TWN Info Service on WTO and Trade Issues (Mar11/09)
17 March 2011
Third World Network

Big gaps still remain in Doha talks, TNC meeting told
Published in SUNS #7105 dated 10 March 2011

Geneva, 9 Mar (Kanaga Raja) -- There continue to be big gaps in the substance of the Doha trade negotiations, and the current process to conclude the Doha Round by the end of the year is failing to deliver results, a number of countries complained at an informal meeting of the WTO Trade Negotiations Committee (TNC) on 8 March.

The informal meeting of the TNC had been called to review and assess the latest developments in the Doha negotiations.

While some Members acknowledged that progress is being made particularly in the Negotiating Groups, these are mainly of a technical nature and differences still remain, said trade officials.

There was also acknowledgement at the informal meeting that the process is going too slowly, with some Members starting to say that "we are running out of time", and that "it is now or never". Some Members are also starting to say that "we are in the end game now, one way or the other," said trade officials.

The common view voiced by delegations at the informal TNC meeting was that the process needs to keep going forward, said trade officials, who envisaged in the coming weeks a large number of meetings to take place in every conceivable configuration.

Speaking at the informal TNC meeting, WTO Director-General and TNC Chair, Pascal Lamy, said: "Our current process - at each and every level - remains too slow and continues to fall short of the tangible substantive breakthroughs to be captured by Negotiating Chairs in the revised texts which they will bring out around Easter."

The informal TNC meeting was preceded a day earlier by a "Green Room" meeting of some thirty delegations convened by Lamy to source inputs from Members, as well as their views on how to move forward.

A participant in the Green Room meeting told SUNS that the meeting was a very short one of about half-hour or so. The Director-General told delegations in the Green Room that there are still gaps on the various issues and that Members need to do more, said the trade diplomat.

According to the trade diplomat, Lamy told delegations that if Members want revised draft texts produced by Easter, they will need to accelerate work in all negotiating groups. To do that, Lamy said that there is need to move away from extreme positions to the middle ground, in order to find compromise positions. The trade diplomat said that the US reported that no concrete progress had been made in its bilateral talks.

Meanwhile, speaking to SUNS after the informal TNC meeting, Ambassador Roberto Azevedo of Brazil, commenting on remarks made that the process can be improved, however said: "We don't have a problem of process. We have a problem of substance. And there is no process that you can put in place that would cure that."

"The fact is that we have a very big gap in the negotiations," he stressed.

Noting that some Members have been calling for an improvement in ambition in non-agricultural market access (NAMA) and services, the Brazilian envoy pointed out that Members are in a "single-undertaking".

"You can't just try to improve the ambition in some areas and freeze the rest," he said. "So, if you're going to actually improve the ambition, you have to improve it across the board."

The kinds of contributions that are being asked of Brazil are not minor contributions, he said, pointing out, for instance, that in NAMA, these cover more than one-third of the tariff lines. If Brazil were to implement what was requested of it, this would lead to tariff cuts equivalent to a coefficient of 8, rather than a coefficient of 20, as stated in the draft NAMA modalities text, he added.

To aggravate the situation, Ambassador Azevedo said, this would be unilateral and without any compensation for the undertaking by Brazil. The formula cuts cannot be interpreted as a minor contribution to liberalization in NAMA, which would then be achieved by the sectoral initiative, he told SUNS.

"If this view prevails, then we're not entering the end-game. We're reaching the end of the game," he said.

Also speaking to SUNS after the informal TNC meeting, Ambassador Michael Punke of the United States said: "Our message was very straightforward. Our message is that the end game is now, one way or the other."

Pointing out that the US has a very clear perspective on what's being realistic in the context of the Doha Round, the US envoy elaborated: "And we believe that being realistic means that you live up to the responsibility that is commensurate with your role in the global economy. That's where realism is needed..."

Underscoring that this was not a developed versus developing country issue at all, he said, in apparent reference to large emerging countries such as India, China and Brazil, that this is "a very focused discussion about a few economies that have a particular responsibility..."

According to trade officials, the process now is about delivering the draft texts by Easter (late April). They stressed that these texts (some nine in all) will be coming out one way or the other, with the question being what sort of texts they will be.

