TWN Info Service on WTO and Trade Issues (May16/10)
16 May 2016
Third World Network

WTO Chairs' reports reveal continued differences on key issues
Published in SUNS #8238 dated 11 May 2016

Geneva, 10 May (Kanaga Raja) -- Reports by the Chairs of the various WTO negotiating groups on their recent discussions - in particular on agriculture, non-agricultural market access (NAMA) and services - have revealed continued differences among the Membership on the key issues.

At an informal Heads of Delegation (HOD) meeting on Monday (9 May), convened by WTO Director-General Roberto Azevedo, the Chairs of the various negotiating groups reported on the recent discussions that they had held on the work going forward post-Nairobi.

The D-G also reported on his recent consultations, both in Geneva and in his various bilateral visits to capitals in the past weeks.

In their interventions, a number of delegations spoke on their priorities for the work going forward, with several developing countries highlighting the importance of agriculture, in particular the issue of domestic support, the development dimension and Special and Differential Treatment (S&DT).

REPORTS OF NEGOTIATING GROUP CHAIRS

According to trade officials, the Chair of NAMA negotiating group, Ambassador Remigi Winzap of Switzerland, referred to the recent open-ended meeting of the negotiating group and said that many members are looking for a foothold, and to try and find ways to narrow their differences.

The largest group of members, Winzap said, would like to continue to pursue an agreement on NAMA in the Doha context. Others took either an indifferent or defensive position, usually in support of industrialisation policies.

Among the issues raised by Members were ways of adjusting the current level of ambition. They did not want sequencing of issues (namely, that NAMA should stand on its own), and there should be less than full reciprocity for developing countries and special and differential treatment (S&DT).

Non-tariff barriers (NTBs) should also be addressed, although it was on the tariff side that most Members talked about their preferences. Members also mentioned improving predictability by reducing ‘water' (between bound and applied tariffs). But it is important to get the balance right and an outcome that would help as many countries as possible.

According to the Chair, among the NTBs that were mentioned were coherence with regional trade agreements and labelling.

He said many Members are looking for ways to advance the negotiations - they are looking at it from different perspectives, but they are also making linkages between NAMA and market access in agriculture.

The challenge is how to build convergence across this diverse group of opposing views, keeping in mind that without an outcome in other areas there can be no outcome in NAMA and vice versa, he said.

The Chair of the agriculture negotiations, Ambassador Vangelis Vitalis of New Zealand, said there was a shared understanding of the objective among Members, which is that agriculture should be part of any outcome at MC11 (in 2017), and that there is discussion with respect to the negotiating mandates of Nairobi and of Article XX (of the Agreement on Agriculture), which calls for continuance of the agriculture reform process, as part of the built-in agenda of the Uruguay Round.

According to the Chair, there was concern expressed by Members about rising trade protectionism as well as the impact of preferential trading arrangements on the multilateral negotiations.

A number of references were made to the Sustainable Development Goals, including Goal 2 which has as an objective, the elimination of export subsidies, something which the Chair said, Members have already achieved.

He also pointed to the discussion on the challenge of the once-in-two-years ministerial conference. There are also the known ‘knowns' - the domestic political cycles that countries go through that can lead to some concerns about trade, among the electorate of members.

He also highlighted the importance of understanding clearly where Members are going in the negotiations here in Geneva, because this will have an impact on domestic policy reform. Many Members also spoke of the value that they attach to the multilateral trading system.

There was a discussion on the substance, said the Chair. Last September, Members spoke about their positions on market access and domestic support and took very hard positions on these. It was the Chair's sense that Members are more willing at this stage to try and find pragmatic ways forward.

The Special Safeguard Mechansim (SSM) and public stockholding for food security purposes are very high priority issues for a number of Members, Vitalis said, adding that for many others, their positions on these issues have not changed.

He also said that domestic support is a clear priority for the Membership and there was a discussion whether this might be a target for MC11. There were many Members who said that this would be a good idea.

But in terms of specific ideas on how to move out of the rut that we have been on this issue, we do not have these proposals as yet, said the Chair.

