Mexico tilts draft even more to favour US and EU

Geneva, 14 Sep (Chakravarthi Raghavan) -- The Chair of the Ministerial Conference at Cancun issued Saturday a revised Draft Ministerial Declaration Text which reflects totally and completely the views and demands of the major developed countries, while making some minor cosmetic changes to claim that the views of the developing countries have been taken into account.

Reports in media based on Saturday briefings at Cancun by secretariat sources close to the chair, had said that the host country is looking to make Cancun a success, and not a failure at Seattle, by launching negotiations on transparency in government procurement and trade facilitation.

The revised text issued in Cancun Saturday afternoon (local time) shows the extent of the tilt by the Mexican chair of that conference.

The revised draft text, and the process followed in the runup to and at Cancun itself, leave little doubt that behind the facade of an inclusive process, the WTO is run by the two major trading powers, the US and the EU, and the secretariat (irrespective of the nationalities of personalities heading it or staffing it), is driven not even by the ‘free trade’ ideology propagated from time to time (rhetorically) in speeches and statements, but by the interests of the two majors, and their neo-mercantilist corporate agendas.

Failure here would be welcomed only by the opponents and will set back the trading system, the Mexican chair is reported to have said at the end of an informal plenary in the early hours of Sunday (Cancun) to hear comments.

In fact his text, and acceptance of it, will strengthen the view of those in the developing countries who see the entire institution totally biassed and undemocratic, and hence one that should be repudiated.

A failure at Cancun, due to refusal of the developing countries to surrender, would in fact strengthen the system, provided when they come back to Geneva, they fix the process and procedures, and use even their minority power to use the budget processes to call the secretariat to order and ensure they behave independently.

[According to the WTO website account, the Chairperson and Mexican Foreign Minister Luis Ernesto Derbez, distributed the new draft ministerial declaration, just after midday local time in Cancun (on Saturday) , and then suspended the meeting to give delegations time to study it. The ministers were given less than 6 hours to study it and were called back to the meeting at 7:00 in the evening local time. That meeting went on beyond 1 in the morning of Sunday, with developing country ministers and groups making adverse and critical comments.

[The developed countries including the US and EU, who have in fact ‘gained’ in this text, also were critical, of agriculture being too ambitious, and little ambition in other areas.

[From the WTO website briefing notes, the Ernesto Derbez was treating the views, as views on record by countries, and was pressing them to compromise so that Cancun can be a success. He and the WTO head were due to hold consultations (confessionals and or ‘green room type limited consultations) to get the opponents in the developing world to yield.

[Though purporting to be based on the discussions in the committees and groups, and the reports of their chairs to the informal HODs on Friday, the revised draft clearly reflects none of these, but pushes the idea of the two majors as demandeurs.

[At the night meeting, that ended about 1 am local time of Sunday, according to information provided by trade diplomats at Cancun, a number of developing country ministers in their various coalitions on various subject, spoke up critically, in particular of the agriculture text, lack of explicit consensus on the four Singapore issues, and the lack of any balance.

[The WTO website report said of these criticisms that “ministers largely repeated well established positions arguing that their particular concerns had not been included in the text.”

[The WTO website report cited Derbez as saying that the text was still a draft and its aim is to help put together all the insights gained through various modes of consultation with a view to putting together an overall package that would win broad acceptance. He said the revised draft contained all of the elements necessary to enable members to strike a deal and address the key needs and concerns of all, in a satisfactory manner. Following the meeting he and Director-General Supachai Panitchpakdi would continue consulting with members in a variety of formats, assisted by the facilitators,” focussing on areas where serious differences remained,.” with focus on areas where serious differences remained.

[Trade diplomats at Cancun said that the Ministers from the developing countries, in particular the Africans, said the text on the cotton initiative did not reflect the proposal to phase out subsidies and for subsidizing countries to compensate the African producers in the interim. A number of developing countries, in particular African, Caribbean and Pacific region countries, complained that the draft had too little on special and differential treatment for developing countries.

[The US and EU would appear to have warned developing countries that each delegation would be responsible for what happened in the night meeting.

[At the close of the night meeting, Derbez, according to the WTO website posting, said he would reflect on the ministers’ comments, but that he was very concerned whether members are willing to work together to reach a consensus, given the time left before the end of the meeting - less than 24 hours.

[Derbez comments suggested that having put their positions on record, “and this did not worry him”, he wants them to help a consensus for the Cancun meeting to succeed, [and not be a failure like Seattle]. If no consensus is reached, “the only winners will be the enemies of the trading system,” he is reported as saying in the WTO website.]

The revised draft declaration sheds what little was left in the draft sent from Geneva, of the ‘development’ issues and the claims of the Doha negotiations to be a ‘development agenda.’

On the cry of the African cotton producers/exporters for relief against the subsidisation of cotton production and its exports, principally by the United States, but to a lesser extent by the EU, the WTO provides a farce of a reply.

