More finger pointing, less negotiation, as Ministerial gets under way

Hong Kong, 14 December (Martin Khor) -- No progress seems to have been made in negotiations on market access issues of agriculture, NAMA and services after two days of the Ministerial
Delegations are holding to the positions they had before Hong Kong. “It’s too early yet to expect anyone to move away from their known views,” said one veteran trade analyst who has been to almost all the previous WTO Ministerials.
But this Conference has been marked by an unusual degree of finger-pointing and blame-making. It is as if some of the major players already know that there will be no progress in Hong Kong in agriculture, and it is best to prepare the ground early to ensure someone else takes or at least shares the blame. In particular, the EU Trade Commissioner Peter Mandelson, seems to have decided on an aggressive stance towards its partners in the so-called G4 (comprising US, EU, Brazil and India).
Throughout the day, some delegations were holding “confessionals” (a strange WTO jargon for private meetings at which frank talk is supposed to be held) with the facilitators appointed to the chosen subjects – agriculture, NAMA, services and rules.
In the late afternoon, the first “heads of delegation” (HOD) meeting was held, in which all members can participate. Tonight, starting 10.30 pm, the second session of the “Green Room” (to which about 30 members are invited) will be held, and it may kick off the “real negotiations” as it will discuss development issues with agriculture and NAMA next and services. The first Green Room meeting, on Tuesday night, discussed mainly procedural matters.
Similar to the practice in past WTO Conferences, the status of the Green Room meetings lies in the shadowy territory of happening and not happening. Its existence was not mentioned at the opening ceremony, and officially no one confirms it is taking place nor who has been invited.
At a WTO media briefing this evening, three journalists asked about the Green Room, whether it would be held that night, and who would attend the meeting. The WTO official was careful in his answers. “Should the Green Room exist, it will be held at that time.” “In meetings such as this, should they exist, each group with be represented.”
At this afternoon’s HOD meeting, chaired by Hong Kong’s Commerce Secretary, John Tsang, three of the facilitators (appointed by Tsang to assist in informal consultations) reported on their work till then.
The facilitator for agriculture, Kenya’s Trade and Industry Minister Mukhisa Kituyi, said there was no advance so far but members he met were willing to make progress, according to a trade official. He added that many want to see an end date for export subsidies.
Views were also given on market access, trade-distorting domestic support, special products, special safeguard mechanism and sensitive products. On cotton, Kituyi reported that all want to address this problem, but differences remain on how to do that. A large number of Africa countries are interested in this issue.
The facilitator for NAMA, Pakistan Commerce Minister Humayun Khan, reported that from the consultations he gauged that there were differences among members on the level of ambition and on the relation between flexibility and ambition. Members are still holding to maximalist positions. Members have to move now, otherwise there would be a more difficult task later.
Trade Minister of Guyana, Clement Rohee, the facilitator for development specific issues, said there was interest to focus on the LDC related special and differential treatment proposals in Annex F of the draft text. Of these, the main focus has been on the proposal for duty and quota free market access for products from LDCs. Though many matters raised were related to his mandate, some were more related to NAMA and agriculture (referring in particular to preference erosion, a very divisive issue) which he could not deal with. He said that from the discussions, he concluded that a breakthrough on the issue of duty and quota free access for LDCs can come only at the highest political level. Members have certain sensitivities. There is need for progress but there are also legal difficulties to resolve, to achieve secure access.
Earlier, in the morning, the first agriculture meeting open to all members was held. It discussed what members considered to be the tasks for ministers. Because members had different positions, they came up with conflicting suggestions. Kituyi reported that he had already met the US, EU, four cotton proponents, G-10, G-20, Cairns Group and Japan and that he would meet others. He said now it is for ministers to show leadership and take responsibility and calculated risks. He urged members to negotiate among themselves because they do not want attempted compromises to be imposed on them.
During the discussion, many issues and suggestions were made. These include the need to now focus on flexibilities in market access particularly for developing countries; to fix the end date for export subsidies and deal with the ambition level for market access and domestic support; to find a balance between flexibilities and ambition, and "parallelism" in eliminating export subsidies and disciplining other export measures; and developing countries' issues such as cotton, and market access for tropical products and crops produced as alternatives to narcotics.
Some countries (including Pakistan, Grenada, Uganda, Uruguay, Argentina, Costa Rica) wanted an agreement on an end date for export subsidies with the understanding that disciplines on export credit, food aid and exporting state trading enterprises would also have to be agreed eventually.
