The WTO media coverage over the past few days has been scathing for India and China. "U.S. slams China, India for putting Doha round into 'gravest jeopardy'" was the headline in the International Herald Tribune. "US: China, India threaten Doha round of WTO talks" read the Associated Press. "India blocking WTO talks - diplomatic sources" was the headline in Forbes. And "China throws up barrier to Doha agreement" was the headline in the British daily, the Guardian. So, are India and China the bad guys? Are they trying to destroy the Doha negotiations?
One of the big questions coming into this ministerial meeting was the extent to which big developing countries like China, India and Brazil, would be prepared to open their markets to imports from around the world. The Doha talks are now sticking on this. Brazil has accepted the deal on the table. China and India are unhappy at the extent to which they are being asked to expose their agricultural and manufacturing producers to outside competition. The U.S. has attacked both countries for putting the talks into the "gravest jeopardy" since the Doha Round started seven years ago. Other exporting agricultural countries like Uruguay and Paraguay also spoke out against these developing countries trying to retain policy flexibility to protect their markets.
Are India and China's positions legitimate?
Before I answer these questions, a few facts and figures. First, both India and China are still poor countries. India ranks 128 out of 177 countries and China ranks 81 out of 177 countries in the UN's Human Development Index. According to the UNDP, 16 percent of Chinese people and 34.7 percent of Indians live below the poverty line. Furthermore, there are massive income inqualities between rural and urban populations and between the rich and poor in both countries.
I think the concerns of China and India deserve attention at the WTO. Both countries have serious and legitimate food security concerns and an enormous number of livelihoods to protect. Supporting and building strong rural communities and decent employment is vital if both countries are to meet the development challenges ahead.
As importantly, it is not just China and India who are concerned about the effect of import surges on their manufacturing and agriculture sectors. They are supported by over half the WTO membership who share these concerns. It's hard to see how blasting other countries in the media is going to change that.
All of us, journalists, NGO representatives, delegates, attending the WTO ministerial here in Geneva are spending lots of time (and money) at the WTO cafeteria. No doubt the service there is excellent. Friendly waiters make it less painful to think about how many meals you've had in the same place over the past five days!
Ministers today, congratulated the service as well... but a service of a different kind. This afternoon was the "signaling conference" on services, where ministers discussed how they could further liberalize the services industries in their countries.
Coming out of the meeting on time (at 7pm), they all highlighted that discussions had been positive, with substantial "signals" coming from some of the major players. The EU and U.S. allegedly highlighted their ability to offer more access to their markets for highly skilled professionals - this was one of the long-standing demands by India.
It sounds like this "positive" meeting will add to the momentum that the Round gained yesterday. As a result, it is likely that the conference will extend into next week... probably until Tuesday or Wednesday. Good news for the WTO cafeteria.
How developing countries' concerns will be addressed in the coming days remains very uncertain. Many of them - including India, China, South Africa, Argentina, Indonesia - still have significant concerns with the proposals on agriculture and NAMA. But the tendency here right now is to overlook these concerns and blame others for not being more positive.
Issues like banana, preference erosion and cotton, remain to be dealt with. There is huge pressure to rush these issues. This is of great concern because there will be no time to properly consider the impacts of what is agreed to in a possible deal.
Negotiations ended tonight with general agreement on a set of numbers for agriculture and industrial goods (NAMA) that had been proposed by WTO Director General Pascal Lamy earlier in the day. Not all countries agreed, but most did, and so the Green Room members have decided to put this text aside for now, and to work on the remaining issues. Tomorrow there will be a meeting on services, called a "signalling conference." On Sunday there will be another Green Room meeting on agriculture and NAMA to get agreement on the remaining issues.
So what is in the Lamy compromise?
The document may look like a set of incomprehensible figures, but there is a lot of important stuff in there. On agriculture, the U.S. is being asked to reduce its ceiling of trade-distorting support to US$14.5 billion, down from its $15 billion offer earlier in the week. Developed countries will start cutting their agricultural tariffs at 70 percent and developing countries will start cutting their tariffs at 47 percent (two-thirds of the developed countries). Developed countries are being given a flexibility of up to 6 percent of tariff lines for sensitive sectors. Developing countries are being given 12 percent of tariff lines to safeguard food and livelihood security and rural development. Developing countries will have to cut these tariff by on average 11 percent, and they will be able to shield 5 percent of these lines from any tariff cut. There are also further details for the Special Safeguard Mechanism, which is a tool available to developing countries in case of import surges.
On industrial goods or NAMA, developed countries will have to reduce their industrial tariffs to under 8 percent. Developing countries have to reduce their industrial tariffs to between 20 and 25 percent. Depending on which level they choose they will be given flexibility to exempt some tariff lines from the tariff cut. But, developing countries will not be able to exempt entire sectors from the tariff cut. So for example, they will not be allowed to exempt the entire automobile sector from a tariff cut, but they would be able to exempt some products, like the engines, the car body and the car seats. Developing countries are also strongly requested to participate in negotiations to eliminate tariffs on certain sectors. If they participate in these so-called "sectoral initiatives" they will be allowed to cut their tariffs less.
