TWN Info Service on WTO Issues (July04/8)

16 July 2004

Third World Network

G90 MEETING HEARS VIEWS ON JULY PACKAGE FROM G90 GROUPINGS, G20, EU AND US

At the opening session of the G90 Ministerial meeting in Mauritius, on 13 July, statements were made by Ministers representing the ACP and LDC groups, the Africa Union, the G20 (represented by Brazil and India), the EU and US.

These statements gave interesting indications of the positions and points of emphases of these major groupings on the July package, a draft of which is expected to be issued anytime now.

Below is a report of the opening session of the G90 meeting, written by Tetteh Hormeku, of the TWN Africa secretariat.

With best wishes

Martin Khor

TWN

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G90 Meeting hears views on July package from G90 groupings, G20, EU and US

TWN Report by Tetteh Hormeku, Grand Baie, Mauritius, 14 July 2004

The different perspectives and positions of some of the major groupings in the WTO were reflected by their Ministers when they spoke at the opening session of the Ministerial Meeting of the Group of 90 countries in Grand Baie, Mauritius on 13 July.

Among the speakers were the Ministers of Mauritius (representing the host country and the ACP), Rwanda (representing the African Union), Tanzania (representing the LDC Group), India and Brazil (representing the G20 developing countries), the European Commission, and the United States.    

The G90 is an alliance of African Union, ACP and LDC countries which form the membership of the G90.   The spokespersons of the various component constituencies of the G90 articulated the motivations of the group.  The other major groupings or countries sought to present themselves as friends of the G90, with many interests in common. 

Ministers Celso Amorim of Brazil and Kamal Nath of India, representing the G20, emphasised the need for continued solidarity of the G90 and G20 as important for ensuring a pro-development outcome of the negotiations under the Doha work programme. 

On the other side,  the EU representative, Commissioner Danuta Hubner told the meeting that the EU supported the formation of the G90 and shares some of its basic ideas.  On his part, the USTR,  Bob Zoellick recounted positive US initiatives in favour of G90 countries, including the US African Growth and Opportunity Act (AGOA), the Millennium Challenge Account (MCA) and others, and emphasised the need for G90 countries to work together with the US and other countries, north and south, to save Doha.

The messages of friendship from the different sides had different points of resonance with the concerns expressed by the G90 spokespersons.  The G20 representatives emphasised unity, cohesion and solidarity of the G90 and G20 members in the face of the common problems faced by developing countries as a result of the inequities and imbalances of current WTO agreements, as well as of failures by members to live up to commitments.   On their side the USTR and the EU commissioner emphasised the need for flexibility, balance and compromise, and in particular the need for the G90 to be flexible and be willing to compromise.

On their part, the G90 representatives stressed the vulnerability of their countries, their marginal role in world trade, and the need for the WTO and its July package to recognise the problems, interests and positions of their countries.  Commenting on requests that the G90 take part in “give and take” in the negotiations, the Tanzanian Trade Minister Juma Ngasongwa, stated that “give and take” must recognise the rich-poor divide and “the simple fact that the poor have already given so much and may not have much more to continue giving.”

In his welcoming statement, the Minister of Trade of Mauritius, Mr Cuttaree stated that the G90 is made up of the most vulnerable members of the WTO.  As such they stand most in need of the fair and equitable multilateral trading system.  He pointed out however that the global system as it  exists today is imbalanced and skewed against their countries, and that most G90 countries have been marginalised since the Uruguay Round.  This makes unacceptable a DDA which is anything other than developmental. 

Minister Cuttarree said that G90 members are in favour of a fair, equitable framework, and it is in this light that they view the July framework.  G90 members approach the negotiations with a positive framework, with the understanding the negotiations are a process of give and take.  However, the outcomes of the negotiations cannot command legitimacy if they go against the interests especially of the vulnerable countries.  In such an event the development dimension of Doha would just be rhetoric.  He hoped that all partners are of this view.

Speaking for the Least Developed Countries, the Minister of Trade and Industry of Tanzania, Dr Juma Ngasongwa, stated that LDCs are aware of the emergence of a definite spirit of consensus and give and take that can be built upon to advance the interests of developing countries, including the LDCs, in a win-win situation for all parties.  This will be possible if on the basis of an approach that combines “rigorous analysis, steadfast defence of our core interests and flexibility to allow movement where this is compatible with our overall interests”. 