On the market access issue, some countries (New Zealand, the US) stressed the priority they give to market access, and some wanted the level of ambition (the tariff reduction formula) settled before the flexibilities are addressed. However, this view was opposed by many other countries (including Venezuela, Canada, Kenya, Grenada, the Philippines, Uganda, India). They stressed the need to focus on flexibilities first, so that countries can be confident about making ambitious commitments more generally, or because they see flexibilities as important for developing countries.
A group of a dozen Latin American countries (represented by Bolivia and Costa Rica) called on developed countries to give duty-free and quota-free market access to tropical products and alternatives to narcotics from developing countries. The EU stressed the need for balance (the tariff reduction formula and flexibilities are linked and should be discussed together); and parallelism (the end date for export subsidies cannot be agreed before the issues of export credit, food aid and exporting state trading enterprises are settled).
Meanwhile, a war of words continued between some major delegations, with an eye to avoiding blame if the Ministerial is found to be a failure. The EU Trade Commissioner continued his aggressive finger-pointing at a morning press conference. Obviously answering to charges that the EU’s poor offer on market access in agriculture is mainly to blame for holding back progress, Peter Mandelson said the EU had made substantial offer in agriculture, and called on others to engage seriously with the EU on its offer.
“I’m sorry for the brinkmanship of the large agricultural exporters, who are standing away from serious dialogue with us. In these negotiations, there is not enough on the table to negotiate about.” Mandelson said there was an insistence during the previous night’s Green Room that there should be focus only on agriculture. “Let’s realise unless we negotiate across the board, we’ll go no further in agriculture. We need to know what we’re getting out of the Round for what we’re putting in.”
He also highlighted the “development package”, saying that the LDC package is now in some trouble, as there is resistance among some members on the scope of “duty and quota free”, coverage of eligible countries and product coverage, and the issue of making access legally binding. [According to diplomatic sources, some developed countries are reluctant or unable to accept duty free rice and textiles from certain Asian LDCs].
At a meeting with NGOs, Brazil’s WTO Ambassador, Clodoaldo Hugueney, said that the G20 had not seen movement in agriculture from its partners, so it was not justified for the G20 to move. Asked to comment on the charge by Mandelson that large agricultural exporting countries were posturing rather than negotiating, Hugueney said that the proposals from the EU and US would not result in cuts in their real levels of total trade-distorting domestic support. “We must see real cuts in domestic support in this Round. The question is whether they want to negotiate, or just posture and spin. For two years we have insisted on negotiations in agriculture. Instead of considering our position seriously, they make speeches and declarations.”
The issue of food aid in the context of the export competition pillar of the agriculture negotiations has become a hot issue in Hong Kong, and a flashpoint in the blame game as to why the Conference is unable to come up with an end-date for export subsidies.
This issue became more controversial after the publication by the Financial Times on the opening day of the Conference of an advertisement placed by the World Food Programme on how the creation of disciplines on food aid by the WTO would adversely affect the situation of world hunger. This drew negative comments from many diplomats, which said that a UN agency should not be so publicly and directly involved in lobbying on a sensitive WTO negotiating issue.
The EC, on the defensive for not agreeing to name an end date for export subsidies, continued to press the US on the use of its food aid as an export subsidy, saying that dumping of surpluses under the cover of food aid is an abuse of the concept. In a “fact sheet”, it suggested that a WTO discipline be introduced so that food aid be donated only in “untied” cash for free procurement.
The EU fact sheet charged that the US donated $2.6 billion of food aid in 2003, all procured on the US market and provided with US logistics as “in-kind” food aid. With this kind of tied food aid, up to 60% of the budget stays in the donor country (going to agribusiness companies, logistics and shipping companies). According to the EC, for the US, food aid accounts for 20% of wheat exports and over 50% of skimmed milk powder exports, and the US proposed to exempt over 85% of global food aid from future WTO disciplines. “The EU will not talk about end dates for phasing out export refunds without parallel commitments from others,” said the fact sheet.
On its part, the USTR office came out with its own fact sheet arguing against the EC’s “cash only” proposal, which it said would lead to a decline in food aid. Taking a swipe at the EU, it said that overall EU food aid in cash and in kind declined after the Commission and member states moved to “cash only” food aid in 1996. It quoted OECD data that the EU and its members normally provided 2 to 5 million tons of cereal aid in 1970-96, but that EU food aid rarely exceeded 2 million tons after 1996, and that in 2002 EU food aid was 1 million tons.

Developing country groupings (G20, G33, AU, LDC, ACP) hold “historic meeting”
Hong Kong, 14 December 2005 (Hira Jhamtani) – Ministers of five major groupings of the developing countries met for a consultation among themselves after the opening ceremony of the WTO’s Ministerial Conference on Tuesday evening at what was described by some Ministers as a “historic event.”
