| Geneva Update # 6
August 8, 2002
By Shefali Sharma “REALITY CHECK”: TWELVE MONTHS TO MEXICO AND the 5TH MINISTERIAL In typical fashion, a year in advance of the 5th WTO Ministerial, there is a lot of posturing going on between developed and developing countries. The EC is concerned that the agenda on environment is not moving in a broad enough manner, so it is pushing for technical assistance for the so-called Singapore Issues (funding primarily investment and competition) so that Developing Countries will agree in a year to negotiations on these issues. Meanwhile, the US is proposing a relatively ambitious agenda in Agriculture as a way to placate the Cairns Group (18 countries both Developed and Developing who identify their interest as exporters of agricultural products) who were outraged by the recently passed US domestic farm legislation and are questioning whether the US is truly committed to deeper liberalization of agricultural trade . Meanwhile, many Developing Countries are saying that Doha was just the beginning and that they are not willing to make progress on issues of interest to the EC, US and other if they see no commitment on their part to rebalance past grievances. They say real progress between now and Mexico on “development” by the Quad (EC, US, Japan and Canada) will be the real test as to what can truly be achieved at a “mid term” review in Mexico. The month of July included two General Council meetings (where delegations discuss the WTO agenda at large), one Trade Negotiating Committee meeting (where Chairs of each Negotiating body such as the Special Session on Agriculture presented their reports) and several meetings of the “Special Sessions” themselves, as mandated by Doha. Special Session is the name given to actual negotiations on specific areas. The Special Sessions of Negotiations held included Agriculture, Services, Committee on Trade and Development and Market Access on Trade in Industrial Goods. It is still controversial whether the Special Session in the Committee on Trade and Development (CTD) constitutes an “official” negotiation. The CTD is of prime importance to developing countries because it is discussing mandatory changes in WTO agreements that would rebalance the problems and inequities of the Uruguay Round by giving special treatment to the developing countries. The Developing Countries (DCs) continue to be frustrated because none of the mandated issues regarding implementation and Special and Differential Treatment (S&D) have progressed and resolution of S&D talks has been postponed to December of 2002. It is unlikely that the Quad will agree to address these issues in a concrete manner by the end of this year since both the EC and the US see these as negotiating items that involve tradeoffs. The EC hints that they see S&D and Implementation as a tradeoff in exchange for progress on other issues like Investment, Competition, Environment, Agriculture and Market Access on Industrial Goods. From the perspective of developing countries, both S&D and Implementation treat issues that have already been negotiated, sometimes more than once, making the extraction of further concessions in exchange for the changes they seek entirely inappropriate. For them, many of these issues are not new concessions, but ensuring that promises already made are kept. These promises were made to DCs first during the Uruguay Round and then again in Doha. To now be expected to make further concessions again to see any resolution is seen as the Developed Countries negotiating in bad faith. Other issues involve changing the imbalances in the agreements themselves. Implementation issues, as mandated by Doha, must be resolved in various bodies in the WTO rather than directly in a negotiating special session. For instance, members were to arrive at some sort of decision regarding access to US, EC, Canadian textile markets by the end of July in the Agreement of Textiles and Clothing (ATC), but no decision or change has been made. The Negotiating Group on Market access of Non-Agriculture Products (which is a negotiation to reduce barriers to trade in all primary commodities and other natural resources not covered by the Agreement on Agriculture) has been deadlocked. However, it has arrived at a decision that links Agriculture and Services negotiations to Market Access talks in a more concrete way. The EC and the US are interested in developing modalities (a framework) for the negotiations in this area as early as January 2003. The group has officially agreed to begin discussing modalities by March 31, 2003 with an attempt to complete them in two months later, by May 31, 2003. Scepticism exists amongst many members that complications in each negotiation and between different negotiations will make it virtually impossible to arrive at modalities for Agriculture, Services and Market Access by the time of the 5th WTO Ministerial (to be held in Mexico in September 2003), much less the designated date March 31, 2003. On the other hand, both the WTO Secretariat and the Quad are putting a great deal of pressure on other members to adhere to the agreed dates, as is evident from their interventions at the WTO and in the press. Incidentally, this drive by the Quad to meet deadlines does not seem to apply in areas of S&D and Implementation. Developing countries are intervening in discussions of Market Access with caution this time around. Many of them are asking for studies to be conducted of impacts of liberalization of the industrial goods sector. Others are equally aware of the need to change the rules in Agriculture whereby their domestic producers can be protected from the surge of highly subsidized dumped imports. If Doha is any test, however, it will take more than dissatisfaction on the part of Developing Countries to deliver a more balanced outcome of negotiations between Developing and Developed