| Framework for modalities or 'platform' for future careers?
By Chakravarthi Raghavan, Chief Editor, South-North Development Monitor
Published in SUNS, 20 July 2004 The draft framework text, Job(04)/96, issued on 16 July by General Council chair Shotaro Oshima and WTO Director-General Supachai Panitchpakdi, aimed at restarting the stalled WTO negotiations, is a "Doha-minus" document, that has probably made an overall package to relaunch and conclude the negotiations launched at Doha more difficult. Studying the paper over the weekend, and while awaiting instructions from capitals, several trade diplomats of developing countries (speaking non-attributively) felt that the paper would need so many changes and re-drafting to put a balance back into the package, that it may not be easy to negotiate all these in just about 10 days. The entire paper, and its approaches, are viewed by developing country delegations and by civil society groups as imbalanced and lacking equity, and heavily weighted in process and substance in favour of the developed countries, in particular the US and EC. It lacks any specificity in agriculture, but is specific in Non-Agricultural Market Access, is merely rhetorical on Special and Differential Treatment, downgrades even more the priority issue of Doha, 'implementation issues', and subsumes it with the S&D issue, clothing both in rhetoric but without any operational content. In agriculture, it accommodates some of the key concerns of the US and EC and other developed countries (in market access, and on 'sensitive products'), while mentioning the concerns of the developing countries but not in the same way. On domestic support, the text is so framed that it would legitimise the various current illegal subsidies, and in effect create a new ceiling (for the US in a new blue box), and then provide for negotiating some reductions in these, but not elimination. On export subsidy and export credits, it makes some advance, and envisages the phasing out (when and how in the future is not clear), but any benefit this may give to the competitive agricultural exporters is more than offset by the way the domestic support and market access pillars are dealt with. On Non-Agricultural Market Access (NAMA), though presenting it as 'a platform' and not 'a basis', the framework is specific and uses the Derbez text, which has been in fact rejected by the developing countries. It launches negotiations on Trade Facilitation on the basis of modalities set out in an annex, even though there is no agreement, leave aside explicit consensus on the modalities. En plus, the other three Singapore issues, are kept on the WTO agenda, to be pursued even during the current negotiations, as a study process, and likely to be brought up later after a Doha minus accord is concluded. Overall, there is no value-added or benefit to developing countries, as a group or individually, in adopting a Doha-minus framework package, and perhaps some harm, some trade experts suggest. At Doha, and later at the UN General Assembly in New York, the EC had sought to put a label on the Doha Work Programme, by having it titled as the Doha Development Round.. This was not acceptable to the developing countries, and was not accepted.. However, the former WTO head, Mike Moore, and the current DG, Dr. Supachai Panitchpakdi, as well as the EC and others have been using the term 'Doha Development Agenda' as a kind of public relations and marketing tool, but have not cut much ice. And since the Doha Declaration and the meeting in 2001, the 'development deficit' in the Doha Work Programme and its implementation have been repeatedly brought to the fore, by the developing countries, and even more by civil society and many academic studies. Instead of making up this deficit, and paying attention to the 'development' issues, there is a renewed attempt at marketing - by calling it in the draft decision as 'Doha Development Agenda'. There was little of 'development' in the original agenda, and none at all in the Oshima-Supachai package for a 'Doha minus'. The WTO has set itself an end-July deadline for a framework package to relaunch the negotiations, and an attempt to rush through the Oshima-Supachai package. This is based on some dubious assumptions related to the political calendars of the US elections and the change of guard at Brussels - and that if the package is not agreed now and the talks relaunched, it would be a long time before negotiations can be resumed and concluded. In the cover-note to the framework paper, and in justifying the use of the Derbez NAMA text, which has been opposed by developing countries and latest by the G90 Ministers, Oshima and Supachai have cited the chairman of the NAMA negotiating group as saying that this was the only practicable option given the wide divergences among members, but that it should be treated not as an agreed text but as "a platform for the further negotiations that will be necessary." Perhaps, the entire Oshima-Supachai paper, and not merely Annex B on NAMA, could be seen and understood as a 'platform'. The