REALIGNING INTERNATIONAL TRADE NEGOTIATION ASYMMETRY:

DEVELOPING COUNTRY COALITION STRATEGY IN THE

WTO DOHA ROUND AGRICULTURE NEGOTIATIONS

A DISSERTATION

SUBMITTED TO THE SCHOOL OF LAW

AND THE COMMITTEE ON GRADUATE STUDIES

OF STANFORD UNIVERSITY

IN PARTIAL FULFILMENT OF THE REQUIREMENTS

FOR THE DEGREE OF

DOCTOR OF SCIENCE OF LAW

OLAJUMOKE OMONIYI ODUWOLE

MARCH 2011

This dissertation is online at: http://purl.stanford.edu/ps629hb2783

2011 by Olajumoke Omoniyi Oduwole. All Rights Reserved.

Re-distributed by Stanford University under license with the author.

ii

I certify that I have read this dissertation and that, in my opinion, it is fully adequatein scope and quality as a dissertation for the degree of Doctor of the Science of Law.

Deborah Hensler, Primary Adviser

I certify that I have read this dissertation and that, in my opinion, it is fully adequatein scope and quality as a dissertation for the degree of Doctor of the Science of Law.

Timothy Josling

I certify that I have read this dissertation and that, in my opinion, it is fully adequatein scope and quality as a dissertation for the degree of Doctor of the Science of Law.

Allen Weiner

Approved for the Stanford University Committee on Graduate Studies.

Patricia J. Gumport, Vice Provost Graduate Education

This signature page was generated electronically upon submission of this dissertation in electronic format. An original signed hard copy of the signature page is on file inUniversity Archives.

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REALIGNING INTERNATIONAL TRADE NEGOTIATION ASYMMETRY:

DEVELOPING COUNTRY COALITION STRATEGY IN THE

WTO DOHA ROUND AGRICULTURE NEGOTIATIONS

Abstract

Recently, it has become apparent to developing countries in the WTO that their

limited bargaining power has, in fact, been a stumbling block to obtaining desired

negotiation outcomes in the multilateral trade system. Thus, to execute any

fundamental changes to the status quo, there was a need to cluster together, pool

resources and form alliances to leverage their collective strength in the negotiations.

What remained unclear, however, was what role this increased coalition activity by

developing countries played in the current WTO negotiations process. Therefore, the

primary purpose of this dissertation is to describe how this shift toward coalitions as a

negotiation strategy by developing countries occurred and to consider the possible

implications of this coalition strategy for the future of the multilateral trading system.

Due to the complexity of the Doha Round, I restricted my area of study to the

Doha Round agriculture negotiations as a single case study, since agriculture is the

undisputed ―locomotive‖ of the Round, having set the tone for the majority of the

negotiations. Using qualitative data, I captured a contextual description of four

developing country agriculture coalitions – Cotton-4, G-20, G-33 and G-90 – as

―nested cases‖ throughout the agriculture negotiation process from March 2003 to

March 2010. I described the function of developing country coalitions in the

negotiations by comparing and contrasting aspects of each coalition‘s negotiation

strategy or tactics during the research study period.

In sum, I investigate my preliminary assessment of the reason coalition

strategy emerged as the dominant negotiation tool for developing countries in this

particular WTO Round. I then describe how these coalitions maneuvered in the

ongoing negotiations during the study period. At the end of my descriptive

comparative analysis, I was able to explain the significance of coalitions as a strategic

tool for developing countries in WTO trade rules negotiations as well as assess the

specific role that each of the four case study coalitions have played in the negotiation

process. In conclusion, the study highlights some of the lessons learned from

developing country coalition strategy in this Round. The information derived could

serve as a platform for further research in this area and eventually explain the raison

d'être behind the negotiated outcomes.

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Dedication

To my husband

Olatunde Tikare Oduwole

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ix

Acknowledgments

The last four years spanning my JSD program at Stanford have been eventful as well

as challenging. Along the way my family and I have met some of the most amazing people while living in California and Texas, and we have enjoyed many positive, life-changing

experiences here. There are several people who have helped to ensure that my time at

Stanford was an enriching experience.

I thank the late Professor John Barton and Professor Tim Josling, who both believed in this project from its inception, and particularly, in my ability to produce sound research in

this area. Their expertise, guidance, approachability and kindness were an invaluable source

of encouragement to me throughout the process, giving me confidence, and helping to bring clarity and focus to my research. I also thank Professor Deborah Hensler and Professor Allen

Weiner for their helpful comments and for their time. This dissertation would not have been

what it is without the support of Dr. Carol Shabrami, a mentor and a friend. On several occasions the Stanford Law School has lived up to its sterling reputation

by demonstrating exemplary concern on my account. I thank Ms. Catherine Glaze and Ms.

Chidel Onuegbu of Stanford Law School Students Affairs, and Ms. Lucy La Pier of the

Stanford Law School Advanced Degrees Program for their assistance over and above the call of duty.

The friendships that we made in the US have been deep. Since 2006, Ms. Anne-

Kathrin Kroemer has been a rare and precious blessing to me and my entire family. I especially thank Maryam Garba, Ify Emelife, Bisi Akinola, Yemi Arogunmati, Gboyega

Ayeni, Auntie Tilewa, Tunde and Tola Elegbede, Feyi and Esosa Ojomo, and Pete and Maria

Sommer for their friendship and support demonstrated in countless ways during our years in California. In Houston, the support of friends such as the Bassirs, the Odelowos, the Oguchis,

the Asares, our numerous friends at Faith Bible Church and our Shell colleagues – particularly

during periods while I travelled on research trips – is unquantifiable. I also thank Dr. and Dr

(Mrs.) Olumide Ogundahunsi for their hospitality during my research trips to Geneva, Switzerland as well as all the trade diplomats, WTO officials and stakeholders who were kind

enough to grant me an audience despite their tight schedules.

My coming to Stanford Law School for the SPILS master‘s degree program in 2006 was made possible by the benevolence of several members of the Nigerian corporate

community. I thank Dr. and Mrs. D. Desalu, Ms. Mairo Bashir, Mr. Gbite Adeniji, Mr. Asue

Ighodalo, Chief Ade-Ojo, Mr. Aig Aig-Imoukhuede, Mr. and Mrs. Awosika, Dr. Wale

Babalakin, Mrs. Mosun Olusoga, Dr. Koyin Ajayi, Mrs. Bola Adesola and Mr. and Mrs. Yomi Badejo-Okusanya. I‘d also like to thank the Faculty of Law, University of Lagos and The

Kuramo Foundation for their patience during my study leave.

My parents, Professor and Mrs. ‗Folabi Olumide, have been unwavering pillars of support, without whom we literally could not have coped with the demands of work and life in

the US. Pastor Wale Adefarasin and Pastor Laolu Adefarasin kept close tabs on us throughout

our time abroad, which was heartwarming. I thank my brothers and sisters (Oy and Pa Yoms, Rots and Dolly, Funmi and Tunji), and the Oduwole clan for their continued support over the

years. Our children Segioluwa and Babatise (who was born at Stanford in 2007) have brought

such joy into our lives. I had to leave them for weeks at a time on several occasions, but they

remained a source of encouragement throughout the period, without complaint. My husband, a man of uncommon grace, has continually epitomized love through his

wisdom, unwavering support and uncountable sacrifices over the years. He stood with me in

steadfast faith from the conception of this dream till it became a reality….and our God saw us through.

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Table of Contents

Abstract .................................................................................................................. v

List of Tables/Illustrations ................................................................................... xiii

List of Abbreviations ........................................................................................... xiv

CHAPTER 1 .................................................................................................................. 1 1.0 INTRODUCTION ....................................................................................... 1

1.2 Why Agriculture? ......................................................................................... 3

1.3 The Research Study...................................................................................... 5

1.4 Conclusions.................................................................................................. 8

CHAPTER 2 ................................................................................................................ 11 2.0 RESEARCH DESIGN ............................................................................... 11

2.1 Methodological Approach .......................................................................... 11

2.2 The Data .................................................................................................... 12

2.3 Study Period............................................................................................... 19

2.4 The Analysis .............................................................................................. 20

2.5 Conclusions................................................................................................ 22

CHAPTER 3 ................................................................................................................ 23 3.0 THEORETICAL FRAMEWORK AND LITERATURE REVIEW ............ 23

3.1 International Negotiation Theoretical Framework ....................................... 23

3.2 Relevant Coalition Theory.......................................................................... 30

3.3 Conclusions................................................................................................ 39

CHAPTER 4 ................................................................................................................ 43 4.0 DEVELOPING COUNTRY COALITIONS UNDER THE GATT/WTO ... 43

4.1 Decision-Making under the GATT/WTO ................................................... 44

4.2 History of Developing Country Coalitions in the GATT/WTO ................... 49

4.3 Conclusions................................................................................................ 60

CHAPTER 5 ................................................................................................................ 63 5.0 AGRICULTURE AND DEVELOPING COUNTRIES UNDER THE

GATT/WTO ......................................................................................................... 63

5.1 The Crux of the Matter: The ―Development Debate‖ .................................. 63

5.2. Role of Agriculture in International Trade Rules ........................................ 84

5.3 Conclusions.............................................................................................. 113

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CHAPTER 6 .............................................................................................................. 115 6.0 THE CASE STUDY COALITIONS ......................................................... 115

6.1 Cotton 4 .................................................................................................... 118

6.2 G-20 ......................................................................................................... 131

6.3 G-33 ......................................................................................................... 144

6.4 G-90 ......................................................................................................... 153

6.5 Conclusions .............................................................................................. 162

CHAPTER 7 .............................................................................................................. 163 7.0 THE DOHA ROUND AGRICULTURE NEGOTIATIONS-MARCH 2003

TO MARCH 2010 .............................................................................................. 163

7.1 Introduction .............................................................................................. 163

7.2 Phase 1 - Establishing the DDA Agriculture Agenda (2003-2005) ............ 163

7.3 Phase 2 - The Doha Round Draft Modalities on Agriculture (2006-2008) . 184

7.4 Phase 3 - Towards the Doha Round ―Endgame‖ (2009-2010) ................... 194

7.5 Developing Country Coalition Strategy: An Analysis ............................... 198

CHAPTER 8 .............................................................................................................. 211 8.0 IMPORT OF DEVELOPING COUNTRY COALITION STRATEGY–

DOHA AND BEYOND ...................................................................................... 211

8.1 United We Stand? Key Lessons Learned ................................................... 211

8.2 Negotiation through Litigation .................................................................. 218

8.3 The Journey Ahead: 2011 and Beyond ...................................................... 219

8.4 Conclusions .............................................................................................. 223

Appendix I - Cotton 4 Proposals and Position Papers .......................................... 227

Appendix II - G-20 Proposals and Position Papers .............................................. 247

Appendix III - G-33 Proposals and Position Papers ............................................. 272

Appendix IV - G-90 Proposals and Position Papers ............................................. 297

Bibliography ....................................................................................................... 304

xiii

List of Tables and Illustrations

Tables:

Table 1 Developing Countries in the GATT/WTO 1773-2011 ......................................................... 54

Table 2 Doha Round Agriculture Regional Groups ......................................................................... 55

Table 3 Doha Round Agriculture Groups with Common Interests .................................................... 56

Table 4 Cotton 4 Agriculture Trade Statistics .................................................................................126

Table 5 G-20 Agriculture Trade Statistics ......................................................................................135

Table 6 G-33 Agriculture Trade Statistics ......................................................................................146

Table 7 G-90 Agriculture Trade Statistics ...…………………………..……………………..……155

Illustrations:

Figure 1 The Structure-Strategy-Process-Outcomes Model.............................................................. 39

Figure 2 WTO Doha Round Agriculture Negotiations Coalitions .................................................... 58

Figure 3 Market Access: Developing Country Alliances.................................................................117

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List of Abbreviations

ACP African, Caribbean and Pacific Countries Group

AG Africa Group

AMS Aggregate Measurement of Support

ASCM Agreement on Subsidies and Countervailing Measures

BRIC Brazil, India and China

CAP Common Agricultural Policy

CCP Counter-cyclical Payments

Cotton 4 Group of Four Cotton Countries (Benin, Burkina Faso, Chad and Mali)

CTA Committee on Trade in Agriculture

C4 Cotton Four Group (Benin, Burkina Faso, Chad and Mali)

DDA Doha Development Agenda

Doha Round Doha Development Agenda

DSB Dispute Settlement Body

DSU Dispute Settlement Understanding

EC European Community

EU European Union

FAO Food and Agriculture Organization

FIPs Five Interested Parties Group

GATS General Agreement on Trade in Services

GATT General Agreement on Tariffs and Trade

GDP Gross Domestic Product

GSP Generalized System of Preferences

G-7 Australia, Brazil, China, European Union, India, Japan, and United States.

G-8 Canada, France, Germany, Italy, Japan, Russia, the UK and the US

G-20 Group of Developing Countries in WTO Agriculture Negotiations

G-20 (UR) Group of 20 Developing Country WTO Members in Services (first known as

Café au Lait Group)

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G20 (finance) Group of 20 Finance Ministers and Central Bank Governors

G-33 Group of 46 Developing Country WTO Members

G-48 Group of 48 Developing Country WTO Members in Services Negotiation

(first known as Café au Lait Group, later as the G-20 (UR))

G-90 Group of 65 Developing Country WTO Members

G-110 G-20 + G-33 + G-90

IBSA India, Brazil and South Africa

IBSAC India, Brazil, South Africa and China

ICAC International Cotton Advisory Committee

IGDC Informal Group of Developing Countries

IMF International Monetary Fund

IPR Intellectual Property Rights

ITO International Trade Organization

Key Members Australia, Brazil, European Union, India, Japan, and United States.

LDC Least-developed country

Members WTO members

MFA Multi-fiber Agreement

MFN Most-favored nation

MTM Ministerial trade mandate

NAMA Non-agricultural market access

NAMA 11 Group of 11 developing countries in NAMA negotiations

New Quad Brazil, EU, India and US

NFIDC Net food importing developing country

NGO Non-governmental organization

NIEO New International Economic Order

NTB Non-trade Barriers

OECD Organization for Economic Cooperation and Development

Quad US, Japan, the EU and Canada

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RAM Recently-acceded Members Group

RTA Regional Trade Agreement

SDT Special and Differential Treatment

SP Special Products

SPS Agreement on Sanitary and Phytosanitary Measures

SSM Special Safeguard Mechanism

SVE Small and Vulnerable Economies

TNC Trade Negotiations Committee

TRIPS Trade-Related Aspects of Intellectual Property Rights

UK United Kingdom

UN United Nations

UNCTAD United Nations Conference on Trade and Development

UR Uruguay Round

URAA Uruguay Round Agriculture Agreement

US United States of America (USA)

USD United States Dollar

USDA United States Department for Agriculture

USTR United States Trade Representative

WCA West and Central African Countries

World Bank International Bank for Reconstruction and Development (IBRD)

WTO World Trade Organization

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1

CHAPTER 1

Our guiding light must be the needs and hopes of peoples

everywhere…we must aim to perfect the triangle of development,

freedom and peace.1

1.0 INTRODUCTION

In 2007, I had the opportunity to conduct research on the participation of

African developing countries in the World Trade Organization (WTO) dispute

settlement process. In the context of this research, I found that developing countries

might be better served in the multilateral trading system if they sought to influence the

formation of international trade rules from their inception, rather than waiting to

challenge stronger countries by initiating a dispute. Furthermore, it became clear from

my study that there is ―strength in numbers,‖ meaning that developing countries in the

WTO would do well to work in unison towards the attainment of common goals in

multilateral trade by forming coalitions.2

Interestingly, in recent times it appears to have become more apparent to

developing countries in the WTO that their limited bargaining power is, in fact, a

stumbling block to successful negotiations in the multilateral trade system. Thus, to

execute any fundamental change to the status quo it is essential to cluster together,

pool resources and form alliances to leverage their collective strength in the

1 KOFI ANNAN, IN LARGER FREEDOM: TOWARDS DEVELOPMENT, SECURITY AND HUMAN RIGHTS FOR

ALL, REPORT OF THE SECRETARY GENERAL OF THE UNITED NATIONS FOR DECISIONS BY HEADS OF

STATE AND GOVERNMENT IN SEPTEMBER 2005 5 (UNITED NATIONS 2005). 2 Olajumoke Oduwole, West Africa‘s Participation in WTO Dispute Settlement: The ―Cotton 4‖ and

The US-Upland Cotton Dispute (May 2007) (J.S.M. thesis Stanford University).

2

negotiations.3 What remained unclear, however, was what role this increased coalition

activity by developing countries has assumed in the current WTO negotiations

process. Therefore, the primary purpose of this dissertation is to describe how this

shift towards coalitions as a negotiation strategy by developing countries has occurred

and its implications for the future of the multilateral trading system.

As a result, I have chosen to focus this study on the ongoing WTO Doha

Development Agenda (DDA or Doha Round), the current Round of multilateral trade

rules negotiations, which may constitute the most critical international trade

negotiations of our time. However, because of the breath and complexity of the Doha

Round, I have further restricted my area of study to the Doha Round agriculture

negotiations as a single case study, since agriculture is a key issue for both developing

and industrialized economies. I describe the negotiation strategy of four developing

country agriculture coalitions – Cotton 4, G-20, G-33 and G-90 – as ―nested cases‖

within the case study to identify the function of developing country coalitions in the

Round by comparing and contrasting aspects of each coalition‘s negotiation strategy

during the course of the study period of this research. Through ―process tracing,‖4

this study aims to contribute a practical description of current developing country

negotiation strategy in the DDA to existing literature in this area.

3 AMRITA NARLIKAR, INTERNATIONAL TRADE AND DEVELOPING COUNTRIES: BARGAINING COALITIONS

IN THE GATT AND WTO 2 (ROUTLEDGE PUBLISHERS 2003). 4 ALEXANDER GEORGE & ANDREW BENNETT, CASE STUDIES AND THEORY DEVELOPMENT IN THE

SOCIAL SCIENCES 214-15 (MIT PRESS 2005). (Process tracing is a method used to evaluate and develop

theories in Political Science by extracting all of the observable implications of a theory. Once these

observable implications are extracted, they are then tested empirically, often through the method of elite

interviews, but may also be tested through other rigorous forms of data analysis. It is often used to

complement comparative case study methods).

3

The study analyzes qualitative data about the negotiation process derived from

interviews with WTO trade diplomats in their official capacity, which provide a

picture of confidential inter-governmental negotiations (both the DDA negotiations

and internal coalition negotiations) from an insider‘s perspective. The interviewees all

described their countries‘ as well as their coalitions‘ negotiation strategy or ―behavior‖

mainly in terms of the tactical positions held and the proposals submitted in the course

of the negotiations. As a result, the study focuses primarily on analyzing the external

manifestation of these coalitions‘ interests through their positions and proposals as

communicated to other WTO members (Members). The information derived from this

research could serve as a platform for further research, eventually explaining the

raison d'être behind the negotiated outcomes.

In sum, I capture a contextual description of four developing country

agriculture coalitions – Cotton-4, G-20, G-33 and G-90 – through the negotiation

process in the Doha Round agriculture negotiations from March 2003 to March 2010.

By means of this descriptive comparative analysis, I seek to elucidate the importance

of coalitions to developing countries and to explain how coalition strategy emerged as

the dominant negotiation tool for developing countries in this particular WTO Round.

1.2 Why Agriculture?

Over 40 topics are currently being negotiated by 153 Members in the Doha

Round, indicating the level of complexity faced in multilateral trade negotiations.

However, agriculture is the undisputed ―locomotive‖ of the Round and the sector has

4

set the tone for the majority of the DDA negotiations. In fact, the agriculture

negotiations are the central issue for developing countries in the Doha Round and will,

in effect, determine the ―level of ambition‖ for the DDA negotiations and the

agreements that these negotiations ultimately produce.5 Furthermore, since

industrialized countries and some larger developing countries have important non-

agriculture trade interests, certain other DDA agenda issues, such as non-agriculture

market access (NAMA) negotiations, have now been conditionally linked to the

progress attained in the agriculture negotiations.

Moreover, from the inception of the multilateral trading system in 1947 until

the current Round of multilateral trade negotiations agriculture trade rules have been a

highly contested area in the multilateral trade system.6 Over the years, the lack of

discipline in the application of international agriculture trade rules by Members has

led to the high level of distortion with respect to competition in the global agriculture

market that persists today. The protectionist measures of government subsidies and

artificial price controls adopted by many countries in the trade of agricultural products

ensured that, in general, farmers in richer countries engendered a significant advantage

over their less privileged counterparts when they compete in international markets.7

5 Since the underlying philosophy behind the multilateral trade system advocates liberalization of

international trade between Members, the ―level of ambition‖ of a Round depicts how much further

liberalization of trade rules the negotiations hope to achieve. 6 MELAKU DESTA, THE INTEGRATION OF AGRICULTURE INTO WTO DISCIPLINES IN AGRICULTURE IN

WTO LAW 17-8 (Bernard O‘Connor ed., 2005). 7TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT 11-2 (MACMILLAN 1996); JOHN BARTON ET

AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF THE GATT AND THE

WTO 30 (PRINCETON UNIVERSITY PRESS 2006).

5

The crucial role that agriculture trade rules negotiation played in the Uruguay

Round is well documented in the literature.8 Likewise, agriculture has again assumed

center stage in the ongoing Doha Round negotiations. For this reason, the agriculture

debate presents a model of the larger WTO negotiation process.

Currently, there are several active bargaining coalitions that purport to promote

developing country interests within the context of the ongoing Doha Round.9 As the

focus of my research study, I have selected the four developing country agriculture

coalitions – Cotton 4, G-20, G-33, and G-90 – for a descriptive investigation of their

various negotiation strategies.

1.3 The Research Study

According to Pascal Lamy, the WTO Director General, the ―development

agenda‖ is one of the primary objectives of the DDA and encompasses all aspects of

the negotiations.10

This statement of intent became of crucial importance to trade

negotiations in the area of agriculture early in the Round in the wake of the dramatic

8 TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT (MACMILLAN PRESS 1996); JOHN BARTON ET

AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF THE GATT AND THE

WTO (PRINCETON UNIVERSITY PRESS 2006); DOUGLAS IRWIN ET AL., THE GENESIS OF THE GATT

(CAMBRIDGE UNIVERSITY PRESS 2008). 9 World Trade Organization, http://www.wto.org/english/tratop_e/agric_e/negoti_groups_e.htm (last

visited March 11, 2011). (Developing country coalitions established after the commencement of the

Doha Round in 2001 include: African, Caribbean and Pacific (ACP) Group (2001); Core Group on

Singapore Issues (2001); Recently Acceded Members (RAM) (2003); Cotton-4 (2003); G10 (2003);

Friends of Antidumping (2003); G11 (2005); G-20 (2003); G-33 (2003); G-90 (2003); Core Group on Trade Facilitation (2005); NAMA-11 (2005). 10 Pascal Lamy, Director General, World Trade Organization, Speech given at Meeting of the Steering

Committee of the Inter-Parliamentary Union (IPU) Parliamentary Conference on the WTO—IPU

Headquarters (September 22-23, 2005). http://www.wto.org/english/news_e/sppl_e/sppl02_e.htm (last

visited March 11, 2011).

6

―failure‖ of the Fifth WTO Ministerial Conference at Cancún, Mexico in September

2003.11

Likewise, after the WTO‘s July 2008 Mini-Ministerial Meeting,12 the then

Chairman of the Agriculture Committee, Ambassador Crawford Falconer, released a

briefing paper,13

which was followed by the further Revised Draft Modalities on

Agriculture in December 2008.14

Here, yet another Doha meeting had ended in a

stalemate—on this occasion, due to a deadlock between the US and some developing

countries led by India over the details of a special safeguards mechanism (SSM) to be

incorporated into the agriculture agreement. This development left further doubt

about the viability of the ongoing Round.15

Interestingly, the current difficulty in

reaching a consensus in the Round after almost 10 years of formal WTO negotiation

has been attributed, in part, to the increased developing country participation in WTO

11 Hereinafter Cancún Ministerial Conference. The Round was launched at the Fourth WTO Ministerial

Conference in Doha, Qatar in November 2001, however, at the end of the Cancún Ministerial

Conference two years later, no consensus was reached among Members on negotiated issues at the

conference because of the ―Singapore issues.‖ The Cancún Ministerial Conference, therefore, ended

without the issuing of a Ministerial Declaration. 12WTO Mini-Ministerial Meeting held in Geneva in July 2008 among the seven key WTO members—

Australia, Brazil, China, European Union, India, Japan and the United States. 13 WTO Committee on Agriculture Special Session August 11, 2008, Report to the Trade Negotiations

Committee by the Chairman of the Special Session of the Committee on Agriculture, Ambassador

Crawford Falconer; JOB(08)/95, available at

http://www.wto.org/english/tratop_e/agric_e/chair_texts_11aug08_e.pdf. 14 WTO Revised Draft Modalities on Agriculture, December 2008, TN/AG/W/4/Rev.4 p. 24, available

at http://www.wto.org/english/tratop_e/agric_e/chair_texts08_e.htm. This revised draft was a follow-up

to the original version released in July 2007 as well as the Committee‘s working papers produced in the

course of the negotiations. As expected, the revised draft, the third one that year, (previous drafts were

released in February and May 2008), contained no real surprises; rather, the draft built on the

achievements of earlier documents by attempting to clarify technical and legal details and contained

formulae for cutting tariffs and trade-distorting subsidies. 15 After a lull in Geneva, the ―routine‖ WTO Ministerial meeting held in December 2009 failed to generate the political will required to jumpstart the negotiation process and finalize commitments to

conclude the DDA. Despite this setback, the WTO Director General scheduled a ―stock taking‖ meeting

for March 2010, which was initially supposed to convene at a ministerial level—but was ultimately held

at the senior official level primarily because of the United States‘ refusal to commit to talks at a more

senior level.

7

negotiations.16

This research describes the role that each of the four selected developing

country bargaining coalitions has played in the ongoing WTO Doha Round agriculture

negotiations, by comparing and contrasting their coalition negotiation strategies. The

study investigates how ―coalition strategy‖ has emerged as a critical tool for

developing countries in the current Round and suggests the implications of this

strategy for the future of international trade negotiations.

Selecting the Doha Round agriculture negotiations as a case study, I describe

the negotiation strategies of the four agriculture coalitions from March 2003 to March

2010. Using qualitative data, I identify each coalition‘s role in the current Doha

Development Agenda (DDA) agriculture negotiation process by investigating its

negotiation positions and proposals throughout the study period. The objective of this

research is to highlight the negotiation strategies adopted by each of these four

agriculture coalitions in their attempts to advance developing country interests in the

Doha Round agriculture negotiations. I focus on developing country coalition

strategies in the current WTO Round because the prevalence of developing country

coalitions in this Round distinguishes the Round from previous GATT/WTO Rounds.

I seek to understand why this is so, and how these coalitions could possibly affect this

Round as well as future Rounds.

16 There was a consensus on this point based on the 30 interviews conducted with trade delegates and

stakeholders in Geneva, Switzerland in September 2008 and March 2010. (Interview transcripts on file

with the author).

8

1.4 Conclusions

On the face of it, the rationale for developing countries‘ utilization of

bargaining coalitions in multilateral trade negotiations appears clear. The economies

of scale harnessed from pooling these countries‘ limited political, financial and

technical resources significantly enhance the capacity of a developing country in the

negotiation process.17

In turn, this arrangement helps to increase developing country

access to critical, albeit informal, trade negotiations conducted in WTO Green Room18

sessions, in which they are better able to withstand external pressures from more

powerful developed countries as they negotiate their collective positions with greater

certainty.19

However, due to the potential costs attached to any delegation of an

independent State‘s power or authority in the context of coalition decision-making, the

picture does not appear to be completely rosy. As is the case in any form of alliance in

which countries are required to set aside their own positions on given issues in the

interest of the group, the threat of defection remains a serious one. This threat poses a

real challenge, particularly in the case of developing countries, many of which have

political and economic ties to developed countries that may hinder their bargaining

stance in the course of negotiations. Furthermore, in a developing country coalition in

17 Olajumoke Oduwole, Nothing Ventured, Nothing Gained? A Case Study of Africa‟s Participation in

WTO Dispute Settlement, 2:4 Int. J. Private Law, 358, 364-67 (2009). (Arguing that financial and

technical limitations as well as capacity constraints preclude developing countries‘ participation in

WTO dispute settlement). 18 See infra p.43 and note 10. 19 Olajumoke Oduwole, Nothing Ventured, Nothing Gained? A Case Study of Africa‟s Participation in

WTO Dispute Settlement, 2:4 Int. J. Private Law, 358, 367 (2009). Mayur Patel, New Faces in the

Green Room: Developing Country Coalitions and Decision-Making in the WTO, Working Paper, The

Global Economic Governance Programme, University College Oxford 10 (2007), available at

http://www.globaleconomicgovernance.org/docs/Patel_Main%20text_new.pdf).

9

which there is one or more dominant member(s) undertaking much of the technical

preparation for the negotiations, other weaker members of the group may be

constrained to challenge or oppose the coalition leadership on the adopted group

positions that are based on such generated research findings, even if they conflict with

the weaker member‘s interests. The Doha Round, therefore, offers an important

opportunity for the in-depth study of developing country bargaining coalitions as a

strategic tool in the multilateral trading system.

This study describes aspects of the Doha Round while the negotiation is still in

progress. As a result, the study necessarily excludes the actual final negotiation

outcomes from the Round. However, the current status of the negotiations is already

indicative that the DDA negotiations are as much political as they are economic,

leaving little doubt that important changes are currently occurring in the international

trading system.

Indeed, the changing terrain of international relations spearheaded by the

meteoric rise of emerging economies, such as China and India, and the current global

recession, has shifted the traditional dynamics of the international trade system in

recent times. This shift is reflected in the agriculture negotiations as well as other

areas such as non-agriculture market access, services and intellectual property rights,

thereby making an analysis of the current negotiation process even more topical. In

addition, in the wake of these important changes, other broader issues, such as global

health and environment concerns, have filtered into the application of Sanitary and

Phytosanitary Measures (SPS) as well as the ongoing climate change debate, and are

increasingly impacting international trade relations more recently. In response to

10

these changes, there has been a proliferation of bilateral and regional trade agreements

to compensate for the lag in the Doha Round negotiations as Members struggle to

reposition themselves for the future.

Chapter II presents the research design adopted in the study. Chapter III

presents the theoretical framework for negotiation coalitions underpinning this

research; Chapter IV maps out the use of coalitions by developing countries in the

GATT/WTO pre-Doha. Chapter V reviews international agriculture trade in the

GATT/WTO multilateral trading system and discusses the role of ―development

issues‖ within the system. Chapter VI depicts each of the four selected coalitions,

describing the background and formation, membership dynamics and negotiation

interests of each coalition. Chapter VII is an investigative description and analysis of

the Doha Round agriculture negotiations from March 2003 to March 2010, comparing

and contrasting how the negotiation strategies of each case study coalition manifested

during the study period. Chapter VIII concludes the study by drawing inferences from

the case study to highlight the significance of developing country coalition strategy

through the lessons learned in the course of the DDA agriculture negotiation process

as it impacts the WTO today as well as in the future.

11

CHAPTER 2

2.0 RESEARCH DESIGN

2.1 Methodological Approach

This research study draws attention to the emergence of ―coalition strategy‖ as

the principal negotiation strategy for developing countries in the Doha Round. By

investigating the function that developing country agriculture coalitions have assumed

in the current trade negotiation process, the research describes how coalition strategy

assumed this role as well as the import of this development (if any) for the multilateral

trading system.

Using the DDA agriculture negotiations as a single case study, I described the

negotiation strategies adopted by four developing country agriculture coalitions in the

DDA agriculture negotiations, (Cotton 4, G-20, G-33, G-90) as manifested by the

positions and proposals that these coalitions assumed during the course of the study

period. Specifically, I focused on each coalition‘s formation dynamics, membership

dynamics and negotiation interests. I chose to concentrate on developing country

coalition strategy in the current WTO Round because the preponderance of developing

country coalitions in this Round, particularly in the area of agriculture, constitutes a

marked departure from what obtained in the Uruguay Round and all preceding GATT

Rounds.

12

I adopted a three-pronged approach to retrieving the qualitative data utilized in

this study. First, I completed a review of relevant literature in the field. Second, I

performed a content analysis of coalition negotiation proposals and WTO official

negotiation documents to identify the issues and the positions of each coalition. Third,

I interviewed 30 WTO Members and stakeholders in Geneva to obtain their informed

assessments of the Doha Round agriculture negotiations and the negotiation strategies

of the four coalitions being investigated. I also directly observed two developing

country coalition meetings in progress.

2.2 The Data

As mentioned above, the data used for this study included a literature review of

WTO negotiations in the Doha Round agriculture negotiations. In addition, I

conducted interviews with trade delegates and stakeholders as well as a content

analysis of relevant WTO documentation. An account of the selection process for the

case study coalitions and the data generated for this qualitative study follows below.

2.2.1 Case Selection

2.2.1.1 Agriculture

For purposes of this study, I selected the Doha Development Agenda

agriculture negotiations as an illustrative case to describe the current negotiation

process, specifically as it pertains to the four selected developing country agriculture

13

coalitions. The sheer magnitude and complexity of the current negotiations made

researching the entire Round unfeasible due to the limited timeframe and available

resources, since over 40 topics are currently being negotiated in the Doha Round by

153 WTO Members.

This selection of the Doha Round agriculture negotiations was based on a

number of considerations. First and foremost, the significance of international

agriculture trade to many industrialized countries, developing countries and least-

developed countries is noteworthy. This fact has been reflected in the history of

international agriculture trade since the inception of the GATT/WTO system.

Furthermore, agriculture played a crucial role in the Uruguay Round that

ushered in the WTO in 1995 and became a highly contentious issue in the ongoing

Doha Round. For example, in the Uruguay Round (UR) on two separate occasions, in

1988 and again in 1990, the Latin American Cairns Group members successfully

engineered a crisis in the UR negotiations by walking out of the negotiations and

threatening to veto any UR agreement that did not include agriculture. Such crises

continued in the Doha Round with the July 2008 stalemate essentially between the US

and India over the minutiae of a special safeguard mechanism (SSM) being the most

recent episode. The agriculture debate, therefore, can be considered to be

representative of the larger WTO negotiation process with all its complexities.

14

2.2.1.2 Case Coalition Selection – Cotton-4, G-20, G-33 and G-90

Since the Doha Round commenced in 2001, there has been a dramatic increase

in the number of negotiation coalitions formed at the WTO, particularly by developing

countries. There are currently 26 active coalitions in the Doha Round negotiations, 15

of which are participants in the agriculture negotiations.1 In 2003, a pivotal year in the

Doha Round negotiations due to the peculiar negotiation climate, the following eight

coalitions were created in the DDA negotiations to address various issues: Recently

Acceded Members (RAM), Cotton-4, G10, Friends of Antidumping, G11, G-20, G-33,

and G-90. However, I selected the three developing country agriculture coalitions

that were established during this period, namely Cotton-4, G-20 and G-33. In

addition, although G-90 is technically categorized as a ―general coalition‖ by the

WTO secretariat, for purposes of this research I re-classified this group as an

agriculture coalition of developing country members based on its membership and the

principal issues that the group represents.

G-90 is an amalgamation of three developing country coalitions at the forefront

of the agriculture negotiations. The group comprises the Africa Caribbean and Pacific

(ACP) Group, the African Group (AG), and the Least Developed Country (LDC)

Group – which were all existing developing country coalitions formed prior to or at

the beginning of the Round. The ACP Group (2001) is a geographical grouping of

1 World Trade Organization, http://www.wto.org/english/tratop_e/dda_e/negotiating_groups_e.htm.

(March 11, 2011). Developing country coalitions established after Doha Round 2001 include: African,

Caribbean and Pacific (ACP) Group (2001); Core Group on Singapore Issues (2001); Recently Acceded

Members (RAM) (2003); Cotton-4 (2003); G10 (2003); Friends of Antidumping (2003); G11 (2005);

G-20 (2003); G-33 (2003); G-90 (2003); Core Group on Trade Facilitation (2005); NAMA-11 (2005).

15

former European Union (EU) colonies that share a common interest in preserving their

EU market access preferences in agriculture. The African Group (1997) is a regional

group comprising all of the African WTO Members, and the LDC Group (1999)

includes all of the least developed countries that belong to the WTO. Thus, although

the G-90 coalition is officially classified as a general group, in practice, the group is

primarily concerned with agriculture negotiations by virtue of its membership

composition and their reflected interests.

The high concentration of new developing country coalitions formed in 2003

was an ideal opportunity to begin the examination of the agriculture coalitions from

their inception during that year and to track their evolution over the course of the

seven-year study period. Since all four coalitions were formed under the same

economic and political climate during the negotiations, 2003 constituted an ideal base

period from which to follow each group‘s progression during the course of the

negotiations. The cut off point for this research study is March 2010. In sum, I

selected all of the developing country agriculture coalitions formed within this

timeframe, namely: Cotton 4, G-20, G-33, and G-90.

