Report by the Chairman of the Trade Negotiations Committee

At the February Council, we agreed that the task before us was to implement decisions and to operationalize the elements for political guidance resulting from MC8 in a pragmatic and realistic manner. The most realistic and practical way forward was to take small steps, gradually moving forward the parts of the Doha Round which were mature, and re-thinking those where greater differences remained. I encouraged all Chairs to informally consult on this basis. Trade Facilitation and Dispute Settlement were exceptions. In these areas, Members had agreed on detailed work plans which they had already started implementing.

Since the February Council, all Chairs of negotiating groups have consulted with delegations in different formats. I will report on this shortly.

First, let me report to you briefly on international meetings in which I have recently participated, starting with the Spring meetings of the World Bank and the International Monetary Fund in Washington and the meeting of G-20 Trade Ministers in Puerto Vallarta, Mexico. At both of these meetings, I cautioned that world trade was growing much slower than in the past – with a trade forecast for this year at around 4 per cent growth in volume, compared to an average of 6 per cent in the past 15 years and 5 per cent last year. So, a clear deceleration. This 2012 forecast is mostly a consequence of sluggish growth in advanced economies particularly in the Eurozone. The contribution of trade to growth in emerging and developing countries is also decreasing and is forecast to further decline.  I warned that the prevailing deteriorating situation could get worse if trade protectionism increased.  So far, as you know, although protectionist pressures have been reasonably contained, recent worrying slippages in the form of trade restrictive measures have been registered and we will publish this on the occasion of our next monitoring report. So, we have to continue and help you all in redoubling vigilance on this front.

At the Spring Meetings of the Bank and Fund, I stressed that trade finance remained a downside risk. The low end of the trade finance market, in particular in Africa, is affected by the necessary re-regulation and de-leveraging of the financial sector. Regional development banks and the World Bank’s International Finance Corporation will need to step up their support.  I also mentioned that it was worth keeping re-examining the Basel framework of prudential regulations with respect to trade finance and I have convened the Expert Group on Trade Finance on 15th May to review the situation. As usual a report will follow to the next meeting of the Working Group on Trade, Debt and Finance.

At the recent G-20 Trade Ministerial in Puerto Vallarta, the discussion focused on global value chains and the impact that this new pattern of trade has on trade policies and trade politics.  There was a shared sense that global value chains today require a new trade narrative, where imports matter as much as exports; where both imports and exports contribute to job creation and to growth.  Trade as the expression of value addition along global production chains, requires us to take a fresh look at the way we measure trade.  It also requires that we reflect about the value of interpreting as we have done traditionally, bilateral trade balances which in this new pattern become much less relevant at least for policy and action. The discussion focused on the systemic conditions under which global value chains can work better, including the importance of trade facilitation measures, the blurring frontier between goods and services and adequate and affordable trade finance.  I stressed and I re-stress today that this is not about “new issues” versus “old issues” or a new selection of priorities. It is about how to ensure that global value chains, whether on industrial products, on agriculture or on services are oiled through the proper trade policies.

Ministers expressed a strong encouragement for the WTO to keep cooperating with other organisations such as the OECD and UNCTAD to better understand the functioning and trade policy implications of global value chains.  There was also support to give fresh impetus to the Doha negotiations towards results in areas with potential for prompt resolution – such as trade facilitation – while intensifying efforts to find creative ways and approaches to overcome the most critical and fundamental stalemates in specially challenging areas.

On trade facilitation, there was a collective acknowledgement of its win-win potential for all Members, with work here in Geneva moving forward and of course provided technical assistance and capacity building for developing countries and in particular the least-developed countries is adequately provided.

Finally, last week I attended UNCTAD XIII in Doha, Qatar.  At this meeting I emphasized much of the same points, stressing the importance of Aid for Trade to assist developing countries, and in particular the poorest, participate into global value chains and moving into value addition. I also cautioned that the current fiscal difficulties in donor countries should not lead to a drying up of support for Aid for Trade, which so far has not happened as the first numbers for 2010, which we now have, show.

Here in Geneva, I have continued my coordination meetings with Chairs of Negotiating Bodies, and with you, Madam Chair. I have met individually with a number of delegations. I am also aware that many of you have continued informal contacts amongst yourselves, which I encourage.

Turning to activities in Negotiating Groups, since the February General Council, there has been one agriculture open-ended informal on 22 March. These consultations confirmed that the ten outstanding issues which were identified by the previous Chair remain key political issues and that they will need to be resolved before any overall agreement can be reached. The Chair plans to continue to consult with delegations on possible further technical work or early harvest approaches.  

