12 July 2004, Mauritius

Director-General's statement distributed to G-90 Ministers

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> Press release: Supachai Urges G-90 Ministers, All Ministers To Show Flexibility


Your Excellencies, Ladies and Gentlemen,

Since the Cancún Ministerial Conference in September 2003, heroic efforts have been made by many to put the Doha Development Agenda back on track. For my part, I have flown more than 250,000 kilometres, engaged in discussions with a large cross section of WTO Ministers and participated in 11 ministerial meetings — the majority of which have been in Africa, Latin America and the Caribbean — in addition of course to meeting many more Ministers individually either in Geneva or elsewhere.

We have all invested a great deal of time and effort into the DDA. My appeal to you is not to let all this effort, and the hopes and expectations that are riding on it, go to waste. We have one chance to build the foundation for a historic trade deal. Now is the time to show flexibility and to build bridges. Let me underline that this is an appeal that I have been making to all Members. I am not singling out this group. My appeal to you, however, has particular urgency because this G-90 Ministerial Meeting is the last leg in the long relay of Ministerials since Cancún. The G-90 also represents a large proportion of the WTO Membership.

We have just 11 working days to achieve agreement on frameworks for modalities on agriculture and non-agricultural market access; on the treatment of the cotton initiative; and on the so-called “Development” and “Singapore issues”. If we fail, the DDA will be consigned to the backburner for an indefinite time. That would weaken the multilateral trading system. Let us make no mistake about it, the world would not be any better if we do not succeed at the end of July — indeed it would surely be a lot worse.

I certainly understand the difficulties that many G-90 countries face. I know that some of you are apprehensive about further liberalisation of global trade. The WTO is not perfect and the multilateral trading system is certainly capable of improvement. But it is also unrealistic, if not harmful, to believe that there is an alternative to the WTO. It is unrealistic because no other system can deliver the same depth and breadth of market access, or the legal certainty of a global rules-based trading environment. It is harmful because any distractions at this critical stage in the negotiations risks undermining our very objectives of trade and development as established at Doha.

Ultimately, it is only the WTO through the DDA that can push through imperative, development-friendly reforms such as the elimination of export subsidies; substantial reduction in trade-distorting domestic support; and substantial improvements in market access including the reduction of tariff peaks and tariff escalation. It is only the WTO which can improve global rules for the conduct of trade. The end of July is not the end of the DDA but, if we lose impetus now, we risk losing all the important flexibilities and compromises that have so far been offered in the negotiations. Even if these flexibilities do not fully satisfy all demands, it is a fact that they take us much further than we have ever been before in a WTO round of negotiations.

Let me underscore where some of these key flexibilities are being demonstrated.

In agriculture we have a truly historic opportunity to eliminate all forms of export subsidies at a date certain. There is also convergence on making substantial reductions in trade-distorting domestic support. You know as well as I do that these reductions will never happen in the context of regional or bilateral free trade agreements. Flexibility has also been demonstrated in market access. The so-called “blended” formula for tariff reductions, which is not favoured by the G-90, is no longer likely to be the basis for the market access pillar in agriculture. There is now growing convergence on the “tiered” approach. This approach is designed not only to result in substantial overall tariff cuts but also to address the problem of tariff peaks and tariff escalation.

Let me also recall that special and differential treatment will be an integral element of all 3 pillars of agriculture. It will include lower reduction rates and longer implementation periods. There is also convergence on a number of new instruments such as Special Products (SP) and a new agricultural safeguard mechanism for developing countries (SSM) to address food security, livelihood security and rural development concerns of developing countries. Of course, some important differences remain. But it is a fact that advances that we only dreamed of just a few years ago, not only in market access and export competition but also in reducing domestic support, could actually become reality. And as you all know, a breakthrough in agriculture will unlock the DDA.

On the so-called “Singapore Issues”, you might recall that not long ago the proponents wanted to launch negotiations on all four “Singapore Issues” — trade facilitation, transparency in government procurement, investment and competition. Any solution that “unbundled” these issues, by giving them separate treatment was firmly rejected.

The proponents have now offered to move significantly away from this position. They have indicated their willingness to settle for the launching of negotiations on just one issue — trade facilitation — and to put the other 3 issues on the backburner, outside the “single undertaking”, that is to say outside the DDA. Members have also indicated a willingness to address some of your main concerns on the final modalities text on trade facilitation, provided the outcome is fair to all participants.

I would ask you to compare this to the original position of the proponents at the Singapore Ministerial Conference in 1996. The concerns that you have continually expressed have had their effect. We have seen a major scaling down. However, in any negotiation there is always a limit to how far a demand can be taken before the deal falls apart. Just as it is your responsibility to judge how best to respond, it is my duty to give you my frank assessment of the situation. Adhering to a position of continuing with clarification work on trade facilitation while dropping the other 3 issues completely is unlikely to lead to agreement. If we do not handle this carefully it may jeopardize the whole deal in July, just as it did in Cancún. We now have a golden opportunity to find a solution after 8 years of bickering. If we do not take it, it may well be that we will find ourselves back to square one, with the proponents pressing for negotiations on all four issues.

On the Cotton initiative, as you are aware, the greater part of the WTO membership would like to see this important issue dealt with as part of the agriculture negotiations. At the same time, proponent countries are concerned that cotton might get lost within the broader agriculture negotiations. I believe it is entirely conceivable that we can find a way of reconciling these two positions by finding an appropriate place for cotton within agriculture.

