TWN Info Service on WTO and Trade Issues (Apr07/16)

30 April 2007

WTO Update: New agriculture paper, services blockage, Washington politics

Below please find an article updating the situation at the WTO, on the anticipation of a new agriculture paper by the Chair of the agriculture negotiations, and on the services negotiations of last week, and on some news from Washington on the fast track.

With best wishes
Martin Khor 
TWN

WTO UPDATE:  NEW AGRICULTURE PAPER, SERVICES BLOCKAGE, WASHINGTON POLITICS

By Martin Khor (TWN), Geneva, 27 April 2007 

The Chair of the WTO's agriculture negotiations, Ambassador Crawford Falconer of New Zealand, is now expected to distribute his new paper on the afternoon of Monday, 30 April.

Falconer had last week indicated that his much-anticipated paper would be given out Thursday or Friday.

The next informal meeting of the agriculture committee in special session was scheduled to meet on Friday 4 May. It has now been shifted to Monday 7 May at 3 pm. That meeting will be the first opportunity for members to multilaterally give their views on the Falconer paper.

The continuing stand-off in agriculture has also led to a continuing lack of movement in services. This week, services market-access negotiations resumed in the WTO for the first time since the suspension of the Doha talks in July 2006.

However, the bilateral and plurilateral services talks did not seem to make much progress, as any movement in services is not expected unless there is first a breakthrough in agriculture and then in non-agricultural market access (NAMA).

This afternoon, the Chair of the services negotiations, Ambassador Fernando de Mateo of Mexico told a press briefing that it is not clear what a breakthrough would look like for each component of the market access negotiations (agriculture, NAMA and services).

Of these three, it is even more difficult to ascertain what a breakthrough would mean in services, as this would have to wait for developments in agriculture and NAMA.

De Mateo added that WTO members are committed to making progress in market access, including in services, and there had been meetings this week at the WTO on a plurilateral and bilateral basis.

He said that the Chair of the negotiations on domestic regulations had also put forward a draft text on his own responsibility. De Mateo was referring to a room paper dated 18 April on "Disciplines on Domestic Regulation pursuant to GATS Article VI: 4: Informal note by the Chairman", distributed to the Working Party on Domestic Regulation.

According to a trade analyst: "Nothing seems to be happening in services and it is not clear what the level of ambition is or is going to be in services, as the services negotiators do not know what the level of ambition is going to be in agriculture and NAMA."

It is clear that progress in other areas will depend on agriculture, and the coming week should see some intense informal discussions as the various groupings study the Falconer paper.

The paper will contain "challenges" put to the WTO members to answer difficult options and issues that are blocking the negotiations. They will also contain what Falconer considers the "centres of gravity" on various issues.

The distribution of the paper will mark a new phase of the WTO's troubled Doha negotiations, as it may stimulate the WTO members and their groupings to react, in one way or another, to Falconer's comments and possible proposals on how difficult issues may be resolved.

In June 2006, Falconer issued a comprehensive paper entitled "Draft possible modalities on agriculture" in which he placed texts in most of the agriculture issues. But a lot of key texts were in brackets, and figures for cutting tariffs and for putting maximum limits or caps on different types of domestic support were given either in wide ranges (denoting the large differences in proposed figures by various members) or were put within blank brackets (denoting that no figures had been agreed to, nor were they being attempted in the paper).

Falconer has been at pains to say that his paper on Monday will not be an updated version of the draft modalities document, but is meant to provoke members to react, so that he can gauge the latest positions and attempt to produce a new draft modalities paper in a few weeks.

Whatever may be in Falconer's paper, the positions of major agriculture players seem to remain as entrenched as ever.

On Wednesday (25 April), a paper by Pakistan on special products evoked strong critical comments from many developing-country groupings led by the G33 and supported by the ACP Group, the African Group and the small and vulnerable economies group.

The paper received support, some of it qualified, from a few developing countries and some developed countries.

The intensity of opposition from the large groups of developing countries demonstrated that the position of the majority of developing countries in defence of "special products" and the special safeguard mechanism remains firm.

Much of the action this week was in Washington, where WTO Director-General Pascal Lamy has been holding a series of meetings, mainly with members of Congress.

Lamy's main task has been to convince influential members of Congress to support a new fast track authority for President George W Bush. He told them that progress on renewal of the trade promotion authority (TPA) is crucial to the momentum in the WTO negotiations.

But he also stressed that "big developing countries" had to play a breakthrough role along with the US and EU. Only through concessions from the likes of India and Brazil can the US Congress even entertain the idea of renewing TPA, Lamy told journalists.

The US Trade Representative Susan Schwab herself warned this week that the US would be pushed to the sidelines on trade without a TPA. "We cannot, will not, have a Doha round agreement without it," she said.

There are conflicting reports as to whether influential Democratic members of Congress are in a mood to provide a new TPA to Bush.

Some reports this week said that Charles Rangel, the Democrat who chairs the House Ways and Means Committee (which has the mandate over trade), is making progress in talks with the office of the US Trade Representative on trade promotion authority.

He has been quoted as saying that he would support extending fast track to help complete the Doha negotiations.

However, the talks on a TPA have been bogged down by Democrat demands on labour standards, including that members of a free trade agreement involving the US have to adopt and enforce core labour standards of the International Labour Organisation.

The Republicans cannot accept this, as it would expose the US to challenges for its own labour laws and standards, which may not be up to the ILO standards.

A trade expert in Geneva remarked Friday that it would be difficult to get the US Congress, led by Democrats, to give a new TPA to President Bush.

"The fast track authority will be subject not to trade logic but to the political dynamics in which the race for the next Presidency has already begun.

"The Democrats in the end will not think it is in their political advantage to empower Bush with a new fast track. And the whole country is preoccupied with so many political issues and problems, so the Doha Round is not going to get priority."

Max Baucus, the Democratic chair of the Senate Finance Committee, which has oversight over trade deals, has stressed that there is less incentive to renew the TPA without the impetus of a Doha deal on the horizon.

The Doha negotiations thus seem to be caught in a "chicken and egg" cycle where the US Congress is not up to giving a new TPA unless a good Doha deal (in the American view, this implies that US trading partners would agree to very significant market openings for its products and services) exists, while such a Doha deal would be very difficult to achieve if the US does not have a TPA to back up their negotiators.