TWN Info Service on WTO and Trade Issues (Jul13/07)
29 July 2013
Third World Network

Members voice range of views on Bali deliverables
Published in SUNS #7634 dated 25 July 2013
 
Geneva, 24 Jul (Kanaga Raja) -- The last meeting of the WTO Trade Negotiations Committee (TNC) before the summer recess here saw a number of countries voicing a range of views on the potential deliverables for the upcoming ninth Ministerial Conference (MC9) taking place in Bali this December.
 
The varied interventions of delegations came following a report by Director-General Pascal Lamy, who chaired his last TNC meeting on Monday before stepping down at the end of August, on the state-of-play on what he thought were the three potential Bali deliverables: Special and Differential Treatment (S&D)/Least Developed Country (LDC) issues, agriculture and trade facilitation (see SUNS #7633 dated 24 July 2013).
 
Developing countries stressed, amongst others, the importance of a balanced Bali package that had the LDC issues at its core, as well as the issues of S&D and food security. They also called for more focus on Section II of the draft negotiating text on trade facilitation (on S&D provisions for developing country and least developed country members), and that both Sections I (on commitments) and II of the draft text should move together.
 
Some trade diplomats said that while there was a general view emerging on the need for a balanced package, and viewing the Bali package as just an ‘early harvest', and that the entire Doha Round had to be taken up after Bali and completed, for the ‘early harvest' to survive, there was an uneasy impression, confirmed by the US intervention, that the US is merely wanting to pocket a binding Trade Facilitation accord, and walk away from the Doha Round and its single undertaking covering other issues of importance to the developing world.
 
According to trade officials, in its intervention at the TNC meeting, Nepal (on behalf of the LDCs) said that any Bali package must be balanced and must accommodate all members, adding that the LDC issues should be accorded priority.
 
It recalled that the LDCs had made a proposal on 31 May that included duty-free quota-free market access for LDC products (DFQF), cotton (both trade and development aspects), simplified rules of origin, and a services waiver. The Group is now in the process of reformulating some of these issues, and is trying to strike an internal balance.
 
On agriculture, the LDC Group supported the G-33 proposal on public stockholding for food security.
 
On trade facilitation, Nepal said that this should go hand-in-hand with arrangements to enhance capacity for the LDCs so that they can implement the agreement. It also called for rapid agreement on the 28 Cancun Agreement-specific proposals and on the S&D monitoring mechanism.
 
Indonesia (on behalf of the G-33) said that it was encouraged by the positive atmosphere in the discussions on its proposal (on public stockholding for food security), but cautioned that the Bali ministerial conference is fast-approaching. It said that the G-33 is open to any discussion that might offer reasonable solutions that are meaningful, operational and effective.
 
It said that it is clearly seeing some contours of an agreement but the question of ‘legal certainty' is an important issue, adding that there is need to intensify the work, and to ensure that there is an outcome that can deliver in the areas of food security, livelihood security and rural development.
 
Speaking for itself, Indonesia said that while it was encouraging, there is need to acknowledge that time is rapidly running out and that some gaps remain. It supported the G-20 proposal on export competition and the (upcoming) Cairns Group proposal, adding that the issue of export competition is an important one for Indonesia. It also wanted a deal on trade facilitation and believed that the issue of the 28 Agreement-specific proposals should be resolved.
 
Morocco (on behalf of the African Group) said that while members are seemingly close, they are also far away from getting an agreement. An agreement needs to be reached before Bali and is not to be negotiated there, it said, adding that it will be too late if members go to Bali with issues unresolved.
 
It said the African Group will do all it can in the three areas of trade facilitation, agriculture and development, stressing that the LDC issues are at the core, and that S&D is also central. Work needs to be speeded up in these areas, and it is essential that there be a satisfactory outcome for the LDCs.
 
It said that the African Group is fully engaged on the question of trade facilitation, and wants a balanced agreement that is mutually beneficial and takes into account national specifics and levels of development in terms of commitments to be undertaken. There is need for trade-related technical assistance and capacity-building in Section II of the draft negotiating text (on S&D). Both Sections I (on commitments) and II must move together.
 
