13th Geneva Week for Non-Resident Members and Observers of the WTO
AITIC Briefing Session
The Doha Work Programme: The Single Undertaking and What is the Way Forward?
22 November 2006, 15.00 - 18.00, Room CR II, Centre William Rappard
I. Introduction
1. On 22 November 2006, AITIC held its Briefing Session [note 1] for the participants of the 13 th Geneva Week for WTO Non-Resident Members and Observers (20-24 November 2006). Attendees also included AITIC Members as well as other interested WTO members and observers. The objective of the session was to discuss the single undertaking principle in the negotiations under the Doha Work Programme (DWP) and to reflect possible ways forward as negotiations have resumed after more than three months of suspension.
2. This report is divided into two sections: the first focuses on the AITIC Session; the second provides an overview of the salient points of the Geneva Week programme organised by the WTO Secretariat.
II. The AITIC Session of the Geneva Week
A. The Single Undertaking and the Doha Work Programme
i. Mr Tony Miller, Permanent Representative of the Hong Kong Special Administrative Region of China to the WTO
3. Mr Tony Miller presented the concept of the single undertaking in the WTO negotiations and how it has worked out in practice from the perspective of a small economy.
4. Referring to the complex and changing trade negotiations jargon, Mr Miller recommended to the non-residents to refer to AITIC’s Glossary of Commonly Used International Trade Terminology with Particular Reference to the WTO. It defines the single undertaking as: “ The normal condition for a trade round in which all issues under negotiation must be agreed and implemented in a single package.” In theory, such a condition is to level out the playing field of a round of trade negotiations, both with respect to the issues and the procedure adopted.
5. The WTO consists of a highly divergent membership of 150 countries with different levels of development, political and economic weight, trade interests and negotiating capacities. The principle of “nothing is agreed until everything is agreed” requires the large players in the WTO to take into account issues that may be marginal to them but are of vital importance to small economies and to those with limited representation and negotiating capacity. Hong Kong , China , for example, is a relatively small economy but it has substantial trade interests. Globally, it ranks 11 th in trade in manufactures and 10 th in services.
6. Mr Miller acknowledged that, in practice, the single undertaking is viewed by many as a double-edged sword. Disagreement between larger players on one issue puts the whole round at risk and, with it, the benefits for poorer countries. In the DWP negotiations, although accounting for only 10 per cent of world trade, agriculture has come to entirely dominate the agenda. In his view, however, rather than a sign of failure of the single undertaking, this proves that agriculture is essential to a majority of WTO members. As this pillar has been left largely untouched by trade liberalisation prior to the Uruguay Round, distortions in agricultural trade cause the most damage to the multilateral trading system. High tariffs, subsidies, quotas and non-tariff barriers negate the comparative advantage of developing countries.
7. In view of the resumption of the DWP negotiations, Mr Miller cautioned that in his experience, towards the end of a negotiating round, some of the issues that are vital to the non-residents risk being overlooked. He encouraged the non-residents to mindfully watch these issues, insist on addressing them and use the single undertaking as a shield in pushing for a truly balanced outcome.
ii. HE Mr Ujal Singh Bhatia, Ambassador, Permanent Representative of the Republic of India to the WTO
8. Ambassador Bhatia traced the history of the single undertaking, described some of its essential attributes and placed it in the context of negotiating flexibilities for developing countries within the DWP.
9. The speaker recalled that prior to the Uruguay Round, parties to the General Agreement on Trade and Tariffs (GATT) were free to sign up to different articles of the Agreement, sometimes taking into account their level of development. The single undertaking concept first appeared in the so-called “Dunkel Draft Text”, the first complete draft of the results of the Uruguay Round tabled by the then Director-General of the GATT in December 1991. This approach sought to achieve an equilibrium among all of the issues addressed, including those newly taken on board, such as trade in services, trade-related aspects of intellectual property rights (TRIPS) and trade-related investment measures (TRIMS).
10. In committing all members to subscribe to the outcome of the negotiations as a whole, another objective of the single undertaking is having a single set of WTO members, all with the same or similar obligations. Account of the differences in development among members is taken by derogations from general rules, i.e. special and differential treatment (S&D). Moreover, by prescribing an outcome on all issues, the single undertaking allows for trade-offs within and across the issues under negotiation as well as between the negotiating parties. In the case of trade disputes, a non-compliant party may be sanctioned by retaliation, that is through the temporary suspension of a concession in an area, say tariffs, in return for a violation in another, e.g. domestic support.
11. In Ambassador Bhatia’s view, a substantial problem of the current negotiations at the WTO is that the DWP seeks to unify potentially conflicting approaches: that of substantial trade liberalisation with that of fostering development. For the latter, effective flexibilities need to be incorporated in the general rules. This is a complex task not only on the political level but also with respect to the different legal and constitutional systems of member countries. He concluded by stating that, more than anything, the S&D issue seems key to the conclusion of the Doha round and the continuing application of the single undertaking principle.
12. In the discussion that followed, participants asked the speakers their opinion regarding the feasibility of achieving the objective stated in paragraph 24 of the Hong Kong Ministerial Declaration, which foresees a “comparatively high level of ambition in market access” in the agriculture and non-agricultural market access (NAMA) negotiations. Some expressed concern that the focus on these two areas and the standoff between the two large trading powers, the European Communities (EC) and the US, risked marginalising other issues. Others were of the view that the single undertaking concept prevented the frontloading of agreed decisions, i.e. the possible “early harvests”. One participant enquired if the duty-free and quota-free (DFQF) market access initiative for least-developed countries (LDCs), as decided at the Hong Kong Ministerial Conference in December 2005, was part of the single undertaking or if it could become an “early harvest”.
