TRADE FACILITATION TALKS MEET SETBACK OVER DRAFT TNC REPORT

WTO talks on trade facilitation stalled on 11 November when a meeting of the Negotiating Group fell apart after Members could not agree on the contents of their draft report to the to the Trade Negotiations Committee (TNC). The immediate cause of the breakdown was said to be a perception by many developed countries that the modifications to the text proposed by developing countries during the group's 9-11 November session sought to alter the balance of the draft report's text. Developing countries expressed disagreement with the draft report's proposed timeline for proceeding with the trade facilitation negotiations.

Members were unable to even discuss draft ministerial declaration text on trade facilitation for the Hong Kong Ministerial Conference in December, as had been originally intended by Chair Ambassador Muhammad Noor Yacob of Malaysia. This text is supposed to be linked to the report for the TNC.

The rift that has suddenly emerged appears to put brakes on talks that had thus far been progressing steadily and relatively free of the discord that has characterised other issues in the Doha Round negotiations.

The trade facilitation mandate comes from the 2004 July Package (WT/L/579), which asks Members to "clarify and improve relevant aspects" of General Agreement on Tariffs and Trade (GATT) 1994 Articles dealing with freedom of transit for goods (Article V), trade-related fees and formalities (Article VIII), and transparency in the regulation and administration of trade regulations (Article X).

Text-based negotiations main sticking point

Sources report that Yacub appeared frustrated by Members' inability to discuss and adopt the report, but had to acknowledge that their views were far apart, including on the key issue of if and when to start text-based negotiations. This had already become apparent during informal consultations last month when delegates discussed what they wanted to see in the draft report that Yacub was to prepare (see BRIDGES Weekly, 2 November 2005).

Most of the text in the report referred to the wide range of contributions that had been made from over 100 Member delegations, as well as the need to identify Members' "trade facilitation needs and priorities" so that they can be given the assistance and support required to meet them. According to trade sources, the main sticking point in the draft was Paragraph 4, which states that "Members must be mindful of the overall deadline for finishing the negotiations and the resulting need to move into focused drafting mode early enough in 2006 so as to allow for a timely conclusion to text-based negotiations on all aspects of the mandate."

Many developing countries differed on the issue of when to start text-based negotiations. Kenya reportedly objected to the report's recommendation that called for intensifying negotiations "with a view to developing a set of multilateral commitments on all elements of the mandate." A developing-country delegate told Bridges that the "all" was cause for concern, since articulating comprehensive commitments would require Members to have a clear idea about the implications of the various proposals currently on the table, some of which appeared to go beyond the strict negotiating mandate for the talks. It also threatened to close the door to new or revised proposals in the future. Before engaging in 'high-gear' negotiations, the delegate continued, Members needed a common understanding and interpretation of the various proposals on the table, consensus on which proposals are part of the negotiating agenda, and an agreement to keep the door open to future proposals.

Many developed countries considered the text acceptable though not 'perfect,' and reserved the right to match proposals for significant changes with new ones of their own. The US, the EU, China, Canada, Australia, New Zealand, Costa Rica, and Sri Lanka reportedly described the Chair's text as balanced. Sources indicate that the Chair introduced a handful of changes on the second day.

The breakdown occurred on the third day of the meeting, after several developing countries made new proposals for different language on technical assistance. They also called for removing the report's implicit mention of the end-2006 target date for concluding the Doha Round as the deadline for the trade facilitation talks. The EU, eventually supported by the US, Canada and New Zealand, argued that the changes were substantive, would alter the balance of the draft report, and were thus unacceptable.

The report (TN/TF/W/72, currently restricted) classifies elements proposed by Members under three broad headings: measures to modify the three GATT articles at the centre of the trade facilitation talks, provisions for improving trade-related cooperation among customs authorities, and cross-cutting issues. Sub-headings under the first item pertain to specific issues covered by different submissions, including the availability of information, consultation processes for new trade-related rules, advance rulings, appeal procedures, fees and charges connected with importation and exportation, and matters related to goods in transit. Sub-headings under 'cross-cutting submissions' included the identification of Members' needs and priorities, as well as technical assistance and capacity building.

Developing country concerns on technical assistance persist

Technical assistance has been another contentious issue, in spite of the fact that the trade facilitation mandate, set out in Annex D of the July Package, explicitly links developing country Members' eventual obligations to the successful delivery of technical assistance.

Many developing countries want clearer assurance that the necessary technical assistance will be forthcoming before they agree to any specific commitments. Wondering whether developing countries were developing unrealistic expectations about the levels of technical assistance that developed country Members could provide, a developed country trade diplomat said that greater certainty about technical assistance would become possible only with greater clarity about the sort of commitments WTO Members were agreeing to. A developing country trade delegate rejected this concern, pointing out that the level of assistance provided to Members would be based on an assessment of their actual needs beyond what they could implement with domestic resources.

Argentina proposes improvement to language on S&D

Many developing countries also wanted stronger language on special and differential treatment (S&D). Trade sources indicate that Argentina proposed improvements to Paragraph 7 of the draft, which calls on Members to "deepen and intensify" negotiations on S&D to arrive at effective provisions "that allow for necessary flexibility in implementing the results of the negotiations." Arguing that the meaning of "necessary flexibility" was unclear, Argentina called for language that would explicitly anchor it to the July Package S&D mandate in Paragraph 2 of Annex D, which specifies that "the extent and the timing of entering into [trade facilitation] commitments shall be related to the implementation capacities of developing and least-developed Members." Furthermore, Paragraph 7 of the draft report only recognised links to Paragraphs 2 and 3 of the July Package's trade facilitation mandate. The Argentine proposal went further, saying that the draft should also mention Paragraphs 4, 5 and 6 of the Annex, which deal with helping developing countries meet the cost of proposed measures.

The meeting has been postponed to 18 November. A trade diplomat said that Members' differences were not 'insurmountable,' and that they would try to reach an agreement on both the draft TNC report as well as the draft ministerial declaration text. Consensus on the text of the report to the TNC is essential, as the draft ministerial text will refer to provisions within it. The delegate added that there was some pressure to deliver text to WTO Director-General Pascal Lamy by 25 November.

ICTSD reporting; "WTO Talks on Trade Facilitation Falter On Draft's Mention of Deadlines for Action," WTO REPORTER, 15 November 2005.