US embassy cable - 05GENEVA1258

UNCLAS SECTION 01 OF 04 GENEVA 001258 
 
SIPDIS 
 
PASS USTR FOR ALLGEIER AND DWOSKIN 
EB/OT FOR CRAFT 
USDA FOR FAS/ITP/SHEIKH, MTND/HENKE 
USDOC FOR ITA/JACOBS 
 
E.O. 12958: N/A 
TAGS: ETRD WTRO USTR, Trade 
SUBJECT: MAY 2005 MEETING OF THE WTO TRADE NEGOTIATIONS COMMITTEE 
 
SUMMARY 
 
1.  The 19 May 2005 meeting of the WTO Trade Negotiations 
Committee lasted only one-half day, with most Members either 
restating well-known positions or refraining from intervening 
altogether (including the United States, Japan, European 
Communities and Brazil).  The limited engagement was primarily 
due to the short time period since the last TNC meeting, which 
was held on 28 April 2005, with only trade facilitation and rules 
(regional trade agreements) negotiating groups having met during 
the intervening period.  While the meeting was brief, the tone 
was more upbeat than the April meeting, reflecting Members' 
relief that agreement had been reached, at the Paris mini- 
ministerial meeting, on the ad valorem equivalents (AVE) 
"gateway" issue for agricultural market access negotiations. 
Many Members also welcomed that substantive discussion had begun 
on certain "agreement-specific" special and differential 
treatment proposals within the Committee on Trade and Development 
Special Session.  The Services Council Special Session Chairman 
made a downbeat assessment of the state of his group' 
negotiations, noting that 39 developing countries and 31 least- 
developed countries still had not made initial market access 
offers (now two years overdue).  Notwithstanding the general lack 
of progress in services, several Members expressed appreciation 
to Canada for making the initial revised services market access 
offer.  Switzerland and several developing countries emphasized 
the need to maintain a transparent and inclusive process leading 
up to the July and beyond. 
2.  There were many comments on the likely form of the "first 
approximation" for the July 2005 General Council meeting.  There 
seems to be a general acceptance that the Chairman will issue a 
report that takes stock of progress in the negotiations in all 
areas, but also identifies significant gaps that will need to be 
overcome to serve as a "roadmap" for the negotiations leading up 
to the December 2005 Hong Kong Ministerial Conference.  Members 
also seem to appreciate the need for greater specificity, at this 
point, in some negotiating areas, notably agriculture and non- 
agricultural market access (NAMA), than in others.  The TNC 
Chairman provided an oral status report on "implementation- 
related" issues, pursuant to Article 12 of the Doha Declaration, 
noting some positive signs, but continuing divergences of views. 
He urged Members to "redouble" their efforts on these items.  He 
will report further on the items at the July 2005 General Council 
meeting.  The Chairman ended the meeting without scheduling a 
date for the next TNC meeting, preferring to use informal 
meetings and consultations to generate momentum through inter- 
linkages across all negotiating areas.  End Summary. 
 
Chairman's Report on the 
Status of Doha Negotiations 
 
3.  TNC Chairman Supachai's introductory comments were generally 
upbeat, noting that the situation had brightened since the April 
meeting as a result of renewed impetus received from ministers. 
With only 30 working days remaining until the July 2005 meeting 
of the General Council, it is important to coordinate work in 
Geneva with ministerial gatherings taking place elsewhere. 
Supachai does not envisage a package of decisions to be taken at 
the July meeting, as was done in 2004, but there is a need to 
provide ministers a clear picture of where to focus work in order 
to make Hong Kong a success.  The substantive basis for the July 
report will need to be developed within the negotiating groups, 
but it is already evident that there will be different levels of 
specificity for various areas of the negotiations. 
 
4.  Supachai briefly summarized his perceptions of the 
developments in the principal negotiating areas.  Beginning with 
agriculture, the agreement on ad valorem equivalents was seen as 
a positive sign, although further technical work, notably in 
verification, is required in order to enter into the hard work of 
developing a market access methodology.  Supachai is hopeful that 
the agreement on AVEs will lead to a "knock on" effect in other 
negotiating areas, particularly in NAMA.  While there are five 
formula proposals for NAMA, the divergences are considerable. 
Supachai noted satisfaction that the Committee on Trade and 
Development (CTD) Special Session is now discussing substance, 
rather than process, with respect to agreement-specific special 
and differential (S & D) treatment proposals.  Supachai's 
assessment of the status of the services negotiations was 
downbeat, particularly critical of the Members that have not yet 
submitted initial offers, now two years overdue.  Supachai will 
write a second, stronger letter to ministers of Members that have 
not yet submitted their initial market access offers.  Supachai 
recognized that good progress was being made in the trade 
facilitation negotiations, with quite a number of new proposals, 
including many from developing countries.  He noted that the 
Rules Group had met earlier the same week to discuss regional 
trade agreements and will meet end May to discuss other areas. 
Supachai observed that while there has been good engagement in 
Rules, "concrete progress is needed as soon as possible." 
 
