ECA Geneva Liaison Office Monthly Report for May to June 2003

1.0 Overview

This Report, which will become a monthly report, covers activities during the months of May and June 2003 in the two major trade organizations based in Geneva, the World Trade Organizations (WTO) and the United Nations Conference on Trade and Development (UNCTAD). The Report also highlights activities in which the ECA Geneva Liaison Office participated and contributed substantively.

WTO discussions on the current round of multilateral trade negotiations, called the Doha Agenda, continued in the various Committees and Negotiating Bodies. During the month of May, the Director General of the WTO issued a "checklist of issues" in preparations for the Fifth WTO Ministerial Conference, which provides a synopsis of the issues to be discussed at Cancun. At UNCTAD a number of expert group meetings were held on various issues and preparations for UNCTAD XI continued. ECA also participated in the Second International Forum on Trade Facilitation organized by the Economic Commission for Europe (ECE) in collaboration with other regional commissions, including ECA.

ECA organized, jointly with the African Union (AU), in Mauritius from 11 to 13 June 2003, a High-Level Brainstorming Meeting of African Trade Negotiators Preparatory to the Fifth WTO Ministerial Conference. The recommendations and conclusions of this meeting served as important inputs into the Meeting of Senior Officials as well as the Meeting of African Ministers of Trade held in Mauritius from 16 to 20 June 2003.

2.0 Activities at the World Trade Organization (WTO)

During the month of May 2003 a number of WTO Committees and Negotiating Bodies held meetings, and these included: the meeting of the Committee on Trade and Environment, Committee on Anti-Dumping Practices, Committee on Subsidies and Countervailing Measures, the Working Group on Trade and Transfer of Technology, the Council for Trade in Services, the Committee on Trade and Development, the Committee on Customs Valuation, and the Working Group on Interaction Between Trade and Competition Policy. The Trade Negotiating Committee (TNC) and the General Council of the WTO also held meetings during the month. For the month of June 2003, the meetings held included those of the Textiles Monitoring Body, the Dispute Settlement Body, and the Committee on Agriculture.

Broadly, parallel negotiations have been taking place in the WTO on various issues and countries and/or group of countries have been making proposals and submissions on many of these issues. Critical for Africa have been negotiations on market access, agriculture, TRIPS and Public Health, services, rules and special and differential treatment. Although African countries have remained engaged in many of these, the small size of most African missions in Geneva has made it extremely difficult to follow all the negotiations. The Africa WTO Geneva Group has accordingly agreed to an approach whereby selected members of the Group are made "focal points" for certain negotiations and report regularly at the Tuesday Meetings of the Group. This second best solution has helped the Group to be informed of the negotiations simultaneously taking place in the various Committees.

Agriculture remains the most difficult area of the negotiations, as bridging the gap between the United States position and that of the European Union is proving elusive. While the U.S.A. would like to see substantial reduction in trade distorting measures in agriculture, such as domestic support measures and export subsidies, discussions in the European Union on reforming the Common Agriculture Policy (CAP) has stalled due to disagreements among EU members.

Similarly, while some progress had been made to agree on modalities of implementing the Doha Declaration on TRIPS and Public Health, the United States has blocked consensus by insisting on assurances that drugs produced in developing countries under compulsory licensing would not be re-exported.

On operationalizing the provisions of special and differential treatment as agreed in Doha in order to "make them more precise, effective and operational", there was lack of progress in the Committee on Trade and Development (CTD) and the Chairman of the General Council decided to assume responsibility of trying to move the negotiations forward. This has raised the issue of the "mandate of Doha" on this issue, which was given to the CTD. Furthermore, in trying to move the process forward the Chairman has farmed some of the negotiations to subsidiary bodies of the WTO, thereby stretching further the capacities of African countries to follow the negotiations.

As regards market access for non-agricultural products, negotiations have focused on the formula to be used for further tariff cuts and concerns of developing countries on its impact on their industries as well as government revenues.

