Castillo cover note claims transparent and inclusive process!

Geneva, 2 Sep (Chakravarthi Raghavan) - The Chairman of the General Council, Amb.Carlos Perez del Castillo, and the head of the WTO, Dr. Supachai Panitchpakdi, in a cover note to the draft Ministerial text (prepared and forwarded to Cancun on Castillo’s own responsibility), has suggested that the text constitutes a “workable framework” for action by ministers and constitutes an “adequate and manageable basis for discussions.”

Perez del Castillo drew up the text under claims of authority as GC chair and on his own responsibility, and circulated it to the members on 24 August 2003.  Though there were wide ranging challenges to such claims of authority at the General Council, and a lack of any consensus on the document on various issues and the annexes, Perez del Castillo declined to hold further consultations or reflect the other views in the text itself, but promised to do so in a cover note.

The cover note dated 31 August was reported to have been sent to delegations on 2 September, but very quickly found its way to a website of the Geneva-based ICTSD, a WTO friendly NGO, and in turn relayed around the world by the NGO community. The WTO released it officially on 3 September.

The cover note does not provide details of the full range of divisions, some very sharply held ones, on the range of issues covered by the Doha work programme and negotiations, but has mentioned that there are differences over Agriculture, Non-Agricultural Market Access (NAMA), the “Singapore issues” (investment, competition policy, transparency in government procurement and trade facilitation), Special and Differential Treatment (S&DT), Implementation issues, and the question of deadlines.

Astonishingly, the Castillo-Supachai cover note claims that the 24 August text is the product of lengthy and massive consultations over many weeks, “conducted in a transparent and inclusive way.”

In fact, between 11 August when the WTO and General Council reconvened after a short summer-break, and the consultation process began, with informal Heads of Delegation (HOD) meetings held and announced as ‘transparency exercises’, the real negotiations were in smaller groups of countries, invited to participate - with fact of the meetings, time and locale, not put on the WTO board where these are displayed. Often delegations invited to participate get the information over the phone, or by handing out slips of paper to the country concerned about a ‘consultation’ in room xxx at such and such a time. These slips of paper are handed over to the delegate, at the WTO premises when they are attending other meetings.

The nature of these meetings have been such that very few delegations have even been able to keep track of all of them or those they attend or keep records of when and whether meetings took place and who were present. However, participants from the developing world, have confirmed that on any average day, there were simultaneously 4-5 such meetings of 10-20 invited participants taking place simultaneously, and others not invited did not even know about them.

The Castillo-Supachai cover note, addressed to the Mexican chair of the Cancun meeting, Mexico’s External Relation’s Secretary Dr. Luis Ernesto Derbez Butista, while flagging some of the differences among members on these issues, has a paragraph: “You may find it useful to have a fuller account of the differences that divide negotiators in key areas.” But it does not say how such a “fuller account” will be available to the Ministers gathering at Cancun.

Trade ambassadors of key developing countries, particularly those of them who have expressed sharp differences with the approach and formulations in the draft Ministerial in key areas, would not comment in detail, but some said that the Castillo cover note is slightly better than the one that then General Council chair, Mr. Stuart Harbinson of Hong Kong China (now chef de cabinet of the WTO head) and Mr. Mike Moore the DG, produced and forwarded to the Doha ministerial on claimed authority, and presented it at the opening inaugural ceremonial session (where it could not be challenged) and brought before the Doha conference.

However, Third World trade experts point out that in key areas - agriculture, industrial tariffs and Singapore issues - the draft text and the covering letter remain extremely unbalanced and oriented to the US and EU.

Trade experts like Mr. Bhagirath Lal Das (former Indian Ambassador to the GATT), agree and note that there are omissions in all the critical areas, viz., agriculture, industrial tariff and Singapore issues. “The Revised Ministerial Text in all these areas remains unbalanced and unfair,” he says in a communication to SUNS.

Asks Mr. Das: “I wonder how long the WTO institutional machinery will be allowed to continue with such a blatant denial of the rights of a large number of the developing countries to reflect their specific suggestions and proposals in a fair manner in an important paper like the one for the consideration of the Ministers in the Conference?”