Minister Ngasongwa stated that while the LDCs had spoken their will on core issues, it is important to remind the world of its moral obligation on the major social problem of poverty which has been acknowledged, but on “which we have failed to transform our intentions into concrete action.”

He pointed out that while the “carpet of endemic poverty is rolling forward”,  the responses in terms of commitments on ODA, debt, and “addressing the development concerns in multilateral trade through tackling the supply-side constraints in a definitive manner remains more a subject of international rhetoric”. 

The minister added that addressing the social problems deriving from poverty are the issues at stake that make the negotiations in Agriculture, Non-Agricultural Market Access and the Singapore Issues the potential “deal-breakers”.  He continued that:   “ ‘Give and take’ must always consider the necessity of bridging the divide between the rich and the poor, and the simple fact that the poor have already given so much and may not have much more to continue giving.

“These are the issues that underlie the developing world’s concern with market access in agriculture and NAMA as well the development concern in trade.  They underpin the apprehensions behind a bold thrust forward for negotiations on Trade Facilitation”, he added.

The Minister of Trade of Rwanda spoke on behalf of the African Union.  He stated that African countries recognise that their national and regional developmental efforts need to be anchored in a friendly multilateral trading system.

Speaking on the motivations of the G90, he recalled that the alliance of LDCs, ACP and AU countries  originated in Doha, and was influential in the achievements of the Doha ministerial, including the decisions of TRIPS and Public Health, the ACP waiver, and the Doha development agenda itself.  However, after Doha, members were unable to get the declarations of that conference into tangible measures, and the period after Doha was characterised by slippages and missed deadlines.  At Cancun, the alliance regrouped to ensure that rhetoric on development was matched by action, which unfortunately did not happen.

The Rwandan Minister reminded the meeting of a number of lessons from the experiences of the G90 in Doha and Cancun.  Among these are the fact that strength lies in unity; that the power of argument and the legitimacy of issues can shape the international trading system to respond to the interests of developing countries;  that the alliances must exist not only during ministerial conferences, but throughout the negotiations.  The G90 meeting should provide the missing links in the efforts of the alliance

The Minister hoped that a G90 platform will emerge which will consolidate the view of the AU, the ACP, and the LDCs.  Such a platform must zero in on the critical issues, and need to be precise, focused, and flexible.  He pointed out the flexibility was not a sign of weakness but a pre-requisite for negotiation. 

The Rwandan Minister added that in showing flexibility, the G90 members will expect reciprocity from their trading partners if trade is to be given a human face.  He called all to live up to the commitment of placing development at the heart of the multilateral trading system.

The first to speak from the G20 was the Indian Minister of Commerce and Industry, Mr Kamal Nath, who noted that the bond of solidarity forged between India, indeed the G20 as a whole, and the G90 in Cancun had grown stronger.     It was his “firm belief that the G20 and the G90 are but two sides of the same coin” and that cooperation between the two groupings was vital to the establishment of a new global order, supportive of the aspirations of all developing countries.

Minister Nath said that a “historically unbalanced international trading system has denied us our legitimate opportunities for growth and development.  A system of international trade free of distortions would bring benefits to all our economies”.

He noted that the distortions in the international trade in agriculture are only the most obvious instance of the travesty of the principle of fair competition which must take account of the widely differing levels of development globally.  “The lavish support and subsidies available to farmers in developed countries depress prices internationally, and handicap the competitive ability of our hard working agriculturalists”,  he stated, pointing to example of the cotton sector and is pernicious developmental consequences for West African producers.

The minister also said that agricultural practices differed among the developing countries and even among the G20, but there is much in common among them. In some G20 countries, the agricultural sector is large and highly competitive.  In others, including India and many G90 countries, a significant proportion of the population practice subsistence agriculture.  He continued:  “We have come together to correct imbalances in ... agriculture, and I have no doubt that a cooperative strategy between the G20 and the G90 in the agricultural negotiations will maximize benefits for all of us.”

