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TWN Info Service on WTO and Trade Issues (Mar06)
5 July 2006
Third World Network
www.twnside.org.sg

Developing countries state their concerns at end of WTO meeting

Ministers of developing countries expressed their concerns about the Ministerial meeting and the current state of play of the Doha negotiations as the WTO meeting was winding to an end on Saturday (1 July).

The leaders and coordinators of a wide range of the developing countries, representing an overwhelming majority of them, issued a joint statement and took part in a joint press conference late on Saturday morning.

The groupings comprised the G20, G33, ACP Group, the LDCs, the African Group, the Small Vulnerable Economies, the NAMA-11, the Cotton-4 and CARICOM. Those who spoke were the Trade or Foreign Ministers of Brazil, India, Indonesia, Zambia, Kenya, Guyana, South Africa, Benin, Guyana, Dominican Republic, Argentina and the Ambassador of Mauritius.

Representatives of the groupings met on 1 July morning and issued a statement. The groups that came together in a show of unity on 1 July were wider than the coalition formed in Hong Kong.

The points commonly stressed by many Ministers were that:

The developing countries had tried their best to contribute to the meetings's success, and the inability to make progress was due to the lack of movement by developed countries (or some of them);

There was an unfortunate attempt by developed countries to shift the burden of the Round onto developing countries by asking the latter to take on onerous obligations especially in NAMA;

In exchange the developed countries were unwilling to take on similar commitments (in both agriculture and NAMA) that there were asking of the developing countries.

The "new trade flows" (a term now bandied around by developed countries and the WTO director-general Pascal Lamy as the new criterion by which to judge a proposal or offer) arising from the Round should be from developing to developed countries and not the opposite; and

The development essence of the Round must be reclaimed if there is to be an outcome.

Below is a report of the press conference and the joint statement of the developing country groupngs. It was published in the SUNS on 4 July.

With best wishes
Martin Khor
TWN

Developing countries state their concerns at end of WTO meeting

By Martin Khor (TWN), Geneva, 2 July 2006

Ministers of developing countries expressed their concerns about the Ministerial meeting and the current state of play of the Doha negotiations as the WTO meeting was winding to an end on Saturday (1 July).

The leaders and coordinators of a wide range of the developing countries, representing an overwhelming majority of them, issued a joint statement and took part in a joint press conference late on Saturday morning.

The groupings comprised the G20, G33, ACP Group, the LDCs, the African Group, the Small Vulnerable Economies, the NAMA-11, the Cotton-4 and CARICOM. Those who spoke were the Trade or Foreign Ministers of Brazil, India, Indonesia, Zambia, Kenya, Guyana, South Africa, Benin, Guyana, Dominican Republic, Argentina and the Ambassador of Mauritius.

Towards the end of the Hong Kong Ministerial, an inaugural meeting of what was then dubbed the G110 (comprising the G20, G33, ACP, Africa and LDC groups) had been held, with the proclaimed aim of uniting the developing countries and resolving differences among themselves, so that they could have a more effective platform in the negotiations.

Representatives of the groupings met on 1 July morning and issued a statement. The groups that came together in a show of unity on 1 July were wider than the coalition formed in Hong Kong.

The effectiveness of this broad platform in the forthcoming negotiations, including in Geneva, remains to be seen.

On Saturday, however, the developing country platform, as presented at WTO's Room W in front of about 200 journalists, was impressive and the Ministers (most of who are veterans at WTO Ministerial meetings) spoke eloquently.

The points commonly stressed by many Ministers were that:

The developing countries had tried their best to contribute to the meetings's success, and the inability to make progress was due to the lack of movement by developed countries (or some of them);
There was an unfortunate attempt by developed countries to shift the burden of the Round onto developing countries by asking the latter to take on onerous obligations especially in NAMA;
In exchange the developed countries were unwilling to take on similar commitments (in both agriculture and NAMA) that there were asking of the developing countries.
The "new trade flows" (a term now bandied around by developed countries and the WTO director-general Pascal Lamy as the new criterion by which to judge a proposal or offer) arising from the Round should be from developing to developed countries and not the opposite; and
The development essence of the Round must be reclaimed if there is to be an outcome.

Brazilian Foreign Minister Celso Amorim (representing the G20) said that at this time when the Round was at a knife-edge, the developing countries are united. Their statement reflect demands that are not impossible, they reflect views of almost all developing countries. July will be the crucial month for finalizing the Round, and we will make sure these demands are part of the final solution, he said.

