TWN Info Service on WTO and Trade Issues (Oct07/17)

22 October 2007

Sharp Differences at WTO General Council

The WTO General Council meeting on 9 October showed up sharply different views on how to proceed with the Doha negotiations for the rest of this year.  The differences were on both substance and process.

A major issue is how to deal with the NAMA negotiations.  The developed countries want the negotiations to proceed, using the paper of the NAMA group Chair as the basis, and especially that his ranges for the tariff-reduction formula coefficients and for flexibilities be accepted.

But a joint paper by four developing-country groupings showed that a majority of developing countries cannot accept the figures in the Stephenson paper.

The United States and European Union were quick to go on the attack, with the US Ambassador calling the proposal disappointing while a trade official in Washington said the proposal is a gigantic step backwards that could signal the end of the Round.

In truth, the proposal could have been what the US and EU were waiting for to trigger an intensification of the "blame game" that already started weeks ago with the USTR Susan Schwab's accusation that a few dissident countries (which she named) were out to scuttle the Round.

Below is a report on the General Council meeting, which was published in the South North Development Monitor (SUNS) on 11 October 2007.

It is reproduced here with the permission of the SUNS.  Any reproduction or re-circulation requires prior permission of the SUNS (sunstwn@bluewin.ch).

With best wishes
Martin Khor
TWN

Trade: Differences on Doha evident at WTO General Council
Published in SUNS #6342 dated 11 October 2007 
By Martin Khor, Geneva, 10 Oct 2007

Different views on how to proceed with the Doha negotiations for the rest of this year emerged at the WTO's General Council meeting on 9 October, with the differences being on both substance and process.

A major issue is how to deal with the negotiations on NAMA (non agricultural market access). The developed countries want the negotiations to proceed, using the paper of the NAMA group Chair, Ambassador Don Stephenson, as the basis, and especially that his ranges for the tariff-reduction formula coefficients and for flexibilities be accepted.

But a joint paper by four developing-country groupings showed that a majority of developing countries cannot accept the figures in the Stephenson paper. The presentation of their formal proposal was the highlight of the Council meeting (See separate article).

The United States and European Union were quick to go on the attack, with the US Ambassador calling the proposal disappointing while a trade official in Washington said the proposal is a gigantic step backwards that could signal the end of the Round.

In truth, the proposal could have been what the US and EU were waiting for to trigger an intensification of the "blame game" that already started weeks ago with the USTR Susan Schwab's accusation that a few dissident countries (which she named) were out to scuttle the Round.

The WTO Director General Pascal Lamy briefed the Council on Doha's progress, reiterating that completing the Round is technically possible but also a political must. To this old message was added the spice that the process is now text-driven (he mentioned not only the agriculture text and the controversial NAMA text but also a new text on services, also controversial, on which consultations are being held).

Lamy also said he was ready to "undertake any meetings of a cross-cutting nature" which might help towards agreement across the board, and that "direct ministerial involvement might also be necessary at some point."

This, to some, was pointing towards a more active Lamy role in bringing the Doha pieces together and to a mini-Ministerial meeting at the WTO at a date which is being speculated about in the corridors.

Following the DG's statement, South Africa's Ambassador Faizel Ismail presented the NAMA proposal of the NAMA 11, the SVEs, and the ACP and Africa Groups. Though they were not co-sponsors, the LDC Group (represented by Lesotho) and China supported the proposal from the floor.

Lesotho also stressed the LDC positions on NAMA and agriculture and on services it took to task partners who are shying away from opening Mode 4 (movement of natural persons), thus depriving opportunities to LDCs.

Venezuela's Ambassador, Oscar Carvallo, responding to Lamy's reference to the need for text-based discussions said that there was a problem there, since there was only one text (agriculture) which could be the basis for negotiations. The NAMA text had fundamental problems and what is needed is not revision, but another text which is in accordance with the mandates.

As for services, Venezuela insisted that no text was required since there was already Annex C (on services) in the Hong Kong Declaration. And regarding Lamy's reference to horizontal or cross-cutting meetings, Venezuela also said this not needed now since there was only one text.

Jamaica's Ambassador, Gail Mathurin, speaking for the ACP Group, asked that the process be transparent and inclusive and that primacy be given to the multilateral process. SDT must remain central and the ACP group would not accept an approach in which development is sidelined.

On agriculture, the important issues for ACP include domestic support, SP and SSM, tariff escalation and strong action on cotton. The preference erosion issue is key and the ACP cannot sign up to a deal if it does not take up this issue adequately.

On NAMA, the group supported the South African statement while on services there is need for flexibility for developing countries while developed countries should make offers that benefit developing countries.

India's Ambassador, Ujal Singh Bhatia, said that India an open mind on a possible Services text but such a text should limit itself to recording the progress made so far and on operationalising Annex C.