It was the first time that so many developing country coalitions (G-20, G-33, Africa Group, LDC Group and the ACP Group) had come together in the context of the WTO The meeting, in the form of a joint consultation for the groupings and their members, was arranged by the G-20.
Today, three Ministers – Celso Amorim of Brazil, Kamal Nath of India and Mari Pangestu of Indonesia -- who took part in the meeting spoke to the media and to the NGOs about the event.
At a press briefing of the G20 this morning, Amorim described the meeting as a historic event and said “this is the first we discussed our different issues among ourselves, and not wait for others to do it with us”. He considered this a timely breakthrough amid the situation where there is no indication of any convergence of positions in the negotiations among WTO members.
Kamal Nath, at the same briefing, said that the groupings together represented four-fifths of humanity. At the meeting, they discussed serious concerns such as the problems in the trade in banana, sugar and cotton. The message is simple, he said. “This is a call to the developed countries, that the concerns of developing countries must be addressed in this Round”.
Mari Pangestu, at a meeting with Indonesian NGOs, also described the consultation among the developing country groupings as a historic event. She said that the meeting had discussed central development issues such as SDT and flexibilities in WTO rules.
All three ministers said they totally support the LDCs’ cause, especially their demand for duty free and quota free market access for products of the LDCs into developed countries’ markets.
The Brazilian minister said that this should however not exhaust the development concerns of the Round, as there were many other development related issues.
Answering a question whether the meeting of developing countries addressed possible conflicts, the Brazilian minister said there are no conflicts, but there are different situations and different needs. And the meeting was the beginning of substantive discussions that would try to bridge this diversity among developing countries.

New developing-country group on NAMA demands respect for SDT and flexibilities
Hong Kong, 14 December (Martin Khor) -- Ministers of 11 developing countries have taken a joint stand on the negotiations on non-agricultural market access (NAMA), stressing that the principles of special and differential treatment as well as flexibilities for developing countries must be fully respected, if the NAMA negotiations are to make progress. The Ministers presented a letter today to the chairman of the Conference, Hong Kong Commerce Secretary John Tsang, with copies to the facilitator on NAMA, Pakistani Commerce Minister Humayun Akhtar Khan, and WTO Director General Pascal Lamy.
The countries have formed a “core group” on NAMA, coordinated by India and South Africa, with other members including Argentina, Brazil, Venezuela, the Philippines, Indonesia, Namibia and Egypt. In their letter, the Ministers said that they strongly believe that tin order to move the NAMA negotiations forward, he following principles must be fully respected:
* Less than full reciprocity in reduction commitments for developing countries through proportionately lower percentage reductions;
* Removal of tariff peaks, high tariffs and tariff escalation, and non tariff barriers in developed country markets on products of developing country export interest;
* Agreement on paragraph 8 (of the August 2004 framework agreement annex B on NAMA) as a stand alone provision of flexibilities for developing countries;
* Substantially increasing the level of bindings at appropriate and equitable levels;
* The NAMA outcome to be calibrated with the ambition achieved in other market access negotiations.
The Ministers referred to two submissions by a group of developing countries on NAMA flexibilities and on Reclaiming Development, which capture important principles to achieve the development dimension of the negotiations. “Unfortunately we find that these important elements have not been adequately reflected in either the NAMA Chairman’s Progress Report or in the draft Ministerial declaration.”
The letter added that the principles of less than full reciprocity in reduction commitments by developing countries and SDT were agreed to in the Doha mandate and remain central to the NAMA negotiations. These have the notion that developing countries should undertake lesser reduction commitments as compared to developed countries, and the commitments should allow for policy space to pursue their development strategies.
“While developing countries are prepared to make a contribution to the NAMA negotiations, we find the developed countries reluctant to offer their fair share,” said the letter. Even though developed countries are highly competitive in industry, they continue to maintain high tariffs, tariff peaks and tariff escalation on various products, particularly of export interest to developing countries. The unequivocal removal of these is at the core of the Doha mandate. Further, there are a large number of non tariff barriers and abuse of trade remedial measures, which need to be addressed.
The letter continued that most developing countries continue to reform and industrialise their economies. Reforms include substantial autonomous tariff liberalisation whereby real market access has already been given. Yet a number of sensitive sectors still exist in most developing countries, given their labour intensive nature, revenue implications and contribution to national employment and output.
