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Background Note

Septemer 2001

WTO Situation Report: September 2001

This note is an update of the Situation Report of March 2001. It centers on the latest developments regarding the preparation for the forthcoming Fourth Session of the WTO Ministerial Conference, which will be held at Doha, Qatar from, 9 - 13 November 2001. It highlights the discussions on implementation issues, which have become an inherent part of the preparatory work for Doha. The length of this note, unusual for AITIC Background Notes, is called for given the wide spectrum of subjects covered. The note seeks to present the less-advantaged country delegates, particularly the Non-Residents, with as comprehensive as possible a guide to the development of the process. Although by no means exhaustive, the note seeks to highlight the salient issues at stake, the convergences and divergences between WTO members, the meetings and the positions that constitute the building blocs for this important meeting.



Preparaory Process

A) Within the WTO

B) Outside the WTO: Regional, National and Other Meetings

Brief Summary of Negotiating

What's in a Round?

I. Introduction

1. The first informal meeting of the General Council after the reality check of end July was held on 4 September 2001. At this meeting, the Chairman of the General Council informed WTO members that by the end of the month he would provide the elements of the draft declaration of the Ministerial Meeting at Doha. In the meantime, he planned to hold informal consultations with individual members or with small groups in the following ten days on the unresolved issues regarding the package that could be agreed on at Doha. In contrast to his consultations so far, the new ones would be on cut-across areas instead of specific issues.

2. On 26 September 2001, the Chairman issued a Draft Ministerial Declaration (JOB(01)140) to be discussed by WTO Members, which was the result of extensive consultations by the Chairman and the Director General of the WTO (DG). In tandem with the Draft Ministerial Declaration, on the same date, a Draft Decision on Implementation Issues and Concerns JOB(01)139 was also presented. These have not yet been fully discussed. (A Background Note dealing specifically with both documents will be forthcoming).

3. The 4 September 2001 General Council meeting came after a month of relative inactivity in the WTO, a fair amount of movement on the sidelines, but not much progress on building a consensus for the Doha agenda. Work at the WTO prior to the summer break concentrated on advancing on three main fronts: continuing the mandated negotiations on agriculture and services (major components of the Built-in Agenda); bridging the gaps between the members differing positions on implementation; and advancing on the preparations for launching a wider process of negotiations (or as the DG has stated, a new round, in fact) at the Doha Ministerial. Clearly, the three are deeply intertwined, as some WTO members consider that substantive progress on the mandated negotiations (particularly in agriculture) or on implementation cannot be reached except if they are trade-offs that can only take place within a larger negotiating mandate. On the other hand, other WTO members, mostly developing and least-developed countries (LDCs) deem progress on implementation a sine qua non condition for any new negotiations.

4. The end of July 2001 was an important benchmark on the road to Doha. To avoid a Seattle repeat, the WTO Director General had stated that, by this date, agreement should have been reached by members on the depth and scope of the Doha agenda: 95% of an acceptable package should be completed by July, leaving only a small number of problems to be addressed at a later stage. Some members (notably the European Union (EU), Japan and the US) seemed to be of the opinion that July was too early to determine whether efforts to widen the negotiations and have an almost definitive package were realistic.

5. Given the complex web of issues to be resolved and the myriad of conflicting positions, after several meetings (a momentous one being that co-hosted by the EU and Japan in Geneva in late March[Note 1]) it was decided that, by end July, a reality check was in order to make an honest assessment of whether dealing with the implementation issues and agreeing on widening the negotiations was feasible.

6. The approach to preparing for Doha is certainly different from the all inclusive strategy that was followed for Seattle.[Note 2] To avoid an unwieldy document, as the elements of the package have not yet been agreed, no draft declaration for Doha was presented prior to the summer break. Thus, as with preparations for Seattle, progress has been elusive. 

7. The difficulty is not only the lack of agreement on the extent and contents of the Doha programme. Perhaps more importantly, the major divide was between two opposite positions (and a host of others in between) which ultimately view the multilateral trading system from two totally different perspectives: those members of the WTO who support the widening of negotiations and regard this as the critical condition for the survival of the multilateral trading system[Note 3], and those who feel that the Uruguay Round process has not yet finished its course and no new negotiations should take place until the fulfilment of rights and obligations - in letter and spirit - pending from the Uruguay Round is well under way. The latter[Note 4] feel very strongly that implementation issues should be resolved prior to negotiating new rules and furthering trade-related liberalisation. The former would argue that the demands on implementation are so significant they must be dealt within the context of a global round of negotiations. Thus the stumbling blocks to launching a round are ominous not only regarding the degree of success of the Ministerial Conference at Doha, but the long-term soundness of the multilateral trading system. Those who have staked the future of the WTO on widening negotiations have repeatedly warned that if this does not happen, the WTO will become irrelevant.

8. The challenge is to narrow the considerable gaps that separate these two seemingly un-reconcilable positions and, through flexibility, accommodate overriding interests and achieve a consensus. The credibility of the system is at stake, even if for different reasons and from different perspectives: loss of credibility of the WTO either by failing to launch a new global round or by the impossibility to resolve the implementation issues. Despite the warnings coming from different quarters, positions seem entrenched and little progress has been noticeable.

