Inside US Trade
In a confidential status report circulated to World Trade Organization members this week, the General Council Chairman and WTO Director General describe entrenched divisions on a possible agenda for a new negotiating round and highlight the importance of addressing developing countries' demands for more trade benefits before a round can be launched.
Chairman Stuart Harbinson and Director General Mike Moore issued what they called a "sobering" assessment of the potential to agree on an agenda for the November ministerial in advance of a two-day reality check meeting set for July 30-31. That meeting will feature senior-level officials from capitals, including Deputy U.S. Trade Representative Peter Allgeier.
The report, reprinted below, also brings to the fore two areas controversial for the U.S., besides outlining the expected divisions over negotiations on environment, investment and competition rules and the level of ambition in a mandate on agriculture talks. It notes "wide support" for negotiations on antidumping, and also highlights developing countries demands to ensure intellectual property rules do not prevent access to affordable medicines.
Overall, the report says negotiations conducted over the last couple of months have not yielded sufficient progress towards consensus on the issues a round could potentially encompass.
"These issues have been the subject of intensive work over the last few months," the report says. "In too many cases, however, the results so far have not yet been proportionate to the effort. It is not simply the extent of the outstanding differences in position that is worrying, it is also the apparently entrenched nature of some of these differences."
The report did note "some encouraging signs of greater engagement to find common ground," but added that "these signs need to be translated into concrete terms if they are to prove meaningful."
Before meaningful progress can be made, countries need to examine "the relationship between the scope of the agenda and the level of ambition," the paper says. In an apparent reference to those demanding a broad, ambitious round like the European Union and Japan, the report seems to say a failure to temper either the scope or ambition of a round could lead to a failure to launch at the November ministerial.
"[W]e risk entering a vicious circle where the question of whether to launch a round and the question of its agenda pursue each other," the report says.
Without agreement on the larger question of a round, the current attempt at reaching consensus on specific issues through informal talks "may be at the limits of what is possible," the report says, urging countries to move towards negotiations on "tradeoffs among issues and positions."
The report warns against going to the ministerial conference "with too many complex issues open." Separately this week, U.S. Trade Representative Robert Zoellick told the National Foreign Trade Council that in his assessment ministers would still be drafting the declaration at conference in Doha, Qatar.
"I can see the pieces coming together, but time is short and as I've said to my fellow ministers, we're in a situation where we're going to have to try to have to do all the drafting at Doha," Zoellick said July 26.
On developing countries' "implementation" agenda, the report notes advances in the process, but says this "needs to lead to tangible progress if these issues are to contribute to, rather than impede, agreement on the package for Doha." Countries have been involved in intense negotiations on the topic, although officials say it is unlikely that an early package of deliverables would be agreed at next week's meeting (see related story).
On antidumping, the report says supporters of negotiations "generally envisage negotiations aimed at improving, clarifying and strengthening the rules governing the application of antidumping measures with the existing framework of the Anti-Dumping Agreement, including taking into account the interest of developing country members." The report notes there has been no outright opposition to these negotiations, but, in an apparent reference to the U.S., says " the position of those members which have not yet expressed a clear view remains to be clarified."
Zoellick this week seemed to take a shot at Japan for pushing the antidumping issue in the new round.
"Japan because of its political climate has been rather paralysed and has tried to find the most sensitive items on others' agendas to try to justify its inaction," Zoellick said. "With 15 weeks to go before the round, Japan should act like the economic leader it should be."
The report also notes a "significant number" of countries in favor of talks on subsidies disciplines, with developing countries' concerns a possible element.
On trade related intellectual property rights, the report cites widespread recognition that the issue of access to medicines should figure prominently in the ministerial declaration, but hints at some of the divisions between developed and developing countries on the issue. These divisions center on whether there should be added flexibility on countries ability to issue compulsory licenses for drugs under patents and over the demand for a moratorium on WTO challenges to involving issues of public health (see related story). In the report, these differences are framed as disagreements over whether the issue should be addressed in the political or operational part of the ministerial declaration or in a separate document.
