Alexandra Strickner and Carin Smaller, TIP/IATP Geneva, 26th October 2004 

^{_{Cancun to Hong Kong, by way of Geneva?}}

Geneva has been a busy place this year.  In July, WTO members achieved

their main goal: saving the Doha Development Round and the multilateral

trading system.  The run up to the July Package presented a picture of a

bruised and damaged multilateral trading system with all hopes pinned to a

successful outcome from the July General Council. The heavy hitters came in for

the meeting, including EU Trade Commissioner Pascal Lamy and US Trade

Representative, Robert Zoellick. In fact, the July Package was really  more

about achieving some kind of agreement 'on anything'than a concrete step

forward on the Doha commitments. Not a single one of the timelines for

decisions laid out in Doha had been met, and desperation permeated the

negotiating atmosphere.

 

That task accomplished, the framework will serve as the basis for

future negotiations.  The assessment and interpretation of this framework by

WTO members however, presents a rather confusing picture as to the actual

status of the document.  Everyone has interpreted the document according to

their own interests and there seems almost no common view on the elements

contained in the framework.  No one is unhappy with the framework, but then

no one is particularly delighted either.  The general comment is - it is not

perfect, but it is the best we could do at the time.  Everyone is conscious

that the most important and sensitive issues are yet to be resolved. Already

members are lowering expectations that further important progress

will happen anytime soon.

^{_{Deciphering the lessons from July}}

In the aftermath of the July Package it is important for civil society

groups to reflect on the results.  In particular, civil society groups

need to assess and observe possible changes for future negotiations. The

WTO is definitely a learning institution; it works to avoid repeating its

mistakes. It was certainly not a miracle that the July package - despite large

differences on key issues such as agriculture and non-agricultural market

access - was finally accepted.  Some media reports even claimed that the

absence of civil society groups - only a small number of NGOs followed

the process in Geneva directly helped take pressure off negotiators and

facilitated the conclusion of the July Package.  Indeed one real possible

result of the process that lead to agreement on the framework may be a

move by WTO members to use General Councils in Geneva as the primary

decision-making forum, leaving Ministerial Meetings to a largely ceremonial

function.

 

Civil society groups must closely monitor the evolving processes and

adapt their campaigns and strategies to fit the changing political landscape.

Developing countries must also become more firm and coherent on their

position regarding the process.  There is no doubt that developing countries

have become better coordinated and have gained a much stronger and unified

voice over the past few years.  Nevertheless, their calls for increased

transparency and inclusiveness need to evolve now into concrete proposals

that would establish at least a minimum set of rules. It was clear in July

that the existing ad hoc approach to process serves some developing

countries but not the majority.
 

Dealing with the Doha Agenda from now until Hong Kong

Given the current political situation with the US elections ahead and

the change of the EU Commission, delegations and country groupings are

concentrating their efforts on so-called 'technical work.'  It is still

unclear what this means and how much technical work on modalities can

take place without further political commitments, especially from the EC

and US. From now until March 2005 there will be a stocktaking exercise to

outline all the issues that require further discussion. This stocktaking

exercise has already started.  From March 2005, trade negotiators expect things

to become political again, with some of the more sensitive issues, such as

definitions of the blue box and sensitive products in the agriculture

negotiations, likely to surface once more.

 

Since a lot of technical work is taking place, it could be an  opportune time

for NGOs to contribute their policy or research work to this technical

process and try to influence the shape of the negotiations that way.
 

^{_{Dynamics in Agriculture}}

The Chair of the Special Session on Agriculture, New Zealand

Ambassador Tim Groser, started the agriculture negotiations with a bang,

taking a very active role from the first and calling on members to start technical

work immediately.  Ambassador Groser put forward an agenda that avoided the

most politically sensitive issues for developed countries (including the

proposed expansion of the blue box to accommodate US farm support programs and

the question of sensitive products). The agenda, which is likely to become

the basis for technical work over the next few months, identified specific

issues in all three pillars.  The agenda includes the green box (under the

domestic support pillar), the question of how to achieve 'parallelism'

between eliminating export subsidies and eliminating the subsidy

element of export credits and food aid (under the export subsidy pillar), and the

special safeguard mechanism (SSM) (under the market access pillar). Also

under market access, Groser listed the question of converting all tariffs

into ad valorem equivalents (AVEs) in order to achieve a uniform tariff

calculation to simplify the implementation of a tariff reducing

formula. Ad valorem tariffs are calculated as a percentage of the price of the

product, as opposed to specific tariffs, which are calculated on a per unit

basis - for example, at X dollars per tonne.  The question of de minimis

support was included in the original agenda but was quickly eliminated because key

developing countries objected to an agenda that seemed to deal with all

developing countries sensitivities first, leaving developed country

sensitivities to the final stages.

