TWN Info Service on WTO and Trade Issues (Dec12/01)
3 December 2012
Third World Network

WTO Members, Lamy's panel exchange views
Published in SUNS #7447 dated 28 September 2012

Geneva, 27 Sep (Kanaga Raja) -- A meeting between heads of delegation and several members of a panel of "WTO stakeholders" formed earlier this year by Director-General Pascal Lamy took place at the World Trade Organisation on Wednesday.

In what was described as the first time that heads of delegation and panellists were having a meeting of this sort, trade officials said that since several panellists were appearing here at the WTO Public Forum (25-27 September), members wanted to have a chance to talk with them and hear their thoughts, as well as to express their views to the panellists.

The Director-General had announced the composition of the "WTO Panel on Defining the Future of Trade" on 13 April, whose task is to examine and analyse challenges to global trade opening in the twenty-first century (see SUNS #7351 dated 17 April 2012).

At a subsequent meeting of the General Council on 1 May, several key developing countries expressed reservations about the panel and made clear that the panel and its outcome would be on the Director-General's own responsibility (see SUNS #7362 dated 3 May 2012).

A number of civil society organisations also strongly objected to the panel of "WTO stakeholders" and in a letter to Lamy dated 25 June, they said, amongst others, that the panel - more than half of which is composed by representatives of the business sector - "does not have the global legitimacy of the stakeholders - those who will be impacted by the future of trade negotiations within the WTO - to be able to propose a legitimate path forward for future WTO negotiations."

The civil society groups had called on Lamy to dissolve the panel, given that any proposals that emanate from it would lack legitimacy (see SUNS #7398 dated 27 June 2012).

The panellists on the "WTO Panel on Defining the Future of Trade" are: Mr. Talal Abu-Ghazaleh, Chairman and Founder, Talal Abu-Ghazaleh Overseas Corporation, Jordan; Ms. Sharan Burrow, Secretary-General, International Trade Union Confederation, Brussels; Ms. Helen Clark, UNDP Administrator, New York; Mr. Thomas J. Donohue, President and CEO, US Chamber of Commerce, Washington; Mr. Frederico Fleury Curado, President and CEO, Embraer S. A, Brazil; Mr. Victor K. Fung, Chairman of Fung Global Institute and Honorary Chairman of the International Chamber of Commerce, Hong Kong, China; Mr. Pradeep Singh Mehta, Secretary-General, CUTS International, India; Mr. Festus Gontebanye Mogaw, Former President of Botswana; Ms. Josette Sheeran, Vice Chairman, World Economic Forum, Geneva; Mr. Jurgen R. Thumann, President, BUSINESSEUROPE, Brussels; Mr. George Yeo, Former Foreign Minister, Singapore and Vice Chairman of Kerry Group Limited; and Mr. Fujimori Yoshiaki, President and CEO, JS Group Corporation, Tokyo.

(Trade officials said that Ms Clark, Mr Donohue, Mr Fung, and Mr Yeo were not present in Geneva for the Public Forum.)

According to trade officials, at the meeting on Wednesday, Lamy outlined the mission statement of the panel and said that it was looking at issues pertaining to sustainable development, economic growth and poverty alleviation, as well as stressing the "big picture".

The panellists were looking at "boxes of issues" and trying to figure out what the key stakeholders in the trading system would like to see coming out of the WTO and how the overall outreach can be improved in terms of explaining how the trading system works.

According to trade officials, Lamy stressed that this is not about the Doha Round and looking into WTO procedures, but about the "big picture" and what it is that can be done to improve the landscape in the twenty-first century so that the WTO can work more effectively.

Several delegations spoke following the remarks by the Director-General.

According to trade officials, Kenya said why is it that up until the Uruguay Round, the seven previous rounds had lasted for a much shorter duration - two years or less. The Uruguay Round took eight years, and did not complete all of its work. It had to shift some of the work into the built-in agenda. Why is this the case and can the panel look at this and figure out what it is that has led this to be such a problem, it said.

It had some suggestions, one being having a lighter negotiating agenda which would facilitate full participation of members. The Doha agenda is a heavily loaded agenda and there needs to be a way to use Article 47 of the Doha Declaration (dealing with the single undertaking) so that there can be a front-loading of issues, i. e. perhaps an early harvest, as well as back-loading without undermining the nature of the single undertaking.

