TWN Info Service on WTO and Trade Issues (Apr10/02)
9 April 2010
Third World Network

Doha talks move into low key
Published in SUNS #6894 dated 30 March 2010

Geneva, 29 Mar (Kanaga Raja) -- With the global political economy in a state of flux, the Doha Round of trade negotiations at the World Trade Organization has now moved into a process led by Geneva-based trade ambassadors aimed at "closing the gaps", but with no prospect of the negotiations being concluded successfully in 2010, but perhaps at best by 2012.

This perspective has emerged at the end of a week-long stock-taking exercise on the Doha Round, capped by a formal meeting of the Trade Negotiations Committee (TNC) on 26 March, where the WTO Director-General and TNC Chair, Mr. Pascal Lamy, announced a new process of engagement aimed at "closing the gaps" on the substantive issues that have led to the current impasse in the Round.

At the TNC meeting, a number of Members and groups voiced their views and positions on the negotiations. A talking point among many delegations at the meeting on Friday was the statement from South Africa, which put the blame for the current impasse squarely on the United States.

The process outlined by Mr. Lamy will now involve a continuation of the Chair-led processes within the Negotiating Groups and what he termed "smaller groups in variable geometry and bilateral contacts", within specific areas, as well as at the horizontal level. (See SUNS #6893 dated 29 March 2010).

It now appears that the practice, since the New Delhi mini-Ministerial meeting of last September, of having senior officials in Geneva once a month has been abandoned.

Trade diplomats have said that the new process will be led by Geneva-based Ambassadors, with senior officials coming from capitals when there is a possibility of discussing politically some of the substantive issues in order to close the gaps.

While Lamy did not provide any specific time-line for Ministerial involvement to tackle the political decisions, he told the TNC that Members should make productive use of the upcoming Cairns Group, OECD and APEC ministerial meetings to foster and facilitate Ministerial dialogue on the Doha Agenda. He did not make any mention of the upcoming G20 leaders' summit in Canada in late June.

However, according to some trade diplomats, nothing is expected to come out of these Ministerial gatherings, without substantive engagement from the United States.

One developing-country trade diplomat told SUNS that he did not expect to see much happening this year, even from the upcoming G20 leaders' summit. He noted that the G20 summit does not have a chapter to specifically discuss the trade issue.

Speaking privately, several trade diplomats pointed the finger at the United States for the current impasse in the Doha talks.

At the TNC itself, South Africa made a statement blaming the United States for the current impasse, and said that it found it "disconcerting that the US remains the most significant major player in the Doha Round that is unwilling to work on the basis of these multilateral texts. Its major constituencies and business lobbies are demanding more market access commitments from its trading partners, particularly from the major emerging markets; including China, India and Brazil, with a longer list of countries in this targeted group that includes South Africa."

"This is the main reason for the current impasse in the Doha Round," said South Africa. (See below.)

[Meanwhile, in the United States, on 27 March, after the US Senate went into spring recess, President Barack Obama announced 15 recess appointments, including the appointments of Mr Michael Punke as Deputy US Trade Representative and US ambassador to the WTO, and Dr. Isi Siddiqui as chief agricultural negotiator. Mr Punke is expected to move to Geneva immediately to assume his post. He has been serving as a consultant to the US Trade Representative since January 2010, on account of his appointment being blocked in the US Senate. This resulted in Punke attending several WTO meetings in Geneva, but not able to speak in any official capacity. Dr Siddiqui was also serving as a consultant. As a result of the recess appointments, both Punke and Siddiqui are expected to serve until the end of 2011, when the next Senate session concludes.]

In its statement at the TNC on 26 March, Egypt, on behalf of the Arab Group, said that the hopes of a stocktaking exercise that ushers the final sprint of the Doha Round may seem farther away than desired, "but that doesn't mean we have less of a responsibility in our upcoming meetings than if they weren't.... We should approach the negotiations with renewed spirit and a resolute unity of purpose to fulfil the goals that spurred us to embark on this journey 9 years ago."

Egypt said that this is not the time to challenge the necessity of Doha, not for developing and not for developed countries. "The financial crisis and its ensuing effects cannot be used as an excuse for reneging on our promise of free trade. In reality, free trade is exactly what the world needs at this point. There's no disagreement among economists on the positive effect of trade liberalization on growing the world economy and creating jobs; and isn't that the holy grail of what this recovery efforts are all about?"

It added that agreement in that respect is not lacking, nor should it also be lacking on the single most important component of Doha, which is development. "Here, too, we are unfortunately deadlocked, for no apparent objective reason. All we need to do is go back to the basics. The main global public good to come out of this round is development; we all agree on the need to increase global trade."

