TWN Info Service on WTO and Trade Issues (Sept07/05)

17 September 2007

US start new WTO blame game

Published in SUNS #6321 dated 12 September 2007

The start of a new WTO "blame game" was made when the US Trade Representative Susan Schwab last week told the media that a small group of developing countries are threatening to block progress in the Doha negotiations, while in contrast, the US is eager to reach a deal.

In Washington, Schwab on 10 September said that "There have been quite frankly some obstructionist members of the WTO who don't want the talks to succeed and who don't want to negotiate on the basis of these texts."

Earlier, on 6 September Schwab, during the APEC summit, had accused South Africa, Argentina, India and Brazil of jeopardising the Doha Round.

The accusatory and aggressive tone of Schwab's message has caused negative response from developing countries' diplomats at the WTO, who say that this does not help to build confidence and goodwill required in he talks.

Below is a report that was published in the South-North Development Monitor -- SUNS #6321 dated 12 September 2007.

It is reproduced here with the permission of the SUNS.  Any reproduction or re-circulation requires the prior permission of the SUNS (sunstwn@bluewin.ch).   

With best wishes
Martin Khor
TWN

US starts new WTO blame game

Published in SUNS #6321 dated 12 September 2007

By Martin Khor, Geneva 11 Sept 2007

An early start to the WTO "blame game" has been launched by the US Trade Representative Susan Schwab who in the past few days has twice announced to the media that a small group of developing countries are threatening to block progress in the Doha negotiations, while in contrast, the US is eager to reach a deal.

In Washington, back from the APEC Summit in Sydney, Schwab on 10 September said that "There have been quite frankly some obstructionist members of the WTO who don't want the talks to succeed and who don't want to negotiate on the basis of these texts."

She said that chances for a WTO deal could slip away if countries refuse to negotiate on the basis of two draft texts issued in July on agriculture and non-agricultural market access (NAMA), according to a Reuters report.

It was the second time that Schwab was blaming developing countries. The Financial Times on 7 September reported that Schwab, during the APEC summit, had accused South Africa, Argentina, India and Brazil of jeopardising the Doha Round by thwarting efforts to reach a deal.

"It will be very clear who the spoilers are," she said.

The accusatory and aggressive tone of Schwab's message was emphasised by the headlines of the articles reporting her comments. "US accuses Doha dissidents," was the heading in the Financial Times, while the Reuters report had the heading "Obstructionists could block WTO deal".

In Geneva, the Schwab remarks have made an impact. Several diplomats from developing countries took a negative view. Some said that they did not take the comments seriously, as they seemed to be in answer to questions by journalists.

Others, however, said that such undiplomatic and pointed comments would have a negative effect on the atmosphere of the negotiations.

"We are still trying to build momentum for the talks which have started slowly, and these kinds of strong remarks blaming specific countries certainly do not help build the confidence and goodwill that is required," said the Ambassador of one developing country.

Many diplomats had a cynical interpretation of Schwab's remarks. According to this view, the US is unable to make any movement in agriculture, particularly on domestic subsidies, because of the uncertainties relating to its 2007 Farm Bill, and because President George W Bush's fast track authority for making trade deals has expired with almost no hope for renewal.

Because of this, the US is most likely to be seen as the biggest stumbling block to progress in the efforts to conclude modalities in agriculture and NAMA negotiations in September or early October.

In anticipation of this, so the argument goes, the US Trade Representative has decided on a strategy of starting the blame game very early on so as to get the media to get and transmit the message that some developing countries are out to block progress in the talks, and to keep up with this aggressive stance and in the process hope that the US will escape the blame, or at least dilute the blame that would otherwise be directed at it.

Schwab's remarks are also seen as being timed to have an impact on the talks and how they are scheduled at the WTO in Geneva.

The agriculture negotiations in Room E (the new Green Room process involving about 35 delegations) are presently discussing market access, and the next agenda item (which will start at the end of this week or early next week) is expected to be domestic support.

On this item, everyone will be waiting to see if the US makes a move to improve its official offer of a cap on overall trade-distorting support of $22.7 billion, and if so, whether the new figure is acceptable.