The Director General of the WTO circulated in May 2003, a checklist of issues for discussion at Cancun. He clustered these issues into three groups: Work in the Trade Negotiating Committee (TNC) and Bodies established by the WTO; Work in the General Council of the WTO and its Other Bodies; and Reports from the Director General. In the first category, discussions and negotiations will focus on agriculture, services, rules, dispute settlement, TRIPS, and trade and environment.

In the second category, discussions and negotiations will focus on TRIPS and Public Health, special and differential treatment, implementation-related issues, and the Singapore issues (trade and investment, trade and competition policy, transparency in government procurement and trade facilitation). The final category will focus on reports of the Director-General to the Ministerial Conference on implementation and adequacy of technical cooperation and capacity-building commitments; on issues affecting LDCs; and status report on implementation of the commitments by Ministers to facilitate and accelerate the accession of the LDCs to the WTO.

3.0 Activities at the United Nations Conference on Trade and Development (UNCTAD)

During the months of May and June 2003 meetings organized by UNCTAD included those of the Commission on Science and Technology for Development, Working Party on Medium-term Plan and the Programme Budget, Meeting on International Cocoa Agreement, and Expert Group Meeting on Effectiveness of FDI Policy Measures and Preparatory Process for UNCTAD XI.

4.0 Second International Forum on Trade Facilitation (Geneva, May 2003)

The Second International Forum on Trade Facilitation was held in Geneva from 14 to 15 May 2003 under the theme "Sharing the Gains of Globalization in the New Security Environment". The meeting was organized by the Economic Commission for Europe (ECE) in collaboration with other regional economic communities and other organizations. The Meeting focused on trade facilitation under the background of more stringent border control measures as a result of increased security in developed countries in the wake of terrorist attacks. The meeting was also intended to contribute to the ongoing debate of the merits and demerits for a multilateral framework on trade facilitation.

The UN regional commissions have placed great importance on capacity building, public/private partnerships and the exchange and sharing of information and experience in their formulation and implementation of trade facilitation tools and projects at the regional, sub-regional and national levels. The Forum strongly supported the establishment of national trade facilitation bodies.

The participants in the workshop stressed that it is necessary to: provide advanced technologies to automatically track and assess shipping contents relative to manifest, and verify the integrity of the cargo; develop and adopt a distributed, secure worldwide data exchange utility where public/private stakeholders are able to obtain highly secure information for any shipment; deploy a standardized, dynamic and open information systems architecture for integrating people, process and technology data into cargo management systems with supply chain security in mind; make security a core part of the business process, so that it enhances operational efficiencies daily and provides efficient risk management when required.

5.0 High-Level Brainstorming Meeting of African Trade Negotiators (Mauritius)

The High-Level Brainstorming Meeting of African Trade Negotiators Preparatory to the Fifth WTO Ministerial Conference was held in Grand Baie, Mauritius from 11 to 13 June 2003. The Meeting was jointly organized by the Economic Commission for Africa (ECA) and the African Union (AU), in collaboration with the United Nations Conference on Trade and Development (UNCTAD), the African Economic Research Consortium (AERC) and the Southern African Trade and Research Network (SATRN). The United Nations Development Programme (UNDP) and the UK Department of International Development (DFID) provided financial support.

The Meeting was attended by a number of representatives of African governments, regional economic communities, the private sector and regional and international organizations. The purpose of this meeting was to assist African countries to form common negotiating strategies and positions on key trade issues to be discussed at the Fifth WTO Ministerial Conference to be held in Cancun, Mexico, from 10 to 14 September 2003.

The recommendations and conclusions of the meeting could broadly be clustered into the following areas: negotiations on agriculture; market access for non-agricultural products; trade-related intellectual property rights (TRIPS); new Working Groups on trade, debt and finance and trade and transfer of technology; the Singapore issues; special and differential treatment; WTO accession issues; small economies; and capacity building for trade and WTO-related issues.