It further said that there must be an agriculture outcome in any Bali package and food security is central for the African Group. Cotton must also be part of any final Bali package. There must also be a post-Bali process that is spelled out so that this is not the end of the Doha Development Agenda (DDA) but a stepping stone.
 
Australia (for the Cairns Group) said that the issues of TRQ (Tariff Rate Quota) administration, food security, and export competition are areas where work needs to be intensified. It was pleased at the way in which the G-33 proposal has been taken up and engaged. This is something to which all Cairns Group countries are seriously committed to an outcome.
 
It said that export competition is a crucial issue for the Cairns Group and there needs to be an outcome of some kind in this area in Bali. An unwillingness to engage on this issue by some will be a risky strategy, it cautioned, adding that the G-20 proposal (on export competition) should be the starting point in the discussions. The progress on the G-33 proposal shows that it is possible to get through the tough issues if you engage seriously, it said.
 
On behalf of itself, Australia said that members are in with a chance for Bali now but there needs to be more work done on the LDC issues, and mind-sets and methods need to be changed if there is to be an agreement.
 
Switzerland (for the G-10) said that it appreciates the work that the Chair (of the agriculture negotiations) had done on the G-33 proposal, adding that there has been some constructive and impressive engagement on this issue.
 
On the G-20 proposal (on export competition), it is not convinced that the proposal is calibrated realistically for a Bali package. On the G-20 proposal on TRQ administration, it said that the G-10 would be affected by this, so this is something where its interests will need to be considered. There is little time before Bali and there needs to be a balanced outcome, it added.
 
On behalf of itself, Switzerland said that a Bali package is doable from the point of view of substance but there are two challenges, one being the clock and the second the negotiating machinery. Geneva and the capitals will need to have their wheel gears clicking much more effectively or seamlessly.
 
On the development issues, it said that it is looking hard to try to find where the LDC issues can be harvested. There needs to be much more work done by capitals getting involved and the horizontal process needs to begin very soon in order to identify issues that are of importance and that can be traded off.
 
Saudi Arabia (for the Asian Group of developing countries) said that members are at a crossroads and must choose between flexibility and rigidity, and between cooperation and recrimination. There is no excuse for failing and members need to be able to achieve a three-way balance. It did not want negotiations to take place at the Bali ministerial conference.
 
It took some solace from the wide recognition of the significance (and) importance of the G-33 proposal and of the progress made, and of the openness of many to consider arriving at solutions. This is encouraging, it added. It also encouraged all stakeholders to be involved in finding a viable solution to the issues of importance to the LDCs.
 
Brazil (for the G-20) said that it is deeply concerned by the state of any early harvest in agriculture for Bali. While it is good that the TRQ administration issue has been considered doable, the level of engagement on export competition (G-20's proposal) is disappointing and regrettable.
 
According to Brazil, the deadline of 2013 (in the Hong Kong Ministerial Declaration on elimination of export subsidies) cannot be allowed to pass silently, and it is hard to imagine a successful MC9 outcome if there is not a meaningful agreement on export competition.
 
Chinese Taipei (on behalf of the Recently Acceded Members) said that there has been some technical progress in agriculture but is too little, too late. The situation has improved but members are not at a point yet where they can say a positive outcome in Bali can be considered likely. Bali is just a small stepping stone to an overall Doha agreement but even this is proving somewhat difficult, it said.
 
On behalf of itself, Chinese Taipei said that it attaches a great deal of importance to the multilateral trading system. On the agriculture issues, it agreed with the G-10 statement. Trade facilitation would be good for both developed and developing countries and should be one of the deliverables for Bali, as should the Agreement-specific proposals and the (S&D) monitoring mechanism, it added.
 
Burkina Faso (for the Cotton-4) endorsed the statements of Nepal for the LDCs and Morocco for the African Group. It is working on developing a proposal on cotton. It called on all its partners to show political will and commitment to reach an outcome in this area.
 
Brunei (on behalf of ASEAN) said that it remains confident that members will not arrive at Bali empty-handed, but all sides must be willing to compromise. It hoped to see more progress on the LDC issues. Time is running short and members need to intensify their work in September, it said.
 