Oxford English Dictionary has several meanings for the noun 'platform', most related to the physical nature (side-walk, train or bus-conductor's platform, railway platform at stations etc). But the figurative, applicable, meaning in the usage here is ".... raised flooring in hall or open air from which speaker addresses audience; the platform (fig.) oratory suitable for this; (fig.) political basis of party etc. declared policy of political party." No one now believes that the negotiations on the Doha work programme can be back on track and completed by end of 2004 (as envisaged in that ministerial declaration), or even August 2005. The framework perhaps is thus a 'platform' for future careers of three personalities. EC Trade Commissioner Pascal Lamy is already a lame-duck, and will be out of office soon, certainly before November, by when the new EU Commission President gets confirmed by the EU Parliament, and presents his commissioners before Parliament. Even if Bush wins a second term in the White House, judged by his views about his USTR Robert Zoellick (as 'combative') expressed reportedly at the US-EC summit in Ireland, there will be a new USTR. And the term of the WTO head, Dr. Supachai Panitchpakdi (and with it those of some of his aides) will end on 31 August 2005 and cannot be renewed (as part of the compromise under which he was elected in a split term with Mike Moore). Already, the candidature of former Uruguay ambassador and (General Council chair in 2003), Mr. Perez del Castillo (who during his tenure here, firmly believed that what is good for the US and EC is good for the rest of the world) has been presented in capitals to WTO member-governments. The Canadian envoy Sergio Marchi is also said to be in the process or likely soon to throw his hat into the ring. And another dark candidate being mentioned is the Mauritius Trade Minister, Mr. Cuttaree. And the US is said to think that a developing country person as head of WTO would suit its interests better, as such a person would be more amenable to US influence. Thus, the July framework paper, if adopted, could at best be added on to the curriculum vitae of these personalities - as they do a 'revolving door' exercise into some other positions, in the private or public sectors. The 'minus' in the Doha declaration and mandates, is for the benefit of the US and EC, who have been constantly striving, over the last two years and more, to rewrite that mandate. This 'minus' has been achieved at the expense of developing countries, trade diplomats said over the week-end. The way the Oshima-Supachai paper has been drawn up and issued also shows that the powers-that-be at the WTO have learnt no lessons from Seattle and Cancun, and are persisting in the GATT/WTO culture of drawing up documents, ignoring the strong views of a large part of the membership, and use of manipulative decision-making process that was responsible for the failures of the Seattle and Cancun Ministerial Conferences. At a time when the WTO's remit and its invasion of domestic sovereign
decision-making has been attracting considerable opposition in many developed and developing countries, and there are calls in parliaments and in civil society against allowing further inroads by the WTO, the multi-lateral organization risks facing a severe backlash and repudiation by such tactics. The WTO members perhaps would do well to read what the Butler Commission in the UK, even while white-washing and absolving the individuals (ministers and intelligence officials) responsible for reliance on faulty intelligence in launching the war in Iraq, has said in a section relating to the machinery of government and decision-making. In some under-stated language, the Commission has come down against what a Guardian newspaper comment has called 'the chino-pant, chat method' of informal government decision-making processes of government, and said: "...we are concerned that the informality and circumscribed character of government's procedures, which we saw in the context of policy-making towards Iraq, risks reducing the scope of informed collective political judgement..." (Para 611 of the report) This is even more applicable to the WTO and its processes for decision-making - since the decisions they make, and acquiesced in by developing country governments, now affect and worsen the conditions of millions of poor in these countries, and seals their fates against development. The Oshima-Supachai text on the long-pending development concerns of developing countries - Implementation issues and operationalising the Special and Differential Treatment provisions in current agreements have been given short shrift - by some rhetorical language up front in the 'draft decision' by the General Council, but without any operational content, guideline or mandate to get these long-stalled issues and concerns addressed with priority and agreements reached. These issues were given priority at Doha but several deadlines were missed, and there is nothing in the Oshima-Supachai paper beyond the rhetorical exhortation to the