Perhaps the answer is that this state of affairs will go on until a group of Ministers get up and challenge and throw out such documents from being brought up for consideration, and demand that the Chairman and DG to bring up a revised text, reflecting all the different views.

This can be done, without the bogey of “another Seattle draft” being raised.

Before Doha, when Harbinson had claimed in the General Council authority to forward on his own documents to the Ministerial Conference, and this was relayed to the media, WTO spokesman Keith Rockwell, in responding to questions from the media, could not cite any rule of the WTO and the General Council, but said that the (secretariat’s) research showed that “there was a degree of inconsistency” in procedures about the right of the Chair and the DG to act thus, but that “flexibility is the watchword.”

For all previous Ministerial Conferences, there had been explicit or some implicit, consent given by the General Council members, whereas this was specifically challenged in the process before Doha, and also now in the preparatory process for Cancun.

However, the Doha precedent, founded on claims of past precedent that the WTO conceded showed “a degree of inconsistency” is now becoming a precedent for Cancun - and perhaps may even get legitimacy through a future dispute settlement process, where the secretariat will provide notes of GATT/WTO practices!

The programme for Cancun, shows that the WTO Director-General and General Council Chair, are to speak at the opening ceremonial session, and the way the programme for the business session and adoption of agenda are listed in the programme of the inaugural session by the Mexican President suggests that the “Doha precedence” may be followed, and the draft declaration brought before the Conference at that time itself, making it difficult for members to challenge the procedure.

Castillo and Supachai have claimed, apart from claims of ‘transparent and inclusive’ consultations, that these resulted in progress, “some indications” of consensus on some paragraphs in the preparatory process, and that it had evolved to a state where agreement would be possible given a positive overall context, The cover letter also claimed that it had been possible to reach an understanding on a framework approach to modalities in agriculture and non-agriculture market access.

“Nonetheless on the substance of these issues, as on the socalled Singapore issues, convergence has so far eluded the negotiators,” the cover letter adds.

Having said this, Castillo and Supachai do a quantum leap in logic and say: “We have therefore found no basis on which to revise the text of 24 August. It remains our best judgement of what could constitute a workable framework for action by Ministers at Cancun. We believe it constitutes an adequate and manageable basis for discussion, and we hope it will prove a useful tool in our search for common ground at Cancu n.”

Some of the key developing countries, while saying that the Castillo-Supachai cover letter is better than the one that Harbinson and Moore provided in a cover letter or their drafts to Doha, were clearly not very happy with the way the agriculture annex, representing the US-EC approaches, had been drawn and included. They were even more upset that on the Singapore issues, the ‘modalities’ formulated by the demandeurs (EC and Japan etc) in some limited last hour consultations, had been included in annexes, the view of the others pressing for further study and listing the issues to be clarified in further studies had not been done.

These ‘clarificatory issues’ are apparently now being tabled as Conference documents and, and according to some delegations, Mexico as chair has assured the countries concerned that it would ensure that they would be fully available to Ministers.

However, it is not at all certain that these opposite views will progress beyond issuance and availability as official documents to all ministers and delegations - and in fact officially will be part of the negotiating documents and processes.

And at some future point, when the US-EC views prevail as a force majeure, the WTO staff, its legal and substantive divisions, will cite these and the final document to claim ‘negotiating history’ which dutifully some panel or other will accept or put in as a footnote in arguendo style ala Lars Anell panel, and made into WTO law!

On Agriculture, and the annex A on it, the cover letter that while many participants viewed it as a “starting point” for the work at Cancun, a “significant number” of others viewed the annex as “insufficiently balanced” and that their own inputs remain on the table for deliberations at Cancun.

“No doubt considerable work on Annex A will be required so as to arrive at an agreed framework.”

On Annex B relating to NAMA modalities for negotiations, despite widespread support for the structure of the text and need for achieving a balance, two paragraphs continue to show divergencies in position: para 3 on type of formula to be used for tariff reductions, and para 6 on a sectoral tariff component.” The opposing points of view relate to “level of ambition” in these negotiations.

On Singapore issues, where on each of them two options have been presented, one for launching negotiations and the other for further study, the covering letter says “clearly these brackets reflect the fact that there are still considerable differences among Members, although the scope of divergence is greater in some areas than others.” Also, the covering note, suggests that a number of delegations have supported possible intermediate approaches.

