministerial meeting next week would be wise."

"In conclusion, my recommendation to you -- again, unless this changes dramatically in the next 48 hours -- is that we do not convene ministers to finalise modalities by the end of the year," the Director-General told delegations at the informal TNC meeting.

(Speaking after the Green Room meeting earlier in the day, some trade diplomats voiced scepticism as to what could change dramatically in the next 48 hours to warrant calling a Ministerial meeting.)

"We have two comprehensive texts on the table. It is the fruit of seven years of work. It puts us closer to the finishing line of modalities. This being so, my sense is that we should now focus on seeing how we gather the necessary political energy into the New Year," said Lamy.

Lamy said that he intends to continue his dialogue with delegations in various formats next week to reflect collectively on the next stages. For this reason, he said that he has decided to hold a formal TNC meeting next Wednesday.

In his report to delegations, Lamy said that he had used this week to hold further consultations. The purpose of those consultations was serious political testing of the chances of bridging the remaining substantive gaps in three key areas -- sectorals, SSM and cotton.

His first conclusion was that, from a technical point of view, the issues are not intractable. "In fact, from a purely technical perspective, you are not that far from an agreement on those issues."

"The bad news is that individual positions -- and the position overall -- have not changed significantly," said Lamy.

On sectors, said Lamy, the underlying issue is a different understanding of the value of the package on the table. Some understand sectorals as a top-up, a non-mandatory addition to the main package. "It would be the cherry on the pie."

For others, this is an essential part of the agreement, which can only be finalised if there is a guarantee of commitments. "It would be the pie on the cherry."

At this stage, these two positions are not reconcilable, said Lamy, adding that his sense is that it would help "if we could get a better collective appreciation of the value of what is on the table, and how much of the difference sectorals would make."

On the SSM, there remain differences as to the size of the flexibilities desired. The main architecture of the SSMs, as proposed in the latest Agriculture text, is basically there but key differences remain on the relationship between the duration of the safeguard and domestic prices.

On cotton, his sense is that both a technical solution as well as the political will was there.

The Director-General said that on sectors and SSM, there continues to be a lack of political will to accommodate the demands from others, or to give comfort to those who cannot accommodate them. "The bottom line is that I have not detected the political drive, from my interlocutors, to make the moves which would give the final push to the establishment of modalities on these two issues."

"My sense is that there was no readiness to spend the political capital needed to get to modalities now. The leaders have expressed a desire, but this has not translated into enough will at this stage. Unless this dramatically changes in the next 48 hours -- which is a timeframe that some of your leaders have asked for -- this is the reality seen from Geneva," said Lamy.

Looking ahead, said Lamy, "our aims should not change. I do not believe that either the political will to preserve the achievements so far or even the necessity to do so will go away, even more so with the deterioration of the economic situation."

On the contrary, he added, it will also become more and more important to reaffirm and defend the basic values of the multilateral trading system and to respect not only the letter but also the spirit of the rules.

"I would suggest that you all handle this with restraint. We have a shared responsibility for the WTO system, and I suggest that what is needed now is some time for reflection and to develop our thoughts on the way ahead," the Director-General concluded.

Meanwhile, speaking to journalists after the Green Room meeting, Ambassador Peter Allegier of the United States, referring to the Director-General's conclusion that there is no good basis for having a Ministerial next week, said: "We are very disappointed, but we also agree that that is a prudent conclusion to draw given the gaps that still exist in some crucial issues."

He expressed appreciation on what Lamy and the Chairs had done to try to help members to get to the point of modalities. They were particularly helpful in trying to move the issue of the SSM.

According to the US envoy, that continues to be the principal problem. It is an issue in which some positions have gotten harder over the last week.

He noted that there were a number of proposals put forward over the last month on that issue. He maintained that the US could agree with those and work with those, but some countries were unable to do that.

On the issue of the sectoral initiative, the US envoy referred to the July 2004 framework, which according to him, said that the sectoral initiative is another key element along with the formula to meeting the Doha obligations.

He also mentioned Paragraph 16 of the Hong Kong Ministerial Declaration (in which the Ministers recognize that members are pursuing sectoral initiatives. To this end, the Ministers instruct the negotiating group to review proposals with a view to identifying those which could garner sufficient participation to be realized. Participation should be on a non-mandatory basis).

He said that the next step is "for us all to consider how we maximize the chances for actually succeeding as we move into the new year and that's where we will be concentrating our attention."

Ambassador Roberto Azevedo of Brazil told journalists after the Green Room meeting that unless something dramatic happens in the next 48 hours, the Director-General was planning on not calling the Ministerial.

Asked as to what can happen in the next 48 hours, he said "Your guess is as good as mine." +