Developing Countries' Initial Responses To The Draft July Package

Original Publication Date: 
19 July, 2004
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Developing Countries’ Initial Responses to the Draft July Package
TWN Report by Martin Khor and Goh Chien Yen, Geneva 20 July 2004

The WTO members had a first round of initial comments on the draft of the “July package” (i.e. draft decision to be adopted at the WTO General Council meeting of 27-29 July) at an informal heads-of-delegation meeting on Monday 19 July.

The delegations were cautious in their statements, with many explaining that they did not yet have the time to fully study the draft, or to get the response from their capitals. According to some delegates, the delegations were also restrained from being too critical of the draft overall, for fear that they may be blamed if there is no agreement arising from the end-of-July meeting. Many delegations said they would make more detailed comments on the draft in the next few days.

The draft, which was co-authored by the General Council chairperson and the WTO Director-General, was released on the afternoon of Friday 16 July.

In their statements at the HOD meeting, several developing countries raised points in the text on which they had concerns.

The following is a report of some of the comments made by some developing countries, as well as the EU and US.

Ambassador Matthew Nwagwu of Nigeria, speaking on behalf of the Africa Group, said the Group expects an all inclusive and transparent process in further work on the draft. The process also needs to be consensus-based, and the Group would like to participate in all consultations and negotiations to be held in the next days.

On agriculture, the Groups’ preliminary observations were that the text places greater focus on some issues of interest to developed countries; it defers to a later stage of negotiations the issues of importance to the Group; it contains new concepts such as the tiered formula for reducing domestic support; and it legitimizes new Blue Box measures.

Furthermore, there is lack of clarity in some issues and dilution of issues such as S and D treatment for developing countries and treatment for LDCs.

On the cotton initiative, the Africa Group recalled that the G90 Ministerial meeting in Mauritius on 13 July stressed that cotton should be treated as a stand alone issue and not as part of overall agriculture negotiations. But it now notes that the text places cotton within the agriculture negotiations, and it called for consultations to resolve this matter.

On NAMA, Nigeria said the Group had on various occasions pointed out its difficulties to accept Annex B of the Derbez text as a basis for further negotiations, yet the draft text has proposed that the Derbez text be a basis for future work. Some of the Group’s concerns were reflected in the NAMA chairman’s letter to the General Council chair when forwarding the Annex, but “we are extremely surprised that these concerns have not been reflected in the draft text,” said Ambassador Nwagwu

The Africa Group wanted clarification howq these issues would be included in Annex B and the legal status of the NAMA chairman’s letter..

On development issues, the Group was concerned the text lacks ambition and falls far short of the Doha mandate. It was also concerned about lack of progress on development issues despite the fact these are long outstanding and have featured in all major WTO meetings and Ministerials.

The Group called for political commitment from development partners to the speedy resolution of these issues and the July package should provide a clear roadmap with timebound and specific benchmarks to fulfill the Doha mandate on these issues.

Further, a number of issues which are key to development in the Doha programme were ignored by the text, including commodities; trade, debt and finance; trade and technology transfer, and TRIPs and public health. These issues should be in the text.

On Singapore issues, the Group welcomed the general thrust of the text to drop from the Doha Development Agenda three of the issues (investment, competition, transparency in government procurement) and focus only on trade facilitation. The Group said that clearly, some consensus has emerged among WTO members to drop these three issues from the WTO agenda, which the Group had all along considered as being non trade related issues.

In this regard, the Group would like to enrich the text by deleting the last four words (i.e. “during the Doha Round”) of the sentence. It is the view of the Group that these issues should still be completely dropped out of the work programme.

On trade facilitation, the Africa Group was concerned that despite repeated calls to take into account its positions, such as the need for clarification, the costs of technical assistance and infrastructure and the applicability of the DSU, yet the draft text calls for the launching of negotiations on a fast track basis, based on a single undertaking. This approach is not acceptable to the Group, said Ambassador Nwagwu.

Brazilian Ambassador Luiz Felipe Seixas Correa, said the text was a complex document which needed detailed analysis. Brazil would not comment on agriculture as the G20 would meet the next day to consider their position.

Ambassador Seixas Correa raised three points and questions . First, on S and D treatment, rather than deal with the substance of this, the text had focused a lot on differentiation of developing countries. On what mandate had the Chair created new categories of developing countries for SDT?

Second, on what mandate was there the singling out of geographical indicators as a focus in implementation issues? Third, on NAMA, what is the process by which discussion will proceed, since the Derbez text annex was now placed as the July annex, and many members had already opposed this text?

According to trade officials, several Latin American countries also expressed unhappiness that there was insufficient clarity or details on SDT, and over the creation of new groupings such as “small, vulnerable economies.” They were also concerned that issues of interest to developing countries were not detailed out but other issues of interest to developed countries were detailed.

Although there was broad support on export competition, they raised concerns on the the new blue box and on the lack of specificity on how special products of developing countries are treated in the text, especially when the sensitive products of developed countries are given more specificity.

India said it would not comment on agriculture until it received a response from capital. On implementation, the text merely a repeat of the unsatisfactory situation, and this was unacceptable. On trade facilitation, more work should be done to clarify the issue, instead of launching negotiations. [ A note on a government press release from Delhi on India’s comment on the draft is at the end of this report ]

The Indonesia Ambassador said the July package is an important document, and thus the text must be one that is fair; and does not undermine the Doha mandate particularly on S&D. It was ready to negotiate a text that is fair, that can facilitate future negotiations. However, Indonesia will have great difficulties to accept any text which it feels is not balanced and which can unfairly undermine key concerns of developing countries particularly on S&D.

