Invisible hand or upper hand?
http://www.tradeobservatory.org Geneva Update January 28 2003 By Shefali Sharma IATP Geneva Office The Road Map to March 2003: What Could It Mean for Cancun? Last week, agriculture delegates to the WTO met to discuss the "Overview Paper" that is supposed to help draft the "modalities" or framework for the new Agreement on Agriculture (AoA). Countries basically reiterated their own entrenched positions. However, some developing countries (DCs) made a few new remarks that have implications for Cancun. 1) Some countries such as India, Malaysia and Kenya on behalf of the African Group stated that it was no longer enough to stick to WTO deadlines just for the sake of meeting deadlines. They suggested that unless the major substantive demands were adequately dealt with, the question of deadlines was moot. India, in its statement in the Special Session stated, "We would like to emphasise that the modalities must comprehensively deal with all aspects of the mandate for negotiations, including rules-related elements, so that the interests and expectations of Members from these negotiations are fully addressed in the ongoing negotiations." This was in response to agriculture committee Chair Stuart Harbinson's Overview Paper: "What is now required is to concentrate on the key aspects, keeping in mind that the negotiations on agriculture do not end at the end of March 2003 and that there will be time thereafter to address matters not directly required for the purpose of establishing draft Schedules for futher commitments." (Para 10, Overview Paper TN/AG/6 available at www.wto.org) Given that the Tokyo Mini-Ministerial will be held February 14-16, Harbinson is being lobbied by countries like the US, Australia and New Zealand to 1) come up with an ambitious proposal 2) to circulate it before the Tokyo meeting (Inside US Trade, January 24, 2003.) Seemingly, this is a measure to avoid being criticized for forging the draft in the Mini-Ministerial. However, a Harbinson Draft that is discussed by only 25 key members of the WTO in Japan further opens up criticism against WTO procedures. These 25 Members have no legitimacy in forging a compromise for draft modalities (one of the intentions of the Japan Mini-Ministerial) that is brought back to Geneva. Moreover, positions amongst various countries are too far apart to force a compromise. According to Geneva sources, Harbinson will most likely forge a draft "in his own personal capacity" as he did with the controversial Doha Ministerial Draft Text. It will likely deal mainly with market access and minimally on the contentious topics of domestic support and export competition so that countries can start to prepare their draft schedules of commitments. This is a working-blindfolded approach that the Services Council has already adopted in creating a March deadline for Services Offers (i.e. definitions, rules and classification remain unresolved). For underfunded ministries in developing countries, the approach makes developing a coherent trade strategy based on national interests virtually impossible. What Exactly is the Doha Mandate on Agriculture? The EC argued last week that the Doha mandate is not about reducing "non-trade distorting" support. While the US argued that issues related to Geographical Indications, Food Safety and Labelling (para. 28 of the Overview Paper) are not part of the Doha Mandate, the EC response has been that as long as negotiations continue in Agriculture, Para 28 concerns must be addressed. Meanwhile, there was tension between larger developing countries that insist that there can be no differentiation or graduation of developing countries versus those who believe that special concessions should be made to the lesser developing countries. Lessons from Services Negotiations? There is a precedent in the WTO for member states to negotiate the liberalization of sectors of their economies having neither conducted assessments of what those sectors need nor having clarified definitions and rules related to the agreement itself. The Services Negotiations are a prime and a critically important example of that. For instance, the US and the European Commission are putting pressure on lesser developed countries to have their services offers ready by March 31 while many members cite lack of services data and capacity to even submit requests. Nor have WTO members resolved key rules related elements of the Services talks such as safeguard mechanisms and classification of services. Critical issues in the agreement as to what constitutes "like services" are far from being resolved. Many officials readily acknowledge that the Geneva based delegations will get no help from capitals in either formulating the requests or in preparing the offers because of the highly technical and complicated nature of the agreement with sweeping implications across services sectors. Also, Ministries in many developing and least developed countries lack the human resources and expertise to conduct the request/offer exercise in the time committed by their Ministers. Currently in bilaterals, many developing country delegates describe a scenario where by one delegate finds him/herself in a room with about 12 EU or US Services trade experts in education, telecommunications, energy and other sectors. Delegates describe this scenario as highly intimidating since they themselves are negotiating many agreements while these experts know and understand the specifics regarding their own services sector. Though Services