II. Implementation

9. Implementation - the major concern of developing countries and one of the intractable issues that contributed to the Seattle failure - has been the subject of intensive discussions and work in the WTO since then. The General Council has been meeting in Special Sessions to advance on resolving the implementation problems and the subsidiary bodies have also undertaken their share of this work. However, the scope and depth of the difficulties have made progress slow. Implementation issues cover a wide spectrum: agriculture, TRIPS, TRIMs, textiles and clothing, customs valuation, rules of origin, technical barriers to trade, sanitary and phytosanitary measures, special and differential treatment, safeguards, etc. Almost one hundred proposals have been submitted, with a number of variations around each one. A brief recount of the salient aspects of the process follows.

10. At the Special Session of 27 April 2001, the Chairman reported that, despite the time and effort invested through the Implementation Review Mechanism[Note 5], the process was not advancing. Despite several informal meetings and continued consultations the breakthrough did not seem to come. By June, the implementation review process was given a nudge by a proposal (based on a Secretariat compilation of ninety-nine unresolved issues, JOB(01)14, 20 February 2001) by a group of seven countries[Note 6] (G-7) and presented at an informal General Council meeting on 21 June 2001. The proposal instilled much needed impetus by infusing a dose of pragmatism and providing a four-category classification of the outstanding difficulties:

(i) issues on which early agreement could be reached[Note 7];

(ii) less urgent issues because they had already been managed or clarified;

(iii) those referred to the subsidiary bodies and to be reconsidered at the September General Council Special Session on Implementation;

other pending issues which could be left to be resolved within a suitable negotiating mandate or to be left for resolution by a political commitment during the (expected future) negotiations. Members reacted favourably and welcomed the proposals as constructive and providing a road map for moving forward the stalled process.

11. Evidently, it would be difficult to enumerate all the issues under contention on implementation, however, to illustrate the general gist of the G-7s first section proposals (i.e. where early agreement was possible) - and the existing gaps between differing positions - a brief review is in order:

· Agriculture: on the original proposal of flexibility in the green box to address non-trade concerns of developing countries such as food security and rural employment, the G-7 proposed to make this flexibility temporary, by suggesting that food security and rural employment measures notified under the green box not be challenged during and until the adoption of the final results of the agriculture negotiations.

· Sanitary and Phytosanitary Measures (SPS)[Note 8]: the G-7 document tones down the original request that developed countries provide longer time periods for developing countries to comply, by proposing at least six months for compliance (instead of the original minimum of 12 months originally proposed) after a new SPS measure has been notified. Similarly the G-7 suggests alternative solutions should be found for measures that would create problems for developing countries (instead of the original proposal of withdrawal of these measures).

· Textiles: the original proposals foresaw that importing developed countries go beyond the liberalisation called for in the Agreement on Textiles and Clothing (ATC) by, among other instruments, applying growth-on-growth for stage 3 with effect from 1 January 2000, instead of 1 January 2002; by a two-year moratorium on antidumping actions after the full integration of textiles and clothing into the GATT and by increasing the growth rates in quotas for small suppliers. The G-7 alternative proposes an increase (percentage to be determined) at the end of the second (current) stage of integration for categories for quotas filled by at least 95% during the last two years, and the elimination of all restrictions on small suppliers, LDC imports and on childrens clothing.

· TRIMs: on the proposed extension of the transition period of implementation for another five years, giving developing countries another opportunity to notify existing TRIMs, and allowing their continuation until the end of the new transition period. The alternative proposed by the G-7 is to work on the solution discussed in the Goods Council to extend TRIMs based on the 2+2 approach (two years extension plus two years grace period subject to a case-by-case review), and new notifications to be considered by the Committee for Trade in Goods.

· Market Access: the original proposal was to define substantial supplier (Article XIII of GATT 1994) taking into account the importance of the product to the exporting member, as opposed to the percentage share in the importing market, the G-7 alternative is that substantial supplier should be understood to have the same meaning as principal supplying interest (Understanding on Article XXVIII).Ê

· Antidumping: to the original request to make the lesser duty[Note 9] mandatory, the G-7 suggests the possibility of upholding it during the negotiations and until the adoption of the results of negotiations on antidumping. On the original proposal that back-to-back antidumping investigations be prohibited on the same product within a one-year period (to reduce threats of antidumping actions), the G-7s suggestion is to have a thorough examination of any application for the initiation of an antidumping investigation, and where an investigation of the same product for the same member does not result in the imposition of final measures within one year prior to the filing of the application, an antidumping investigation should not proceed, unless the examination demonstrates that circumstances have changed.

· Subsidies: some of the original proposals by developing countries included that (i) developing countries export credits should not constitute prohibited export subsidies if they are above LIBOR and (ii) countries in Annex VII(b), excluded from the application of Article 27.2(a) given that their GNP exceeds USD1000, automatically fall into this category if their GNP were to fall below this benchmark. The alternative offered on (i) by the G-7 is that the Committee on Subsidies examines the question of a specific interest rate benchmark for determining when developing countries export credits do not constitute export subsidies. On (ii), the G-7 proposes that countries included in Annex VII be allowed to remain in this category unless their GNP were to exceed USD1000 for three consecutive years in constant 1990 dollars.

· TRIPS: on the request for inclusion of the WHO list of essential drugs within the list of exemptions from patentability in Article 27.3(b) and the right of developing countries to issue compulsory licenses for this list of drugs in order to be able to supply them at reasonable prices, the G-7 alternative reaffirms that the TRIPS Agreement, under certain conditions, does not prevent members from issuing compulsory licences for WHO-approved essential drugs or from allowing parallel imports.

