TWN Info Service on WTO and Trade Issues (Nov14/02)
7 November 2014
Third World Network  

Still no solution on TFA/Food Security, consultations to continue
Published in SUNS #7908 dated 4 November 2014
 
Geneva, 3 Nov (Kanaga Raja) -- WTO members remain sharply divided in their views on three possible scenarios for a post-Bali work programme and resolving the current impasse over implementing the Bali decisions including over Food Security issues and a Trade Facilitation Agreement (TFA), in particular over a non-multilateral approach to a TFA in the WTO.
 
The sharp divide, more or less North-South, came out loud and clear at an informal Heads of Delegation (HOD) meeting of the trade envoys on 31 October, where WTO Director-General and chair of the Trade Negotiations Committee (TNC), Roberto Azevedo, reported on his consultations, and said that there is still no solution to the TFA/Food Security impasse and outlined three possible scenarios, including a possible non-multilateral approach to the TFA on an MFN principle.
 
In his report, the D-G had said that while there was not much support for a plurilateral TFA outside the WTO, there was a whole spectrum of options for a stand-alone TFA on a plurilateral basis inside the WTO, which he added would leave the other Bali decisions and a post-Bali Work Programme behind.
 
In their responses to the D-G's ‘three scenarios' (which he had mooted in consultations over the last week with groups of envoys), while the US, the EU and other industrialised countries seemed receptive to his scenarios including for a possible non-multilateral approach (an euphemism for a plurilateral agreement in the WTO), a range of developing countries - including India, Brazil, South Africa, the LDCs, the G-33 group of developing countries, the ACP Group and the African Group - spoke expressing their opposition to any non-multilateral solution to the TF issue, leaving little doubt that they will reject such an attempt for a stand-alone TFA at WTO.
 
[In terms of the Marrakesh Treaty, such a plurilateral agreement within the WTO has to be in conformity with Art. X: 9 of that treaty which stipulates: "The Ministerial Conference, upon the request of the Members parties to a trade agreement, may decide EXCLUSIVELY BY CONSENSUS (emphasis added) to add that agreement to Annex 4....".
 
[There are several trade experts, and those who negotiated the Marrakech Treaty, that challenge whether such a route is even possible or feasible in respect of trade subjects already covered by existing WTO agreements. In the case of the TFA, which involves issues covered by customs procedures and the pre-shipment agreement in Annex IA, these experts underline that such a procedure is untenable, and developing countries agreeing to any consensus would be doing so to their own detriment, acquiescing in virtually winding up the WTO, ala the League of Nations before World War II. - SUNS]
 
The D-G, at the informal HOD meeting on 31 October, reported that there is still no solution to the Trade Facilitation Agreement (TFA)/Food Security impasse, adding that, together with the General Council Chair, he will continue his consultations with members.
 
Azevedo also urged members to continue talking to each other and think about the three potential scenarios outlined by him which had emerged from the discussions.
 
A number of delegations spoke following the D-G's report at the informal HOD meeting.
 
The African Group said that the other Bali Decisions should not be held at ransom pending the resolution of the impasse, while the LDC Group underlined that it strongly supports multilateralism and that plurilaterals "are isolationist and undermine multilateralism." The LDCs and their issues should not be sacrificed, the LDC Group stressed.
 
The ACP Group urged the main parties in the impasse to redouble efforts to resolve the matter expeditiously, and said that at the same time, the membership should continue the ongoing work to implement other Bali decisions, including the Bali declaration provision to define a post-Bali work program. The LDC decisions and other work in the WTO should not be held to ransom, the ACP said, stressing that other decisions, in particular the LDC decisions, should be prioritised and not linked in any way to the impasse.
 
India said that members have faced several challenges in the past, both under the GATT as well as in the WTO, but that they have also managed to overcome most of them successfully and moved forward. It remained optimistic and did not subscribe to the characterisation of the present situation by some members as a ‘doomsday scenario' or an existential crisis for the multilateral trading system.
 
