'Recalibrating' Hong Kong and rescheduling WTO negotiations

WTO members invited to a "super Green Room" meeting at the WTO headquarters have significantly scaled down their expectations of the outcome of the WTO's Hong Kong Ministerial conference in December.

The meeting, held on Tuesday and to continue Wednesday, was attended by Ministers, and/or officials and Ambassadors of 28 delegations. It was convened and chaired by Pascal Lamy, the Director-General, who also chairs the Trade Negotiations Committee.

According to trade diplomats and officials, there was an "overwhelming" view at the meeting that the Hong Kong conference would not be able to come up with full modalities of negotiations in key areas, especially agriculture and NAMA (non agricultural market access), as time was running out and there were still wide divergences of positions.

The scaling back of goals for Hong Kong represents a setback in the timetable for completing the negotiations by the end of 2006. In September, Lamy had set the target that two thirds of the Round should be completed by Hong Kong.

This was generally understood to mean that full modalities (with approaches, formulae and numbers) for agriculture and NAMA would be agreed to, and clear progress attained in other areas such as services, special and differential treatment for developing countries, implementation issues, trade facilitation and intellectual property.

Now that Hong Kong will miss that goal, there was some expectation at the meeting for another Ministerial conference early next year, to attain what Hong Kong is unable to do. The Indian Commerce and Industry Minister Kamal Nath told journalists that some members had suggested this second Ministerial be held three months after Hong Kong, i. e. in March.

Such a second conference and the date was not something agreed to at Tuesday's meeting. It is however already being talked about as a strong possibility.

"Recalibration of expectations" on what the Hong Kong conference would achieve was the term being widely used during and after the Tuesday meeting at the WTO. What this means concretely in present negotiating terms is not clear to trade diplomats or WTO secretariat officials at this point.

The talk is that if Hong Kong cannot achieve "full modalities", it should instead result in something between what exists in the "July 2004 framework" and the full modalities. A second Ministerial conference in early 2006 could then aim to finalise the full modalities.

This new scheduling implies that the present negotiations will proceed till the end of November, and an attempt will be made to "lock in" whatever can be agreed to in a draft Ministerial text that will be formally discussed at the WTO General Council meeting on 2-3 December.

What constitutes the contents to be "locked in", how that is to be measured , and how it will be done, including in the Ministerial text, will all presumably be subject to debate.

It is also not clear how the Hong Kong Ministerial text is to be drafted. According to trade officials, there was a "very strong preference" expressed at the meeting by delegations for a "bottom-up approach", in which the WTO members draw up the drafts with their own proposed language.

This is in contrast to the top-down approach in which the Chair of the negotiating groups would draw up texts "on their own responsibility" and then expect the members to endorse these unless there are strong objections that can be sustained.

In the past week, at least two Chairs (i. e. of the agriculture and the NAMA negotiating groups) have stated that they would not do the drafting (at least not for now), while the Chair of the services negotiations has been producing several drafts of Ministerial texts which continue to contain controversial elements that repeatedly have attracted strong opposition from many developing countries.

The Chairs of the various negotiating groups were originally supposed to present draft texts to Lamy by the second week of November. Lamy was to have produced a first draft of the overall text by mid-November.

On Tuesday night, perhaps due to the inability of the major members to have a breakthrough in London, or due to the changing expectations for Hong Kong, trade officials could not confirm whether an overall first draft would still be issued in mid-November, or the more recently expected 20 November, or whether it would instead be ready nearer the end of November in time for the General Council meeting of 2-3 December.

Neither could anyone predict if the Hong Kong Ministerial will engage in intense negotiations involving attempts to draft and redraft the text (as happened in Singapore, Seattle, Doha and Cancun) or whether it will be a more relaxed exercise of stocktaking and planning the next steps in the new schedule of the post Hong Kong programme.

