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1. Three main documents directly related to negotiations emerged from the Fourth Ministerial Conference, held in Doha from 9 to 14 November 2001. First was the Ministerial Declaration, which outlines a wide-ranging work programme and the blueprint for negotiations in several areas. These include those on which negotiations had already started under the built-in agenda (agriculture and services), new negotiations on other issues such as rules, trade and environment, and discussions on the so-called Singapore issues, on which negotiations would be launched after the Fifth Ministerial Conference to be held in Cancun, Mexico in September 2003, provided there is explicit consensus on the modalities of negotiations. The second document was the Decision on Implementation-Related Issues and Concerns, dealing with some of the long-discussed implementation-related issues on which developing country members had a particular interest in advancing prior to Doha and the launching of new negotiations. The third document was the Declaration on the TRIPS Agreement and Public Health, also a major bone of contention prior to Doha and of prime interest for developing country members. All these documents lay down the framework of the post-Doha agenda. Some of the issues are discussed in the framework of the negotiating mandate given by the Doha Declaration, while work on others takes place under the Decision on Implementation or the Declaration on TRIPS and Public Health. Three other decisions were adopted at Doha, all of them related to developing country members interests: Procedures for Extensions under Article 27.4 for Certain Developing Country Members (Agreement on Subsidies and Countervailing Measures); European Communities - The ACP-EC Partnership Agreement; and European Communities - Transitional Regime for the EC Autonomous Tariff Rate Quotas on Imports of Bananas.
2. Following agreement on the Doha Work Programme, work in Geneva started in earnest in early January 2002. The first task was to set up the Trade Negotiations Committee (TNC), which, as stated in the Ministerial Declaration, was to supervise the progress of the negotiations. After some debate on who was to chair the TNC, it was agreed by members of the WTO that the WTO Director General would be the chairman, Mr Mike Moore until 31 August 2002 and Dr Supachai Panitchpakdi on taking office, as of 1 September 2002.
3. Regarding the structure of the negotiations, two negotiating groups were established under the TNC: one on market access and one on WTO rules. Additionally, the TNC also established the several temporary bodies where negotiations would be held in the form of the respective committees in special session on the following subjects: agriculture, services, environment, TRIPS, dispute settlement and trade and development. The selection of the chairpersons, who are to serve until the Fifth Ministerial Conference in 2003, with the possibility of extensions, was agreed on 15 February 2002.
4. Several general observations are in order on the general aspects of the initiation of the negotiations. On external events that had a bearing on the negotiations, two in the US stand out. One that produced scepticism on the advancement of the agricultural negotiations was the approval by Congress of the US Farm Bill, the most expensive farm support programme in US history. However, the passing of the Trade Promotion Authority through the US Congress gave negotiators some reason for optimism. An additional development, which was considered as a good omen for the negotiations, was the European Commissions proposals for the mid-term review of the Common Agricultural Policy (CAP). However, the opposition of several members of the EU to the CAP reform, as well as the seeking of trade-offs in other areas - geographical indications - for liberalisation of farm trade are hurdles in the way of a successful outcome not only in agriculture, but for the whole package under negotiation.
5. While the substance of the negotiations is unique to each of the subjects under discussion, the procedural aspects of the negotiations - that had to be agreed prior to starting the negotiations proper - were common to all negotiating groups. Although agreeing on procedures - including phases of work, negotiating guidelines or modalities, number and length of meetings, timetables and deadlines - might seem relatively easy by comparison with the substance of the negotiations, this process was by no means smooth or un-contentious. Reaching agreement on procedures was particularly difficult in the negotiating group on non-agricultural tariffs (see below), which threatened to derail the timetable of the Doha Work Programme and were only adopted on the sidelines of the July TNC meeting. So it was actually only after the meeting of the TNC prior to the summer break that all negotiating procedures were duly in place and negotiations proper got started.
6. The meeting of the TNC held on 18-19 July 2002 put an end to the first phase of the Doha Agenda. During the first six months or so after Doha, work concentrated on setting up work programmes and considering the modalities for negotiations. The July TNC meeting provided WTO members with the opportunity to take stock of progress since Doha. It became clear that progress had been uneven and, in the view of many, not entirely satisfactory. The first months of setting up the negotiating framework gave members an inkling of the difficulties to come when substantive negotiations got under way in earnest. Most members acknowledged that progress had been slow and recognised that, to keep the credibility of the negotiating process, it was important to respect the deadlines set up at Doha. A particular cause for concern was the slow-moving review on agreeing improvements to the Dispute Settlement Understanding (DSU), as this was the first deadline set in the Doha Work Programme to have an agreement on improvements and clarifications, i.e. May 2003.
7. Although each member acknowledged that all aspects of the negotiations were important, members are likely to judge the speed of progress by gauging the advances in their main areas of interest. Thus, the relatively slow progress on trade and environment, geographical indications and the Singapore issues was a disappointment for the EU. Developing country members, on the other hand, regretted the lack of movement on issues that concerned them, particularly implementation; special and differential (S&D) treatment; textiles and clothing; and TRIPS. On rules, discussions are still to lead to negotiations, and no date for starting these has been fixed as yet, as the Doha mandate does not set any specific timeframe on negotiating WTO rules, but refers only to a preliminary phase for members to identify the trade-distorting provisions they wish to clarify and improve, which would be done in a subsequent phase. The chairman of the Negotiating Group on Rules acknowledged the advantages of the absence of rigid deadlines giving members the necessary flexibility to negotiate, taking into account internal dynamics within the group, as well as to enable them to assess the progress in other negotiating areas.