· Special and Differential Treatment (S&D): on the demand that S&D provisions should be converted into concrete commitments, the alternative proposed by the G-7 is that Ministers instruct the Council and subsidiary bodies to undergo a revision of these provisions for improving their practical implementation to be considered by the 5th Ministerial Conference.

· Services: the original proposal states that developed countries shall fully implement commitments undertaken under Mode 4 (movement of natural persons). The G-7 alternative is that members should ensure that administrative practices do not impede the full and effective implementation of their commitments under the GATS, in particular under Mode 4.

12. Within the second section of the G-7 paper which deals with issues that have been solved, clarified, or appear less urgent, two items are worth mentioning: on Rules of Origin, the G-7 paper refers to the original proposal not to have any new interim arrangements, but does not mention the remaining work on harmonisation of non-preferential rules of origin. The deadline for the completion of this work (20 July 1998) was missed, as was that set for 31 December 1999. The new date for completion of the work on harmonisation is by the 4th Ministerial Conference and, if that is not possible, by 31 December 2001. In relation to Customs Valuation, the G-7 document mentions extension of moratorium in Article 20.1. However, the document omits one of the original proposals that seeks inclusion in the Agreement of a multilateral solution that would permit importing countries to obtain information on export values in doubtful cases, to avoid possible fraud.

13. At the Special Session on implementation on 20 July 2001, two additional papers were submitted to take stock of progress and clarify outstanding difficulties. The first, JOB(01)/112, 13 July 2001 (hereafter referred to as Chairmans paper) put forward by the Chairman of the General Council and the DG of the WTO on their own responsibility, outlining the elements on which further progress could be made. The thrust of this document centred on Section 1 of the proposal submitted by the G-7 (Sections 2, 3 and 4 were omitted). As was remarked by several delegations at the 20 July 2001 Special Session, the Chairmans paper also left out other important issues (under Section 1) related to antidumping, textiles and clothing and TRIMs. These, together with the three remaining sections of the G-7 paper were to be the subject of further consultations. The second paper, JOB(01)115, 19 July 2001, discussed at this meeting was a Status Report by the Secretariat on the issues which had been referred to the subsidiary bodies. Reports on these would be forthcoming and submitted to the General Council on 30th September.

14. Members regarded the Chairmans Paper as advancing the process, although developing countries expressed disappointment that it had left out the key issues of their concern and had not adequately dealt with others (market access, subsidies, S&D, Mode 4, TRIPS and health). Some representatives recalled that the 3 May 2000 Decision on Implementation set the 4th Ministerial Conference as a deadline for the resolution of implementation issues and that this was an essential part of confidence-building strategy. Thus, concerns arose about issues referred to the subsidiary bodies, which in the view of many delegations was not a solution. The General Council should deal with these issues, as they required political rather than technical inputs. And, if referred to the subsidiary bodies, these issues should be tackled with specific guidelines and timeframes. It was also suggested that the reports of the subsidiary committees should be staggered to avoid an overcrowding of the discussions if they were all presented simultaneously.

15. For the informal meeting of the General Council of 30-31 July 2001, the Chairman and the DG presented a report, JOB(01)118, 24 July 2001, on the state of the preparatory work on specific issues. On implementation, the report noted that positive developments had taken place (such as the G-7 contribution and the subsequent paper by the Chairman and the DG and other members inputs), which could provide the momentum needed to reach early agreements. However, the report also acknowledged little movement towards convergence in major areas: disagreement persisted on the technical feasibility of resolving certain issues that would require either changes to domestic legislation or to the existing agreements. Additionally, there was no agreement on whether these issues could be appropriately examined within wider negotiations.

16. At the reality check meetings, the Chairman of the General Council stated several important points on implementation: that the Chairmans Paper (JOB(01)/112) was not meant to be exhaustive, as consultations were continuing on the issues left out (antidumping, textiles and clothing and TRIMs). That the referral of issues to the subsidiary bodies did not mean that they were being neglected, this was only a practical way of allowing these bodies adequate time to come up with technical advice on them to enable the General Council to take action. The reports of the subsidiary bodies would be submitted to the General Council on 30 September 2001. Furthermore, the DG and him had suggested other issues to be referred to the subsidiary bodies, among them: the proposal that a member be considered as having a substantial interest in a product when the product constitutes a significant part of its exports be considered by the Market Access Committee; the SPS Committee to take up the issue relative to the negotiation and conclusion of equivalency agreements; the Customs Valuation Committee to deliberate on members concerns regarding fraud; the Subsidies Committee to look into the conditions for determining when developing countries export credits do not constitute subsidies. 

17. The Chairman of the General Council concluded that implementation was an issue of paramount concern for developing country members, thus the slow progress was frustrating. Moreover, on the basis of his consultations, he saw little prospect of advancing on one of the key issues i.e. textiles and clothing.

18. There was however a breakthrough on one of the most contentious issues on implementation, TRIMs. The Council for Trade in Goods approved on 31 July 2001 the waiver that granted eight countries an extension for compliance with the TRIMs Agreement on the basis of the 2+2 approach.[Note 10] The Goods Council also recommended, and the General Council approved, a waiver for Thailand.