The Negotiating Groups, and the plurilateral (for instance, the "G11") and bilateral processes among the major players have to produce inputs for the Chairs of the Negotiating Groups, in order for them to go forward with recommendations in their draft texts on ways to bridge the existing gaps. If the Chairs do not get these inputs, then the texts will either be heavily bracketed and/or will come with options, said trade officials.

They noted that if the draft texts do not advance the process sufficiently, then the prospects of concluding the modalities by the end of July are going to be remote.

According to trade officials, some countries such as Brazil, the European Union and the United States, said at the informal TNC meeting that the problem is not really with the process or the format, but with the substance of the negotiations. There continue to be gaps in the substance, which is the reason why the process is not delivering results.

Trade officials also said that there was acknowledgment by a number of countries that progress is being made (with Negotiating Groups gaining some traction), albeit of a technical nature. However, differences still remain.

There were also concerns voiced by a number of developing countries that sectoral arrangements may be struck among Members that may affect products on which developing countries depend on, and export under preferential arrangements, trade officials added.

In his report to the informal TNC meeting, Lamy noted that the past few weeks have seen intense activity. All negotiating groups are working across the board and that there is progress in all areas, albeit at different levels and of different types. Bilateral and plurilateral meetings on market access issues have also taken place.

"However, we should not fool ourselves. Members are very timidly engaging in ‘give and takes'. Our current process - at each and every level - remains too slow and continues to fall short of the tangible substantive breakthroughs to be captured by Negotiating Chairs in the revised texts which they will bring out around Easter. We need these texts as a basis on which to move the negotiations to conclusion... In order for those texts to really move the negotiations forward, though, there need to be more substantive inputs from negotiators."

"We owe it to ourselves and to our respective constituencies to face this situation up-front and with realism. Realism does not mean defeatism. On the contrary, it should spur us on. Realism tells us how important this negotiation is for all of us. And realism also tells us that we have it in our collective power to make the kind of compromises that we need to take the process on to a successful conclusion," he said.

"We need a serious acceleration of the pace of work. We need to see delegations move from extreme positions towards the middle ground, with compromise proposals starting to emerge. We also need bilateral and plurilateral work, which is mostly related to market access issues, to move forward faster," he concluded.

The Director-General also provided a brief overview of the latest developments across the board in the negotiations.

A number of delegations spoke following the report by the TNC Chair.

According to trade officials, Bangladesh, on behalf of the Least Developed Countries (LDCs), said that a sense of urgency must be infused into the negotiations. The pledge of the development dimension must be met. There is tremendous pressure on the LDCs, as a result of the crisis, and this agreement is something that the LDCs need rapidly. While the small-group meetings are important, the LDCs would also like to be invited to any of these meetings where issues that affect them may be discussed.

It further said that the principles of multilateralism must be adhered to, and a bottom-up approach that is transparent and inclusive must be the order of the day. It would like to see clarity on what offers in enhanced market access in agriculture and NAMA may mean for the LDCs. It would also like to know what the situation is on the issue of cotton. There is lack of clarity, which is constraining the ability of the LDCs to negotiate.

Bangladesh said that it has seen little progress as yet with respect to a monitoring mechanism on Duty-Free Quota-Free (DFQF) market access for LDC products. It also said that special and differential treatment that is precise, operational and effective, needs to be part of all elements of the agreement, and technical assistance must also be built into the agreement.

Kenya, on behalf of the African Group, supporting the LDC statement, said that all issues need to move forward in tandem and simultaneously, and that no issue of importance to any Member is left behind. While it can accept the notion of "variable geometry", the multilateral approach is key. The bilateral process is useful but it cannot be a substitute to multilateralism.

On NAMA, the Group would like to see more engagement on the existing text. Many in the African Group are currently benefiting from preferences, hence it wants to be able to be clear on what is happening in the sectoral negotiations. There will not be development gains in the Doha Round for African countries, if the preferences that they receive in many of their most important markets are nullified by the sectorals. The sectoral negotiations should unconditionally exclude all products affected by preferences. On agriculture, the African Group said that the Rev. 4 draft modalities text is the basis for the negotiations. On Rules, it looks forward to revised texts on fisheries subsidies that contain special and differential treatment for developing countries. On the question of TRIPS, it would like to see the TRIPS agreement amended to take into account the provisions of the UN Convention on Biological Diversity.

