LDC S&D PROPOSALS TAKE CENTRE STAGE IN CTD-SS

Chair Faizel Ismail told a 14 November formal meeting of the WTO Committee on Trade and Development Special Session (CTD-SS) that Members had made "no considerable progress" towards a consensus text on trade and development for the Hong Kong Ministerial Conference. Delegates at the meeting also focused on five potential amendments to WTO agreements based on five proposals put forward by the group of least-developed countries (LDCs). Consensus on the five proposals has remained elusive in recent informal consultations, and Members decided to continue negotiating on them while simultaneously preparing text for a declaration that ministers could adopt in Hong Kong.

Since May 2005, the CTD-SS has been focusing on proposals from the LDC Group and the African Group to enhance the special and differential treatment (S&D) granted to developing countries by specific WTO Agreements, as per Paragraph 44 of the Doha Declaration. In so doing, Members have effectively chosen to temporarily put aside explicit discussion of cross-cutting issues such as eligibility to receive S&D, in spite of some Members' views to the contrary. Negotiations on African Group proposals have also been temporarily halted because trade diplomats deem agreement on them before Hong Kong impossible.

Positions need to be flexible, Chair says

Ismail said at the meeting that consultations have not revealed any moves towards consensus on language for the five LDC agreement-specific proposals (see BRIDGES Weekly, 5 October 2005). He warned that in the absence of more flexibility in Members' positions, their work on the proposals would yield no results, and might even compromise the progress that has already been made. Nonetheless, he said he would continue consultations, and hoped to finish them with some agreement by 18 November.

LDCs have consistently stressed the importance of the five proposals. On 27 October, Uganda made a strong plea for action, asking why LDCs should go to Hong Kong if there were little chance that they would receive improved market access for their products. Zambia blamed the bleak prospects of agreement on the proposals on the lack of "political will of other Members to strengthen S&D provisions." One delegate blamed the current stalemate on the US, saying that it was effectively blocking LDC efforts to secure binding, fully operational language in the amendments.

At an informal 2 November meeting of the CTD-SS, Ismail put forward revised text for the five LDC proposals. Although slightly revised language was presented to a briefing of Ambassadors the following day, the 14 November meeting was once again given the 2 November version, which appears to be the basis from which negotiations are proceeding.

Three paths to Hong Kong

Ismail told Members on 14 November that the CTD-SS needs to prepare text for the Hong Kong Ministerial Declaration, and proposed three options for attempting to do so. First, Members could simply continue their negotiations on the five LDC proposals in the hopes of agreeing on language for them; second, they could stop negotiations on the proposals and work on the declaration text instead; or third, they could do both.

Members decided to pursue the third option. This came over objections from several Latin American countries that continuing the thus far unfruitful negotiations on the LDC proposals did not make sense, and that including the current versions of the proposals in brackets (to indicate that they had not been agreed to) with the declaration text would be the best approach to take.

The Chair suggested that the draft ministerial declaration text could be based upon the 2004 July Package language on the same issue. This would be included in the body of an eventual Hong Kong Declaration, while any agreed text for the agreement-specific proposals would be included in an annex.

Switzerland and others said that new text reflecting progress in the negotiations should be written for the declaration itself. They also pointed out that Members should remain open to other options for the Hong Kong text, such as agreement upon the LDC proposals that could be included in their entirety in the annex. However, several developed countries argued that any possible annex for the proposals should be based upon Ismail's 2 November text.

On 16 November, Ismail presented a four-paragraph draft text for the ministerial declaration to delegates during informal consultations. Acknowledging that progress has been made on the five agreement-specific proposals, the text called on Members to intensify work on them. The draft text also noted that Members need to discuss outstanding issues such as if and how to monitor the functioning of S&D provisions. Some delegates expressed reservations about whether the negotiations truly merited the term 'progress.' During the meeting, several delegations said that Members should not scale back their expectations for negotiations on S&D, but others said that given the time constraints, they needed to be realistic about what could be accomplished.

The five proposals

Recent consultations on the five LDC proposals have focused on Proposal 36, which, in the 2 November version, says that "developed country Members shall, and developing country Members declaring themselves in a position to do so should provide duty free and quota free market access for products originating from LDCs" in a stable and predictable manner. LDCs have been arguing that this access should be specified to be binding and applicable to all products and LDCs in the text. Developed countries, however, have argued for the exclusion of these more obligatory terms. While the 3 November version of the text for the proposals did include these terms within brackets, the text presented to Members on 14 November did not. This led some LDCs to express confusion regarding the negotiation process and ask for them to be put back into the text.

Proposal 23 would require the General Council to decide within 60 days on requests by non-LDC Members to have certain WTO obligations waived to allow them to take measures exclusively in favour of LDCs. However, the 2 November version retains a bracketed stipulation that Members make these decisions while "taking into account the interests of other developing country Members so as not to affect them." Sources suggest that Latin American countries have argued for the inclusion of the phrase to ensure that future waivers for LDCs do not repeat the banana trade experience. Some Latin American producers feel that they have suffered from the waiver granted to the EU allowing it to maintain trade preferences for bananas from African, Caribbean, and Pacific (ACP) countries.

For proposal 84, which seeks exemptions for LDCs from obligations under the Agreement on Trade-Related Investment Measures (TRIMS), the Chair's text would allow LDCs to maintain or introduce measures that are inconsistent with the Agreement based upon temporary notification and exemption procedures. This leans toward the approach favoured by developed countries, rather than the general waiver that the LDCs had been seeking.

Proposal 88 says that LDCs "shall" only be required to undertake obligations or commitments "to the extent consistent with their individual development, financial or trade needs, or their administrative and institutional capabilities." It allows LDCs that find themselves unable to comply with obligations for these reasons to take the issue to the General Council for examination and appropriate action. However, the US has raised some concerns about what a binding "shall" commitment could entail.

Proposal 38 urges donors, multilateral agencies and international financial institutions to coordinate their work to "ensure that LDCs are not subjected to conditionalities on loans, grants and official development assistance that are inconsistent with their rights and obligations under the WTO Agreements." It has broad support from WTO Members.

Members agreed to continue negotiations on these five proposals, keeping in mind that the General Council has said that trade and development issues such as S&D are an area that could potentially yield an "early harvest" agreement in Hong Kong.

Chair Ismail is continuing negotiations this week on both the five proposals and the draft text for the Hong Kong Ministerial Declaration.

ICTSD reporting; "LDCs make strong plea in WTO for action on SDT," SOUTH NORTH DEVELOPMENT MONITOR, 28 October 2005.