TWN Info Service on WTO and Trade Issues (June10/04)
18 June 2010
Third World Network

South voices views on Doha process, stresses on December 2008 texts
Published inSUNS #6943 dated 14 June 2010

Geneva, 11 Jun (Kanaga Raja) -- The draft modalities texts of December 2008 remain the basis for the Doha negotiations, and any "horizontal" process has to be balanced across all areas of negotiations and should not be selective to focus only on market access, a number of developing countries insisted Friday at the World Trade Organization (WTO), at an informal meeting of the Trade Negotiations Committee (TNC).

The comments and stress from developing countries came Friday at the informal TNC that WTO Director-General Pascal Lamy, in his capacity as TNC Chair, had convened, for Members to review and assess the latest developments in the Doha Agenda, and for Lamy to provide an overview of the state-of-play in each of the negotiating groups.

The term "horizontal" process is the current WTO jargon for discussions in small groups involving trade-offs in a number of issues such as services, fisheries subsidies, environmental goods and services, and rules.

Speaking at the TNC meeting (after Lamy's opening remarks), Indonesia, on behalf of the G33, cautioned Members that any horizontal process would have to be guided by the Hong Kong Ministerial Declaration. "It has to be balanced across all areas of negotiations and is not selective with focus only on market access. Further, the varying levels of maturity of the various issues across the negotiations must be taken into account," said Indonesia.

Brazil, on behalf of the G20, said that it would be inconceivable to attempt any horizontal negotiation without agriculture as its cornerstone.

According to trade officials, the developing countries - such as Brazil, India, and China - argued that the basis for the Doha negotiations remain the December 2008 texts, and cautioned that any opening of those texts could lead to an unraveling of the carefully-struck compromises, and that this would mean that the developed countries would have to pay more in other areas, notably in the area of trade-distorting domestic support.

The United States however commented that the world is different now than when it was in 2001 in that new leaders have emerged and they have new responsibilities.

According to trade officials, while everyone acknowledged the importance of a horizontal process, it was clear that there are different interpretations of what a horizontal process entailed.

Some took the view that agriculture and non-agricultural market access (NAMA) had advanced further than other issues such as services, fisheries subsidies, environmental goods and services or rules. The feeling among some Members is that they should have a negotiation involving possible trade-offs in these issues.

According to trade officials, there was another substantial group of countries including Argentina, Brazil, India and China that said that the notion of having a horizontal discussion without agriculture and NAMA, is something that they are not prepared to engage in.

It's clear at this moment that there is enough difference of opinion that the "horizontal process" cannot commence yet, said trade officials.

Speaking at the informal TNC meeting, Lamy acknowledged that Members are not yet at a stage when they can engage into a horizontal give-and-take on the issues which remain open.

Another area of disagreement that emerged during the discussions at the informal TNC meeting was the question of an early harvest for the Least Developed Countries (LDCs) - the issues of cotton, duty-free quota-free (DFQF) market access for LDC products, a simplified rules of origin and a waiver for LDCs in services. The difference of opinion is whether this can be taken out of the Single Undertaking, said trade officials.

In his remarks on process at the informal TNC meeting, Lamy said that the Chairs will continue the consultations in their respective negotiating groups. Groups of Members in variable geometry and bilateral contacts should continue on specific areas as well as horizontally, he suggested.

"The challenge here," Lamy said, "is that you engage into a serious dialogue. That you all reach out beyond your usual constituencies and groups, beyond your usual comfort zone and bring back momentum or output to the membership as a whole in the negotiating groups, as has been done in the case of trade facilitation. Some of you are doing it. All of you need to do it for it to work."

"My sense is that we are not yet at a stage when we can engage into a horizontal give and take on the issues which remain open. For this to happen, we need all these issues to be at the same level of technical maturity and this is not the case yet. We need to keep working to 'line the field of play' on all topics. But let me reassure you that when the moment comes, any horizontal exercise under my responsibility will need to comprise all topics outstanding. There will not be such thing as selective horizontally.'"

On the issue of substance, the Director-General said that "I believe that you are all looking for an extra quantum in these negotiations - by which I mean a combination of ambition and balance for ALL participants, combining what is already on the table and what needs to be there for a conclusion, in line with the mandates which guide our negotiations."

