DG report to HOD raises more questions than answers

Original Publication Date: 
25 June, 2015

Third World Network
Published in SUNS #8045 dated 19 June 2015
Geneva, 18 Jun (D. Ravi Kanth) -- A report presented by the World Trade Organization Director-General Roberto Azevedo on Wednesday (June 17) about his consultations with select trade envoys in different configurations raised more questions than answers over the continued attempts to rescue one major developed country which remains opposed to a developmental outcome in the domestic support pillar of the agriculture package for concluding the Doha Development Agenda (DDA) trade negotiations by the end of the year.
In giving this assessment, several trade envoys told the SUNS that at a heads of delegation (HOD) meeting, Azevedo delivered an oral report on his consultations in Paris and with the trade envoys of seven major industrialized and developing countries as well as select trade envoys on the fisheries subsidies.
The DG presented a downbeat assessment stating that a clearly defined post-Bali work program with precise modalities by end-July is "difficult" as key members are unable to converge on the reduction commitments in the domestic support and market access pillars of the Doha agriculture package, said a South American trade envoy who was present at the meeting.
The DG said that during his consultations with seven trade envoys in two separate rounds of meetings there is no progress on the most difficult issues - the overall trade-distorting domestic support, the aggregate measurement of support, the old and new blue box, and the de minimis support.
The seven countries are: the United States, the European Union, China, India, Brazil, Australia, and Japan.
The two sessions were also attended by the chair for the General Council Ambassador Fernando de Mateo of Mexico, the chair for the Doha agriculture negotiations Ambassador John Adank of New Zealand, and the chair for market access in industrial goods Ambassador Remigi Winzap of Switzerland.
Azevedo said he took part in the two rounds of meetings with the seven trade envoys on June 11 and June 15 in Geneva without revealing the name of the host among the seven who invited him for the consultations.
The DG told the trade envoys that there is no consensus on the domestic support commitments as set out in the 2008 revised draft modalities.
Back in 2011, Azevedo had said that "The December 2008 draft modalities are the basis for negotiations and represent the end-game in terms of the landing zones of ambition. Any marginal adjustments in the level of ambition of those texts may be assessed only in the context of the overall balance of trade-offs, bearing in mind that agriculture is the engine of the Round..."
"The draft modalities embody a delicate balance achieved after 10 years of negotiations. This equilibrium cannot be ignored or upset, or we will need readjustments of the entire package with horizontal repercussions. Such adjustments cannot entail additional unilateral concessions from developing countries."
However, at the HOD meeting, he ought to have but did not explain why there is no convergence on 2008 revised draft modalities and whether he made any attempt to bring about convergence. Otherwise, his earlier statements regardless of his status would continue to stalk him in the coming days, said a trade diplomat who attended the meeting.
Without suggesting that he floated new concepts during those two meetings with seven trade envoys, Azevedo spoke about a moving target for reducing the domestic support. The DG did not elaborate what this moving target is and whose idea it was at the meeting. Azevedo added that there is no support for the moving target to reduce domestic support but did not indicate who opposed it and who supported it.
In the 2008 revised draft modalities, the then Chair Crawford Falconer had suggested a comprehensive framework for reduction commitments in the domestic support pillar. There was no moving target for reducing the domestic support and if anything, it was based on historical and current spending levels in the domestic support of major industrialized countries.
The director-general maintained that the idea of numerical cuts from an absolute number in the OTDS is not acceptable to some G-7 participants.
The United States has a clear problem here because of its farm bill, a South American trade envoy told the SUNS.
The US had agreed to bringing its domestic support to a level around US$14.5 billion in 2008 but later it backtracked on that figure.
Another idea of a percentage cut in the OTDS also failed to gain consensus among the seven countries, the DG said.
Here again he ought to have indicated whose idea was a percentage cut and who opposed it, said an Asian trade official who attended the meeting.
The DG said there was also no convergence on transparency and best endeavour commitments to create adequate mechanisms to address trade concerns arising from OTDS.
In a similar vein, the cuts in Aggregate Measurement of Support (AMS) of the Amber Box are impossible for some members, the DG said, without indicating the names of the countries that rejected the idea.
Some countries among the seven maintained that the reduction commitments in AMS cannot be considered in isolation, the director-general argued.
It is an open secret that the US is not ready to reduce its AMS because of the farm bill, the Asian envoy argued.