"Implementation-Related Issues" 
 
5.  In his capacity as WTO Director General, Supachai reported on 
the consultative process for "implementation-related" issues.  He 
recalled that the consultations were taking place in two tracks, 
one track for extension of geographic indications (GI), and 
another track for all other proposals pursuant to paragraph 12 of 
the Doha Declaration.  Supachai summarized the status of the non- 
GI items, as groups: relationship between TRIPS and Convention on 
Biodiversity (CBD); transfer of technology; balance of payments 
(with a focus on the tiret 3 review); services (where some 
Barbados will provide greater precision to St. Lucia's proposal 
on redistributing negotiating rights); TRIMS tiret 40; customs 
valuation agreement (CVA) proposals; safeguards (where the 
proponent has reserved possibility to return to the discussion in 
the future); and TBT.  Supachai described progress overall as 
modest, but he is hopeful that some substantive results are 
possible, without specifically identifying which items he had in 
mind. He did indicate that for several items, including CVA, 
safeguards and TBT, there does not appear to be any clear way 
forward, and, in the case of TRIMS, that a political decision 
would be required.  For GI extensions, the Secretariat has 
prepared a compilation of views on the relevant technical issues, 
but it is clear that differing views remain on the desirability 
of extending GI protection.  He intends to propose, at the next 
General Council meeting, that the process be continued on both 
tracks, with a report to be made at the July 2005 General Council 
meeting. 
 
Reports from Negotiating Group Chairs 
 
6.  The Council for Trade in Services Special Session Chairman 
reported that only one new initial offer, from Brunei, had been 
submitted since his last report, bringing the total number of 
initial offers to 53 (with the EC counted as one).  Seventy 
Members, 39 developing countries and 31 least-developed 
countries, still need to submit initial offers.  He recalled the 
May 2005 deadline for submitting revised offers and noted the 
recent receipt of the first such offer from Canada.  At the next 
services meeting, the Chairman intends for the Group to assess 
the number and quality of offers, consider the development of 
analytical tools, consult on special and differential treatment, 
and further work on modalities for least-developed countries. 
 
7.  The NAMA Chairman said work at the meeting to be held during 
the week of 6 June 2005 will focus on unbound tariffs and AVEs, 
in light of developments in the agriculture negotiations.  There 
will also be a brainstorming session on non-tariff barriers. 
There have been five proposals on the formula approach, but there 
is no sign yet of possible convergences.  The NAMA Chairman 
encouraged Members to intensify consultations among themselves, 
because the June meeting is the last scheduled NAMA meeting 
before the July General Council. 
 
8.  The Committee on Trade and the Environment Special Session 
Chairman reported progress efforts to develop, by the Hong Kong 
Ministerial, a list of environmental goods for tariff reduction 
or elimination pursuant to paragraph 31(iii) of the Doha 
Declaration. The Secretariat has prepared a compilation of 
environmental goods drawn from five proposed lists of goods. 
The Chairman called for a more broad-based participation in the 
discussions and encouraged developing country Members, in 
particular, to submit proposals for product lists.  The next 
meeting of the CTE Special Session is scheduled for 7-8 July, but 
the Chairman is prepared to convene a special meeting in June, if 
new proposed lists are received.  The Chairman noted that gaps 
need to be narrowed with respect to the subparagraphs 31 (i) and 
(ii) (relating to multilateral environmental agreement elements) 
of the Doha mandate. 
 
9.  The Dispute Settlement Body Special Session Chairman said 
there had been a single meeting since the April meeting of the 
TNC, but he "did not want to overstate progress, since there had 
not been much convergence."  He expects the July result in this 
area to be a report on the discussions thus far and an indication 
of what the group hopes to accomplish for Hong Kong.  However, he 
does not expect to achieve agreement on the elements of the Hong 
Kong result by July.  While the Chairman recognizes the need to 
move to a text-based discussion, he cautioned Members that he 
cannot be expected to pull a draft out of thin air. 
 
10.  The Negotiating Group for Trade Facilitation Chairman said 
the May 2005 trade facilitation meeting had a constructive 
atmosphere and a de-politicized discussion.  The group had made a 
notable achievement in framing issues and there are now 32 
proposals for modalities, with roughly two-thirds of such 
proposals coming from developing countries.  The Chairman 
observed that all the proposals aim to simplify and reduce import 
and export procedural requirements, strengthen transparency and 
due process, and incorporate elements relating to special and 
differential treatment and capacity building. 
 
11.  The Rules Negotiating Group Chairman said there were 
elements of progress on regional trade agreements.  For 
transparency of goods agreements, there had been a revised note 
from the Chairman containing points of convergence in 
notifications, presentation and reviews.  The Group also recently 
analyzed a mock Secretariat-prepared services agreement.  For 
systemic issues, an Australian paper offered some possible 
solutions relating to "substantially all trade" and an EC paper 
discussed RTA disciplines and linkages to the Enabling Clause. 
Several documents have been submitted for the Group's end-May 
meeting to discuss antidumping and subsidies issues. 
 
