Appendix 1: Government Response
What happened at Cancún?
Paragraph 10 'We welcome this long overdue agreement
on TRIPS and public health which removes one of the obstacles
which poor people face gaining access to affordable essential
medicines, and acknowledge the contribution made by the UK Government
to securing agreement.'
We agree that resolution of this issue was a significant
step forward in the run up to the Cancún ministerial.
The Government will work with European Union (EU) partners to
ensure that the World Trade Organisation (WTO) Decision taken
in August is properly reflected in the Trade-related aspects of
Intellectual Property Rights (TRIPS) Agreement. We will also work
to make sure that EU member states (including the UK) make the
necessary changes to existing flexibilities in their compulsory
licensing and medicine authorisation arrangements to enable EU
members, if requested to do so, to be exporters under these terms.
(See response to recommendation 11).
But this important agenda is much broader. We are
committed and will continue work to ensure greater access to medicines
for the world's poor. The Prime Minister's high-level Working
Group on Increasing Access to Essential Medicines in the Developing
World reported in November 2002, with recommendations focusing
on affordable pricing and the development of new medicines. A
team has been established to take forward these recommendations
and related areas of work.
We are working with the pharmaceutical industry,
Non-Governmental Organisations (NGOs), developing country governments,
the World Health Organisation (WHO), European Commission, G8 and
other multilateral partners, to secure greater international commitment
to making medicines more accessible, particularly through affordable
pricing and the development of new medicines for diseases affecting
the poor in the developing world.
Recent developments in the UK and internationally
include:
- The G8 commitments on access
to medicines made at Evian;
- WTO agreement on the outstanding issues on TRIPS
and Public Health;
- The establishment of a WHO body to provide analysis
of intellectual property rights, innovation and public health
for diseases that disproportionately affect developing countries;
- The EU regulation on diversion, which is intended
to encourage companies to offer their medicines at significantly
lower prices to developing countries;
- UK support for the Global Fund to fight AIDS,
TB and Malaria (GFATM);
- Significant UK support for research and development
(R&D) to find new drugs and vaccines, e.g. through public-private
partnerships (PPPs), such as the Medicines for Malaria Venture
and the International Aids Vaccine Initiative;
- New UK Government fiscal incentives for R&D,
including a tax credit in the 2002 Finance Act and additional
tax credit from May 2003 for R&D into HIV/AIDS vaccines and
products for TB and Malaria ;
- Ongoing UK support to strengthening health systems,
with over £1.5 billion committed to partner countries since
May 1997;
- Ongoing work in developing countries to build
a country-level evidence base and improve developing country approaches
to increasing access to medicines.
Paragraph 11 'We support Oxfam's call for UK legislation
to be amended to allow compulsory licensing for export. This
should apply to all drugs for life-threatening diseases, for export
to least-developed countries. The UK should also support similar
changes to European pharmaceutical legislation.'
In accordance with the TRIPS and Public Health Decision
made in the WTO on the 30 August 2003, the UK does intend to amend
national patent legislation to allow granting of a compulsory
licence for export of a copy of any patented medicine, if so requested
in accordance with the terms of the Decision.
As the TRIPS agreement is an area of mixed competence,
we are in the process of consulting with the European Commission
on the requirements for any necessary EU legislation. The EC has
already publicly stated that all WTO members 'now have the responsibility
to ensure that the right conditions are put in place which will
allow the system set up by the Decision to operate efficiently'.
We are encouraging the EC to move as rapidly as possible.
We are investigating what changes are needed to UK
medicine licensing and regulatory procedures to allow generic
manufacturers to export medicines to developing countries. There
are no a priori restrictions on medicines or type of disease to
which the Decision can apply. The Decision will be implemented
in a manner supportive of developing and least developed countries'
rights to protect public health. This includes dealing with life
threatening diseases. Use of the Decision by WTO members will
be assessed by the TRIPS Council on a case-by-case basis.
Paragraph 12 'We see the collapse of Cancún
as a major setback—not least for multilateralism.'
We agree. The UK shares the Committee's view that
the collapse of talks at the Cancún Ministerial was a serious
setback to making progress on the Doha Development Agenda. The
loss of momentum in the multilateral negotiations will affect
the poorest developing countries most. Despite this setback, the
UK is strongly committed to working with others to get the Doha
round back on track. We need to make real progress to live up
to the full ambition of the Doha Development Agenda launched in
2001. We are working closely with the other EU member states and
the Commission to this end and also in dialogue with members of
both the G20 and the African Union/Africa, Caribbean and Pacific
(ACP)/Least Developed Countries (LDCs) alliance of poorer developing
countries.
Paragraph 13 'Important progress has been made
at Cancún, and more may have been made possible. But it
is not possible to say with any certainty whether a good deal
was in the offing, particularly because the unexpected closure
of the ministerial meant that some countries and country groups
had not played all their cards.'
We agree.
PROCESS MATTERS: TIME, TIMING AND ORGANISATION
Paragraph 17 'If Ministerials are to work better
in future, and there is to be sufficient time for negotiations,
then lessons must be learned about the effective use of limited
time. There is little point in delegates wasting time rehearsing
their well-established positions.'
