Hong Kong 13-18 Dec. 2005

The Sixth WTO Ministerial Conference  
Hong Kong, China, 13 to 18 December 2005.

Day 2: Convergence elusive on first full day of consultations; cotton also discussed

First consultations on agriculture, non-agricultural market access and development issues show that differences remain on a number of issues, the ministers handling these issues reported to heads of delegations at an evening meeting on 14 December 2005.

They had been asked to “facilitate” consultations on these subjects by the conference chairperson, John Tsang, Hong Kong’s Commerce, Industry and Technology Secretary. He told the heads of delegations that time is running short, so they need to move quickly to negotiations that are based on a text.

At a separate formal meeting on cotton, a number of African countries called for a clear decision on this at the Hong Kong Ministerial Conference, arguing that failure to reach agreement would undermine the credibility of the WTO.
  

Heads of delegations  Informal meeting 5 pm

When chairperson John Tsang introduced his facilitators, he made clear that their work was in no way a substitute for the heads of delegation process and would not distract from the decision making rights of WTO members. Rather the task of the facilitators was to help generate the consensus that will be needed to approve any text emerging from these negotiations —any decisions taken here can only be taken by the membership as a whole, he said.

This was the first informal heads of delegations meeting, coming towards the end of the first full day of consultations with contacts between the delegations accelerating. Secretary Tsang said he would hold heads of delegations meetings every day at the same time to keep ministers fully informed. He said he would hold other consultations as well, to help build consensus.

He told delegations that he has asked Minister Hyun Kim of Republic of Korea to consult delegations on the services part of the draft ministerial text. And said that should any delegation have any views it wished to convey on rules, delegates could do so through the facilitator at large, Jonas Støre of Norway, who is standing by should his services be required.

Three of the facilitators reported on the consultations they held on 13 and 14 December (details below and in the Day 1 news story).

Kenyan Trade and Industry Minister Mukhisa Kituyi, who facilitates the agriculture discussions, reported that “no great advance has been made on these issues so far.”

Pakistan’s Commerce Minister Humayun Khan, who facilitates non-agricultural market access, said the members’ main differences were about how ambitious the market opening should be and how this related to flexibility. He said that delegates indicated a willingness to find middle ground but continued to adhere to maximalist positions. He said it was “time to start breaking the ice if we are to move at all.”

The facilitator on development issues, Foreign Trade and International Cooperation Minister Clement Rohee of Guyana, said that while all development issues are important he intends to concentrate initially on the least-developed country proposals contained in Annex F of the draft ministerial text and specifically the question of duty-free, quota-free market access for least-developed countries.

He said he does not have a mandate to discuss some issues raised in his consultations because they belong in the agriculture or non-agricultural market access negotiations. This is particularly true of the rather divisive issue of preference erosion, he said.

On the issue of duty free, quota free market access for least-developed countries, Minister Rohee said his discussions went well beyond the technical level and that resolution of this matter could only come through intervention at the highest political levels. While divergences existed, he said, he remains hopeful members can arrive at a way forward.

Agriculture 
Group meeting 11:30 am

This first agriculture meeting open to all members focused on what members considered to be the tasks for ministers, with some apparently conflicting advice for Minister Kituyi on what the aim should be.

Among the suggestions were: to concentrate on the less developed issues flexibilities in market access particularly for developing countries; to try to settle the end date for export subsidies and deal with the basic level of ambition for market access and domestic support; to aim for a balance where flexibilities and ambition are linked and for “parallelism” in eliminating export subsidies and disciplining other export measures; and to focus on developing countries’ issues such as cotton and market access for tropical products and crops produced as alternatives to narcotics.

This does not necessarily reflect the full range of views among all members because a number of groups did not speak. The meeting lasted over its scheduled hour and the “facilitator” said it would resume at 11 am the next day (Thursday 15 December), when he would give priority to those who had not spoken.

Minister Kituyi had already held consultations with a number of groups and individual members and he said he would continue to do so. He particularly urged members to negotiate among themselves because they do not want attempted compromises to be imposed on them. If the approach is to be “bottom-up”, the compromises have to come from the members, he reminded them.

