Report by the Chairman of the Trade Negotiations Committee

Thank you Mr. Chairman.

Since my last report, the TNC has held one informal meeting, on 17 April. The discussions focused principally on the process for the finalisation of modalities in Agriculture and NAMA. As is customary, my remarks at that meeting were made available to delegations in document JOB(08)/28.

In my opening remarks, I underlined that, although intensive work has been taking place in the Negotiating Groups, it is time to move rapidly forward if we wish to conclude the Round this year. I also reported on my consultations regarding the scope of the horizontal process, where, as I prefigured in my last report, more clarity was needed.

On the process leading to the establishment of modalities in Agriculture and NAMA, the aim of the work that has been going on over the past few weeks is to produce revised modalities texts in Agriculture and NAMA, on the basis of the discussions in the negotiating groups, that can provide a platform for the establishment of modalities.

This means that the time is coming very soon to take our work to a higher level and to begin drawing together the threads both within and across the two modalities issues as mandated in Hong Kong. It also means giving sufficient reassurance that all the other negotiating issues are advancing as they should. This is what is being called the “horizontal process”.

As I said at the informal TNC, I believe we need to demystify this term: “horizontal process”. It is not an innovation — we are just bringing together the key elements, as required to reach convergence on modalities.

Similar processes have taken place in the recent past, notably in 2004, and before Hong Kong. The aim is to follow the pattern that has worked in the past — concentric circles of consultations with constant communication among them. The substantive objective is to prepare the formal establishment of modalities in Agriculture and NAMA and to provide sufficient reassurance that other issues are also advancing within the Single Undertaking.

The basic principles to which we are all committed will continue to apply:

• Modalities can only be established by the full membership;
  

• Transparency and inclusiveness are fundamental;
  

• Informal consultations in various smaller configurations are essential to narrow differences but they must feed into multilateral arena in a continuous loop.

To give effect to these principles I will hold informal TNC meetings throughout the duration of the horizontal process. They will serve both to guarantee transparency and to help build consensus. I will supplement them with continuing dialogue with the regional and other groups, as well as with green room meetings. The composition of these green rooms will, as usual, ensure that the full spectrum of Members' views and interests are represented. Some variable geometry may at times be needed depending on the issues being discussed. I am also well aware of the need to allocate time for capitals to consider draft texts and for groups to co-ordinate.

This horizontal process will start at Senior Official level, in order to prepare properly for the Ministerial involvement which is likely to be needed at a later stage.

The starting point for the process will be the Agriculture and NAMA Chairs' revised draft texts; the end product should be sufficient convergence on key points in Agriculture and NAMA to enable final draft modalities texts to go forward to the TNC for establishment of those modalities.

Besides establishing modalities in Agriculture and NAMA, the question of which other issues will need our attention at the same time was one which was raised at both the General Council meeting in December and our last informal meeting in January. As I foreshadowed at that time, I have undertaken many consultations on this question of scope, and our informal TNC meeting on 17 April formed part of this consultative process.

Following these consultations, I think we now have reasonable clarity on scope. It is clear that the primary focus of the next weeks has to be on modalities in Agriculture and NAMA. It is also clear that issues such as Trade and Environment, the S&D Work Programme and Trade Facilitation are advancing and need not be taken up in detail at the time of the modalities. This is also true for Dispute Settlement although not part of the single undertaking. Therefore on these issues the respective Chairs will make reports to the TNC on progress and set out roadmaps for further work in their respective areas.

There remains a middle group of three issues — Services, Rules and TRIPS-related issues — where it became apparent that more clarity was needed. With regard to Services, I think it is now clearer where we are heading, and I would note the presence of a number of Senior Officials here this week, who are working on the preparations for the signalling conference. I will be meeting with them on Friday.

On Rules, I would underline that there is wide agreement that this is not an issue for ministerial negotiations at the time of modalities in Agriculture and NAMA, though of course it is not excluded that some discussion may take place.

This question has been linked to the question of the text. Many participants have made it clear that they expect to see a new document from the Negotiating Group Chair before the opening of the horizontal process. The need that has been identified is to have a document which would not prejudice members' positions. The Negotiating Group Chair has undertaken to table a document addressing these needs.

