Developing countries voice concern over the substance and process of WTO negotiations

Martin Khor (TWN), Geneva, 29 July 2005

The WTO's Trade Negotiations Committee at its continued meeting in the afternoon and night of 28 July, heard statements from many countries, with many expressing disappointment with the lack of outcome of the end-July General Council process, and urging that work intensify after the summer break.

The main discussions on the state of negotiations took place at the TNC, as memberswere requested not to repeat the same points at the General Council meeting on 29 July.

Some developing countries also made critical comments on some of the reports thathad earlier been presented by the chairs of various negotiating groups and bodies.

Some countries implicitly or explicitly disagreed with some key conclusions of theChair of the NAMA negotiating group, Ambassador Stefan Johannesson of Iceland,while others disagreed with points made by the Chair of the services negotiations,Ambassador Alejandro Jara of Chile.

Several countries or groupings were also critical of the negotiating process which theysaid excluded many developing countries, and many more that development concernshad fallen off the agenda.

India, represented by Ambassador Ujal Singh Bhatia, said that it was disappointed atthe lack of progress and that there was a huge task in the remaining months beforeHong Kong. On agriculture (and the report by the agriculture negotiations chair TimGroser to the TNC), India said the G20 proposal on market access had alreadybalanced the interests of exporters and countries with serious concerns of poorvulnerable farmers.

'It was not meant to be a launching pad for other parties to introduce elements ofadditional progressivity into the formula,' said India. 'Introduction of additionalprogressivity is neither envisaged in the framework nor warranted. Similarly, thelevel of ambition should not be linked to flexibilities.'

India would also have liked more emphasis in the agriculture chair's assessment onthe concerns of developing countries regarding special products (SPs) and specialsafeguard mechanism (SSM), as a sustainable outcome has to put the concerns ofhundreds of millions of farmers who live on the edge of subsistence in the middle.

In NAMA, India did not share the Chair's perception of a convergence on the issueof the formula. Egypt's statement on behalf of the African Group (which hadindicated support for a Swiss-type formula with a predetermined coefficient for eachmember qualified by its current average) made it clear that many others shared India'sperception in this regard, Amb. Bhatia said.

While a Swiss type formula has been supported by members as the main modality fortariff reduction, 'it is neither easy nor useful at this point to peg specific numbers tothe members supporting one or the other Swiss formulae on the table,' said India.

India added its disappointment at the current state of the services talks and there isurgent need for corrective action. It said it was filing an ambitious revised offer,opening a number of sectors in Mode 3 (commercial presence), includingarchitectural services, integrated engineering, urban planning and landscapingservices, veterinary services, some environmental services, distribution (excludingretail trade) and additional areas in construction and tourism, and areas in educational,management and life insurance services.

India also expressed 'growing anxiety' over the development dimension of thenegotiations. 'We have given some attention to the S&D cluster, albeit without muchprogress, but have made no effort towards a collective definition of the developmentdeliverables at Hong Kong. This task brooks no delay and should be on priority whenwe reassemble.' An early solution to amending TRIPS agreement to give effect to theAugust 2003 decision (on TRIPS and health) is an urgent necessity.

Bangladesh (speaking for the LDC Group) said the LDCs were not in favour of aRound but signed on, with the only saving grace being the level of ambition, whichappeared quite high and it had hoped for significant developments in many areas ofnegotiations. With time, the LDCs began to wonder if it was right to maintain thoseexpectations.

Though there was talk of a July outcome or approximation, now there are only thereports of the Chairs, revealing the lack of adequate progress. Many members feelLDC concerns are taken care of through tariff reduction exemptions, flexibility inbinding tariff lines etc.

But in reality the LDCs seldom benefit as 'we generally have WTO-pluscommitments through bilateral/regional trade agreements or unilaterally throughnegotiations with the World Bank or IMF. Most LDCs have little binding coverage,or the binding tariffs may be very high, but their actual applied tariffs are only13.8%.'

In the WTO negotiations, LDCs can gain only if members commit to help promoteLDC products. The LDCs Livingstone Ministerial Declaration of June 2005 hadasked for bound duty-free and quota-free market access for LDC products.

Another demand is full implementation of modalities in services for special treatmentof LDCs. The LDC submission had not received responses and revised offers failedto take on board LDC interests. There is little movement in Mode 4. At the sametime, demands are being made on LDCs to open their services sectors, whichundermine the development objectives of the LDC modalities.

'Overall we register our profound disappointment at the lack of progress on manyissues of concern to us,' said Bangladesh. In trade facilitation, proposals do not takeaccount of the implications for LDCs and how they would be able to implement them.

