Inside US Trade
A new proposal by the U.S., European Union, Japan and Canada to extend more benefits to least developed countries in terms of market access and temporary respite from implementing selected World Trade Organization agreements is meeting a cool reaction from potential recipients after Director General Mike Moore told Quad officials this week that the package fell short of his expectations.
The Quad package is meant to build confidence in the WTO by convincing developing and least developed countries that their needs are being addressed. This confidence is ultimately meant to pave the way for the launch of broader WTO negotiations in the future.
The Quad package will form the basis of consultations in the hope of having the WTO approve a final package at a May 3 General Council meeting. Initial reactions had trading partners describing the package in terms ranging from "meaningless" to "underwhelming" and an illustration of why WTO members cannot agree on trade liberalization. Quad officials did not rule out some changes to the package but are unlikely to agree to major rewrites, sources said.
The Quad package, which was presented to Moore on April 3, includes a market access initiative for LDCs that would not cover any new textile and agriculture concessions except those the EU could put in place with a new Lome Convention waiver and the U.S. would implement under legislation to expand trade with sub-Saharan Africa and the Caribbean Basin countries. These two policy initiatives are being presented as supporting the market access initiative for least developed countries. In addition, Japan is planning to review its Generalized System of Preferences program in 2001.
There is no language in the LDC package indicating that any concessions would be bound by the Quad, trade officials said.
The package also foresees technical assistance for capacity-building but does not include commitments for the 10 million Swiss Francs budget requested by Moore. The packages outlines steps to build transparency within and outside the WTO, and a promise to consider sympathetically the requests for extending the implementation deadline on the WTO agreements on investment restrictions and customs valuation.
The package does not mention possible extensions for the transition period of the Agreement on Trade-Related Aspects of Intellectual Property Rights, according to the copy reprinted below.
One official from a developing country said that the package offered developing and least developed countries fewer benefits than plans under consideration at the failed Seattle ministerial. A package of implementation measures developed at Seattle would have extended a one-year moratorium on nullification and impairment cases for TRIPs (Inside U.S. Trade, Special Report, Dec. 10, p. 1).
The final Quad package is laid out in three pages and an annex which gained final approval on March 31 in a Geneva meeting of Quad officials. The annex consists of a draft decision on a market access package for LDCs and technical assistance for capacity building.
Moore wanted to circulate the Quad proposal as a WTO document among members, but Quad officials in unison rejected that proposal because it would have invited counterproposals from other WTO members. This in effect would have set back the process to where it was before Seattle, one source said. The April 3 meeting in which the Quad presented its package to Moore was quite tense, sources said.
Quad members instead insist that the proposal is an unofficial paper that can be used as an input in Moore's consultation process. Moore also told the Quad that, while he would facilitate their efforts, it was up to them to sell the package to the WTO membership. Quad members have been circulating the paper among trading partners in Geneva this week, officials said.
One trade official questioned this week whether members could reach agreement on the proposal unless it went through the official distribution channels of the WTO.
Moore also was critical of the substance of the paper and sought several changes and additions, according to informed sources. He expressed particular disappointment that the Quad was not willing to provide the 10 million Swiss Francs over three years for technical assistance that he has requested, sources said.
The Quad would only agree to dedicate "adequate" resources to capacity-building efforts, and has recommended that Moore seek enough assurances from members for funding that would allow him to devise a three to four year program, one source said. The Quad opposition to providing more funds was strong from the U.S. and EU, so that it would be clear to Moore that his requested funds will not be forthcoming.
The Quad also wants an overview of technical assistance provided by various international organizations to ensure that the money is used properly without duplication, he said. The Quad also has pointed out that the Integrated Framework for Least-Developed Countries could be used in such efforts, trade officials said.
Moore pressed Quad countries to provide market access for all products from least developed countries, which would have meant lifting more agriculture tariffs and easing quota restrictions for textiles. He found little support for major market access changes among Quad officials, and is not holding out much hope for such a change, a WTO source said. Specifically, the Quad package offers LDCs market access for essentially all goods "consistent with domestic requirements and international agreements."
