TWN Info Service on WTO and Trade Issues (Dec08/16)
16 December 2008
Third World Network

Trade: It's even "more pressing" to reach Doha deal next year, says Lamy
Published in SUNS #6611 dated 16 December 2008

Geneva, 15 Dec (Kanaga Raja) -- Citing deteriorating economic conditions, WTO Director-General Pascal Lamy told a media briefing Friday, shortly after calling off a Ministerial meeting expected to take place end this week, that it will be even "more pressing" to conclude the Doha Round as soon as possible next year.

Lamy called off a Ministerial meeting of key delegations, which was expected to take place on 17-19 December, saying that he had not detected the "political drive" to make the moves which would have given the final push to the establishment of modalities on the issues of sectors in non-agricultural market access (NAMA) and the Special Safeguard Mechanism (SSM) in agriculture.

The Director-General made the announcement not to call a Ministerial meeting at an informal session of the Trade Negotiations Committee (TNC) on Friday afternoon. Lamy told the meeting that he would be holding a dialogue with delegations in various formats this week to reflect collectively on the next stages (See SUNS #6610 dated 15 December 2008).

He is expected to hold a formal TNC meeting on Wednesday to hear the views of delegations, a day before the final General Council meeting of the year.

At the media briefing following the informal TNC meeting on Friday, Lamy said "I am under no illusion that reaching agreement on modalities next year would be any easier than this year.

"In fact, should economic conditions further deteriorate, as most analysts expect, it could even prove to be more difficult." But if economic conditions deteriorate further, "the reasons to conclude the Round as soon as possible, will be even more pressing next year."

(In interviews later to media, the Director-General has been quoted as saying that it would be difficult to conclude the Doha talks in 2009 due to the current economic situation. Lamy has also been cited as saying that it would take several months after the new US administration settles in before efforts could begin again to conclude the Doha agreement.)

Lamy noted that the financial crisis has very quickly become an economic emergency, and that unemployment is rising sharply. Also, evidence of surging protectionist measures are to be seen in many places. He added that markets remain extremely nervous and volatile, and that trade flows are on the decline with dire consequences for many developing countries.

"So, my view is that next year, the world will be in even more need of reassurance that governments can take their collective responsibility to strengthen the trading system through a Doha agreement," the Director-General said.

"This is clearly a setback for the negotiations," he said, adding however that it is not the first one.

Noting that setbacks are part of every round that the GATT and then the WTO have lived through, Lamy said "we now need to think of how to assemble the necessary political will" to move forward next year.

What is now awaited is political commitment, he said, adding that next year will be with a different political environment.

Neither he nor members know precisely what this means for the Doha Round. "But I think given the progress made for the last six months, there is good ground to continue in '09."

Lamy told journalists that the starting point for the last weeks had been the G20 leaders' summit on the financial crisis in Washington on 15 November. That summit's statement instructed Ministers to conclude modalities in agriculture and NAMA before the end of this year.

According to Lamy, pressure resulting from this determination had helped negotiations to move forward. They allowed the Chairs to revise texts in good condition. And these draft texts, which Lamy said have been generally well-received, are evidence for those who read it that "we are close, very close" to the end goal of modalities.

Lamy recalled that on 8 December, he had told members that his sense was that before calling Ministers to Geneva, there had to be a round of serious political testing of the chances of bridging the gaps remaining on SSM, sectorals and cotton.

Lamy noted that in his report to delegations at the TNC meeting on Friday, he had said that on cotton, his sense is that "we can see the way forward to an agreement, both technically and politically."

On the issue of sectorals and SSM, Lamy said that the problem is "not that we lack technical solutions," but that "politically speaking, negotiators do not want to move at this time."

For the SSM, the Director-General told journalists that the precise point is the link between the duration of the safeguard and the fall in domestic prices. On the sectoral initiative, it is whether or not the July package on NAMA provides a level of ambition which makes sectorals essential or complementary to an outcome.

According to Lamy, the reality is that despite the leaders' desire to get to a deal, it hasn't translated into enough will at this stage.

"And I think there was the reality [of] not the readiness to politically compromise at this stage, and my own appreciation, which I shared this morning in the Green Room (on Friday morning) with a number of ambassadors, [is] there was not unanimous view about this -- it was a great overwhelming majority of them -- was that calling Ministers in these circumstances was tantamount to running too high a risk, an unacceptable risk which could damage what's on the table, the Round and more generally, the WTO system as a whole."

