All eyes are set on the July-end meeting of the General Council of the World Trade Organization which, it is believed, could lead to either easing of the stand-off between the developed
and developing countries or further aggravate the unfortunate divide which intensified in the wake of the failed Cancun summit last year and has by now almost brought the organization to a standstill.
The July-end, one may recall, is a self-imposed deadline by the WTO member states to break the deadlock at all costs and take the Doha round forward. No date was fixed but a spontaneous consensus favours July 27-29.
Just before the meeting, numerous consultative meetings between various groups of countries are scheduled to be held in a bid to make it a productive get-together.
The groups meeting these days in various capitals include the newly-formed Non Group of 5 (NG5) also called Five Interested Parties (FIPs) Group. It is now the core group in the WTO and its success in reaching some kind of agreement will be considered a real breakthrough.
It consists of the US, the EU, Australia, Brazil and India. Its meeting was held from July 6 to 11 in Paris and the ministers said they had narrowed some differences. In other words, no breakthrough was achieved.
Another important group is G-90 comprising African, Caribbean and Pacific countries. It met in Mauritius on July 12. Of critical importance was the speech of Robert B. Zoellick, the US Trade Representative.
He warned: "We only have a couple of weeks if we are going to be able to advance the Doha Agenda at our July General Council meeting. And if we fail again, because we did fail the last time, I do not know for sure what will happen to the Doha Development Agenda. I do not know whether it will be revived".
However, the US-based Institute of Agriculture and Trade Policy, a prestigious think-tank, is optimistic and says there are all indications that member states may agree to a framework for negotiations - the basic purpose of the meeting - to salvage the Doha round which is mandated to be completed by January 1, 2005 although, keeping in view the pace of progress in talks, it may have to be extended.
The framework for negotiations, if agreed to by all the member states, will set new deadlines for agreeing on the modalities for agriculture, services, NAMA and the other issues on the Doha Agenda. The suggested deadline for agreement on agriculture modalities is June 2005.
An unpleasant aspect of the prevailing situation is that there is still no clear date agreed upon for the next ministerial meeting to be held in Hong Kong which should, in any case, be held by the end of the year. The members are unwilling to set a date until the confusion about the framework for negotiations is cleared.
However, given the differences among members on a number of issues, particularly on agriculture, one can expect only a very general framework document at the end of July. Developing countries want a kind of framework that is consistent in its level of specificity within and across the subjects under negotiation.
So far, the negotiating process for finalizing the framework, in the case of agriculture in particular, has not been transparent. But the issue of transparency is critical.
The Chairman of the General Council Shotaro Oshima (of Japan) has so far held consultations with only a few countries. And the subject of Special and Differential Treatment (SDT) which is of importance to the developing countries has not been a high priority for him, he said in a statement.
The first draft of the framework was to come out this week and the General Council must adopt it before the month of July ends. It means there will not be much time to discuss and revise the draft which, the chairman admits, does not yet fully address the issues of close concern to most developing countries.
But it is extremely crucial to Doha round's survival that a framework for negotiations is agreed upon and adopted with a consensus this time after failure of the General Council to do so in December, March and June.
However, it looks the developing countries may be subjected to pressure to accept a framework devised by the developed countries without taking them into confidence. In case, they protest against such a behaviour of the West, the latter can hold out assurances to them that the issues of critical importance can be taken up in the post-framework period.
The idea is: let a framework be adopted so that the negotiating process moves ahead without more waste of time and that in the meantime the unresolved matters can be talked about and settled. But given the history of broken promises, developed countries cannot be much trusted by the developing countries.
An instance of such an attitude was in evidence when Chairman of the Trade Negotiating Committee on Agriculture Ambassador Tim Groser of New Zealand in June 25 meeting favoured leaving any clear decisions on the terms for Special and Differential Treatment (SDT) to the post-framework phase.
He pleaded for establishing a "work programme" on a variety of issues including Special Products and the Special Safeguard Mechanism (SP/SSM), preferences, market access for least developed countries (LDC), and exemptions from tariff reductions for LDCs. It is not clear what this "work programme" is and how it would look like.
It may be recalled that the Doha mandate calls for SDT to be an integral part of all aspects of the negotiations. Postponing the discussion on SDT is a setback to the Third World because one can't be sure if these issues will at all be addressed once the framework is adopted.
There are indications that a move to broaden the Blue box can end up as a deal-breaker. The US is pressing for redefinition of the criteria of the Blue box to provide for the inclusion of direct payments to farmers based on fixed areas and yields but tied to international prices, known as counter-cyclical payments.
The G-20 is prepared to consider this proposal but would not agree to any change in the production-limiting criterion. Any accommodation of the counter-cyclical payments would require further negotiations on the criteria to ensure that the production limitations were maintained.
The technical jargon apart, the nutshell of the US proposal is that the rich countries want a deal under which they can reduce their Amber box ("trade-distorting") support by shifting that spending to a newly broadened Blue box instead of actually cutting spending.
The proposed new Blue box will be subject to spending limits (which it does not under the existing agreement) but there is a strong possibility that any real reduction in spending will be considerably postponed by re-categorization. The Blue box spending limits are certain to be much less constraining than those agreed for the Amber box.
Meanwhile, the G20 has proposed to classify AMS (Aggregate Measure of Support) and "de minimis" spending in a so-called tiered approach. (The de minimis exempts from reduction any programme that does not cost more than a certain percentage of a country's overall agricultural value-added).
The G-20's idea requires the largest reductions in domestic support from countries with the highest spending levels. The EU is strongly opposed to the proposal, not surprisingly, because they are among the largest spenders.
Ambassador Tim Groser has also come out with an idea not shared by all WTO members. He thinks that one of the objectives of the negotiations on market access is to harmonize tariffs, that is, to bring everyone's tariffs nearer to a common level.
Many developing countries oppose it. If this happens to be the objective of the negotiations, it will be difficult to agree on a formula for market access that responds to developing countries' needs regarding food security and rural development as per Doha declaration's provisions.
Another development in the market access debate is a non-paper from the US which accepts the tiered approach to tariff reduction proposed by the G-20 early in June but wants that every band of tariffs be subjected to a Swiss Formula to calculate reductions.
The formula effectively cuts higher tariffs by more than lower tariffs. The US also insists that for any product whose tariffs are not cut by a given minimum, a tariff rate quota should be created (which allows a certain volume of import on to the market at less than the prevailing tariff rate). The G-20 have refused to accept this proposal.
The EU, which also rejects the Swiss Formula, seeks exceptions for certain so-called "sensitive products." But this cannot be agreed as it tantamounts to become the original blended formula which was proposed by the US and the EU and firmly rejected by the G-20, G-33 and Cairns Group.
The discussion on the need for Special Products (SP) for developing countries has been confused with the recent discussions on sensitive products for developed countries.
It appears that the EU is attempting to link sensitive products with SPs. If sensitive products are allowed, negotiators will insist on a string of conditions, including compensation through minimum tariff reductions.
Hence, there is an urgent need to de-link SP from sensitive products so that the concept of SP for food security and rural development is not weakened. The West simply looks for an opportunity to raise the Singapore issues.
The chairman of the GC, Oshima, once again in June 30 meeting raised it saying a large number of delegations consider the launch of negotiations on trade facilitation to be an essential part of the July framework.
This was a rebuff to the most recent statement of the G-90 also known as the Georgetown Consensus in which it was clearly stated that before starting any negotiations on this matter, a number of issues need further clarification. The developing countries are not prepared to start any negotiations on Singapore issues at this stage.
