US embassy cable - 05GENEVA2781

UNCLAS SECTION 01 OF 03 GENEVA 002781 
 
SIPDIS 
 
PASS USTR FOR DWOSKIN 
EB/OT FOR CRAFT 
USDA FOR FAS/ITP/SHEIKH, MTND/YOUNG 
USDOC FOR ITA/JACOBS 
 
E.O. 12958: N/A 
TAGS: ETRD WTRO USTR, Trade 
SUBJECT: WTO HEADS OF DELEGATION MEETING - NOVEMBER 10, 2005 
 
 
1.  Begin Summary. Following a report by Director-General Lamy 
on the lack of movement in recent informal consultations, WTO 
heads of delegation decided on November 10, 2005 to 
"recalibrate" their expectations for the upcoming Ministerial 
Conference in Hong Kong, China.  At the same time, they also 
stressed their conviction to maintaining a high level of 
ambition for the negotiations as a whole as well as the 
importance of using the Hong Kong meeting as an intermediate 
step in reaching a high-quality agreement by the end of next 
year.  Several delegations said they would intensify their 
negotiating efforts prior to Hong Kong and urged others to do 
the same. 
 
2.  There was disagreement, however, over the nature of texts 
for Hong Kong.  Some such as Australia called for primarily 
factual texts identifying areas of convergence and divergence, 
saying the remaining gaps appear too wide to be bridged by 
chairs in numbers or a range of numbers.  Others, including 
the United States and Hong Kong China, felt chairs should have 
greater flexibility in bridging gaps and empowering Members to 
stretch toward the ambitious agreements they are asking for. 
In his conclusion, Lamy expressed the view that chairs should 
be able to decide an approach on a case-by-case basis in order 
to maximize the potential for progress. 
 
3.  In substantive themes, the EC found its immobility on 
agriculture criticized by many Members, with Brazil blaming 
the lack of trust in negotiations to a situation in which one 
partner makes a proposal but a key partner responds that it 
cannot move because it is already at its bottom line.  Many 
Members expressed the view that development should be a key 
theme in Hong Kong.  Egypt (for the Africa Group) argued that 
development is being neglected and criticized recent proposals 
for creating few new commercial opportunities for Africa.  The 
EC and China called for development deliverables in Hong Kong, 
both mentioning cotton and duty-free quota-free market access 
for LDCs and China adding TRIPS/public health.  END SUMMARY 
 
Lamy's Remarks 
 
4.  Director-General Lamy opened with some thoughts about 
process.  He recognized that some delegations are unhappy with 
his exclusion of certain participants from recent informal 
consultations.  He apologized for any hard feelings, saying he 
is committed to a transparent and inclusive process and no 
offense was intended to anyone - his goal, he explained, was 
simply to try to find a consensus among the smallest of 
concentric circles that could then be broadened to the overall 
membership.  He regretted a "trust deficit" among Members 
handicapping the entire negotiation. 
 
5.  Turning to substance, Lamy reported "some bad news and a 
little good news."  In terms of bad news, there has not been 
enough convergence in recent consultations to reach full 
modalities on all of the elements in the July 2004 framework. 
The question now, he said, is whether Members should try for 
full modalities by Hong Kong - "if we try this jump and we 
miss it," he warned, "we might lose what has already been 
achieved."  The alternative, he explained, is to "recalibrate" 
expectations for Hong Kong to what can reasonably be achieved. 
 
6.  In terms of good news, Lamy felt that no Member wants to 
reduce the level of ambition for the round as a whole.  There 
is clearly the will to achieve ambitious results, he said, and 
when there is a will there is a way - "we just have to find 
that way."  He pointed out that what has already been achieved 
in the negotiations is not negligible; much more is needed, he 
emphasized, but if what has already been achieved is lost 
Members would have a big problem.  In informal consultations, 
everyone is expressing the clear desire to preserve what has 
been accomplished so far. 
 
7.  If Members do decide to recalibrate their expectations for 
Hong Kong, Lamy urged them to carefully reflect about process 
so there is not a lessening of ambition for the overall 
negotiations.  By Hong Kong, Lamy felt there still could be a 
range of numbers or parameters in key areas, together with 
corresponding texts on rules so the overall package is 
balanced and can consolidate the progress achieved since the 
July 2004 frameworks.  Lamy then posed two questions to 
Members on the way forward: 
 
-   First, do Members agree with his assessment of the 
    situation? 
 
-   Second, do Members agree on the need for an intermediate 
    stage in Hong Kong before an attempt is made to reach full 
    modalities? 
 
Member Statements 
 
8.  More than thirty Members made statements, using words such 
as "sobering", "realistic", and "disappointing" to describe 
Lamy's diagnosis but agreeing with him that expectations for 
the upcoming Ministerial Conference must be recalibrated.  At 
the same time, many Members underscored the importance of 
maintaining a high level of ambition for the negotiations as a 
whole.  Ambassador Allgeier emphasized that the Hong Kong 
meeting must be as substantive as possible and serve as a 
launching pad to a high-quality agreement by the end of next 
year, and he affirmed that the United States would intensify 
its efforts in the run-up to Hong Kong.  Other Members hit 
similar themes: 
 
-   Ambassador Gosper of Australia stated that any 
    recalibration must not compromise the ambition set out in 
    the Doha Declaration. 
 
-   Ambassador Valles Galmes of Uruguay recalled previous 
    recalibrations in July 2004 and July 2005 and warned of 
    diminishing overall expectations. 
 
-   India's ambassador described Lamy's assessment as "somber" 
    and said it would go along with recalibration but was not 
    a demandeur of it. 
 
-   Chile, China, and Hong Kong China emphasized the 
    importance of maintaining the intensity and avoiding 
    slippage in the negotiations. 
 
