Lamy says change in mind-set needed for Bali to succeed

11 April 2013

Lamy says change in mind-set needed for Bali to succeed

Director-General Pascal Lamy, at an informal Trade Negotiations Committee meeting on 11 April 2013, said that “the stark reality is that the current pace of work is largely insufficient to deliver successfully in Bali...But, more than changing the pace of work, we need a change in mind-set. We need to move from exploring and understanding issues to closing gaps. We need to move from identifying what does not work to finding alternative solutions to reach consensus.”

Director-General Pascal Lamy’s statement
Informal Trade Negotiations Committee meeting at the level of head of delegation,
Thursday, 11 April 2013

Thank you all for coming.

Let me begin our meeting by first outlining the context and background against which we are preparing for MC9 and in which our Conference in Bali will take place.

The forecast released yesterday does not paint a rosy picture for international trade in 2013. This year looks to be a near repeat of 2012 with both world trade and output forecast to expand slowly and below historical trends and averages. World trade is forecast to grow by 3.3 per cent in 2013. Although this is higher than the 2 per cent growth in 2012, it is still below the 20 year average of around 5 per cent. In addition, downside risks persist, leaving the global economy fragile and the trading system facing the risk of protectionism. The world economy remains in a fragile situation.

Against this uncertain backdrop, the stakes for Bali are high. And this is why for the first time since 2008, there is political consensus that the Ministerial meeting in Bali should be about deliverables in trade facilitation, agriculture and S&D/LDC issues. This was the sentiment I gathered during my recent visits to China, Turkey and the Netherlands.

I see our meeting today not only as an exercise to promote transparency, inclusiveness and information sharing, but mainly as a first in a regular process of continuous narrowing of gaps on the road to Bali.

With about 27 working weeks to the Bali Conference, are we on track on our three potential DDA deliverables for Bali or not?

On all three deliverables there has been a lot of activity resulting in limited progress on substance. Let me provide you with a summary of where we are and then share with you my views on what I believe is needed to ensure that these issues make it for Bali.

On Trade facilitation the Chair has restructured the negotiating process with the support of his four Friends of the Chair, following widespread recognition at the last NGTF meeting that a draft agreement would not have been ready for Bali without more intensive work to find consensus on the text.

The Friends of the Chair have begun their consultations on their respective portfolios.

In parallel with the negotiations on the text of the draft agreement, many developing countries and LDCs are conducting new needs assessments. These will provide an up-to-date documentary basis for those Members to start developing the partnership with donor Members and organisations that they will need in order to access resources for building capacity to implement new trade facilitation commitments. An opportunity for more intensive dialogue and partnering between recipients and donors will be provided at the “Trade Fair” to be organised in the May meeting of the NGTF.

I see two major substantive questions you need to answer collectively:

• one, what is the shared level of ambition in beefing up the trade facilitation related GATT articles: high, medium or low? What is clear is that it cannot be “high for others” and “low for me”.
• two, is there enough confidence that the necessary capacity building means will be available to trigger commitment to new disciplines by poorer countries.

We also know that the scope of a new Trade Facilitation agreement will extend well beyond the traditional areas of responsibility of ministries of trade and commerce, both in terms of disciplines on border management and in terms of the new approach Members are designing to link development assistance with implementation. It is therefore imperative that capitals ensure close coordination among all relevant ministries that will be needed to bring these negotiations to closure in time for Bali.

On Agriculture, intensive consultations have continued on the proposals tabled for decision at Bali, particularly on the G-33 proposal concerning public stockholding for food security and domestic food aid.

The Chair of the Special Session launched on 15 February a technical process related to the G-33 proposal. This process was led by Mr Jonas Skei of Norway as facilitator and was seen as useful and informative.

Building on the knowledge acquired from the technical meetings, Ambassador Adank has subsequently held informal consultations with different groupings of Members in a 1+1 format to seek further feedback from delegations on the proposal itself and explore possible ways forward. His take from these consultations, as reported to an informal meeting of the Special Session on 27 March, is that there is a willingness to engage on means to address the concerns expressed by the G-33. However, it is clear that very significant divergences remain on how to achieve this.

The substantive issue on this proposal seems to me to be the following: is there a way to accommodate the proponents' problem of purchases for stockpiling within the existing disciplines on domestic support, without destabilising the rest of the agricultural disciplines.

As he informed the Special Session, the Chair is continuing with these consultations in different configurations, seeking to identify areas where some convergence might be found and build incrementally out from there.

Regarding the G20 proposal for an understanding on TRQ Administration, the consultations to date have highlighted that Members continue to see this as a useful one to explore for possible decision in Bali, even though there are sensitivities in relation to some aspects of the proposal that members have not yet settled. Some of these sensitivities, as well as differing views, were recalled at the Special Session on 27 March. The consultative process will need to return to this proposal in due course.

On the request for studies on the export competition pillar as well as on export restrictions, the Secretariat studies on export competition (TN/AG/S/27) and export restrictions (TN/AG/S/28) were circulated to the Members on 21 March 2013. Members who would still wish to send additional information or who have specific comments are invited to contact the Secretariat before 15 April so that their comments can be incorporated in a revised version of the documents.

