Motions without movement at WTO

Geneva, 29 Oct (Chakravarthi Raghavan*) - The process of consultations aimed at restarting the trade negotiations, led by the General Council Chair, Amb.Carlos Perez del Castillo and the WTO Director-General Dr. Supachai Panitchpakdi, suggests that at best a series of moves are being mooted, but without any movement from the leading participants, in particular the US and the EU.

After the informal heads of delegation meeting of the General Council on 15 October, Perez del Castillo has been holding bilateral and plurilateral talks, and has held two ‘green room’ meetings on agreeing on modalities on Agriculture and Non-Agricultural Market Access (NAMA).

If there is any pattern, a trade diplomat from a key developing country said, it is one of appearing to be engaged and wanting resumption of the talks, but with none of the majors, in particular the European Communities and the United States, willing to move forward or make the necessary concessions to meet the viewpoints of the developing countries.

As the developing countries, and some of their leaders (here and in capitals) show eagerness to resume the negotiations, the US and the EC seem to be strengthened in their view that they could demand and get a price from the developing countries for this.

On a sober appraisal, and given the political calendar among the majors (US Presidential elections in November 2004, the EU’s expansion with new members this year and the next), there is no expectation that the Doha talks could resume quickly or could conclude by the deadline set at Doha, namely, “no later than 1 January 2005.” However, no one is willing to say so.

There are some trade diplomats, and third world experts, who feel that the more developing countries speak or show anxiety for the resumption and conclusion of the talks, the larger the price that would be sought to be exacted from them by the majors.

In the agenda of the Doha round, on most of the issues, the ‘main demandeurs’ are the developed countries and it does not make sense for the developing countries to push for resumption of the talks, one trade diplomat said.

In terms of agriculture and/or non-agriculture products and market access, developing countries could be better off by using the route of the Global System of Trade Preferences (GSTP) framework, which they have neglected in the euphoria of neo-liberalism and globalization, and making sure through rules of origin etc that the two majors and their agri-business corporations do not infiltrate and use other developing countries as points for exports to others.

And in terms of their market access into developed countries, the end of the peace clause (end 2003) would give them some leverage.

The remarks of the USTR Robert Zoellick since Cancun, show a clear attempt to divert the blame from the US to others, even as Zoellick himself appears to be engaged in some posturing domestically aimed at carving out a future for himself in a new Bush administration, if Bush gets re-elected.

There are suggestions and comments in the US media to suggest that he is aiming for the job of the US Secretary of State, and is castigating Brazil and India and the Group of 20 (to show the Congress and the Senate his credentials).

The EC Commissioner Pascal Lamy, facing heavy criticism from some of the key EU members (like the UK) for his negotiating tactics at Cancun and not taking the EU ministers into confidence, has warned in a speech in London (and a press briefing on the occasion, reported in the Financial Times of 29 Oct) against the “rush to relaunch talks”, arguing that developing countries anxious to relaunch negotiations should be willing to pay a price (by showing flexibility to suit the EC on domestic support?)

The speech also questions the idea (mooted by the US and included in the APEC Summit statement) of taking the Derbez text as basis for the talks at Geneva. He has noted that India had rejected the text and that Brazil was “less ready to negotiate constructively on the text than it claimed.” A few other stones have been thrown around, with some left-handed compliments - Brazil’s Celso Amorim is the “cleverest of all of us trade ministers”, and the South African trade minister Alex Erwin is a “very clever guy”. Lamy has however also brought out that the text on cotton in the Derbez text was written to suit the US, and that this was responsible for the Cancun failure.

Some trade diplomats, who read the text of his speech, said that it showed some rift between Lamy and Zoellick (unlike at Doha where they had teamed up against the developing world).

Adding to the confusion are the recent remarks of the WTO head (at Bangkok, made on the eve of the APEC summit, but published by the media at his request after the summit) which are not exactly the epitome of clarity or objective assessment. Reports of his remarks in the Bangkok Post and The Nation, even seem to imply that at Cancun there had been considerable progress on agriculture, and that it was the Singapore issues (and the refusal of the LDCs and ACP countries to take on board any or all of the issues) that led to the Cancun failure. He has also been reported as saying that “the atmosphere at Cancun had been complicated by a push by African nations to include cotton on the agenda, an issue with a significant political protection in the US.”