8. Achieving progress on implementation issues, a longstanding concern for developing country members, has proved intractable. The reasons are not only the long list of issues under discussion, of which only about half were included in the Decision on Implementation, but also the sensitivity of revisiting the Agreements concluded under the Uruguay Round. Developing country members were convinced that implementation issues had to be addressed upfront before taking on any new commitments. The main focus regarding implementation centred on agriculture, textiles and clothing, S&D, TRIPS and public health, traditional knowledge, the relationship between TRIPS and the Convention on Biological Diversity (CBD), subsidies and anti-dumping.
9. One implementation area on which members noted there had been little progress since Doha is textiles and clothing, of great importance to several exporting developing country members, who had demanded greater market access through making effective the provisions for the early integration of products and elimination of quota restrictions. Additionally they had favoured tightening disciplines in the use of countervailing measures. The lack of agreement amongst members resulted in the inability to transmit a report to the General Council meeting which took place at the end of July 2002, as was stipulated in the Decision on Implementation.
10. Work on implementation regarding anti-dumping has taken place in the Working Group on Implementation within the Committee on Anti-Dumping Practices. This Working Group has been examining two questions on which to issue recommendations and one on which to issue guidelines. The deadline for agreeing on both recommendations and guidelines is twelve months after Doha, which is a fast-approaching deadline, with no visible progress to ensure that the deadline will be successfully met. Indeed, in accordance with the Decision on Implementation, the Anti-Dumping Committee is to work towards clarifying and issuing recommendations on the modalities of application of Article 15 of the Agreement on Anti-Dumping, to ensure that, pursuant to its mandatory provisions, special consideration is granted to developing country members before anti-dumping duties are applied. Another issue under consideration is the interpretation of Article 5.8 of the Anti-Dumping Agreement, which determines whether the margin of dumping is so low (de minimis) and whether the volume of dumped imports is so negligible that anti-dumping duties should not apply, but which does not contain a specific timeframe to determine this. The Committee is to study the question and issue recommendations. Finally, also by October 2002, Guidelines are to be drawn up by the Working Group for the improvement of the annual reviews of the Anti-Dumping Agreement.
11. The long-lasting discussions regarding rules of origin have continued, being another implementation issue where it has been slow moving. Reaching agreement on the harmonisation of rules of origin has proved to be a major challenge. Deadlines have come and gone, the latest one missed was end of 2001. The main obstacle to reaching consensus relates to the implications of harmonisation for other trade areas such as anti-dumping, sanitary and phytosanitary (SPS) measures, labelling and trademark laws, and quota allocations. On anti-dumping, for instance, the US opposes using harmonised rules of origin for determining the origin of a product in an anti-dumping case. Developing country members argue that, once agreed, rules of origin should apply to all non-preferential commercial transactions. Thus, before resolution of the issue of deciding on whether it is obligatory to use the harmonised rules for all commercial transactions, no advances can be foreseen on the unresolved technical questions, which are in themselves divisive. Additionally, another outstanding issue (raised as far back as 1998) that needs urgent resolution refers to the implications of the harmonisation of origin. Indeed, the implications issue has been an obstacle identified by several delegations as the main stumbling block to progress in the Committee on Rules of Origin. Some believe reaching a common understanding on the implications of the harmonised rules of origin on other WTO Agreements would be a major breakthrough. The implications issue is closely associated with circumvention of anti-dumping procedures and the application of SPS measures and quota regulations. Clearing this obstacle would speed up the advances on other rules of origin difficulties.
12. Similarly, implementation difficulties on customs valuation are not yet resolved. Major problems relate to the determination of value for customs purposes when based on the declared value, as many developing country members may have doubts on the accuracy of this value. The Decision on Implementation acknowledges the concerns of developing country members in this regard and directs the Committee on Customs Valuation to identify and assess the means to assist developing country members through exchange of information with the exporting country to determine the export values. The Committee should report to the General Council at the latest by the end of 2002.
13. A more optimistic picture regarding implementation emerged from the review, held in the second part of September 2002, of 19 developing country members [Note 1] with respect to extending the transition period of eight years to eliminate export subsidies specified in Article 27.4 of the Agreement on Subsidies and Countervailing Measures (SCM). In accordance with the Decision on Implementation, which directed the Committee on SCM to extend the transition period, these countries will be able to maintain their investment and export promotion programmes by continuing to grant facilities such as tax breaks for industrial estates, free trade and export processing zones, subsidies for export performance and use of domestic inputs for one year ending in 2003. Thereafter, extensions can be renewed annually until 2007.
14. Two TRIPS-related implementation issues are being examined. One refers to the extension of the five-year transition period in Article 64.2 on dispute settlement. This sub-paragraph provides that the non-violation claim in the nullification or impairment provisions in Article XXIII.1(b and c) of GATT 1994 shall not apply for a period of five years. [Note 2] Some developed country members and several developing country members continue to support the view that the non-violation provision, more related to market access than to TRIPS, should permanently be excluded. Others, namely the US, argue that the non-violation remedy would ensure that the Agreements flexibility is not misused to avoid legitimate obligations. The deadline for the TRIPS Council to make recommendations is the Fifth Ministerial Conference.
15. The other implementation issue related to the TRIPS Agreement is transfer of technology under Article 66.2 (paragraph 11.2), which provides that developed countries shall give incentives to their private sector to encourage the transfer of technology to LDCs. The Decision on Implementation reaffirms the mandatory character of this provision and stipulates the setting up of a mechanism within the TRIPS Council to monitor its full implementation by developed country members in this regard. The deadline for developed countries to submit full reports on the practical functioning of the incentives provided so far is end of 2002. The submissions are to be subject to review and should be updated annually.