According to the Chair, one of the biggest problems that is hurting the domestic support negotiations is that it is difficult to know where we are because only 24 members have actually kept their notifications up to date. This was an embarrassing situation.

With respect to market access issues in agriculture, the Chair said that Members were talking about converting to ad valorem duties, as well as concerns about preference erosion in the context of preferential trading agreements.

He said some Members do not want to take up export competition again as it would no longer be helpful, while others are making this a high priority. Implementing this and the other Nairobi decisions, is very important for many Members.

On other issues, the Chair said some Members wanted to talk about export restrictions, SPS measures, private standards, subsidies for bio-fuels, and GIs. But these are not issues on which there is a consensus emerging, he added.

The Chair of the services negotiations, Ambassador Gabriel Duque of Colombia, said that at the 3 May meeting of the Council for Trade in Services in Special Session, there was a strong show of support for the importance of services to growth and development.

There was discussion about narrowing the difference between what governments commit in the WTO and what their actual regime is, and that there should not be sequencing, which is detrimental to these negotiations.

According to the Chair, these are challenges that delegates are still wrestling with. There are a number of delegations that say that the services negotiations are lagging behind other areas, and that it was important to narrow differences between commitments and existing regimes.

There is a willingness to talk about domestic regulation. Members are prepared to do some brainstorming and are prepared to discuss new approaches. S&DT is going to be very important, he said.

There was discussion as well about putting forward new offers, as well as discussions about Members perhaps taking a sectoral approach to the services negotiations. Members wanted revised and improved offers with flexibility for developing countries.

Some Members called for preserving the DDA architecture, while others said new approaches were needed. Developing and least-developed country decisions that came out of Nairobi should be implemented.

According to the Chair, Members were also talking about services with respect to e-commerce. Some delegations talked about having a services trade facilitation agreement.

There was a lot of discussion across the board and for many delegations there was a sense of urgency and worry about the impact of a further delay.

The Chair of the rules negotiating group, Ambassador Wayne McCook of Jamaica, said there was a reflective mood post-Nairobi. There is a collective appreciation of the importance of moving forward and finding solutions.

Many delegates emphasised how important it was to get progress in rules. Some have called for progress in specific areas, while others said that it was important to have balance.

The Chair informed that there will be a meeting of the group on 25 May where more discussions will take place.

He said there was quite a lot of discussion about the importance of getting an agreement on fisheries subsidies, while others called for an agreement on anti-dumping. Yet others called for an agreement on horizontal subsidies.

There was also a discussion on taking a multilateral versus a plurilateral approach, as well as on whether there should be a linkage between rules and other areas.

According to trade officials, the Chairs of the Committee on Trade and Development in Special Session, the TRIPS Council in Special Session, Committee on Trade and Environment in Special Session, and the new Chair of the Dispute Settlement Body in Special Session briefly spoke at the HOD meeting.

The Committee on Trade and Development in Special Session will be meeting later this month.

On the discussions on the GI register for wines and spirits in the TRIPS Council Special Session, the TRIPS Chair said that Members are reflecting and there is a lot of watching as to what is going on in the other areas.

The Chair of the Committee on Trade and Environment in Special Session said that he has not yet been approached by anyone saying that they have new ideas.

REMARKS BY THE DIRECTOR-GENERAL

According to trade officials, D-G Azevedo mentioned his visits to various countries and of his meetings in the visits with a lot of stakeholders as well as heads of state and government.

When things start to pick up a little bit in the second half of the year, he plans to devote his time to working with members on trying to flesh out more concrete positions.

It was extremely important now that Members implement the Bali and Nairobi outcomes and this includes export competition, cotton, LDC issues, trade facilitation, and the SSM and public stockholding.

Members need to build on these outcomes and advance the negotiations, he said, adding that there has been a significant increase in the level of interest in our work since before Nairobi.

Certainly, this is true in the business community. He pointed to an upcoming meeting on 30 May, and said it was his effort to facilitate discussion between members of the international chamber of commerce and B20 with the WTO membership.

The idea is to have small, medium and large companies from developing and developed countries coming to Geneva to discuss among themselves what they would like to see, and then to discuss it with members. There may be an opportunity to put forward some interesting suggestions.

