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UNCLAS SECTION 01 OF 03 PRETORIA 000677 
 
SIPDIS 
 
C O R R E C T E D COPY (CAPTION CHANGE) 
 
SIPDIS 
 
DEPT FOR AF/S, AF/EPS, EB/TPP/MTA AND BTA 
DEPT PLEASE PASS TO USTR 
COMMERCE FOR ITA/JDIEMOND 
USDA FOR FAS/ETERPSTRA, KROBERTS, AND FAS/ITP 
 
E.O. 12958:  N/A 
TAGS: ETRD EAGR ECON WTO SF
SUBJECT:  DOHA ROUND:  LAMY URGES SOUTH AFRICA TO ASSUME 
GREATER LEADERSHIP 
 
PRETORIA 00000677  001.2 OF 003 
 
 
¶1.  Summary.  WTO Director General Pascal Lamy opened his 
address to the South African Institute for International 
Affairs in Johannesburg on February 10 with the conclusion 
that he and others were right to "recalibrate expectations" 
for December Ministerial in Hong Kong.  As a consequence, 
results exceeded expectations and now there is greater 
attention to what remains to be done.  Lamy felt that South 
Africa had the size and competitiveness to assume a more 
offensive position in the negotiations, and to show other 
developing countries that they, too, could pursue offensive 
interests.  Lamy claimed that everyone knew what had to be 
done to move negotiations forward.  The United States had to 
give more on agricultural domestic support.  The European 
Union had to give more on agricultural market access. 
Developing countries had to give more on industrial tariffs. 
Throughout, Lamy emphasized that every issue discussed in 
Hong Kong embodied a very strong development dimension.  End 
Summary. 
 
Protestors 
---------- 
 
¶2.  As soon as Lamy began his talk at the South African 
Institute for International Affairs on the campus of the 
University of the Witswaterand, a dozen raucous protestors 
started chanting anti-WTO slogans.  Once escorted out of the 
building, they continued chanting next to the window of the 
auditorium for the entire two hours in an effort to disrupt 
the event.  It was in this atmosphere that Lamy lifted points 
from his prepared statement and answered questions.  His 
prepared statement may be found at: www.saiia.co.za or 
www.wto.org/English/news e/sppl e/spll18 e/htm. 
 
Lower Expectations Exceeded 
--------------------------- 
 
¶3.  Lamy began with the conclusion that he and others were 
right to "recalibrate expectations" for December Ministerial 
in Hong Kong.  The result was that the Ministerial exceeded 
expectations in agreeing on a date for the elimination of 
agricultural export subsidies and on the notion that 
developing countries could employ a separate coefficient to 
calculate tariff reductions using the Swiss formula.  He 
listed a number of other areas where progress was made, and 
pointed out that every issue discussed in Hong Kong embodied 
a very strong development dimension. 
 
South Africa 
------------ 
 
¶4.  Hong Kong also opened the door for plurilateral 
negotiations in services, an area where Lamy believed South 
Africa should play a leading role.  He felt that South Africa 
had the size and competitiveness to assume a more offensive 
position in the negotiations.  In addition, South Africa 
should recognize that services were hugely important to its 
own growth and development, and for the growth and 
development of the rest of Africa. 
 
¶5.  Later, Lamy criticized South Africa for taking a 
defensive approach to industrial tariffs and services, 
despite having offensive interests at stake, especially in 
the areas of tariff peaks and escalation.  South Africa could 
play a constructive role on issues surrounding preference 
erosion, as it had suffered from the elimination of textile 
and apparel quotas and could understand both sides.  While a 
successful Doha Round would result in further preference 
erosion, especially when it came to AGOA and the EU's 
"Everything But Arms," Lamy questioned the notion that the 
effort to reduce trade barriers should be scrapped for the 
sake of maintaining preferences.  Finally, he argued that 
much more should be done to advance south-south trade, since 
two-thirds of customs charges paid by developing countries 
went to fellow developing countries.  Lamy hoped South Africa 
would be a leader in this regard, to show other developing 
countries that they, too, could pursue offensive interests. 
 