We agree. The Government has discussed a number of
proposals for the reform of the WTO with our EU partners and the
European Commission, including improvements to the functioning
of the WTO, in particular WTO Ministerial meetings. These proposals
are reflected in the Commission's strategy paper, 'Reviving the
DDA Negotiations—the EU perspective', which was endorsed
by the European Council of Ministers on 8 December last year.
It is vital that we learn the lessons from Cancún. However,
reform of the WTO should not distract members from pursuing the
Doha Development Agenda (DDA).
Paragraph 18 'If Ministerials are to be successful,
the preparatory work must be done. Better progress must be made
at Geneva, deadlines must be met, and decisions should not be
simply postponed to Ministerials.'
We agree.
Paragraph 20 'In our view the closure of the
Ministerial was premature as well as unexpected. Participants
in WTO Ministerials must know when negotiations are set to conclude.
Otherwise, negotiations are unlikely to work. Ministerials ought
not to be extended as a matter of course, and, there should be
clear mechanisms for making decisions about whether, exceptionally,
to extend them. The decision to extend a Ministerial must not
be in the hands of one person.'
As part of the process of lesson learning from Cancún
(See response to paragraph 17) we believe that WTO members should
agree some guidelines for the conduct of Ministerial Conferences,
including on the role played by the Chairman.
Paragraph 21 'In a development round it was a
serious mistake to prioritise negotiations on the Singapore Issues
over agriculture, because agricultural reform is clearly of greater
importance to most developing countries. It was wrong to attempt
to make progress on agriculture a 'reward' that developing countries
would receive if they agreed to include the Singapore Issues on
the WTO agenda. Decisions as to the order in which negotiations
proceed at Ministerials ought to be taken by the WTO's membership
as a whole, rather than being made by the Chairman in consultation
with a small number of countries.'
We share the Committee's view that progress on agriculture
was a much higher priority for most developing countries than
the Singapore issues. We also agree that progress on agriculture
in the DDA should not be seen as a 'reward' for progress on the
Singapore issues. We support the current proposals for the handling
of the Singapore issues made by WTO General Council Chairman Perez
del Castillo.
We think that any guidelines on the conduct of Ministerial
meetings (see answer re paragraph 20) must address the question
of responsibility for the sequencing of discussions. We suspect
that it would in practice be unrealistic for detailed decisions
on the scheduling of discussions to be subject to the explicit
consensus of the entire WTO membership. But any process must
be clear and transparent so it commands the confidence of the
membership as a whole.
In the specific case referred to by the Committee,
we understand that the decision to discuss the Singapore issues
first—and at length—led to a misunderstanding among
some WTO members that there were no plans to discuss agriculture
at all, and that this misunderstanding contributed to the worsening
of the atmosphere that culminated in the failure of Cancún.
This mistake should not be repeated.
Paragraph 22 'The Government refers somewhat
cryptically in its memorandum to the need for 'better designed
negotiating structures'. We invite the Government to clarify what
it means by this phrase, and to outline what it is doing to ensure
that negotiating structures are better designed in future. For
the EU, which uniquely has one negotiator for a number of WTO
member states, it is essential that trade ministers of Member
States meet the EU Trade Commissioner regularly, at least daily,
during WTO Ministerial meetings so that the Commissioner can base
his negotiating position on policies agreed collectively by the
trade ministers.'
There was regular contact between Commission officials
and those of Member States throughout the Cancún Ministerial
meeting. We are satisfied that these Commission officials spoke
with the full authority of Commissioners Lamy and Fischler. We
also fully appreciate the need for Commissioners Lamy and Fischler
to spend as much time as possible in discussion with non-EU counterparts.
We note also that Commissioners Lamy and Fischler were negotiating
on the basis of a policy framework that had been discussed extensively
with Member States, including at Ministerial level, in advance
of Cancún.
That said, we agree with the Committee that there
are lessons to learn from Cancún, in terms of the need
to ensure an effective dialogue between the Commission and Member
States at a political as well as at a technical level. We will
pursue this with the Commission and other Member States before
the next Ministerial meeting.
Paragraph 23 'The status of papers produced by
Chairmen and facilitators of Working Groups, and the role of the
WTO Secretariat in such processes, should be clarified.'
We think that it is useful for the Chairman of a
group, or for a facilitator, from time to time to make proposals
on their own authority. We do not see a problem with the involvement
of the WTO Secretariat in the preparation of such proposals.
The most important consideration is that no proposal can be adopted
except by consensus of the WTO members. This being the case,
a chairman or facilitator will tend to consult all WTO members
with a key interest—developed and developing—in advance.
We are not persuaded of the added value of detailed rules, which
might hamper the flexibility with which potential solutions can
be identified.
GEO-POLITICS MATTERS: NEW COUNTRY-GROUPS AND THE
FAILURE OF BRINKMANSHIP
Paragraph 26 'The increased coordination and
coherence between developing countries at the WTO, and their stronger
voice was perhaps the most positive aspect of Cancún. We
are pleased that the Government—in contrast to some of its
developed country partners—shares this view. […] The
Government can be justly proud of its work in building the capacity
of developing countries to enable them to have a more effective
voice in international negotiations. This important work should
continue—even if countries who receive assistance sometimes
take up positions which conflict with the UK's perceived interests—and
should apply beyond the trade arena.'
