WTO Ministerial Section • Volume 9 • Number 40 • 23rd November 2005

Rules Chair Submits Draft Text To TNC, Divisions Remain

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WTO delegates in the Negotiating Group on Rules discussed revised draft ministerial declaration text put forward by Chair Ambassador Guillermo Valles Galmes of Uruguay, during informal meetings on 18 and 21 November. Though Members broadly described it as an acceptable basis for actual negotiations at the Hong Kong Ministerial Conference in December, one that takes into account the breadth of proposals and progress made, disagreements persist on a number of issues related to the anti-dumping negotiations and the timeline for moving to text-based negotiations. More consensus exists on the paragraph on fisheries subsidies.

Chair mandated to prepare consolidated text, deadline not specified

Establishing time frames to move to text-based negotiations on Rules received the most attention during the discussions. The draft mandates the Chair to prepare consolidated draft texts for amendments to the Anti-dumping (AD) and Subsidies and Countervailing Measures (SCM) Agreements "early enough to assure a timely outcome within the context of the 2006 end date for the Doha Development Agenda." It stipulates that he should take account of progress made in other areas of the negotiations while doing so.

Brazil, Hong Kong, China, Chile, Japan and others would like to fix early 2006 as a deadline for Valles Galmes to develop a consolidated text on rules that would serve as a basis for subsequent negotiations. The US and Egypt objected to such a deadline.

One source reports that Members generally agree that the Chair will need some flexibility in determining the precise moment to come forward with a consolidated text, but that the current phrasing is still too vague to provide him general guidance about when to do so. However, as no consensus was possible on how to translate this into concrete language for the draft, the paragraph remained as it is, with no target dates.

No common ground found on anti-dumping

Consensus was also lacking on various anti-dumping issues specifically mentioned in the text. The draft text simply reports that Members have considered proposals on issues such as the determination of injury/causation, the lesser duty rule, public interest, transparency and due process, interim and sunset reviews, duty assessment, the use of facts available, limited examination and all other rates, dispute settlement, the definition of dumped imports, and circumvention.

Most members of the ‘friends of anti-dumping’ (FAN), a group of developed and developing countries seeking tighter rules, did not want the draft to mention the development of rules that would prevent Members from circumventing anti-dumping duties and countervailing measures, a priority demand of the US (see BRIDGES Weekly, 2 November 2005). WTO rules on anti-dumping do not currently cover circumvention; many Members perceived the issue’s inclusion in a draft text as a victory for the US and the EU, its only clear proponents.

The US, on the other hand, warned that it would block other initiatives in the Rules talks if circumvention were not explicitly mentioned in the text. Moreover, it resisted requests by other Members to explicitly acknowledge negotiations on specific anti-dumping issues in addition to the ones mentioned in the draft.

Similarly, the US blocked attempts by Members of the FAN group to make vague language in the draft text more specific. The text, for example, says that negotiations on anti-dumping should, "as appropriate," clarify and improve anti-dumping rules. Brazil would like to delete phrases such as "as appropriate" from the text, arguing that they further water down an already vaguely formulated mandate.

Some agreement on fisheries subsidies

The most substantial changes were made to the paragraph on fisheries subsidies. The original draft text had been very short and many Members felt that it did not reflect the progress made so far.

The original version noted that "there is broad agreement that the Group should aim to strengthen disciplines on subsidies in the fisheries sector, including through the identification and prohibition of subsidies that may contribute to overcapacity and over-fishing, taking into account the special needs of developing and least-developed Members." The Chair’s text expands on this, calling on Members to "promptly undertake further detailed work to, inter alia, establish the nature and extent of those disciplines, including transparency and enforceability."

At India’s request, Members agreed to add to the text on special and different treatment (S&D) for developing and least-developed countries by appealing for "appropriate and effective" S&D as an "integral part" of the negotiations, taking into account the sector’s importance to "development priorities, poverty reduction, and livelihood and food security concerns."

Members opposed requests by Japan, Korea and Chinese Taipei that the text instruct Members to "preserve the basic concepts and principles of the Agreement on Subsidies and Countervailing Measures (SCM)," arguing that the mandate for fisheries subsidies negotiations was to amend those very principles.

Although the Friends of Fish, a loosely defined group of countries which support a broad ban on fisheries subsidies that includes New Zealand, Chile, Peru and the US, would have preferred an even stronger call for disciplining fisheries subsidies after the Hong Kong summit, they find the revised version of the draft balanced and acceptable, according to New Zealand.

Environmental sources regard the fact that the draft text clearly addresses subsidies that contribute to overcapacity and over-fishing as a major achievement, given that some Members previously tried to limit disciplines to subsidies that were directly trade-distorting, regardless of their the impact on fish stocks in general.

Some sources noted that the very fact that Japan agreed to a text that speaks of a broad agreement that disciplines should be strengthened could be regarded as remarkable, given its initial reluctance to negotiate fisheries-specific subsidies rules at all.

Level of ambition dependent on dynamics in other groups

Members also differ on the overall level of ambition that the Rules Group should aim for, depending on how strongly they would like to link it to the outcomes in other negotiating groups. During meetings of the group, the US has expressed support for a process-based link that would align the timing of anti-dumping negotiations with work carried out in other committees. Switzerland, along with Brazil and the EU, has asked for progress on rules that is "commensurate" with that in other groups in terms of ambition and substance.

Plurilateral consultations continue this week. As no consensus has been reached on the draft within the Rules Group, the Chair has now submitted it to the Trade Negotiations Committee (TNC) on his own responsibility. WTO Director-General Pascal Lamy, who heads the TNC, will ultimately submit a comprehensive draft ministerial text to Members on the basis of the Chair’s texts and further consultations. If Members cannot resolve their differences before the Ministerial Conference starts on 13 December, ministers will take them up in Hong Kong itself. Delegates expect ministers’ negotiations on Rules to be influenced more strongly by developments in other negotiating areas than by the draft text.

Sources report that the Trade Negotiations Committee is scheduled to meet on 30 November.

ICTSD reporting.