'FRIENDS OF THE CHAIR' LOOKING TO SAVE WTO'S S&D REVIEW

On 5 June, Heads of Delegations met again with General Council (GC) Chair Perez del Castillo (Uruguay) to continue the review of special and differential treatment (S&D) provisions (see BRIDGES Weekly, 4 June 2003). Discussions at this meeting focussed mainly on Article XVIII of GATT 1994, which potentially carries large developmental value by giving developing countries space in trade rules to temporarily promote and protect domestic industry. While the discussions were characterised by one developing country delegate as "engaging," none of the proposals on the table (which included one on sanitary and phytosanitary measures) could be agreed upon. In an attempt to jump-start the process forward, especially on the more valuable (and contentious) proposals, Chair Castillo requested that the 'Friends of the Chair' group work on redrafting some of the proposals on which Members have already been able to make some progress. While a number of delegations have expressed apprehension over this process, they continue to await what fruits it may bear before passing judgement. Some sources close to the negotiations have speculated that if meaningful and valuable progress does not come soon, the S&D review may once again find itself in a deadlock.

Process

The 85-plus proposals over which Members have disagreed since mid-2002 (see BRIDGES Weekly, 6 August 2002) are being dealt with now in three categories. The first category, which this Heads of Delegations process is currently addressing, tackles 38 proposals that 'could' be agreed upon before or at the Cancun Ministerial (of which 12 were 'agreed' in principle in December 2002, and another two on 21 May 2003). The second category, comprising another 38 proposals, has been sent to relevant WTO subsidiary bodies -- which are to report back to the GC just prior to Cancun (these would be open to early harvest). Category three, the 15 proposals on which delegates have had most difficulty in finding consensus, would be examined with regard to how they might be redrafted in a way more suitable to agreement, while preserving the concepts they embody (see full proposal at http://www.ictsd.org/issarea/development/resources/Latest-SDT-proposals.pdf). It seems however that redrafting will commence in category one first.

The redrafting exercise in category one, reportedly to be led by Brazil, will include other 'Friends' such as Kenya, Bangladesh, the US, the EC, and Norway. One report indicated that they are scheduled to meet on 12 June to begin redrafting all 24 of the proposals that remain unresolved.

Transparency

Both developing country delegates and civil society organisations have raised broader concerns over the Heads of Delegations and the 'Friends of the Chair' processes. As the former are informal meetings, there are no minutes or records taken, and thus any delegation that cannot attend is hard-pressed to find out exactly what was discussed -- to say nothing of participating. The latter meetings are also informal, with no records taken, and further their attendance is usually restricted to the specified 'Friends'. While a few delegates did highlight the freedom of discussion facilitated by the off-the-record discussions, most indicated some concern about how it was being handled. One Asian delegate was circumspect about the internal transparency related to the 'Friends of the Chair' process, but was willing to wait and see the outcome in coming days (including whether additional countries would be invited to engage in the redrafting).

Article XVIII

A fair amount of the redrafting, speculated one trade source, will involve merging various proposals on the same articles. This was expressly requested by the US delegation in the 5 June discussions on Article XVIII. When asked why they thought this was being sought on Article XVIII specifically (which has five separate proposals relating to it), one source from a developing country mission indicated their belief that it was to facilitate the "watering down" of proposals and trading-off one proposal for another. Another possible reason, offered one trade analyst, is the value that Article XVIII could potentially play for developing countries.

Article XVIII of GATT 1994, entitled 'Government Assistance to Economic Development', recognises that it may be necessary and justifiable for those Members whose economies can only support low standards of living and are in the early stages of development to take protective or other measures affecting imports in order to implement programmes and policies of economic development designed to raise the general standard of living. It deals with modifying or withdrawing concessions (part A), limiting imports due to balance-of-payment (BOP) difficulties (part B), and other measures relating to governmental assistance to establish an industry (part C).
Switzerland and the Quad (US, EC, Canada, & Japan) reportedly wanted to focus the discussions mainly on guidelines for part C, and have the relevant committees deal with parts A and B (e.g. Committee on Balance of Payments, Committee on Trade and Development, etc.). This would, expressed a developing country delegate, be tantamount to moving most of the potentially valuable Article XVIII proposals to category two -- i.e. those to be dealt with by subsidiary bodies.

SPS
On the two proposals submitted on Article 10.3 of the Agreement on Sanitary and Phytosanitary Standards (SPS), dealing with time-limited exceptions for developing countries on new SPS measures, Members remained at odds. In particular, the US, Australia, Switzerland, Japan, Hungary, and Canada opposed the automatic nature of the exception being requested. The EC reportedly appeared more flexible on the matter -- being willing to consider "shall positively consider", as opposed to "shall grant" (as requested by a group of developing countries), and "is enabled to grant", as the language currently stands.

Category II - TRIPs

On the category two items, which have now been sent to the subsidiary bodies, the TRIPs Council dealt with two of the relevant proposals. Least-developed countries had called for the 2006 compliance deadline to be automatically extended for all countries that lacked a "viable technological base". The US, Canada, Japan, Switzerland and other developed countries opposed an automatic extension, noting that they were willing to be flexible depending on circumstances, as they were in the case of pharmaceutical patents where the deadline for LDCs had been extended to 2016.

The African Group had put forward two proposals. The suggestion to extend the compliance deadline under Article 65.4 for patents on pharmaceuticals and agricultural chemicals past 2005 was generally opposed by developed countries although Norway and the EU signalled their willingness for more detailed discussions. Developed countries also rejected a proposal to interpret "exclusive marketing rights" and when they would apply in order to make a clear distinction between such rights and patents. The US noted that the TRIPs Agreement was already sufficiently clear on this point.

The 'Friends of the Chair' group is expected to meet on 12 June. The next informal consultations are scheduled for 16 & 17 June -- however reports indicate these meetings will be limited to a dozen or so Members.

ICTSD reporting.