SUNS  4332 Thursday 26 November 1998



WTO MEMBERS STAKE OUT MORE NEGOTIATING POSITIONS

Geneva, 24 Nov (Chakravarthi Raghavan) -- Industrial and developing country delegations have presented this week at the WTO a range of views and proposals on further trade negotiations already mandated at Marrakesh and the future work already provided under other existing agreements and decisions taken at Marrakesh.

On many of the issues, there were some sharply differing perspectives and views and, save for agriculture perhaps, a division generally between developing and developed countries.

In agriculture, the US and the Cairns Group of agricultural exporters, made clear they expected to see further actions to cut export subsidies, domestic support and border protection.

But a number of other developing countries also raised other specific concerns including on non-trade concerns like food security.

The EC generally pushed for putting all issues -- implementation, mandated negotiations (agriculture and services), issues arising from the built-in review process of various agreements and others -- into one big basket of issues for comprehensive round of negotiations and implementation as a single undertaking, and completed in a three-year time-frame.

Some of the Cairns group developing countries also seemed to support this, but others had some reservations. The US, EC and Japan also seemed to imply that the "reviews" provided for in various agreements should be used for new disciplines and tightening existing ones, including in the areas covered by the TRIPS and TRIMS agreements.

On TRIPS -- where there are some mandated reviews about grant of patents on plants and animals, as well as review of the accord as a whole -- the US and some others mentioned the transition periods that will come to an end for many developing countries in 2000, as well as the current limitation about invoking of the "non-violation" clause in dispute settlements which the US said should not be renewed.

On TRIMS, the US, EC and Japan wanted the review process to result in more disciplines to do away with other performance requirements, including export performance and technology transfer requirements. But India and some others said that the "review" process, written into various agreements, had been to enable various difficulties and unforeseen effects of new agreements in new areas, particularly given the "highly intrusive" nature of various agreements into the domestic
policies of countries, to be assessed, and if necessary modified or remedial action taken.

The purpose of these reviews, India said, was not to impose additional burdens and commitments on developing countries but, on the basis of experience gained, to provide relief to Members.
India also sharply questioned the emphasis by the US and EC on taking up and completing the review processes within the time frames in respect of some, but not all accords, and contrasted the US position in respect of the review of the Rules of Origin agreement and for harmonisation of the rules, where the original time frame has expired, and has been extended till end of 1999, but with the US insisting that even this can only be an objective.

Rejecting the idea of a comprehensive round, linking every review and examination of existing accords to a new round, India said that the proponent (the EC) would like developing countries to accept new inequities and new difficulties as a price for removal of inequities and difficulties experienced in implementation.

Trade officials the various presentations as an initial staking out of positions, though some saw that this process could also result in "freezing" positions - unlike in the pre-WTO GATT negotiation processes where many things were informal and within a small group.

The presentations came at the two-days of informal meetings of the General Council preparing, in terms of the mandate given (in para nine of the Declaration of the 2rd Ministerial meeting in Geneva in May this year) to undertake a preparatory process for recommending a work programme and recommendations for the 3rd Ministerial meeting to be held in the United States in 1999.

An earlier informal meeting had heard views on a wide-ranging number of issues of "implementation", both overall and under individual agreements. On the basis of this the secretariat has prepared an informal check-list. A similar check-list is to be prepared in respect of the mandated negotiations and reviews, dealt with at this week's meeting.

The issues addressed at three sittings on Monday and Tuesday this week included questions of further negotiations in Agriculture and Services specifically mandated at Marrakesh in April 1994, and review and possible negotiations provided for in the various agreements annexed to the WTO and the decisions at Marrakesh, including under TRIPS, TRIMs, Subsidies and Countervailing Measures, Dispute Settlement Understanding.

While some countries spelt out their views in formal documents, particularly in regard to agriculture, services, others dealt with these and others in a more general way, reserving their right to come
back to the issues in greater detail later.

The informal process, on Tuesday afternoon, also revisited the issues of implementation, with many developing countries asking the secretariat to prepare an analytical paper on the gains and losses for developing countries as a result of the implementation of the Uruguay Round.

The United States and the EC were opposed to such a secretariat paper.
But with a large number of developing countries calling for such an analytical study, the chairman of the General Council, Amb. John Weekes of Canada, is to hold further consultations on how to proceed on the demand of developing countries for a secretariat analytical paper.

Before the Uruguay Round agreements were concluded at official level in December 1993, and again after formal adoption at Marrakesh, the then GATT secretariat produced studies and projections of trade and welfare gains in the range of 200 to 500 billion US dollars. There were also
similar projections and claims from the OECD, the World Bank and others. There was also the talk of the liberalization being a "win-win" situation - based on economic theories without relationships to facts.