Azevedo was pleased with the change in tone that he has heard from the members. It is more positive than what he has heard in quite some time. There is a lot of ideas about process and substance, but we are not getting too many clear examples of these coming forward as proposals, as yet.

There is need to find ways of overcoming members' differences, he said, adding that with respect to the Doha Round, he has not heard anything that would be characterised as a breakthrough.

According to Azevedo, for two years we did not have success on this. The differences are not really about substance, they are much more about politics. He has not heard any ideas at all on how that process can move forward.

The D-G said that there are also ideas that are being put forward that many Members would like to support, some of these are inside the DDA like fisheries subsidies. Others are not, like competition policy, small and medium sized enterprises, investment, e-commerce, private standards, and NTBs.

"We need to get a much greater specificity on this," he said, adding that e-commerce for example could cover an entire universe of potential issues. So what exactly do Members mean on this?

The D-G also mentioned the importance of timing and the process, saying that with respect to timing, if we are to deliver on results by MC11, we need to begin to establish our priorities as soon as possible.

We know that the issue of public stockholding for food security purposes is an issue for MC11. We don't have unlimited time to find other issues, if there are other issues, he said.

It needs to be a proponent-driven process. He also said that he is a proponent of multilateral negotiations. He suggested that any discussions that begin in the non-Doha areas be open and inclusive.

Not everyone will be ready or willing to participate in all the discussions. This needs to be recognised and Members will need to take on board the different circumstances of different members.

He said that he is hearing loud and clear from capitals that we need to keep delivering. That we need to build on the success of Bali and Nairobi and we need to begin to define the outlines of what we might achieve by MC11. Our period of reflection must soon be over, said Azevedo, adding that Members need to be more specific on what they would like to see.

VIEWS OF MEMBERS

According to trade officials, Paraguay said that small steps can be helpful to make progress, but there is need to make sure that things are balanced and are done in a useful way. Agriculture is the key and the SDGs could be a good guidance.

On market access in agriculture, Paraguay said tariff peaks, tariff escalation, SSM and quantitative restrictions should be looked at. Domestic support is extremely important.

South Africa said MC10 had made an important contribution and advanced the DDA on export competition. There is need now to begin to look for ways forward. What is clear is that some members challenge the DDA model and the notion of S&DT, whereas most developing countries are not prepared to give up the DDA mandate and possibly expose themselves to more onerous demands from other countries.

We need to carefully assess how we go forward and we need more time to reflect on the best ways to move ahead, but one idea should clearly articulate the importance of development and S&DT that must be included, South Africa added.

The European Union said that Nairobi was a major success and there is need to start building on this. The period of reflection has been useful and necessary but we now need to move from thinking to acting. We don't want to drift, we want to start preparing for MC11 now. There are those who think we should focus on an ambitious outcome with one or more core areas covered and there are those who think we should try for something small.

The EU favours a more ambitious outcome. There is need to address domestic support in agriculture and public stockholding. Beyond this, there needs to be a discussion on services, fisheries subsidies, as well as good progress in other areas.

But the Nairobi Ministerial Declaration (NMD) also says that other areas of interest to WTO members could be taken up, it said.

Japan said that there is need to move off reflection and into acting. Cutting-edge trade liberalisation is happening elsewhere, whether we like it or not. The world is changing very fast. Digital trade and global value chains go beyond borders and existing multilateral rules.

There is need to begin to find areas where we can reach agreement at MC11. The WTO is a multilateral institution and the goal is always on a multilateral solution. But if multilateral outcomes don't work, plurilateral outcomes like the Information Technology Agreement (ITA) which are on an MFN basis are the second-best option.

According to Japan, while S&DT is important, some developing countries have some of the world's most competitive industries. Should they get S&DT? There should be a needs-based approach to the question of S&DT.

Japan would be interested in talking about e-commerce and fisheries subsidies, which is one of the SDGs.

The United States said that there is need to consider what the path forward is. The idea of having discussions has been useful. This reflection period has been useful, but we need to show a little bit more engagement.