If it is unable to make a credible offer, the US looks set to put the onus on others to make concessions which it considers to be satisfactory, and make this the condition for its own future improved offer.

Schwab's comments in recent days on developing countries being out to wreck the Round, and especially her naming of specific countries, seems to confirm what was observed in the failed G4 Ministerial talks in Potsdam at the end of June - that the US and the European Union had reached some kind of understanding to be lenient on each other's weaknesses (and not to make significant demands on each other) while combining to pressurize the developing countries to make onerous concessions, particularly in NAMA.

The US seems to have decided on the tactic of putting the blame on some developing countries (which the USTR labelled as "advanced developing countries"), instead of on the EU, and to have chosen to attack them on their alleged non-cooperation in NAMA, in an attempt to take the spotlight away from agriculture (in which it finds a problem in making a credible offer).

The US would have chosen NAMA to be the battleground for public opinion and for the blame game because the draft modalities paper of the NAMA negotiations Chair, Canadian Ambassador Don Stephenson, largely reflects the position of the developed countries, while ignoring the positions and perspectives of the developing countries.

A majority of developing countries formed a united front to protest against the Stephenson paper during meetings on NAMA and of the Trade Negotiations Committee at the end of July, before the WTO's summer break.

A joint statement expressing the strong criticisms of the developing country groupings (including the NAMA 11, the ACP and Africa and LDC Groups) and their feelings of how unfair and imbalanced was the NAMA modalities paper, made a deep impression at the end-July meetings.

At least three countries stated clearly that they could not accept the Stephenson draft as the basis or even as a basis for negotiations, while several other developing countries made statements at the WTO or in their capitals that verged on rejecting the draft as the basis for negotiations.

At last week's APEC Summit, the US played a leading role in getting the leaders to issue a statement on the WTO negotiations which pledged their "political will, flexibility and ambition to ensure the Doha Round negotiations enter their final phase this year."

The most important operational line was that the negotiations should resume "on the basis of the draft texts tabled by the chairs of the negotiating groups on agriculture and non-agricultural market access."

Back in Washington, Schwab was quick to point to this part of the APEC statement, saying that "it was a very, very important message and we'll see whether it resonates." She then accused some countries of being "obstructionist" and who do not want to negotiate on the basis of these texts.

The US is thus obviously preparing the ground to put pressure on developing countries to accept the Stephenson draft as the basis for the NAMA negotiations, and to point fingers at those countries that either reject it or that want significant changes to it.

Diplomats at the WTO were quick to point out that the APEC leaders' statement did not commit non-APEC members to accept the NAMA Chair's draft, and that many important players in the NAMA-11 such as India, Brazil, Argentina, South Africa and Venezuela are not APEC members, and neither are most of the countries in the ACP, African and LDC groups.

The US will however find it difficult to escape the spotlight as most observers and many in the media, together with most WTO delegations, are of the view that any progress at the September talks is conditional on whether the US makes a forward move in agriculture. Indeed, this has been the situation at least since June 2006.

Last week, the EU trade commissioner, Peter Mandelson, said that all countries had to make compromises, but stressed the need for the US to offer deeper cuts in agricultural subsidies. "We are in a stalemate and I believe the US holds the key to unlocking it," he said in an interview on the BBC.

And on 10 September, the Press Trust of India reported from New Delhi that the Indian Commerce Minister Mr. Kamal Nath said that the US will have to come out with new proposals on cuts in farm subsidies to break the deadlock at the multilateral trade talks.

At the WTO, many developing countries have been preparing themselves for the battle ahead on NAMA, even as the agriculture negotiations proceed. A meeting was held on Tuesday morning of the NAMA 11 together with coordinators of the ACP, African, LDC and SVE (small and vulnerable economies) groups.

Meanwhile, it is still not clear when Stephenson will launch the negotiations on NAMA. In July, he had indicated that the first open-ended NAMA meeting would be held around 17 September, but until Tuesday afternoon, there has been no notification sent out on the meeting.

The Chair of the NAMA negotiations has however, in the past two days, started consultations with a few individual countries and coordinators of groupings.