THIS NEWS ITEM IS DESIGNED TO HELP THE PUBLIC UNDERSTAND DEVELOPMENTS IN THE WTO. WHILE EVERY EFFORT HAS BEEN MADE TO ENSURE THE CONTENTS ARE ACCURATE, IT DOES NOT PREJUDICE MEMBER GOVERNMENTS’ POSITIONS.
They were speaking on the record, in a formal meeting of the Trade
Negotiations Committee, the forum for the full membership to
oversee the negotiations. The focus was on the talks among
ministers, which broke down on 29 July when a small group of them could
not agree on details of a new “special safeguard mechanism” for
developing countries (explained below).
The members were echoing WTO Director-General Pascal Lamy’s opening comments in the meeting.
He spoke of “a collective responsibility” to reflect on next steps. The progress made in agriculture, non-agricultural market access and other subjects should be preserved, Mr Lamy said.
“This represents thousands of hours of negotiation and serious political investment by all the members of the WTO. This should not be wasted.”
Mr Lamy also suggested members allow time for “the dust … to settle a bit before we can have a clear idea of those next steps”.
The formal Trade Negotiations Meeting brings to a close the talks among ministers. Several of them stayed to the end and spoke in today’s meeting.
Over the previous nine days they met, sometimes late into the night in meetings of various types, including a group of seven ministers — Australia, Brazil, China, the EU, India, Japan, and the US — who reported next to Green Room sessions of about 30 representative delegations, and finally to almost daily informal meetings of the full membership.
Working closely with Mr Lamy were Norwegian Foreign Minister Jonas Gahr Støre, who chaired talks on intellectual property issues, the chairs of the agriculture and non-agricultural market access (NAMA) negotiations, Crawford Falconer and Don Stephenson, and General Council chairperson Bruce Gosper.
Reports from the agriculture and non-agriculture chairs will be circulated shortly, along with Mr Lamy’s own report on the 26 July “signalling conference” on services. These will join reports on other Doha Round subjects already submitted to the Trade Negotiations Committee.
In his opening report to the committee, Mr Lamy summarized the account
of the breakdown that he gave the previous day, and urged members to
resolve together not to lose the potential benefits of what was almost
agreed, even if it takes longer.
“You all know the value of what is on the table, not only in agriculture and NAMA [non-agricultural market access], but across the whole range of the agenda, whether in services, the fastest growing and most dynamic sector in most economies, or in trade facilitation,” he said.
Members should consider how to overcome the obstacles, with new ideas and new solutions, he went on.
“Our immediate priority is to reaffirm our commitment to the multilateral trading system, which comes out dented this week,” he said. “All ministers present here over the last 10 days have underlined how vital this system is, in terms not just of trade but also of international stability.”
One of the targets is how to do better next time. “I am convinced that there will be a next time, which is why I said yesterday that I was not throwing in the towel.”
In their comments, members broadly shared the view that the negotiations
must continue, and that a lot was achieved in the nine days. “We made
enormous progress together,” “we have been close to a deal,” and “it
would be a terrible setback to put the clock back” were typical
Some went so far as to say that their own internal reforms will continue even without agreement: “We’ve told our farmers that interruption here does not mean reform is also interrupted,” said one.
Members generally refrained from blaming anyone for the deadlock, apart from broad comments about “a coalition of the unwilling”, or calls from some developing countries for developed countries to move further. “The failure of one is the failure of all,” was one comment.
Some highlighted issues that concerned them, and some called for an “early harvest” — to implement some actions that have already been agreed, such as duty-free quota-free market access for least-developed countries, aid for trade and the “enhanced integrated framework” of assistance to least-developed countries.
Some repeated their concern about the way the negotiations were organized, with the focus on breakthroughs in groups of members rather than the membership as a whole. Others said the failure was not caused by the negotiating process but by the content of what was being negotiated.
Most speakers praised Mr Lamy and his fellow chairs for the huge efforts that they put into trying to broker a deal. Turkey, which gained a reputation for snatching victory in the last minute of the Euro 2008 football tournament, said the team was good, the coach was great, but what was needed was a last-minute striker. Another speaker said you don’t lose a match — you gain experience.
One suggested Mr Lamy adopt for a short time a sign this delegate once found in a restaurant: “Aujourd’hui le patron se repose” (today the boss is resting). And then: “Aujourd’hui le patron ne se repose plus” (today the boss is no longer resting).
Today’s speakers in the formal Trade Negotiations Committee were: El
Salvador, the least-developed countries (Lesotho speaking), the EU,
Japan, the African Group (Kenya speaking), Argentina, the US, Guyana,
Venezuela, South Africa, the African Caribbean and Pacific (ACP) group
(Mauritius speaking), India, Mexico, China, Switzerland, Colombia, the
G-33 (Indonesia speaking), the Cotton Four (Burkina Faso speaking),
Brazil, Israel, Uruguay, the Philippines, Costa Rica, Côte d’Ivoire,
Bolivia, Hong Kong China, Australia, the recently-acceded members
(Chinese Taipei speaking), Chile, Nigeria, Pakistan, Cuba, Rep.Korea,
Morocco, Ghana, Norway, Turkey, Paragruay, Oman, Dominican Republic,
small and vulnerable economies (Barbados speaking), Uganda, Guatemala,
Peru, Honduras, Ecuador, Panama,Sri Lanka, Nicaragua, Nepal.