In his statement at the informal HOD, D-G Azevedo reported that there had been an intensive process of consultations in a range of configurations in the weeks since the meeting of the TNC on 16 October.
 
He recalled the four questions that he had set out two weeks earlier and which members have tried to answer: What should we do with the decisions on Trade Facilitation and public stockholding?; What should we do with the other Bali decisions, including the LDC package?; How should we respond to the ministerial mandate to develop a work program on the post-Bali agenda?; And how do we see the future of the negotiating pillar of the WTO?
 
"We still do not have a solution to the impasse before us - the impasse that establishes a political link between the Public Stockholding programs and the Trade Facilitation Agreement," said Azevedo. In this context, he said that members have been trying to map out what may lie ahead, and that from these discussions, three potential scenarios have emerged, "which we explored during the consultations."
 
"Scenario 1 is that we find a solution for the impasse quickly," said the D-G, adding that unfortunately "it is not in our hands - and I have no concrete indications that it is about to happen."
 
Even if a solution to the impasse were found tomorrow "we would still have a problem as regards the post-Bali work program. The detailed and precise modalities-like work program that we had been discussing previously would be virtually impossible to achieve by the agreed December deadline."
 
Scenario 2 is that members continue their search for a solution to the current impasse, he said, adding, "while we wait for a solution, continuing our essential work on the other Bali decisions - or anywhere, frankly - is proving very difficult."
 
"Members are disengaging... So, under this scenario, while we keep looking for a solution to the impasse, progress in other areas seems impossible. In the consultations, many members - both developed and developing members - indicated they did not support a scenario where we keep looking for a solution to the impasse indefinitely - they want to move forward."
 
Under Scenario 3, the D-G said that in the absence of a solution to the impasse, some members have indicated an openness to look for alternative ways to make progress, noting that some Members are already talking about alternative ways to take the TFA forward.
 
He pointed out that there are basically two alternatives here, namely, scenarios 3A and 3B. Scenario 3A is that members seek implementation of the TFA as a plurilateral agreement outside the WTO.
 
"If this happens then I am afraid that the other Bali decisions and the post-Bali agenda will not have a bright future. But, overall, I have not heard much sympathy for this approach during my consultations," the D-G reported.
 
Scenario 3B is that members seek implementation inside the WTO - an open-ended approach to implementation where those that want to move forward with implementing the agreement would do so. It would therefore be less than multilateral, at least in the first instance, but would also leave open the possibility of a full multilateral agreement at some point in the future.
 
According to the D-G, there is a whole spectrum of possible ways that this could happen. It could be taken up as a traditional, stand-alone plurilateral agreement, and that this option could leave the other Bali decisions and the post-Bali work program behind. "Right now, I do not hear anybody proposing this course of action."
 
He highlighted that there are many options between this and the other end of the spectrum, in that Members, for example, could take an approach where the terms of the TFA are simply put in place by those parties who are willing to do so, on an MFN basis. Section 2 (S&D provisions and assistance and capacity-building support) would be an integral part of this, and technical assistance would be available to developing countries who want to participate in this approach.
 
This approach could also be linked to bringing some or all of the other Bali decisions forward. "In saying this, of course, some pointed out that public stockholding, unlike the rest of the Bali issues, would be more problematic to take forward in the absence of a fully multilateral solution," Azevedo said.
 
Summarising that these, broadly, are the scenarios which members have explored in the conversations of the last two weeks, he said that how this will play out is not for him to say. "It depends on many factors which are, ultimately, in your hands."
 
According to Azevedo, all delegations agreed that scenario 1 - whereby a solution is found - is the preferable option.
 
Scenario 2, "under which we would keep looking for a solution, was not greeted with any enthusiasm by many delegations. They pointed out that developments since 31 July are not encouraging and that we need to face reality. Anyway, this scenario would only exist until such a time as some members table proposals to move ahead."
 
On Scenario 3, Azevedo reported that there were different views. 3A - an undertaking outside the WTO - seems to find no supporters anymore. At this stage no-one wants to consider implementing the TFA outside the WTO.
 
