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by Martin Khor

Two important meetings recently revealed deep differences still among member states of the World Trade Organisation as the clock ticks towards the end-July General Council meeting which is supposed to adopt a Declaration that the Cancun Ministerial conference failed to do last September.

This article examines the four key issues that will make or break the July meeting, and the differences that remain within each of them.

Countries at the World Trade Organisation are still far apart on all the key issues, just three weeks before the deadline of 27 July for them to reach agreement and salvage the current trade negotiations, known as the Doha programme.

Two important meetings recently in Geneva which were meant to bring the WTO members closer together, instead showed up how wide their differences are.

'I must say that, from yesterday's meeting, the picture is not a reassuring one,' said the chairman of the WTO General Council, Japan's Ambassador Shotaro Oshima, on 1 July.

The meetings were of the Trade Negotiations Committee (TNC), which oversees the negotiations of the Doha programme, on 30 June and an informal meeting of the heads of delegations (HOD) the next day.

The TNC meeting received reports from the various committees on the state of negotiations, whilst the HOD meeting saw an informal exchange of views among the WTO Ambassadors on how their countries see the situation.

The WTO is trying to recover from the debacle of the collapse of its fifth Ministerial meeting in Cancun last September. A draft Declaration was produced at that meeting, but was rejected by many member states the night before the meeting ended, and there was too little time and too many gaps to fill to salvage either the draft or the meeting.

As a last act before that meeting ended, the Trade Ministers instructed the WTO's General Council in Geneva to complete what they could not by mid-December.

But that deadline went by without any decisions. A new deadline was set, for a special meeting of the General Council on 27-29 July, to consider and adopt a new Declaration containing decisions on key issues.

This is to be the document that the Ministers would have signed in Cancun, if they had reached agreement there.

The end-July deadline is seen as 'immovable' because of two political factors. Firstly, the United States will soon be engrossed in presidential elections, with a probable change of cabinet, whether there is a new President or not. So the present Trade Representative Bob Zoellick and his team will not be able to have much say on WTO matters after July.

Secondly, the President and Commissioners in the European Commission will be changed in a couple of months. Thus, after the summer break, the present Trade Commissioner, Pascal Lamy, will no longer be able to function effectively.

Leading WTO officials are thus warning everyone that if the July deadline is missed, it will take a year or even two years before the negotiations can pick up sufficiently again for key decisions to be made.

Oshima squashed speculation that some new deadline for later this year could be set if the July meeting fails again.

'I am aware there has been speculation recently that the July deadline may not be a firm cut-off date,' he said. 'Let me be very clear that I am thoroughly committed to concluding the exercise by the end-July meeting, and I would not like there to be any doubt of the end-July deadline.'

On four of the key issues, however, there seems to be deadlock, and it would take a near-miracle for them to be resolved in the few remaining weeks. The issues are agriculture, non-agriculture products, the Singapore issues, and the development issues.

First, on AGRICULTURE, there are big differences not only between North and South countries, but also between the United States and the European Union.

One of the problems is that the US is insisting on a formula to cut tariffs drastically, which the developing countries are vehemently opposing. Another problem is that the US and EU have still not clearly committed to significantly reducing their domestic subsidies and to eliminating their export subsidies, despite their earlier promises to do so.

A meeting on agriculture recently failed to narrow to gaps. It is generally agreed that unless there is a solution on agriculture, there will be no 'movement' on other issues.

On NON-AGRICULTURAL PRODUCTS, the US, EU and other developed countries still insist that the developing countries must drastically cut their tariffs, under a 'non-linear formula' in which the higher the tariffs, the more drastic the reduction rate.

This is resolutely resisted by the majority of developing countries which fear that such a decision will result in a flood of cheap imported industrial goods. This in turn would ruin their local industries, reduce government revenue and increase their trade deficits and external debt.

The developing countries want to have the flexibility, which has always been available to them, to choose their own rate of liberalisation, or at least to have a milder formula for tariff cuts.

However, the chairman of this issue, backed by the industrialised countries, keeps insisting that there should be a 'non-linear formula' determining the tariff reduction exercise, to the frustration of many developing countries. A clash is very likely if the Chairman insists on this formula in the draft Declaration.

On the so-called four SINGAPORE ISSUES of investment, competition, transparency in government procurement and trade facilitation, most of the developing countries are now rallying behind a call to remove the first three issues from the WTO's agenda altogether.

They want to get rid of the idea of launching negotiations or even to continue with any further discussions on these issues.

On that basis, they would be willing to intensify the on-going discussion on the remaining issue (trade facilitation), with a view to eventually starting negotiations for a new agreement, provided they get some guarantees first at the discussion stage.

Among the guarantees are that the agreement will not be legally binding, and that developed countries will help meet the developing countries' costs of implementing the agreement.

However, the EU, Japan and some other developed countries want to keep the first three issues inside the WTO at a low-level discussion level, so that one day they can re-ignite these issues into a full-fledged negotiation towards legally binding agreements.

They also want the end-July meeting to immediately launch negotiations for a trade facilitation agreement that is legally binding.

Thus, the developed and developing countries still disagree on how to proceed on the Singapore issues. This was admitted recently by General Council chairman S Oshima, who told the HOD meeting: 'Members remain far apart on a number of key questions, and a decisive momentum for an agreement in July has yet to be built.'

On the DEVELOPMENT ISSUES, there have hardly been discussions on them after Cancun. So the developing countries are frustrated that once more the issues that are important for them are not paid any attention.

There are two key areas here. The first is a set of measures to make effective and operational the principle of special and differential treatment for developing countries in the WTO rules.

The second is a set of 'implementation issues', or proposals to solve the problems faced by developing countries in the implementation of the existing WTO agreements. These issues have not been satisfactorily considered, let alone solved, and there is no chance of doing it by the end of July.

The developed countries will try to cover up this gap through wonderful rhetoric, as in the past, with words such as that 'we reaffirm that development is at the centre of our concerns'.

Whether the developing countries can live with that, or instead demand some stronger commitment in deeds, remains to be seen.

The time-table that emerged from the recent meetings is that a first draft of a Declaration will be prepared by the General Council chairman and the secretariat and circulated anytime between 9 and 14 July.

The WTO member states can then react to that draft through comments and proposed amendments.

What will happen after that was not announced. Presumably a second draft will be produced, but whether it will be done before or during the 27-29 July Council meeting is not known. It may also be possible that if there are too many disagreements, a second draft may not even materialise.

The only 'sure thing' is that the negotiations will intensify in the next few weeks as the end-July deadline approaches. Much of the consultations will be in Geneva, but some of the serious talking will also be done by Ministers and senior officials outside Geneva.

- Third World Network Features

(The writer is Director of the Third World Network).

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