The efforts (and the prognostications for success or failure) at the General Council in Geneva, led by Perez del Castillo and Supachai, have probably to be seen in this light, trade observers said.

Some key developing country diplomats seem to feel that in this situation, they should stay engaged, but not show any undue anxiety or keenness to kickstart the negotiations and conclude it.

So far, in the Castllo-led process, there has been one HOD ‘green room’ type meeting (last week) with participation of some 28 countries, and another of about 30 on NAMA this week.

From the trend of these talks, it seemed that while everyone is trying to give the impression of negotiating, the positions remain as far apart as at Cancun.

The majority of members who spoke at the agriculture consultations, did not come out against resuming negotiations using the Derbez text as a basis or starting point, but qualified it with so many caveats in particular areas of concern to them in the text, that it was difficult to draw any detailed conclusions on the way forward, one trade diplomat said.

Another said that while there had been some intense negotiations on agriculture at Cancun, this was essentially one involving the US, the EU and the Group of 20, and that others had not been involved nor present in these talks. Thus it was difficult to judge whether they were near accord (and that the deadlock over Singapore issues forced a breakdown) or whether the US manipulated the talks to focus on Singapore issues on the last day, and thus a breakdown (rather than allow talks on agriculture and cotton, and thus a breakdown that would be blamed on the US).

The GC Chair, Perez del Castillo, did not apparently try to sum up the discussions or draw any conclusions on agriculture.

However, trade diplomats said that he was clearly waiting for the EC (currently in a period of ‘reflexion’) to make up its mind and state its position. In effect he seemed to say that while they were all working towards Plan A (meaning the stage of negotiations ‘if ministers at Cancun had been able to achieve the objectives set for them), they might have to move towards Plan B (something less).

At the meeting, APEC members, led by Cairns group members Australia and New Zealand, came out in favour of taking up the negotiations on the basis of the Derbez text, though even they seemed to have some problems with it. But other APEC members who also cited the APEC summit declaration for further talks on the basis of the Derbez text would appear also to have pointed to their own areas of problems and difficulties with the text.

By orchestrating the support (in particular from Australia and New Zealand at the Bangkok APEC meeting) for the Derbez text, the USTR (Robert Zoellick) has attempted to divert attention from the US, which has been blamed for the failure at Cancun over agriculture in general, and the cotton issue in particular.

But if he had hoped to divert the discussion into a fight over whether or not the Derbez text (drafted in agriculture and cotton to suit the US) should be the basis, it has not so far borne fruit, with the major developing countries having seen through his game.

Japan, a leading member of the APEC, while in favour of taking the text as a basis, made clear that it would find it difficult to comply with the Derbez text on the issue of cutting tariffs on agricultural products.

The EC’s remarks showed that it was not ready to proceed on the basis of the Derbez text, pointing out that none of its member-states were members of the APEC (and thus a summit statement from there was not binding on them). The EC also made clear that it was currently in a process of reflection after Cancun, and was not at present ready to engage in negotiations. The Cancun final statement (mandating the General Council to act for successful and timely conclusion of the negotiations) was “a good objective, but may be difficult to achieve.”

Responding to the issue of ‘green box’ domestic support measures raised by Mexico earlier, the EC said this type of demand did not “encourage” the EC to move forward.

The Derbez text (Annex A, para 1.5) on framework for modalities, provides for “review of Green Box criteria with a view to ensuring that Green Box measures have no, or at most minimal trade-distorting effects or effects on production.”

Developing countries, in particular the members of the Group of 20 (of which Mexico is a member) want disciplines on Green Box subsidy measures, and have found the mere call for ‘review’ to be weak, in terms of modalities. But the EC’s remarks show that even this is not acceptable.

Brazil, the leading spokesman for the G-20, wanted the majors to clearly indicate their stands on domestic support reduction commitments and dates and the end-date for export subsidies. On market access, they need to know the exact composition of blend of approaches to be used, so that agricultural producers and exporters like Brazil would know the level of market access they would have in the industrialized world.

The US saw great merit in the Derbez text for its “common framework” for both developing and developed countries, on domestic support, export subsidies and credits, and market access.