We agree that the emergence of a much stronger developing
country voice, particularly of the poorer developing countries
was a very positive development. We welcome the Committee's agreement
on the principle of offering support to developing countries (with
their varying interests) as they work on their negotiating positions,
irrespective of how that might sit with the UK's own position.
We believe it is important that developing countries are able
to work out what best suits their needs rather than have a position
worked out for them, however well meaning that advice might be.
For example, in the run up to Cancún, we contributed financial
support to assist the African Union, ACP and LDCs to come together
to discuss their common agenda for the WTO round. These 60 poorer
WTO members subsequently found common ground, forming a new alliance
for Cancún, the 'G90'. We also believe that it is important
for these negotiating groups to have consultation and discussion
structures in place to enable them to agree positions with sufficient
flexibility and speed to assist the negotiating process. As well
as responding to requests for direct support to developing country
governments, the UK will continue to provide funds and technical
assistance to:
- Third parties (e.g. United
Nations Conference on Trade and Development (UNCTAD), the Commonwealth
Secretariat) who in turn provide direct support on key issues
identified by a developing country;
- Organisations offering specialist advice or networking/support
services (e.g. The Advisory Centre for WTO Law);
- ?Regional organisations (e.g. a trade facilitation
programme with the South African Development Community (SADC));
- Multi-donor and agency initiatives to address
trade issues in-country (e.g. the Integrated Framework, the World
Bank/International Monetary Fund (IMF) Initiative to identify
mechanisms to support developing countries in coping with the
adjustment costs of transition to trade liberalisation)
- Research into key issues of concern to developing
countries.
Paragraph 27 'All participants in negotiations
need to be flexible; otherwise agreement is impossible. Country-groups
should, as far as possible, work out their positions prior to
Ministerials. And, perhaps most importantly, the EU and the USA
must realise that the geo-politics of the WTO have changed; they
cannot expect to set the agenda. Further, given the significant
barriers to South-South trade, negotiations and liberalisation
between developing countries must form part of a development round.
In this regard, we were interested to see the European Commission's
somewhat provocative suggestion that the G20+ be invited to give
preferential access to the poorest countries.'
There are substantial gains to be made from removing
tariffs barriers to trade between developing countries, and thus
increasing regional trade between developing countries. We fully
support the commitment by the World Trade Organisation, made in
the Doha Declaration in November 2001, to 'the objective of duty-free,
quota-free market access for products from least developed countries',
and the further commitment 'to consider additional measures for
progressive improvements in market access for LDCs'. We encourage
all members of the World Trade Organisation, including members
of the G20+, to deliver on that commitment. The EU, through the
Everything But Arms Agreement of February 2001 has already implemented
this principle (subject to phasing in for full market access
for bananas, rice and sugar).
Paragraph 29 'The members of the G20+ are not
the very poorest countries, and they do have different interests,
but they are a serious grouping—at Cancún the G20+
represented 63% of the world's farmers and 51% of the world's
population—and should be treated with respect rather than
contempt.'
We fully agree. The EU at the highest level is engaging
with the G20, which we have strongly encouraged. The UK too is
actively engaging with key G20 members.
Paragraph 31 'The EU's offer to unbundle the
Singapore Issues, and to withdraw its demands for a start to negotiations
on Investment and Competition, came far too late. The European
Commission's strategy of brinkmanship was destined to derail Cancún,
particularly given the complications introduced by the emergence
of new country-groups. The timing of the Commission's offer to
unbundle the issues left countries with little time to consider
their positions, consult with their allies and respond constructively.
The unexpected closure of the Ministerial reduced the time available
still further.'
We stand by statements we made previously on this
issue, as set out in the supplementary memorandum.[1]
SUBSTANCE MATTERS MOST: THE SINGAPORE ISSUES, AGRICULTURE
AND COTTON SUBSIDIES
Paragraph 35 'The insistence, by the EU and a
small number of other countries, on the adoption of the Singapore
Issues, in the face of overwhelming opposition from most developing
countries, and the linkage made in the Derbez text between progress
on agriculture and non-agricultural market access and progress
on the Singapore Issues, were key factors in the collapse of Cancún.
The EU's decision to pursue negotiations on the Singapore Issues
was a major error. The lesson is simple: developing countries'
concerns should be listened to carefully and taken seriously.'
We believe that that any WTO agreement must be development
friendly. It is vital that the 'new issues' do not jeopardise
overall progress on the Doha Development Agenda and imperil the
other undoubted benefits of a successful Round.
Paragraph 36 'The timing of the agreement on
CAP reform and the EU's failure to agree on an absolute reduction
in subsidies may well have made it difficult for the EU to sell
its CAP reform plans to other members of the WTO. But the timing
and extent of CAP reform was something that the EU's member-states
alone could determine. This was an own goal resulting from a lack
of coherence between EU policies on trade, development and agriculture.'