Texts of some of the statements — those supplied by delegations for publication on the website — can be found here
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Blocked over a disputed zone.
The talks among minister broke down on 29 July over the special
safeguard mechanism (SSM). What exactly was the problem?
This is not about protecting poor farmers in general — that is already covered by what has been agreed on the formula for cutting tariffs, smaller or no cuts for “special products”, different treatment for small and vulnerable economies, recent new members and special cases such as Bolivia, exemptions for least-developed countries. It was not even about the SSM itself. This is about one particular circumstance.
The SSM would allow developing countries to raise tariffs temporarily to deal with import surges and price falls. The blockage was only about import surges, and in a particular instance of that.
Agreed already: All WTO members have agreed that developing countries will have an SSM. They have more or less agreed on how big the import increase would be to trigger the temporary tariff rise, and they have agreed on how high the rise should be in general.
The blockage is about the situation where the SSM raises tariffs above commitments countries made in the 1986–94 Uruguay Round — the “pre-Doha Round bound rates”. In the case of new members, that means commitments made in their membership agreements.
So, essentially, the blockage is about the SSM reaching into a disputed
zone: above pre-Doha bound rates.
Who was involved? The blockage is often described as one between the US versus India and China. This is only partly true. All three are major trading countries with both importing and exporting concerns. But they were also among the small group of seven delegations trying to reach an initial settlement before taking the issue to larger groups and eventually the full membership. The blockage was within that group of seven. Other countries outside were also concerned, including other members of the G-33, and some exporting developing countries.
Two philosophies: A number of countries have opposed breaching the pre-Doha Round commitments, while others insist it has to be allowed. In the 10 July draft agriculture text, the possibility of breaching these commitments is in square brackets (ie, indicating no agreement), except for least-developed countries. This reflects two different and unresolved views about what the SSM is for:
The SSM as protection for poor and very vulnerable farmers: according to this view, the SSM should be freer and easier to use, with smaller triggers and bigger tariff increases. This is related to the argument that prices are depressed because of large subsidies in rich countries. Advocates: G-33 and its allies.
The SSM as a time-bound means to help liberalization (used only within liberalization): according to this view, the SSM’s use should be more restricted, and related to cutting tariffs from pre-Doha Round levels. That would mean no tariff increase above those levels, the SSM must not be triggered by normal fluctuations in price or normal trade expansion, and it should be limited to the period of liberalization. This is related to the arguments that poor farmers need to export in order to escape poverty, and that the pre-Doha Round commitments were a negotiated compromise balance of rights and obligations, which should not be touched. Advocates: Latin American, Southeast Asian and other countries in the Cairns Group but not in the G-33; US. Developing countries among these say it is not a “North-South” issue but has an impact on South-South trade.
Attempted compromise: Draft texts and numbers that were discussed
(principally the 10 July draft agricultural modalities and changes to
it), attempt a compromise between two opposing positions. The numbers
most discussed would apply to developing countries that are not small
and vulnerable economies and not least-developed countries, which have
their own more liberal treatment. The SSM would allow the tariff to go
above the pre-Doha Round commitments but it would be constrained by
setting additional criteria — a minimum increase in imports before this
could happen (the additional “triggers” of 15%, 40% etc, which are not
in the 10 July draft), and by limiting how high the tariff could rise
above the Pre-Doha rate (15% of the post-Doha bound rate or 15
percentage points, whichever is higher, in the 10 July draft). The
blockage was about how large the numbers should be.
Flexibility versus normal trade growth: The question underlying the blockage was whether an additional trigger is needed to constrain the instances when the SSM would raise the tariff above the pre-Doha rate and if so how large it should be. One view was that at most it should be low. The opposing view was that normal trade growth, and not a genuine surge, could trigger the tariff increase.
In practice: In terms of tariffs, the exact significance of this depends on the situation of a particular product in a particular country. In some cases the pre-Doha legally bound maximum could be 100% but the actual tariff charged could be, eg, 20%. In order to be raised into the disputed zone (to go above the pre-Doha rate), the applied tariff would have to be multiplied by five or rise 80 percentage points, and to hit a proposed ceiling of about 15% above the pre-Doha bound rate it would have to rise even more. If on the other hand both the pre-Doha bound rate and the applied rate are 20%, any increase in the tariff would immediately take the tariff into the disputed zone.
Many developing countries have large gaps between their bound maximum tariffs on agricultural products and the tariffs they apply. Some do not. Countries that recently joined the WTO tend to have small or no gaps. Data can be found in the tariff profiles or downloadable directly in this pdf file.
The G-33, Cairns Group and others are listed here.