Egypt (for the Arab Group) said that it looked forward to a balanced package in Bali, and hoped that there will be balance across the three areas of development, agriculture and trade facilitation. The Arab Group is working on all of these issues, which are very important, but this does not detract from the fact that the post-Bali process has to be very important also, and this is something that it would insist on, in terms of a clear roadmap coming out of Bali on what would be coming next.
 
On behalf of itself, Egypt said that the Doha Development Agenda (DDA) is important to ensure that the integrity of the WTO is preserved. It looked forward to a balanced Bali package.
 
On trade facilitation, there is need for a balance between Sections I (on commitments) and II (on S&D) of the draft negotiating text, it said, expressing concern that the progress is not balanced, and that Section I is too ambitious. There is need to settle Section I issues without putting too onerous a burden on developing countries. If the proponents of this issue do not take seriously the concerns of developing countries, it will be very difficult to have an agreement on trade facilitation at Bali, it warned.
 
It also said that agriculture is central for development, and there must be an important outcome across the three key proposals in this area.
 
Jamaica (for the ACP Group) said that considerable work remains to be done if members are to succeed at Bali. On trade facilitation, it said that there should be a substantial outcome on Section II (on S&D) of the draft negotiating text. There should also be technical and financial assistance provided commensurate with the obligations that are being asked of the developing countries in terms of implementing these measures.
 
Bangladesh agreed with the LDC Group statement.
 
The European Union was of the view that trade facilitation is unfortunately an area where expectations for major progress have not been sufficiently met. On Section I (on commitments), it said that the text contains too many issues that can be described as ‘trivial' in nature, but on which we continue to spend precious time. However, there is need to be pragmatic in this process.
 
According to the EU, the Trade Facilitation Agreement cannot reflect the specific wording used in the legislation of each and every one of the WTO's 159 Members. Constitutions will not be changed and fundamental principles of our legal systems will not be adapted because of the Trade Facilitation agreement.
 
All of us, however, have room for manoeuvre on the numerous technical issues that still remain to be resolved, it added.
 
Where fundamental issues exist, we need to dedicate time to resolving them, but we need to separate them from those that are simply a matter of preference and on which we can be directly flexible. This is the way to make adequate progress on these issues, it said.
 
On Section II of the draft text on trade facilitation (on S&D), it said positions have significantly been clarified in recent weeks and that we are not far away from agreement on the main principles. We need to keep in mind that the flexibilities foreseen in Section II will in principle be available to all developing countries, it added.
 
On the G-20 proposal on export competition, the EU said that it has indeed committed to phase out export subsidies but this commitment was made in a very specific context and is clearly part of the single undertaking and the successful conclusion of the whole DDA.
 
On development issues, it said that progress has been limited, but that the monitoring mechanism and the Agreement-specific proposals are clearly possible deliverables for Bali. A stronger effort is also needed on the LDC issues.
 
Japan said that there is need to shift gears and step up the pace.
 
Mexico said that the Bali ministerial conference cannot just be another ministerial meeting. There is need for an outcome here and a balanced result is crucial for the continuation of the negotiating function of the WTO.
 
Korea said that more work is needed to achieve convergence on a Bali package. Some progress has been made on trade facilitation in terms of removing square brackets, but more is needed. The political issues need to be fleshed out so that they can go into a trade-off mode in the horizontal process.
 
It supported the G-33 statement by Indonesia. On the G-20 proposals, it said that any attempt to change the key sensitivities of Rev. 4 (draft agriculture modalities text) could be counterproductive. There is need to move quickly into the horizontal process.
 
The US (represented by Ambassador Michael Punke) said: "On the positive side of the ledger, it is possible to point to some very good work in this town over the past seven months. We should acknowledge in particular the labor intensive efforts of our experts on trade facilitation and agriculture. While all of us wish that more would have been accomplished by this juncture, these efforts have helped to narrow the ground and to clarify the issues."
 
The US added: "If WTO Members have not exactly shrouded themselves in glory, they have at least kept the ship afloat for the fall, and in some cases, managed to steer it away from obvious shoals. To paraphrase from the immortal Monty Python, ‘We're not dead yet'."
 
