TWN Info Service on WTO Issues (Dec03/9)

Third World Network

16 December 2003

Dear friends and colleagues


The WTO’s General Council meeting, mandated by the Ministers in Cancun to carry on the work they could not complete, started on 15 December, with a report by the General Council chairman, that little progress had been achieved since Cancun.

His report on four issues showed divergences of views among Members that could not be bridged in the three months after Cancun.

Many countries began to give their reactions and views on the first day.

Below is a first report of the GC meeting.  More reports will follow.

With best wishes

Martin Khor





WTO General Council convenes, with little progress and wide gaps

TWN Report by Martin Khor, Geneva 15 December 2003


The WTO General Council meeting mandated by last September’s Cancun Ministerial conference to continue its unfinished work opened here this morning with a report by the Council chairman showing that little or no progress has been made since Cancun to bridge the wide gaps between WTO members, mainly on North-South lines.

“We have witnessed little real negotiation, gaps remain wide and there does not seem to be a sense of urgency,” the chairman, Carlos Perez del Castillo, told the meeting.

As a result of the lack of progress from the “informal consultations” of the past three months, Castillo did not table any new texts that could mark an advance over the Cancun conference which had collapsed without an agreed Declaration.

He presented only a report of his own views on where the members stand on four issues that he had selected for the post-Cancun consultations - agriculture, cotton, non-agriculture market access (NAMA) and Singapore issues.

On all these issues, his report showed up wide divergences of positions.  And many of his own suggestions for moving ahead on these issues - especially the Singapore issues - can also be expected to be a source of disagreement among members during the next days.

With this meeting, the immediate post-Cancun phase (which only involved informal consultations directed by Castillo, as the work of the negotiating bodies had been suspended) will come to an end.  Castillo’s suggestion that WTO activities be re-activated through the various regular and negotiating bodies early next year (probably mid-February when the new Chairpersons are appointed) will most likely be accepted by this meeting.

Statements made by the first half a dozen countries after Castillo’s presentation indicated that members would be re-stating their known positions and that thus the General Council meeting would substantively be mainly a “non-event.”

However, there is at least one exception.  Forty four developing countries (including some of the largest such as China, India and Nigeria and the poorest in the LDC Group) issued a new joint paper calling for further work to be dropped on three of the Singapore issues, whilst agreeing to only a clarification exercise (and not negotiations) for a fourth issue.  (See separate report in SUNS).

This is a new position that the 44 countries have formulated and formally presented jointly, and it is expected to put pressure on those developed countries that have been demandeurs of negotiating new rules on these issues.

In his report, Castillo said as the consultations went deeper into substance, “the persisting difficulties became more apparent.”  On the positive side, members were willing to enter into substance and showed strong commitment to the multilateral trading system and the Doha agenda.

But on the negative side, he added, we witnessed little real negotiation or movement towards accomodation  among positions, or searching for common ground.  “Gaps remain wide,” he said, not only among positions but also between generalized statements of commitment and flexibility, and any concrete manifestation in negotiating positions.

On agriculture, he said the Derbez text was the starting point in consultations, with its elements and structure “generally acceptable” while divergences remain on substance.

On domestic support, he suggested the “more trade distorting measures” be the focus of greater reductions, with very substantial reductions of the total AMS or its total phasing out over a timeframe to be negotiated.  The Blue Box should be capped and subject to reduction.  On the Green Box, his reading is that the current Derbez text is “reasonable” and should be kept as such. 

(The Derbex text does not propose reduction of Green Box subsidies, in contrast to the demand by many developing countries that new disciplines be placed on at least some of these).

On market access, Castillo said “the notion of a common approach for both developed and developing countries seems now to be gaining ground.”  But he seems to contradict himself when he added that “the blended approach” in the Derbez text (which is used for both developed and developing countries) has been the “subject of concerns by a number of developing countries” and that further work is needed on “this or other formulas”.

On export competition, Castillo said it was accepted that commitments will apply to all forms of unfair competition, but the key outstanding issue is the end date for phasing out export subsidies.  He said commitment to eliminate all forms of export subsidies is a “must” for these negotiations to succeed.

On special and differential treatment, more work is needed and it is clear the concepts of special products and special safeguard mechanism, with  conditions and products to be determined, have become part of the negotiations’ approach.

On the cotton issue, Castillo said further work was needed on three tracks - procedure, trade related substance and development-related issues.  He urged members not to get bogged down by the procedural issue whether cotton should be a stand-alone issue or part of the agriculture negotiations.

On trade-related aspects, the role of direct export subsidies in distorting the cotton market may be minimal but the effects of other forms of subsidy (domestic support) need further discussion.  On development issues, he said financial and technical assistance will also be an essential part of the overall response.

On NAMA, Castillo said the consultations used the Derbez text as starting point, and broadly recognized that it had the appropriate structure and elements for a framework on modalities.

