WTO Members Prepare for "Final Countdown" as Ministerial Looms

26 September 2013

With just ten weeks to go until the WTO's ministerial conference in Bali, Indonesia, members have spent the month of September feverishly working in an effort to prepare a final set of deliverables in time for the December gathering. While the renewed pace of work is "inspiring," WTO Director-General Roberto Azevêdo reported on Monday, members must continue to "expedite our negotiations and work more intensely" in the remaining months ahead.

Azevêdo: main Geneva negotiations should be done by end-October

WTO members have been engaged in an intense series of consultations during the past three weeks since Azevêdo formally took office as Director-General on 1 September. The meetings to date have been at three levels, addressing all of the Bali topics: trade facilitation, agriculture, and issues related to developing and least developed countries.

The first tier of consultations have been the so-called "Room E/D meetings," named for the rooms at Centre William Rappard in Geneva where these are held, where Azevêdo has convened approximately 50 ambassadors - accompanied by at most one technical official each - representing a range of interests and coalitions.

The first cycle of the new Room E/D format featured ten sessions, which were then followed by a meeting of senior officials from capitals on 19 September. Members then met in the context of the Trade Negotiations Committee this past Monday. The next cycle of Room E/D consultations is now already underway, with another TNC scheduled for 30 September.

While the work over the past few weeks has been "focused, precise, and business-like," Azevêdo warned WTO members at Monday's TNC that there is still a long way to go in order to clinch a deal in time for the December conference.

"From the week of 14 October onwards, we will be in final countdown mode to the end of the month," he said. "A frank assessment of the progress that has been made will be required - as well as setting the course for the final stretch of our path towards Bali."

Members should be ready to conclude the main part of their Geneva negotiations by late October, he added. "By then, we should be able to see the [Bali] landing zones."

Delegates speaking to Bridges generally welcomed the escalation in pace of the negotiations, while cautioning that many differences remain at both political and technical levels.

"Members are more focused now - more than before - on Bali," a developed country delegate said. "But the question is how much will we be able to do?"

"Even if an outcome comes, it will be one with calibrated ambition," another delegate noted, given the limited time between now and the ministerial. "There will be a lot of compromise."

Trade facilitation

The meetings this month have addressed all parts of the trade facilitation mandate, Azevêdo reported on Monday.

However, concerns still remain over how to resolve differences in Section 2 of the text, a notoriously contentious area that deals with flexibilities for developing countries. These countries have long been wary of taking on potentially "onerous" commitments that could prove difficult and costly to put into effect. Some developed countries, however, have stressed that obligations need to be binding in order for a trade facilitation pact to yield any benefits.

"This is the bargaining area," one trade official said. "It's a chicken-and-egg question - do you commit to the funding first, or do you commit to binding rules first with the expectation of then getting assistance."

Sources say that customs cooperation - technically part of "Section 1" of the trade facilitation draft text - is also proving to be particularly difficult. This is a "make-or-break" issue, one developing country delegate commented. Other tough issues include consularisation, transit, pre-shipment inspections, and customs brokers, the delegate added.

"If these issues - and Section 2 - are settled, dropped, or we reach some sort of compromise, I think trade facilitation could be done for Bali," the source said. "Otherwise, it would be hard to have an agreement."

There is also no consensus yet on whether and when to have a trade facilitation "signalling conference," where members openly submit definitive proposals for finalising the text, another source said, referring to an idea floated during earlier meetings in July. (See Bridges Weekly, 25 July 2013)

Agriculture: "peace clause" gains traction

The proposal from the G-33 coalition for providing increased flexibility to developing countries for building food security stockpiles and domestic food aid has been the subject of "intensive consultations" in recent weeks, Azevêdo reported.

Notably, the idea of a "peace clause" - in other words, a due restraint mechanism that would prevent WTO members from launching disputes in a certain area - has continued to gain momentum. The proposed peace clause is one of a series of options that was presented in a "non-paper" earlier this month by a subset of the G-33. (See Bridges Weekly, 19 September 2013)

However, sources have said, there are still many open questions over how such a peace clause might work. For instance, whether it would be political or legally binding; what timeframe would the clause be applicable for; what it would cover; and what would be a possible path to a long-term solution after Bali, among other issues.

"The devil is in the details," one delegate warned.

A proposal from the G-20 developing country coalition on export competition "remains sensitive," the Director-General reported, though members appear open to adopting some kind of outcome in Bali. Another proposal on the administration of tariff-rate quotas (TRQs) is facing difficulty over disagreements on its special and differential treatment (S&DT) provisions.

"This is a simple and straightforward proposal that most members tend to find well-calibrated and achievable," Azevêdo said. "I would hope that this could be done quickly so we can concentrate on the more complex agriculture issues."

Monitoring Mechanism advances; complications for "Cancún 28" proposals

With regards to the development-related components of the proposed Bali package, discussions on the Monitoring Mechanism have reportedly advanced in recent weeks.

The so-called Monitoring Mechanism would review the functioning of provisions in WTO rules for S&DT treatment in favour of developing countries and potentially suggest improvements. However, sources say that questions remain over the mechanism's function - specifically, whether it will focus on reviewing the effectiveness of S&DT proposals, or instead on their implementation.

Other questions include the nature of the recommendations that the mechanism will be allowed to make to WTO bodies, and the mechanism's relationship with those same bodies.

Though the discussions on a Monitoring Mechanism appear to be progressing, sources say that the Cancún 28 proposals appear to no longer be on the table.

The Cancún 28 are a series of proposals on special and differential treatment that were agreed in principle - though not "harvested" - at the WTO's fifth ministerial conference in Cancún in 2003. Over the past several months, WTO members had been reviewing which of the proposals could be adopted as is, and which would require updating. However, sources say that the LDC Group and the African Group have now asked that the 28 proposals be considered for adoption together as a single package.

"It was a bit of a surprise," one developed country delegate remarked. "Our view is that, if something is meaningful, and commercially also valuable, then it should be doable to work on as many issues as possible."

Another delegate familiar with the African and LDC Group discussions explained that, upon review, the groups had decided to push for the Cancún 28 proposals to be adopted as a whole in order to ensure that those proposals with the most economic value are adopted.

Disagreements among members over which proposals to adopt, and which to revise or push back to after-Bali, prompted the LDC and African Group's positions.

"These were already compromises," the delegate explained, referring to the negotiations prior to the 2003 Cancún ministerial. "We don't want to cherry-pick and end up with something valueless."

While the Director-General has said that the issue "is not necessarily closed" as far as he is concerned, some delegates expressed scepticism that the Cancún 28 proposals will be on the table for Bali.

"It's not going to happen," one said. "We've dropped it in the Bali context."

LDC issues: revised rules-of-origin proposal tabled

Proposals from the LDC Group on cotton and on operationalizing the services waiver are still forthcoming, sources say. However, differences within the group on duty-free, quota-free market access currently remain unresolved, given the fear of some least developed countries of preference erosion.

The LDC Group has submitted a revised proposal on rules-of-origin, which was reportedly well-received by many members.

"These are now in the form of guidelines, rather than a draft decision," one delegate familiar with the proposal explained, adding that this helped make it more acceptable to members who had previously opposed it.

ICTSD reporting.

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