Cablegate: October 13, 2005 - Meeting of the Wto Trade

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 05 GENEVA 002505

SIPDIS

PASS USTR FOR ALLGEIER AND DWOSKIN
EB/OT FOR CRAFT
USDA FOR FAS/ITP/SHEIKH, MTND/YOUNG
USDOC FOR ITA/JACOBS

E.O. 12958: N/A
TAGS: ETRD WTRO USTR
SUBJECT: OCTOBER 13, 2005 - MEETING OF THE WTO TRADE
NEGOTIATIONS COMMITTEE (TNC)

Summary

1. The meeting of the WTO Trade Negotiations Committee (TNC)
on October 13, 2005 featured a more upbeat atmosphere evident
since the lift given to the process by the new U.S.
agriculture proposal. Director-General Lamy and many other
speakers observed a new impetus in the negotiations, while
many Members allowed themselves to guardedly express hope that
the upcoming Sixth Ministerial Conference in Hong Kong, China,
can be a success. At the same time, however, participants
remained realistic about the shortness of time and the
difficult challenges ahead.

2. Lamy set the tone in his opening remarks by noting this
week's developments seemed to have reignited the negotiations.
He saluted the important contribution from the United States
on agriculture, and he referred as well to the positive role
played by other proposals including those of the EU, the G-20,
and the G-10, but Lamy also underlined that positions on
agricultural market access remain very far apart - too far
apart for real negotiations to occur. The chair of the
agriculture negotiations echoed this message. Quite a number
of other delegations welcomed the positive momentum engendered
by recent proposals, many singling out the U.S. agriculture
proposal for special mention, with Australia and Mexico
emphasizing that it is time for movement on market access.

3. Besides the United States, several speakers - for the EU,
the G-20, and the G-10 - took advantage of the meeting to
outline their proposals. Brazil, speaking for the G-20,
underscored that the tariff reductions specified in the
group's market access proposal represented a "maximal limit"
for developing countries. G-10 members, including Agriculture
Minister Iwanaga for Japan, emphasized they are willing to
improve market access but the outcome must be equitable for
food-importing countries. Japan and Norway rejected a tariff
cap. Benin, speaking for the four cotton countries, voiced
concern that none of the recent agriculture proposals included
specific solutions on cotton, and warned that there could be
trouble in Hong Kong if the issue was not explicitly
addressed.

4. Other themes of the meeting included broad support for
Lamy's proposed roadmap for Hong Kong and beyond, including
taking a bottom-up approach in preparing texts for ministerial
consideration and making the process as transparent and
inclusive as possible.

Lamy's Statement

5. Lamy began his statement by recalling the roadmap leading
up to the Sixth Ministerial Conference that he enunciated at
the previous TNC and foreshadowing the substantial amount of
work that will be required next year to convert what is agreed
in Hong Kong, particularly with respect to modalities, into
specific commitments. Outlining what he described as an
"incompressible" number of drafting and legal episodes, he
concluded that the Ministerial Conference must be a success or
the 2006 target will be missed.

6. He then assessed the current state of play, beginning with
agriculture and judging that "the engines of the negotiating
plane have been switched on again" in large part because of an
important contribution from the United States.

- The U.S. proposal puts domestic support on a par with
export competition in terms of its negotiating shape
even if there are elements where further approximations
are necessary, according to Lamy.

- On market access, however, Lamy said that positions
remain too far apart for real negotiations to commence,
despite proposals by several participants - the G-10,
the EC, the United States, the G-33, and the G-20.

- Development must be kept at center stage, he said, which
means addressing special and differential treatment in
an inclusive way and making every possible effort to
advance the cotton dossier.

7. Lamy then turned to other issues, outlining areas where
convergence is needed leading up to Hong Kong.

- On NAMA, there is an emerging consensus over a Swiss
formula with a limited number of coefficients, he said.
By mid-November, there needs to be 1) a range of numbers
for the formula, 2) comparable detail on flexibilities,
and 3) a way to fix the base rate for unbound tariffs.
This is the minimum before addressing issues such as
preference erosion, sectoral, and non-tariff barriers.
- On services, Lamy said that Members need to define a
level of ambition that matches the ambition elsewhere in
the negotiations, and devise a plan for achieving it.