“These sectors have to be carefully managed, using the same policy tools that were available to the developed countries at similar levels of development. It is for these reasons that we have been arguing that the paragraph 8 of the Framework Agreement be finally settled as it is a “stand alone” S&D provision with no linkage to the formula or other elements. The figures, presently in brackets, are the barest minimum required by developing countries.”
The letter added that the Round provides an opportunity to create a more transparent, predictable and inclusive trading system by substantially increasing the level of bindings by all WTO members. However, it has to be acknowledged that binding of unbound tariff lines is a concession in itself. Regarding the level at which these tariff lines may be bound, appropriate treatment, which may include marking-up the base rates, would need to be agreed so as to address the sensitivity of these tariff lines.
Said the letter: “The ambition in NAMA cannot be viewed in isolation. It has to be proportional to and commensurate with the contributions by developed countries in other market access areas. Developing countries cannot be expected to pay for the much needed reforms in the agriculture sectors of developed countries. The disproportionate demands presently being made of developing countries would also lead to an imbalanced outcome resulting in the exacerbation of the current difference in the treatment of agricultural and non-agricultural products. “This is unacceptable as it would jeopardize the development intent of the Round.”

“Development Package”: Can the US and EU implement what they promised?
Hong Kong, 14 December (Chee Yoke Ling) – Some key elements of the “development package” that has been floated at the Hong Kong Ministerial cannot be taken at face value because neither the EU nor the US can guarantee that they can implement what they have promised, according to a US fair-trade advocate and a European parliamentarian.
Ms. Lori Wallach of US-based Public Citizen has criticised the US offer. She said that the USTR cannot deliver on zero tariff-quota for least developed countries’ goods without congressional approval, and Congress opposes any such move.
“Neither USTR nor even the US President has authority to deliver such tariff cuts regarding any import sensitive agriculture goods,” said Ms. Wallach. The USTR lost his tariff proclamation authority (a right to declare certain tariff cuts without congressional approval that had been in place since 1974) for a list of 500-plus such items in the 2002 Fast Track. Now, delivering tariff cuts on these items requires a vote of Congress, she explained.
According to Ms. Wallach, key members of the U.S. Congress have said explicitly that they oppose the “zero tariff” or ‘everything but arms’ proposal.
She said that the USTR cannot deliver on ‘aid for trade’ promises made on December 14 which, according to the USTR’s own briefing papers, are “subject to the President’s budget request being approved” and developing countries’ agreeing to liberalize their trade. “The claim that the US will double its aid for trade funding is “subject to the President’s budget request being approved”. Yet, the U.S. Congress is in a deep budget crisis and the likelihood that this will be approved is uncertain”.
The U.S. has already announced this same pledge – to move funding levels to US 2.7 billion by 2010 once this year.
This apparent recycling of pledges seems to apply to the European Union, too. Dr. Caroline Lucas, a member of the European Parliament Trade Committee for the Green Party, warned that the EC offer is a massive diversion and a sweetener pill to soften the severe impact of the concessions that are being extracted from developing countries. She said that it is “incredibly arrogant to think that developing countries will be taken in by that offer”.
Dr. Lucas also said that the majority of the commitments, such as duty free and quota free products, have already been provided so there is nothing new. She stressed that “The biggest lie is that the European Commissioner will be able to conjure up US 1 billion because the EU budget is already under major attack”. She added that the EU cannot even guarantee the pledged “paltry sum of USD 40 million for cotton, and if the EU diverts from existing budgets to deliver the US 1 billion for development, it would be totally unacceptable”.

NGOs bring early Christmas cheer to the Ministerial: Santa and Jingle Bells highlight services controversy
Hong Kong 14 December (Sanya Smith) -- To the tune of “Jingle Bells”, NGO participants brought their anti-GATS message to the delegates today. Wearing Christmas hats they sang modified Christmas carols in the foyer of the Hong Kong Convention and Exhibition Centre at lunchtime on Wednesday.
A Santa co-opted by multinational corporations then rewarded corporations that had been particularly naughty such as Coca Cola, Halliburton and AOL Time Warner by giving them special plurilateral deals in the water, construction and cultural sectors.
The carols were organised by Our World Is Not For Sale, an international coalition of NGOs and networks, which is concerned that Santa is coming early this year for the big service multilaterals if Annex C of the Draft Ministerial Text is accepted.
The carolers then finished with an anti-GATS version of “O Christmas Tree” which included lines such as “Say no to GATS, and benchmarks too, our world is not for selling” and “Protect essential services, Stop Annex C.”