16. Agriculture negotiations continue to divide WTO members along the same lines as those that pitted them against each other during the Uruguay Round. This became evident in the Special Sessions of the Committee on Agriculture. As was agreed in late March 2002, the work programme would consist of four special sessions scheduled for the rest of 2002. It would begin with discussions on export subsidies and continue with market access and domestic support. The follow-up on all three would take place at the last meeting in 2002 scheduled for late November.
17. Thus, as planned, the first meeting held in early June 2002 was devoted to discussion of export credits, export subsidies and state trading enterprises. On export credits, while the EU and members of the Cairns Group argued for shortening the repayment periods, the US was not ready to have a discussion on a specific rules-based approach on export credit disciplines. Similarly, on export credits, the US favoured setting up rules on interest rates, while the EU supported the rules-based approach and argued for finding a means of calculating the subsidy component of export credits with a view to phasing the reduction of this subsidised portion over time. On state trading enterprises, the US called for their elimination, whereas the Cairns Group members Canada, Australia and New Zealand argued that no distinction should be made between state trading enterprises and private grain traders with respect to imposing export credit disciplines.
18. The discussion on export subsidies did not advance, some members putting the responsibility for this on the EU for skirting discussion on export subsidies whilst focusing attention on export credits. While the Cairns Group called for the elimination of export subsidies in three years, the US proposed a period of five years. The EU seemed more inclined to discuss the reductions of export subsidies by value rather than by volume, as this approach would provide flexibility for subsidising certain specific products. Japan on the other hand, while ready to discuss reductions of export subsidies, was reluctant to accept a timetable for their elimination.
19. On 25 July 2002, the US presented a comprehensive and ambitious proposal on all three pillars of the negotiations. This proposal called for deep tariff cuts; the elimination of export subsidies over a period of five years (as seen in the paragraph above); the elimination of export monopolies; and the limitation of the use of trade-distorting domestic support. As could be expected, the proposal proved to be highly controversial, with some members criticising it for being unbalanced and unrealistic and remarking that it was in stark contrast with the character of the recently approved US Farm Bill. Other members, notably the Cairns Group, welcomed the general focus of the proposal and considered it as a positive effort to fulfil the Doha mandate.
20. The US proposal was discussed during the two-day informal meetings at the end of July 2002 on the modalities for market access negotiations. At this point, the differences between the WTO members became even more evident. The market access discussions continued in formal mode in early September 2002 centred on tariff reductions, administration of tariff rate quotas (TRQs) [Note 4]; the special safeguard for agriculture; and state trading enterprises. On tariff reductions, the formula approach split negotiators into those who favoured the use of the so-called Swiss formula [Note 5] - also referred to as the harmonisation approach, as it aims at deeper cuts to higher tariffs - and the Uruguay Round approach of linear tariff cuts (in the Uruguay Round the aim was a 36 percent average cut). While the US, some members of the Cairns Group and several developing country members [Note 6], on the one side, favour the approach that has come to be known as the Swiss formula, others such as the EU, Norway, Japan, Switzerland and South Korea oppose it, arguing that this would result in inequitable outcomes, as some countries would be forced to reduce more than others. On TRQs, members of the Cairns Group, in opposition to the EU, Japan and South Korea, supported their eventual phase out as well as the reduction of in-quota tariffs to zero. The chairman of the Special Session of the Committee on Agriculture cautioned members that they would have to be more flexible as speedier progress was needed if the deadline of March 2003 for agreeing on negotiating modalities for market access talks was to be met.
21. According to the agreed timetable, the negotiating session on domestic support took place on 23-27 September. This most sensitive of negotiating subjects set in opposition once more the agriculture liberalisers against the friends of multifunctionality. Rigid national positions led to a deadlock that prompted the chairman of the Special Session to remark that the lack of flexibility made it so much more difficult to come up with an overview on the modalities for negotiations, to be able to meet the deadline of March 2003. Issues on which no agreement was possible included whether the non-trade distorting green box domestic support, excluded from reduction commitments, should be made more flexible. The aim would be to include, for instance, developing country members concerns such as food security and rural development or other developed country concerns such as compensation for producing under higher standards or non-producer concerns and animal welfare. Liberalising members, keen on tightening green box disciplines, also supported the elimination of the trade-distorting subsidies of the amber box by eliminating it, together with the blue box of direct payments to farmers under production-limiting programs. The EU and Switzerland oppose this unless trade-offs take place in other negotiating areas such as trade and environment and the extension of higher protection of geographical indications to products other than wines and spirits. The meeting to cover outstanding issues on the three pillars will take place on 18-22 November.
22. Following the deadline set in the Doha Ministerial Declaration for submission of initial requests for specific commitments by 30 June 2002, a fortnight of services negotiations took place in July. Concrete progress was illustrated by submissions by around 25 countries of initial bilateral requests, seeking improved market access and covering all sectors. Although requests are made bilaterally and are confidential, it is well known that it is the developed countries that have made most of the requests, with few developing members participating in this process. Developed members requests focused on a wide spectrum, from energy, tourism, professional, and franchising services to computer-related and environmental ones. Developing country members requests have focussed on cross-border movement of professionals, and professional services as well as construction, distribution and maritime. It would seem that, if developing country members were to have a meaningful participation, it is now a pressing matter for them to start analysing these requests and they would be advised to identify the sectors where it would be to their advantage to make their own requests.
23. Services negotiations also focussed on government procurement and services subsidies. On government procurement in services, although Article XIII.2 provides for multilateral negotiations, developing country members argue that Article XIII.1 exempts government procurement in services from national treatment, market access and most-favoured nation (MFN) treatment. However, the EU, which attaches particular importance to government procurement in services, considers that access, MFN and national treatment are covered by the mandate to negotiate, admitting the possibility of selecting which sectors to open and of imposing limited restrictions where necessary on national treatment. By 30 June 2003, the chairman is due to make a progress report. On subsidies, which at present are not subject to disciplines, Argentina, Chile and Hong Kong have proposed that members provide information on their services subsidies programmes.
