NGOs Call on Governments to Reject the 13 September Draft Text

The text of 13 September completely sidelines developing countries’ positions which they have voiced for a long time. It also back-tracks on the development promises made in Doha.

US/EU – WTO Secretariat Driven Text

The text does not represent developing countries’ concerns in all areas. It is also not a reflection of the positions expressed by developing countries in the last 2 days of consultations. On 12th September, 90 countries expressed a common position that there should be no negotiations on the Singapore issues. Also on 12th September, Canadian Minister Pettigrew said that the talks were polarized. Yet the text agrees to negotiations on all four issues!

This puts in question the entire legitimacy of the process – the WTO is a consensus-based institution, that supposedly is ‘Member-driven’. This text clearly shows that the institution is US/EU/and WTO Secretariat driven.

Governments are also now commencing Green Room negotiations (of about 30 countries), excluding the majority of Members. This process should also be rejected by developing countries.

Agriculture: Increased Dumping Legitimised, Even as Developing Countries Asked to Open Markets

In both the area of Domestic Supports and Export Subsidies, the text does not call for any serious reforms on the part of the developed countries. Subsidies and dumping will actually be able to increase, even as developing countries are told to decrease their tariff levels drastically.

– Para 1.5. The Green Box is not tackled in any serious way in the text. The Green Box is a major loophole that is allowing dumping to continue. The Green Box is now defined as ‘non-trade distorting’. Subsidies in the Green Box are currently allowed without limits. Of course only developed countries have the money to provide these subsidies. And in the tens of billions, they are certainly trade-distorting. Both the US and EU play games – while reducing supports in the AMS or Amber box subsidies and Blue Box, these are shifted into the WTO-sanctioned Green Box. The phrase in the text that the “Green Box criteria shall be reviewed with a view to ensuring that Green Box measures have no, or at most minimal, trade-distorting effects..” will not require the US and EU to make any reforms.

– Para 3. The Export Subsidies and credits paragraphs renege on the promises made in Doha, that these subsidies will be phased out with a view of ‘elimination’. Instead, 3.1 effectively provides for the continuation of export subsidies.

– 2.1, 2.2, 2.7, 2.8 Unlike for instance the Green Box where no details are provided hence allowing developed countries to continue their current practices, the Market Access commitments are very detailed in calling for developing countries to drastically reduce their tariffs. A mix of formulas are suggested – Uruguay Round as well as Swiss formula. Most developing countries have rejected a Swiss Formula. This formula will wipe out small farmers in the South. Special treatment has been provided to developed countries to maintain high tariffs in 2.2. However, the possibility of developing countries availing to this is ‘remain(s) under negotiation’ (2.8).

– The “strategic products” (SP) is entirely inadequate. Developing countries had asked for no tariff cuts on SPs. The text requires minimal cuts. Tariffs cuts are exempted for products with existing low bound rates. This may help some countries, but for the majority, it is meaningless, since their sensitive products have higher tariff rates.

– 2.9 The Safeguard Mechanism is proposed, but based on tight conditions and only for some products. This Mechanism should be available for all products to address import surges and price drops.

– 6. The Peace Clause gives immunity to developed countries’ subsidies. It should expire as agreed in the current agreement by 31 December 2003 and not be renewed as suggested.

Non-Agricultural Market Access

– In spite of much opposition to Annex B on Market Access for Non-Agricultural Products in the original draft declaration, Annex B on the newly released Draft Declaration is virtually identical to the previous. No substantial changes have been made whatsoever to accommodate and address the sentiments of many developing countries. We reiterate: Annex B employs the non-linear formula for tariff reduction which implies that industries that enjoy high tariff rates will have to experience deeper, more substantive cuts than others, making all tariff lines eventually converge to zero. Furthermore, the Annex also binds the rest of the previously unbound tariff lines at twice the MFN applied rate, and then applies the aforementioned non-linear formula for eventual tariff reduction. This lethal combination robs developing countries of the much-needed policy space and flexibility to promote and nurture chosen industries. Selective and targeted industrial promotion strategies have historically been proven to be of crucial importance to a country’s industrial development, and tariffs and inter-industry tariff differentials are in turn an important component of such strategies. By imposing these harsh tariff cuts on developing countries’ industries, Annex B essentially pulls the plug on any prospect of survival for local industries, and much less on any prospect of industrial development for many developing countries.

– At the same time, Annex B on Market Access for Non-Agricultural Products maintains its weak and feeble reference to non-tariff barriers (NTBs). It has become obvious in recent years that developed countries have used NTBs to protect and promote their chosen industries. Annex B makes no firm commitment on elimination of these NTBs. In fact, it only promises “to proceed with… ultimately negotiations on NTBs.” Annex B therefore, with its combination of the non-linear formula and the non-committal statement on NTBs, is lop-sided and biased, and fundamentally inimical to developing countries’ interests.

GATS: too swift negotiations and no exclusions for public services

The draft declaration text provides mechanisms to intensify the negotiations not to meet the countries’ needs but to liberalise services through market access and rule changes. The draft declaration should contain a “horizontal date” for setting a date to make improved offers by those who have already made offers and urges those who have not submitted to do so as soon as possible. This does not take into account the lack of capacity of developing countries to make offers according to their country’s or peoples’ interests nor refers to the option of not making any offering. On the contrary, the negotiations should only aim at higher levels of liberalisation. Worse, no sector or mode should be “a priori” excluded: this means that the decalaration would explicitly call not to take water services and other basic needs services out of the GATS. The declaration calls for negotiating new rules on subsidies, emergency safeguards, domestic regulation and public procurement to be finanalised at times set (by end 2004 except for emergency safeguards by March 2004) while the negotiations are very contentious and progressing with difficuloty and will have very far implications for countries by restricting domestic regulation and stopping to support their own services even if the declarations refers to the right ro reintroduce new regulations. The best endavour language for services and mode 4 of export interest to developing countries is very weak and with no firm commitment, neglecting the problems of developing countries with increased imports of services.