various bodies dealing with them, and the Special Sessions of the Committee on Trade and Development (where S&D issues being negotiated) to expeditiously complete the review of all outstanding agreement-specific proposals and report to the General Council with recommendations for clear decision. On the Implementation issues, the TNC (headed by Supachai), the negotiating bodies and WTO bodies, where these issues are bottled up, are again asked to "redouble their efforts" to find appropriate solutions as a priority. But given that nothing happenned on past exhortations, repetition is value-less. The Implementation issues came up at the time of the Geneva Ministerial meeting, and subsequently on the agenda of the Seattle Conference. At Doha, the developing countries agreed to a compromise and place those issues that may need change of the rules into the negotiating agenda, and to be treated as a single undertaking. But all this is now being sought to be given a go-by. The Implementation issue, identified as a priority negotiating issue in the Doha Declaration, and to be dealt with by Trade Negotiations Committee (TNC) and as part of a single undertaking, and specific deadlines set, is in fact now being pushed into the General Council - where it will be more easily buried. As developing country diplomats point out in private, the secretariat and its head have never believed in or accepted these issues - trotting out some dubious economic theories against them. One of the first things, Dr. Supachai did, when he assumed office in September 2002, was to go before an UNCTAD forum to question these concepts, but was in fact challenged by developing country diplomats and was unable to respond to them. Supachai also scoffed at the implementation issues, asking whether there would be another set of 'implementation issues' at the end of the Doha negotiations. No wonder there has been no focus or effort at the WTO, and in the framework to deal with them, even from the secretariat side. [And Groser, and those in the secretariat playing with words and English language, are setting the scope for more havoc, on basis of negotiating history, by future panels and the Appellate Body, the WTO's Star Chamber, by converting 'a single undertaking' of the Doha Declaration into 'The Single Undertaking' - making it a specific legal concept - that was never there or intended at Punta de Este, during the tortous Uruguay Round negotiations, or in the Marrakesh treaty, but imported as a legal concept by the negative consensus approach for adopting rulings in the DSU processes to hit developing countries, in the Indonesia car dispute and other rulings.] There is some rhetorical language and promise used on the problems of the African cotton producers and their Cotton initiative (for a three-year phase out and compensation), and how it is to be addressed in the Agricultural negotiations. But in fact, the cotton subsidy issue that is politically very embarrassing for the US, is to be part and parcel of the agriculture negotiations. And the US cotton subsidy payments will be subsumed into its new blue-box (the second tiret of paragraph 13 of Annex A) and then reduced, but not eliminated, over time. In Agriculture and Non-Agricultural Market Access (NAMA), as well as on the Singapore issues, the Oshima-Supachai paper advances the cause and interests of developed countries, in particular that of the US and EC - while the positions of developing countries are prejudiced by the prejudgements and non-formulation of alternatives to reflect their views. The Oshima-Supachai text is to come up before an informal General Council session Monday evening, when the text and its annexes are set to be introduced and explained. A night meeting of the General Council has been set from eight to midnight Geneva time, presumably to hear any comments. However, as of lunch-time Monday, most developing countries were unclear about the informal General Council meeting or the likely process. A number of them also see a major effort in the Oshima-Supachai text, and in the activities of the EC, to divide the developing countries, and play one against the other. #
Trade: Agriculture framework, an asymmetric Doha-minus
Geneva, 19 July (Chakravarthi Raghavan) -- The draft framework text, Job(04)/96,
issued on 16 July by General Council chair Shotaro Oshima and WTO
Director-General Supachai Panitchpakdi, aimed at restarting the stalled WTO
negotiations, is a "Doha-minus", both overall and in the agriculture annex. The framework on agriculture in Annex A provides for what (when implemented)
would perhaps come to be called 'dirty greening and blueing' of the domestic supports
of the developed countries, and enable these countries to shield their markets in
'sensitive' products from import competition from developing countries. The annex gives full recognition to the continuance of blue box and green box
subsidies which are generally adopted by the major developed countries, but there is
no guidance in the text about any possible elimination of these subsidies in future. On green box subsidies, para 16 of the annex wants to ensure continuance of the basic