"Biopiracy", Kenya said, is a big concern for many African countries. Trade facilitation is also important for many African countries, who also require trade-related technical assistance and capacity-building. African countries also want the development outcomes in each track of the negotiations to remain as the core objective.

Australia, on behalf of the Cairns Group of agricultural exporters, said that there is a window of opportunity, but it is narrowing. There is a more constructive atmosphere, but atmospherics alone will not be enough to bring about a deal. Ambition in agriculture is the key determinant of ambition elsewhere in the Round. The development dimension is also a very important element. Governments need to take into account the costs of failure when they are assessing their positions in these negotiations.

Speaking for itself, according to trade officials, Australia said that it agreed with the TNC Chair. Despite greater intensity, there is clearly a need to move more quickly, and that there is also need to have meaningful texts in April, if Members are to engage in the kinds of negotiations that can bring about a conclusion. "We just can't have an amalgamation of square brackets." There is need to move on all fronts.

The European Union said that it agreed with the TNC Chair's report. The current pace of the negotiations is not sufficient to reach the objectives that have been collectively set by the membership. That means texts are needed by April and an agreement on modalities-plus by July. There is need to move forward on many fronts. The bilateral and plurilateral discussions need to be intensified and feed more efficiently into the multilateral process. The "variable geometry" does work well, but the real challenges are not the process, it's how to achieve progress on substance. A sense of urgency increases everyday, and "we have not had the kind of advances we need on substance."

Paraguay said that this is a development round and agriculture is the key. For a small, vulnerable economy that depends on agriculture for 80% of its exports, the level of ambition in agriculture is disappointing.

Chinese Taipei said that there is need to ensure that the opportunity does not slip through our fingers. It would like to participate in the small-group discussions. While it appreciates some of the work that is being done with respect to developing a horizontal mechanism on non-tariff barriers and a consolidated text on trade facilitation, this does not translate into progress in market access. Without market access, there will not be sufficient conditions to conclude the round. It is becoming more concerned about the lack of progress.

Pakistan said that the small window of opportunity still exists. It supported the Cairns Group, in that agriculture is the pivot in the negotiations and is critical to the development agenda. Progress is slow, it added.

According to trade officials, Malaysia said that it supports the Cairns Group. Movement in the negotiations is too slow, and there is need to hasten the pace and to produce quality texts. The Rev. 4 text in agriculture has been stabilized and there should be no attempts to unravel what has been largely agreed. On NAMA, while there has been good work in developing the horizontal mechanism for non-tariff barriers, problems remain on substance.

Japan said that there is need for a bottom-up approach. It wants to see text-based discussions on domestic regulation and an LDC waiver for services. On the issue of market access, there is need to be engaged more intensively, both in NAMA and services.

Korea said that Members have not yet made a breakthrough. "It's now or never for the Doha Round." The window of opportunity narrows day-by-day and what Members need to do is to focus on texts that are robust, renewed, and revised.

Canada said that the two buzz-words for the moment are "urgency" and "compromise". "We are approaching the hour of the day at which there will be no tomorrows," it said.

Costa Rica supported the Cairns Group. While it was pleased to see that the rhythm has picked up, there is no getting away from the fact that there is need to redouble efforts. There is need to abandon the conceptual discussion for text-based negotiations.

Singapore said that while there has been some good work done, Members are now entering the end-game. If the Easter deadline is to be met (for revised texts), the bilateral and plurilateral legs must move more quickly, and give inputs to the multilateral process. Tangible signals must come from the bilateral and plurilateral legs.

Hong Kong-China said that it detected some headway, but there is need to start seeing some compromise proposals. "The window of opportunity has now narrowed to an arrow slit at the Chateau de Chillon (around Lake Geneva)," it said.

Mexico said that negotiations are not moving at a sufficient pace. Market access needs to be given more emphasis. There is also need for more clarity and predictability. There is clearly a situation in which some Members are putting forward maximalist positions and others are adopting minimalist positions. It expressed concern that some Members are trying to be paid off for obligations that they undertook in the previous Rounds.

Switzerland said that it took note that agriculture is the pillar and key issue (in the negotiations). But it said that a foundation built on one single pillar can be problematic. There is need for more balance.