13. Mr Miller recognised that the level of ambition in agriculture and NAMA could prove decisive for the Doha round. He estimated that a less ambitious negotiating outcome may be difficult for governments to sell domestically. As particular national interests on subsidies and tariffs are widely dispersed across consumer and producer constituencies, those losing out are likely to exert considerable political pressure, while those seeing only marginal gains remain silent. After the time-out for reflection on the negotiating positions, Mr Miller felt WTO members did well in seeking advances through “quiet diplomacy”, rather than through previous “megaphone diplomacy”. Quiet diplomacy allowed WTO members to test bottom lines and possible scenarios without the usual “naming and shaming practices”. Citing the example of the Cotton Four (C-4) countries (Benin, Burkina Faso, Mali and Chad), he pointed out that due to the single undertaking, less influential developing countries have the power to veto a negotiating outcome that does not address satisfactorily issues of vital importance to them. He recalled that the Uruguay Round negotiations have been perceived by many as dominated by the interests of the two big players, the EC and the US. Today, however, the WTO landscape is a significantly different one. In his view, there are no longer two, but five giants (Brazil, China, EC, India and US) and developing countries have joined forces in groups which have had strong impact, such as the Group of 20 (G-20) and the Group of 33 (G-33). Mr Miller stated that his delegation has been very much in favour of achieving an early harvest on DFQF market access for LDCs, but unfortunately some WTO members have insisted on keeping it within the single undertaking.
14. On the agriculture-NAMA link, Ambassador Bhatia was of the view that while the major distortions in NAMA have been mostly addressed by previous rounds, trade in agricultural products remains heavily distorted. Tariff and non-tariff barriers remain unjustifiably high and non-transparent. Developed country farmers continue to receive up to 30 per cent of their revenues from government payments, although agriculture’s contribution to these countries’ gross domestic product (GDP) is between two and five per cent. In developing countries, up to two-thirds of the population depend on agriculture, which in India alone represents almost 700 million people. An appropriate balance with NAMA could be achieved by an ambitious outcome in agriculture. He agreed with Mr Miller that WTO negotiations are no longer a fight between two giants and he felt that the single undertaking principle has contributed to that change in the WTO. He was optimistic that once agriculture is addressed, the other issues will not be sidelined. In his opinion, trade facilitation is the only area where negotiations are proceeding well enough to contemplate a fast-track conclusion.
B. The Doha Work Programme: What is the Way Forward?
i. HE Mr Zhenyu Sun, Ambassador, Permanent Representative of the People’s Republic of China to the WTO
15. In view of the danger of a total collapse of the DWP negotiations, Ambassador Sun estimated that the suspension of talks had served its purpose to some degree. Members had time to reflect on their negotiating positions as well as on the consequences of a DWP failure, such as a surge in the number of regional trade agreements (RTAs) and in the number of trade disputes. In order to make significant progress now, as the negotiations have resumed in a “quieter” mode, Ambassador Sun recommended strengthening the role of the Chairs of the negotiating groups. In this context he welcomed the informal consultations presently conducted by the Chairs of the Committee on Agriculture in special session and the Negotiating Group on Market Access. He added that more political guidance from capitals could assist in advancing the process.
16. The speaker stated that the degree of flexibility of the US on domestic support and, in particular, Blue Box support, is critical for the DWP. The US Congress will define the extent of this flexibility by a decision on whether to roll over or to reform the 2002 Farm Bill. In addition, WTO members will be observing whether and under which terms the US Congress decides to renew the US President’s Trade Promotion Authority (TPA). According to Ambassador Sun, much will depend on the degree of co-operation on these issues between a Congress with a Democratic majority and the Republican Government
17. For developing countries, the first priority remains the removal of heavy distortions in agricultural trade, followed by effective S&D provisions, paragraph 8 (of the 2004 July Framework) flexibilities in NAMA and DFQF market access for LDCs. He insisted that all members need to adopt a more pragmatic approach and be readier to compromise, especially when considering the figures on the table at present.
18. Concluding his statement, Ambassador Sun cited some statistics from the 2005 WTO World Trade Report to highlight the importance of economic growth in stimulating trade flows. Before the initiation of any tariff reductions, Brazil, India, China and South Africa registered a 19 and 39 per cent increase in imports in 2005 and 2004 respectively. Thus, he argued, flexibilities in support of development and economic growth are not irreconcilable with trade liberalisation.
ii. HE Mr M. Clodoaldo Hugueney Filho, Ambassador, Permanent Representative of Brazil to the WTO
19. Ambassador Hugueney focused on agriculture and development, the aspects of the Doha mandate he considered lagging behind the most in the current state of play of the negotiations.
20. Improving the rules for agricultural trade is, in the speaker’s view, the most pressing priority in the current negotiations. He welcomed the fact that the EC, the biggest agriculture subsidiser, had embarked on reforming its Common Agricultural Policy (CAP) in 2003, in particular by lowering its domestic support spending. However, subsidies remain high and the EC tariffs still strongly discriminate against developing countries. Ambassador Hugueney regretted that the US Government, though spending slightly less on its farmers than the EC, had increased its domestic support levels over the past years. To overcome the deadlock in agriculture, the most important element was to convince the US to improve its domestic support offer.