concepts, principles and effectiveness of these subsidies, thus entrenching these
subsidies deeper in the WTO system. This is purported to be balanced approach. Groser in his text also is opening the way for future mischief, by using the term
'The Single Undertaking' as a specific accepted legal norm, while the Doha
Declaration merely uses the term 'a single undertaking'. Some ambiguous language of principles is used to accommodate the concerns of
developing countries (with offensive or defensive interests) - but with many details
even of the concept left to be negotiated. After Doha (November 2001), the US adopted its Farm legislation, and this law
mandated (well into the future) increase in domestic supports under various heads,
including some socalled 'counter-cyclical payments' of about $10 billion a year. Depending on final agreements - on percentages and the 'historical periods' to
calculate average total farm output (para 8 and second tier of paragraph 13 of Annex
A) - one expert estimated that in theory the US could increase this support to an
annual 12-20 billion dollars, and show this in the new blue box for the US. It could
show against this new blue box several of the payments claimed to be in the 'green
box' but should rightfully have been in its 'amber box'. In further talks for settling a 'historical period' for calculating the total agricultural
output (calculated as the value as close as possible to the point of first sale and
included in the member's schedule) a total value is to be set, and from this an 'agreed
percentage' to be negotiated for cuts. It would thus be painless for the US to cut over time, and in harmonisation with EC,
the subsidies to be put into a new blue box, from a notional 12-20 billion dollar
ceiling down to the current $10 billion counter-cyclical payments - without any pain
to their farmers or congressmen and senators who are backing the farm lobby. And if there be any pain, paragraph 14 of Annex A can be invoked! The framework for General Council decision has up-front the 'reaffirmation' of the
sectoral initiative on cotton, and says that it would be pursued in the agriculture
negotiations within the parameters set. However, in the agriculture annex, though there are some references, in substance
there is in fact nothing tangible to benefit the west African cotton producers,
excepting as part of the overall agricultural modalities package. There is no question
of the phasing out of the heavy subsidisation by the US and Europe over a 3-year
period or for compensating the West African producers (all LDCs) for their losses
hitherto and till phase-out. The Groser drafted, 'Doha-minus' mandate for drawing up modalities in agriculture,
shows that it would not only give full recognition to and legitimise the 'blue box' and
'green box' subsidies of the developed countries to their agriculture sector, but
everything the major developed countries are now doing, and many contrary to
Marrakesh promises, may be continued and legitimised, albeit under claims of
capping and tighter rules etc. In effect it means that whenever the US and EC for their treasury reasons cut
anything, this can be put it into the WTO as the norm, so that others will also be
forced to do the same - an extension of the 1992 Blair House approach to agriculture
in the Uruguay Round. And if the unpublished Brazil cotton ruling, and the one yet to come out on sugar
against the EC show anything, it is the difficulty to 'prove' that something contrary
to rules is being done under green, blue etc. Those subsidising illegally can just delay
producing data in their possession, or plead commercial secrecy, and since the onus
of proof rests first on the complainant, nothing can be done. Whether any adverse
inference can be drawn or not, has been ruled to be a question of fact, and hence not
amenable to reversal by the appellate body. There are some positive elements in the agriculture annex over export subsidies and
export credits, and how to discipline these through future negotiations. But the question of how these export subsidies will be eliminated and the reduction
commitments effected by 'progressive annual instalments' is left open. Would the
majority of export subsidies be reduced in a final instalment (and backloaded into the
distant future) or would it be cut in an initial installment. This is not clear either, but
left to negotiations. And without cuts in domestic support in developed countries, and with the shielding
of the domestic markets of developed countries on 'sensitive' products, the
competitive exporters of developing countries would still be at a disadvantage in these
markets, or in matching the reduced subsidies or credits in third markets. Developing countries with a defensive interest - whether in G20 or G33 - have been
for the moment left alone to fight the market access battle later - but still under a
tiered 'single formula'. There is no empirical evidence to support the view that developing countries need
