1. The AITIC day was devoted to briefing Non-resident members and observers of the WTO on progress on the issues under negotiation or discussion that are of particular interest to them, in particular so that they could better follow the Trade Negotiations Committee Meeting with which the Geneva Week started off.

II. State of Play of Negotiations on Agriculture – Mr David Woods

2. Mr Woods described the draft “Modalities for the Further Commitments” [Note 1] tabled in February 2003 (and revised in March 2003) by the Chairman of the Special Session of the Committee on Agriculture, Mr Stuart Harbinson (“the Chairman’s draft”). This document, which takes up many specific proposals by WTO members, has an approach to negotiations which is similar to that adopted in the Uruguay Round. It proposes reform under three pillars: market access, domestic support and export competition.

●  On market access, the Chairman’s draft proposes a commitment to reduce bound tariffs. It sets different levels of commitments for different bands of current tariffs, each of them to be implemented over a period of five years. Moreover, according to the text, the reduction commitment on products subject to tariff preferences would be implemented over a period of eight years instead of five. The Chairman’s draft also includes proposals on the expansion of tariff quotas. 

● On export competition, the Chairman’s draft contains a proposal on the elimination of export subsidies, the implementation period being longer for developing countries.

● The text also proposes to reduce domestic support subject to reduction commitments (“the Amber box”) by 60% over a period of five years for developed countries and by 40% over a period of 10 years for developing countries. LDCs would not be required to make reductions. Non-trade distorting measures not subject to any reduction commitments (“the Green box”) would be expanded to policy areas of particular interest to developing countries.

3. Other proposals included in the Chairman’s draft relate to export credits, food aid and state-trading enterprises, among others. Mr Woods explained that the views on this document differed, some countries agreed that it was acceptable as a basis for negotiation; others (the Cairns Group, United States) believed it is not ambitious enough and others (EU, Japan and Switzerland) found it unacceptable. Mr Woods remarked that the EU, which just reformed its Common Agricultural Policy (CAP), had not issued a proposal yet. For the Chairman to be able to amend the current text before Cancún, he would need a strong signal from the EU.

4. A participant asked about the current situation on the elimination of export subsidies on cotton. Mr Woods referred to the WTO dispute in which Brazil had challenged the cotton subsidies of the United States. This case, of prime importance to African country producers also called into question the peace clause of the Uruguay Round. The rest of the discussion centred on what would be the best negotiating position for developing countries in the negotiations on agriculture. The speaker replied that this was difficult to answer, as developing country interests differed and was a very politically charged issue for which members had enormous ambitions, therefore one could not generalise.

III. Trade in Services: Progress and Achievements – Mr Falou Samb

5. Mr Samb explained that under the Doha Ministerial Declaration, the deadline for submitting initial requests for specific commitments was 30 June 2002. Progress in this respect was illustrated by submissions of initial bilateral requests by approximately thirty countries and of initial offers by 28 members.

6. Services negotiations also focus on GATS rules: with regard to the emergency safeguard mechanism (ESM), discussions are continuing on the desirability and feasibility of applying the same ESM on trade in services, than the one applied on trade in goods. ASEAN countries made a proposal on this issue, but no substantive progress has been achieved. On domestic regulation, discussions focussed on the examination of regulatory measures as contained in Article VI.4 of the GATS. Finally, on government procurement, discussion centred on national treatment, market access and most-favoured nation treatment .

7. Regarding horizontal issues, the speaker noted the difficulty for developing countries to assess their trade in services. Another horizontal issue relates to difficulties that may arise when a member puts limitations under either market access or national treatment in its schedule of commitments. This issue is discussed under the technical review of the GATS, through Article XX.2.

9. Mr Samb also noted the importance of the issue of modalities for the special treatment of LDCs. A draft proposal was submitted to the Secretariat, based on various LDC proposals [Note 2] and the speaker believed an agreement could be found at Cancun. On modalities for the treatment of autonomous liberalisation, the Special Session of the Council for Trade in Services adopted a very important decision, which gives the possibility to members to get a credit from another member on a bilateral basis. He noted that developing countries and LDCs would have to present their offers and requests in 2004 at the latest, ensuring that their interest would be well served.

10. At a participant’s request, Mr Samb presented the draft decision submitted by LDCs on Special and Differential Treatment (S&D).  In particular, the decision contains one proposal that highlights the flexibility granted to LDCs. Another proposal relates to the improvement of market access for services of particular interest to developing countries, such as tourism. Another participant indicated that developing countries lacked human and financial resources and that the concept of capacity building had to be better defined to help these countries to be more active in the negotiations on trade in services.

