Highly Flawed Process in Services Talks Continues in Hong Kong
Dear Mr. Chairman,
It is regrettable that the Director-General Pascal Lamy failed to adequately redress the critiques we raised in the run-up to the Hong Kong Ministerial regarding the highly flawed and undemocratic process of the services talks in Geneva[1].

In addition to the problems in the services negotiations, Lamy himself had caused anger amongst many delegations in Geneva just before they left for Hong Kong. In transmitting the text to Hong Kong, he dropped the cover note that had been attached to the draft ministerial text. The cover note stated that “the texts in all of these annexes were presented on the responsibility of the respective Chairs. They do not purport to be agreed texts and are without prejudice to the position of any Member”.
The Hong Kong process of the past two days in services negotiations has been similarly biased and undemocratic. Many delegations are extremely unhappy with the process which the facilitator, Korean Minister Hyung Chong Kim, is managing:
1) At an open-ended meeting on services on the 16th, the G90 comprising the Africa Group, the Least Developed Countries and the Africa, Caribbean and Pacific countries had tabled their alternative services text, which deletes many elements that did not reflect their views. Other countries opposed to Annex C included Cuba, Indonesia, Philippines, South Africa and Venezuela. The latter do not regard Annex C as an appropriate basis for negotiations. However, in summing the meeting, Minister Hyung said that only 16 countries in their intervention were opposed to the text and wanted it reopened, whilst 26 countries wanted Annex C maintained. The Minister had counted the G90 as one Member!
2) Minister Hyung then went on suggest that if the membership still had not reached consensus on any new language by December 17th, he would simply remove the brackets to Annex C:
“I suggest we organize small groups to find an agreement and I suggest that if no agreement were to be found in the next 24 hours, we keep the text and we drop the brackets.” This echoes the same arguments made by the Chair of the Council for Trade in Services (CTS) in Geneva, Mexican Ambassador Fernando De Mateo, when he allowed himself the prerogative in October, to put into the text many elements proposed by the US, EC et al., but insisted that there had to be consensus before these elements could be removed.
3) The process to resolve these differences was not clarified to the whole membership on the 16th. Instead, a drafting committee was subsequently selected by unnamed individuals and without consultation with the entire Membership. This group convened last evening.
4) Despite the majority disagreeing with the content of Annex C, services was negotiated in a closed green room last night of about 30 Members, excluding most Members, and in the early hours of the morning when Ministers are weighted down by exhaustion. Moreover, it was not discussed openly amongst the whole membership till the fourth day of the ministerial.
5) The practice of “confessionals” convened by the facilitator, whereby members individually give their bottom lines and concerns to a few individuals (the facilitator Hyung, Secretariat staff Hamid Mamdouh, Director of the Services Division of the WTO, and the Geneva Chair, de Mateo), is highly coercive, non-transparent and undemocratic. There are even reports that Secretariat Staff Mamdouh had been telling Members that Annex C already enjoys a high level of convergence and that they should not try to change it.
This undemocratic process is creating a volatile situation whereby the facilitator and those associated with him are seriously losing the credibility of many Members.  Pushing such a process further is likely to cause a collapse of the talks in Hong Kong. Should this happen, the blame lies on the shoulders of the WTO secretariat and those associated with facilitating these talks.
Civil society groups also denounce the substance of Annex C and paragraph 21 of the Ministerial text referring to sectoral and modal objectives. This language will be the entry point for sectoral negotiations after Hong Kong. It will completely erode the flexibility enshrined in the GATS for developing countries. Instead, they will be forced into market liberalization before their local suppliers are able to withstand competition, with anti-development consequences.
We call for an end to the non-participatory, exclusive and undemocratic processes in Hong Kong, and for Annex C to be dropped from the Ministerial Declaration.
cc. Director General Pascal Lamy
cc. Korean Minister Hyung Chong Kim

[1] The exchange of letters between Director General Pascal Lamy and civil society organizations can be found at www.tradeobservatory.org.
These letters were written to Lamy when in Geneva, the Chair of the Council for Services, Mexican Ambassador Fernando de Mateo, had tabled a draft Ministerial text which contained many elements pertaining to complementary approaches, such as quantitative, qualitative, sectoral and modal targets which the majority of the Membership did not agree with. Only after six weeks of very heated opposition by almost 80 countries did the Chair drop quantitative targets from the text. However, he left intact language on sectoral/ plurilateral and modal targets which the majority still opposed. As a result of tough negotiations in the final General Council of 2nd December, reference to Annex C in para 21 of the draft Ministerial text was