US embassy cable - 05GENEVA2179

UNCLAS SECTION 01 OF 04 GENEVA 002179 
 
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: MEETING OF THE WTO TRADE NEGOTIATIONS COMMITTEE (TNC) 
- SEPTEMBER 14, 2005 
 
 
Summary 
 
1.  On September 14, 2005, the new WTO Director-General, 
Pascal Lamy, convened his first meeting of the Trade 
Negotiations Committee to outline a process for advancing the 
Doha Development Agenda (DDA) and ensuring that the upcoming 
Ministerial Conference in Hong Kong, China is a success.  Lamy 
brought a new brisk, no nonsense style, emphasizing that he 
wanted more negotiating and less speeches.  The Chairs 
followed his example in their presentations and Member 
comments were limited and to the point. 
 
2.  Lamy's overall message is that Hong Kong should serve as 
the two-thirds point in the negotiations and set the stage for 
completion of the negotiations at the end of 2006.  In his 
statement, he pointed to key issues where he felt progress 
will be central to advancing the negotiations and he 
identified key actions that were needed for each of them.  In 
terms of process, Lamy set a couple of informal benchmarks for 
the negotiations.  By mid-October, he said Members should be 
in a position to assess the progress being made and define 
their ambitions for the Ministerial Conference, and by mid- 
November, the negotiating groups should have produced 
substantive and specific results so there is sufficient time 
for review in capitals.  Time is short and Members are 
entering a three-month period of ongoing permanent 
negotiations leading up to Hong Kong, he said.  He closed by 
urging Members to stay ambitious and not to settle for lowest- 
common denominator outcomes. 
 
3.  Following Lamy's presentation, the TNC heard reports from 
the negotiating group chairs and fourteen Members made 
statements.  Lamy did not suggest a date for the next TNC, 
saying he would have a clearer picture of how to proceed 
following upcoming negotiations in key areas. 
 
Lamy's Statement 
 
4.  Lamy opened the meeting by saying the essential question 
is - what do Members have to do to ensure that Hong Kong 
serves as the two-thirds point in the negotiations and sets 
the stage for successful conclusion at the end of 2006?  This 
is the objective we should focus on, he said, because if 
Members do not make it two-thirds of the way in Hong Kong then 
prospects for a conclusion in 2006 will be seriously 
compromised. 
 
5.  Lamy then presented a "precise diagnosis" of essential 
questions to be solved if Members wanted to arrive at a 
coherent result in Hong Kong.  The list is not exhaustive, he 
said, but these issues are "strategic" and progress is 
necessary to turn what has been a vicious cycle into a 
virtuous one. 
 
-    Progress on agriculture is needed urgently, he said. 
     Members should prepare agreement on an end date for 
     export subsidies as well as parallelism for state trading 
     enterprises, export credits, and food aid.  Members need 
     a clear vision of what will be done on domestic supports 
     including the reduction commitments and a tiered formula 
     for reductions of the final bound aggregate measure of 
     supports.  On market access, there should be a solid 
     package of equivalent ambition to the other pillars 
     including a tiered formula with flexibilities for 
     sensitive and special products.  In addition, we must 
     tackle "all elements of the cotton dossier," he 
     emphasized. 
 
-    A lot of work remains to be done on NAMA, he said, 
     including on core elements of formula, flexibilities, and 
     unbound tariffs.  Members need to strike the right 
     balance between formula and flexibilities and make 
     progress on the issues of preference erosion, sectors, 
     and non-tariff barriers. 
 
-    On services, there is a new dimension - the importance of 
     the issue for developing countries - that should energize 
     the negotiations.  In the run-up to Hong Kong, Members 
     should develop different approaches that lead to more and 
     better commitments to open trade as well as improvements 
     in services rulemaking. 
 
-    On rules, Lamy framed the goal for Hong Kong as "arriving 
     as closely as possible to draft negotiated texts on 
     antidumping, services and countervailing measures, and in 
     fisheries subsidies."  He encouraged Members to make 
     "third-generation proposals" as well as drafting 
     suggestions as soon as possible so that Members can focus 
     on improvements in Hong Kong. 
 
