NEW TEXT IN THE WORKS

Negotiations remain deadlocked on the third day of the Hong Kong Ministerial Conference. Nevertheless, efforts are underway to beef up the draft declaration. At WTO Director-General Pascal Lamy's request, several Members came up with new text on several specific issues in the agriculture, non-agricultural market access (NAMA) and development talks. These submissions were discussed in a 'Green Room' meeting that continued into the early hours of Friday morning. During the gathering, Members were presented a draft text on duty- and quota-free market access for least-developed country (LDC) exports that would not exclude any countries, but would contain limited exemptions for certain products.

Meanwhile, serious fault lines are emerging between some countries over how to continue with the Doha Round services negotiations. New language for the draft declaration's services annex proposed by a group of developing countries appears to cross some of the EU's stated 'red lines.' Sources suggest that a failure to resolve what to do with the annex on services could even grow into a significant obstacle to consensus in Hong Kong.

Lamy Asks for Texts

On the basis of 'Green Room' discussions among 25-odd delegations on Wednesday night, Mr Lamy identified 13 areas in the agriculture negotiations where he believed that Members might be able to expand upon the draft ministerial declaration, and asked them to draft and submit possible additions to the text.

With regard to export competition, these issues included an end date for the total elimination of export subsidies; the phase-out schedule; and an agreement on food aid, certain forms of export credit, and state trading enterprises that export. On domestic support, Mr Lamy identified the number of bands for reductions, the thresholds for those bands, and the extent of reduction in total trade-distorting support. As for market access, the most controversial of the three 'pillars,' Members were asked to come up with proposals for the number of bands in which to classify tariffs for the purposes of cutting them; on how to treat sensitive products (which developed and developing countries can designate for special tariff treatment); special products (only available to developing countries); the special safeguard mechanism; and preference erosion. The draft declaration text already addresses some of these issues, citing, for instance, 'working hypotheses' on three bands for classifying domestic subsidies and four bands for tariffs.

Also at the Wednesday evening Green Room meeting, Members identified nine areas in the NAMA negotiations on which to submit text: the formula, the coefficients, the relative values of the coefficients, 'Paragraph 6' countries (i.e., those with fewer than a certain percentage of their tariff lines bound, and thus eligible for exemption from tariff cuts under the NAMA mandate in the 2004 July Framework), the 'Paragraph 8' flexibilities for developing countries, other special and differential treatment (SDT), the 'mark-up' approach for unbound tariffs, sectoral liberalisation initiatives, and the relative level of ambition in agriculture and NAMA.

Guyanese Trade Minister Clement Rohee, who is facilitating the development talks, had also asked Members to come forward with new text, particularly for a possible draft decision on duty- and quota-free market access for LDC exports.

The facilitators and Mr Lamy are continuing to process members' submissions. New text on agriculture and NAMA is expected some time on Friday.

In spite of the broad move towards putting more meat on the bones of the draft declaration, agriculture facilitator Mukhisa Kituyi, Kenya's trade and industry minister, cancelled a planned plenary session on Thursday after his consultations led him to the conclusion that Members were still too far apart to make such a meeting worthwhile. At the heads-of-delegation (HOD) gathering on Thursday evening, he urged Members to submit their revisions to the draft declaration as soon as possible. Pakistan's Commerce Minister Humayun Akhtar Khan made a similarly glum assessment of the NAMA talks based on his consultations. He told the HOD meeting that Members remained entrenched in their positions, and even ran the risk of regressing.

Services: G-90 Floats New Annex

The G-90, which includes the group of African, Caribbean, and Pacific countries, the LDC group and the African Union, circulated an alternative annex on services for the declaration on Thursday evening. The text, which builds on an earlier one submitted by the Association of Southeast Asian Nations (ASEAN) group, modifies the prescriptive and mandatory language in the Chair's text that is currently 'Annex C' of the draft declaration. It also drops the original text's reference to a report containing sectoral and modal objectives outlined by Members -- a report that some G-90 countries had criticised as primarily reflecting developed country concerns.

The qualitative objectives set out by the G-90 differ somewhat from those in the original annex, in that Members are asked to improve their commitments in all four modes of supply rather than to bind commitments at their present level of market access. The new text strengthens references to developing country interests, urging further liberalisation particularly in Mode 4 (which covers the cross-border movement of service providers) de-linked from commercial presence and "sectors of export interests to developing countries." The paragraph of the original text that obliged Members to enter into plurilateral request-offer negotiations has been replaced with a stipulation that such negotiations "may also be pursued," and the modalities set out for plurilaterals have been removed.

