DG report to HOD raises more questions than answers

The WTO Director-General updated heads of delegation of member states on 17 June concerning his recent consultations with select trade envoys on the Doha Round, but his report appears to have left quite a few questions unanswered.

by D. Ravi Kanth

GENEVA: A report presented by the WTO Director-General Roberto Azevedo on 17 June about his consultations with select trade envoys in different configurations raised more questions than answers over the continued attempts to rescue one major developed country which remains opposed to a developmental outcome in the domestic support pillar of the agriculture package for concluding the Doha Round trade negotiations by the end of the year.

In giving this assessment, several trade envoys told the South-North Development Monitor (SUNS) that at a meeting of heads of delegation (HOD), Azevedo delivered an oral report on his consultations in Paris and with the trade envoys of seven major industrialized and developing countries as well as select trade envoys on fisheries subsidies.

The DG presented a downbeat assessment, stating that a clearly defined post-Bali work programme with precise modalities by end-July is “difficult” as key members are unable to converge on the reduction commitments in the domestic support and market access pillars of the Doha agriculture package, said a South American trade envoy who was present at the meeting.

The DG said that during his consultations with seven trade envoys in two separate rounds of meetings there was no progress on the most difficult issues – the overall trade-distorting domestic support (OTDS), the Aggregate Measurement of Support (AMS), the old and new Blue Box, and the de minimis support.

The seven countries are the United States, the European Union, China, India, Brazil, Australia and Japan.

The two sessions of consultations, on 11 and 15 June, were also attended by the chair of the General Council Ambassador Fernando de Mateo of Mexico, the chair of the agriculture negotiations Ambassador John Adank of New Zealand, and the chair for market access in industrial goods Ambassador Remigi Winzap of Switzerland.

Azevedo said he took part in the two rounds of meetings with the seven trade envoys in Geneva without revealing the name of the host among the seven who invited him for the consultations.

No consensus

The DG told the trade envoys that there is no consensus on the domestic support commitments as set out in the 2008 revised draft modalities.

Back in 2011, when he was Brazil’s ambassador to the WTO, Azevedo had said, “The December 2008 draft modalities are the basis for negotiations and represent the endgame in terms of the landing zones of ambition. Any marginal adjustments in the level of ambition of those texts may be assessed only in the context of the overall balance of trade-offs, bearing in mind that agriculture is the engine of the Round...

“The draft modalities embody a delicate balance achieved after 10 years of negotiations. This equilibrium cannot be ignored or upset, or we will need readjustments of the entire package with horizontal repercussions. Such adjustments cannot entail additional unilateral concessions from developing countries.”

However, at the HOD meeting, he ought to have but did not explain why there is no convergence on the 2008 revised draft modalities and whether he made any attempt to bring about convergence. Otherwise, his earlier statements regardless of his status would continue to stalk him in the coming days, said a trade diplomat who attended the meeting.

Without suggesting that he floated new concepts during those two meetings with the seven trade envoys, Azevedo spoke about a moving target for reducing domestic support. The DG did not elaborate what this moving target was and whose idea it was at the meeting. Azevedo added that there was no support for the moving target to reduce domestic support but did not indicate who opposed it and who supported it.

In the 2008 revised draft modalities, the then chair of the agriculture negotiations, Crawford Falconer, had suggested a comprehensive framework for reduction commitments in the domestic support pillar. There was no moving target for reducing domestic support and if anything, it was based on historical and current spending levels in the domestic support of major industrialized countries.

The DG maintained that the idea of numerical cuts from an absolute number in the OTDS was not acceptable to some of the seven participants.

The United States has a clear problem here because of its farm bill, a South American trade envoy told SUNS.

The US had agreed to bring its domestic support to a level around $14.5 billion in 2008 but later backtracked on that figure.

Another idea of a percentage cut in the OTDS also failed to gain consensus among the seven countries, the DG said.

Here again he ought to have indicated whose idea a percentage cut was and who opposed it, said an Asian trade official who attended the meeting.

The DG said there was also no convergence on transparency and best-endeavour commitments to create adequate mechanisms to address trade concerns arising from the OTDS.

In a similar vein, the cuts in the AMS were impossible for some members, the DG said, without indicating the names of the countries that rejected the idea.

Some countries among the seven maintained that the reduction commitments in the AMS cannot be considered in isolation, the DG said.

It is an open secret that the US is not ready to reduce its AMS because of the farm bill, the Asian envoy argued.

As regards the Blue Box commitments, some members of the seven pressed for adhering to the 2008 revised draft modalities. There was also a discussion on maintaining or eliminating the Blue Box. There is no need for the new Blue Box which was specifically created for the US in the 2004 July modalities, according to the DG, said an African trade envoy.

Azevedo said a cut in the de minimis is one of the biggest red lines for some countries among the seven nations.

The US wants China and India to undertake reduction commitments in their de minimis support.

On average tariff cut proposals and new approaches in the market access pillar, there are continued differences as some members want the 2008 revised draft modalities while some others are ready to lower the level of ambition through the average cut formula.

At present, there is no consensus on tariff rate quotas, special products and special safeguard mechanism if the average formula framework is adopted, Azevedo pointed out.

The DG also spoke about the larger “green room” meetings on fisheries subsidies and the package for least developed countries (LDCs) such as rules of origin, market access for LDC services providers, duty-free and quota-free market access, and cotton.

On fisheries subsidies, some countries want an important standing discipline as well as prohibition of most harmful subsidies, Azevedo said.

Countries also remained divided on extending special and differential treatment flexibilities, according to the DG.

Azevedo said he is going to convene dedicated meetings on cotton, rules of origin, and duty-free and quota-free market access in July.

Azevedo said the time has come for hard political decisions for finding solutions, failing which it would be difficult to make progress by the WTO’s tenth Ministerial Conference in Nairobi, according to trade envoys present at the meeting. (SUNS8045)                          

Third World Economics, Issue No. 595, 16-30 Jun 2015, pp5-6