R 191605Z DEC 08
FM USMISSION GENEVA
TO SECSTATE WASHDC 7783
INFO WORLD TRADE ORGANIZATION COLLECTIVE

UNCLAS GENEVA 001105 
 
 
PASS USTR FOR VERONEAU, ROHDE 
EEB/TPP/MTAA FOR CRAFT 
USDA/FAS FOR ONA 
USDOC FOR ITA 
 
E.O. 12958: N/A 
TAGS: ETRD WTRO USTR
 
SUBJECT: December 17 Meeting of TNC 
 
¶1.  Summary. At a meeting of the Trade Negotiations Committee (TNC) 
on December 17, 2008 WTO Director General Lamy recognized with 
disappointment that it is not possible to conclude the Agriculture 
and NAMA modalities before the end of the year, but stressed the 
need to continue work in early 2009 toward concluding the Doha Round 
while defending the rules of the multilateral trading system. 
Agriculture and NAMA consultations will resume early in the new year 
based on the latest draft texts issued on December 6, and Members 
will also restart work in the other negotiating areas.  DG Lamy also 
announced the WTO will use the Trade Policy Review Body (TPRB) to 
provide a forum where Members can monitor and discuss any trade 
restricting measures taken since the financial crisis.  Lamy 
mentioned that several Members had raised the possibility of an 
early harvest for Trade Facilitation, Duty Free Quota Free (DFQF), 
cotton, and bananas.  Agriculture Chair Crawford Falconer said he 
was convinced that the remaining differences in Agriculture are 
bridgeable and announced plans for an Open Ended meeting early in 
2009 to allow for a bottom-up exercise to go through the text. 
Falconer also said that if there were to be an early harvest, it 
should include cotton.  NAMA Chair Luzius Wasescha said the major 
outstanding issues were sectoral agreements and requests for 
specific flexibilities by Argentina, South Africa, and Venezuela and 
announced plans for an Open Ended in January.  The Chairs of other 
Negotiating Groups made brief statements on the state of play on 
their issues, with the Rules Chair announcing forthcoming texts this 
week.  Forty-two countries made interventions, with most expressing 
support for DG Lamy's call to continue work toward Modalities in 
Agriculture and NAMA in the new year and to resume other key areas 
of negotiations.  Despite widely shared disappointment with the 
current state of affairs, Members refrained from finger pointing. 
Members' views differed on the idea of an early harvest and what it 
should include.  There were a number of calls by Members for a full 
meeting of the Ministerial Conference to be held by the end of next 
year, and Switzerland offered to host it.  The Swiss also pointed to 
the annual Trade Minister meeting they will hold in Davos in January 
as a first opportunity for Ministers to take stock and reengage. End 
Summary. 
 
DG LAMY'S STATEMENT 
 
¶2.  DG Lamy reported that Members' overall positions on sectorals, 
cotton, and the Special Safeguard Mechanism (SSM) had not changed 
enough to warrant calling a Ministerial this year.  Though Members 
were not far from an agreement on these issues, the necessary 
political drive to close the remaining gaps was lacking.  Looking 
ahead, conclusion of the Round should remain the focus for 2009. 
Members should resume work to conclude modalities in Agriculture and 
NAMA based on the revised texts, continue to make progress on the 
other negotiating areas, and work to strengthen the relevance of the 
WTO in the global economic system-beyond just providing a forum for 
negotiations.  Lamy reported some Members had raised the possibility 
of an early harvest for Trade Facilitation, Duty Free Quota Free 
(DFQF), cotton, and bananas, noting that Trade Facilitation warrants 
some acceleration since it has the greatest consensus.  He did not 
offer a personal view on the idea of an early harvest but noted that 
the areas suggested warrant priority attention, starting with Trade 
Facilitation. 
 
¶3.  Beyond negotiations, Lamy reminded Members that the WTO has a 
responsibility to follow up on commitments made by world Leaders to 
avoid taking trade protectionist measures during the financial 
crisis.  He proposed the TPRB as a forum for Members to monitor and 
discuss trade restrictive measures.  The first such review of the 
TPRB will take place in the second half of January.  (Bolivia 
subsequently raised concerns in the General Council about 
establishing this mechanism without prior consultation among 
Members, so it appears that the General Council Chair will hold 
consultations on this early in the new year.)  Lamy also agreed to 
proposals by Egypt and Japan to report periodically on the findings 
of the Secretariat's financial crisis task force, with the first 
report coming this week.  The WTO will also continue to monitor 
trade finance and continue efforts to develop a clear roadmap for 
Aid for Trade.  On the latter, the WTO needs to keep the focus on 
trade mainstreaming in national development policies and keep 
pressure on donors for the mobilization of funds, particularly in 
light of the global financial crisis.  Lamy also mentioned that 
Members needed to discuss when to schedule the next regular meeting 
of the Ministerial Conference and that the GC Chair would consult 
with Members to get their views. 
 
