Bridges Daily Update #1 | WTO: Mixed Expectations as Delegations Arrive for Eighth Ministerial Conference

14 December 2011

Trade ministers from around the world are gathering in Geneva this week for their eighth biennial ministerial conference (MC8), during which they will review the WTO's activities and welcome Russia, Samoa, and Montenegro as new members. While the three-day event is widely expected to be devoid of any significant negotiating outcome, a plethora of bilateral and small-group meetings are being planned in the margins of the conference that could set the tone for the high-level gathering.



Over ninety ministers are expected to attend the event. Trade sources told Bridges that all the major trading powers would be represented by their ministers. Some had feared that few would attend an occasion characterised both as eventful, as it marks the entrance to the WTO of the only large economy pending - Russia - and low-ambition, given the acknowledged impossibility to finalise the current round of negotiations this year.

The main consensus text due to emerge from the conference has already been agreed by members. This document, entitled ‘elements for political guidance', sets out instructions that ministers are due to provide the global trade body at the conference. Agreed two weeks ago at the WTO's General Council, it will form the first part of a ‘chair's summary' to be issued at the conclusion of the meeting by the conference chair, Nigerian finance minister Olusegun Olutoyin Aganga.

A second part of the summary is due to reflect issues raised in ministers' statements during plenary discussions, as well as topics discussed in three parallel working sessions - one on the importance of the multilateral trading system and the WTO; another on trade and development; and a third on the ongoing Doha round of trade talks.

A series of draft decisions, including on least developed country (LDC) accessions and an LDC services waiver, have also been forwarded to trade ministers for approval in the coming days.



Draft decisions

Delegates expect separate decisions to be reached on a range of outstanding trade issues. Last month's agreement to grant Russia membership of the global trade body is due to top the list of decisions to be approved, alongside Samoa's and Montenegro's respective bids to join the organisation.

Other draft decisions include a small collection of LDC deliverables, including a waiver that would allow members to grant preferential treatment to services and service suppliers of LDCs, rather than being bound by their most-favoured nation obligation under WTO rules.

Ministers are also expected to agree to extend the deadline for LDCs to comply with their obligations under the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The current deadline is expected to end in mid-2013.

The original deadline for LDCs to comply with the TRIPS Agreement was set for 2005, but was extended in that same year so that countries could identify their priorities for financial and technical assistance in IP protection. To date, only six have submitted their priority needs - prompting the request for another extension.

A draft decision on LDC accessions to the global trade body has also been forwarded to ministers: the decision would have the LDC subcommittee "develop recommendations to further strengthen, streamline, and operationalise" the 2002 LDC accession guidelines by including commitment benchmarks in the area of goods, and potentially services.

Meanwhile, two familiar decision items from past ministerial conferences have also returned to this year's agenda: TRIPS non-violation complaints and e-commerce tariffs.

In the case of TRIPS non-violation, members would extend to the next ministerial conference a moratorium on bringing disputes to the WTO on the grounds that the organisation's intellectual property rules have been breached, rather than just the letter of the TRIPS agreement. Meanwhile, the decision on e-commerce would have members continue to refrain from imposing tariffs on music, books, and other items downloaded online.

Split over Doha's future



Negotiating groups and coalitions are planning to hold separate meetings ahead of the main event. Draft ministerial declarations seen by Bridges suggest that WTO members are likely to take divergent positions over the future of the Doha Round - an issue that increasingly appears likely to be a key point of contention between countries at the ministerial.

Two developing country groups were due to meet today: the G-20, which favours reforming developed country agriculture, and the G-33, which supports granting developing countries greater agricultural market access flexibilities. The Cairns Group of developed and developing country net agricultural exporters is slated to meet tomorrow, as are the group of small, vulnerable economies (SVEs) and the G-90, a development-focused group that brings together LDCs, other former Africa, Caribbean and Pacific colonies of European countries, and SVEs, all supported by Brazil, India, and China.

According to the draft statements, the G-90 is likely to underscore that the WTO would suffer a damaging blow if it is unable to complete the Doha Round, which the sponsors argue would damage the organisation's credibility and undermine its future work. Signatories are expected to categorically reject the adoption of a plurilateral approach to concluding the Round or parts of it - an approach that some actors have suggested could represent a way out for the ten-year talks.

Washington in particular has argued that the Doha Round cannot be completed on the basis of the current draft text, unless large developing countries such as China and India agree to grant greater market access for US industrial goods and agricultural products.

However, one African delegate observed that many developing countries believe that Doha must be concluded before the WTO moves on to other work.

Single undertaking: cherry picking?

Similar to other developing country groups, the G-90 is expected to argue that the single undertaking, the development mandate, and inclusive, transparent decision-making are critical aspects of the Doha talks that cannot be abandoned.

Some observers, including WTO Director-General Pascal Lamy, have mooted the possibility that members could clinch deals on areas where consensus already exists as a down-payment on the full Doha package - an option foreseen as a possibility under the Doha Declaration.

While some members are reportedly willing to consider this type of approach, it remains to be seen whether it could work in practice. One difficulty will be to reach agreement on which issues should be prioritised if members adopt such a ‘cherry-picking' approach.

"Which of the cherries can we pick?", one trade source asked wryly.

The G-90 are likely to argue that any such ‘early harvest' must give priority to issues of importance to least-developed countries (LDCs) - such as duty-free, quota-free market access for their exports and new disciplines on trade-distorting support for cotton.