In NAMA, the negotiating group has met three times to determine how further work would take place on Wagon 1 and Wagon 2 NTB proposals as well as on tariffs. The Chairman has proposed resuming consultations on some of the Wagon 1 NTB proposals. In respect of Wagon two NTB proposals and tariffs, he will pursue consultations on the way ahead.

With regard to the Services negotiations, the Chair held an Enchilada group consultation in late March. This consultation showed that some Members have been exploring more fully different negotiating approaches, keeping in mind the need to advance the negotiations where progress can be achieved. At the same time the respective Chairs of the working parties on Domestic Regulation and GATS Rules have been consulting on the best way forward in these areas.

In the Rules area, the Chairman extended an invitation to consult bilaterally with any delegation that wanted to share its thoughts about the way forward, and a number of such consultations have been held or are scheduled. In addition, the Technical Group held its second meeting of the year back-to-back with the Rules Committees late last month to share Members’ practices in this area.

On Trade Facilitation Members successfully concluded the first phase of the Work Plan adopted at the beginning of the year.  The negotiating group has agreed on new language that will be incorporated into an improved version of the Draft Consolidated Negotiating Text. It was further decided to continue the facilitator process with three groups (S&D, transit and customs brokers/Pre-Shipment Inspection). This will be complemented by a parallel track of negotiations amongst delegations in different member-driven formats, covering issues that still need to be narrowed such as customs co-operation, authorized traders, fees and charges, expedited shipments, appeals, publication and other areas delegates which to address. This process will be consolidated at a next Group’s meeting from 9-13 July.

Turning to TRIPS-GIs for wines and spirits, there is in general no sign of appetite for activities, including work on low-conflict technical issues, as the issue of linkages is still cited as an obstacle for engagement on the side of the joint proposal group. The Chairman will start a process of consultations with individual delegations and in groups to determine how best to operationalize those elements of the MC8 outcome that relate to the work of the Special Session.

On Trade and Environment, consultations will be held in May in order to discuss the process forward.

On Special and Differential Treatment, Members have resumed consideration of the elements of the Monitoring Mechanism. On the 28 Agreement-specific proposals, agreed to in principle at the Cancún Ministerial, they expressed their resolve to fulfil the Ministerial guidance from MC8 by taking stock of these proposals with a view to adopting those that could be agreed. The proponents of those proposals – the African Group – have been invited to indicate which of those proposals remain priorities for them. The new Chairman of the Committee on Trade and Development Special Session has been meeting key delegations with a view to advancing work in this area.

With regard to the Dispute Settlement negotiations, the Chairman of the DSB Special Session convened a series of consultations in the week of 5 March, on a number of topics under discussion, namely third party rights, panel composition, Member-control and flexibility, and strictly confidential information (SCI). Further meetings are foreseen for the week of 7 May, covering these issues as well as remand and developing country interests.

I wanted to provide you with this global overview for the sake of collective transparency and inclusiveness. Clearly, overall the situation has not evolved much since my last report. But at the same time, my conversations over the past few weeks with Ministers and delegations have provided me with a sense that Members wish to continue to explore any opportunities to gain the necessary traction and try to make tangible progress as soon as possible.

Allow now me to say a few words on the upcoming 15th Anniversary of the Information Technology Agreement. A symposium open to all WTO Members, Observers, private sector IT industry representatives, academic experts in IT technologies, international inter-governmental organizations, NGOs and journalists will be held on 14-15 May to mark this event.  This will provide an excellent occasion to look at how the elimination of tariffs in this sector has spurred innovation, has provided affordable access to technologies and has helped oil other sectors of the economy.  It is also meant to serve as a stark reminder of how trade opening can be a win-win game for all its participants, developed and developing countries. As we look back on this sectoral agreement now covering 74 Members, I hope it can serve as example of how to move forward pragmatically in opening trade.  I also hope it can help bring the ITA agreement to a new phase of greater opening and new participants.

Finally, Madam Chair, Members will recall that at the February Council, I announced, which I had done at MC8, my intention to convene a “WTO Panel on Defining the Future of Trade” in order to analyse the drivers of today’s and tomorrow’s world trade, to take a fresh look at trade patterns and what it means to open global trade in this 21st century, bearing in mind the role of trade in contributing to sustainable development, growth, jobs and poverty alleviation. I also repeated that this panel is under my responsibility.  You will all have seen my fax announcing the composition of this panel, which will meet several times in the course of the year. Its first meeting will be here in Geneva on 16 May. In the autumn, it will have an opportunity to hear the views of Members, a crucial step in ensuring that its findings are relevant to today’s realities. The expectation is that the panel’s analysis will be finalized in early 2013.  As always, I will keep you informed of developments.

This concludes my report today, Madam Chair. Thank you.