If, in July, we can achieve substantial movement in the agriculture negotiations, then we would see the cotton initiative boarding a train that is moving with considerable momentum in the right direction. This scenario could encompass specific treatment of cotton when the results of the DDA are being implemented. I would therefore urge you to work with your trading partners to find some compromise language that could serve as the basis of agreement on cotton in July. I was encouraged to find among LDC Ministers at the Third LDC Trade Ministers Meeting in Dakar an openness — indeed an appetite — to explore this avenue. I hope you will provide yourselves with the same flexibility here.

On non-agricultural market access, as in agriculture, there is increased understanding that we should not overload the weaker and more vulnerable Members. LDCs, who represent the majority of G-90 countries, are neither expected to apply any agreed reduction formula to their tariffs nor take part in any sectoral approach. There is also recognition of the need to address meaningfully the question of erosion of preferences. Moreover, G-90 countries, like all developing countries would certainly benefit from the special and differential treatment provisions that are designed to protect the interest of all developing countries.

I know that there are expectations about the “exemptions” proposed in the letter by Commissioners Lamy and Fischler. My understanding from Commissioner Lamy is that the elements in his letter are essentially political concepts, which would need further discussion and negotiation. You should also be aware that many developing country Members, including LDCs, have in our consultations in Geneva expressed concern over the potential creation of an additional category of developing countries. If I may, let me come straight to the point. I have been told that the concept of “exemption” from tariff reductions for the G-90 as a group, if pressed at this point, will meet with fierce objection from other developing countries and could be a deal-breaker.

Another issue which I know is of great interest to you is the erosion of preferences in both agriculture and non-agricultural market access. Some countries have shown a willingness to address your concerns. But it is not yet clear how far they will be ready to take action, and there is stiff opposition from some others. How preference erosion might be handled depends on the negotiations. I think we can find an acceptable approach at the framework stage. But I will not mislead you into believing that preferences can be preserved indefinitely. The global trading environment has changed, and is changing not just because of WTO negotiations, but also because of the emergence of new low cost producers, and the proliferation of bilateral and regional trading agreements, amongst other things.

“Development” concerns are an integral part of the negotiations and development permeates the whole of the DDA. No one questions that development concerns must be appropriately reflected in the July package. There is also certainly a growing body of opinion among the WTO membership that favours giving prominence in July to our mandate to make existing special and differential treatment more precise, effective and operational. Developing countries represent more than two-thirds of the WTO membership. And to a large extent, we owe the successful launch of the DDA, to the faith that developing countries have in the WTO to deliver results that meet their needs and expectations. For the negotiations to succeed, there has to be a readiness by all Members, developed and developing, to recognize and accommodate the needs of their colleagues, and to make concessions to achieve consensus.

I said at UNCTAD XI, just a few weeks ago, that we do not have the luxury of time on our side. Nor, as I see it, do we have much choice. If we want trade to work as an engine for growth and development, it is indispensable that we succeed in the DDA. Every Minister, as well as Head of State and Government, that I have met have told me that they want the DDA to succeed. Recent declarations and statements by groups all around the world have reaffirmed their commitment to the DDA and their willingness to do what is necessary to reach agreement on a package by July. Some groups of Members have already shown important signs of flexibility. The question today is, how will the G-90 respond ?

The end of July is just 11 working days away. Our task is difficult but not impossible. We are searching for convergence on frameworks that will allow us to advance to the next phase of the negotiations. We cannot expect the July package to answer all questions and address all concerns. Some issues will have to be settled later on. But we can and must expect it to be ambitious and balanced. For this to happen, we need all Members to contribute by being realistic and to exercise restraint and faith. All Members including the G-90 must avoid locking themselves unnecessarily into positions. The danger is that, by locking into tactical positions now, your negotiators will have no room for manoeuvre when they need it most in the days ahead.

I cannot put it any better than President Kagame of Rwanda, who in his very recent address to the African Union Ministers of Trade very wisely said:

“This window of opportunity is a real one, and we cannot allow it to slip away. Clearly, we should seize the occasion, use real imagination and be as constructive as possible..............We all have our priorities and interests. This would be a complicating factor in any negotiation. That is why the search for compromises is of paramount importance. And let no one think that flexibility and a predisposition to compromise is a sign of weakness or a sell-out. Rather, it should be seen as a willingness to advance our common interests, resulting in a win-win situation”.

I need not remind you of the disappointment of Cancún and the soul searching that took place afterwards. I, for one, have no wish to see a replay of Cancún. But if delegations do not heed the wise words of President Kagame, then I fear the worst. There is no point in glossing over difficulties. It is worrying that we have seen too little searching for common ground and too much hardening of positions. If we fail in July, we will be repeating the mistakes of history and will have only ourselves to blame.

Let me recall that when we returned from Cancún, Members from Africa, the Caribbean, and Central and South America, were amongst the first to express their determination to ensure that our negotiations regain momentum at the earliest possible time. It was also these Members that were amongst the first to reaffirm their commitment to the DDA and their wish to engage positively. I was very impressed by the strong sense of continuing personal involvement which Ministers of these countries demonstrated. At every Ministerial I attended, Ministers assured me that they will continue to exercise close personal supervision in order to get the DDA back on track.

The line between success and failure is a very fine one indeed. I have said this before, but it cannot be said enough times, we are on the verge of making history by pushing through fundamental agricultural reform in the DDA. On the other hand, failure to secure a framework agreement by the end of this month may mean the unravelling of offers made by developed countries to eliminate agriculture export subsidies and other subsidized forms of export competition. No one could genuinely believe that such unravelling constituted progress.

At this late stage, it is of paramount importance that we avoid creating any unnecessary divisions or place additional obstacles in the path of the negotiations. This is not the time to falter in our commitment and resolve to meet our objectives as established at Doha three years ago. I count on you all to use this highly important meeting to demonstrate that the G-90 is determined to play its part in solving the complex problems we face, and in building bridges to progress.