Cotton: US announces new measures

With no consensus on their proposals for the reform of Washington's trade-distorting cotton subsidies, African cotton-producing countries have accepted that the ‘political guidance' text for inclusion in the chair's summary will simply reiterate the mandate from the WTO's 2005 Hong Kong ministerial declaration, to address cotton "ambitiously, expeditiously and specifically."

No mention was made of a ‘standstill' proposal that would freeze cotton subsidies at their current, historically-low level, tabled recently by the C-4 group of West African cotton producers (Benin, Burkina Faso, Chad, and Mali).

An announcement from the US today outlined a package of measures that Washington said was aimed at helping LDCs. They included renewing a technical assistance program for West African cotton-producing countries, expanding duty free, quota free (DFQF) treatment for certain cotton grown in LDCs, and additional help for countries seeking to make maximum use of existing US trade preference programmes.

"We look forward to pursuing new trade initiatives in close cooperation with our LDC partners at the WTO Ministerial Meeting this week and in the future," said US Trade Representative Ron Kirk said in a statement.

However, critics claimed that, as the US is a net cotton exporter, the measures would do little to address the concerns expressed by West African cotton producers.

Competitiveness of C4 cotton is affected by low prices in world markets caused by subsidies. The biggest importer of cotton today is China, which buys both from the US and the African producers. "The main problem has never been US cotton market access, but US cotton subsidies and dumping," observed Romain Benicchio, policy advisor for Oxfam.

Ministerial follows months of negotiating setbacks

The biennial ministerial conference comes against the backdrop of the continuing global economic slowdown, and recent reports suggesting the rise of protectionist measures among the Group of 20 economic powers.

The past months have also seen members struggle to make headway in Doha or in establishing agreed-upon elements for this week's conference. Efforts to conclude the trade round by the end of 2011 were abandoned earlier this year, followed by a similarly unsuccessful attempt to agree on the early harvest of an LDC-focused mini-package.

After the latter effort fell through in July, DG Lamy made clear that "what we are seeing today is the paralysis in the negotiating function of the WTO."

The process of determining the agenda for this year's ministerial also faced various setbacks, with members struggling to achieve consensus either on draft decisions or items of political guidance to forward to ministers.

One of the few areas where members have been able to reach consensus, it seems, is that this year's event is not to be a Doha Round negotiating ministerial.

"There is no climate for any surprises, to be honest," one delegate told Bridges.

Another official suggested that the fact that this is a "pre-cooked ministerial" could actually allow for more open discussions than at previous gatherings. "The fact that we have already taken care of determining the outcome of the ministerial... means that the atmosphere won't be one of tension," the source added. "People will be articulating their views frankly and openly, as it won't lead to a negotiating outcome."

There is hope that such an atmosphere will allow ministers to actually engage in providing political guidance and content to the WTO beyond Doha.

"WTO ministerial conferences are a golden opportunity for countries to review the functioning of the WTO, as well as developments in the broader international trade system, including the proliferation and trends in plurilateral and preferential agreements" remarked Ricardo Meléndez-Ortiz, Chief Executive of the International Centre for Trade and Sustainable Development (ICTSD).

Indeed, ICTSD, with the support of the government of the Netherlands, launched today a process of expert meetings and analytical work to explore ways of strengthening the global trade system. "We expect to contribute to re-energizing the non-Doha functions of the WTO, and to finding ways of realizing the WTO's potential as an essential and primary economic governance device."

ICTSD is the publisher of Bridges Weekly and the Bridges Daily Update.

Government Procurement Agreement

The first day of the ministerial is also expected to see an announcement regarding whether or not a deal has been reached among 42 WTO members that would liberalise billions of dollars in public contracts.

A ministerial-level meeting of the committee tasked with the negotiations is scheduled for Thursday morning, after several days of parties "negotiating very intensely," trade sources told Bridges. Countries have mainly been working on "tying up a lot of loose ends," the source continued.

The key question that remains, however, is whether the EU has managed to resolve its differences with the US and Japan on the range of government purchases subject to the rules of the agreement. Disagreements on this issue between these three trading powers have mainly been faulted for slowing down negotiations.

China's continued efforts to accede to the agreement have also drawn attention in recent months. Last week, Beijing submitted a long-awaited "robust, revised offer" outlining which Chinese government agencies would be covered under the agreement, what thresholds would apply, and other related details.

The deal seeks to establish international rules for the non-discriminatory purchasing of goods and services by governments, with due consideration for countries' differing levels of economic development. The agreement promotes efficiency and transparency in the use of public funds.

An earlier version of the agreement took effect in 1996, and was finalised during the Uruguay Round of trade talks. The current talks seek to renegotiate the 1996 GPA, along with bringing in new potential parties.

Activists gather in protest over food security, financial crisis

Despite the low expectations for deliverables on Doha, civil society groups have also gathered in Geneva to protest against the global trade body, though demonstrations to date have been quieter than in years past.

An ‘Occupy WTO' tent, in the vein of similar ‘Occupy' movements cropping up around the globe, has been set up by local Geneva activists outside the ministerial conference centre. Joining the protesters will be activists from Our World Is Not For Sale, a coalition of farmers, labour, and social movements, and the International Trade Union Confederation (ITUC).

"The existence of the WTO has done nothing to prevent trade imbalances growing to unsustainable levels accompanied by dangerously widening income inequality," said Sharan Burrow of the ITUC in a statement.

Trade and Development Symposium

Friday and Saturday will also see ministers and trade experts gather for discussions at a major civil society symposium, being held at the WTO headquarters. The two-day gathering will address a range of issues, including the future of the multilateral trading system.

The event is being organised by ICTSD. For further details, visit http://www.ictsdsymposium.org.

ICTSD reporting.

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