US And EU Change Tactics: Seek To Woo G20Trade Negotiating Bodies Expected To Resume In February

News and Updates

Geneva Update

After the failure of the Ministerial meeting in Cancun, the General Council Meeting in December 2003 brought no substantial progress in trade talks. However, all members stated their willingness to restart trade talks in 2004. Since the break over Christmas and New Year, various WTO members and WTO Director General Supachai have continued their efforts to restart trade talks. A Mini-Ministerial meeting was held during the World Economic Forum in Davos in January on the invitation of the Swiss President, Mr. Joseph Deiss. Earlier in January, Robert Zoellick, US chief trade negotiator, sent a letter to all WTO trade ministers outlining his view on how to advance the Doha Round negotiations. Consultations for new chairpersons, among others for the General Council and the trade negotiating bodies, have started. It is expected that the Trade Negotiating Committee (TNC) and its subsidiary bodies will start working again soon, once the decision on chairpersons is taken. Nonetheless, the probability of a true break through and a fresh start in negotiations soon remains low.

Japan likely to chair the General Council; New Zealand under consideration to chair the negotiating committee for agriculture

The next General Council Meeting will take place on 11th and 12th February 2004. It is expected that all new chairpersons for the various bodies will be finalized at this meeting, including the new Chair of the General Council and the chairpersons for the various negotiating bodies. According to WTO tradition, the Chairperson of the General Council rotates between a developing and a developed country (including a rotation among regions). Mr. Carlos Perez del Castillo, Ambassador of Uruguay to the WTO, was Chairman of the General Council in 2003. It is now the turn of a developed country - this time from Asia - to take over the position. Geneva sources confirm it is very likely Japan will be the next Chair of the General Council.

Robert Zoellick created some annoyance on this issue with a proposal in his New Year's letter to all WTO member trade ministers (dated January 11th). He suggested a break in tradition and proposed that a Chair from a developing country should again preside in 2004, because it is important to give prominence to development issues in liberalizing trade. He even suggested some possible countries for the job, including Brazil, Chile, Pakistan, Singapore and South Africa - all members of the G20, except Singapore. The G20 (Group of 20) is a coalition of developing countries that united before the Cancun Ministerial on agricultural issues, demanding meaningful reform from the U.S. and EU in particular as a precondition for continuing negotiations on the wider Doha Agenda. At the time, the U.S. and EU were very critical of the group, not least because of its effective power to hold up talks.

Developing countries, including G20 members, refused the proposal for various reasons. For the G20, acceptance would have limited the groups' room for maneuver in the forthcoming negotiations. For developing countries in general, controlling the Chair of the General Council in 2005 is more interesting. If trade talks take off again in 2004, the Doha Round might be concluded in 2005. Furthermore, a new WTO Director General will be selected in 2005: Dr. Supachai's term ends in September 2005 and consultations for his successor will start as soon as January 2005. Moreover, developed countries such as the EU member states and Switzerland did not support Zoellick's proposal.

A number of countries have indicated interest in chairing the negotiating committee in Agriculture, including Egypt, Australia, New Zealand and Pakistan. Through the Cancun Ministerial Stuart Harbinson, former ambassador to the WTO for Hong Kong and now a high-level WTO official, chaired the committee. Geneva-based delegates indicate that New Zealand has a good chance of being accepted as chair, despite the fact that it is a country with important interests in Agriculture and so it does not have a neutral view. New Zealand's Ambassador, Tim Groser, is widely respected among WTO members for his skills as a chairman. Whoever takes up the position will be in a crucial position in determining the success or failure of the Doha Round. For developing countries, particularly those fighting for Special and Differential Treatment and for the inclusion of the Special Product and Special Safeguard Measures Approach (SP/SSM Alliance), New Zealand is not an ideal chair. New Zealand is strongly committed to the rapid liberalization of all countries' agriculture and has not in the past been sympathetic to the concerns of SP/SSM Alliance.

Geneva sources also report that Chile is likely to become the chair of the negotiating committee for Non-agricultural Market Access (NAMA). As for services and rules, Australia is said to have very good chances to become the next chair.

So far informal, opaque consultations continue on the issue of nominating chairs. The trade negotiating bodies can only resume work if agreement can be reached among the membership on these appointments.

Next Ministerial Meeting - Hong Kong or Oman?

The question of when and where the next Ministerial Meeting will take place will largely depend on whether any agreement in agriculture is achieved in the next few weeks. Both EU Trade Commissioner Lamy and US Trade Representative Zoellick want a Ministerial Meeting in 2004, a year ahead of the normal schedule. Lamy has proposed such a meeting for the middle of 2004 already, while Zoellick has proposed later in the year. Their timepreferences are probably linked to their professional careers. Lamy will leave office earlier than Zoellick and therefore prefers a ministerial meeting as early as possible. Both may be in their last year in their current position and they of course would like to their term of office with a successful move towards the conclusion of the Doha Round, especially after their failure in Cancun.