He added: "If there is one thing which remains crystal clear in all our minds it is that we cannot, I repeat, cannot have an ambitious result without overall balance. Such is our challenge - to aim for high ambition while ensuring balance."

Several countries spoke following the report by the Director-General.

Indonesia, on behalf of the G33, in reiterating the group's view and position on some key aspects, stressed that the December 2008 draft modalities (revision 4) will continue to serve as the basis for further negotiations on agriculture. It also said that development remains at the heart of the negotiations and the Round.

The Doha mandate for special and differential treatment will be preserved and is integral to any results of the Doha Round negotiations, said Indonesia, adding that the process of negotiations remains multilateral, inclusive, bottom-up and fully transparent.

It further said that discussions in various configurations, including small groups, bilaterals and plurilaterals, can only be acceptable when they are fed into and brought back to the multilateral formats.

With regard to any horizontal process, the G33 cautioned Members that such a process would have to be guided by the Hong Kong Ministerial Declaration. "It has to be balanced across all areas of negotiations and is not selective with focus only on market access. Further, the varying levels of maturity of the various issues across the negotiations must be taken into account," said Indonesia.

The G33 urged Members to make every appropriate effort to bridge differences, build on progress made so far and to build up the political capital which is required for concluding the Doha Development Round.

Brazil, on behalf of the G20, said that the December 2008 draft modalities are the basis for negotiations in Agriculture and NAMA and represent the end-game in terms of the landing zones of ambition. Any adjustments in the level of ambition of those texts should be limited in scope and must be assessed in the context of the overall balance of trade-offs.

These draft modalities, Brazil said, embody a delicate balance achieved after eight years of negotiations. If this balance is upset, the entire package will have to be readjusted, with inevitable horizontal repercussions. Such readjustments cannot entail additional unilateral concessions from developing countries.

The G20 said that it has consistently emphasized the centrality of Agriculture in the Doha Development Agenda. For the G20, it would be inconceivable to attempt any horizontal negotiation without Agriculture as its cornerstone. "We must focus on the key issues that lie at the center of the negotiating impasse. The progress that we achieved since 2001 is not just a matter of quantity, but also of balance."

"We continue to be guided by the agreed notion that this is a Development Round, which must have S&D (special and differential treatment) for developing and least-developed countries as an integral part of any results. If the balance in the 2008 texts can be improved, it must be to the benefit of those countries."

The G20 also reiterated the principles of transparency and inclusiveness. "The whole membership must be involved in any horizontal negotiations, because the whole membership is likely to be affected. We must take collective ownership of the difficult political decisions that lie ahead."

Brazil, on behalf of itself, said that it has refrained since 2008 from presenting far-reaching demands in areas where it has offensive interests. "This is not because its ambition is satisfied by the 2008 draft modalities, but rather because we believe that the balance inherent in those modalities offers a possibility for concluding the negotiations. An added quantum in any other area will have repercussions for that balance."

In other words, said Brazil, you do not "preserve the package" by adding selectively to it in areas of priority interest for developed countries. In fact, unreasonable, selective increases in ambition will wreck the balance and destroy what has been achieved.

"... we have serious doubts about the possibility of making meaningful advances in areas that, as some have suggested in recent weeks, would be ready for more immediate engagement or that could help the gateway issues, like services, fishery subsidies, environmental goods and services, and others."

Services and environmental goods and services, in particular, are clearly market access negotiations, said Brazil. And, as far as it is concerned, any trade-offs in these areas would be contingent on the outcomes in NAMA and agriculture. "As long as we lack clarity in those two key areas, it is difficult to see how and why we could show flexibility in the rest of the market access pillar."

"Any attempt at changing the level of ambition in the Round would have to start by agriculture in the developed countries," Brazil continued. "Both in market access and domestic support, that is where the great distortions lie. Those who call for more ambition should start by saying what they are prepared to do," stressed Brazil.

South Africa, supporting the G20, said that in recent meetings, it had heard some major developed countries argue that the world had changed since 2001, when the Doha mandate was adopted. These players argue that some major emerging developing countries are now larger players in international trade.

To these arguments, South Africa responded, there are a few simple truths that remain the same.

These include that:

-- "We had all agreed to redress the deep imbalances that still characterized the global trading system against developing countries in the Doha mandate. It is for this reason that we called this round the Development Round.

