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European Commission To Place Doha Back On Track

EU- WTO: European Commission Proposes To Put Doha Round Of Trade Talks Back On Track

Following the failure of the WTO Ministerial meeting in Cancun, and after two months of intense consultations with EU Member States, the European Parliament and all European stakeholders (business, trade unions and civil society), the European Commission yesterday adopted a strategy paper aimed at contributing to the re-launch of the Doha talks.

The input received leads the Commission to conclude that the fundamental objectives of the EU in this negotiation remain valid: a clear preference for a multilateral trade system, a strong rules-making component alongside market access and the need to ensure that the negotiations do deliver a development round. But to take into account what has happened in Cancun and since, the paper recommends a revised strategy to achieve EU objectives, in the form of a refreshed and updated negotiating position in several areas. This paper will now be discussed with EU member states and the European Parliament.

Commenting on the Communication, which was sent to the Council and Parliament on November 26, EU Trade Commissioner Pascal Lamy said: “After the failure in Cancun, it was clear that ‘business as usual’ was not an option. We needed to have a deep look into what went wrong in Cancun and draw the necessary conclusions. We have listened carefully to all points of view inside and outside Europe, and we believe there is now enough support to get the train back on track. Indeed, the very strong feeling inside the Commission is that the multilateral system should be the EU’s priority number one to harness globalisation, to deliver on EU objectives, and to secure a real development round.”

“The clear lesson of Cancun is that no single player or group of players can deliver the Round or make the multilateral system work on his own. We need a major effort from all sides if we are to re-launch this year. Such efforts were rarely on show in Cancun, and a repeat of this would mean disaster for the multilateral system, and an effective end to the Round. While we can and are ready to make further adjustments in the EU position, what we need is a Round in which all contribute and make adjustments, developed and developing countries alike, according to their capacities, so that all Members, including the poorest, can effectively be part of the system, exercising their rights and responsibilities,” Commissioner Lamy said.

The Communication identifies those areas where the Commission believes there is room for flexibility in the EU’s position, including those areas where the EU has already put forward ideas for movement, and those areas where more movement is necessary from others. It also sets out ideas for limited reforms of the WTO, especially in relation to the management of future WTO Ministerial meetings, and to the ability of smaller WTO Members to take part effectively in the negotiations. Commissioner Lamy added: “My view is clear: the time is ripe to move forward, and we believe that what we are proposing gets the balance right in terms of firmness of position in some areas, and possible concessions elsewhere. It is of course for Member States and the Parliament now to consider these ideas, but I am sure we will be ready by mid-December for discussions in Geneva.”

Commenting on the proposal, EU Agriculture Commissioner Franz Fischler said: “We will do our part to get the Doha talks back on track. We have fundamentally reformed our farm policy, we have substantially moved from our initial position. The Doha talks will only succeed if other major players also start moving from their entrenched positions. We fully acknowledge that developed countries have to do more than developing countries, but the strong exporters have to do their bit as well. If we want to make progress, it is essential that the distinction between the trade-distorting impact of different policies is clearly recognised. If not, why bother to reform? Europe would be penalised for constantly reforming, for making its support more and more trade-friendly, while others would be rewarded for going in the opposite direction. I will seize the opportunity of the FAO Summit from 1-2 December in Rome to discuss our position with our trading partners, in particular with developing countries,” said Commissioner Fischler.

Post-Cancun reflection period

The Communication sets out the conclusions reached by the Commission on the four questions posed as part of the consultation after Cancun, based on the input received from Member States, the European Parliament, EU business and trade unions as well as NGOs:

On the question of balance between the multilateral and bilateral/regional trade negotiations, it is clear from all sides: multilateral negotiations should remain the European priority.

On “rule-making” and its relation to “market access”, it is also clear that there remains solid support for rules (whether on anti-dumping, on regional agreements, on the Singapore issues or on the relations between trade and the environment) as the necessary complement to market opening and as an essential pre-requisite to integrate developing countries better into the world economy.

On development, our consultations emphasise the importance of more open markets accompanied by trading rules, aimed at the integration of developing countries and especially the poorest among them into the world economy. It is not about absolving or sheltering poor countries from WTO commitments. It is about a gradual opening of developing country’s markets, first and foremost among themselves – south-south trade. It is about special and differential treatment for developing countries: longer transitions periods and technical assistance to implement WTO commitments. It is also about providing solutions for the world’s poorest countries – least developed countries (LDCs), landlocked countries or those particularly vulnerable to economic shocks. They will need a differentiated treatment among developing countries both in terms of market access – duty-free and quota-free access could be given to them by rich as well as emerging developing countries – as well as technical assistance which puts them in a position to assume greater commitments.

On WTO reform, a modest but feasible package of reforms focusing on the preparation and management of WTO Ministerial meetings, better participation of smaller Members and other means to improve the efficiency and inclusiveness of WTO negotiations is desirable.

What the Communication says

The Communication identifies areas where the EU can show further flexibility:

On Singapore issues (creating rules on competition, transparency in public procurement, investment and trade facilitation), the Commission proposes to show flexibility by considering each issue on its own merits rather than treating them as part of the Doha package. This opens the door to the possibility to exclude any one or all of the issues from the single undertaking and to pursue negotiations among those (many) Members willing to do so, still within the WTO but not formally linked to the other issues on the DDA.