We accept that the Common Agricultural Policy (CAP)
reform timetable left relatively little time to prepare the ground
for negotiations prior to and at Cancún. However, the Government
believes that the extent of the reform was substantial enough
to be conducive to a better outcome at the WTO. Shortly after
the conclusion of the CAP reform deal, the EU and US, at the request
of other WTO Members, agreed a joint paper published in August,
which in turn generated various other proposals from the G20 and
other groupings. The EC/US text formed the basis of the draft
Cancún Ministerial text and subsequently the Derbez text
produced during the Cancún Ministerial. We agree the EU
needs to work harder to explain to many countries the longer term
impact of both the CAP reforms agreed last year and to ensure
that the continuing process of reform of other regimes takes proper
account of their importance for the wider WTO agenda.
Paragraph 40 'Although trade policy has international
repercussions, it is primarily the product of domestic politics.
When international trade policy is the by-product of US electoral
politics and rising protectionist sentiment, the USA's trading
partners, including developing countries, are the losers. In our
pre-Cancún Report we suggested a general principle: the
burden of adjustment should not fall on those countries who are
least-equipped to deal with it. The same applies to the burden
of non-adjustment. We welcome DFID's ongoing work which aims to
understand better the plight of the West African cotton producers,
and encourage the UK and its EU partners to emphasise, in their
dealings with the USA as well as with their own farmers, that
the poor should not have to suffer the impacts of northern subsidies.'
The Government has commissioned further research
on the impact, both absolutely and relatively of US (first as
most important) EU, and Chinese cotton subsidies on West Africa.
The WTO dimension needs also to be taken into account as the EU
debates reform of the CAP cotton regime, which has seen EU production
rise fourfold in recent years, even though minimal amounts are
exported.
THE EUROPEAN COMMISSION AND THE EU'S MEMBER STATES:
MANDATE, COMMUNICATION, ACCOUNTABILITY AND TRANSPARENCY
Paragraph 45 'In our view the Government should
have done more to persuade the EU and the Commission to unbundle
the Singapore Issues, and to drop Investment and Competition rather
than simply make them less of a priority. The Government should
not have left itself open to the charge that it failed to express
its views about the Singapore Issues with sufficient force.'
We regret the perception that the Government failed
to make its case on the Singapore issues within the EU with sufficient
force. In addition to our public statements on UK priorities
for the DDA, we were in regular private contact with the Commission
at all levels to express our view. We are in no doubt that Commissioner
Lamy understood clearly the UK view that investment and competition
in particular should not be allowed to get in the way of progress
on the DDA. For reasons of trust between UK Ministers and the
Commission, the exact terms in which we set out the UK position
must remain confidential.
Paragraph 46 'Although we welcome the EU's commitment
to greater use of Sustainability Impact Assessments as a contribution
to enhancing transparency and improving discussion of the impacts
of trade policy, the UK Government should do more. They should
clarify the legal status of the Article 133 Committee and explain
its role in determining the aims of European trade policy and
pursuing those aims in multilateral fora. The UK Government should
also consider following Denmark's example by publishing the agendas
of Article 133 Committee meetings when it next holds the presidency
of the European Union in 2005. We share the Government's view
that the policies pursued by its developing country partners should
be determined through democratic and inclusive processes; the
EU should make this case through example.'
The Government is happy to clarify the legal basis
of EU trade policy. Article 133 of the EC Treaty establishes
a common EU commercial policy. It provides for the Commission
to propose negotiating directives to the Council and for the Council
to decide these negotiating directives by qualified majority voting.
It establishes a committee of representatives of Member States
(hence 'the Article 133 Committee') to assist the Commission in
the conduct of negotiations. So the Article 133 Committee per
se has no decision-making role, although it is in practice the
forum in which trade policy issues are discussed on a regular
basis between the Commission and Member States, and it is the
Committee, which prepares any discussion in the Council of Ministers
on any issue relating to international trade negotiations.
UK officials, in common with the officials of other
Member States, speak on the basis of positions agreed with Ministers
in advance and report to Ministers on the outcome of discussions.
The Government seeks to develop UK positions following full and
open consultation with interested stakeholders. We would therefore
question the Committee's assumption that the process of developing
UK input into EU trade policy is neither democratic nor inclusive.
We agree with the Committee that the Article 133
Committee should operate in as transparent a manner as possible,
subject only to the fact that some communications between Governments
on sensitive issues must remain confidential. We welcome the
current practice of the European Commission in publishing a wide
range of Article 133 Committee working papers on their website.
We are open in principle to following the Danish practice of
publishing the agenda of 133 Committee meetings in advance and
will discuss this with our EU colleagues in the run up to our
Presidency.
GOVERNANCE, ROLE AND SCOPE: THE WTO AND A DEVELOPMENT
ROUND
Paragraph 48 'Along with Pascal Lamy, many developing
countries, and many NGOs, we are also concerned about the governance
of the WTO, and specifically about the way in which Ministerials
are run. As the World Development Movement put it, 'for an organisation
that creates so many rules, it is surprising that the WTO does
not have any rules to guide its own negotiations and decision-making.'
