International Trade Daily
November 15, 2001
ISSN 1533-1350 Lead Report
By Daniel Pruzin and Gary G. Yerkey

DOHA, Qatar--Member countries of the World Trade Organization Nov. 14 agreed after six days of often difficult talks here to begin negotiations aimed at setting new rules governing trade in areas ranging from agriculture to services, and from intellectual property protection to import tariffs on industrial goods.

A ministerial declaration issued at the conclusion of the talks sets the broad parameters of new trade negotiations that will begin early next year. The objective is to complete the negotiations by Jan. 1, 2005.

To placate a reluctant India, ministers adopted a separate chairman's statement stating that a WTO member has the right to take a position on modalities that would prevent negotiations from proceeding after the fifth ministerial conference, due in late 2003, until that member is prepared to join in an explicit consensus.

WTO Director-General Mike Moore said that the "real work" of negotiating now begins. "It's a restatement of the commitment to multilateral rules," Moore said of the decision to launch the negotiations.

The WTO's fourth ministerial conference began Nov. 9 and was scheduled to end by midnight Nov. 13. Trade ministers worked through the night well into Nov. 14. Final agreement eluded their grasp time after time as various problems arose such as the European Union's steadfast refusal to accept language calling for movement toward the eventual phase-out of export subsidies for agricultural products.

EU, U.S. Claim Victory

Both the United States and the EU--often at odds over trade issues--claimed victory in the talks, saying that their interests had been protected.

A spokesman for European Union Trade Commissioner Pascal Lamy said the Doha round agenda represented a "very pleasing and significant" result for Brussels, even though it failed to secure an immediate mandate to negotiate on investment and competition policies.

Lamy conceded that the EU had been isolated over agriculture during most of the talks. He said that the EU, in particular, had rejected wording in the proposed agenda for the new negotiations committing countries to the e ventually "phasing out" of export subsidies. The EU in the end accepted the language with the proviso that it would not "prejudge" the outcome of the negotiations.

Lamy said at a news conference after the talks that, on several occasions, he had feared that the discussions would end without agreement--attributing his fear to what he called the "Seattle syndrome," referring to the fa iled attempt to launch new WTO talks in Seattle, Wash., two years ago.

Zoellick Optimistic

U.S. Trade Representative Robert B. Zoellick, who also spoke to reporters after the talks, said he is now optimistic that the Doha meeting will provide the momentum to succeed in the upcoming WTO negotiations.

"We are delighted that we now have overcome the stain of Seattle," he said. "This signal of forward progress on trade gives an important signal and very timely boost to the multilateral trading system."

The talks among WTO trade ministers were initially billed as an opportunity for developing countries to make their case for fairer treatment in the global trading arena. And it was suggested by the United States and the E U, among others, that developing countries would even be able to make some progress toward that goal at the talks in Doha.

Developing Countries Settle for Less

But in the end it was the developed world, led by the United States and the EU, that appeared to come away with what it wanted. The developing countries achieved a victory in only one area--albeit relatively significant-- dealing with intellectual property rights and public health.

A high-ranking developing-country official said that the United States had come to Doha with "limited" objectives--focusing on opening markets for agriculture, industrial goods, and services. And he said that the United S tates succeeded in advancing its interests.

"It has protected what it wanted to protect," the official said.

The official, who asked not to be identified, said that the EU, for its part, had also succeeded in achieving what it wanted--from a commitment from other WTO members to begin negotiations on investment and competition po licy to suffering minimal damage in the agricultural area.

"They can go home and celebrate," he said. "They got everything."

The official said that, in the meantime, developing countries took away virtually nothing from the Doha meeting--in part because they were divided on their objectives.

"The unity that we thought existed no long exists," the developing-country official said.

Edward B. Rugumayo, who headed the Ugandan delegation to the talks, told BNA that the only success for developing countries was in the area of intellectual property protection, where poorer WTO members won some increased flexibility in interpreting the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) to fight HIV/AIDs, malaria, tuberculosis, and other diseases.

"It's not much," Rugumayo said. "But it's something. The EU has been the major victor, and the United States has also won."

The ministerial declaration makes reference to the need to interpret TRIPs in a manner supportive of public health, a goal spelled out in detail in a separate ministerial declaration.

Implementation Text

The separate text on implementation spells out some 50 immediate initiatives that WTO members will take to help developing countries comply with existing WTO agreements and ensuring more flexible terms under these agreeme nts. The initiatives spell out actions relating to WTO agreements on agriculture, sanitary and phytosanitary measures, textiles and clothing, technical barriers to trade, trade-related investment measures, antidumping, cu stoms valuation, rules of origin, subsidies and countervailing measures, and TRIPS.