However, India pointed out that developing countries could neither provide nor match the developed countries on domestic support (out of budget), nor export subsidies, and could only use tariffs. Hence without the developed countries disciplining and reducing domestic support and eliminating export subsidies, using a common framework would be to the disadvantage of developing countries.

India also cited para 5 of the final ministerial statement at Cancun and said that not only the Derbez text, but all other texts and papers moving towards a “high-level of converge” have to be taken into account. The concerns and differences of members over the Derbez text have to be sorted out.

Para 5 of the final statement at Cancun said: “We bring with us into this new phase all the valuable work that has been done at this Conference. In those areas where we have reached a high level of convergence on texts, we undertake to maintain the convergence on texts, while working for an acceptable overall outcome.”

On NAMA, some 30 countries were involved in the consultations this week on how to move ahead on the issue of non-agriculture market access.

The general feeling among the countries present in the meeting would appear to be that the text prepared in Cancun, referred to as the Derbez text, could be the starting point to recommence negotiations in non-agriculture market access.  However no country is completely happy with it.

Also, it was easy to find such an accord at the level of generalities, but when it comes to specifics on the particular issues of concern to developing countries, the convergence and consensus quickly break down, one of the negotiators explained after the meetings.

There are several areas of contention particularly on the core modalities for tariff reductions contained in paragraph 3 and 6 of the Framework for Establishing Modalities in Market Access for Non-Agricultural Products (Annex B of JOB(03)/150/Rev.2).

Mauritius on behalf of the African Group pointed out that the framework has not taken on board proposals made by developing countries. The Derbez text should therefore provide room to address this issue and take into account these proposals that are still on the table.

In this vein, India highlighted and reaffirmed paragraph 5 of the Cancun Ministerial Statement which states that the work of negotiations should proceed on the basis of convergence of the texts. Hence, other texts, apart from Debrez’s text on NAMA, should also be taken into consideration. The eventual framework should therefore be reflective of all the proposals that have been made.

Canada said that the framework should focus on substantive issues and suggested referring to the Chair’s Draft Elements of Modalities (TN/MA/W/35/Rev.1).

Kenya expressed the need for the framework to be able to help developing countries stimulate industrial output and growth and address the concerns of developing countries in this regard.

The US noted that the draft text focussed more on exceptions to, rather than the rules for making tariff reduction commitments. The US reiterated its interest in ensuring genuine market access in the NAMA negotiations.

On the core modalities, several developing countries including Indonesia and Malaysia mentioned the need for any formula approach to effectively operationalise the principles of special and differential treatment and less than full reciprocity. They also raised concerns with the way unbound tariff lines is treated in tiret 2 of paragraph 4 of the Derbez text. In their view, unbound lines should not be subjected to tariff reductions through the formula, as stipulated in tiret 2. Kenya suggested that since there is much frustration over the formula and instead of going through some complicated mathematical calculations, countries should look at more straight-forward and simple approaches.

On the sectoral tariff elimination approach, developing countries reiterated the need for this component of the core modalities to remain voluntary for developing countries. Kenya also pointed out that the Derbez text would force developing countries to do what should be voluntary with regards to binding and the sectoral tariff elimination approach. This approach was contrary to past negotiating practice in these matters.

Developing countries also argued that given the principles of special and differential treatment and less than full reciprocity the eventual framework should result in more benefits for developing countries. On the other hand, developed countries urged developing countries to raise their level of ambition in making tariff reductions.

The GC Chairman, Perez del Castillo recognized that more work needs to be done on the formula and sectoral approaches, in paragraph 3 and 6 of the Derbez text respectively. Perez del Castillo also recognized the fact that progress in NAMA would be tied to developments in other areas, in particular agriculture. This view was openly shared by New Zealand, Norway, Switzerland and others.

Costa Rica also suggested that NAMA is tied to the Singapore issues: However, Columbia pointed out that there is no clarity as to the Singapore Issues to which NAMA could be associated with.

Amb Perez del Castillo informed the countries present that he will continue with small group consultations which will be followed by a bigger meeting of more countries. He urged member countries to try to reach agreement on the framework for NAMA by 15 Dec 2003.

(*With inputs from Goh Chien Chen.)

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