The motivation for introducing new rules must be broader than
one of efficiency; it must also be to ensure that multilateral
negotiations are democratic, accountable and transparent. We were
pleased therefore to hear Patricia Hewitt state that: 'the fundamental
principle of one member one vote must not be tampered with'. It
seems likely that greater use might be made of mini-Ministerials,
to try to reduce the pressure on Ministerials themselves. This,
and other organisational improvements are suggested in a reflection
paper produced by DG Trade of the European Commission for the
consideration of the Article 133 Committee. We would be interested
to hear the Government's response to the proposals mooted in this
paper. Specifically, we invite the Government's comments: first,
on what might be done to improve the effectiveness of Ministerials;
and, second, on the likely impact of a greater use of Ministerials
on levels of democracy, accountability, transparency and the participation
of developing countries at the WTO.'
The Government supports the observations submitted
to the WTO by the European Commission on behalf of the EU. These
were discussed with Member States prior to submission.
We support in particular the ideas set out in the
Commission paper on the scope for making better use of Ministerial
conferences. For example, we think that the WTO could usefully
clarify the respective roles of the Chairman and the Director
General at Ministerial conferences.
We understand the Committee's second question to
refer to the likely impact—in particular for developing
countries—of a greater use of 'mini-Ministerial' meetings
bringing together a subset of WTO members. We think that, in
an organisation of the size of the WTO, it will sometimes be necessary
for the Chairman of the General Council and the Director General
to bring together small groups of members to attempt to identify
potential solutions to particular issues. For such meetings to
be effective, they have to bring together developing as well as
developed countries (all mini-Ministerials in recent years have
followed this practice, as have meetings of the 'Green Room' in
Geneva and at Ministerial conferences). They are not a substitute
for the need ultimately to secure the consensus of all WTO members
for any proposed course of action.
Paragraph 50 'But in our view, rather than excuse
the developed world from delivering on its promise of a 'Development
Round' which involves developing countries, the appropriate response
is to work harder to deliver a round that really does serve the
developmental interests of the WTO's diverse membership. If trade
and trade liberalisation is a positive-sum game, then it ought
to be possible to ensure that all countries gain; for a development
round, the gains for developing countries should be substantial.'
We agree.
Paragraph 51 'We would like to hear the Government's
views about the implications for developing countries of a shift
to plurilateral trade negotiations and agreements: might such
a shift presage the emergence of a more flexible and development-friendly
WTO; and, how could the interests of developing countries, and
the priority afforded to poverty reduction, be protected?'
A strong, rules-based multilateral system is the
best way of ensuring the interests of the weakest economies are
secured. However we recognise that WTO members are at markedly
different stages of development. Rather than promote a multi-speed
WTO through adding to the few existing WTO plurilateral agreements,
we should make Special and Differential Treatment provisions specific,
operational and closely reflective of developing countries very
different levels of economic development so that we can achieve
the objective of fostering greater integration into the world
trading system.
Paragraph 52 'Now is not the time for fundamental
reforms which act as a distraction, and which postpone any progress
on making trade work for poverty reduction. The question is whether
there are some limited and useful reforms, which can be undertaken
immediately to restart negotiations in a more transparent and
efficient manner without stalling the process completely, whilst
discussions about more fundamental reform go on in parallel. We
invite the Government to comment on what immediate reforms it
would like to see and what it is doing to secure such reforms,
and also to tell us what input it is making into debates, including
the work of the Sutherland Commission, about longer-term reforms.'
We are in regular contact with individuals from the
Sutherland Commission and will continue to feed into the ongoing
debate in Geneva.
Reviving a genuine development round
Post-Cancún prospects: Bilateralism,
transatlantic relations and the Peace Clause
Paragraph 54 'The UK Government must ensure that
its strong support for multilateralism is heard loud and clear
by its European partners, and also that in the EU's own bilateral
relations—through for instance Economic Partnership Agreements
with the ACP countries—its objective remains developmental
partnership rather than bilateral arm-twisting.'
We agree and we will work to ensure that Economic
Partnership Agreements (EPAs) are used as a 'development tool'.
EPAs should foster the smooth and gradual integration of ACP countries
into the world economy thereby promoting sustainable development
and contributing to poverty eradication. We are discussing the
process and substance of EPAs with our colleagues in beneficiary
countries and with civil society.
Paragraph 55 'We trust that the Prime Minister
is using what political capital he has with President Bush to
convince him that reviving the development round is an important
front in the war on poverty, and that the war on poverty is complementary
to the war against terrorism.'
The Prime Minister has been engaging with President
Bush on these issues. The Prime Minister took the opportunity
of President Bush's visit to the UK in November 2003 to raise
the issue of trade. In their Joint Statement of the 20th November,
the Prime Minister and President Bush stated their commitment
to 'advance an open trade regime'. They went on to state 'We are
committed to an open, fair, and multilateral world trading system.
Recognising that the WTO Ministerial in Cancún was a missed
opportunity, we reaffirm our commitment to a successful conclusion
of the WTO' s Doha Development Agenda. We will work with our international
partners to achieve a successful conclusion to the Round that
will benefit both developed and developing countries. We call
for a resumption of the negotiations, and encourage all parties
to make serious and substantial contributions to these important
negotiations.'