The Enabling Clause could be advanced and that this could help developing countries to participate in global value chains. There needs to be some bench-marking of trade and poverty alleviation, and it might help as well if the impact of trade on generating jobs and development can be looked at, it added.

Australia praised the notion of the panel and said in these challenging times the multilateral trading system and the "big picture" needs to be looked at. We have been depending on the multilateral trading system as an engine for economic growth, development and employment. If the multilateral trading system is struggling, that means the overall international effort to address these issues is not delivering as well.

While there is a stalemate in the Doha negotiations, other elements of the work including dispute settlement and the regular committees are functioning. However, the overall progress in these areas (apart from dispute settlement) has been rather modest, it said, adding that any guidance from the panel that might impact on WTO work would be of value.

Mexico, praising the creation of the panel, said that there is a financial crisis and "we are not out of this yet". Trade growth has decelerated (in 2011) and growth expectations have been further revised downward this year. There is need to begin to look at some of the changes in the way in which the world is functioning now with respect to trade and global value chains (GVCs).

People need to look at things from a less mercantilist point of view - and see not only exports as good, but that imports are good as well. Mexico has opened its market and it has had great benefits for its citizens and businesses.

Mexican citizens are now better dressed, and have better quality clothing and footwear than at any time in their history and this is due to the fact that these items are now much more affordable than they had been. Imports of services are very important as well, it added, noting that 75% of imports in services are intermediate services.

In the regular work and dispute settlement, the WTO is a success story, but "we are having difficulties with respect to the negotiation element of the work", and there is need to look at new issues as well, Mexico said. The panel must bear in mind some of these issues such as competition and investment. The issues of exchange rates, trade and climate change, private standards and the challenges of GVCs should also be looked into by the panel.

Singapore said that it is keen to hear from the panellists on what they value about the WTO, on the effect on the WTO of the challenges being faced today. The panel needs to tell governments the way that they see things.

Brazil said that the WTO is part of the "big picture". There is need to ensure that the disciplines keep up with what is happening today; in fact, some disciplines can be updated through the regular work, but this is rather slow. While the dispute settlement system is working, the regular bodies are not working as well as they could, inching forward in terms of any updating of the rules. The only way to update disciplines in bold leaps is through negotiations, and this is not working at all well.

On the Public Forum's topic, "Is Multilateralism in Crisis?", Brazil said that it is not sure of that but certainly "we are in a transition period" and it is not a question of who needs to contribute more. It's not a question of emerging markets needing to contribute more, or a question of the level of ambition. The problem is "we have conflicting agendas" and at a time when you have a more democratic system with more players, and you have a series of conflicting agendas, it makes arriving at a consensus much more difficult.

So, how do you produce more disciplines at a time of conflicting agendas, Brazil asked, and in terms of the negotiations themselves, how do we come up with a common agenda.

In terms of what needs to be done, Brazil pointed to three areas in the negotiations, namely, services, goods and the food industry. Noting that some say that the food industry represents only 7% of world trade, it said that it is important to know that trade is only a portion of what the food industry is involved in.

It said even non-trade elements of the food industry is affected by distortions and subsidies that are taking place in the international arena. A number of countries would like to see more trade in agriculture but this is difficult at the moment, "and if we are going to be able to ever succeed in the negotiations, all three of these areas must be addressed."

The European Union agreed on the need to look at the "big picture", saying that there is need to preserve the negotiating function of the WTO. There is need to properly communicate the benefits of the multilateral trading system, and the need to find a link between regional trade agreements (RTAs) and the multilateral trading system. There is also need to ensure that the RTAs are disciplined in a way that makes them compatible with the rules and disciplines of the WTO.

On the future of the Doha Development Agenda (DDA), the EU said that what needs to be done is to find a way to deal with these hard-core issues, and how the Doha Round can be concluded. "We have a path ahead of us that came out of the last ministerial conference [MC8 held last December] and there are some things on which we can get agreement" in the areas of development and trade facilitation, but solutions need to be found to unblock the negotiations in key areas.

There is also need to start addressing global challenges. While the DDA should not be replaced, there is need to begin to discuss some of the new issues, including food security, environment and climate change, raw materials and energy, and GVCs. There is need to look at the "big picture", but there is also need to look at the WTO activities as well.

One of the things that the EU would like the panellists to look at is how the WTO can better interact with other international organisations, specifically the International Labour Organisation (ILO).

Saudi Arabia said that the WTO is an economic organisation that should not be used as a political tool. The accessions process needs to be made more flexible and that the WTO should be working more closely with other international organisations.