In contrast, "many were more ready to explore the options that may be possible around 3B", he said, adding that there is clearly already an active discussion taking place between members on what the options here in 3B might be.
 
He sensed that these members want to find a way of implementing the TFA inside the WTO, but only they can tell how long it would be before they act. In their view, the WTO needs to deliver on the negotiating pillar or the Organisation will suffer probably irreparable damage.
 
Others are more reluctant. They are concerned about taking a non-multilateral approach - even if it could potentially be multilateralised in due course, said the D-G.
 
Nonetheless, there was a widespread feeling that with any approach on Trade Facilitation, Section 2 must be delivered and the Trade Facilitation Agreement Facility must become operational for those who decide to implement the TFA. Similarly, there was a clear desire that the other Bali decisions - particularly those concerning the LDCs - must also be delivered.
 
But in the conversation, a large number of questions were raised: How exactly would this happen - how would scenario 3B be developed? How can we be sure that section 2 is delivered? How can we ensure that any such approach is only transitory measure leading to multilateral solution in the longer term? What happens to the other Bali decisions - how would they be taken forward - and what assurances can be given on this? Is it possible to leave the door open to get the full implementation of the Bali package at a later stage? Does this set a precedent for future negotiations? And how do we ensure that such an undertaking would enable the resumption of work on the post-Bali work program?
 
"So this is where we are today. The question we must address now is how we should proceed. And the answer must come from you," Azevedo told the members.
 
Pointing out that there are just a few more weeks until the December General Council meeting (10-11 December), he said that at that General Council meeting "we have to be clear about how we see the future of the organization. At a minimum we have to decide on how to proceed with the post-Bali work program mandated by ministers in Bali."
 
The D-G highlighted a series of major international meetings between now and then, and which he planned to attend: the Second United Nations Conference on Landlocked Developing Countries; the APEC trade ministers' meeting; the G-20 leaders' summit; the East African Community leaders' summit; and the African Union trade ministers' meeting.
 
His intention is to seize these opportunities to discuss the situation here at the WTO. He urged the members to continue talking to each other and think about the scenarios that he has outlined. He said that together with the General Council Chair, he will continue his consultations with members, with a focus on the two or three weeks directly before the General Council meeting.
 
Speaking on behalf of the African Group, Lesotho, referring to the current impasse, said that the cardinal principle of pursuing consultations with an aim to break the back of the current impasse should be the center of Members' attention.
 
The continental recognition of the importance of both trade facilitation and food security is well documented in the Summit decisions of the African Union, it said, adding that this leaves the African Group with no other option save for a desire to see a positive resolution of the impasse.
 
As for the other Bali Decisions, the African Group continued to maintain the position that these decisions should not be held at ransom pending the resolution of the impasse.
 
The Group failed to see the logic behind apportionment of blame concerning the current impasse yet by the same token the other Bali Decisions including the LDCs issues, which in effect are non-binding, are held at ransom.
 
Clearly there is a gaping question on the moral conscience and sensitivity of Members to the issues of interest to the most indigent Members of the WTO particularly because they are not the source of the impasse, said the African Group.
 
The view of the African Group is that "there is only one source of our mandate in carrying out our work and that is the Bali mandate. There is no declaration of failure on food security and trade facilitation by those members undergoing consultations. For that matter, [the] Bali mandate is the only relevant mandate for our work."
 
Uganda, on behalf of the Least Developed Countries (LDCs), said that "none of the issues of interest to us were ever captured in binding language in Bali. In fact, the Ministers in Bali had elected that for issues such as ours, priority should have been accorded to them. That never was. It is now less than forty days to the appointed deadline."
 
Uganda reiterated that "time is not on our side in the preparation of a post-Bali work program. A lot of water has gone under the bridge. We have engaged in discussions that have not been reduced to text."
 
However, instead of a work program, there is a series of circles that do not seem to answer nor speak to the LDCs' specific needs and interests. "It was never the intention of our forefathers for our needs and interests to be put at the periphery. In fact, on the contrary, they pledged themselves to seek to place our needs and interests at the heart of the Work Programme."
 