Egypt said that the writing is on the wall. "If free trade is imperative for our future, then meaningful development that really manages to level the playing field for all players, has to be our unequivocal priority and focus for the road ahead."

It noted that development was conspicuously absent from all discussions and consultations that it participated in during the week. "This cannot and should not be allowed to continue!"

While it acknowledged the difficulties that the current process has faced in advancing negotiations and achieving the desired progress, Egypt considered that process alone cannot be blamed for the current stalemate. "Whatever future route we agree on, will not bear fruit in the absence of real political leadership and engagement."

It further stressed that any future process of negotiations, whether with or without a horizontal dimension, has to be sufficiently representative of developing Members' interests, and that from the very beginning, in order to deliver on the developmental mandates and necessary flexibilities for developing countries in all the negotiating tracks. "The multilateral track should always remain central in leading our work."

"Therefore, it is incumbent on us before we embark on a new phase of negotiations, that we caution from attempts to reinterpret the mandates, and any possible backtracking on commitments, or lowering the level of ambition at the expense of developing countries."

Egypt said that the Arab Group shared the views of many developing countries on the necessity of upholding the mandates and building on the progress achieved so far, and the need to counter new notions introduced to the detriment of the development component of the Doha Round.

In its statement at the TNC, Brazil, on behalf of the G20, recalled the two general principles it stated in document JOB 09/174, of 23 November 2009:

1. That the December 2008 draft modalities are the basis for negotiations and represent the end-game in terms of the landing zones of ambition. Any marginal adjustments in the level of ambition of those texts may only be assessed in the context of the overall balance of trade-offs, taking into consideration that Agriculture is the engine of the Round; and

2. That the draft modalities embody a delicate balance achieved after eight years of negotiations. This equilibrium must be respected, or we will need readjustments of the entire package with horizontal repercussions. Such readjustments cannot entail additional unilateral concessions from developing countries.

The G20 regretted that, despite its best efforts, no meaningful substantive progress has been achieved over the past several months.

It therefore supported the new process announced by the Director-General and welcomed two elements in particular:

1. That alongside the Negotiating Group's work, the Director-General will also conduct consultations that will focus on the key issues that have led to a general negotiating impasse. To move forward, we must no longer avoid these enabling issues. We must identify and measure the existing gaps in those critical areas;

2. This exercise must be conducted by the membership as a whole. Such horizontal discussions could potentially affect the whole membership and we must take collective ownership of the difficult political decisions that lie ahead.

In its statement, South Africa said that for developing countries that began this round on the promise that it would address the inequities of the current trading system, and that it would create new opportunities for their development, the current impasse in the Doha Round has been frustrating and painful.

The distortions caused by the high levels of protection and trade distorting subsidies in agriculture in rich countries continue to destabilize and undermine the productive potential of many developing countries, including South Africa.

The plight of cotton farmers in Africa is a stark reminder of inequity of the current regime. "The LDCs are still waiting patiently for some dividends from the Doha Round, especially for the agreement we reached in Hong Kong to create new opportunities for their development by providing them with DFQFMA (duty-free quota-free market access)."

The South African statement recalled that the South African Minister Rob Davies had pointed out at the seventh Ministerial Conference held in December 2009 that "South Africa was not part of the agreements reached by some members in the July 2008 Package."

"We continue to believe that the texts that emerged 'are imbalanced and reflect too much accommodation of the sensitivities of developed countries in agriculture, while demanding too much from developing countries in terms of reducing their applied industrial tariffs and policy space for industrial development'".

However, Minister Davies also stated that, "Despite these reservations, we have been willing to work to see whether, on the basis of the existing texts, the specific problems posed for SA (South Africa) and SACU (Southern African Customs Union), arising from the historic injustice of South Africa's classification in the Uruguay Round as a 'developed country', can be resolved in a fair manner."

South Africa further said that it recognized that the current recession has caused job losses in many countries around the world with developing countries suffering the major impact. South Africa, which already had 23 percent unemployment before the recession, has lost close to a million jobs since then.

"We therefore find it disconcerting that the US remains the most significant major player in the Doha Round that is unwilling to work on the basis of these multilateral texts. Its major constituencies and business lobbies are demanding more market access commitments from its trading partners, particularly from the major emerging markets; including China, India and Brazil, with a longer list of countries in this targeted group that includes South Africa."

"This is the main reason for the current impasse in the Doha Round," said South Africa.

As Members go forward, South Africa said that it is clear that the only way of overcoming the current impasse and bringing the round to a successful conclusion will require a renewed dialogue amongst WTO members.