IV. Market Access: What is at Stake? – Mr Charles Tsai

11. The Doha mandate provides for the reduction or the elimination of tariffs and non-tariff barriers for non-agricultural products, taking into account the special needs and interests of developing countries and LDCs. Mr Tsai noted that the 31 May 2003 deadline for an agreement on modalities for negotiations had been missed and that progress in market access will rest on progress in agriculture, TRIPS, implementation and S&D. 

12. He then described the Draft Modalities proposed by HE Mr Girard, Chairman of the Negotiating Group on Market Access, the Chairman’s text [Note 3] whose key elements are:

● A tariff reduction formula, with higher cuts for tariffs above average bound tariff rates, lower cuts for tariffs in countries with higher average bound tariff rates, and an unspecified B coefficient;

● a sectoral elimination (for electronics, fish, leather goods, etc);

● S&D: Developing countries will have a longer implementation period and LDCs will not be required to implement market access requirements and are expected to “substantially increase their level of binding commitments”;

● non-tariff barriers.

13. The speaker indicated that while the EU, Japan and the US believed that the tariff cuts under the formula were aggressive and that the treatment for countries with high versus low average bound tariff rates was unequal, developing countries have raised concerns that their tariff preferences would be eroded.

14. Many comments arose from this presentation. One of them related to flexibility given to developing countries to protect their infant industries. A participant asked about the reactions of countries to the B coefficient. Mr Tsai said the reactions were very different, depending on the level of the coefficient: indeed, if it is low, the implications on tariff reductions can be very strong. Another participant asked how modalities would be treated. The speaker replied that they would apply on a bilateral basis. Another question related to the level of tariff binding allowed under regional trade agreements. This issue has not yet been clarified.

V. TRIPS: What remains to be done? – Mr Edward Chisanga

15. Mr Chisanga focused first on TRIPS and public health. The Doha Declaration on this issue requires that an expeditious solution be found to the problem of WTO members with insufficient or no manufacturing capacity of pharmaceuticals to use compulsory licensing under the TRIPS Agreement. One WTO member had opposed a compromise solution presented in late 2002. Therefore the final decision would probably have to come before or at Cancun, if at all.

16. On the incentives to transfer technology to LDCs (Article 66.2 of the TRIPS Agreement), a Decision was taken in February 2003 [Note 4].  According to this decision, the reports on the implementation of Article 66.2 shall contain an overview of the incentives regime offered by developed countries, which will identify the types of incentives; the eligible enterprises/institutions providing the incentives; and information on their functioning.  The mechanism will be reviewed after a period of five years. Mr Chisanga highlighted the importance for developing countries to follow the reports presented by developed countries even though they lacked the capacity to do so.

17. Regarding the respite granted to LDCs with regard to enforcing patents on pharmaceuticals and exclusive marketing until 2016, the speaker noted that the TRIPS Council had implemented this decision through a waiver. LDCs, which already have laws to protect these products, would probably modify them to stop protecting until 2016.

18. Concerning S&D negotiations, no real progress has been achieved except on the implementation of Article 66.2. Mr Chisanga noted that due to lack of capacity, LDCs had made a proposal, at Doha, to be exempted from implementing the TRIPS Agreement. Following this, the Doha Compilation of Outstanding Implementation Issues Raised by Members [Note 5] states that the transition period for LDCs shall be extended so long as they retain the LDC status.

19. Discussions focused on how to progress more quickly on Article 66.2. Mr Chisanga replied that this issue should be one of the first results and a proof that it is one of the biggest achievements on TRIPS for LDCs. Another concern was that the extension of the implementation period was applied to LDCs, but not to other countries with similar conditions as LDCs. Mr Chisanga replied that this was because the LDCs are the only group that are legally recognised as such by the WTO Agreements.