This approach would allow the WTO to develop rules on these issues while accepting the reality that not all WTO members are ready to take this step now. Views gathered on trade and the environment stress the need to maintain the EU’s high level of ambition, to ensure that trade is supportive of sustainable development and the resolve to pursue in the WTO, the Johannesburg commitments. The Commission is, however, ready to show flexibility in the means to reach these objectives.

On the relationship between Multilateral Environmental Agreements (MEAs) and the WTO, it is now proposed to focus more on a political commitment to ensure coherence between environmental and trade rules. On environmental goods and services, the Commission proposes that market opening is aimed primarily at benefiting developing countries. Finally, it is proposed to enhance developing countries’ ability to address trade and environment issues through technical assistance.

Geographical indications (Gis) remain a powerful instrument to support rural development across the world, building notably on the diversity of the world’s agriculture. The EU continues to pursue three main objectives in the negotiation: the extension of the level of protection currently available to wines and spirits to other goods; the rolling back of a limited list of Gis in use in countries where the Gis did not originate and the creation of a multilateral register for Gis. However, on the latter, the Commission is ready to show flexibility as to the specific arrangements for the creation of a multilateral register. On commodities, the Commission supports the launch of a commodity initiative within the WTO aiming at raising the profile of the issue. While this was proposed by preparatory texts to the Cancun conference, the issue was never properly discussed. For its part the EU intends to adopt an action plan early 2004.

Areas where the EU has already put forward ideas for movement and where negotiations could now seriously commence:

On agriculture, the Communication recalls the number of times the EU has adjusted its position just in the course of the last year – from our offer of substantial reductions in the amber box – the most trade distorting support – to the acceptance of disciplines over the blue box. But in other areas, EU flexibility has not even been picked up by others: for example, despite our offer to eliminate export subsidies on a list of products of interest to developing countries, no country has come forward with the names of such products. Moreover, on market access, it is time others picked up the ball, for example, in providing duty-free and quota-free access for the least-developed countries to their markets. Such moves from emerging developing countries would be a means of ensuring compensation for the erosion of preferences of LCDs in rich country markets.

On cotton, as part of the agriculture negotiations, an effective and specific solution should be sought in the WTO to the plight of the African countries. It should contain three key elements: an explicit commitment to grant duty and quota-free access for least developed imports, as the EU already provides through the “Everything but Arms” initiative.

A substantial reduction of the most trade-distorting domestic support and the elimination of export support, where the Commission will include cotton amongst products of interest to developing countries in the list for which EU export subsidies would be eliminated. Given the urgency, this initiative, while being integrated within the agricultural negotiations, could receive a specific treatment, for example a specific timeframe for implementation. In addition, aid and development measures should be pursued in parallel with the relevant international organisation to support modernisation and restructuring of the cotton sector in least developed countries. The Commission will make further proposals in this area.

The Commission believes we need stronger rules on fair trade (anti-dumping, subsidies) to protect domestic industries against unfair trade practices while at the same time reducing the risk of abuse for protectionist reasons. The EU has already tabled ambitious proposals to improve existing rules and it is now time to move into substantive negotiations.

Areas where flexibility is needed from others:

On industrial tariffs, the proposals for decreasing tariffs on offer at Cancun fell short of those needed to deliver on the Doha mandate: the exceptions and exclusions from tariff reductions, especially by developing countries, would have resulted in a very low level of engagement. Taking into account that trade in industrial products represents around 90% of world trade and over 70% of developing country exports, the Commission believes this is an area where other countries and in particular emerging developing countries need to show a higher level of commitment. This is essential to open up South-South trade. For its part the EU maintains its proposal to decrease tariffs according to a single formula, to address tariff picks and tariff escalation and to negotiate further reciprocal reductions for textiles and clothing tariffs to as close as possible to zero.

On trade in services, the Commission believes that, WTO members and in particular developing countries need to participate more actively in the negotiations by tabling offers to open up trade in services. The EU for its part will maintain its proposals to open trade in services, in particular those aimed at developing countries such as temporary entry of professionals (Mode IV) while maintaining a high level of protection for public services in the EU.

Proposals to improve WTO functioning

The failure in Cancun showed important organisational and procedural shortcomings, which the Commission believes can be remedied in the short term with a relatively modest but feasible package of reforms. Such a package of reforms, can be perfectly combined with the on-going negotiations, addressing issues such as improvement in the preparation and management of Ministerial conferences, as well as in the participation of smaller developing countries in the negotiating process.

Background

In order to prepare this Communication, consultations have taken place with Member States, with the European Parliament, with business, trade unions as well as NGOs. Contacts have also taken place with third countries representatives.

The Communication will now be discussed at an informal meeting of EU Trade Ministers, as well as with the European Parliament on 2 December. The issue will also be discussed at the EU General Affairs Council on 8/9 December.

More information about the EU and WTO at: http://europa.eu.int/comm/trade/index_en.htm More information about the EU and the WTO farm negotiations at: http://europa.eu.int/comm/agriculture/external/wto/index_en.htm

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