The debate on implementation at Doha focused on the sensitive provisions relating to textiles and clothing, in particular demands by developing countries for the application of more favorable methodology in applying so-ca lled "growth on growth" market access commitments in developed country markets.

But in the end, the United States and Canada remained firm in their opposition to the growth on growth demands, with the United States arguing that adoption of the demands would require legislative changes in Congress. Mi nisters eventually agreed that the issue should be addressed within the WTO's Goods Council.

Indian Minister of Commerce and Industry Marasoli Maran said Nov. 14 that India and other developing countries had won a "good deal" in the talks.

Some officials suggested that Maran took a deliberately uncompromising stand in the Doha discussions in order to win political points back home, where the WTO is unpopular. India's position on the Singapore issues, Lamy s aid, was "not extremely forthcoming."

Doha Mandate

The Doha ministerial declaration includes mandates to tackle the following issues, either through negotiations or work programs: implementation; agriculture; services; market access for non-agricultural products; TRIPs; t rade and investment; trade and competition policy; transparency in government procurement; trade facilitation; WTO rules (including antidumping and subsidy rules); dispute settlement; trade and environment; electronic com merce; small economies; trade, debt, and finance; trade and transfer of technology; technical cooperation and capacity building; least-developed countries; and special and differential treatment for the WTO's poorer membe rs.

Those issues covered by negotiations will be dealt with through a Trade Negotiations Committee (TNC) managed by the WTO's General Council. The TNC will hold its first meeting no later than Jan. 31, 2002, with the deadline for concluding the negotiations fixed for Jan. 1, 2005. A mid-term review of the negotiations will take place at the WTO's fifth ministerial conference scheduled to take place by the end of 2003.

As with earlier rounds, the negotiations will take place as a "single undertaking," meaning that an agreement in one sector will only be finalized once agreement is reached on all issues.

"It's a fairly respectable list" of issues, argued Stuart Harbinson, the Hong Kong diplomat and chairman of the WTO General Council who is credited by many with making the success of Doha possible through his management o f the preparatory process in Geneva.

Some Issues Delayed

Harbinson acknowledged that decisions on initiating negotiations concerning the four so-called "Singapore issues"--investment, competition, trade facilitation, and government procurement--have been put off until the WTO's fifth ministerial in two years. Nevertheless, "it may prove not to be such a bad thing if we start somewhat staggered," he said, citing the need to build capacity in developing countries to handle such difficult negotiat ions.

Lamy admitted that on several occasions during the late hours of the Doha ministerial he feared the meeting could collapse because of Indian intransigence on the Singapore issues.

"The process of getting consensus in this organization is in some ways much more unpredictable than in other organizations," the EU commissioner said.

Trade officials said that countries such as Canada and Japan were engaged in a sometimes comic filibustering effort during an all-night heads of delegation gathering in order to keep diplomats in the conference room while Chairman Youssef Hussain Kamal of Qatar and WTO Director-General Moore sought to hammer out a compromise acceptable to New Delhi. Had the weary delegates headed out of the room, they might have never come back, some pess imists feared.

Agriculture Phase-Out Language

On agriculture, ministers endorsed a mandate committing the membership to "comprehensive negotiations" on farm trade.

"Without prejudicing the outcome of the negotiations," ministers agreed the negotiations should aim for substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support.

The "phasing out" language on export subsidies proved to be the biggest sticking point on agriculture. The European Union insisted on the "without prejudice" clause as the price for accepting the text, arguing that it cou ld not accept pre-negotiation of the issue.

A compromise text that garnered support late Nov. 13 calling for the reduction of export subsidies "in the direction of phasing out" was shot down by Cairns Group member Argentina for being too weak. The 18-member Cairns Group of agricultural exporting nations sought language committing the membership to the elimination of export subsidies.

European Agriculture Commissioner Franz Fischler claimed the final text respected Brussels' demand that the language on export subsidies should not "pre-judge" the outcome of the negotiations by setting a zero target. "Af ter a long struggle, we obtained this," Fischler declared.

Lamy eventually accepted the language, with some modification, after trade ministers from the 15 EU member states provided him with a mandate to do so in a special meeting here on the margins of the WTO conference.

Fischler also claimed the negotiations would discipline all forms of export subsidies, including U.S. export credits and the subsidy element of state-trading enterprises found in some Cairns Group countries such as Canada .