12.  The CTD Special Session Chairman said the 6 April meeting 
had been suspended due to different views on the timing of the 
discussions for agreement-specific proposals and cross-cutting 
issues.  Members will address the LDC agreement-specific 
proposals as a matter of priority.  The work has gotten back on 
track, as Members are now discussing the substance of the issues, 
rather than process, and the Chairman hopes to have some 
recommendations for the July General Council meeting. 
 
Statements from Participants 
 
13.  Interventions were made by Korea, Mexico, Rwanda (on behalf 
of the Africa Group), Canada, India, Zambia (on behalf of the LDC 
Group), Uganda, Hong Kong China, Kenya, Benin (on behalf of the 
ACP Group), Botswana, Singapore, Indonesia, Switzerland, 
Malaysia, Thailand, Peru, Bolivia, Chile and Barbados. 
 
14.  Agriculture:  All the interventions referred positively to 
the resolution of the ad valorem equivalents "gateway" issue for 
market agricultural market access negotiations. However, several 
Members noted a great deal of time had been devoted to this 
technical issue and little time remained for the real 
negotiations on the formula, and treatment of special and 
sensitive products.  The ACP Group registered its concern about 
the treatment of sugar by the AVE agreement and it cautioned 
against an outcome that would lead to the disappearance of a 
"system" for agriculture upon which most of its members rely. 
The African, LDC and ACP Groups made predictable interventions 
with respect to cotton, sugar and preference erosion. 
Switzerland identified GI extension as a crucial component of the 
overall balance in the negotiations.  Presumably because of the 
AVE discussions, Switzerland cautioned against small group 
discussions, particularly with Chairman or Secretariat 
participation, that did not allow Members to make their views 
known on specific issues of particular importance. Korea and the 
ASEAN countries also made references to the need for 
inclusiveness and transparency in the negotiating process. 
 
15.  Development:  Developing countries made predictable calls 
for progress on the "development dimension" of the Doha Agenda, 
including attention to the special and differential treatment 
items (in both the CTD Special Session and within the negotiating 
groups), "implementation-related" issues, cotton, sugar, 
preference erosion, and TRIPs and Public Health.  India, Bolivia 
and Barbados requested a "development audit" of the all areas of 
the negotiation, to get an outline of development outcomes that 
could be expected at Hong Kong.  India and Peru described a 
solution to the TRIPS and the Convention on Bio-Diversity issue 
as essential to reaching a balanced result, and requested a clear 
mandate in July for further work.  Canada announced that it had 
amended its patent, food and drug act to provide a framework for 
the exportation of low-cost drugs to developing countries. 
 
16.  NAMA:  Members had little to say about the NAMA 
negotiations, presumably because there had not been a meeting or 
other notable developments since the April TNC meeting. 
Developing countries reiterated calls for "less than full 
reciprocity," "special and differential treatment," consideration 
of preference erosion, and duty-free, quota-free access for 
imports from least-developed countries.  Switzerland and 
Singapore spoke up for maintaining ambition in the discussions, 
with Hong Kong China adding that Members have been too focused on 
the pain and not on the benefits to be derived from the 
negotiations.  Switzerland added that the level of ambition for 
NAMA should not diverge considerably from the level for 
agriculture.  Mexico expressed confidence that a convergence can 
be obtained by July on the formula, with flexibilities for 
developing countries. 
 
17.  Other Negotiations:  There was little said beyond passing 
references to the services, rules and trade facilitation 
negotiations.  Canada announced that it had submitted the first 
revised offer for services, and said that it had included 
improvements for Mode 4, as well as in a number of specific 
sectors.  Canada encouraged other Members to join it in making 
services offers public, as a means to improve transparency in the 
negotiating process.  On rules, there were no calls, this time, 
to begin text-based negotiations, although Mexico asked for a 
Secretariat-prepared compendium, grouped by topic, of the 158 
 
SIPDIS 
antidumping proposals.  Kenya expressed appreciation for the 
large number of trade facilitation proposals, but felt that some 
went beyond the scope of the negotiating mandate.  Kenya also 
sees a need to "operationalize" technical assistance that is to 
be provided in parallel with the trade facilitation negotiations. 
The only mention of the dispute settlement understanding 
negotiations was by Mexico, which described them as a very 
important element. 
 
Concluding Remarks 
 
18. TNC Chairman Supachai concluded the meeting by noting that 
ministers expect to receive a broad substantive outcome in July 
that can lead to a successful conference in Hong Kong.  Supachai 
wants to have clear ideas for agriculture in all three pillars. 
For agricultural market access, Members will need to confront 
issues of the formula, bands and thresholds, as well as 
definitions of special and sensitive products.  The work in NAMA 
needs to be reinforced, with a concrete shape for the formula, 
coefficients, and flexibilities for developing countries.  There 
should be equivalent specificity for agriculture and NAMA, with 
important divergences in each negotiating area identified.  For 
development, Supachai encouraged redoubled work on the LDC 
agreement-specific S & D proposals, as well as balance on other 
development items.  Supachai did not announce a date for the next 
meeting of the TNC, preferring to focus on work in consultations, 
as a means of making progress in all areas in a balanced manner. 
 
Deily