WTO talks intensify as new texts tabled
WTO Members engaged in intense discussions at the end of May in a bid to consolidate the progress outlined in the release of the long-awaited negotiating texts on agriculture and industrial goods trade. Chair Ambassador Crawford Falconer and his counterpart Don Stephenson, released the new proposals on agriculture and non-agricultural market access (NAMA) respectively on May 19. Both papers, which were originally expected at the end of April, were designed to clear the way for a meeting of ministers to clinch a final deal in the weeks that follow.
Farm text offers some progress on sensitive products
The much heralded farm text— seen as a vital stepping-stone towards the launch of the ‘horizontal-process’ in which senior officials begin making tradeoffs between different sectors—incorporated some gradual progress in areas such as sensitive products, but delegates cautioned that it still contains numerous unresolved issues.
The key progress was the incorporation of the complex methodology for designation of ‘sensitive products’ – goods that developed and developing countries will be able to slate for smaller tariff cuts in exchange for expanded market access through quotas.1 The draft text also dramatically reduced the number of square brackets (short-hand for issues that do not yet command consensus) from 235 to 32.
However, the text left most of the controversial headline numbers (such as the percentage cuts for overall tradedistorting subsidies) untouched, while in other areas simply restructured or clarified negotiating options. Of the few ‘hot spots’ that remain, Falconer identified the discussions on ‘special products’ and the ‘special safeguard mechanism’ – both designed to help shield developing countries from the full force of import tariff reduction – as the most divergent.
Yet, speaking to journalists immediately after the release of the text, Falconer said that Members were “getting pretty close to the last Russian doll” – a reference to the successive drafts which have been necessary to narrow down negotiating options.
Proposals greeted with mixed reaction
Many WTO Members extended a cautious welcome to the latest texts, while some criticised parts they felt were unbalanced, calling for a further revision of the drafts. Several developing countries (including the ACP group) are insistent that substance must take precedence over arbitrary deadlines before the farm text can be combined with other subjects. The ACP is backed in its view by the G-33 group, composed of some 42 developing countries that favour flexibilities to protect small farmers and rural communities. Critics claim that while recent intensive informal consultations at the WTO have focused on accommodating developed country sensitivities, many issues of concern to developing countries have yet to be discussed in comparable detail.
Other Members, notably the EU, are insistent that if steps are not taken to reach a deal on modalities this summer and to wrap-up the Round by the end of the year, the talks will collapse.
The G-20—a coalition of developing countries that favour reform of developed world agriculture—welcomed the text as “a good basis to build on,” saying that the group, which includes Brazil, India and China, was “prepared to work hard this week to improve it and narrow the differences.” The bloc told Falconer that new elements resulting from this process could then “be incorporated in your document.”
NAMA text grants developing countries more leeway
Developing countries would be able to shield a higher share of industrial imports from the full force of tariff reduction if they agree to relatively steep overall cuts, according to Stephenson’s latest draft proposals on NAMA.
In its most commercially significant advance, the text includes the potential for developing countries to shield up to one-fifth of industrial imports from the full force of tariff reduction if they agreed to cap most manufacturing duties between 19% and 21%. These so-called ‘coefficients’ would be linked to different levels of flexibility based on a ‘sliding-scale’ option that has been relatively acceptable to Members during recent talks.2
The new text also provides multiple potential options for dealing with the central issues of ‘formula’ that will determine countries’ future tariff levels; ‘flexibilities’ for developing nations to shield some products from duty cuts; and treatment of ‘unbound’ tariff lines not currently subject to binding caps at the WTO. By providing more possibilities, Stephenson told journalists on May 20 that “this text provides lots of room to negotiate…if that’s what Members wish to do finally.”
Wide range of options remain in brackets
The NAMA paper reflects several recent proposals, including a number seeking special treatment for individual countries. One bracketed provision, for instance, would allow South Africa to shield an extra number of products from standard tariff cuts, so that the Southern African Customs Union (SACU) does not have to choose between preserving its longstanding common external tariff and exposing countries like Lesotho and Namibia to international competition.
Another potential option in the new text is a relatively recent EU-US proposal to constrain the ability of developing countries to choose which products to shield from tariff cuts. Responding to fears that entire industrial sectors could be blocked off, the proposal - hotly opposed by countries including China and Brazil - would prevent large swaths of a particular industrial sector from being shielded from standard liberalisation obligations.3 Stephenson said that there was “no consensus” on the issue.
Changes for small and vulnerable economies
Stephenson’s text introduced a new potential provision for many of the ‘small and vulnerable economies’ (SVEs) that account for less than 0.1% of world NAMA trade. Instead of applying the agreed formula, countries would be allowed to make an average cut based on their existing tariff levels, if that proves less burdensome.
