WTO Director General warns the negotiations are in trouble

By Kanaga Raja, South-North Development Monitor, 12 July 2005

-- The WTO Director-General Supachai Panitchpakdiwarned members at an informal Heads-of-Delegation (HOD) meeting Friday that'progress is nowhere near sufficient in terms of our critical path to Hong Kong,' andthat 'these negotiations are in trouble.'

In his assessment of the state of play in the negotiations on the Doha work programmeso far, Supachai said that there is still a 'slender chance of averting a crisis, but everyhour must be made to count.'

Expressing regret that progress up until today remains far from sufficient, Supachaicalled on members to immediately change gears in the trade negotiations.

In a separate statement to the HOD meeting following the Director-General'sassessment, the General Council Chair Ambassador Amina Mohammad of Kenya saidthat it is unlikely that members will have agreed elements of text by the end of Julyin any of the main areas of the negotiations, or in other areas of the Doha Workprogramme (see SUNS #5839).

Meanwhile, trade officials also confirmed that the General Council meeting starting27 July would only assess the state of the negotiations. Ministers are not expected toattend the meeting, unlike the situation in the July 2004 General Council meeting.

In his statement at the HOD meeting, the Director-General first gave his impressionsof the G8 summit in Gleneagles (6-8 July) that he had attended, saying that the leadersthere put much emphasis on the vital role of trade in development, especially inAfrica.

'Frankly, it is sobering to pass from the high level of expectations and hopes that Ihave encountered in Scotland to the reality of the negotiating process here in Geneva,'he said.

Against this background, he recalled the numerous warnings that he issued atsuccessive TNC meetings about the state of play in the negotiations since thebeginning of the year.

In March, he sounded a note of caution - that 'we were not yet in a crisis mode, butthat we certainly needed more sense of urgency'. This message did not seem to beheeded, he said, adding that in April, he warned that 'we were very close to a crisis'.

'I said that, at the current pace, we were not going to make it by July, and possibly notby December. I said I was still not pushing the alarm button, but that my finger washovering over it. I asked you all to prove me wrong.'

While the May TNC meeting took place against a somewhat brighter background,substantive progress continued to be rather limited. Supachai said that this was stillnot good enough, and stressed that members absolutely had to make concrete progressacross the board.

'So, where have we got to since then? Has the picture improved? I regret to say thatthe progress up until today remains far from sufficient, and I regret even more that myearlier warnings seem more valid than ever,' Supachai said.

Supachai went on to briefly review the state of progress in some key negotiatingareas:

• In Agriculture, some progress has been made. While the AVE (ad valoremequivalents) issue has been unblocked, this has not yet sufficiently galvanized thenegotiations on the most fundamental element of the market access package, thetiered formula for tariff cuts, although some progress has just been made on otheraspects of the market access pillar. Some progress has also been made on domesticsupport and, to a lesser extent, on export competition. Of course, it remains importantto advance work on all three pillars, although some sequencing is necessary for thatto happen.
• In the NAMA (non-agricultural market access) negotiations, there were somehopeful signs in June, but now positions appear to be hardening. 'I fear that theobvious constraint here is still the lack of progress on Agriculture.'
• In the Services negotiations, while the situation has improved since the May TNCin terms of numbers of initial and revised offers, the quality of the offers continuesto be poor. It remains for the membership to see how to take these negotiationsforward to Hong Kong.
• In the Rules areas, including Trade Facilitation, 'we still need to consolidate thewide range of ideas on the table to prepare the ground for further progress in mostareas. That said, some useful progress has recently been made on Trade Facilitationand in the RTAs (regional trade agreements) track in the Rules Group.'
• In the work on S&D (special and differential treatment), there is some hope thatprogress is possible on the Agreement-specific proposals, starting with thosesubmitted by the LDCs, and 'I certainly hope that some can be harvested soon.'

'It is true that some progress has been made in certain areas of the negotiations. Butlet us be clear: this progress is nowhere near sufficient in terms of our critical path toHong Kong, and it is not being seen in the key issues which would help unblockprogress across the board,' Supachai said.

'Overall, there seems to be a renewed sense of blockage and frustration. We are alsoseeing a resurgence of sterile debate about process, rather than negotiations onsubstance.'

'I am afraid we have to face the facts. These negotiations are in trouble,' Supachaiwarned, noting that very little of the political support which has been shown atsuccessive Ministerial meetings has been turned into concrete progress in thenegotiating groups. Everyone has a generalized commitment to progress, but whenit comes to the specifics, the familiar defensive positions take over.

However, Supachai said that there remain some limited but important possibilities ofrenewing the momentum this month. The Chair of the Agriculture group hasproduced a paper which clarifies the areas where movement is needed, and the Chairof the NAMA group was also expected to issue a similar paper on Friday.

A number of Ministers will be meeting informally in China (12-13 July), and theywill be faced with some key questions, Supachai said, adding, 'we look to them forclear guidance on crucial political issues, although we are all aware that it is onlyhere, in a fully inclusive forum, that real convergence can be reached.'

He said that he has not given up hope of substantive progress in areas such asAgriculture and NAMA by the end of this month, though clearly 'we should notexpect a package of formal decisions like last July.' At the very least, there is a needto establish a good base for the intensive work that will surely have to be done in thelast quarter of the year.