The compromises being made so far to reach this agreement are killing any chance for a successful development round. The result is a complicated mess, reflecting a narrow set of commercial interests, rather than a vision to reform the trading system. So far, this deal fails on nearly every count to reach the Doha Round's original goals.
Numbers and rumours are circulating around the WTO about a possible deal for the Doha Round. We have found the document that lays out Lamy's ideas for how to conclude the Doha Round, specifically on modalities for agriculture and industrial goods (NAMA). It outlines details, including numbers, for how to reduce American and European subsidies and to reduce tariffs on agricultural and industrial goods for both developed and developing countries.
A group of around 30 ministers are meeting with Lamy in the Green Room to discuss whether they like the compromise that he has put on the table...
Today, WTO Director General Pascal Lamy was given support by the WTO members to continue his small group meetings with seven key WTO powers. He delivered a damning speech to the WTO membership, warning them that the next 24 hours was crucial and that if they showed no further flexibility, they faced the serious consequences of failure.
The G7 meeting started around mid-day and continued for around five hours. According to one delegate, Lamy circulated ideas for numbers on tariff and subsidy cuts in order to bridge the gaps between members. According to WTO sources, there were very encouraging signs of progress and very interesting ideas circulating in the G7 meeting. Pascal Lamy and the seven members are now taking their ideas to the larger group of members in the Green Room, in the hopes of building greater convergence with the others.
The mood in the WTO has lifted considerably in the last few minutes. The number crunching has begun. It is still unclear whether this will lead to an agreement or not.
One of the longest running disputes at the WTO concerns the banana trade. And once again, the banana dispute has popped up this week in Geneva as a stumbling block for negotiators. I sat down this morning with Alistair Smith, expert at Banana Link, to get the latest.
IATP: The WTO is trying to solve a long-standing banana dispute in Geneva. Can you explain to us what's at stake here?
AS: The so-called "banana war" has been bugging trade relations between banana producers in Europe, Africa and the Carribean countries, and Latin American countries for more than 15 years. The dispute revolves around the preferential access to the EU market that some African and Carribean countries enjoy as a result of historical relations. At the WTO, Latin American countries are fighting what they see as a disadvantage for them on the world market.
IATP: What's been proposed over the past few weeks to solve this conflict? Why is it so important in the current WTO ministerial?
AS: Developing countries involved swear they will not agree to a broader deal on Doha unless a satisfactory solution is found on bananas. Pascal Lamy proposed an agreement on July 12, that was accepted by the EU, but the West African and Caribbean countries think it goes too fast and want longer to implement the proposed tariff cuts. Latin American countries put forward a proposal to cut the high EU import tariff a little faster than in Lamy's proposal on July 21; they also offered to leave some other tropical products that are also important to the ACP (African, Caribbean and Pacific countries) out of the list for cuts to be agreed in the wider agriculture talks. Despite the inevitable doubts of the small Caribbean island exporters, we think the Latin American proposal could prove to be a very significant step towards ending the long-running banana wars. We know that most ACP Ministers are taking the Lamy proposal for tariff cuts over 6 years seriously, even though they have told the Latin Americans they want to keep negotiations on bananas separate from a deal on other tropical products. Some of the biggest Latin exporters, like Colombia and Costa Rica, have publicly stated this week that they can live with the Lamy proposal.
In short, at this critical juncture in Geneva, we believe that, as so often in the past, it is behind-the-scenes corporate lobbies that are endangering the banana peace. Governments and the WTO Secretariat on their own could easily broker the peace required, especially if special measures can be agreed for the small Caribbean island producers in the three Windward Islands and Jamaica.
IATP: Banana Link has been working for years with stakeholders of banana production and trade around the world to improve the sector's sustainability. In your view, what is the way forward on this question?
AS: We are hoping there is agreement on banana tariffs into the EU, because there are other more important issues that need to be addressed within the sector. This dispute has been a significant distraction for the last 15 years. We invite all governmental and private parties to turn their energies to making a real success of the international Multi-Stakeholder Forum on Bananas, scheduled to be launched in 2009. Once parties concerned can take their eyes off the all-consuming issue of euros per tonne duty, then, together with plantation workers' and producers' representatives, we believe that substantial practical advances can be made quite quickly on the range of social, economic and environmental issues facing the sector.
No, Freddy Mercury has not joined the show. Yes, the Doha talks have been saved for one more day. A late night Green Room meeting with around 30 ministers gave WTO Director General Pascal Lamy support to continue his small group consultations with the G7. The mood among members was slightly more positive as they left the Green Room, but there are still enormous hurdles to overcome. The G7 will start meeting again tomorrow (Friday) at noon. The Green Room of 30 countries will meet after that. Stay tuned for more...