Each of the four coalitions in this selection pool exhibited significant

differences in their composition and characteristics. For example, Cotton-4 is a small,

issue-specific coalition comprising members with identical interests. G-20 is a

heterogeneous issue-based alliance with interests spanning the entire agriculture

sector. Its members have divergent interests. G-33 is more homogenous in its

composition because the group is specifically focused on only two issues pertaining to

developing countries in the negotiations. As mentioned above, G-90 is an umbrella

16

group with interests spanning across various topics in the DDA negotiations. The

diverse nature of each of the coalitions under review, along with their divergent

interests on some of the issues which they seek to address, lent itself to a rich

contextual description of developing country coalition strategy in the DDA agriculture

negotiations process.2

2.2.2 Content Analysis

In the course of the DDA agriculture negotiations, the WTO secretariat has

issued several official documents relating to the negotiations. My content analysis

aimed to cover all unrestricted proposals and position papers issued by each of the

four coalitions which are indicative of their strategic activity thus far in the

negotiations. I also analyzed the negotiation Framework documents and Ministerial

Declarations as well as the current December 2008 Revised Draft Modalities on

Agriculture, which constitutes the current formal position in the DDA agriculture

negotiations. The crucial importance of the Modalities in WTO negotiations stems

from the fact that these documents, in effect, determine the scope of the commitments

being negotiated on in the Round. Modalities are broad parameters adopted by WTO

members as a template for negotiation on specific issues based on the agreed mandate

for each Round. These Modalities then form the basis of the concrete obligations

(including figures) and are modified as the negotiations progress. With the inclusion

of binding figures based on Members‘ proposals, draft Modalities continue to be

2 In this dissertation, based on the interview data collected, a ―coalition‘s strategy‖ is deemed to consist

primarily of the group‘s efforts in advocating its negotiation positions and interests (whether through

the submission of proposals or other actions) in an attempt to arrive at a desired outcome.

17

negotiated until a final agreement emerges by consensus among all WTO Members—

at which point the Modalities substantively become legally binding as the

implementation ―bible‖ of the various WTO agreements. Therefore, based on past

experience with the Uruguay Round Agriculture Agreement (URAA) implementation

difficulties, the Modalities for the agreement on agriculture will have serious

implications for the quality of outcomes derived from the multilateral trade

negotiations.

2.2.3 Elite interviews

The original data used in this study were derived from 30 elite interviews

conducted with WTO trade diplomats and stakeholders in Geneva, Switzerland and

direct observation of two developing country coalition meetings, conducted over two

field trips spanning a combined four-week period. Each interview was semi-

structured, based on an interview protocol and typically lasted between 60 and 90

minutes each.

I conducted interviews with trade diplomats who were solely dedicated to or

heavily involved with the Doha agriculture negotiations on behalf of their various

countries. My interview pool comprised representatives of members of the four

coalitions being examined—Cotton-4, G-20, G-33, and G-90. Because there is some

overlap in the membership of these coalitions, I primarily targeted countries that were

members of two or more of the groups in order to collect more detailed information

from their broader knowledge base within my limited timeframe. In total, I conducted

18

14 interviews with developing country coalition members‘ agriculture trade

delegates.3

Furthermore, the WTO has identified the following six WTO Members as

being key to the DDA multilateral trade negotiations: Australia, Brazil, European

Union, India, Japan, and United States. These six players (the Key Members) and

China, now jointly known as G-7, were the sole participants in the WTO Mini-

Ministerial meeting held in Geneva in July 2008. I sought to conduct interviews with

agriculture trade delegates from each of these delegations. I successfully conducted

eight interviews from six of the G-7 countries, with the exception of one of the

industrialized countries - Japan. However, I conducted a substitute interview with a

delegate from another important industrialized country in the agriculture negotiations

– New Zealand. The stakeholders interviewed included a number of WTO staff as

well as trade NGO officials in Geneva. I conducted a total of eight stakeholder

interviews.4

The field trips were timed to coincide with pivotal periods in the negotiations.

The first field trip was in September 2008, on the heels of the controversial WTO

Mini-Ministerial Meeting held in July 2008. The second field trip was in February

2010 after the Seventh WTO Ministerial Conference held in Geneva in December

2009, and just prior to the WTO Stock Taking Exercise held in March 2010 that serves

3 This excludes the developing country Key Member country delegates. 4 Five interviews with WTO staff and three interviews with representatives from civil society.

19

as the cut-off point for the research.5 The multiple rounds of interviews were required

to obtain different layers of coalition data as the DDA negotiations progressed.

Although I interviewed trade delegates in their official capacities, in reporting

my findings the anonymity of the trade delegates and governments they represent was

preserved. In addition, the WTO staff interviewed expressly requested confidentiality,

and the same courtesy was extended to the NGO officials as well, to preserve the

integrity of the data. Moreover, to promote candor from the speakers during the

interviews, the sessions were not audio taped. However, I took comprehensive notes

during each interview which remain on file. The interviews were labeled and the data

were then sorted under different topical headings until trends emerged from

interviewee accounts of each coalition‘s role in the negotiation process during the

study period.

2.3 Study Period

The ongoing agriculture negotiations commenced in March 2000, adhering to

the Uruguay Round Agriculture Agreement (URAA). Article 20 of the URAA

provided for the resumption of agriculture negotiations one year before the end of the

URAA implementation period—which was technically 1999. However, the

agriculture negotiations were later subsumed under the Doha Declaration that

established the current Round in 2001. Although several WTO Members submitted

5 At the end of the Seventh WTO Ministerial Conference in December 2009, Members had agreed that a

―stock taking‖ session should be scheduled early in 2010 to re-evaluate the DDA negotiations and set a

timeline for the timely completion of the Doha Round.

20

proposals on different aspects of the agriculture negotiations, Members were unable to

agree on draft Modalities by the original deadline set for that task, which was March

2003. As a result, the agriculture negotiations did not commence in earnest until

around March 2003 with the release of the chairperson‘s summary on March 18, 2003,

unofficially known as the ―Harbinson text.‖6 In light of these developments and

subsequent events during the course of the Round, I narrowed my research study to the

negotiations that took place between March 2003 and March 2010, concluding my

analysis after the completion of the most recent WTO ―Stock Taking Exercise.‖

2.4 The Analysis

My analysis utilized the qualitative data collected in the case study to describe

the import of developing country coalition strategies adopted in the present

multilateral trade negotiations. I focused on how each of the four selected agriculture

coalitions evolved in the negotiation process during the study period. I sought to

highlight the role that developing countries have played in the Doha Round

negotiations so far through the use of coalition strategies.

The description of the DDA agriculture negotiations from March 2003 to

March 2010 offered clear insight into the coalition negotiation process as experienced

by developing countries in the present Round. This description was based on the 30

elite interviews conducted with trade delegates and stakeholders, who gave candid

information about each coalition, and the direct observation of two developing country

6 World Trade Organization, TN/AG/W/1/Rev.1, March 18, 2003.

21

coalition meetings. Existing literature on developing country coalitions and on the

GATT/WTO agriculture negotiations also informed the descriptive analysis.

Furthermore, a content analysis of each coalitions‘s proposals and position papers

from March 2003 to March 2010 filed as formal WTO documents was also completed.

The documentation relied upon in the content analysis comprised unrestricted WTO

documents that I extracted from the WTO official document database, originating

from either the WTO secretariat or the agriculture negotiation Chair, or as formal

submissions from the coalitions themselves. Therefore, in order to accurately identify

each coalition‘s issues of interest, the coalition positions derived from the interview

data were verified with the official proposal documents for triangulation.

In this study I described, compared and contrasted how the four coalitions have

behaved through their tactical strategy adopted in the negotiation process. However,

the highly confidential nature of these inter-governmental negotiations posed some

limitations on the research. For instance, my inability to physically attend the actual

formal WTO negotiations, and perhaps even more importantly, the private informal

meetings conducted between coalition members, undoubtedly deprived me of valuable

information.7 As a result, the necessity of relying on secondary information

(documents, literature and interviews) has vitiated my ability to reproduce a precise

report of both the coalitions‘ internal dynamics as well as the innermost intricacies of

the negotiations process. Furthermore, the atmosphere of uncertainty surrounding the

entire Doha Round, with the repeated delays encountered in the negotiations, and the

potential collapse of the Round on at least two occasions, gave me some cause for

7 I was only able to informally attend two developing country coalition briefing/knowledge sharing

sessions.

22

concern during the course of my research. Nonetheless, despite the research

limitations and the subject‘s potential mortality, this study qualifies as a welcome

contribution to the limited body of literature in this area by giving a credible insight

into developing country coalition negotiation strategy during the study period.

2.5 Conclusions

This chapter presented the research design adopted in the present study. The

purpose of the study was to investigate and describe the strategies adopted by

developing country coalitions in the Doha Round agriculture negotiations to ascertain

how coalition strategy became the paramount negotiation tool for developing countries

in this Round. The study was based on four developing country coalitions – Cotton-4,

G-20, G-33 and G-90 within a single case study – the Doha Round agriculture

negotiations – from March 2003 to March 2010. The findings of the study illuminated

the significance of these developing country coalitions in the ongoing Round and

extracted some lessons for future WTO negotiations.

Chapter III presents some relevant theories in this area of research that

underpin the current study.

23

CHAPTER 3

3.0 THEORETICAL FRAMEWORK AND LITERATURE REVIEW

In this chapter, I present an overview of existing literature from different areas

spanning international relations, political science, law, economics, psychology and

sociology as they relate to the current study. The objective of the review is to frame

this multidisciplinary research by highlighting some of the relevant thinking with

respect to international negotiations and coalitions across different fields and to

properly situate the research question within the context of the ongoing discourse.

3.1 International Negotiation Theoretical Framework

International trade negotiations constitute a continuous process rather than a

one-time transaction. Indeed, the international trade system is compelled to respond to

new developments in the world economy as trade patterns change.1 Therefore, the

asymmetrical gap between industrialized and developing countries with respect to the

content and implementation of international trade rules may warrant closer attention in

the light of recent changes on the global economic scene.2

The significance of the role of negotiation in international fora, while well

established in social science literature, continues to undergo a metamorphosis with

each passing decade. From the post-World War II era to the Cold War and beyond

1 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches, 5

International Negotiation 1, 6 (2000). 2 See supra p. 9.

24

different circumstances in world history have influenced the dynamics among States.

Over the last 40 years, international negotiation, formerly predominantly preoccupied

with security and territorial issues, has gradually broadened its scope to include human

rights, the environment, and the global economy. Renowned international relations

scholars, such as Keohane and Krasner, theorized in the 1980s that economic issues

are embedded in well-defined sets of principles, standards, rules and decision-making

procedures known as regimes or international arrangements.3 Such regimes are said to

offer predictability among the actors in inter-state dealings based on shared knowledge

and the existence of a framework for such interaction. Thus, countries are said to be

compelled to behave in a constructive manner, to adjust to policies that they would not

have adopted otherwise and to engage in international negotiation at levels

incomparable to any other time in world history.4

Indeed, since the inception of the current multilateral trading system in the late

1940s, WTO Members, then known as ―Contracting Parties‖ under the GATT, have

been engaged in an ongoing series of negotiations regarding multilateral trade rules.5

However, in practice, the ideal ―preferred negotiated outcome,‖ whereby the

Contracting Parties favor the agreed outcome above the status quo (i.e. no agreement)

or to any other agreed upon outcome, appears not to have been as forthcoming for

weaker Contracting Parties in these negotiations.6 Yet, these weaker Contracting

3 See Robert Keohane, The Demand for International Regimes, 36 International Organization 325

(1982); STEPHEN KRASNER, STRUCTURAL CAUSES AND REGIME CONSEQUENCES: REGIMES AS

INTERVENING VARIABLES, IN INTERNATIONAL REGIMES (Stephen Krasner ed., Cornell 1983). 4 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches, 5

International Negotiation 1, 10 (2000). 5 There have been eight Rounds of trade negotiations. The DDA is the ninth Round. 6 William Zartman, Negotiation as a Joint Decision-Making Process, 21:4 Journal of Conflict

Resolution 622 (1977).

25

Parties continued to join the GATT and remained in the system, acquiescing to the

negotiations.7

Since the 1980s, relying on the power configuration of the international system

at the time, Krasner also contended that the structure of negotiations between

asymmetrical players had a direct impact on the process and outcome of the

international negotiations of the day.8 At the time, weaker States utilized negotiation

strategies, such as excessive demands, inflexibility in their positions or spurious

threats, but only met with frustration over their inability to achieve the desired

objectives due to the limitations in the national economic capabilities of such States.9

Yet, Landau asserts that the ingrained asymmetry of power among States in economic

negotiations is not an insurmountable block to reaching sound outcomes because

weaker States have begun to adopt a variety of negotiation strategies to compensate

for their shortcomings at the bargaining table.10

For instance, the marginalization of

developing countries to the periphery of the international trade system has been the

principal catalyst for coalition formation in this area, resulting in ―ideological fights,‖

confrontational coalitions, and bloc-style diplomacy by developing countries over the

7 See infra p. 45 and note 9. 8 See STEPHEN KRASNER, STRUCTURAL CAUSES AND REGIME CONSEQUENCES: REGIMES AS

INTERVENING VARIABLES, IN INTERNATIONAL REGIMES (Stephen Krasner ed., Cornell 1983). 9 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches, 5

International Negotiation 1 (2000). 10 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches,

5 International Negotiation 1, 17-8 (2000). (―The most endowed parties do not end up necessarily with

the best; it might even be the opposite. Weaker parties have many tricks in their bags. They used them extensively in the Uruguay Round. They resisted the instruments used by the most powerful, either

bilaterally before the negotiations or during the negotiations. They joined other players to advance their

specific interests. They bridged solutions and served as intermediaries between great powers at odds

with each other. Indeed, the United States, the EU, Japan, Canada are key players. However, weaker

states, which are also emerging economies, may soon join that club.‖)

26

years.11

The various arguments on the actual or perceived asymmetry in the multilateral

trading system, hinging on Members‘ bargaining power derived from political weight

and available resources have already been the subject of much debate in academic

literature by scholars of international relations and other related fields of study.12 This

debate, therefore, hinges as much on descriptive analysis as on normative theory. For

purposes of this research study, I assume that negotiation asymmetry between

industrialized and developing countries is a key factor in the multilateral trading

system.

Moreover, with the advent of ―globalization,‖13

international trade negotiation,

in particular, has gained unprecedented attention in international circles. This fact is

11 J. P. Singh, Coalitions, Developing Countries, and International Trade: Research Findings and

Prospects, 11 International Negotiation 499 (2006). 12 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches,

5 International Negotiation 1(2000). (Landau argues, perhaps counter-intuitively, that the structural

analysis of bargaining power is no longer significant and is, in fact, now inadequate in rationalizing the

distributional outcomes of international trade negotiations. In her opinion, during certain bargaining

situations, there is strength in weakness and, as such, asymmetry has not yet constituted a significant barrier to negotiation and does not automatically result in lop-sided outcomes. Therefore, she

concludes that the ability of a party to walk away from a deal in the endgame is the ultimate source of

bargaining power, since symmetry or asymmetry can perform different functions during the negotiation

process depending on the roles of the negotiating parties and can, therefore, produce varied outcomes). 13 Globalization implies the integration of countries into the world economy through increased trade,

investment, short-term capital flows and international migration of skilled and unskilled labor. It is

widely believed that this process is associated with faster economic growth, higher standards of living,

and expanding opportunities for technological development and cultural advancement for participating

countries. The establishment and strengthening of economic and trading groupings across the world

successfully typified by the European Community (EC) and North America Free Trade Agreement

(NAFTA), among others, has necessitated the integration of other regions to ensure survival. National

borders appear to be fast losing their traditional significance, particularly in the area of trade relations, as many companies, now citizens of the world, are allocating resources to countries and regions based

on efficiency. See Nsonguru Udombana, How Should We Then Live? Globalization and The New

Partnership for Africa‟s Development, 20 B.U. INT‘L L.J. 300 (2002). See also Sumitra Chishti,

Globalization, International Economic Relations and the Developing Countries, 39:3 International

Studies 227 (2002).

27

clearly demonstrated by the nature and mandate of the World Trade Organization

(WTO), where multilateral trade agreements are negotiated today.14

Therefore, Cassidy and Neave have argued that the emphasis of political

science and sociological literature on the descriptive portion of the negotiation process

is rooted in the fact that political or social situations are, in general, fundamentally

influenced by the specific behavior of individuals or small groups.15

Thus, the

assumed roles16

and the interrelationship among coalition members within and outside

of the group directly influence coalition behavior as well as the strategies adopted by

the coalition in the course of the negotiation.17

In addition, more recently, Singh

identifies two major factors that he considers to be responsible for the formation of

multilateral coalitions: domestic economic interests and the minutiae of international

association.18

He theorizes that each coalition must first establish its own common

position on specific issues through internal negotiation among its members. Once the

common positions have been established, Singh states that it is only then that the

coalition negotiates as a ―single party‖ with other coalitions or parties to the

negotiation.19

14 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches,

5 International Negotiation 1 (2000). 15 Gordon Cassidy and Edwin Neave, Dynamics of Coalition Formation: Prescription vs. Reality, 8:2

Theory and Decision 159 (1977). 16 Christophe Dupont, Negotiation as Coalition Building, 1 International Negotiation 47, 56-7 (1996).

(Useful typology roles and behaviors proposed by Sjostedt, Spector and Zartman include five possible

roles: drivers, conductors, defenders, brakers, and cruisers). 17 Christophe Dupont, Negotiation as Coalition Building, 1International Negotiation 47, 56 (1996). 18 J. P. Singh, Coalitions, Developing Countries, and International Trade: Research Findings and

Prospects, 11 International Negotiation 499, 502-03 (2006). 19 J. P. Singh, Coalitions, Developing Countries, and International Trade: Research Findings and

Prospects, 11 International Negotiation 499, 502-03 (2006).

28

Furthermore, economic negotiations are typically highly technical in nature

and now encompass a diverse range of domestic and international issues.20

Today,

multilateral trade negotiations remain extremely complicated, ironically perhaps

because of these very coalitions. As coalition members come together to formulate

their collective strategy, there are numerous factors that each coalition member must

individually consider in protecting its own varying interests within the broader areas of

multilateral trade.21

What is more, on the domestic front of multilateral negotiation

powerful lobby groups, such as industry, corporations, NGOs, and local governments,

often exert a strong influence on national governments in an attempt to steer that

Member‘s trade policies in desired directions.22

Thus, although we typically refer to

Member countries as a ―single entity‖ in multilateral negotiations, with presumably

unified positions on trade issues, each country‘s interests actually comprise different

factions under government, industry and civil society. In addition, influenced by

academia, lawyers, and other non-State actors, the actual multilateral trade negotiation

landscape is changing, and many of these advocates have now transcended national

boundaries in pursuit of manipulating the negotiation process as well as the

outcomes.23

20 Christophe Dupont, Negotiation as Coalition Building, 1 International Negotiation 47 (1996). 21 Ole Elgstrom et al., Coalitions in European Union Negotiations, 24:2 Scandinavian Political Studies

114 (2001). 22 CHARAN DEVENRNAUX ET AL, CASE STUDIES IN US TRADE NEGOTIATION VOL. 1: MAKING THE

RULES 17 (INSTITUTE FOR INTERNATIONAL ECONOMICS 2006). (Stating that ―Trade rules result from the actions of a host of interested parties-domestic, national, and supranational-competing and cooperating

to shape agreements by using such tactics as forum shopping, coalition building, agenda setting, and

grassroots organizing.‖) 23 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches,

5 International Negotiation 1, 4 (2000).

29

As a result, one of the critical success factors for international trade

negotiations is for national governments to consult their respective business

communities24

as well as other relevant stakeholders, because such groups can now

have a significant impact on the negotiation process and the outcomes there from.

Moreover, trade delegates themselves are becoming increasingly critical players as

they work towards specific negotiation objectives, while juggling conflicting interests,

principles and insights from their home governments.25

Interestingly, however, in the

course of international economic negotiations negotiators for powerful states appear to

be more concerned with their domestic constituents than with weak states, while

negotiators for weak states seem more concerned with their relationship with powerful

states than with their own domestic constituents.26

Consequently, any ensuing

instability of the multilateral bargaining coalitions may stem from balancing Member

interests on these two levels (internal and external relations) in the negotiation process.

Therefore, while these issues pertaining to the internal negotiations that occur within

each individual WTO Member are significant and interesting, and are perhaps

indicative of some of the major challenges currently facing developing country

bargaining coalitions, the analysis of these domestic negotiations fall outside the

purview of the current study.27

Below is a further discussion on coalition theory.

24 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches,

5 International Negotiation 1, 4 (2000). 25 Christophe Dupont, Negotiation as Coalition Building, 1International Negotiation 47 (1996). 26 Robert Wolfe, Sprinting During a Marathon: Why the WTO Ministerial Failed in July 2008, Groupe

d‘Economie Mondiale (GEM) Working Paper 24 (April 2009). 27 There are, essentially, three levels of negotiations identified by this study. The first level is the

negotiations within each WTO Member, the second level is the negotiations between coalition members

and the third is the negotiations between the coalitions (as a single group) and other WTO Members.

This study focuses principally on the third level of negotiations, partially on the second level of

negotiations and is unable to analyze the first level of negotiations due to time and resources

30

3.2 Relevant Coalition Theory

States have long used coalitions in the international negotiation context to

achieve their desired objectives. A coalition is formed when two or more Members

agree to combine their resources in pursuit of a collective purpose. The objective of

such groupings in the multilateral trading system is to achieve a shared advantage

against a common opponent or to attain a mutually beneficial goal.28

Existing coalition theory in this area contends that developing country

bargaining coalitions can only be effective and enduring if they are formed under

certain internal and external conditions. In her research on developing country

coalitions in the Doha Round GATS29

negotiations, Amrita Narlikar theorizes that

developing countries should choose primarily to align themselves in groups based on

structural components, such as ―sustainability‖ (internal coherence) and

―effectiveness‖ (substantial external weight).30

On the flip side of the same coin, Narlikar and Tussie have espoused a theory

relating to two fundamental problems that developing country coalitions, in particular,

encounter in the course of their collaboration efforts: ―minimal external weight” and

―risk of fragmentation”31

By minimum external weight the authors refer to the

chronic lack of political clout that developing country coalitions suffer from on the

international negotiation scene, which originates directly from the minute share of the

constraints. 28 Ilja van Beest et al., The Excluded Player in Coalition Formation, 29:2 PSPB 237 (2003). 29 General Agreement on Trade in Services (GATS). 30 AMRITA NARLIKAR, INTERNATIONAL TRADE AND DEVELOPING COUNTRIES: BARGAINING

COALITIONS IN THE GATT AND WTO 197 (ROUTLEDGE PUBLISHERS 2003). 31 Amrita Narlikar & Diana Tussie, The G-20 at the Cancún Ministerial: Developing Countries in the

WTO, 27:7 The World Economy 947, 954 (2004).

31

world economy that these countries control. Minimum external weight is manifested

when a group of weaker Members are beholden to industrialized super powers, such as

the United States or the European Union. As a result, these Members are constrained

from precluding any consensus reached by the dominant players or resisting political

pressure exerted over them and operate under the constant threat of being

marginalized in multilateral trade negotiations.32

For example, towards the conclusion of the Uruguay Round of multilateral

negotiations, many developing countries were quite perturbed by the impending

changes within the international trade system, particularly in areas such as intellectual

property; however, rather than become outsiders from the system, at the conclusion of

the UR these developing countries all embarked on the ―single undertaking‖

agreement and joined the WTO.33

―Fragmentation‖ refers to the phenomenon whereby bargaining coalitions

disintegrate and ultimately fail because one or more countries defect (or appear to

defect) from the agreed upon negotiation position. Causes of fragmentation may stem

from coalition structure and interests, strategies adopted, as well as external

influences.34

Narlikar and Tussie contend further that whereas all bargaining

32 Amrita Narlikar & Diana Tussie, The G-20 at the Cancún Ministerial: Developing Countries in the

WTO, 27:7 The World Economy 947, 954 (2004); JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE

REGIME: POLITICS, LAW, AND ECONOMICS OF THE GATT AND THE WTO 37 (PRINCETON UNIVERSITY

PRESS 2006). 33 JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 92-7 (PRINCETON UNIVERSITY PRESS 2006). 34 Amrita Narlikar & Diana Tussie, The G-20 at the Cancún Ministerial: Developing Countries in the

WTO, 27:7 The World Economy 947, 954 (2004).

32

coalitions run the risk of becoming fragmented, coalitions of weak Members fragment

for reasons similar to the minimum external weight factor.35

However, while defection has, indeed, been a serious problem for developing

country coalitions in the past due to their fragile economic position in international

trade, I argue that in the current Round the principal threat to developing country

coalition coherence is fragmentation due to divergence of interests among coalition

members. Thus, coalitions may implode as a result of Members‘ different negotiation

priorities, causing internal pressures due to the range of issues that such coalitions may

seek to address on behalf of their diverse membership. These internal conflicts may

result in a split based on the conflicting interests or priorities within the group.36

Moreover, the form of negotiation strategy adopted by a coalition may be

indicative of the risk of fragmentation; as a result, a coalition that adopts a

―distributive‖37

negotiation strategy may be more likely to fragment due to the higher

(external) incentives offered to its members for defecting.38

In fact, in practice broad

political judgments must be made on the part of developing country Members in order

to determine their individual negotiation thresholds or best alternative to a negotiated

35 Amrita Narlikar & Diana Tussie, The G-20 at the Cancún Ministerial: Developing Countries in the

WTO, 27:7 The World Economy 947, 954 (2004). (according to Narlikar and Tussie, minimum

external weight is a structural constraint which can be overcome in several ways: 1.Coalition can be

reconstituted so it includes some larger economies; 2.Coalition of small and weak countries can

improve bargaining strength by relying on larger numbers which helps enhance collective market size

of the coalition and also the legitimacy of its agenda—most importantly in the endgame, countries find

it easier to refuse a sub-optimal deal if they are not isolated in their resistance; 3.Even if coalitions

comprise some of the weakest countries, they can still exercise a powerful influence in the negotiations

by conducting detailed research on the subject and thereby finding a niche in the negotiations). 36 While this argument may appear obvious on the face of it, the fact that countries with divergent

interests have sought to form alliances with each other for various reasons in the current Round lends credence to the point. 37 Distributive bargaining is a ―win-lose‖ strategy cf. collaborative bargaining which is a ―win-win‖

strategy. 38 Amrita Narlikar & Diana Tussie, The G-20 at the Cancún Ministerial: Developing Countries in the

WTO, 27:7 The World Economy 947, 954 (2004).

33

agreement (BATNA) on various coalition issues.39

Likewise, collectively, coalition

members need to determine the group‘s own BATNA because, whether individually

or collectively, developing country coalition members could rationally decide to

remain with the status quo rather than pursue and conclude an unfavorable Doha

Round agreement. For example, at the 2008 Mini-Ministerial meeting held in Geneva,

India and the United States were unable to agree on the details of a special safety

mechanism (SSM) for developing countries. Although at the time there was

inconclusive evidence as to whether India was acting individually or on behalf of the

G-33 coalition (or both), it became apparent that India referred the status quo ante to

the multilateral trade agreement being proposed at the time.40

Therefore, based on coalition formation, Narlikar classifies developing country

coalitions into two broad categories: bloc type coalitions and issue-based alliances.

Accordingly, bloc coalitions are based on identity or ideology, comprising like-

minded States taking a position ―across the board,‖ whereas issue-based alliances are

generally less structured, uniting for specific reasons or to fend off identified threats.41

39 A BATNA is a pre-determined position that a party brings into a negotiation. The best alternative is

then used as a yardstick against which a proposed agreement is measured. In this instance, a BATNA

will prohibit a negotiator from accepting an unfavorable Doha agreement or one that is not in the

Member or coalition‘s best interest because it provides a better option outside the negotiation. Ideally,

since BATNA is the alternative to what a negotiated agreement would be otherwise, it ought to aid

flexibility and allows much more room for innovation than a predetermined bottom line. However, as

in the current Round, a negotiator with a strong BATNA also has more power because of the

knowledge of (or calculation of) an attractive alternative that could be resorted to in the event that an

acceptable agreement is not achieved. See RICHARD SHELL, BARGAINING FOR ADVANTAGE:

NEGOTIATION STRATEGIES FOR REASONABLE PEOPLE (PENGUIN BOOKS 2ND ED. 2006).

40 See infra p. 204. 41 Amrita Narlikar & Diana Tussie, The G-20 at the Cancún Ministerial: Developing Countries in the WTO, 27:7 The World Economy 947, 957 (2004); See AMRITA NARLIKAR, INTERNATIONAL TRADE

AND DEVELOPING COUNTRIES: BARGAINING COALITIONS IN THE GATT AND WTO (ROUTLEDGE

PUBLISHERS 2003). (Narlikar offers three methods of forming coalitions based on well-established

International Relations (IR) theories. The first category is based on the realist theories of International

Relations, which stress the importance of the collective interests of the parties. Second, neo-liberal IR

34

She contends that although bloc-type coalitions had been the mode of choice for

developing country until the early 1980s, issue-based coalitions became prevalent

during the Uruguay Round negotiations as a result of the inherent limitations of bloc-

type diplomacy. Narlikar has argued further that developing country groupings have

learned hard lessons over the years. Through that process they have evolved into the

third generation of ―smart” coalitions - hybrid coalitions with features of both bloc-

type and issue-based alliances that we have today.42

Based on the identified limitations of these developing country coalitions, I

consider “agenda setting” as a possible answer to identifying and resolving some of

these issues. According to Wilson and Herzberg, two key factors have been identified

from the study of agenda processes, namely, the structure of an agenda and the agenda

procedures,43

which together contribute to making agendas a powerful tool for

pursuing desired interests or as a blocking device to prevent opposing interests or to

protect the status quo ante. 44

Therefore, by tackling contentious issues that are

important to developing countries at the beginning of the negotiation process,

developing country coalitions can become much more effective participants in the

negotiating process.

theories, which go beyond those interests to promote cooperation among the group‘s members and

third, constructivist theories, focus on the ideas and group identity in coalitions). 42 Amrita Narlikar & Diana Tussie, The G-20 at the Cancún Ministerial: Developing Countries in the

WTO, 27:7 The World Economy 947, 957-9 (2004); See AMRITA NARLIKAR, INTERNATIONAL TRADE

AND DEVELOPING COUNTRIES: BARGAINING COALITIONS IN THE GATT AND WTO (ROUTLEDGE

PUBLISHERS 2003). 43 Rick Wilson & Roberta Herzberg, Negative Decision Powers and Institutional Equilibrium:

Experiments on Blocking Coalitions, 40 Political Research Quarterly 593 (1987). (―The first is that the structure of an agenda matters for political choices….it has been demonstrated both theoretically and

empirically that the order of an agenda dictates the outcomes selected by decision-makers. The second

point is that different agenda procedures generate different strategies for political actors.‖) 44 Rick Wilson & Roberta Herzberg, Negative Decision Powers and Institutional Equilibrium:

Experiments on Blocking Coalitions, 40 Political Research Quarterly 593 (1987).

35

This noteworthy political science literature that analyzes actors‘ agenda setting

behavioral strategies within political institutions has concentrated on agenda setting

primarily in a domestic context, because of the critical role that agendas play in the

transformation of individual preferences into collective choices.45

In the present

context, however, early in the course of attempting to commence the current Round of

multilateral trade talks, the WTO witnessed its first major deadlock in the third WTO

Ministerial Conference held in Seattle, USA in 1999.46

The meeting was convened

primarily to determine the agenda of the next negotiation round and to declare the

Round open; however the meeting ended without achieving either objective. While

the failure of the Seattle Ministerial was widely attributed to its being thwarted by

angry demonstrators from the anti-globalization movement by the international media,

in actual fact, within the conference itself, WTO Members were deeply divided on

several critical issues, as mentioned above, and were, therefore, unable to agree on the

negotiation agenda for the new Round.47

With respect to coalitions, in the final analysis, the primary advantage of any

coalition remains the quality of its membership. Coalitions rely on the capacity of

their members to collaborate with one another in executing required assignments,

despite their differences. Thus, the internal group dynamics of developing country

coalitions are crucial because developing country Members often compete with each

other in the same markets. This phenomenon is typically manifested among them in a

45 Rick Wilson & Roberta Herzberg, Negative Decision Powers and Institutional Equilibrium:

Experiments on Blocking Coalitions, 40 Political Research Quarterly 593 (1987). 46 Herein after the Seattle Ministerial Conference. 47 JEFFERY SCHOTT, THE WTO AFTER SEATTLE IN THE WTO AFTER SEATTLE, 5 (Jeffrey Schott ed.,

Institute for International Economics, 2000).

36

history of distrust and lack of communication, with little or no shared collaborative

experience.48

In order to appropriately analyze these behavioral tendencies, Pfetsch

and Landau divided the negotiation process into four stages which lend themselves to

further examination: (1) the structural relationship between negotiators; (2) the process

of negotiation itself; (3) third party intervention; and (4) the outcome of the

negotiation process.49

In this instance, the current research undertakes a study of the

negotiation process itself by tracing and analyzing the negotiation strategies adopted

by the case study coalitions based on their negotiation proposals and the positions that

they represent.

Other scholars, such as Wagner, have sought to determine whether the

coalition type affects the negotiation process and whether process affects the

negotiated outcomes by analyzing multilateral negotiation processes. She questions

whether ―negotiation analysts expect convergent bargaining behaviors to lead to

compromises between negotiators‘ positions and problem-solving behaviors to lead to

the integration of these positions, with the latter assumed to be the superior

outcome.‖50

Therefore, in light of the ongoing discourse on the trends in existing literature

regarding multilateral negotiations and developing country coalitions, it becomes

increasingly important for developing countries to gain a clearer understanding of

coalition dynamics in order to create competitive negotiating strategies. The current

48 Pennie Foster-Fishman et al., Building Collaborative Capacity in Community Coalitions: A Review and Integrative Framework, 29:2 American Journal of Community Psychology 241 (2001). 49 Frank Pfetsch & Alice Landau, Symmetry and Asymmetry in International Negotiations, 5

International Negotiation 21, 22 (2000). 50 Lynn Wagner, Negotiations in the UN Commission on Sustainable Development: Coalitions,

Processes, and Outcomes, 4 International Negotiation 107 (1999).

37

research acknowledges the structural coalition theories posed above and may draw on

them in analyses in subsequent later chapters.51

However, the study focuses primarily

on contributing descriptive knowledge in the area of developing country coalition

bargaining strategies in the context of the ongoing negotiation process.

According to Odell, the negotiation process can be a key determinant in the

final agreement reached.52

Furthermore, Zartman‘s earlier study of international

negotiation may help to guide our analyses of international negotiation today.53

Zartman identified four typologies: the psychological approach, the economic

approach, the strategic approach and the process analysis approach to studying

international negotiation because of what he viewed as their contribution to the

theoretical development of the subject.54

However, he considered the fourth approach,

process analysis, as engendering the most productive results in the field because it

treated the actual negotiation as a learning process in which concessions are given and

51 Pennie Foster-Fishman et al., Building Collaborative Capacity in Community Coalitions: A Review

and Integrative Framework, 29:2 American Journal of Community Psychology 241 (2001). (Noting

that science and practice are often advanced when literature on a subject is integrated into an

overarching theoretical framework). 52

JOHN ODELL, NEGOTIATING TRADE: DEVELOPING COUNTRIES IN THE WTO AND NAFTA 1

(CAMBRIDGE UNIVERSITY PRESS 2006). See also STEPHEN WOOLCOCK, THEORETICAL ANALYSIS OF

ECONOMIC DIPLOMACY, IN THE NEW ECONOMIC DIPLOMACY: DECISION-MAKING AND NEGOTIATION IN

INTERNATIONAL ECONOMIC RELATIONS 21 (Nicholas Bayne & Stephen Woolcock eds., 2007).

(Relying on similar reasoning as Odell, Woolcock also makes a case for the process of decision-making

and negotiation in the economic diplomacy sphere). 53 William Zartman, Negotiation as a Joint Decision-Making Process, 21:4 Journal of Conflict

Resolution 524-25 (1977). 54 William Zartman, Negotiation as a Joint Decision-Making Process, 21:4 Journal of Conflict

Resolution 524-25 (1977). While the psychological approach focuses on the decision- makers (rather

than the negotiation process) and attempts to analyze negotiation in terms of their behavioral patterns

and interpersonal dynamics, the economic approach emphasizes the converse—artificially constructed concepts and negotiation scenarios with Pareto-optimality, which, in the author‘s opinion, limit the

usefulness of these theories for meaningful prediction in practice. Despite suffering from some of the

same criticisms as the economic approach, the strategic approach forms an important part of negotiation

theory, given that a rational choice analogy can help determine when to engage in negotiation and when

to abstain.