"This will require us to discard the mercantilist approach taken by some of the major players and an adherence to the principles or values of: (a) Fairness; (b) Respect for the Doha Development Mandates; ( c) a willingness to honour convergences and agreements reached during the multilateral process; (d) a recognition of the value of a stable multilateral rules based trading system; and (e) a willingness to contribute to the strengthening of global governance."

All these values do not necessarily bring substantially more market access in the short term, nor can they be added up in dollars and cents but they are the basic ingredients required to secure the conclusion of the Doha Round in the shortest time and to build a more sustainable multilateral trading system, it added.

As Minister Davies stated at the Davos Ministerial discussions, said South Africa, doing the same thing over and over again and expecting different results, was recognized a long time ago by Albert Einstein as the definition of madness!

A process that continues to work in the silos of single issues and that does not attempt to discuss the balances required to make the final package acceptable to all and that continues with "business as usual" will lead to debilitation, and will risk unraveling over 8 years of work, added South Africa.

"We therefore agree with you (the WTO Director-General) that what is required now is a process that is based on multilateralism, transparency and inclusiveness based on the work of the Chairs of the negotiating groups and the TNC, but that also allows for frank horizontal discussions on the trade-offs required across the negotiations to allow for a fair and balanced package that all members can sell to their constituencies."

"The current stock-taking exercise takes place in a political context. Ministers at MC7 (seventh Ministerial Conference) recognized the impasse that the round was faced with and felt it wise to give us more time to find our way forward. They will require a report. It is clear to us that at some stage in the process we will require ministerial guidance and engagement. How and when such engagement takes place will require further consultations. We leave this to your judgement."

As to what is to be done in the meantime, South Africa said: "The question we should be asking is, how do we address the issues that confront the poorest countries, and those issues that are of clear systemic interest to all of us? It would seem to us that WTO members would be wise to use the time while we struggle to overcome the current impasse to address some of these issues."

In this spirit, South Africa said that it fully supported the plea of the LDC group, the African Group and the ACP for an early harvest on issues they have highlighted such as DFQFMA, a services waiver for LDC preferences and an early resolution of the cotton issue.

"It would also be wise to use the time available to us to reach interim understandings and agreements on some of the most important systemic issues that offer opportunities for all and that address the most harmful practices of members," said South Africa, adding that these issues could include: trade facilitation, export competition and fish subsidies.

It urged Members to begin a serious discussion in the coming weeks on these suggestions as a way forward and how to successfully conclude the Round.

In a statement, India said that given the waning confidence of the world outside about the prospects of the Doha Round, it believed that this stock-taking week has provided a good opportunity to work on three objectives - "taking stock of where we are, redefining our negotiating objectives for the year based on the lessons of the last six months of engagement, and preparing for a new phase of engagement."

"While we have clearly achieved greater clarity on the first and third objectives, we are somewhat intrigued with the loud silence on the second."

"There is nothing to suggest that the political constraints that have impeded our progress over the last six months will suddenly disappear in the next six months. This has clear implications for what we can achieve this year," said India.

India believed that the primary preoccupation in the stocktaking exercise has to be to take stock, on the basis of Chair's report of where Members are on substantive issues. "The future process follows from this and cannot be the dominant theme of our deliberations."

In some comments on the substantive aspects, India drew attention to the Chairs' reports (made at the TNC at the beginning of the stocktaking exercise on 22 March).

On agriculture, India said "we need to have a serious horizontal discussion regarding the demands for additional flexibilities by developed countries in agricultural market access. Accommodation of these demands will drain the agricultural negotiations of whatever ambition was achieved through the formula cuts. The principle of buying your way out of commitments cannot be the basis of negotiations. If we fail to draw a tight line on this issue, we cannot prevent downstream effects on the ambition in other areas."

India agreed with the Chair that the SSM (Special Safeguard Mechanism) is a politically charged issue. It also happens to be a key determinant of the development intentions of the Round. There are a number of equally politically charged issues in domestic support and market access which are barely being discussed.

"If we are to have a horizontal process even within agriculture, we will need to come to terms with all these issues like OTDS (overall trade distorting domestic support), Green Box, Blue Box, developed country flexibilities, etc. We cannot focus our efforts on just one or two issues and set the rest aside on the ground that they are political. At this stage, everything is political. A horizontal discussion has to begin within a negotiating group itself."

On the issue of cotton, India said "it is important that we take the covers off and have a serious political multilateral discussion. The fact of the matter is there is only one proposal on the table, which is un-bracketed and un-annotated. If this is being challenged, it is for those who challenge it to put forward a counter proposal. We cannot continue to deal with this important issue on tip toes."