"I have recommended today that Ministers not come to Geneva next week to finalize this deal on agriculture and NAMA modalities.

"I think locking a deal now would have greatly improved our chances for completing the Round next year. I think in these very difficult economic times, it would have sent welcome signals to [the] market and public that governments can work together to address the problems that confront us. But the reality is otherwise," said Lamy.

"I am under no illusion that reaching agreement on modalities next year would be any easier than this year. I fact, should economic conditions further deteriorate, as most analysts expect, it could even prove to be more difficult, but the reasons to conclude the Round as soon as possible, if that's the case, will be even more pressing next year."

Asked as to what lessons had been learned, Lamy said that if one read stories of the rounds, including rounds with a much smaller number of participants and topics, this process has always been hectic and bumpy. There has always been moves and setbacks. But at the end of the day, the eight previous rounds succeeded.

"My benchmark is not whether I give you good news or bad news. My benchmark is 'have we made progress?'."

Lamy said if you read the texts and compare it to where we were in July, and compare July and where we were last year, "there is immense progress". What's on the table has moved and "we are much closer than we were in July, and in July, we were much closer than [in the] beginning of this year."

Asked for his comments about a remark made earlier by Brazil's Minister for External Relations, Mr. Celso Amorim, that what was lacking was a clear signal by the next US administration regarding the WTO (see below), Lamy said that until 20 January 2009, George W Bush is the president of the US and Susan Schwab is the US Trade Representative.

Lamy added that it is a tradition in the US that transition teams do not give signals apart from what the president-elect decides to go public on. And this tradition has been respected at this time.

In response to a question on the issue of cotton, the Director-General was of the view that if there was a Ministerial meeting at the end of this week, "cotton could have been closed with reasonable chances of success."

Meanwhile, at a media briefing on Friday morning, before Lamy's announcement on calling off the WTO Ministerial meeting, Brazilian Minister Amorim told journalists that whatever happens, the G20 developing countries at the WTO will continue, alive and well.

"We will continue to show the path for a Round that will really be a development round, that would be fair, just and true to its objectives."

According to Amorim, if there is a failure or postponement, "I think probably the most appropriate word that would apply to that would be 'greed'".

The Brazilian minister was also of the view that a Ministerial meeting would help bring clarity to the process and this in itself is a positive. He added that a Ministerial would be useful in terms of clarity because it will show where the flexibilities lie, and what are the reasons for them and how the world community will see these flexibilities.

Without naming the United States, Amorim said that the financial crisis was created in the economy that is now making the most excessive demands. "This is another irony... they should be showing the leadership. That is not happening."

Amorim also said that with the current US administration coming near to an end, there is need for signal from the new one. Referring to letters sent by Congressmen, including Democrats, to President Bush on not signing on to an agreement, Amorim said that there is need for signal that these Democrats are not speaking on behalf of the new (Democratic) administration.

On demands in relation to the sectoral initiative, the Brazilian minister said that it is very important before the media in the rich countries say that it is Brazil, India and China that don't want to open their markets, it is very important that they (media in rich countries) have in mind that what Brazil, India and China and other developing countries offered in July was accepted by the totality of the developed world in terms of NAMA with the exception of one single country. This is something that one has to take into account.

Amorim said that "We are in a totally absurd situation in which things are being asked from Brazil, India and China, which are not even being asked from countries that have much higher per capita incomes..."

The Brazilian Minister also said that if one were to ask him what was the main issue in July (the failed Ministerial meeting), it would be SSM. "If you ask me what's the main issue now, it's not SSM, it's sectorals."

"The big issue is sectorals," said Amorim, adding that the reason is because "there is an effort to re-balance the July package in favour of one rich country.

"Of course, it's a powerful country," said Amorim, not mentioning the United States by name. That's the main reason for not going further now, he added.

The Brazilian Minister noted that since the Hong Kong Ministerial meeting in 2005, according to the mandate, sectorals should be voluntary, but the effort to make it precise now at this stage makes it impossible.

"If we take the proposals in sectorals as they were, it would be the equivalent in some sectors to go to coefficient of 12 instead of coefficient 20," said Amorim. +