Mood at WTO gloomy as 'Ministerial Green Room' convenes

A Mini-Ministerial meeting was under way at the WTO this afternoon in an attempt by the Director-General Pascal Lamy to provide some political momentum to the faltering preparatory process for the Hong Kong Ministerial conference in mid-December.

There have been several "mini-Ministerials" before, but they have been organised and hosted by one or the other of the WTO Members. This one is unique in that it is held at the WTO premises and was convened by the Director-General in his capacity as chair of the Trade Negotiations Committee.

During the period of the General Council meeting at the end of July 2004, a super Green Room meeting of over 20 Ministers present in Geneva (and some Ambassadors) was held, but that was convened and chaired by the then Chair of the General Council, the Ambassador of Japan. And that meeting was linked to the General Council meeting then taking place.

That Green Room meeting over two days finalised the draft of the July Package that a few hours later was endorsed by the General Council, to become the July Framework which is the main basis for the current negotiations.

Perhaps the WTO Secretariat and its Director-General believe that the mini-Ministerial Green Room format that largely produced the July Framework is a suitable one that will now save the Hong Kong Ministerial from being termed a "failure."

Lamy coordinated the WTO Green Room mini-Ministerial, causing delegates to whisper that the TNC Chair was clearly taking centre stage in the negotiating process, unlike previously (as in the preparations for Seattle or Doha or Cancun) when the then General Council chairs were in the driver's seat, with the then DGs by the side.

"Lowering of expectations for Hong Kong" was the term that seemed to be most used in the WTO corridors today, as delegates mulled over reports (printed and word-of-mouth) that the London meeting the night before of Ministers of the four members (US, EU, India and Brazil) plus special guest Japan had failed to produce a breakthrough.

Talk was rife that major players were intensifying a "blame game", with the European Union successfully shifting the Ministerial-level negotiations away from agriculture, which had been almost the sole focus of recent Mini-Ministerials. The EU Trade Commissioner Peter Mandelson made it clear in London that the EU could not (or in any case would not) go any further in agriculture than its 28 October offer, so there was no point talking any more about improving it.

Supported by the US, the EU insisted that the London meeting focus instead on NAMA and services. Mandelson reminded that the EU's demands that developing countries open up in these areas are conditions for sticking to its agriculture offers.

Since the EU agriculture offer, especially in market access, is considered stingy, the Mandelson stance has been taken to mean keeping a very high "ambition" in NAMA and services while maintaining a low ambition in agriculture.

Interviewed by the BBC, the Indian Commerce and Industry Minister Kamal Nath on Monday night aptly described the EU position as "giving an inch and asking not just for a foot but a mile." He had also stressed at a press conference that India's main interest was defence of its small farmers and that India would not accept extreme demands for it to liberalise in agriculture and NAMA.

He called the EU's proposal in NAMA (that developing and developed countries have the same coefficient of 10 in the tariff reduction formula, which implies very steep cuts for developing countries' industrial tariffs) a "non starter."

Brazil was clearly unhappy that the London talks shifted away from agriculture, since the main yardstick of whether the Doha negotiations succeed has been the degree of real agricultural liberalisation in the developed countries.

Many developing country delegates at the WTO today shared Brazil's unhappiness. They privately viewed the EU's move to set aside the agriculture talks, and the US's support of that, as a tacit agreement between the two WTO majors to accept that each of them had reached its bottom line in agriculture, to "forgive" each other for that, and to team up and seek maximum concessions from developing countries in NAMA and services.

An Ambassador from a developing country noted that at the London talks, the EU could have taken the gentleman's option of apologising for its weak agriculture offer and signalling that the ambition it had set for NAMA and services could now be lowered.

"There was no apology or lowering of its demands made of developing countries," said the Ambassador. "Instead, it gave developing countries a slap through its agriculture offer, and then persisted with its arrogant demand to extract blood from them in NAMA and services."

The angry mood among developing country delegations in the corridors downstairs seemed to indicate that it would be no easy task for the EU and US to take those delegations invited to the "super Green Room" meeting upstairs for a ride.

According to press reports, the Brazilian Foreign Minister Celso Amorim, had told the London meeting that Brazil's ambition level in NAMA and other areas would be proportionate to what it gets in agricultural market access.

But the EU proposal seemed to Brazilian officials to be way off the mark: in their calculation, the EU was asking developing countries to cut industrial tariffs by 75% on average but offered to cut its own agricultural tariffs by 39%. And if sensitive products (subject to lower than formula cuts) are included, the EU cut would fall to 34% or less.

Amorim told the meeting that if the EU accepted the G20's agriculture market access proposal, the EU would have to cut its agricultural tariffs by 54% on average, then Brazil would consider the scenario of cutting its bound industrial tariffs through NAMA negotiations by about 50% on average. This would imply acceptance by Brazil of a coefficient in the Swiss formula of 30.

However, if the EU did not accept the level of cuts proposed by the G20, Brazil was only willing to consider the scenario of applying a NAMA coefficient of 60, which could imply a 35% cut in its average bound tariff.
This compares with the 39% average cut in agricultural tariffs for the EU contained in the EU's 28 October proposal. (The EU however claims that its proposal entails a 45% average cut for itself).

"By the look of things, the EU and US will not accept lowering of their demands on the developing countries," said another developing-country diplomat in the corridor, as the Green Room meeting was going on.

"They seem intent to turn the spotlight away from agriculture, where they have defensive interests and cannot offer much, and to focus attention on areas where they have offensive interests, and make un-reasonable demands that the developing countries would be wise to reject.".

Most developing country delegates seem to share this view, that the EU (now supported by the US) hope that through this tactic the blame can be shifted to (or at least shared by) the developing countries, should the Hong Kong Ministerial meeting fail to deliver the full modalities it was supposed to.

Perhaps this explains the very brief statement issued by Mandelson on Tuesday, following the London meeting. "I am not in the business of scaling down ambition. If we do not deliver ambitiously on the Doha Round as a whole we risk losing or compromising Doha's key development component. That is not acceptable to Europe. I have been warning for months of the dangers of restricting our negotiations to agriculture. We have now broadened the discussions and we should concentrate on making up lost time."

It should not be difficult to point out the contradictions in this statement. Many development and trade experts, and many developing country policy makers and delegates believe that the so-called high ambition set by the EU for developing countries to open up their economies would in fact damage if not destroy "Doha's key development component." And that the low ambition shown by the EU for itself in agriculture would also endanger the possible development benefits of the Doha agenda.

By late afternoon, it was not clear what the Green Room meeting had decided or not decided on.

According to a trade official, there were 27 members invited to the meeting. These included the EU, US, India, Brazil, Japan, Canada, Switzerland, Hong Kong, Zambia, New Zealand, Australia, Korea, South Africa, Malaysia, Lesotho, Benin, Chad, Thailand, Argentina, Mexico, Costa Rica, Jamaica, Egypt, Kenya, Pakistan and China.

The developed countries were represented by their Ministers. Many developing countries were represented by their Ministers or Vice Ministers (these include India, Brazil, Zambia, South Africa, Lesotho, Benin, China and Egypt) while the remainder were represented by their Ambassadors.

It is expected that on Wednesday there will be small meetings, some involving Ministers, of groupings such as the G20, and perhaps the Five Interested Parties in agriculture. However, some of the meetings scheduled may depend on what happens at the meeting today.