On NAMA (non-agricultural market access), India applauded the work that the Chair has done in the last few months on NTBs (non-tariff barriers). The considerable technical engagement on these issues has paved the way for text-based negotiations on a number of proposals.

"We now look forward to a Chair-led process to discuss the important outstanding issues like sectorals, country specific flexibilities, etc. in a manner consistent with the mandate."

On the issue of TRIPS, India said that the proponents of document W/52 view the three issues of the GI register, GI extension and the TRIPS-CBD relationship as an integrated whole.

"We have found the DG (Director-General) led consultative process on the last two issues to be useful in clarifying a number of technical and other issues. It is important that we continue to make progress on these issues to prepare the ground for a Ministerial decision. Needless to say, we view an outcome on these issues as an integral part of the outcome on the Doha Round," India stressed.

On the Special Session of the Committee on Trade and Development, India said that it was disappointed with the lack of progress on the key issues under discussion in this group.

"Fundamental differences remain on the mandate and scope of the monitoring mechanism. We also find it difficult to agree with the Chair's assessment that there is progress on the Agreement-specific proposals. There has been no discussion on these issues for about a year."

[In pursuance of the Doha work programme on special and differential treatment
(S&D), developing countries and the least developed countries (LDCs) had tabled a total of 88 Agreement-specific proposals in the Special Session of the Committee on Trade and Development. Thirty-eight of these proposals (Category II proposals) were referred to other negotiating groups and WTO bodies for consideration. Of the proposals remaining for consideration in the Special Session, Members, in 2003, reached an in-principle agreement on 28 proposals, even though these are yet to be formally adopted. In addition, Members at the Hong Kong Ministerial Conference adopted five decisions in favour of the LDCs.]

On the issue of services, India agreed with the Chair's assessment that no significant progress has been made on market access issues since July 2008.

"We have on earlier occasions provided specific details of the anomalous situation created by developing countries having made disproportionately higher commitments in this Round so far, compared to the developed countries. The negotiations cannot end with the anomaly in place. An outcome based on this anomalous situation would be a travesty of the development mandate."

"It is important that in future engagements, we focus more on the requests of developing countries for liberalizing sectors and modes of supply of their export interest, which have remained un-responded to so far," said India.

It also said that now that Members have a draft proposal on the LDC waiver, "we need to expedite our efforts to attain finality on this important issue."

On domestic regulation, India said that it continues to be disappointed. "Our negotiating objective has to be to build on the requirements of GATS article 6.4, not detract from them. Our future efforts have to be based on the 2009 text." India welcomed the information exchange work programme on subsidies and hoped that its major trading partners will fully participate.

On trade facilitation, India said "we have progress of sorts through the consolidated draft text but it requires serious work before we can move towards closure. In this area, we believe there are no losers - Simplification of trade procedures by reducing trading costs is in the interest of all Members. However, we have to keep in mind the implementation capacities of developing and least developed Members."

The mandate developed in July 2004 and in Hong Kong, clearly links commitments to support and assistance for infrastructure development, said India, adding that it is important that this linkage is respected and that adequate assistance is provided for implementation of commitments so that we can achieve a high standards agreement.

Regarding the way forward, India said that given the circumstances, it is but appropriate that Members begin a new phase of engagement with circumspection. The approach outlined by the Director-General meets the requirement of the situation.

It would be unrealistic to expect dramatic progress in the next few months given that the political situation is not likely to change for the better, said India. "However, we have no choice but to pursue our Sisyphean task. At the same time, it is important that we approach the new phase of negotiations with a clear understanding about their intent." (In Greek mythology, Sisyphus was a king punished in Tartarus by being cursed to roll a huge boulder up a hill, only to watch it roll back down, and to repeat this through eternity.)

According to India, the purpose of these negotiations cannot be to meet the unrealistic demands of one or more Members for new or additional market access, but to come to a balanced outcome in line with the development mandate.

The development dimension has to be the defining feature of all outcomes in the Round and the interests of smaller countries, especially the LDCs and SVEs (small and vulnerable economies), have to be firmly protected. It must also be clear to all Members that a few developing countries cannot be the bankers of the Round, stressed India.

"If additional demands are made on us, we will weigh them against the requirements of the development mandate and deal with them accordingly. We would also like to emphasise that any additional flexibilities from our side will require adjustments and contributions by other Members in various areas of the negotiations. Having said this, we are ready to engage in any process that is decided, to take the negotiations forward."

In conclusion, India said that "while we obviously have to continue to negotiate without deadlines, the process cannot continue endlessly without reaching closure. We have to deliver results at sometime to retain our credibility, given the widespread doubt about early completion. At some point therefore, we will have to come to terms with the demands of the LDCs and others for early outcome." +