"We've probably managed to do just enough over the past seven months to give us one final shot at a meaningful package for the 9th Ministerial Conference in Bali," the US said, adding: "For the part of the United States, our new US Trade Representative, Michael Froman, has made clear that we are committed to working toward a successful outcome at Bali. The US agenda is full, but I can guarantee my colleagues here today that we will do our share and more. Our experts in Geneva and Washington are examining the degree to which we can be flexible in our positions on key issues."
 
"But we are far beyond the time for tactical maneuvering. Which is why I have spent a significant amount of time over the past couple of weeks delivering some unpopular messages in this chamber. Given the shortness of time we will confront in the fall, we can't spin our wheels on repetitions of tired debates - and we all know what they are. I have heard many delegations complain recently about their ‘disappointment' over this or that issue. And my response is, ‘Join the club'. There is no monopoly on disappointment in the Doha Round. Certainly the United States has its own lengthy catalogue. But wallowing in our collective angst will not create a single new trade opportunity for any of our people. The question today - and the question for the fall - is can something meaningful be salvaged?"
 
According to the US, "Trade facilitation is widely acknowledged as the big ticket item most likely to come to fruition by Bali. And ministers from every corner of this membership have directed us to get it done. At various moments in the past few weeks, it's been possible to imagine we might succeed. In areas such as advanced rulings, we've seen that the combination of advance work by proponents, skillful chairing, and flexibility all around - can deliver substantive results. We'll need to repeat that formula throughout the text to deliver for Bali."
 
The US also said that there is need for a meeting of the minds on key issues, starting with the relationship between Section 1 and Section 2, adding that it was the US that first put forward a proposal - four years ago - for unprecedented flexibilities in trade facilitation for developing countries.
 
"But we cannot lose sight of the underlying premise of this proposal. These state-of-the-art flexibilities offered to developing countries in Section 2 exist for one purpose - to support full implementation of meaningful, trade facilitating commitments that bring benefits to traders and developing countries alike. For there to be real benefits for all, obligations must be clear and binding," the US stressed.
 
"The value that the WTO adds to global trade is binding rules. If we don't create binding rules, our WTO negotiations add no value, and frankly, that type of outcome is of no interest to the United States. We already have a non-binding customs codes in the World Customs Organization. Which is why we have pushed back against Section 2 proposals that would allow Members to avoid the establishment of definitive end dates for implementation," it added.
 
Such proposals, said the US, effectively make the trade facilitation agreement non-binding, adding that this issue must be addressed for a multilateral agreement to succeed.
 
"It is also important for all trade facilitation advocates to make their voices heard. Too often, we hear quiet encouragement in the corridors and hallways, but deafening silence in the critical debates. The few voices against a strong agreement thus attain disproportionate volume. If all those who support trade facilitation do not speak up, there is a very real chance that we will fail in the final push for agreement."
 
Beyond trade facilitation, the US said that it has engaged extensively to find calibrated deliverables in agriculture and the so-called "development" pillar, including discussions of the monitoring mechanism and the Cancun 28 measures, adding that at the same time, "we've been honest and clear that some issues are too integrally associated with balances of the single undertaking to be part of the Bali package."
 
"I do want to underscore the position of the United States on the G33 proposal, which represents one area in which our extensive engagement has put the issues in much sharper relief than at the beginning of the year. Critically, there appears to be broad recognition that we will not amend the Agreement on Agriculture, a significant evolution in our discussion," said the US.
 
To succeed in reaching agreement, it stressed, it will also be critical to address food security in a way that minimises distortions to global trade, promotes transparency in the context of WTO commitments, and encourages continued reform.
 
"We are committed to work hard in finding a solution that strikes these balances."
 
South Africa said that the key to success at Bali is to deliver a balanced package that is in favour of the poorest countries. "Yet as we assess the state of play of the negotiations - with just 6-8 weeks of effective negotiating time before Bali - we are all aware that we will need a miracle to deliver such a package!"
 
On trade facilitation, South Africa said that it has worked hard during the past several years to modernise and develop its Customs Control procedures and systems and facilitate trade and is thus an active participant in these negotiations.
 
