PERSISTENT DIVISIONS, CROWDED AGENDA LOOM OVER DOHA MODALITIES PUSH

WTO Member delegations are still behaving as though a ministerial-level meeting will be held between mid-March and mid-April to reach a framework accord that would make it possible for the Doha Round negotiations to be concluded by the end of the year.

But while trade missions in Geneva keep an eye on hotel availability for their capital-based colleagues, wide-ranging divisions make it far from clear whether top officials would actually be in a position to hammer out a deal, even if they did find themselves summoned to WTO headquarters.

In order for ministers to have a realistic chance of striking a ‘modalities’ accord – formulae and figures for cuts to agricultural tariffs, farm subsidies, and manufacturing duties, as well as exceptions to these – they must be presented with a limited number of issues on which to make tradeoffs. This is the view broadly shared by WTO Director-General Pascal Lamy, the chairs of the agriculture and industrial goods negotiating committees, and trade diplomats.

Though ministers alone are empowered to decide headline issues such as where to cap their own countries’ industrial tariffs in return for concessions others make on limiting farm spending, few of them are likely to be able (or inclined) to address arcana such as product-specific subsidy rules or tariff quota administration. Nevertheless, these technical issues have the potential to significantly affect the value of countries’ liberalisation offers, particularly on farm trade. They need to be resolved in order to enable more straightforward comparisons and tradeoffs.

Geneva-based delegates are currently trying to resolve many of these underlying technical issues, based on draft agreement texts issued on 8 February by the chairs of the negotiating committees on agriculture and non-agricultural market access (NAMA). Discussions in the two committees, starting this week, were supposed to set the stage for a ‘horizontal process’ of cross-sectoral tradeoffs, first among negotiators and senior officials, and ultimately among ministers themselves.

However, little subsequent headway has been made thus far on agriculture, even though Crawford Falconer, the New Zealand ambassador who chairs the negotiations, had suggested that agreeing on at least some of the numerous issues would not be overly difficult (see related story, this issue).

In the NAMA negotiations, far fewer numbers are necessary for Members to directly determine their pain and gain: the formula ‘coefficients’ that will determine future tariff ceilings for industrialised and developing countries, and the ‘flexibility’ figures that will determine how many products the latter will be able to shield from liberalisation. Indeed, this clarity – quite distinct from the fogginess off agriculture concessions – has likely contributed to the contentiousness of the talks. Chair Canadian Ambassador Don Stephenson’s new text removed any potential figures for these flexibilities, and suggested that given the utter deadlock, Members might try to pursue consensus by exploring ways to trade off higher coefficients against lower flexibilities, and vice versa (see BRIDGES Weekly, 13 February 2008).

Initial reports from sources who attended Members’ first discussion of the NAMA text, on 20 February, suggest that several delegations, irrespective of whether they wanted the flexibilities expanded or further restrained, were critical of the chair’s decision to remove the figures altogether. They said it left no basis for negotiation.

To the extent that they have featured in the discussions, ‘horizontal’ comparisons between agriculture and NAMA have consisted primarily of complaints about the ‘exchange rate’ between the two.

French Agriculture Minister Michel Barnier created a stir this week when he called the new farm text “unacceptable,” and said in Brussels that twenty of the EU’s 27 member states agreed that it gave up too much on agriculture without getting concessions in the NAMA draft or on protections for regionally-linked foods.

Thailand took the opposite view in the WTO agriculture negotiating committee, alleging that while most developing country manufacturing duties would be brought down into the 20s, some farm tariffs could remain as high as 500 percent if Brussels gets its way and avoids a tariff cap. The NAMA-11 alliance has unfavourably contrasted the developing country flexibilities on NAMA to those available to rich nations in the agricultural negotiations – the latter are not subject to an import volume limit.

Sources say that Falconer and Stephenson will consult with Members for the rest of the week, and announce on 22 February whether they intend to continue talks in their respective negotiating committees, in order to further revise the draft texts.

‘Christmas tree’ threatening Easter modalities?

Also threatening to crowd the scope of a potential modalities drive is the ballooning list of issues that different WTO Members are saying that they want addressed during the horizontal process.