21. The speaker said that in his opinion, if only the overall approach, for example in agriculture, were more development-oriented, developing countries would not be so insistent on seeking flexibilities. Everyone agreed on the need for a balanced outcome, but views differed widely on what such balance would be. Members face a number of domestic political constraints, including the impact of the DWP on their labour markets, economic growth strategies or certain protected industries.
22. Concluding his statement, Ambassador Hugueney made two comments in relation to the political economy of the multilateral trading system and to the process he expected in the coming months of resumed negotiations. He found that at present, within the WTO, developing countries had demonstrated a stronger interest and negotiating strength in the round, as illustrated by the impact of country groups, such as the G-20 at Cancun; the G-90 regarding preference erosion; the LDC Group on DFQF market access; the C-4 countries or the NAMA-11 countries. These coalitions reflect a new and changing economic geography in the world, where not only the bigger developing countries are gaining economic weight. He pointed out that even in poverty-stricken Africa, economic growth is garnering strength. Finally, he emphasised that the Geneva negotiating process certainly needs to be followed closely, in particular by the non-residents, but he also reminded them not to underestimate the impact of political developments in the WTO members’ capitals.
23. Participants enquired whether, and to what extent, the inclusion of labour and environmental provisions as a condition for the extension of the TPA could slow down the conclusion of the Doha Round. One participant asked the Ambassadors what they thought needs to happen to unblock the negotiations in agriculture. Another commented on the problem of preference erosion, in particular regarding sugar.
24. Ambassador Sun felt that without TPA renewal, negotiations would likely flounder. He estimated that if the DWP negotiations made considerable progress by early 2007, prospects for renewing TPA would be better. To unblock the stalemate in the negotiations, all members have to recognise that they should offer more and be ready to compromise. He reiterated that if US domestic support is addressed, most developing countries will probably be ready to scale down their expectations for flexibilities, such as those on special products. He insisted that the needs of resource-poor farmers must be taken into account, citing statistics according to which in China and India still more than 500 million people, most of them farmers, live on less than USD 1 a day. He understood the problems associated with preference erosion, especially for the small and vulnerable economies (SVEs). He hoped that any Doha outcome on this would be complemented by assistance under the Aid for Trade initiative.
25. Ambassador Hugueney stressed that, in his view, the fate of the Farm Bill could be more decisive for the DWP than the question of TPA renewal. He expected labour and environmental provisions to be directed towards bilaterally negotiated agreements of the US, rather than being imposed as a condition for a multilateral deal at the WTO. He agreed with Ambassador Sun that at this point it is crucial that all members move collectively. No member has the potential to single-handedly unblock the negotiations. The US certainly needs to offer more on domestic support but he also acknowledged that developing countries need to improve their NAMA proposals. On the comment on sugar, he responded on a more general note, that a system that artificially maintains prices and production of commodities at levels that do not correspond to the economic reality will not be feasible.
III. The Geneva Week Programme
A. Opening remarks by the Director-General of the WTO, Mr Pascal Lamy
26. Mr Pascal Lamy, Director-General (DG) of the WTO welcomed the non-resident members and observers to the 13th Geneva Week. Although negotiations were suspended in July 2006, progress has been made on some issues that are not part of the DWP single undertaking. The General Council recently decided that small economies would be assisted by regional institutions in handling technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS) and TRIPS. Vietnam’s accession process was concluded and approved by the General Council on 7 November 2006. The Aid for Trade Task Force [note 2] submitted its recommendations on 27 July 2006. Mr Lamy took the opportunity to encourage the non-residents to use the Geneva Week to work towards addressing the issues of concern to them, as the negotiations have resumed.
B. Introductory Remarks by the Chairman of the General Council, HE Mr Eirik Glenne ( Norway)
27. Ambassador Eirik Glenne, Chairman of the General Council emphasised the importance of a well-functioning multilateral trading system. Developing countries, in particular those with resource constraints, stand to suffer most from an increase in bilateral and RTAs. He hoped that the Geneva Week, as part of the WTO’s assistance to the non-residents and its work towards achieving a transparent and inclusive negotiating process, would enable the non-residents to ensure that their voices are heard.
C. Briefing on the Special Session of the Committee on Agriculture and the Sub-Committee on Cotton —HE Mr Crawford Falconer ( New Zealand), Chairman of the Special Session of the Committee
28. Ambassador Falconer observed that the period of reflection since the suspension of the DWP talks in July 2006 had not resulted in any rapprochement between members on agriculture. Quiet exchanges had taken place either in bilateral or trilateral discussions. He considered that the suspension was the only available option at the time. But the absence of movement in the meantime underscored the need to return to a multilateral process on an informal level. He explained that members are currently attempting to advance on technical issues. The aim is to complete 90 to 95 per cent of work before seeking ministerial-level involvement to accomplish the remainder. Ambassador Falconer believed that a good 20-25 per cent of work on agriculture is still outstanding. He hoped that the informal talks would make significant progress until mid-December 2006 and then advance further until mid-February 2007.
29. The Chairman explained the reasons for his cautious optimism. WTO members agreed at Hong Kong to eliminate export subsidies by 2013. On domestic support, the EC and the US still have considerable room for improving their offers. The US domestic support spending level, for example, is actually lower than the ceiling it is offering in the negotiations. On market access, positions are not irreconcilable, as many members’ applied tariff rates are significantly lower than their bound rates, especially those of developing countries. On cotton, Ambassador Falconer noted that movement is already occurring as the US is revamping its support programmes, moves that are being followed closely by the C-4 countries.