Whatever happens in Hong Kong, a short period of extremely intense negotiations can now be expected between January and March/April next year, with the clock ticking towards the "really final deadline". Negotiating brinkmanship - where the players keep their cards from others' view to see if they can get the best deal for themselves - will probably be played to the very last minute.

Whether that will lead to an agreed outcome, or the WTO members simply agree to disagree, and miss yet another crucial deadline, remains to be seen.

The lowered expectations for Hong Kong is a major - but not fatal - blow to the timetable for concluding the Doha Work Programme (now widely dubbed the "Doha Round") by the end of 2006. After finalising the full modalities, a period of some 8 to 9 months is needed to further negotiate details and prepare schedules of commitments, before the final agreement can be signed.

In turn, some six months are required after the agreement is concluded for the United States to bring it to its Congress for a vote. By July 2007, President Bush's present authority for fast track approval of trade deals will expire, and it would be very difficult for him to get an extension, given the mood in Congress which has turned against free-trade agreements.

Without Congressional approval and US participation, the Doha final deal would not be worthwhile or operational for other members. Thus, the real deadline for the Doha negotiations is the date of expiry of the US President's fast-track authority, and the Doha agreement has to be concluded by the end of 2006 to have a vote in Congress before that expiry date.

Missing the "full modalities" deadline in Hong Kong thus forces the WTO to cut the timing extremely fine, as the next deadline of March/April 2006 for the full modalities seems to be quite final.

It was Pascal Lamy, and not the Chair of the General Council, who chaired the super Green Room meeting on Tuesday. A super Green Room in end-July 2004 at the time of the General Council had, by contrast, been chaired by the General Council chairperson.

Green Room meetings at Ministerial conferences have also been chaired by the Chair of the Conference and not the Director-General.

Lamy told the meeting that progress in the talks is now "insufficient" and it was time to take a cold-eyed look at what can be done at Hong Kong. According to sources who were present, participants in the meeting agreed with this assessment, expressed disappointment but reiterated the aim of ending the Round by the end of 2006 in line with the agreed mandate and the same level of ambition.

Many of the participants said there was a need to "recalibrate" the plan for Hong Kong. The Ministerial outcome should capture the progress made between the July 2004 Framework and the present state of negotiations. This would be something between the July Framework and full modalities in agriculture and NAMA. What cannot be covered in Hong Kong should be dealt with expeditiously after the Ministerial.

Many participants from developing countries made the point that there must be balance in the content of the issues, and between the issues. There should also be balance in the level of "specificity" on different issues.

For instance, some developing countries strongly argued that if figures are agreed to for tariff reduction in agriculture, there should simultaneously be agreed details on issues that are important to developing countries, especially their use of special products and a special safeguard mechanism.

After the meeting, the Indian Minister Kamal Nath told journalists that at the London and Geneva meetings, there was a realization that expectations for Hong Kong had to change as there was "not enough time left and too many divergences." There was a large sense that "we have to contain the expectations for Hong Kong as there just isn't time enough."

Nath said there was a need to "recalibrate" the planning for Hong Kong as this was not just any Round but a Development Round. "I made clear India's position regarding Hong Kong, that the crucial development aspects can't be left in mere statements of intention," he stated. "There must be specificity for these development aspects. If there are numbers for market access, there must be something measurable in the developmental items."

Nath said he told the meeting that the only defensive mechanism available to developing countries to counter domestic subsidies in agriculture is the use of tariffs. "They (the developed countries) are seeking that we give away our only mechanism. It is not possible for countries with only this mechanism against trade-distorting domestic subsidies to give this away. There has to be balance."

Nath added that there must also be balance in all the modes of supply in services, and in NAMA in which the Framework agreement provides for flexibilities for developing countries.

"This Round will have to stand scrutiny as to whether development goals have been met," he said. "We have to ensure that whatever deal is re-calibrated to come up in Hong Kong meets the stated objectives of this Round. The test of this Round is whether it benefits those who earn a dollar a day or $5,000 a month."