The new group of seven key WTO powers (U.S., European Union, Japan, Australia, Brazil, India and the newly added member China), met until the early hours of Thursday morning to see whether they could thrash out a deal to save the Doha Round. The effort seems so have failed.
Only those that were in the room actually know what happened; and they are not talking. Rumors circulating around the WTO suggest that it was a long, hard and gruelling night. No progress to speak of, just a confirmation that the differences between the seven members remain wide, and that no one is prepared to make the next move. The talks could very possibly collapse tonight.
A statement by WTO Director General Pascal Lamy this morning confirmed that the seven countries "still remain too far apart," but he has not given up.
Thanks to the WTO’s excellent and archived web casting, I saw U.S. Trade Representative Susan Schwab announce the U.S. agricultural subsidies offer at her July 22 press conference. At the end of her prepared remarks, she said, “we need more ministers to start talking about what they can do, not what they can’t do.” Her remark challenged developed countries and developing countries to do more to open up their markets to U.S. agricultural and non-agricultural goods “in exchange” for the U.S. offer to cut $2 billion from its annual ceiling on agricultural Overall Trade Distorting Support, and for assurances that U.S. agricultural support programs would be exempt from legal challenge by other WTO members. The remark was in no way intended to include the U.S. among WTO members that would “do more” to negotiate changes to the WTO agreement on intellectual property (TRIPS).
On July 17, 108 WTO members submitted a proposal for “Draft Modalities for TRIPS-Related Issues." The proposal concerns three issues: 1) protecting genetic resources (GR) and traditional knowledge (TK) used in patented products; 2) creating a register of Geographical Indicators (GI) (e.g. “Roquefort cheese”) to help protect the sales of GI products; 3) expanding GI protections. The proposal is opposed by a small group of WTO members, including Australia, Argentina, Canada, Chile, Costa Rica, Mexico, New Zealand, South Africa and the United States. Perhaps even more importantly, the International Chamber of Commerce, the Intellectual Property Owners Association and the National Foreign Trade Council, representing patent holding companies, had written to Ambassador Schwab to warn her of the alleged damage to their financial interests if TRIPS were opened for re-negotiation.
Because the Doha Round is a “single undertaking” in which “nothing is agreed until everything is agreed,” it is difficult to understand why the United States refuses to negotiate on TRIPS. If the U.S. wants agricultural and non-agricultural market access, surely it understands that a promised $2 billion cut is an insufficient offer, particularly in light of its past refusal to notify agricultural subsidies to the WTO accurately and on time. What is such a promise worth, given the U.S. track record?
Furthermore, most economic modeling estimates that the results of the Doha agreements on agriculture and non-agricultural market access will harm or be commercially insignificant for most developing country members. Amending TRIPs to require that patent applicants disclose genetic resources and traditional knowledge used in patent products could lead to a system for licensing the use of GR and TK that might yield real financial benefits for many developing country members, especially mega-biodiverse members, such as Mexico and Costa Rica.
As the proponents of the amendment argue, and I reiterated in a Mexican Chamber of Deputies seminar on July 10, the TRIPs amendment is needed not only to protect GR and TK in patented products, but also to improve the general quality of patents. U.S. patent documentation has become so deficient that in May 2007, the U.S. Supreme Court ruled (KRS International Inc. v. Teleflex Inc. et al) that patent applicants had to furnish more and better documentation to satisfy the criteria for receiving a patent. The current state of U.S. patents is such that the patent examiner approves the claim of utility, “if you can spell it [the word “utility”], according to a lawyer interviewed in Peter Drahos and John Braithwaite’s Information Feudalism.
The U.S. may get its way on TRIPS by doing nothing but deny that there is a consensus to amend TRIPS. But it cannot hope to get a Doha deal with an offer to cut $2 billion in agricultural subsidies, and reporting those cuts to the WTO when it likes and how it likes. Nor can it begin to address the “patent pathology” that is killing important innovations and awarding dubious patent claims.
Today's "7" refers to the number of countries now left in WTO Director General Pascal Lamy's Green Room: U.S., EU, India, Brazil, Japan, Australia and China. Some see this as a sign of crisis. But as they were rushing out through the WTO lobby at 11pm tonight, ministers made it clear that they would keep working throughout the night.
On the substance of the discussions, no one is talking. For sure these seven countries have now engaged in serious bargaining. Whether they can agree is one question. The other question is whether an agreement reached among these seven will make its way to the broader membership. Although some countries were unhappy at being left out, the initial green room of 30 was by and large accepted as being representative. This group of seven is exclusive. It has no legitimacy to represent all 152 members. It is disappointing to see this step backward in the negotiating process at the WTO.