38

received, thereby ultimately reaching a convergence of interests.55

As far back as

1977 Zartman argued convincingly that

In attempting to develop scientific comprehension of a subject,

it is as important to understand the nature of the subject itself as

it is to develop theories to explain how it works…It is therefore

important to continue to pose the question of correspondence

between theory and reality, while still pursuing the debate over

the internal development and consistency of current theory.56

More recently, noting with surprise the academic neglect of the study of the

process by which trade policy is negotiated Devereaux et al proffered an interesting

model that captured, in my opinion, the essence of this very process, particularly as it

applies to complex negotiations such as multilateral trade agreements.57

Stating that

the structure of multilateral negotiations can be analyzed along four dimensions –

issues, parties, levels and linkages – the authors contended that ―the structure of a

negotiation strongly influences each party‘s constraints and opportunities.‖58

Therefore, the ―Structure-Strategy-Process-Outcomes‖ model depicted below can be

55 William Zartman, Negotiation as a Joint Decision-Making Process, 21:4 Journal of Conflict

Resolution 524-25 (1977). (―But does it capture the essence of the process? Does it reflect the nature of

negotiation as found in the majority of real cases? Or if certain unreal assumptions have to be made to

handle the problem theoretically, do these assumptions respect the nature of the process or do they

abstract that very nature?...On the other hand, as already noted, concession/ convergence analysis

depends on the identification of specific positions. It is therefore limited in its application to

quantifiable cases…‖) 56 William Zartman, Negotiation as a Joint Decision-Making Process, 21:4 Journal of Conflict

Resolution 619-20 (1977). 57 CHARAN DEVENRNAUX ET AL, CASE STUDIES IN US TRADE NEGOTIATION VOL. 1: MAKING THE

RULES 17-9 (INSTITUTE FOR INTERNATIONAL ECONOMICS 2006). (Furthermore, in analyzing process

dynamics, the authors have delineated seven tactical elements of complex negotiations which mature trade negotiators utilize as follows: 1) Organizing to influence 2) Selecting the forum 3) Shaping the

agenda 4) Building coalitions 5) Leveraging linkages 6) Playing the frame game 7) Creating

momentum). 58 CHARAN DEVENRNAUX ET AL, CASE STUDIES IN US TRADE NEGOTIATION VOL. 1: MAKING THE

RULES 17-9 (INSTITUTE FOR INTERNATIONAL ECONOMICS 2006).

39

utilized as a guide for explaining the DDA agriculture negotiation process during the

analysis of the case in later chapters.

Figure 1 The Structure-Strategy-Process-Outcomes Model

Source: Charan Devenrnaux et al (2006)

From this model, we see that as the negotiation progresses the structure of the

negotiations as well as the strategies adopted by developing country coalitions

continue to evolve. Thus, a contextual description of developing country bargaining

coalition tactical strategies in the Doha agriculture negotiation process during the

research study period represents a meaningful contribution to existing literature in this

area.

3.3 Conclusions

One significant consequence of engaging in interactive bargaining and value

creation for developing countries in the Doha Round has been the increased likelihood

StructurePlayer

StrategiesEmergent Process Outcomes

Constraintsand

Opportunities

Shaping the structure

Observing and

adapting

Interactions

40

of effective negotiation outcomes.59

The nature of multilateral trade negotiations

under the auspices of the WTO, with its ―single undertaking‖ agreement template,

lends itself to the deployment of problem-solving techniques in negotiation. Yet, the

system (like most other international organizations) is also plagued with

manifestations of ―unequal equality.‖60

The synopsis above discusses the reasons countries engage in multilateral trade

negotiations and highlights some of the difficult issues surrounding the participation

by Members that are juggling several interests. We have identified the various levels

of negotiation that occur within a coalition, namely, the internal domestic negotiations

within each member country as well as the compromises that must be reached between

coalition members to enable them to portray a cohesive front in the actual (external)

negotiations when engaging with other WTO Members.

The rationale behind the use of coalitions in complex negotiations was also

explored, focusing on some concerns that are peculiar to developing country

coalitions, such as fragmentation and insufficient external weight, as well as the

advantages to be attained by setting the negotiation agenda.

Finally, the literature review solidifies the basis for adopting ―process tracing‖

as the preferred analytical tool for the study.

59 Lynn Wagner, Negotiations in the UN Commission on Sustainable Development: Coalitions,

Processes, and Outcomes, 4 International Negotiation107, 109 (1999). (Wagner summarized this

process as follows: ―each party must move beyond presenting and restating its positions and must learn

the other‘s reasons for its negotiating position if they are to identify joint benefits.‖ This deductive

approach to negotiation that welcomes creativity from negotiators is a striking contrast to the

convergent negotiation process, which emphasizes the extraction of concessions from other negotiators prior to any shift in position. Here, by distributive bargaining and claiming value, ―bargainers seek to

influence their opponents to choose an outcome that is desirable for oneself [by offering] concessions

and try to persuade the other side to concede). 60 Lynn Wagner, Negotiations in the UN Commission on Sustainable Development: Coalitions,

Processes, and Outcomes, 4 International Negotiation107, 109 (1999).

41

Chapter IV presents an overview of decision-making in the WTO as well as a

summary of the use of coalitions by developing countries within the multilateral

trading system.

43

CHAPTER 4

4.0 DEVELOPING COUNTRY COALITIONS UNDER THE GATT/WTO

The importance of the impact of international trade agreements on ordinary

citizens across the globe has increased tremendously in the wake of globalization.

Indeed, trade rules are directly responsible for the ―winners‖ and ―losers‖ in the

multilateral trading system, and their impending effects on the life of the ordinary

man.1 As a result, less developed countries have recently become progressively more

engaged in the negotiation of WTO rules in recent times, with the effects of the rules

being increasingly felt in domestic trade policy. Therefore, as the world shrinks, many

countries now appear to be more amenable to relinquishing some of their sovereignty

in trade negotiation, perhaps due to such socioeconomic and geopolitical factors, in

favor of greater integration and collaboration at multilateral, regional and bilateral

levels.2

1 JOHN ODELL, NEGOTIATING TRADE: DEVELOPING COUNTRIES IN THE WTO AND NAFTA 1

(CAMBRIDGE UNIVERSITY PRESS 2006). 2 Mayur Patel, New Faces in the Green Room: Developing Country Coalitions and Decision-Making in

the WTO, Working Paper, The Global Economic Governance Programme, University College Oxford

15 (2007), available at http://www.globaleconomicgovernance.org/docs/Patel_Main%20text_new.pdf.

(Where he stated that, ―The process of institutional change is essentially perceived as a reflection of

structural shifts in the world economy. As applied to the WTO, one interpretation of this is that

increases in developing country membership and the economic growth of emerging markets have altered the balance of material power in the trading system, thereby explaining the observed shifts in

governance.‖ According to Patel, today, unlike the situation under the GATT, many coalitions are now

highly visible, formalized and coordinated, with some developing country coalitions already apparently

influencing the negotiations considerably, in areas such as public health, under TRIPS, as well as in

agriculture). See also per Interviewee 16.

44

4.1 Decision-Making under the GATT/WTO

The World Trade Organization is a member-driven organization, which means

that all substantive decisions are reached jointly by the consensus of the organization‘s

Members. This Consensus rule refers to the unanimous approval by all Members on a

given issue or agreement, with no dissent, for all WTO decisions.3 This decision-

making feature of the WTO differentiates it from other international organizations

such as the World Bank and International Monetary Fund (IMF), because the WTO

does not delegate its decision-making authority to a board of directors or the

organization‘s Director General. Rather, Members take substantive decisions and

reach agreement only by consensus.

The principal formal decision-making body of the WTO is the Ministerial

Conference, which meets at least once every two years.4 The Ministerial Conference

is attended by prominent officials, typically Members‘ trade ministers or delegation

ambassadors from the WTO‘s 153 Members which is where ultimate decisions

regarding WTO trade rules are made. These international trade rules are negotiated by

the Members over a period of time until a consensus is reached. This process is

referred to as a Round of negotiations. Since the inception of the GATT in 1947 to

3World Trade Organization,

http://www.wto.org/english/thewto_e/whatis_e/tif_e/org1_e.htm#ministerial (last visited March 11,

2011). 4 World Trade Organization, http://www.wto.org/english/thewto_e/whatis_e/tif_e/org2_e.htm (last

visited March 11, 2011). There are also several lower layers of WTO meetings at the delegate or senior

official level, which meet more regularly and are also open to all WTO Members. These regular

meetings are led by the General Council, which also meets as the Dispute Settlement Body as well as

the Trade Policy Review Body.

45

date, there have been eight Rounds of negotiating multilateral trade agreements, with

the ongoing DDA constituting the ninth Round of negotiations.5

However, for developing countries, the consensus-based decision-making

nature of the WTO poses a number of problems.6 First, Article IX:1 of the Marrakesh

Agreement Establishing the World Trade Organization presumes the physical presence

of Members in order to register their dissent.7 The footnote to Paragraph 1 expressly

states that if no Member present at the meeting at which the decision is taken formally

objects to the proposed decision, this is regarded as consent.8 Unfortunately, many

small developing countries do not have the resources to deploy permanent

representatives to the WTO headquarters in Geneva, Switzerland and are, therefore,

absent from such meetings.9 In addition, some developing country Members would be

constrained from openly challenging or opposing an industrialized country, which may

5 World Trade Organization, http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm (last

visited March 11, 2011). 6 JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 37 (PRINCETON UNIVERSITY PRESS 2006). 7 World Trade Organization Analytical Index, Marrakesh Agreement Establishing the World Trade

Organization, available at http://www.wto.org/english/res_e/booksp_e/analytic_index_e/wto_agree_03_e.htm#top 8 World Trade Organization Analytical Index, Marrakesh Agreement Establishing the World Trade

Organization, available at

http://www.wto.org/english/res_e/booksp_e/analytic_index_e/wto_agree_03_e.htm#top

(Article IX: Decision-Making ―1. The WTO shall continue the practice of decision-making by

consensus followed under GATT 1947. 1. Except as otherwise provided, where a decision cannot be

arrived at by consensus, the matter at issue shall be decided by voting. At meetings of the Ministerial

Conference and the General Council, each Member of the WTO shall have one vote. Where the

European Communities exercise their right to vote, they shall have a number of votes equal to the

number of their member States. 2. which are Members of the WTO. Decisions of the Ministerial

Conference and the General Council shall be taken by a majority of the votes cast, unless otherwise

provided in this Agreement or in the relevant Multilateral Trade Agreement. (3) (footnote original) 1 The body concerned shall be deemed to have decided by consensus on a matter submitted for its

consideration, if no Member, present at the meeting when the decision is taken, formally objects to the

proposed decision.”) (italics mine). 9 Olajumoke Oduwole, Nothing Ventured, Nothing Gained? A Case Study of Africa‟s Participation in

WTO Dispute Settlement, 2:4 Int. J. Private Law 358, 364-67 (2009).

46

be such a country‘s benefactor through donor aid, on any issue.10

Nevertheless,

technically, both absence and silence are interpreted as consent under WTO decision-

making rules. Therefore, while all Members are presumably empowered and

protected from abuse of the system by consensus-based decision-making, the system

may also make it impracticable for smaller Members to initiate or to implement any

agenda in the organization without the consent of stronger Members.11

Furthermore, an informal, yet vital, decision-making process under the WTO,

inherited from the GATT, whereby decision-making is de facto primarily determined

through smaller caucus meetings such as ―Green Room‖ meetings,12

and more

recently ―Room E‖ 13

and G-7 meetings,14

has been the recipient of mixed feeling from

developing countries in general.15

Green Room meetings are a series of meetings with

10 Richard Steinberg, In the Shadow of Law or Power? Consensus-based bargaining and outcomes in

the WTO, 56: 2 International Organization 339 (2003). (Stating that, in practice, most decisions were

made under ―the shadow of power‖ in which large economic size was effectively used as an ―invisible

weighting‖ of the votes). See also, Olajumoke Oduwole, Nothing Ventured, Nothing Gained? A Case

Study of Africa‟s Participation in WTO Dispute Settlement, 2:4 Int. J. Private Law, 358, 364-67 (2009). 11 JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 37 (PRINCETON UNIVERSITY PRESS 2006). 12 The WTO secretariat conducts informal meetings with the objective of unraveling complexity in

Members‘ negotiations. Members attend by invitation only, issued by the Director General. These

smaller caucus meetings are held in the Director General‘s conference room (informally known as the ―Green Room.‖ These meetings typically have between 20 to 40 trade delegates in attendance at the

request of the WTO director general or the minister who is chairing a Ministerial Conference. 13 In the Doha Round agriculture negotiations it has also become common practice for the chairperson

of the agriculture negotiating group to attempt to broker a compromise between groups of interested

delegates on a difficult issue by inviting select Members to meet on these issues. Such meetings are

informally referred to as ―Room E‖ meetings. Chaired by the talks‘ chairperson, (Ambassador

Crawford Falconer of New Zealand at the time), the Revised Draft Modalities on Agriculture were

negotiated primarily over several Room E meeting between 36–37 delegations. All coalitions were

represented to ensure the talks were inclusive and transparent. See per Interviewee 13; World Trade

Organization, http://www.wto.org/english/thewto_e/whatis_e/tif_e/org1_e.htm#ministerial (last visited

March 11, 2011). 14 The WTO Director-General adopted the most stringent negotiation format to date at the last WTO Mini-Ministerial Conference held in July 2008 in Geneva, at which only seven countries—comprising

the 6 Key Members (the United States, the EC, Japan, Australia, India and Brazil), plus China - also

known as the G-7 - were invited to engaged in active consultations behind closed doors, to the

exclusion of all other Members. 15 Transcripts from 30 interviews conducted with WTO Members and stakeholders (on file with the

47

restricted attendance convened for trade delegates from select countries—typically

OECD16

countries led by ―the Quad.‖17

At these meetings important discussions are

held regarding the multilateral trading rules negotiations, the essence of which

subsequently cascades to the remaining WTO member countries.18

In effect, this

negotiation system excludes most developing countries from active participation in

WTO negotiations.19

As a result, these informal meetings have been a source of serious contention

among excluded WTO Members because these Members believed that ―decisions‖

were being reached ―behind closed doors‖ excluding the of majority of the

membership of the organization.20

Historically, all but a handful of developing

countries had been marginalized from these informal activities, presumably because of

their individual economic resource constraints, which limited their ability to

participate in overlapping meetings, and their lack of clearly articulated negotiating

author). 16 The Organization for Economic Cooperation and Development (OECD) is a group consisting of 30

industrialized countries. 17

Leading industrialized country bargaining coalition comprising US, Japan, the EU and Canada. 18 Until as recently as 2001, after the WTO Seattle Ministerial, developing countries were often not

even informed of critical consensus-building Green Room meetings, and as a result were in effect completely sidelined from the decision making process. Mayur Patel, New Faces in the Green Room:

Developing Country Coalitions and Decision-Making in the WTO, Working Paper, The Global

Economic Governance Programme, University College Oxford 17 (2007), available at

http://www.globaleconomicgovernance.org/docs/Patel_Main%20text_new.pdf.

AMRITA NARLIKAR, INTERNATIONAL TRADE AND DEVELOPING COUNTRIES: BARGAINING COALITIONS

IN THE GATT AND WTO 37 (ROUTLEDGE PUBLISHERS 2003). 19

Mayur Patel, New Faces in the Green Room: Developing Country Coalitions and Decision-Making

in the WTO, Working Paper, The Global Economic Governance Programme, University College Oxford

14 (2007), available at http://www.globaleconomicgovernance.org/docs/Patel_Main%20text_new.pdf. 20 Mayur Patel, New Faces in the Green Room: Developing Country Coalitions and Decision-Making in

the WTO, Working Paper, The Global Economic Governance Programme, University College Oxford 4

(2007), available at http://www.globaleconomicgovernance.org/docs/Patel_Main%20text_new.pdf.

48

priorities.21

Nonetheless, the case has been argued that while this negotiation system

may, indeed, exclude most developing countries from active participation in

multilateral trade negotiations, the level of intricacy required in negotiating

multilateral trade agreements has made such meetings a necessity if any agreement is

ultimately to be reached.22

For instance, Members are apparently often reluctant to

discuss sensitive issues such as the reduction of domestic support in agriculture, in

meetings with the full WTO membership in attendance.23

Although views regarding this issue remain divided, recently a consensus

appears to have emerged on the role of developing country coalitions in promoting

greater equity in the process.24

21 Mayur Patel, New Faces in the Green Room: Developing Country Coalitions and Decision-Making in

the WTO, Working Paper, The Global Economic Governance Programme, University College Oxford 4

(2007), available at http://www.globaleconomicgovernance.org/docs/Patel_Main%20text_new.pdf. 22 Per Interviewee 11. 23 Interviews with WTO trade delegates (transcripts on file with the author). 24 For instance, in the 2008 negotiations there were 37 delegations in Room E comprising: Argentina (Cairns Group, G-20), Australia (Cairns Group coordinator), Benin (Cotton-4, African Group, least-

developed, Africa-Caribbean-Pacific), Brazil (G-20 coordinator, also Cairns), Burkina Faso (Cotton-4

coordinator, also African Group, least-developed, ACP), Canada (Cairns), China (G-33, G-20, recent

new member), Colombia (Cairns, tropical products group), Costa Rica (tropical products coordinator,

also Cairns), Côte d’Ivoire (African Group coordinator, also ACP), Cuba (G-33, small and vulnerable

economies), Dominican Republic (small-vulnerable economies coordinator, also G-33), Ecuador

(tropical products, recent new member), Egypt (G-20, African Group), EU, India (G-33, G-20),

Indonesia (G-33 coordinator, also G-20, Cairns), Jamaica (ACP coordinator, also G-33, small-

vulnerable), Japan (G-10), Kenya (G-33, African, ACP), Rep. Korea (G-33, G-10), Lesotho (least-

developed countries coordinator, also African Group, ACP), Mauritius (G-33, ACP, African),

Malaysia (Cairns), Mexico (G-20), New Zealand (Cairns), Norway (G-10), Pakistan (Cairns, G-20,

G-33), Paraguay (Cairns, G-20, tropical products, small-vulnerable), Philippines (G-33, G-20, Cairns), Switzerland (G-10 coordinator), Chinese Taipei (recent new members coordinator, also G–10),

Thailand (Cairns, G-20), Turkey (G-33), Uruguay (Cairns, G-20), US, Venezuela (G-33, G-20).

(Previously, during 2007: Panama as recent new members‘ coordinator; Uganda as African Group

coordinator.) World Trade Organization,

http://www.wto.org/english/tratop_e/agric_e/chair_texts08_e.htm (last visited March 11, 2011).

49

4.2 History of Developing Country Coalitions in the GATT/WTO

The utilization of trade coalitions among Contracting Parties under the General

Agreement on Tariffs and Trade (GATT) and now the WTO Members has enjoyed a

colorful, yet discrete history. Therefore, one may be hard pressed to find academic

studies dedicated to the sparse sprinkling of developing country coalitions during the

GATT era.

The Informal Group of Developing Countries (IGDC), a coalition described as

having been plagued with ambiguity, is one example.25

The coalition was dominated

by the five larger developing economies of the time,26

but operated ineffectually due

to underlying mitigating circumstances.27

Indeed, the group included members with

conflicting interests, such as Israel and Turkey, and Members such as Spain and

Greece that later joined the European Community (EC). As a result, the group took

very weak positions when compared to other active developing country groupings of

the time in the United Nations.28

25 Sonia Rolland, Developing Country Coalitions at the WTO: In Search of Legal Support, 48:2 HARV.

INT‘L L. J. 483, 488 (2007). (The IGDC, however, marked an important shift in developing country

participation by rejecting the elitist status quo in the GATT exhibited by leading industrialized

countries and creating a platform for exchanging information and the developing research on trade,

particularly services). 26 Argentina, Brazil, Egypt India and the former Yugoslavia, but broadly defined as comprising all

developing countries. 27 Divergent interests and Green Room participation dynamics hindered developing countries from

being actively engaged in the GATT negotiations. As a result, coalition activity may also have been

inhibited. 28 AMRITA NARLIKAR, INTERNATIONAL TRADE AND DEVELOPING COUNTRIES:

BARGAINING COALITIONS IN THE GATT AND WTO 35 (ROUTLEDGE PUBLISHERS 2003).

(Developing country groupings both at the UN General Assembly and at the United Nations Conference

on Trade and Development (UNCTAD) such as ―Afro-Asia unity‖ and ―G-77‖ respectively had a much

stronger voice in international affairs).

50

However, in 1982 this informal group of countries crystallized into the G-10,

the first formalized developing country coalition, at the start of the Uruguay Round.29

With the introduction of Services onto the negotiation agenda developing countries

appeared to have been shaken out of their apathy into actively engaging in the GATT

negotiation process.30

Likewise, another revolutionary coalition was formed during

the same period, first known as the Café au Lait Group, then as the G-20 (UR) and

later developed into the G-48.31

After three decades of passivity, these two coalitions

instigated a dramatic change in developing country behavior in the GATT, with many

more coalitions springing to the fore.32

Building on the lessons learned – successes,

challenges and failures – from these coalitions during the Uruguay Round, developing

countries slowly began to view coalition building as a possible means of achieving

their desired objectives on a range of negotiation issues. However, it appeared that for

various reasons developing country coalitions were neither particularly well received

nor sustainable under the GATT framework.33

29 The core members of IGDC joined other leading developing countries to form the G-10 focusing on Services. Its membership comprised Argentina, Brazil, Egypt, India,

and Yugoslavia plus Chile, Jamaica, Pakistan, Peru, and Uruguay. 30 AMRITA NARLIKAR, INTERNATIONAL TRADE AND DEVELOPING COUNTRIES:

BARGAINING COALITIONS IN THE GATT AND WTO 39 (ROUTLEDGE PUBLISHERS 2003). 31 This coalition was the first cross-over coalition (containing both industrialized and developing

countries. The group was led by Colombia and Switzerland, issue was services in Uruguay Round. 32 Under the UR, with the exception of perhaps the Cairns group, another cross-over coalition,

developing country coalitions were typically short-lived with rapid turnover and, therefore, were not

sustainable in the negotiation process. This phenomenon may have originated from fragmentation and

insufficient external weight. In addition, developing country relations, already diverse and competing,

were compounded by the fact that there was no ―single undertaking‖ agreement in effect. See Pennie

Foster-Fishman et al., supra pp. 36-7. 33 For the same reasons developing countries were passive within the system to begin with. Even

developed country groupings at the time, such as the European Community (EC), the QUAD and the

Nordic group of like-minded countries, were cultivated and sustained only by the concerted efforts of

their leaders. These countries drew on their economic weight within the system to develop these

coalitions because of their appreciation of the impact of such groupings in the negotiation exercise.

51

By contrast, the WTO as an institution has since formally recognized the

usefulness of coalitions as a tool for managing the significantly increased complexity

of the multilateral trading system today.34

Indeed, since the advent of the organization

developing countries, in general, have begun to play a more proactive role in

international trade rules negotiations and the dispute settlement processes. Still,

although developing countries now constitute two-thirds of WTO membership, these

countries continue to struggle to have their voices fully heard in WTO negotiations,

particularly with respect to achieving their trade-related development objectives.35

These problems are not new; they stem from long-standing tensions over international

trade imbalances.

Therefore, arguing for institutional change, accountability and transparency in

WTO decision-making procedures, Patel noted that in response to closed-door Green

Room sessions, developing countries have now identified bargaining coalitions as a

means of improving their representation in the WTO.36

Furthermore, the WTO

secretariat itself has welcomed and actively utilized bargaining coalitions as a means

34 Since the Uruguay Round negotiations, coalitions have proven themselves to be an invaluable means of simplifying the increasingly complex multilateral trade negotiations. As a result, these groups

achieved formal status and recognition in the WTO. 35 Sonia Rolland, Developing Country Coalitions at the WTO: In Search of Legal Support, 48:2 HARV.

INT‘L L. J. 483, 495 (2007). 36 Mayur Patel, New Faces in the Green Room: Developing Country Coalitions and Decision-Making in

the WTO, Working Paper, The Global Economic Governance Programme, University College Oxford

11 (2007), available at http://www.globaleconomicgovernance.org/docs/Patel_Main%20text_new.pdf.

(According to Patel, ―The capacity of any member state to influence the agenda of the WTO depends on

their ability to engage in the processes of decision-making, to be represented in ongoing meetings, to

submit proposals and to consistently lobby for these over the course of the negotiations. Developing

countries though have been historically marginalized from these decision-making activities given their

individual resource constraints and lack of clearly articulated negotiating priorities…Under the GATT, the lack of universal membership and the focus of discussions on tariff reductions restricted the

incentive for developing countries to participate. Additionally, the free-trade ethos of the institution

contradicted the preferred policies of state intervention pursued by many countries. To the extent that

developing countries did engage in trade negotiations, it consisted largely of securing special and

differential treatment, and trade preferences from industrialized countries.‖)

52

of tackling the complexity of the negotiations.37

In response to protests by some

aggrieved Members regarding the organization‘s decision-making processes, the WTO

secretariat has stated that the key to successfully conducting these informal meetings

is truly ensuring that all Members are kept adequately informed of the process

(―transparency‖).38

In addition, the secretariat actively attempts to ensure that each

Member, even though not physically present, has the opportunity to provide input into

the meeting‘s deliberations (―inclusiveness‖) through broad coalition representation.39

As a result, virtually all developing country WTO Members belong to at least

one coalition and, in many cases, several coalitions to address their divergent domestic

interests. Today, on any given issue, once the coordinators of the relevant coalitions

and other key WTO Members (Key Members)40

are present at a meeting, all interested

Members are presumably represented in the deliberation process. The coalition

coordinators, therefore, assume responsibility for ensuring both transparency and

inclusiveness within their coalitions – and that coalition positions and interests are

well represented at the meetings.41

Thus, while the traditional informal negotiation system may have de facto

excluded most developing country Members from active participation in WTO

37 World Trade Organization,

http://www.wto.org/english/thewto_e/whatis_e/tif_e/org1_e.htm#ministerial (last visited March 11,

2011). 38 World Trade Organization,

http://www.wto.org/english/thewto_e/whatis_e/tif_e/org1_e.htm#ministerial (last visited March 11,

2011). 39 World Trade Organization,

http://www.wto.org/english/thewto_e/whatis_e/tif_e/org1_e.htm#ministerial (last visited March 11,

2011). 40Australia, Brazil, China, European Union, India, Japan and the United States (G-7). 41 Per Interviewee 6 (Presenting a dissenting view on the role of coalition coordinators stated that ―The

leadership would represent the group‘s interests up to a point, but they need to protect their own

interests. Also, the members in the room will remember of focus on the areas that affect them (they

may genuinely forget or move on from issues which do not affect them directly.‖)

53

negotiations due to their underprivileged economic status, some Members have stated

that belonging to one or more coalitions that share these Members‘ interests appears to

have alleviated much of their discontent with the WTO informal meeting system.42

Consequently, in order to have a voice, to achieve any meaningful concessions

from industrialized countries or to change the status quo, developing countries appear

to have realized that there is a need to cluster together, pool resources and form

alliances to leverage their collective strength in the negotiations.43

To buttress this

point, even middle economic powers, such as China, India and Brazil, have

increasingly begun turning to other like-minded Members in an attempt to alter the

archetypal international trade rules negotiation dynamics through bargaining alliances

to their own advantage.44

Undoubtedly, since its inception in November 2001 the Doha Round has been

inundated with problems resulting from the divergence of interests between the

industrialized and developing countries as well as among the developing countries

themselves.45

Consequently, an unprecedented number of coalitions in various areas

of the negotiations have emerged as a simple reaction to the sheer magnitude and

complexity of the current negotiation mandate.46

The Doha Round of multilateral

42Transcripts from interviews conducted with WTO Members and stakeholders (on file with the author). 43 See supra pp. 8-9. 44 Although larger developing countries are typically invited to Green Room meetings, by their actions

as coalition coordinators in this Round, these countries appear to have come to appreciate the benefits

with collective strength brings to the negotiation table. In addition, with the emergence of

collaborations such as IBSA (comprising India, Brazil and South Africa) formed in 2003, these

countries are even more aware of the importance of their leadership role among developing countries

and its effect on the negotiations. See http://www.ibsa-trilateral.org/ (last visited March 11, 2011). 45 Sonia Rolland, Developing Country Coalitions at the WTO: In Search of Legal Support, 48:2 HARV.

INT‘L L. J. 483, 488 (2007). (―…increasing heterogeneity of developing countries and their diverging

interests also is reflected in the plethora of coalitions. Coalition strategies therefore appear promising

for developing countries but they face serious hurdles.‖) 46 Robert Wolfe, Sprinting During a Marathon: Why the WTO Ministerial Failed in July 2008, Groupe

54

trade negotiations has approximately 40 topics being negotiated by 153 WTO

Members, which represents a marked increase from previous Rounds.47

Thus, the

current WTO negotiating environment particularly lends itself to an intricate web of

bargaining coalitions, with overlapping memberships, due to the multiplicity of

interests within, as well as between, the various Members. Table 1 below depicts all

of the developing country coalitions from GATT to the present, showing the increase

in coalition activity over the period.

Table 1 Developing Countries in the GATT/WTO 1773-2011

DEVELOPING COUNTRIES IN THE GATT/WTO 1973 – 2011

Timeline Coalition

Tokyo Round and pre-

Uruguay (1973-1979)

ASEAN Group (1973); Informal Group of Developing Countries

(IGDC 1982); Café au Lait Group (1983)

Uruguay Round

(1986 – 1994)

Developing Countries on Services (1986); Cairns Group (1986); Air

Transport Services (1986); Food Importers‘ Group (1986); Latin

American Group (1986); MERCUSOR (1991).

WTO (post 1995-present) Pre-Doha Round 1995 – 2001: Like-Minded Group (LMG) (1996);

Small Vulnerable Economies (SVEs) (1996); African Group (1997);

Caribbean Community (CARICOM) (1997); Friends of Fish (1998);

Friends of Geographical Indications (1998); Friends of the

Development Box (1999); G-24 on services (1999); Least Developed

Countries (LDC) Group (1999); Paradisus Group (2000).

Doha Round 2001-2007: African, Caribbean and Pacific (ACP)

Group (2001); Core Group on Singapore Issues (2001); Recently

Acceded Members (RAM) (2003); Cotton-4 (2003); G-10 (2003);

Friends of Antidumping (2003); G-11 (2005); G-20 (2003); G-33

(2003); G-90 (2003); Core Group on Trade Facilitation (2005);

NAMA-11 (2005).

Source: WTO website; Patel (2007) http://www.wto.org/english/tratop_e/dda_e/negotiating_groups_e.htm

d‘Economie Mondiale (GEM) Working Paper 11 (April 2009). 47 At the end of the Uruguay Round, the GATT had 123 Contracting Parties.

55

Unsurprisingly, there are currently approximately 25 coalitions in the Doha

Round,48

15 of which are actively engaged in the agriculture negotiations – the focus

of this research.49

Below are two additional tabular representations of the current

DDA agriculture groupings as classified by the WTO secretariat.

Table 2 Doha Round Agriculture Regional Groups

DOHA ROUND AGRICULTURE REGIONAL GROUPS

Groups Description Countries

ACP African, Caribbean

and Pacific countries

Angola, Antigua and Barbuda, Barbados, Belize,

Benin, Botswana, Burkina Faso, Burundi,

Cameroon, Central African Republic, Chad, Congo, Cote d'Ivoire, Cuba, Democratic Republic

of the Congo, Djibouti, Dominica, Dominican

Republic, Fiji, Gabon, The Gambia, Ghana, Grenada, Guinea, Guinea-Bissau, Guyana, Haiti,

Jamaica, Kenya, Lesotho, Madagascar, Malawi,

Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Papua New Guinea,

Rwanda, St Kitts and Nevis, St Lucia, St Vincent

and the Grenadines, Senegal, Sierra Leone,

Solomon Islands, South Africa, Suriname, Swaziland, Tanzania, Togo, Trinidad and Tobago,

Uganda, Zambia, Zimbabwe

African group

All African WTO members

Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad,

Congo, Congo (Democratic Republic), Côte

d‘Ivoire, Djibouti, Egypt, Gabon, The Gambia,

Ghana, Guinea, Guinea Bissau, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius,

Morocco, Mozambique, Namibia, Niger, Nigeria,

Rwanda, Senegal, Sierra Leone, South Africa, Swaziland, Tanzania, Togo, Tunisia, Uganda,

Zambia, Zimbabwe

48 World Trade Organization, http://www.wto.org/english/tratop_e/dda_e/negotiating_groups_e.htm

(last visited March 11, 2011). Covering interests in all areas ranging from Services to NAMA. 49 World Trade Organization, http://www.wto.org/english/tratop_e/agric_e/negoti_groups_e.htm (last

visited March 11, 2011).

56

APEC

Asia Pacific Economic

Cooperation forum. (Nineteen WTO

members and two

governments in

accession negotiations)

Australia, Brunei Darussalam, Canada, Chile,

People's Republic of China, Hong Kong, China, Indonesia, Japan, Republic of Korea, Malaysia,

Mexico, New Zealand, Papua New Guinea, Peru,

Philippines, Russia, Singapore, Chinese Taipei,

Thailand, United States, Viet Nam

EU European Union, in

the WTO officially called the European

Communities

Austria, Belgium, Bulgaria, Cyprus, Czech

Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia,

Lithuania, Luxembourg, Malta, Netherlands,

Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, United Kingdom

MERCOSUR Customs union Argentina, Brazil, Paraguay, Uruguay

Source: WTO website http://www.wto.org/english/tratop_e/dda_e/meet08_brief08_e.htm

Table 3 Doha Round Agriculture Groups with Common Interests

DOHA ROUND AGRICULTURE GROUPS WITH COMMON INTERESTS

Groups Description Countries

Cairns

group

Agricultural exporting

nations lobbying for

agricultural trade

liberalization.

Argentina, Australia, Bolivia, Brazil,

Canada, Chile, Colombia, Costa, Rica,

Guatemala, Indonesia, Malaysia, New

Zealand, Pakistan, Paraguay, Peru,

Philippines, South Africa, Thailand,

Uruguay

G-10

Coalition of countries

lobbying for agriculture

to be treated as diverse

and special because of

non-trade concerns

Chinese Taipei, Rep of Korea, Iceland,

Israel, Japan, Liechtenstein, Mauritius,

Norway and Switzerland. Not to be

confused with the Group of Ten Central

Bankers.

G-20

Coalition of developing

countries pressing for

ambitious reforms of

agriculture in developed

countries with some

flexibility for

developing countries

Argentina, Bolivia, Brazil, Chile, China,

Cuba, Ecuador, Egypt, Guatemala, India,

Indonesia, Mexico, Nigeria, Pakistan,

Paraguay, Peru, Philippines, South Africa,

Tanzania, Thailand, Uruguay, Venezuela,

Zimbabwe

57

G-33

Also called ―Friends of

Special Products‖ in

agriculture

Coalition of developing

countries pressing for

flexibility for

developing countries to

undertake limited

market opening in

agriculture

Antigua & Barbuda, Barbados, Belize,

Benin, Bolivia, Botswana, China, Congo,

Côte d'Ivoire, Cuba, Dominica, Dominican

Republic, El Salvador, Grenada, Guatemala,

Guyana, Haiti, Honduras, India, Indonesia,

Jamaica, Kenya, Korea, Mauritius,

Madagascar, Mongolia, Mozambique,

Nicaragua, Nigeria, Pakistan, Panama, Peru,

Philippines, St Kitts & Nevis, St Lucia, St

Vincent & the Grenadines, Senegal, Sri

Lanka, Suriname, Tanzania, Trinidad &

Tobago, Turkey, Uganda, Venezuela,

Zambia, Zimbabwe

G-90

Coalition of African,

ACP and least-

developed countries

Angola, Antigua-Barbuda, Bangladesh,

Barbados, Belize, Benin, Botswana,

Burkina Faso, Burundi, Cambodia,

Cameroon, Central African Republic, Chad,

Congo, Cote d‘Ivoire, Cuba, Democratic

Republic of the Congo, Djibouti, Dominica,

Dominican Republic, Egypt, Fiji, Gabon,

Ghana, Grenada, Guinea (Conakry), Guinea

Bissau, Guyana, Haiti, Jamaica, Kenya,

Lesotho, Madagascar, Malawi, Maldives,

Mali, Mauritania, Mauritius, Morocco,

Mozambique, Myanmar, Namibia, Nepal,

Niger, Nigeria, Papua New Guinea,

Rwanda, Saint Kitts & Nevis, Saint Lucia,

Saint Vincent & the Grenadines, Senegal,

Sierra Leone, Solomon Islands, South

Africa, Suriname, Swaziland, Tanzania, The

Gambia, Togo, Trinidad & Tobago, Tunisia,

Uganda, Zambia, Zimbabwe.