He stated that the G20 had presented constructive ideas for the framework in agriculture, relating to market access, and balance and specificity among all three pillars.  They have put ideas for a framework which would provide less than full reciprocity for developing countries, for flexibilities for special products, and a special safeguard mechanism; and to ensure that livelihood and rural development concerns of developing countries remained at the heart of the negotiations in agriculture.

Minister Nath referred to the lack of progress with the development mandate of the Doha, and to the large number of proposals submitted by developing countries on S&D which have languished for months.  He stated that “any outcome in July must present an agreed road-map, and a concrete programme of work in this regard”.  So also for the implementation issues.

In addition to seeking market access in developed countries, the Minister called on developing countries to expand trade among themselves, and welcomed the launch of the third round of the GSTP negotiations, adding that India is hopeful of achieving ambitious results which will also seek particularly to address the needs of the least developed countries.

Recognising that not all developing countries are at the same level of development, or have similar capacity to undertake multilateral trade commitments, the Minister affirmed India’s commitment to fully contribute to the meaningful realisation of the flexibilities contained in the Doha mandate to address vulnerabilities and weaknesses of developing countries.

“What we must guard against are any attempts to use this issue to foster divisions among developing countries.  I have little doubt that such divisions will only result in reinforcing discriminatory and, in some cases, unfair trade practices, to our common detriment.”

For his part, the Brazilian Minister, Mr Celso Amorim welcomed the opportunities for dialogue between the G20 and the G90 as they shared common experiences and similar aspirations and said that increased interaction among the two groups “has become all the more necessary in view of repeated attempts at creating artificial distinctions among us and changing our partnership into an adversarial relationship.”   He stressed that this must not be allowed to happen, particularly at the this crucial stage in the negotiations of the Doha Development Agenda, and expressed his conviction that the two groups could turn the tide in their favour if they built confidence at the political level and intensified coordination among their experts.

Referring to the launching of the Third Round of Negotiations of the Global System of the Trade Preferences among developing countries at Sao Paulo, Minister Amorim stated that the GSTP was a privileged instrument for further expanding the already substantial and fast-growing South-South trade.  “We understand each other’s hopes and concerns.  We view trade as a vehicle for economic and social development.   We have no colonial past.  We never exercised colonial domination.  Paternalism and condescendence are not part of our world view.  Given our common points of departure, we can easily dispense with third party intermediates to communicate among ourselves”, he added.

Amorim said further that even though the Doha Development Agenda explicitly places development at the centre of the current trade negotiations, little progress had been made so far  to give meaning to this.  “We have yet to redress the development deficit which only became more acute as a result of the Uruguay Round agreements,” he stated, pointing in particular to the implementation file and S&D items.  These issues should remain on the table for negotiations and not sent to committees to lie dormant for another decade or more.

He stressed that Agriculture was paramount for development, and noted that while developed countries have traditionally enjoyed the benefits of free trade in areas which they had comparative advantage, such as manufacturing industry and sophisticated services,  the logic of free trade was turned upside down when it came of areas of special interest to the developing world such as agriculture. 

Amorim said that the G20 was formed in the lead up to Cancun to make sure that a framework for trade in agriculture would lead to an outcome in line with the interests of the developing countries and in keeping with the Doha mandate. 

Since the impasse at Cancun, there had been encouraging signs, with the EU indicating its willingness to finally eliminate export subsidies, an important step which had prompted moves on other pillars of the agriculture agreement. 

He added, “We expect an agreement to be reached on defining a credible end date for all forms of export-subsidies - and this should include the instruments applied by the US and other countries of equivalent effects on export competition.”

On market access, Amorim noted that the G-20 had come up with a solid technical approach to handle specific circumstances.  While the developed countries had the ability to establish large social safety nets and would be able to afford the costs of necessary adjustments, this did not apply to developing countries.   Therefore, negotiations must arrive at operational and effective S&D provisions capable of satisfying the food security, rural and development concerns of developing countries which were clearly spelt out in the Doha mandate.  He stated that  “in view of its diverse composition encompassing members from Asia, Africa and Latin America, the G-20 articulated a comprehensive proposal embracing several perspectives, reflecting the concerns of exporters as well as importers of agricultural commodities”

Amorim also said the efforts of the G-20 had already changed the dynamics of the agriculture negotiations, adding that “we have successfully left behind the flawed approach of the so-called blended formula, which allowed developed countries to do nothing in products of our interest, while imposing difficult conditions on areas of sensitivities for developing countries.”

