TWN Info Service on WTO and Trade Issues (Jun13/08)
19 June 2013
Third World Network  

Substantive progress needed to deliver at Bali, says Lamy
Published in SUNS #7597 dated 4 June 2013
 
Geneva, 3 Jun (Kanaga Raja) -- With only about forty working days left before the end of July, Members must make "substantive advances" in this period if they are to have any chance of successfully delivering at the ninth ministerial conference (MC9) in Bali this December and preparing a post-Bali roadmap, the Director-General of the World Trade Organisation (WTO), Pascal Lamy, warned on Monday.
 
According to trade officials, delegations who took the floor after Lamy at the informal meeting of the Trade Negotiations Committee (TNC), stressed that importance of the Bali ministerial meeting cannot be underestimated, and failure to achieve something in Bali would very likely lead to a severe loss of credibility to the WTO's negotiating function.
 
A number of developing countries reiterated that an adequate amount of progress is needed in Section II of the draft negotiating text on trade facilitation (on special and differential treatment provisions for developing country and least developed country members), and that more flexibility needs to be seen on this front from the developed countries.
 
They further said that the question of food security is extremely important, and that this had to be part of a Bali package. They also said that development issues must be at the core of any agreement, further stressing the importance of the issues of Duty Free Quota Free (DFQF) market access for LDC products and cotton.
 
South Africa stressed that agriculture must remain a core element of the Bali package, and that development and the LDC pillar is a litmus test for the multilateral trading system. "We cannot return from Bali without any meaningful delivery to the poorest members of this organisation," said South Africa.
 
In his statement at the informal TNC meeting, Lamy, as TNC Chair, said that the purpose of the meeting was to report back to the membership on his recent consultations and contacts and to continue the review of progress on the three Bali potential deliverables of trade facilitation, agriculture and Special and Differential Treatment (S&D)/Least Developed Country (LDC) issues.
 
At the last meeting (in April), said Lamy, "we collectively faced up to the reality that the pace of the substantive engagement to successfully deliver in Bali was wanting. In realisation of the heavy responsibility that confronted us all, not only for Bali, but also for the future of the DDA [Doha Development Agenda] and the WTO's negotiating function, we all committed to a set of prescriptions - changing course; urgently engaging substantively; seeking necessary political will and flexibility from capitals and displaying mutual trust and realism."
 
Since the April meeting, the continuous intensive process in negotiating groups has started to bear some incremental progress, Lamy maintained, but that on the negotiating mode, "we are yet to see the kind of flexibilities that are needed in an endgame negotiation."
 
"We all know that process, however good, is not enough to deliver. It is substantive engagement that holds the key. And here time is turning against us. We are entering the red zone," he warned.
 
Lamy gave his assessment of the state of play on the three areas for Bali deliverables.
 
On agriculture, he said that intensive consultations have continued on the G-33 proposal concerning public stockholding for food security and domestic food aid on the basis of the four questions posed by the Chair (of the agriculture negotiations) to facilitate the search for convergence.
 
According to the TNC Chair, some progress has been made on elements of political convergence which have begun to surface such as willingness to work on declaration/communique language that would recognise in general terms that the policies and programmes mentioned in the first part of the G-33 proposal could fall within the scope of "General Services" of Paragraph 2 of Annex 2 to the Agreement on Agriculture, together with a political message on the role of public stockholding in developing countries.
 
On the amendment or interpretation of existing agriculture disciplines, Lamy said that the views on this issue span a range of different options, none of which is the subject of any consensus at this stage. The main concerns expressed regarding an amendment or interpretation have been: (i) the infeasibility of the "one-solution-fits-all" approach given the differences in the situations the proponents find themselves in, and (ii) the complexity of the issue which many see as only resolvable as part of a much broader agricultural negotiation, which cannot happen in the short time left before Bali.
 
According to Lamy, some Members have indicated an openness to consider a mechanism/process that might provide for some additional flexibility for specific Members on the basis that this would be time-limited, non-automatic, and create no or minimal trade or production distortions. Such flexibility should not be at the expense of economic reforms and transparency - notably through timely notifications - would be an important element in monitoring any flexibility. Some Members also stressed that whatever the temporary solution, it should be an operational one and should not be a substitute for a broader solution.
 
So, said Lamy, "on the key outstanding issues raised by the proposal, we have made progress towards framing the debate appropriately. This is just at conceptual stage and let me stress that obviously none of this is agreed or even accepted as the possible avenue to solve this matter."
 
On this point, what is needed is to explore further a possible landing strip working out the specifics. This will be the focus of the Chair's continuing consultations.
 
On the G-20 proposal on export competition, Lamy said that the preliminary and varying reactions to this proposal indicate that a more in-depth exchange of views to seek to identify the way forward is urgently required and the Chair will be working in this direction.
 
Further to the discussions held over the (G-20) proposal on Tariff Rate Quota (TRQ) administration, "it seems to be in a reasonably good shape."
 
On trade facilitation, Lamy reported that further progress has been made on improving the draft Trade Facilitation agreement through negotiations conducted by the four Friends of the Chair. This allowed Members at the Negotiating Group meeting on 24 May to eliminate a further batch of square brackets from the text. It also produced convergence on other parts of the text that can hopefully be turned into consensus during the new phase of negotiations by the Friends of the Chair that has just begun.
 
"But the progress that is being made is still not enough to provide assurance that we are on track to produce a good result for MC9. What is needed now is more signals of flexibility of the kind displayed at the Senior Officials' meeting in May," said Lamy, adding that the key issue is how to build consensus, especially on those areas which require a higher level of political intervention such as customs co-operation and transit, as well as on other issues such as pre-shipment inspection, customs brokers and consularisation fees.
 