Paragraph 56 'We would not want to see the WTO
swamped by a flood of disputes, but clearly if the WTO is to be
credible and effective, developing countries must be able to make
use of its dispute settlement procedures to challenge trade-distorting
agricultural subsidies wherever they are found. The Peace Clause
should not be extended; backdoor efforts by the USA and the EU
to extend it through re-interpretation of its expiry date must
be resisted strongly.'
The Peace Clause expired on 31 December 2003 and
has not been extended.
We support the EU proposal for a similar mechanism
to be included in any new Agreement. The Peace Clause provided
a valuable level of stability for WTO member countries complying
with their Uruguay Round Agreement commitments. The Uruguay Round
committed all member countries to an agreed level of reductions
in agricultural support. Those reductions were to be phased in
over 6 years and, once fully implemented, remain in force until
a new agreement is reached. The rationale behind the Peace Clause
is that so long as members continue to comply with their WTO commitments,
their support system should not be open to challenge.
WHAT'S ON THE TABLE?: THE DERBEZ TEXT AND THE SINGAPORE
ISSUES
Paragraph 60 'If the Derbez text is to be the
basis for negotiations, the Singapore issues must—with the
possible exception of Trade Facilitation on which a explicit consensus
seems near—be removed and the condescending language on
cotton subsidies expunged. The Singapore Issues should be considered
parallel to the round, with reports on possible ways forward made
to the WTO's General Council by the start of 2005. A solution
to the issues around cotton should be pursued within the agriculture
negotiations, alongside efforts to tackle agricultural subsidies
more generally.'
We have said clearly for some time that the 'new
issues' should not jeopardise overall progress on the Doha Development
Agenda and imperil the other undoubted benefits of a successful
Round. As the Secretary of State for International Development
told the United Nations General Assembly on 30th October we must
'pick up from where Cancún left off, with investment and
competition off the table'
Pursuit of progress on launching negotiations on
both Transparency in Government Procurement and Trade Facilitation,
while each have significant merits, must not be at the expense
of moving the round forward. Multilateral agreements on these
two issues have real potential for bringing benefits to developing
countries in the form of increased efficiency in trade flows and
value for money in government procurement. For example, in Mozambique
an overhaul of customs management has led to a rise in customs
revenue from US$86m in 1996 to US$198m in 1999 and to a record
US$236m in 2000—despite cuts in import duty in 1996 and
1999. We will play our part in addressing developing countries'
negotiating capacity and wider constraints in implementing reforms.
On cotton, we agree that we must find a solution
as an integral part of the WTO agricultural negotiations, whilst
addressing in faster time what can be done to secure the livelihoods
of thousands of cotton producers in the interim before US and
EU subsidies are phased out. It is important as part of any coherent
response on cotton to reduce the trade distorting nature of EU
subsidies. We consequently will also push in EU negotiations for
substantive reform of the cotton regime.
Paragraph 62 'We fail to understand how, having
signed up to the Ministerial Declaration, the European Commission
can perform a U-turn on the Singapore Issues and hope to retain
its credibility. Such a manoeuvre shows no appreciation of the
strength of feeling among developing countries about the Singapore
Issues. If the Commission's about-turn looks shoddy to us, as
parliamentarians of an EU member state, we can imagine how it
must look to developing countries. This is not the way to rebuild
trust and confidence in the EU's commitment to a genuine development
round. Neither is it the way to revive the round or to work towards
an equitable inclusive system of multilateral global governance.
Credibility and trust, the essential lubricants of peaceful international
relations, are quickly lost, but slowly regained. We look forward,
in the interests of transparency and accountability, to hearing
exactly what position the Government has been taking at meetings
of European trade Ministers and officials in the run-up to 15
December.'
UK Ministers and officials have on numerous occasions
since Cancún made the UK position clear to the Commission
and to other Member States. We have stressed that we do not want
the Singapore issues to stand in the way of progress on other
issues and that we do not think that the EU should continue to
press for negotiations on investment and competition. As previously
stated, we are content with the differentiated approach set out
by WTO General Council Chairman Perez del Castillo for the handling
of the Singapore issues.
Paragraph 66 'There may well be value in optional
participation and plurilateral agreements on the Singapore Issues,
but unless developing countries' underlying concerns are addressed—including
legitimate concerns about their policy space—the Commission's
proposals will not, and should not, be accepted. Plurilateral
optional agreements entered into by a sub-set of the WTO's membership
are not problem-free; this approach was floated by the EU prior
to Cancún and received, at best, a lukewarm response from
developing countries. A plurilateral approach would leave developing
countries with the unenviable choice of taking part in negotiations
that they don't want, or not participating and facing pressure
at a later date to sign up to an agreement they had no part in
negotiating.'
Following discussion with Member States, the Commission
continues to explore the option of taking a plurilateral approach
to some or all of the Singapore issues. We strongly agree with
the Committee that this will only work if the underlying concerns
of developing countries can be addressed.
