Report by the Chairman of the Trade Negotiations Committee
Let me start by welcoming today the participants to the Geneva Week for non-residents who have the opportunity to attend this General Council meeting. I am pleased that we again have been able to synergize the Geneva Week and this session so as to allow participants to get the overall picture of what is happening here.
Since my last report to the General Council in February, the economic situation has continued to worsen for all WTO Members. Trade has become a casualty of this crisis. Our forecast shows that world trade will contract by 9 per cent this year, driven lower by the collapse in global demand and by shortages of trade finance that have created supply-side constraints to export growth, in particular in many developing countries.
No-one can foresee how long this recession might last, nor how deep its consequences will be on our social fabrics, but there can be no doubt either about the fragility of the world economy or about the central importance of trade in the recovery.
This current global economic crisis has taken centre stage at a number of international meetings I have attended recently and I wanted to share with you some of my impressions and conclusions from these gathering as well as from some of my recent bilateral meetings. I would also like to provide you with my sense of the way ahead in the Doha Round over the next couple of months.
As you know, I participated in the G20 meeting in London in early April. The focus and agenda of the meeting was understandably geared towards finding solutions to the immediate challenges facing the international financial system. But I was very encouraged by the sensitivity of the G20 Leaders to the importance of international trade in general and the multilateral trading system in particular in terms of boosting aggregate demand and restoring sustained growth globally.
In my intervention to the G20 I stressed four main points.
First, I stressed the importance of keeping trade open and fighting against protectionist pressures. I emphasized the need for Leaders to strongly support the WTO monitoring mechanism of trade and trade-related measures taken in the context of the crisis which provides Members with regular updates, the next one due before the end of June.
Second, I stressed the importance of keep opening trade by concluding the Doha Round. I explained the important progress we have already made in what is effectively the most ambitious multilateral trade deal ever and I encouraged them to engage vigorously in tackling the few remaining challenges.
Third, I also stressed the importance of keeping the Aid for Trade promises made, in particular since they will allow many of the poorest countries to prepare their exit from the crisis by investing and improving their productive capacity.
Finally, I also raised the importance of ensuring availability and affordability of trade finance to keep oiling the wheels of trade.
You will all have seen the G20 Communiqué. In addition to rejecting protectionism, committing to provide funding for trade finance, engaging to maintain Aid for Trade pledges and committing to conclude the Round, Leaders sent an important signal to the world that trade and the WTO remain at the heart of a broader solution to this crisis. This commitment was further emphasized in a number of bilateral meetings I had during the G20 meeting.
This renewed focus and political attention to trade and the Doha Agenda was more recently in evidence at the spring meetings of the World Bank and the IMF where my participation in the IMF Committee and the World Bank Development Committee as well as in meeting with a number of Ministers confirmed the momentum which has been building in recent weeks.
As the ILO has recently stated, it is clear that the full social impact of the current crisis, unfortunately, is still to come and it will inevitably create more political pressures on the multilateral trading system. But it is precisely at this time, when protectionist temptations flourish, that the value of the multilateral trading system is all the more apparent to all us.
If there is one consistent message I can take out of my meetings in these last three months is that governments are looking to the WTO system of global trade rules for predictability, transparency, stability and as a provider of confidence for economic operators. All stakeholders agree that open trade remains central to global economic recovery. They are looking at the conclusion of the Doha Round as the lowest hanging global stimulus package available.
Turning now to the Doha Round, overall, my impression is that while the economic crisis has worsened since the beginning of the year, the political atmosphere in the negotiations has improved. We have seen an increasing level of political engagement and clear signals of renewed commitment and support for a rapid conclusion of the Doha Round.
The recent visit by new USTR Ambassador Ron Kirk to Geneva early this month was very welcome and timely. He clearly expressed his commitment to a successful conclusion of the Round. We also have seen elections in India and we are impatiently awaiting the nomination of the Commerce Minister.