Turkey said that time is ticking, and the window of opportunity is narrowing. There is need for more flexibility and transparency and inclusiveness. The bilateral and plurilateral processes must feed into the multilateral process, and not be a substitute for it.

Sri Lanka said that as a small and vulnerable economy, it is not prepared to take on painful commitments in agriculture or services, while Colombia supported the Cairns Group.

The US, represented by Ambassador Michael Punke, said: "We are clearly at a critical juncture in the negotiations... The end game is now - one way or the other. We must act with the sense of urgency that this requires."

On NAMA, he said that the US is encouraged by the constructive engagement from many of the Members it has met with and talked with over the past several weeks on sectorals and the product basket approach. "We believe that we can jointly develop a modality that can achieve an ambitious outcome, that also addresses Member's sensitivities, and that is mutually beneficial for all participants."

On services, Ambassador Punke said that a few weeks ago, the US participated in a useful initial exchange among a group of 30 services delegations, roughly equivalent to the Signalling Conference participants, on key areas of importance to an acceptable services outcome. "This meeting began to examine in greater detail Members' sensitivities. It also provided an opportunity to explore possible flexible approaches that could lead to improved offers in sectors and modes of supply for many Members," he said.

In the case of agriculture, he said that the US takes encouragement from the constructive engagement among Members seeking to clarify various parts of the draft text. A number of issues remain to gain a meaningful understanding of the actual calculations and implications of the Rev. 4 draft text. "Preparatory work in various configurations and established groups has been quite valuable to ensure that the clarification process takes on board Members' views. This practical and meaningful engagement now from Members provides encouragement."

"While we welcome these positive signs, I think all of us would agree that there remains significant cause for concern. Time is not our ally. In November, our Leaders described what was already a 'narrow' window of opportunity and with each passing day this window narrows further. Likewise, there remain sizable substantive gaps that must be bridged if we are to succeed. We will not succeed unless we pick up the pace and, most importantly, seriously deepen the level of engagement."

Now is the time for serious discussions of possible gives and takes on a "what if" basis, he added. "As my colleagues know, the United States' view is that much of this work can only happen successfully in the context of bilateral negotiations."

Noting that many Members have grown impatient with the pace of work among the larger players, he said: "We share that impatience."

"We need to be creative in trying out different formats for bringing together Members to work through issues including bilateral, plurilateral and multilateral approaches. We have seen some of that creativity already but more is needed - both in form and substance," he said.

He said, for instance, that to build successful NAMA sectorals, all interested Members need to participate in collaborative and informal discussions at a product specific level. "In services, we need to build on the initial exchange among the participants in the informal group to get greater clarity on what the outcome on services may look like - and it will take active engagement on the part of all members of that group to achieve that clarity. In agriculture, there are a host of important and difficult outstanding issues that have been identified and which must be addressed."

He noted that in the end, "each of us is looking for a balance so that each of us can go home and say that the final deal, while not perfect, is reasonable".

Brazil, speaking on behalf of the G20, said that the Doha Development Agenda (DDA) is at a critical juncture. The multilateral trading system has a value to all WTO members.

"After almost 10 years of negotiations and trade-offs, realism will be the key to conclude the Doha Round. Agriculture has been the engine of the DDA. Agriculture will be the key determinant of the level of ambition in all other areas of the negotiation and the benchmark for the end-game in terms of the landing zones. Gaps in substantive positions must be bridged realistically," said the G20.

Speaking on its own behalf, Brazil, represented by Ambassador Roberto Azevedo, said: "We all clearly agree that we are not making sufficient progress despite our engagement in the various formats of the cocktail approach. Some of us have misgivings about some smaller formats of the cocktail approach and the fact that they are not delivering breakthroughs."

"We believe most - if not all - misgivings about process stem from a deep sense of frustration with the lack of progress, which we fully share. But let's face the facts. We do not have a problem of process. We have a problem of substance. No process, regardless of how representative, inclusive, or transparent it may be, will cure this fundamental substantive problem."

He said that after interacting with some other delegations in the last few weeks, it seems that many are still not quite aware of the size of the actual existing gaps in the negotiations.

"We clearly started this Round with very high expectations. High expectations are actually required at the beginning of any trade negotiation as a means to inject ambition and to drive the process forward. However, Brazil had to temper down those expectations over time and, after ten years of negotiations, we had to accept what is actually achievable," he said.

