On Sunday 1st August all those who are conversant with international trade issues had a sigh of relief on hearing the news that the WTO had come out with a framework agreement. After the collapse of the 5th Ministerial Meeting in Cancun, there was a general belief that failure to reach even a minimalist agreement in Geneva in the July session of the General Council of WTO would have inflicted a severe blow to the multilateral trade negotiations and the credibility of the WTO.

In spite of all the initiatives since Cancun to revive the negotiating process through different modes (“mini-ministerials”, “green rooms”, “blue rooms”, “confessionals”…) and the emergence of new groupings (the G33, G10 and the “Five Interested Parties” – a non-group in the WTO jargon!), delegations had arrived in Geneva in July with still a lot of apprehensions. The reason being that, in spite of the movements made on various sticking issues, there was still not enough convergence to guarantee a positive outcome.

The Chairman of the General Council, Japanese Ambassador Oshima and Secretary General Supachai Panitchpakdi, in an attempt to put pressure on delegations to bridge their differing positions, had fixed the 30th of July as a “drop-dead” time-limit for an agreement. The fact that the negotiations exceeded the deadline by more than 24 hours, is a clear illustration that they could have collapsed again if last-minute “give-and-take” had not taken place.

<B>What has changed since Cancun ?</B>

A comparison of the proposed agreement in Cancun, dubbed as the “Derbez text”, because it was presented by the Chairman of the Ministerial meeting, Mexican Minister of Trade, Luis Ernesto Derbez, with the framework agreement of 31 July 2004 reveals the following :

1. The contents of the July consensus are much more focussed than in the “Derbez text”. The main text of the latter contained 30 paragraphs on 27 items and it contained five annexes. The new main text contains only 3 paragraphs, and all the issues are contained in the first paragraph. Three of the four annexes are related to the key issues, contained in paragraph one.

2. The three annexes which had been retained from the “Derbez text” have been developed further, especially the one on agriculture (from 4 pages to 7 pages and 7 paragraphs to 50 paragraphs although the higher number of paragraphs also result from a re-arrangement of items).

3. The real change in substance affects only four issues : agriculture, non-agricultural market access (NAMA), cotton and the “Singapore Issues”.

Let us start with the “Singapore Issues”, the supposed deal-breaker at Cancun. It is to be recalled that in the “Derbez text”, there was a proposal to continue the process of clarifications (with a view to negotiate at some future unspecified date) on two of the four “Singapore Issues”, “Trade and Investment” and “Trade and Competition”, while for the other two, “Trade Facilitation” and “Transparency in Public Procurement”, negotiations were to start on the basis of modalities set out in two annexes. It is also worthy of mention that the majority of the constituency of the WTO (including the G-90 group to which Mauritius belonged) was in favour of the continuation of the clarification process on all four issues and it did not give in even when Commissioner Lamy proposed to start negotiations on only one “Singapore Issue”, namely Trade Facilitation. As the negotiations broke at that stage in Cancun, the blame was put on developing countries, especially the G-90, for their inflexibility.

The July text not only proposes just “Trade Facilitation” for negotiations but it actually drops out of the Doha Round of negotiations the other three issues, which goes further than the position of developing countries in Cancun. Moreover, the Annex on modalities for negotiations contain a number of conditionalities in favour of developing and least developed countries and specific obligations on developed countries, which waters down significantly the ambitions contained in the “Derbez text”.

After Cancun, I wrote that the deadlock on “Singapore Issues” was only the pretext for putting an end to the negotiations. There was not sufficient substance at stake to justify a breakdown of the negotiations. The “Singapore Issues” have never been a deal breaker. They provided a convenient expedient to lay the blame for the breakdown at the door of developing countries, especially the G-90. The only fault of the latter was to let their emotions play in the hands of those who had no choice but to put a temporary halt to the negotiations. The significant retreat of the main proponents (“demandeurs” in the WTO jargon) of the “Singapore Issues” in less than a year should be sufficient proof that they never had the status of a deal breaker.

The real deal breaker in Cancun was the explosive combination of agriculture-cotton, whose dynamics was supported by the establishment of the G-20 and the Cotton Initiative Group, and to a lesser extent, the NAMA proposals (not so much because of their inherent contents but because of their asymmetry compared to the proposals in agriculture).

No wonder then that so much efforts had been devoted since Cancun to the agriculture issue. The Annex on Agriculture in the July text is a remarkable combination of the defensive and offensive interests of various groups of countries. Developed countries which are heavily subsidizing their agriculture are being given comfort by an imaginative set of instruments ( “tiered formula”, sensitive products, “deminimis”, safeguards, “boxes”, etc.) which would mitigate the impact of future cuts while obligations on their trading partners to follow suite, albeit with special and different treatment, keep alive their offensive interests. Large competitive agricultural exporters have comfort in the obligation imposed on countries with subsidized agriculture to reduce the sum of all trade-distorting support by 20% within a year (which was not in the “Derbez text”), the capping of certain categories of subsidies and other formula, which can enhance their market access. Developing countries with defensive interests are also offered some special instruments (special products, special safeguard mechanisms, SDT, etc.) while LDCs are saddled with little obligations while promised enhanced market access. Countries, like Mauritius, which have special access to protected markets, are being promised that the “importance of long-standing preferences is fully recognized”.