Our Geneva process is continuing to push ahead across the whole negotiating agenda. While at the moment much of the work in the Negotiating Groups could be described as technical, it is no less important for that. The Chairs are making every effort to clear the runway for political takeoff, and I thank them for this.
In Agriculture, we have a new Chairman for the Special Session, Amb. David Walker. Building on the good work that has been done in the group up to now, he is continuing his consultations to advance a number of issues that remain open, among which is the formulation of the SSM. Also to be considered over the coming weeks are outstanding technical issues, among others, under sensitive products, special products, tropical products and preference erosion, cotton and tariff simplification. Nor is it, in my view, too early to start preparing for the scheduling and verification process and the drafting of legal language.
The NAMA Negotiating Group has recently held an open-ended meeting. Sponsors of sectorals reported the technical work at which they have been engaged and they expressed their intention to engage in the coming weeks with their trading partners to move this issue forward. This week there will be a Negotiating Group session on the textual proposals on Non-Tariff Barriers. In July, the Group will hold a scheduling workshop, designed to give participants the opportunity to prepare themselves in respect of the technical issues that will come up when the scheduling phase begins for real.
The Rules Group has also been working on a broad front, with meetings recently on Anti-Dumping, Subsidies and Countervailing Measures and Fisheries Subsidies and further activity planned on Regional Trade Agreements. On Anti-Dumping, the Group followed a three-tiered approach in discussing the Chair's text — first, discussing issues in square brackets, second, text not in brackets, and third, issues not currently reflected in the text. The discussions regarding horizontal subsidies were of a general nature as delegations were given the opportunity to present their general views regarding how they view negotiations in this area proceeding. The Group also discussed fisheries subsidies and continued its discussions on the roadmap by focussing on issues such as prohibition and general exceptions. The next round of open-ended meetings is scheduled for the week of 29 June.
The Services Special Session last month saw participants restate their offensive and defensive interests. The discussion on LDC modalities is progressing, but detailed proposals are still awaited and hopefully will come soon so that this negotiation can also move forward. The next meeting of the Special Session will take place in conjunction with the next Services cluster, possibly to be preceded by one of the Chairman's enchiladas.
In the CTD Special Session, Members have been focusing on coming up with elements of a Monitoring Mechanism on S&D. iscussions on the Agreement-specific proposals have been put on hold until Members are in a position to put forward new ideas or new language that would de-freeze this part of the discussion.
The TRIPS Special Session has seen some strategic positioning going on, and the Chair is working to focus the group on getting ready to move forward as soon as the wider environment allows. At the next session on 10 June he will aim to orient the discussion towards issues rather than specific proposals.
The Negotiating Group on Trade Facilitation has also been making useful progress on all pillars under its mandate. Work on the GATT Articles' side produced a number of additional suggestions on how to improve the existing texts. Good progress was equally made on the S&D front where the Friend of the Chair process now seems firmly established and well under way. The Group plans to meet again next month.
In Trade and Environment, the Chair has been consulting delegations on various aspects of the July work programme. An open-ended transparency meeting was held recently and overall there is a willingness to engage in activities that would help delegations to prepare for the next phase under this work programme, including technical work on a range of issues. There is also further scope for deepening knowledge and understanding of a number of issues under the mandate, including capacity-building and development-related issues. The Chair intends to hold further consultations in the near future to discuss on the different substantive elements of the work programme, including the cross cutting issues.
Lastly, the DSB Special Session has recently discussed litigation costs for small participants, with the participation of the Advisory Centre on WTO Law. Delegations are also discussing issues such as panel composition and confidential information.
So, overall, worthwhile progress at the technical level, which as we all know is a necessary but not a sufficient condition for concluding the Round. The key question remains “when will participants be ready to come back to the table at political level?” I hope that we will start to see an answer emerging soon.
As you all know, a series of major international political meetings are scheduled to take place over the next two months. We can expect the Doha Round to be a key consideration at all of these meetings — as it should be — and we need to work for momentum to build through this sequence of meetings. This sequence will provide us with a series of occasions at which the political process for the Round can be re-ignited.