9.  Members disagreed over the nature of texts for Hong Kong. 
Australia called for primarily factual texts identifying areas 
of convergence and divergence, saying remaining gaps appear 
too wide to be bridged by chairs.  Argentina, the EC, Brazil, 
Switzerland, and others opposed the use of numbers in the 
absence of agreement on full modalities.  Hong Kong China felt 
chairs should be free to advance the process in any way they 
can, narrative or numerical.  Ambassador Allgeier opined that 
chairs must strike a delicate balance, representing Member 
views on the one hand but also empowering them to stretch 
toward the ambitious agreements Members are asking for. 
 
10.  The EC's agriculture stance was implicitly or explicitly 
criticized by many Members.  Ambassador Hugueney of Brazil 
attributed the lack of trust to difficulties created when 
proposals are made and the response from a key partner is that 
it cannot move because it is already at its bottom line. 
Costa Rica said it is looking for a sign from the EC that 
ambitious outcomes are possible in all areas.  Uruguay said 
some Members are showing more flexibility than others and 
added that the talks could be in trouble if some Members have 
no room to maneuver - "if that is the case, recalibration 
won't solve the problem." 
 
11.  Many Members hit development themes.  On behalf of the 
Africa Group, Egypt strongly argued there has been little 
progress on issues of commercial importance for African 
countries, citing preference erosion, cotton, TRIPS/public 
health, and the five LDC-specific proposals as of critical 
importance.  Zambia (for LDCs), Tanzania, and Kenya all argued 
that development should be the main theme in Hong Kong.  The 
EC and China called for development deliverables including 
cotton and duty-free, quota-free market access for LDCs. 
China also mentioned TRIPS/public health. 
 
12.  Many delegations including Chile, the EC, Hong Kong 
China, and Switzerland stated that the Ministerial Conference 
can still be a success by consolidating progress made since 
the July 2004 package.  Many Members used the term "launching 
pad" to describe the Ministerial Conference's importance in 
kick-starting the final phase of negotiations in 2006.  Korea 
and Singapore added that Lamy's transition to a more 
integrated approach in the negotiations has been a positive 
development.  Other points made by Members that might be of 
interest to Washington agencies include: 
 
-   India, Brazil, and China highlighted the need for balance 
    across issues, with India repeating Nath's statement that 
    the negotiations turn on more than one pivot. 
 
-   India, Egypt on behalf of the Africa Group, and Mexico 
    said they would oppose attempts to reinterpret existing 
    mandates in the negotiations. 
 
-   Singapore and Thailand saw the need for members to have a 
    program and list of priorities to give them a clear sense 
    for what they need to accomplish in 2006. 
 
-   Jamaica worried that progress on its priorities is lagging 
    and an intermediate step in Hong Kong could deepen 
    existing imbalances. 
 
-   The Philippines highlighted the importance of gaining 
    greater clarity on issues set out in annex B, paragraph 8 
    of the July 2004 decision. 
 
-   Bulgaria noted the importance it attaches to GIs and 
    expressed concern that Hong Kong, as an intermediate 
    stage, might lock in concessions made conditionally. 
 
-   Colombia stated that agriculture equates to development 
    and argued that more countries should recognize the gains 
    that will come from better market access. 
 
-   Argentina asked Lamy whether changing expectations for the 
    Ministerial Conference also meant a delay in the mid- 
    November target date for texts. 
 
-   The Democratic Republic of the Congo asked Lamy how he 
    planned to put development back at the center of the 
    negotiations. 
 
Lamy's Assessment 
 
13.  Following Member statements, Lamy said he heard 
widespread agreement that Members share his disappointment but 
see a need to recalibrate their objectives for Hong Kong.  At 
the same time, however, they clearly do not want to reduce 
their ambitions for the negotiations and want the Hong Kong 
meeting to be a positive step toward completion of the 
negotiations in 2006.  There is also strong agreement on the 
need for texts to prepare capitals for Hong Kong, he judged, 
but he regretted the insistence on a bottom-up approach that 
he felt implies a lack of confidence in the process. 
 
14.  There the consensus stops, Lamy felt, creating a problem 
for chairs in devising texts.  There seem to be two views - 
one that chairs should prepare factual reports with no 
numbers, and another that chairs should do whatever they can 
to capture progress achieved since July 2004 and one way to do 
that is to give them the option of including numbers.  The 
first view is defensive and tactical, he judged, while the 
second is oriented toward narrowing gaps and covering as much 
distance as possible.  He concluded that chairs should be able 
to decide an approach on a case-by-case basis in order to 
maximize the potential for progress. 
 
15.  Then Lamy responded to the questions on timing (from 
Argentina) and development (by Democratic Republic of the 
Congo).  On timing, Lamy said the date for some texts is 
slipping, but it cannot go beyond late November if ministers 
and capitals are to have sufficient time for review.  On 
development, Lamy emphasized that Hong Kong must reaffirm the 
development aspect of the negotiations and credibly advance 
issues such as S&DT and the package of LDC-specific issues, 
but he repeated his view that progress here can be no 
substitute for progress elsewhere and stressed that the 
greatest development gains will come from the pillars of the 
negotiations. 
 
16.  The EC asked whether Lamy's approach might "introduce 
modalities through the back door" and cause confusion if 
chairs issue texts that do not emanate from convergence among 
Members.  Lamy responded sharply, first "thanking" the EC for 
so clearly expressing the suspicion that he'll be heavy-handed 
in preparations for Hong Kong and then opining that "one 
doesn't need to be clairvoyant" to understand why the EC 
doesn't want numbers in texts.  He urged Members to trust the 
chairs they've appointed, to try to improve confidence in the 
process, and to continue working hard to achieve balanced 
texts by Hong Kong.  Allgeier