TWN Info Service on WTO and Trade Issues (Feb08/06)

11 Feb 2008

The following is an article on the "bizarre situation" in the WTO as everyone waits for the Chairs' new texts on agriculture and NAMA and as preparations are also being made by some for a rush to a "horizontal process" (Green Room and mini Ministerial to discuss agriculture and NAMA together, with other issues also)

This article was published in SUNS on 6 Feb 2008. Permission is required for reproduction from SUNS  (sunstwn@bluewin.ch).

Regards
Martin Khor
TWN

SUNS #6408 Wednesday 6 February 2008
south-north development monitor SUNS
Uncertainty, unreality as Doha enters a new "bizarre" phase
By Martin Khor, Geneva, 5 February 2008

As the WTO members await the issuing of the revised draft texts on agriculture and non-agricultural market access (NAMA), there is a lot of  uncertainty and a sense of unreality about the process after that.

The only "certainty" is that the agriculture paper will come out at the end of this week. The NAMA paper is also supposed to be issued this week - according to Director-General Pascal Lamy at the informal Trade Negotiations Committee (TNC) meeting on 31 January.

But some diplomats wonder whether it will come out at the same time as the agriculture paper, or a few days later.

Lamy told the informal TNC meeting that the negotiating groups will then meet to discuss the texts, thus ending speculation that a "horizontal process" would start straightaway for a Green Room of selected members to discuss the drafts. This "immediate horizontal process" had been preferred by Lamy, according to some diplomats, but it met with opposition.

How long will the consultations take on agriculture and NAMA, and when will further revised drafts be issued? There is no clear answer to this question.

It depends largely on the reaction of members to the two papers. The chair of the agriculture negotiations, Ambassador Crawford Falconer of New Zealand, has told some journalists that if there is "movement" during small-group consultations (in "Room E" of the WTO), there could be a revised text. If there is no movement, there is no point doing a second revision. It depends on the progress, he said.

Falconer is known to oppose too soon a move to a "horizontal process", believing that time is required to have members respond to his agriculture text.

Many members, especially from developing countries, want the agriculture consultations to continue so that their issues will get fair treatment. If the paper were to go straight to the Green Room "horizontal process", then the vast majority who are excluded from the Green Room would be at a great disadvantage.

As for the NAMA paper, several senior developing-country diplomats privately are of the view that it will not take account of the views or interests of developing countries. They are expecting that the Chair, Ambassador Don Stephenson of Canada, will continue to take the positions of the US, EC, Japan and other developed countries, in terms of the numbers for the coefficients and of the flexibilities for developing countries.

According to this view, the new NAMA paper could try to take into account somewhat the positions of countries like the small vulnerable economies, so as to isolate the "core" developing countries affected by the tariff-reduction Swiss formula, and have the latter apply coefficients within the range proposed in the July 2007 draft, and with that paper's very limited flexibilities.

If that were to happen, developing countries in the NAMA 11 group, such as Argentina, South Africa, Brazil and Venezuela, can be expected to again lead strong criticisms against the new NAMA paper, as they did last July.

Their strong reaction (which amounted to a near-rejection) almost stalled the whole negotiations, but the developing countries which were distressed with the paper eventually decided to give the NAMA negotiations one more try.

If the agriculture negotiations still need time, and if the NAMA paper meets another round of strong criticisms, it is unclear when or whether the "horizontal process" will be convened.

At Davos, following a lunch meeting of selected Ministers, the media was informed that a decision was taken to convene a Ministerial meeting around or Easter. (Easter Sunday is 23 March). The meeting would presumably aim to conclude "modalities."

It was unclear from the Davos meeting, as it is still unclear now, what would be the scope of such a Ministerial - including the topics to be included, and the countries to be invited.

The lack of clarity at Davos on the scope of issues for the Ministerial has become quite a controversy back in Geneva.

Even the date for the mini-Ministerial is a source of uncertainty or contention. If the negotiating groups need time to sort out what to do about the revised drafts, then would it be wise to impose an "artificial deadline" of an end-of-March mini-Ministerial?

Diplomats have been counting the weeks to end-March to ascertain whether there is sufficient time. There are six weeks between now and end-March. Next week will be spent for Geneva Missions and capitals to study the papers. That leaves five weeks.

If Ministers need a week to prepare before they come, and the Green Room process needs at least two or three weeks to thrash out the issues in a horizontal manner involving all kinds of trade-offs, that leaves only one to two weeks for consultations on the agriculture and NAMA papers, including the revisions that probably need to be made by the two Chairs.

Given the wide differences in many areas in agriculture (for example, domestic support, tariff-cut formula, sensitive products, special products, special safeguard mechanism, preference erosion, etc) and in NAMA, it would be almost miraculous for enough gaps to be bridged to meet the Easter deadline.

This uphill task is then complicated further by the choice on scope of issues to be covered by the horizontal process. Lamy is said to favour only covering agriculture and NAMA, because that would give the Green Room and the Ministerial a much better chance of success, since fewer topics would be covered.