The LDCs' view therefore is that everything else "should not necessarily revolve around the circles the way they were presented to us. Why are we not asking what it is that we can do for LDCs as the starting point of reference? For once let this Organisation change its narrative. It was never meant to deliver for one group of members. On the contrary, it was meant to deliver for developed, developing and least developed members alike."
 
The LDC Group said that it has heard from some that they would not seek to hold LDC issues hostage because of the current impasse. It welcomed such positive statements of solidarity, and urged members to take a leap of faith and move beyond the statements of solidarity.
 
Uganda noted that the LDCs had submitted a collective request on the services waiver in July, and that they are working on holding the high-level meeting in mid-January 2015, where non-LDCs in a position to do so would indicate areas where they would grant preferences.
 
Highlighting that this is one of four outcomes for LDCs in Bali, Uganda expressed hope that members will be in a position to turn these into concrete preferences to LDCs during the high-level meeting in mid-January.
 
Specifically on the current stalemate, the LDCs' view is that the issues characterising the impasse are not insurmountable. It urged all parties to remain actively engaged with the view to an expeditious resolution of the same, taking into account the interests of all the parties concerned.
 
The LDCs group is committed to the full implementation of all Bali outcome decisions including but not limited to the TFA. Its view is that what "we are seeing manifested today is a symptom of a major underlying systemic current. The huge imbalance in the way we negotiate and the way we conduct our business."
 
"... is it possible that had we adopted at least one binding outcome out of the many developing and LDC decisions in Bali; could we have been where we are today, where we have this high degree of mutual mistrust and suspicion," it asked, adding that it is not sure.
 
"We therefore have to find a way of curing this malaise with the view to changing the way we negotiate, as opposed to our rules of procedure."
 
In concluding, Uganda said that the LDCs strongly support multilateralism. It is inclusive and transparent. Plurilaterals are isolationist and undermine multilateralism.
 
"We should not forget that in the past, members have pursued plurilateral agreements seeking neither prior approval nor blessing from this house. They continue to do so today. What is the difference this time round? I am not even sure that we have exhausted all the tools that multilateralism has put at our disposal." The LDCs and their issues should not be sacrificed, Uganda stressed.
 
Kenya, on behalf of the African, Caribbean and Pacific (ACP) Group of countries, said that the collective view of the ACP Group is to urge the main parties in the impasse concerning the Bali decisions on Public Stockholding and Trade Facilitation to redouble efforts to resolve the matter expeditiously.
 
At the same time, it added, the Membership of the WTO should continue the ongoing work to implement other Bali decisions, including the Bali declaration provision to define a post-Bali work program. LDC decisions and other work in the WTO should not be held to ransom. In fact, other decisions, in particular the LDC decisions, should be prioritized and not linked in any way to the impasse.
 
There is need to quickly roll up our sleeves, and in a bottom up approach, work towards finalising a Post-Bali Work Program. "The Doha Declaration, the July Framework, and the Hong Kong Declaration are all existing mandates from Ministers that continue to guide our work on the DDA negotiations. In this regard, Members should be tabling their ideas on issues central to concluding the DDA with or without a post-Bali work program."
 
Kenya noted that a lot of material and work is already on the table in all the areas, which provides the basis for defining a post-Bali work program.
 
As it had highlighted in its principles document earlier this month (JOB/TNC/41), the ACP Group was not part of the breakdowns in 2008 and 2011. "We have always remained constructive and in fact played a pivotal role in arriving at the Bali package agreed upon last year."
 
The ACP believes that the momentum must be restored. The founding fathers of the WTO created built-in rules to deal with a lack of consensus. It urged Members to uphold the legal commitment of those founding fathers, under the same rules, to continue the practice of taking decisions by consensus. (This is seen as a reference to the second sentence of Art. IX: 1 of the WTO treaty that provides for decisions by voting where consensus is not found).
 
Kenya also urged a quick resolution of the impasse over the Public Stockholding and TF Decisions in a manner that maintains the core principles of trust, inclusiveness, and commitment to multilateralism.
 