However, a Hong Kong Ministerial in 2004 seems unlikely. First, Hong Kong indicated officially that the only possible week for a ministerial meeting in 2004 is the last week of the year. The convention center is already booked every other week of this year. It is hardly likely the WTO membership will decide to hold a ministerial meeting over Christmas and New Year for the sake of having a meeting in 2004. Second, the decision on a date for the next ministerial would have to be taken at the next General Council Meeting, in February. According to Geneva sources, the membership seems split on this question. Some advocate to set a date as soon as possible, arguing this would ensure that trade talks reach again momentum. Others - in particular developing countries - sustain the position that right now it is early to set a date before some concrete movements and results are seen in the negotiations. Despite the increasing pressure of the major trading partners and WTO Director General on developing countries to show flexibility in trade talks, too many questions remain to count on a break through. This situation makes it also difficult for the U.S. and the EU to promote any particular date. The fear of another failed ministerial meeting is a big threat for the two big power blocks.

However, even though a Hong Kong Ministerial is unlikely to happen in 2004, another country has offered to host a Ministerial Meeting if needed: Oman. This means any of the spring General Council Meetings could decide to hold a Ministerial after all, if movement in the talks warranted it.

A Ministerial in 2004 will stretch already over-worked developing country delegations in Geneva, who are already preparing for the eleventh session of the UN Conference on Trade and Development (UNCTAD XI), which will take place in mid-June in Sao Paolo, Brazil. Their concern with any possibleoverlap has already been expressed to the WTO membership.

US and EU seem to change tactics - Objectives remain the same: split the G20 and make WTO members agree to their framework approach in agriculture With the New Year, the powerful trading blocks seem to have adopted a new strategy to achieve their goals. During the period after Cancun, both the U.S. and the EU tried hard to make the rest of the world believe that it was developing countries and their new alliances (such as the G20 or the Alliances of the African Union, Least Developed Countries and African, Pacific and Caribbean Countries - AU/LDCs/ACP) that were responsible for the failure of the fifth Ministerial. Enormous pressure was put on the G20, with the aim to split the group, but without success. The U.S. managed to force out several Latin American countries, including Colombia, Peru, Ecuador and Guatemala. However the group continued to exist and became even stronger in the post Cancun period.

Now Robert Zoellick and Pascal Lamy seem to have changed tactics to achieve an agreement on their agricultural framework. Both the U.S. and the EU are making noises to reemphasize their differences in the area of agriculture, a familiar story to veterans of WTO negotiations. Robert Zoellick wrote a long letter at the beginning of 2004 to all WTO Trade Ministers saying he does not want 2004 to be a lost year for WTO negotiations and proposing to focus the talks on the market access agenda, as a possible way to move forward. Zoellick's letter adopts a new gentle and understanding voice with regard to the concerns and needs of developing countries. In substance, the letter suggests a split between the EU and the U.S. by again calling for an early elimination of all export subsidies, a position the EU has clearly rejected. Nonetheless, various sources in Geneva report that Zoellick consulted Lamy about the content of the letter in advance. The two powers may not be as far apart as the letter would like to suggest.

At the same time Geneva-based delegates of the G20 report that both the U.S. and the EU are trying to move individual G20 members to adopt theirframework for agricultural talks. There seems to be a mixed approach that combines offering concessions to individual G20 members, while also increasing pressure at the capital level to accept the framework approach. Recent visits of Lamy and Zoellick to various key trading countries have served this purpose. Furthermore another G20 - EU meeting is scheduled for right after the next General Council Meeting in February. At the WTO itself, the WTO Director General is doing his part by pressuring WTO delegations in Geneva and officials in capitals to show flexibility. According to Geneva sources, Supachai has told some countries that he already has a new text for agriculture ready for discussion. Developing countries are concerned this will simply be another push for the U.S./ EU compromise framework of August 2003.

G20 members and other developing countries have welcomed Zoellick's reengagement in the Doha Round negotiations. In truth, many G20 members have a common interest with the US and EU in wanting to liberalize agricultural markets - unlike many of the members of the SSP/ACP alliance. However, they remain skeptical until discussions enter a more substantial stage, so they can assess the quality of Zoellick's and Lamy's proposals. None of the G20 delegates in Geneva confirm any substantial change in their position. Furthermore, Indian officials in Geneva have clearly denied the comment in an article by Guy de Jonquires in the International Economy of January 26, which claimed India was reconsidering its refusal to lower its high farm trade barriers. Together with many other developing countries, India maintains and reiterates its critique of the framework approach and in particular the blended approach for tariff reductions, which would force developing countries to make much larger tariff cuts than developed countries.

