South stress on development, LDC issues in post-Bali work

Developing countries have highlighted the need to tackle issues relating to the least developed countries and the importance of advancing development objectives in the Doha Round trade talks at the WTO.

by Kanaga Raja

GENEVA: The meeting of the WTO General Council on 20 February heard a number of developing countries calling for high priority to be accorded to the least developed countries’ (LDCs) issues, and for the development dimension to be at the centre of the post-Bali work programme for concluding the Doha Round.

The developing countries also stressed that the Rev.4 draft agriculture modalities text and the Rev.3 draft NAMA modalities text should be the basis for the negotiations. They further called for a transparent, inclusive and bottom-up approach in the negotiations on defining the work programme.

Progress report

At the meeting, WTO Director-General Roberto Azevedo, as Chair of the Trade Negotiations Committee (TNC), had provided an overview of the progress to date on each of the Doha Round negotiating areas including agriculture, non-agricultural market access (NAMA), services, rules, TRIPS issues, trade and environment, trade and development, and the Dispute Settlement Understanding (DSU) negotiations.

On agriculture, he reported that the focus in the consultations so far had been mostly on the domestic support and market access pillars. He said it was clear that all elements within the agriculture framework were inter-related and there seemed to be a general acceptance that they would need to be dealt with as an overall package.

Azevedo said there had been a good level of attendance and engagement at these consultations and the chair of the agriculture negotiations would be continuing his consultations and convene an informal meeting of the Special Session of the Agriculture Committee in the near future.

In the Negotiating Group on Market Access, the main focus of the chair’s consultations had been on tariffs, and these consultations had shown that work should mainly focus on the so-called “formula-applying members” in a first stage.

Certain ideas had been orally presented in terms of an alternative approach to the Swiss formula in the Rev.3 draft NAMA modalities text, said Azevedo. At this stage these were only ideas which would need, at some point in time, to be translated into more concrete proposals.

An open-ended meeting of the Negotiating Group had been scheduled for 2 March to discuss the observations from these consultations and for information-sharing on activities amongst members in respect of non-tariff barriers, said Azevedo.

On services, Azevedo reported that over the past few weeks the chair of the services negotiations had consulted over 40 delegations, in a variety of configurations, on the next step in the services component of the work programme.

On the issue of trade and development, Azevedo said that proponents had tabled two lists of S&D (special and differential treatment) provisions that they would like to be taken up as part of the work programme. Although the negotiations awaited concrete textual proposals by the proponents soon, Azevedo said that this marked a forward step in an important area of work.

On the DSU negotiations, Azevedo said that the work had led to the presentation of “conceptual elements” of possible  solutions  in all 12 issues under discussion. These elements did not, at this stage, reflect full convergence. Nor did all participants perceive these elements, taken together, as necessarily reflecting an adequate  overall  balance  of interests.

Azevedo was of the view that members had had a productive start to the intensive process that was launched in January, and in the past few weeks, they had started to engage more substantively, particularly in the three core areas (i.e., agriculture, NAMA and services).

“Progress is slow, but we are moving forward,” said the Director-General. Substantive positions had not changed a great deal since the last time these issues were discussed, but the tone of the discussions was more positive.

To find solutions members needed to move away from general statements of what they hope is desirable, and also away from finger pointing, to a situation where they identify more clearly the problems and challenges ahead of them, and explore potential solutions for each of those problems and challenges.

He said he was not suggesting that members move away from the existing mandates or guiding principles. “I am simply suggesting that we have to explore alternative approaches and alternative paths which fit within them.”

Noting that the conversation would be deepened over the next two or three weeks under the negotiating group chairs’ process, Azevedo said the key word was “doability”, meaning what was doable for all members and not just for some.

Azevedo urged members to talk directly to each other, and stressed the need to get into a solution-finding mode.

Strong support

A number of delegations spoke following the Director-General’s report. According to trade officials, Saudi Arabia, on behalf of the Arab Group, indicated its strong support for the multilateral trading system and the Doha Development Agenda (DDA). The deadlines for the implementation of the Bali decisions must be respected, it said.

It said that recently acceded members (RAMs) should have additional flexibilities. Many of these countries had undertaken extensive commitments as part of their accession process and this needed to be recognized.

Saudi Arabia also stressed that the development dimension must be the overarching principle.

Burkina Faso, on behalf of the Cotton-4 grouping, said it was essential that the resolution of the cotton issue be a part of the Bali work programme, and that there be deliverables by the 31 July deadline (for drawing up the work programme for concluding the Doha Round).

It appealed to all stakeholders to give high priority to cotton to ensure appropriate answers to the problems being faced by West African cotton growers.

It would also like to have an agreement in all areas by the 10th WTO Ministerial Conference (MC10, to be held in Nairobi from 15-18 December this year).

Chinese Taipei, on behalf of the RAMs, said that agriculture, NAMA and services were at the centre of these negotiations. They needed to be tackled in parallel and sequencing (of these issues) was not an option.