24. No agreement was reached on two crucial issues of particular importance to developing country members and on which extensive discussions have taken place in the past, namely the special safeguard clause for trade in services and how to give credit for unilateral autonomous liberalisation. However, negotiators reached consensus on a couple of deadlines: 15 March 2004 for agreeing on a possible services safeguard and 15 March 2003 for the chairman of the Working Party on GATS Rules to report on progress and the points of agreement and disagreement on the establishment of a safeguard mechanism. Several developing country members have argued for the need to protect their services sector from unforeseen circumstances, but developed members (the EU and the US) oppose such a mechanism, as they are concerned about the difficulties of implementation.
25. On the modalities for the treatment of autonomous liberalisation, several snags impede agreement: whether credit for autonomous liberalisation should be pursued through bilateral or multilateral negotiations, and whether openings in sectors negotiated after the Uruguay Round (basic telecommunications, financial and professional services) should be considered as autonomous measures. Developing country members would certainly consider the latter as autonomous liberalisation and, regarding credit for it, they would wish to keep the weight of numbers and negotiate credit for autonomous liberalisation plurilaterally or multilaterally. The chairman has suggested that a change of positions is necessary and has invited members to show more flexibility, so that the outstanding areas of divergence would not stand in the way of an agreement on modalities for giving credit to autonomous liberalisation at the next Special Session of the Council for Trade in Services to be held at the end of October 2002.
26. Another modalities-related issue of major importance relates to the modalities for the special treatment of LDC members. Discussions in June and July 2002 have centred on several areas, namely: that LDCs are requested to make specific commitments in a limited number of services sectors; that LDCs should receive assistance from developed countries in identifying areas of their commercial interest and that they commit themselves to invest in those areas where LDCs make specific commitments; encouragement of transfer of technology and training by foreign suppliers in each of the services sectors where LDCs make specific commitments; extension of full market access and national treatment by developed country members to those sectors in which LDCs have a specific export interest, among others. [Note 8] At an informal meeting in early October 2002, LDCs announced that they would be presenting a formal proposal.
27. Traditionally, negotiating reductions of tariff and non-tariff barriers has been at the crux of multilateral trade negotiations and, since preparing for the 1999 Seattle Ministerial, many members have seen inclusion of market access for industrial products as an essential component of any negotiating package. Prior to Doha, several developing country members had expressed reluctance to negotiate industrial tariffs, not least out of concern for the erosion of preferences. And for many poor developing and LDC members this reluctance related to uncertainties of losing both customs revenue - of crucial importance as an income earner - and protection. However, the Doha Declaration addresses a long-standing demand of developing country interest: it provides for reduction or elimination of tariff peaks, tariff escalation and non-tariff barriers (NTBs) on industrial products, with a clear mandate that product coverage would be comprehensive and without a priori exclusions.
28. Although the substance of negotiations was clear enough, it was the procedural hurdles that loomed larger. The impasse was over the deadlines to determine the modalities of the negotiations. The Quad [Note 9] initially leaned towards having a date in line with the deadlines on modalities for services market access and for agriculture, i.e. March 2003. This would allow them to gauge the value of trade-offs made in other negotiating areas, such as agriculture, of particular importance to the EU. Developing country members, on the other hand, supported a longer timeframe, going as far as July 2003. The initial compromise date of 31 May 2003, proposed by the chairman, was finally accepted by all members, not without hard bargaining by both developing country members and, holding out to the last, the EU.
29. At the July session of the TNC, members finally agreed that modalities would be decided no later than 31 May 2003. It was also agreed that developing country members and least-developed countries would have to make fewer concessions, as stated in the Doha Declaration through less than full reciprocity in reduction commitments. Important issues on which progress is needed for the negotiations to advance are varied. One preliminary condition would be to have a factual basis for the negotiations in the form of comprehensive information on levels of bound and applied tariffs. The WTOs Integrated Data Base (IDB) contains this information notified by members, but it is incomplete and not fully up-to-date, usually for developing and LDC members. The latest status of submissions contained data for only 97 out of 144 members, and for some the information is far from being complete. [Note 10] One of the crucial elements, which would contribute to a smooth negotiating process, is to have this factual instrument in place. Another difficulty to be resolved is the question of definitions, particularly of non-tariff barriers, i.e. whether they should go beyond border measures by an importing country and include measures such as export duties and export restrictions. Also related to NTBs, an issue for debate is their overlap in other negotiating groups, namely trade facilitation and rules.
30. On modalities for the negotiations several methods are being proposed: from the zero-for-zero (complete elimination of tariffs through requests and offers) - usually favoured by Japan, the US and Norway for certain sectors - to the harmonisation of tariffs through the formula progressive approach, favoured by the EU or Korea, or the simple application of linear reduction, with differing views on what would be covered by each different modality and under what timeframe. Some members have suggested that the request and offer is no longer a feasible method, given the large number of participants in the negotiations.
31. A sensitive matter, which has fallen under the mandate of the Negotiating Group on Market Access, is improvement of market access for environmental goods. A first stumbling block relates to their definition. Some would suggest using already existing lists, such as the APEC environmental product list, as a starting point (New Zealand, the US), while others (the EU) would opt for using production or processing methods (PPMs) as a means to distinguish these goods. The use of PPMs as a criterion for definition is strongly resisted by developing country members.
