TWN Info Service on Trade and WTO Issues (Aug08/06)
5 August 2008
Third World Network

Trade: Africans played pivotal role at turning point of WTO talks
Published in SUNS #6531 dated 5 August 2008

Geneva, 4 Aug (Martin Khor) -- As the dust settles over the failed WTO talks in Geneva of the last fortnight, a fact that has been under-highlighted has become more clear. That is the important and even crucial role that the African and other smaller economies played in the mini-Ministerial process.

Much of the media publicity has focused on the role of the United States and European Union on one hand, and on India, China and Brazil on the other hand. And that is because these were the key players within the group of 7 WTO members that undertook the intense inner negotiations for most of the nine Geneva days (21-29 July).

However, on the two key issues on which the talks took an important turn, the African Group and the other groupings of developing countries -- the G33, ACP, LDCs and SVEs (small vulnerable economies) -- played a significant and even pivotal role.

One of these was the special safeguard mechanism. The inability of the G7 to settle on this issue was the immediate cause of the breakdown of the talks. The other issue was cotton, over which no discussion was held because it was an item lower down the agenda than the SSM. There is widespread belief that it was to avoid this issue that the US took such a tough and rather inexplicably stubborn position on the SSM.

On both these issues, the majority of developing countries took a strong position, and Africa was in the centre of them.

Some developed countries, particularly the US, was trying to portray that India was the only country standing in the way of an overall deal because of its unreasonable position on SSM. Later, China was also lumped together with India, as wanting to use the SSM to block market access to their agricultural markets.

The mainstream media played up this portrayal by the US, adding to the external pressures on India and China. The two countries however also answered back, through the colourful briefings and lobby statements of Indian Commerce Minister Mr. Kamal Nath and the Chinese Ambassador and officials at the Trade Negotiations Committee.

There was also the leadership provided on the SSM issue by the G33 and its coordinator, the Indonesian Trade Minister Mari Pangestu.

The turning point came, however, when the African Group, together with the coordinators of the ACP, LDC and SVE groups, took the decisive step to come together with the G33 (whose leading members include Indonesia, China and India) for a grand alliance to support an effective SSM.

The coordinators of the groupings held a meeting on Sunday 27 July afternoon to discuss their positions and decided to issue a joint statement placing their views on why they found the SSM portion of the 25 July draft of Pascal Lamy, the WTO Director General, inadequate and not acceptable, and placing their own positions on various aspects of the SSM, including the trigger, the remedy especially with regard to the raising of tariffs above the pre-Doha rates, and the need to include FTA imports in the use of the SSM.

When Kamal Nath entered the WTO building on 27 July night for a Green Room meeting, he announced to the waiting media that a hundred developing countries were behind having an effective SSM, and not just India. A hunt began among the journalists to find the joint developing-country statement, which became the "breaking news" of that night.

From then on, it was not possible for the US or other countries to characterise the SSM battle in the G7 as just "an Indian problem." With this solid backing of so many developing countries and their groupings, India was able in the G7, and Indonesia and others in the Green Room and the TNC, to stick to their position, that an effective and easy-to-use SSM is a legitimate demand.

On the cotton issue, the African Group continued to take the lead to back the core group in the cotton initiative, the Cotton 4 led by Burkina Faso, to demand that there be deeper cuts in domestic subsidies of cotton and in a faster schedule than in any general formula or programme agreed on for agriculture as a whole.

Kenya's deputy prime minister Mr Uhuru Kenyatta, near the start of the Geneva talks, said at a press conference that "millions of poor people in Africa are dependent on cotton production but the huge subsidies in developed countries have continued to depress world prices, thereby driving farmers out of production with no other sources of income. We therefore look forward to an effective and long term solution on cotton."

With the cotton issue set aside while other issues claimed the agenda, the many Africa Ministers who came to Geneva were getting increasingly frustrated. At the end, the talks broke over the SSM issue, and cotton was never even discussed.

The African countries, led on this issue by the Burkina Faso Trade Minister, Mr. Mamadou Sanou, were furious with the turn of events. "We have been patient but we now feel betrayed, cotton was never even discussed," he told the formal Trade Negotiations Committee meeting on 30 July, after the talks had collapsed.

And at an African Group press conference on the same day, Sanou expressed great disappointment and distress that the cotton issue had been relegated to the sidelines to be discussed at the last moment, and that moment never even came.

"Now after 10 days we have not discussed the issue we were invited here to discuss. The invitation (from Lamy) said it wanted me to come to negotiate on cotton. You will agree it is very discouraging. The impact is very grave on our cotton farmers. Because of the subsidies to US and EU cotton growers, our farmers are in a very negative position, suffering severe deficits, there is a risk the whole system will collapse in our countries. The cotton system is threatened with extinction in the short term. We are faced with imminent threat and we cannot control our anger when we see the situation in our countries.

"We are disappointed the big countries that ask us to liberalise our trade and economy, that those same countries are afraid to trade with us on a level playing field, on a fair basis."

The African Group press conference, at which the Minister spoke, was held on 30 July, in the morning after the talks had collapsed, and just before the TNC meeting.