'In the SDT negotiations in the Committee on Trade and Development specialsession, despite major concessions from the LDC Group, there is no progress. TheS&D provisions are important to us and the texts must provide economicallymeaningful results for us.

'On cotton, we call on members to address the concerns ambitiously, expeditiouslyand specifically in all three pillars of agriculture negotiations.'

The LDC Group also registered its concerns about the current negotiating process.'Lately we have been observing that in many negotiations, even where we have aninterest, the LDCs have not been invited.'

Another concern was with the pace and manner of negotiations. 'We have beennoticing that small groups of Members develop understandings among themselvesand bring their texts to the general Membership only at the last possible moment. Thisplaces us in an extremely difficult situation. It is only when we see the broadparameters of the negotiations that we can observe how our interests are affected. Forinstance, only when the formula is accepted and applied, would we evaluate theerosion of preferences. However, the scope for negotiations, both in substance and intime, is so limited that we are unable to incorporate our concerns.

'We urge the membership to ensure the proposals are tabled early in the negotiations,when there is time to discuss the issues. This would take care of both theparticipation element as well as the time and space for the negotiations.'

Venezuela said the development dimension is the fundamental premise in the Round,and any assessment has to see how that premise is translated into fair internationaltrade benefiting developing countries, greater market access for their products, S&D,and the development of their productive and trade capacities through trade.

On Agriculture, it said any tariff formula approach should take into account thespecial characteristics of each developing country, to preserve policy space forsocioeconomic development. It reiterated the importance of special products and aspecial safeguard mechanism and tropical products and erosion of preferences.Developing countries should be exempt from reduction of de minimis domesticsupport.

On NAMA and the tariff reduction formula discussions, Venezuela rejected anyproposal far from the Doha mandate to fully take into account the special needs andinterests of developing countries, including through less than full reciprocity inreduction commitments.

'If we make simulations, using the different proposals, especially, those of developedcountries, we end with disproportionate reductions on the tariff universe, further fromwhat is tolerable for developing countries,' said Venezuela.

It added that the developed countries would be affected less in terms of fiscal revenue,and they would also make less proportionate tariff cuts, with less effects on theiralready consolidated industries, in contrast to the effects on infant industries ofdeveloping countries. 'This will be translated into a concession that constrains thefuture of our national enterprises and our economic development.'

The NAMA negotiations on tariff reduction should take into account ensuring policyspace is preserved (which the simple Swiss formula had not perceived); dependenceof developing countries on customs revenue, vulnerability of small and mediumenterprises in our economies, or preference erosion.

Commenting on the report of the chair of the services negotiations, Venezuela saidthe report by Amb. Alejandro Jara was not an objective summary of the discussionsheld at the services special session on 27, 30 June and 1 July. Annex 1 of the report,summarizing the debates related to sectors, modes and rules in the framework of theprogress is 'without precedents because it was the first time that it is included, andmoreover, it does not have the green light of the Membership because we did notparticipate in the consultations.'

It added that the report's portrayal of crisis favors the use of certain 'benchmarks', asparagraph 5 stated that 'a considerable number of Members recognized that therequest-offer method alone is not producing the desired results.' Venezuela said that'the report does not reflect the opinion of another considerable group of Membersthat do not share this view.'

It also criticised the report's section on future work, which it said did not mention theissue of rules (even though the report had earlier stated the central importance to somemembers of a successful outcome on emergency safeguard measures); nor does itinclude an assessment of trade in services, in a general and sectoral mode.

Venezuela also referred to the intention of the chair to engage himself in intensiveconsultations on a broad range of issues, and remarked that recently 'theseconsultations have been taken in an informal way impeding our following up of theprocess and its results, so these should not continue.'

'Because of what we have exposed, before accepting this report, we request theinclusion, in the language of the report, of the opposition of many countries to themodification of the negotiation modalities in GATS, and likewise the implicationsand conclusions that derive from that omission. In the same way, we request theelimination of annex 1, a product of restricted consultations in which we did notparticipate.'

Venezuela also highlighted the importance of transparency in the negotiations. Theurgency to achieve agreement should not overshadow and leave behind the necessarytransparency. We cannot expect to complete in two weeks the work of one year. 'Theprogress should be an ongoing and inclusive one so to avoid the last hour syndromein the future.'

Jamaica, represented by Ambassador Ransford Smith, said it shared thedisappointment of the TNC not meeting its objectives and deadlines.

On Agriculture, in the market access pillar, certain development aspects such asSpecial Products (SPs), a Special Safeguard Mechanism (SSM), the treatment ofcountries with ceiling bindings and preference erosion have received much lessattention and have not moved satisfactorily. This is based on the premise that someissues must be addressed before others.

