Lack of convergence continues on eve of General Council meeting

By Martin Khor (TWN), 26 July 2005

On the eve of the WTO General Council meeting (which starts on 27 July), there does not appear to be any last minute breakthroughs on the main issues of agriculture or non-agricultural market access (NAMA).

The situation may become more clear later on Tuesday afternoon when two meetingson agriculture and NAMA are convened at the informal heads-of-delegation level forthe Chairs of the negotiating groups to brief members on the results of theirconsultations of the last several days.

'There has not been convergence on any of the key issues,' said a delegate involvedin the agriculture consultations. 'At best, there has been a better understandingamong the delegations on where each of them stands. But there is nothing on paper.'

About 14 members, which include the so-called Five Interested Parties (FIPs) plus 9others, have been meeting on agriculture since last Thursday. Among the contentiousissues in market access are the structure of the tariff-reduction formula and whetheror not to place a maximum limit on tariffs, with the Group of 20 proposing caps of150% for developed countries and 100% for developing countries, with the US insupport of a cap and the EU against.

Trade officials said the EU seemed reluctant to allow any 'movement' in agriculturebefore the summer break. Some EU member states at a meeting last weekend of theEuropean Union's Committee 133, which deals with trade issues, reportedly cautionedthe EC against making concessions in agriculture, especially on market access and thecapping of tariffs, unless there is progress in other areas such as NAMA.

On Tuesday morning, an informal consultation in a small group was convened by theNAMA chair, Ambassador Stefan Johannesson of Iceland, to discuss thetariff-reduction formula. Members invited included Brazil, Canada, China, the EC,Egypt, India, Jamaica, Japan, Kenya, Malaysia, Mexico, New Zealand, Norway,Pakistan and the US.

Delegations present did not indicate any change in their known positions, said adiplomat present at the meeting. There was thus no basis for the Chair to produce a'first approximation', and he can only be expected to give an update of the report onthe state of the NAMA negotiations that he had produced a fortnight ago, said thediplomat.

At the meeting, there was discussion on the Pakistan proposal, that a simple Swissformula be adopted with two coefficients, one for developed countries (i.e. theirpresent collective average bound tariff of 6%) and one for developing countries (theircollective average bound tariff of 30%). The advantage of such an approach is thatit is transparent and simple to understand, said Pakistan.

Some countries, including China and Malaysia, indicated interest in exploring thePakistan proposal further.

However, other developing countries present indicated that they could not accept theproposal. India, for instance, reportedly said that the harmonizing approach implicitin the Pakistan proposal was not provided for in the Doha mandate and that it did notfulfil the principle of less than full reciprocity, as developing countries would beobliged to cut their tariffs more.

Jamaica also found difficulty with Pakistan's proposed coefficients, as the outcomeof using them would mean that developing countries like itself would have to cut theirbound rates by far more than what is possible or equitable. It said that the coefficientsare critical and the numbers presented did not meet the countries' needs.

There should be differentiated coefficients for different countries to respond to thecountries' various interests, and to have only one coefficient for developed countriesand another for developing countries was not appropriate. Other features should thusbe structured in, Jamaica added.

Korea was reportedly of the view that one size does not work. It suggested that thediscussion on coefficients should go on after September and the Chair in his reportshould just note the degree of support for the various formula approaches.

The United States reportedly indicated that the Pakistan proposal would not deliverthe market access it was looking for. The key issue is to balance the coefficients withthe flexibilities for developing countries, indicating that a less 'ambitious' formulawould be linked to less flexibilities.

It reaffirmed its proposal of a simple Swiss formula with dual coefficients, but addedthat all proposals have to be looked at, so that members could come up withsomething that can be sold politically.

The Chair reportedly told the meeting that the main problem was not so much to findthe structure of the formula and the coefficients, but the relation between the formulaand the degree of flexibility for developing countries.

However, this linkage between the level of ambition in the formula and coefficientson one hand, and the degree of flexibilities on the other hand, was objected to byseveral developing countries present. They argued that flexibilities constituted aseparate issue, which was a right for developing countries separate from the questionof the formula.

Kenya reportedly said it did not understand why the issues of the level of ambition inthe formula and coefficients was being mixed up with the issue of flexibilities asthese are two different issues.

Brazil stressed the same point, saying that flexibilities already exist and do not dependon the level of ambition. Also, simplicity in a formula should not be taken as an endin itself.

Meanwhile, consultations have also being held on special and differential treatment,with the discussion focusing on five agreement-specific proposals relating to leastdeveloped countries, with an attempt to reach agreement on some or all of them bythe General Council meeting.

The deadline for reporting on a review of all the agreement-specific proposals was setfor this General Council meeting. The progress has been painfully slow, anddiscussion has now narrowed down to only the five LDC-related proposals.

Among the most contentious of the remaining points is the proposal by LDCs thatdeveloped-country members shall provide bound duty free and quota free marketaccess for goods originating from LDCs in a manner that ensures stability, securityand predictability.

The developed countries, led by the US and EU, do not want the word 'bound' in thetext. They reportedly do not want to be bound in the WTO to provide such access toLDCs, preferring that the issue be dealt with on a bilateral basis.

Another contentious issue relates to the trade-related investment measures (TRIMs)agreement. The LDCs want the text to allow them to maintain existing measures(permanently) and to adopt new measures (temporarily) that deviate from theirobligations under TRIMs.

Developed countries on the other hand are willing only to allow LDCs to temporarilymaintain existing measures, and to request duly motivated waivers from Article 2 ofTRIMs, with limited duration.

Other issues that are being discussed are LDC proposals regarding waivers ofobligations under GATT 1994, and a proposed Decision of Measures in favour ofLDCs.