30. Responding to questions from participants, the Chairman did not hold much hope for the “5+5 proposal” (a reduction by USD 5 billion of US domestic support and an additional five per cent average tariff reduction by the EC). On flexibilities for developing countries, he noted that the number of special products would certainly be far from the numbers currently suggested. He emphasised that it is politically unfeasible to commit developing country members to tariff reductions that would threaten the livelihood of rural populations.
D. Briefing on the Negotiating Group on Market Access — HE Mr Don Stephenson ( Canada), Chairman of the Negotiating Group
31. Ambassador Stephenson based his presentation on the report he had submitted to the Trade Negotiations Committee (TNC) one month before the suspension of the negotiations in July 2006 [note 3].
32. The speaker defined the “ambition” in NAMA negotiations as tariff reductions minus flexibilities, plus the results of sectoral negotiations. Although the use of the Swiss Formula is agreed, the number of coefficients is still a point of contention. On unbound tariffs, an agreed non-linear mark-up approach is to set the base rate for applying the formula. The mark-up figure is still not agreed, with proposals ranging from 5 to 30 percentage points. But Ambassador Stephenson pointed out that final rates after application of the formula differ minimally, irrespective of which mark-up is used, with the exception of those tariff lines that would not go through the formula (flexibilities under paragraph 8 of the NAMA Framework of the July Package).
33. As for the figures for paragraph 8 flexibilities, the speaker expected that the numbers in brackets in the July 2004 NAMA Framework, will probably remain unchanged in the final deal. That would allow developing countries to make at least half the formula cuts on 10 per cent of tariff lines provided that the products do not exceed 10 per cent of the total value of a member’s imports. Alternatively, they would be able to keep, as an exception, tariff lines unbound, or to exempt from formula cuts up to 5 per cent of tariff lines (provided they do not exceed 5 per cent of the total value of a member’s imports). Consensus is also emerging that implementation periods for developing countries’ tariff reductions should be double the length of those for developed countries.
34. The speaker explained that the objective of non-mandatory sectoral negotiations is to achieve liberalisation at a higher level than the formula in product sectors of interest to the participants. A recent sectoral proposal from Turkey on tariff harmonisation on textiles and clothing [note 4] is controversial because it remains below the ambition of the formula cuts.
35. Ambassador Stephenson stated that preference erosion is an unavoidable, but manageable problem. Two proposals are currently on the table: the African Group [note 5] proposes to use a “correction coefficient” and longer implementation periods for some tariff lines, while the African Caribbean and Pacific Group of States (ACP) [note 6] suggests defining a set of specific products based on an “index of vulnerability” and then “managing” its liberalisation to soften the impact of erosion. According to the Ambassador, another solution could consist of an implementation period of an additional 5-10 years for certain products.
36. On Non-Tariff Barriers (NTBs), Ambassador Stephenson pointed out that the enforcement of already existing rules could eliminate many such barriers. Some members have suggested putting in place a faster arbitration procedure for trade disputes concerning NAMA NTBs.
E. Briefing on the Special Session of the Council for Trade in Services — HE Mr Fernando de Mateo y Venturini, Chairman of the Council
37. Ambassador de Mateo y Venturini reviewed the scope of the GATS, which includes essentially all services except public services and measures affecting air traffic rights. Following a so-called “positive list” approach, members select services sectors in which they undertake commitments by inscribing them in their services schedules. Negotiations proceed in a request and offer mode. The Chairman noted that developed and recently-acceded WTO countries are those that have made the largest number of commitments in services. While these two groups average over 100 services commitments in their schedules, the average in the WTO is around 50. Sectors where most commitments have been made include tourism, business, and the financial sector.
38. Currently, 69 offers and only 30 revised offers are on the table. At Hong Kong, Ministers, set out some negotiating objectives, instituted plurilateral request-offer negotiations, decided that LDCs are not expected to undertake new commitments and reiterated the need to implement the “LDC Modalities” [note 7], according to which “special priority” is to be accorded to liberalising sectors of interest to LDCs.
39. The Chairman reported that negotiations have resumed in “soft” mode on 17 November 2006. On 29 November 2006, members will meet for a services stock-taking exercise. In view of the experience with previous rounds, the Ambassador said there is still reason for hope that negotiations will conclude.
40. In response to questions from participants, Ambassador de Mateo reported that about 22 plurilateral request-offer negotiation initiatives have taken place in the Council in Special Session. The sectors concerned include education, financial services, telecommunication, express delivery, and transportation services, mostly with about eight or nine demandeurs.
F. Briefing on the Negotiating Group on Trade Facilitation — Mr Tony Miller ( Hong Kong, China), Chairman of the Negotiating Group
41. Mr Miller presented a short historical background and briefly described current work of the Negotiating Group on Trade Facilitation. The speaker stated there had been a very active participation of WTO Members in the negotiations, with around 120 proposals currently on the table. Mr Miller mentioned three formal submissions: the proposal by the African Group on implementing the technical assistance and capacity-building (TACB) and S&D Mandates of Annex D of the July 2004 Framework [note 8], the so-called “CHIPS” (China, India, Pakistan and Sri Lanka) proposal on the process of trade facilitation negotiations [note 9] and the proposal from a group of Latin American countries on S&D [note 10].
42. The speaker pointed out that the shape of the final package is already emerging and members are working on the so-called third-generation proposals. Yet, they still need to negotiate what sort of commitments should be in the final deal.