Cotton-4

Main African cotton

producers

Benin, Burkina Faso, Chad, Mali

Source: WTO website http://www.wto.org/english/tratop_e/dda_e/meet08_brief08_e.htm

58

Furthermore, Figure 2 below depicts the level of complexity of these

Members‘ interests in the DDA agriculture negotiations, which has resulted in a

duplication of membership in several coalitions, sometimes with seemingly

contradictory goals.50

Figure 2 WTO Doha Round Agriculture Negotiations Coalitions

Source: WTO External Relations Department January 2010

The duplication of coalition membership has created an intricate web of

entangled interests as countries attempt to cover their different negotiation interests or

positions.51

For instance, Nigeria subscribes to G-33 issues, utilizes EU preferences

50 Per Interviewee 5, per Interviewee 13 51 In Figure 2 above, Cotton-4 is subsumed within the LDC group.

59

for EU market access but aspires to G-20 market access positions.52

However, the

large number of coalitions may have helped developing countries, in particular, in

articulating their negotiation positions.53

In fact, developing countries may now view

this increase in negotiation activity as a positive development because it is cultivating

a solid negotiation experience for many developing countries as they explore different

avenues to achieve their negotiation goals.54

According to the representatives of developing countries whom I interviewed,

the aim of their proposals is to promote the removal of agricultural distortions, which

are the largest in international trade, from WTO rules that currently seek mainly to

protect inefficient farmers in industrialized countries.55

To achieve this overarching

objective, coalitions appear to have become an indispensible tool for developing

countries in this Round because developing countries now view the use of coalitions

as a means of securing the level of influence and representation necessary to reflect

their given positions in the negotiations.56

The rationale behind these Members‘

thinking is that the collective strength and resources of a developing country coalition

could give the group the ability to negotiate with greater credibility by advancing

positions based on stronger technical analysis.57

Significantly, an overwhelming majority of the interviewees from both sides of

the economic divide stated that these coalitions are important to developing countries

because most developing country members rely on the coalitions for knowledge

52 Per Interviewee 2 53 Per Interviewee 16 54 Per Interviewee 2 55 Per Interviewee 17 56 Per Interviewee 10 57 Per Interviewee 10

60

sharing in the form of technical capacity as well as information by way of access to

closed Green Room negotiations, in addition to the ―external weight‖58

or critical mass

of support on contested issues which these coalitions seem to provide.59

Many

developing country interviewees went so far as to say that it would be extremely

difficult for developing countries to achieve their negotiation objectives without

coalitions.60

Therefore, in practical terms, the general consensus among the Members

interviewed is that the groups serve a beneficial role for these countries because they

aid their understanding of the WTO negotiation process, particularly for smaller

countries with limited resources. The prevailing attitude in negotiation dynamics is

that ―the larger the meeting, the more unwieldy the deliberations.‖61

Thus, the ―open

room‖62

is now perceived as more of a general discussion forum for all the

Members—and no longer as the forum in which core negotiations take place.

4.3 Conclusions

While there is currently clearly a favorable disposition to bargaining coalitions

among developing country Members, whether or not this recent plethora of developing

country bargaining coalitions is actually achieving the desired objectives in the Doha

negotiations remains to be seen after the DDA is formally concluded.

58 See supra p. 30. 59 Per Interviewee 2 60 Per Interviewee 61 Per Interviewee 13 62 The General Assembly of the WTO where formal negotiations are held and decisions taken.

61

Chapter V is an outline of international trade in agriculture under the

GATT/WTO system from its inception to the commencement of the research period.

The précis highlights some of the development-related challenges that have been faced

by developing countries, in general, within the system.

63

CHAPTER 5

5.0 AGRICULTURE AND DEVELOPING COUNTRIES UNDER THE

GATT/WTO

The thesis of this research is that the participation of developing countries in

WTO negotiations has developed exponentially in the DDA compared to all other

previous Rounds. The principal difference in negotiation strategy in this Round is the

predominant use of bargaining coalitions. The objective of this chapter is to establish

a solid foundation upon which the analytical contribution of this dissertation will be

built.

Therefore, the tensions that underlie the relationship between industrialized

countries and developing countries in the GATT/WTO are outlined below, in addition

to an overview of the ―development debate‖ within the system. The history and issues

of international trade in agriculture in the multilateral trading system are also

discussed, and serves as a backdrop for the case study.

5.1 The Crux of the Matter: The “Development Debate”

The debate about the place for ―development issues‖ within the context of the

GATT can be traced to the initial conception of the Bretton Woods institutions and a

multilateral trading system.1

1 DOUGLAS IRWIN ET AL., THE GENESIS OF THE GATT 78 (CAMBRIDGE UNIVERSITY PRESS 2008).

64

In recent years, the international community has given the problem of poverty

in least developed countries (LDCs) and developing countries unprecedented

attention. Indeed, scholars on both sides of the economic divide have argued that a

general obligation is owed to the global poor, the neglect of which constitutes a

violation of the group‘s human rights.2 One perceived root of poverty in developing

countries is the inequality that exists within the world trading system.3 As a result, the

last six decades chronicle the developing countries‘ attempts to tilt the balance of

power in international trade towards equilibrium, in an attempt to attain their

development goals. Hence, a careful analysis of multilateral trade negotiation since

the 1940s reveals a constant tension between industrialized countries and developing

countries on a number of key issues regarding trade rules and their impact on the

economic development of developing country Members.

The Special and Differential Treatment (SDT) accorded to developing

countries under the multilateral trade system takes the form of exemption provisions

for LDCs and developing countries in the WTO.4 SDT is one aspect of the broader

development agenda sought by developing country Members in the multilateral

trading system.5 The concept first emerged during the formation of the GATT, and

2 Whether the obligations should take the form of a positive duty to promote the group‘s well-being or a

negative duty not to cause them harm is sometimes in contention, but the overwhelming view of

commentators is that a duty is owed to those living in abject poverty. See THOMAS POGGE, WORLD

POVERTY AND HUMAN RIGHTS, 29-30 (POLITY PRESS 2ND ED. 2008); Peter Singer, Famine, Affluence,

and Morality, Philosophy and Public Affairs 229 (1972) c.f. Magnus Reitberger, Poverty, Negative

Duties and the Global Institutional Order, 7:4 Politics Philosophy Economics 379 (2008). 3 Magnus Reitberger, Poverty, Negative Duties and the Global Institutional Order, 7:4 Politics Philosophy Economics 379, 380-81 (2008). 4 World Trade Organization, http://www.wto.org/english/thewto_e/glossary_e/s_d_e.htm (last visited

March 11, 2011). 5 Faizel Ismail, Mainstreaming Development in the World Trade Organization, 39:1 Journal of World

Trade 11 (2005). (Ismail has described four elements of the development dimension in the WTO

65

calls for the interests of developing countries to be given particular consideration

within the system. The initial provisions of the GATT, while espousing fairness with

its legitimacy and systemic processes through the cardinal principles— the Most

Favored Nation principle (MFN) clause and National Treatment clause6— negated the

idea of allowing developing countries concessions by means of specific exemptions

from these rules to facilitate their economic development.7 The rationale behind SDT

is ensuring proportionality in the commitments undertaken between industrialized

Members and developing country Members based on their different levels of

advancement as well as gains accrued from the trading system.8 It has been argued

that the goal of the developing countries in this regard is to attain equality in outcomes

from the application of trade rules.9

Some issues for which developing country Members seek SDT include market

access, preference erosion, commodity dependence, net food importing countries‘

dependence on food imports, rural development and food security and supply side

issues.10

These issues primarily center on agriculture, again highlighting the sector‘s

comprising: fair trade, capacity building, balanced rules and good governance). 6 Article I and Article III, GATT 1947. (While the Most Favored Nation principle (MFN) states that

Members must accord the same treatment to trading partners as they would to their most favored

trading partner, the national treatment clause provides for the uniform treatment of all products – both

imports and domestic products – within a customs territory). 7 Sumitra Chishti, Globalization, International Economic Relations and the Developing Countries, 39:3

International Studies 227, 231 (2002); Amrita Narlikar, Fairness in International Trade Negotiations:

Developing Countries in the GATT and WTO, The World Economy 1013 (2006). (Developing countries

were aggrieved over the exclusion of provisions relating to the equality of outcomes in the multilateral

trading system that could actually enable these countries to attain economic development). 8 Faizel Ismail, Mainstreaming Development in the World Trade Organization, 39:1 Journal of World

Trade 11 (2005). (Ismail has described four elements of the development dimension in the WTO comprising: fair trade, capacity building, balanced rules and good governance). 9 Frank Pfetsch & Alice Landau, Symmetry and Asymmetry in International Negotiations, 5

International Negotiation 21 (2000). 10 World Trade Organization, http://www.wto.org/english/thewto_e/whatis_e/tif_e/dev4_e.htm (last

visited March 11, 2011).

66

critical importance to developing countries. Historically, the last six decades chronicle

the attempts made by developing countries in the international trade system to

entrench these concessions within the system. As such, a careful analysis of

multilateral trade negotiation since the 1940s documents a constant tension between

industrialized and developing countries on a number of central issues.11

However, the fundamental development challenges being faced by developing

countries are manifold. Although the ―development component‖ of the current Round

was well emphasized at the commencement of the Round,12

developing countries

continue to strive to substantively influence the DDA negotiations in all development-

related aspects of the negotiations.13

Moreover, the issue is compounded by the lack of a clear definition for the

concept of a ―developing country‖ in the WTO. This issue remains nebulous because

Members generally self-designate themselves as ―developing‖ countries. Formally,

only the least-developed countries (LDCs) are officially categorized as such by the

WTO, based on the World Bank and United Nations current classifications.14

Nonetheless, other developing countries, particularly Members belonging to groups

such as small and vulnerable economies (SVEs), net food importing developing

11 See JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS

OF THE GATT AND THE WTO 35 (PRINCETON UNIVERSITY PRESS 2006); See also, DOUGLAS IRWIN ET

AL., THE GENESIS OF THE GATT (CAMBRIDGE UNIVERSITY PRESS 2008). 12 World Trade Organization, Doha Ministerial 2001: Ministerial Declaration Paragraph 2, November

2001, WT/MIN(01)/DEC/1, available at http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm 13 Faizel Ismail, Mainstreaming Development in the World Trade Organization, 39:1 Journal of World

Trade 11 (2005). 14 United Nations, http://www.unohrlls.org/en/ldc/related/62/ (last visited March 11, 2011).

67

countries (NFIDCs), African, Caribbean and Pacific group, the African group typically

claim ―developing country‖ status.

In addition, as a result of the SDT provisions woven into trade rules for

developing countries in general and LDCs in particular, even emerging economies

have sought to remain in this category in order to continue benefitting from the

exemptions available to their so called peers within the system.15

Therefore the

counter argument has been levied against SDT in some quarters for being a

disincentive to development.16

Likewise, in the current Round, these LDC Members contend that while an

ambitious outcome from the DDA may provide better access for their products in

global markets and reduce the distortions that obstruct their exports, the major

concerns that they face in the trading system are related to more fundamental

development challenges of their economies.

In actual fact, at the inception of the GATT the issue of preference erosion

nearly precluded the establishment of the global trade system. At the time (and

persisting until today), there was a system of preferential access for goods from British

15 For example, developing countries such as Pakistan have formally sought to be treated as LDCs for

purposes of WTO rules (although the application was later withdrawn). 16 Constantine Michalopoulos, The Role of Special and Differential Treatment for Developing Countries

in GATT and the World Trade Organization, World Bank Policy Research Working Paper No. 2388

(July 2000), available at SSRN: http://ssrn.com/abstract=630760. (Arguing for the targeted use of SDT

for LDCs alone, Michalopoulos states that SDT has been extended to include technical assistance and

extended transition periods to enable developing countries to meet their commitments in new areas

agreed on in the Uruguay Round. However, many WTO provisions permit industrialized Members to

grant preferential treatment through a variety of non-binding agreements with select developing country

trade partners. Michalopoulos concludes that ―weaknesses in the institutional capacity of many developing countries provide a conceptual basis for continuing special and differential treatment in the

WTO, but that the benefits should be targeted only to low-income developing countries and those that

need help becoming integrated with the international trading system.‖ Furthermore, he argues for an

effective system of graduation for higher-income developing countries because these Members‘

capacities and need for assistance differ vastly.)

68

colonies (the Commonwealth) into the United Kingdom. Although the United States

and the United Kingdom managed to bridge their differences to form a mutually

agreeable framework for international trade, this singular issue delayed the system‘s

formation for almost two years.17

The Bretton Woods agreement was negotiated and

signed in July, 1944, in Bretton Woods, New Hampshire, USA by all 44 members of

the Allied Nations, the group of industrialized nations at the time. The agreement

established an international monetary regime based on fixed (but adjustable) exchange

rates and two institutions: the International Monetary Fund (IMF) and the International

Bank for Reconstruction and Development (the World Bank).18

However, the issue of

the liberalization of world trade that had originally been billed for agreement was

effectively sidelined at the time.19

5.1.1 The General Agreement on Tariffs and Trade (GATT)

At the inception of the current multilateral trade system in the late 1940s, the

dominant philosophy was that open, free and non-discriminatory trade promotes good

relations between States and is conducive to world peace.20

Therefore, the GATT was

established as the custodian and enforcer of ―free and fair‖ trade rules.21

17 DOUGLAS IRWIN ET AL., THE GENESIS OF THE GATT 43 (CAMBRIDGE UNIVERSITY PRESS 2008). 18 DOUGLAS IRWIN ET AL., THE GENESIS OF THE GATT 43 (CAMBRIDGE UNIVERSITY PRESS 2008). 19 DOUGLAS IRWIN ET AL., THE GENESIS OF THE GATT 43 (CAMBRIDGE UNIVERSITY PRESS 2008).

(This omission of the global trade agenda was due to growing resistance to the initiative from within

the British government. Factions within the British government resisted the idea of reducing trade

barriers because of the imperial preference system already in existence for British colonies. Furthermore, fearing foreign competition in agriculture, proponents of the discretionary use of

quantitative restrictions were extremely vocal in their opinions at the time). 20 DOUGLAS IRWIN ET AL., THE GENESIS OF THE GATT 22-7 (CAMBRIDGE UNIVERSITY PRESS 2008). 21 The GATT‘s two cardinal principles are the principle of non-discrimination embodied in the Most

Favored Nation (MFN) clause which states that no member should discriminate between trading

69

This position was strongly advocated by the then secretary to the United States

Department of State, Secretary Cordell Hull.22

This view itself is not new and can be

traced back to the economic principle of comparative advantage espoused by David

Ricardo, which identifies international trade as an engine of economic growth.23

Thus,

in the wake of World War II, the United States proposed the formation of an

International Trade Organization (ITO).24

The vision for the ITO was ambitious. The ITO was meant to be a

comprehensive charter including provisions on important areas, such as competition

policy, labor standards, investment guidelines and rules on economic development.25

The Chair of the International Trade Conference, American economist, Clair Wilcox,

was quoted by William Diebold as saying:

If the peoples who now depend upon relief are soon to become

self-supporting, if those who now must borrow are eventually to

repay, if currencies are permanently to be stabilized, if workers

on farms and in factories are to enjoy the highest possible levels

of real income, if standards of nutrition and health are to be

raised, if cultural interchange is to bear fruit in daily life, the

world must be freed, in large measure, of the barriers that now

obstruct the flow of goods and services.26

partners, and the National Treatment clause states that foreign and local goods should be treated

identically (i.e. no differentiation) once they are within a given market. (See Articles I and III of GATT

1947 respectively). 22 DOUGLAS IRWIN ET AL., THE GENESIS OF THE GATT 23 (CAMBRIDGE UNIVERSITY PRESS 2008). 23 Comparative advantage forms the basis of modern trade theory. Like Adam Smith, Ricardo was also

an opponent of protectionism for national economies, especially for agriculture. 24DOUGLAS IRWIN ET AL., THE GENESIS OF THE GATT 43 (CAMBRIDGE UNIVERSITY PRESS 2008). 25 JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 35 (PRINCETON UNIVERSITY PRESS 2006) 26 William Diebold, The End of the ITO, 16 Essays in International Finance, International Finance

Section, Department of Economics and Social Institutions (Princeton University Press 1952). (out of

print) cited in Amrita Narlikar, Fairness in International Trade Negotiations: Developing Countries in

the GATT and WTO, The World Economy 1005, 1012 (2006).

70

However, the US Congress withheld ratification of the Havana Charter for

domestic reasons and the ITO was stillborn.27

In its stead, 23 States28

signed a

Protocol of Provisional Application stipulating the interim operation of the GATT

with the objective of salvaging the economic damage caused by the war as well as

reversing the protectionist policies implemented by industrialized countries after the

Great Depression of the 1930s.29

Significantly less ambitious than the ITO, the scope of the GATT sidestepped

these more intricate domestic issues mentioned above and focused instead on general

trade processes, such as tariff reduction, among the Contracting Parties.30

To some,

the GATT covered little more than the commercial policy chapter of the Havana

Charter, in addition to a weak dispute settlement mechanism.31

Yet, despite these

limitations, the GATT remained in place as the basis of the multilateral trading system

for the next 50 years. Operating as a quasi-institution, the institution had over 120

27 The list of 53 signatories to the ITO agreement included—Afghanistan, Australia, Austria, Belgium,

Bolivia, Brazil, Burma, Canada, Ceylon, Chile, China, Colombia, Costa Rica, Cuba, Czechoslovakia, Denmark, Dominican Republic, Ecuador, Egypt, El Salvador, France, Greece, Guatemala, Haiti, India,

Indonesia, Iran, Iraq, Ireland, Italy, Lebanon, Liberia, Luxembourg, Mexico, The Netherlands, New

Zealand, Nicaragua, Norway, Pakistan, Panama, Peru, Philippines, Portugal, Southern Rhodesia,

Sweden, Switzerland, Syria, Transjordan, South Africa, United Kingdom, United States of America,

Uruguay, Venezuela. 28 List of 23 original GATT ‗47 signatories—Australia, Belgium, Brazil, Burma, Canada, Ceylon,

Chile, China, Cuba, the Czechoslovak Republic, France, India, Lebanon, Luxembourg, Netherlands,

New Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South Africa, the United Kingdom and the

United States. 29 Suleiman Abu-Bader & Aamer Abu-Qarn, The Relationship between GATT Membership and

Structural Breaks in International Trade, 8:4 Global Economy Journal 1(2008). (Stating that by this

time, in an attempt to protect their domestic industries, developed countries had all but crippled any meaningful international trade, leading to the imminent collapse of the world economy). 30 JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 35 (PRINCETON UNIVERSITY PRESS 2006). 31 JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 47 (PRINCETON UNIVERSITY PRESS 2006).

71

Contracting Parties by the mid-1990s when the World Trade Organization (WTO) was

established at the end of the Uruguay Round.32

Developing countries were initially in the minority. In fact, compared to the

35 developing countries that were signatories to the ITO Havana Charter, only 11

developing countries had signed the GATT as of March 1948.33

Having achieved the

inclusion of some meaningful language and provisions in the ITO negotiations, many

developing countries were disappointed about the content of the GATT. However, the

provisions of the GATT did espoused fairness in its rules through its cardinal

principles—the Most Favored Nation (MFN) clause and the National Treatment

clause. Moreover, the European colonies at the time were already subsumed into the

system by virtue of their colonial masters‘ involvement in the GATT. Thus, at the

point of attaining their independence from Europe these countries gained automatic

entry into the GATT system.

Subsequently, the pre-independence trading patterns of these developing

countries were perpetuated – with the continued over-reliance by developing countries

on these industrialized countries as their principal trading partners being the most

common feature.34

This feature operated a formalized system of preferences in which

developing country exports had priority access to European markets. In contrast, the

developing country Contracting Parties that had not been European colonies had to

32 World Trade Organization Analytical Index, Marrakesh Agreement Establishing the World Trade

Organization, (April 1994), available at

http://www.wto.org/english/docs_e/legal_e/marrakesh_decl_e.htm 33

AMRITA NARLIKAR, INTERNATIONAL TRADE AND DEVELOPING COUNTRIES: BARGAINING

COALITIONS IN THE GATT AND WTO 35 (ROUTLEDGE PUBLISHERS 2003). 34Amrita Narlikar, Fairness in International Trade Negotiations: Developing Countries in the GATT

and WTO, The World Economy 1005, 1017 (2006).

72

chart their own trade policy path, leading to some level of strain among developing

countries as they competed for market share in industrialized countries‘ markets.35

Furthermore, while industrialized countries actively implemented trade

liberalization policies based on their laissez-faire philosophy, several developing

countries favored the import-substitution philosophy of the time. Thus, the free-trade

ethos of the institution contradicted the preferred policies of state intervention pursued

by many developing countries. As more developing countries emerged into the

international trading system, particularly as many former colonies gained their

independence from European States in the 1950s and 1960s, many of them

implemented import substitution regimes, which reflected the popular ideology of the

day.36

The newly-independent developing countries, which by this time had become

the numerical majority in the GATT, called for a New International Economic Order

(NIEO)37

in an attempt to realign the balance in world trade rules in their favor.38

The

objective of the NIEO was three-fold: first, to eliminate the economic dependence of

developing countries on industrialized country patronage; second, to promote the

accelerated development of the economies of the developing countries based on the

principle of self-reliance (by means of import substitution) and third, to introduce

appropriate institutional changes for the global management of world resources in the

35 See infra pp. 76-7, 116 (This competition remains till today, for instance the EC Bananas dispute

which pitched ACP Members against Tropical products group Members over EU market preferences). 36 JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 161-62 (PRINCETON UNIVERSITY PRESS 2006). 37 See Declaration on the Establishment of a New International Economic Order (NIEO), G.A. Res.

3201 (S-VI), U.N. Doc. (May 1, 1974). 38 MICHAEL TREBILCOCK & ROBERT HOWSE, THE REGULATION OF INTERNATIONAL TRADE, 471

(ROUTLEDGE PUBLISHERS 3RD ED. 2005) (1995).

73

interest of mankind as a whole.39

However, lurking just below the surface of the international trading system

was the fear of these developing countries, many of them newly independent States,

that industrialized country Contracting Parties would bypass the developing country

Contracting Parties altogether in favor of bilateral and regional trade agreements.40

This silent but credible threat from industrialized countries in the GATT lay beneath

the surface, precluding developing countries – now a numeric majority – from

assuming any form of dissent.41

Furthermore, the lack of universal membership at that

time and the focus of negotiations primarily on tariff reductions posed a structural

challenge to developing country Contracting Parties since insufficient financial and

technical capacity restricted these countries‘ ability to negotiate the increasingly

complex rules on their own.42

As a result, developing countries refused to fully

engage in reciprocal negotiations under the GATT because there was no compelling

39 See Declaration on the Establishment of a New International Economic Order (NIEO), G.A. Res. 3201 (S-VI), U.N. Doc. (May 1, 1974) 40 Industrialized countries are economically independent and have a choice of trading partners whereas

developing countries are generally overly reliant on trade from these countries and have to compete

with each other for industrialized country market share. Therefore, industrialized countries are

technically in a position sideline multilateral trade rules and enter into more favorable bi-laterally or

regional agreements if the multilateral trading agreements are deemed too unfavorable. An example of

this power was witnessed in the Uruguay Round when multilateral trade negotiations were stalled for

over two years until the US and EC were able to work out an agreement on bi-lateral terms, known as

the Blair House Accord. It was only then that the Round was concluded. 41

RUBENS RICUPERO, THE WORLD TRADING SYSTEM: SEATTLE AND BEYOND, IN THE WTO AFTER

SEATTLE, 66 (Jeffrey Schott ed., Institute for International Economics 2000). (―As an African prime

minister put it, there is only one thing worse than globalization and that is to be left outside it – to be even more marginalized by it.‖) 42 Olajumoke Oduwole, Nothing Ventured, Nothing Gained? A Case Study of Africa‟s Participation in

WTO Dispute Settlement, 2:4 Int. J. Private Law, 358, 364-67 (2009); AMRITA NARLIKAR,

INTERNATIONAL TRADE AND DEVELOPING COUNTRIES: BARGAINING COALITIONS IN THE GATT AND

WTO 37 (ROUTLEDGE PUBLISHERS 2003).

74

incentive for these countries to actively participate in the Rounds.43

Therefore, the

latent insecurity resulting from a combination of the above factors led to developing

country Contracting Parties at the time being largely passive ―free riders‖ in

multilateral trade negotiations.44

Indeed, the only notable exception to these countries‘ lack of participation in

the system was their attempts to secure concessions to the GATT rules by means of

special and differential treatment and continued trade preferences from industrialized

countries.45

As developing countries clamored for better treatment in the form of

preferential market access for their products as well as exemptions from GATT

obligations, they took their trade struggle to the broader international community, to

the United Nations General Assembly. Consequently, the 1960s were designated as

the first UN Decade for Development.46

In addition, in 1964 the United Nations

43 Mayur Patel, New Faces in the Green Room: Developing Country Coalitions and Decision-Making in

the WTO, Working Paper, The Global Economic Governance Programme, University College Oxford

10 (2007), available at http://www.globaleconomicgovernance.org/docs/Patel_Main%20text_new.pdf. 44 In essence, the GATT MFN principle allowed smaller countries with insignificant share of world

trade to remain dormant in the system, without having to lower their own tariffs, while enjoying the systemic benefits for free. This systemic free riding, which was used to secure consensus in previous

Rounds, was justified under the guise of special and differential treatment for these small economies.

See JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 29 (PRINCETON UNIVERSITY PRESS 2006). 45 JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 46 (PRINCETON UNIVERSITY PRESS 2006), SEE DOUGLAS IRWIN ET AL., THE

GENESIS OF THE GATT (CAMBRIDGE UNIVERSITY PRESS 2008). 46 Hans-Henrik Holm, A Banner of Hope? North-South Negotiations and the New International

Development Strategy for the Eighties, XVI Cooperation and Conflict, 197 (1981). (After President

Kennedy first proposed that the UN General Assembly adopt the 1960s as the first UN Development

Decade, in a plea for economic growth and an attempt to draw all nations together to generate universal

cooperation in fighting against poverty, ignorance and disease, the UN fell into a pattern of regularly proclaiming ―years and decades‖ since then. The goals of the first Development Decade were four-

fold: first, an attempt to express a political commitment from UN member States. Second, to allow

developing countries an equitable share of earning from the extraction of their own natural resources,

third, to increase development aid to developing countries, and fourth, to increase foreign direct

investment to developing countries. However, without binding commitments or any other

75

Conference on Trade and Development (UNCTAD) was established to promote the

integration of developing countries into the world economy in a ―development-

friendly‖ manner. Thus, in effect, through UNCTAD, developing countries were

hoping to achieve the objectives that had so far eluded them under the GATT

system.47

While the organization never developed into a parallel international trade

institution, over the years UNCTAD has progressively evolved into a valuable

resource for developing countries in consensus building, data collection, research and

policy analysis as well as technical assistance aimed at the specific needs of

developing countries and LDCs.48

Nonetheless, the developing country initiatives yielded positive results in the

sense that the GATT system was compelled to implement some institutional changes

in this area in response to these external interventions. In 1965, the GATT introduced

Part IV into the agreement (based on the recommendations of the GATT Committee

on Trade and Development), which, generally, contained rhetorical, non-binding

language. Furthermore, in 1971, the GATT followed the lead of UNCTAD and

enacted two waivers to the MFN principle, one of the cardinal rules of the system.49

These waivers permitted industrialized countries to implement programs granting

concrete strategy, between 1962 and 1980 development aid from industrialized countries actually fell

from 0.5 per cent of these countries‘ gross national product to 0.3 per cent respectively). 47 Sumitra Chishti, Globalization, International Economic Relations and the Developing Countries,

39:3 International Studies 227, 231(2002). (This was an attempt by developing countries to establish an

alternative trade organization that would benefit their own interests; however, they did not succeed

because they lacked developed country cooperation). 48 RUBENS RICUPERO, THE WORLD TRADING SYSTEM: SEATTLE AND BEYOND, IN THE WTO AFTER

SEATTLE, 65 (Jeffrey Schott ed., Institute for International Economics 2000); United Nations

Conference on Trade and Development (UNCTAD),

http://www.unctad.org/Templates/Page.asp?intItemID=1530&lang=1 (last visited March 11, 2011). 49 In 1979, the GATT established a permanent exemption to the MFN obligation by way of the Enabling

Clause after the two initially temporary waivers which were limited to a ten year period.

76

tariff preferences to goods imported from select developing countries.50

Technically,

by 1979 the permanent waiver was instituted in the form of a Generalized System of

Preferences (GSP) under the GATT. The provision became informally known as the

―Enabling Clause,‖ which represents the legal basis for all Preferential Trade

Arrangements (PTAs) between industrialized and developing country WTO members,

as well as Regional Trade Agreements (RTAs) among developing countries under the

WTO today.

However, since there is no legal right to recourse embedded in the Enabling

Clause, due to its non-reciprocal, non-binding nature, such provisions lend themselves

to the possibility of being misused as political tools of undue influence in the hands of

preference-giving countries. As a result, these GSPs have received mixed reviews

from developing countries over the years.51

For instance, one example of a major GSP

was the Lomé Convention (1975-2000) between the EU and Africa, Caribbean and

Pacific (ACP) countries.52

These agreements grant former EU colonies preferential

50 JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 47 (PRINCETON UNIVERSITY PRESS 2006); MICHAEL TREBILCOCK & ROBERT

HOWSE, THE REGULATION OF INTERNATIONAL TRADE, (ROUTLEDGE PUBLISHERS 3RD ED. 2005) (1995).

51 It has been argued that the effectiveness of Special and Differential Treatment for developing

countries as a tool for their development over the years has been limited. Many products that were of

significant interest to developing countries were exempted from the list, and the preferences were

granted by developed countries on a voluntarily (and selective) basis, and could be withdrawn at any

time, thus proving to be economically and politically limiting for developing countries. Many of these

issues and limitations persist today under the WTO. Conversely, the fact that developing countries can

be migrated off the GSP once they are perceived to have attained a certain level of development may

become a double-edged sword as some Members may opt to retain developing country status at the

WTO, rather than face the cold reality of trading with industrialized countries without any preferences.

See supra p. 67 and note 16. 52 The ACP-EEC Convention signed at Lomé, Togo on 28 February 1975 between the European

Community (EC) and 71 African, Caribbean, and Pacific (ACP) countries, known as The Lomé Convention, was a trade and aid agreement, available at

http://www.acpsec.org/en/conventions/lome1.htm; In June 2000 a new trade and aid agreement was

reached between the EU and the 71 ACP countries, known as the Cotonou Agreement, after Cotonou in

Benin, where the convention for the new agreement was held, available at http://eur-

lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:22000A1215(01):EN:NOT

77

access to EU markets for their products – at the expense of other developing country

producers, such as the Latin American exporting countries.53

Despite these competing

interests, this was the first time that developing countries had succeeded in

substantively advancing the development debate under the GATT.

By the 1970s and 1980s, the changing era in world politics had a major effect

on the global trading system as well as on developing countries. Despite the fact that

both decades were designated as the second and third UN Development Decades

respectively, the UN ―International Development Strategy‖ had not proven to be

effective in reducing suffering for the one billon poorest people in the world.54

These

challenges were unsurprising, considering the difficulty in reaching meaningful

agreements within the UN in the face of the wide economic disparity among the

organization‘s members, and the limited substantive effect of UN resolutions in

practical terms. Furthermore, the popular growth strategy of the NIEO movement,

which promoted import substitution and the protection of infant industries, did not

yield the desired results due to the fact that developing countries with more open trade

policies recorded greater levels of success in international trade.55

Consequently, the economic downturn experienced during the period caused by

the accumulation of sovereign debt by many of the larger developing countries, such

53 These Latin American Countries, through a bargaining coalition known as the Tropical Products

group in the Doha Round, have continued to advocate for a level playing field in this area. 54 Hans-Henrik Holm, A Banner of Hope? North-South Negotiations and the New International

Development Strategy for the Eighties, XVI Cooperation and Conflict, 197 (1981). (The concept of an

international development strategy was introduced in the Second Development Decade, policies were outlines and targets set to reinvigorate countries on this issue. By the Third Development Decade in the

1980s, while following almost the same strategy adopted in the 1970s, the articulation of development

was aligned with the NIEO ideology). 55 BELA BALASSA, NEW DIRECTIONS IN THE WORLD ECONOMY, 17 (NEW YORK UNIVERSITY PRESS

1989).

78

as South Korea, Mexico, Brazil and India. This occurrence created a ―debt crisis,‖

requiring the intervention of the IMF in many cases, which resulted in many countries

attempting to reform their trade policies through liberalization.56

Although some

developing countries in Latin American, such as Mexico and Brazil, were enjoying

considerable economic progress by the late 1990s, the Southeast Asian financial crisis

that destabilized that entire region during this period engendered another major

intervention by the IMF.57

The severity of this latter crisis was unique in the extent of

financial contagion resulting from the interconnectivity of the global system. This

phenomenon became symbolic of the ―globalization‖58

of the international

community.59

Furthermore, the dynamics of the Cold War era, in which developing countries

were pawns in the political (and ideological) game between the United States and the

56 The Latin American debt crisis occurred in the early 1980s (and for some countries starting in the

1970s), often known as the "lost decade,‖ when several Latin American countries reached a point where

their foreign debt exceeded their earning power and they were not able to repay it. The sovereign debt

originated from In the 1960s and 1970s when many of these countries, notably Brazil, Argentina and

Mexico, borrowed huge sums of money from international creditors for industrialization and infrastructure programs. 57 The Asian financial crisis that gripped much of Asia started in July 1997, and raised fears of a

worldwide economic meltdown due to financial contagion. Although most of the Asian governments

seemed to have generally sound fiscal policies, the IMF had to initiate a $40 billion program to stabilize

the currencies of South Korea, Thailand and Indonesia, the economies most severely affected by the

crisis. 58See supra p. 26 and note 13. 59 Although globalization may be viewed positively, many initially took a more cynical approach,

viewing the phenomenon as center-periphery relations, with the wealthier industrialized economies at

the center and the poor extraction and agrarian economies at the periphery. However, no matter which

camp one belongs to it is obvious that in today‘s global village people‘s lives are now inextricably

intertwined. See Rudolf Dolzer, Global Environmental Issues: The Genuine Area of Globalisation, 7 J. Transnat‘l Pol‘y 157 (1998); Nsonguru Udombana, How Should We Then Live? Globalisation and The

New Partnership for Africa‟s Development, 20 Boston University Int. Law Journal, 302 (2002). See

also, IMMANUEL WALLERSTEIN, HISTORICAL CAPITALISM (VERSO PUBLISHERS 1983); ANTHONY

GIDDENS, RUNAWAY WORLD: HOW GLOBALISATION IS RESHAPING OUR LIVES (ROUTLEDGE

PUBLISHERS1999).

79

Soviet Union, ended in 1991 with the collapse of the Soviet Union.60

This collapse

resulted in the increased demand for capital from the international monetary system in

the succeeding years by several countries that were formerly members of the

communist bloc. As a result, today, all but a handful of developing countries have

abandoned all links to communism, and have taken active steps to join the pro-liberal

multilateral trading system.61

Over the years, more and more developing countries have acceded to the

GATT/WTO to take advantage of the benefits that the system has to offer.62

To

buttress this point, while the GATT was ratified by 22 Contracting Parties at its

inception; six decades later the WTO currently has 153 Members, with the majority of

Members being developing countries.63

Although Barton et al have stated that

outcomes from the GATT/WTO negotiations may disproportionately benefit powerful

Members; they contend that these outcomes may, nevertheless, make all Members

better off than they would have been otherwise.64

Unsurprisingly, however, as soon as

these developing countries join the WTO, tensions arise (and are sustained) between

both sides of the economic divide.65

Nevertheless, the current Uruguay Round

60 With the disintegration of the Warsaw Pact in 1989, the Soviet Union announced its abandonment of

political hostility to the Western world; thus, the Cold War ended in 1991. The Warsaw Pact was a

mutual defense Treaty of Friendship, Cooperation and Mutual Assistance, subscribed to by eight

communist States in Eastern Europe at the instigation of the USSR on May 14, 1955, in Warsaw,

Poland. 61 Current self-described communist countries include Cuba, Vietnam, Laos, and People‘s Republic of

China. 62 See Joseph Stiglitz, Globalization and Growth in Emerging Markets and the New Economy, 25

Journal of Policy Modeling 505 (2003), available at

http://polisci.osu.edu/faculty/mcooper/ps597readings/Stiglitz2.pdf 63 World Trade Organization, Members and Observers as at July 2008, available at

http://www.wto.org/engwlish/thewto_e/whatis_e/tif_e/org6_e.htm 64

JOHN BARTON ET AL., THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND ECONOMICS OF

THE GATT AND THE WTO 18 (PRINCETON UNIVERSITY PRESS 2006). 65 At present under the WTO, recently acceded Members (RAMs) formed a coalition in 2003 to protect

80

Agriculture Agreement (URAA) for instance, although criticized by developing

countries as being inequitable in practice, appears to have significantly improved

WTO international trade rules in agriculture (at least in principle), when compared

with what obtained under the GATT.66

Therefore, despite the limitations of the GATT, it is a testament to the

multilateral trading system that the body remained the basis of the system for the next

50 years, operating as a quasi-institution with over 100 Contracting Parties by the mid-

1990s when the WTO was established at the end of the Uruguay Round.