In domestic support, Jamaica had hoped that a decision would have been taken by theend of July to exempt developing countries from the requirement to reduce the deminimis. This is an opportunity missed.

In the Export Competition pillar, the export interests of small developing countrieswhich need to make use of export credits should not be unreasonably prejudiced bynew disciplines. On state trading enterprises, developing countries should be exemptfrom new disciplines.

On NAMA, much work has been done in certain areas such as the formula and thetreatment of unbound lines. But much less work has been done on issues such asflexibilities and less than full reciprocity, which are to await the resolution of theso-called key issues. Jamaica had serious doubts about this approach.

'In NAMA, the principles of flexibilities and less than full reciprocity are stand aloneissues. We are very concerned that there is the real risk that the genuine interests ofmembers in these areas will not receive the attention that is necessary. We do notwish these issues to be addressed in a rushed, pressure cooker atmosphere.'

The NAMA negotiations results should recognize the vulnerabilities of developingcountries, through appropriate flexibility and moderation in commitments. This is theintent of the proposal of some CARICOM members which is attracting growingsupport.

'Moderation in commitments and flexibilities are fully consistent with the spirit andsubstance of the Doha mandate. Yet it appears to be almost an assumption thatdeveloping countries, including small vulnerable members, will be expected to maketariff cuts in this Development Round which far exceed what developed countries,with their competitive industries, undertook to make ten years ago in the UruguayRound.'

Jamaica stressed that the principle of less than full reciprocity should be a part of thecore formula in order to achieve a substantial difference in outcomes in the reductioncommitments of developed and developing countries. It stressed the separation of theprinciple of less than full reciprocity in reduction commitments and special anddifferential treatment as given effect through flexibilities. It was also concerned aboutpreference erosion.

On services, Jamaica cautioned against attempts to introduce other approaches whichwould erode or eliminate flexibility provided under the GATS and in the negotiatingmodalities.

Liberalization should be approached and undertaken progressively and with dueregard to the implications for building domestic capacity, preserving policy space, andstrengthening and diversifying services exports. The GATS does provide scope forthis kind of approach to be taken through flexibilities built into the Agreement itself.A renewed sense of commitment to this principle would help alleviate anxieties ofsome developing members.

Jamaica also expressed deep concern with regard to the state of the negotiations interms of development. The development component at the current stage of the Roundis sadly lacking, not only in regard to the specific development issues but also interms of development as a cross cutting issue in the negotiations.

'Paradoxically we find that developed partners are taking defensive positionsprecisely in those areas and on those matters where they should be accommodatingthe interests of developing countries, while taking aggressive and sometimesuncompromising postures where their own interests will be served vis a vis those ofdeveloping countries, in areas such as NAMA and Services. This cannot be the roadto a development outcome.

'We frankly believe that a course correction is needed. Some of our partners seem tobelieve that development concerns can be taken care of merely through liberalization,and more liberalization, and this lays the ground for insufficient attention to issuessuch as the potential for harming vulnerable domestic industries, and small farmers,the underestimating of adjustment costs and even of the potential for causing and/ordeepening macro economic imbalances. Unless we act in a focussed and sympatheticway to redress these matters the Development aspect of the Round may end up beinglargely in the nature of a deficit.'

The African, Caribbean and Pacific Group (ACP), represented by AmbassadorSamuel Amehou of Benin, expressed concern about the state of the Round, with'negotiations in trouble.' On agriculture, the group's concerns include preferences,special products, a tariff formula with sufficient flexibility and duty and quota freeaccess for LDCs.

On cotton, the group called for elimination of all forms of cotton export subsidies andimproving market access for international trade in cotton; clear delivery on bound,duty-free and quota-free access for cotton and its by-products for LDCs that are netcotton producers and exporters; and elimination of domestic support measures and thecreation of an emergency support fund for cotton production.

On NAMA, the ACP is preoccupied with several aspects of the formula, treatment ofunbound tariffs, preference erosion and flexibilities for ACP countries and non-tariffbarriers.

On rules, the ACP said regional trade agreements should be formulated in a way thatassists development. The deliberation on Article XXIV of GATT should confergreater flexibility for developing countries in terms of transitional periods and thedegree of liberalisation and incorporate real SDT.

On trade facilitation, it is crucial that any commitments should be within the resourcecapacity of the developing countries. Tabled proposals should not go beyond thecurrent mandate. Concrete actions are needed on technical assistance and capacitybuilding.

On development issues, the ACP expressed concern over the lack of effectiveprogress. It defined development issues as SDT, implementation issues, the situationof LDCs, small economies, commodity issues, technical assistance, capacity building,technology transfer and trade, debt and finance.

On TRIPS and public health, the ACP supported the call to amend the TRIPSAgreement with a view to put in place a permanent solution.