32. Geographical indications. The TRIPS Agreement grants the same level of protection to geographical indications (GIs) as it does to the other categories of intellectual property (IP) rights, but additional protection is awarded to wines and spirits. On this issue, the proponents and the opponents of extending this additional protection to other areas are from developed and developing country members. Proponents (Bulgaria, the EU, Mauritius, Nigeria, Sri Lanka, Switzerland) argue that this two-level protection is unjustified and that extending protection to other sectors would lead to benefits to producers of quality products, particularly for those of developing country members. The opponents of extension (the US and the Cairns Group) point to the dangers of increasing market access barriers that result in increased costs and that the same protection can be granted by certification marks.
33. TRIPS and Public Health. The Council for TRIPS at its 25-27 June session formally adopted the decision taken at Doha (paragraph 7 of the Declaration on TRIPS and Public Health), to extend until 2016 the time limit for providing patent protection for pharmaceuticals and other chemical products for least-developed countries (LDCs). In addition, a waiver was approved that would exempt LDCs from granting five years of exclusive marketing rights for any new drugs in advance of extending patent protection. However, the right of manufacturers to file for eventual patent protection (mailbox arrangement) is upheld in LDCs. African countries had initially requested exemption from both exclusive marketing rights and filing obligations, but they compromised on this solution.
34. The Doha Declaration on TRIPS and Public Health was generally considered a partial success, recognising the difficulties faced by members who have insufficient or no manufacturing capacities in making effective use of compulsory licensing, as this applies only to the supply of domestic markets. Paragraph 6 instructs the Council for TRIPS to find an expeditious solution to this problem, with the end of 2002 as deadline. Discussions have centred on what legal means will be used to alter current patent protection. Two main positions oppose developing country members, particularly those with the capacity to manufacture generic drugs, which favour weaker patent rules to allow poor members to obtain generic substitutes of patented drugs, and industrial countries looking for safeguards to restrict the overriding of patents and to prevent these generic substitutes from being sold in the world market. Thus, the US has supported the view that patent holders should be given the opportunity to supply the drugs before compulsory licenses are issued and the possible use of waivers before the issuing of compulsory licences. The EU has proposed amending the TRIPS Agreements provision limiting compulsory licensing to the domestic market, while Switzerland has proposed specific safeguards against diversion of products from the intended market - including the introduction of quantitative restrictions, assigning responsibility to importers and exporters for the non-diversion of the goods, and labelling and packaging requirements to prevent diversion. Informal negotiations will continue in October.
35. Exclusions and alternatives to patents: Article 27.3(b). The provisions under this Article of the TRIPS cover two of developing country members main concerns: the relationship between the TRIPS Agreement and the Convention on Biological Diversity with regard to issues involving patents on living organisms and the protection of traditional knowledge of indigenous communities to develop inventions, including patented medicines. Eleven developing country members [Note 11] have submitted a proposal to modify the TRIPS Agreement to ensure it will be compatible with the objectives of the CBD. The modifications would also aim to restrict bio-piracy acts, i.e. when an individual entity in one country can assert patent rights over the biological resources under the sovereignty of another country. Thus, they suggest the requirement that application for a patent would require disclosure of the country of origin of the biological resource and the traditional knowledge involved, that the authorities of the country of origin agreed to the extraction of the resource and that fair and equitable benefits accrue according to the laws of the country of origin. Developed country members, in particular the US and the EU, object to this modification of the Agreement and argue that a distinction should be drawn between protection of intellectual property rights and regulating access to genetic resources.
36. At the Doha Ministerial Conference, differences were rife in interpreting the mandate given in the Doha Declaration with respect to the initiation of negotiations on trade and investment, trade and competition, transparency in government procurement and trade facilitation at the Fifth Session of the Ministerial Conference. These differences at Doha led the chairman of the Conference, upon the request of several delegations, to clarify the exact meaning of the text adopted. He stated that it was his understanding that a decision would need to be taken by explicit consensus before negotiations could begin. The reservations of participants on the issue, and the lack of a clear-cut mandate, have resulted in the absence of progress on agreeing the modalities and limited advancement on discussion of substantive issues. However, disagreements over substance are evident with regard to what specific issues the eventual negotiations would cover.
37. Working Group on Trade and Investment. Long-standing disagreements between the proponents of a multilateral agreement on investment (the EU, Canada, Korea, Japan) and the opponents of such an agreement (usually developing country members and non-governmental organisations) do not seem to have changed much since negotiations on a multilateral investment agreement (MAI) under the aegis of the OECD were suspended in 1998. Discussions on an international investment agreement in the WTO (IIA) have centred on matters such as the definition of what types of investment would be covered by the agreement: should coverage be restricted to foreign direct investment (FDI), i.e. a vehicle for building long-term interests in enterprises based in other countries? This is favoured consideration of developing country members, as well as Japan and Korea among others. Or should the agreement cover an asset-based definition of investment, which extends to portfolio and other types of financial investments, usually short-term and speculative? Canada and the US support a broad definition of investment, while the EU favours a definition that is all-inclusive of FDI, but would include some portfolio investment if it meets the criteria for management influence in and a long-term relationship with the investment recipient.
38. Other issues under discussion have been requirements on transparency and non-discrimination, including national treatment and MFN treatment. On modalities, proposals have centred on a positive list approach, resembling the GATS mode of limiting the sectors in which commitments are undertaken but, also as in the GATS, ensuring non-discrimination by basic obligations on MFN and national treatment. Other issues that require clarification include: exceptions, balance of payments safeguards and consultations on whether investment-related disputes under an IIA would be subject to the WTO dispute settlement mechanism.