The purpose of this first meeting was to start looking for compromises, Minister Kituyi said. He urged them not repeat long, detailed and well-known explanations of the reasons for their positions. “We are here to find compromises between positions — not to tell others what they already know.”

He said the Ministerial Conference is the best chance in a long time to find compromise: “Our diplomats in Geneva and our experts from capitals have not succeeded and now it is for ministers to show leadership and take responsibility and calculated risks.”

Part of the purpose of the meetings open to the full membership is transparency. Minister Kituyi informed the membership that he had already met the US, EU, four cotton proponents, G-10, G-20, Cairns Group and Japan and that he would continue to meet others.

“I encourage you to negotiate with each other and not to wait for me to invite you to consultations,” he said. Countries or groups that fail to do that will miss the opportunity to “contribute” to the outcome, he cautioned.

In the discussion: Some countries sought agreement on an end date for export subsidies with the understanding that disciplines on export credit, food aid and exporting state trading enterprises would also have to be agreed eventually. Some of these also argued that the level of ambition for market access (the tariff reduction formulas) have to be settled before flexibilities can be sorted out.

Some others more broadly stressed the priority they give to market access, one citing World Bank figures indicating that the largest gains from an agreement, including for developing countries, would come from improved market access.
Another group stressed the need to focus on flexibilities first, so that countries can be confident about making ambitious commitments more generally, or because they see flexibilities as important for developing countries.

A group of about a dozen Latin American countries stressed their call for developed countries to give duty-free and quota-free market access to tropical products and alternatives to narcotics from developing countries.

One member stressed the need for balance and parallelism: the tariff reduction formula and flexibilities are linked and should be discussed together, and the end date for export subsidies cannot be agreed before the issues of export credit, food aid and exporting state trading enterprises are settled.

  
Development issues 
Group meetings 14 December, 4 pm, and 13 December 2005, 5 p.m.

The meeting on 14 December was a transparency exercise for Minister Rohee to report on his consultations with delegations in groups or individually. This was similar to the report he gave to the heads of delegations meeting (see above).

At an earlier meeting on 13 December, members raised issues including: special and differential treatment for developing countries, food importing countries, trade and the transfer of technology, trade and debt, commodities, supply-side constraints, aid-for-trade, cotton, implementation (including intellectual property and the Convention on Biological Diversity) and the erosion of preferences.

Some linked some of these issues to technical assistance and capacity building, and some supported the package of proposals for least-developed economies and announced new financial assistance.

Minister Rohee concluded that some of these issues are directly related to the specific development agenda, while others need to be discussed in other negotiating groups such as agriculture and non-agricultural market access.

  
Cotton 
Formal plenary session 8 pm

The four countries that had originally proposed the cotton initiative (Benin, Burkina Faso, Chad and Mali) called for members to act quickly and concretely, in order to help countries escape a situation that the Chad minister described as worse than misery. They blamed subsidies in some rich countries on depressed prices and repeated the proposal they submitted to the Cotton Sub-Committee in Geneva a month earlier.

Some other African countries (Niger, Cameroon, Guinea, Uganda, Ghana and Rwanda) supported the proposal and said they are also affected. India described the cotton situation as a “bleeding wound on the conscience of the world”, Brazil said the G-20 considers this to be a priority issue in Hong Kong, Australia said a breakthrough in the agriculture negotiations is needed to deal with the cotton problem, and the EU appealed to all WTO members to work for a solution, saying it had opened its markets and reduced its subsidies.

The US appreciated other countries’ restraint in not mentioning the US by name and accepted that as the major subsidizer it has a responsibility to deal with the problem, which it will not shirk. Part of this is happening with new proposed legislation aimed at scrapping the export subsidies that a WTO dispute panel ruled was illegal, the US said.

But the US added that 11 studies show that the impact of the subsidies on prices is considerably less than alleged and therefore the problem also arises because of supply constraints, which the African countries also mentioned. For this reason, the US is also working on development assistance for the four cotton countries to help increase yields and tackle such issues as marketing.

The US concluded it has had good meetings with the “Cotton Four” and will continue to work for a solution.