Agriculture will be the key to unlock trade talks

Agriculture is the key to move forward trade talks in all other areas. Right now the U.S., the EU and WTO Director General Supachai are doing all they can to push for acceptance of the framework agreement in the so-called Derbez Text from September 13th, 2003. As outlined in the last Geneva update (see the update from December 2003), the framework approach is highly problematic as it will allow developed countries to address both theirimport and export interests in agriculture, while forcing developing countries into steep tariff cuts, which means the further opening up of their already highly vulnerable agricultural markets.

Given that agriculture is the most crucial area for the continuation of talks and given the existing proposals - whether it be the US/EU or the G20 framework - lack substance to seriously addresses the root causes of exportdumping and increased market concentration in agriculture, civil society needs to use this hiatus in the talks to push for multilateral agriculturaltrade rules that will actually meet these needs. On various occasions, critiques and alternatives have already been promoted that would ensure food sovereignty over the profit interests of multinational agri-business firms and allow family farmers and peasants all over the world to exist andproduce for their local markets. It will be crucial for civil society to ensure that the G20 does not collapse in the next couple of months as well as to ensure that the G20's proposals and demands better reflect the needs of small farmers worldwide.

UNCTAD XI - US and EU aim at reducing UNCTAD's mandate to technicalassistance and capacity-building

From 13th to 18th June, UNCTAD XI will take place in Sao Paolo, Brazil.UNCTAD - the United Nations Conference on Trade and Development-wasestablished in the 1960s out of the understanding that trade can be beneficial for development in the right conditions. The core of UNCTAD's mandate has been to understand the relationship between development and trade and to identify the frameworks, rules and regulations of trade that advance development. UNCTAD is an inter-governmental negotiating forum, but its role in establishing multilateral trade norms has been very much diminished since the establishment of the WTO in 1995. Although UNCTAD has lost importance since 1995, the institution remains essential for developing countries as a source of critical analysis and as a place to debate trade and development issues. Developed countries, however, are very critical of UNCTAD. They would like to further diminish UNCTAD's scope of action.

Discussions on the ministerial text being prepared for the conference in June have just started in Geneva. UNCTAD members will discuss and negotiate this text within the so-called preparatory committee. Ultimately, the text will establish the mandate of UNCTAD's work for the next four years, until the next conference is held. Trade Ministers from member countries will formally adopt the work program in Sao Paolo.

Reports from developing country delegates participating in this preparatory committee are alarming. Both EU and U.S., but also other countries such as Japan and Canada, consider UNCTAD's work on trade belongs to the WTO. During the preparatory committee's session at the end of January, these countries clearly said UNCTAD as an institution, as well as the draft conference text tabled by the Chair of the preparatory committee-Sha Zukang of China-is too critical of trade and does not highlight sufficiently to gains of trade liberalization and export-oriented growth. The U.S. and the EU were also critical of the proposal in the draft conference text that more policy space was needed to ensure that developing countries developed trade policies that benefited their development.

Developing countries are organized within the Group of 77 (G77) plus China within UNCTAD. The G77 spokesperson said UNCTAD is crucial to their members. For the G77 and China, a broad-based UNCTAD that undertakes independent analysis, offers space for political debate and ensures technical assistance and capacity-building, is an essential counterweight to the gross imbalance in resources and power that undermine them in multilateral trade negotiations with rich countries.

Geneva-based NGOs will monitor this process to keep civil society organizations updated. However, it will be crucial for civil society organizations having in engaged in WTO-related work to include the UNCTAD conference in their agenda for 2004. If the U.S., the EU and other developed countries succeed in reducing UNCTAD's role to a capacity building/technical assistance organization, civil society will also have lost out. It is crucial to support developing countries in the struggle to save UNCTAD's broad mandate and to even broaden and enrich it with civil society's views.

All documents and information on the preparatory process of UNCTAD can be accessed at www.unctad.org. In case civil society organisations which do not have an accreditation with UNCTAD do wish to participate in UNCTAD XI and the preparatory process, a fast track accreditation process has been set up (info see at the homepage of UNCTAD).

NB: The Zoellick letter, the communique of the G20 in response to this letter as well as the WTO Simulations of the blended approach can be accessed at www.tradeobservatory.org.

Alexandra StricknerInstitute for Agriculture and Trade Policy (IATP), Geneva Office15 Rue des Savoises1205 GenevaSwitzerlandtel 41 22 789 0724fax 41 22 789 0733{www.tradeobservatory.org}{www.iatp.org}