had thus far been seen as a "tradeoff" for gains in other agreements, DCs and Least Developed Countries (LDCs)are now recognizing the complexity and the ambition of the Services requests and are increasingly concerned about the implications of their offers. Moreover, with all the deadlines to resolve development-related concerns now passed and no solution in site (see Geneva Update #10), DCs have little reason to make offers by the proposed March 31 deadline. However, the current state of deadlock in agriculture should provide many of these developing countries with the leverage they need to delay or refuse making their offers entirely. No Sleep Till Cancun? EU Agriculture Commissioner Franz Fischler has recently declared that any agreement on modalities for agriculture is unlikely until Cancun. This creates a very uncertain atmosphere in Geneva. It remains to be seen whether even the meager proposal tabled by the EC at the end of 2002 will be accepted by all EU members states. However, even if accepted, the proposal creates little real change in the EU's market distorting policies. The agriculture debate has surprisingly left the US off the hook despite the egregious nature of the 2002 Farm Bill. When developing countries are asked about this, they express some wonder that all the energy is going into attacking only the EC while the US still remains the largest contributor of dumped products on the world market. The US proposal will do nothing to curb its dumping practices. Instead, the proposal is focused on forcing open the markets of developing countries. It aims to reduce the EC's comparative advantage over the US by demanding that the EC make domestic support reductions and eliminate export subsidies. The US proposal to reduce trade-distorting domestic support to 5% of the total value of agriculture in a country's GNP (a total of roughly $10 billion for the US) ignores the billions of dollars spent in the US on the so-called non-trade distorting supports, including decoupled payments to farmers. Delegations predict that after the February 4-5 Trade Negotiating Committee (TNC) and the February 10-11 General Council meetings, pressure to address the 4 Singapore issues (Investment, Competition, Government Procurement and Trade Facilitation) will increase. At the Cancun Ministerial in September, Ministers committed themselves to decide whether negotiations on these issues will be launched. It is hard to tell how Ministers will decide, given the EC reluctance to make concessions on agriculture. Fischler will have a difficult time coming to any sort of an agreement on an a mid-term review of the EU Common Agriculture Policy (CAP)that means something for developing countries. And this puts EC Trade Commissioner, Pascal Lamy in a bind. He cannot table proposals at the WTO that are more ambitious than the EU Member States' CAP reform proposals. At this point, the EC is unlikely to make any real reductions in its domestic support before 2013. In other words, DCs have no reason to accept an expansion of the already overwhelming WTO agenda. In fact, many small delegations have made it clear that they cannot be expected to literally negotiate night and day on issues that were supposed to be resolved last year. Developed countries must show leadership and come to a valid agreement on issues such as S&D and TRIPs and Health. If not, they must stop negotiating these issues now and either put them off to Cancun or push back other deadlines for agreement on market access in agriculture, services and non-agricultural products. If they do push things off, Cancun promises to be an intensely political event with high stakes. Implications It is unlikely that an agreement will be made on agricultural modalities anytime soon. Harbinson may pull off what he did prior to Doha: bring a draft to the Tokyo Mini-Ministerial with options for critical paragraphs and without brackets for about ten percent of the entire WTO membership to decide. If this happens, it is likely that most issues of concern to developing countries will be sidelined in the draft. The question is how will WTO members respond to this approach? Strong statements about how the draft does not reflect the interest of developing countries, as the past shows, are not good enough. Will developing countries actually be able to address such processes that consistently undermine their interests and will they be able to do so before the Cancun Ministerial? (See "Mockery of a Multilateral Trading System: Who is Accountable?1" for an account of the Pre-Doha Process and Power Politics in the WTO2 for a comprehensive analysis.) Meanwhile, how will Harbinson draft the modalities accommodating the EU, when the European Commission has not even tabled an official proposal? Finally, will the EC be able to convince or cajole members to agree to negotiations on the Singapore issues for last minute minor concessions in agriculture in Cancun? Whatever the answers, the months leading to Cancun promise to be fraught with difficulty for the trade system. Footnotes 1 This article and other Geneva Updates can be found at www.tradeobservatory.org. Click on Trade Information Project. 2 Download at www.focusweb.org Please note my NEW MAILING ADDRESS: Institute for Agriculture and Trade Policy (IATP), Geneva Office 15 Rue de Savoises 1205 Geneva Switzerland tel 41 22 789 0724 fax 41 22 789 0733 _______________________________________________ Futurework mailing list [EMAIL PROTECTED] http://scribe.uwaterloo.ca/mailman/listinfo/futurework