The plight of cotton prices of these farmers is to be resolved by tackling the entire sector, from cotton through yarn, textiles and clothing products, and the end prices, burying the issue of the unfair subsidisation and dumping by the rich nations.

The paragraph in the draft, dealing with it, is one that completely bows to the views of the USTR Robert Zoellick, who advanced this idea in the discussions on this at the Cancun ministerial. And the Mexican chair of the Cancun Ministerial and the WTO head have ‘bought’ this and incorporated the US view in that para.

The thesis that cotton prices can be lifted by increasing consumption and prices of end products, and removing distortions in the production chain, is economic doctrine not borne by any evidence, and flies in the face of studies done (at UNCTAD and published as UN publication, but which no one wants to be reminded of) on the relationship of raw material prices and the prices of end products at the store, and the profits garnered and taken away by the marketing and distribution of these by the corporations.

[That report brought out that the price that the producer is paid is a very small percentage, and that a very large proportion of the differences between producer price and end price for the product paid in the stores, is absorbed by the transnational corporate businessmen. Now that GATS and services have been brought into the WTO, to enable middlemen to siphon off even larger proportions as ‘value-added’, there is nothing for the producer, and the producing countries whether in commodities or processed products are now competing with each other on the basis of offering cheaper wage labour.]

The revised DMD provides for launch of negotiations, on basis of modalities formulated by the demandeurs, and not even discussed at Geneva or elsewhere of the membership, on two Singapore issues, ‘transparency in government procurement’ and ‘trade facilitation’, and to enable or force negotiations on investment and competition policy by linking completion of the negotiations in agriculture and non-agricultural market access to agreement on modalities to launch the negotiations on investment and competition policy.

Though seemingly, the other two issues are sent back to Geneva to clarify issues, the actual wording and the footnote can leave little doubt that in fact it is a decision to decide to launch negotiations, with the General Council asked to act.

The Doha mandate and assurances of ‘explicit consensus’ is swallowed up in the process between Geneva and Cancun and back to Geneva! The rich indeed are ‘very hungry’.

The revised draft text, Mr. Bhagirath Lal Das, former Indian Ambassador to the GATT, commented to the SUNS, “fully concedes the demands of major developed countries in transparency in government procurement and trade facilitation, and almost concedes their demand in investment.”

However, the text does not provide any concession from the major developed countries in the areas of agriculture and industrial tariffs. “It has absolutely no merit from the perspective of the developing countries, and merits rejection, he said.

On investment, the last indent in para 14, obliging the General Council to “adopt” modalities that “will allow negotiations to start”, pre-empts the clarificatory process and peremptorily presumes the decision that should be taken the General Council.

The paragraph in the text (para 27) on the cotton issue raised by the African exporters, the high subsidies given by the US on cotton (support to farmers and dumping of exports) is totally sidelined, by addressing “the impact of distortions.”

In agriculture, there is nothing requiring the capping and eliminating/reducing of Green Box subsidies. Mere review of criteria will not serve any useful purpose. With the possibility open for providing subsidies and increasing subsidies through the Green Box, no amount of discipline on tariff in the developed countries can be of much help. There is no direction for eliminating blue box subsidies and commensurate annual reductions. Developed countries are allowed softer tariff cuts, while the developing are used the ‘Swiss formula’ (the harmonisation approach) for agriculture tariff reduction.

On investment, it says, “We agree:

·        to intensify the clarification process called for in paragraph 22 of the Doha Declaration, covering the elements listed in that paragraph as well as other elements raised by Members, including the elements identified in WT/MIN(03)/W/4 (the text of India and others);

·        to convene the Working Group in Special Session to elaborate procedural and substantive modalities on the basis of paragraphs 20, 21 and 22 of the Doha Declaration, and other elements raised by Members.

We reiterate that the special development, trade and financial needs of developing and least-developed countries should be taken into account as an integral part of any framework, which should enable Members to undertake obligations and commitments commensurate with their individual needs and circumstances. Consideration should be given to the relationship of the negotiations to the Single Undertaking;

·        modalities that will allow negotiations on a multilateral investment framework to start shall be adopted by the General Council no later than [date].”

A footnote makes clear that the date for adoption of modalities by the General Council (no specific consensus is provided), “will coincide with the date for agreeing on modalities on agriculture and NAMA.”

It thus links the agreement on modalities to progress in agriculture and NAMA.  This will either result in splitting the G-21 (since India and others are opposed to any negotiations) or enable Brazil and others to get something in agriculture, and then pressure India and others. The same is true of competition also.

This in effect will create, what was predicted when Perez del Castillo issued his draft text here, namely, that the G-21 alliance while likely to create deadlock on agriculture at Cancun (as happened in Montreal), would set the stage for t he alliance to be split and collapse (as happened in Geneva Montreal mid-term review meeting of 1989), unless Brazil and others are willing to show some solidarity with others on the procedures and on Singapore issues.

This has not happened, and some of the remarks of the ministers from that region at Cancun even suggest that once their interests are accommodated on agriculture, they will compromise on other issues. – SUNS5418

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