Countries. At Stake Towards Mexico… What we are talking about, then, are three categories of negotiations and some parallel concerns: Market Access, whereby Developed Countries (DDs) will try to move aggressively in Agriculture, Services and Industrial Goods to secure the greatest amount of access in developing countries while ensuring that their domestic interests are well protected. They will do this by clever language in negotiating text, promises to give benefits in parallel negotiations under the Single Undertaking (Where nothing in the WTO is agreed to until everything is agreed, so that, in theory, a country that loses something under the agricultural negotiations, can look for gains elsewhere, perhaps in services. However, it also obliges weaker WTO members to take on more commitments than they would choose to.). Meanwhile, DCs, who are still reeling from the Uruguay Round and, in some cases, their recent accession to the WTO, will try their best to ensure that they can retain enough policy making space in the various areas (through S&D and other creative means) to enable their domestic industries to still continue to grow, fight for ways to control the dumping actions of developed countries on their markets and ensure that the market access commitments they make (whether through multilateral or bilateral means) provides them some benefits. Even in Agriculture, some DCs are saying there seems little of hope of real market access in DDs, all they can hope for is to find ways to keep alive the livelihoods of their farmers. Not all DCs have similar interests and it is precisely these diverging interests and priorities that Quad countries take advantage of through bilateral deals. We can expect bilateral deals to play a key role once again in Mexico. DCs are unable, in most cases, to create unified bottom line positions that allow them to have strong bargaining powers with DDs for a more balanced outcome within the WTO. The other area of continued debate is Implementation and S&D. Scattered in discussions in all areas of negotiations, these issues are key for developing countries and DCs will weigh the outcomes in these negotiations to determine new concessions. The Quad will use these to divide different countries including Least Developing Countries (LDCs) who often diverge in their development interests from the larger developing countries. The other issues of contention are Environment, Singapore Issues (Investment, Competition, Government Procurement and Trade Facilitation). In these areas, the EC and US do not have a common agenda, but are in favor of an agreement. The EC is especially keen to negotiate on these isues. Excluding some Latin American and Asian countries, most developing countries do not want to negotiate these issues. As discussions have continued over clarification of issues in Competition and Investment, the mood has come down to a “substantive” debate over what each area means rather than a debate about whether to negotiate or not. Depending on who one talks to, there are those who believe that this is still a “study program” while others (both developed and developing) are seeing this as a beginning of an outline of what negotiations could look like. However, many feel that no one will really know what is happening with the new issues until things heat up by next January. Many clearly feel that they have no capacity to understand or to undertake further commitments in the WTO given the heavy workload. In competition, according to one delegate, South Africa is “engaging” in the process, Malaysia is critical and Thailand is assuming that negotiations will take place but would like to dilute the ambitions of the EC. India continues to stand firm on its Doha stance and is demanding that its concerns regarding each of the specific issues be clarified by those who want to develop agreement in these areas. The African and Caribbean countries believe they lack capacity to take on new commitments and need time to understand the implications better. Delegations predict that in January, their will be a marked shift in the aggressiveness of the talks, particularly by the EC as they would like “modalities” in place by the Ministerial in September 2003 where a “vote” based on consensus could take place. The difference between the US and the EC positions then will become much more apparent. What is clear, though, is that government procurement and trade facilitation are getting scant attention. Parallel Concerns: Technical Assistance Equally important, though largely Secretariat and donor-driven, is the issue of Technical Assistance. The Secretariat has secured pledges of 30 million Swiss francs from donor countries for capacity building. It is trying to implement its Technical Assistance Strategy in a variety of ways, including through the participation of Regional Development Banks. The WTO Secretariat is moving forward with the idea of “mainstreaming” trade in development plans and even encouraging countries to start taking loans on trade related capacity building. The WTO Secretariat is also emphasising the Integrated Framework (IF), a trade-related capacity building program for LDCs that was tried and failed several years ago, and which was “revamped” in 2001. After inserting language in Doha on the viability of the “integrated framework” without actual discussion by Ministers on this issue, the Secretariat feels that it has the political mandate to push the IF model. The IF is presented as a viable model that could be used for technical assistance in every developing country, yet its three initial pilot projects (in Mauritania, Madagascar and Cambodia) are their first phases of the pilots. Nor has a thorough review been conducted to know what is actually being achieved by these pilots. In spite of this, the IF has been expanded to 11 more countries. In October, the WTO in conjunction