Let me now turn to the TRIPS issues, namely GIs and the TRIPS/CBD relationship. For the mandated negotiations on a GI register, the TRIPS Special Session Chairman will be making a report to the TNC on the work in his area. In addition, I have a mandate from Ministers in Hong Kong to conduct consultations as Director-General on the issues of GI extension and the TRIPS/CBD relationship. For these two issues, we will also have reports indicating the state of play in my consultations, which are currently being undertaken with the assistance of DDG Rufus Yerxa. On the basis of the consultations so far, I believe these reports are likely to factually set out the different positions, rather than to offer solutions. However, consultations are continuing and I reiterate my call today for continued efforts between the groups of Members concerned, so as to try to avoid a big clash during the modalities exercise.

From what was said at the informal TNC meeting, and also from my contacts with officials in Geneva and elsewhere, I think we are all aware of the urgency of what we are doing. However, we also know that it is the substance which drives the process, and that we must proceed step by step. The balance between these two key aspects of our work — urgency and substance — is what we must strive to fine-tune over the coming days.

As you are all aware, it has not yet been possible to circulate comprehensive revised modality texts for Agriculture and NAMA. In Agriculture, some participants have again asked for some more days to be able to finalize work they have been undertaking among themselves on some key inputs to the revision process, namely on sensitive products, tropical products and preference erosion. I would urge the Members involved in this work to make every effort to conclude it rapidly, and I hope that they will have good news to announce at the meeting the Agriculture Chair has convened for tomorrow and Friday.

If we are to meet the collective target we have of concluding the Round by the end of 2008, an objective which has been again restated by ASEAN Trade Ministers last weekend, we have only a few weeks, not months or semesters, in which to establish modalities. This is a very tight schedule, but it is still doable. And I firmly believe this is doable within the procedures and principles that guide the work in this multilateral organisation.

There is no choice to be made between substance and timing. Today I believe it is fair to say that we have come a long way in breaching differences on substance. Putting the modalities in place very soon, therefore, is the only way to achieve our end of year target, since it would leave us just enough time for scheduling in Agriculture and NAMA and to wrap up the negotiations in the other areas. And this is what many Members have recently confirmed to me.

The reasons why we must conclude the Round this year are visible to all of us and they are becoming more critical by the day. In my last report, I mentioned what was happening in the world economy, in particular the turbulent situation in the financial markets. Since then, we have also witnessed an unprecedented escalation in food prices world wide which has had negative effects particularly on developing countries that depend on imports for their food security or are net food buyers. The result, as we have seen, has been unrest linked to these high food prices in a number of your countries.

Although the WTO cannot provide anything immediate to help solve the current crisis, it can, through the Doha Round negotiations, provide medium to long term solutions. This appeared clearly in various meetings I have attended, whether at the UNCTAD XII meeting in Accra, or at the recent UN Chief Executives Board (CEB) where we worked with the UN Secretary General and Heads of other international organisations and bodies to address the various facets of this crisis.

Alongside other efforts by governments and international organisations, a WTO deal could help soften the impact of high prices by tackling the systemic distortions in the international market for food. We all aim to substantially lower barriers to trade in agricultural products and diminish levels of trade distorting subsidies, particularly in developed countries that have hampered food production and investment in agriculture in many developing countries. This is doable and we are nearly there. As you are all aware, the overall outcome would be less distortion in world markets and increased international trade, leading to more rapid and efficient adjustment by supply to changes in demand.

This issue is also connected to our Aid for Trade agenda which addresses capacity problems of developing countries in production, infrastructures or standards which are obviously relevant pieces of the food prices puzzle.

This food price issue is obviously bad news for many countries today. But if the declining trend in prices of agriculture commodities which we have witnessed in the last decade is to be reversed, which I believe must be, it can also mean good news for the future, provided the necessary policy responses are given. The WTO can provide part of the solution. Which is why it can, and must play, its full part in this vital effort. For this reason, and it is a compelling one for you all, the conclusion of the Doha Round is more urgent today than it was yesterday.

That concludes my report today, Mr. Chairman. Thank you.