Supachai stressed that it is important to keep in mind that the Hong Kong Ministerialis not far away in that from the beginning of September, members will have 13 weeksto prepare it.

Ambitions remain high for significant results across a broad range of issues by then,and this is necessary if members are to have a chance of finishing the Round in goodtime, Supachai said, adding, 'Hong Kong must take us into the last lap of thenegotiations. This in turn means that Ministers have to be presented with amanageable set of key decisions to consider there. If we go to Hong Kong with aChristmas tree, no-one will be happy with what they get.'

'So, we need to change gear in the negotiations, but even more to change our mindsetand our approach,' Supachai emphasized, noting that the time is long overdue to passfrom identifying to solving problems; from the technical to the political level; andfrom generalities to specifics.

'The crisis that threatens is all the more menacing because it is not a crisis of dramaticdivergences or headline-grabbing conflict - it is a crisis of immobility. I think thereis still a slender chance of averting it, but every hour must be made to count,' heconcluded.

In her statement at the HOD meeting, Ambassador Amina Mohammad, referring thatit is unlikely that there would be agreed texts at the July General Council meeting,said, 'This situation is most regrettable'.

Although July has been seen as an important marker leading up to Hong Kong, 'ourmain focus must remain on the Ministerial Conference itself,' she said.

Between now and the 27 July General Council meeting, she envisaged that work willcontinue intensively.

The Director-General and herself will continue to meet with delegations in variousformats and also be in contact with Chairs of negotiating groups and other bodies.

The 27 July meeting will take stock and register progress on the basis of all workdone since July 2004 and of the reports from various bodies - including from thechairs of the negotiating groups, she said.

At that meeting, the Director-General will provide a further assessment on theprogress of the negotiations in his regular report as Chair of the TNC, taking intoaccount individual reports from Chairs of negotiating groups which will be submittedto the meeting of the TNC to be held prior to the General Council.

The Council will also receive a report from the Director-General on his consultativeprocess on all outstanding implementation issues under paragraph 12(b) of the DohaMinisterial Declaration.

It will also receive reports on the Work Programme on special and differentialtreatment from both the Chair of the Special Session of the Committee on Trade andDevelopment and from the Chairs of subsidiary bodies to whom a number of S&Dissues were referred in 2003. Also, the Chair of the Dedicated Session of theCommittee on Trade and Development will report on progress in the WorkProgramme on Small Economies. The Council will, in addition, receive a report fromthe Chair of the TRIPS Council on the implementation of paragraph 6 of the DohaDeclaration on the TRIPS Agreement and Public Health.

'Our objectives for Hong Kong are clear. We must agree to modalities in the keyareas of the negotiations, if we are to close the round in 2006,' the General CouncilChair stressed.

She added that it is essential that members work towards an ambitious and balancedoutcome at Hong Kong. This must include not only negotiating modalities forAgriculture and NAMA, but also real progress on substance and process for marketaccess and rule making in Services, significant and substantial progress in Rules andTrade Facilitation, and tangible development gains in accordance with the mandateof the DDA.

At the same time, she said, members mustn't forget other elements of the Doha workprogramme on which there must be concrete progress by Hong Kong.

These issues range from the Work Programme on Small Economies to the WorkingGroups on Trade, Debt and Finance and on Transfer of Technology, and from TRIPSand Electronic Commerce to the work on environment in the regular Committee onTrade and Environment, as well as the commitments members undertook in respectof least-developed countries.

'Although developing countries have thus far been very forthcoming in agreeing thatattention should be focused initially on what many consider to be the key areas for thenegotiations as a whole, they have put us on notice that they wish to see progress onthese other elements by Hong Kong. We must ensure that the development dimensionof the negotiations yields concrete results in accordance with our mandate.'

'I would also like to recall that last July we extended the Doha moratoria on TRIPSnon-violation complaints and e-commerce duties until the Hong Kong Ministerial,and we will need to take these issues also into account in the preparation of any textor texts in the autumn,' she added.

The General Council Chair reiterated that members have 13 weeks from thebeginning of September until 1 December, which is the scheduled date of the finalGeneral Council meeting prior to the Ministerial, by which time 'we should aim tohave a broadly agreed text to present to Ministers.'

'Let me emphasize that we are all now looking to conclude the negotiations in 2006,using the Hong Kong Ministerial as a platform to take us into the endgame. Failureto get there will be a major setback for growth, development and the multilateralsystem. You, the Members, will have to decide whether that is an option,' shestressed.

According to trade officials, several African countries including Benin, Rwanda,Zambia, Djibouti and Uganda spoke following the statements by the Director-Generaland the General Council Chair.

These countries said that for them, a successful outcome to the negotiations isessential and that they cannot afford a failure. They stressed that it was important thatpolitical intentions be turned into concrete progress.

Benin voiced concerns that the issues of development and cotton were not making theprogress that was needed to be made.

Trade officials also said that they did not expect many ministers to attend the GeneralCouncil meeting on 27 July. They said that the situation was not similar to last yearwhen about forty trade ministers attended the July General Council meeting thatculminated with a binding General Council Decision.

They also indicated that the 27 July meeting would be more of an assessment ofwhere members stand, identifying where the areas of convergences and divergenceslie and what work programme should be undertaken to bring about greaterconvergence on the issues.