43. Mr Kunio Mikuria, Deputy Secretary General of the World Customs Organization (WCO), recalled paragraph 9 of Annex D of the July Package, according to which members should take into account the relevant work of the WCO and other relevant international organisations in this area. He pointed out that the majority of the substantive issues reflected in members’ proposals are addressed in WCO instruments, such as the Revised Kyoto Convention [note 11], the Harmonised System [note 12], the WCO Data Model [note 13], the Immediate Release Guidelines [note 14], the Time Release Study Guide [note 15] and the Istanbul Convention [note 16]. Mr Mikuria highlighted that the WTO should provide a framework for implementation of these standards containing provisions on S&D, TACB, as well as dispute settlement procedures.
G. Briefing on the Negotiating Group on Rules and on the Draft Decision on RTA Transparency — Ms Clarisse Morgan, Counsellor, Rules Division, WTO and Mrs María Carmen Pont-Vieira, Counsellor, Trade Policy Review Division, WTO
44. Ms Morgan referred participants to the Doha mandate to clarify and improve rules on anti-dumping, subsidies and countervailing measures (SCM), including fisheries subsidies, as well as for disciplines under WTO agreements relating to RTAs. She highlighted that safeguard measures, i.e. temporary tariffs or quotas imposed against imports, threatening to or damaging domestic industries, are not covered by the Doha mandate for negotiations.
45. On anti-dumping, she noted that specific proposals have been submitted by, inter alia, the Friends of Anti-Dumping Group, and by Canada, Egypt, India, and the US. To date, few text-based proposals have been tabled regarding subsidies and, specifically, fisheries subsidies. Ms Morgan also mentioned that extensions for compliance and exemption from certain WTO commitments for developing countries are also being discussed.
46. Mrs Pont-Vieira recalled that in July 2006, the Negotiating Group on Rules agreed on a new WTO transparency mechanism for RTAs [note 17]. The decision focused on centralising information at the WTO; facilitating the flow of information, including instructions on when to notify RTAs; and the general process of notification. The WTO Secretariat will present each of the notified RTAs for consideration by the membership.
H. Briefing on the Committee on Subsidies and Countervailing Measures — Mr Marc Koulen, Counsellor, WTO Rules Division
47. Mr Koulen after outlining the basic disciplines of the Agreement on SCM referred to Article 27.4 which allows for an extension of the eight-year transition period for the elimination of export subsidies for developing countries. A decision [ote 18] adopted at the Doha Ministerial Conference in November 2001 provides that the Committee shall grant, on an annual basis, extensions of the transition period with respect to some export subsidy programmes, for a subset of developing countries fulfilling certain criteria [note 19].
48. On the basis of this decision the Committee on SCM has granted extensions for 43 export subsidy programmes, maintained by 19 developing country members between 2002-2006. An April 2006 proposal from SVEs [note 20] submitted to the Committee advocates extending the transition period for SVEs until 2018. Panama [note 21] has argued in a June 2006 submission that this should apply to all developing countries. Mr Koulen reported that informal consultations on the proposals would be held on 24 November 2006.
I. Briefing on the Regular and Dedicated Sessions of the Committee on Trade and Development — Mr Faizel Ismail ( South Africa), Chairman of the Committee
49. Mr Ismail referred participants to an updated note [note 22] by the WTO Secretariat listing the developmental aspects of the DWP negotiations on which, according to paragraph 51 of the Doha Declaration, the Committee on Trade and Development (CTD) is mandated to work.
50. In the framework of discussions on commodity price decline, raised in paragraph 55 of the Hong Kong Declaration, Mr Ismail reported that the International Coffee Organisation and the International Cocoa Organisation have been invited to the CTD’s 57 th and 59 th session respectively. Due to the success of these meetings, members have requested the convening of a panel discussion on commodity issues whose participants would include a number of organisations such as the IMF, the ITC, UNCTAD and the World Bank as well as the Chairman of the Task Force on Aid for Trade.
51. Upon request from the LDC Group, the review of measures taken to implement the decision on DFQF access for LDCs of Annex F of the Hong Kong Declaration has been added as a standing item in the work programme of the CTD in 2006. Written submissions have been provided by the US [note 23] and Japan [note 24]. The LDC Group view the CTD in Special Session (CTD-SS) as the appropriate forum for discussion of the Hong Kong Decision, along with other relevant negotiating groups and WTO bodies. Other delegations consider the CTD the adequate body for consideration of the Decision.
52. Mr Ismail also informed participants of developments on the Work Programme on SVEs since Hong Kong [note 25]: in pursuance of paragraph 41 of the Hong Kong Ministerial Declaration, the General Council on 7 November 2006 agreed to the CTD in Dedicated Session (CTD-DS) recommendation that regional bodies assist small economies in the implementation of their obligations under the SPS, TBT and TRIPS Agreements.
J. Special and Differential Treatment — HE Mr Burhan Gafoor ( Singapore), Chairman of the Special Session of the Committee on Trade and Development
53. Ambassador Gafoor recalled that development is a cross-cutting issue underlying the work of each and every negotiating group at the WTO. The mandate of the CTD-SS consists of designing exceptions and flexibilities for developing countries, i.e. S&D provisions, without undermining the WTO rules-based system.
54. He proceeded to explain the status of the 88 proposals on making S&D provisions in WTO agreements more effective [note 26]. On Category I proposals, which members have agreed to give priority to, Ambassador Gafoor noted that good progress has been made since Hong Kong, with revised texts on four proposals on import licensing procedures and on GATT Article XVIII (governmental assistance to economic development) and constructive informal discussions on two SPS proposals [note 27]. In addition, members need to agree on the scope of a monitoring mechanism for the effectiveness of S&D provisions.