III. Preparaory Process

19. Progress on reaching a consensus on the agenda for Doha proceeded on two main tracks: in the WTO proper, in formal and informal meetings, and others of varied groups of WTO members held outside Geneva. The former took place mainly prior to the August break, the latter meeting process gathered speed during the lull in Geneva.

A. Within the WTO

20. The process has advanced in dribs and drabs. Since it got started in February 2001 - when the General Councils accepted Qatars offer to host the Conference - 35 plenary meetings, formal and informal, took place, as noted by the DG at the informal meeting of the General Council on 30 July 2001. In contrast with the preparations for Seattle, which were considered Secretariat-drivenÓ, the process of forging a consensus for Doha is being guided by the Chairman of the General Council through an open-ended, inclusive and transparent member-driven process. In early March 2001, the General Council Chairman issued a document posing six questions and urging members to determine whether there should be a decision or a declaration on a new round of trade talks. The questions included: (a) whether the General Council or a special working group should oversee preparations for Ministerial agenda; (b) whether implementation issues should be discussed before the Ministerial; (c) whether ongoing mandated negotiations in agriculture and services should be linked to preparations for Doha or be conducted on a separate track; (d) whether new issues - such as environment, transparency in government procurement, investment, competition, government procurement, and labour - should be discussed along with the outstanding issues or be reviewed differently; and (e) what should be the link between various informal meetings held within the WTO and those outside Geneva.

21. On 20th April 2001 the Chairman of the General Council issued a six-point Initial Checklist of Possible Issues for Discussion for the 4th Ministerial Conference[Note 11]: i) Ministers' Views and Statements on Current Issues; ii) Implementation; iii) Ongoing Negotiations/Reviews; iv) Other Elements of the Work Programme; v) Organization and Management of the Work Programme; and (vi) Technical Cooperation and Capacity Building. This document was discussed at an informal meeting on 3 May 2001. From this meeting the Chairman concluded he would continue the process by having open-ended consultations on some of these points.

22. Following on these consultations, on 25 to 26 June 2001 an informal meeting at Senior Official level took place in Geneva. To prepare for the meeting, a report on the consultations was circulated by the Chairman (JOB(01)/94, 22 June 2001). The Chairman informed members that although wide support for the enlargement of the negotiating agenda at Doha, was reported, dissonant voices on the scope and level of ambition of an enlarged negotiating agenda obstructed progress, as members restated their long-standing positions on the scope of further liberalisation on agriculture, on additional protection for geographical indications, on investment, competition and the environment. By contrast, the issues on which the Chairman noted convergence were: that the preamble to the Doha Declaration would be a brief and political statement which would put emphasis on the development dimensions, including a possible reference to TRIPS and public health. On the second item, implementation, the Chairman reported that it was recognised by all as being a key, systemic issue. On the built-in agenda, there was convergence on services, but differences remained on agriculture, geographical indications and other issues. The Chairman was positive on possible negotiations on market access and trade facilitation. (For more detail on individual positions, see Section IV below). The Chairman concluded that the discussions had been useful in clarifying a number of issues, but also recognised that much remained to be done. There was wide support for the end of July reality check, not as a deadline but as a frank snapshot of progress and problems. By the end of July, the Chairman saw the need for significant movement towards convergence to build on a firm foundation for detailed drafting in the autumn, and for moving the process beyond consultations to negotiations.

23. July 2001 was an active month on the preparations for Doha. There appeared to be some movement in preparation for the final stocktaking (reality check) session of the end of the month. Prior to it, the Chairman commented on various areas including market access for non-agricultural products and implementation, and advanced several elements for discussion regarding the Ministerial Declaration. The later were based on the 20 April checklist (see para 21). On another track, the Chairman reported that if other linkages and issues were to be successfully addressed, broad consensus seemed to exist on coverage, objectives, modalities and special and differential treatment with respect to possible negotiations on liberalising trade in non-agricultural products. However, there was no agreement on the main issue of interest to developing countries, namely addressing tariff peaks and tariff escalation.

24. To facilitate discussions at the informal meeting of the General Council of 30-31 July, which would conduct the reality check on progress of the preparatory process for Doha, the Chairman and the DG circulated a report, JOB(01)118[Note 12], 24 July 2001. This report still noted wide gaps among the positions, notably on implementation (see above). It reviewed the progress made on the Built-in Agenda (negotiations on agriculture and services and reviews of elements of the TRIPS Agreement), and also on other areas of possible inclusion in the work programme: relationship between trade and investment, trade and competition policy, transparency in government procurement, trade facilitation, market access negotiations on non-agricultural products, trade and environment, and other issues including antidumping, dispute settlement, electronic commerce, regional trade arrangements. Subjects of particular interest to specific developing countries on which papers were submitted: special and differential treatment and the possible establishment of working groups on trade and debt, trade and finance, and trade and technology transfer[Note 13]; special needs of small economies[Note 14], and export credits[Note 15].

25. Despite the high hopes that by the time the reality check came positions would have converged, the situation continued mostly static. The Chairman of the General Council acknowledged substantial gaps between positions persisted, but time was pressing and it was urgent to begin the process of moving beyond the entrenched positions. Members could not risk reaching Doha with too many issues open. The DG echoed the Chairman on the urgency of closing the distance between the differing positions. Failure to agree on a forward work programme that would advance the objectives of the multilateral trading system would condemn the WTO to a long period of irrelevance. This work programme, he believed, was the launching a new round. The DG stated that the fact that wide gaps still existed was because the process of focussing on single-issue consultations had reached its limit. The time had come to start the process of addressing the relationship and possible trade-offs between issues, which involved political commitment and resolution.