On the option of further study, the covering letter says that a number of developing countries have idenitified issues for further clarification and that these delegations have put forward proposals in this regard which form part of the range of views before Ministers. There is no indication how these ‘range of views’ will be brought up before the Ministers.

There are two other paragraphs on S&DT and implementation, with the latter bringing out that there are significant differences in positions of members on paragraph 12 (b) of the Doha declaration.

That paragraph, setting out how Ministers at Doha decided to proceed in tackling these issues, said in 12 (a) that where a specific negotiating mandate is provided in the Declaration, the relevant implementation issues will be addressed there, while 12(b) says, “other outstanding implementation issues shall be addressed as a matter of priority by the relevant WTO bodies, which shall report to the TNC.... for appropriate action.” This made 12 (b) part of the single undertaking too.

In terms of the Cancun draft, in fact the issue has been subtly shifted from the TNC (where the issue, as others are part of the single undertaking) to the General Council where it could be endlessly discussed and kicked back and forth.

Following is the text of the covering letter, signed jointly by Castillo and Supachai and addressed to Dr. Luis Ernesto Derbez Bautista, External Relations Secretary (Minister) of Mexico:

“We are writing to you in your capacity as Chairman of the Cancun Ministerial Conference of the WTO to convey the Draft Ministerial Text which is being presented on the responsibility of the Chairman of the General Council in close co-operation with the Director-General.

“In circulating this text on 24 August we made clear that it did not purport to be agreed in any part at that stage, that it had not been possible to include many of the proposals submitted by delegations, and that it was without prejudice to any delegation’s position on any issue. These observations continue to apply.

“We are pleased to say, however, that it will now be able to reflect agreement in one very important area TRIPS and Public Health. The adoption by the General Council of the Decision on the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health on 30 August 2003 was an historic and significant event. We believe that this evidence that the WTO system is working, and can produce important results on critical issues of particular interest to developing countries, will give us all added confidence in dealing with the challenges we face in other areas.

“The present Draft Ministerial Text is the product of lengthy and intensive consultations over many weeks, conducted in a transparent and inclusive way. All participants have worked hard with us and engaged constructively. There has been progress. On some paragraphs, there were indications of consensus in the preparatory process. Some others, we believe, are evolved to a state where agreement would be possible given a positive overall context. It has also been possible to reach an understanding on a framework approach to modalities in agriculture and non-agricultural market access. Nonetheless on the substance of these issues, as on the so-called Singapore issues, convergence has so far eluded the negotiators.

“We have therefore found no basis on which to revise the text of 24 August. It remains our best judgement of what could constitute a workable framework for action by Ministers at Cancun. We believe it constitutes an adequate and manageable basis for discussion, and we hope it will prove a useful tool in our search for common ground in Cancun.

“You may find it useful to have a fuller account of the differences that divide negotiators in key areas. We would characterize these briefly as follows:

“Agriculture has remained one of the most sensitive areas of the negotiations under the Doha Development Agenda. Despite significant progress made since Doha, efforts to establish modalities for the further commitments have not yet borne fruit. Recent initiatives by a wide range of Members, including various groupings, have re-energized the negotiations by proposing a so-called “framework” approach and submitting specific inputs to this effect. We can report that there is now a widely shared view that the objective in agriculture at Cancun should be to add impetus to the negotiations through, first, agreeing on such a framework which should, of course, be faithful to the Doha mandate and, secondly, directing the subsequent work towards establishment of full modalities.

“Based on the inputs by participants and the consultations held, we have distilled the draft framework at Annex A to the Draft Ministerial Text as our best effort to provide Ministers with a workable basis for consideration at Cancun. This draft framework leaves room for a range of possible outcomes in terms of eventual modalities. And, although the draft framework takes a certain direction in some areas, it leaves it open in others. The levels of ambition in domestic support, market access and export competition as well as the final balance will depend, to a significant extent, on the figures to be negotiated once the framework is agreed.

“At the recent Heads of Delegations and General Council meetings, many participants, while criticizing Annex A and reiterating their attachment to their own inputs, considered it a starting point for the work at Cancun. A significant number of others felt that Annex A was insufficiently balanced for that purpose and made the point that their own inputs remain on the table for deliberation in Cancun. No doubt, considerable work on Annex A will be required so as to arrive at an agreed framework.