In its statement at the HOD meeting, India said that it could not agree more with the statement that "the present situation is a manifestation of the huge imbalances in the way we have functioned. It is high time that the needs and interests of the poorest of the poor are brought center stage in this house."
 
It reiterated that "we have faced several challenges in the past, both under the GATT system as well as in the WTO. But, we have also managed to overcome most of them successfully and move forward respecting the needs and interests of all members. We therefore remain optimistic and do not subscribe to the characterization of the present situation by some members as a ‘doomsday scenario' or an existential crisis for the multilateral trading system."
 
India said that it is hopeful that members would be able to show flexibility and understanding towards each other's concerns to enable further progress. On its part, it is prepared to take a step forward towards an acceptable resolution of the issues before us, in a manner that meets the aspirations of the membership.
 
On the suggestions by some members of exploring alternative approaches for the implementation of the Trade Facilitation Agreement, India once again urged members "to abjure the temptation of seeking alternative approaches without assessing carefully the systemic implications of rearranging our founding value system, enshrined in the Marrakesh Agreement that underpins the principles and objectives of the multilateral trading system."
 
India firmly believes in the multilateral trading system and remains fully committed to its objectives, and to ensuring that it works for all. It strongly urged members to advance discussions on all non-binding decisions in the Bali package "so as not to lose time as we try and resolve the current situation". It reiterated its commitment to the implementation of all Bali decisions.
 
The post-Bali Work Programme towards a balanced and successful conclusion of the DDA must also receive due attention of the membership, said India.
 
That an agenda for development should take almost thirteen years to negotiate goes against the very basis of the Marrakesh Agreement which recognizes inter alia, that there is need for positive efforts to ensure that developing countries, especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development, India added.
 
South Africa associated itself with the statements made by Lesotho on behalf of the African Group, Kenya on behalf of the ACP, and Uganda on behalf of the LDCs.
 
South Africa's commitment to the WTO - and to multilateralism - is premised on the core, founding principles that bind this organisation and includes, notably, the full participation of all Members in all its decision-making processes.
 
"We hold fast to agreed negotiating principles that facilitate equitable and balanced outcomes, and we are particularly attached to the vision set out in the Doha Declaration that recognises that the majority of WTO members are developing countries, and that we should ‘seek to place their needs and interests at the heart of the Work Programme'".
 
The recent exchanges on the question of public stockholding and trade facilitation suggest that a resolution "is not out of reach and, therefore, it would be incumbent on us all to do whatever we can to support efforts towards a positive resolution of the matter - as soon as possible."
 
South Africa encouraged the central players to engage directly to find a durable solution that - in the first place - serves the food security needs of millions of poor people around the world. It would be a serious indictment against the organisation if a solution to this matter is not found, particularly when a solution appears to be possible, it added.
 
"The initial consultations we have had this week also seem to suggest that most Members are ready to pursue further work on the other Bali Decisions, particularly on those rather modest decisions in favour of LDCs. South Africa gives its support to this effort as the LDC issues have languished despite the Bali Declaration injunction that we prioritise work in areas where legally binding outcomes were not achieved."
 
South Africa added: "We need to ‘catch up' in these areas, and we hope that Members do not compound current difficulties by continuing to refuse to constructively engage on other issues, including on the post-Bali work programme, until the public stockholding and trade facilitation matters are settled."
 
The final question posed to the Membership on "the future of the negotiating pillar of the WTO" is of serious concern to South Africa, because it appears to signal the beginning of an effort to further erode the principles and legal framework that underpin the WTO.
 
The proliferation of plurilateral and regional arrangements already marks a retreat from multilateralism, and this organisation should not be entertaining discussions that would encourage non-multilateral and non-inclusive outcomes, South Africa emphasised.
 
South Africa said it supports multilateral approaches to trade negotiations in the WTO in which decision-making is by consensus and in which the single undertaking principle is preserved.
 
"We cannot lightly enter a discussion that would lead to questioning the very foundations of multilateralism, and we would not support any approach that over time replaces the existing inclusive and participatory formats for negotiations that are far better suited to advancing the interests of all Members in a balanced and equitable manner," it said.
 
