Lamy: July the "Last Petrol Stop" on the Road to Bali

6 June 2013

With just weeks before the WTO's annual summer break, "time is turning against us," Director-General Pascal Lamy warned members on Monday, referring to the pace of efforts to prepare a package of deliverables for the organisation's ministerial conference this December in Bali, Indonesia.

Members have spent the first half of the year attempting to craft a deal from the overall Doha Round of trade talks, which were declared at an impasse at the WTO's last ministerial in December 2011. The proposed deal, if completed, would include an agreement on trade facilitation, as well as components relating to agriculture and some developing and least developed country (LDC) issues.

However, at Monday's meeting of the Trade Negotiations Committee (TNC), which is tasked with the Doha negotiations, members grimly noted that much more progress is needed between now and the end of July if they still wish to see an ambitious outcome in Bali at year's end.

"Despite the challenges in front of us, China does not believe that there is a ‘Plan B' for this organisation, and actually we have no route of retreat," Chinese Ambassador Yi Xiaozhun said on Monday - a sentiment that sources say was expressed by various others. "We all know what is at stake here: the negotiating function of this organisation, the confidence of the outside world in this system and, most importantly, the interests of each and every of us, particularly the weak ones."

Paris mini-ministerial

The week before this Monday's TNC, Australia convened over a dozen trade ministers and senior officials at the Organisation for Economic Co-operation and Development's (OECD) annual meeting in Paris in order to take stock of the current negotiations.

These "mini-ministerials" have traditionally served as an exercise for WTO members to evaluate the status of the Doha talks. Following last week's meeting, ministers said that June and July must demonstrate results - particularly with regards to cleaning up the trade facilitation draft text - in order to ensure the Bali conference's success.

"If there is only moderate progress between now and July then time will have beaten us," Australian Trade Minister Craig Emerson told reporters last Thursday following the meeting, in comments reported by Reuters.

Trade facilitation: More than 500 brackets remain

An agreement on trade facilitation - which deals with topics such as easing customs procedures and cutting times at border crossings - is meant to serve as the centrepiece of any package for this December's ministerial. However, despite the removal of some brackets from the hundreds scattered throughout the current draft text, well over 500 remain.

Since late March, four senior officials - Michael Stone of Hong Kong, Ambassador Mario Matus of Chile, Ambassador Remigi Winzap of Switzerland, and Ambassador Yonov Frederick Agah of Nigeria - collectively referred to as the "Friends of the Chair," have been consulting with members on the remaining points of contention in the current draft text, under the guidance of Ambassador Eduardo Ernesto Sperisen-Yurt of Guatemala, who chairs the trade facilitation talks. (See Bridges Weekly, 20 March 2013)

The Friends of the Chair presented the latest results of their consultations at a formal meeting of the trade facilitation negotiating group, held during the week of 24 May. While they are now aiming to turn the convergence that has emerged in some parts of the text toward consensus, the Friends have said that they expect ambassadors to join the technical experts currently involved in the negotiations, in the hope that this can lead to additional progress on the more political subjects.

"The progress that is being made is still not fast enough to provide assurance that we are on track to produce a good result at MC9," Lamy warned on Monday, calling for more flexibility on trade facilitation, such as that offered by some members at a senior officials' meeting in late April.

"No one can seriously expect that the many areas of disagreement that still exist in the text can be left until the autumn and can then be sorted out in time for Bali," he added.

Members also noted that some new brackets have been added to areas of the draft agreement that had previously been deemed closed, sources said.  Brazil reportedly suggested on Monday the objective of removing 50 percent of the brackets in the trade facilitation draft text by the end of July, an idea that was supported by the EU.

"We should not, however, fool ourselves into thinking that minor drafting changes can replace a serious negotiation on the key issues on the text," EU Ambassador to the WTO Angelos Pangratis said. "A serious engagement has so far been lacking. I hope this will change in the coming days and few weeks."

G-20, G-33 agriculture proposals

Members have also spent the past several months discussing proposals regarding agriculture. Two of these are from the developing country G-20, a coalition that seeks farm policy reform in the developed world. The third has been tabled by the G-33, another developing country group that has large populations of smallholder farmers.

