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THE NEGOTIATIONS ARE IN MOTION
The US proposal on Agriculture seen as source of momentum
18 October 2005
GENEVA UPDATE NO.2

The Doha negotiations, which only a few months ago was characterized as stalled over many areas of disagreements among Members, are now back in motion. This is the common refrain from heads of key negotiating committees-Agriculture, NAMA, and Services-in a series of lobby meetings with social movements and NGOs in Geneva. This was also the assessment expressed at the meeting with the Brazilian Mission and the meeting with the G90 yesterday.

Agriculture the Locomotive
The agriculture negotiations remain the most important area in this round. Ambassador Mateo of Mexico, the chair of the services negotiations in fact referred to this round as an agriculture round and called the agriculture negotiations “the locomotive of the round. ” The proposal of the United States to cut by 60% its subsidies, committing to eliminate export subsidies by 2010, and challenging EU and Japan to commit to as much as 70% reduction of their own support to their farmers has provided a big push to the negotiations.

Trade analysts however are quick to point out that the US and EU proposals amount to nothing more than empty promises once again. The US proposal to cut its subsidies would not really affect the actual level of overall subsidies. On the contrary the proposal would even allow the US to increase its overall level of support through the expansion of the blue the box, the increase in the use of the di minimis, and the unlimited use of the green box.

The most alarming development however as pointed out by Aileen Kwa of Focus on the Global South is that “Whilst effectively nothing is being offered by those that most distort agricultural trade, the US and EU are attempting to use this occasion to extract yet more market access openings from the developing world.”

Whether or not consensus over the proposed modalities for agriculture is possible before Hong Kong remains an open question however. They have found a staunch supporter though in the form of Brasil, the leader of the G20. Brasilian Ambassador Clodoaldo Hugueney applauded the US proposal and said that while it was not enough, it was a definite step forward.

The assessment of Crawford Falconer, the chair of the agriculture committee is that the “Members should generate a sufficient degree of convergence” soon for modalities to materialize by Hong Kong. According to Falconer, the most important proposals are already on the table and this reflects a certain degree of progress already. What proponents or these proposals are trying to do at this stage is generate support from a wider membership.

Falconer however feels that time is running out for the negotiations and that innovative approaches and processes including more informal processes are necessary to ensure that the objectives of the negotiations are met. “This is a bit like cramming time for agriculture” said Falconer. He described the way he has tried to manage the process through what he calls “doctor’s clinic” meetings, a way of trying to get Members together to review what is going on in the negotiations as way to speed up the process in order to achieve the desired results on time.

If the Chair succeeds though in gaining consensus around the current US-EU proposal, the long term consequence of this, according to small farmers organizations will be the death sentence to them all, not only in the developing countries but in the developed countries as well.

NAMA : It’s Number Crunching Time
While Falconer of agriculture was trying so hard to project himself as a mere facilitator of the member driven process, Stefan Johanneson the Chair of the NAMA negotiations was more direct in reiterating that his main motivation as Chair is to ensure that the objective of the NAMA negotiations to come up with “full modalities by Hong Kong is met.” For NAMA, full modalities means “final figures are plugged into the formula already.” “ This is number crunching time” according to Johanesson. He adds that “No numbers by Hong Kong would make it highly unlikely for us to conclude the Round as desired.”

Johanneson is optimistic however that their have already been movement towards convergence at least around a Swiss or Swiss-type formula. The priorities for this month according to the NAMA chair are defining formula felxibilities and the getting consensus over the issue of unbound tariffs based on a number of proposal on the table which include the mark-up approach of Canada, the ABI proposal and the proposal from Pakistan.

When questioned by Brazilian and other trade unions about the possible consequences of rushing into a NAMA deal, Brazilian Ambassador Hugueney responded that while the industrial sector is important, he stated that the essence of these negotiations is trade liberalization and therefore they should be ready to reduce their tariffs. He even went as far to say that in competitive sectors, they were ready to reduce beyond the applied tariffs.

GATS : Putting the Wheels to keep pace
“As the agriculture negotiations start to move, the NAMA and the GATS negotiations must have the wheels to move forward as well.” This was how Mexican Ambassador Mateo, the Chair of the Services negotiations explained the links between GATS and the agriculture negotiations. In describing the state of play, Mateo reported that 23 developing country Members have still to make their initial offers. More than the problem of numbers however, Mateo feels that the critical issue plaguing the services negotiations is the quality of offers made. Supposedly to address this issue of lack of quality offers, proposals have surfaced for “complementary approaches” or “targetting”. While a number of countries like Brazil, Malaysia, Philippines and country groupings like ASEAN, have raised opposition to benchmarking proposals, arguing that these proposals subvert the flexibilities built-into the request-and-offer negotiating process of GATS, Mateo has not seen any real opposition to these proposals for complementary approaches.