with the other five IF agencies (IMF, ITC, UNCTAD, UNDP and the World Bank) will sponsor a “Mainstreaming Seminar” for Geneva delegations entitled “Integrating Trade Into Development Strategies: The Role of Policy, Technical Assistance and Capacity Building.” It will be held in Geneva on October 21-22 at the WTO. It is still unclear what the agencies mean by “mainstreaming” trade. The three seminars at this meeting will include, “1) Mainstreaming Trade in National Development Strategies, Concepts, Experiences and Results, 2) Enhancing and Extending the Integrated Framework Model and 3) Mainstreaming, Coherence in Policy Making and the Doha Development Agenda. The experience with technical assistance thus far is that the WTO has allocated over 500 activities to build capacity developing countries for the “Doha Development Agenda” most of which consist of seminars and workshops on many of the Doha issues. Many delegations fear that the emphasis has been put on the Singapore issues, which are not of prime concern to developing countries, but that TA in this area will be used as a political means to accept negotiations on these issues. They fear that assistance in areas of investment and competition are given much more attention in the technical assistance plans and by WTO member donors who want countries to negotiate in these areas. The EC has already been making noise that the new issues should get priority and has pledged a sizeable chunk of assistance in that direction: 300,000 Euros for investment, 300,000 for trade facilitation and competition, with an additional 750,000 Euros for the integrated framework. (8/2/02 EC paper on WTO related TA). It is clear that beneficiary country inputs on the broader vision and goals of such technical assistance is not being internalised. PROCESS: Meanwhile the struggle for process (defined here as accountability, transparency and democracy in decision making structures of the WTO between developed, developing country members and the WTO Secretariat) continues in a fragmented fashion. After the first proposal of 13 countries in the Like Minded Group (LMG) on May 13 on accountable procedures for Ministerials, Australia, Canada, Hong Kong China and a few others submitted a “rebuttal” of sorts at the July 8th General Council Meeting. The current Chair of the General Council, Canadian Ambassador Sergio Marchi, has promised to conduct consultations after this summer break on problems with internal transparency and accountability that have plagued the institution since its inception. Meanwhile, the problems that undermined last year’s negotiating processes have returned. The US had its own high level meeting of about 18 countries in Geneva on July 16th, around the time high senior officials were visiting for the TNC. The US wanted to “assess” the situation in the run up to Doha. As a repeat occurrence of Doha meetings where officials were either refused entry into high level meetings or to speak, one “lower” level official from an ASEAN country was not allowed to speak in this meeting because his ambassador was not present. There are also rumours, supported by US hints in the press, that a mini- ministerial should be planned by the end of this year. The US has said that there seems to be a need for such a ministerial because “ a large number” of countries feel it should happen. However, this seems more like media spin than reality as many countries appear to be opposed to mini-ministerials. They saw the process, used last year before Doha, as extremely undemocratic and disruptive last year. Another controversy this month surrounded the apparent willingness of at least some WTO members to support the current Chair of Agricultural Negotiations, Ambassador Stuart Harbinson of Hong Kong China, retaining his position as Chair despite his having accepted a new position, Chef de Cabinet for the new Director General Suapachai Panichpakdi, within the WTO Secretariat. Harbinson will resign from the Hong Kong China Mission to take the job. Several NGOs, spearheaded by Focus on the Global South, denounced this potential blurring of a necessary division between political and legislative roles played by Member States versus the administrative role of the Secretariat. But up until last week, there were rumors that Harbinson would stay on until the Ministerial in Mexico, while others conjectured that he would stay until he finishes his draft report on Agriculture modalities due at the end of the year. Apparently coincidentally, Ambassador Marchi has sent out some draft guidelines on Chairmanships in the last few days for Members consideration. It is unclear whether these guidelines are a response to this brewing controversy. The debate over whether Secretariat Staff can chair negotiating bodies was already aired at the WTO in February this year, when Director General Moore, in an “ex officio” capacity, accepted on an “exceptional” basis to chair the Trade Negotiating Committee. At that time, it was made clear that a DG chairing the TNC negotiations was an “exceptional” arrangement since many member states clearly felt that there is severe conflict of interest in such and arrangement. The Cairns Group is interested to keep Harbinson as Chair, because they feel that he can move the negotiations forward quickly. Another issue raised this month in the early General Council meeting by some Developed countries was that of trade related voting in terms of the election of the Director General. Some Developing Countries responded strongly against this idea. Brazil and India spoke up to say the WTO works on the basis of “one country one vote”. The other contentious issue at this meeting was what the appropriate role of Chair in the WTO should be. According to an Asian delegate, an area of concern is on differing positions on draft texts. They do not want to see a repeat of Doha where the Chair