- On rules, Lamy urged Members to intensify the ongoing
text-based negotiating process, so that by Hong Kong
there has been a rigorous consideration of proposed
amendments to the agreements.

- The greatest development gains will stem from
substantive areas, he reiterated, so it is by advancing
these areas that a development package will appear. It
is "still possible and necessary" to harvest agreement
on a good number of agreement-specific proposals, he
said, beginning with those of the LDCs.

- Members also must ensure that implementation and
TRIPS/public health are addressed in an appropriate way,
he said, along with "building the necessary base" for an
aid for trade package by the end of the round.

8. In their informal consultations, Lamy urged Members to aim
for "fresh ideas" that can be brought back to the overall
membership and catalyze negotiations, consistent with goals of
transparency and inclusiveness. He said he would be reaching
out to different Members and groups, and he reported that he
would be continuing the consultative process on outstanding
implementation issues, including those related to GIs, with
the assistance of relevant chairs and two Deputy Directors-
General, Rufus Yerxa (on GIs and TRIPS/CBD) and Valentine
Rugwabiza (on TRIMS).

9. Lamy closed by recalling the importance of a bottom-up
approach whereby the text for ministers grows out of
convergence in the negotiations. That, however, puts "severe
pressure" on negotiators to deliver results in a very short
time. But it can be done, Lamy emphasized, and Members should
stand by the target of a comprehensive draft text by mid-
November - about thirty days from now "counting every day as a
working day."

Statements by Chairs

10. Lamy invited the chairs to make statements, noting that
two chairs - the trade facilitation chair, Ambassador Noor,
and the dispute settlement understanding (DSU) chair,
Ambassador Spencer - were not present.

Agriculture

11. Ambassador Falconer agreed with Lamy's assessment of the
agriculture negotiations, referring to his written report
(TN/AG/20) and adding that political momentum is needed in the
next week or ten days to maintain the pace for Hong Kong.
There have been considerable advances, but Members do not have
the luxury to move at a leisurely pace - further political
guidance is needed quickly. On the three pillars:

- Falconer reported that Members have come a long way on
export competition and further movement on parallelism
is grounds for confidence, but agreement is linked to
the other pillars and will not come automatically.

- Because of recent developments, including the U.S.
proposal, there is now a basis for believing that a deal
on domestic supports is "possibly within reach," but it
too is linked to other parts of the negotiations.

- On market access, participants are making proposals and
talking numbers but positions remain a "very long way
apart and it is not yet possible to discern the basis of
a deal with any confidence."

NAMA

12. Ambassador Johannesson agreed with Lamy's roadmap for Hong
Kong, saying it is "absolutely necessary" to reach modalities
at MC6 because twelve months is the bare minimum required to
finalize and verify schedules and commitments. Members are in
the midst of an intensive meetings schedule, he reported,
including formal negotiations on September 21-22 where Members
discussed three key issues of formula, flexibilities, and
unbound tariffs in an integrated manner on the basis of
contributions by Pakistan and Mexico.

13. He further reported that informal consultations have been
frank, useful, and they have revealed divergences "of utmost
concern" on key elements. Extremely wide gaps remain on
formula and flexibilities, he reported, with Members retaining
very different expectations over expected outcomes, including
over the nature of contributions by developed and developing
countries. Gaps on unbound tariffs are less wide, he said,
but they are there. The challenges lies on these issues, he
said, and he urged Members to get started on solving those
issues now.

Services

14. The recently departed services chair (and current Deputy
Director-General) Jara began by bringing Members up to speed
on offers - 69 initial offers have been submitted so far,
along with 29 revised offers. He commented that many Members
still have not made a submission - despite the fact that
initial offers were due two and a half years ago - and the
hoped-for conclusion of the round is now only fifteen months
away.

15. The key question for Hong Kong, he said, is how to better
specify objectives for market access and rules. On market
access, he said there is wide agreement that request/offer
should be the primary instrument, but there is also interest
in complementary approaches to better organize negotiations
and reach a higher level of ambition. A related issue, then,
is how to set new targets without encroaching on flexibilities
for developing countries. But it is important to remember
that more offers and more commitments do not necessarily
equate to higher levels of liberalization. That is the goal,
he said, even if it only locks in existing levels of
liberalization.