These qualifications would allow the Quad to keep in place quotas on textiles and agriculture as prescribed by the two relevant WTO agreements, one trade official said. Textile quotas are to be phased out by 2005 under the Uruguay Round agreement.
The draft decision also asks developing countries to provide to the extent possible market access preferences to LDCs, trade officials said. One developing country official was critical of this language noting that it was already a concession on their part to agree to allow developed countries to grant preferential access to least developed countries only without demanding concessions of their own.
In addition, Moore questioned the formulation in the package that benefits be extended for goods "originating" in least developed countries and proposed instead a wording change to "exporting" from least developed countries in an effort to broaden the initiative, sources said. The original wording had been carefully chosen to prevent the risk of trade diversion, and Quad officials initially rejected the proposal, one source said. But he said there may be a possibility to change the proposed wording if products in question of the trade diversion risk can be prevented by certificates of origin.
But Moore did recognize certain positive parts of the package such as the section on implementation, which offers countries the possibility of getting more time to implement investment and customs valuation rules. "It's a step in the right direction but it remains to be seen if consensus can emerge," one WTO source said.
On transition periods, the Quad only agreed to look at requests on a case-by-case basis and made no mention of possible additional time to comply with the TRIPs agreement, which in itself has no provision for extending the transition period for compliance. At this time, no WTO member has officially requested an extension.
Another source pointed out that this element of the proposal left open several key questions raised by the Agreement on Trade-Related Aspects of Investment Measures. For example, he questioned whether a promised willingness to consider "duly substantiated requests" for leeway would cover a request for a waiver of certain investment policies, not just extensions. Waivers from the TRIMs obligations are needed for countries that did not initially notify a given policy to the WTO or have a conflicting deadline on investment obligations between regional trade agreements and the TRIMs requirements.
The Quad package offers to grant an additional three years to LDCs to implement their obligations under the WTO agreement on Sanitary and Phytosanitary Measures. It also urged cooperation with other international organizations to help developing countries meet their obligations under the SPS agreement and the WTO agreement on Technical Barriers to Trade.
On transparency, the Quad urged an earlier derestriction of documents, increasing the dialogue with non-governmental organizations, setting up greater information sharing and improving the procedures for conducting WTO ministerials.
The Quad also suggested that wider views should be represented in the smaller, informal consultations and that the results of such consultations should be explained to all WTO members.
WTO members are expected to meet in an informal Heads of Delegation meeting on April 10 to discuss the Quad package and various aspects of the WTO work program such as implementation of past agreements and a desire by developing countries for more time to implement existing obligations.
Quad members have also agreed that developing countries' implementation concerns can be initially raised in a special meeting of the General Council but should then be dealt with in the subsidiary committees of the WTO because these have greater technical expertise, trade officials said. The results of the work in these committees could then be reported back to the General Council, officials said.
But developing countries are cool to having their concerns relegated to subsidiary committees since they argue past experience has shown little in the way of results under such an approach.
India backed by a number of developing countries have been pressing the WTO to agree to deal with implementation issues in a special session of the General Council. And last week Moore told a March 28 informal meeting of the General Council that there was "an emerging consensus" to examine these issues in such a forum.
Developing country officials have said that the starting point of any discussions is the long list of issues they laid out in the Oct. 19 draft of the Seattle Ministerial Declaration. These demands had been whittled down at the Seattle Ministerial meeting to a series of immediate concessions that could be offered to developing countries and LDCs.
One developing country official said that the more immediate implementation concerns should be resolved by the end of this year while the rest could be resolved by the end of next year.
However, officials from industrialized countries were skeptical that some of the concerns raised by developing countries could be addressed outside the context of a round and characterized them as a renegotiation of past commitments.
Inside US Trade, issue: Vol. 18, No. 14
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