Geographic Identifiers to Be Discussed

Also covered in the negotiations will be the protection of geographical indications for food products such as rice, cheeses, and hams. Negotiations will take place on the establishment of a global system of registration a nd notification of geographic indications for wines and spirits, with discussions on possibly extending such protection to geographical indications for other products such as cheeses, hams and yogurts to take place in the WTO's TRIPs Council.

Although Fischler admitted the text made no specific reference to those forms of subsidization, the goal was "implicit" in the language, he argued.

"For example, it is clearly mentioned that the documents which the different parties of the WTO presented within the [mandated] negotiations in Geneva are part of the negotiating process," Fischler said. "The European Uni on for example presented a paper on geographical indications, and that will be part of the process."

Special and differential treatment will be an "integral part" of the agriculture negotiations, ministers agreed.

Nontrade concerns will also be taken into account as part of the negotiations as required under the WTO's Agreement on Agriculture setting out the framework for future farm negotiations.

The modalities for establishing further commitments on farm liberalization will be set out by March 31, 2003. In addition, comprehensive draft schedules setting out the market access offers of WTO members must be submitte d no later than the WTO's fifth ministerial conference, due to take place in late 2003.

France had pushed the EU to agree on a deadline for submitting the schedules after the fifth ministerial gathering. Some EU officials said the push was a bid by Paris to pressure other members into accepting WTO negotiati ons on investment, competition and the environment at the fifth meeting by threatening to delay further progress in the agriculture talks.

Australian Trade Minister Mark Vaile said that with the new mandate, WTO members "have moved beyond the position where agriculture is being treated differently from industrials and services. This for the first time will m ove agriculture into the process of negotiation equivalence."

It will be the first time that global trade negotiations have been held since the Uruguay Round of talks under the General Agreement on Tariffs and Trade, the WTO's predecessor, which began in 1986 and concluded in 1993.

Environment Mandate

On the environment, the EU succeeded in getting a mandate to initiate WTO negotiations on three specific issues: the relationship between WTO rules and specific trade obligations set out in multilateral environmental agre ements (MEAs); procedures for regular information exchanges between MEA secretariats and relevant WTO committees; and the reduction or elimination of tariff and nontariff barriers on environmental goods and services.

The first concession on trade provisions in MEAs and WTO rules is seen as a significant concession for Brussels. The mandate would theoretically allow WTO members to negotiate terms ensuring that restrictions on trade und er agreements such as the Cartagena biosafety protocol (for genetically modified organisms) could be safeguarded under WTO rules.

The environment text also calls for discussions on clarifying WTO rules in relation to the effects of environmental measures on market access, relevant provisions under the Agreement on Trade-Related Aspects of Intellectu al Property Rights (such as patenting of life forms) and eco-labeling in the WTO's Committee on Trade and Environment (CTE). The CTE will report to the fifth ministerial conference on its work and make recommendations on future action, "including the desirability of negotiations."

In addition, ministers agreed to examine the relationship between TRIPs and the U.N.'s Convention on Biodiversity as well as the protection of traditional knowledge and folklore.

Antidumping, Subsidies

Officials representing U.S. industry, meanwhile, who also attended the Doha meeting, claimed mixed success in achieving their objectives in the area of antidumping and subsidies.

Earlier, the United States made a significant political concession by agreeing to negotiations "aimed at clarifying and improving disciplines" under the WTO's existing antidumping and subsidies agreements. The mandate, ho wever, states that such negotiations will preserve the "basic concepts, principles and effectiveness of these Agreements, their objectives and instruments."

Already, Senate Finance Committee Chairman Max Baucus (D-Mont.) has raised concerns. In a statement issued Nov. 14 in Washington, D.C., Baucus said, "I am extremely troubled by the decision to reopen the agreements reache d just a few years ago on antidumping and anti-subsidy measures. Both Houses of Congress have made it clear that they oppose negotiations to further weaken U.S. trade laws."

Zoellick, meanwhile, told reporters here Nov. 14 that House Ways and Means Committee Chairman Bill Thomas (R-Calif.) had told him in a telephone conversation Nov. 13 that the U.S. negotiators should not take the position adopted by Clinton administration officials in Seattle, i.e., refuse to talk about the trade law issue.

"Frankly, if we did," Zoellick said, "we wouldn't have had the launch of the round [this week]. I also just don't think it's appropriate for the United States to say we refuse to talk about other people's issues but they have to talk about our issues."