Domestic support still remained a challenge.  In this regard, Amorim stated that the directions of the Doha mandate instructing substantial reduction in trade distorting domestic support must be met.  Cotton was a special case as the devastating effects of subsidies in the rich countries affected some of the poorest countries in the world.   He said that a solid technical and political approach had to be developed regarding the overall subsidies and also the reduction of its individual components.

Referring to the issue of S&D treatment, Amorim stated that this could not treated as an afterthought, but was an integral part of the work programme.  It was essential that S&D and implementation figured prominently in the July package.  “We would favour, in particular the establishment of a specific negotiating group linked to the TNC to discuss proposals on outstanding implementation issues”,  he added.

On Singapore Issues, Amorim said:   “We shared the reluctance of developing countries to take up additional commitments regarding the so-called Singapore issues, especially in view of the lack of clarity on the decisions concerning three of them - namely Investment, Competition and Government Procurement-and their relation to the Work Programme.”  He added that it “would be in favour of formal statement to the effect that those issues (1) would not taken up in negotiations in the Doha Round in any form, and (2) will not the object of any plurilateral approach in the regular programme of the WTO”.

On trade facilitation, Amorim said that “any negotiations should not put additional burdens on weaker economies”, adding that “we share the concerns regarding technical assistance and capacity building to address resource constraints.”  It was also important to clarify the relationship between the rules to be negotiated and the applicability of the Dispute Settlement Mechanism.

Finally on the G-90 Ministerial Meeting, Amorim said that the meeting could contribute effectively to sharpen the negotiating stance of the vast majority of the WTO membership.   He said that, in important ways, the Cancun Ministerial had indirectly succeeded in reshaping multilateral trade negotiations, adding that  “the G-90 and the G-20 were at the centre of this Copernican revolution”

He called on the two groups to increase their involvement in all WTO deliberations, and not resign themselves to concentrating on a few specific concerns.  He added: “In this world of ours nothing is really for free.  One way or the other, we will finish by paying the favours that are - or appear to be - bestowed on us.  Sometimes with unilateral market concessions; sometimes with sheer political dependence.”

Furthermore, he called on the two groups to work hard together to maximise convergences and make the most of them.  “In this very unequal arena of international relations every gain has to be the result of long, arduous and fierce struggle.  Nothing is given away.  Everything has to be conquered.”    He was confident that, by remaining committed to their central goals as contained in the letter and spirit of Doha, they would achieve the substantial goal they legitimately expect.  “But this implies that we stay alert and steer away from short-term advantages derived from derogations and other illusory and elusive hand-outs.”

Amorim concluded that the G-90 and the G-20 together formed not only the majority in WTO but also represented the largest part of humankind.  “Let us take the task we have before us in our own hands.  Unity among the developing countries is the surest road to success”.

The incoming EU Trade Commissioner Dauta Hubner next addressed the meeting.  She said a year ago it would have been hard to imagine addressing the G90 and that the group had emerged from nowhere as a major force in world trade talks, adding that the “EU supported the formation of the G90 as a coalition, and supports many of your proposals”.

Noting that the DDA negotiations was at a critical stage, she said that there was a chance this week to give the world a signal that the multilateral system was alive and kicking, and that both the EU and G90 were committed to results.  She added that “in order for the Mauritius Declaration to contribute to a breakthrough in the WTO it is crucial that it is flexible enough to give latitude to negotiators in Geneva to pursue actually their work”

Hubner said that the EU supported the view of the G90 on many of the basics, including S&D and the fact that the G90 should not take on onerous new commitments; that the vulnerable economies of the G90 needed some protection; that the DDA negotiations should not ignore preferences; and on the importance of technical assistance.  She stated that all “these points of agreement need to be reflected in the frameworks for end July - and most in fact already are”.

However, she said that in a number of areas the G90 approach appeared to be “either a little too ambitious, too rigid, and in others it leaves insufficient room for manoeuvre to those engaged in the negotiations in Geneva”.