For instance, the EU and the US have been demanding a ‘signalling conference’, at which major target markets would indicate how much they were willing to open up their services sectors to foreign competition. Japan and Canada want anti-dumping rules to be included. Brussels wants geographical indication protection for regional food names, India and Brazil point to a proposal to reform WTO patent rules for inventions that use biological resources, and so forth, with different countries highlighting different priorities.

WTO chief Lamy has warned that bringing a ‘Christmas tree’ of different issues onto the table would decrease Members’ chances of reaching a breakthrough on agriculture and NAMA modalities.

Moreover, even on these other issues, Members’ positions remain far apart.

According to the terms of a 12 February report on the services negotiations issued by Chair Ambassador Fernando de Mateo (Mexico), Members agree on little other than principles and guidelines which they already adopted in the past, from the 2005 Hong Kong Ministerial Conference through to the Doha mandate and the GATS agreement itself. “Significant divergences persist” on newer proposals, be it a call from primarily rich countries for the depth of services market-opening to be comparable to that on agriculture and NAMA, or an appeal from mostly developing countries to be granted greater access in Mode 1 (cross-border supply of services, like business process outsourcing) or Mode 4 (temporary international labour movement).

The rules talks are also divided. Countries including Japan, Brazil, the EU, Canada, China, Taiwan, Korea, and Norway have been heavily critical of a draft anti-dumping text that Chair Ambassador Guillermo Valles Games (Uruguay) issued last November. They object to the fact that it would, under certain circumstances, explicitly legalise ‘zeroing’, a controversial US calculation methodology that they claim inflates anti-dumping duties (see BRIDGES Weekly, 30 January 2008). The US, on the other hand, is content to use the text as a basis for further talks.

Earlier this week, Japan, Canada, the EU, India, and Korea urged Valles Games to issue a new rules text as soon as possible. The chair, however, said he would do so “in due time.” Notably, these countries have also been among the most critical of the reforms proposed in Valles Games’ draft text on another component of the rules negotiations: disciplines on fisheries subsidy spending.

Those potential disciplines would ban a broad range of support for fisheries, in an attempt to curb overcapacity and overfishing. Developing countries would, however, be allowed to maintain several ordinarily-banned payments if they establish a national fisheries management system and have it peer reviewed at the Food and Agriculture Organisation (FAO). India and the group of African, Caribbean, and Pacific (ACP) countries say that these requirements are so onerous that they render the exception useless. This week, they proposed (TN/RL/W/217) relaxing the disciplines for artisanal and small-scale fishing, arguing that making it too difficult to support them could threaten the livelihoods of millions.

Other Members, such as Norway, Korea, and the EU, stressed the importance fisheries management schemes. Australia said that establishing a good fisheries management system was not impossible for developing countries.

If Members are trying to reach a breakthrough on agriculture and NAMA, why are they making all of these demands on other issues now? The WTO’s 'single undertaking' principle that "nothing is agreed until everything is agreed" means that a government could veto an eventual Doha package that it found unsatisfactory, even after a modalities deal on those two issues.

“A lot of countries, [such as] the US and the EU, think that the greatest leverage [to achieve their goals] is in the horizontal process, regardless of the single undertaking,” explained one delegate. “Thus, it is not surprising that relatively less powerful delegations also feel the same way.” Small countries would find their options even more constrained after a modalities deal was struck, the source said, since they would come under “heavy pressure not to block the round,” on the grounds of, say, unsatisfactory progress on development issues such as duty- and quota-free market access for least-developed country exporters.

The official suggested that if services trade comes to figure seriously in the horizontal process, then other countries may push for having their own priorities included in those discussions as well. The former, at least, seemed likely, since the EU had expended “a lot of political capital” in its pursuit of a signalling process. “We’re preparing to have to deal with all issues.”

Meanwhile, Lamy is believed to be consulting with Members on the scope and timing of a potential horizontal process.

Each of the past three years has seen a failed push for a Doha Round modalities breakthrough. Although negotiators point out that this year, significantly more of the necessary underlying technical work has been completed, some are taking a wry attitude towards the current target of ‘around Easter’ for a ‘mini-ministerial’ meeting. “Which Easter?” runs the joke. “Catholic or Orthodox?”

Catholic Easter is on 23 March this year; Orthodox Easter on 27 April.

ICTSD reporting; “France rallies EU partners against world trade pact,” EURACTIV, 19 February 2008.