TWN Info Service on WTO and Trade Issues (June 07/27)

28 June 2007

Calls for "development dimension" as WTO talks return to Geneva

The WTO's  Trade Negotiations Committee, which oversees the Doha negotiations, held an informal meeting just a day after the Potsdam meeting of the G4 ended in acrimony.

Many developing countries stressed the need for transparency and participation in the renewed Geneva process.

Below is a report of that meeting.

Bets wishes
Martin Khor
TWN

Calls for "development dimension" as WTO talks return to Geneva

By Martin Khor (TWN), Geneva, 26 June 2007

With the collapse of the G4 talks and probably of the G4 itself as a group, WTO members are welcoming the return of the Doha negotiations back to the WTO's headquarters in Geneva.

This was one major outcome of an informal meeting of the WTO's Trade Negotiations Committee, which oversees the Doha negotiations, held just a day after the Potsdam meeting ended in acrimony.

"It's the only horse left in the race, and everyone seems committed to it," said a trade official.

Almost all members that spoke said that they supported the continuation of the Doha negotiations, and at the WTO. Several developing countries however also stressed that progress would depend on the "Development Dimension" being fully reflected, and on a transparent and participatory process.

Some also said that while the Chairs of the negotiating groups were asked to prepare negotiating texts, they should do so under the guidance of all the Members. Members should negotiate with one another and not with the Chairs, said some countries including Nigeria and Bangladesh.

The TNC meeting on late afternoon of 22 June was convened in an atmosphere of crisis, as the sudden closure of the Potsdam meeting was unexpected.

The WTO Director-General Pascal Lamy reiterated at the meeting that G4 convergence would have been helpful but was not indispensable. This is not a negotiation among four players but a collective endeavour among all participants, in a single undertaking with a broad agenda and development at its heart. It is timely to reassert these basic principles.

Lamy stressed that the core of the negotiations is the Geneva process, the only place where decisions can and should be taken. The Chairs of the Agriculture and NAMA groups are working on revised texts. "The need now is for urgent action to restore confidence that these negotiations can and will be finished successfully."

He suggested that from now on, the process would be conducted by the Chairs and himself.

G4 members then gave their own accounts of what happened in Potsdam. The European Union said that the problem was the "exchange rate" in the triangle of issues (agricultural subsidies, agricultural market access and NAMA).

The balance of fairness is key to the Round. The "landing zone" in agriculture can be seen and it had taken the EU to the limits of what it can do in tariff cuts. But more has to be seen on NAMA in the landing zone. Emerging markets have to make more efforts than other developing countries. The G4 process has run its course but the EU is committed to the WTO process.

The United States said that the challenges now are daunting, as time is short. In Potsdam, there was important progress in agriculture but this was conditional on progress in other areas, especially high ambition in NAMA.

The US said that it was not impossible to have both high ambition and special and differential treatment. However, the fastest growing markets are the emerging markets and simple fairness must be part of the equation. It would be irresponsible to squander what has been achieved. The US said that it was prepared to work with the Chairs.

Brazil, represented by Ambassador Clodoaldo Hugueney, said that the Potsdam failure was due to differences that could not be bridged as the development dimension had been lost in an attempt to make it a market-access Round for developed countries, with developing countries having to pay the price.

Brazil gave many details on the offers and demands in agriculture and NAMA, and on why it thought the "exchange rate" between the obligations of developed and developing countries being sought by the EU and US was imbalanced. The support of developing countries for the Round depends on the development dimension.

India, represented by Ambassador Ujal Singh Bhatia, said that the setback in Potsdam was due to differences between G4 members on the meaning of the "development agenda" and how it should be reflected in the Round. This fundamental divide has to be addressed by the entire membership if the multilateral process is to succeed in the coming weeks. The core political issue had to be resolved - how to give full effect to the development mandate.

[More details of the statements by Brazil and India were reported in SUNS #6279 dated 26 June 2007.]

Jamaica, represented by Ambassador Gail Mathurin, spoke on behalf of the ACP Group and the G90, which includes the ACP, the African and the LDC Groups.

Jamaica expected that despite the disappointing Potsdam events, the multilateral process will continue and that this process will be transparent, inclusive and member-driven.

It also expected that any future texts on draft modalities will be balanced and take fully into account the interests and concerns of all members, especially those in the G90. It further expected that there will be sufficient time given to analyze and consult on the contents of these draft texts, to allow an effective response.

"As we move to the consideration of draft modalities, we continue to insist that a Round committed to development should demonstrate this by placing the specific needs and interests of developing countries, including the G90, at the core of the deliberations," said Ambassador Mathurin.

"To do so successfully, any text on draft modalities must cover the range of issues which have been put on the table by developing countries. We will not be able to accept partial modalities."

