By Aileen Kwa

Problematic Language in the Draft Ministerial Text

In general, the draft text in various areas highlights “convergence” or a “working hypothesis” in some issues, but not in others. These also happen to be those issues where the key players would like to “lock in” their interests. However, this is problematic since the text does not give offer similar “convergence” language in issues of importance to the developing countries.

Para 5 – delete “there has been some convergence concerning the reductions in Final Bound Total AMS, the overall cut in trade distorting domestic support and in both product-specific and non product-specific de minimis limits”. Or change “convergence” to “some discussion”.
Implication of Para 5: “Convergence” implies that there is acceptance of the offers on the table, primarily the US and EU offers to “cut” domestic supports. Unfortunately, both US and EU offers are simply “paper cuts”. These offers cut into the overly generous “bound” or allowable levels of support US and EU had provided themselves in the Uruguay Round. They do not actually cut into the applied levels of supports. The entire exercise is one of “box-shifting”, shifting supposedly “non-trade distorting” supports into the “Green” or “Blue Box”.
Accepting the “convergence” language in this paragraph implies that post-Hong Kong, it would be much more difficult to demand that US and EU reduce their supports. The US currently provides “trade-distorting” supports of US$ 21 billion. In spite their “offer” to cut “trade-distorting” supports by 53 – 60%, Their “offer” would still allow them to provide up to US$23 billion in supports. Similarly, EU has offered to cut trade distorting supports by 70%, yet this will allow them to increase supports by about 15 or so billion.
US supports amount to approximately US$74 billion per year, and that of the EU is close to 90 billion Euros per year. These overall levels of supports will be retained and the current dumping by US and EU in cotton, rice, wheat, diary, soy, beef, corn, will be maintained.
The paragraph has implications for the “cotton countries” since the US has said repeatedly that it will only treat cotton as part of the overall agriculture modalities.
US and EU are defensive about their domestic supports and this is a leverage the developing countries have over them and should use in the negotiations to bargain for broad flexibilities (e.g. broad Special Products [SP] and Special Safeguard Mechanism [SSM] provisions). Developing countries should not give this leverage away, whilst the language for SP and SSM (para 7) remains vague.
NON AGRICULTURAL MARKET ACCESS (NAMA) Para 13 – delete “there is a working hypothesis to use a Swiss Formula for these negotiations”.
Implication of Para 13: There is no agreement on a Swiss Formula in Geneva. Many delegations have put forward Swiss-type formulas (e.g. the Argentina, Brazil and Indian formula, the ABI, or the Caribbean formula) which provide developing countries with a lot more flexibilities. In particular, the Caribbean formula has not even been mentioned by the Chairman’s report (Annex B).
If this language is agreed to, developing countries will loose the leverage they have in demanding broad flexibilities (e.g. to leave a higher no. of tariff lines unbound, to bind at higher levels than currently suggested, and for tariffs cuts to be made on average, rather than on a line-by-line basis etc).
SERVICES Para 21: The developed countries plus India would like sectoral /plurilateral negotiations to commence, post Hong Kong (along the lines of negotiations in Telecoms and Financial Services of a critical mass of countries in 1997 in the WTO). This is proposed through para 21 of the draft text and Annex C. If plurilateral/sectoral negotiations are launched, this will erode completely the flexibilities enshrined in the GATS and push developing countries into very aggressive liberalisation, before their domestic suppliers are able to compete.
Brackets around reference to Annex C in para 21 were inserted at the General Council of 2nd December due to opposition by the large majority of developing countries to this Annex. Annex C will institutionalise the discussions currently taking place within “Friends Groups” on key sectors. In Geneva, the majority of developing countries have steered clear of the ambitions of the “Friends Groups”, composed of key exporting countries. Paragraph 7b of Annex C therefore forces countries into negotiations if requests have been made of them. It states that countries “shall enter into negotiations” if plurilateral requests have been made of them.
The other problematic item in Para 21 is reference to the intensification of negotiations “with a view to expanding the sectoral and modal coverage of commitments”. This, too, should be deleted.
The paragraphs of Annex C that are anti-development include:
Para 1 – on Modal targets. i.e. opening up services markets in all modes of supply including Mode 3 on commercial presence. The language on Mode 4 (movement of persons) however, is very limited. This paragraph should be deleted.

Para 2 –  on sectoral objective, it notes that “in order to provide guidance for the request-offer negotiations, the sectoral and modal objectives as identified by Members may be considered”. This should be deleted.

Para 7 – on how plurilateral negotiations should be “organized. This entire paragraph should go.

Para 4b – This is about government procurement, also driven by the EC. There is reference to government procurement in the GATS. However, any language that goes beyond having discussions should be deleted. Delete “including on proposals for a possible framework on government procurement”. The only proposal on the table is EC’s on market access in government procurement.

Para 11b – Under Timelines, 11b says that Members can submit “plurilateral requests” by date […]. Again, this will unnecessarily formalise the plurilateral negotiations.

Ministers should delete Annex C or ensure that its contents are radically different from the current version. In this regard, the ASEAN / AU / ACP alternative text already endorsed in Geneva and currently being considered by G90 ministers is a good basis to work from, although it should be further strengthened. There are two reference made to plurilateral negotiations in this alternative text and these references are best deleted. Eg. para 6 of the ACP text under “approaches”, and para 11a under “timelines”  – “plurilateral requests from a group of Members, if any, shall be submitted as soon as possible”.
Some countries have suggested changing para 7b on plurilaterals from “shall enter into negotiations” to “should enter into negotiations”. This is insufficient and will still provide a platform for exporting countries to commence these negotiations and coerce others into the room through political pressures.
The Annex A (agriculture) and B (NAMA) are Chair’s reports which were not negotiated texts and do not have the endorsement of the membership. They were submitted on the “Chairs’ own responsibility”. The annexes are biased in favour of the developed countries’ positions. They should either be dropped from the text, or there must be clear language to establish the fact that they are not to be used as the basis for negotiations post Hong Kong.