Paragraph 67 'We reiterate what we said prior
to Cancún; The Singapore Issues are not a development Priority.
Developing Countries have made this abundantly clear. Agreements
on these issues should not, therefore, be pursued as part of the
current round. This reasoning should apply to each of the issues,
with the possible exception of Trade Facilitation, an issue on
which explicit consensus seems near.'
We agree that these issues are not a development
priority and must not jeopardise the progress of the round. However
as we stated in our response to paragraph 60, Transparency in
Government Procurement and Trade Facilitation, have real potential
for bringing benefits to developing countries.
Paragraph 68 'A development-friendly agreement
on agriculture must, at a minimum, pass two developmental tests:
will it stop dumping? and, will it allow developing countries
to protect themselves from any continuation of dumping? In addition,
it must: reduce tariffs and tackle tariff peaks and escalation;
extend duty-free and quota-free access to all LDC exports into
all developed countries; ensure that tariff barriers are not replaced
by other forms of protectionism; include binding timetables to
reduce and in time eliminate domestic support and export subsidies
of all types; and, compensate and assist current preference holders
and ensure the food security of the net-food-importing developing
countries and the LDCs.'
We agree on the need for reductions in the overall
level of trade distorting subsidies over time, not just in the
EU, but in all countries and particularly those in the developed
world. However we do not agree that all domestic support should
be eliminated, if it can be shown to be non- or minimally trade-distorting.
We believe strongly in the need to consider assisting
current preference holders, but see this as transitional assistance
to enable them to adjust to changes, rather than compensation.
We agree with the need to ensure food security. But
we see food security as an issue that can affect poor households
in all developing countries, not simply net-food importers and
LDCs.
THE EUROPEAN UNION AND AGRICULTURAL REFORM
Paragraph 69 'We welcome the inclusion in the
Derbez text of the EU-inspired proposal to 'remove export subsidies
for products of particular interest to developing countries',
and hope that developing countries will respond positively to
this offer. This offer must remain on the table post-Cancún;
there must be no backtracking. And it must be for developing countries
themselves to determine which products are of particular interest
to them.'
We welcomed this proposal when it was originally
made by the EU in January 2003. Developing countries have yet
to respond. We are working with the Commission to encourage developing
countries to respond.
Paragraph 72 'The interests of European taxpayers
and consumers, and most especially the farmers of developing countries
who suffer the effects of the dumping of agricultural products,
are poorly served by the EU's agreement on CAP reform. The reform
may be substantial in terms of EU politics, but that does not
mean that it will make a substantial difference to developing
countries. Partially decoupled agricultural support will still
keep European farmers in business at the expense of farmers in
developing countries. If agricultural subsidies keep farmers in
business, and their products are exported, then those subsidies
are trade-distorting. This is self-evident.'
The Government regards the decoupling of subsidies
as a significant step forward, but will continue to press for
similar reforms in the CAP regimes under current discussion, and
to ensure that domestic subsidies are at most minimally trade
distorting.
Paragraph 74 'The question of whether or not
particular forms of agricultural support fall into the Green Box
must be based on objective assessments rather than political bargaining,
as the EU itself seemingly recognised in its earlier proposal
to review the Green Box criteria. This issue has become too politically
divisive for it to be considered objectively at the WTO. We support
the call made by CAFOD, Action Aid and others for an independent
review—preferably conducted by the World Bank—of the
Green Box criteria and the impact of different forms of subsidies
on production and trade, and recommend that the UK Government
support this proposal too.'
Our current view is that reopening the question of
Green Box criteria runs the risk of enlarging, rather than narrowing,
the range of exceptions, thereby exacerbating the potential for
trade distortion.
Paragraph 75 'Multilateral trade negotiations
at the WTO are supposed to be about providing a level playing
field. The Common Agricultural Policy slants the playing field
to the tune of $50 billion per year. As Oxfam point out, you can
defend multilateralism or defend the Common Agricultural Policy,
but you cannot do both. The UK must continue to press for urgent
and radical reform of the CAP, including full decoupling, rather
than going along with an exercise which tries to hide trade-distorting
subsidies in a different coloured box. If the EU wishes to support
its farmers, or protect its environment, or improve animal welfare,
this must be done in a manner which does not harm the interests
of developing countries.'
The Government agrees that there is a clear link
between progress on WTO agriculture negotiations at the multilateral
level and progress on CAP reform within the EU. We pushed hard
for the EU CAP reform deal agreed June last year, both because
reform was much needed internally within the EU, but also because
it would enable progress to be made in the WTO. This Government
has long been a strong advocate for both CAP reform and multilateral
trade negotiations and will continue to be at the forefront of
arguing strongly for progress in both areas.
DEALING WITH DIFFERENCE: PREFERENCE EROSION, SDT
AND COHERENCE
Paragraph 80 'In response to our pre-Cancún
comments on SDT, the Government acknowledged that 'the WTO systems
must be made more flexible and sophisticated to respond to widely
differing needs' and suggested that a first step in encouraging
a constructive debate might be to establish an expert working
group which would report to the WTO's General Council, this sounds
like a good idea; we look forward to hearing what progress the
Government has made with this proposal.'