New Issues: Breach of Doha Agreement

The draft declaration calls for the start of negotiations on trade facilitation and transparency in public procurement while there is no explicit concensus to do so nor on the modalities of the negotiations.[1] Moreover, it keeps investment and competition policy on the agenda of the WTO –as the EU wants- by setting a date (time not yet in draft declation) to agree on modalities for negotiating (i.e commencing negotiations) an investment agreement, without any explicit consensus, and by continuing consideration for modalities for negotiating an agreement on competition. As Doha texts referred to explicit consensus on modalities for the four issues at the fifth Ministerial conference and this explicit consensus was clearly not achieved here, the four issues should be taken off the WTO agenda at this conference: no is no. Linking the date of agreeing modalities on investment negotiations with those on agriculture and NAMA (footnote 1) and linking the report on exploring modalties for competion negotiations will make it very difficult for developing countries to resist agreement on new negotiations in the future. Even the limitations put in the modalities on transparency in public procurement (Annex D) cannot avoid that the negoatiations will go beyond what was agreed in Cancun, as was experienced during the Uruaguay round negotiations.

Backtracking on Implementation Promises

Implementation issues have been a priority issue for developing countries. In Doha, they were promised that decisions would be taken by the end of 2002. There are about 100 implementation proposals on the table. Not only has no decision been taken, the text downgrades the promises to negotiate implementation issues, and merely refers any ‘appropriate action’ to a later date. This is unacceptable.

Special and Differential Treatment

There is a long list of S&D issues proposed by the African Group in Geneva. The ones that would be most meaningful for developing countries are not being addressed in the package proposed. What is offered is also useless since it is only more best-endeavour language (which was the problem in the first place with S&D) and that will not be acted upon.

Cotton: Reinforcing Dumping

Instead of eliminating the dumping in cotton, the text will serve to legitimize the dumping taking place. No binding action is proposed for the developed countries. The structural imbalances will thus be retained. The suggestions to involve the Bretton Woods Institutions to commence with programmes for diversification is merely ‘bribery’ at an international level.

An aggressive agenda for Developing Countries

a) This Draft Ministerial Text has completely destroyed the very few developmental dimensions that were enshrined in the Agenda that came out of Doha Ministerial Conference of the WTO. These developmental dimensions need to be reinstated and built upon by retaining the separate Declarations on “implementation concerns” and “TRIPs and Public Health”. One way in which the developmental concerns should be built upon is by formulating a separate Declaration on the ‘Cotton Initiative’ that would contain effective and unconditional commitments from developed countries towards elimination of cotton subsidies of all forms.

b) “Explicit Consensus” has been extremely critical in maintaining the sovereignty of developing and least developed countries with respect to initiation of negotiations on modalities of Singapore issues (investment, competition, government procurement and trade facilitation). The present Draft Ministerial Text (dated September 13, 2003) denies countries their sovereign right to decide whether they want to negotiate on Singapore issues. It is therefore critical that we reinstate this wording in the Draft Ministerial Text in the form that it was mandated by the Doha Ministerial Conference.

c) WTO has a tradition of respecting “consensus”. The way in which the current language of the Draft Ministerial Text on Singapore issues has been derived, threatens respect for “consensus” at the WTO. Given that there does not exist a “consensus” to initiate negotiation on any aspect of Singapore issues, we must respect this reality and say it clearly that negotiations on any dimension of Singapore issues cannot begin. If we do not want to respect the basic tenet on which WTO functions, it would be worthwhile to dissolve the WTO.

d) Tariffs are the only means for providing a level playing field against import of hugely subsidized products originating from countries, especially developed countries. There should be no tariff reductions entertained in these negotiations.

e) Trade-distorting domestic support and export subsidies have been central features of agricultural regimes in the developed countries. These have essentially benefited large farmers and corporations in these countries who have been able to export highly subsidized agricultural produce leading to the destruction of agriculture in developing countries. What is required and desirable is that developed countries cap and drastically reduce domestic supports across the boxes (green, blue, amber- AMS). Export Subsidies must be eliminated.

f) The peace clause has been a hazard in the growth of agriculture of developing countries. As negotiated during the Uruguay Round of trade negotiations, we demand that the Peace Clause should die its natural death by 31st December 2004.

g) No offers or negotiations in rules should take place in Services until and unless a proper assessment of the impact of services liberalisation has been conducted. Public services should be taken out of the GATS.

h) “Transparency”, “Accountability”, “Sovereignty” and “Democracy” are central features of any rational decision-making process. The processes of decision-making such as “green rooms” that have become a central feature of the WTO Ministerial Conferences defy all these four tenets of a rational decision-making process. Hence we demand that Chairman Derbez and Director General Supachai Panitchpakdi institute processes of decision-making that respect these features at the present and future Ministerial Conferences and WTO processes. Failure to do so should be treated as a premise on which the WTO should be dismantled.

[1] see letter by Antigua & Barbuda, Bangladesh (on behalf of the least developed countries), Barbados, Botswana, Belize, China, Cuba, Dominica, Egypt, Grenada, Guyana, Haiti, India, Indonesia, Jamaica, Kenya, Malaysia, Nigeria, Philippines, St Kitts & Nevis, St Lucia, St Vincent and the Grenadines, Surinam, Tanzania, Trinidad & Tabago, Uganda, Venezuala, Zambia and Zimbabwe) on 12Th September to the facitator Pettigrew about whom complaints were heard about his grilling during bilateral meetings.

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