Clarifying further, Hubner said that the EU considers development as a cross-cutting dimension of the negotiations.  She added that both the EU and the G90 had proposed that in “both agriculture and NAMA, the least developed countries and other weak or vulnerable developing countries in a similar situation - basically the G90 group - should not have to open their markets beyond existing commitments, and should benefit from increased  market access offered by all the other countries.”

She also mentioned that Trade Related Assistance (TRA) and the Integrated Framework (IF) were top priorities, and that the EU was fully committed to improve  TRA delivery and make the IF a very successful instrument.  She said that it would be good if the message from Mauritius stressed the G90 expectation for improvements in the quality and quantity of assistance, and further that the G90 committed themselves to mainstream trade in their development agenda.

On the Singapore Issues, Hubner said that there was now consensus among WTO members to treat each issue on its own merits.  She said further that Trade Facilitation was clearly a useful tool for all members of the WTO and a key tool for development, and that the EU was ready to support G90 requests about possible costs of measures in the negotiations. 

Seeking to “dispel three myths”, she stated that “first, trade facilitation is about saving money, both for companies and for the customs, and not extra costs.  Simplification is cheap, not expensive.  Secondly, trade facilitation is not about access to developing country markets.  That not a target for us.  It will be mainly of value to your companies, especially small ones, trying to export.  Thirdly, even without a WTO agreement, we are already committed to major development aid projects in this area.”

She added a WTO framework would have the added value of bringing in the private sector as investors and set some targets for aid, and that this was a once in a life-time chance to negotiate some really useful procedures for companies.  She therefore welcomed the openness and flexibility that the G90 was now showing on the subject.

Hubner said that on the three other Singapore issues, the EU could go along with dropping them from the Single Undertaking and even from the DDA, but they should remain part of the WTO’s regular work.  She stated that these were important subjects and totally trade related, adding that it was hard to explain that there were rules for services due to the GATS but there was still nothing for manufacturing.   “Perhaps if they are completely de-linked from the Round we can have a more sane discussion of them, and I for one look forward to that”, she added.

She said that she saw some willingness of the part of the G90 to consider continuing work on these issues on the regular WTO programme, and if this was confirmed in Mauritius, it would be a good sign of the willingness of G90 to be constructive and compromise.  “You have to recognise that the EC has been flexible in accepting to give up negotiations on these issues in the Round.  We ask you to meet us not half way, but a quarter of the way on this”, she added.

On NAMA, Hubner said that WTO members had to make contributions corresponding to their capacity and level of development, and that tariff reduction should not be asked from the weak and vulnerable developing countries.  “What we are looking for is tariff bindings to provide predictability in world trade”,  she stated.

She said further that the EU and the G90 saw eye to eye on the issues of preference erosion and the need for others to match the EU’s everything but arms initiative.  However, she emphasised that the NAMA/Derbez text includes all these points, and therefore called upon to the G90 to look carefully at the Derbez text.  “Since your vital interests - both offensive and defensive - have been reflected in the text, my advice would be that we should avoid the risk of unravelling the text, and of throwing the baby out with the bathwater”,  she added.

On agriculture, Hubner said that the EU supported many of the ideas contained in the Kigali declaration (of the African Union trade ministers), including sensitive products, use of safeguard clauses, free access to developed country markets of LDC products, reducing tariff escalation and quotas.  She added that the EU’s proposal to put export subsidies on the table of negotiations was part of its attempt to ensure that the agriculture negotiations reflected the development dimension, and that the EU expected full parallelism in this regard.

Hubner said, however, that the EU did not fully understand the resistance of the G90 to the use of a blended formula as the basis for the negotiations in agriculture.  She stated that this formula gave most flexibility on products which were important for developing countries.  “Not agreeing on this flexibility implies reducing the advantages of preferential access”, she added.

Furthermore, Hubner said that on domestic support, the EU was ready to reduce considerably trade-distorting support, locking in place and making irreversible the major reforms of the CAP that have adopted in recent years.  “Nevertheless, domestic support which is non-trade distorting should not be affected:  we all have interests to ensure that agriculture remains part of our social fabric, and we will insist on the right to support the environment,  for example.”