26. More than fifty delegations took the floor. Although some may have noted increasing support for going beyond the mandated negotiations of the Built-in Agenda, there was no consensus for including any further issues. Summarising[Note 16]: although the Quad had sought to demonstrate their agreement on the launching of the new round, they were still far apart on specific issues, such as investment and competition, the environment, or antidumping favoured by the EU, and the US appearing reluctant to negotiate new rules on antidumping or to make competition issues the subject of dispute settlement. The US on the other hand, together with the Cairns Group, saw the future of a new round agreeing on specific commitments and deadlines on agricultural liberalisation, on which the EU, Japan, Korea, Norway and Switzerland differed.

27. A number of delegations agreed that the only practical tactic to resolve implementation problems (of paramount concern to developing countries) was within a new round. Developing countries resisted the expansion of the agenda to include new issues (investment, competition, environment, and core labour standards). African and LDC countries put implementation issues at the top of their agenda as a condition to accept some flexibility on other issues. Even on initiating negotiations on tariff reductions on non-agricultural products, consensus was elusive, as developing countries expressed concern about erosion of preferences and centred their interest negotiating tariff peaks and tariff escalation, whereas the EU, for example, would agree to this only in the context of a wider negotiating mandate.

28. Many members regretted the amount of time devoted to discussing negotiations on new issues to the detriment of more crucial subjects such as agriculture, textiles and antidumping and appealed for scaling down the ambitions and considering other options such as a non-negotiating alternative. Some considered that the WTO would not become irrelevant on account of not having an enlarged negotiating agenda.

B. Outside the WTO: Regional, National and Other Meetings

29. A number of formal and informal meetings between regional groups or between individual WTO members have taken place to exchange information, coordinate positions, or guide the negotiating process. Evidently, these meetings reflect the positions already stated at the numerous formal and informal meetings that have taken place in the WTO, be it in the General Council or the subsidiary bodies. What is interesting is that the coordination process taking place among the less-developed members of the WTO, has on many occasions resulted on agreed documents on most of the issues under contention through consensual declarations.

Zanzibar Ministerial

30. Trade Ministers from the 49 LDCs met in Zanzibar on 22-24 July 2001 to adopt a common position for Doha by preparing their development agenda with negotiating objectives and proposals[Note 17]. Salient among the issues was the reiterated view that given the LDCs limited capacity to negotiate and undertake further commitments, the future WTO work programme and any future negotiations would have to be based on an agenda taking account LDC interests. On more specific issues, the LDCs highlighted their special concerns regarding:

(a) Market Access: to ensure the security of their preferential market access by providing contractual status to the duty free and quota free preferences through a new legal instrument; a call for harmonisation of preferential rules of origin among preference-giving countries.

Implementation: the list of issues, viewed from the LDC perspective included:

i. Agriculture: immediate implementation of duty free and quota free access to cover all their primary, semi-processed and processed agricultural exports.

ii. Services: demands for commitments under the Services Agreement by developed countries in Mode 4.

iii. Subsidies: exclusion from Annex VII for LDCs only if their per capita remained above the Annex VII level for a period of four years.

iv. TRIMs: exclusion of all LDCs from TRIMs disciplines.

v. TRIPS: implementation of all transfer of technology provisions, particularly that on Article 66.2; flexibility under the TRIPS Agreement and the right to take action for easy access to medicines, extension of the transitional period of implementation.

vi. Customs Valuation: development of simplified procedures for LDCs to be able to take antidumping and countervailing duty actions.

(c) Accession: understandable since nine LDCs are in the process of negotiating their terms of accession, and yet, no LDC has been able to accede to the WTO through negotiations since the organisation as such was established in 1995.[Note 18]

Among the proposals for facilitating accession: streamlining procedures and documentation; establishing clear, simplified fast-track procedures; providing eligibility for all acceding LDCs to the provisions on special and differential treatment contained in the WTO Agreements, including the transitional periods stipulated for LDCs, to be counted from the date of accession.

31. Given the difficulties LDCs would have in having these demands taken into consideration by the resort of the WTO members, it is not surprising that the host of the meeting, the Minister for Industry and Trade of Tanzania, Iddi Simba, mentioned at the closing of the meeting Most of us are not ready for a new round.

COMESA and SADC Ministerial[Note 19]

32. It was held in Cairo on 30 July 2001. Because of the composition of these two regional bodies, (members from Eastern and Southern Africa), the communiquŽ reflected the interests and positions of LDCs and African countries. Full support for the position of the LDCs as contained in the Zanzibar Declaration, and summarised their stance on:

(a) Implementation: concern about imbalances in the Uruguay Round Agreements and lack of progress in resolving implementation issues; agreed to form a working group in Geneva to work out papers on issues of priority. Emphasised the limited technical and institutional capacities to fully adapt national legislation to meet their obligations under the multilateral trade agreements or be able to draw the benefits. Call on WTO to implement the 15 December Decision to address the unresolved implementation issues with a view to completing the process by the Doha Ministerial.

i.TRIPS: reaffirmation that nothing in the TRIPS Agreement prohibits members from taking measures in the interest of public health and to provide access to medicines at affordable prices.

ii.TRIMs: undertake a review of the Agreement to address its effects on development prospects in line with the provisions of Article 5 (which recognises trade, financial and overall development needs of developing and LDCs).

