Bridges Weekly Trade News Digest • Volume 10 • Number 13 • 12th April 2006
WTO Members ‘Open’ To Talks On S&D Monitoring Mechanism
At a 7 April meeting of the WTO Committee on Trade and Development - Special Session (CTD-SS), delegations said they were open to relaunching talks on a monitoring mechanism for special and differential treatment (S&D). This marked the first time in some three years that the committee has substantively engaged with ‘cross-cutting’ rather than agreement-specific issues in the negotiations. Although the General Council in July 2002 approved the creation of such a monitoring mechanism, asking the CTD-SS to determine how it would work, talks have been on hold since early 2003 due to concerns from some countries that it could be used to enforce differentiation among developing country Members of the WTO.
As the monitoring mechanism concept deals with the need for adequate implementation of S&D across all WTO agreements, it is one of the so-called ‘cross-cutting’ issues in the negotiations, as compared to the group of proposals for changes to specific WTO rules. The CTD-SS has since May 2005 been focusing on the latter group of ‘agreement-specific’ proposals, largely because most developing countries felt that they were more urgent. Cross-cutting issues, by contrast, were mired in controversy, and suffered from the absence of a specific deadline for dealing with them. The 7 April gathering looked at agreement-specific issues before the addressing the cross-cutting ones.
The idea of a mechanism to implement and monitor S&D in the WTO was introduced into the CTD-SS by the African Group in 2000 (TN/CTD/W/3/Rev2 and W/23). The disagreement arose as a result of subsequent submissions from the EU (W/13, 20 and 26) and Switzerland (W/14), which suggested that the mechanism could be used to determine when a developing country could "graduate" to developed country status. The issue of graduation is linked to the extremely controversial question of according different treatment to Members classified as developing countries in the WTO. In 2003, several middle-income developing countries said they did not want to discuss the monitoring mechanism because they saw it as tied to differentiation, to which they were opposed. Some of them called for more progress on the agreement-specific issues before Members moved to cross-cutting ones, arguing that there was little point to an S&D monitoring mechanism until specific provisions for such treatment had been determined.
Agreement talks needed on monitoring mechanism — but no detail yet
Chair Ambassador Burhan Gafoor of Singapore asked Members to share their interpretation of the Hong Kong Ministerial Declaration’s mandate to "resume work on all other outstanding issues, including on the cross-cutting issues, the monitoring mechanism, and the incorporation of S&D into the architecture of WTO rules, and report on a regular basis to the General Council".
Kenya intervened on behalf of the African Group to suggest that the committee’s ‘cross-cutting’ work should focus on a "development framework" and the monitoring mechanism. With regard to the former, Kenya referred to a proposal it tabled at the Hong Kong Ministerial Conference that sought to link the mandate of the CTD-SS to the operationalisation of elements of GATT Article XVIII (4), which provides for letting countries "in the early stages of development" to temporarily deviate from their obligations in order to promote industrial and economic development. Although they did not go into extensive detail about the "development framework," they suggested it should be a general framework to address developing countries’ access to effective S&D.
On the monitoring mechanism, several Members referred to earlier submissions on the issue, and expressed support for restarting discussions. Countries such as Malaysia and Egypt, which had earlier blocked talks on the issue, said that they were open to negotiations. Others suggested that work on the monitoring mechanism would be a good way to re-launch talks on outstanding and cross-cutting issues, since Members’ positions were relatively limited, ranging from some that think a mechanism is "needed" to others which are simply "interested." The devil may well prove to be in the detail: in spite of the General Council’s approval for creating a monitoring mechanism, delegates have thus far been unable to agree on its scope, aim and location (see, for example, BRIDGES Weekly, 28 November 2002). On scope, delegates need to decide whether the mechanism will monitor the implementation of the WTO agreements in their entirety; all S&D provisions; or only the S&D provisions added by the Doha Round.
The EU said that it supported transparency and notification measures that ensure the effective implementation of WTO rules, including the monitoring mechanism. It added that if Members wanted to be particularly ambitious, they could consider "guidelines" that could apply different S&D to different developing countries. Although several developing countries immediately expressed their disinterest in this sort of differentiation in S&D rules, sources suggest that delegates privately recognised that the EU had not explicitly linked the monitoring mechanism to differentiation as it had in earlier submissions on the issue. This enabled countries such as China and Mexico to suggest that talks on the nature, scope and location of the monitoring mechanism continue, but without a link to differentiation.
Some trade sources suggest that the shift in position on cross-cutting issues could be attributed to the relative movement achieved on the agreement-specific ones — 27 proposals were agreed to in principle at the 2003 Cancun Ministerial Conference, and a key set of five LDC proposals were adopted in Hong Kong — or to a hope among Members that enough time has elapsed since the relatively unproductive 2002-3 discussions for them to expect that they will not be repeated.
SPS, waiver proposals examined
Earlier in the day, delegates continued negotiations on agreement-specific proposals (see BRIDGES Weekly, 1 March 2006). Draft amendment text put together on the basis of two separate proposals, one from the African Group and another the other from a group of largely Asian developing countries (proposals 24 and 25, from TN/CTD/W2 and W/3/Rev.2 respectively) called for developing country Members to be granted ’special consideration’ under Article 10.3 of the Agreement on Sanitary and Phytosanitary Measures (SPS), which provides for developing countries to receive, upon request, "specific, time-limited exceptions" to their SPS obligations. Although the chair urged delegates to lift the many brackets in the text that indicated disagreement on wording, differences between the two groups of countries, as well as within the African group itself, rendered this impossible.
The Hong Kong decision requiring developed countries to grant duty-free and quota-free access to 97 percent of the tariff lines for LDC exports was not discussed at the meeting, though it was on the agenda. LDCs want the monitoring and implementation of the decision to take place in the CTD-SS. The US, the EU and others, however, believe that this should happen in the LDC Sub-Committee.
Exactly when developed countries have to implement such market access for LDC exports also remains a matter of some contention. According to the Hong Kong Declaration, they have to do so "by 2008 or no later than the start of the implementation period [for Doha Round commitments]." Trade sources suggest that in informal consultations with each other, LDCs have argued that the decision has to be enforced by 2008, while the US maintains that it must be done as part of the single undertaking of the Doha Round, whenever it is concluded. They also disagree on whether the Hong Kong mandate to "ensure that preferential rules of origin applicable to imports from LDCs are transparent and simple, and contribute to facilitating market access" requires further negotiation to make sure that it is adequately operationalised. The LDCs tend to think so; the US does not.
Informal consultations are likely to continue on the eight remaining agreement-specific proposals, which have been grouped into five potential draft amendments. The CTD-SS will likely hold a formal meeting shortly before the 15-16 May session of the General Council.
ICTSD reporting.