VI. Dispute Settlement: Negotiations and Case Studies – Ms Kerry Allbeury

20. Ms Allbeury started by indicating that the deadline for completion of dispute settlement (DS) negotiations had been missed (31 May 2003). The DS negotiations in 2002 focussed on the examination of various issues put forward by members (approximately 40) for clarifying and improving the Dispute Settlement Understanding (DSU). From January to May 2003, the Special Session of the Dispute Settlement Body (DSB) met once a month to analyse and discuss specific proposals based on discussions of 2002.  At the beginning of May, the Chairman presented a framework document including all the proposals. Gradually, this document was transformed into a Chairman text including issues on which consensus could be reached. These issues included: the enhancement of third party rights at all stages of the proceedings; the clarification of certain issues not addressed directly in the DSU (such as the treatment of confidential information); questions relating to the appellate stage (for example, the introduction of an interim review phase into the appeal); questions related to implementation, such as the clarification of the issue of sequencing and S&D related proposals (for example, the clarification of how S&D provisions should be reflected in panel reports).

21. The speaker said that WTO members recognised that useful work had been done and that this document was a useful basis for further work. However, some delegations were disappointed because some issues of particular interest to them were not reflected, and wanted more work on them, whereas others believed work should proceed only on the issues contained in the Chairman’s text. On 10 June 2003, at the TNC meeting, the Director-General decided that this issue would be discussed at the meeting of the General Council on 24 July 2003.

22. Discussion then focused on remedies. The most revolutionary proposal on this question was made by Mexico, concerning the possibility to trade the rights to retaliate. Other proposals have been made to strengthen remedies. For example, India proposed to facilitate cross-retaliation when developing countries are involved. A participant asked about the status of third parties. Ms Allbeury replied that during the consultation phase, a country could be a third party to a dispute if it has a substantial trade interest in it; at the panel stage any members having a substantial interest can be a third party.

23. Participants complained about the complexity of the system, the lack of legal expertise in small developing countries and the fact that most DS documents were only available in English. According to Ms Allbeury, the system is strong, automatic and rules-based and it protects more the weaker than the stronger. On the lack of legal expertise, she insisted on the fact that developing countries could ask for technical assistance, in particular from the Advisory Centre on WTO Law. Regarding the language problem, the documents that are not distributed as official WTO documents are not translated. Another difficulty for small islands, such as Fiji, was that even as third parties, they have no strength. The speaker replied that the third party status was indeed limited, but that it allows a country to express its views, and that the enhancement of third party rights was currently being negotiated.

VII. Special and Differential Treatment: Problems and Prospects – Ms Esperanza Durán

24. Ms Durán indicated that S&D provisions for LDCs could be found in many WTO Agreements and that they generally occurred in several forms. There is a general recognition that the interests of developing countries and LDCs are not the same as those of developed countries and therefore developing countries and LDCs should be entitled to a special treatment. S&D also exists in the form of preferences; the easing of the rules or number of obligations to be met, the provision of longer implementation periods; and provisions on technical assistance.

25. According to paragraph 44 of the Doha Ministerial Declaration, S&D provisions have to be reviewed in order to make them more precise, effective and operational. Paragraph 12.1 of the Decision on Implementation-Related Issues and Concerns directed the Committee on Trade and Development (CTD) to identify S&D provisions that are mandatory in nature and to make recommendations on how to make non-binding provisions mandatory in practice, to find additional ways to make the provisions more effective and how to incorporate S&D in the architecture of the WTO rules. Work in the CTD is focusing on the concrete measures that can be taken on this issue. For example, how can a provision be made mandatory?

26. The deadline set by the Ministers in Doha (31 July 2002) was extended twice (31 December 2002 and 10 February 2003), but all three were missed. The work was suspended in the Special Session of the CTD and the Chairman of the General Council initiated consultations. The numerous proposals and their varied nature made it difficult to advance. In an effort to sort out the proposals, in a submission [Note 6] after the first deadline was missed, Switzerland categorised the nearly 90 proposals in the clusters: 35 proposals on issues already specified for negotiation under the Doha Work Programme; 10 regarding trade opportunities for developing countries; 15 proposals for safeguarding development policies; nearly 20 proposals on ensuring the availability of technical assistance; and a few technical proposals that would not require changes to existing trade rules.

27. The speaker also noted that there were different interpretations of the Doha mandate: some believed it was necessary to strengthen S&D provisions by making them more “precise, effective and operational”. Others interpreted the Doha mandate as providing for the altering of fundamental “rights and obligations”.

28. On the way forward, Ms Durán highlighted the approach paper circulated by the Chairman of the General Council, HE Mr Perez de Castillo [Note 7]. This paper indicates that all proposals are still on the table and classified them into three categories: those that have already been agreed on (12 by February 2003); those on items already specified for negotiation under the Doha Work Programme or being considered by other WTO bodies than the CTD and which could be resolved at the technical level; and those reflecting important divergences of views that could be preserved conceptually but redrafted for a more positive outcome.