55. He intended to start informal consultations in order to reignite the negotiations in the committee. He shed light on the issue of implementation of the decision on duty- and quota-free market access for 97 per cent of LDC exports, which is addressed at the regular session of the CTD. He reported that the LDC Group has tabled proposals on the implementation of DFQF market access [note 28] and called on other developing countries to state their positions. The US has already expressed its intention to use its own Generalized System of Preferences (GSP), currently under review, as a basis to implement the decision on LDC market access.
K. Briefing on Small and Vulnerable Economies — Ms Marion Jansen, Economic Research and Statistics Division, WTO
56. Referring to a recent study [note 29], Ms Jansen explained the essential characteristics of SVEs and described their trade-related problems. SVEs are characterised by small population size and land area which result in limited endowment of factors of production and thus in limited potential to diversify domestic production and export and heavy import reliance. The speaker pointed out that, despite high income volatility, there is no systematic relationship between smallness and limited growth possibilities. Limited opportunities to exploit economies of scale and high transportation costs, especially when smallness is combined with remoteness, negatively affect SVEs’ competitiveness.
57. SVEs are deeply concerned with many aspects of multilateral trade liberalisation under the DWP, in particular the erosion of preferences. They fear that loss of export markets will have substantial spill-over effects on the entire economy. Ms Jansen noted that the SVEs are seeking to address these problems mainly through their proposals under the Work Programme on Small Economies.
L. Briefing on Aid for Trade — HE Mrs Mia Horn Af Rantzien ( Sweden), Chairman, Aid for Trade Task Force
58. Ambassador Horn Af Rantzien briefed participants on the Recommendations of the Task Force on Aid for Trade [note 30] that were presented to the General Council in July 2006 and endorsed at its meeting on 10 October 2006. She reported that the scope of measures under Aid for Trade, as guided by paragraph 57 of the Hong Kong Ministerial Declaration, included i) trade policy and regulations; ii) trade development; iii) trade-related infrastructure; iv) assistance for trade-related adjustment; and v) building productive capacity [note 31].
59. She described three levels of action to make Aid for Trade operational. First, on the demand-side, the Enhanced Integrated Framework (IF) process should serve as the foundation to ensure delivery for LDCs. Where needed, non-LDC “International Development Association-only” (IDA-only) [note 32] countries would have recourse to separately funded in-country process similar to the mechanism for LDCs to identify their trade needs.
60. Second, to fill the gap between recipients and donors, the Task Force had advised building on existing co-ordination mechanisms. At the country level, it is recommended to bring together all stakeholders in a National Aid for Trade Committee to mainstream trade into their Poverty Reduction Strategy Papers (PRSPs), assess the needs and ensure smooth co-ordination with the donors. To address regional issues, the Task Force suggested adopting a similar approach with a Regional Aid for Trade Committee.
61. Third, on monitoring and evaluation, Ambassador Horn Af Rantzien explained that the Joint Database of the Organisation for Economic Co-operation and Development (OECD) and the WTO will be an important tool. The Task Force has recommended setting up a body in the WTO to carry out monitoring and evaluation of Aid for Trade activities.
62. In the current phase, and in pursuance of the decisions of the Meeting of the General Council on 10 October, the Director-General needs to work further on making the Task Force recommendations operational in an ad hoc Consultative Group. His report, due in December 2006, is also expected to elaborate on potential options for a monitoring mechanism.
M. Briefing on the Enhanced Integrated Framework — Mr Mark Gawn, Counsellor, Permanent Mission of Canada
63. Mr Gawn recalled that the Integrated Framework (IF) was launched in 1997 as a trade-related technical assistance initiative aimed at the integration of trade into national development strategies in LDCs. Six partner organisations, namely the IMF, the ITC, the World Bank, UNCTAD, the UNDP, and the WTO in addition to bilateral donors collaborate in undertaking technical reviews, diagnostics, managing the IF trust fund and in the execution of projects. The IF is governed by its Steering Committee and a Working Group. The IF Trust Fund finances the mainstreaming activities under the auspices of the World Bank.
64. Some positive results have been achieved in the IF implementation, i.e. increased co-ordination and dialogue between the governments and trade-related national institutions as well as a higher profile of trade in economic and development policies. However, some weaknesses remain, such as insufficient in-country capacity, lack of systematic follow up and funding shortages. The enhanced IF is being set up pursuant to the recommendations of the IF Task Force [note 33]. At the Hong Kong Conference, Ministers have recommended setting up the Task Force to explore ways and means for an enhanced IF with increased predictable resources, improved IF governance and strengthened in-country capacity and ownership. It will be guided by the aid effectiveness principles of the Paris Declaration [note 34], including country ownership, donor harmonisation and use of country systems. A transition team under the Chairmanship of Canada has been established with the objective of implementing the recommendations of the Task Force for launching the enhanced IF in early 2007. Representatives on the team will be drawn from LDCs, donors and IF agencies.
65. Questions were raised regarding the relevance of the establishment of a Secretariat for the enhanced IF and whether it would not be duplicating the process under Aid for Trade. Mr Gawn explained that the bulk of the resources under the enhanced IF will be allocated to in-country action and a minimum of resources will be left to the Secretariat in Geneva.
N. Briefing on the Special Session of the Council of TRIPS — HE Mr Manzoor Ahmad ( Pakistan), Chairman of the Council for TRIPS Special Session, Mr Adrian Otten, Director, Intellectual Property Division, WTO
66. Ambassador Ahmad referred to Article 23.4 of the TRIPS Agreement which mandates WTO members to establish a multilateral system of notification and registration of geographical indications (GIs) for wines and spirits. Mr Adrian Otten briefed participants on the status of work on extending the additional protection of GIs for wines and spirits under the TRIPS Agreement to other products (GI extension) as referred to by paragraph 18 of the Doha Declaration. In addition the TRIPS and Public Health Declaration was briefly discussed.