While reiterating the commitment to participating fully in the multilateral process, Ambassador Mathurin said that "at the same time, we cannot sacrifice content in order to meet some timeframe, and that content must fully deliver the development dimension."

China, represented by its Deputy Permanent Representative Mr. Li Enheng, said that in discussing the Potsdam failure, the responsibility and blame should not be shifted onto any third party that is not involved in the process.

This is because that third party, referred to on one recent occasion by a developed Member, has never been pressing other developing countries for concessions beyond the latter's capabilities at any time and any place. On the contrary, the developing third-party country as referred to fully understands the position and difficulties of other developing countries.

[China was presumably referring to news reports that US Trade Representative Susan Schwab had said that apparent "backtracking" by Brazil and India on certain offers of industrial tariff cuts was mainly due to their concerns about China.]

China said that to make progress within any process, either plurilateral or multilateral, we need sufficient political will and flexibilities from all sides, particularly the leadership from the major developed Members.

If the major developed Members want to take much from the developing Members, they have first and foremost to decide what they are ready to give to developing Members.

Without a balance of and a right proportionality between request and offer and without stopping the lip-service and replacing it with concrete actions by taking into serious account the development dimension of the round and fully accommodating the special difficulties of the developing Members, we could never have a successful conclusion of the negotiations, said China.

Zambian Ambassador Love Mtesa, on behalf of the LDC Group, said that the Group expected that all countries will ensure that the development dimension of the round must be kept to the fore.

It is in all of our interests to ensure that the level of ambition, as regards development, remains high. While the Potsdam failure makes the task of concluding the round that much more difficult, it should not be seen as the end of the Round, he said.

Ambassador Mtsea stressed that "we should avoid sacrificing substance or principles in the process" and that the Geneva process should be transparent and inclusive. "We should now deal with the core issue of development, which is the raison d'etre of the Doha Round."

Indonesia said that it shared the disappointment over the Potsdam failure, and understood that it is not easy to impose technical solutions on deeply unresolved political issues. What we need now is a political commitment from all members to remain engaged in the multilateral process in Geneva.

Indonesia fully supported the bottom-up multilateral approach, for there is no better alternative. It stressed that transparency and inclusiveness of all members must and should be maintained. Only through a genuine process of dialogue and negotiations involving the whole WTO membership can results be achieved.

Nigerian Ambassador Yonov Agah said that with the Potsdam setback, the multilateral process should proceed in earnest, but in a manner that enables Members to negotiate among themselves rather than with the Chairs.

Nigeria expects that the WTO, as a rules-based organisation, would make decisions on the basis of the rules and the bottom-up approach, which should be transparent and inclusive. "We need to ensure that emphasis is on the development content of the outcome, rather than time-lines," it said.

South Africa, which coordinates the NAMA-11 group, lamented the failure at Potsdam. It said that the key challenge in the Doha mandate was the removal of distortions, created by high levels of subsidies in the large developed countries that continue to undermine the development and livelihoods of the majority of poor rural people in developing countries.

The Doha mandate also emphasized the need to remove tariff peaks, high tariffs and tariff escalation in industrial tariffs, in particular on products of export interest to developing countries. Developing countries too were to contribute but based on the principles of less than full reciprocity and Special and Differential Treatment.

However, said South Africa, the reports from Potsdam suggest that the US, which was perceived to be the main cause of the suspension of the Round in June 2007, failed to put forward an offer to make effective cuts in its trade distorting domestic support. The EU too failed to put forward a new offer that would create new trade flows and real market access in Agriculture.

However, both the US and the EU have insisted on developing countries reducing their tariffs on industrial products that would have devastating effects on their industrial production and employment. A Swiss 18 coefficient cut of over 58% that the EU and US have demanded is also totally out of proportion to their own offers in NAMA where they will only make a cut of 25%, said South Africa.

Thus, added South Africa, the positions taken by the EU and the US in Potsdam are not a basis for a successful outcome in the Doha Round. Their proposals will only exacerbate the existing inequities and imbalances in the trading system and undermine the possibility of achieving a fair, balanced and development-oriented trading system.

The EU and US, the largest beneficiaries of the world trading system since the Potsdam conference in 1945, need to show leadership and ensure that we all work together to create a new world from which all countries will benefit, rich and poor, big and small. This is the only sustainable basis for the conclusion of the Doha Round and the Doha Development Agenda.

Bangladesh said that it never understood why agriculture has remained outside the rules of the multilateral trading system and why the industrialised countries are getting special and differential treatment. It stressed that the Doha Round should not be held hostage to any other processes outside the multilateral process.

It also stressed that the Chairs of the negotiating groups could not go ahead in formulating texts by themselves. Members should not negotiate with the Chairs but among themselves.

Ecuador also said that the G4 process should not be replaced by a process that is not transparent.