(b) Special and Differential Treatment: elaboration of meaningful provisions with the aim of promoting industrial development in Africa.

(c) Market Access: While welcoming the AGOA[Note 20] and EBA[Note 21] initiatives, the EU and the US were urged to provide necessary capacity building and to address the persistence of tariff peaks and tariff escalation, binding the duty and quota free access for all products from African and least-developed countries, abolishing restrictive SPS and TBT measures which impede market access. Any negotiations on tariffs should not undermine the preferential treatment of COMESA/SADC in developed country markets.

(d) Transfer of Technology: make it a top priority of the WTO work programme.

(e) Mandated Negotiations:

i. Agriculture: credit and recognition to developing countries for autonomous liberalisation; substantial and progressive reductions of trade-distortive domestic support measures of developed countries, but flexibility to COMESA/SADC countries to accord them for agricultural development and food security. Export subsidies by developed countries to be substantially and progressively reduced with a view to their total elimination. Negotiations in agriculture should continue in the context of the Built-in Agenda and be concluded within a reasonable period.

ii. Services: continuation of existing architecture of GATS, in particular the positive list approach; effective implementation of provisions in Articles IV and XIX concerning increased market access for developing countries and LDCs in the sectors of modes of supply of interest to them, particularly Mode 4.

(f) New Issues: reiteration that the ILO is the only competent organisation to deal with core labour standards; trade and environment was no yet ripe for negotiation and the CTE should continue its work programme; lack of conviction on negotiating rules on trade facilitation; no consensus on trade and competition policy as a substantial number of developing and LDCs do not have legal and administrative infrastructure on competition; continuation of work programme on electronic commerce.

SAARC Ministerial

33. The trade ministers of SAARC members[Note 22] met on 23 August 2001 in New Delhi for consultations and coordination of national positions in preparation for Doha, as they had done prior to the Seattle Ministerial. The conclusion of the meeting reflected agreement among the members on several major issues:


(a) Implementation: a careful review revealed lack of meaningful progress; concern was expressed that further delay in achieving results would erode the credibility of the multilateral trading system among the developing and least-developed countries.

(b) Market Access: the Uruguay Round had not resulted in increased market access for developing and least-developed country exports due to the persistence of tariff peaks and tariff escalation and use of non-tariff barriers.

(c) Special and Differential Treatment: provisions need to be contractually binding and not remain best endeavour clauses.

(d) Textiles and Clothing: in view of limited liberalisation up to now, affecting items under specific quota restraints, there was an immediate need for more meaningful integration, including measures for an accelerated removal of quota restrictions through the integration of an additional 50 percent of imports of products from the four product groups at the beginning of the third stage of integration by January 2002 and increased growth rates until 2005; restraint of unilateral modifications of rules of origin, moratorium on the application of antidumping, countervailing duties and safeguard measures by importing countries on the exports of the developing and least-developed countries.

(e) TRIPS: harmonisation of the TRIPS Agreement and the UN Biodiversity Convention; meaningful transfer of technology to developing and least-developed countries to be effectively operational; higher protection of geographical indications other than wines and spirits; greater flexibility to permit affordable access to essential medicines in accordance with public health concerns and needs of developing countries.

(f) TRIMs: positive approach to requests for further extension of the transition period for developing countries.

(g) Mandated negotiations:

i. Agriculture: reiteration of the calls for substantial reductions in tariff peaks and tariff escalation, reductions in domestic support and elimination of all forms of export subsidies by developed countries; need for differential and more favourable treatment for developing countries on such issues as: flexibility for developing countries to safeguard food security and rural development concerns and extension to agriculture of the flexibility available to developing countries under the Agreement on Subsidies and Countervailing Duties.

ii. Services: increased commitment by developed countries in facilitating market access to developing countries, especially through movement of natural persons.

(h) New Issues:

i. Investment and Competition: opposition to any move on negotiations on these, which place limitations on development policy options; opposition to drawing plurilateral agreements, i.e. to return to the pre-Uruguay Round situation, as contrary to the principles of the multilateral trading system.

ii. Labour standards or environment: resolute opposition.

iii. Involvement of NGOs and civil society: opposition to any involvement in decision-making in the WTO; also opposed was the solicitation of amicus curiae briefs in Dispute Settlement Procedures.

Mini Ministerial Meeting in Mexico

34. At the invitation of the Mexican Government, seventeen WTO members had a meeting in Mexico City on 1 September 2001.[Note 23] The list of issues to be discussed included: agriculture, environment, implementation, rules and the Singapore issues, i.e. trade and investment and trade and competition. The meeting did not conclude with a communiquŽ or concluding remarks, though it became known that it had been decided to have a follow up meeting at ministerial level in Singapore in October. On implementation it became clear that at least a minimal package was necessary and that the Chairman and the DG would produce another prospective arrangement; on agriculture and antidumping, the general impression was that some flexibility could be possible on the part of the EU on the former and the US on the latter; on environment, a deal seemed more difficult to achieve, given the EUs mandate and the reluctance of other members to give ground on the precautionary principle, eco-labelling and the relation between Multilateral Environmental Agreements (MEAs) and WTO rules.