Activists present petition with 135,000 names on GMO case to WTO
Hong Kong, 14 December (Lim Li Lin) -- On the second day of the 6th WTO Ministerial conference in Hong Kong, activists presented the Deputy Director of the WTO, Alejandro Jara, with a petition signed by more than 135,000 people from 100 countries and more than 740 organisations opposing the WTO dispute complaint on genetically modified organisms (GMOs) filed by the US, Canada and Argentina against the European Union in the WTO.
The preliminary ruling on the case is expected in January 2006. This will be circulated amongst the parties in the case for their comments before the final ruling is announced. The US initiated the case in 2003 alleging that the EU had a de facto moratorium on approvals of GMOs, and that it was not taking action against member states which are passing national bans on GMOs.
Also presented was a basket of local organic agriculture produce, signifying the right of citizens to sustainable, healthy and productive food and farming. Armed with banners declaring “Monsanto plunders and kills peasants and the planet” and “WTO: hands of our food”, the activists attracted a small army of TV cameras, microphones and furious notepad scribbling.
Friends of the Earth International Chair, Meenakshi Raman said that the WTO should not force feed anybody with GM foods. She said, “the WTO is the wrong place to be deciding what we eat and how we protect our environment”.
This echoed the demands of the thousands of people from all over the world who have signed the global ‘Citizens’ Objection’ demanding that the right to decide what they want to eat should be up to them and not the WTO, that governments have the right to develop laws that protect their citizens health, environment and farming, and that these could include bans and labeling requirements.
The ‘Citizens Objection’ also supports the Precautionary Principle, as enshrined in the Biosafety Protocol, which is an international law under the UN’s Convention on Biological Diversity that regulates GMOs, and demands that any decisions concerning the regulation of international trade in GMOs should be made in accordance with the Biosafety Protocol and not the WTO.
Well known French farmer and activist, Jose Bove, said that most of the people and farmers in Europe refuse GMOs, and warned that they would take action to keep Europe free from GMOs and to protect the world from GM farming. He said that civil disobedience would continue, even if they had to go to jail.
Green Party MP and delegate to the Ministerial meeting, Caroline Lucas, said that “the right of individual countries to decide whether or not to allow GMOs in their food chains or their environment is a key element of the democratic principles which are supposed to underpin the EU itself. Neither the WTO nor the EU have any right to overrule the clear majority of EU citizens who do not want GMOs in their communities”
Indian ecologist, Vandana Shiva, said that GMOs are promoted as a solution to feeding the world and to alleviate starvation, yet GM cotton in India has failed every year. Well-known author and activist Susan George said that the WTO should be subject to human rights and environmental laws.
When asked about the outcome of the WTO GMO case, Alejandro Jara refused to comment, as it is still the subject of a dispute settlement. He said that the result remains to be seen, and encouraged the activists (who responded in a chorus of protests) to make their views known to their governments – “those who run the shop”.

Our countries need flexibility in services, says Africa Group
Hong Kong, 14 December (Hira Jhamtani) – “Market access only is not sufficient for Africa. We need a comprehensive development package” said Rachid Mohamed Rachid, the Egyptian Foreign Trade and Industry Minister, representing the African Union, in a press briefing on 14 December 2005.
The African group, he said, stressed a high priority to the current round of trade negotiations. Its current position is based upon the Ministerial Declaration of Cairo and Arusha. Rachid further elaborated that Africa’s priority is development. In terms of international trade, it means Africa needs to develop its supply capacity and infrastructure to conduct trade. This is the development package for Africa, and any aid or trade package must be translated as such.
Agriculture is also of importance to many African countries. The African group aligns itself with the G-20 and G-33 in asking for elimination of export subsidy and reduction in trade distorting support. Other important agricultural issues are agreement on SP and SSM, as well as solving the cotton problem.
On GATS, Africa supports the proposal that members of the WTO must have flexibility in rules and liberalization of services. The region needs support to get benefit from trade in services. When asked further on its position regarding Annex C of the draft ministerial declaration, the Minister said that, it is very ambitious and that Africa should be careful on full fledged services liberalization. Its position is embodied in the alternative text presented by the ACP.
The Trade minister of Rwanda, accompanying the Egyptian Minister reaffirmed that for Africa, development is a priority, agriculture is of utmost important, industrial goods are important and services are the least important.
On the development package, Rachid also said there is a need for better governance of aid for trade and to avoid repackaging old ideas under new labels.


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Announcements
• 17 December 2005: 2-4pm
‘Review of the HK Ministerial: How will it end and what to do after?’
Organised by Third World Network
Venue: HK Convention and Exhibition Centre, NGO Centre, Room B
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