only longer time span and lesser cuts to adjust. This non-economic, but ideological
view of the AoA and Marrakesh treaty, is now carried into the framework. So developing countries with defensive interests need not think they have been
spared. It is just a new attempt to split the G-20 and the G-33. Those developing countries with 'aggressive' or export interest also get nothing:
unless the domestic support in developed countries is drastically reduced, no amount
of 'substantial improvement' in tariff lines for market access will create a level playing
ground. After Doha, the US enacted its Farm Bill (2002), and this aid is mandated well into
the future as counter-cyclical payments to farmers: when prices fall support will
increase, in effect insulating the farmers from the market and market-based reforms. Some of these payments were found (after very costly evidence gathering and
research by Brazil) in the Brazil vs US cotton dispute to be in violation of the US
commitments under agriculture. On this basis, the panel went on to judge the effect of the US subsidy on third markets
for Brazilian cotton exports and judged it had been hurt. All these may now be
reversed and payments accommodated in the 'new US Blue Box' (second tiret of
paragraph 13 of Annex A for amending Art. 6.5 of AoA) and then gradually reduced
(but not eliminated). The second tiret of para 13 of the agriculture annex, for changes to Art. 6.5 of the
AoA, is tailored to meet the US needs. The framework ensures it. Only some details
are left for the next stage of negotiations. No wonder at Mauritius, USTR Robert Zoellick was purring like a cat that swallowed
the canary. The Marrakesh Agreement and the AoA was supposed to have laid out a reversal of
course in agriculture and set in motion a process of reform over a period on
agricultural support in all three pillars (domestic support, export subsidy and market
access) to bring that trade into line with market-forces. The AMS was set on a particular time period calculation, and cuts were to be effected
on that. But the de minimis, and the lack of product specificity, plus the leeway for
the supposedly non-trade distorting 'green box' support was misused to the point that
the support levels now are much higher than in 1995. Instead of cuts from the point at the end of that implementation period (end 2003), the
ceilings and caps are to be set at the Final Bound AMS (UR commitments) plus
allowed de minimis plus a level to be determined of blue box payments - and then cut
by developed countries on a harmonised basis. The green box itself was framed to enable the developed world to put all its subsidies
from the treasury into the 'green box', knowing developing countries can't afford such
payments Though there is some reference to reviewing the green box criteria, it is to be in terms
of its "basic concepts, principles and effectiveness" and to take "due account of
non-trade concerns." There will be no particular new disciplines nor reductions, only a promise of the
'particular' importance of the improved obligations for monitoring and surveillance.
The blue box level is now to be set at an agreed percentage of average total value of
agricultural production during a historical period. Both the percentage and the
historical period are to be agreed in negotiations. The original AMS excluded product-specific domestic support upto 5% of total value
of the agricultural product during the agriculture year. Also excluded was non-product
specific domestic support upto 5% of total value of agricultural production. This is
already a substantial exemption. Read together, the new proposals will mean that the AMS plus the allowed de
minimis, will be increased further by the new 'blue box' level to be negotiated. This is apart from the green box availability. To avoid or prevent circumvention of agreement and box- or product-shifting of
support, product-specific AMS is to be capped at their respective average levels
during a historical basis to be agreed. The term 'historical basis' occurs too often; but it is not clear when 'history' begins or
'ends' for the AoA. Is it pre- or post-Uruguay Round? pre-Doha or post-Doha? The Groser text envisages that "some" (but not all!) of these product specific caps are
then to be reduced. And de minimis is to be reduced by an agreed percentage, not cut either. The United States and Europe and Japan could drive a coach and four through these
gaps. All in all, the failure of developed countries to reverse course after Marrakesh, and
the current estimated support now of $350 billion will be legitimised and then perhaps
cut over a period. In return, at the moment the US and EC are getting a Trade Facilitation agreement -
which in fact will be an agreement where all the ideas that they had been pushing, but
failed to get agreements (in the Tokyo Round and the Uruguay Round) will be
resurrected to expand the space in developing country markets for TNCs of Europe,
US and Japan., with developing undertaking shipping and transport infrastructure