39. Working Group on the Interaction between Trade and Competition Policy. The Working Group has so far covered most of the substantive issues it was mandated to discuss in the Doha Declaration, namely core principles, such as transparency, non-discrimination and procedural fairness, as well as provisions on hardcore cartels; modalities for voluntary cooperation; and strengthening competition institutions in developing country members through capacity building. The programme for 2002 consisted of four meetings. The first two took place in April and June and centred on competition institutions in developing country members and on the definition of hard-core cartels. The EU favours a narrow definition as included in a recommendation by the OECD covering competition in domestic markets. However, this excludes export cartels, which have a more direct effect on developing members of the WTO. These are dealt with more at length in a set of guidelines drawn under the auspices of UNCTAD. [Note 12] Transparency and non-discrimination and procedural fairness will be discussed at the meetings of 26-27 September. The crucial and controversial issue of modalities for negotiation has not yet been discussed.
40. Transparency in Government Procurement. Australia has been the only WTO member to submit a formal discussion paper on the methods of procurement [Note 13] that focuses on the need to establish a framework for strict accountability and probity by the requirement to provide the appropriate documentation on the procurement process and the method selected. This would guarantee an objective, fair and consistent treatment of tenders.
41. Trade Facilitation. Discussions on the simplification of import procedures have taken place in the Council for Trade in Goods, where several proposals have been presented by developed countries on adding specificity to existing agreements on the simplification of import procedures. Although this could be a useful tool for developing country members and would greatly increase their customs-related efficiency, they have been reluctant participants out of concern that their rudimentary customs systems would make it difficult for them to undertake commitments on these issues. The EU has presented the most comprehensive plan in this regard, proposing separate agreements or understanding on the GATT articles related to trade facilitation, i.e. Article V (Freedom of Transit); Article VIII (Fees and Formalities connected with Importation and Exportation); and Article X (Publication and Administration of Trade Regulations). [Note 14]
42. Anti-dumping and Countervailing Measures. The Doha Work Programme provided two phases, an initial one to identify the provisions to be clarified and improved which would precede the negotiating phase proper. However, no indication of the timeframe for each of these phases was indicated. Subsequently, probably due to the lack of a well-defined agenda, proposals have been long in coming and, although two proposals have been put forward, negotiations are yet to start. One proposal, backed by fourteen members [Note 15], supports the rewriting of anti-dumping rules to limit the discretion of the investigating authorities to find injury and assign dumping margins; to elaborate clearer, more comprehensive and representative criteria when making calculations of constructed value; prohibiting zeroing, i.e. assigning a zero value to transactions when the dumping margin is negative. A second proposal also by this group, minus Turkey [Note 16], sought to include in the negotiations other important issues not specifically addressed in the Anti-Dumping Agreement, such as the definition of product and like product under investigation; definition of domestic industry; whether the determination of normal value should include home-market sales to affiliates when calculating a dumping margin. The EU presented its proposal [Note 17] on 8 July 2002 and the US is expected to present a concept paper likely to focus on upholding the capacity of countries to have strong disciplines against unfair trade practices and on addressing market distortions.
43. Fisheries Subsidies. An issue to be resolved is what makes the fisheries sector so special as to require specific disciplines rather than having the sector covered by those applicable to subsidies in general. The so-called friends of fish (Australia, Chile, Ecuador, Iceland, New Zealand, Peru, the Philippines and the US) argue that subsidies applied to fisheries not only distort trade and are harmful for the environment, but have negative consequences as they prevent developing country members from building up their own fisheries, a situation not covered by the Agreement on Subsidies and Countervailing Measures (SCM), whose focus is on the effects of subsidies on competition. Members against fishery-specific subsidy disciplines (Korea, Japan) make a case for not fragmenting the SCM, downplay their distorting role on trade and, as for the environment, they believe that these should be dealt by national, regional and international conservation measures. The EU, another subsidising member, in contrast to Japan and Korea has not explicitly opposed tighter disciplines. A possible reason is that the EU has plans to overhaul its fisheries policy, but is encountering internal opposition from six countries - the friends of fishing, namely France, Greece, Ireland, Italy, Portugal and Spain - to reforming its common fishery policy.
44. Regional Trade Arrangements (RTAs). Negotiations to clarify and improve the disciplines relating to regional trade arrangements, as provided for in paragraph 29 of the Doha Ministerial Declaration, took place on 8-10 July 2002. Australia and the EU have presented proposals. Apart from procedural matters, on issues such as timeframes and the necessary data for assessing the WTO compatibility of a given agreement, the substantial issues under discussion include, among others, the long-debated definition of the requirement that free trade agreements (FTAs) and customs unions cover substantially all trade. Australias proposal includes defining a percentage of all tariff lines, trying to close the loophole that results in trade distortions in the agriculture sector, as many RTAs exclude agriculture from coverage. Another important issue to be defined is the requirement that duties and other trade regulations applied to non-signatories cannot exceed those existing prior to the formation of an RTA.
45. Apart from the question of definitions, other issues of importance regarding RTAs are the extent to which they can deviate from WTO rules on anti-dumping, countervailing and safeguards; the case for compensation following formation or enlargement of an RTA; should the WTO develop preferential rules of origin; should the new rules emerging from these negotiations be applied to existing arrangements or whether existing arrangements should be grand-fathered (i.e. be allowed to continue on the grounds that they were already in place prior to the new rules), etc. Regarding developing country members, issues under debate relate to whether RTAs covered by the Enabling Clause [Note 18] should be subject to the disciplines of Article XIV or be excluded.