sends a text in their “own responsibility.” Agriculture The negotiations on Agriculture seem quite unpredictable at this moment, especially in light of the question of the Chairmanship of the Negotiating body (as discussed under PROCESS above). It is clear that one camp (notably the Cairns Group) want significant cuts in trade barriers in both the US and EC. In particular they want to eliminate all export subsidies, discipline export credits and aggressively reduce tariffs from all countries for market access to their markets. Another camp of developing countries, while they agree with the Cairns Group on the reduction of domestic support and subsidies from developed countries like the US and the EC, would like to be able to protect their markets from unwanted imports, particularly where those imports are damaging their domestic production. Many developing countries are increasingly reluctant to espouse steep, across the board tariff cuts for developing countries in agriculture. Meanwhile, the EC is insisting that the US control its use of export credits and the US is working on aggressive formulas for reducing export subsidies (primarily a tool of the EU, together with Norway, Japan and Switzerland) with commitments on reduction of domestic support. One of the key issues at this month’s intersessional meeting on Market Access, was what to do with the Special Safeguard Mechanism (SSG) against import surges. This provision is expiring in the Agreement on Agriculture and most developing countries have been ineligible or otherwise unable to use the SSG as it stands. They now would like to create an SSG that would help them to protect their own markets and the livelihoods of their farmers. At the WTO, the burden of proof is with the importer to show that an import surge is causing unmanageable damage to their domestic interests. Developing Countries with very little capacity to take on protracted investigations would like to see S&D granted to them that would reduce this burden. A Paper on the SSG was submitted by Argentina Bolivia, Costa Rica, Paraguay, Phil, Thailand regarding S&D. Countries are also proposing different technical formulas for reduction in tariffs. The US has proposed the elimination of all forms of Special Safeguards. An Inter-Agency Panel that was formed in Doha published its report on the financial difficulties of Net Food Importing Countries (NFIDCs) and LDCs due to liberalization in Agriculture and “Basic Foodstuffs.” One of the goals is to create a financial mechanism to deal with their difficulties given the fluctuating prices of basic food in world markets. NFIDCs and LDCs complained in the July 31 General Council that the report does not fulfil its mandate because it makes no clear cut recommendations on what the best approach is to deal with this problem. The donor countries responded by saying that these countries must come up with a new proposal and terms of references for the panel if countries want “further work.” The next Agriculture meetings at the WTO will be the 2-4 September Special Session on Market Access, the 5-6 September informal intersessional on Domestic Support, and the Special Session on Domestic Support on September 27th). Services Talks The first bilateral sessions were held this month between countries based on initial requests made by some WTO members. Not all countries receive requests and most countries did not make them. On average, countries received 18 requests. Very few were made to the Least Developed Countries. Japan was one of the only countries that submitted requests to LDCs, Two known requests came from Latin America (Uruguay and Brazil), the US and EC had substantial requests. The US made quite an explicit covering note to delegations that their document was confidential and should not be shared with anyone. US requests were primarily in the area of finance (including banking and insurance), telecommunications, express delivery, energy, computers, distribution and environment. The US was also quite aggressive in demanding specific domestic regulation changes in countries. Increasingly, countries are concerned that pressure will be put on them in the area of domestic regulation and they are contemplating how to move on this issue—whether they should pursue this in a multilateral or a bilateral context. The concern on multilateralizing domestic regulation is that depending on the outcome and the limited bargaining ability of developing countries, any multilateral regulatory regime could be quite damaging to the political autonomy of developing countries. The US, with its decentralized regulatory structure, could also run into severe problems with state and local legislatures and thus is engaging in bilateral moves. The bilateral sessions were supposed to end with a short special session at the end; however, there was confusion amongst member states and the Secretariat on July 26. No one knew until the last day that a final special session that could have perhaps resulted in a “sharing” of the experiences of the bilateral process failed to take place. Increasingly, the weaker countries are concerned as to the implications on their resources in handling the bilateral process on numerous services sectors and modes, without clarity on classification. Another concern is that the OECD is becoming active in “technical assistance” in Services for developing countries. What is the scope and goal of their engagement is unclear. In the next Services Weeks, countries hope to bring specialists from specific sectors to the meetings. Assessment continues to be a standing item on the agenda and the on going debate of who gets credit for liberalization outside of the WTO i.e.” autonomous liberalization” still continues. The next Services meetings are due in October (21-22 for regular bodies, with bilaterals in the middle and then the Special Sessions on 28-31). |