Cairns Group Ministerial

35. The 22nd Ministerial Meeting of the Cairns Group was held in Punta del Este, Uruguay, on 3-5 September 2001. Special ministerial guests, including the US Secretary of Agriculture and the USTR, the Kenyan Minister of Trade and Industry, also attended the meeting. The CommuniquŽ issued at the end of the meeting noted with concern that, according to the OECD current support provided by tariffs and non-tariff barriers to agriculture amounted to the staggering figure of USD1 billion per day. Thus, the urgency to bring agriculture under WTO rules to provide the conditions for fair competition on the basis of comparative advantage. The Cairns Group was committed to push for agricultural reform to establish a fair and market-oriented trade in agriculture. In relation to the Doha Ministerial, the Group reaffirmed full integration of agriculture into WTO rules; called for the elimination of all forms of export subsidies; improved market access through substantial cuts in tariffs and tariff peaks, elimination of tariff escalation, increases in tariff quota volumes, strengthening the administration rules for tariff quotas, and elimination of the remaining non-tariff measures; and major reductions in domestic support leading to its elimination. It also demanded enhanced and concrete special and differential treatment for developing countries and a clear understanding of the timetables and benchmarks for concluding the negotiations and a structure that would enable the work to advance. The communiquŽ noted the strong commonality of views between the Cairns Group and the US in relation to the approach and ambition for agricultural trade liberalisation objectives at the Doha Ministerial.

IV. Brief Summary of Negotiating

36. The member of the WTO with a more comprehensive agenda regarding Doha and the launching of the new round is the EU. Its negotiating mandate[Note 24] includes: investment and competition, on which the EU would be agreeable to accept plurilateral agreements. Trade and environment is another major element in the EUs agenda. It would include clarification of the WTO relation with MEAs, the scope for use of labelling schemes and the application of the precautionary principle.[Note 25] The EUs is also open to negotiate antidumping and subsidies. It supports negotiations for reaching multilateral agreements on trade facilitation, transparency in government procurement and electronic commerce, which the EU would see as being in the interest of both developed and developing countries. To seek support from developing countries on these issues, the EU would be flexible and sympathetic on some of the implementation issues on which the developing countries are demandeurs, including extension of the TRIPS Agreement to cover geographical indications other than wines and spirits, the relationship between TRIPS and the Convention on Biological Diversity, the question of traditional knowledge, TRIPS and access to medicines, the review of the Dispute Settlement Understanding. The EU would also be receptive to a review of the special and differential treatment provisions to make them more operational.

37. On the inclusion of investment, environment and review of the antidumping rules, Japans position is closer to the EU than to that of the US, favouring their inclusion in the new negotiating agenda. On antidumping rules the EU and Japan are joined by other WTO members who have expressed widespread support for tightening rules on antidumping, including Latin American and Asian countries such as Chile and Korea.

38. The US interest in a new round is less comprehensive than that of the EU. The US main interests are market access, transparency in government procurement and the revision of the dispute settlement rules. On implementation, the US (together with Canada), would rule out changes to the Agreement on Textiles and Clothing, as the implementation schedule, already approved by Congress, was part of US law. The US, with a host of other WTO members would favour negotiations of reductions in fishing subsidies. The US has been reluctant to accept negotiations on investment and competition. Some developing countries, notably Colombia and Chile, would be favourable of the inclusion of investment. On competition, opposition to its inclusion comes from other WTO members, including Brazil, Chile, India, Pakistan, Indonesia, Hong Kong - China, Singapore, Ghana, South Africa, Trinidad and Tobago. Similarly LDCs are opposed to inclusion of competition as they lack the legal and administrative structures and capacity or lack a central competition authority. These and other members of the WTO would also oppose the plurilateral approach to investment or competition, stating their support for a single undertaking.

39. On agriculture, one of the most important issues that held back negotiations during the Uruguay Round, continues to be the subject of wide divisions: on the one hand the agriculture exporters, US and the Cairns Group, seeking a more ambitious mandate than the existing one on Article 20 of the Agreement on Agriculture, on the other hand, the EU supported by Norway, Japan, Switzerland and Korea, for whom the multi-functionality of agriculture is paramount, although they could perhaps agree to setting a date for finalising the mandated negotiations under Article 20.

40. On trade facilitation, which seemed a reasonably neutral issue, developing countries are reluctant to include it as part of the new negotiations for concern this would be subject to dispute settlement.

V. What's in a Round?

41. Most of the attention has focused on the necessity of widening the negotiations on the one hand and dealing with the implementation issues on the other. Lingering in the background, and expressed only occasionally, is the need to have a back-up strategy to a possible failure to launching a new comprehensive round of multilateral trade negotiations and/or failing to address the implementation issues to everyones satisfaction. Some members, those who would support the widening of the negotiations beyond the Built-in Agenda, would advance the theory of the bicycle: if the bicycle stops moving, it will fall down. Those who favour concentrating work at the WTO on tackling the implementation issues have expressed their disagreement with the argument that not widening the negotiations beyond the Built-in Agenda would relegate the WTO into irrelevance. They consider that the work programme is vast and crucial enough to merit the full attention of WTO members. Moreover, they believe that resolving the implementation issues would lead to the consolidation of the multilateral trading system.