Timelines and Deadlines 
----------------------- 
 
¶6.  Lamy explained that the expiration of U.S. Trade 
Promotion Authority in July 2007 meant that there was less 
than a year left to finish Doha trade negotiations.  This was 
because lawyers would need three months to put any agreement 
into final form, and the U.S. Congress must be notified 
 
PRETORIA 00000677  002.3 OF 003 
 
 
90-days before it could schedule a vote.  Complicating 
matters was the fact that several important WTO members 
(including the United States) would hold elections in the 
second half of 2006.  Therefore, most of the hard work would 
have to be done during the first half of 2006. 
 
Triangular Negotiations 
----------------------- 
 
¶7.  Lamy claimed that everyone knew what had to be done to 
move negotiations forward.  The United States had to give 
more on agricultural domestic support.  The European Union 
had to give more on agricultural market access.  Developing 
countries had to give more on industrial tariffs.  This was 
the "negotiating triangle" that would open the door to making 
progress on other issues.  The timeline for resolving this 
"triangle" was the end of April 2006. 
 
Public Perceptions and Politics 
------------------------------- 
 
¶8.  Lamy closed by saying that while making concessions in 
trade negotiations was not painless, a successful Doha Round 
would be a plus -- both for the world and for each individual 
country.  The public relations problem was that we would 
always hear more about losers than winners.  In this context, 
he noted that public opinion in favor of trade agreements had 
dropped from 66% to 60% this year.  This might please some 
politicians who continued to think that they could promote 
exports while restricting imports, he reckoned, but this was 
logically inconsistent and politically unsustainable over the 
long run.  Lamy cautioned that countries embarking on trade 
opening needed to also have the domestic policies in place to 
complement multilateral trade adjustments. 
 
Questions and Answers 
--------------------- 
 
¶9.  During question time, Lamy was peppered with 
challenging questions from the organizers of the protest 
trying to disrupt the event.  Other questions reflected a 
general lack of knowledge about the WTO and trade 
negotiations.  In the course of his answers, Lamy said that 
there was still the need for a "green room" to facilitate 
negotiations.  He noted that despite various attempts to 
reform the structure of the WTO, pragmatism had lead to the 
current system of country groupings, such as the G-20, G-33, 
and Latin American countries, that could engineer compromises 
and mediate differences.  He noted that South Africa played 
this role with Brazil and India.  Brazil had offensive 
interests in agriculture while India had defensive interests. 
The result was a G-20 proposal that Lamy thought brought 
members much closer to what might be a final compromise than 
did proposals from the United States and the European Union. 
 
¶10.  When it came to the power and authority that he 
exercised over the negotiations, Lamy explained that the work 
of the WTO encompassed negotiations, surveillance, 
litigation, and training.  The area where he could exercise 
the most authority was training.  The area were he could play 
the most proactive role was negotiations, where in any given 
hour he might be called upon to be a broker, navigator, 
shepherd, doctor, or even midwife. 
 
¶11.  Lamy noted that increasingly issues in the WTO 
surrounded regulatory barriers to trade, such as those 
involving health, environment, and other social concerns. 
Many of these were rooted in values rather than in monetary 
concerns.  Negotiating in monetary terms was easier, since 
both sides could always split the difference.  Negotiating in 
value terms was more difficult, and he cited as an example 
the debate on genetically modified organisms. 
 
¶12.  When a questioner attacked the WTO as serving the 
interests of rich countries, Lamy argued that development 
concerns had pervaded Doha negotiations, whose purpose it was 
to correct past imbalances in the GATT that had their roots 
colonial legacies and cold war geopolitics.  He added that 
Doha negotiators recognized that it was easier for countries 
with budget and administrative capacity to adjust for trade 
opening, and for this reason developing countries needed more 
flexibility in a final agreement and assistance in 
implementation.  Finally, he pointed out that three-fourths 
of WTO members were now developing countries.  Today, the 
G-20, G-90, and other developing country clubs wielded 
 
PRETORIA 00000677  003.2 OF 003 
 
 
considerable power in the WTO. 
 
¶13.  In answer to criticism of the United States for 
offering in the negotiations to reduce cotton subsidies when 
it was required to do so anyway because of a dispute 
settlement ruling, Lamy responded that either way -- dispute 
settlement or negotiations -- the change was due to the WTO. 
He also argued that while EU tariffs were still very high on 
sugar, the effort to eliminate subsidies had to move forward. 
These were positive developments motivated by the WTO. 
 
TEITELBAUM