G. Dispute Settlement Understanding (DSU) [Note 19]
46. Recent developments on the discussions on how to improve and clarify the DSU have centred on a proposal for a more open system. Indeed, the US submitted a communication calling for more transparency, including discussing guideline procedures for handling of amicus curiae briefs, opening all panel, Appellate Body and arbitration meetings to the public, and making public dispute settlement related documents, such as parties submissions or oral statements, except for those portions that deal with business confidential information or law enforcement methods. These proposals did not meet with universal favour, particularly from developing country members who regard them as undermining the governmental nature of the WTO. Regarding the issue of sequencing, which has occupied a fair amount of the members attention for some time, a new concept paper was presented by 13 countries [Note 20], of which nine are Latin American. Sequencing refers to the order in which DSU Articles 21.5 and 22 are applied. There is a problem of consistency between these articles. The former requires the referral to a Panel of disputes between parties over the appropriateness of corrective measures applied following an initial finding of non-WTO consistency. The Panel is to present its report 90 days after such a referral. The second, by contrast, allows a party to seek DSB authorisation of compensation or withdrawal of concessions where a Panel ruling is not implemented within a reasonable period of time. Negative consensus applies to this procedure, so that compensation or withdrawal of concessions can be possible 30 days after the expiry of a reasonable period of time. In a nutshell, the crucial difference of opinion is as to whether the Article 21.5 procedure must be resorted to before the Article 22 procedure becomes available. [Note 21]
47. Interest of developing country members in improving the DSU has been patent. A submission in early October 2002 by nine developing countries [Note 22] remarks that developing countries have been involved, either as complainants or defendants in 149 out of 262 disputes. They make a series of wide-ranging proposals to make some existing S&D provisions in the DSU mandatory and to propose others that would provide effective S&D treatment for developing countries, among them: to make the mechanism of cross-retaliation automatic for developing country members; in cases where a developed country member is found to have violated obligations in a dispute with a developing country member, or fails to prove its claims against a developing country member, it should contribute to the legal costs incurred by the developing country member. Similarly, notwithstanding the fact that they have yet to be parties in a WTO dispute, the LDC members presented a proposal [Note 23] focussing on provisions that would benefit LDCs, including making compensation mandatory; rendering retaliation effective for LDCs by making collective retaliation automatic; adding a provision allowing for dissenting judgements in the DSU, etc. LDCs remark that their absence from disputes is not because of lack of concerns worth referring to the dispute settlement system, but due to structural difficulties of the system itself.
48. The first Special Session of the Committee on Trade and Environment (CTE) met in March 2002 and, on procedures, members agreed to hold meetings on 11-12 June and on 10-11 October. Meetings so far have centred on the scope of the mandate at Doha. While the EU, the member most interested in the environmental negotiations, presented a paper interpreting the Doha mandate which sought to define key terms such as multilateral environmental agreement (MEA) and specific trade obligations among parties, some members considered that this submission stretched what they held to be a circumscribed negotiating mandate. The Doha Declaration stipulated three main areas of the work programme: the legal relationship between WTO rules and the specific trade obligations in MEAs among parties to the MEAs; the procedures for information exchange between the MEA secretariats and the WTO committees and the criteria for granting observer status; and trade liberalization in the area of environmental goods and services, including a reference to fisheries subsidies. A procedural issue on which no agreement was reached was that of observers at the CTE Special Sessions. While some members believed this should be resolved as rapidly as possible, others argued this was an issue for the General Council and the TNC to resolve. On environmental goods and services, although there was general support for negotiations in the respective organs (the Negotiating Group on Market Access and the Council for Services in Special Session), some called on the CTE to clarify the concept of environmental goods. In contrast to the almost negligible level of agreement visible, the participation of members was significant, with submissions by Argentina, Canada, India, New Zealand, Switzerland and the US.
49. S&D has been a long-standing concern of developing and LDC members of the WTO. Regretfully, as the chairman of the Committee on Trade and Development in Special session reported to the TNC during its July meeting, the differences between members on how to achieve the mandate in the Doha Declaration and the Decision on Implementation proved irreconcilable. Thus, the end-of-July deadline for the CTD to review all S&D provisions with a view to strengthening them and making them more precise, effective and operational and to provide recommendations to the General Council was not met. The deadline was extended until the end of the year to examine both specific proposals and cross-cutting issues. What is clear is that the scope and number of issues raised by the different proposals constitutes a heavy work programme, revolving around the elaboration of a mechanism for monitoring the effectiveness of S&D provisions and further discussions on how to incorporate S&D treatment into the architecture of WTO rules. Given that only six formal and informal meetings were scheduled for the rest of the year, the time for discussion of specific proposals, from both developed, developing and LDC members and groups was clearly not enough. As a consequence, three more meetings have been scheduled. At the request of a developing country member, all the remaining meetings thus scheduled will be formal.
50. The difficulties relate not only to the number of changes proposed by developing country members (around 80) on different specific provisions, but to differences in focus: while developing country members favour review of specific provisions, developed country members would rather approach the issue more broadly by focussing on the overall objectives of S&D treatment and how S&D provisions have been taken advantage of by developing country members. Additionally, industrial countries would rather have specific S&D provisions referred to the respective WTO bodies and not have them discussed in the CTD framework. Furthermore, developed country members consider some of the proposals exceed the scope of S&D. They illustrate this by pointing out, among other issues, one of the points contained in the joint proposal of the African Group [Note 24] aiming at making the rapid and sustained expansion of the export earnings of the less developed members a binding commitment for developed country members (Article XXXVI.2 of Part IV, of GATT 1994). Some developing country members disagree and consider these developed country attitudes and proposals as dilatory tactics. Some developing country members have made it clear that a lack of progress on S&D would be to the detriment of future negotiations, particularly those of the Singapore issues, which developing country members were reluctant to include as subjects for negotiations.
51. Additionally, on preferential tariff treatment, some developed country members have argued that they cannot possibly give preferences to those developing country members that have a higher income per capita than them. In relation to this discussion, some developing country members are concerned that these discussions might open up a debate on the sensitive issue of the graduation of some developing country members, or of creating a multi-tiered categorisation [Note 25]. Furthermore, several developing country members are becoming concerned that the proposed monitoring mechanism of S&D may also open the door for a surveillance device on their own compliance with WTO Agreements.