Broadly, the Meeting reviewed progress in the current round of multilateral trade negotiations in Geneva, the so called Doha Development Agenda (DDA), launched at the Fourth WTO Ministerial Conference held in Doha, Qatar in November 2001. The Meeting expressed serious concerns at the general lack of progress in these negotiations, as evidenced by missed deadlines for a number of key negotiations of importance to African countries and an impasse in several issues. The most critical of these has been lack of progress on the negotiations on agriculture, with the March 31, 2003 deadline on agreement on "modalities" having been missed; the impasse in the TRIPS Council in the implementation of the key elements of the Doha Declaration on TRIPS and Public Health, which promised to make critical medicines and drugs affordable to large section of the population in developing countries; and lack of agreement on operationalization of the provisions of special and differential treatment (S&D) in the WTO Agreements. Against this background, the Meeting called for a "strong political message" to emanate from this meeting of African Ministers of Trade reflecting their deep concerns and urging WTO members and the Director General of the WTO to inject momentum in these negotiations and ensure that Cancun yields positive results.

1. Negotiations on Agriculture

On agricultural negotiations, the meeting made a number of recommendations on market access issues, export competition, domestic support measures and other issues. More specifically, the Meeting recommended that there is urgent need for progress on agreeing on "modalities" for further liberalization of agriculture and for addressing the negative impact of domestic support measures and export subsidies in the OECD countries on Africa's agriculture. It supported the submission to the Committee on Agriculture of the WTO by a number of West African cotton producing countries expressing concern about the negative impact of cotton subsidies in OECD countries on the livelihood of cotton producers in West Africa.

2. Negotiations on Trade in Services

On trade in services, the meeting reviewed the current state of play in the negotiations, particularly the Request/Offer process, including related deadlines for these processes; assessment of negotiating capacities; and possible strategies to be adopted by African countries. The meeting noted that very few African countries had so far presented requests to trading partners and called on African countries to define their objectives, including the analysis of costs and benefits of further liberalization in this sector, before making new commitments. It was noted that trade in services is a sector which offers enormous opportunities for African countries in terms of creating employment and generating foreign exchange.

3. Market Access for Non-Agricultural Products

On market access for non-agricultural products, the meeting raised concerns regarding the "modalities" submitted by the Chairman and noted that these modalities have not adequately accommodated Africa's development interests. The meeting recommended that in view of the importance for African countries of achieving some level of industrialization, these countries should be allowed to choose the pace and timing of liberalization and that the draft modalities should reflect more appropriately the S&D provisions for developing and least developed countries and the revenue implications of further tariff reductions. The meeting also called for effective measures and mechanisms to be established to deal with the erosion of preferences.

4. Trade-Related Intellectual Property Rights (TRIPS)

On TRIPS and Public Health, the meeting expressed grave concerns at the failure to expeditiously find a multilateral solution, which would enable countries with insufficient or no manufacturing capacities for drugs to make effective use of compulsory licensing under the TRIPS Agreement. In view of the importance of this issue to human life, the meeting recommended that a "very strong message" be sent by African leaders calling for the full and expeditious implementation of paragraph 6 of the Doha Declaration on TRIPS and Public Health.

5. Trade, Debt and Finance and Trade and Transfer of Technology

On the issue of trade, debt and finance, the meeting reiterated the importance of a "holistic approach", in view of the interlinkages of these issues. The meeting also called for the operationalization of WTO provisions relating to transfer of technology, with a view to making it easily accessible by African countries. Regarding the Cancun WTO Ministerial Conference, the meeting recommended that African countries should call for the extension of the mandates of these two Working Groups beyond Cancun.

6. Singapore Issues

On the Singapore issues, the meeting noted that WTO members do not have common understanding on how these issues should be dealt with and on the exact mandate of the Doha Declaration on these issues. Accordingly, the meeting recommended that while African countries should remain engaged on these issues, more importantly they should seek technical assistance to enhance the educational process.