-    Development should be integrated across all of the issues 
     in the negotiations so the sum of results in each area 
     delivers on the development dimension of the 
     negotiations.  In addition, there are development-related 
     issues such as work on special and differential treatment 
     where Members need to define an acceptable outcome for 
     Hong Kong.  He opined that Members should intensify work 
     on TRIPS/public health so that agreement can be reached 
     to amend the TRIPS text.  He said that an "aid for trade" 
     window would be essential to turn the development promise 
     of the round into reality and noted the IMF and World 
     Bank have started work on it. 
 
6.  On process, Lamy said he hoped today's TNC session would 
mark the beginning of a new and more productive phase for the 
TNC.  He would call more formal and informal meetings, he 
said, but before scheduling anything specific he wanted to let 
the negotiating process continue in the respective groups. 
There are only three months left, he said, and Members should 
consider themselves in ongoing permanent negotiations. 
 
7.  In assembling the package for ministerial consideration in 
Hong Kong, Lamy said it would be important to make a 
transition between a vertical, issue-specific approach and an 
integrated approach.  That task would be accomplished in a 
"bottom-up" fashion, he explained, with the components of the 
package being developed by Members in the negotiating groups, 
rather than a top-down approach where the DG or someone else 
simply threw a comprehensive text on the table. 
 
8.  He closed by setting a couple informal benchmarks - by mid- 
October, Members should be able to assess progress and define 
their ambitions for Hong Kong, and by mid-November, the 
process should aim for specific results and a consolidated 
text so that there is sufficient time for review in capitals. 
Lamy urged Members to stay ambitious, and not to settle for 
least-common denominator results. 
 
Statements by Chairs 
 
9.  Lamy then invited the chairs to make statements, noting 
that the chair of the rules negotiations - Ambassador Valles 
Galmes of Uruguay - was out of town. 
 
Agriculture 
 
10.  The agriculture chair, Ambassador Falconer of New 
Zealand, began by emphasizing that there is much to be done by 
mid-November.  For better of worse, the negotiations are in a 
new phase, after the last phase (ending in July 2005) did not 
succeed in achieving a first approximation of modalities.  Now 
we are on a path where we must achieve modalities by mid- 
November.  It will be important to focus on essentials, both 
in terms of issues and sequencing. 
 
11.  To move forward, there must be political movement.  We 
hear that intensive work is going on in capitals, but we have 
yet to see the fruit of any new developments.  In short, we 
are still where we were in July, when Ambassador Groser 
prepared his overall assessment of the negotiations, and there 
is very little time to prepare for Hong Kong.  He then posed 
three questions that would be pivotal to progress and which 
have been the topic of recent negotiations: 
 
-    First, on structure, should we continue to focus on a 
     structure without numbers, or should we tackle both 
     structure and ambition at the same time?  Do we need 
     numbers to help us move the discussion of structure 
     forward? 
 
-    Second, how do we define the level of ambition? 
 
-    Third, with respect to balance, to what extent do we need 
     to look at overall balance across the pillars?  What are 
     the tradeoffs necessary to reach agreement? 
 
Services 
 
12.  Ambassador Jara began with an assessment of offers, 
saying there is widespread disappointment with the state of 
play including the number and quality of offers as well as new 
business opportunities created.  At the current rate we would 
be very lucky, he said, if we had a critical mass of initial 
offers by the end of the round.  [Note: Jara tabulated that 
there have been 69 initial offers from 93 Members, meaning 
there are more than twenty offers outstanding not including 
LDCs or more than fifty including LDCs.  Revised offers were 
due last May, he added, and so far there have been only 27 
from 51 Members.] 
Services negotiators have an intensive schedule leading up to 
the next services cluster on topics such as modalities for 
LDCs, which he felt should be part of the Hong Kong package, 
and on finding complementary approaches to request-offer to 
help address what he described as "the current unsatisfactory 
situation."  Leading up to Hong Kong, he would work to further 
identify the expectations of Members across all aspects of the 
negotiations. 
 