The projections of gains, based on some speculative assumptions have now been proved largely incorrect for many, if not most developing countries, and unlike the socalled Paretta optimality, the final outcome (both in terms of actual market access and increased trade gains, as well as the new obligations under various accords) appears to be one of gains for a few industrial countries, and losses for the many developing countries, as well as further marginalisation of the poor everywhere.

The term Paretta optimality (after the Italian economist who proposed the theory of allocative efficiency) is used in trade and welfare economics to indicate a situation where at least one party gains and no one loses.

In the discussions on agriculture, under mandated negotiations, Australia (the main Cairns group spokesman), supported by other Cairns group members including Argentina, Uruguay and Chile, as also the United States and Canada, that the preparatory process must address the scope, structure and time-frame of the negotiations. Article 20 of the Agreement on Agriculture (AOA), and the preamble, set out the scope, namely continuing the process of reform and to establish a fair, market-oriented agricultural trading system. It would also be necessary to lay out, in terms of structure, how and in what bodies the issues will be negotiated, as well as the chair of the bodies.

The negotiations must commence before end of 1999, and need to be completed before 2003 the expiry date in Art. 13, for the so called "peace clause" of the agreement, which provide that measures conforming to the agriculture agreement may not be challenged under other provisions like the subsidies agreement.

New Zealand also spelt out some of the details of what they were looking for under the negotiations:

the issues of market access, including tariffs (methodologies and time frame for further reductions, tariff peaks, tariff escalation, prohibitive tariffs and entry price mechanisms);
tariff quotas and guidelines on them, including transparent administration, and treatment of preferential access and imports from non-WTO members within such tariff quotas;
special safeguards and import monopolies;
disaggregation of AMS (aggregate measure of support) by product, technical issues of base periods for external reference prices, time-frame for further reductions;
production limiting programmes and green-box criteria;
export subsidies and time frames for further reductions, circumvention of export subsidy commitments;
special and differential treatment and export restrictions.

The US which more or less flagged the same issues, including for an
outcome to result in elimination of all export subsidies, nevertheless
did not focus on the issue of aggregation and disaggregation of the
AMS.

The aggregation of AMS across all products, and the leeway to balance them in terms of reduction, has benefited both the US and the EC.

The US also called for parallel actions on dealing with problems arising from the Sanitary and Phytosanitary Agreement and the Technical Barriers to Trade.

Egypt underscored the need for some modesty in ambitions and for realistic expectations. Egypt also stressed the importance of non-trade concerns of the net food importing countries, and need to
operationalise the provisions of the objectives in the agreement. Egypt also complained that the US and New Zealand papers for agriculture negotiations treated the S&D issue as a peripheral one.

India insisted that unlike in the Uruguay Round, the implementation problems of agriculture, and the concerns and shortcomings, particularly those facing developing countries, should be faced up front. In a sense the process has been initiated in the Committee on Agriculture and should continue in that frame, rather than creating new negotiating bodies or in accord with any rigid time-frame.

A large number of developing countries had predominantly agrarian economies, with a large percentage of the population dependent on agriculture. Their main preoccupation was to ensure food sufficiency, and stable markets for their products.

At the same time, they faced issues of market access, and the very high tariffs, and failure of the developed countries to fulfil their commitments of special and differential treatment.

The net outcome of the agriculture agreement was that some countries that had high levels of export subsidies were allowed to continue, with some modest reductions, but those like developing countries not having export subsidies were prohibited from giving any new subsidies.

Pakistan, India, Mauritius, South Africa and several others raised the issues of "non-trade concerns" of food security, and said that the hypothesis of liberalisation as a panacea did not take into account the realities faced by a number of developing countries, who may not have the resources to import food. Developing countries need to have other objectives, including increasing productivity of marginal farmers in agriculture, and there was need for a "market plus".

On the producer subsidy issue, India noted that the OECD countries who had an aggregate $151 billion or 34% of the value of agricultural production as subsidy in 1997, countries like India with very paltry subsidies and with no implications for international trade were required to strictly adhere to stringent subsidy regime and subject to lengthy and detailed questioning when their notifications were reviewed.

It was necessary to provide a certain degree of flexibility to developing countries, by appropriately modifying the AOA, particularly on the domestic support and green box measures.

Brazil said that in respect of agriculture negotiations, the scope of negotiations should be clearly defined, and the structure and time-frame should be set out. The issues of the high tariff bindings,
tariff peaks and tariff quotas, as well as tariff escalation would need to be tackled and resolved to improve market access. There should be increases in volume of tariff rate quotas and reduction of in-quota tariff rates and rules on administration should be agreed. There should also be significant commitments on reduction of trade-distorting domestic support and export subsidies.

The negotiations on agriculture, Brazil pointed out, neither required a new mandate nor any cross-concessions. Such concessions had already been made in the Uruguay Round