"We remain convinced that the incorporation of strengthened disciplines on Customs Cooperation will enhance the value of a Trade Facilitation Agreement for all members and we will continue to work towards this end."
 
South Africa stressed that there are still many issues in Trade Facilitation where the level of ambition of the proponents remains too high. It is strange - to say the least - that at this stage of the negotiations, the major OECD members remain divided on issues such as: Advance Rulings; Authorised Economic Operators; Appeal Procedures; to name a few, and on which they seek to impose their systems on each other.
 
On issues such as the Single Window, where the level of ambition being sought is clearly not doable to the majority of members including OECD members, South Africa said, the proponents have yet to lower the ambition.
 
"On some other issues such as pre-shipment inspection, consular fees and transit in fixed infrastructure, which are clearly highly controversial and where it has been argued that these issues go beyond the mandate, the proponents have still to withdraw these from the negotiations. The proponent-led process, chosen for this negotiation, clearly needs to be reviewed."
 
In addition, said South Africa, Section II of the text which is intended to provide flexibility and capacity to the poorest countries, is still far from being resolved. These members that will have to bear the greatest burden of implementation of the Trade Facilitation Agreement at least deserve to know what it is they will be asked to implement in Section I of the agreement. They also deserve to be provided the necessary capacity and flexibility to enable them to also benefit from the Trade Facilitation Agreement, it added.
 
South Africa said that it remains of the view that Agriculture is the core issue of the Doha Round and should be an important part of the deliverables for Bali.
 
"There is still too little progress made on the core issues of the G33 proposal on food security, and little hope that there will be any positive outcome on Export Competition. Of these issues, export subsidies have long been regarded as the most trade distorting and economically unjust of the imbalances in the trading system."
 
On the LDC and so-called Development issues, South Africa said that the majority of members included in the ACP, LDC and African Group will measure the success in Bali on the extent to which "we have been able to deliver any tangible and meaningful progress on this Pillar of the package. Too little has been done at this stage."
 
According to South Africa, the real issues at Bali are about the big questions of the way forward on the Doha Development Agenda and the Future of the Multilateral Trading System itself.
 
"We still have a chance to put the multilateral system back on track in Bali - towards its historic journey - of being fair, balanced, development oriented and inclusive. If we fail to make this course correction in the little time available after the summer break, history will judge us poorly," it cautioned.
 
According to trade officials, Norway agreed with the G-10 statement. It said that there is a lack of clarity on the development issues, and there is need to know who will do what and how. It was concerned that some people seem to think that a small Bali package will solve everything, but in fact, the bulk of the Doha Round still needs to be decided. It hoped that Bali can be a catalyst for progress later in the Doha Round. There also needs to be direction on the post-Bali process and that should be part of any agreement in Bali that emerges from a declaration.
 
Chile said that it had seen progress on trade facilitation. It supported the G-20 and (upcoming) Cairns Group proposals.
 
On the G-33 proposal, it said that there is now recognition that there is a real problem here, and Norway's idea of flexibility in terms of the pricing mechanism was something that has been appreciated by all. On the G-20 proposal on export competition, it said that there needs to be a discussion on this, and to take this proposal as a starting point in the discussion.
 
On the S&D monitoring mechanism and the 28 Agreement-specific proposals, it said that there has been some progress but there is need for greater clarity.
 
On trade facilitation, it said that this is at the very heart of what members are trying to achieve. Without agreement on trade facilitation, what we would simply have is a plurilateral agreement without any recourse to dispute settlement and any of the benefits of Section II (on S&D). It called on developing countries not to waste this opportunity.
 
Argentina supported the G-20 and (upcoming) Cairns Group proposals. On the G-20 proposal on export competition, it was seriously concerned at the objections it had heard from some people that this is an issue that could threaten the overall Bali outcome. There is a mandate from the Hong Kong Ministerial Declaration and the LDCs, the ACP and the African Group have all expressed support (for the proposal). It hoped to have a discussion on this issue after the summer break.
 
Kenya supported the African Group, the ACP and the G-33.
 
According to trade officials, India supported the G-33, the G-20 and the Asian Group. It said that progress has been made but more needs to be made if there is to be a successful outcome in Bali. It is encouraged to see that there has been greater engagement but there is an enormous amount of work to be done in all areas.
 
