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Developing countries on Modalities of New Issues
TWN Info Service on WTO Issues (July03/5)
Third World Network 9 July 2003
www.twnside.org.sg

Dear friends and colleagues

12 DEVELOPING COUNTRIES CHALLENGE EU APPROACH TO THE WTO 'SINGAPORE ISSUES' AND SET OUT THEIR OWN APPROACH

In a significant development at the WTO, twelve developing countries have set out their own approach to how the "modailities" of the four Singapore issues (investment, competition, transparency in governmentr procurement and trade facilitation) should be handled before and at the Cancun Ministerial Conference.

They did this in a communication submitted at the WTO in the past few days, responding to an earlier EC paper of February 2003.

The developing countries' paper criticises the EU's "superficial" treatment of "modalities" as implying only procedural matters and a listing of elements. Instead, say these countries, the term "modailities", as practised in current WTO negotiations, means the substantive aspects of the issues, and the nature and direction of the obligations involved.

The twelve countries also said that there is still a divergence of views between Members in the working groups or in the committee on trade in goods. Thus, "the exercise of clarification of certain elements relating to four Singapore issues is still on going. Differences of opinion still abound, even amongst proponents. It is therefore clear that more discussion and clarification would be necessary so that Members are in a position to look at the issue of modalities for each of the Singapore issues in an informed manner."

The paper quotes similar positions in the statements of recent Conferences held by the Ministers of Trade from Eastern and Southern Africa held in Nairobi, Kenya (28-29 May 2003), the LDC Trade Ministers held on 31 May- June 2, 2003 at Dhaka (Bangladesh), and the Trade Ministers of the African Union held on 19-20 June, 2003 at Grand Baie (Mauritius).

In effect, the developing countries are putting forward the view that the clarification process on the Singapore issues has not yet been completed as there is no convergence of views, that the time is not yet ripe to discuss the modalities, and that Cancun should not launch negotiations on the four issues, but instead the process of clarification of issues should continue.

Below is a more detailed report of the 12 developing countries' paper.

Please check our website for previous issues of TWN Info Service.

With best wishes
Martin Khor
Third World Network
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12 DEVELOPING COUNTRIES CHALLENGE EU APPROACH TO WTO 'SINGAPORE ISSUES'
Third World Network Report
by Martin Khor, Geneva 7 July 2003

Twelve developing countries have challenged the European Union's approach on how to handle the question of modalities for the Singapore issues at the WTO's Cancun Ministerial conference.

In a communication submitted to the WTO last Friday, they put forward their own views on their understanding of the status of the Singapore issues, and on how the question of modalities should be handled.

The developing countries' paper, entitled "Comments on the EC communication on the modalities for the Singapore issues," was submitted by Bangladesh, Cuba, Egypt, India, Indonesia, Kenya, Malaysia, Nigeria, Pakistan, Venezuela, Zambia, and Zimbabwe.

It was in response to the European Communities' paper to the General Council (WT/GC/W/491) dated 27 February and entitled "Singapore Issues: The Question of Modalities." That paper had put forward the EC's views on the term "modalities" with the aim of "ensuring that a positive decision will be taken at Cancun.

The Singapore issues are investment, competition policy, transparency in government procurement and trade facilitation. They have since the first WTO Ministerial in Singapore in 1996 been discussed in working groups. The major developed countries, led by the EU, are attempting to get a decision in Cancun to launch negotiations for new agreements on these four issues.

The developing countries' paper challenges the EC paper's assumptions that negotiations will begin on the Singapore issues after Cancun, that they are part of the "single undertaking" agreed to in Doha, and that a consensus is required on modalities defined as procedures and elements or categories of issues (rather than the substantive aspects).

Disagreeing with what it calls the EC's "superficial" approach to "modalities", the twelve countries set out their own position. Their paper states that: "A proper and fuller understanding can be found in the way "modalities" are treated in the previous and current negotiations. In defining the meaning of "modalities", it is clear that a mere classification of issues and a mere listing of some of the elements is not enough.

"The substance of those subjects and the nature and direction of obligations form a fundamental and intrinsic part of the modalities. The EC's paper seeks to divert the decision needed on modalities, to a decision on "elements of modalities" or on the classification of issues rather than on agreement on the listing and substance of the issues. On the substance and content of these subjects, it is silent.

"The EC's "elements of modalities" therefore do not constitute "modalities". Explicit consensus on the modalities is required for negotiations to commence not consensus on how to classify and group the different procedural and structural aspects of the Singapore issues."

The twelve countries also said that there is still a divergence of views between Members in the working groups or in the committee on trade in goods. Thus, "the exercise of clarification of certain elements relating to four Singapore issues is still on going. Differences of opinion still abound, even amongst proponents. It is therefore clear that more discussion and clarification would be necessary so that Members are in a position to look at the issue of modalities for each of the Singapore issues in an informed manner."

The paper quotes similar positions in the statements of recent Conferences held by the Ministers of Trade from Eastern and Southern Africa held in Nairobi, Kenya (28-29 May 2003), the LDC Trade Ministers held on 31 May- June 2, 2003 at Dhaka (Bangladesh), and the Trade Ministers of the African Union held on 19-20 June, 2003 at Grand Baie (Mauritius).

In effect, the developing countries are putting forward the view that the clarification process on the Singapore issues has not yet been completed as there is no convergence of views, that the time is not yet ripe to discuss the modalities, and that Cancun should not launch negotiations on the four issues, but instead the process of clarification of issues should continue.