Indonesia felt the current draft text needs to be improved in terms of its balance, and in its treatment of development issues or issues of real concern to developing countries as called for by the Doha Mandate. As an initial step to achieving this recognition and balance, the level of specificity of all S&D must be given the same importance as other issues in your text.

Indonesia also made a statement on behalf of the G-33 (or the Alliance on Special Products/Special Safeguard Mechanism). The G33 had met earlier that day and agreed they need more time to receive guidance from their capitals and to coordinate within the group.

The G-33 would however like to flag at this point, their deep disappointment on how unfairly the issues of SP & SSM have been treated in the draft. Indonesia underlined that for the G-33, the issue of SP & SSM is of great importance in the negotiation, which will determine our ability to join any consensus.

For this reason the G33 reiterated the need to provide the concept of SP with a adequate level of commitment and specificity. The Group stressed that SP for developing countries must be de-linked from the issue of sensitive products, and be of primary significance in the market access pillar as mandated by the DDA. Moreover the concept of sensitive products for developed members must be secondary and not undermine the market access pillar.

The Bangladesh Ambassador, speaking on the Singapore issues, said we are being asked to accept negotiations on trade facilitation while the other three issues still remain in the WTO. This, he said, represents an unbalanced outcome.

The level of ambition on trade facilitation is far in excess to what can be justified by the movement on all other areas of development significance. Further, the mandate of negotiations as contained in Annex D goes far beyond what wa stated in the Doha Declaration. Members were being asked to accept an outcome even before negotiations start with words such as “establishment of an agreement” in the annex.

Bangladesh also said the modalities should provide that implementation by LDCs should only be after they had received the necessary technical assistance and infrastructural capacity building to enable them to implement such an understanding.

The European Union’s Ambassador Carlo Trojan’s said the EU considers the text as an acceptable basis for further negotiations. But we need to have the balance right: balance between agriculture and other components, between the 3 pillars in agriculture, and within the export competition pillar.

He added the EU has considerable interest in reducing tariffs in industrial goods and in further opening the services markets. Annex B on NAMA represents the bottom line between ambition and flexibility and “we should avoid any unravelling.”

On agriculture, Trojan said the text needs much more precision and clarification. On domestic support, the EU has interest in a framework which puts pressure to undertake farm reform on those members who, contrary to the EU, have not done so and the text still leaves us with a number of question marks.

On export competition, the text falls well short of the requirement of parallel elimination of export subsidies and of all trade-distorting elements of other export competition instruments. The text will need much more clarity to meet the principle of full parallelism.

On market access, clearer indication is needed on how sensitive products will be addressed when it comes to opening markets and cutting tariffs, as the text appears somewhat contradictory.

On trade facilitation, the EU said the annex on modalities was fair and balanced.

Trojan added the text asks for the negotiations to take account of the different levels of development of members’ preference and commodity dependence and the need to address concerns of vulnerable developing countries. DCs. He said the draft constitutes a fair starting point for addressing these concerns taking account of the interests of all developing countries. DCs. Trojan said “it gives comfort without creating new categories.” [However, as reported above, several developing countries expressed concern about the creation of new categories of developing countries, thus contradicting Trojan’s assertion that the concerns of all developing countries were addressed].

Trojan said an acceptable outcome on cotton should be implemented at an early stage. And all outstanding implementation issues should move into a negotiating mode; he mentioned that for the EU, geographical indicators protection is part of the single undertaking.

According to trade officials, the United States stressed the importance for the July package to be adopted as the global economic system needed it. On agriculture, the US said there was too much flexibility given to sensitive products in market access. ON NAMA, the US insisted that the non-linear formula and sectoral approach must be retained. On development issues, there is need to ensure that what is agreed complements (and not undermine) what was agreed to in agriculture and NAMA.

NOTE ON INDIA STATEMENT: Also on 19 July, the Indian Commerce and Industry Ministry issued a statement in Delhi stating the draft framework is disappointing in respect of agriculture as it does not provide the required balance between the provisions for the developed countries and those meant for developing countries.

The Ministry statement said: “From India’s point of view the draft on agriculture does not provide the required balance, fairness or equity between the provisions for the developed countries and those of developing countries. We find that there is greater level of specificity on matters of interest to the developed countries and a greater level of generality in respect of the special and differential treatment components of the developing countries. What is disappointing is the lack of appreciation of developing countries’ sensitivities in agriculture. This is particularly true of those developing countries where subsistence agriculture prevails and where the rural population is dependent on agriculture for their food and livelihood security. We believe that much work will have to be carried on in making the draft text acceptable. We expect that these would be suitably addressed in the next few days during the negotiations if there is to be a consensus on the agriculture framework. We shall be working with the G-20 on agriculture and jointly put forward our concerns in the discussions at Geneva, the statement says.

“In the other areas of NAMA (Non Agricultural Market Access), Singapore Issues and on Implementation Issues as well as special and differential treatment (S&DT), India is ready to work with other members of WTO in order to arrive at a consensus.”

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