7. Regional Trade Agreements (RTAs)

The meeting underscored the important role of regional trade agreements (RTAs) in promoting development and regional integration and recommended that African countries ensure that in clarifying and improving disciplines and procedures under existing WTO provisions applicable to RTAs, this should not undermine the flexibility of developing countries to pursue their development and regional integration objectives. Furthermore, the meeting emphasized the need for African countries to synchronize their views and positions on the WTO rules and the ACP/EU Economic Partnership Agreement (EPA) negotiations.

8. Special and Differential Treatment (S & D)

As regards special and differential treatment, the meeting recommended that African countries should insist for the work on S &D to be completed within a specified timeframe and for early harvest on certain aspects of these issues.

9. Small Economies

For small economies, the meeting called for the mandate of Doha to be fully addressed and called on the General Council to make necessary recommendations for action to be taken at the Cancun WTO Ministerial Conference.

10. WTO Accession Issues

Similarly, on WTO accession issues, the meeting noted the continuing difficulties being experienced by African countries to accede to the WTO, and more importantly that no African country has acceded to the WTO since its inception. The meeting recommended that Ministers call for measures and mechanisms to be initiated to facilitate the accession of African countries.

11. Capacity Building in Africa for Trade and WTO-Related Issues

As regards capacity building in Africa on trade and WTO-related issues, the meeting reiterated the importance of such technical assistance and capacity building for the effective integration of African countries in the global economy and the multilateral trading system. The meeting recommended that due attention be paid to research to support African negotiators; need to develop capacity for national dialogue among stakeholders at the national, sub-regional and regional levels; and the importance for developing mechanisms for effective participation of the private sector and civil society in trade formulation, implementation and negotiations. The meeting also recommended that African countries take measures to ensure effective participation of African organizations and research institutions in the delivery of capacity building in Africa.

6.0 African Ministers of Trade Meeting (Mauritius)

The Conference of African Ministers of Trade was held in Grand Baie, Mauritius from 19 to 20 June 2003 and was preceded by the meeting of Senior Officials from 16 to 18 June 2003. In a Ministerial Declaration adopted at the end of their meeting, the Ministers expressed serious concern at the general lack of progress in the current round of multilateral trade negotiations, as evidenced by missed deadlines on key issues and negotiations of importance to African countries. Among them was the failure to meet the deadline for establishment of the modalities for further commitments in agriculture, which is a major setback for the reform programme. The Ministers noted that progress in the agricultural negotiations is critical for Africa's development and holds the potential to lift millions of Africans out of poverty.

Similarly, the Ministers expressed concern at the failure to find a multilateral solution that would enable Members with insufficient or no manufacturing capacities to make effective use of the compulsory licensing under the TRIPS Agreement as mandated by Paragraph 6 of the Doha Declaration on TRIPS and Public Health. On modalities for market access for non-agricultural products, they called for the modalities and the actual negotiations to facilitate development and industrialization processes in African countries by appropriately addressing issues of tariff peaks and tariff escalation as well as the revenue implications of further tariff reductions.

On other issues, Ministers emphasized the importance of completing the work programme on special and differential treatment (S&D) endorsed at Doha; and expressed concern about lack of progress and missed deadlines regarding implementation-related issues. As regards the Singapore issues, the Ministers noted that WTO members appear not to have a common understanding on how these issues should be dealt with procedurally and substantively. Taking into account the potential serious implications of these issues on African economies, they called for the "process of clarification" to be continued.

The meeting of Senior Officials welcomed the establishment of an ECA Geneva Liaison Office and the Ministerial Declaration expressed appreciation to the Economic Commission for Africa (ECA), The African Union (AU) and the United Nations Conference on Trade and Development (UNCTAD) for the technical assistance provided on trade issues.