 

The technical work for agriculture will involve different country

groupings producing technical papers on issues of concern.  The Group of 33

(G33) is likely to draft papers on special products (SP) and the special

safeguard mechanism (SSM).  On the SSM they will be looking for a mechanism that

is simple and effective to use. Many existing safeguard mechanisms are

complicated and require high standards of proof of injury to the domestic

market before they can be applied.  The Group of 20 (G20) will work on

the market access pillar, in particular the formula for tariff reduction. 

The Cairns Group has been very active, circulating papers among its

members on issues such as the green box, ad valorem equivalents, food aid, export

credits and State Trading Enterprises (STEs).

 

Ambassador Groser said that unless he was given a stronger role within

the negotiations, it would be very difficult for him to stop the process

moving outside the WTO, as happened in July.  He was referring to the role

played by the Five Interested Parties (FIPs), of the US, EU, Brazil, India and

Australia, who in many ways made agreement possible by first coming to

agreement themselves on key elements of the framework proposal on

agriculture. Ambassador Groser suggested he lead smaller group meetings with

interested parties on particular issues and said he should be given a

degree of freedom to determine the exclusivity of the process. This attempt at

reviving the Chair-driven process is despite a response to the loud calls

for greater transparency and participation in the negotiations by

delegations irritated by FIP�s role.

To date, the FIPs have not re-appeared with the commencement of

negotiations. The FIPs originally appeared when negotiations were

stalled and there was a vacuum in political decision-making.  For now, WTO

members are committed to discussing technical issues with all political

decisions postponed until after the US elections and the new EU Commission has

settled down.  But whether this 'non-group' is dead or not, remains to be

seen. None of its members say it is dead, but it is not meeting at the moment.
 

^{_{Deadly Dealings in Service Negotiations}}

Unlike the negotiations in agriculture and non-agricultural market

access, where different WTO members are negotiating jointly according

to common interests, market access negotiations in services are undertaken

bilaterally.  Among those members that have already tabled offers for

services liberalization - more than 40 members have done so - bilateral

negotiations continue throughout the negotiating sessions. Representatives

from the services industries regularly come to Geneva to meet trade

negotiators - partly in the WTO itself - to lobby governments and to

pressure members to table offers and undertake commitments to

liberalize their services sectors.  During the special session at the end of

September, representatives from the energy industry among others undertook

such lobby exercises.

 

The July Package contains a deadline for revised services offer in May

2005. Some trade negotiators and even the Chair of the services negotiation

group - Chilean Ambassador, Alejandro Jara - are already saying it

will be difficult to meet the deadline.  After the first offers were tabled

last year, the concerned parties started their assessment.  Developing

countries have repeatedly pointed out, that in the area of most interest to them

 - Mode 4 (the temporary movement of persons) - offers tabled by developed

countries fell far short of their expectations.  For some of these

countries, tabling revised offers - in other words improved offers -

might be difficult.  The US is also waking up to the fact that the deadline for

revised offers might not be too good for them either.  The US is

facing huge political questions on the issue of job losses through outsourcing,

while state level migration authorities are becoming more critical of Mode 4

proposals and their implications for federal migration laws.

 

Another issue keeping services negotiators busy is the consolidation of

existing EC schedules.  For the past several months, the EC has been

harmonizing the schedules of commitments of newly acceding EC member

states and also Austria, Finland and Sweden who joined the EC already in 1995.