Earlier in the day, a developing country negotiator had reported that the EU, the US, and Mr Lamy had been exerting "immense pressure" on some G-90 countries in informal private meetings to dissuade them from seeking amendments to the services annex of the draft declaration. Noting that the EU had warned in bilateral meetings that there would be no Ministerial Declaration if the annex were weakened, the diplomat suggested that the EU was using services as a way to avoid making substantial commitments in agriculture. Mr Lamy, too, had intimated to them that demanding modifications to the annex could potentially jeopardise the Hong Kong meeting. The US was said to be warning capital-based officials from some G-90 countries not to push for changes to the text.

An EU official asserted Thursday morning that "we cannot accept any weakening in the current text." He said that the EU's preference would be to make the text more ambitious. If ministers failed to adopt Annex C in Hong Kong, he continued, "the declaration would be useless from the point of view of services."

Meanwhile, four developing countries -- Indonesia, Philippines, Venezuela and South Africa -- submitted a letter to services facilitator Kim Hyun-Chong, Korea's trade minister, essentially emphasising that the services annex was not an agreed text and it would thus be premature to adopt it in its current form.

G-20: Export Subsidies Deliverable in Hong Kong

The G-20 strongly emphasised in a press conference that setting an end-date for export subsidies was one of the few agriculture deliverables in Hong Kong. Representatives from the group of developing countries said that agreement on such a date would send an important signal to the public at large about WTO Members' commitment to the Doha Round. They also noted that most developed and developing countries had endorsed the year 2010 for completing the phase-out.

The EU and Switzerland, however, had objected to setting such a date during a Wednesday night 'Green Room' meeting. In a nod to their concerns, the G-20 suggested that the elimination date could be placed in brackets in the Hong Kong Ministerial Declaration, the removal of which would be contingent on agreement on 'other forms' of export support. This was debated on Thursday night, but the EU continued to oppose it, as did Switzerland, albeit to a lesser extent.

Development Package

The draft decision text on LDC market access given to Members in the Green Room on Thursday night would extend duty- and quota-free access to all LDCs "on a lasting" -- though not formally bound -- basis. However, it would allow Members to exempt a certain percentage of self-designated tariff lines from the obligation to provide full market access. The size of this reservation would progressively decrease. The implementation date for the scheme was also left open.

Delegations did not have time to discuss the proposal at the meeting, and will continue discussions on the matter on Friday.

LDCs' long-standing demand for duty- quota-free market access has commanded the lion's share of the negotiations on the 'development package' that Members have set their sights on since they agreed to lower their ambitions in agriculture, non-agricultural market access (NAMA) and services, the core market access areas of the negotiations. However, several trade diplomats indicated on Thursday that once this issue was settled, they would address issues of interest to all developing countries. The G-20, as well as the larger G-90 developing countries, cautioned that any development 'package' adopted in Hong Kong must deliver concrete benefits rather than merely expound good intentions.

EGS: India Criticises 'List' Approach

India released a statement Thursday outlining its opposition to the so-called 'list' approach to liberalising trade in environmental goods as not in the interests of developing countries. This would have Members create a multilaterally-agreed list of environmental goods for expedited liberalisation under Paragraph 31(iii) of the Doha Declaration. In the negotiations in the Special Session of the Committee on Trade and Environment, India has advocated an alternate "environmental project" approach, whereby market access for goods and services associated with a particular project would be temporarily liberalised for a specific time period, as approved by a designated national authority. The more specific of the two bracketed alternatives in the draft declaration text for how to proceed on environmental goods would effectively adopt the list-based approach.

Tonga Accedes to the WTO

The Ministerial Conference on Thursday afternoon approved Tonga's terms of accession, following a lengthy process that began in 1996. Tonga thus becomes the 150th Member of the WTO, on the heels of Saudi Arabia, which acceded on 11 December. In a statement to the plenary, Tonga's minister for labour, commerce and industries referred to the long journey of the accession process.

As a WTO Member, Tonga joins its fellow South Pacific islands of Fiji, Papua New Guinea and the Solomon Islands. International charity Oxfam had issued a controversial statement on the tortuous process of WTO accession for small island states in the South Pacific, stating that accession would impoverish the nation. Tonga emphasised that it was "simply not an option" to not be part of the WTO based on a consideration of the pros and cons of membership. Just prior to the Doha Ministerial Conference in 2001, after finishing the entire accession process, Vanuatu -- another South Pacific island nation -- decided not to become a WTO Member, ostensibly for "technical reasons."