5.1.2 The World Trade Organization (WTO)

The WTO came into being on January 1, 1995 by the Marrakesh Declaration

of April 15, 1994 at the completion of the Uruguay Round.67

Unlike its predecessor

the GATT, the WTO has a broader mandate than trade alone.68

The organization

presents itself as a rules-based institution, emphasizing its role and duty to propagate

an equitable multilateral trading system and catering to the interests of both

industrialized and developing countries. With strong novel features, such as a

negative consensus voting mechanism69

and a Dispute Settlement Understanding

their interests and influence the negotiations in their favor. They are all developing country Members. 66 See infra p. 90-92. 67THE WORLD TRADE ORGANIZATION, THE LEGAL TEXTS (CAMBRIDGE UNIVERSITY PRESS 1994),

available at http://www.wto.org/english/docs_e/legal_e/marrakesh_decl_e.htm 68 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches,

5 International Negotiation 1 (2000). 69 Unlike the GATT, the WTO voting procedure is a ―negative consensus‖ mechanism, in which all

resolutions are deemed to be ―passed‖ by all WTO members, unless expressly blocked by one of the

contracting parties.

81

(DSU) establishing a strong dispute settlement mechanism,70

the WTO sought to

distance itself from and to correct many of the weaknesses and past criticisms leveled

against the GATT.71

The WTO has metamorphosed into a highly influential body, affecting not

only trading interests, but also spreading to other important arenas, such as labor, the

environment and human rights, as well as Intellectual Property rights, government

procurements and investment measures, which were novel areas included under the

Uruguay Round agreement. While trade and commerce remain its principle focus, the

organization has sometimes been accused of extending its purview to encompass

additional areas relating to issues of sovereign state internal regulation and governance

beyond the scope of its perceived legitimate mandate.72

Such instances include, for

instance, labeling provisions required by WTO rules identifying the origins of goods

sold within a domestic market. Consequently, the expansion of its trade mandate to

other international as well as domestic debates has engendered pertinent issues related

to wide-ranging questions on the international trade system to the forefront. These

70 Andrew Guzman & Beth Simmons, International Dispute Resolution: Power Play and Capacity

Constraints: The Selection of Defendants in World Trade Organization Disputes, 34 J. LEGAL STUD. 558, 559 (2005). Olajumoke Oduwole, Nothing Ventured, Nothing Gained? A Case Study of Africa‟s

Participation in WTO Dispute Settlement, 2:4 Int. J. Private Law 358, 359 (2009). (Since the advent of

the WTO dispute settlement mechanism in 1995, developing countries, in general, have become

increasingly active in bringing disputes before the WTO, and may, in fact, have benefited from such

intervention. Despite what skeptics of the system might believe, Guzman and Simmons assert that

developing countries now litigate, both as complainants and respondents, at rate comparable to their

developed country counterparts under the WTO DSU. In addition, Oduwole has identified two limiting

factors—capacity constraints and political hurdles—which may affect the ability of a developing

country to bring cases before the Dispute Settlement Body). 71 The GATT has been accused of being an ―almost English gentleman‘s club‖ which means the leading

industrialized Contracting Parties were being elitist or exclusive in their dealings with other Contracting

Parties. 72 John Jackson, Sovereignty Modern: A New Approach to an Outdated Concept, 97American Journal

of International Law 782 (2003). Also See U.N. Commission on Human Rights, 52nd Sess., Provisional

Agenda Item 4, pp14-15, U.N. Doc.E/CN.4/Sub.2/2000/13, (2000) (Preliminary report submitted by J.

Oloka-Onyango & Deepika Udagama).

82

delimitation considerations are in addition to thinly veiled tensions regarding balance

of international trade rules between the ―North-South‖ geopolitical divide.

In its Preamble, the WTO sought to advance the global economy by advocating

principles of free and fair trade by raising the standards of living of peoples around the

world.73

The WTO also sought to accomplish this objective through employment and

increased volumes of trade in goods and services and to achieve sustainable

development while protecting and preserving the environment. The Marrakech Treaty

that established the WTO recognized that there is a need for ―positive efforts designed

to ensure that developing countries secure a share in the growth in international trade

commensurate with the needs of their economies.‖74

Nevertheless, the question about whether the WTO is first and foremost the

appropriate medium for developing countries to achieve their development goals

remains unanswered. While some have argued that the expectations that developing

countries have of the WTO regarding their economic development is unrealistic and

unworkable,75

others contend that the WTO is the only organization with ―teeth‖ in the

form of enforceable trade sanctions by virtue of its dispute settlement system, hence,

the organization is an effective medium for addressing such development concerns.76

73 World Trade Organization Analytical Index, Marrakesh Agreement Establishing the World Trade

Organization, available at

http://www.wto.org/english/res_e/booksp_e/analytic_index_e/wto_agree_03_e.htm#top;

http://www.wto.org/english/docs_e/legal_e/marrakesh_decl_e.htm 74 World Trade Organization Analytical Index, Marrakesh Agreement Establishing the World Trade

Organization, available at

http://www.wto.org/english/res_e/booksp_e/analytic_index_e/wto_agree_03_e.htm#top;

http://www.wto.org/english/docs_e/legal_e/marrakesh_decl_e.htm 75 RENATO RUGGIERO, REFLECTIONS FROM SEATTLE, THE WTO AFTER SEATTLE, XIII (Jeffrey Schott

ed., Institute for International Economics, 2000). 76 Because of the WTO‘s effective enforcement of multilateral trade rules through its dispute settlement

mechanism.

83

However, whether developing countries have achieved any meaningful strides in this

regard over the last six decades is still open to debate, and the challenges still being

faced by developing countries in the Doha Round are indicative of this dilemma.

Despite the above considerations, former WTO Director General, Renato

Ruggiero, has stated that the liberalization of developing economies, and the resulting

new prominence of the developing world in the global economy, is an event that rivals

the industrial revolution in historical significance.77

Therefore, industrialized WTO

Members can no longer provide international economic leadership on their own, but

must adjust to the changing international terrain. The new role of so called ―middle

powers,‖ larger developing countries, such as China and India that now command

substantial economic weight in world trade, is noteworthy. On this note, three issues

were highlighted at the G-8 summit held in L‘Aquila, Italy in July 2009: the need to

broaden the group, a new focus on food security, and a call to conclude the Doha

Round by 2010. Almost two years later, in retrospect, the most significant

development at that summit, and a recurring theme since then, may be the growing

acceptance that the G-8 – Canada, France, Germany, Italy, Japan, Russia, the UK and

the US – is no longer an adequate forum for economic policy-making at the global

level.

In the WTO, developing countries have also been encouraged to realize, with

the help of UNCTAD, that free riding and selective participation casts these countries

77 RENATO RUGGIERO, REFLECTIONS FROM SEATTLE, THE WTO AFTER SEATTLE, XIII (Jeffrey Schott

ed., Institute for International Economics, 2000).

84

as ―tactical‖ players, focusing on immediate gains, rather than ―strategic‖ longer-term

players within the WTO system.78

Moreover, the sensational ―failures‖ of the WTO Ministerial conferences held

in Seattle, USA in 1999 and Cancún, Mexico in 2003 as well as the July 2008 Mini-

Ministerial held in Geneva have demonstrated the unrelenting difficulty being

experienced by WTO Members in reaching a consensus agreement in the Doha Round

– after nine years of negotiation. Some have attributed this stalemate to intensified

developing country participation, particularly with respect to agriculture, and leaves

little doubt that important changes are currently occurring in the international trading

system.

5.2. Role of Agriculture in International Trade Rules

The historical importance of agriculture to nations around the world

accentuates the importance of the agriculture trade debate. Until now, despite its

declining contribution to Gross Domestic Product (GDP) in most industrialized

economies, these countries continue to place agriculture on a high pedestal through

their trade policies. These policies may be politically motivated (as many

industrialized country farmer constituencies are notoriously powerful), or based on

strategic national food security concerns.

For instance, in the United States, as is the case in many other industrialized

countries, farmer associations and agro-allied organizations have typically had a long,

78 RUBENS RICUPERO, THE WORLD TRADING SYSTEM: SEATTLE AND BEYOND, THE WTO AFTER

SEATTLE, 70 (Jeffrey Schott ed., Institute for International Economics 2000).

85

deeply-entrenched history in national politics.79

Consequently, although the US was

the principal proponent of the current international trading system based on liberal

principles of free trade, in the area of the country‘s agricultural trade policy, the US

has consistently implemented protectionist policies with overt government

intervention in the sector.80

These policies have been manifested in the form of import

restrictions, export subsidies, and import fees to sustain US farm incomes for selected

products since the 1920s to the present US agricultural policy on areas such as cotton

trade policies.81

Likewise, the European Union82

Common Agricultural Policy (CAP) has been

soundly criticized for similar reasons.83

The CAP has been accused of impeding

79 In general, agricultural interests in industrialized economies are far better organized than their counterparts in developing countries. These groups wield political weight typically in the form of a

symbiotic relationship in which farm interests rely on income from political rent-seeking, whereas

politicians rely on farm-related rural constituencies for valuable election votes. 80 Judith Goldstein, The Impact of Ideas on Trade Policy: The Origins of US Agricultural and

Manufacturing Policies, 43: 1 International Organization, 31, 32 (1989). (Analyzing the US agricultural

policy in 1989, Goldstein contends that the contradictory US approaches to agricultural trade policy vis-

a-vis manufacturing trade policy since World War II are rooted in the effects of the 1930s Great

Depression in response to the prevalent economic thinking at the time. Goldstein argues that the pre-

1930s trade policy in both sectors was identical, with declines in either sector eliciting a similar

response in the form of increased trade barriers. Subsequently, when the Congressional response to the

depressed US economy of the 1930s—the Smoot-Hawley Act implementing the use of protective tariffs—trade liberalization and farm subsidies followed. Thus, by the mid-1940s, this two-fold

strategy was already being implemented for agriculture and manufacturing, respectively, prior to the

GATT/WTO era). 81 The US agricultural market witnessed a significant decline in the post World War I industrial boom,

forcing prices down dramatically. By 1928, the Hoover administration implemented a program to

subsidize agriculture, and the Federal Farm Board was established, among other initiatives in the

agriculture movement, and laying the foundation for the current protectionist system. The first Farm

Bill, as we know it today, was passed in 1965, and the current 2008 Farm Bill (Food, Conservation and

Energy Act, 2008) is the 10th piece of legislation to date. 82 EU and EC are used interchangeably throughout this document to describe the European Union and

the European Community respectively under the WTO. 83 In an attempt to ensure food security in Europe, particularly after the shared experience of World War II, the European countries made agriculture a central policy in the Treaty of Rome in 1957. By January

1962, the Council of Ministers designated six products as common agricultural markets. A European

Agricultural Guidance and Guarantee Fund was then created to fund the CAP—which guaranteed

farmer incomes, leading to the overproduction fostered by the artificially high prices maintained in the

common market. Accordingly, the CAP created a new unified European agricultural market with its

86

certain developing country agricultural imports from accessing EU markets, while

simultaneously undermining developing country agricultural production through

export dumping in foreign markets.84

A flagship of European integration at the time of

its inception in the 1960s, the CAP served to reconcile the desire for new markets by

efficient agricultural producers in France and the Netherlands with the farm interests

of less competitive EU members, such as Germany, which relied on high domestic

prices to sustain farmers‘ income levels.85

Conversely, the agricultural sector does have tremendous economic

significance in most developing countries because the majority of the populations in

these countries remain agrarian, relying almost exclusively on agriculture or

agribusiness for their livelihood.86

In many developing countries, agriculture is

overwhelmingly the largest employer of labor, the largest source of GDP as well as the

largest foreign exchange earner. Whereas as much as 75% of the world‘s poor reside

in rural areas and are solely dependent on agriculture for their livelihood, in

three fundamental principles of market unity, financial solidarity and community preference that

remained relatively unchanged for the next three decades. In the EU, this objective of a unified Europe

resulted in a CAP established to a large extent on elements of political asymmetry within the union that

utilized price support, protectionist measures and trade-distorting measures to protect its farmers‘ interests. However, in addition to internal agitation over the increasing financial burden of the program,

the CAP has undergone a series of adjustments in rapid succession over the last 15 years, amid

significant internal turmoil within the EU as well as continuous external pressure from the international

community for its reform. 84 Peter Nedergaard, The 2003 Reform of the Common Agricultural Policy: Against all Odds or

Rational Explanations? 28:3 European Integration 203 (2006). 85 Isabelle Garzon, A Changing Global Context in Agricultural Policy, Notre Europe CAP 2013 Project,

(Notre Europe, June 2007), available at http://www.notre-europe.eu/fileadmin/IMG/pdf/Policypaper28-

Garzon-en.pdf 86 Pascal Lamy, Director General, World Trade Organization, Speech given at Meeting of the Steering

Committee of the Inter-Parliamentary Union (IPU) Parliamentary Conference on the WTO—IPU

Headquarters (September 22-23, 2005). http://www.wto.org/english/news_e/sppl_e/sppl02_e.htm (last visited March 11, 2011). (According to Lamy, ―Agriculture is undoubtedly an extremely important

component of the Doha Round. This can be of no surprise to anyone, since some of the world's poorest

countries are amongst the most economically dependent on agriculture. Countries like Congo, Guinea

Bissau and the Central African Republic derive 50% of their GDP from agriculture. In fact, over 50% of

the exports of 12 of the world's least developed countries are agricultural.‖)

87

comparison, the growth of agricultural trade remains sluggish in many developing

countries today. The agriculture sector, however, remains a critical factor in

stimulating growth and reducing poverty as well as enhancing food security and other

non-trade concerns around the world.87

Therefore, the rationale behind the selection of the Doha Round agriculture

negotiations as an illustrative case for this research study is that the area depicts the

complexities and asymmetries present in the multilateral trading system. In recent

times, the World Bank has estimated in relation to the economies of developing

countries, particularly LDCs, that ―while agriculture declines relative to the rest of a

growing economy as incomes improve, its growth is absolutely critical at early stages

of development and, can often drive export-led growth.‖88

Thus, an organized,

efficient and productive agricultural sector represents gainful employment for millions

living in poverty around the world. Furthermore, the sector can guaranty an adequate

supply of food locally, thereby alleviating hunger and extreme poverty. However,

although rural farmers in many developing countries have struggled to increase their

productivity throughout the last three decades, too many of them are still suffering.89

Hence, it is apparent that enhanced international trade volumes, technological

advancement as well as the ability of these countries to sustain a long-term

87 ALEX MCCALLA, REFORMING AGRICULTURAL TRADE FOR DEVELOPING COUNTRIES, VOL

1: KEY ISSUES FOR A PRO-DEVELOPMENT OUTCOME OF THE DOHA ROUND 3 (Alex

McCalla ed., World Bank 2001). 88

ALEX MCCALLA, REFORMING AGRICULTURAL TRADE FOR DEVELOPING COUNTRIES,

VOL 1: KEY ISSUES FOR A PRO-DEVELOPMENT OUTCOME OF THE DOHA ROUND 2 (Alex McCalla ed., World Bank 2001). 89 See ALEX MCCALLA, REFORMING AGRICULTURAL TRADE FOR DEVELOPING COUNTRIES,

VOL 1: KEY ISSUES FOR A PRO-DEVELOPMENT OUTCOME OF THE DOHA ROUND (Alex

McCalla ed., World Bank 2001).

88

comparative advantage particularly in agricultural produce, such as cotton, are

essential requirements for their development.

In addition, the mounting cost of staple foods such as wheat, soy beans and

corn over the past decade has caused serious concerns regarding food security and

livelihood security, particularly in net food-importing developing countries (NFIDCs)

to the fore of the DDA.90

This ―food price inflation‖ has resulted in part from the

pressure exerted on the supply of such produce due, to the increased production of

biodiesel and ethanol for industrialized country markets.91

Moreover, considerations

about impending climate change regulation, which could further strain global

feedstock supplies, particularly in developing countries, is significant.92

Whereas, according to the Food and Agriculture Organization (FAO), West

Africa, for instance, enjoys leading global positions in the production of commodities

90 FATOUMATA JAWARA & AILEEN KWA, BEHIND THE SCENES AT THE WTO: THE REAL WORLD OF

INTERNATIONAL TRADE NEGOTIATIONS 26 (ZED PUBLISHERS 2003). Jennifer Clapp, Developing

Countries and the WTO Agriculture Negotiations, Working Paper No. 6, The C.I.G.I. Working Paper

Global Institutional Reform 3 (March 2006) (In effect Ethanol or biodiesel (or livestock feed) may be

produced in developing countries for export to industrialized country markets, or the produce may be

exported directly – thus creating competition for such produce as raw materials versus food in

developing countries). 91 International Center for Trade and Sustainable Development (ICTSD), Biofuels: Food vs

Fuel Revisited, 12:2 ICTSD China Programme (March 2008), available at http://ictsd.org/i/news/bridges/4542/ (―Investment in new refining capacity and the continuation of

rapid build out in the biofuel sector, spurred by subsidies, have ensured high feedstock prices. Europe‘s

biodiesel programme and the US fuel ethanol programme impose a massive additional demand on the

farm production base, driving up prices for all grains and oilseeds, which compete for the same land.

Many other countries have launched similar programmes without thinking about the aggregate effect on

world markets. This has been the major cause of higher prices for corn, wheat and soybeans. To

illustrate: many US farmers grow both soybeans and corn. However, since biofuel mandates subsidies

corn ethanol, a large number of producers are devoting more acreage to corn to the detriment of

soybeans, which are not primarily used for biofuels in the US. This has created a relative shortage of

soy in the market, with corresponding price increases. Moreover, since soy is primarily used to feed

livestock, the shift has resulted in higher prices for meat and milk. Corn, also used to feed livestock, is

also more expensive because of demand for corn ethanol. Likewise, high fructose corn syrup (HFCS) is now almost as expensive as sugar because it is a corn product.‖) 92 See International Center for Trade and Sustainable Development (ICTSD), Ensuring incorporation of

agriculture and biofuels in sustainable strategies, available at http://ictsd.org/climate-

change/agriculture-and-biofuels/

89

such as cocoa, cassava, yams, citrus, groundnuts, plantains, pineapples and rubber, to

mention only a few,93

the rewards of such production in the form of income earned

through international trade have not yet impacted lives in the region.94

The World

Bank has stated that the abolition of tariffs, subsidies and domestic support schemes

by industrialized countries would yield almost $300 billion in economic gains

worldwide by 2015, with two-thirds of the benefits accruing from agriculture.95

Furthermore, as a percentage of GDP, the economic benefits would be one-third more

for developing countries than for rich nations, with twice as much gain in sub-Saharan

Africa, currently the world‘s poorest region.96

Thus, the potential gains from true

liberalization in this sector are significant, particularly for developing countries.97

Nevertheless, agricultural trade remains one of the most protected areas of

international trade today.98

On average, the Organization for Economic Cooperation and Development

(OECD) countries subsidize agriculture (via tariffs, export subsidies and domestic

support) to the tune of approximately USD $300 billion per year.99

In the process, a

depression of global prices for agricultural commodities occurs. Developing countries

93 United Nations Food and Agriculture Organization (FAO), Economic and Social Department, The

Statistics Division, World Ranking by Commodity (2005).

http://www.fao.org/es/ess/top/topproduction.html?lang=en&country=159&year=2005 (last visited

March 11, 2011). 94 The factors limiting the international trade and income potential of these countries are both internal

and external. The asymmetry in international trade rules is only one part of the equation. 95 The World Bank, World Integrated Trade Solution (WITS) http://wits.worldbank.org/wits/ (last

visited March 11, 2011). 96 The World Bank, World Integrated Trade Solution (WITS) http://wits.worldbank.org/wits/ (last

visited March 11, 2011). 97 ALEX MCCALLA, REFORMING AGRICULTURAL TRADE FOR DEVELOPING COUNTRIES, VOL

1: KEY ISSUES FOR A PRO-DEVELOPMENT OUTCOME OF THE DOHA ROUND 3 (Alex

McCalla ed., World Bank 2001). 98 World Trade Organization, Groups in the Agriculture Negotiations,

http://www.wto.org/english/tratop_e/agric_e/negoti_groups_e.htm (last visited March 11, 2011). 99 Joseph Stiglitz, Trade and the Developing World: A New Agenda, Current History, 387 (1999).

90

are also faced with the daunting task of attempting to penetrate highly protectionist

industrialized country markets and are encountering high tariff rates as well as non-

trade barriers, purportedly disguised as sanitary restrictions.100

Consequently, one strong indication of the renewed global focus on agriculture

is the World Bank 2008 Development Report, which was dedicated solely to

agriculture after a 25-year interval.101

The report states that between 1980 and 2002,

bilateral and multilateral agriculture assistance from industrialized countries to

developing countries decreased from USD $6.2 billion to USD $2.3 billion per

annum.102

Indeed, this recent high-level attention has once again put the spotlight on

the importance of agriculture as a tool for development and poverty alleviation around

the globe.

5.2.1 The Dark Ages – Agriculture Under The GATT

The unrestrained lack of discipline in the agriculture sector trade over the

years, which led to the high level of distortion with respect to market competition in

global agriculture trade that persists today, has been well documented in the literature.

The protectionist measures of government subsidies and artificial price controls

adopted by many countries in the trade of agricultural products ensured that farmers in

100 Jennifer Clapp, Developing Countries and the WTO Agriculture Negotiations, Working Paper No. 6,

The C.I.G.I. Working Paper Global Institutional Reform 1 (March 2006). 101 Department for International Development (DFID), Official Development Assistance to Agriculture,

DFID, UK 8 (2004), available at http://dfid-agriculture-consultation.nri.org/summaries/wp9.pdf. 102 Department for International Development (DFID) Official Development Assistance to Agriculture, DFID, UK 8 (2004), available at http://dfid-agriculture-consultation.nri.org/summaries/wp9.pdf. In

addition, according to Food and Agriculture Organization (FAO) the share of agriculture loans in the

portfolios of international financial institutions fell by 20% in the 1990s. See FAO 2003 Anti-Hunger

Programme. http://www.fao.org/english/newsroom/news/2002/5500-en.html (last visited March 11,

2011).

91

richer protectionist countries had a significant advantage over their less privileged

counterparts in open competitive markets.103

From the inception of the current system and the first draft Charter of the

aborted ITO prepared by the US in 1946,104

agriculture has consistently been subjected

to different treatment under international trade and will probably remain differentiated

to some degree for the foreseeable future.105

Primarily introduced into trade talks in

the Kennedy Round in 1962,106

agriculture played a significant role in the Uruguay

Round and has since taken center stage in international trade negotiations and

disputes, particularly after the WTO Seattle and Cancún Ministerial meetings.107

Initially, the exclusion of the agriculture sector arose (and was applied de

facto across the board)108

as a result of an exemption requested by the US government

during the GATT negotiations in order to retain the complicated system of agricultural

103 Timothy Josling, Reflections on the Exceptional Treatment of Agriculture in the WTO in

PERSPECTIVES ON INTERNATIONAL AGRICULTURAL POLICY – IN HONOR OF THE RETIREMENT OF

PROFESSOR STEFAN TANGERMANN 21-4 (GJAE 2010). 104 United States Department of State, ―Suggested Charter for an International Trade Organization of

the United Nations‖ (Washington D.C. 1946) cited in WTO, GATT Analytical Index: Guide to GATT

Law and Practice 4 (Updated 6th Edition 1995). 105 MELAKU DESTA, THE INTEGRATION OF AGRICULTURE INTO WTO DISCIPLINE IN AGRICULTURE IN

WTO LAW 17-8 (Bernard O‘Connor ed., Cameron May Publishers 2005). 106 Agriculture was never formally exempted from international trade rules; however, it was given

merely a cursory mention in GATT ‘47. Here, agricultural products were covered by a handful of

Articles relating to ―primary commodities‖ in (Article VI); ―foodstuffs‖ in Article XI.2a); ―agricultural

and fisheries product‖ (Article XI.2c); and ―primary product‖ (Article XVI.3. Moreover, the addendum

to Article XVI vaguely stated that ―primary product‖ was understood to mean, inter alia, any product of

a farm, ―in its natural form or which has undergone such processing as is customarily required to

prepare it for marketing I substantial volume in international trade.‖ c.f. URAA and its highly specific

terms and definitions. 107 1999 WTO Ministerial Meeting held at Seattle, US, 2003 WTO Ministerial Meeting held at Cancun,

Mexico. 108ANWARUL HODA & ASHOK GULATI, WTO NEGOTIATIONS ON AGRICULTURE AND DEVELOPING

COUNTRIES 15 (JOHNS HOPKINS UNIVERSITY PRESS 2007). (Other GATT Contracting Parties

justified their use of quantitative restrictions either by claiming that they were relying on the ―existing

legislation‖ provision of the Protocol of Provisional Application of GATT or the Protocols of Accession

for subsequent members).

92

protection already well entrenched in the US by the 1950s.109

Therefore, the GATT

gave special concessions in the area of agriculture by allowing quantitative import

restrictions in instances in which domestic output was also controlled and further

allowed to export subsidies for primary products albeit under vague conditions.110

These exemptions pandered to the whims of the powerful and sensitive domestic

agricultural interest groups in these countries, and agriculture ―exeptionalism‖ under

the GATT was perpetrated.111

Thus, these legal exemptions placated the leading industrialized countries, such

as US, Canada and the EU, and these Members as well as others took full advantage of

the system, leading to multilateral agriculture trade becoming an extremely

undisciplined sector. By the 1980s, in the build up to the Uruguay Round, the

application of these agriculture exemptions had become a major hindrance to

international trade in agriculture goods, leading to increased agitation for more

discipline in the sector by the commencement of the Uruguay Round.112

109

FATOUMATA JAWARA & AILEEN KWA, BEHIND THE SCENES AT THE WTO: THE REAL WORLD OF

INTERNATIONAL TRADE NEGOTIATIONS 26 (ZED PUBLISHERS 2003); See Jennifer Clapp, Developing

Countries and the WTO Agriculture Negotiations, Working Paper No. 6, The C.I.G.I. Working Paper

Global Institutional Reform 3 (March 2006); ANWARUL HODA & ASHOK GULATI, WTO NEGOTIATIONS

ON AGRICULTURE AND DEVELOPING COUNTRIES 15 (JOHNS HOPKINS UNIVERSITY PRESS 2007). 110 Article XI and Article XVI of the GATT ‗47 111 TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT 46 (MACMILLAN PRESS 1996). (The different

treatment of agriculture trade has its roots in domestic political and security concerns of Members). 112 TIMOTHY JOSLING, REFLECTIONS ON THE EXCEPTIONAL TREATMENT OF AGRICULTURE IN THE WTO 21-4

IN PERSPECTIVES ON INTERNATIONAL AGRICULTURAL POLICY – IN HONOR OF THE RETIREMENT OF

PROFESSOR STEFAN TANGERMANN 59 (GJAE 2010); See DOUGLAS IRWIN ET AL., THE GENESIS OF THE

GATT (CAMBRIDGE UNIVERSITY PRESS 2008), TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT

101 (MACMILLAN PRESS 1996).

93

5.2.2 The Uruguay Round Agriculture Agreement (URAA) Negotiations

By 1986, Contracting Party indiscipline in the area of international agriculture

trade was so rampant that the Punta del Este Declaration, which launched the Uruguay

Round (UR) in that year, positioned agriculture at the core of the negotiations.113

However, a fall in world agricultural prices in the 1980s led to increased protectionist

tendencies against agricultural imports by the United States and the then European

Community (EC). Eventually, an ―open subsidy war‖ between the two super powers

(US and EU) erupted in a ―race to the bottom‖ on a global scale.114

This agriculture

trade war took the form of undercutting product prices on the global market. As a

result, both the US and the EU suffered economic loss as the cost of the subsidies

being provided to their farmers affected their domestic budgets. However, perhaps

even more importantly, other farmers around the world suffered significantly as they

could not compete with the industrialized super powers‘ price cuts on agricultural

products in global markets.115

The need to address this critical situation precipitated

the formation of the Cairns Group.116

113Launched at Punta del Este, Uruguay in September 1986 and concluded in Geneva in December

1993. Signed by Ministers in Marrakesh, Morocco, in April 1994. 114 Diana Tussie, Holding the Balance: the Cairns Group in the Uruguay Round. In The Developing

Countries in World Trade: Policies and Bargaining Strategies 182 (Diana Tussie & David. Glover eds.,

Lynne Rienner Publishers 1995). 115TERENCE STEWART, THE GATT URUGUAY ROUND: A NEGOTIATION HISTORY (1986-1994) VOL IV:

THE END GAME (PART I) (KLUWER LAW INTERNATIONAL 1999); See GIOVANNI ANANIA ET AL (EDS.),

AGRICULTURE TRADE CONFLICTS AND GATT: NEW DIMENSIONA IN US-EUROPEAN AGRICULTURE

TRADE RELATIONS (WESVIEW PUBLISHERS 1994). 116 A group of agricultural exporting nations lobbying for agricultural trade liberalization. It was formed

in 1986 in Cairns, Australia just before the beginning of the Uruguay Round. The group initially consisted of 14 agriculture exporters from both developed and developing countries – a cross over

coalition. The members were primarily Latin American exporters, with three industrialized country

Members – Australia, New Zealand and Canada. Current membership: Argentina, Australia, Bolivia,

Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay,

Philippines, South Africa, Thailand and Uruguay.

94

The aggressive use of non-tariff measures, such as quantitative restrictions,

restrictive state trading, and minimum import prices to protect domestic farmers in

industrialized countries had been taking their toll on the multilateral trading relations

among GATT Contracting Parties since the 1960s. Furthermore, the proliferation of

domestic agricultural subsidy schemes advanced by many industrialized countries in

the 1970s led to the overproduction and resulting surplus of the products. These

surpluses were enhanced by technological advancements in the production of select

highly lucrative products. Thus, there was the need for additional export subsidies in

exporting countries.117

Therefore, amid growing budget pressure against these

programs, and the reduced welfare of consumers due to artificially high prices,

exporting countries were forced to commence domestic reform of their agricultural

sectors, despite protests from strong domestic agriculture lobby groups. Therefore,

multilateral trade rules in this area became appealing to governments as a way of

sidelining these domestic lobby groups,

As a result agriculture commanded a prime position for these countries in the

Uruguay Round negotiations.118

Contracting Parties agreed that there was an urgent

need to bring more discipline and predictability to world agricultural trade. This was

to be achieved by correcting and preventing restrictions and distortions, including

those related to structural surpluses, to reduce the uncertainty, imbalances and

instability in world agricultural markets.119

117 ANWARUL HODA & ASHOK GULATI, WTO NEGOTIATIONS ON AGRICULTURE AND DEVELOPING

COUNTRIES 12 (JOHNS HOPKINS UNIVERSITY PRESS 2007). 118 Jens Haahr, The Same Old Game? The European Community in the International Political Economy,

1985-91, 28:1 Cooperation and Conflict 73, 80 (1993). 119 General Agreement on Tariffs and Trade, BISD, Suppl. 33 1987, 24.

95

Moreover, the state of the international agricultural trade sector at the time

resulted in several developing countries becoming net food importers. This was the

result of the inability of the predominantly rural farmers in these countries to compete

with the government treasuries of their industrialized country counterparts. Thus,

developing countries, with their NIEO ideology, were agitating for their own

development concerns mainly under the auspices of UNCTAD.120

As stated above,121

the objective of the NIEO was three-fold: first, to eliminate the economic dependence

of developing countries on industrialized country patronage; second, to promote the

accelerated development of the economies of the developing countries based on the

principle of self-reliance (by way of import substitution); and third, to introduce

appropriate institutional changes for the global management of world resources in the

interest of mankind as a whole.122

However, it was the change in world economic conditions and the collapse in

global agricultural prices of the 1980s, along with increasingly protectionist domestic

policies, which finally led to a farm policy crisis in the majority of the industrialized

countries.123

As a result, a GATT Committee on Trade in Agriculture (CTA) was

established in 1982 to address the agriculture issue, since no significant progress had

been made since the Tokyo Round. As expected, the CTA encountered many

120 See supra p.75 (In 1964 the United Nations Conference on Trade and Development (UNCTAD) was

established to promote the integration of developing countries into the world economy in a

―development-friendly‖ manner). 121 See supra p. 72. 122 See Declaration on the Establishment of a New International Economic Order (NIEO), G.A. Res.

3201 (S-VI), U.N. Doc. (May 1, 1974). 123 TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT 101-32 (MACMILLAN PRESS 1996). (The

financial and economic costs of these policies increased exponentially, leading to serious domestic

concerns in these countries).

96

difficulties in the execution of its task but was able to present broad, if inconclusive,

recommendations that paved the way for the URAA negotiations.124

Simultaneously, the Organization for Economic Cooperation and Development

(OECD), through its Ministers for Agriculture, commissioned an analytical study of

the effects of existing agriculture policies on both domestic and international trade in

1982. This Ministerial Trade Mandate (MTM), which produced a report analyzing the

approaches to a balanced reduction of protection and to identifying policies with a

significant impact on trade, also helped to focus the minds of negotiators in the new

Round.125

Consequently, the UR set out to address these fundamental issues in

agriculture trade and to bring the sector fully under the discipline of the multilateral

trading system. It was also agreed that the aim of the negotiations must be to achieve

greater liberalization for agriculture trade and bring all measures regarding import

access and export competition under strengthened and more operationally effective

GATT rules and disciplines. Nevertheless, the journey ahead proved to be turbulent

sailing.126

In 1986, several WTO members, led by the US and the Cairns group, insisted

that there could only be further trade liberalization if significant progress was made in

the area of agriculture market access.127

Although the EC remained conservative,

seeking gradual reduction of subsidies, the liberalization of agriculture trade rules in

124 TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT 131 (MACMILLAN PRESS 1996).

125 TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT 110 (MACMILLAN PRESS 1996).

126 After seven tumultuous years of intense negotiations the Uruguay Round was finally concluded. 127 The US feared the progressive displacement of its agricultural products by the EC in third-markets

and advocated liberalization as a means to recovering its market share. The US called for the

elimination of all forms of trade-distorting measures in agriculture over a 10-year period, this proposal

was dubbed the ―double-zero option.‖

97

the UR was pivotal to the negotiations.128

In light of the current research, the role of

the Cairns Group in the UR, particularly the negotiation dynamics of the URAA

warrants closer examination.

Building on two preliminary meetings held in April and July of 1986 between

a few non-subsidizing agriculture exporters, the group crystallized on August 27,

1986, in Cairns, Australia, three weeks before the Punta del Este meeting launching

the Uruguay Round.129

The French, via the EU were attempting to block the

preparatory draft for the upcoming Ministerial meeting because it included agriculture

as part of the agenda, therefore, the Cairns Group members came together to counter

the EU‘s resistance to the proposed agenda.130

Until this point, the GATT provisions

with respect to international agriculture trade were extremely weak.

The main objective of the Cairns Group was to secure the inclusion of

agriculture in the UR negotiation agenda in order to diffuse the US-EU subsidy war

through GATT rules. The group‘s members stated that they sought the removal of

market access barriers, substantial reductions of agriculture subsidies and the

elimination, within an agreed period, of subsidies affecting agricultural trade.131

The Cairns Group then began technical analyses of ways to liberalize

international agriculture trade rules in practice. With the emergence of credible

128 The EC came under tremendous pressure during the UR to reform its CAP, notably, the 1992

MacSharry reforms on cereal and livestock products. 129 SANOUSSI BILAL, AGRICULTURE IN A GLOBALISING WORLD ECONOMY IN NEGOTIATING THE FUTURE

OF AGRICULTURAL POLICIES: AGRICULTJURAL TRADE AND THE MILLENNIUM WTO ROUND 5-6

(Sanoussi Bilal & Pavlos Pezaros eds., Kluwer Law International 2000). 130

TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT 144 (MACMILLAN PRESS 1996). See ALAN OXLEY, THE CHALLENGE OF FREE TRADE (HARVESTER WHEATSHEAF PUBLISHERS 1990). 131 Having succeeded in achieving this primary agenda-setting objective, the coalition became a credible

group in the UR agriculture negotiation process in recognition of its achievement because agriculture

had traditionally been a contested issue in the GATT. Shortly thereafter, the group evolved from an

agenda-setting coalition into an issue-based negotiating with the same membership.

98

studies as well as information sharing among the members, the group issued its first

proposal in October 1987. The group sought a middle ground between the radical US

proposal for 100% cuts over a short implementation period and the EU‘s overly

protectionist position, and proposed ambitious cuts with a slower phase-out period.

However, even within the Cairns Group itself, there were the strong dissenting views

expressed by Canada due to the impact of the group‘s proposal on the country‘s own

―politically sensitive‖ dairy industry.132

Canada‘s protectionist interests, which ran

contrary to the group‘s liberal ―fair trade‖ ideology, propelled the country to submit its

own proposal, causing internal tension in the group, particularly between Canada and

Australia. However, most of the group‘s proposal was accepted by the GATT

contracting parties as the basis for discussion in the Montreal mid-term review held in

December 1988. Therefore, the continuing deadlock at this meeting due to

inflexibility on the part of the EU prompted the Latin American Cairns Group

members led by Argentina and Uruguay to walk out of the negotiations—stating that

they would veto any UR agreement reached without the inclusion of an agriculture

agreement.133

As a result, the negotiations were deferred until April, 1989.