NEGOTIATING GROUP CHAIRS' STATEMENTS 
 
¶4.  Agriculture Chair Falconer expressed his hope that the emerging 
consensus in the latest text would not be lost in the coming months. 
 He identified cotton, sensitive products, tariff rate quota (TRQ) 
creation, tropical products, preferences, and remaining high tariffs 
in developed countries as the areas where most of the remaining work 
is needed.  If there is to be any early harvest, it should be for 
cotton.  One of Falconer's regrets in his revised text was that he 
could not include results on tropical products and preference 
erosion, but he expressed hope the July agreement could be the basis 
for a deal once the EC and the Latin countries worked out their 
differences on bananas.  He plans to hold an Open-Ended in the new 
year to go through the text and then restart the cycle of Open-Ended 
and issue-specific work. 
 
¶5.  NAMA Chair Wasescha gave a short report commenting on the status 
of discussions about country-specific flexibilities and providing a 
work program for 2009. On Argentina and Venezuela, Wasescha said 
that members need to examine specific details about the use of 
flexibilities.  On South African Customs Union, he described a 
proposal based on discussions with members: a Swiss coefficient of 
20 with 18 percent half-cut flexibilities and 5 years of grace on 
textiles, apparel, and footwear or a Swiss coefficient of 22 with 16 
percent half-cut flexibilities and three years of grace on textiles 
an apparel.  (Note: South Africa later discredited this proposal 
insisting that it still needs 3 percent of no-cut flexibilities, in 
addition to 16 percent half cut flexibilities and harshly 
criticizing the U.S. and EC for their lack of understanding of their 
special situation.)  Wasescha reported that he will hold an 
Open-Ended meeting on his new text in early January and will resume 
small group meetings. The negotiating group will also look at data 
to help Members assess the value of the concessions in the text.  He 
will consult with members on how to advance non-tariff barrier 
discussions and will hold consultations with members on the key 
remaining hurdle, sectoral agreements. 
 
¶6.  The Services Chair reported that the situation was unchanged 
from July but that he intended to restart meetings in early 2009 to 
build on the progress made during the July signaling conference. 
 
¶7.  The Rules Chair said that he would issue new draft texts on 
antidumping, horizontal subsidies, and a roadmap of fisheries 
subsidies in the coming days.  He also announced that he would be 
convening Members early next year to start conducting an initial 
review of the transparency mechanism for Regional Trade Agreements 
(RTAs) and would also elicit views from the Chairs of the Committee 
on RTAs and the Committee on Trade and Development and the 
Secretariat on their experience so far in implementing the 
mechanism. 
 
¶8.  The TRIPS Special Session Chair announced his intention to 
intensify work in January and mentioned he might do papers to help 
focus on specific issues, leading to a draft text. 
 
¶9.  The Trade and Environment Chair reiterated the work programs he 
had laid out in July for all elements of paragraph 31, noted that 
the intermittent time period had permitted capitals to do necessary 
internal analytical work on environmental goods of interest, and 
expressed hope that delegations will be better prepared to offer 
their submissions on environmental goods in the new year. 
 
¶10.  The Trade and Development Special Session Chair noted some 
progress in clarifying thoughts on the Agreement-specific proposals 
and the Monitoring Mechanism but that no new revised language has 
been achieved.  He plans to continue work on all elements in the 
Hong Kong mandate in 2009 and will resume meetings in the third week 
of January. 
 
¶11.  The Trade Facilitation Chair announced plans for a meeting in 
late February and suggested that Members needed to consolidate 
multiple proposals into single documents and improve their proposals 
to reflect commonalities. 
 