However, he went on to describe the strong disagreements on the key aspects of the Derbez text, thereby throwing up the question whether there really has been such a “broad recognition” of the text’s elements.

He pinpointed three areas of contention.  He said there is general acceptance for a formula type approach (for tariff reduction) but no agreement yet on the specific formula to be used.  On the sectoral component, the key issue is its “mandatory versus voluntary” nature and whether it is a core or supplementary modality.  On para 7 regarding flexibilities for developing countries, some countries feel it provides too much flexibility and others that it is too constraining.

On Singapore issues, Castillo said there were different proposals, with debate but no consensus.  He suggested that work continue on “exploring possible modalities” for two issues (trade facilitation and government procurement transparency). 

“What treatment, if any, the other two issues might receive in future is a matter for further reflection at some appropriate time.”

On further work overall, he suggested all the Doha agenda bodies should resume their work early next year, once the Chairmanship issue is settled, with the Trade Negotiating Committee providing an overview of the process. 

Speaking on behalf of the G-20 developing countries on agriculture issues, Brazilian Ambassador Luiz Felipe de Seixas Correa reported on last week’s G20 Ministerial meeting in Brasilia.

The G20 took note that the Derbez text was the subject of “extensive consultations and concerns expressed by many delegations.”  The G20 insists that the level of ambition of the Doha mandate remains the guiding principle of agriculture negotiations.

Any framework to be viable must be consistent with the Doha mandate and lead to modalities in agriculture negotiations that would result in “substantial reductions in domestic support, substantial increase in market access, phasing out of all forms of export subsidies and operational and effective special and differential treatement that takes into account rural development and food security concerns of developing countries” whilst concerns of recently acceded members would also be addressed.

The G20 Ministers wanted prompt resumption of talks in negotiating bodies with a view to completing the Round within its original framework as any delay will be detrimental to developing countries.

Speaking on behalf of Brazil, Seixas Correa called for face to face negotiations among different countries to take place.  He asked for ways to “escape the traditional way of doing business in this building based on cycles of assorted consultations followed by subsequent attempts at producing Chair texts.” 

On Singapore issues, Brazil was prepared to work to prepare draft modalities for trade facilitation and transparency in government procurement, but it did not consider the Derbez text annexes on these issues to be draft modalities as they were “not much more than negotiating mandates”.

Bangladesh Ambassador Toufiq Ali, speaking on behalf of the LDCs, said the LDCs had been marginalised in world trade and “even our industrialization process is in jeopardy.”  He said that in the LDCs’ view, the Derbez text in most areas could form the basis of moving forward,  with small changes required on agriculture and NAMA.

However major changes are required in the text on cotton, said Toufiq Ali. This issue should be given special attention and utmost priority.

“We are concerned about the undue emphasis being given to Singapore issues,” added Toufiq Ali.  “According to the Doha Declaration, these issues are not part of the single undertaking.  We do not understand what these issues have to do with the multilateral trade rules that the WTO deals with, except for trade facilitation.”

Even on trade facilitation, he added that each of the countries is taking measures internally to facilitate trade, and the proponents must explain to us what they desire from negotiations in this subject.

He called for the development dimension to be at the core of all subjects in the Doha round.  “LDCs must get the policy space and comfort required to enable our countries to participate meaningfully in the multilateral trading system.”

The United States said it remains firmly committed to the Doha agenda and that there has been an effort to rebuild trust and confidence.  It is prerpared to build upon the Derbez text as a means of going forward, and a point of departure for serious discussions.

On NAMA, the US said the text does not meet its ambitions or expectations.  On Singapore issues, the US has focused on trade facilitation and procurement transparency.  On cotton, it wanted to deal with the trade related issues as part of the agriculture negotiations.

On process, there should be a plan in place by the February General Council meeting or soon after.  The US wanted a hybrid approach involving both informal consultations and a reactivation of negotiating groups and the TNC.

It added, that whatever approach was adopted, “there is simply no substitute for substantive engagement among delegations.  We need to get out of the habit of trying to negotiate with Chairs and negotiate with one another instead.”

European Commission Ambassador Carlo Trojan said the EC found its meeting with the G20 in Brasilia to be useful with an open atmosphere and that a process had started for the two sides to see eye to eye.

He agreed with Castillo’s assessment that there is willingness to reignite the negotiating process but no movement.  We are moving in the right direction but we are not on track yet, he added.

He said there was a window of opportunity lasting a few months next year to do what we should have done in Cancun.  The EC thought the top-down process of informal consultations is best but this can be supplemented by the work of the negotiating bodies.

On Singapore issues, Trojan told the media outside the meeting that the EU had made a “major shift” in agreeing to unbundling the issues and also that some of the issues may fall out of the single undertaking and the Doha agenda, but not outside the WTO. 

He said the EC was willing to put the issue on the “backburner” but does not want to drop them completely from WTO.

The meeting continues on 16 and 18 December.