An association representing about two dozen U.S. companies and organizations, including Bethlehem Steel Corp., Micron Technology Inc., and U.S. Steel LLC, wrote the Bush administration and members of Congress last week sa ying that any negotiation in the WTO can only lead to "substantial weakening of the antidumping and countervailing duty laws...."

One industry source, who asked not to be identified, told BNA that the language in the final declaration opens the door to negotiations that could undermine U.S. trade laws.

But the source said that U.S. negotiators will be able to protect the integrity of the laws by pointing to the sentence in the declaration that says that the negotiations will begin on clarifying and improving the agreeme nts, "while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives...."

The source said that "instruments" refers to domestic laws that are used to protect against unfair trade practices--such as the antidumping, countervailing duty, Section 201, Section 337, and Section 301 laws in the Unite d States.

Investment/Competition

On the so-called "Singapore issues" of investment, competition, trade facilitation, and transparency in government procurement, members agreed to carry out two years of study on the respective issues, followed by a decisi on at the WTO's fifth ministerial conference in 2003 on whether these issues should be negotiated as part of the new round.

The study programs for investment and competition policy will focus on specific "core principles" such as transparency and nondiscrimination. For investment, another core principle will be modalities for pre-establishment commitments based on the "bottom-up" approach of the General Agreement on Tariffs and Trade, while on competition so-called "hardcore cartels" will be a subject of study.

The text fudges the mandate for incorporating the issues in the Doha trade round at a future date, stating that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, "by explicit consensus," at that meeting on modalities of negotiation."

Lamy denied that the fudged compromise on investment and competition which was needed to get India's support for the launch of a new round represented a setback for the EU.

Asked if the idea of including investment and competition within the single undertaking meant that the EU would not sign off on the results of a round unless India and others agreed to the negotiations, Lamy said the "ans wer to this question will be given at the fifth ministerial conference."

Some trade diplomats expressed surprise that the United States and EU allowed negotiations on the relatively noncontroversial issues of trade facilitation and transparency in government procurement to be pushed off until after 2003. Talks on transparency in government procurement have been taking place at the working group level in the WTO for the past five years, with the United States pushing for a final, separate agreement on the issue ever since the 1999 Seattle ministerial.

The original draft ministerial declaration drawn up by General Council Chairman Harbinson Oct. 27 would have provided for immediate negotiations on trade facilitation and transparency in government procurement, but the Af rican Group, headed by Nigeria, insisted that the decision be deferred until later.

Dispute Settlement

On dispute settlement, ministers agreed to negotiations on improving and clarifying the WTO's Dispute Settlement Understanding. Because discussions on DSU reform have already been under way in the WTO and are in an advanc ed state, the declaration sets a May 2003 deadline for completing the negotiations.

Ministers agreed in their declaration to continue the WTO's ongoing work program on electronic commerce and to maintain the moratorium on the imposition of customs duties on electronic transmissions, which was decided in May 1998 until the fifth ministerial meeting.

Labor Language

On labor, the ministerial declaration reiterates the WTO's Singapore ministerial declaration, which affirmed the membership's commitment to the observance of internationally recognized core labor standards. The declaratio n also notes the work soon to get under way in the International Labor Organization regarding the social dimensions of globalization.

The text is a setback for the United States and the European Union, which wanted to insert language citing the need for cooperation between the WTO and ILO on labor issues. Developing countries were adamantly opposed to any text linking the WTO's trade agenda to labor issues.

For non-agricultural products, the trade ministers agreed to reduce or eliminate tariffs and non-tariff barriers on products of particular interest to developing countries.

"U.S. companies continue to face high tariffs in many sectors," said Franklin J. Vargo, vice president for international economic affairs at the National Association of Manufacturers. "Reaching an early agreement on eliminating those tariffs on a sectoral basis is the surest way to fix that problem and to provide a needed stimulus to American and global economic activity."

White House spokesman Ari Fleischer said Nov. 14 at his daily news briefing that President Bush welcomed the WTO members' decision to launch negotiations on a new round. "This agreement has the potential to expand prosperity throughout the world and to strengthen the global economy. The president believes that open trade benefits America's farmers, workers and families; creates high-paying jobs for Americans," he said.

President Bush, in a Nov. 14 statement, said, "This bold declaration of hope by the World Trade Organization has the potential to expand prosperity and development throughout the world and revitalize the global economy."

Texts of the WTO Ministerial Declaration; Declaration on the TRIPs Agreement and Public Health, Implementation-related issues and concerns--Decision; Subsidies--proposed procedures for extensions under Article 27.4 (of the Subsidies and Countervailing Measures Agreement) for certain developing country members are available on the WTO web site