There has been a disappointing lack of progress
in addressing Special and Differential Treatment issues. We had
hoped to see agreement in Cancún to at least an initial
package of measures, however limited, which might then have opened
the way to a wider dialogue on Special and Differential Treatment
within the WTO. We will continue to press the case for Special
and Differential Treatment within the WTO system which helps all
WTO members integrate into the wider world trading system at a
pace that is appropriate for them and to explore the possibility
of the creation of an expert working group to move the debate
forwards.
Paragraph 81 'The recognition by the international
financial institutions, and the WTO, that the impacts of trade
liberalisation vary by country, and that the timing and sequencing
of a country's trade reforms matters is welcome and somewhat overdue.
Such a recognition necessitates increased coherence between the
various multilateral institutions. As such, we warmly welcome
the IMF-World Bank adjustment assistance initiative as a concrete
mechanism for strengthening and coherence between the WTO, the
IMF and the World Bank, and applaud DFID for its role in promoting
this initiative.'
We agree on the importance of progress in collaborative
working between the IFIs and WTO. We have long recognised that
there will be losers from trade liberalisation as well as winners,
at least in the short to medium term in most WTO member states.
Trade liberalisation policies should progress gradually and be
complemented with other policies to help maximise economic opportunities
for all and minimise short-term costs and their adverse effects.
The Department for International Development and HM Treasury are
working closely with the World Bank, IMF and others to develop
effective mechanisms to respond to the adjustment needs of different
developing countries.
Paragraph 83 'The IMF-World Bank initiative is
potentially very significant; the UK must do its utmost to ensure
that it is well-designed. Decisions about whether, when, how,
on what basis, and to which countries assistance should be provided,
must be based on the needs of developing countries. And the IMF-World
Bank initiative must not be the sole preserve of the international
financial institutions. Rather, its design and operation must
be shaped by the expertise, knowledge and experience of developing
countries themselves, UNDP, UNCTAD and bilateral donors, as well
as the expertise and backing of the international financial institutions.
As the Government states, adjustment assistance and mechanisms
to deliver it must be built on sound analysis of the impacts of
liberalisation on poverty.'
We agree that for this initiative to effectively
address the needs of developing countries, they should be involved
in the design process. The UK is also working with EU partners
and US on this initiative. This is the best way to ensure coherence
with trade policies is achieved. We will continue to work with
the IMF and World Bank to encourage different stakeholders, including
developing countries, to participate in the design of this initiative.
We are also fully conscious of developing country concerns that
this initiative needs to be developed in parallel with and not
as a substitute for agreeing Special & Differential Treatment
provisions as an integral part of the different agreements.
POLITICAL LEADERSHIP
Paragraph 87 'Patricia Hewitt stated that: 'Europe
as one of the largest and leading players in the WTO does need
to take a lead and put a great deal of effort into helping get
the talks back on track in Geneva'. We fully endorse this. The
EU was the primary architect of the Doha Development Agenda and
could—by working with others including the G20+, the G90
and the G33—revive the round.'
We agree. Engaging with the G20, G90 and G33 is a
priority for us. We are regularly meeting with members of these
groupings on a bilateral and multilateral basis. For example the
EU will be meeting with G20 representatives on 12-13 February.
Paragraph 92 'In summary, whilst it is very good
news that the EU is going to re-engage with negotiations, and
is prepared to be a little more flexible on the Singapore Issues,
in other areas the Commission's paper does little more than re-state
familiar positions. As the paper itself makes clear, the EU's
objectives have not changed; rather what the Commission proposes
are new strategies to refine and sharpen the EU's negotiating
approach. As we have made clear, particularly on agriculture,
this is not enough.'
We continue to work with the Commission and other
Member States to move the negotiations forward and ensure developing
country views are fully taken into consideration.
Paragraph 93 'The UK must continue to play its
part, encouraging the EU in its support for multilateralism, pushing
the EU further and faster on agricultural reform, and re-iterating
that the Singapore Issues are not a developmental priority.'
We agree.
Paragraph 94 'If the legacy of Cancún
is a genuine development round and a WTO more responsive to the
diversity of developing countries, then the collapse of the Ministerial
may be seen as a key episode in the emergence of a fairer system
of global governance in which developing countries' voices are
clearly heard. As an example of what can be achieved through multilateral
co-operation, the delivery of a genuine development round would
be hard to beat. That should be the aim.'
We fully agree and remain committed to the realisation
of the promises made at Doha. We are working with our key international
partners in pursuit of this goal. The Government will continue
to be at the forefront of those pushing for an open and rules-based
international trading system that fulfils its potential to contribute
to the reduction of poverty in poorer countries.
Department for International Development
Department for Trade and Industry
10 February 2004
1 As the 'Supplementary memorandum submitted by
the Department for International Development and the Department
of Trade and Industry, in response to further questions from the
International Development Committee' on 27 October 2003, states:
'Lamy has told the European Parliament that an earlier move would
have been premature in the light of the movement from other countries
on issues in Cancún.It is not possible to be certain, with
hindsight, whether or not this judgement was correct.' Back
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