The twelve countries' paper starts by quoting the Doha Ministerial Declaration text on the four Singapore issues. It also quotes the statement by the Conference chairman that a decision would indeed need to be taken at the Fifth Ministerial by explicit consensus before negotiations could proceed, and that this would also give each Member the right to take a position on modalities that would prevent negotiations from proceeding after the Fifth Ministerial conference, until that Member is prepared to join in an explicit consensus.

The countries say that the assumption in the EC paper that negotiation on Singapore issues will commence after Cancun is not correct. They add that Paragraph 20 relating to investment and competition policy of the Singapore Ministerial Declaration of 13 December 1996 clearly stipulates as follows: "It is clearly understood that future negotiations, if any, regarding multilateral disciplines in these areas, will take place only after an explicit consensus decision is taken among WTO Members regarding such negotiations."

The paper continues: "As we are all aware, no decision of that kind has been taken on the basis of explicit consensus at subsequent Ministerial Conferences at Geneva (1998), Seattle (1999) and Doha (2001). Thus, the status of the discussion remains the same as was decided at the Singapore Ministerial Conference. This position was reiterated in the Chairman's concluding statement at Doha. Explicit consensus is a pre-condition for negotiations to commence."

The developing countries' paper also says that the assumption in the EC Paper that Singapore issues are part and parcel of Single Undertaking is also not correct. It quotes Paragraph 47 of the Doha Ministerial Declaration: "With the exception of the improvements and clarifications of the Dispute Settlement Understanding, the conduct, conclusion and entry into force of the negotiations shall be treated as parts of a single undertaking."

The developing countries state that in the present discussions at the WTO, the four issues are not treated as part of negotiations in the Doha Work Programme and thus do not come under the TNC. It is thus incorrect to state that these issues are part of the Single Undertaking.

They also say that the assumption in EC paper that WTO Members agreed to engage in preparatory work on Singapore Issues until Cancun Ministerial is also not correct.

"As per the Doha Ministerial Declaration, in the period until Fifth Ministerial Conference, Members agreed to focus on clarification/review of certain elements relating to Singapore issues," said their paper.

"Since explicit consensus on modalities is a pre-condition for commencing negotiations, it is very important to clarify the meaning and issue of modalities. The Doha Ministerial Declaration itself does not define the term "modalities."

"It would thus be logical to define it from current WTO practice. It is clear that the "modalities" on negotiations on an issue contains the aspects of the issue that are agreed on and the nature and direction of obligations to be undertaken. Consensus on modalities would therefore require agreement by all Members on the specific issues to be covered, and the substantive treatment of these issues, including the nature and direction of obligations and commitments arising from them."

The twelve countries criticize the EC paper for offering a superficial consideration of "modalities". "It does this by:

The developing countries said that unlike the approach taken by the EC in its paper, each of the Singapore issues has its own particular aspects, each of them has their own complexities, and each issue is at its own level or stage of discussion. It would thus not be feasible or appropriate to put the four issues into a single basket.

Their paper continues: "Modalities of negotiations is not defined in the Doha Ministerial Declaration and the EC approach of simply listing the very broad areas for negotiation is inadequate. Since the declaration has not defined 'modalities', it is therefore rational to look at this in the context of WTO practice.

"A proper and fuller understanding can be found in the way 'modalities' are treated in the previous and current negotiations. In defining the meaning of 'modalities', it is clear that a mere classification of issues and a mere listing of some of the elements is not enough. The substance of those subjects and the nature and direction of obligations form a fundamental and intrinsic part of the modalities.

"The EC's paper seeks to divert the decision needed on modalities, to a decision on 'elements of modalities' or on the classification of issues rather than on agreement on the listing and substance of the issues. On the substance and content of these subjects, it is silent. The EC's 'elements of modalities' therefore do not constitute 'modalities'. Explicit consensus on the modalities is required for negotiations to commence not consensus on how to classify and group the different procedural and structural aspects of the Singapore issues."

In a section on concluding remarks, the developing countries said that they have constructively engaged in the discussion in the respective working groups/CTG on Singapore issues.

"However, the discussions in the working groups/CTG, for example in the WGTI, have clearly shown that there is no clarity even amongst proponents regarding the structure of any possible multilateral framework or its components, said the paper. In fact this difference of opinion extends even to the basic issues such as scope and definition. The differences of views between Members on various aspects under discussion have been brought out clearly in the Working Group's Annual Report for 2002.

"The divergence of views and lack of clarity among proponents has also impacted on developing and least developed members ability to better evaluate the implications of closer multilateral cooperation for their developmental policies & objectives and human and institutional development - a key component of the Doha mandate.

"The related issue is the provision of adequate technical assistance and capacity building to developing and least developed members in these areas. The exercise of clarification of certain elements relating to four Singapore issues is still on going. Differences of opinion still abound, even amongst proponents.

"It is therefore clear that more discussion and clarification would be necessary so that Members are in a position to look at the issue of modalities for each of the Singapore issues in an informed manner. Similar position has also been reiterated at the meeting of the Ministers of Trade from Eastern and Southern Africa held in Nairobi (Kenya) from 28-29 May 2003, the Second LDC Trade Ministers' meeting held on 31 May- June 2, 2003 at Dhaka (Bangladesh), and the Trade Ministers' meeting of African Union held on 19-20 June, 2003 at Grand Baie (Mauritius)."

The relevant extracts from the declarations issued after these meetings are placed in an Annex to the developing countries' paper.

The developing countries concluded their paper by reiterating their commitment to engage constructively in the discussion in the respective working groups/CTG with a view to better evaluate the implications of closer multilateral cooperation for their developmental policies & objectives and human and institutional development.

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