Amorim added he was "confident we'll get there, it is not easy but the burden of leadership is with the richer countries who have more to give. We are here to express our commitment to the Round and its final leg. We'll be prepared to engage."

Indonesian Trade Minister Mari Pangestu (who coordinates the G33) said the press conference was held to stress that "we as developing countries came here to negotiate, we have shown flexibility, but we did not come to renegotiate that this is a Development Round.

"There is talk (by developed countries) that the flexibilities (for developing countries) erode market access. This is not helpful. Our flexibilities in special products (SP) and special safeguard mechanism (SSM) are about protecting targeted sectors that are vulnerable, and are aimed at food and livelihood security and rural development.

"They are not to be renegotiated, they are to address real concerns of developing countries as they open up for greater trade. The issue is about having "effective" instruments for flexibilities, it's not about loopholes or erosion of market access."

Pangestu said the talks cannot move except if there is movement in the G6. "We remain committed to a Development Round. The vulnerabilities are different with regard to different groups of countries. Also, the benefits of market access are very different for different groups of countries and this underlies the concerns of developing countries."

As example, she said that in low-income developing countries, agriculture accounts for 70% of all employment, while in some other developing countries the share may be 30%, and in developed countries it was only 4%. "We therefore ask for effective instruments to address our vulnerabilities."

Indian Commerce Minister Kamal Nath (a leader in both the G20 and G33) said that "there is no need to pretend that this has not been a failure. It would be a great pretence to say that this meeting has been successful. The leadership (of making progress) rests with the developed countries. After one and a half days we concluded there is just no negotiating space as there is a difference of perception."

Stressing that this is a Development Round, Nath said that paragraph 24 of the Hong Kong Declaration mandated that market access should be enabled for developing countries to developed countries' markets. "This is a Round for trade flows and trade wins so that developing countries benefit.

"But if the developed countries come to Geneva in the hope that developing countries will make market access available to them, and at the same time they retain their agricultural domestic support, then there is no negotiating space."

Nath called on developed countries to use this period for reflection. There is a unity of purpose of developing countries to strengthen the multilateral trading system. Thus, he said, it is a great disappointment to us (that the talks failed. "We came here with the hope to achieve the mandate of this round.

"We will urge the Director General to engage bilaterally and with ambassadors and groups. If he sees a sense of convergence, we'll be back. But there can be convergence only if there is a commitment to the goals -- there is the Hong Kong Declaration, there are flexibilities there. Not by chance, but to serve the ends of the mandate. We can't have completion (of the Round) without the content.

Referring to the Green Room meetings, Nath said: "We cannot negotiate farmers' subsistence and livelihood security. I can negotiate commerce but I shouldn't even be asked to negotiate this (subsistence and livelihoods). While I am disappointed, I am not pessimistic. The structure of the multilateral trading system should be maintained and strengthened, and we should move on. This is a period of reflection."

Guyana's Foreign and Trade Minister Clement Rohee (coordinator of the CARICOM countries) said that the Caribbean countries had come to negotiate. There were two issues to resolve - where to locate the landing zone (i. e. the areas of convergence for the modalities) and who was to provide the leadership in this.

He added that the members felt that the leadership was with the G6. But at the end of the day the calls to them (to show leadership) fell on deaf ears. "So we are still searching for the landing space. We said we won't stand in the way of a package, but that package should not disadvantage the small vulnerable economies, given their vulnerability, and their extreme openness in trade and investment."

Rohee said in the period ahead there should be high level consultations combined with the bottom-up approach, and a balance must be struck between these. The countries of the G110 have an important role to play.

Kenyan Trade Minister M. Kituyi (coordinator of the African Group) said it was critical for the development constituency to re-state its unity of purpose, that the agenda has not changed, and why we are united.

Kituyi said that even at this dark hour, we still see the value of the multilateral trading system, and that the bilateral system is more hostile. Using democracy in multilateralism, every effort should be made to complete the full modalities.

Referring to the developed countries, Kituyi added that there was a de-link between the solidarity in statements made by political leaders, and the flexibilities shown in the negotiations, and this gap must be closed. The negotiations must recognise that the flexibilities that are to be given must be for those who are supposed to be beneficiaries of the Round, the developing countries.

Deputy Trade Minister Rob Davies of South Africa (which coordinates the NAMA 11 developing countries) said that "we are united here around the common demand to reclaim the essence of the Doha mandate, that the needs and interests of developing countries are at the heart of the Doha Work Programme.