Norway said that the multilateral trading system rules have prevented protectionism from breaking out on a wide scale, but it is true that some governments are beginning to use more flexibilities as a means of protecting domestic producers. The question remains how do you open markets in the twenty-first century.

There are a lot of bilateral and regional trade agreements, it noted, adding that it was not sure how much value they would add to what Brazil had suggested with respect to opening markets or addressing disciplines across the three areas (services, goods and the food industry).

How can those three areas be de-blocked, it asked, saying "are we seeing a change in paradigm." Is there a moving-away from the multilateral trading system towards blocs and is this the way to open markets in the twenty-first century? If that is the case, what implications are there for global governance, and what are the responsibilities of the major economic players with respect to the system?

Japan said that there is need to look at the impact of GVCs and to look at WTO rules in terms of how they may affect these chains. There is need to examine ways of levelling the playing field for members and to be able to reflect in the discussion the change of paradigm that has come about as a result of the economic conditions in which we are placed. "We need to discuss whether there are ways that business can be involved in the negotiating process through a more expedited manner."

Lesotho said that there is no other way forward in the twenty-first century other than through having trade flows move effectively, but there is need to update the framework of the multilateral trading system. There are other policies that are required for poverty alleviation beyond trade. There is need to preserve the bottom-up approach in terms of WTO decision-making and to be more flexible with respect to accessions and to shorten the accessions process for developing countries. The financial crisis has dealt a big blow to trade and what is being seen now is people using exchange rates as a tool which at the end of the day is protectionist.

It stressed that development must be factored into anything coming out of this (the panel's) report and the only way that the global economy can tap into untapped meaningful potential is by tapping into the potential in developing countries.

The Philippines said that the key questions are how and why trade opening benefits the people. There is need to translate the benefits into a narrative that the man in the street understands. There is also need to ensure that trade unions and workers see that trade can deliver jobs for them. There is need to have a stocktaking of the current situation. With respect to GVCs and RTAs, there is need for greater coherence among the key actors.

Chile said that the negotiating function of the WTO is not working, but that the other two areas (regular work and dispute settlement) are. The negotiating function is important and if the problems here are not addressed, the risk is that it could contaminate the work in the other two pillars as well.

Eighty percent of its GDP is linked to trade and it is important for Chile. There is need to strengthen the framework of the WTO and suggestions on this would be very important. There is need to find a way where the system is strengthened for all, and by all.

Switzerland said that governments provide the legal framework for trade and they are very keen to create an attractive environment for business. So it is important for governments to understand what business really wants. Does it want more market opening or protection at the borders, or ways to improve the way GVCs function, or stronger multilateral trading rules?

Colombia said that there is need to find ways in which the WTO fits into the "big picture". There is need for more trade and members are struggling to deliver on this. There is need for constituents, businesses - large and small - workers and consumers to see benefits from trade. This is true across services, goods and food areas. It is beyond its comprehension why an area as important as food continues to be as distorted as it is today.

Haiti said that some of the work of the panel must focus on the plight of the least developed countries (LDCs). Something between a quarter and a third of the world's population are living in LDC conditions. "We cannot settle for a three-tiered world." There is need to be able to find ways to strengthen these countries because the strength of any chain can only be measured by the strength of the weakest link.

It pointed to some things like the Enhanced Integrated Framework that are working but much more needs to be done. The multilateral trading system needs to be strengthened so that it better serves the interests of the LDCs.

Turkey said there is need to call on the stakeholders "to ensure that they really do understand that they have a stake in what we do." It is interested in the value chain, and the system needs to be strengthened to make people aware that this is a system that holds benefits for all.

The United States posed three questions to the panel, namely, how do we build consensus. The WTO is a consensus-based organisation but we have not fully grappled with the fact that for the first time in the history of the multilateral trading system, the biggest players are not like-minded. So, we haven't begun to grapple with the implications of all that means, it said, adding that it saw at the ministerial conference last December that "we didn't really have a consensus on how to deal fully with the single-undertaking".

It said that there is need now to try to find ways where new kinds of consensus can be generated and 2012 has been all about the search for these other kinds of consensus. It said there has been some minor successes like the LDC accession (improved guidelines). The key question now is how to form consensus in this multi-polar environment.

It also asked what is the evidence that trade supports development. It said that it takes it for granted that this is correct. It was something that was an assumption of the GATT and WTO, from its origins and through its history, but it sees that there are some people who don't necessarily take this for granted, and may not even believe this is helpful for development.