The post-Bali work programme should be something doable, and the level of ambition must be something affordable for all members. Having said this, it stressed that the level of ambition must be more than nothing.

Referring to comments from members that the Rev.4 agriculture and Rev.3 NAMA texts were the preferred starting point for the negotiations, it noted that it had heard from some members that they would like to have new proposals considered.

It urged these members to translate ideas such as request-and-offer approach, average tariff cuts and tariff simplification into concrete proposals as soon as possible so that there could be real traction in terms of the negotiations and engagement.

The flexibilities accorded to developing countries, the LDCs and the RAMs that were contained in the texts needed to be taken into account, it said.

The RAMs had already made deep concessions which should be taken account of, it said, adding that there was a need to adhere to the mandates of the Doha Ministerial Declaration, the Hong Kong Ministerial Declaration and the July framework.

Other countries should at the minimum be prepared to do as much as the RAMs had done as part of their accession process. The percentage of tariff lines that were duty-free in the RAMs was higher than the WTO average and the percentage of tariff lines that were tariff peaks was lower. Members should see this as an example.

Brazil said that it would like to see considerable levels of ambition in all three pillars of the agriculture negotiations – export competition, domestic support and market access – as well as in cotton.

“Connecting the dots”

The United States said that in its view, the past few weeks had been a relatively productive period in the development of a post-Bali work programme for the Doha Development Agenda.

“We have been in a necessary process of ‘connecting the dots’ in the current landscape of the DDA and dealing honestly and directly with the picture that is revealed. When we connect the dots, what is revealed, undeniably, is that we are nowhere near consensus. We are quite distant from a common view of what a work programme should look like, or how it could realistically enable us to conclude the Round in a manner that works for everyone, and that can be accomplished in a relatively rapid timeframe.”

The US claimed there were now clear indications from a number of members, both developed and developing, that the Rev.3 text in NAMA was not a viable basis for concluding the negotiations, while others remained attached to that text.

Another example, in the US view, was the very stark presentation of facts regarding Rev.4 (agriculture text), demonstrating that only one member – namely, the US – would be required to cut into current domestic support programmes, while members whose programmes had grown exponentially since 2008 would make no meaningful contribution.

“Meanwhile, those members have stated clearly their expectation that this mind-boggling imbalance, which would clearly fall short of any true effort to reform trade-distorting agricultural subsidies, should be preserved. Using the lexicon of the WTO, we view that as blood for water – or blood for air – which is simply not an outcome that we could endorse.”

In the US’ view, “we must continue to recalibrate. We are collectively better positioned than we were a few weeks ago to really start tackling the question of what recalibration means.”

The US noted that during one of the recent informal meetings in Room W (at the WTO), there was a refreshingly direct exchange on the concept of “differentiation” in the roles and contributions of developing-country members.

The US said it wanted to be clear about what it did and did not mean when it referred to differentiation. “We do not mean that we are seeking a new categorization of members within the WTO. We are not talking about ‘graduation’. We recognize such a discussion would result in endless debate and no outcome, and furthermore it is not what we need in order to accomplish a reasonable outcome.”

What the US meant was that, for example, “a developing country member that  today  maintains very significant agricultural domestic support programmes and has the productive capacity to affect global markets will necessarily have to participate in negotiations, and contribute to outcomes, in ways that are different than developing countries that don’t have such programmes.”

According to the US, such developing countries “are different from other developing countries, and we cannot succeed if we pretend otherwise. But let me also be clear: the United States is not seeking new market access outcomes in Doha from those WTO members who would not have applied the formula under the existing NAMA framework.”

“We are simply trying to prompt an honest discussion of world trade as it exists today and to foster an outcome that reflects real world trade dynamics. None of this requires any revision of categories within this institution, but it does implicate the need for a flexible approach that recognizes that there can be no one-size-fits-all approach for development,” said the US.

Crucial year

Bangladesh, on behalf of the LDCs, said that this was a crucial year for the WTO, and highlighted the need to get an agreement on the post-Bali work programme by the end of July.

On the LDC-specific issues, it noted that there had been a meeting held on rules of origin and a high-level meeting on the LDC services waiver. There had been good progress but much work needed to be done, it said.

It cited a recent report by the UN Conference on Trade and Development (UNCTAD) which pointed out that the current account deficits of the LDCs were widening to $40 billion, and added that this was likely to widen further on account of falling commodity prices.

It was very important that the issues of importance to the LDCs be concluded by 31 July, it said.

On the services waiver for the LDCs, it would like to see those countries that had made pledges at the high-level meeting on 5 February make notifications locking in those pledges by the deadline of 31 July.

It did not want to see coming out of any post-Bali work programme a situation that would land the LDCs in a worse position than other non-LDC members. It would also like to see positive decisions on duty-free, quota-free market access for LDC products.

Lesotho, on behalf of the African Group, endorsed the LDC and Cotton-4 statements. It was encouraged by what it had seen with respect to more focused and specific discussion particularly on agriculture. It was of the view that the Rev.4 draft agriculture modalities text was a good starting point.