67. Ambassador Ahmad noted that divergences on GIs emerge between “New World” and “ Old World” countries. They concern the extent to which protection of registered GIs should have legal effects at the national and the international level. The so-called Joint Proposal Group ( New World) [note 35] would consider the register as a database with legal effects at the international level only for those opting to participate in the system. The Old World group, led by the EC [note 36] seeks to apply the protection of registered GIs to all members. The speaker reported that the Special Session has based its discussions on a document circulated by him, entitled “List of Priority Concerns for Discussion at the Meeting of 16-17 March 2006”. In view of the steep divisions and the linkage between this issue and the negotiations on agriculture, the Chairman expected difficulties in making progress in the near future.
68. On GI extension, Mr Otten explained that most countries of the Joint Proposal Group also oppose the EC’s desire to extend the higher protection provided by the TRIPS Agreement for wines and spirits to other products. They argue that the general protection under the TRIPS Agreement is sufficient and debate whether paragraph 18 of the Doha Declaration provides a mandate for these negotiations at all. Controversy prevails over the EC’s “claw back” proposal [note 37], submitted in the Committee on Agriculture, on the treatment of currently used product denominations. Opponents of GI extension argue that the resulting changes in labelling would cause consumer confusion. The speaker further identified three main obstacles: i) the close linkage between GI topics; ii) the interrelation with agriculture negotiations; iii) the lack of harmonisation of members’ GI systems.
69. Mr Otten briefly referred to the 2003 Decision on the implementation of paragraph 6 of the Doha Declaration on TRIPS and Public Health [note 38]. WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector can make use of compulsory licensing to respond to imminent public health emergencies. He noted that although in 2005 WTO members decided on an amendment of the TRIPS agreement [note 39] accordingly, the decision will only enter into force once two-thirds of WTO members have ratified. Mr Otten urged non-resident members to notify their ratifications to the WTO Secretariat as soon as possible. He also recalled that the WTO is providing technical assistance for the implementation of the paragraph 6 mechanism.
O. Briefing on the Committee on Sanitary and Phytosanitary Measures — Ms Gretchen Stanton, Counsellor, Agriculture and Commodities Division, WTO Secretariat
70. Ms Stanton informed the participants that the SPS Committee has met about 4 times this year and a workshop was held on implementation in March 2006. In 2006, the Committee debated guidelines on regionalisation; questions on undue delay in risk assessment; use of private and commercial standards and questions regarding invasive species.
71. She reported that a meeting on transparency has been proposed for October 2007, the funds for which will be made available through the Global Trust Fund. The objective would be to bring together SPS experts with the national notification authorities and enquiry points of WTO members. The speaker also delivered an overview of the technical assistance provided by the WTO Secretariat. Regional seminars on SPS will be held in Francophone and Anglophone Africa in 2007.
72. The speaker observed that developing countries and LDCs have not presented many demands for the technical assistance offered by the WTO under the Standards and Trade Development Facility, in addition to that delivered by the ‘three sisters’ (Codex Alimentarius, the World Organization for Animal Health and the International Plant Protection Convention), the World Bank or the World Health Organisation. Ms Stanton concluded her statement by recommending developing countries to use the good offices of the SPS Committee regarding SPS-related barriers to their exports. Sri Lanka, for instance, has recently been able to maintain its cinnamon exports to the EC through this facility.
P. Briefing on Technical Barriers to Trade — Mr Margers Krams, Chairman of the TBT Committee
73. Mr Krams reviewed the general provisions of the Agreement on Technical Barriers to Trade (TBT). The TBT disciplines provide for a country’s right to regulate without the regulation becoming an unnecessary obstacle to trade. The scope of TBT measures is quite broad and affects many different policy areas, including the protection of human health, safety, and certain environmental measures. The TBT Committee meets regularly, generally to discuss the implementation and administration of the TBT Agreement and technical co-operation for developing countries.
74. The Chairman also discussed the recently passed Fourth Triennial Review Report [note 40]. A triennial review on the operation and implementation of the Agreement is mandatory under Article 15.4. The report focuses on six elements: the implementation and administration of the TBT Agreement; good regulatory practice; conformity assessment procedures; transparency; technical assistance; and S&D. Under this last element, the Triennial Review committed to a more focused exchange of information among WTO members. Specifically, it requires members to inform the Committee about S&D provided and how they have taken the TBT provisions into account in the preparation of regulations relating to TBT.
Q. Briefing on the Committee on Rules of Origin — Ms Vera Thorstensen ( Brazil), Chairman of the Committee
75. Ms Vera Thorstensen presented the status of the harmonisation work programme [note 41] (HWP) on non-preferential rules of origin that the Committee is conducting. She explained that the General Council has recently postponed the deadlines for completion (July 2007 for 94 core policy issues and December 2007 for 43 technical issues) due to the complexity of outstanding issues in the HWP. Nevertheless, significant progress has been made on rules specific to food products and textiles. The speaker announced that she recently finalised a revised package including the rules for all products except machinery [note 42].
76. Ms Thorstensen referred to the different criteria for determining origin of traded goods applied by WTO members. The EC generally resorts to the value-added criterion, according to which a certain percentage of increase in value results in a change of origin. The US, Japan and Korea prefer to define origin on the basis of a change of tariff classification of the concerned product in the Harmonised System 2002.