However, the EU and US want to also include services, as they have insisted on an outcome here that reflects "comparable ambition" with agriculture and NAMA. The EU also insists on geographical indications. Other countries, like Japan, would like rules to be included.

India is known to want to include services and possibly other issues in a horizontal process. Its ambassador told the informal TNC that members have listed other issues that must be dealt with together with agriculture and NAMA and "we cannot relinquish the leverage on agriculture and NAMA without obtaining assurance that the issues of our interest will be favourably addressed."  Without a discussion regarding other issues, "it will be very risky to go into a Ministerial process which is designed to focus only on two issues."

There are many contentious points among WTO members in services, rules, geographical indications, etc. If these are put in the pot, it would be impossible to have the Green Room and the mini-Ministerial to come up with a finished dish by Easter. On the other hand, if these other issues are not included, several countries may not want the horizontal process to start as yet.

Admitting that scope is a problem, Lamy told the General Council on 5 February that the TNC meeting "provided less clarity on the scope of the horizontal process. This is a matter on which further consultation will be needed." (See separate article on General Council meeting).

There is as yet no solution to this problem of scope. At the TNC, Lamy while mentioning agriculture and NAMA said it was also important to give "all necessary comfort" to members on the other areas.

"The problem is that comfort means different things to different delegations," said an Ambassador. "Some countries want certain issues to be in, but other countries feel as strongly that they should not be in."

Another question is why an Easter deadline is needed at all. Having such a deadline in fact contradicts the stated need for the members to review the agriculture and NAMA papers and to continue to negotiate so that the gaps are bridged and the Chairs can get their second revised papers (if there are to be such papers) more acceptable.

Several diplomats are of the view that the real "demandeurs" of this deadline are Lamy, the EU Trade Commissioner Peter Mandelson and the Brazilian Foreign Minister Celso Amorim.

They point to the fact that the terms of office of Mandelson and Lamy will end next year. They presumably would like to have the Doha Round wrapped up as part of their accomplishments, and ending 2008 without a Doha deal would be most disappointing for them.

As for Amorim, he is a "true believer" of the Round in that he thinks the best chance to have reform in US agricultural subsidies would be under the Bush administration, as the new Administration may not have any reform inclination, said a diplomat.

All three also evidently believe that if there is no "modalities deal" by April, it would be not be possible to finish the Round by November or December (since 6 to 9 months are needed for scheduling etc).

And then the Doha baton would be passed from President Bush to a new US Presidency. If the Democrats were to win the Presidential elections, it would be uncertain whether the Doha talks could be revived in 2009 or at all.

Many delegations share this view that things will become more complicated in the USA under a new President that may not be committed to Doha. But they also insist that it is important to get a fair Doha deal, rather than be pressurised into having a deal even if members are not yet satisfied with the outcome, just to meet a deadline set by the US domestic political agenda.

"While urgency is called for, it must be urgency based on realism," said the Indian Ambassador, Ujal Singh Bhatia, at the TNC. "Predetermined deadlines will not get us anywhere...A Ministerial meeting should only be called when the preparatory ground work provides clear indications for a successful outcome."

Another issue connected to this is utility or otherwise of continuing to negotiate when the US does not have a Trade Promotion Act (TPA), which gives the President fast track authority.  It has been widely understood that a final Doha agreement stands a chance of getting through the US Congress only if a TPA is in place.

Last week, the US Trade Representative Susan Schwab assured that she would try her best to get a new TPA as soon as there is a breakthrough in the Doha negotiations.

There is almost no hope that even if the USTR tried that Congress has either the time, interest or appetite to quickly approve a new TPA this year. Only last week, the House Majority Leader Steny Hoyer, a Democrat, expressed doubts whether pending free trade agreements (with Colombia, Panama and Korea) which had been put to Congress under the previous TPA would be passed in the present Congress.

"If even trade deals that had been sent to Congress under the last TPA cannot be passed this year, what chance would there be for a whole new TPA to be adopted just to accommodate a Doha agreement?" asked the Ambassador of a developing country.

Another Ambassador said the developing countries are in a situation of not wanting to make more concessions or show their "bottom lines", since they are not sure that the US is able to deliver without a TPA, and thus it was most unwise to enable the developed countries to "pocket" the concessions without there being any deal at this stage.

"And then on the other hand we are asked to make deep concessions and open our markets to satisfy the US so that it can try to get a TPA, while we are not sure at all whether such an attempt will be made, and if made we know the chances of success are very slim."

All in all, said the Ambassador, it is a very bizarre situation that the WTO delegations find themselves in.

"Everyone says there is the need to see the papers and then to spend enough time for more consultation to bridge gaps, yet we are also told there is an imperative for the process to culminate with an Easter Ministerial.

"We are told the US needs to see great results from its point of view to get a TPA, yet delegations are unwilling to give the US what it wants since it does not have a TPA to assure us that what we give is going to result in some benefits, or at least in a TPA."

In this "bizarre situation", which will be compressed into the next two months or so, it is hard to see how everything can come together to make it a successful Easter.

In any case, the next stage of this Doha sage will start in the next few days with the release of the agriculture paper and perhaps together with it the NAMA paper. +