16. The new chair, Ambassador de Mateo Y Venturini of Mexico,
picked it up from there, emphasizing his resolve to get a good
draft package ready for Hong Kong that can guide the
negotiations next year. To facilitate work on an initial
draft text, he is circulating a list of possible elements with
three main components - 1) objectives for the negotiations, 2)
ways to achieve the objectives, and 3) timelines. These are
not rigid concepts, he said, just an attempt to structure the
debate.

Rules

17. Ambassador Valles Galmes said that work on antidumping is
receiving the most attention, and it is has moved past the
philosophical stage. Although substantive differences remain
great, he reported that he is committed to a comprehensive
draft text early next year and to that end he is working on
the development of legal operative text through an intensified
schedule of plurilateral consultations. He is looking to
Members to select key issues for focus in this advanced stage
of the negotiations. Due to the difficulty of the technical
issues, he is working with Friends of the Chair. He stressed
that the Friends process is not a veiled attempt to prioritize
issues, but rather a way to move through the heavy schedule
ahead. He reported that he is also looking for draft texts on
subsidies, fish, and transparency in RTAs in Hong Kong.

TRIPS Special Session

18. Since his last report, Ambassador Ahmad reported that
Members succeeded in overcoming procedural differences and
held useful, productive discussions over three proposals - the
EC proposal, the joint proposal, and the proposal by Hong Kong
China. To date, however, substantive differences remain -
there is no sense of direction and no narrowing of differences
among Members.

Trade and Environment

19. Ambassador Ali recalled that discussions have focused on
paragraph 31(iii) of the Doha Declaration, including
environmental goods liberalization, following calls by many
Members to intensify work prior to Hong Kong. There have been
two main approaches, he explained, a list approach in which
some delegations have identified lists of specific projects
they would like considered in the negotiations, and an
environmental project approach in which environmental goods
and services would be liberalized within a framework of
environmental projects undertaken at the national level.
Discussions continue, he said, including an informative
information exchange session that took place the day before
the TNC, focusing on five broad topics including wastewater
management, solid and hazardous waste management, air
pollution control, renewable energy projects, and
environmentally preferable products. Ali closed by
emphasizing the importance to participants of other parts of
the mandate.
Trade and Development

20. Faizel Ismael said his consultations indicated that work
for Hong Kong on S&D should focus on the five proposals from
the least-developed countries. Work would also proceed on as
many of the remaining African proposals as possible. He noted
he has been unable to advance the negotiations on any
proposals however because neither the LDCs nor the Africans
have been prepared, although the LDCs have signaled that they
expect to be ready by next week to continue work. He further
reported that he will meet with the chairs of the other
relevant bodies to review the status of the category two S&D
proposals that were referred to those bodies for
consideration.

United States Statement

21. Ambassador Allgeier introduced the recent U.S. agriculture
proposal, describing it as a response to repeated calls for
the United States to clarify what it is willing to do on
domestic supports. With this proposal, the United States "has
crossed the political Rubicon of reform," he emphasized, and
he hoped it would mark a turning point and be a sufficient
basis for unlocking progress in the broader negotiations. He
emphasized the proposal is conditional, however, and it must
be met with equivalent ambition by other Members or it cannot
be sold at home. The full text of Ambassador Allgeier's
statement can be found on USTR's website.

Statements by Other Members

22. Thirty Members made statements, many expressing hope for
success in Hong Kong while at the same time conveying a
realistic sense of the challenges ahead. Much of the
discussion centered on agriculture. Other themes included
concern about the shortness of time, support for Lamy's
roadmap for Hong Kong and into 2006, agreement on a bottom-up
approach in preparing texts for ministerial consideration in
Hong Kong, and recognition that the negotiating process must
be transparent and inclusive. Some other specific points made
by other delegations may be of interest to Washington
agencies:

- Quite a number of speakers welcomed the positive
momentum in the negotiations, many acknowledging the
impetus created by the recent U.S. proposal. Mexico and
Australia (on behalf of the Cairns Group) underscored that the
time has come for movement on agricultural market access.

- China recognized the important contribution of the U.S.
proposal, but it also expressed concern about the depth of
real reductions, blue box disciplines, and the lack of special
and differential treatment components in all three pillars.