“On modalities for the negotiations on non-agricultural market access, the idea of a framework has also emerged as a likely basis for decisions by Ministers in Canc=9Cn. However, despite widespread support for the structure of the text and the need for achieving a balance of positions, two paragraphs, in particular, show continuing divergences in position. These are paragraph 3, on the type of formula to be used for tariff reductions, and especially paragraph 6, on a sectoral tariff component. The opposing points of view on these two matters relate to the level of ambition in these negotiations.

“On the one hand there are those delegations that would prefer an ambitious formula complemented with a mandatory sectoral elimination/reduction component, and on the other, those who would prefer a more modest formula with only a voluntary sectoral component. Clearly there is still some way to go before we reach agreement. Numerous delegations have also pointed out that the level of ambition in other areas of the Doha agenda will also influence the ambition levels on these two issues. These are not the only areas of disagreement with regards to Annex B, but in our view they are the most significant.

“With respect to the four ‘Singapore issues’ (Relationship between Trade and Investment, Interaction between Trade and Competition Policy, Transparency in Government Procurement and Trade Facilitation) you will recall that Ministers in Doha agreed that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that Session on modalities of negotiations.

“On these four issues, as listed in paragraphs 13-16, including annexes D, E, F and G, we would note the following. In each of the four areas there is a first bracketed option containing a decision to launch negotiations and setting forth the modalities for such negotiations. The second bracketed option refers the matter back to the respective bodies for further clarification. Clearly, these brackets reflect the fact that there are still considerable differences among Members, although the scope of divergence is greater in some areas than others.

“We are aware that a number of delegations may not find their position on these issues reflected in the two basic options, and that possible intermediate approaches which have been supported by a number of delegations have not been specifically included. However, these intermediate approaches as well as the substantive work done on the four Singapore issues in Geneva remain a part of the spectrum of possibilities available for further consideration by Ministers in Cancun. With respect to the option of launching negotiations in each of the four areas, consultations in Geneva have not enabled us to make proposals on possible modalities that could attract the explicit consensus of Ministers.  Ministers should therefore be aware that the draft modalities contained in Annexes D-G were not the product of negotiations, although they do reflect the views of a range of proponents that varies according to the issue. For a possible consensus on modalities in any of these four areas to emerge further work by Ministers will be required.

“With respect to the second option in each of the four areas, namely that of referring the matter back to their respective bodies for further clarification, we should point out that a number of delegations supporting this approach have identified issues that would require further clarification in those bodies. In the General Council, these delegations put forward proposals in this regard which form part of the range of views before Ministers in Cancun.

“Though there appeared to be a broad agreement on the proposed text of paragraph 11 on special and differential treatment, some Members wished to strengthen further the package submitted in Annex C to Ministers for adoption. In this context we would also like to inform you that the proposal on the Enabling Clause and the one on the Review of the Progress on Market Access for LDCs on which Members had agreed ad referendum, and which were reflected as such in Annex C, have since been accepted by all Members.

“Our aim in paragraph 12 on implementation was to reaffirm the Doha mandates in this area and to give some sense of a way forward on these issues. We have had to keep in mind that there are significant differences in the positions of Members on certain issues, as well as on the interpretation of paragraph 12(b) of the Doha Ministerial Declaration which, in turn, has influenced their negotiating positions and expectations. The paragraph may not satisfy all expectations but it seeks to avoid prejudicing any positions.

“The three paragraphs on a Sectoral Initiative on Cotton, on Commodity Issues and on Coherence reflect issues raised towards the end of the Geneva process.  The sectoral initiative on cotton in paragraph 25 will, of course, be taken up as a separate agenda item at the Conference.

“Lastly, we should mention the question of deadlines. It has been suggested that consideration should be given to the co-ordination, where appropriate, of the various deadlines currently in square brackets. Ministers will thus have to decide what the deadlines should be and how they should be inter-related.

“As the focus of negotiation shifts from Geneva to Cancun, let us assure you, Mr. Secretary, of our continuing firm commitment to assist you and all the other Ministers in your important tasks. We are copying this letter to all WTO Members and participants in the negotiations for their information.” – SUNS5411

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