A new option was also provided for the developing countries that currently have binding caps on fewer than 35% of their tariff lines. These states, including Nigeria, Cameroon, Sri Lanka and Mauritius, would be divided into three tiers based on the proportion of tariff lines currently bound. All would have to bind the majority of their tariff lines at an average of 28.5%, but the tier with the lowest binding coverage would be able to leave the highest proportion of lines unbound.
Development verses access - again
The release of the NAMA draft incited fervent reaction from both rich and poor countries over whether it did enough to open markets or help developing countries. Brazil and India stressed that developing countries should have to make smaller contributions than rich ones under the principle of “less than full reciprocity.” India’s commerce minister Kamal Nath said the text would need to be “completely revised and significant convergence achieved” before taking talks to the ministerial level.4 Industry groups also expressed disappointment that the current figures would mean greater tariff cuts for developing countries than for developed economies such as the US and the EU. “This would be in complete disregard of the Doha mandate,” said the Federation of Indian Chambers of Commerce and Industry.
Meanwhile, the US and EU echoed concerns also raised by their business lobbies that the new proposals did not go far enough to prise open developing country markets, and could allow entire sectors to be excluded from tariff cuts.5 The US-based Association of Manufacturers called the new text “disappointing and…a step backward from the liberalisation the world needs.”
Services text receives lukewarm welcome
Following the release of the revised agriculture and NAMA texts, WTO Chair Ambassador Fernando de Mateo y Venturini, released new proposals on the services sector on May 26. The text, which sets out suggestions for freeing up trade in services such as banking and telecoms as part of a global deal, immediately met with criticism from a coalition of service industry groups.
“At this point in the negotiations, a text is needed that provides political guidance on the level of ambition in the Doha round services negotiations,” members of the Global Services Coalition said in a statement.6 “This version illustrates that members are still ‘consulting’ and demonstrates how little progress has been made in the services negotiations,” they added.
The coalition members, which include groups from Australia, Brazil, Canada, the EU, Hong Kong, Japan, Taiwan, the US and other countries complained that negotiations on services still lag badly behind those on agriculture and industrial goods, even though the nearly 7-year-old talks are supposed to open markets in all three areas.
EU urges action and concessions
Following the release of the NAMA, agriculture and services texts, the EU was immediately in favour of pushing forward, warning countries against delay. “Those pushing for slippage are pushing for failure,” one EU source said. Indeed, EU Trade Commissioner Peter Mandelson urged developing countries to yield ground in the negotiations, during the European Parliament’s foreign trade panel on May 27.
“The emerging economies must now engage in a serious negotiation,” Mandelson said.7 “The excuse from the emerging economies that we cannot negotiate on NAMA because we need clarity on agriculture no longer holds water,” he added. “There are no more excuses.” Mandelson said that any developed or emerging economy that thinks it can come to the Doha table empty-handed on industrial goods will go home the same way. “On that basis I could not sell a political deal in Europe and I would not try,” he emphasised.
“The window of opportunity to close out the bulk of this negotiation is there,” Mandelson said. “I do not pretend that it will be easy or that success is guaranteed. I think we face a desperately complex and difficult phase.”
Towards an end-June ministerial?
Delegates speculate that trade ministers could be brought to Geneva around the end of June if sufficient advances can be achieved in the talks in the days and weeks ahead. However, it appears there is some division over the extent to which a ministerial meeting is needed soon. While the EU has been vocal in insisting that ministers be called to Geneva as soon as possible (potentially by June 23), many developing countries have emphasised instead the need to first put real substance into the process.
According to sources close to the discussions, WTO Director- General Pascal Lamy is keen to ensure that the ministerial takes place soon and he put pressure on Falconer to issue his latest farm draft at the time he did. However, only the immediate horizon is clear, with tentative senior official meetings penned as early as June 9. Whether or not the Chairs will then issue further revised draft texts remains to be seen.
1 This methodology was first put forward by Australia, Brazil, Canada. Japan, the EU and the US – informally dubbed the G6. (See Bridges weekly, April 11 2008 www.ictsd.org/weekly
2 See: WTO Roundup, TNI Volume 7, Number 3, April 2008.
3 See: Bridges Weekly, December 12 2007.
4 See: India wants new WTO industrial text completely revised, Reuters, May 23 2008.
5 See: WTO members tussle over industry proposals, Reuters, May 27 2008.
6 See: WTO services text disappointing – global coalition, Reuters, May 27 2008.
7 To read Mandelson’s full speech see: www.ec.europa.eu/trade