- On behalf of the G-20, Ambassador Hugueney of Brazil
reviewed the group's two recent proposals - on market access
and domestic supports - saying that the G-20 was asked to
provide its vision of ambition, and it came through in a sign
of unity from Members with offensive and defensive interests.
The 36-percent average tariff cut for developing countries is
as far as they can go, he stressed. He foreshadowed that more
proposals from the G-20 are in the works on issues such as
sensitive products; tropical products; the treatment of
recently acceded Members; how to deal with subsidized exports
from developed countries into developing country markets;
product-specific caps on domestic support, monitoring, and
surveillance; state-trading enterprises; and export
restrictions.

- Ambassador Trojan recapped the EU's contributions on
agriculture, emphasizing that the EU can deliver what it is
proposing on domestic supports - "while we have heard some
good news from the U.S. earlier this week, we are certainly
not yet there." He said the EU has gone far on market access
and commitments should be based on both tariff reductions and
TRQ expansion. Sensitive products are an important part of
the equation, he said.

- Switzerland presented the G-10 concept of allowing Members
to choose between two options on agricultural market access.
At one point in his intervention, Ambassador Wasescha
questioned whether the authors of some proposals could pay the
price if their ambitions are fulfilled.

- G-10 members Norway, Japan, and Chinese Taipei added that
they are willing to contribute on agriculture, but the outcome
must be equitable for them. Agriculture Minister Iwanaga of
Japan ruled out a tariff cap and said the Japanese people will
never accept an outcome that destroys its agriculture.
Norway's representative hit similar themes.

- Ambassador Bhatia of India supported the G-20 proposal,
stating that agriculture represented a major development
outcome of the round. He called for a balanced outcome on
services to promote development, and he pushed back on Lamy's
assertion that a consensus seems to be forming around a NAMA
formula, putting the focus instead on the previous Argentina-
Brazil-India (ABI) proposal.

- Indonesia spoke on behalf of the G-33, emphasizing the
importance of special products, food security, and rural
livelihoods. The Philippines, Cuba, and El Salvador picked up
similar themes.

- Brazil, Norway, and Thailand stressed the importance of a
text-based process on rules, particularly antidumping, with
Norway calling for "firm clear guidance with a high degree of
specificity to guarantee a meaningful result" in the round.
Others - including Colombia and Peru - made passing references
to the issue.

- Benin noted that recent proposals lack solutions on cotton,
and he warned that there could be trouble in Hong Kong if
cotton is not taken into account, including the trade and
development aspects. Mauritius mentioned the elimination of
cotton subsidies, improving market access opportunities
through bound duty-free and quota-free access, and creating an
emergency fund for cotton producers.

- Mauritius (speaking for the ACP) bemoaned the push for
progress on agricultural market access, saying it is not in
the interest of most WTO Members, and he welcomed recent
proposals calling for policy space and flexibilities for LDCs
and small economies.

- Peru, Colombia, and Ecuador highlighted the importance of
tropical products, with Peru describing the issue as an
offensive dimension of special and differential treatment and
Colombia opining that some market access proposals offer
little hope on this issue.

- Bolivia, Brazil, Colombia, Cuba, Ecuador, Peru, and India
raised TRIPS/CBD, with Cuba calling for a ministerial
declaration in Hong Kong. Peru and Colombia said they seek an
obligation for patent applications to disclose the source and
country of origin of any genetic resources or traditional
knowledge, together with proof of prior informed consent and
an assurance that benefits are equitably shared.

- There seemed to be differences of opinion over
complementary approaches to request/offer in the services
negotiations. Australia and Norway expressed support; India
seemed willing to look at alternatives to request/offer;
Brazil and Thailand put the focus on existing guidelines; and
Mauritius registered "clear objection."

- Venezuela's representative made a singularly unhelpful
presentation, saying there seems to be little commitment by
developed countries for agriculture reform and warning the
developed world to be wary of making "false promises" to
developing countries. There are still debts to be paid on
S&D, she said, and the credit of some Members should be
cancelled.

Lamy's Conclusion

23. Lamy concluded by saying there seemed to be convergence
around his diagnosis that the negotiations are re-ignited. He
said he took a couple of other clear messages away from the
meeting, including the importance of transparency and the
centrality of development. On this latter point, he said he
agreed with the gist of India's message - the main development
gains from the round would indeed come from substantive
pillars such as agriculture. In closing, Lamy noted a strong
sense of urgency in the room - here we are talking of days, he
said, while at our next meeting we will be talking of hours.
Shark

© Scoop Media