Intense activity as General Council debates Hong Kong text

WTO members were engaging in intense informal negotiations and discussions on Friday, 2 December focused on how to respond to the revised draft Ministerial text to be transmitted to the WTO's Hong Kong Ministerial Conference starting 13 December.

Discussion on the Ministerial draft, which was issued at 6.00 pm on 1 December, started at the General Council meeting late Friday afternoon, 2 December. Until then the Council was discussing other items on the agenda.

Meanwhile, Ministers from six members (the US, EU, Brazil, India, Japan and Australia) arrived in Geneva on Friday, 2 December. They are scheduled to start a meeting among themselves on Friday night and Saturday morning to early afternoon.

They are expected to discuss the content of the key issues, as well as how to manage the process in Hong Kong.

Among the most contentious issues relating to the text, which is expected to emerge at the General Council on Friday evening is the treatment of services. (See separate article). Many developing country delegations expressed their unhappiness on this question when they informally met the WTO Director General Pascal Lamy on Friday morning, according to diplomatic sources.

However, it is unclear whether Lamy and the Chair of the General Council, Kenyan Ambassador Amina Mohamed, will agree to requests from several countries that the section on services in the revised text be changed.

Several developing country members, including in the African Group and the ACP Group, and some Latin American, Asian and Caribbean countries, are expected to propose that the text and possibly the Annex be changed to make it clear that the Annex is written by the chair of the services negotiations (Mexican Ambassador Fernando de Mateo) in his own responsibility and does not represent an agreed text that Ministers are being asked to endorse.

However, at a meeting with the G90 developing countries on Friday morning, Lamy reportedly told them, in relation to Annex C on services, that as long as there is no consensus for it to disappear, it will remain, and that there is need for a consensus if it is to be removed, according to G90 sources.

Some diplomats pointed out that this contradicts the so-called "bottom up"approach that Lamy claims has been directing the drafting of the Ministerial draft. It also contradicts the denial by Lamy to charges made by NGOs that the services Chair had said that a consensus is required to change the draft of the services text that he prepared.

The status of the revised text of 1 December is likely to be one of the key issues, if not the key question, at the General Council meeting and beyond that in the days leading to Hong Kong.

Two options have been put informally to members: that the text is transmitted by the members through the General Council, or that the text is sent to Hong Kong by the chair of the General Council and the Director General "on their own responsibility." The option, of making amendments, and holding another meeting to get the endorsement of the members, is apparently not on the table.

The treatment of services in the text and Annex C, which many developing countries consider unfair and not in line with their positions, has become perhaps the most controversial issue in the run up to Hong Kong and threatens to also be among the Ministerial conference's most contentious issues.

Another issue that is looming large is the treatment of cotton, which African countries in particular are characterizing as grossly inadequate. As a result of effective complaining in the Green Room meetings, especially by the Benin ambassador, the revised text includes an option of deciding on modalities for cotton as an "early harvest".

That option is in square brackets, but if it remains, it enables the issue of modalities for cotton (for an early end to export subsidies and a fast-track phasing out of domestic support) to have a significant place on the agenda.

According to diplomatic sources, Lamy will write a cover letter to Ministers to accompany the draft text, and that letter will contain sets of questions on agriculture and NAMA for the Ministers to focus on when they meet.

Questions on agriculture include:

• What are the elements of the formulae for the reduction commitments in trade distorting domestic support? And what are the disciplines that should complement the reduction commitments?
• What are the elements of the formula for tariff reduction commitments and other elements to support it? And what are the flexibilities that should accompany the tariff reduction commitments?
• What agreement is needed regarding parallelism in order to determine an end-date for elimination of all forms of export subsidies?
• What are the elements necessary to deal with cotton ambitiously, expeditiously and specifically in all three pillars?
• What are the elements of S&D necessary in all three pillars?

In NAMA, the issues that the Ministers will be asked to focus on are:

• Can Ministers agree on all the elements needed to finalise the formula and other elements that support it?
• Can Ministers resolve remaining differences about flexibilities?
• On unbound tariffs, can Ministers agree that a mark up is the way forward?

The selection of questions can also be expected to stir disquiet and unhappiness among some members, who feel that questions that are important to them are left out while the framing of the questions can skew the discussions in certain unfair directions.

For instance, the ACP Group of countries can be expected to object that the problems posed by preference erosion is missing in the agriculture and NAMA sets of questions.

And the questions framed for NAMA seem to bias the discussions towards certain "solutions", for example, that the treatment of unbound tariffs should be along the lines of marking up from the existing applied tariffs to obtain the base values, (and then applying the formula to reduce these base values).

This is a drastic way of reducing the presently unbound tariffs by very sharp rates, which is likely to cut deeply into the applied rates.

Meanwhile, at the General Council, Hong Kong's Secretary for Commerce, John Tsang, who will chair the Ministerial conference, announced six Ministers as facilitators in charge of the negotiating process in various areas.

They are Humayun Khan of Pakistan for NAMA; Mukhisa Kituyi of Kenya for agriculture; Clement Rohee of Guyana for specific development-related issues; while Hyun Chong Kim of Korea, Jonas Store of Norway and Ignacio Walker of Chile will be facilitators at large for services, rules and other issues.