77. In addition, each bilateral or regional trade agreement (RTA) granting tariff preferences applies specific preferential rules of origin. Every additional set of rules multiplies the barriers to export encountered by developing countries. Ms Thorstensen called on the parties affected to push bilaterally for simplification and compatibility of the more than 350 existing systems of preferential rules of origin. Preferential rules of origin remain outside of the mandate of the WTO. However, the decision on DFQF market access for at least 97 per cent of products originating from LDCs in Annex F of the Hong Kong Declaration mandates members to ensure that rules of origin are transparent and simple. If this decision is not acted upon, each major player is likely to apply its own set of rules of origin, thereby jeopardising the ability of LDCs to benefit from the decision.
R. Briefing on the Working Group on Trade, Debt and Finance — HE Mr Peter Brño ( Slovakia), Chairman of the Working Group
78. Ambassador Brño recalled that the Working Group on Trade, Debt and Finance has been established at the Doha Ministerial Conference in 2001 on request from developing countries. Its mandate is to craft measures to respond to the problems of external debt and financial and monetary instability which constrain developing countries’ capacity to benefit from trade liberalisation.
79. Ambassador Brño stated that all members’ commitment to work on these issues remains very limited. Many developing countries do not see opening their markets as a means to debt reduction. They favour debt cancellation, as decided by the G-8 summit in Gleneagles, Scotland in July 2005.
80. Only four proposals have been tabled in the Group by the ACP [note 43], Argentina [note 44], Cuba [note 45] and the EC [note 46]. The ACP has proposed to establish a regular Committee to address developing country concerns, that have not been addressed by the Working Group. Other members argue that this would make the Group’s work overlap with that of the CTD. In the discussion that followed participants contemplated whether a future role for the Working Group could be to exercise a monitoring function on relevant issues comparable to that of the CTD in Dedicated Session on Small Economies.
S. Closing Session and Evaluation of the 13 th Geneva Week — HE Ms Valentine Sendayoye Rugwabiza, WTO Deputy Director-General and Mr Alberto Campeas, Director, Development Division, WTO
81. In her closing statement Ambassador Rugwabiza noted that participants commended both the format and the content of this Geneva Week in their evaluations. She said that the WTO Secretariat had sought to design a Geneva Week programme that took account of suggestions for improvements made in the evaluations of the last Geneva Week in April 2006. Some participants requested more time to be allocated to technical issues such as rules of origin, TRIPS and SPS. Others expressed interest in additional presentations on fisheries and RTAs.
82. Many delegates suggested doubling the duration of each of the two Geneva Weeks thereby enabling the delegates to better “digest” the information. A number of delegates requested that forthcoming sessions of the Geneva Week be held simultaneously with a General Council Meeting so that non-residents could participate in such important meetings. Ambassador Rugwabiza agreed to this request. More generally, the date of the Geneva Week could be selected in such a way that it maximises opportunities for delegates to attend other meetings of interest to them: a delegate underlined how helpful it had been to attend the Trade Policy Review (TPR) of Colombia in view of the forthcoming TPR of his own country.
83. Ms Rugwabiza pointed out that due to budgetary constraints it would not be possible to extend the Geneva Week duration. She proposed that a single two-week long Geneva Week could be held instead. Delegates unanimously turned down this proposal explaining that being present in Geneva twice a year was essential to avoid losing track of WTO developments.
List of Acronyms
ACP |
African, Caribbean and Pacific Group of States |
C-4 |
Cotton Four |
CAP |
Common Agricultural Policy |
CTD |
Committee for Trade and Development |
CTD-DS |
Committee for Trade and Development in Dedicated Session |
CTD-SS |
Committee for Trade and Development in Special Session |
CTE |
Committee on Trade and Environment |
DG |
Director-General |
DFQF |
duty-free and quota-free |
DWP |
Doha Work Programme |
EC |
European Communities |
G-8 |
Group of Eight |
G-20 |
Group of 20 |
G-33 |
Group of 33 |
G-90 |
Group of 90 |
GATS |
General Agreement on Trade in Services |
GATT |
General Agreement on Tariffs and Trade |
GDP |
Gross Domestic Product |
GI |
Geographical Indication |
GSP |
Generalized System of Preferences |
HWP |
Harmonisation Work Programme |
IDA |
International Development Association |
ITC |
International Trade Centre |
IF |
Integrated Framework |
IMF |
International Monetary Fund |
LDC |
least-developed country |
MEA |
Multilateral Environmental Agreement |
MTS |
Multilateral Trading System |
NAMA |
Non-Agricultural Market Access |
NTBs |
Non-Tariff Barriers |
OECD |
Organisation for Economic Co-operation and Development |
PRSPs |
Poverty Reduction Strategy Papers |
RTAs |
regional trade agreements |
S&D |
Special and Differential Treatment |
SPS |
Sanitary and Phytosanitary Measures |
SVEs |
small and vulnerable economies |
TA |
Technical Assistance |
TACB |
Technical Assistance and Capacity-Building |
TBT |
Technical Barriers to Trade |
TNC |
Trade Negotiations Committee |
TPA |
US Trade Promotion Authority |
TPR |
Trade Policy Review |
TRIMs |
Trade-Related Investment Measures |
TRIPS |
Trade-Related Aspects of Intellectual Property Rights |
UNCTAD |
United Nations Conference on Trade and Development |
UNDP |
United Nations Development Programme |
US |
United States |
USD |
United States Dollar |
WCO |
World Customs Organization |
WTO |
World Trade Organization |
|