On cotton, Hubner stated that the EU is fully committed that the Round should result in significant reductions in support and in tariff protection on cotton.  However, results that help the West African cotton producers, can only be achieved by including this in the agriculture negotiations.  “On its own, as a self-standing issue, I fear it will not go anywhere.  Cancun showed that”,  she added.

Commissioner Hubner concluded by saying that the EU shared the goal of harnessing the potential of global trade for the benefit of developing countries and reduction of poverty.  “The EU is ready, as shown in the Lamy/Fischler letter, to make sure that this round benefits your countries at an extremely modest price for you .. . In the European Union, you have a reliable partner”,  she said.

In his address to the meeting the USTR, Robert Zoellick,  gave his assessment on some of the core issues at stake in the negotiations.  On agriculture, he stated that with the EU statement of finally eliminating export subsidies, there was the possibility of achieving very deep cuts in trade distorting domestic subsidies, as well as significant and effective opening for developed and major developing countries alike.

He said that for the G90, there was the possibility of requests in particular areas that meet their needs, including acceptance of special and differential treatment as integral to agriculture; a general acceptance of special products and special safeguard mechanisms and the exemption of least developed countries , and perhaps other poor countries as well.  He added that while there was interest by some of the G90 countries to maintain a restricted use of food aid, it was only fair to the European Union that food aid is not used as a form of subsidy.

On cotton, Zoellick said while he would push for reforms at home and in the international context, the only way to deal ambitiously  with this was through the agricultural negotiations.   He added that “these negotiations should be able to result in substantial reductions in trade distorting subsidies, but also in substantial reductions in barriers to market access, including in some of the major textile producers  that ... will be using a lot of cotton in a world where textile quotas have been ended.  Some of them have extremely high tariff barriers, so we also need to open markets for your cotton,  and cotton of countries around the world.”  On the development aspects of the cotton issue, he mentioned that two of the West African cotton producers are already candidates for the Millennium Challenge Account.

On NAMA, Zoellick said that the goal will probably be to increase the number of tariff bindings of the G90, but hoped that they would join in terms of opening markets, not only with developed countries, but also through south-south trade, where there are great opportunities.  He added that while there is need to be sensible to the adjustment of the preferences enjoyed by G90 members, it was important that preferences are not “pitted against the notion of the Most Favored Nation trade liberalization, which has been the core of global trade opening”.

In the area of services, Zoellick said that there was the need to explore the opportunities for developing countries in this area.  He added that the World Bank had now estimated that over 50% of the GDP of developing economies was in the services industry, and that services constitute the infrastructure of development, in terms of communication, energy, transportation.  He suggested that the opportunity should not be missed  whether through working with aid programmes or with the World Bank, with integrated programmes developed to identify possibilities for developing countries to participate in services.

On trade facilitation, Zoellick said that it was in the interest of all to make progress in this area as much as in regular market access, especially because as countries adjust to ending textile quotas, many of the G90 countries would have to improve their costs in bringing goods in the market, and the timeliness of doing so in order to compete with some of the most competitive countries.  He added that therefore trade facilitation was not about trying to commit countries to large scale investment like ports or rail roads, but with the problems of customs systems, to make sure that information is shared, to add efficiencies to the rules, procedures, fairness, express shipments - all of which are becoming critical as marketers move through the cycle for their consumers more quickly.

On the development dimension, Zoellick said that while this runs throughout the work in the negotiations, the hardest task would be to strike a balance on limiting developed country requests of member of the G90 without limiting the opportunities for them.  In this regard, the main purpose of Lamy’s proposal was trying to reassure countries, and to let the LDCs, the poorest countries know, that they won’t be burdened.

Overall Zoellick said that developing countries had as much to do as developed countries, and that at this last stage of the discussions, he hoped that, rather than focus on the divisions, developed, developing, EU, US, different continents, all would come together and see where they could focus on the commonalities.  “Big or small, developed or developing, G-20, G-90, my goal for all of us, is to make sure that each of us can participate in the benefits of trade”, he added.

In conclusion he said that WTO members had only a couple of weeks left to advance the Doha Agenda at the July General Council meeting.  “And if we fail again, because we did fail the last time, I do not know for sure what will happen to the Doha Development Agenda.  I do not know whether it will be revived”, he added.

He called on the G90 to retain flexibility, for any result must reflect compromise.