A host of other contentious issues are also potentially on the agenda, including the push by the EU for stronger protections for geographical indications, the push by India and others for greater protections for traditional knowledge, and India's support for links between the WTO and the Convention on Biological Diversity, which could undercut protections for patented plant varieties. The U.S. opposes all these initiatives, but favors its own controversial one: the ability to bring WTO complaints over nullification and impairment of its benefits under TRIPS, such as when a country does not enforce its TRIPS laws that are on the books.
On dispute settlement, an area where the U.S. favors talks, the report says there is a cross-section of views, with "no consensus evident."
On the mandate for agriculture talks, the report says "the gap between the positions of members has to date remained wide. On the one hand are the EU, Japan and others who are looking for a reiteration of the current general mandate under Article 20 of the Agriculture agreement along with a concluding date for the talks linked to the end date of a broader round. On the other hand, the Cairns group of agricultural exporters want specific targets for what is reformed, such as export subsidies and domestic support and tariffs, and specific timeframes for these reforms. A middle ground, according to the report, are some other WTO countries looking to give a "political impetus" to the agriculture talks at the ministerial, which one source said referred to the U.S. effort to broker a deal between the two sides.
On the other half of the built-in agenda, services negotiations, countries are looking for additional benchmarks that would ensure progress, according to the report.
On investment and competition, the report notes the longstanding divisions, although it does not name the countries involved. On one side, the EU and Japan and a handful of others are pushing for negotiations, but on the other side most developing countries say these areas are not ripe for negotiations and should be further studied. The report does point to compromise positions.
On investment, there is a proposal for further study in the working party until 2003 with the possibility of revisiting that year. Zoellick hinted at this option this week, saying the WTO committee structure should be used to bring issues to the fore at the appropriate time. But a senior EU official last month rejected this idea as giving little prospects for the start of actual negotiations (Inside U.S. Trade, June 29. p.1). On competition, the report notes more readiness to accept talks among some countries if the overall balance suits their needs or if the competition rules would not be enforced by dispute settlement.
The report notes wide divergences on the EU's environmental agenda, which seeks to clarify that WTO rules do not override multilateral environmental treaties, allow the use of precautionary measures where there are potential health or environmental risks, and allow eco-labelling. But other countries want "certainty that the purpose of any such exercise is not to weaken" trade rules.
On transparency in government procurement, the report reflects a range of positions, from a few members, like the EU, which want a broader mandate that could lead to market access, to those resistant to opening negotiations, like India. In the middle are those who want a short mandate that deals with transparency only, and others who are willing to accept the talks of the overall agenda suits their needs, according to the report.
The report does note "considerable potential support" for a common position on e-commerce, a U.S. priority, which would involve a decision to maintain a moratorium on tariffs on electronic transmissions and continue the WTO work program on e-commerce.
The report is most ambitious in the areas of trade facilitation and industrial tariffs, outlining the possible basis for negotiations in these areas, where it says there is strong support.
On trade facilitation, if developing countries concerns about technical assistance and their aversion to having trade facilitation rules subject to dispute settlement, negotiations could focus on streamlining customs procedures and making them more transparent and nondiscriminatory.
On market access for industrial, or non-agricultural goods, the report outlines the following elements for negotiations. Coverage should be comprehensive, with no product exclusions and both tariffs and non-tariff measures like textile quotas would be on the table. The objectives would include substantial reduction or elimination of tariffs and nontariff barriers. Many developing countries also insist that talks address tariff peaks -- high tariffs on sensitive products like textiles -- and tariff escalation, which are tariffs that rise the more a good is processed and discourage the development of value-added industries in developing countries. Developing countries also require that the not be required to fully reciprocate in lowering their own tariffs, according to the report.
The U.S. and EU, along with Japan and Canada, are bringing in a select group of countries to discuss implementation and the preparations for a round, according to informed sources. The list of invitees includes South Africa, Singapore, Australia, Brazil, New Zealand, Thailand and Uruguay, as well as Harbinson, sources said.:
