Rising food prices could affect WTO talks
By Aileen Kwa
GENEVA - Rising food and fuel prices, with related social destabilization, may
necessitate a "course correction" in the liberalization talks on industrial
goods and agriculture, the African, Caribbean and Pacific group of nations told
World Trade Organization (WTO) director general Pascal Lamy last week.
Lamy told the WTO's trade negotiations committee on April 18 that he wants to
conclude negotiations on agriculture and non-agriculture (industrial goods)
market access (NAMA) in May. That process would include a ministerial meeting.
In response, developing states from Africa, the Caribbean and Pacific
(ACP)
regions warned Lamy about following the agreed sequence of steps in the talks.
Representing the ACP countries at the meeting on April 18, Ambassador of
Jamaica Gail Mathurin said: "We are just [starting to see] momentum on some of
the issues of concern to the ACP group. We wish to place on record that we will
not accept being pressed to enter a horizontal process with partial
modalities," Mathurin said. "Partial modalities" refers to agreement on some
issues while leaving out others, while "horizontal process" refers to
negotiations at which trade-offs are made between various issues.
Mathurin cautioned the director general that, "our countries are grappling with
various policy alternatives in order to address the rapid and continuing rise
in food and fuel prices, along with the potential for social instability. It is
important to draw lessons from the current crisis. This might necessitate a
course correction."
One African negotiator commented afterwards on condition of anonymity, "We have
made much progress in agriculture, but a ministerial [meeting] would be
premature. We would be taking a step backwards because people will resist."
The negotiator said Lamy "is giving the same story: that we are making a lot of
progress and we expect revised texts very soon. In contrast, we are saying we
are not yet ready for ministers to decide on texts."
Some developing country delegates commented later that Lamy did not attempt to
address the need for more time the majority of members had spoken out about.
Higher level of talks
Lamy said that negotiations will move to a higher level, the so-called
horizontal process, by May 5 when trade-offs will be made between agriculture,
NAMA and some other issues. This will involve only about 25 to 30 invited
senior officials in closed meetings with selected member states. After that,
Lamy intends to host a week of closed ministerial meetings.
He did not mention specific dates for the mini-ministerial meeting but, as of
last week, it is widely known that the WTO Secretariat is making preparations
for hosting ministers in the week of May 19. Such a ministerial meeting would
then culminate in a meeting of the entire membership at the level of the trade
negotiations committee to rubber stamp the outcome.
Mathurin reminded the director general: "The ACP group wishes to recall that we
supported the process which you outlined at the last meeting of the trade
negotiations committee, that is, to continue working in the negotiating groups
[which deal with the agriculture and NAMA issues] in order to develop, in a
balanced way, full modalities [rules], especially on agriculture and NAMA.
"This would lead to revised texts which we would have an opportunity to review
in our capitals, in our respective groupings and in the respective negotiating
groups before moving to a horizontal process and eventually to a meeting of
ministers. This was recognized as a process which would give comfort to all
members," said Mathurin.
"I note that you are still committed to continuing that approach. We would not
want to see this approach jeopardized by the introduction of artificial
timeframes."
She went on to state that "the ACP group represents a vast constituency of the
WTO membership and it is important that the views of its members be fully taken
on board in these negotiations. While there has been progress in many areas of
the negotiations, there are still many issues to be further addressed and many
of these concern the interests of the ACP group."
What are some of the outstanding issues in the negotiations? Last week, talks
on "sensitive products" broke down. These are products that the developed and
large developing countries would like to protect.
The Group of Six, including the US, European Union, Brazil, Canada and
Australia, disagreed among themselves about their own joint proposal. Any
outcome on this issue would have an impact on many of the smaller countries
that export to the EU.
Market access clash
Closely related to this is the direct clash between small countries on market
access. "Tropical products countries", such as Costa Rica and Ecuador, are
pushing for faster liberalization of their exports to the EU. The ACP
countries, on the other hand, are fighting for measures to help them deal with
"preference erosion", which refers to the loss of preferential treatment of
their products due to liberalization.
They want the EU to undertake a slower liberalization process in relation to
its non-ACP trading partners, particularly for those products that the ACP
exports to the EU under preferential terms. There is considerable overlap in
the list of tropical and preference products, including bananas and sugar. How
this issue will be resolved remains a puzzle.
Also unresolved are issues developing countries have for years been fighting
for to safeguard rural livelihoods and food security: the special products and
special safeguard mechanism clauses.
In the special products (SP) negotiations, where developing countries want
slower or no liberalization on products important to food security and rural
livelihoods, negotiators are far from agreeing on the details of how these
products will be designated.
They are also yet to agree on the percentage of tariff lines that can enjoy SP
treatment; and the highly contentious issue of whether some products could be
exempted from tariff cuts. In talks last week, the US and a group of exporting
countries, including New Zealand, Australia, Canada and Thailand, submitted a
proposal that was clearly aimed at watering down the proposal of the SP
proponents.
Equally, there is no consensus on the special safeguard mechanism (SSM). The
SSM would eventually allow developing countries to impose higher tariffs in the
event of large surges in agricultural imports. There is no agreement on product
coverage, that is how many tariff lines will be covered by this mechanism, how
it will be triggered and what the remedies might be.
Call for time
An agriculture meeting on Friday, chaired by New Zealand's Ambassador Crawford
Falconer, again saw the majority of members asking for more time before he
releases the next version of his agriculture text. It looks unlikely,
therefore, that Lamy's timelines for May will materialize.
At the forefront of attempting to push the current Doha Development Round of
WTO negotiations to a hurried conclusion are the WTO Secretariat, the European
Union, Brazil and the George W Bush administration. India, on the other hand,
breaking ranks with Brazil on this issue, has been expressing grave doubts
about whether a conclusion in May is possible.
Lamy presses services meeting
Lamy also found himself at odds with officials from developing countries when
he announced that there will be a limited ministerial ''signaling'' conference
on services trade chaired by himself.
No dates were given but it is expected that it will take place with a
mini-ministerial meeting planned for May 19 scheduled to deal with the issues
of non-agricultural market access and agriculture. He indicated that senior
officials will begin negotiations in Geneva on May 5. Most in Geneva, however,
do not believe that this timeline can be met.
The ''signaling'' conference will focus specifically on market access:
participants are expected to ''signal'' to each other the extent to which they
are prepared to liberalize their services sectors.
According to Lamy, ''any outcome on market access among participants in the
plurilateral process will be automatically extended on an MFN [most favored
nation] basis to all members''. This comment worried many developing country
negotiators.
''Plurilaterals'' refers to negotiations between a subset of WTO members. The
outcomes of such talks are, in theory, binding only on those members. MFN
refers to each member state granting trade advantages equally to all trading
partners.
He also said that ''participation in the signaling conference would be, more or
less, among members participating in the plurilateral request and offer
negotiations, plus representatives of regional groupings".
This would mean that only the developed countries, the emerging developing
countries and a few others will be included in these meetings. These are the
countries that account for most of world services trade. The bulk of WTO
members, however, would not be involved.
As chairperson of the signaling conference, Lamy said he would provide an oral
report to the trade negotiations committee, where he made the announcement on
April 17.
The main elements of the report would include ''a description of the sectors
and modes of delivery discussed and the signals exchanged regarding new or
improved commitments which participants would be ready to undertake''. The
conference will probably last one day.
Excluded groups concerned
In the corridors of the WTO there was great unhappiness about this signaling
conference by those who have been excluded from the small group services
meetings and who will not be party to the conference. Many are worried about
the implications for their countries.
''The conference is being pushed by the developed countries,'' one African
delegate, whose delegation is not involved, said on condition of anonymity.
"Even though we are not involved, our fear is that what they agree among
themselves will impact on us.
''This can happen in two ways. One, the outcome can be used as a benchmark for
other members who are not participating. Second, we cannot refuse or oppose
other members from coming together. However, what is the implication in terms
of the multilateral process when we have the secretariat directly involved? The
director general [DG] is chairing the meeting himself. The involvement of the
DG [undermines] the neutrality we expect of the secretariat''.
He went on to ask, ''Will the DG then say, 'the plurilateral group has achieved
this. Those who have not participated, can you achieve two-thirds of what was
achieved?'''
Services trade is of major interest for both the US and the EU, with business
groups from the two lobbying intensely in Geneva in recent weeks.
What could happen, and this would be very dangerous for all countries,
including those who are not participating, is that the conference becomes the
starting point for ''sectoral'' negotiations. Sectoral negotiations constitute
the formalization of negotiations on specific services sectors.
It takes place when there is a ''critical mass'' of countries involved, as was
the case after the Uruguay Round in telecommunications and financial services.
''Critical mass'' refers to the countries that contribute to most of the trade
in that sector. The eventual outcome is a common template of liberalization in
each sector under negotiations.
This regulatory template or framework tends to put liberalization,
''pro-competitive'' objectives and the rights of foreign firms ahead of
national objectives such as universal provision of services. This may therefore
not advance developing countries' interests.
In 2004, the WTO's dispute panel ruled against Mexico in a case brought to the
WTO by the US. The US said Mexico's regulations were anti-competitive and
contravened the Telecoms Reference Paper, the regulatory framework that
resulted from the telecommunications sectoral negotiations.
The panel ruled that Mexico had failed to provide American basic
telecommunication suppliers with equal access to and use of public
telecommunication networks and services. The Mexican company Telmex had charged
the US supplier higher interconnection rates.
Mexico tried to defend its regulations on the basis that they were designed to
include the costs for rolling out telecommunications infrastructure, a need of
many developing countries.
The panel, however, accepted the US argument that the rates charged should be
based solely on the specific services foreign companies required. No
contribution to the development of Mexico's telecommunications infrastructure
could be included in the rate because Mexico had adopted the Reference Paper.
Even though countries may choose not to sign on to such a regulatory template,
once such a template has been adopted by a ''critical mass'' of states and it
is formally part of the multilateral framework, there is a de facto, hidden
obligation on all.
In theory, the countries that are non-signatories can ignore such a
''benchmark''. However, in practice, bound under international law, it becomes
a minimum norm which would be used by foreign investors and trading partners to
evaluate countries. This norm will be seen as the minimum guarantee to protect
their interests.
Aileen Kwa is an independent trade policy analyst on leave from Focus on
the Global South, a non-governmental organization that engages in policy
research and activism to generate critical analysis and debate on globalization
and neo-liberalism.
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