"For us, the real issues in the Services negotiations are twofold," said India. "Firstly, we still wait for firm and clear commitments from developed countries on the areas where developing countries have made requests. The responses so far have been quite disappointing and it is essential that this vital part of the Services mandate is fully addressed if we are to have an ambitious, balanced and sustainable outcome.

"Secondly, we need significant progress on disciplines in Domestic Regulations. In this connection, we hope to see the revised text by the month end."

On NAMA, India supported the South African statement and hoped the new paper will add balance and realism to the NAMA negotiations.

China's Ambassador Sun Zhenyu said that despite intensification of negotiations on Agriculture and on NAMA in recent weeks, unfortunately real progress has been limited.

The fundamental problem lies in the lack of progress in some key issues, in particular in the reduction of domestic support as well as on the needs to meet development dimension.

China supported the NAMA proposal presented by South Africa. It appreciated very much that the paper tries to address many development issues and it recognizes the extensive commitments by RAMs and supports more flexible treatment for RAMs in the modalities. It hoped the NAMA Chair will give full consideration to the proposal.

Barbados' Ambassador, Trevor Clarke, on behalf of the small, vulnerable economies (SVEs), said it was clear to many that differing interpretations of the Doha mandate, especially as it relates to "a development round" continue to sit as a low cloud hanging under the higher cloud of political uncertainty.

"Some persons inside this room and many more outside have long come to the conclusion that the 2001 commitments have been lost along the way - especially in NAMA, and must be restored," he said.

The SVEs attach great importance to the various mandates and principles which are supposed to guide these negotiations, including the principle of less than full reciprocity, the requirement for contributions to be measured from current bound rates and the mandate to provide further flexibilities for SVEs.

The average reductions required from SVEs should thus be consistent with these principles. Indeed, the principles are shared by SVEs and the vast majority of developing countries that have jointly sponsored the NAMA proposal.

"SVEs do not think that any member should object to the proposals contained in this paper and SVEs therefore wish to endorse the statement delivered by South Africa and urge that these principles should guide the revision of the draft NAMA modalities," he said.

Ambassador Clarke recalled that last year he supported India's call for a development audit of the proposals then on the table, in all areas of the negotiations. "That call was not heeded. Now we are seeing a text that has increased the level of concern among developing countries."

In agriculture, the SVEs are of the view that the treatment proposed for the SVEs in the market access pillar is appropriate and the group called for removal of the brackets contained in paragraph 52 of the Revised Draft Modalities for Agriculture'. There also needs to be a satisfactory solution in the area of Special Products and on the Special Safeguard Mechanism.

In NAMA, the picture is very different, said Ambassador Clarke. He reiterated that the numbers as proposed for SVEs are unacceptable and do not adequately take into account that SVEs should not be asked to make tariff cuts which are deeper than any other members - excluding LDCs and RAMS.

On Services the SVEs believe that any text should be based on the reaffirmation of Annex C of the HK Ministerial Declaration, should update relevant timelines and reflect the status of Domestic Regulation and other rules. It is necessary to have a development oriented outcome in line with the provisions of GATS Articles IV and XIX. 2.

On Rules, any text on fisheries must take into account the importance of that sector to small, vulnerable economies, specifically the small coastal states.

Brazil said a clear vision is needed on the negotiations to the end of the year. It also stressed the need to take into account the concerns of members of customs unions in the NAMA negotiations.

Argentina agreed wit Brazil that we have to be clear on the future negotiations process. It said that at this meeting, two thirds of the membership had sent a message that development is not at the centre of the negotiations as it should be. The mandates must be respected.

Bolivia expressed dissatisfaction that under the NAMA Chair's text, the cuts for developing countries are two and a half times higher than the cuts for developed countries and this is not in the interests of development and it also does not respect the policy space needed by developing countries.

The European Union wanted work to take place on the basis of both texts (agriculture and NAMA). It did not agree with South Africa's contention that agriculture sets the ambition level for the Round. It wanted to see the overall package. It was willing to work for exceptions but the NAMA outcome could not be emptied of its commercial and trade content.

The United States said it was prepared to work on both the agriculture and NAMA texts. It is now time to accept both texts, said the US.

It was disappointed with the South African statement on NAMA. The US had agreed to accept different coefficients for developed and developing countries and a hierarchy for developing countries. It was willing to work with SVEs and paragraph 6 countries but a sweeping proposal is not the best way to address specific problems.

Referring to calls for special treatment for customs unions in the NAMA negotiations, the US said the WTO is primary in the multilateral system and any suggestion that plurilateral arrangements should take precedence cannot be supported.

It also did not agree that agriculture sets the level for the Round as all elements must be taken into account. If other issues are taken as residual, it is a recipe for disaster.