China said that it is deeply concerned over the current crisis. It noticed that some people are questioning whether the Bali package could be duly implemented. It also noticed that some other people are losing patience and trying to explore other options.
 
"The Bali Package represents a delicate balance of interests achieved through consensus among all Members. We have no reason at all to break such balance or ignore the decisions and mandate made by our Ministers in Bali last December."
 
The TF implementation should be multilateral in nature and let all the Members benefit and the overwhelming majority of WTO Members to participate. The door should be open to all without any condition, said China.
 
"We must make sure that any new ideas must be conducive to promoting the multilateral trading system, conducive to strengthening the solidarity and trust among members and conducive to finding solutions that must be the multilateral and continuous process of Bali and eventual conclusion of the Doha round."
 
China believes that any discussion of the TF implementation outside the WTO is counterproductive, and it will not join such discussion. "To translate the multilateral agreement into a plurilateral one is not a good idea either."
 
In the most exceptional circumstances, should TF be moved as the continuous process of Bali on a multilateral basis, all the other elements in the Bali Package should follow and be seriously moved ahead. In this regard, concerns of the least developed members should be the top priority of the work, it said.
 
According to trade diplomats, Cuba stressed the need to fulfil the Bali mandate, adding that plurilaterals are not acceptable.
 
Venezuela called for all the Bali issues to be implemented. It said that plurilateralism saps the multilateral trading system, trade diplomats added.
 
According to trade diplomats, the US said that there is need to be realistic, and that it is less and less hopeful of finding a solution to the impasse, while Chile stressed on the need to implement the Bali package. Japan said that it is prepared to consider alternatives, trade diplomats said.
 
In its statement, the European Union said that it deeply regrets the decision of individual Members not to implement the consensual decisions taken by all Ministers in Bali.
 
It maintained that this is having already in a visible way a profoundly negative impact on the entire multilateral system. The timelines agreed in Bali and the trust created by MC9 have been severely disrupted, if not entirely lost already.
 
According to the EU, what is particularly troubling today is to see those very Members who are at the heart of the current crisis trying to divert attention from the essence of the current stalemate and convince others to forget about the compromise achieved in Bali, to dismiss the deal reached and to pretend to go back to business-as-usual while in fact nothing can move forward. This is simply not possible, it said.
 
From the EU's perspective, there is one solution to the current crisis: "we need to make good on the commitments made in Bali and implement them. This is the one solution that is in the interest of each and every Member of this organisation. The Trade Facilitation Protocol should be adopted while negotiations resume on the post-Bali work-programme and on a permanent solution to the public stockholding issue. This is the only approach that can allow us to advance on all of these issues, in the best interest of all."
 
The EU said it remains fully committed to the multilateral system and to this organisation, and has a strong preference to finding a multilateral solution to the current stalemate.
 
While those at the origin of today's situation should also be responsible for putting forward acceptable solutions, nothing of the sort has been done up to now. In this situation, business-as-usual is not possible, it said. At the same time, the EU said it feels strongly that a collective effort needs to be made to minimise the impact of the current situation on those countries depending the most on a functioning multilateral system.
 
In this context, it is ready to continue its engagement on the follow-up and implementation of the LDC and development decisions taken in Bali which are set out in Part 2 of the Declaration.
 
The EU said that it should be well understood by all that the current situation cannot last forever. Each WTO Member has to of course continue defending its trade interests, but there is a fine line between negotiating tactics leading to success and to disaster. "We are perilously close to the latter."
 
In these circumstances, the EU as well as other WTO Members will evaluate its options and see how best to move forward and how best to salvage the years of work that went into the preparation of the Trade Facilitation Agreement.
 
The EU said that it has a clear preference to achieve a multilateral Trade Facilitation Agreement. Anything less can only be seen as a temporary measure on the road to the full implementation of the Ministerial Decision on Trade Facilitation. Only once a multilateral outcome is secured, can the trust that is necessary to move on the rest of the DDA be rebuilt, it said. +