On trade facilitation, it said that there has been considerable work done since last December. While it is true that we did not reduce by half the number of square brackets in the draft negotiating text, it said that according to Indian technicians, the number of square brackets has been reduced by 110, so, there are now about 400 square brackets. And of these, 87 are linked to customs cooperation and more than 100 to Section II (on S&D), so that more than half of the remaining square brackets can be settled by just resolving two issues.
 
On customs cooperation, India said that this is one of four areas that is clearly spelled out along with Articles V, VIII and X, adding that it wants a binding agreement on customs cooperation. There are difficult issues that still need to be dealt with on trade facilitation. All delegates will have to show flexibility.
 
On the TRQ administration issue in agriculture, it said that there has been quite a lot done, but more still needs to be done, and that much more needs to be done on export competition, an issue that has been supported by the African Group, the LDCs and the Cairns Group. We are at a stage now where we can begin to see an outcome in the G-33 proposal, and this is something that is important for India. The G-33 is open to any solution that is meaningful and provides relief with a degree of certainty, it added.
 
With only eight weeks to go, it hoped that the Bali ministerial conference is one that can produce a meaningful outcome, but there will still be a need for a post-Bali process and that there is still much to do after Bali.
 
Mauritius supported the African and ACP Group statements. It stressed that Bali should not be a negotiating forum, and that Bali will be a defining moment in the history of the WTO. It said that food security is a critical element.
 
Paraguay, on behalf of land-locked countries, in respect of trade facilitation, wants MFN and national treatment on transit issues and unbroken access to ports, but does not want interrupted travel, quantitative restrictions, quality control of products on route, and fees to be charged.
 
On behalf of itself, Paraguay supported the G-20 and (upcoming) Cairns Group proposals, as well as the G-33 proposal.
 
China associated itself with the statements of the G-20, G-33 and the Asian Group of developing countries, and supported the LDC group statement.
 
It said that through painstaking negotiations of the last one and half months, some encouraging signs have emerged and the mood here in Geneva has slightly changed as compared to the last TNC meeting in early June.
 
"On all subjects, Chairs have been working hard, and Ambassadors and technical experts have seriously engaged. Members now have a much better understanding of each other's concerns, of the scope of each subject, and of where to put our hands on for possible solutions."
 
More importantly, it said, Members, major players in particular, started to recognise the natural linkage among various issues of the Bali package, adding that China is not in favour of the ‘hostage-taking' approach.
 
"However, we have to realize that, as in any negotiation, there is an unavoidable linkage among different subjects. That is why it is extremely important for us to move and achieve progress in parallel on all subjects. China believes that now we are moving in that direction and calls on Members to continue in that regard."
 
On trade facilitation, China noted that some progress has been made, with around 60 square brackets removed recently. Of course, this pace is far from enough to clinch a deal by December. It called on all Members to accelerate work to substantially reduce the square brackets and pave the way for political decision by ministers.
 
On agriculture, China said that Members have been focusing on the ‘gateway issue' - the G-33 proposal on food security. "We appreciate the more open minds of the major players towards each other's concerns and encourage them to continue to engage each other."
 
In a nutshell, China said, "if we concentrate on question 2, 3 and 4 raised by [Agriculture] Chair Ambassador Adank, to find a landing zone is highly doable. Meanwhile, we look forward to more engagement on the issue of export competition."
 
On development, China noted that Members are conducting intensive consultations on the major issues - Monitoring Mechanism and 28 Cancun proposals. "We understand that progress is limited and urge all participants to continue discussion in a constructive and pragmatic manner. We also encourage LDCs to speed up their internal coordination so as to allow Ambassador Smidt [the facilitator] to organize further consultations."
 
China said that despite "our cautiously positive tone, we have to soberly admit that the current pace of work remains too slow to guarantee a harvest at MC9. We have to do some serious thinking during the summer break."
 
China cautioned that the clock is ticking and "we have no time to lose. As of early September, we must continue our work with full speed in the run up to Bali ministerial, which is a historical opportunity for the WTO and the multilateral trading system." +