-- "We had also all agreed that agricultural trade, that had been neglected for over 50 years in the GATT, would be the focus of this round and the driver of the level of ambition in all other areas of the round. Developed countries were to lead by opening their markets and reducing their trade distorting subsidies.

-- "We had all agreed that in NAMA, the products of interest to developing countries would be prioritized. The contributions of developing countries would be based on the principle of less than full reciprocity and special and differential treatment."

South Africa's experience in the round thus far has been that: The level of ambition in agriculture has been going down as developed countries have demanded more and more flexibilities to protect their sensitive sectors; the level of ambition in NAMA on the other hand has been going up as developing countries have been under continuous pressure to reduce their tariffs through the use of the much more onerous Swiss Formula.

In South Africa's view, "the July 2008 texts were imbalanced against developing countries. However, we were and remain prepared to work on the basis of these texts, in a spirit of multilateralism, provided that the flexibilities that we require are provided to us. As we stated before, there is only one major developed country that now finds itself unable to work on the basis of these texts, thus threatening to unravel over eight years of negotiations."

According to South Africa, there are also "some major developed countries that now argue that the level of ambition contained in the July 2008 texts are too low and that what is needed now is to 'review these texts and to raise the level of ambition across the board.'"

However, said South Africa, in all of these discussions, there is no mention of the willingness of developed countries to raise the level of ambition on agriculture. The major distorters of agriculture trade have not offered to increase their commitments to make real and deeper cuts in trade-distorting domestic support or to open their agriculture markets. "On the contrary, what we have heard since July 2008 are demands to increase the number and percentage of sensitive products for developed countries and a refusal to apply a tariff cap on some astronomical tariffs of over 1000 percent that will continue to keep out developing country exports to their markets."

The rallying call by these countries to "raise the level of ambition" is therefore not convincing, nor is it credible, said South Africa, adding that what is now needed is a renewed dialogue between Members "on how we can conclude the Doha round on its development mandate."

South Africa also called for an early harvest for the LDCs, especially on the issues of Duty Free Quota Free market access for LDC products and cotton.

Zambia, on behalf of the LDCs, said that the contours of the package needs to be viewed based on the landscape on which Members are currently working. While it has no difficulty with the notion of a "horizontal process", it was important that the way in which the negotiations are conducted is not altered, and that it does not in some way shift attention from the real problems in the negotiations.

An inordinate delay in the Doha Round is something that is adversely affecting the poorest and weakest countries the most, and that there are currently LDC issues that are ripe for harvest. By failing to agree on these issues, the negotiations are not permitting these benefits to accrue to people who represent 12% of the world population, but only 1% of its trade, said Zambia. The human angle should not be forgotten. It is important to restore the credibility of this round and an early harvest would go some way towards doing that.

Australia, on behalf of the Cairns Group, said that distortions in agriculture disproportionately affect developing countries. Agriculture represented 3-5% of overall economic output in industrialized countries, but between one-third and one-half of output in developing countries.

On behalf of itself, Australia said that it attaches great importance to the services negotiations. If there is to be an outcome, it has to be one that includes an ambitious services package. What has happened in services is less clear than what is seen in agriculture and NAMA; and services should be part of any horizontal process, along with agriculture and NAMA.

Colombia said that the horizontal process must look at all areas, but there can't be a process that involves some issues to the detriment of others.

India, supporting the G20 and G33, said that firstly despite the active political and official engagement we have witnessed over the last few weeks in various places, the political impasse that is responsible for the stalemate in the negotiations still persists. "We have to therefore continue our efforts to resolve the political differences through discussions in various formats and geometries. We agree with your assessment that till such time as we see some light at the end of this tunnel, it would not be very productive to launch into yet another phase of engagement, horizontal or otherwise."

"Secondly, we do not believe that phrases such as 'added quantum' are helpful in our efforts to conclude the Round at an early date. In our view, they only tend to feed unrealistic and unrealizable expectations of some. We believe there is already an ambitious and balanced set of market access commitments on the table. Obviously, some adjustments at the margins are necessary to conclude the negotiations. In other areas, there is more work to be done. Our efforts have to remain focused on finding the political consensus to complete this work. Anything which has the effect of raising the goal posts or disturbing the delicate balance we have achieved in the negotiations so far, should be avoided."