There is also the issue of Section 2, which provides flexibility for developing countries to implement the binding disciplines in Section 1, Lamy pointed out, further saying that these flexibilities are about developing countries scheduling commitments under categories A, B and C, according to their ability to implement them, coupled with technical assistance based on needs assessments.
 
"The key now is to synergise both parts of the agreement so that the flexibilities in Section 2 are used constructively to move the substantive disciplines in Section 1," said Lamy, adding that last week's negotiations showed that the key in this area is not so much whether assistance is available, which it is, but rather finding a way to better link needs with available assistance.
 
"Members need to invest now in making the breakthroughs that we need to see before the end of July. No-one can seriously expect that the many areas of disagreement that still exist in the text can be left until the autumn and can then be sorted out in time for Bali. We need to start removing less conflictual brackets now."
 
In his vew, there are three ways of removing brackets: agreement on substance, agreement to disagree and papering over disagreement with ambiguous or with best endeavour language.
 
"Experience of GATT/WTO negotiations pleads, I believe, broadly, for the first two options."
 
On S&D, the TNC Chair said that in the two meetings held so far on the Monitoring Mechanism and the Cancun agreement-specific proposals, positive advances have been made which could potentially translate into concrete progress in the coming weeks. Further such consultations are planned.
 
"We need to show similar progress in the six Agreement-specific proposals, relating to the Sanitary and Phytosanitary Measures Agreement and the Import Licensing Procedures Agreement to present a credible development package to Ministers in Bali."
 
On LDC issues, Lamy noted that the LDC Group submitted their proposal on an LDC Package for Bali which was circulated to delegations last Friday in document TN/C/W/63. The package that the LDCs are proposing to form part of a Bali outcome includes essentially four areas: implementation of the Hong Kong DFQF (Duty Free Quota Free) Decision; preferential rules of origin; cotton; and operationalisation of the LDC Services Waiver.
 
Lamy said that this was the thrust of the message he had delivered to Ministers last week, both at a small gathering of trade Ministers hosted by the Australian Minister on the margins of the annual OECD Ministerial meeting in Paris and during the bilateral meetings that he held.
 
In Paris, he said he had asked two questions of Ministers: (i) Whether they were all ready to ensure that by the end of July, the contours of landing zones would be in sight; (ii) Whether in particular the so-called "majors" were ready to be more flexible in their positions by moving more to the middle and not simply asking others to move where they were.
 
According to Lamy, the Ministers expressed concern that the negotiations were not on a path that provided confidence of success in Bali. Ministers acknowledged that not making progress in Bali would have damaging implications for the future of the Round and the credibility of the multilateral trading system. Therefore, something significant, substantive and credible had to be done as a building block for work after Bali to pursue the DDA.
 
Ministers acknowledged that holding up progress in one area over demands in another was not a productive approach. In order to unblock this situation, Ministers instructed their negotiators in Geneva to test various options and explore landing zones in a more focused, intensified manner on a "without prejudice" basis in all three areas, added Lamy.
 
[A press release issued by the Indian Ministry of Commerce and Industry on 30 May, referring to Minister Anand Sharma's meeting in Paris with Lamy and WTO D-G-designate Mr Roberto Azevedo, quoted Minister Sharma as telling them that India will play a constructive role in ensuring a successful outcome in the Bali Ministerial.
 
[While recognising the importance of Trade Facilitation (TF) and upgrading infrastructure at border, ports and custom procedures for giving a boost to exports, Sharma underscored the need for addressing the concerns of food security which have been outlined in a proposal presented by G-33 countries. "This is essential to protect the interest of the subsistence farmers in developing countries and also the responsibility of the state for assuring food security for the poor and vulnerable section of the society," he said.
 
[According to the press release, Minister Sharma also said that government procurement of food grains for public distribution system under the MSP mechanism cannot be diluted. This assumes importance as the Food Security Bill is pending before the Parliament.
 
[On the possibility of an early harvest at Bali, Sharma stressed that it must address the concerns of LDCs and small and vulnerable economies to ensure that the development dimension of the Doha Round is retained, according to the press release.]
 
[Some participants said that apart from the mini-ministerial meeting hosted by the Australian Trade Minister, there had been some bilaterals and limited plurilaterals. Also, some of the trade ministers had meetings with Ambassador Azevedo (who was present in Paris at their request), who takes over as D-G in September.
 
[The various discussions centered around a Bali package, and key issues of give-and-take in achieving it.
 
[According to some of the participants at the Paris meeting, little progress was made. The US and EU were insisting on securing a Trade Facilitation Agreement with mandatory obligations in Section I of the draft TF text, and unwilling to consider or indicate the concessions they would make to developing countries on a Bali package - whether on TF or food security or LDC issues. They were merely promising to consider what they could give after securing a TF agreement, and it was not even clear whether it would be as part of a Bali package, or a future work programme.
 
[The Bali meeting, and its successful conclusion, is thus held hostage by the US and EU, in their attempts to secure a TF accord without any quid pro quo on their part, a developing country trade diplomat said. It raised questions as to whether once the TF deal was secured, the US and EU would even engage in serious negotiations on the other issues in the Doha talks, and carry out the obligations they undertook at Marrakesh, under Article 20 of the Agreement on Agriculture, for continuation of the reform programme, or bury Doha and bring new agendas into the WTO. - SUNS] +