The Cairns Group also played a key role in fostering a framework agreement

on the basis of which negotiations resumed after the April mid-term review. In a

meeting between the US, the EU and the Cairns Group, a ―freeze‖ on levels of

protection and support was agreed upon, including long-term objectives of ―substantial

progressive reductions.‖ By this time, the US and the EU were both experiencing

serious budgetary constraints due to the subsidies war and were, therefore, more

132 TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT 146 (MACMILLAN PRESS 1996).

133 TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT 147 (MACMILLAN PRESS 1996).

99

amenable to a deal. Furthermore, the US lent its tacit support to the group earlier on in

the UR because both parties‘ liberal trade interests converged at the time. Although

these other factors contributed to the emergence of the Cairns Group as an influential

force in the UR agriculture negotiations, the group definitely possessed some critical

features that heightened its efficacy.

In 1990, there was another stalemate in the negotiations at the meeting of the

Trade Negotiation Committee (TNC) which took place in Brussels in December of

that year, again precipitated by EU‘s refusal to proceed on an agriculture proposal.

The Cairns Group members once again walked out of the UR negotiations due to the

lack of sufficient movement in the area of agriculture.134

Moreover, the Cairns Group

successfully threatened to block the negotiations in other areas unless progress was

made in agriculture. The credibility of these developing countries‘ actions, and its

effect on the negotiations demonstrated the important role that developing countries

could play in multilateral trade negotiations.

After two more years of the UR being at a standstill, an agreement was finally

reached bilaterally between the US and the EU in the 1992 Blair House Accord. The

EU convinced the US to decrease the ambitiousness of the UR agriculture package,

particularly with respect to domestic support and export subsidies. However, the Blair

House Accord had to be re-negotiated in 1993 to make concessions to further

accommodate the French—but the UR was ultimately concluded that year.

The Cairns Group kept the momentum going in the agriculture negotiations

throughout the UR. Although the group had previously enjoyed the support of the US

134 TIMOTHY JOSLING ET AL., AGRICULTURE IN THE GATT 155 (MACMILLAN PRESS 1996).

100

for its liberal agriculture proposals, the Blair House Accords also represented the

substantial watering down of the ambitious US agriculture proposal to accommodate

EC CAP interests. However, despite having to scale down its demands in response to

pressure from the stronger GATT members, at the conclusion of the Round, the

coalition quietly accepted the Blair House Accords, and even issued a communiqué in

October 1993 calling for the completion of the round.135

This action was taken despite

the fact that the eventual UR Agriculture Agreement (URAA) fell far short of even the

group‘s revised objectives.

Thus, in the end game, the Cairns Group failed to oppose the US-EU pact.

Moreover, it was not until May 1994 at the Ministerial meeting held in Montevideo

that the Cairns Group expressed its displeasure with the URAA. Nevertheless, the

Cairns Group was an exemplary (predominantly developing country) coalition in the

UR. Perhaps the group‘s most important contribution to the Round was

―checkmating‖ the EU‘s actions and ensuring that the reform of agriculture rules was

included on the UR agenda. Furthermore, the coalition was an effective catalyst over

the years, ensuring that the agriculture agreement negotiations were not sidetracked by

the two superpowers.

Although the Cairns Group adopted a negotiation strategy that successfully

capitalized on the political environment of the day, the group did not purport to

challenge the super powers. This may have been the result of an opposing negotiation

strategy within the group. ―Fragmentation‖ refers to the phenomenon whereby

135 General Agreement on Tariffs and Trade Doc.TNC/W/117, October 29, 1993 (Communiqué issued

at the 13th Ministerial Meeting held in Geneva, October 17-18, 1993—urging completion of the

negotiations on a comprehensive basis).

101

bargaining coalitions disintegrate and ultimately fail because one or more countries

defect (or appear to defect) from the agreed upon negotiation position.136

The causes

of fragmentation may stem from coalition structure and interests, the strategies

adopted as well as external influences. Therefore, while the Latin American Cairns

Group members seemed determined to pursue an aggressive stance in the negotiations,

the industrialized country members did not. Thus, a lack of internal consensus may

have been the cause of the failure of the Cairns Group to address the Blair House

Accords decisively in the end game. Rather, the coalition‘s collective agenda appears

to have been restricted to restraining and modifying the behavior of the US and the EU

in global agriculture markets to the detriment of the group‘s desired pro-liberalization

outcomes. Significantly, the coalition‘s history of mediation in the negotiations gave

the Latin American members‘ walkout (and the threat to walkout) strong credibility.

Furthermore, the primary advantage of any coalition remains the quality of its

membership. Coalitions rely on the capacity of their members to collaborate with one

another in executing required assignments, despite their differences. Therefore, the

ability of the Cairns Group members to successfully share knowledge, undertake

analytical studies and agree on technical proposals is significant. Another important

feature of the group was the members‘ self-identification as a group of ―fair trading

nations‖ (with the exception of Canada that restricted imports of dairy products and

livestock). In addition the appreciable cohesiveness that the group displayed publicly

throughout the Round, despite any divergent internal interests, is commendable.

These strengths led to the group‘s sustainability in the negotiation process. Despite

136 Amrita Narlikar & Diana Tussie, The G-20 at the Cancún Ministerial: Developing Countries in the

WTO, 27:7 The World Economy 947, 954 (2004).

102

the internal tensions that may have developed between the industrialized country

members and the developing country members,137

the members reached a compromise

internally and presented a fairly united front throughout the UR.138

The group remains in existence today, (though in a more diluted form), as a

well-respected ―think tank‖ known for its strong technical capabilities, which are still

being displayed well into the Doha Round.139

At the conclusion of the UR, the URAA provided rules regarding the

controversial ―three pillars‖ of market access, domestic support and export subsidies.

The agreement also encompassed special and differential treatment for developing

countries, non-trade concerns, the ―Peace clause‖140

—a temporary moratorium on the

institution of litigation against certain URAA infringements as well as a firm

commitment to continue further negotiations for reform at a specified time.141

More specifically, in the area of market access for agricultural products, the

URAA succeeded in prohibiting various forms of non-tariff barriers, such as

quantitative import restrictions, minimum import prices, discretionary import

licensing, and voluntary export restraints.142

Instead, the agreement prescribed the

137 Other areas of divergent interests within Cairns group were over: temperate products vs. tropical

products; grains vs. rice and sugar, free trade vs. some import quotas (Canada). 138 DIANA TUSSIE, HOLDING THE BALANCE: THE CAIRNS GROUP IN THE UR IN THE DEVELOPING

COUNTRIES IN WORLD TRADE: POLICIES AND BARGAINING STRATEGIES 181 (Diana Tussie & David

Glover eds., Lynne Rienner Publishers 1993). (Here, Tussie attempted to identify the factors that

sustained the cohesion of the coalition and the role it played in the UR by considering the UR

Agreement on the Agriculture negotiation process). 139 The group is not as prominent in the DDA agriculture negotiations but still technically active. Also

some changes in membership occurred, for example, Hungary withdrew from the group prior to its

accession to the EU. 140 Article 13, URAA-prohibiting WTO litigation on the URAA provisions until Jan 1, 2004. 141 World Trade Organization, The Doha Declaration explained,

http://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm (last visited March 11, 2011). 142 ANWARUL HODA & ASHOK GULATI, WTO NEGOTIATIONS ON AGRICULTURE AND DEVELOPING

COUNTRIES 17 (JOHNS HOPKINS UNIVERSITY PRESS 2007); Robert Hedec, Does the Agreement on

103

conversion of these quantitative restrictions into ―bound‖ tariffs, while reducing all

existing tariffs by an average of 36% over a six-year period for developed countries.143

In addition, a system of ―safeguards‖ was implemented to address import surges to

protect domestic producers under abnormal situations or when world prices plummet

below preset trigger points. As compensation for converting some non-tariff measures

into tariffs, some WTO members reserved the right to invoke special safeguards on

such products. 144

Regarding domestic support, the URAA sought to identify and expose trade-

distorting practices, to impose a ceiling on them and then to work towards the

reduction of their use by member States. Payments that were considered to minimally

distort trade, such as payments for research, infrastructure, food security or domestic

food aid were labeled ―Green Box‖ measures;145

direct payments made under

production-limiting programs, labeled the ―Blue Box,‖ were also exempt from

reduction commitments. Other support was classified as the ―Amber Box,‖ which

comprised categories earmarked for compulsory reduction commitments, based on

each country‘s calculation of the Aggregate Measurement of Support (AMS).146

Agriculture Work? Agricultural Disputes after the Uruguay Round, Working Paper #98-2,

(International Agricultural Trade Research Consortium 1998), available at http://purl.umn.edu/14612 143 With the exception of some non-agricultural provisions under GATT, such as Articles XX and XXI,

or provisions under other agreements, such as the Agreement on Safeguards. One time-bound

exemption was given in the case of rice, for Asian countries such as Japan, Korea and the Philippines.

Furthermore, developing countries, particularly the LDCs enjoyed more flexibility in this area for

balance of payment reasons. 144 Where such rights are reserved, members are entitled to impose additional duty on a product in any

year when either the volume of imports exceeds domestic production (based on preceding three-year

average) or the price of imports falls below the designated trigger levels (trigger was set based on the average value of the product from 1986-88). 145 Developing countries were given exceptions to these provisions for development aid purposes. 146The calculation of annual levels of trade distorting support in monetary terms provided by a WTO

Member to its agriculture sector. However, the modalities detailing the formula allowed for

manipulation by some WTO Members, thus defeating the intent of the rule.

104

Export competition reform took a similar approach to that of domestic support

reform. The URAA listed the six widely recognized infringements in this area, such

as direct subsidies on exports and mandated that they and any other subsidies

dependent on export performance be reduced to agreed upon, capped levels.

However, the base period for reduction of export and domestic support were set at

levels from periods of uncharacteristic historic highs. While food aid was exempted

from export subsidy reductions, the URAA also tried to block the use of food aid as a

means of circumventing agriculture trade rules.147

Another interesting feature of the URAA was the Peace Clause mentioned

above. 148

Although the Peace Clause was inserted into the URAA at the insistence of

the US and the EU, after its expiration in January 2004, as anticipated, agriculture

became a highly litigated area in the WTO dispute settlement system, with agricultural

disputes accounting for about 27% of all cases brought to the DSB today. 149 Notably,

throughout the agreement, the URAA contained elements of Special and Differential

Treatment for developing countries, giving these countries less stringent obligations

than developed country members as well as longer implementation periods.150

However, at the time, developing countries were fighting for economic survival on

147 Agreement on Agriculture, Part V: Article 10, Prevention of Circumvention of Export Subsidy

Commitments, Paragraph 4 Prevention of Circumvention of Export Subsidy Commitments, available

at http://www.wto.org/english/docs_e/legal_e/14-ag_02_e.htm#articleXX 148 Richard Steinberg & Timothy Josling, When The Peace Ends: The Vulnerability of EC and US

Agricultural Subsidies to WTO Legal Challenge, 6:2 Journal of International Economic Law 369

(2003). 149 Timothy Josling, Agriculture Trade Disputes in the WTO in Trade Disputes and the Dispute

Settlement Understanding of the WTO: An Interdisciplinary Assessment 245 (James Hartigan ed., 6

Elsevier Series on Frontiers of Economics and Globalization 2009). 150 Developing countries‘ obligations were only two-thirds of the agreed upon cuts in tariffs, domestic

support and export subsidies, to be implemented over a period of 10 years.

105

several fronts—amid financial crises requiring World Bank intervention for many

States as well as the effects of globalization that had begun to be felt across the globe.

After signing the Marrakech agreement, many developing countries began to

verbalize their discontent with the stipulations in the agreement with respect to their

own developmental goals. The ―single undertaking‖ negotiation system adopted under

the Uruguay Round - whereby all the negotiated agreements were bound together for

agreement as one package - left many smaller developing countries bewildered as to

what they had agreed to -in effect- when the entire legal texts comprising ―the results

of the Uruguay Round of Multilateral Trade Negotiations‖ came into effect under the

WTO.151

As a result of the implementation challenges experienced by many countries

regarding the WTO rules, these countries appeared unwilling to pursue a similar

course in the DDA.

However, the objective of the Uruguay Round to integrate agriculture

comprehensively into the GATT rules, as the rules applied to non-agriculture goods

was largely successful. Thus, agriculture is now governed by the URAA and GATT

‘94. Yet, is still a long way to go before agriculture trade rules are fully liberalized in

the multilateral trade context. A cursory examination of the interpretation and

operation of the URAA pre-Doha Round as well as the implementation issues

experienced by WTO Members may help shed some light on the current difficulties

151 THE WORLD TRADE ORGANIZATION, THE LEGAL TEXTS (CAMBRIDGE UNIVERSITY PRESS 1994). (This document contains the Marrakesh Agreement Establishing the World Trade Organization, the

Multilateral Agreement on Trade in Goods-known as GATT ‘94, the Urguay Round Agriculture

Agreement, as well as the Services agreement, TRIPS agreement, the Dispute Settlement

Understanding, the Trade Policy Review Mechanism, the Plurilateral Trade Agreements, among

others).

106

being experienced by WTO Members in reaching an agreement in the ongoing Doha

Round.

5.2.3 “After Uruguay” – Agriculture in the WTO

In the immediate aftermath of the UR, with its limited achievements the

URAA was lauded as providing a solid foundation in the reform of agriculture upon

which future liberalization could be built. However, whether Members are actually

complying with the new agriculture rules, or whether the rules are so weak as to

merely furnish the appearance of change without any actual real reform has been an

ongoing debate.152

The root of the division remains the Uruguay Round Agriculture Agreement

(URAA). By 2003, developing countries were now completely convinced that the

URAA was inherently unfair to them despite the increased market access provisions

and the Special and Differential Treatment (SDT) provisions that the URAA

contained. Upon witnessing the effects of the URAA implementation, developing

country Members were unhappy with the fact that industrialized Members seemed to

be able to exploit loop holes in the UR Modalities on the URAA, to the detriment of

developing country interests. In addition, the onerous and expensive implementation

requirements of some provision in the Uruguay Round agreements in other areas such

as intellectual property had also left developing countries disgruntled.153

152 Stefan Tangermann, Has the Uruguay Round Agreement on Agriculture worked well? Working

Paper #01, International Agricultural Trade Research Consortium 1(2001). available at

http://purl.umn.edu/14586 153 Amrita Narlikar, Fairness in International Trade Negotiations: Developing Countries in the GATT

107

Despite the strides achieved by the URAA in attaining unprecedented reform

regarding agriculture trade rules, towards the completion of the agreement it remained

apparent to developing countries that there were still significant inequalities in

multilateral agriculture trade rules. This discontent resulted in the inclusion of a

clause in the URAA formally committing WTO members to resume further

negotiations on agriculture rules by a specified future date.154

The implementation of

the URAA over the next six years further buttressed this point, and deepened the

frustration felt by some developing countries towards the unfairness of the

international agriculture trade regime.

Since 1998 the primary concern of several developing country Members has

centered on the issue of the implementation of all Uruguay Round agreements.155

As

a result, the 1999 Seattle Ministerial debacle transpired as an off shoot from the

discont expressed by many developing countries in the course of implementing the

and WTO, The World Economy 1005, 1024 (2006). 154 Article XX, URAA, Continuation of the Reform Process, available at

http://www.wto.org/english/docs_e/legal_e/14-ag_02_e.htm#articleXX. See Jennifer Clapp, Developing Countries

and the WTO Agriculture Negotiations, Working Paper No. 6, The C.I.G.I. Working Paper Global

Institutional Reform 7 (March 2006). 155 According to the WTO secretariat, for many developing countries, and particularly for the least-developed countries, capacity constraints have been a major obstacle to the full implementation of

Uruguay Round agreements. A lack of financial, human and institutional resources has prevented

governments in these countries from putting the often highly complex Uruguay Round agreements into

effect. In addition to these capacity constraints, some developing countries take the view that the

Uruguay Round agreements have not delivered the economic benefits that had been expected. Officials

from these countries believe that agreements on textiles, subsidies, agriculture, intellectual property

protection, anti-dumping, sanitary and phytosanitary measures and trade-related investment measures

do not adequately reflect the interests and concerns of developing countries and need to be ―re-

balanced.‖ Some developed countries had initially been reluctant to engage in the implementation

debate and officials from these countries took the line that addressing the concerns spelled out in recent

years by developing countries amounts to amending or renegotiating the Uruguay Round agreements.

While some governments have said they are prepared to entertain such a prospect, they have made it clear that those proposals requiring amending agreements can only be addressed within a wider set of

negotiations encompassing areas of interest to their citizens. The issue has been at the forefront of the

preparations for the Doha Ministerial Conference. See World Trade Organization,

http://www.wto.org/english/thewto_e/minist_e/min01_e/brief_e/brief07_e.htm (last visited March 11,

2011).

108

Uruguay Round agreements. Amid unprecedented public demonstrations on the

streets of Seattle, talks among WTO Members in the 1999 WTO Ministerial meeting

came to a gridlock when Members were unable to reach an agreement on the

negotiation agenda for the next Round of multilateral trade negotiations.156

However, two years later many industrialized countries were perhaps more

willing to engage in multilateral negotiations with a development twist due to world

events.157

Officially, the Doha Development Agenda was so designated in order to

promote and address some of the issues most pertinent to developing countries.

Another objective was to correct the perception among many developing country

WTO Members that the preceding negotiation Rounds, including the UR, had all

reflected the trading agenda of industrialized countries alone.158

Therefore, in 2001,

the then Director General Mike Moore noted that, ―…there is a growing recognition

that implementation is central to our work. Developing countries have won. They

have succeeded in focusing the attention of all governments on the difficulties they

have faced in implementing our agreements. It is also clear that further efforts to

rebalance past agreements in any significant way will require new negotiations.‖159

Thus, the Doha Round was ostensibly an attempt to demonstrate the WTO‘s strong

commitment to development issues.160

156 JEFFERY SCHOTT, THE WTO AFTER SEATTLE IN THE WTO AFTER SEATTLE, 5 (Jeffrey Schott ed.,

Institute for International Economics, 2000). 157 For instance, the economic rise of China and India, increased terrorism around the world today and

the global economic recession. 158 Jennifer Clapp, Developing Countries and the WTO Agriculture Negotiations, Working Paper No. 6, The C.I.G.I. Working Paper Global Institutional Reform 1 (March 2006). 159 World Trade Organization, Doha WTO Ministerial 2001: Briefing Notes,

http://www.wto.org/english/thewto_e/minist_e/min01_e/brief_e/brief07_e.htm (last visited March 11,

2011). 160 Eugenia McGill, Poverty and Social Analysis of Trade Agreements: A More Coherent Approach?,

109

Furthermore, the DDA has been described as a constructive global response to

the 9/11 terrorist attacks on the US, which triggered the renewed determination to

eradicate poverty, and to promote economic development in the world‘s poorest

regions, with the hopes of curbing the spread of further fundamentalism around the

globe.161

In the build up to the Doha Ministerial meeting scheduled for November 2001,

tensions were high since the issues that had derailed the Seattle Ministerial meeting

remained unresolved. Moreover, the WTO released a controversial draft declaration

in October 2001, in advance of the Doha Ministerial meeting, which was met with

different reactions from WTO members. The draft sought to ―commit Members to

negotiations aimed at ―substantial improvements in market access‖ and ―reductions of,

with a view to phasing out, all forms of export subsidies, and substantial reductions in

trade-distorting domestic support.‖162

While most industrialized countries, with the exception of the EU, reluctantly

considered the draft to be a ―basis for discussions,‖ developing countries vehemently

decried its contents in the weeks preceding the much anticipated Doha Ministerial

meeting.163

Consequently, even prior to its commencement, agriculture in the Doha

Round was already causing agitation in several quarters on both sides of the economic

divide.

27 B.C. Int‘l & Comp. L. Rev. 371, 374 (2004). 161 See supra p. 68 (Looking back at the inception of the multilateral trading system post World War II,

one of the major reasons for establishing the system was to foster world peace through economic

prosperity). See also, Overseas Development Institute, The WTO Doha Round Impasse-Implications for Africa, ODI Briefing Paper 41 (September 2008). 162 World Trade Organization, draft Doha Declaration, WT/MIN(01)/DEC/W/1, available at

http://www.wto.org/english/thewto_e/minist_e/min01_e/min01_chair_speaking_e.htm 163 Released on October 12, 2001 by Mr. Stuart Harbinson, Agriculture Committee chairman at the

time.

110

Although the Doha Ministerial Declaration was eventually signed by WTO

Members on November 14, 2001 after a tough marathon negotiation, there remained a

number of loose ends regarding what precisely had been agreed as the actual scope of

the negotiations in the Round.164

The DDA covers 21 subjects in areas, such as

implementation, agriculture, services, industrial tariffs, subsidies, antidumping,

regional trade agreements and the environment.165

On the issue of development, many

developing countries and LDCs continued to challenge the substance of the

Declaration in terms of immediately identifiable progress in topical areas such as UR

implementation concerns. However, from the language of the Declaration, it is clear

that the DDA is according the development debate, and its ancillary concerns, with

more concrete recognition than any other previous Ministerial Declaration to date. Be

that as it may, while the inclusion of development issues marks a significant

achievement for developing countries, it has been noted that, again, the ―single

undertaking‖ format of the negotiations implies ab initio that developing countries

would also be required to make major concessions in other areas in order to achieve

their agriculture objectives in this Round.

In sum, the Doha mandate generated mixed reactions from WTO members and

stakeholders. While some believed that this mandate was definitely a step in the right

direction toward transforming the WTO into a more ―balanced‖ institution, catering to

164 World Trade Organization, Fourth Ministerial Conference held in November 2001 in Doha, Qatar

(herein after Doha Ministerial) 2001: Ministerial Declaration Paragraph 2, November 2001,

WT/MIN(01)/DEC/1 available at http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm 165 World Trade Organization, Doha Ministerial 2001: Ministerial Declaration Paragraph 2, November

2001, WT/MIN(01)/DEC/1 available at

http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm

111

the interests of all its members, others contended that the DDA did not go far enough

in addressing issues of particular interest to developing countries. Accordingly, the

Doha Declaration expressed WTO members‘ commitment to ―substantial

improvements in market access, the reduction of (with a view to phasing out) all forms

of export subsidies, and substantial reductions in trade-distorting domestic support.‖166

The Declaration also went further to note that special and differential treatment for

developing countries would form an integral part of the DDA agriculture

negotiations.167

Articles 13 and 14 of the Doha Declaration address the issue of

agriculture.168

Accordingly, Article 13 states inter alia:

…We recall the long-term objective referred to in the

Agreement to establish a fair and market-oriented trading

system through a programme of fundamental reform

encompassing strengthened rules and specific commitments

on support and protection in order to correct and prevent

restrictions and distortions in world agricultural markets. …

Substantial improvements in market access; reductions of,

with a view to phasing out, all forms of export subsidies;

and substantial reductions in trade-distorting domestic

support. We agree that special and differential treatment

for developing countries shall be an integral part of all

elements of the negotiations and shall be embodied in the

Schedules of concessions and commitments and as

appropriate in the rules and disciplines to be negotiated, so

as to be operationally effective and to enable developing

countries to effectively take account of their development

166 World Trade Organization, Doha Ministerial 2001: Ministerial Declaration Paragraph 2, November

2001, WT/MIN(01)/DEC/1 available at

http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm 167 World Trade Organization, Doha Ministerial 2001: Ministerial Declaration Paragraph 2, November

2001, WT/MIN(01)/DEC/1 available at http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm 168 World Trade Organization, Doha Ministerial 2001: Ministerial Declaration Paragraph 2, November

2001, WT/MIN(01)/DEC/1 available at

http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm

.

112

needs, including food security and rural development. We

take note of the non-trade concerns reflected in the

negotiation proposals submitted by Members and confirm

that non-trade concerns will be taken into account in the

negotiations as provided for in the Agreement on

Agriculture. (italics mine)

While Article 13 mimics Article 15.1 of the URAA in some respects, by expressly

stipulating that SDT should form an integral part of the negotiations and the

subsequently agreed upon rules, the Declaration has been interpreted by developing

countries as a firm commitment that Doha Round SDT commitments will be legally

enforceable, as opposed to the more aspirational language of the URAA.169

However,

due to the diverse range of interests within developing countries themselves, there is

until now no consensus as to the actual content of the provisions relating to special and

differential treatment in the Draft Modalities on Agriculture. The only agreed upon

common consensus pertains to the treatment of least-developed countries under the

rules. Some developing country members argue that the eligibility for proposed SDT

should be determined by objective economic criteria such as per capita income of

members,170

which aligns with developed country arguments regarding countries such

as South Korea.171

In addition, proposals about how best to incorporate important

non-trade concerns, such as food security, livelihood and poverty alleviation, rural

169Constantine Michalopoulos, The Role of Special and Differential Treatment for Developing

Countries in GATT and the World Trade Organization, World Bank Policy Research Working Paper

No. 2388 (July 2000), available at SSRN: http://ssrn.com/abstract=630760. (Industrialized Members

were expected to provide special and differential treatment, but in practice their commitments on

market access, preferential treatment, and technical assistance are not enforceable. Leaving it up to the

industrialized Members to decide which developing countries get preferential treatment invites extraneous considerations in determining who gets how much special treatment.) 170 WTO Committee on Agriculture Special Session TN/AG/6, 18 December 2002 p.3 171 No incentive for LDC countries to migrate to developing country status. Controversy regarding

countries such as Pakistan, which wanted to claim LDC status in order to enjoy the S&D treatment

accorded to those countries.

113

development, environmental protection, food safety and animal welfare also highlight

the differences between developing and developed countries on these issues. The

above issues continue to run throughout the different proposals put forward by various

developing and developed countries and coalitions.

In fact, since developing country interests are not always completely aligned,

perceptions of what constitutes ―fair‖ trade rules sometimes differ greatly. Due to the

complexity of the international trade system, differences emerge on several levels

among larger developing countries, such as Brazil, India and China (also known as

―middle‖ powers) because of the divergence in their primary trade interests.172

Smaller developing countries and LDCs also differ in specific areas of concern, such

as net food importing countries, Small Island and landlocked countries, and compete

against each other with respect to the current system of preferential trade. However,

in general, developing countries of all economic levels still understand the need for

fairness and continue to advocate equality in the international trade system.173

5.3 Conclusions

International trade negotiations are, in effect, cumulative because current and

future negotiations are intricately linked to the previous agreements and the historical

events of that era.174

Therefore, it follows that each multilateral trade Round builds on

172 These countries also have strong interests in other areas of trade such as manufacturing via non-agriculture market access (NAMA), services and intellectual property. 173 Amrita Narlikar, Fairness in International Trade Negotiations: Developing Countries in the GATT

and WTO, The World Economy 1005, 1006 (2006). 174 Alice Landau, Analyzing International Economic Negotiations: Towards a Synthesis of Approaches,

5 International Negotiation 1(2000).

114

the achievements or failures of the previous Round. WTO trade relations between

industrialized and developing countries, which typically have their roots in

confrontation and ideological debate, have shaped the current DDA negotiations.

Reviewing the Uruguay Round (UR) of multilateral trade negotiations, I discussed

some of the important changes that took place internationally leading up to the UR and

during the Round itself, contending that changes such as the ending of the cold war,

and the proliferation of bilateral trade agreements due to the increasing divergence of

interests between developing countries, affected the multilateral trading system.175

In

addition, I highlighted the agriculture negotiations under the UR and examined the

crucial role of the Cairns group, a cross-over coalition, in the negotiations.

This chapter has discussed some of the principal issues surrounding developing

country membership and participation in the GATT/WTO system in an attempt to lay

a solid foundation for the case study. Next, I consider each of the selected developing

country coalitions, describing their formation, membership and negotiation interests –

which directly reflect their tactical strategies in the DDA agriculture negotiation

process.

175 ALEJANDRO JARA, BARGAINING STRATEGIES OF DEVELOPING COUNTRIES IN THE URUGUAY ROUND,

IN THE DEVELOPING COUNTRIES IN WORLD TRADE: POLICIES AND BARGAINING STRATEGIES 11 (Diana

Tussie & David Glover eds., Lynne Rienner Publishers 1993).

115

CHAPTER 6

6.0 THE CASE STUDY COALITIONS

One of the primary objectives of the Doha Development Agenda (DDA) is to

promote more equitable trade rules for all WTO Members. Indeed, this goal was

clearly stated in the 2001 Doha Declaration adopted on November 14, 2001

inaugurating the Round.1 In essence, one of the ways in which the Doha Declaration

sought to address this issue was by acknowledging the tension among WTO Members

stemming from unresolved issues from the Uruguay Round– particularly between the

North/South divide. This was achieved by the Declaration expressly recognizing the

need to foster special and differential treatment (SDT) for developing countries.

At the time, it appeared that, in practice, some developing countries interpreted

this ―development agenda‖ to mean that developing countries would be exempt from

further trade obligations in the Round, while industrialized countries would be

required to concede to developing country SDT requests to redress inequities in the

Uruguay Round single-undertaking agreement. However, industrialized countries

rejected this position, which they claimed would negate the level of ambition reached

in the UR agreement. This initial conflict saw the DDA commence on an unsteady

note for the first two years of the Round. In response to this issue, developing

1 World Trade Organization, Doha Ministerial 2001: Ministerial Declaration Paragraph 2, November

2001, WT/MIN(01)/DEC/1 available at

http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm

116

countries formed an unprecedented number of bargaining coalitions by the Cancún

Ministerial Conference in 2003, as a means of pursuing their desired negotiation

outcomes in the present Round.

Moreover, among developing countries themselves lays a broad range of

divergent interests spanning the entire spectrum of the Doha negotiations.2 Within the

agriculture negotiations alone, some developing countries are export-led economies

and are, therefore, mainly interested in liberalizing agriculture trade rules for a freer

global market.3 Some countries are heavily dependent on imported food, and are thus

highly vulnerable to food price fluctuations on the world market,4 whereas others are

extremely cautious about exposing their poor farmers to global competition because of

the risk to livelihood security in their countries.5 Yet another further complication

with developing country agriculture interests stems from the issues of preferential

market access granted to certain developing countries (to the exclusion of others) by

industrialized countries.6 Figure 3 below depicts some of these competing interests

among developing country.

2 Per Interviewee 8 (―There is a division in the developing world. In the first group, some developing

countries understand the process, while in the second group, some countries (especially the new ones)

don‘t—the request from the second group is unrealistic so they will always complain. For example,

compare the bananas case (where there was balance for both sides) to the cotton case (where there must

be a solution or there will be no Round.)‖) 3 The Cairns group developing country members are known as ―confident‖ traders with ―offensive‖

interests. 4 Net food importing developing countries (NCIDCs) with food security concerns. 5 These are conservative countries, typically with a high population of poor farmers with ―defensive‖

interest in agriculture trade. 6 See supra p. 72 and note 35. (Trade preferences enjoyed by ACP countries with the EU has led to

acrimony with the Tropical products).

117

Figure 3 Market Access: Developing Country Alliances

Source: WTO External Relations Department January 2010

Before describing the Doha agriculture negotiations during the study period in

Chapter 7, first, I introduce each coalition below. In introducing and discussing the

selected coalitions, I will be focusing primarily on three aspects of each coalition

including: formation dynamics, membership dynamics, and group interests or issues.

While various other behavioral and structural variables may be selected for study, I

have opted to concentrate on these three areas because I believe these areas illuminate

the rationale behind the emergence of coalition strategy as the principal negotiation

strategy for developing countries in the Doha Round.

The objective of this chapter is to provide a profile analysis of each case study

coalition and ascertain its strategic drivers in the Doha Round agriculture negotiations.

118

The information presented in the descriptive analyses in this chapter and the remaining

chapters in this research are based on the qualitative data derived from 30 elite

interviews conducted with WTO trade diplomats and stakeholders, and the direct

observation of two WTO developing country coalition meetings. Furthermore, I have

relied on data obtained from a content analysis of WTO official documents comprising

coalition proposals, WTO Ministerial Declarations and the Draft Modalities on

Agriculture. This information provides us with an understanding of the political

economy of the Doha Round agriculture negotiations and how the four selected

coalitions evolved within this context.

Therefore, the current chapter discusses why the selected coalitions assumed

certain negotiation strategies in the Doha Round agriculture negotiations. In essence,

the underlying principle behind the formation of all developing country coalitions in

the Doha Round is identical – the developing country Members believed they could

achieve more of their desired negotiation outcomes by working together that they

would negotiating as individual WTO Members.

6.1 Cotton 4

6.1.1 Cotton 4 (C4) Background and Formation

Cotton is undoubtedly the most important natural fiber of the 20th century. The

crop enjoys significant attention from both developed and developing countries alike.7

7 The end of the Multifiber Arrangement (MFA) and the increased use of genetically modified (GM)

cotton have profoundly altered world cotton markets in recent years. The economic restructuring and

119

Over the past two decades, world cotton prices have fluctuated significantly, crashing

by more than 45% in 20048 due to the decline in cotton‘s market share in the textiles

industry, largely due to increased competition from oil-based synthetic fibers.9

However, today, cotton prices are currently at their highest levels since the US civil

war and have doubled in the last year alone.10

This increase in price is attributed

primarily to the effects of bad weather which has resulted in a global supply scarcity.11

Therefore, the US trade distorting policies in the area of cotton, comprising counter-

cyclical payments (CCP) made directly to cotton farmers in seasons with low prices

are unlikely to be utilized at present.12

Although the world‘s leading cotton producers are China, India and the United

States, the United States and West and Central African (WCA) countries dominate

global export trade in cotton, jointly accounting for approximately 50% of all raw

growth of China and India have been important as well. During the mid-2000s, world cotton

consumption grew at its fastest rate in decades, and world cotton trade has grown even faster. The

restructuring of world consumption and trade means that trade policies around the world are more

important to every country. The end of MFA import quotas has allowed the comparative advantage of

developing countries to increasingly drive world textile production and trade. See US Department of Agriculture (USDA) Economic Research Service, http://www.ers.usda.gov/Briefing/Cotton/trade.htm

(last visited March 11, 2011). 8 UNITED NATIONS FOOD AND AGRICULTURE ORGANIZATION (FAO), DECLINE IN NOMINAL PRICES FOR

SELECTED COMMODITIES, 1980-2000, IN THE STATE OF AGRICULTURAL COMMODITY MARKETS 21

(2004). 9 Oil-based fibers receive subsidies that fall outside the purview of the WTO and as a result enjoy a

competitive advantage over cotton and other natural fibers. 10 United Nations Conference on Trade and Development (UNCTAD), International Cotton Advisory

Committee http://www.unctad.org/infocomm/anglais/cotton/Doc/ICAC0111.pdf (last visited March

11, 2011). (During the first five months of 2010/11, commencing August 1, 2010, the Cotlook A Index

surged from 86 cents per pound at the start of the season, on August 2, 2010 to a record 186 cents per

pound on December 22, 2010). 11 United Nations Conference on Trade and Development (UNCTAD),

http://www.unctad.org/infocomm/anglais/cotton/Doc/ICAC0111.pdf (last visited March 11, 2011).

(Relatively low world stocks of cotton; limited supply, robust demand and a very low level of

uncommitted cotton caused the surge in prices in 2010/11). 12 US cotton farmers are given direct payments to augment their income during low price periods.

120

cotton exports.13

While the United States accounts for approximately 40%, WCA

countries account for 10% of world exports. African cotton production is dominated

by 14 former French colonies in West and Central Africa (WCA), an area known as

the ―Franc Zone.‖14

Cotton is the only cash crop for many of the region‘s farmers,15

accounting for 30% to 60% of all export earnings in the region and 5% to 10% of the

region‘s Gross Domestic Product (GDP).16

Thus, despite the WCA countries‘

relatively small percentage of world cotton production, the commodity is of crucial

importance to the region as a major economic driver. Therefore, while there is a wide

disparity between the two major cotton exporters for economic and geographical

reasons, this disparity was purportedly further exacerbated by the negative impact on

the West and Central African farmers as a result of the subsidies being paid to their

competitors in industrialized countries.

In 2002, the International Cotton Advisory Committee (ICAC) released a study

stating that 73% of world cotton production was subsidized, as opposed to 50% only

five years previously.17

ICAC went on to estimate that leading cotton-producing

countries – the US, China and EU – subsidized their domestic cotton production to the

13 Charles Hanrahan, The African Cotton Initiative and WTO Agriculture Negotiations, CRS Report for

Congress 2 (2004), available at http://www.nationalaglawcenter.org/assets/crs/RS21712.pdf

(The United States is the second largest producer of cotton, but is the world‘s largest exporter.

