Majors holding out lollipops for developing countries?

by Chakravarthi Raghavan

GENEVA: Trade negotiators of developing countries and their key groupings have been given a clear and unambiguous message from the WTO’s power structure that they would be indulged in being allowed to keep talking about implementation issues and/or about special and differential treatment and may get some lollipops on these issues, but only at the end of the new round, after a successful outcome has been reached in areas of interest to the developed world such as the Singapore issues and financial services.

And the EC and the US have also made clear that any S&D treatment, at the conclusion of the negotiations, would be available to developing countries not as a group or categories of them but on a case-by-case basis.

These two messages were sought to be put across by the US and EC at the TNC meeting on 18-19 July, even as the two engaged in making speeches for the record that would or could shift the blame onto the other members, particularly since the overall economic downturn renders the outlook for the round very uncertain.

The EC Director-General for Trade Peter Carl served notice again that the modalities for agreeing on concepts for negotiating “systemic rules” on the Singapore issues had to be adopted and agreed to by the Ministers at Cancun (September 2003). Also, the successful outcome of the negotiations under the Doha work programme was conditional on the Singapore issues. As for S&D, he made clear for the record that the EC was open to negotiations, but that on rules there would be differentiation (by the EC?) between individual developing countries.

The US Deputy Trade Representative Peter Allgeier, in his speech, stressed the US’ own ambitions: elimination of export subsidies and significant agricultural reform, and proposals to be formulated on market access, liberalization of services including financial services, the need for “differentiation” on S&D. On implementation, he said the US was committed to full implementation of the Textiles and Clothing Agreement (meaning no growth-on-growth or other ideas but waiting for end-2004 for elimination of all quotas).

He said the US took seriously paragraph 12 of the Doha Declaration on implementation, but added: “Our collective expectations must reflect the reality that some of the issues simply may not be the subject of consensus at the end of the day, while others may only carry the potential for achieving consensus within the context of the broader Doha negotiations.”

Missed deadlines

Before the developing countries had cleared the compromise text on the modalities for the negotiations on market access for non-agricultural products, the incoming WTO Director-General Supachai Panitchpakdi, at a press conference with incumbent Mike Moore, had advised the developing world about not becoming pessimistic about some deadlines - a reference to their talk till then that the end-2002 deadline on implementation issues and the July 2002 one on S&D could not be missed and sought to be put in the Cancun or the final basket without affecting other deadlines and the TNC work programme.

He was responding to a question that there could be no credibility for the WTO when deadlines in the Doha declaration and decisions on developing-country questions were being ignored (e.g., the growth-on-growth issue in textiles and clothing or the S&D treatment framework negotiations, the subsidies issue etc) while the WTO was pushing the developing countries on the EC-US deadlines and demands, such as market access on non-agricultural commodities.

Moore, who earlier had spoken of a “smooth, seamless transition” to his successor and was confident that the deadlines and timelines would be met, very adroitly told the correspondent that the WTO should not be blamed - “we are working hard to meet them” - but that they were under pressure in one or two areas. He pointed to the TNC meeting and several meetings of senior officials (a reference to a US-convened informal meeting of some 20 or more countries, besides the majors).

At the press conference, Supachai’s designated chef de cabinet, Stuart Harbinson of Hong Kong China (who, with Moore, had put together and pushed the Doha texts), sat on the side in one of the seats behind the media. Supachai is yet to get accustomed to the media nuances at Geneva, but has also to bear in mind that the culture of the institution and its secretariat, even more than in other places, is tuned to promote, in an ideological way, the power and interests of the majors.

At the press briefing, in response to the question about the deadlines, Supachai specifically mentioned the US-convened meeting and the views there about agriculture and services but also S&D and textiles, and hoped that the senior officials and ambassadors could resolve the issue.

He then said: “We should not be too pessimistic about some delays. Deadlines are there, we must and should do our best to meet the deadlines, but it is not the end of the world if you would miss some deadlines.”

He also spoke of the interest shown on all sides on S&D at the US-hosted meeting, and added: “There are some proposals ... S&D will have to be drafted and dealt with systematically.” He mentioned in this connection proposals for “graduation” and others to make S&D treatment systematic. It would need more time and “we should not be too pessimistic if we miss some deadlines.”