Only some “out of the box” ideas like a special “Blue Box” (I spare you the workings of the “Boxes”) or a stand-alone treatment for cotton failed to be retained.

On cotton, until the G-90 meeting in Mauritius the support for a standalone treatment outside agriculture was still alive, although in the corridors the possibility of a fall-back position was actively canvassed. In Geneva, the cotton groups reluctantly rallied to the position of the large majority to treat cotton under agriculture with some special provisions (they found some “special language”, a speciality at the WTO process!). With the cotton bomb defused, the road for a consensus on agriculture was open.

So much attention had been devoted to the agriculture-cotton issue that Non-Agricultural Market Access (NAMA) got unequal treatment. As a result, the asymmetry which existed between the Annex on Agriculture and the one on NAMA in the “Derbez Text”, had actually widened: while the Annex on Agriculture was being enriched by new elements to accommodate the concerns of all parties, the Chairman of the NAMA resisted all attempts to change the Annex on NAMA. He instead proposed some sort of an annex to the Annex, which he termed “vehicle” which was to reflect the concerns of those not in agreement with the original “Derbez text”. The lack of flexibility of the chair of NAMA threatened the overall consensus (the opponents of his approach spoke of a “vehicle without engine and wheels”) and the concession was the inclusion of an opening paragraph which reflected summarily some of the concerns on the text. The road promises to be bumpy for the NAMA vehicle in the detailed negotiations.

The July WTO framework agreement does contain significant changes compared to the “Derbez text”. Do these changes reflect a change in approach?

l Has there been a change in approach ?

Since the debacle of the Seattle WTO Ministerial Meeting in 1999, there is increasing recognition that the key elements of multilateral trade agreements cannot be determined by the trading majors alone while the concerns of the rest of the constituency of the WTO being confined to inoperative provisions.

In the Doha Round some of the concerns of the developing countries were taken on board with “development” supposedly being at the heart of the new Round of negotiations. But the broad principles enshrined in the Doha Development Agenda failed to translate into concrete proposals which can satisfy the majority of the WTO members. The reason being that as negotiations progressed, it became increasingly clear that there was more than merely issues of North-South divide, development vs trade liberalization or agriculture vs industrial goods. Interests of individual countries are varied and complex. This has been illustrated recently by the proliferation of groups at the WTO formed around specific interests rather than traditional alliances, with countries belonging to several groups (Mauritius is a member of the G-10, G-33, G-90, ACP, AU, small economies…).

The “set-menu” approach of the past is probably dead. This is clearly illustrated by a main text which is getting shorter and shorter while annexes are getting thicker. The Annex on Agriculture in the July text is certainly what is nearest to an “à la carte” approach. The Annex on Trade Facilitation has moved in this direction. The Annex on NAMA is certainly not there yet. Consensus will be maintained only if this approach is pursued further.

We should, nevertheless, be aware of the difficulties of this approach. With 147 countries not only having to agree on the menu (they just threw three “Singapore Issues” out of the window) but having their say in the ingredients to be used in preparing the selected dishes, one has to be patient at the table. And to make things more complicated, no one can start eating unless there is complete agreement on who eats what and pays how much, in line with the golden rule of the WTO cuisine “nothing is agreed until everything is agreed”!

<B>And Mauritius ?</B>

Mauritius has done remarkably well to keep all its “preferences” on the menu. From the explicit mention of “long-standing preferences” in the Annex on Agriculture, to the “non-reciprocal preference beneficiary Members” in the NAMA text, the possible exemption of tariff cuts on industrial products (para 6 of the NAMA text) or the “small-vulnerable economies” option, all the favourites of Mauritius have been retained.

Some of the issues for Mauritius might lie outside the menu proposed in the July text. The problem is that some of the food to be eaten is cooked outside the WTO kitchen or some of the ingredients brought to it might be borrowed from other cuisines. For example the sugar coating given by the EU in its ingredients on Agriculture (compliments Commissioner Fishler), while appealing to others, does taste sour to Mauritius. Similarly, the feast which is being proposed to some in January 2005, with the “eat as much as you can” at the Textiles and Clothing’ buffet, is not necessarily to the taste of our local industry.

Translating what is on the menu into appetizing dishes for Mauritius will certainly not be an easy task for our negotiators. They need all our support.

The proof of the pudding is in the eating.

Bon Appétit.

<B>Mahmood Cheeroo

Secretary-General

Mauritius Chamber of Commerce and Industry</B>

• ‘The Soap-Box Opera’ in L’express of 15 October 2003

<I>“Mauritius has done remarkably well to keep all its ‘preferences’ on the menu. From the explicit mention of ‘long-standing preferences’ in the Annex on Agriculture, to the ‘non-reciprocal preference beneficiary Members’ in the NAMA text, the possible exemption of tariff cuts on industrial products”</I>