In addition to the disagreements over the draft ministerial text, the GC meeting also a clash of wills between developed and developing counties in areas where developing countries had specific problems and had made proposals to address them. The developing countries were confronted with a generally hostile response from developed countries, which while acknowledging the legitimacy of the issues were unwilling to show the flexibility necessary to adopt the proposals put forward for addressing the problems.
Issues placed by developing countries before the GC in relation to which decisions were either blocked or delayed by developed countries included textiles and clothing, proposals for addressing the crisis of declining commodity prices, Iran's accession to the WTO, and observer status for the League of Arab States.
Kenya and Tanzania presented to the GC a proposal (earlier submitted to the Committee on Trade and Developmen) to deal with the crisis posed to primary commodity dependent countries by the continued decline in the prices of these commodities. They proposed a decision in Cancun to set up a work programme to deal with this problem.
Kenya argued that 50 member countries were dependent on primary commodities like coffee, cocoa, cotton, jute and 30 of these countries were in the HIPC category. For these countries, proposed solutions that simply depended on the free market have not been adequate. Specific proposals to address tariff peaks, tariff escalation and other market access measures were relevant, but they are not enough. More comprehensive measures were needed that would allow the commodity dependent countries to manage supply and prices.
Benin, Columbia, India, Indonesia, Jamaica, Malaysia, Paraguay and Uganda all spoke in support of the proponent countries.
All the major developed countries rejected the core proposal for market supply management, some of them doing little more than using the issues raised as an opportunity to press for their own specific demands for reforms of the Agreement on Agriculture (AoA).
Australia argued that the issues raised showed the need to reform the AoA, but it would not support any proposal for the establishment of commodity agreements. Similarly the US argued that the problem of primary commodities has to do with domestic support and export subsidies. The solution was to seek reform in these areas. The US supported Australia's view that prices should be a function of the market, and that price management schemes were outside the remit of the WTO.
On its part, the EU stated that there was no single answer to the problem of commodity prices. It was open-minded on the question of market access for LDCs. However it doubted the relevance and efficacy of prices stabilisation and management schemes. In any case the issue was already on the agenda for UNCTAD XI and should be pursued there.
The developed countries showed a similar hostility on the issue of textiles and clothing. Two proposals brought by textile exporting developing countries to address fears of increased actions anti-dumping as well quota problems that could arise from the anticipated phase-out of the textile quotas by the developed countries were blocked by the Quad countries.
The proposals in relation to textiles and clothing were jointly submitted by a number of textile exporting developing countries. The proposal on quotas, aimed to address the potential reduction in market access in the year 2004, was submitted by Brazil, Costa Rica, Egypt, Guatemala, Hong-Kong China, India, Indonesia, Macao China, Maldives, Pakistan, People's Republic of China, Sri Lanka, Thailand and Vietnam. The other proposal submitted by the same countries, with the exception of Bangladesh, Brazil, Costa Rica and Egypt, was for the short-term dispensation on anti-dumping actions in favour of developing countries following the full integration of the textile sector into the GATT from January 2005.
At the General Council, India (which chairs the International Textiles and Clothing Bureau, the alliance of developing country textiles and clothing exporters) spoke on both proposals on behalf of the sponsoring countries. On the proposal on anti-dumping, Ambassador Chandrasekhar, explained that the fear of the exporting countries was that as the quota system was phased out, there would be an increase in anti-dumping investigations against developing country exporters.
He noted that in the EU at the moment, industry associations instigate many such anti-dumping investigations. These investigations take a long-time, call upon a lot of resources by the developing countries, leading to disruptions and even decline in production. This has been especially harmful for small and medium enterprises. He added that while the practice may not be as widespread in the US as in the EU, even then, they have similar effects.
Amb. Chandrasekhar expressed the concern that as the quotas are abolished, leading to a downward pressure on prices of textile products in the developed countries, industry associations in the latter countries may be 'encouraged' to instigate anti-dumping actions to protect themselves against developing country exporters.
To address this, the sponsoring countries propose a two-year grace period, following the full integration of the textile sector in GATT, during which no anti-dumping actions would be initiated against developing countries. All the sponsoring countries supported India’s presentation.
Chile, while not being a sponsor of the proposal, argued that the concerns expressed by the proponents highlighted once more the need for urgent action on WTO rules on anti-dumping.
However, Canada countered that it cannot accept a measure such as proposed, which will nullify its citizens' rights of access to its laws.
The US also stated that it could not accept the proposal. In its view, the issue had already been dealt with in the Doha decision of implementation to the effect that developed countries would be considerate when undertaking anti-dumping investigations.
Japan noted that there was the need to reform the rules on anti-dumping but cannot support the proposal. For its part, the EU stated that while it will live up to its Doha commitments, it will not support the proposals.
The General Council therefore took note of the proposal, but recorded that there was no agreement.
The proposal on quota concerned the practice of "carry-forward" currently followed by the textile exporting countries, which faced quota restrictions in developed country markets. The practice enabled the exporting countries to balance their export quotas in a current year against a subsequent year. The fear of the exporting countries is that this flexibility would not be available for the year 2004, since the developed countries are expected to phase out their quotas in 2005.
The proposal concerned mechanisms to avoid difficulties to exporting developing countries due to this situation. This was especially important because, as the countries explained, this is the time most orders for textile products are placed, and therefore a certain amount of security was required as the producers prepare their contracts.
While the US expressed understanding of the concerns, it suggested that there are other ways to address the problem, and therefore was unable to agree to the proposal.
The EU stated that it had received the proposals only recently, and that furthermore such proposal was not foreseen in the Agreement in Textile and Clothing. It was therefore unable to support the proposal.
Ambassador Castillo, Chair of the General Council indicated he would undertake further consultations on the issue.
The above may be instructive in terms of the responses made by members to the report submitted by Ambassador Castillo, Chair of the General Council on the progress so far (or lack of it) on the Doha mandates on Special and Differential Treatment. He reported that of the 83 items listed there under, 38 could be resolved before Cancun. 14 out of these had been agreed to in principle, and 12 of the 14 had been sent back to the friends of the Chair for re-drafting.
Discussing the report, Kenya and Zambia expressed their frustration at the lack of progress on the issue of S&D, and at the failure to achieve the terms of the Doha mandate. The US, however, stated that a lot of hard-work had been put into the issue, and progress had been made. Cuba and Botswana disagreed with the US. Malaysia registered its frustration, while noting that it was confident that progress could be achieved before Cancun.
The EU shared the views of Malaysia, while Norway agreed with India, which shared the widespread frustration and disappointment, but pointed to the need to work hard if agreement is to be reached before Cancun.
Ambassador Castillo summed up by saying that the work was difficult, but he was not demoralised, and was committed to realising the Doha mandate.
On the issue of Iran's request for accession to the WTO, the United States stated that it was still reviewing its relations with Iran. It was therefore not prepared at the moment to join the consensus on establishing a Working Party to consider Iran's application.
Speaking for the developing countries, Tanzania hoped that the US review will be completed soon in order to proceed with Iran's request.
The question of observer status for the League of Arab States at the Cancun ministerial was considered under the agenda item of preparations for the Cancun Ministerial. The Council of Europe Development Bank, the North American Commission for Environmental Cooperation, and the United Nations Human Settlements System made similar requests.
Egypt, speaking on behalf of the Arab states, and supported by Jordan, spoke on the request of observer status for the League. Objection by the US and Israel meant there was no consensus. Ambassador Castillo indicated that the issue would be taken at the next meeting of the General Council.
On the requests by the other bodies, Egypt stated that all the four requests should be taken together. Therefore all the requests will be taken at the next General Council.
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