Major-power views

The EC’s Peter Carl told the TNC that the Singapore issues were “systemic, rules-making subjects” and of progress being made, but called for intensifying negotiations between now and Cancun to establish concepts on which rules could be based so that ministers could agree on the modalities of negotiations and give the go-ahead on the second and determining phase of the “Doha Development Agenda.” He added: “Need I underline that these four [Singapore] issues are part of the single undertaking and that the successful conclusion of the round as a whole is, among all other subjects, preconditioned on the successful outcome to the Singapore issues?”

On the S&D issue, he added: “Let me say for the record that the EC is open to negotiate proposals made on special and differential treatment, and expect such negotiations will be an important element in the ensemble of decisions to be taken at Cancun. But we need to get beyond political correctness and be clear about whether, and if so, what kinds of differentiation are genuinely good for development. Are blanket exemptions from the rules conducive to poorer members’ integration? The experience of this organization and of development policy over the last 30  years suggests otherwise.

“Is it logical, when negotiating market access or elaborating rules, to ignore the differences between individual developing countries in terms of their level of development or capacities? ... I think we ought to know better than that: a ‘one-size-fits-all’ policy does not work any better when applied to developing countries as a whole than when applied to the entire WTO membership. These issues need facing if the round is to be a development round in more than name.”

Allgeier said that in proposals the US would be submitting, it would support the establishment of an appropriate monitoring mechanism on S&D (a proposal by the African Group contains the call for a monitoring mechanism), and that the US would work with the Chairman of the Committee on Trade and Development Special Sessions Amb. Ransford Smith and other CTD members in developing this idea and “bringing it to fruition.” The US was ready to engage in a discussion of ideas on specific S&D provisions, “but a note of caution is in order.” In several cases, Allgeier said, the issues raised are part of the ongoing negotiations or have been the subject of previous debate and review under the heading “implementation.”

“We will need to have realistic expectations on this issue,” he declared, adding that in the US view, “S&D is not an end of itself,” but a tool to foster economic development, adjustment and integration into the multilateral trading system.

“The certainty and predictability of adhering to a rules-based system, combined with the thoughtful recourse to S&D provision, are shown to be the best way to promote long-term economic growth.” He noted that a “number of members” have raised the issue of differentiation in this context, and “this is an area that deserves more attention in our future work.”

On the implementation issues and the “growth-on-growth” question in regard to textiles and clothing quotas, where the US has agreed “to review again the tirets discussed at Doha,” Allgeier thanked the Malaysian chair of the Council for Trade in Goods (Amb. Supperamaniam) for his stewardship of the issue, and said: “While no consensus has emerged, the discussion has been serious and not perfunctory. The engagement has been significant. Members recognize the complexity of the issues involved and their implications. For our part, the US remains committed to the continued full implementation of the Agreement on Textiles and Clothing agreed in the Uruguay Round.”

(Under the US Uruguay Round Agreements Act, some one-half of the quotas impeding the developing-country exporters of textiles and clothing are to remain in place until midnight of 31 December 2004 and disappear on the next morning!)

Allgeier then want on to address “more broadly” the implementation issues, and said the US was “gratified” with the work done since Doha, mentioning the work in the Committee on Subsidies, where it was close to agreement on a number of requests under Art. 27.4 of the Subsidies and Countervailing Measures (SCM) Agreement. (This provision provides developing countries an 8-year period for phasing out export subsidies “in a progressive manner”, while a developing country is to not increase its export subsidies but eliminate them in a shorter period when  use  of  the  subsidies is inconsistent with its development needs. However, a developing country seeking to continue the export subsidies beyond the eight years could apply and seek consultations with the Committee at least one year before expiry of the 8-year period.)

As for the other implementation issues, the US added: “We take seriously the provisions of paragraph 12 of the Doha Declaration on  implementation and intend to pursue the discussions responsibly. Our collective expectations must reflect the reality that some of the issues simply may not be the subject of consensus at the end of the day, while others may only carry the potential for achieving consensus within the context of the broader Doha negotiations.” (SUNS5165)                                             

From Third World Economics No. 284 (1-15 July 2002)