Marketing year 2003 exports are estimated at 2.9 million metric tons and account for 41% of world

cotton exports. The WCA region is the third largest producer, accounting for5%of world cotton

production and the second largest exporter, accounting for 12% of world cotton exports. Uzbekistan is

the third largest exporter with about 10% of world exports. China, the world‘s largest cotton producer,

is also the world‘s largest importer of raw cotton). See Appendix II. 14 Benin, Burkina Faso, Cameroon, Chad, Central African Republic, Congo, Cote d‘Ivoire, Equatorial

Guinea, Gabon, Guinea-Bissau, Mali, Senegal, Togo and Niger.) 15 Over 2 million farmers in the region produce cotton. 16 World Trade Organization, WTO Negotiations on Agriculture Poverty Reduction: Sectoral Initiative

in Favour of Cotton, paragraph 1, 1 TN/AG/GEN/4; United States Department for Agriculture (USDA)

Economic Research Service. http://www.ers.usda.gov/Briefing/Cotton/trade.htm (last visited March 11,

2011). 17 See infra p. 227

121

tune of US $6 billion from 2001 to 2002, with over half of that amount going to US

cotton farmers.18

As a result the US share of global cotton exports increased from

17% in 1998 to 42% by 2003.19

During this same period, tensions surrounding the contested cotton subsidies

eventually resulted in Brazil instituting a dispute against the United States before the

WTO Dispute Settlement Body in March 2003. In September 2002, the government

of Brazil requested consultations with the United States government, pursuant to

Article 4 of the WTO Dispute Settlement Understanding (DSU), regarding allegedly

illegal subsidies to US upland cotton.20

However, in March 2003, after a series of

deliberations between the parties, the issue remained unresolved and Brazil requested

the establishment of a dispute settlement panel by the WTO Dispute Settlement Body

(DSB).21

Although Brazilian farmers produce cotton, in actual fact, the country is not a

major producer or exporter of the crop. However, Brazil appeared to have made a

strategic decision to challenge the US over the cotton subsidies (as well as the EU over

sugar subsidies – an area in which the country does have important trade interests),

18 See infra p. 227-28. 19Oxfam International, Finding the Moral Fiber: Why Reform is Urgently Needed for a Fair Cotton

Trade, Oxfam Briefing Paper 69 (October 2004), available at

http://www.oxfam.org.uk/resources/policy/trade/downloads/bp69_cotton.pdf ; Romain Benicchio, The

WTO ruling on the Brazil-US cotton dispute: What Implications? The White Paper on Cotton 35

http://www.tlc.gov.co/econtent/Documentos/Publicaciones/WhiteCotton.pdf (last visited April 20, 2007). 20 World Trade Organization, WT/DS267/1; G/L/571; G/SCM/D49/1; G/AG/GEN/54 3 October 2002 21 World Trade Organization, DS276,

http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htm

(last visited March 11, 2011).

122

perhaps to gain political leverage in the DDA negotiations in a tactical calculation that

has been referred to as ―negotiation through litigation‖22

The specific measures being called into question were the US agricultural

domestic support measures; export credit guarantees; and other measures, which

Brazil claimed were export and domestic content subsidies in breach of the provisions

of the Agreement on Agriculture. Thereafter, several third parties registered an

interest in the case.23

Still, no WCA cotton-producing country joined Brazil as a party

to the dispute against the US despite Brazil‘s best efforts to get these countries on

board.24 The issues surrounding the non-participation of African countries in the WTO

dispute settlement process have been discussed extensively by this author elsewhere.25

However, suffice it to say that capacity issues as well as political constraints may have

contributed to the WCA cotton producers‘ lethargy in joining the adjudication process.

Rather, the WCA countries appeared to prefer other methods of addressing the

problem, which soon became evident from their actions. However, eventually, two

WCA cotton producers, Benin and Chad, joined the dispute as third parties (interested

observers) to the dispute.

In September 2004, the Panel finally issued its report, after having requested

additional time due to the complexity of the case. The report was substantially in

22

CHARAN DEVEREAUX ET AL, CASE STUDIES IN US TRADE NEGOTIATION VOL. 2: RESOLVING DISPUTES

238 (INSTITUTE FOR INTERNATIONAL ECONOMICS 2006). 23 Argentina; Australia; Benin; Canada; Chad; China; Chinese Taipei; European Communities; India;

New Zealand; Pakistan; Paraguay; Venezuela; Japan; Thailand. 24 Olajumoke Oduwole, West Africa‘s Participation in WTO Dispute Settlement: The ―Cotton 4‖ and

The US-Upland Cotton Dispute (May 2007) (J.S.M. thesis Stanford University). (stating that free riders are able to deflect the various costs associated with WTO adjudication [in this case negotiation], and yet

remain in a position to enjoy the systemic effects of favorable panel decisions due to the most-favored

nation principle (MFN). 25 See Olajumoke Oduwole, West Africa‘s Participation in WTO Dispute Settlement: The ―Cotton 4‖

and The US-Upland Cotton Dispute (May 2007) (J.S.M. thesis Stanford University).

123

Brazil‘s favor. In summary, the Panel found that the United States was utilizing illegal

subsidies for producers, users, and exporters of US upland cotton, in direct violation of

its WTO obligations.26

In response, the United States challenged the Panel‘s decision

and in March 2005, the Appellate Body issued its report, upholding the majority of the

Panel‘s findings. Unsurprisingly, the report was adopted by the WTO contracting

parties later that month.27

The Panel found that Article 13 of the URAA, often

referred to as the ―Peace Clause,‖ which permits the use of certain domestic support

measures, did not apply to the domestic support measures currently in question for

upland cotton.28

The Panel further found that the US export credit guarantee programs as well

as the notorious ―step 2‖ payments to US domestic users of upland cotton were import

substitution subsidies and export subsidies within the purview of the Agreement on

Subsidies and Countervailing Measures (ASCM).29

Therefore, these policies violated

US obligations under GATT,30

and the Panel concluded that these prohibited US

subsidies31

should be withdrawn immediately.32

Finally, the Panel found that

subsidies proven to have significantly suppressed prices within the meaning of Article

26 World Trade Organization, US-Upland Cotton Dispute DS267

http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htm (last visited March 11, 2011). 27 The WTO Appellate Body decision was adopted on March 21, 2005. 28 Furthermore, under the terms of Uruguay Round Agriculture Agreement (URAA), the Peace Clause

expired in 2003. 29 CHARAN DEVEREAUX ET AL, CASE STUDIES IN US TRADE NEGOTIATION VOL. 2: RESOLVING

DISPUTES 267 (INSTITUTE FOR INTERNATIONAL ECONOMICS 2006). 30 Agreement on Subsidies and Countervailing Measures (ASCM) Art 3.1 (a) and (b), Art 3.2; AA Art

9.1 (a), Art 10.1. See World Trade Organization Analytical Index , available at

http://www.wto.org/english/docs_e/legal_e/24-scm_01_e.htm 31 Specifically, the marketing loan program payments, step 2 (user marketing) payments, market loss

assistance payments, and counter-cyclical payments. The Panel found that US programs supporting

production flexibility and crop insurance did not affect Brazil‘s interests, since the link between these

payments and price suppression was not established. 32 Within six months of the adoption of the Panel report or by July 1, 2005.

124

6.3(c) of the ASCM, thereby seriously prejudicing Brazil‘s interests, and should be

reversed.33

In October 2006, Brazil and the United States both requested the

establishment of a compliance panel, which was granted by the DSB. 34

The Panel

report was delivered in December 2007, and was again substantively in Brazil‘s

favor.35

The US-Upland Cotton dispute marked the first (and only) instance in which a

developing country has challenged a developed country‘s protectionist measures

regarding cotton utilizing the dispute settlement mechanism. As the Cotton issue

continued to receive unprecedented attention from the international media, the Cotton-

4 came into existence in May 2003 when four of the West African cotton-producing

countries – Benin, Burkina Faso, Chad, Mali –formed a coalition solely dedicated to

the plight of their poor cotton farmers resulting from the effect of contested cotton

subsidies on the global cotton market. The group became increasingly vocal in their

demands for fair trade in cotton on behalf of the entire region. The Cotton-4 presented

its first proposal in May 2003.

The Cotton Initiative describes the damage that the contested industrialized

country cotton subsidies cause the WCA cotton farmers, calling for their immediate

elimination and also clamors for adequate compensation to be paid to affected WCA

33 World Trade Organization,

http://www.wto.org/english/tratop_e/dispu_e/cases_e/1pagesum_e/ds267sum_e.pdf (last visited March

11, 2011). 34 Brazil had earlier requested the DSB to constitute a compliance panel in August 2006, but the request

was denied. 35 World Trade Organization, http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htm (last

visited March 11, 2011).

125

countries while phasing out the illegal subsidies.36 In response, the United States

Trade Representative (USTR) put up a spirited defense on this issue and maintains that

US trade policies on cotton do not harm Africa.37 Rather, the USTR contended that

the C4 problem is much larger than US subsidies.38

According to one interviewee,

―C4 farmers are still in trouble because they have not invested in infrastructure. (The)

2008 world price increased when the US decreased (cotton) acreage and went into

corn and soy-beans, Australia had a drought – yet C4 farmers didn‘t benefit at all from

the increased prices. Negating factors include bad financing, predatory groups, no

competition, government interference, evil middle men. The farmers suffer.‖39

Some industrialize countries have also insinuated that the NGO assistance that

the coalition receives, which forms the basis of its proposals, is subjective in nature

and may have a hidden non-liberalization agenda.40

6.1.2 Cotton 4 Membership Dynamics

Below is a tabular representation of the Cotton 4‘s broad agriculture trade

statistics.

36

SALLY BADEN ET AL., WHITE GOLD TURNS TO DUST: WHICH WAY FORWARD FOR COTTON IN WEST

AFRICA, 6 (OXFAM INTERNATIONAL 2004). 37 Office of the United States Trade Representative, Dispelling Myths about US Support to Cotton

Farmers, Issued by the Office of the United States Trade Representative (September, 2004), available at

http://ustraderep.gov/assets/Document_Library/Fact_Sheets/2004/asset_upload_file784_6153.pdf

(Arguing that US Programs Have Not Caused Low Cotton Prices and Hurt Foreign Growers). 38 The US says the subsidy is not the issue for C4 type farmers – that the processing middlemen, trading

structure are the problem even the developed country small farmers complain c.f. this is exactly why the

inefficient markets subsidize to avoid strain. 39 Per Interviewee 15 40 Per Interviewee 13

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Table 4 Cotton 4 Agriculture Trade Statistics41

Member

Country

Year Joined

GATT/WTO

GDP

(USD)

Agriculture

% of GDP

Country

Population

Agriculture

Population

Other Group

Memberships

1. Benin 1963/1996 $6.68B 32% 8.66

Million

4 Million ACP, Africa

Group, G-90,

LDCs, G-33

2. Burkina

Faso

1963/1995 $7.95B 33.3% 15.23

Million

14 Million ACP, Africa

Group, G-90,

LDCs

3. Chad 1963/1996 $8.40B 13.6% 10.91

Million

7.4 Million ACP, Africa

Group, G-90,

LDCs

4. Mali 1993/1995 $8.74B 36.5% 12.70

Million

9.6 Million ACP, Africa

Group, G-90,

LDCs

The Cotton 4 is a small, tightly-knit, issue-based alliance. The four coalition

members - Benin, Burkina Faso, Chad, Mali - share a number of common features.

All four countries are West African countries, with a similar history as former French

colonies. In addition, they are all least-developed countries and share identical

interests in cotton as a major economic driver in their countries. Moreover, although

only these four Franc Zone countries took this proactive step against the contested

subsidies, the group enjoys the backing of all CWA cotton producers, all LDCs, all

members of the African Group and all Africa, Caribbean and Pacific Group (ACP)

members.

Therefore, this coalition can be termed ―highly homogeneous‖ in its

composition. In practice, Burkina Faso has emerged as the group‘s coordinator by

virtue of the fact that it is the largest cotton producer among the four countries.

Because this coalition is small, with identical interests, there are no divergent interests

41 Sources: World Bank, World Development Indicators, July 26, 2010; http://databank.worldbank.org/;

World Trade Organization, http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm; United

Nations Food and Agriculture Organization (FAO) http://www.fao.org/.

.

127

within the group, despite the fact that two members – Benin and Chad – joined the

Brazilian cotton case as third parties, (Benin is also a member of G-33 while the other

three coalition members are not).

6.1.3 Cotton 4 Positions and Proposals42

The Cotton-4 presented its first proposal, “Poverty Reduction: Sectoral

Initiative in Favor of Cotton”43

on May 16, 2003 and then again at the 5th WTO

Ministerial meeting held at Cancún, Mexico in September 2003.44

The proposal

consisted of an eight-page document presented at a WTO Committee on Agriculture

Special Session as a joint proposal by Benin, Burkina Faso, Chad and Mali to WTO

negotiations on agriculture.45

The Cotton Initiative was divided into three parts—a

summary section, the context of the issue, and the proposal. Specifically, Cotton-4

called for the complete phase-out of support measures for the production and export of

cotton. Drawing particular attention to the effect of these contested subsidies on

global markets, the group emphasized the need for WTO members to recognize the

strategic importance of cotton to the Franc Zone, based on the negative impact the

contested subsidies continue to have on the affected nations‘ development policies and

poverty eradication programs.

42 Appendix I contains the Cotton 4 proposals and position papers. 43World Trade Organization, TN/AG/GEN/4, May 16, 2003. Joint proposal by Benin, Burkina Faso, Chad and Mali, [hereinafter Cotton Initiative]. 44 World Trade Organization, WT/MIN(03)/W/2/Add.1 and WT/MIN(03)/W/2. The proposal became a

Cancún Ministerial Conference document at this time. 45 World Trade Organization, WT/MIN(03)/W/2/Add.1 and WT/MIN(03)/W/2. The proposal became a

Cancún Ministerial Conference document at this time.

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In essence, the Cotton Initiative proposed that there be an urgent solution in the

form of an emergency measure in favor of cotton-producing LDCs. The proposed

emergency measure was to implement a mechanism for phasing out each type of

support for cotton production and export—to take effect immediately at the upcoming

Ministerial meeting in September 2003—with a specified conclusion date. 46

Calling

for the establishment of a mechanism to phase out support for cotton production with a

view to its total elimination as an "early harvest" item in the Cancún Ministerial

meeting47

and transitional measures in the form of financial compensation for cotton

producing LDCs to offset their loss of revenue, until support for cotton production has

been completely phased out. The proposal also stated the group‘s commitment to the

issue of ―special products‖ (SP) for all developing countries.

Furthermore, in August 2003, the Cotton-4 released another proposal detailing

the implementation modalities for the elimination of the contested subsidies.48

The

group sought the establishment of an immediate mechanism to phase-out cotton

support and requested an extra-judicial remedy in the proposal.49

This request took

the form of a call for financial compensation for cotton-producing LDCs during the

phase-out period.50

In April 2005, the Cotton-4 released yet another position paper lamenting the

fact that the plight of the WCA cotton farmers remained unchanged –two years after

46 See infra p.227 (Cotton Initiative, Paragraph 36 p.6) 47 WTO fifth Ministerial Meeting held at Cancún, Mexico in September 2003. [hereinafter Cancún

Ministerial]. An early harvest is the concept of new rules taking effect before the conclusion of the

Round. 48 World Trade Organization, Poverty Reduction: Sectoral Initiative in Favour of Cotton, Proposal on

Implementation Modalities, Joint Proposal by Benin, Burkina Faso, Chad and Mali, TN/AG/GEN/6,

August 4, 2003. 49 See infra p.227 (Cotton Initiative, Paragraph 3). 50 See infra p.227 (Cotton Initiative, Paragraph s 10-15).

129

the submission of the Cotton Initiative.51

The document reiterated the group‘s position

as adopted by the July 2004 Framework and reaffirmed the coalition‘s determination

to work towards the successful resolution of the cotton issue in the upcoming Hong

Kong Ministerial Conference.

In 2006 C4 submitted two technical proposals on the level of reduction of

domestic support for cotton.52

Basing the proposals on the July 2004 Framework and

the 2005 Hong Kong Ministerial respectively, the group linked the reduction in cotton

in mathematical terms to whatever general reduction is agreed to by WTO Members.

In addition, the group has released Cotton 4 Declarations reiterations their position on

the issue every two years on average.53

The Cotton 4 is a small, single-issue coalition with a highly homogeneous

membership composition. C4 members have identical interests on the cotton issue and

also share several similarities in their country profiles. The group appears to rely on

moral suasion as its primary negotiation strategy. With the help of international

media, the C4 has attempted to ―name and shame‖ industrialized countries into

changing their cotton trade policies, and has received significant traction and attention

with the deployment of this strategy. Although the cotton section of the 2008 Revised

Draft Modalities on Agriculture basically reflects the C4 position at present,

insufficient movement by the US on the issue leaves much uncertainty about any real

51 World Trade Organization, TN/AG/SCC/GEN/1, April 1, 2005. 52 World Trade Organization, TN/AG/GEN/12; TN/AG/SCC/GEN/3, February 16, 2006 (Proposed

Elements of the Reduction Formula for Domestic Support for Cotton); and TN/AG/SCC/GEN/4, March

1, 2006 (Proposed Modalities for Cotton under the Mandate of the Hong Kong Ministerial Decision). 53 See infra pp. 227-44. (Appendix I contains the C4 Proposals and Position papers).

130

progress on this issue, despite the C4‘s moral high ground.54

On the other hand, the

EU, for example, has already undertaken major changes to its Common Agricultural

Policy (CAP) since 1992 when the MacSharry reforms were implemented.55

Therefore, under CAP, payments originally notified in the ―blue box‖ (related to

supply control) have gradually been changed until, in their present form, they are

unrelated to current production or price levels and can satisfy the criteria for the

―green box.‖ As a result, the EU has much more latitude to negotiate reductions in the

allowable trade-distorting support. 56

The C4 has also been the beneficiary of technical support from NGOs and has

issued technical proposals on the cotton issue during the course of the DDA

agriculture negotiations. Of the four coalitions under review, C4 is utilizing the most

normative strategy, appealing to the moral suasion of all WTO Members and the

international community at large for its cause. While this strategy has earned the

cotton issue a much-coveted place at the negotiation table, it remains to be seen

whether the group will succeed in attaining its negotiation goals. The coalition enjoys

54 Per interviewee 16 55 Timothy Josling & Alan Swinbank, European Union: Shadow WTO Agricultural Domestic Support

Notifications, Discussion Paper 00809 Markets, Trade and Institutions Division, International Food

Policy Research Institute (IFPRI) (IFPRI 2008), available at

http://www.ifpri.org/sites/default/files/publications/ifpridp00809.pdf . 56 Timothy Josling & Alan Swinbank, European Union: Shadow WTO Agricultural Domestic Support

Notifications, Discussion Paper 00809 Markets, Trade and Institutions Division, International Food

Policy Research Institute (IFPRI) (IFPRI 2008), available at

http://www.ifpri.org/sites/default/files/publications/ifpridp00809.pdf .

Timothy Josling & Alan Swinbank, European Union: Shadow WTO Agricultural Domestic Support

Notifications, Discussion Paper 00809 Markets, Trade and Institutions Division, International Food

Policy Research Institute (IFPRI) (IFPRI 2008), available at

http://www.ifpri.org/sites/default/files/publications/ifpridp00809.pdf .

131

the overwhelming support of all developing country coalitions, including G-20, G-33,

and G-90.

6.2 G-20

6.2.1 G-20 Background and Formation

Developing countries increased participation in the Doha Round launched in 2001

against the backdrop of the 9/11 US terrorist attacks based on: 1) the need for reform

and further participation by developing countries in the negotiation of WTO rules, and

2) the experience of developing countries in negotiating the previous Round (UR),

which substantively incorporated agriculture trade rules in the negotiations for the first

time. As such, developing countries considered the new Round an opportunity to

review all the liberal trade rules reforms initiated in the 1990s to bring a ―development

component‖ into the system in an attempt to shape the rules for free as well as fair

trade.57

Despite the achievements of the URAA, most WTO Members believed that

agriculture trade rules still lagged behind compared to other sectors. Some developing

country Members have gone as far as to categorize the URAA negotiations as a ―bad

experience‖ in the Uruguay Round, which resulted in imposed rules on the developing

countries as well as the trauma that resulted from that round.58

As a result, at this time

57 Per Interviewee 10 58 Per Interviewee 10

132

the negotiation atmosphere remained tense due to the lingering implementation issues

from the UR and disenchantment from several quarters among the WTO Membership.

By 2003, during the build up to the WTO Ministerial meeting scheduled to

take place later that year, developing countries noticed a repeating negotiating pattern

among industrialized countries. For instance, ―the US was defensive on domestic

support but also wanted market access abroad (offensive), so they were offering

minimum possible changes but asking developing countries to open up—which would

have been a repeat of UR.‖59

The situation was further exacerbated by August 2003

when at the instance of the WTO Members, the US and the EU presented a joint

proposal essentially codifying their own internal interests in agriculture.60

The

developing countries were scandalized by this cosmetic arrangement to manipulate the

approaching Ministerial meeting to the industrialized countries‘ favor, and they

quickly came together as G-20 expressly for the purpose of blocking this US-EU

agenda.61

Thus, the G-20 agriculture coalition nucleus was formed in Geneva in these

preparatory meetings for the Cancún Ministerial meeting and formally crystallized

into a developing country bargaining coalition on August 20, 2003 largely at the

instigation of Brazil.62

(Note that the G-20 agricultural coalition currently under

review is completely distinct from the G20 group of finance ministers and central bank

59 Per Interviewee 10 60World Trade Organization, JOB(03)/157 (restricted), 13 August 2003 61 Per Interviewee 2, per Interviewee 3 62 The date of inception of the group is apparently also one of the rationales behind the group‘s name

―G-20,‖ since there are now 23 members in the group.

133

governors which meet periodically over the global economy).63

With this blocking mission in mind, the developing country members of the

Cairns Group formed the core of the new coalition. Not wanting a repeat performance

of the Uruguay Round negotiation experience, the group excluded the industrialized

country members of Cairns Group (Australia, New Zealand and Canada) from the G-

20 because of the perceived reluctance of these countries to openly challenge the July

2003 US-EU framework proposal.64

While its precursor, the Cairns Group was a

cross-over coalition of exporters seeking liberalization in international agriculture

trade rules, the G-20 consists of developing countries exclusively and the group‘s

members have both liberal and conservative trade interests.

Brazil, primarily with the support of India, China, Argentina and South Africa,

convinced several other smaller developing countries to join them in resisting the US-

EU framework. Although it was an informal group at the time of its inception, the

idea gained momentum quickly because developing countries perceived the stakes to

be high by. 65

These countries believed that if the US-EU proposal succeeded in its

agenda setting objective, their agenda could account for as much as 80% of the DDA

agriculture rules.66

Therefore, even some industrialized countries such as Switzerland

and Japan and the other Cairns group members (Canada, Australia and New Zealand)

63 The G20 (finance) - a Group of 20 Finance Ministers and Central Bank Governors was established in

1999 to bring together systemically important industrialized and developing economies to discuss key

issues in the global economy. The G20 (finance) is the premier forum for our international economic

development that promotes open and constructive discussion between industrial and emerging-market

countries on key issues related to global economic stability. By contributing to strengthening the

international financial architecture and providing opportunities for dialogue on national policies, international co-operation, and international financial institutions, the G20 (finance) helps to support

growth and development across the globe. http://www.g20.org/index.aspx 64 Per Interviewee 10 65 Per Interviewee 10 66 Per Interviewee 6

134

passively supported the group because of their own interests in seeing the US-EU

proposal fail.67

The G-20 has since defined itself as a ―coalition of developing countries

pressing for ambitious reforms of agriculture in developed countries with some

flexibility for developing countries.‖68

Accordingly, G-20 stands for the objectives of

liberalizing the agricultural sector of international trade and remains dedicated to these

objectives and firmly believes that developing countries must garner collective

strength if they are to succeed in their negotiation objectives – particularly, ―breaking

the monopoly of market access impeding development of developing countries.‖69

Interestingly, the role of this coalition during the course of the negotiations has

become a barometer for ―balance‖ in the negotiations. As a result, G-20 positions

have become one of the major reference points for the DDA negotiations today.70

6.2.2 G-20 Membership Dynamics

Below is a tabular representation of the G-20‘s broad agriculture trade

statistics.

67 Per Interviewee 6 68 G-20, http://www.g-20.mre.gov.br (last visited January 2010). 69 Per Interviewee 17 70 Per Interviewee 4

135

Table 5 G-20 Agriculture Trade Statistics71

Member

Country

Year Joined

GATT/WTO

GDP

(USD)

Agriculture

% of GDP

Country Population

Agriculture

Population

Other Group

Memberships

1. Argentina 1967/1995 $328.46B 9.84% 30.8

Million

3.1 Million Cairns Group

2. Bolivia 1990/1995 $16.67B 13.5% 9.6 Million 3.9 Million Cairns Group

3. Brazil 1948/1995 $1.57T 6.7% 191.9

million

22.4 Million Cairns Group

4. Chile 1949/1995 $169.45B 3.9% 16.8

Million

2.3 Million Cairns Group

5. China 2001 $4.32T 11.3% 1.32 Billion 833.9

Million

G-33

6. Cuba72 1948/1995 6.4% 11.2 Million

1.5 Million G-33, G-90, ACP

7. Ecuador 1996 $54.68B 6.6% 13.4

Million

2.8 Million

8. Egypt 1970/1995 $162.28B 13.2% 81.5

Million

23.8 Million G-90, Africa

Group

9. Guatemala 1991/1995 $38.98B 11.6% 13.6

Million

5.8 Million Cairns Group

10. India 1948/1995 $1.15T 17.5% 1.13 Billion 582.5

Million

G-33

11. Indonesia 1950/1995 $510.73B 14.4% 227.3

Million

87.8 Million Cairns Group,

G-33

12. Mexico 1986/1995 $1.08T 3.77% 106.3

Million

20.6 Million

13. Nigeria 1960/1995 $207.11B 32.7% 151.2

Million

39.9 Million G-33, ACP, G-

90, African

Group

14. Pakistan 1948/1995 164.53B 20.4% 166.1

Million

77.1 Million Cairns Group,

G-33

15. Paraguay 1994/1995 $15.97B 20.2% 6.2 Million 1.9 Million Cairns Group

16. Peru 1951/1995 $129.10B 7.23% 28.8

Million

7.1 Million Cairns Group,

G-33

17. Philippines 1979/1995 $166.90B 14.9% 90.3

Million

31.3 Million Cairns Group,

G-33

18. South

Africa

1948/1995 $270.44B 3.33% 48.7

Million

5.2 Million Cairns Group,

ACP, G-90,

African Group

19. Tanzania73 1961/1995 $20.49B 45.3% 42.2

Million

G-33, LDCs,

G-90, ACP, African Group

20. Thailand 1982/1995 $272.42B 11.6% 67.3

Million

28.7 Million Cairns Group

21. Uruguay 1953/1995 $32.18B 10.8% 3.3 Million 340,000 Cairns Group

71 Sources: World Bank, World Development Indicators, July 26, 2010; http://databank.worldbank.org/;

World Trade Organization, http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm; United

Nations Food and Agriculture Organization (FAO) http://www.fao.org/. (where available). 72 The data for GDP of Cuba was not available on the World Bank website. 73 Agricultural Population for Tanzania was not available on the FAO website.

136

22. Venezuela 1990/1995 $314.15B 4.02% 27.9

Million

1.8 Million G-33

23. Zimbabwe 1948/1995 $3.41B 19.1% 12.4

Million

7.2 Million G-33, ACP, G-

90, African

Group

The G-20 is a highly heterogeneous group of developing countries, with

divergent interests. The group is led by Brazil and India, and its membership

comprises several other important developing countries such as China, Argentina, and

South Africa. Thus, G-20 members have offensive and defensive agriculture trade

interests, yet these countries realized that it is better to work as a group than

individually.74

Importantly, the fact that China, India, Brazil and Mexico – the four largest

developing countries by far – are all active in G-20 despite their very different trade

profiles and interests, both in agriculture and in other areas, is remarkable.75

While

Brazil is a leading developing country with heightened interest in agriculture exports,

India is a leading developing country with a strong commitment to defensive interests

in the sector. This unique collaboration was built on the foundation of the IBSA

coalition (India, Brazil and South Africa), which had materialized earlier in 2003.76

IBSA is a group of emerging economies focused on developing country convergence

in agriculture as well as other key areas, such as trade in services, non-tariff barriers

74 Per Interviewee 16, Interviewee 1 75 With GDPs over 1 trillion each these countries are actually emerging economies or countries in

transition. 76 Formed on the sidelines at the 2003 Evian Summit of G8 countries, the group was later formalized by

the Brasilia Declaration in Brasilia, Brazil in June 2003. http://www2.mre.gov.br/dibas/; IBSA

http://www.ibsa-trilateral.org/; G-8 http://www.g8.fr/evian/english/ (last visited March 11, 2011).

137

(NTBs) to trade and intellectual property rights (IPR), alternate sources of technology

and energy security.77

In addition, with the accession of China into the WTO in 2001, the group was

further strengthened by China‘s membership. Typically low-key in the WTO, China

has been a discreet but firm supporter of rebalancing agriculture trade rules in favor of

developing countries due to its own high population of rural farmers.78

China is the

largest and most competitive developing country economy and is currently the second

largest economy in the world after the United States.79

Although China‘s economy

depends principally on industry and services, with agriculture accounting for only

about 10% of GDP, the country‘s membership in G-20 gives significant economic

weight to the coalition.

While the G-20 has only 23 members, the group accounts for 60% of the

world's population, 70% of the world‘s farmers and 26% of global agricultural

exports.80

―G-20 (as a group) would not have achieved this status if (member

countries) were acting individually; they now have fundamentally changed the

geopolitics of the agriculture negotiations.‖81

As a tactical move, Brazil decided to focus on South-South relations,

cultivating developing country relationships and instigating important disputes against

the US (cotton) and the EU (sugar) to attain a position of strength in the negotiations.

As the G-20 coordinator, Brazil has invested a lot of political will into ensuring that

77 Debashi Chakraborty & Dipankar Sengupta, IBSAC (India, Brazil, South Africa, China): A Potential

Developing Country Coalition in WTO Negotiations, CHS Occasional Paper No. 18, French Research Institute in India 15 (2006). 78 Per Interviewee 15 79 China is currently the world‘s largest exporter and second largest importer after the United States. 80 G-20, http://www.g-20.mre.gov.br 81 Per Interviewee 10

138

the group remains cohesive and relevant in the DDA agriculture negotiations by

engaging group members with integrity.82

These leadership efforts on the part of the

larger developing countries appear to be reaping benefits in the Doha Round

coalitions, in general, as the occurrence of fragmentation has been minimal within the

group.83

Internally, the negotiation dynamics within the group have been simplified by

a position whereby members concede to the lowest common denominator or lowest

common ground of the group on any given issue. However, the internal negotiations

are extremely difficult.84

For instance, G-20‘s position is diametrically opposed to

ACP‘s position because of the preferential access from EU, yet G-20 has some ACP

countries as members85

Furthermore, in order to maintain cohesion, G-20 does not expressly discuss

SPs and SSM as a group because of the divergent interests within the coalition on this

highly sensitive issue. In fact, some of the coalition members have both offensive as

well as defensive interests within their domestic constituents. Therefore, the group

members have compromised internally, and G-20 remains silent on the issue for the

most part.86

Thus, such controversial issues are taken up by members via other means

in the negotiation.

According to group members, decisions are made by consensus and

compromise within the group is achieved by dialogue. Individual country interests are

82 Per Interviewee 10 83 Previous or fluctuating G-20 members have included: Colombia, Costa Rica, Ecuador, El Salvador,

Peru and Turkey. (Ecuador and Peru rejoined the group). 84 Per Interviewee 10 85 Per Interviewee 2 86 Per Interviewees 4, 1 and 12.

139

presented to the group and an attempt is made to accommodate them, whenever

possible, into the group position.87

―Members address differences by agreeing to

disagree, but maintain a unified front because of the agreed importance of the

coalition. The importance of the coalition aided compromise; the mutual goals against

US-EU overriding developing countries. Cooperation was key. Strong leadership

from Brazil and the technical education of members have helped a great deal.‖88

Smaller countries also have a voice because of the consensus process.89

They

too are able to address the group and table their views.90

Smaller countries are also

very well represented within the G-20. Bolivia, Guatemala, Uruguay, all with

different individual interests were able to present their views, for instance on tropical

products.91

Moreover, although countries as small as Tanzania can technically block

decisions within the group (because decisions are made by consensus), these countries

do not do so, despite their own present circumstances. For instance as NFIDC

members, because they are aware of the systemic benefits that G-20 can bring to WTO

rules for all developing countries as a whole.92

Rather, the technical discussions

improve the members‘ understanding of issues and equip members to formulate

proposals to address their individual concerns.

Likewise, although Ecuador or Guatemala have tropical products interests in

direct conflict with ACP interests of countries, such as Tanzania and Zimbabwe,

members co-exist and manage to negotiate to have their issues incorporated into the

87 Per Interviewee 1 88 Per Interviewee 1 89 Per Interviewee 3 90 Per Interviewee 1 91 Per Interviewee 7 92 Per Interviewee 2

140

G-20 declarations, which is an important step. G-20 members genuinely appear to

believe their positions are addressed by the coalition.93

This position was expressed

despite the fact that larger developing countries – the BRIC countries94

–wield

significant economic weight when they insert themselves into coalitions; yet, the

leadership of the coalitions, though sometimes smaller economies are still able to steer

the group‘s positions and proposals in desired directions.95

Therefore, the G-20 is considered particularly important across the board

because of the technical contributions of the group which have been accepted into the

Draft Modalities on Agriculture; not just the political statements of the group as well

as the coalition‘s emphasis on gradual change.96

The G-20 stresses the importance of

balance in the negotiations and that concessions here will affect other areas of the

negotiations.97

As a result, today, 80% or more of the December 2008 Revised Draft

Modalities on Agriculture is based on the G-20 proposals.98

The only major area that

G-20 members expressly disagree over is SSM – which is, therefore, essentially

excluded from the G-20‘s formal group position.99

Thus, being an extremely heterogeneous group of countries, when the G-20 is

able to compromise and reach an internal position, it has been seen as symbolic of

what can be achieved on a broader level in WTO.100

The group has, therefore, been

93 Per interviewee 10 94 Another acronym for Brazil, India, and China. 95 Per Interviewee 21 96 Per Interviewee 5 97 Per Interviewee 15 98 The G-20 was instrumental in the tiered formula creation in the current Revised Draft Agriculture

Modalities. 99 Per Interviewee 8 100 Per Interviewee 10

141

portrayed as an example of how developing countries can influence the WTO

negotiation process, particularly in this Round which is a development Round.101

However, although the G-20 is known for making astute and firm interventions

in the DDA agriculture negotiations, in recent years the group appears to have

decreased in visibility as well as momentum.102

Whereas the first two years of the

Draft Modalities on Agriculture were attributable to the coalitions, over the last few

years of the negotiation the G-20 has been relatively inactive, perhaps because of

prominent role of SDT issues, such as SSM, which are currently at the forefront of the

negotiations.103

―G-20 in 2007 is different from G-20 today (2010) because of the

differences in interests G-20 is less engaging or not engaging to avoid tension (since

they aren‘t interested in SSM).‖104

Therefore, the G-20‘s role as a developing country

coalition in the agriculture negotiations appears to have evolved during the course of

the Round.

6.2.3 G-20 Positions and Proposals105

To counteract the US-EU framework, the G-20 submitted its own agriculture

framework proposal to the Cancún Ministerial Conference on September 4, 2003.106

This counter-proposal was initially submitted on August 20, 2003 and was reproduced

101 Per Interviewee 10 102 Per Interviewee 15 103 Per Interviewee 21 104 Per Interviewee 22 105 See infra pp. 243-67 (Appendix II contains the G-20 proposals and position papers). 106 World Trade Organization, Ministerial Conference Fifth Session Cancún, 10 - 14 September 2003,

Joint Proposal by Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, El

Salvador, Guatemala, India, Mexico, Pakistan, Paraguay, Peru Philippines, South Africa, Thailand and

Venezuela submitted by Brazil. WT/MIN(03)/W/6; JOB(03)/162/Rev.1, 4 September 2003.

142

as a ministerial document during the conference.107

The four-page document adopted

the format of the US-EU framework and addressed domestic support, market access

and export subsidies – inserting empty ―square brackets‖ throughout the proposal to

signify its lack of agreement with the earlier proposed terms. The proposal addressed

Special and Differential Treatment under each heading, and also noted that the issue of

preference erosion as well as the particular concerns of recently acceded members and

least-developed countries should be effectively addressed.108

According to one interviewee, ―the first proposal was a critique of the EU-US

proposal, so it was a reaction to that. The nature of the group was clear—a developing

country hybrid group. There was a lot of pressure to dissolve the group, which gave a

strong contribution and at that moment things changed in agriculture negotiations.‖109

Furthermore, in December 2003, the G-20 issued a communiqué reiterating the

importance of the multilateral trading system and the role of agriculture in the DDA

negotiations. The group called for WTO Members to ―approach the upcoming

negotiations with an open spirit and readiness to reach consensus…‖110

By May 2004, the G-20 submitted its formal critique of the US-EU ―Blended

Formula‖ proposal, which the group termed ―a fundamentally flawed approach to

agricultural market access.‖111

This critique identified two main issues: first, the fact

that the implementation of the blended formula would fail to deliver substantial

improvements in market access; and secondly, the fact that inequitable results would

107 Previously circulated as JOB (03)/162/Rev.1. 108 World Trade Organization, WT/MIN(03)/W/6; JOB(03)/162/Rev.1, 4 September 2003, Paragraph 4 109 Per Interviewee 10 110 World Trade Organization, WT/L/559, December 23, 2003. G-20 Ministerial Communiqué. 111 World Trade Organization, TN/AG/GEN/9, May 7, 2004. Communication from The G-20: ―The

Blended Formula.‖

143

arise from the application of the blended formula on the different tariff structures of

industrialized Members and developing country Members. In addition, the group

released another communiqué reiterating its positions in light of the importance of the

DDA agriculture mandate.