42. However, the issues may not be as polarised as they might seem. The depth and breadth of the Doha agenda on negotiations on which everyone could agree on cover a wide spectrum. Similarly, the ways to deal with, and the number of implementation issues, on which agreement could be found is immeasurable. The key is flexibility, not only on the levels of scope and ambition, but also in possible compromises regarding semantics. A modus operandi can be found to come up with an acceptable package to which all will be able to subscribe. The success of Doha will be dependent on this. What is clear, as many have repeatedly mentioned, is that too much is at stake, for all members and prospective members of the WTO, for developed and developing countries, for economies in transition and LDCs, for small and vulnerable economies. To allow another Seattle failure is in nobodys interest.Ê The challenge in the forthcoming weeks is the determination of all members alike to bridge what up to now seem positions cast in stone and display a modicum of flexibility to find compromises that will make an eventual consensus possible.


Note 1: Attended by officials from Australia, Brazil, Canada, Chile, Egypt, Hong Kong - China, Hungary, India, Malaysia, Mexico, Morocco, New Zealand, Singapore, South Africa, South Korea, Switzerland, Thailand and Turkey.[Return to text]

Note 2: The draft Ministerial Declaration for Seattle had received inputs from all members and was a 32-page document of mostly bracketed (i.e. not agreed) text resulting from a strategy of an all-inclusive approach (taking on board more than 200 proposals).[Return to text]

Note 3: This position has been voiced by the G-7 and heads and top names in the inter-governmental circles including the UN Secretary General, the members of the UN Zedillo Panel (charged with issuing a Report on Financing for Development), the President and the Chief Economist of the World Bank, the present and three former directors general of the WTO, among others. [Return to text]

Note 4: Apart from opposition from individual developing countries such as India, Malaysia, Pakistan, and other members of the Like Minded Group, this position has also been espoused by several informal groups of WTO members: the least-developed countries, the member countries of the South Asian Association for Regional Cooperation (SAARC), (see section on the regional and national meetings below). [Return to text]

Note 5: This mechanism started in earnest on 3 May 2000, by a Decision by the General Council that states that the process should be completed not later than the 4th Session of the Ministerial Conference. [Return to text]

Note 6: Argentina, Morocco, New Zealand, Norway, Switzerland, Thailand and Uruguay. [Return to text]

Note 7: In this proposal, the majority of outstanding issues, and not necessarily those that could find an early solution, meaning by this, as understood by the Chairman of the General Council anytime between now and the Fourth Ministerial Conference (Chairmans Statement, 20 July 2001, No. 5465). [Return to text]

Note 8: On the important issue of guidance in relation to the negotiation and conclusion of equivalency agreements (tiret 12 of the Secretariat compilation), the G-7 document does not propose alternatives. [Return to text]

Note 9: The lesser duty rule provides that only a duty lower than the calculated dumping margin should be applied if this duty is sufficient to prevent injury to domestic producers. [Return to text]

Note 10: Argentina, Chile, Colombia, Mexico, Pakistan, the Philippines and Romania. Ten countries had requested the extension, including Egypt and Thailand. The extension is until 31 December 2001 with the possibility of another two-year extension until 31 December 2003. [Return to text]

Note 11: Job(01)/51. [Return to text]

Note 12: Already referred to in the section on implementation (see above, para 14). [Return to text]

Note 13: Submitted by Cuba, Dominican Republic, Kenya, Honduras, India, Indonesia, Malaysia, Pakistan, Tanzania, Uganda, and Zimbabwe. [Return to text]

Note 14: Submitted by Antigua and Barbuda, Barbados, Dominica, Dominican Republic, Fiji Islands, Grenada, Haiti, Jamaica, Maldives, Mauritius, Papua New Guinea, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Solomon Islands and Trinidad and Tobago. [Return to text]

Note 15: Submitted by Brazil. [Return to text]

Note 16: For more detailed positions, see section V below. [Return to text]

Note 17: The Secretary General of UNCTAD and a Deputy Director-General of the WTO, representing the DG, also attended the meeting. [Return to text]

Note 18: The Democratic Republic of Congo and Niger joined the WTO (after the Singapore Ministerial), but as they were GATT Contracting Parties they did so without negotiating their terms of accession. [Return to text]

Note 19: Ministers and heads of delegations from Comoros, Djibouti, Egypt, Ethiopia, Kenya, Malawi, Mauritius, South Africa, Sudan, Swaziland, Uganda, Zambia and Zimbabwe attended the meeting. [Return to text]

Note 20: African Growth and Opportunities Act. [Return to text]

Note 21: EUs Everything but Arms Initiative to provide duty-free and quota free access to the 49 LDCs covering all goods except arms.[return to text]

Note 22: SAARC members include Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka , all are members of the WTO, except Bhutan and Nepal which are in the process of accession. Bangladesh did not attend the meeting due to forthcoming elections. [Return to text]

Note 23: Attended by Argentina, Australia, Brazil, Canada, the EU, Egypt, Hong Kong - China, India, Jamaica, Singapore, South Africa, Switzerland, Tanzania and Uruguay. Malaysia and Pakistan, originally expected to attend, did not. [Return to text]

Note 24: Stemming from the EU Commission Paper on strategy for a new WTO Round (Note for the attention of the 133 Committee, 13 December 2000). [Return to text]

Note 25: Defined in the Rio Declaration: where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing measures to prevent environmental degradation. [Return to text]


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