MEMBERS DISCUSS LAMY'S DRAFT MINISTERIAL TEXT; REVISIONS TO FOLLOW

WTO Director-General Pascal Lamy released a comprehensive draft Hong Kong Ministerial Declaration text to Members at a short meeting of the Trade Negotiations Committee (TNC) on 26 November. Negotiators have since been discussing potential modifications to the text almost non-stop, in a series of 'green room' meetings involving Lamy and representatives from 25-30 delegations, as well as in a 30 November meeting of the TNC.

Sources report that Members disagreed on whether the draft text should be associated with ranges of figures for subsidy and tariff cuts, and are currently looking for ways in which to "capture" any existing convergence in the body of the text (as opposed to footnotes or annexes) and direct ministers to the issues on which negotiators need guidance.

The draft's annexes on agriculture, non-agricultural market access (NAMA), and special and differential treatment (S&D) have reportedly proved particularly contentious. The General Council is scheduled to meet from 1-2 December to discuss the text. Lamy is expected to circulate a revised version of the draft based on Members' comments in time for the first day of the session.

Lamy: "no surprises" draft

It is perhaps emblematic of the negotiations that Members are finding so much to disagree with in a text initially described as "bland" by Indian government officials. The text asked ministers to establish target dates for agreeing on "full modalities" on agriculture and NAMA -- the same detailed framework including specific numerical values and formulae for reducing tariffs and subsidies that Members had once hoped to finalise in Hong Kong.

The draft also provided blank spaces for dates to agree on how to proceed with several proposals to improve the provisions for S&D in particular WTO agreements, and enjoined Members to "intensify" the negotiations on services, intellectual property rights, and the environment. Lamy did not attempt to 'split the differences' between Members' negotiating positions, as has been attempted in the past with mixed results. He indicated in the text that Members' opinions on different issues ranged from full agreement to a substantial degree of divergence.

Other issues addressed in the eight pages that constituted the body of the draft text include aid for trade, commodities, the expansion of trade-related technical assistance for least-developed countries (LDCs), and duty- and quota-free market access for LDC exports.

Attached to the text as annexes were the reports submitted by the chairs of the Doha Round negotiating bodies on agriculture (Annex A), NAMA (B), services (C), rules (D), trade facilitation (E) and S&D (F). (See BRIDGES Weekly, 23 November 2005)

Members react: ag, NAMA, S&D annexes prove contentious

Brazilian Ambassador Clodoaldo Hugueney made some remarks about the draft text on behalf of the G-20 group of developing countries in the Committee for Trade and Development on 28 November. He blamed the lack of convergence indicated in the agriculture section of the text not on the process that produced it, but on "the lack of political will on the part of some major participants," implying a failure to propose deeper cuts to farm subsidies and tariffs. He praised the text for not attempting to invent compromise positions, saying that "it is better to have a progress report than a document that does not reflect the reality of the negotiations."

In the 30 November TNC, the US said that Lamy's draft text reflected the state of the negotiations, and called for focused, intensified efforts to make progress on some issues that are within reach for Hong Kong.

Even before Lamy's comprehensive draft text was made public, EU statements had suggested that it thought that the agriculture chair's report went too far (because it included a range of figures encompassing Members' proposals for subsidy and tariff reduction), while the services one did not go far enough. Thus, it was not surprising that the EU objected to the presence of the agriculture and NAMA chairs' reports in the ministerial declaration on the grounds that both contained specific numbers.

A number of Members felt uncomfortable with the range of figures that NAMA Chair Ambassador Stefan Johannesson of Iceland included in Annex B for the coefficient to be associated with the industrial tariff reduction formula (to which countries' final tariff level will be strongly linked). While the draft text said that "the coefficients which were mentioned for developed Members fell generally within the range of 5 to 10, and for developing Members within the range of 15 to 30," some delegations found this too restrictive, and others, the opposite.

Sources report that Members were also unable to reach an agreement on how to phrase five S&D-related amendments to specific WTO agreements that LDCs have been seeking, even though Annex F already contained different possible options for four of them. Nor were they satisfied with a compromise version of the annex that Lamy produced on 28 November. Deputy Director-General Valentine Rugwabiza is now trying to broker compromise on the five agreement-specific LDC proposals. The US indicated that it was open to providing duty- and quota-free market access for LDCs in all but one sector. This would be the textiles sector, where it is reluctant to fully open its markets to Bangladeshi exports. Switzerland proposed sewing up LDC market access in every other sector before turning to textiles.

In addition to differences over the content of the annexes, Members have also been questioning their legal status. Would the chairs' reports acquire legal effects if ministers were to adopt a declaration that included them as annexes? Would these legal effects change if ministers simply "took note" of the reports, rather than "adopting" a declaration of which they formed part? The Africa Group told the TNC that it considered the annexes to potentially be binding guidelines -- and thus did not support their inclusion.

How to orient ministers' discussions in Hong Kong?

In spite of these differences, several delegations indicated that they would like the Hong Kong summit to yield more than a simple date for full modalities. They are thus looking for ways to encourage targeted ministerial engagement and negotiations at the summit, in spite of the fact that the draft text is not very specific. Sources report that in an attempt to do so, Members in the 'green room' meetings engaged in a two-track process: articulating a set of questions to pose to ministers in Hong Kong in order to guide their discussions, and drafting text for inclusion in the body of the draft ministerial declaration that would "capture" convergence alluded to in the reports by the chairs of the agriculture and NAMA negotiations.

With regard to agriculture, these questions may pertain to the structure of the formula and rules for reducing domestic subsidies; the elements of the formula for reducing tariffs; the prerequisites for an agreement on when to eliminate export subsidies; and S&D. On NAMA, ministers may be asked if they can agree on the broad shape of the tariff reduction formula and flexibilities to be accorded to developing countries when applying it, as well as the treatment of unbound tariff lines. Of course, these issues are roughly identical to those that the chairs had deemed to be in need of ministerial guidance in their reports. These questions are expected to be circulated to Members along with the revised draft text on 1 December.

Geneva trade sources indicate that the paragraphs on agriculture drafted in the green room point to Members' "working hypothesis" of classifying trade-distorting domestic support into three tiers, with the heaviest subsidisers making the greatest percentage reductions. They also indicate convergence on the principle of classifying tariffs into four tiers, with a limited number of sensitive products. The text on the NAMA talks mentions a "working hypothesis" on a Swiss formula for tariff reductions (which would cut high tariffs much more steeply than low ones). It instructs the Negotiating Group on NAMA to finalise the structure and details of the formula, "as well as the issues of unbound tariffs and flexibilities, as early as possible." Both texts reaffirm the importance of S&D.

Final form of draft declaration remains unclear

One delegate indicated that it would not be possible to be sure of what the revised draft ministerial text might look like until it is closed after the upcoming session of the General Council. Lamy may present delegates with revised versions of it on the second day of the gathering as well.

The General Council has the option of modifying the draft declaration text, or accepting it as is and sending it to the Ministerial Conference. If they do not agree on the text, General Council Chair Ambassador Amina Mohamed of Kenya and Lamy will have the option of sending it to the Ministerial Conference under their own authority.

Lamy's draft ministerial declaration text is available online at http://www.wto.org/english/thewto_e/minist_e/min05_e/draft_text_e.htm.

ICTSD reporting; "WTO draft for HK meet bland: India," PRESS TRUST OF INDIA, 28 November 2005; "WTO chief keeps up pressure for progress in talks," REUTERS, 26 November 2005.