The G-20 proposal on the administration of tariff rate quotas (TRQs) is in "pretty good shape," Lamy said. Members have generally said that the TRQ proposal is one of the most technically-advanced ones on the table, and is well-calibrated to the overall package.

The more recent G-20 proposal on export competition, however - which was circulated on 21 May - has sparked a range of reactions among members, with the US and EU being among those that have reportedly opposed it. (See Bridges Weekly, 30 May 2013) Speaking for the EU on Monday, Pangratis noted that the G-20 proposal "comes at a very bad time and it is extraordinarily unbalanced in a way that is difficult to comprehend," while adding that the EU is ready to explore ways to look at the export competition subject within the broader agriculture talks.

Others, such as Brazil, said on Monday that the 2013 deadline for developed countries to phase out their export subsidies should not pass in silence, and that negotiations should at least yield a "step forward in this area."

"A more in-depth exchange of views to seek to identify the way forward is urgently required," Lamy said regarding the export competition proposal, noting that the chair of the agriculture negotiations will be working in this vein.

The G-33 proposal on food stockholding and domestic food aid, meanwhile, continues to generate controversy among members, with consultations on the subject still ongoing. While some elements of possible convergence have emerged, members now need to explore "a possible landing strip" to sort out the specifics, the Director-General reported.

Some, such as the US, have accused other WTO members of holding up progress on trade facilitation in order to get what they want in the agriculture negotiations, particularly with regards to the G-33 proposal. "The only chance for success at Bali is for this hostage-taking to stop," US Ambassador to the WTO Michael Punke said ahead of the Paris OECD meeting, in what many assumed was an implicit criticism of India, who has been one of the main advocates for  increased flexibility for developing countries to purchase food at administered prices when building food stocks or providing domestic food aid.

LDC proposal circulated

Meanwhile, discussions regarding the development-focused component of the Bali package are also ongoing, in both informal ambassadorial consultations as well as under the Committee on Trade and Development's (CTD) Special Session.

The work in this area has been focused around three clusters. The first involves the 28 Cancún proposals, which are part of a group of 88 proposals aimed at strengthening the special and differential treatment (S&DT) provisions in the various WTO agreements that were agreed, but not harvested, ten years ago. The second involves the so-called Monitoring Mechanism, which would review the functioning of provisions in WTO rules for S&DT treatment in favour of developing countries and potentially suggest improvements.

There have been positive advances in both of these areas, Lamy said on Monday, which could "potentially translate into concrete progress" in the weeks ahead. However, in the third cluster - proposals involving the Sanitary and Phytosanitary Measures and the Import Licensing Procedures Agreements - similar progress is needed.

Last Friday, the LDC Group also submitted its proposal for LDC-specific issues to be considered for the ministerial. It includes the implementation of the duty-free quota-free (DFQF) market access decision taken at the 2005 Hong Kong Ministerial Conference; preferential rules-of-origin; the operalisation of the services waiver agreed at the 2011 ministerial; and trade and development assistance with regards to cotton.

While many members welcomed the submission of the LDC proposal and pledged to review it in the coming days, trade sources note that not all LDCs are in agreement on the DFQF issue, due to concerns that some countries' preferential treatment under existing schemes could be eroded as a result.

Ambassador Steffen Smidt of Denmark will serve as a facilitator for the consultations regarding the LDC component of the Bali package. The full proposal is available at http://docsonline.wto.org, under the name (TN/C/W/63)

Formal TNC at end of July

"We have about 40 working days left before the end of July, which I see as the last petrol station before the Bali highway," Lamy told members. "We must make substantive advances in this period if we are to have any chance of successfully delivering in Bali and preparing a post-Bali roadmap."

A formal meeting of the Trade Negotiations Committee is scheduled for 22 July, with a meeting of the General Council currently slated for 24-25 July.

ICTSD reporting; "Trade ministers say running against time to save global WTO talks," REUTERS, 30 May 2013.

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