US embassy cable - 05GENEVA1840

UNCLAS GENEVA 001840 
 
SIPDIS 
 
PASS USTR FOR ALLGEIER, DWOSKIN, HAFNER 
STATE/EB/OT FOR CRAFT 
USDA/FAS/ITP FOR SHEIKH, MTND/HENKE, FAA/SE/WILSON 
USDOC FOR ALDONAS, SPETRINI, JACOBS 
 
E.O. 12958: N/A 
TAGS: ETRD, USTR, WTRO, Trade 
SUBJECT:  WTO RULES/REGIONAL TRADE AGREEMENT NEGOTIATIONS, JULY 
2005 
 
 
1.  Summary/Overview: The Negotiating Group on Rules met on July 
25 for a single day to discuss the Regional Trade Agreements 
(RTAs) element of its mandate.  The first half of the day was in 
formal session and addressed so-called "systemic issues," i.e., 
possible clarifications and improvements to current RTA 
disciplines, while the second half of the day focused on 
"transparency", in particular what kinds of subsequent reporting 
should be required of WTO Members after the WTO had performed its 
review.  On the whole, Members are presenting more defensive 
concerns in the systemic discussions, in effect supporting a weak 
approach to, or even specific dilution of, current disciplines. 
In the Fall, the chair will start a series of informal meetings 
with Members to try to identify which systemic issues need 
clarification for the Hong Kong ministerial. 
 
2.  With respect to systemic issues, there were no further 
comments on the Australia and EC papers on how to measure the 
GATT requirement that RTAs eliminate tariffs on "substantially 
all the trade" between RTA partners.  However, at the end of the 
meeting, Japan formally objected to the use of tariff lines as a 
measure of substantially all trade, thereby placing itself in a 
more explicitly recalcitrant position in the negotiations along 
with other countries whose RTAs have major exemptions for 
agriculture trade (Switzerland, Norway, etc.).  In doing so, 
Japan showed that its years of being a defender of strong RTA 
rules were over, and by comparison, made the EU look serious 
about GATT disciplines. 
 
3.  The NG Rules then considered the paper submitted by 
China (TN/RL/W/185), which called for special and differential 
treatment (S&D) for developing country partners to RTAs with 
developed countries in meeting the "substantially all trade" 
coverage requirement of GATT Article XXIV, and in being eligible 
for phase-outs longer than ten years.  At the same time as 
calling for S&D, the Chinese delegate recognized the relevance of 
tariff lines to determine coverage, called for developed 
countries not to be eligible for phase-outs longer than ten 
years, and supported applying the newly clarified rules to 
agreements currently in force.  Many developing countries agreed 
with the developmental aspects of China's paper.  Japan and 
Canada, which have expressed concerns in the past about broad S&D 
provisions, tried to suggest that the S&D discussion should be 
deferred until it was clearer how the NG Rules intended to 
clarify the rules.  While many Members, including the EU, agreed 
with the proposal to make longer phase-in periods available only 
to developing countries, Hong Kong China and the United States 
noted that developed country Members might also have "exceptional 
circumstances" that warranted longer than ten years under the 
1995 WTO Understanding on Article XXIV. 
4.  Following up on a paper the ACP filed over a year ago, the 
delegate of Barbados made a statement at the end of the 
discussion on systemic issues which emphasized S&D elements for 
those developing countries in the process of negotiating with 
developed countries (converging with China's paper in a way that 
the China delegation later told US delegates had not been 
intended.)  The ACP proposal is widely understood to aim at 
ensuring that ACP Members could have relatively low levels of 
tariff elimination in the RTAs they are currently negotiating 
with the EU to replace its unilateral preference program for the 
ACP countries (maintaining preferential access for bananas, sugar 
and other products of interest to other developing countries.) 
The Ambassador of Colombia reacted sharply against introducing 
new means to discriminate against other developing countries, 
explaining that it had undertaken a study of all the EC-ACP 
agreements, back to the Treaty of Rome, and announcing that she 
would be presenting a paper on her findings. 
5.  During the afternoon, the NG Rules took up transparency 
issues, working off a Chairman's list of questions about the 
nature of periodic or subsequent reporting of significant 
modifications, with the United States trying to keep the content 
and periodicity of reports to a minimum, emphasizing only the 
need to report significant changes, and others such as Hong Kong 
and Taiwan pushing for more frequent and analytical approaches. 
The Chair said that for the fall, he would issue a revised paper 
reflecting the NG Rule's progress on the transparency issue 
overall.  Shark