Bridges Weekly Trade News DigestVolume 16Number 33 • 3rd October 2012

“Signs of Momentum” in WTO Doha Round Talks, Lamy Says

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Nearly a year after last December’s ministerial conference, signs are emerging that WTO members could soon be reviving their efforts in moving the Doha Round talks forward, after the negotiations were formally declared at an impasse last year. However, despite recent proposals of deliverables that could help balance a potential trade facilitation agreement, both WTO Director-General Pascal Lamy and members have cautioned that repeats of past problems that slowed earlier efforts at achieving results must be avoided.

Discussions with ministers, delegates, negotiators, and the private sector have confirmed a “collective desire to re-engage,” Lamy told members at a meeting of the General Council - the WTO’s highest decision-making body outside the ministerial conference - on Wednesday.

“But, let me be clear,” the trade chief warned. “As I said in July, I am neither under any illusion that the factors that have shaped the impasse which we face have changed substantively, nor do I harbour any dream about achieving grand designs or comprehensive deals.”

Possible balance for trade facilitation deal?

Over the last several months, members had been reviewing whether an agreement on trade facilitation could be put forward as an early Doha deliverable. Yet members had repeatedly disagreed over whether such a deal could stand by itself, or whether it would instead need to be balanced by another deliverable from a different negotiating area.

However, since members’ return from the August recess, Lamy noted, a series of ideas have been raised as possible elements that could be delivered to balance an outcome on trade facilitation.

For instance, recent proposals have been raised in the agriculture negotiations by the G-20 group of developing countries, and other ideas regarding special and differential treatment and the monitoring mechanism, as well as non-DDA issues such as the expansion of the Information Technology Agreement (ITA), are also being discussed at an informal level. (For more on the agriculture proposals, see related article in this issue)

Even with widespread acknowledgment among members that trade facilitation could be an achievable outcome, some members did express concern over potential problems such a deal might raise.

Barbados, speaking on Wednesday on behalf of the Small and Vulnerable Economies (SVEs) noted that trade facilitation, while having the potential to make trade more efficient, could also worsen the balance of trade on import-relying countries. Setting up waivers or longer implementation timeframes for some countries that could be affected might be a way to mitigate this problem, it suggested. Lesotho, speaking on behalf of the African Group similarly cautioned that a trade facilitation deal might not necessarily be a win-win outcome.

However, some officials commented to Bridges ahead of the General Council that the value of a trade facilitation agreement could extend beyond just its commercial benefits. “If we can do something on trade facilitation, it could be a catalyst for continuing work in the future on other [Doha] issues,” one developed country official said.

Negotiations within the group tasked with the trade facilitation talks are still ongoing, with delegates set to meet next week to continue their discussions.

Bali countdown

“We are now effectively 14 months away from the Bali Ministerial,” EU Ambassador Angelos Pangratis said in his remarks to fellow WTO members, referring to the December 2013 gathering slated to be held in Bali, Indonesia. “We should make sure that we use this time wisely and with a sense of urgency to not find ourselves a year from now searching for creative ways of explaining why we have not taken the steps that ministers at [the Eighth Ministerial Conference] asked us to make.”

Others similarly stressed the need to make progress on the instructions given by ministers at the last ministerial, sources told Bridges, while noting the potential pitfalls that may still lie ahead of the Bali meeting.

China, for its part, cautioned against any members attempting to “ask for the moon” in trying to identify areas for potential progress in the Doha talks. “On the other hand, members shall exert their maximum willingness and flexibility to any reasonable request with a view to forging consensus of balanced interests,” China urged.

US Ambassador Michael Punke, in turn, assured China that the US “wouldn’t be asking for the moon,” adding in his intervention that members should be wary of avoiding a repeat of last year’s failed attempt to secure a package of Doha deliverables ahead of the December conference.

While he agreed that trade facilitation is unlikely to succeed as a standalone agreement - adding that no one is still saying that it should - any efforts to balance it with another deliverable should be approached carefully.

Members need to recognise the “poison pills” that brought down last year’s effort, Punke warned, adding that “now is the time to get down to work.”

Havana Club row resurfaces

The systemic implications of a major member not implementing dispute settlement rulings was also raised during Wednesday’s meeting, with Cuba expressing concern over the US’ non-implementation of a decade-old ruling (DS176) by the WTO’s Appellate Body on registering trademarks in the US involving Cuba. Several Latin American countries made their own interventions in support of Cuba’s position, trade sources confirmed to Bridges.

In the original case, WTO judges had ruled that a provision in the US Omnibus Appropriations Act of 1998, which prohibits “those having an interest in trademarks/ trade names related to certain businesses or assets confiscated by the Cuban Government from registering/renewing such trademarks/names without the original owner’s consent,” was in violation of multilateral trade rules.

Though not a complainant in the dispute - the case was filed by the then-European Communities - Cuba has argued that the US Patent and Trademark Office and the US Supreme Court have both rejected a request to renew a Cuban company’s “Havana Club” trademark, giving it instead to US-based company Bacardi.

The US, for its part, has consistently held that it is working toward implementing the ruling’s terms. The issue was also raised at the WTO’s Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS) during their meeting in June. (See Bridges Weekly, 13 June 2012)

Ukraine renegotiation proposal under scrutiny

Systemic concerns regarding another WTO member - in this case, Ukraine - also surfaced at Wednesday’s meeting, as a result of a proposal recently circulated among delegations in Geneva by Kiev. In the proposal, Ukraine outlined a list of areas where it hopes to renegotiate the tariff schedule included in its accession protocol, which reportedly contains nearly 400 goods on which the country would like to raise tariffs.