Brazilian Ambassador Hugueney however qualified their opposition by saying that while they were against benchmarks, they were open and willing to explore other proposals on the so-called “complementary approaches” saying that as long as they were compatible with the principles of the GATS, they would support it.

The target for Hong Kong remains the establishment of the plan (on services) for 2006 and the idea is to finish the negotiations by end 2006. Mateo described the first semester of 2006 as “hunting season” for services as Member countries negotiate on final offers.

G90: Looking for “Development”
The main concern of G90 countries is ensuring that the ‘development’ focus of the so called Doha Development Agenda would remain central to the negotiations. As one G90 Ambassador said, this was looking more like a market access round rather than a development round. The G90 however are still looking to gain in three areas: 1. Meaningful market access in all areas; 2. Protecting flexibilities of developing countries (enshrined in the Uruguay Round agreements on Special and Differential treatment); and 3. Trade capacity building. The G90 countries are realizing more and more however that the “grand vision of development”for this round has now been relegated to the back burner and is the last thing on the agenda. They also start to question the drive for market access especially in the context of the erosion of productive capacities of developing countries, brought about by liberalization. One African Ambassador described this feeling best when he remarked that “market access would be useless if we have nothing to sell.”

India
Sumanta Chaudhary highlighted the importance of GATS for India. This is the only area where India would gain from the Round. In agriculture and NAMA, India’s interests are primarily defensive. The services sector is more than 50% of current GDP, and India’s share in world trade is increasing primarily because of computer services.

He said it was important that a certain amount of specificity is added to the current negotiations on services, such that it is compatible with the 2001 GATS guidelines and did not undermine the inbuilt flexibilities in GATS. Other negotiating approaches – bilateral or plurilateral – were not in contradiction with the guidelines. Any such approach which can speed up the pace of services negotiations in this round should be seriously considered by members.

He underlined the importance of Mode 4 for India. There was improvement on this issue from some developing and a few developed countries, but not from the US. He also said that India’s revised offer did not go beyond what had already been autonomously liberalised. On the issue of ‘complementary approaches’, India is in favour of a prescriptive and qualitative approach, rather than a quantitative one. He also said that flexibility in the GATS must be understood in the context of “progressive liberalisation.” In answer to a question about what India’s expectations from Hong Kong are, Chaudhary responded that there are countries with offensive interests in other areas, but they were not being questioned about these. India has an offensive interest in GATS and has the right to persue this.

Rajesh Aggrawal, India’s agriculture negotiator said that Hong Kong is most likely to be a success, and that parties were interested in concluding the Doha Round. The main issue outstanding is market access, with the US and EU are still far apart, and expectation is being placed on the EU to move. The EU Council of Ministers are meeting today in Luxembourg, and negotiators are waiting to see what will come out of that. In domestic supports, support levels could decrease further, but what has been offered is within the negotiating range.

Waiting for the Text
Another important development is that in a completely unprecedented move by the WTO secretariat, Pascal Lamy, the Director General announced that he would be the one releasing a draft text for Hong Kong by November 15 and that it will be taken to Hong Kong “under his own responsibility”. This has never happened before as it has always been traditionally the Chair of the General Council, together with the various sectoral Chairs that would release a draft text that has traditionally resulted from a series of negotiations among its Members.

Reactions from the Committee Chairs have been varied and contradictory with some like the Agriculture and Services Chairs saying they did not know who was drafting the text and where the content of this text was coming from. The only thing they are sure of is that they support this process. The Chair of NAMA however says he has taken the initiative to put something together for the section on NAMA.

The G90 on the other hand says that nothing is new because they have always been exlcuded from the process of drafting texts for Ministerials. As one G90 member said for previous Ministerials they were only able to get their hands on the text when things were too late. For this year, they hope to get the text beforehand so they can take stock of whether or not their positions have been taken into account. They plan to assess how much of the “development” this Round has promised will actually be concretely written into the text and negotiations.

For more details on the latest from Geneva, please get in touch with Focus on the Global South:

Joseph Purugganan – josephp@focusweb.org; Mary Lou Malig- marylou@focusweb.org; Aileen Kwa – aileenkwa@yahoo.com; and Jacques Chai Chomthongdi- jacques-chai@focusweb.org Or call us at: +41 788397003 * With additional reports from Alberto Villareal of Friends of the Earth International and Vidya Rangan, EQUATIONS. *