As regards the blue box commitments, some members of the seven pressed for adhering to the 2008 revised draft modalities. There was also a discussion on maintaining or eliminating the blue box. There is no need for the new blue box which was specifically created for the US in the 2004 July modalities, according to the director-general, said an African trade envoy.
Azevedo said a cut in the de minimis is one of the biggest red lines for some countries among the seven nations.
The US wants China and India to undertake reduction commitments in their de minimis support.
On average tariff cut proposals and new approaches in the market access pillar, there are continued differences as some members want the 2008 revised draft modalities while some others are ready to lower the level of ambition through the average cut formula.
At present, there is no consensus on tariff rate quotas, special products, and special safeguard mechanism if the average formula framework is adopted, Azevedo pointed out.
The director-general also spoke about the larger green room meetings on fisheries subsidies and the LDC package such as rules of origin, market access for LDC services providers, duty-free and quota-free market access, and cotton.
On fisheries subsidies, some countries want an important standing discipline as well as prohibition of most harmful subsidies, Azevedo said.
Countries also remained divided on extending special and differential treatment flexibilities, according to the director-general.
Azevedo said he is going to convene dedicated meetings on cotton, rules of origin, and duty-free and quota-free market access next month.
Azevedo said the time has come for hard political decisions for finding solutions failing which it would be difficult to make progress by the tenth ministerial meeting in Nairobi, according to trade envoys present at the meeting.
Despite Azevedo's approach to dump the 2008 revised draft modalities, the Small and Vulnerable Economies on 17 June called for adhering to the previous ministerial mandates, including the Rev. 4.
In a comprehensive proposal, the SVEs said the following general principles must remain as an integral part of the Post-Bali Work Program:
a. Development dimension of the Doha Development Agenda is central.
b. Basic principles for the negotiation process: Bottom-up, transparent and inclusive process, Member-driven process and less than full reciprocity.
c. Special and Differential Treatment (SDT) should be an integral component in all areas of the Work Program.
d. SDT for the SVEs: enhanced flexibilities for SVEs on all elements of Agriculture, NAMA and services, as well as in any other component of the Work Program of our interest.
e. SVEs believe in building future work on the basis of the agreed mandates and the stabilized flexibilities contained in the Draft Modalities of 2008 and 2011.
f. Balanced outcome according to the level of ambition and contributions of Members. If as a result of the negotiations there is a lowering of the level of ambition, SVEs' flexibilities and contributions will also have to be revisited in that same way.
Key Elements of the SVE proposal include:
* Flexibilities captured for SVEs in Rev. 4 and Rev. 3 are the basis for future work. The level of ambition in Agriculture is central to the Round. Progress should be made across all negotiating areas in the Post-Bali Work Program.
2.1 Agriculture:
i. Market Access: Enhanced flexibilities for SVEs, Special Safeguard Mechanism (SSM), Special Products, Tariff Rate Quotas (TRQs) (Paragraphs 65, 112, 127, 130, 144, 157, 158 of the Rev. 4)
ii. Domestic Support: Enhanced flexibilities for de minimis, overall trade-distorting domestic support (OTDS), Blue Box.
iii. Export Competition:
-- Enhanced Flexibilities in Export Credits, Export prohibitions and restrictions, Food Aid, and State Trading Enterprises
-- Cuba's proposal on Export Credits
2.2 NAMA:
i. Market Access: Enhanced flexibilities. (Including specific flexibilities for Fiji, Bolivia, and Gabon)
Participation in sectorial initiatives should remain on a voluntary basis.
2.3 Services:
i. Market Access: Flexibilities contained in Paragraph 8 of Annex C of the Hong Kong Declaration Articles XIX. 2 and in the Guidelines and Procedures on the Negotiations in Trade in Services.
ii. Domestic regulation: Enhanced SDT for SVEs.
iii. We reiterate that targeted technical assistance as agreed in paragraph 10, Annex C of the Hong Kong Ministerial should enable developing countries to participate effectively in the negotiations.
2.4 Fisheries Subsidies:
i. Additional Flexibilities for Small and Vulnerable Economies under article III of the proposed draft Chair's text on fisheries subsidies, based on the SVEs' proposal.
ii. We reiterate that the referred proposal seeks some additional flexibility for SVEs with respect to the proposed exemptions to the prohibited subsidies under Article I. +