52. The need for trade-related technical assistance and capacity building (TRTACB) is well recognised throughout the Doha Declaration, which devotes four paragraphs confirming them as core elements of the multilateral trading system. Furthermore, the Declaration specifically mentions that the delivery of technical assistance will be designed to assist developing country members, LDCs and low-income countries in transition to implement their WTO obligations and exercise their rights. Priority members for receiving TRTACB are the small, vulnerable, and transition economies, as well as members and observers without representation in Geneva, i.e. the non-residents. As is the case with S&D, differences along North-South lines exist regarding the approach: whilst developing country members wish to focus on a broad and long-term approach, which would include increased development assistance, developed country members wish to focus on the immediate needs posed by the on-going negotiations. Similarly, as on S&D, developing country members have made the provision of effective TRTACB a condition for advancing on negotiations. The recipients of TRTACB have called for making it more effective and have been critical of the traditional TRTACB mode of delivery. They have stressed that tailor-made TRTACB is the only way to make it effective, taking into account local needs and the local environment in local language. They have also pointed to the importance of long-term commitments, emphasising the lack of effectiveness of several days one shot programmes that present concepts not easily replicated in different situations and different constraints. Similarly, the need for inter-agency and donor coordination has also been underscored.
53. The approach of having meetings at ministerial level of a limited number of countries has been resorted to, in order to smooth out differences when a WTO ministerial meeting draws near. A number of mini-ministerials were held prior to the meeting in Doha. In preparation for the Cancun Ministerial in September 2003, Australia has already proposed hosting an informal meeting of Trade Ministers from around 25 countries representing a broad cross-section of the WTO membership on 14 and 15 November 2002. It has been announced that the focus of this meeting will be on implementation and market access issues and developing country members concerns.
Note 1: Barbados, Belize, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Jamaica, Jordan, Mauritius, Panama, Papua New Guinea, Uruguay and the six members of the Organization of Eastern Caribbean States. (return to text)
Note 2:Non-violation refers to the situation where a member considers that another member has nullified or impaired the benefits provided under a WTO agreement, even in cases which are not directly in conflict with the provisions of the agreement. (return to text)
Note 3: For a more detailed view of the background of the negotiations on Agriculture during the first phase, i.e. those negotiations under the built-in agenda and progress on the negotiations under the Doha Work Programme proper, see the AITIC Thematic File: Post-Doha Agenda: Agriculture Negotiations: Current State and Prospects, April 2002. (return to text)
Note 4: A tariff rate quota is a volume of imports whose tariff is lower that the tariff charged for imports above the quota. Market access within the TRQ is also known as within access or in quota. Imports in excess of the specified tariff quota volume - also known as over access or out-of-quota - face higher tariffs. (return to text)
Note 5: Methodology proposed by Switzerland during the Tokyo Round for reducing tariffs on industrial products. (return to text)
Note 6: Cuba, Dominican Republic, Honduras, Kenya, Nicaragua, Pakistan, Sri Lanka and Zimbabwe. (return to text)
Note 7: For background on the services negotiations, see the AITIC Thematic File: Post-Doha Agenda: The WTO General Agreement on Trade in Services (GATS): Scope and Negotiations, December 2001. (return to text)
Note 8: See JOB(02)/30 for issues raised by Uganda on behalf of LDC members and JOB(02)135 for a note by the WTO Secretariat, Checklist of Issues Raised. (return to text)
Note 9: Canada, the EU, Japan and US. (return to text)
Note 10: Status of Submissions to the Integrated Data Base (G/MA/IDB/2/Refvg.15) 17 September 2002. (return to text)
Note 11: Brazil, China, Cuba, Dominican Republic, Ecuador, India, Pakistan, Thailand, Venezuela, Zambia and Zimbabwe. (return to text)
Note 12: Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices. (return to text)
Note 13: WT/WGTGP/W/31, 15 May 2002. (return to text)
Note 14: C/C/W/394, 12 July 2002. (return to text)
Note 15: Brazil, Chile, Colombia, Costa Rica, Hong Kong-China, Israel, Japan, Korea, Mexico, Norway, Singapore, Switzerland, Thailand and Turkey, TN/RL/W/6, 26 April 2002. (return to text)
Note 16: TN/RL/W/10, 28 July 2002. (return to text)
Note 17: TN/RL/W/13, 8 July 2002. (return to text)
Note 18: The agreement to grant more favourable treatment to developing country members without according the same treatment to other members was one of the outcomes of the Tokyo Round. It covers GSP, non-tariff measures, regional trading arrangements between developing country members and special treatment for least-developed countries. (return to text)
Note 19: For a more comprehensive review of developments until June 2002, see the AITIC Thematic File: Post-Doha Agenda: The Doha Work Programme: The WTO Dispute Settlement Understanding, June 2002. (return to text)
Note 20: Bolivia, Canada, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Japan, Kenya, Norway, Peru, Switzerland, Uruguay and Venezuela. (return to text)
Note 21: Negative or reverse consensus refers to the inability of a member to block a decision except by consensus. (return to text)
Note 22: Cuba, Honduras, India, Indonesia, Malaysia, Pakistan, Sri Lanka, Tanzania and Zimbabwe, TN/DS/W/19, 9 October 2002. (return to text)
Note 23: TN/DS/W/17, 9 October 2002. (return to text)
Note 24: TN/CTD/W/3/Rev.2, 17 July 2002. (return to text)
Note 25: Graduation refers to the proposal that certain developing country members have reached a level of economic development such that they should now be treated as developed country members. (return to text)
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