The US said it is determined to conclude the environmental goods agreement (EGA) by the G20 leaders' meeting to be held in China. A group of members has already started to move towards this outcome.

On fisheries subsidies, the US said that this is an area that cannot wait. Fish stocks are dangerously depleted and it is an area that cuts across the interests of developing and developed countries. Seeing that a multilateral negotiation was not possible in Nairobi, a group of 28 members put together an approach on fisheries subsidies that they think could make progress.

On the question of S&DT, the US said that there are certain approaches to this issue that it is willing to look at. But there needs to be a better discussion about development issues more generally. In the Doha era, this was difficult to do. But now they need to be looking at this.

On agriculture, services, NAMA and development, the US said that these are still very important issues. We need to find ways of moving these issues forward. We have to be creative. The US said that it did put forward an idea on domestic support based on all major subsidisers trying to find ways to contribute.

There is need to look as well at agricultural market access, said the US, citing the World Bank as saying that 90% of the distortions in agriculture are not caused by subsidies but by tariffs, and that developing countries collect 70% of their agricultural tariffs from other developing countries.

The issue of agricultural market access is not a North-South debate as the SSM differences have made clear, the US claimed.

On MC11, the US said that it is too soon to begin to prepare for an outcome here. It is important to recognise that some ideas may not fit into a two-year cycle.

India said that the period of reflection has been valuable. It has given members a chance to assess. India has been active and will continue to be active. The efforts to find a way forward must come through a member-driven process. Progress is best made through the submission of written proposals.

The Bali and Nairobi ministerial meetings produced results; they may not have been optimal, but they did produce results. Implementation of these outcomes is important.

On agriculture, India said that there was progress made on export competition, and implementation of this is going to be very important.

On services, it said that this is a new frontier for many developing countries. India said that there is need to follow up to make progress in each of the four modes of supply.

India said that even though there are difficulties in the DDA, pursuing things multilaterally is preferable.

Brazil said that it is actively engaging and that it has been talking with capitals. It is prepared to engage with new proposals, if and when that time emerges. It is looking to have more trade.

According to Brazil, there is a linkage being made now between development and S&DT. S&DT is not a problem for development. It is something which is helpful in staging implementation of reforms.

In terms of what hinders development, it is tariff peaks, domestic support, and tariff escalation. It is not S&DT, Brazil said, noting that S&DT was a very important component of the Trade Facilitation Agreement.

On agriculture, Brazil said that domestic support and market access are very important. It is ready to engage on NAMA and talk about market access there if market access is being discussed in agriculture.

Argentina called for implementation of the NMD as soon as possible, particularly with respect to export competition. It saw domestic support as the most important issue. It is also committed to fisheries subsidies. It would like to see this as an outcome for MC11.

Benin, on behalf of the LDCs, referred to the retreat that the group had held recently in Montreux. Through this retreat, the LDCs are improving their prospects for putting together some new ideas and new proposals. There needs to be more progress in cotton, agriculture, duty-free quota-free market access for LDCs (DFQF), and on the services waiver.

Mexico expressed concern that trade was growing slowly. It is now more of an issue in the political discourse. Governments now are finding that trade is politically sensitive, and trade is being seen as something dangerous by some members of the electorate rather than as an engine for growth. It said progress can be made in areas like rules, and fisheries subsidies.

China said that reflecting is enlightening, even exciting, but sometimes painstaking. But at the end of this process the truth is that nobody has changed their negotiating position.

In an apparent reference to the US proposal on domestic support, China said we should refrain from making proposals that have already been rejected. It is not possible for one member to forcibly change another member's position without changing their own position.

The exercise needs to be bound in the NMD. S&DT is extremely important, it said. All the Doha issues should be looked at. It is open as well to exploring non-Doha issues.

EGA is not a multilateral exercise and it is not a G20 business, so it should not be brought here or to the G20, it underlined.

Canada said trade is a contributor and can be a multiplier to help domestic policies but is not a solution in of itself. Issues that have been considered to be outside of the Doha Round can actually help to find solutions in the Doha issues, including in agriculture where satellite technology has helped farmers in developing countries to increase their output many-fold if they can access weather data through GPS. +