TNC meet shows “stormy” ministerial ahead at Cancun

Geneva, 3 Apr (Chakravarthi Raghavan) - The informal meeting Wednesday, with participation of capital-based senior officials, at the WTO of the Trade Negotiations Committee of the Doha negotiations showed, at least judged by the interventions at the meeting, that while there is no progress across a wide range of issues and subjects in the negotiations, no one wants a postponement or extension of the deadline to conclude the talks - end 2004.

This does not mean that everyone or even the active players in the talks (from the developing and developed world) believe that the agenda of negotiations would be completed and signed by end 2004 - just that even the talk of extension of the talks or postponement of the deadline would result in no progress until near the end, and so they don’t talk about it and discourage such talk.

The various delegations listed the issues and activities (of interest to them) where actions were needed before or at Cancun to achieve the completion of the negotiations in time. The issue of agricultural modalities, and the ‘development’ issues were stressed by various delegations.

However, everyone showed great reluctance, if not reticence, on the level of ambition that need to be set to enable the negotiations to end by 31 December 2004.

A very large majority felt that work between now and Cancun (within the working groups) need to be done to develop (or agree) on the modalities for negotiations on the Singapore issues - investment, competition policy, government procurement and trade facilitation.

However, it was also apparent, that there are considerable gaps and differences among participants on the various details and aspects of these modalities. And some trade diplomats and observers think that the differing perspectives on these issues which had not been addressed in the working group, when sought to be tackled, would bring up many differences - as in agriculture for example.

The awareness of this has made the European Union, the ‘demandeur’ on these issues, and particularly the investment one, take a more general, and at the surface a minimalist approach, so that modalities could be agreed on, and Cancun ministerial meeting would decide to launch the negotiations based on these modalities.

The United States has not been a demandeur in this. Both the EU and Japan are concerned that with its power and range of bilateral relationships, the US could through bilateral agreements secure great advantages to its corporations, and it is only by putting these issues into the WTO, and thus subject to its most-favoured-nation treatment provision, that their own corporations could be at a competitive advantage or at least have a ‘level playing field’ visavis US corporation.

Interestingly, in terms of what could or should be achieved at Cancun, the US was one, if not the only one, who openly disagreed with some members (like Singapore or China) that saw Cancun as only a mid-term review meeting. The US said that at Cancun they must agree on the modalities of negotiations on the Singapore issues.

In bilateral discussions with key developing country delegations, the US has explained that it had agreed to put the investment and other Singapore issues on the negotiating agenda at Doha, in order to get a balance (the EC argument). The main purpose of the US (and many others) is to accommodate the EC, and in return get the EC to move on agriculture.

At the same time, the US ambitions on Singapore issues, and in particular investment, and the scope of the negotiations, differ considerably from those of the EU. For example, in order to reduce opposition, the EC has been for having the investment negotiations and rules cover only Foreign Direct Investment (FDI), whereas the US has been insisting, and rightly so, that it is not possible or feasible to differentiate between FDI and portfolio investments.

In fact several old and new studies clearly show any foreign investment, even one seen to be ‘brick and mortar’ and hence theoretically stable and long-term, is really not so and it is delusional of any developing country policy-maker to think it would be or negotiate on that basis. Every investment, and the risks that go with it, can be spun into derivatives and almost immediately assets taken out of the host country, leaving behind only the liabilities and an empty shell, so to say.

In terms of the outlook and assessment of the forthcoming Cancun meeting, and the kind of declaration or decision that the Ministers could be called upon to make, the two opposite ends of the spectrum of expectations lay between China (very pessimistic) and the United States at the other.

Delegations who spoke, including those who were most optimistic that the negotiations could be concluded with substantial accords within the target date set, were however very careful not to discuss or give their views on the ‘level of ambitions’ that ministers should set or decide at Cancun.

China took the position that the Cancun meeting should be seen as a stock-taking and a mid-term review one, and not one to reach agreements. Perhaps decisions could be taken to accelerate and ensure the quick accession of the Least Developed Countries and such matters.

The US disagreed, for example with Singapore and one or two others who saw Cancun as basically a mid-term review meeting, and brought up prominently that the Cancun meeting would need to agree on the modalities for negotiations on the Singapore issues.

In between were a number of delegations, with varying emphasis or focus, who spoke on several major issues on which agreements should be reached before Cancun. Also, in respect of the areas of talks where deadlines had been missed, the ministers would need to take stock and some political guidance given and new deadlines set.

The international peace and security situation, which has been hit by the US-UK invasion and war in Iraq, and its consequences and likely effects, did not figure in the informal TNC at all.

As one trade diplomat tried to explain, while their capitals at the highest levels are very much concerned by the war in Iraq and its likely trajectory and consequences, these perceptions have not trickled down to the trade negotiators here. And since they did not have any control over the war situation or its dynamics and, in the absence of specific instructions, most WTO members are putting it aside and not alluding to it.

In opening the discussions, the WTO Director-General, Dr. Supachai Panitchpakdi, who chairs the TNC, stressed that at a time of growing global economic uncertainty, progress in the Doha Round towards timely conclusion could make a much-needed contribution to confidence. The converse was also true, he said.

Supachai referred to the “fact of missed deadlines” and the disappointments they created, and said he took them very seriously and shared the disappointment.  However, he mentioned (among the missed deadlines) only the deadline missed on agriculture - for reaching an accord by 31 March on the modalities for specific commitments.

In what sounded like a pep talk, he also told the senior officials and ambassadors that they should not allow their disappointment to distract from the tasks ahead on the whole range of the Doha agenda, “nor let it weaken our determination to arrive at a balanced and positive outcome.”

He cautioned against being dazzled by speculation about prospects for success or failure at Cancun, but that “success or failure of the Round itself should be our primary concern.” Cancun would be part of the successful continuation of the work programme, and it was for delegations here and in capitals to make it feasible for Ministers to tackle issues productively and give guidance (for negotiations) to carry on to a timely conclusion.

Given the lack of any progress in any area of the negotiations since Doha (November 2001), many observers find it difficult to foresee how the talks on such a large agenda, some 50% more than that on the Uruguay Round agenda as several trade experts outside have pointed out, could be successfully concluded.

And if any issues are put back on the back-burner or jettisoned from the negotiating agenda towards the end, as in the past, it will be those issues of importance to the developing world.

As for Cancun, where ministers are going to be called upon to handle a large number of issues and reach decisions, the WTO establishment will most likely try to repeat the Doha process - the chair of the General Council putting forward a text, without clearly spelling out alternatives, set up at Cancun a non-transparent consultation process, with ‘facilitators’ pre-selected (as in the runup to and at Doha), and seek to get endorsement.

Many Third World ambassadors insist it would not possible this time to repeat Doha, that the Doha meeting took place in a very different situation, and that ‘launching’ negotiations and setting an agenda is one thing, but reaching agreements on substantial matters is quite another. – SUNS5318

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