It was confirmed on 27 March that the G-20 is working on a proposal concerning export competition, which should be submitted soon. Contrasting views emerged on the suitability of this area as a subject for decision at Bali, and also on export restrictions.

To conclude, we have in agriculture an active engaged process but we are still a long way from agreement in these important areas.

Coming to the work being done in the Special Session of the Committee on Trade and Development, the Chair has continued with his text based meetings on the three clusters of work, namely the 28 Cancún Agreement-specific Proposals, the Monitoring Mechanism and the six Agreement-specific proposals relating to the Agreements on SPS and Import Licensing Procedures. These meetings have been complemented by some specific issue based “informal informals”.

While some progress has been made in all three areas, there is an urgent need to re-double our efforts and close the gaps, in what are key elements of the developmental component of our on-going work.

The substantive question on this issue is whether there is a way to allow for a regular review of S&D provisions in our disciplines across the board and more importantly, what would be the operational consequences of such peer review.

On the LDC specific issues — preferential treatment to services of LDCs, DFQF, ROO and Cotton — we are still awaiting proposals from the LDCs so that work can commence on them.

In this respect, I have been requested by the LDC group to appoint a facilitator to address the LDC component for Bali. They have expressed their wish to see Ambassador Steffen Smidt (Denmark) appointed as Facilitator. I would like to inform you that as TNC Chair, I will appoint Ambassador Smidt to act as my facilitator, as soon as he receives the green light from his capital.

And since we are on LDC issues, let me stress the importance of reaching agreement on the matter of the extension of the TRIPS transition period for LDCs, which is currently set to expire in July, in view of the TRIPS Council meeting scheduled for 11-12 June which is fast approaching.

So, assuming my diagnosis is right, the stark reality is that the current pace of work is largely insufficient to deliver successfully in Bali. This means that without rapid acceleration and real negotiations, it is highly probable that you will not see the deliverables you desire in Bali.

But, more than changing the pace of work, we need a change in mind-set. We need to move from “exploring”, “understanding” and “discussing” issues to negotiating to closing gaps. We need to move from identifying what does not work to finding alternative solutions to gather consensus.

At this stage, it would not be responsible to start pointing fingers at others as the source of the problem. Those of you who are tempted to engage in blame game at this point, do it at your own peril. Rather it is time to have a hard look at where flexibilities can be found to address the three issues on the Bali menu. It is time to check with capitals that they are ready to spend the necessary political energy, to provide additional flexibility to generate convergence across all three areas.

Work on substance needs to urgently accelerate in negotiating groups. It is substance that drives the process and on which progress is gauged. Therefore, written proposals, language and textual suggestions around which to build consensus have to begin to emerge very soon. And here I would caution about over-engineering solutions. There is no time left to “over-engineer”. The process in negotiating groups should be Chair-led. But, I must also stress that the primary responsibility for negotiation rests with you.

As an insurance policy for all Members that tactical linkages across the three areas are preserved, it will be necessary to have a horizontal review of our progress across the three issues. The TNC will be central in this. Coupled with a number of green rooms and small groups in variable geometry. As Chair, I intend to convene green room meetings every fortnight to look horizontally at progress in the three areas and engage in negotiating substance. I intend to convene the first of these green rooms on 1 May and then on 14 May. As usual, these will be followed by TNC meetings to ensure full transparency and inclusiveness. I can already announce that the next TNC should take place on 31 May.

But, let me be clear, for any horizontal review process to be useful and productive, real negotiations within the negotiating groups need to take place and remain at the heart of your activities. There can be no substitute for a meaningful negotiating group process.

We also know that there are other areas connected to the WTO agenda that some of you are actively engaged in which could also be ready in time for Bali, including ITA expansion and GPA. In addition, the results of the Global Aid for Trade review in July will also have to form part of the Bali deliverables.

Finally, on post-Bali, as I indicated at our last meeting, I am continuing my consultations under the two assumptions that (i) Bali delivers and (ii) the consultations do not distract from the main goal of delivering in Bali. It is clear that the Bali Conference has to instruct on the Post-Bali process. However, my view is that this conversation has to continue before we can arrive at a shared understanding of what the post-Bali agenda will entail.

On my part, I will continue my consultations here in Geneva with you, with the Chairs of negotiating groups and the Chairman of the General Council. I will also gauge the expectations for and post MC9 from several stakeholders outside of Geneva. I will start this next week at the spring meetings of the IMF/World Bank; then in May, at the mini-Ministerial on the margins of the OECD meeting in Paris. As always, I will report back to you on my consultations.

To conclude, we are working on Plan A — delivering successfully in Bali on the three areas of trade facilitation, agriculture and S&D/LDC issues. Although the odds are not bright today, they are still good enough to warrant a major effort. But, to succeed, you need to urgently change course, to be more flexible in your negotiating attitude, to accelerate your substantive work and to refrain from throwing bricks at each other. These are the ingredients to avoid hitting a wall with undesirable consequences not only for Bali, but importantly, for the credibility of the multilateral trading system.

ENDS

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