The Deputy Prime Minister of Kenya, Mr. Uhuru Kenyatta, who coordinated the African Group throughout the meetings, started the conference by reading a statement of the group.

"We came to Geneva with an open mind, to engage constructively," said the statement. "During the two weeks of our stay in Geneva, we have exercised considerable flexibilities. We accepted the leadership of the G7, hoping that the consultative process would result in moving the process forward.

"As the G7 process progressed, we patiently waited for a positive outcome... However, as you have witnessed yesterday the G7 consultative process did not achieve progress. Taking into consideration the two week we have been here in Geneva, leaving many important national issues in our capitals unattended, we are deeply disappointed with the stalling of negotiations.

"It should be known that most of the key issues of interest to the African continent were not even discussed, especially the issue of cotton...

"Considering that this was a Development Round, we wish to state categorically that we African Ministers came here with a lot of optimism and are disappointed with the lack of progress during the last few days that has resulted in this situation. As stated in this room last week, leadership comes with responsibility. It is rather unfortunate that this does not seem to have been the case.

"We call upon the membership to consider resumption as soon as is feasible and continue with the negotiations. Africa critically needs to realise development and get itself out of poverty through the establishment of fair trade rather than aid. Africa's opportunity to achieve fair trade has therefore been gravely undermined by the lack of progress in the negotiations."

Lesotho's Commerce Minister Popane Lebesa, coordinator of the LDCs, said it was indeed a pity the negotiations did not go beyond the G7. The SSM issue was not resolved. Other issues not even discussed - duty free quota free status for LDC products, preference erosion, cotton and others.

A key part of the food crisis, distortions caused by subsidies, will remain to haunt us, he said. He added that Aid for Trade should continue to be pursued. The enhanced integrated framework (EIF) is lagging behind and should be quickly launched. "We waited too long. It appears a mere pie in the sky."

To a question how soon will the talks resume, given elections in some countries, Kenyatta said "as much as we urge a resumption of talks as soon as possible, we recognise there are events like elections in many countries in the next months which will take priority.

"Though we would like to see a mini Ministerial in the next months, that might be difficult to achieve. But we need to remain focused. This Round should not be derailed by internal politics. We are talking of a fair-trade system that recognises Africa requires the development aspect to be a full participant in global trade.

"The effects of the failure on our cotton farmers will be bad. We discussed reduction of overall trade distorting domestic support (OTDS) here. The OTDS makes cotton farming unproductive in Africa. Were we able to ensure cuts in the OTDS so that market prices reflect real costs it would have impacted positively on African cotton farmers. But we did not get a deal on OTDS. The poor carry the heaviest burden (on that)."

Lesotho's Minister Lebesa said that cotton was not discussed at all. He said the US had offered to continue to discuss it with parties concerned even with this failure. If cotton had been part of conclusion of Doha Round, the conclusion would have been based on multilateral rules. Now the Cotton 4 countries will have to face the US directly rather than at the WTO.

Asked to elaborate what the US is prepared to do with the Cotton-4, and would it be for US to reduce subsidies and would it ask for anything from the C4, Lebesa said that on cotton it is different to negotiate multilaterally or bilaterally. Bilateral talks may give some benefits to the C4, but in longer term a WTO agreed rule on how the subsidy issue on cotton would be handled is better.

The Minister of Burkina Faso, Mamdou Sanou, who chairs the Cotton-4 group, expressed great disappointment at the results of these talks. "At the first TNC meeting (on 21 July) we expressed our concerns. We did not want the cotton issue to be relegated to the sidelines and be considered at the very last minute.

"We always insisted at the Green Room meetings that cotton be considered. We were promised this... But now after 10 days we have not discussed the issue we were invited here to discuss. The invitation said it wanted me to come to negotiate on cotton. You will agree it is very discouraging.

"The impact (of the failure of the talks) is very grave on our cotton farmers. Because of the subsidies to US and EU cotton growers, our farmers are in a very negative position, suffering severe deficits. There is a risk the whole (cotton) system will collapse in our countries.

"The cotton issue is very urgent as the cotton system is threatened with extinction in the short term. This can only make worse the depth of our disappointment. We are faced with imminent threat and we cannot control our anger when we see the situation in our countries. We are disappointed the big countries that ask us to liberalise our trade and economy, and that those same countries are afraid to trade with us on a level playing field, on a fair basis."

Asked to provide details on the US willing to negotiate with the C4, the Lesotho Minister said: "There is no detail, just a statement the US made in the Green Room."

A journalist commented that some countries pushing for the SSM said they were doing this for millions for farmers in developing countries. Do the African countries accept the arguments are in their interests or do they see you it differently?

The Kenyan deputy premier said that the SSM is part of the modalities and the issue is how we protect vulnerable economies and sectors from import surges.

"We find it amazing that it is impossible to accept and understand how a trade negotiation can collapse because of remedies that are supposed to be activated in exceptional circumstances. It is not central to growth of trade or to the development aspects of trade, only a mechanisms and remedy to be used for exceptional circumstances." +