"This priority has been subordinated now by vested interests and commercial interest groups in the developed countries, as manifested in the unwillingness of big subsidisers among developed countries to make a bold move. They are held hostage by vested interests."

He said we are also seeing that any concession that is being offered (by developed countries) is matched by a commercial concession to an interest group in the countries, and this is leading these countries to place unrealistic and inordinate demands on developing countries, especially in NAMA.

"The coefficients being suggested for developing countries would require a level of social dislocation and adjustment in our countries without any compensating factor, and which those countries are not willing to undertake themselves.

"The spread in the coefficients (between developed and developing countries) that the developed countries has suggested is so narrow, that the level of adjustment that they themselves have to undertake in NAMA is derisory by comparison" he said, referring to what the developed countries want developing countries to undertake.

He added that there is also a marginalisation of the concerns of the LDCs and other groupings represented here.

"To make progress, we have to reclaim the Development essence of this Round. Unless we can reach a political commitment around that, we will not make progress .We ourselves are committed to the multilateral trading system but in many respects the ball is in other courts if the Round is to succeed."

Zambia's Trade Minister Depak Patel (coordinator of the LDC Group) said that it is extremely immoral for the developed countries, who profess to want to help the poorest countries, that the LDCs had to struggle for ten years in order to obtain language in Hong Kong (for concessions to the LDCs) on a "best endeavour" basis, and then for these rich countries to neglect the LDCs' concerns after that.

"We have learnt that what they can't get from us (in market access) in the WTO, they try to get from us through structural programmes of the Bretton Woods institutions. We have had enough of that."

He said he was appreciative of the efforts of the developing countries in the G6 in putting pressure on the developed countries to deliver on the LDC agenda. "We stand united, we will not allow ourselves to be blamed for the failure (of the Geneva talks) and we believe in the multilateral route. Bilateralism is disastrous for us."

He reiterated that the LDCs are not to blame for the delay in the talks. Agreeing with what Kituyi said, he reiterated that the words of the leaders and heads of state (of developed countries) must be matched by actions of their negotiators in the WTO.

The Minister of Argentina (which is a member of the G20 and NAMA 11) said what the developing country groupings had issued was a strong statement of unity. He reiterated the importance of reducing agricultural subsidies which constituted a distortion of trade. "Such distortions have been prohibited for years for industrial goods," he said.

"Subsidies for exports and domestic subsidies are legal for agriculture and illegal for industrial products. This is something inequitable in the rules of trade. This Round has to change that. If it does not, this Round doesn't have any reason at all to exist."

The Minister of Benin (representing the four African countries in the cotton initiative) said the meeting of developing country groupings was very good, and the issues were put on the table and all spoke with one voice. Two major actors (US and EU) are trying to impose rules on us, it is important that we express our voice, he said. If there is a collapse in the negotiations, we know who are responsible.

If the talks end, we don't want to wait to be marginalised further, added the Benin Minister. For the Cotton 4, our proposal should be taken into account as it is vital for our population -- we are not begging, what we ask for is to respect WTO rules and end the subsidies and to have a trade flow for us.

The Minister of Dominican Republic (representing the small and vulnerable economies) said that the Hong Kong Declaration had mandated that the problems of small vulnerable economies had to be addressed. The concerns of SVEs were in both agriculture and NAMA, and they had asked that additional flexibilities be given to them, and that these concerns should be taken into account. "We support the whole group of developing countries," he added. "It is the developed countries that should take the leadership for finishing this Round."

Ambassador Servansingh of Mauritius (coordinator of the ACP Group) said that the Group represents the majority of developing countries, and that it shares the unified platform of developing countries. "We are committed to the multilateral trading system and to an outcome to deliver on development... What is most important is that there is an outcome that is development oriented."

Asked by the media to comment on a remark by the US Trade Representative that SP and SSM have been at the core of blockages against market access, and that developing countries are also blocking access in NAMA Kamal Nath said he did not know what was meant by the USTR.

He said that the principles on SPs are in the framework agreement and the Hong Kong Declaration, and only the issue of indicators are to be negotiated. It is too late to negotiate other principles, which are not open to negotiate.

As for NAMA, again the mandate is in the Hong Kong Declaration, that there be less than full reciprocity, he said. If the developed countries say by how much they are willing to cut their tariffs, then through applying the less than full reciprocity principle, the developing countries could tell by how much they in turn could cut, and this would be by less.