There will be a meeting of Cairns Group and other country trade ministers on 8-9 June. The OECD trade ministers meeting will be another opportunity later in June. In July there will be the meetings of leaders around the G-8 and G8+ as well as the gathering of APEC Trade Ministers. Each of these meetings should provide opportunities for greater political engagement at Ministerial level and help create the conditions for moving us toward agreement on agriculture and industrial goods and of course on the Round as a whole. As always, I will keep you informed of any developments on these fronts.
I will also of course be continuing my regular exchange of views and coordination with the Chairman of the General Council and the Negotiating Chairs with a view to advancing each area under the overall umbrella of the Single Undertaking.
I have been informed of the informal discussions which have been on-going amongst some of you — looking outside the current tool box of the negotiating process with a view to placing the talks on a more direct path, for commencing the scheduling of Agriculture and NAMA commitments.
I am well aware that for some of you, the modalities approach is sacrosanct. It is an approach that makes clear to all what is on the table through the formula cuts in tariffs and the specific flexibilities that would be agreed. But others believe that while the modalities spell out the defensive elements of the agreement, through flexibilities, these flexibilities in themselves make it difficult to ascertain what new market access opportunities may emerge. If governments could indicate what products would be accorded more flexible treatment in the scheduling stage, whether on sensitive products, on special products, on Duty-Free-Quota-Free or on NAMA flexibilities, some countries believe it would lend greater clarity to the process.
My own sense is that there is scope to work on these two areas along two simultaneous tracks. One would see technical engagement in the negotiating groups move to a higher gear to cover a number of technical issues as mentioned previously. Simultaneously, Members would start some sort of “outcome testing”, through bilateral or plurilateral discussions, where they would provide each other with greater clarity on the use of flexibilities and through it, on the value of the deal. This is, in my view doable, provided we see serious political engagement on the part of Members. In other words, provided Ministers give the necessary instructions for substantive work to happen on these two tracks.
Finally, on Aid for Trade, I am glad to report that preparations for the Second Global Aid for Trade Review on 6 and 7 July are advancing well.
I attended the High Level Conference on the North South Corridor in Lusaka on 6-7 April which allowed the Chairpersons of COMESA, EAC and SADC to outline the various projects and programmes that constitute the North South Corridor Model Aid for Trade Programme. The Conference offered a good outline of the bottlenecks to trade that need to be removed in a sequential manner in order to reduce trade costs.
I also recently attended the second regional review of Aid for Trade in Montego Bay, Jamaica for Latin America and the Caribbean where a number of projects were showcased focusing on progress made in implementing Aid for Trade on the ground. I will be flying to Cambodia tomorrow for the Asia and Pacific regional review.
On all these occasions I have stressed the importance of ensuring that Aid for Trade promises were kept, despite the crisis. In fact, Aid for Trade is an ingredient to help developing countries prepare better to exit the crisis. By building their productive capacity, they would unlock their growth potential and this would help them take advantage of new trade opportunities. I also emphasized the need to keep fostering this South-South cooperation on Aid for Trade the importance of which is obviously on the rise.
Looking ahead I believe that the Second Global Aid for Trade Review on 6 and 7 July will provide a concrete and specific occasion to show how Aid for Trade is working in practice and to review the fulfilment of the commitments to additionality. I am working closely with the Chair of the Committee on Trade and Development, with DDG Rugwabiza and the membership to prepare this meeting.
To conclude, Mr. Chairman, while, according to some, we may be seeing the bottom of the economic crisis, we have not yet seen its full social impact which will inevitably trigger negative political pressures on the trade front. I personally believe, and I want to share this very openly with you, that the “stress test” of the multilateral trading system is still to come. It is therefore crucial that we keep our monitoring system on the alert and that we advance towards the conclusion of the Round. A more solid house will resist the strong political winds which we unfortunately have to forecast.