TWN Info Service on WTO and Trade Issues (June09/06)
5 June 2009
Third World Network

Developing countries nix Lamy's two-track approach to Doha talks
Published in SUNS #6708 dated 28 May 2009

Geneva, 27 May (Kanaga Raja) -- Many developing countries appear to have opposed and/or voiced concerns over a suggestion by WTO Director-General Pascal Lamy for work along "two simultaneous tracks", one on modalities in agriculture and non-agricultural market access (NAMA) and another for commencing the scheduling exercise in both these areas.

Lamy's suggestion and opposition to it from several developing countries came at a meeting of the General Council - the first full formal session after Lamy's recent re-election.

Responding to the suggestion from Lamy, many developing countries voiced their concerns that the current multilateral process could be weakened as a result of the bilateral/plurilateral approach (associated with the scheduling exercise). They also stressed that the agenda of the Doha negotiations should not be selectively re-opened, and that the Doha Round must focus on the development dimension.

(Some recent media reports in the US have suggested that the US administration and US Trade Representative Ron Kirk are viewing favourably the proposal floated by Canada that members should go straight away to schedule their commitments in agriculture and NAMA, without first agreeing on the modalities. More recently, Lamy, speaking in Oman, appears to have said that now that the Indian general elections are over, India and the United States should hold bilateral talks to resolve their differences over agriculture and NAMA issues, and enable the Doha negotiations to conclude.)

The Director-General's proposal for simultaneous two track-approach came in a statement that he made at the General Council in his capacity as Chair of the Trade Negotiations Committee. Apart from his assessment of the current situation in the various negotiating groups, he also touched upon the two-track approach.

He told the Council: "I have been informed of the informal discussions which have been on-going amongst some of you - looking outside the current tool box of the negotiating process with a view to placing the talks on a more direct path, for commencing the scheduling of Agriculture and NAMA commitments.

"I am well aware that for some of you, the modalities approach is sacrosanct. It is an approach that makes clear to all what is on the table through the formula cuts in tariffs and the specific flexibilities that would be agreed. But others believe that while the modalities spell out the defensive elements of the agreement, through flexibilities, these flexibilities in themselves make it difficult to ascertain what new market access opportunities may emerge.

"If governments could indicate what products would be accorded more flexible treatment in the scheduling stage, whether on sensitive products, on special products, on Duty-Free-Quota-Free [market access] or on NAMA flexibilities, some countries believe it would lend greater clarity to the process.

"My own sense is that there is scope to work on these two areas along two simultaneous tracks. One would see technical engagement in the negotiating groups move to a higher gear to cover a number of technical issues as mentioned previously. Simultaneously, Members would start some sort of 'outcome testing', through bilateral or plurilateral discussions, where they would provide each other with greater clarity on the use of flexibilities and through it, on the value of the deal.

"This is, in my view doable, provided we see serious political engagement on the part of Members. In other words, provided Ministers give the necessary instructions for substantive work to happen on these two tracks," said Lamy.

Lamy concluded his statement by saying: "... while, according to some, we may be seeing the bottom of the economic crisis, we have not yet seen its full social impact which will inevitably trigger negative political pressures on the trade front.

"I personally believe, and I want to share this very openly with you, that the 'stress test' of the multilateral trading system is still to come. It is therefore crucial that we keep our monitoring system on the alert and that we advance towards the conclusion of the Round. A more solid house will resist the strong political winds which we unfortunately have to forecast."

According to trade officials, many developing countries voiced their concern that the multilateral process would be weakened and that the gains that may have accrued to them as a result of the negotiations so far could somehow be eroded through a parallel process in which they may not be participating. Concerns were also raised that the flexibility provisions that have been accorded to developing countries in agriculture and NAMA could also be eroded.

According to a trade diplomat from a developing country, many developing countries were against the two-track proposal put forward by the Director-General. He said that the Lamy suggestion was what the US had wanted to supplement the multilateral consultation.

According to the trade diplomat, there is no room for bilateral/plurilateral consultations and that not all delegations have the capacity to negotiate.

Speaking to SUNS, Ambassador Roberto Azevedo of Brazil said that Brazil's concern was that the process should not come before substance. In terms of substance, Brazil had pointed out at the meeting that if there are changes in substance, it has to be development-friendly.

He said that Brazil would not accept the selective re-opening of the Doha package. Also, if the package is re-opened at some point, everything else would be re-opened. The landing zone has been set by the modalities, and "if you want to make changes, it has to be balanced and at the margins, not a complete change of the landing zone."

In this context, he said, the flexibilities negotiated by the developing countries are an integral part of the landing zone, and re-negotiating the flexibilities is not a minor adjustment.

Finally, said the Brazilian envoy, "you cannot change the multilateral nature of the process. Having said that, we are open to talk to people and see how we can move the process forward."

Many countries spoke following the report of the Chair of the TNC.

According to trade officials, Gabon, on behalf of the informal group of developing countries, said that a successful Doha Round would send out a clear signal of support to the multilateral trading system. It said that the Doha mandate needs to be followed. There is need to make sure that the elements of convergence that has been achieved are protected.

However, there should be no selective re-opening of the negotiations, and other issues should not be included in the agenda. Transparency is achieved, not through bilateral outcomes, but through the multilateral process. The negotiations should not be taken outside the multilateral process.