INTERVENTIONS BY MEMBERS 
 
¶12.  Cote d'Ivoire on behalf of the Africa Group, Jamaica on behalf 
of the ACP Group, and Tanzania on behalf of the LDC Group welcomed 
the new Agriculture and NAMA texts as reflecting the current state 
of negotiations while raising some persistent concerns on remaining 
issues.  On Agriculture, the Africa and LDC Groups stressed the 
importance of resolving cotton and welcomed some progress in SSM, 
and the ACP Group stressed the importance of bananas and tropical 
products.  On NAMA, the ACP Group emphasized sectorals should be 
voluntary.  On preference erosion, Tanzania reported that the LDCs 
do not have a consensus on the issue of disproportionately affected 
(DA), and Cote d'Ivoire called for a just solution that is based on 
the reality of export statistics. All three Groups raised concerns 
about sectorals that cover products in the preference erosion 
solution, and they supported cotton for early harvest.  The Africa 
Group raised the importance of making progress in Rules, Services, 
and Trade Facilitation, while the ACP Group urged caution in 
proceeding with Trade Facilitation as an early harvest because of 
the additional work needed on capacity building and special and 
differential treatment.  South Africa supported cotton and DFQF as 
early harvests, and Egypt supported cotton for early harvest, saying 
Trade Facilitation is not ready yet.  Burkina Faso on behalf of the 
Cotton-Four supported an early harvest for cotton. 
 
¶13.  Indonesia on behalf of the G-33 agreed the draft texts were a 
good basis for further work in Agriculture and NAMA and said that 
the G-33 has shown flexibility as demonstrated by recent progress on 
the issues of Special Products and SSM.  The underlying principle of 
SSM is that it should be simple, effective, and not burdensome and 
must provide a safeguard to the most vulnerable.  The latest 
Agriculture text has captured some of this, but more intensive work 
is needed.  Barbados on behalf of the Small and Vulnerable Economies 
(SVEs) supported the G33 statement on SSM, regretting there has been 
no discussion of additional SSM flexibilities for SVEs. 
 
¶14.  Brazil on behalf of the G-20 noted the gap in political will to 
conclude a deal and emphasized that Agriculture is the key to the 
Round.  While supporting the new Agriculture text as the basis for 
negotiations, Brazil noted that the unbracketed numbers on overall 
trade distorting support (OTDS) represents a conditional position 
and expressed concern that developed countries have reduced the 
level of ambition in market access and domestic support. Speaking on 
its own behalf, Brazil said that the failure to reach modalities can 
be explained by excessive ambition and new calls for concessions 
that came in late in the negotiations, clearly referring to the 
United States position on NAMA sectorals.  On early harvest, Brazil 
urged caution, expressing concern about the potential impact on the 
Single Undertaking. 
 
¶15.  The EC emphasized the need to resume work in early 2009 on 
Agriculture and NAMA modalities based on the latest draft texts and 
to pursue further progress in Services, the three TRIPS issues, 
Trade Facilitation, and Rules.  They said they were open to an early 
harvest in Trade Facilitation.  Canada pushed for work to continue 
on Rules, Services, and Trade Facilitation, and Japan also stressed 
the need to advance negotiations on Rules and Services.  The EC, 
Canada, Japan, and many others also supported Lamy's call for the 
TPRB to monitor trade restrictive measures in a transparent way. 
 
¶16.  The United States representative welcomed the draft Agriculture 
and NAMA texts and stressed that the primary focus of the WTO should 
be to conclude the Doha Round, especially in light of the current 
economic crisis.   All negotiating groups should resume work in the 
new year, with Services, Trade Facilitation, fish subsidies, and 
environmental goods and services being important ingredients in any 
final Doha agreement.  He also supported Lamy's idea for public 
monitoring of new restrictive trade measures.  Emphasizing the 
importance of Aid for Trade as a complementary activity to the 
negotiating mandate, he announced that the US increased annual Aid 
for Trade spending to 2.3 billion in fiscal year 2008, an increase 
of 60 percent from the previous year.  He closed by assuring Members 
that Washington is working very closely with the Obama transition 
team to ensure that early attention is given to the DDA by the new 
administration. 
 
¶17.  Ecuador, Colombia, Costa Rica, Guatemala, and Honduras raised 
the issue of bananas and the EC's failure to comply with the July 
agreement.  Ecuador threatened cross retaliation, possibly in the 
areas of Services and Intellectual Property, and possible new 
litigation on the legality of the EU's Economic Partnership 
Agreements (EPAs) and certain EU subsidies. 
 
¶18.  Venezuela, Bolivia, and Cuba made statements criticizing the 
lack of transparency in the small group negotiations on Agriculture 
and NAMA and emphasizing the need to focus on development in the 
Doha Round.  Venezuela criticized Members who talk about the need to 
avoid protectionism and yet are practicing it by subsidizing the car 
industry, banks, and others.  There seems to be a double standard 
where subsidies seem to be the good kind of protectionism, while 
tariffs are the bad kind. 
 
 
ALLGEIER