A provision in the General Agreement on Tariffs and Trade, Article 28, does indeed allow for the renegotiation of accession terms, and Ukraine did file a notice late last year alerting members that it would seek to do just that for the duration of the three-year period, starting on 1 January of this year.

However, the size and timing of the request has alarmed some other delegations in Geneva.

“The EU is of the firm opinion that the procedure set out in Article XXVIII GATT is not meant for renegotiating a significant part of the accession commitments of WTO members,” EU Ambassador Pangratis told members at Wednesday’s General Council gathering.

“It is all the more surprising that this happens so shortly after Ukraine’s accession,” Pangratis continued; Ukraine joined the global trade body in 2008. “The EU considers that Ukraine’s request raises very obvious and very serious systemic concerns as it risks undermining the credibility of members’ commitments to their WTO obligations.”

Other members, including Australia, Brazil, Cambodia, Japan, Mexico, New Zealand, Nigeria, Switzerland, Turkey, Malaysia on behalf of ASEAN, and the US, also raised similar concerns during the meeting over Ukraine’s proposal to renegotiate its tariff schedule, trade sources confirmed to Bridges.

“Obviously the process is there, and it’s a legitimate process,” an official from a large developed country told Bridges ahead of the meeting. “But the size of their request doesn’t make it a simple negotiation,” the official said.

“This will certainly create friction, I’m sure,” a delegate from a large developing country predicted, speculating that some might begin to worry that Russia - having recently acceded and having such strong economic ties with Ukraine - could later wish to re-examine its own accession terms.

Next General Council to sign off on Laos accession

Members at the next General Council meeting on 26 October are expected to formally approve the accession protocol of Laos, following Friday’s announcement that the Working Party tasked with the country’s accession had completed its negotiations. Laos - a least developed country, or LDC - began its accession process in 1997, though the first Working Party was not held until 2004.

“This process has been long and tedious and very difficult for us,” , Laos’ Minister of Industry and Commerce, told the Accession Working Party on Friday. “We knew that we were engaged in a difficult exercise of convincing our trade partners of our good will, but also the constraints we are facing as a least developed country with less bargaining power and still rely on [overseas development assistance].”

Whether or not Laos would be able to join the WTO this year was until recently an open question, with Ukraine reportedly slowing the negotiations by making strong demands of both the Asian country and another LDC aiming to accede - Yemen. Laos clinched an agreement with Ukraine only in late July, paving the way for this month’s Working Party to announce that negotiations had been concluded successfully.

Under WTO rules, countries wishing to join the global trade body must conduct both multilateral negotiations with current members, as well as bilateral talks with any specific WTO member that asks. Back in July, following the instructions given at December’s Eighth Ministerial Conference, members recently agreed on a revised set of guidelines on the accession of LDCs in light of the long-standing concerns that these countries, in the negotiation process, are often asked to make demands beyond their capabilities. (See Bridges Weekly, 4 July 2012)

Along with the difficulties in pressing forward with negotiations in Geneva as an LDC, Nam said, was the challenge of convincing stakeholders back home to make the reforms required to join the 157-member WTO.

“We… underestimated the difficult negotiations we would have to undergo at the internal front,” he said on Friday. “Quite frankly, trying to convince our trading partners of the position of Lao PDR only to go home, and to convince our internal partners of the justification of the reforms requested, was one of our most difficult and hard tasks.”

Nam, in his address on Friday to the Working Party, expressed his hope that Laos will be able to domestically ratify the accession protocol by December, which is the next step after the General Council formally signs off on the terms. Laos will formally become a WTO member 30 days after submitting its instrument of ratification, in line with the global trade body’s rules.

Director-General’s race to kick off in December

The upcoming months are also set to see the beginning of the race for electing a new head to the global trade body, with current Director-General Pascal Lamy’s term set to end on 31 August of next year.

While New Zealand Trade Minister Tim Groser has already made clear his interest in the post, many have speculated that the new trade chief could potentially come from a developing country, given that the relatively recent appointments of World Bank and International Monetary Fund heads stuck to tradition in choosing candidates from the US and EU, respectively.

In line with WTO procedures, the process for appointing a new Director-General must begin nine months ahead of the current head’s leaving office. The process will therefore officially begin on 1 December. Members will then have the month of December to nominate candidates and submit them to the General Council chair, who will conduct the process with the help of the Dispute Settlement Body and Trade Policy Review Body chairs acting as facilitators.

Candidates will then have three months to make themselves known to current members - i.e. until the end of March. A General Council meeting to conclude the process and announce the new trade chief must be held three months before Lamy concludes his term, in other words by 31 May. The race for the Director-General is expected to be watched closely by trade observers and policymakers alike, given that the next ministerial will be held under his or her stewardship.

ICTSD reporting.

One response to ““Signs of Momentum” in WTO Doha Round Talks, Lamy Says”

  1. “Signs of Momentum” in WTO Doha Round Talks, Lamy Says | Nepal Trade

    [...] body outside the ministerial conference – on Wednesday.Click here to read more: This entry was posted in News, Public News. Bookmark the [...]

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