Nath added that some participants in the Green Room had mentioned the need for a second Ministerial meeting, three months after Hong Kong, but the location had not been discussed.

According to a trade diplomat, Brazil stressed at the meeting that even if Ministers and delegations worked extra hard and even though there are calls for progress to be made in NAMA and services, this should not be at the expense of the need for more progress in agriculture.

There must be clear understanding on this, so that there is development of the negotiations in the right direction, said Brazil. It would not be acceptable for major developed members to say that they are unable now to go beyond what they have offered in agriculture, because the offers were not sufficient. If they not able to go beyond this level now, then when would it be possible to do so?

According to the diplomat, the Green Room meeting also discussed the possibility of another Mini Ministerial at the end of November in Geneva, which would presumably be linked to the General Council meeting at the beginning of December.

Some Ministers said they were willing to be continuously engaged, and to come to Geneva, and Lamy suggested that Ministers could also be involved in writing texts for Hong Kong.

Outside the meeting, an Ambassador of a developing country, on hearing that there are plans for more Ministerial involvement in the negotiating process and in text drafting before Hong Kong, remarked that in reality this would put the developing countries at a severe disadvantage.

"Very few Ministers from developing countries will be able to be in Geneva to be on call for meetings or to do drafting, so it is not a feasible idea as far as developing countries are concerned.

"On the other hand, the developed countries have the resources for their Ministers to be present, or they can come over at short notice as Geneva is close by for them. Thus the idea that Ministers should now be called on to take part in negotiations and undertake drafting of texts is very worrying as this will bias the process against developing countries."

Another senior diplomat questioned the basis on which the super Green Room of Ministers was planned.

He said it was not clear to the members on what basis the choice was made to invite certain delegations, and their Ministers, to the Green Room, and not others. The decision to have this meeting was not put before the membership for prior approval, and many delegations did not even know who had been invited, let alone what happened at the meeting.

"Whatever decisions they take will be their decisions only, as we were not there," he commented.

The first session of the mini-Ministerial Green Room took place on Tuesday afternoon, and was attended by 28 invited delegations at the level of Ministers, senior officials and Ambassadors. This session discussed general aspects of the negotiations and the expectations for Hong Kong.

The 28 delegations included the EU, US, India, Brazil, Japan, Canada, Switzerland, Hong Kong, Zambia, New Zealand, Australia, Korea, South Africa, Malaysia, Lesotho, Benin, Chad, Thailand, Argentina, Mexico, Costa Rica, Jamaica, Egypt, Kenya, Pakistan and China.

On Tuesday night, another session was held to discuss agriculture, NAMA and services. Only Ministers (plus one official) were invited to this meeting. Another meeting on Wednesday morning, to discuss development issues, was also on a Minister-plus-one basis.

As several developing countries among the 28 delegations invited to the first session did not have Ministers attending, it was not possible for them to attend the other substantive sessions. The bias towards developed countries in the super Green Room thus became more pronounced.

The organizing of such a "Mini Ministerial Green Room" has major systemic implications for the decision-making process and structure in the WTO. Previous mini-Ministerials were organized and hosted by a particular WTO Member, and thus were not part of the official WTO process.

The Geneva meeting of 8-9 November was organized and hosted by the WTO Secretariat and chaired by the Director-General. The meeting has thus become part of the WTO's decision-making system, even though the meeting may be termed "informal."

In which case, several issues arise, some of which were voiced by the diplomats interviewed. These include the mandate to hold such a meeting, the basis for selecting delegations and Ministers, the choice of chairperson for such a meeting, the selection of topics, and the longstanding complaints of lack of transparency and of the inability of the majority of developing countries to participate.

These concerns can be expected to increase if more mini-Ministerials and super Green Rooms are organized in the run up to Hong Kong and if selected Ministers are invited to draft texts.

[ This article was published in the SUNS, 10 Nov 2005 ]