Brazil had to agree with quite modest outcomes in agriculture - the engine of this development Round - where developed countries will enjoy all sorts of flexibilities that negate market access for products from the developing world. The Brazilian Government had to then devote more time to explain to its domestic constituencies that, although certain expectations will not be met, the overall results are worth the efforts it is undertaking, he said, adding: "Of course, many in Brazil are still unconvinced."

He noted that despite these obvious shortcomings from a developing country perspective, "a few developed Members argue that what we have on the table is unbalanced and that to sell the Round at home they need further contributions. They claim that there is 'unfinished business' in areas of their interest: NAMA and services. For them - even though they don't say this clearly in meetings such as this one - agriculture is off the table. Moreover, if they have to make any further concessions in agriculture, it could only be by 'cutting water' in the domestic support pillar."

"We could never accept such [a] proposition," he said, adding that Brazil rejects the notion that the "unfinished business" exists only in some areas. All areas have important pending issues and nothing has been permanently fixed. "Either we have a single undertaking or we don't. We can't simply raise the level of ambition in selective areas and effectively freeze others. Additional concessions from any Member have to be compensated with gains for them."

"Real market access can only be exchanged for equally real market access. Trade-offs have to be proportional. No serious negotiator will ever engage under the presumption that someone was tricked in 2008, that payment is owed to any particular Member. If anyone insists in obtaining unilateral concessions from others, that Member will not be helping the cause of bridging the gaps among Members," he pointed out.

As far as Brazil is concerned, he said: "we negotiated seriously and in good faith throughout the process and we - like many others - did actually empty our pockets in the July 2008 attempt to clinch the deal. Under the negotiated NAMA formula, Brazil will cut current applied rates - not bound rates - by 33% in key strategic and vulnerable sectors such as automobiles, textiles, footwear, and toys. To be clear, these deep cuts are with the use of the flexibilities."

He noted that every study done so far - by Brazil, by the WTO Secretariat, or by independent entities - show that, in this Round, Brazil will create more trade than any developed country. Some of those studies actually suggest that Brazil's NAMA contribution is the largest among all WTO Members.

"We are, therefore, contributing in a very meaningful way. Any attempts to downplay this contribution are disingenuous to say the least," said the Brazilian envoy.

He added: "Despite this disproportionate effort, Brazil is still being asked to take additional NAMA cuts that, if implemented, would average those equivalent to a formula coefficient 8, instead of the coefficient 20 of the draft modalities. These additional cuts would cover over 3,200 lines, more than a third of all our NAMA lines. To make matters even worse, these cuts would go for free, because the demandeur believes it is entitled to such unilateral contributions."

He stressed that the formula cuts cannot be interpreted as a minor down-payment for the actual NAMA liberalization, which would actually be delivered by the sectorals. "If this view prevails - and this is a big 'if' - then we have not reached the 'endgame'; we have reached the 'end of the game'."

Further aggravating this scenario are the existing currency asymmetries provoked by excessively flexible monetary and fiscal policies adopted by some key developed economies, not only to stimulate faster growth, but also in attempts to reverse the effects of a crisis they created themselves, the Brazilian envoy pointed out, adding that the depreciation of the major currencies essentially wiped out any impact that Brazil's tariffs had on imports.

Given this scenario, he said that it is not surprising that "Brazil's trade balance experienced a dramatic change more recently, especially with regard to dollar denominated economies. Our trade surplus with the United States, which amounted to US$9.9 billion in 2006, is now a deficit of US$7.8 billion. This is a shift of US$17.6 billion against Brazilian exports. The totality of this shift occurred exclusively for NAMA products (from a US$6.9 billion NAMA surplus in 2006 to a US$10.3 billion deficit in 2010)."

"Given this scenario, it is simply unrealistic to expect further significant and unilateral NAMA contributions by Brazil," he stressed.

He concluded that "we must all understand that some of us - Brazil among them - are at the end of the line. These countries will not forgo their development prospects, the welfare of their citizens, nor the budding social prosperity they so painstakingly achieved. We want to preserve the multilateral trading system. But it must be a system that allows for growth and social development; a system that does not give in to disproportionate demands for sacrifice in the developing world." +