improvement to facilitate these. However, in the US and Europe, the exports of the developing world can easily be
blocked or their trade "unfacilitated" by the various defensive measures already in
their armoury (anti-dumping etc) plus the new 'security' related restrictions under the
plea of fighting 'terror'. At some not too distant medium-term, the various subsidies can be increased under
some other count, and legitimised promised to be cut in future negotiations - in return
for negotiating agreements in one, two or the three dormant Singapore issues. When this happens, those who pushed for 'flexibility' at Mauritius can take the credit. In market access, the provision for protection of sensitive products of developed
countries is assured - with a purported maximum number as "close approximation"
to the number of tariff lines with out-of-quota tariff rates. By one calculation, some trade experts said that as many as 25% of the EU's tariff
lines could be brought under 'sensitive products' and shielded, and more than 30%
of the tariff lines of Japan and a few others. While this may hurt the US and its
exports, and thus the US could be expected to oppose it, the provision also would
enable the US to use the approach to prevent imports on its own 'sensitive products'
- cotton, dairy products and sugar. The Groser text also talks that no sensitive product category could be completely
shielded. However, the demand of Brazil and others that there should by a limit on high tariffs
(resisted by Japan and others who wish to vary, and even increase tariffs for example
on rice etc) is left for future negotiations - to be dealt with in terms of a 'role of tariff
caps under a tiered formula'. In contrast, there is only a promise of negotiating Special Products ('sensitive
products' for developing countries) and a Special Safeguard Mechanism (SSM) - and
both to be made coherent with each other. The basis for selection and treatment of
these sensitive products for developing countries is to be established in the
negotiations. The question of SSM itself (para 38) remains under negotiations. In the paragraph 43 on Special Safeguard Mechanism for the developing countries,
there is a mention at the end of "under conditions to be agreed". This gives the
impression that the SSM will not be applicable to all products by the developing
countries, but only to some selected products. This is asymmetric and iniquitous. Added to the yet to be achieved fullest liberalization of tropical products (from
Heberler report time in the late 1950s and early 60s at the old GATT), a promise
recommitted at Montreal mid-term and the Marrakesh agreement) are now to be
added products to diversify from illicit narcotic crops, and the question of
long-standing preferences and addressing preference-erosion. May be all developing countries should diversify into narcotic crops for exports
only, and then trade it off with promises to control and diversify, so that they could
also get the benefits! Everyone except LDCs are to make a contribution in agriculture. The tariff reductions from 'bound rates' perhaps may help developing countries, but
also would be of greater help to the developed where there has been dirty tariffication. In NAMA, this issue is still dangling, and the Derbez text is still pushing a
harmonised approach, with the tariff reductions from the bound rates or twice the
applied MFN rates for non-bound tariffs, and 2001 as the base year. In contrast, in the Groser text for agriculture, the 'historical periods' are left to be
negotiated. And if the past be any guide to the future, it will be post-Doha, rather than
2001 or pre-Doha. Overall, the entire Oshima-Supachai text is completely biassed against developing
countries. Concluding such a bad framework package at the 27 July General Council,
and foreclosing developing country positions in the talks ahead, does not seem to
serve any interest of any developing country or groups of countries. The WTO and its leaders, and its governments are in the business of promoting the
interests of corporations and enterprises - behind the rhetoric of growth, employment
and poverty reduction, the WTO is a mercantilism organization. Any chief executive officer (CEO) of a corporation, at some point or other, will assess
the pros and cons of continuing a loss-making unit of the enterprise with no
foreseeable prospect of turning into a profit-making one. At that point, the CEO
would cut the losses and close down the unit or discontinue the line of production. There is nothing in the framework to benefit developing countries, or even enable
them to 'freeze' some of concessions made between Doha and Cancun. It will set the
WTO on a course of potential danger to the institution itself, and it may be time for
a pause and rethink. The WTO leadership, and even many trade ambassadors, have become too involved
to sit back and think again. But it is perhaps time for governments to think and act
like a CEO, and see how useful it is to continue this kind of negotiating process with
undigestible and unrelated agendas.
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