NAMA 
13.  Ambassador Johannesson agreed with Lamy that time is 
short and that the negotiations are entering a difficult 
phase.  Future meetings would address formula, unbound 
tariffs, and flexibilities in an integrated and hopefully more 
forward-looking manner.  Key challenges will be optimizing the 
balance between ambition and flexibility and moving to a 
meaningful dialogue over numbers.  In addition, it will be 
important to address non-tariff barriers, he said, and he 
called for specific proposals from Members wishing to address 
the issue, reporting that so far proposals have not been 
forthcoming.  He asked Members to stay on call in a continuous 
negotiating mode prior to Hong Kong. 
 
TRIPS 
 
14.  Ambassador Ahmad provided a short report, explaining that 
there would be formal and informal efforts in the run-up to 
Hong Kong to try to overcome remaining blockages.  A 
disagreement over the linkage of one proposal to the mandate 
of the Special Session has been resolved and all proposals can 
now be discussed.  That is but a first step, he emphasized, 
and there has been no narrowing of differences on substantive 
issues including legal effects, participation, and cost and 
administrative burdens. 
 
Trade and Environment 
 
15.  Ambassador Ali recalled that while all aspects of the 
mandate are important, the paragraph 31 (iii) aspect related 
to the reduction or elimination of tariff and non-tariff 
barriers to environmental goods and services remains the best 
candidate for tangible progress by Hong Kong.  On this item, 
Members are trying to get a sense of what can be achieved in 
Hong Kong on the basis of a list approach, an environmental 
project approach, and/or other approaches.  Other aspects of 
the mandate are equally important, he said, asking Members to 
reflect on what can be achieved. 
 
Dispute Settlement Understanding 
 
16.  Ambassador Spencer said he did not have much to add to 
his written report from July.  The focus of the upcoming 
negotiating session would be on five or six contributions made 
by Members in previous months.  He hoped there would be a text 
by Hong Kong, but that would be up to the Members to decide. 
Members should focus on what they want out of this review, he 
said, and it is the responsibility of Members to negotiate 
amongst themselves to make this happen.  He quipped that if 
the negotiations were a football match, it was time for the 
goal-keepers to become strikers. 
 
Trade Facilitation 
 
17.  Ambassador Noor gave a short report, noting that there 
have been no meetings since the last TNC but work to prepare 
for the Ministerial Conference would resume soon.  Next steps 
included a further assessment of proposals made, and the 
Secretariat compilation in TN/TF/W/43 would help to advance 
 
SIPDIS 
discussions.  There has been a special focus on technical 
assistance, capacity building, and special and differential 
treatment, he said, where some progress has already been made 
but concrete ideas are needed. 
 
Trade and Development 
 
18.  Faizel Ismael reported that there has been intensive work 
on the five LDC-specific issues - differences are narrowing 
and although Members are very close on some of those issues, 
they have not yet agreed on any of them.  His approach in the 
near term would be to consult on what Members hope to achieve 
in Hong Kong, try to resolve the LDC-specific issues, and then 
move on to other agreement-specific proposals including those 
made by the Africa Group. 
 
Statements by Members 
 
19.  Fourteen Members made statements, most of them heeding 
Lamy's request to be concise and not to repeat well-known 
positions.  Themes included the shortness of time, the 
centrality of agriculture, the importance of transparency and 
inclusiveness.  A few specific points may be of interest to 
Washington agencies: 
 
-    India expressed concern that implementation issues were 
     not included in Lamy's presentation.  India described 
     these issues as "vital" and called for progress 
     specifically on TRIPS/CBD as well as granting additional 
     flexibilities for developing countries in the TRIMS 
     agreement. Bulgaria also pointed to implementation, 
     opining that GIs is "the only implementation issue 
     specifically mentioned in the Doha Declaration" and 
     describing it as a key to a successful Ministerial 
     Conference.  Lamy responded that he would continue the 
     same level of attention and involvement in these issues 
     as his predecessor. 
 
-    In a reference to bananas, Honduras pointed to 
     "collateral issues" that have important implications for 
     the negotiations.  Lamy responded that it would be 
     important to ensure that litigation deadlines did not 
     interfere with the negotiations. 
 
-    Costa Rica stressed the importance of tropical products 
     and urged Lamy, in his consultations with different 
     regions, to take into account differing viewpoints within 
     regions.  Lamy provided assurances that he would consult 
     with all participants.  Shark