29. A participant noted that the objective of S&D was to improve competitiveness, but that small economies were at a disadvantage compared to Brazil and China for example, which are big developing countries and are more competitive than them. Therefore, he wanted to know if S&D provisions could be sub-divided into one category for small economies and another one for other developing countries. Ms Durán replied that members had rejected so far the issue of differentiation, because small economies were not yet recognised as an official category.

VIII. Work Programme on Small Economies – Dr Roman Grynberg

30. Dr Grynberg noted that the specificity of SVEs was recognised. Paragraph 35 of the Doha Ministerial Declaration is dedicated to SVEs: members must examine issues relating to the trade of small economies; they must frame responses the trade-related issues identified for the fuller integration of SVEs into the multilateral trading system; the General Council must review the work programme and make recommendations for action at the Cancun Ministerial Conference. However, no sub-category was created in the WTO, in particular because of the principle of non-discrimination and the most-favoured nation clause.

31. SVEs have specific problems (small populations, prone to natural catastrophes, lack of capacities, etc.) The Doha mandate provides for examining these issues, but there is a political problem on the definition of SVEs. Members cannot act without knowing which countries are considered as small economies. Therefore, in Cancun, members should take an active step to solve this problem. A participant noted that SVEs had to be considered as a unique category. The speaker insisted on the fact that SVEs have to make this issue a priority in order to succeed, especially since one country can block a consensus when a decision is not in its interest. One participant asked whether the political disagreement on a definition of SVEs came from developing or developed countries. Dr Grynberg replied that the opposition came from countries committed to a multilateral trading system with non-discrimination and also from those who wanted to benefit from the erosion of trade preferences.

32. The issue of land-locked countries also was mentioned. These countries sometimes have even more cost difficulties than in island countries and therefore they must insist to be considered as SVEs. Dr Grynberg informed the meeting on the Work Programme for small economies of the Commonwealth Secretariat. He said that partners were needed for implementing this programme, especially in Africa and in the Caribbean.

IX. Round Table Discussion: Stocktaking on Progress and the Backdrop for Cancún

33. Mr Samb recalled the importance of trade in services for developing countries and LDCs, which offers important opportunities not couched in S&D terms, but in already agreed terms, for example Mode 4, which was of particular interest to these countries. Tourism and labour force were two sectors in which developing countries had a comparative advantage.

34. HE Dr Simkhada, former Ambassador, Nepal, stressed the importance of the multilateral trading system. He noted that developing countries and LDCs, including non-residents, were participating more in the work of the WTO, but that they still had to improve on this participation. The speaker also highlighted the importance of acceding to the WTO and establishing permanent missions in Geneva.

35. Dr Grynberg believed the WTO accession process was institutionally flawed and that the concept of “give and take” did not exist in favour of developing countries and LDCs. According to him, the price to pay to accede to the WTO was much too high. Developing countries had to make “WTO Plus” commitments and they did not get much in return. On services, he insisted on the importance of Mode 4 for developing and least-developed countries. The liberalisation of this sector would become the main source of foreign exchange earnings. Remittances in some cases exceeded export. He did not understand how developing countries could liberalise their capital without liberalising their labour sector.

36. Mr Tsai repeated the importance of defining SVEs before examining trade-related issues specific to these countries. He noted that the WTO Secretariat had conducted very useful studies on small economies, but regretted that no progress had been made in practice. He also indicated that according to the studies, there was no correlation between the size of a country and its trade performance and that small economies, in the past, had actually performed quite well.

37. The discussion focused on the benefits of the multilateral trading system. One participant repeated that the process of accession to the WTO was complex and very costly for LDCs, compared to the benefits they could get from the system. He regretted that no strict and clear rules existed on accession, while rules were the essence of the WTO. Another delegate said that the more a country was developed, the more active its role was in the multilateral trading system, as LDCs hardly participated they could not reap the benefits. LDCs cannot liberalise until they have an institutional, legal and financial structure in place. He insisted on the fact that LDCs must join forces, instead of acting in a scattered way, thus being overwhelmed by developed countries in bilateral negotiations. Much more had to be done, in terms of capacity building and greater participation in international trade so that developing countries, small economies and LDCs, particularly those that were non-resident, could participate more effectively in the activities and negotiations of the WTO.