There needs to be some analysis done on this, it said, noting that there are two types of countries emerging - a group that is turning inward and raising barriers and a group that is turning outward and lowering barriers. This is not a North-South issue.

There are a lot of opening in developing countries, so what is the evidence of these two models, are they succeeding or are they not succeeding, it asked. There is need to address the "global schizophrenia" about trade. It is not true to say that there is no trade liberalisation going on today; it is just not going on at the WTO. Why is there trade opening bilaterally, regionally, but not in Geneva?

Egypt said that there is need to strengthen the multilateral trading system. There has been discussion about ideas like trade and environment, investment and competition coming onto the agenda of these so-called twenty-first century issues. It recognised the importance of these issues, "but before we begin to embrace these issues, we need to finish with the twentieth century issues that are on the table currently with respect to the Doha Round."

El Salvador said that governance and coherence are of great importance but the panel needs to look very closely at the issue of coherence between international organisations and how they are working together to advance sustainable development. It is very important to get a balanced outcome and that can be done across a greater coherence programme.

Argentina said that there are certain issues that need to be examined that have not been looked at in any great detail. One of these issues is the impact on the food industry of bio-fuels policies. Bio-fuels policies are a major part of agriculture and we see a broadening of those who benefit from agriculture distortion. It is not only producers who have benefited but also some consumers of bio-fuels. There is an impact here as well on commodity prices.

On GVCs, Argentina agreed that there is need to look at the linkages between these and trade, but the GVC discussion does not always reflect the needs of many developing countries. When looking at the question of GVCs, the role of agribusiness in these global value chains has not been effectively examined and that needs to take place.

Jamaica asked what stock do business leaders put in new WTO commitments. Is it their sense that what is being proposed here is something that would help them in terms of seeking their strategies or do they just move ahead anyway because we are too slow in addressing what it is that they find of importance. It would like to know, in respect of social issues, what it is with respect to the WTO agenda that can be improved to facilitate job creation.

Hong Kong-China said that the negotiating function of the work has stalemated. It does not mean that the other areas of the work are not functioning, but "what can we do here to improve what we do now, and how do we bring around the negotiating function."

China said it supports the development of global supply chains and has benefited a lot from these chains. It hoped that more developing countries will pay more attention to this, so that they too can draw benefits from the global supply chains. But global supply chains cannot cover all WTO members, and not even a majority of them.

So, it asked, what should we as members of the multilateral trading system do to address the remaining issues that might affect the rest of the members - agriculture, tariff peaks, tariff escalation, and LDC issues and the like.

"What can we do to get all of the issues that remain on the Doha agenda back on track?"

The Doha Round is deadlocked, it added, noting that some may think that the way forward is to do more work bilaterally, plurilaterally or regionally. "Is this really something that would be of benefit to the multilateral system?"

India said that trade is important in developing countries as one of the tools for growth, but it is not the only tool. There is need to look at certain aspects of trade policy and of trade opening. This is important particularly in an environment when many industrial countries are talking about trying to bring jobs back to their countries. It said that it has benefited from the multilateral trading system, and was a founding member of the GATT.

It acknowledged the challenges to the multilateral trading system, pointing out that there are major problems. One of the biggest problems is how to have inclusive growth and how to reconcile the agendas of countries with per capita income of more than $80,000 a year with those that have a per capita income of only $500 a year. This has to be measured against a backdrop of 157 WTO members.

There is need to find ways to satisfy concerns on employment growth and welfare gains. This is something we all need to focus on and how can we use the trading system so that we can open trade for the betterment of the global community, it said.

Apart from the delegations, several members of the panel also spoke at the meeting, said trade officials.

According to some trade diplomats, an impression that was left on the developing countries was that except for one or two members of the panel, the rest appeared to be either pushing their own corporate agendas or those of their funders.

The trade diplomats were of the view that Lamy appears to be playing up these GVCs in an effort to create divisions among the BRICS (Brazil, Russia, India, China, South Africa) and to get support for the mercantilist agendas of the US and EU and putting agriculture in cold storage.

The trade diplomats added that the entire panel is perhaps a kind of a front, and that through the panel the Secretariat will write a report, and more or less dump, or put aside, the current Doha Round trade negotiations and developing country issues for the so-called "big picture" and the undefined twenty-first century agenda. +