Article XXI of the GATS agreement allows members to withdraw

commitments once made.  However this involves a process of compensation to all

those that indicate a loss due to a change of existing schedules.  According

to Geneva sources, some developed countries such as Switzerland and Japan

are trying to use this process to limit the scope and use of this Article

by demanding compensation from the EU without proof of losses. If their

demand is accepted, it will set a precedent that any future withdrawal of

commitments by a member will entitle any other member to ask for

compensation without having to first show damages. This will render

Article XXI meaningless. Given that Japan and Switzerland have been key

Demandeurs for the Singapore Issues, the rationale of the approach to article XXI

makes more transparent what many civil society groups and to date some

developing countries have been saying: that GATS is to a large extent the hidden

investment and government procurement agenda.
 

_{^{Developing Countries Defeated in NAMA}}

No formal negotiations have taken place on non-agricultural market

access (NAMA) but informal meetings were held earlier in the month.  The

Chair of the Negotiations Group on NAMA, Iceland's Ambassador Johanesson, was

keen to get members to commence technical work on the formula for tariff

reduction, the sectoral approach and flexibilities.  Some developing country

voices spoke out against moving so quickly on technical issues without

re-opening the debates on the elements in NAMA of most concern to them, elements

specified in paragraph one of Annex B of the July Package.

 

The negotiations in July surrounding NAMA created serious tensions

between developed and developing countries and even threatened to derail

overall negotiations on the July package.  Developing countries only agreed to

accept Annex B on the condition that four key elements would be

subject to 'additional negotiations.'  The Chair, supported by many members,

seems to be showing reluctance to re-open the negotiations, preferring instead

to move straight to technical work.  Given that very few developing

country members spoke out against the proposed agenda of Ambassador

Johannesson, it now seems more likely that paragraph one of Annex B will not

be given adequate consideration.

 

At the moment there are no country groupings working actively on NAMA.

During the July Package, it was the Africa Group that was most vocal

and given that many other developing country groupings are focused on other

issues, it could be important for the Africa Group to continue to speak with

a unified voice on NAMA.

 

Civil society groups have started to come together around NAMA issues

But more active mobilization is required.  More work is needed both in

terms of research and campaign activities in order to heighten awareness around

the issues.
 

^{_{Differentiating Special and Differential Treatment}}

The July Package avoided creating a new category of 'weak and

vulnerable' developing countries, as advocated by EC Commissioner Lamy. 

In fact, paragraph 1.d of the Framework explicitly says no new sub-category of

members will be established.  However, some G90 countries seem keen to

create a differentiation that would separate them from the more

advanced developing countries (the G90 includes the Africa Union, Africa,

Caribbean and Pacific (ACP) countries, and least-developed countries (LDCs)). 

It is still unclear what the agenda of the G90 is on this issue, and indeed

whether they will continue to coordinate as a group over particular

issues at all.  Since developed countries are very interested to limit the

number of developing countries that benefit from SDT, however, the issue is

not likely to go away. It is clear this could be a very divisive issue for

 developing countries and will need close monitoring by civil society.
 

^{_{Decisions on Trade Facilitation}}

One concrete outcome of the July Package is the establishment of the

Committee on Trade Facilitation and the appointment of the Chair,

Ambassador Noor from Malaysia.  This is an interesting choice considering that

Malaysia advocated very strongly against the Singapore Issues and was a leading

country in the fight against the inclusion of the four issues. It is

expected that the Committee will meet soon to establish an agenda of

work.
 

Deciding on the next Director General

Next year, WTO members will be choosing a new Director-General.  Rules

and procedure have been set out to help formalize the process.  Until

December 2004, candidates will be nominated (candidates can only be nominated

by their own government).  From January to March, a formal process of

consultation will take place with a decision to be made by May 2005. 

The list of people currently nominated includes the former Ambassador of

Uruguay to the WTO, Eduardo Perez del Castillo; the current Ambassador of

Brazil to the WTO, Luiz Felipe Seixa de Correia; the Trade and Foreign Minister

of Mauritius, Jaykrishna Cuttaree.
 

^_Conclusion

The July Package may have saved the WTO and the multilateral trading

system for now, but most of the work - political and technical - remains to be

done. There are still no commitments from anyone, especially from developed

countries guaranteeing the development dimension of the round. 

Developing countries are very cautiously satisfied with the results of July, but

unless developed countries show that they are willing to give real

concessions and start addressing the inequalities existing in WTO Agreements, the

multilateral trading system will continue to teeter.

 source