"Now you say that we must cut by 70% while you cut by only 20%. This is not what this Round is about."

Amorim said he concurred with Nath.

Asked whether the meeting was now all over, Amorim said that from the start he had been sceptical the meeting would succeed. But it's not like the meeting failed, rather it is more like a suspension of the meeting, with the Director General to intensify consultations.

He said the talks were not so far from agreement, if a few things could be done: the EU had moved, and it could move a bit more in agricultural market access; the US had indicated in the past it had flexibility in domestic support, and it could go down; and some understanding is needed on SP and there must be proportionality in tariff cuts.

Responding to another question, Amorim said the burden is on the developed countries to show leadership. The developing countries have a bigger stake than the developed countries in the multilateral trading system. "Concluding the Round is very important for Brazil but we can't conclude at any price," he said, adding that the developing countries had paid a high price in the Uruguay Round, including accepting intellectual property and services into the system.

"This Round is basically about agriculture, the unfinished business of the Uruguay Round. If this Round fails, it would be because the developed countries are not addressing the problem." He quoted an editorial in an American newspaper, which had commented (after Brazil had won the cotton subsidies case against the US) that "We knew agricultural subsidies are immoral, now we know it's also illegal."

Pangestu said that SPs and SSM are about vulnerabilities and there were independent from what decision is made on market access. "We are constructive and do not want to renegotiate the mandate. "Effective" is what we say (the instruments have to be) and we can negotiate that (the meaning of effective).

The Indonesian Minister said the most basic point is that SP and SSM should not be measured by the perspective of market access. "When you open and liberalise the market, it shouldn't be in a way that has adverse effects for vulnerable groups."

The joint statement of the developing country groupings said that they met on 1 July to assess the latest developments and to coordinate their efforts to ensure the negotiations lead to an outcome consistent with the development mandate of the Doha Round.

"The G-20, the G-33, the ACP Group, the LDCs, the African Group, the Small Vulnerable Economies, the NAMA-11, the Cotton-4 and CARICOM agreed that the DDA must address on a priority basis, in a meaningful and comprehensive manner, the development needs and concerns of developing countries.

The Groups stressed that the talks must negotiations respect the Doha mandate, the July framework and the HK declaration, and "any attempt to renegotiate or rewrite these would not be acceptable."

They recalled the Doha Development Agenda placed the needs and interests of developing countries at the heart of the work programme. They also renewed their commitment to reaching an agreement on full modalities for agriculture and NAMA by the end of this month.

"They acknowledged the need for addressing domestic support, agricultural market access and NAMA, but emphasized that the elements of this triangle are not equal," said the statement.

"The most substantial results must be achieved in the areas where the greatest distortions lie, in particular on trade-distorting subsidies in agriculture, that displace developing country products and threaten the livelihoods of hundreds of millions of poor farmers.. Such distortions have been prohibited for industrial goods for several decades.

"Market access will be an important component of a successful Round, but market opening in the developing countries must take into account their social and economic realities. A development Round should not lead to the deindustrialization of the developing world. The priority is to reduce market access barriers in developed countries in order to create opportunities for the export products of developing countries.

"The success of the Round cannot rely primarily on the efforts of developing countries. The greatest contribution must come from the developed countries, who must show leadership in this regard. Developing countries are prepared to contribute in proportion to their capabilities and in line with the mandate.

"The Groups reiterated the importance of S&D in all areas of the negotiations. In this context, they stressed the importance of flexibilities in NAMA for industrial development in developing countries, and the role of SPs and the SSM in addressing the food security, rural development and livelihood concerns of developing countries.

"The Groups recognized the need to address the expectations of the LDCs with regard to making operational the Hong Kong Ministerial Decision on Duty Free and Quota Free market access and the simplification of rules of origin. They reaffirmed the need to address the issue of cotton ambitiously, expeditiously and specifically in its trade-related and developments aspects. They also agreed on the need to provide adequate responses to the trade-related issues raised by the SVEs and recently acceded developing Members. They also recognized the need to address the issue of tropical products and products of particular importance to the diversification of production. They recognized fully the importance of long-standing preferences and the need to address the issue of preference erosion.

"The Groups emphasized the need for a bottom-up, inclusive and transparent process as a necessary condition for achieving a result that responds to the needs of all Members. The Groups reaffirmed their commitment to a successful completion of the Round by the end of 2006."