Development must be central, Gabon said, referring in this context to special and differential treatment, less than full reciprocity and cotton.

Cuba said agriculture subsidies have been bad for food security in developing countries. The current crisis began in the US which is now trying to go around the modalities. Concluding the Doha Round should be the top priority, but it was not sure whether re-igniting the political process is the best way forward.

Cuba said that it did not support the idea of over-shooting the modalities and going straight to scheduling. The development objectives should be the focus of discussions. Modalities are not just sacrosanct for some members, but for the majority of members, said Cuba. A change of mandate could lead to the collapse of the negotiations.

Tanzania, on behalf of the Least Developed Countries, said that it is crucial to conclude the Doha Round with the development dimension at its centre. It had concerns over bilateral and plurilateral approaches as a means to narrowing the gaps. There is need to make sure that anything coming out of these approaches be mainstreamed into the multilateral process so that small developing countries will not be left out.

Tanzania also referred to an early harvest of issues that are of importance to the LDCs, including duty-free, quota-free market access, a service waiver for the LDCs, Mode 4 in the services negotiations, and cotton.

Switzerland said that there is need for a combination of bilateral, plurilateral and multilateral processes. There is need to ensure that the process does not leave behind smaller delegations.

Turkey said that skipping over the modalities will not serve the process of expediting the conclusion of the round.

Egypt, on behalf of the African Group, said that the multilateral process must be the way forward in full transparency. It is against any major changes to the process. The group does not see the need for changing the process.

Chinese Taipei said that there is need for a multilateral approach as a way of moving forward.

The EU said that there is need to conclude the round as soon as possible. A successful conclusion is the best insurance policy against protectionism. Referring to some suggesting changes to the process, it said that we need to step up the work being done, but there is no need to make dramatic changes.

Substantial work is needed in the negotiating groups, it said. Agriculture and NAMA modalities are not an end in themselves but a means to the end, the end being scheduling. We should look at some ways to move the round forward, it said, adding that it is open to exploring processes. But there is need to make sure that the agriculture and NAMA modalities are concluded.

Japan said that the approach with respect to simultaneous tracks is both interesting and useful.

Barbados, on behalf of the small and vulnerable economies, said that these economies will support any process that leads to a fair and balanced outcome. It did not want a process that will put at risk the progress made so far, and which could shift the emphasis from the development dimension.

Argentina said that the round must be focussed on development. There is need for multilateral discussions, and they need to be transparent and inclusive. It also stressed on the development dimension.

The US responded to some of the statements made by members and expressed confusion over the use of two terms fundamental to the work -- "modalities" and "mandate".

It agreed with the EC's statement that modalities are a means to an end, not an end in themselves. This is even more true for specific modalities. The formula is not the only modality.

Referring to what was agreed on five years ago as part of the July 2004 Framework, the US said that it agreed to multiple modalities with respect to tariff reduction, including sectorals and request-offer. "Where does it say that modalities precludes Members from knowing what's on the table and what's not on the table? This would be a rather odd way to get to a conclusion."

"We need to look pragmatically at how we get to the finish line. This doesn't mean ignoring or dismissing progress we've made, but nor does it mean rigidly refusing to see if some modification of envisioned negotiating paths would be a more certain and effective path to get us there," said the US.

It said that it is not making any specific proposals today. On the mandate, the US said that there have been lots of discussion about not changing the mandate. "We agree with that."

The US said that it is not proposing a change in the mandate, but it would like to remind Members that a fundamental principle of the mandate is the Single Undertaking. "We don't see any need at this point to change that part of the mandate."

Norway said that there is need to prepare for scheduling sooner or later, so why not start earlier if we really believe we want to end the round soon.

Korea was of the view that the multilateral process should not be deviated from. Negotiating groups must be at the centre.

China said that there is need to focus on how we can move forward. Members must keep in mind that this is a development round. Flexibilities must not be subject to negotiations again. The developed countries already have flexibilities in agriculture, sensitive products and on the Blue Box. The process should be multilateral and should focus on the agriculture and NAMA modalities to close the gaps.

Mexico said that we need to use as many tools as we can. Closing the gaps in agriculture and NAMA modalities is vital, but there may be other ways in which we can move forward.

Australia said that there is need to resolve some of the differences one way or the other. The US is quite right in that the formula is not the only method. There are other ways including the request-offer approach. Bilateral and plurilateral approaches have always been part of the negotiations.

Meanwhile, the G20 made a statement at the General Council expressing its deepest concern in relation to the recent decision of the US to reintroduce dairy export subsidies, as announced by the US Department of Agriculture on 22 May.

It said that the measure shows the rising of "murky protectionism", not directly violating WTO obligations and yet potentially weakening the WTO system in a time of economic crisis.

It further said that it is a worrisome sign that the US decision follows a similar decision by the EU to reintroduce export subsidies. These examples, if emulated by other developed countries, will contribute to aggravate significantly the world economic situation and its hardship on the developed world.

The Director-General also informed the General Council that he has decided to retain Alejandro Jara of Chile, Valentine Rugwabiza of Rwanda, Harsha Singh of India and Rufus Yerxa of the US in their positions as Deputy Director-General. Their terms of office will begin on 1 October. +