Trade-distorting domestic support in agriculture was an issue for the African Group, it said, adding that it would like to see good disciplines in terms of overall trade-distorting domestic support levels as well as product-specific caps.

Barbados, on behalf of the African, Caribbean and Pacific (ACP) Group, said it wanted a good outcome on the post-Bali work programme by the stipulated deadline, with the concept of the development dimension being preserved and at the front and centre.

It would also like to see the issues of importance to LDCs addressed, and the Rev.4 agriculture text and the Rev.3 NAMA text reflected in any outcome. The issue of longstanding preference erosion and the LDC issues were of crucial importance to the Group, it said.

Guatemala, on behalf of the grouping of small and vulnerable economies (SVEs), stressed the importance of a transparent, inclusive and bottom-up process. The important principles that had been highlighted in the various Ministerial declarations must be preserved, it said. It was also important that in the discussions, the flexibilities that had been obtained by the SVEs in the draft texts be recognized.

The European Union said that the success of the Bali Ministerial Conference had given the WTO another opportunity, perhaps its last, to come to a successful conclusion of the DDA, and “it is our fundamental and collective responsibility not to miss this opportunity.”

In this context, the EU said, “we need to maintain the focus of our efforts on exploring what can be done and achieved today, and not on what we would have liked to get 14 years ago at the time of the Round’s launch, or 7 years ago when we were so close to a deal.”

The EU said it was ready to continue to look to creative solutions in all areas, as long as everyone else was willing to do the same. All of the core issues needed to be taken forward in parallel and would have to achieve commensurate levels of ambition.

Still, the EU accepted that agriculture may determine what will and won’t be possible in the DDA overall, keeping in mind, however, that finally a balance would be needed within the agriculture pillar as between all the areas of a possible outcome.

On the next steps, the EU agreed with the Director-General that it was crucial at this stage that the necessary technical work be taken forward.

The market access pillar – in both agriculture and NAMA – was a particular case in point. The need for a simpler, more realistic market access approach had been stressed by a large number of members during the conversations up until now, it said.

Useful work on non-core issues like rules and TRIPS could also move forward aiming at exploring what elements could realistically be part first of the work programme and then of a possible DDA outcome, it added.

According to the EU, the first weeks of this year had shown that slowly but surely members were beginning to open up to the idea and to converge towards the need of exploring possible realistic solutions in all areas. “This is the mindset that we need in order to advance and to keep our July work programme deadline as well as to see concrete results by MC10.”

Ambitious and detailed

According to trade officials, China associated itself with the statement by the RAMs. There was a need to sow seeds now so that members could achieve an ambitious and detailed post-Bali work programme by 31 July and have a result by MC10. There was also a need for adherence to the Doha and Hong Kong Ministerial mandates, as well as the Bali mandate and the 2004 framework.

On the issue of domestic support in agriculture, China said that it was very important not to mix up different kinds of domestic support. There were different natures and different purposes as well as different histories and different per capita sizes with respect to domestic support programmes, it said. There were programmes that supported big rich farmers for commercial purposes and there were those that supported the livelihoods of hundreds of millions of small poor farmers.

Members must build on the work of the Rev.4 agriculture text and the Rev.3 NAMA text, said China.

While there was a need for recalibration, members’ comfort levels should be taken care of in terms of dealing with any recalibration. There should not be any scenarios in which only a few members suffer discomfort.

China also stressed on the need for a transparent and inclusive approach. It said that recalibration should be non-discriminatory, and if there was a readjustment for some, it must apply to all.

China pointed out that the Doha Development Agenda was a development round. Special and differential treatment and the principle of less than full reciprocity and flexibilities for the LDCs must be preserved.

Cuba stressed on a transparent and inclusive process. The post-Bali work programme must include all of the Doha issues and have priority for the developing countries. There could be recalibration but the mandate should not be reinterpreted, it said. It endorsed the development dimension mandate, saying that this must be preserved. The flexibilities that applied to some countries – and even to specific countries – must also be preserved, it said.

Intensive engagement

India said that an intensive process of engagement had begun, and that members were in the process of developing a clearly defined post-Bali work programme.

There was a need to seek the right level of ambition starting with agriculture, it said, adding that the existing mandate had to be respected, as well as the progress that had already been achieved.

Equitable, balanced and development-oriented outcomes must be sought through a transparent and inclusive process, it said. Trade for development was the objective of this round; it was not a round designed to enhance market access.

The global trading system was highly inequitable and trade did not necessarily lead to development, it said.

It stressed the importance of policy space. Trade for commercial purposes that impinges on policy space could not deliver development, it said, underlining the need to level the playing field.

Japan expressed frustration over the slow progress being made, saying that some countries were simply repeating their basic positions going back a long time.

Paraguay said that members were having frank discussions but did not have a clear idea of what they were seeking. It said that export competition needed to be tackled, as did trade distortions in cotton. (SUNS7968/7970)    

Third World Economics, Issue No. 587, 16-28 Feb 2015, pp2-5