Thirdly, said India, there are occasional references in the TNC to studies done by various organizations listing the gains from the Doha Round. While these studies differ quite significantly in their conclusions, on one issue they are generally congruent - that the least benefit from the Round will accrue to the poorest countries. It is therefore strange that this issue rarely comes up for discussion in the TNC especially when we are ostensibly engaged in a Development Round.

If at all there is a justification for an added quantum, it is for such countries, said India, noting that Sub Saharan Africa, for instance, accounts for less than 1% of global trade and the Doha Round will not change this to any significant degree. "It is in this context that the demand of the LDCs, repeated today, for an early outcome on issues of their interest like DFQF, Cotton and the LDC Waiver in Services should be viewed. We believe the time has come to look at this issue seriously."

Fourthly, on the issue of horizontal negotiations, India said that it is clear that horizontal negotiations mean different things to different people. The horizontal process cannot be about a focus on selected issues to address the market access concerns of a few. In India's view, a horizontal process has two features - it must be horizontal within all negotiating areas and across all horizontal areas. For instance, in agriculture, that would mean focusing not only on templates and the SSM (Special Safeguard Mechanism) as we have been doing for many months, but also having meaningful discussions on domestic support and developed country flexibilities.

"You cannot solve the SSM without such a discussion. As far as a process across the negotiating areas is concerned, we cannot conceive of such a process without a significant discussion on distortions in agriculture, which is at the core of the Round. Market access issues would need to be balanced by a serious discussion on disciplines in various areas like Services, anti dumping, TRIPS etc. For instance, for many of us, an outcome on the Disclosure issue in patent applications is essential for a balanced outcome. A horizontal process must address such concerns."

"The fifth issue, I would like to refer to is the demand by at least one Member for additional contributions to be made by the so-called 'advanced developing countries'. This is a new phrase in the Doha lexicon and to our knowledge, has never been discussed or defined in the WTO. It is not clear why such a distinction is sought to be made at this stage because there is no basis for it in the Doha mandate."

India said that it has a share of 2% percent of global GDP while supporting 17% of the world's population. According to some recent estimates, there are 455 million people in India who live on less than $1.25 per day. "While we are certainly not averse to a debate on this issue, I would only say that such irrelevant diversions can only serve to distract us from our objective of concluding the Round at an early date."

Chile called for the horizontal process to begin in all areas.

Hong Kong-China said that there needs to be work done on all fronts and through a variety of different formats, as called for in the March stocktaking. There is need for an ambitious outcome. In some areas that are not clearly defined, more work needs to be done in the negotiating groups to gain more clarity.

Turkey said that the December 2008 texts remain the basis for the negotiations.

Chinese Taipei, on behalf of the Recently Acceded Members (RAMs), said that a transparent and inclusive process is vital. The December 2008 texts reflect the overall balance and should be preserved.

China, supporting the G20 and the G33, said that the Doha Round is a development round. Trade-distorting subsidies and market access in industrial countries for products of interest to developing countries should be taken into account in any discussions of a horizontal nature or in small-group discussions. Any efforts to change the rules halfway through the negotiations would not be helpful. The current package involves a delicate balance, and if this balance is upset, there is a risk that the whole package could unravel.

China also called for an early harvest for the LDCs. You could not have a discussion that was essentially designed to benefit the industrial countries, and the "cocktail" approach should not be seen as an appetizer to raise expectations in the developed world for further concessions by emerging countries, it said.

Barbados, on behalf of the small, vulnerable economies (SVEs), supported the G33. It reiterated that the development dimension is at the heart of the negotiations and that the December 2008 texts are the basis for the negotiations. The multilateral approach should be the basic framework.

Costa Rica said that development will not be enhanced strictly by flexibilities, it also has to be about trade and the substantial liberalization of trade in agriculture and industrial goods. All members must make a contribution to conclude the Round. The industrial countries must make the most substantial contribution but there are other developing countries that had larger markets and more advanced technology. They need to play a larger role too.

The United States said that there is no substitute for direct negotiations among Members. It said that it was prepared to negotiate in any and all formats. It highlighted the need to move from a status quo that has not and will not lead to agreement. The approach needs to be changed. It is unhelpful to talk about a balance that never was. It was important to realize that history has changed since the negotiations were launched (in 2001) and that there are new leaders that have emerged. With leadership comes responsibility.

Argentina said that the question of ambition requires balance to be taken into account, and that any ambition must involve a discussion of the development dimension. It supported an early harvest package for the LDCs. +