Again, the G-20 released two communiqués to WTO Members in March

2005112

and September 2005,113

respectively, in advance of the Hong Kong Ministerial

Conference. The documents reaffirmed the G-20 position on all areas of the

agriculture negotiations, such as the three pillars, SDT provisions and cotton.

The G-20 is a highly heterogeneous developing country coalition focused on

reforming WTO agriculture trade rules. The coalition‘s membership has diverse

interests and, therefore, holds divergent views on key issues in the negotiations.

However, the G-20‘s main strategy is to strive for balance in the agriculture

negotiations.114

The G-20 has placed a premium on collaboration and unity of

developing countries in the current Round. The coalition has a reputation for

presenting well thought out and technically-sound proposals that strike a middle

ground in the negotiations. As a result of this collaborative strategy, many of the

group‘s proposals have been accepted by other WTO Members and have been

included in the December 2008 Revised Draft Modalities on Agriculture.

The G-20‘s main challenge will be sustaining the unity of purpose between its

members with offensive and defensive agriculture trade interests in the Doha Round

negotiations end game.

112 World Trade Organization, WT/L/606, March 23, 2005. 113 World Trade Organization, WT/L/621, September 27, 2005. 114 This strategy of G-20 members appears to have trickled down to other areas of the negotiation such

as NAMA.

144

6.3 G-33

6.3.1 G-33 Background and Formation

During the 2003 negotiation build up discussed above, another group of 6

similar-minded developing countries anxious to protect their poor rural farmers also

began meeting just prior to Cancún. Led by Indonesia, while the group‘s origins were

not as crisp as those of the G-20, this coalition of developing countries pressing for

flexibility for developing countries to undertake limited market opening in agriculture,

also known as ―Friends of Special Products,‖ ultimately grew into the G-33 at Cancún

a few weeks later. The group focused on only two issues: the designation of Special

Products (SP) by developing country Members and the need for a Special Safeguard

Mechanism (SSM). These two issues currently embody the principal issues of special

and differential treatment for developing countries in the DDA agriculture

negotiations.

Special products (SP) are agricultural products deemed to be of utmost

importance to developing countries‘ food security, livelihood security and rural

development. In the current December 2008 Draft Modalities on Agriculture,

developing countries have sought to be entitled to self-designate a yet to be agreed

upon number of their agricultural products as ―special products‖ based on guide

indicators.115

In addition, developing countries are seeking to utilize a special

115 World Trade Organization, Revised Draft Modalities for Agriculture December 2008.

TN/AG/W/4/Rev.4 p. 24 Section D, paragraphs 129-131.

http://www.wto.org/english/tratop_e/agric_e/chair_texts08_e.htm (last visited March 11, 2011).

145

safeguard mechanism (SSM) to protect their economies‘ food security, livelihood

security and rural development from competing imports.116

Indonesia proposed SP and SSM to address the issue of the poor and

vulnerable farmers who cannot compete fairly in a completely liberalized international

agriculture trade environment. According to one developing country interviewee,

WTO is an advocate of not just free trade but also fair trade. Doha

being the development Round, the development of developing

countries should be at the heart of this Round. The international

trade playing field is not level; therefore safeguard measures are

needed by developing countries for development. A safeguard

measure is only temporary but we need it. Most developing

countries don‘t have social safety nets and things will become

chaotic if things go wrong in agriculture sector. 117

Likewise, it was also noted that the objective of Doha is to correct the

imbalances in the Uruguay Round. After textile and clothing, agriculture is the most

distorted product. Most agriculture countries are developing countries and developing

countries are more dependent on agriculture. That is, 80% of the labor force in

developing countries is based on agriculture and they live below poverty level so food

security, livelihood security and development are the primary drivers for the

coalition‘s positions.118

The G-33 now has 46 members and enjoys the support of AG, SVE, and LDC

for its SP/SSM positions, which means that the proposal is, in effect, supported by

116 World Trade Organization, Revised Draft Modalities for Agriculture December 2008.

TN/AG/W/4/Rev.4 pp. 24-26, Section D, Paragraphs 132-146. 117 Per Interviewee 12 118 Per Interviewee 12

146

more than two-thirds of WTO Members. 119

In addition, the EU has occasionally

supported the G-33 because they too have protectionist interests in this sector.120

6.3.3 G-33 Membership Dynamics

Below is a tabular representation of the G-33‘s broad agriculture trade

statistics.

Table 6 G-33 Agriculture Trade Statistics121

Member

Country Year

Joined

GATT/W

TO

GDP (USD)

Agric

%

GDP

Country Population

Agriculture Population

Other Group

Memberships

1. Antigua &

Barbuda 1987/1995 $1.21B 3.05% 86,634 18,000 G-90, ACP,

LDCs 2. Barbados 1967/1995 $3.68B 3.77% 255,203 8000 G90, ACP,

LDCs 3. Belize 1983/1995 $1.35B 12.2% 322,100 74,000 G90, ACP,

LDCs 4. Benin 1963/1996 $6.68B 32% 8.6 Million 4 Million ACP, Africa

Group, G-90,

LDCs 5. Bolivia 1990/1995 $16.67B 13.5% 9.6 Million 3.9 Million Cairns Group,

G-20 6. Botswana 1987/1995 $13.41B 1.87% 1.9 Million 818,000 ACP, G-90,

African Group 7. Cote d‘Ivoire 1963/1995 $23.41B 25% 20.5

Million 8.2 Million ACP, G-90,

African Group 8. China 2001 $4.32T 11.3% 1.3 Billion 833.9

Million G-20

9. Congo 1997 $11.66B 40.2% 64.2 Million

1.2 Million ACP, Africa Group, G-90,

LDCs 10. Cuba

122 1948/1995 6.4% 11.2 Million

1.5 Million G-20, G-90, ACP

119 Per Interviewee 2 120 Per Interviewee 7 121 Sources: World Bank, World Development Indicators, July 26, 2010;

http://databank.worldbank.org/;

World Trade Organization, http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm; United

Nations Food and Agriculture Organization (FAO) http://www.fao.org/. (where available). 122 There was also no information available for the GDP of Cuba.

147

11. Dominica 1993/1995 $357.38M 17.2% 73,193.42 14000 G90, ACP,

LDCs 12. Dominican

Republic 1950/1995 $45.54B 6.54% 9.9 Million 1.1 Million G-90, ACP,

LDCs 13 El Salvador 1991/1995 $22.11B 13.2% 6.1 Million 1.6 Million 14 Grenada 1994/1996 $638M 5.87% 103,538 22,000 ACP, G-90 15 Guatemala 1991/1995 $38.98B 11.6% 13.6

Million 5.8 Million Cairns Group

16 Guyana 1966/1995 $1.16B 28.1% 763,437 117,000 G-90, ACP,

LDCs 17 Haiti

123 1950/1996 $6.4B 9.8 Million 5.9 Million ACP, G-90,

LDCs 18 Honduras 1994/1995 $13.34B 13.6% 7.3 Million 2 Million 19 India 1948/1995 $1.15T 17.5% 1.1 Billion 582.5

Million G-20

20 Indonesia 1950/1995 $510.73B 14.4% 227.3

Million 87.8 Million Cairns Group,

G-20 21 Jamaica 1963/1995 $14.61B 5.32% 2.6 Million 492,000 G-90, ACP,

LDCs 22 Kenya 1964/1995 $30.35B 27% 38.7

Million 27.7 Million ACP, G-90,

African Group 23 Korea 1967/1995 23.8

Million G-10

24 Madagascar 1963/1995 $9.46B 25.2% 19.1

Million 13.5 Million ACP, Africa

Group, G-90, LDCs

25 Mauritius 1970/1995 $9.32B 4.38% 1.2 Million 110,000 G-10, ACP, G-

90, African

Group 26 Mongolia 1997 $5.25B 21.1% 2.6 Million 503,000 G-33 27 Mozambique 1992/1995 $9.84B 28.6% 22.3

Million 17.1 Million ACP, G-90,

African Group 28 Nicaragua 1950/1995 $6.59B 19.4% 5.6 Million 946,000 G-33 29 Nigeria 1960/1995 $207.11B 32.7% 151.2

Million 39.9 Million G-20, ACP, G-

90, African

group 30 Pakistan 1948/1995 $164.53B 20.4% 166.1

Million 77.1 Million Cairns Group,

G-20, 31 Panama 1997 $63.08B 6.44% 3.3 Million 638,000 32 Peru 1951/1995 $129.10B 7.23% 28.8

Million 7.1 Million Cairns Group,

G-20 33 Philippines 1979/1995 $166.90B 14.9% 90.3

Million 31.3 Million Cairns Group,

G-20 34 St. Kitts &

Nevis 1994/1996 $543.34M 2.6% 49,189.94 11000 G90, ACP,

LDCs

123 There was no information available on the GDP and agriculture percentage of GDP for Haiti.

148

35 St. Lucia 1993/1995 $996.43M 4.76% 170,204.56 35000 G90, ACP,

LDCs 36 St. Vincent &

the

Grenadines

1993/1995 $597.93M 7.95% 109,117 23000 G90, ACP, LDCs

37 Senegal 1995 $13.27B 15.7% 12.2

Million 8.6 Million ACP, Africa

Group, G-90,

LDCs 38 Sri Lanka 1995 $40.56B 13.4% 20.1

Million 8.8 Million G-33

39 Suriname 1978/1995 $3.03B 4.71% 515,124 88000 G-90, ACP,

LDCs 40 Tanzania

124 1961/1995 $20.49B 45.3% 42.4 Million

G-20, LDCs, G-90, ACP,

African Group 41 Trinidad &

Tobago 1962/1995 $24.14B 0.309

% 1.3 Million 92000 G-90, ACP,

LDCs 42 Turkey 1951/1995 $734.85B 8.65% 73.9

Million 15.5 Million

43 Uganda 1962/1995 $14.32B 22.7% 31.6

Million 23.6 Million ACP, Africa

Group, G-90, LDCs

44 Venezuela 1990/1995 $314.15B 4.02% 27.9

Million 1.8 Million G-20

45 Zambia 1982/1995 $14.31B 21.2% 12.6 Million

8.1 Million ACP, Africa Group, G-90,

LDCs 46 Zimbabwe 1948/1995 $3.41B 19.1% 12.4

Million 7.2 Million G-20, ACP, G-

90, African

group

G-33 has been heralded as a good example of the new developing country

collaboration in the Doha Round because it brings together a cross section of

developing countries to form an issue-specific coalition.125

Although G-33

membership is large, comprising 46 countries at present, the group‘s interests are more

homogeneous than those of the G-20 or G-90. For instance, the SP and SSM issues

have a broad appeal to several developing countries, particularly the smaller countries,

124 Information on Agriculture Population of Tanzania was not available 125 Per Interviewee 16

149

which depend more heavily on agriculture. Therefore, the G-33 membership includes

several countries that also belong to SVEs, LDCs, NFIDCs, ACP and African Group.

―This food security issue will bring developing countries with large populations closer

together and bind then tighter (India, China, Indonesia) G-33‘s cause may become

more important to this negotiation to protect security.‖126

Thus, there are large,

medium and small (LDC) G-33 members, but all 46 countries negotiate internally to

reach a common consensus, ―which is important and good.‖ 127

The group also boasts

of influential countries such as Korea and China among its members.128

While some of the group‘s members said they joined G-33 at the request of

Indonesia (with whom they had a close relationship in NAMA), the majority of the

members joined G-33 because of its protectionist strategy and flexible approach to

market access. Still, while some countries want to protect the livelihood of their

farmers, they also bear the fact in mind that employment and livelihood and an

increase in efficiency could be obtained by opening up their export sectors –which

they also consider to be critically important. In a nutshell, the more moderate G-33

members believe that there should be some compromise on the mechanics of SSM and

the number of SPs so as not to render the Round completely redundant.129

This

concern speaks to the need to balance the consumer‘s interest and the farmer‘s interest

domestically and internationally—the balance between liberalization and

126 Per interviewee 16 127 Per Interviewee 14 128 Per Interviewee 2 129 Moderate G-33 members are typically also Cairns Group and G-20 members seeking to balance

other domestic concerns.

150

protectionism.130

However, in the negotiations, G-33 has often been accused of

assuming the lowest common position of the group. This may often appear to be the

case as decisions are reached by consensus among all members within the group.131

Indonesia is the G-33 coordinator and represents the group in the Green Room.

Preparatory meetings are held before Green Room meetings with the members and

Indonesia gives debriefing sessions afterwards. Overall, G-33 members seem satisfied

with the process.132

One critical issue that could be seen to cause some strain within G-33 is the

fact that the group‘s coordinator (Indonesia) was excluded from the WTO Mini-

Ministerial which was held in Geneva in July 2008 – while India, another prominent

group member, was part of that meeting, which ended in a stalemate purportedly over

the SSM issue. One interviewee ―doesn‘t know how comfortable G-33 were to leave

India in the small group (2008 Mini-Ministerial) to defend their position,‖133

thus

insinuating that India might have an agenda of its own, distinct from the group‘s

position. 134

Moreover, the other large developing country member of the group which

was invited to the Mini-Ministerial – China – has consistently kept a low profile on

this issue and declined to speak on behalf of either the G-33 or the other agriculture

group to which it belongs, the G-20.

Therefore, while the consensus appears to be that G-33, in general, is the

representative of developing countries and SDT in the DDA, many developing

130 Per Interviewee 5 131 Per Interviewee 4 132 Per Interviewee 12 133 Per Interviewee 15 134 Per Interviewee 14

151

countries would reject that notion completely. Among developing countries, there are

many different views of the development component of DDA.135

In sum, by binding together as their respective coalitions, the G-20 and G-33,

in particular, have definitely saved developing countries from an unfavorable

negotiating situation. There has been ―discomfort‖ because of differing interests but,

all things considered, this friction has been very well managed by these coalitions and

cohesion has been maintained.136

6.3.3 G-33 Positions and Proposals137

The G-33 has successfully brought the SP/SSM issue to the forefront of the

DDA agriculture negotiations.138

In recent years, the G-33 has become increasingly

active in the release of proposals and position papers, with several proposals being

submitted between 2006 and 2010.139

In the past, the perception was that G-33

proposals leaned towards political rhetoric rather than substantive claims. However,

while G-33‘s proposals have become increasingly technical in nature, perhaps due to

the controversy surrounding the SSM debate, a perception has developed in certain

quarters that the group is heavily reliant on analytical assistance from NGOs.140

This

135 Per Interviewee 23 136 Per Interviewee 22, Interviewee 14, Interviewee 11 137 See infra pp.271-93 (Appendix III contains the G-33 Proposals and Position papers). 138 Per Interviewee 12 139 G-33 has submitted four proposals on SP and SSM since 2006. In reverse order these are: TN/AG/GEN/30 28 January 2010 on refocusing SSM; TN/AG/GEN/29 10 February 2009 on SSM for

SVEs; TN/AG/GEN/27 17 December 2007 on SPs and TN/AG/GEN/17 11 May 2006 on SSM and SPs. 140 Some Members have contended that NGOs in this space may need to justify their own existence and

may get paid for the work they do, which may taint their objectivity. On SSM one interviewee stated

that the end product of such research studies may be lacking in rigor since the parochial goal and lack of

152

has led to some other WTO Members to question the objectivity of the data upon

which G-33‘s proposals are based. 141

In addition, in 2006, a joint communiqué was released by G-33, and African

Group, ACP and LDC (G-90) on Special Products and the Special Safeguard

Mechanism.142

These coalitions have jointly noted that they could not be expected to

join a consensus on any agreement on agriculture unless their food security, livelihood

security and rural development needs are effectively addressed through tariff

reductions, SPs and the SSM.

Currently, the perception of rigidity has formed around the coalition from

certain quarters. The US, for example, has found other developing country groups

such as Cotton 4 and AG to be more solutions oriented than the G-33.143

Currently,

there is very little dialogue between G-33 and the US, or with liberal exporters such as

Uruguay, Paraguay, and the like. According to one interviewee, ―G-33‘s latest

position paper is still a philosophical defense of its protectionist position and these

kinds of rhetoric are expected in the early stages of the negotiations and not in the end

game.‖144

In sum, the G-33 is a large, yet homogeneous, coalition. Being an issue-

specific coalition, all of the group‘s members agree, perhaps in varying degrees, on the

SP and SSM issues. In the negotiations the group has been perceived as dogmatic,

particularly in recent times. By maintaining an inflexible position in the 2008 Mini-

balance of the G-33, and its technical advisers, is fairly obvious. However, this is not a widely held

view among WTO Members. 141 Per Interviewee 15 142 World Trade Organization, Joint Communication from the G-33, African Group, ACP, and LDCs on

Special Products and the Special Safeguard Mechanism.TN/AG/GEN/17, May 11, 2006. 143 Per Interviewee 13 144 Per Interviewee 23

153

Ministerial the group suffered some backlash from WTO Members and stakeholders,

in general, who felt that the Round should not be sacrificed based on SSM

dynamics.145

6.4 G-90

6.4.1 G-90 Background and Formation

The G-90 emerged at the Cancún Ministerial meeting as the umbrella

developing country coalition primarily to prevent the adoption of the Singapore issues

into the Doha Round negotiation agenda. The group comprises the Africa Caribbean

and Pacific (ACP) Group, the African Group, and the Least Developed Country

(LDC) Group – which were all existing developing country coalitions prior to or at the

beginning of the Round. Formed in 2001, ACP is a geographical grouping of former

EU colonies that share a common interest in preserving their EU market access

preferences in agriculture. The African Group, formed in 1997, is a regional group

comprising all of the African WTO Members, and LDC, formed in 1999, includes all

of the least-developed countries that are Members of the WTO.

Collectively, these developing countries, already adamant in the past that the

Singapore issues should not be included in the Doha Round, formed an umbrella

coalition expressly to precluded the inclusion issues onto the DDA negotiation agenda

during the Cancún Ministerial meeting. The Singapore issues refer to four new issues

introduced into the WTO agenda at the December 1996 Ministerial Conference in

145 Per Interviewee 13

154

Singapore. These are: trade and investment, trade and competition policy,

transparency in government procurement, and trade facilitation. Developing countries

are generally of the opinion that these areas would put them at a disadvantage in

international trade when competing with industrialized countries if they were covered

by WTO rules. Therefore, the addition of these issues to the Doha Round negotiation

agenda has remained controversial since 1996, and was partly responsible for the

collapse of the Seattle Ministerial meeting in 1999.

Although G-90 is technically categorized as a ―general coalition‖ by the WTO

secretariat, for the purposes of this research, I have re-classified this group as an

agriculture coalition of developing country members based on its membership and the

principal issues it covers. The G-90 is primarily dedicated to agriculture and

development issues, such as the special and differential treatment of developing

countries. These are broad issues that cut across most developing countries –

particularly the smaller countries – and as such are overlapping areas of interest for all

three coalitions. The coalition‘s membership consists of both WTO members and

non-members.

The G-90 is an umbrella body for small developing countries. Prior to the

birth of the G-90, the coordinators of these groups had been meeting informally to see

how they could collaborate proactively (apart from their proven effectiveness as a

blocking coalition).146

The group is informal in its organizational structure, however,

for the first time in WTO history, a G-90 ministerial meeting was held in Hong Kong

during the 6th Ministerial conference in 2006.

146 Per Interviewee 17

155

6.4.2 G-90 Membership Dynamics

Below is a tabular representation of the G-90‘s broad agriculture trade

statistics.

Table 7 G-90 Agriculture Trade Statistics147

Member

Country

Year Joined

GATT/WTO

GDP

(USD)

Agric %

of GDP

Country Population

Agriculture

Population

Other Group

Memberships

1 Angola 1994/1996 $84.95B 6.58% 18 Million 12.5 Million ACP, African

Group

2 Antigua &

Barbuda

1987/1995 $1.21B 3.05% 86,634 18000 G-33, ACP,

LDCs

3 Bangladesh 1972/1995 $79.55B 19% 160 Million 75.6 Million LDCs

4 Barbados 1967/1995 $3.68B 3.77% 255,203 8000 G-33, ACP,

LDCs

5 Belize 1983/1995 $1.35B 12.2% 322,100 74000 G-33, ACP,

LDCs

6 Benin 1963/1996 $6.68B 32% 8.6 Million 4 Million ACP, Africa Group, LDCs, G-

33

7 Botswana 1987/1995 $13.41B 1.87% 1.9 Million 818,000 ACP, G-33,

African Group

8 Burkina

Faso

1963/1995 $7.95B 33.3% 15.2

Million

14 Million ACP, Africa

Group, , LDCs

9 Burundi 1965/1995 $1.163B 34.8% 8 Million 7.2 Million ACP, Africa

Group, LDCs

10 Cote

d‘Ivoire

1963/1995 $23.41B 25% 20.5

Million

8.2 Million ACP, G-33,

African Group

11 Cambodia 2004 $10.35B 34.6% 14.5

Million

9.7 Million LDCs

12 Cameroon 1963/1995 $23.39B 19.5% 19 Million 8.2 Million ACP, G-33,

African Group

13 Cape Verde 2008 $1.59B 8.76% 498,672 90,000

14 Central

African

Republic

1963/1995 $1.98B 52.9% 4.3 Million 2.8 Million ACP, Africa

Group, LDCs

15 Chad 1963/1996 $8.40B 13.6% 10.9

Million

7.4 Million ACP, Africa

Group, LDCs

16 Congo 1963/1997 64.2 Million

1.2 Million ACP, Africa Group, LDCs

17 Cuba 1948/1995 6.4% 11.2

Million

1.5 Million G-20, G-33, ACP

18 Democratic

Republic of

Congo

1963/1997 $11.66B 40.2% 1.2 Million ACP, G-33,

African Group

147 Sources: World Bank, World Development Indicators, July 26, 2010;

http://databank.worldbank.org/;

World Trade Organization, http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm; United

Nations Food and Agriculture Organization (FAO) http://www.fao.org/. (where available).

156

19 Djibouti 1994/1995 $874.68

M

3.86% 849,245 637,000 ACP, Africa

Group, LDCs

20 Dominica 1993/1995 $357.38

M

17.2% 73,193.42 14000 G-33, ACP,

LDCs

21 Dominican

Republic

1950/1995 $45.54B 6.54% 9.9 Million 1.1 Million G-33, ACP,

LDCs

22 Egypt 1970/1995 $162.28

B

13.2% 81.5

Million

23.8 Million G-20, African

Group

23 Fiji 1993/1996 $3.59B 15.1% 844,046 309,000 ACP

24 Gabon 1963/1995 $14.53B 4.06% 1.4 Million 406,000 ACP, African

Group

25 Gambia 1965/1996 $811.14

M

28.5% 1.6 Million 1.2 Million ACP, Africa

Group, LDCs

26 Ghana 1957/1995 $16.65B 33.5% 23.3 Million

12.6 Million ACP, African Group

27 Grenada 1994/1996 $638M 5.87% 103,538 22000 G-33, ACP,

28 Guinea 1994/1995 $3.79B 24.8% 9.8 Million 7.9 Million ACP, Africa

Group, LDCs

29 Guinea

Bissau

1994/1995 $429.60

M

55.5% 1.5 Million 1.2 Million ACP, Africa

Group, LDCs

30 Guyana 1966/1995 $1.16B 28.1% 763,437 117,000 G-33, ACP,

LDCs

31 Haiti 1950/1996 $6.40B 9.8 Million 5.9 Million G-33, ACP,

LDCs

32 Jamaica 1963/1995 $14.61B 5.32% 2.6 Million 492,000 G-33, ACP,

LDCs

33 Kenya 1964/1995 $30.35B 27% 38.7

Million

27.7 Million ACP, G-33, ,

African Group

34 Lesotho 1988/1995 $1.62B 7.22% 2 Million 817,000 ACP, Africa

Group, LDCs

35 Madagascar 1963/1995 $9.46B 25.2% 19.1

Million

13.5 Million ACP, Africa

Group, LDCs, G-

33

36 Malawi 1964/1995 $4.26B 34.3% 14.8

Million

10.9 Million ACP, Africa

Group, LDCs

37 Maldives 1983/1995 $1.26B 6.19% 305,027 61000 LDCs, G-90

38 Mali 1993/1995 $8.74B 36.5% 12.7 Million

9.6 Million ACP, Africa Group, LDCs

39 Mauritania 1963/1995 $2.85B 12.5% 3.2 Million 1.6 Million ACP, Africa

Group, LDCs

40 Mauritius 1970/1995 $9.32B 4.38% 1.2 Million 110,000 G-10, G-33,

ACP, African

Group

41 Morocco 1987/1995 $88.88B 14.6% 31.6

Million

8.6 Million African Group

42 Mozambique 1992/1995 $9.84B 28.6% 22.3

Million

17.1 Million ACP, G-33,

African Group

43 Myanmar 1948/1995 48.4% 49.5

Million

33.5 Million LDCs

44 Namibia 1992/1995 $8.83B 9.09% 2.1 Million 906,000 ACP, African

Group

45 Nepal 2004 $12.61B 33.7% 28.8

Million

26.8 Million LDCs

157

46 Niger 1963/1996 $5.35B 40% 14.7

Million

12.2 Million ACP, Africa

Group, LDCs

47 Nigeria 1960/1995 $207.11

B

32.7% 151.2

Million

39.9 Million G-20, G-33,

ACP, African

Group

48 Papua New

Guinea

1994/1996 $8.23B 33.6% 6.5 Million 4.8 Million ACP

49 Rwanda 1966/1996 $4.45B 37.4% 9.7 Million 8.7 Million ACP, Africa

Group, LDCs

50 St. Kitts &

Nevis

1994/1996 $543.34

M

2.6% 49,189.94 11000 G-33, ACP,

LDCs

51 St. Lucia 1993/1995 $996.43M

4.76% 170,204.56 35000 G-33, ACP, LDCs

52 St. Vincent

& the

Grenadines

1993/1995 $597.93

M

7.95% 109,117 23000 G-33, ACP,

LDCs

53 Senegal 1963/1995 $13.27B 15.7% 12.2

Million

8.6 Million ACP, Africa

Group, LDCs, G-

33

54 Sierra Leone 1961/1995 $1.95B 50.2% 5.5 Million 3.3 Million ACP, Africa

Group, LDCs

55 Solomon

Islands

1994/1996 $644.87

M

36% 510,672 350,000 ACP, LDCs

56 South Africa 1948/1995 $276.44

B

3.33% 48.7

Million

5.2 Million Cairns Group, G-

20, ACP, African

Group

57 Suriname 1978/1995 $3.03B 4.71% 515,124 88000 G-33, ACP,

LDCs

58 Swaziland 1993/1995 $2.83B 7.34% 1.1 Million 351,000 ACP, African

Group

59 Tanzania 1961/1995 $20.49B 45.3% 42.4 Million

G-20, G-33, LDCs, ACP,

African Group

60 Togo 1964/1995 $2.89B 43.7% 6.4 Million 3.5 Million ACP, Africa

Group, LDCs

61 Trinidad &

Tobago

1962/1995 $24.14B 0.309% 1.3 Million 92,000 G-33, ACP,

LDCs

62 Tunisia 1990/1995 $40.30B 9.91% 10.3

Million

2.1 Million African Group

63 Uganda 1962/1995 $14.32B 22.7% 31.6

Million

23.6 Million ACP, Africa

Group, LDCs, G-

33

64 Zambia 1982/1995 $14.31B 21.2% 12.6

Million

8.1 Million ACP, Africa

Group, LDCs, G-

33

65 Zimbabwe 1948/1995 $3.41B 19.1% 12.4

Million

7.2 Million G-20, G-33,

ACP, African

Group

158

WTO OBSERVERS

66 Afghanistan $10.62B 31.6% 29.02

Million

16.4

Million

67 Bahamas $7.23 1.59% 337,668 9000

68 Bhutan $1.28B 18.7% 686,789 638,000

69 Comoros $530.11M 45.8% 643,571.31 597,000

70 Equatorial

Guinea

$18.52B 1.99% 659,197 433,000

71 Ethiopia $25.58B 44.5% 80.7

Million

63.2

Million

72 Lao People‘s

Democratic Republic

$5.54B 34.7% 6.2 Million 4.6

Million

73 Liberia $842.50M 61.3% 3.7 Million 2.3

Million

74 Samoa $523.38M 10.8% 178,869 51,000

75 Sao Tome

&Principe

$174.61M 16.8% 160,174 94,000

76 Seychelles $833.01M 2.33% 86,956 63,000

77 Sudan $55.92B 25.8% 41.3

Million

22.1

Million

78 Vanuatu $589.59M 14.3% 233,866 74,000

79 Yemen $26.57B 14.3% 22.9

Million

9.3

Million

NOT WTO MEMBERS OR OBSERVERS

80 Cook Islands 6,000

81 Eritrea $1.65B 24.3% 4.9 Million 3.6 Million

82 Kiribati $136.56M 27.5% 96,558 22000

83 Marshall Islands $158.4M 9.37% 59,667.18 14000

84 Micronesia $257.74M 44.5% 110,414 26,000

85 Nauru 2,000

86 Niue

87 Palau $180.7M 3.5% 20,278.74 5000

88 Somalia $917.04M 65.5% 8.9 Million 5.9 Million

89 Timoro-Leste $497.91M 25.8% 1.0 Million 878,000

90 Tuvalu 3,000

All three coalitions that comprise the G-90 have their own unique peculiarities.

The Africa Group that includes all African WTO Members is based on a ―vague

common position‖ because the continent, although predominantly defensive in its

interests also has some offensive interests. For instance, Kenya favors preferences

159

while South Africa favors market access. The countries also have different colonial

and historical backgrounds, which affect their international trade patterns. Thus, while

AG as a group has its own positions, these positions are usually based on some

―constructive ambiguity” in an attempt to accommodate members‘ divergent

interests.148

While the AG is based on geography, the ACP group is based on history.149

The ACP coalition is founded on a trade alliance between ACP countries, as former

European colonies, and the EU for preferential treatment in international trade. ACP

countries have an interest in operationalizing GATT provisions concerning

transparency in regional trade agreements.150

The group is also active in fishery,

agriculture (preferences) and NAMA negotiations.151

In agriculture ACP has been

described as the most ―effective‖ in furthering its own interests in the ongoing

negotiations by encouraging protracted negotiations because the delay has enhanced

the status quo with regard to trade preferences to the detriment of the tropical products

group.152

The interests of the LDCs are virtually subsumed into the AG and ACP group

interests because most LDCs belong to one or both of these coalitions. LDCs are most

concerned with attaining special exemptions because of their economic frailty by way

of special and differential treatment within the multilateral trading system, and in this

instance in the agriculture negotiations.

148 Per Interviewee 2 149 Per Interviewee 6 150 World Trade Organization, Regional Trade Agreements, Article XXIV GATT ‘94

http://www.wto.org/english/tratop_e/region_e/region_e.htm (last visited March 11, 2011). 151 Per Interviewee 2 152 Per Interviewee 6

160

Therefore, while the G-90 coalition cannot be said to be highly specific or

technical in its proposals, the group is able to mobilize large numbers of developing

countries to advocate for broader development-related issues that affect its members

across the board.

6.4.3 G-90 Positions and Proposals

153

After the G-90 effectively disrupted the Cancún Ministerial meeting over the

Singapore issues,154

they later issued a position paper in 2004 entitled, ―Elements of a

G-90 Platform on the Doha Work Programme.‖155

This document addressed areas

across the board in the Doha negotiation of interest to the group‘s members. The

substantive text began with the issue of agriculture and noted nine areas to be

addressed within the July Framework negotiations. Some of their concerns in this

areas included: the need for binding, effective and meaningful Special and Differential

provisions, the importance of long-standing preferences; concerns pertaining to net

food importing developing countries (NCIDCs), the SP and SSM issues as well as

other issues pertaining to LDCs.156

The issue of cotton was specifically singled out

and the G-90 requested that both the trade-related aspects and the development-related

aspects of cotton be addressed expeditiously.

153 See infra pp. 294-30 (Appendix IV contains the G-90 Proposals and Position papers). 154 World Trade Organization, Ministerial Conference Fifth Session Cancún, 10 - 14 September 2003

Consolidated African Union/ACP/LDC Position on Agriculture; Communication from Mauritius, WT/MIN(03)/W/17, 12 September 2003; World Trade Organization, Ministerial Conference Fifth

Session Cancún, 10 - 14 September 2003, AU/ACP/LDC Joint Position on Development Issues

Communication from Mauritius, WT/MIN(03)/W/20, 12 September 2003. 155 World Trade Organization, WT/L/577, July 19, 2004. 156 World Trade Organization, WT/L/577, July 19, 2004, Paragraph 10.

161

At Hong Kong, G-90 again issued a comprehensive 18-page document stating

all the group‘s positions in the DDA negotiations.157

As before, the agriculture issue

received high priority along with other developmental concerns and the group‘s

positions in this area were further elaborated.

G-90‘s main justification is to offer a significant headcount of WTO Members

with which to make broad political statements to the WTO.158

The ―strength in

numbers‖ strategy appears to have been effective as a blocking strategy. The group‘s

limitations as a proactive coalition originate from the composite interests of its

members. For instance, while the G-20 may be able to challenge the US on market

access or subsidies, the group would be unable to challenge the EU on similar grounds

due to ACP‘s interest in EU trade preferences.159

However, despite the group‘s

differences, they continue to strive for the collective good of developing countries.160

Recently, the G-90 has actively called for the timely completion of the Doha Round.

Interestingly, the group‘s current collaborative stance (as opposed to its initial

blocking strategy) may actually diminish its bargaining leverage in the negotiations.

This is because while the G-90 may now realize the benefits which may be accrued by

developing countries upon the conclusion of the Doha Round single undertaking

agreement, the group‘s strength may primarily be its ability to block undesirable

agreements.

157 World Trade Organization, WT/MIN (05)/8, December 13, 2005. 158 Per Interviewee 23 159 Per Interviewee 6 160 Per Interviewee 17

162

6.5 Conclusions

This chapter has generated a profile of each of the four developing country

agriculture coalitions under review, considering each coalition‘s strengths,

weaknesses, opportunities and threats to achieving its negotiation objectives. By

capturing each coalition‘s formation dynamics, membership dynamics and negotiation

interests in the Round, we begin to gain insights into the coalitions‘ tactical strategies

that have been adopted in the negotiation process during the study period. The

detailed description of the Doha Round agriculture negotiations over a seven-year

period that follows renders an account of how these developing country coalitions

pursued their negotiation objectives through the tactics they deployed during the

negotiation process.

163

CHAPTER 7

7.0 THE DOHA ROUND AGRICULTURE NEGOTIATIONS-MARCH 2003

TO MARCH 2010

7.1 Introduction

Using the Doha Round agriculture negotiations as a single case study, this

research traces the negotiation process by describing the negotiation strategies of four

developing country agriculture bargaining coalitions – Cotton 4, G-20, G-33 and G-

90, illuminating each coalition‘s tactical approach during the study period. The time

frame under review is a seven-year period from March 2003 to March 2010. The

review is divided into three parts. Phase 1 recounts the inception of the negotiation

and how the negotiation agenda was agreed upon. Phase 2 scrutinizes the process that

produced the current December 2008 Revised Draft Modalities on Agriculture, while

Phase 3 analyzes the ongoing endgame dynamics of the negotiation process. The aim

of this research is to describe the role of developing country coalition strategy in the

ongoing negotiation process.

7.2 Phase 1 - Establishing the DDA Agriculture Agenda (2003-2005)

The year 2003 was very turbulent in the Doha Round negotiations. Although

agriculture negotiations had commenced in March 2000 (as stipulated under the

Uruguay Round Agriculture Agreement), and had been subsumed under the Doha

164

Declaration in 2001, not much tangible progress had been made. During this period

friction between industrialized countries and developing countries had been steadily

increasing since the conclusion of the Uruguay Round, with no signs of abating. The

main source of friction at the time was due to the lingering cloud of distrust hanging

heavily over the international negotiation climate, particularly for developing

countries, since the Seattle 1999 agenda-setting debacle.1 By 2003, developing

countries were now completely convinced that the URAA was inherently unfair to

them, despite the increased market access provisions and the SDT provisions that the

URAA contained. After witnessing the effects of the URAA implementation over the

past six years, developing country Members had become extremely disgruntled with

the fact that industrialized Members appeared to be able to exploit loop-holes in the

URAA Modalities to their advantage (and to the detriment of developing country

interests). Overall, the onerous and expensive implementation requirements of many

of the UR single undertaking agreements, such as the intellectual property agreement

(TRIPS), the agreement sanitary and phytosanitary measures (SPS), as well as the

services agreement (GATS), had left many developing countries extremely unhappy

with the current rules.

Under the original DDA timeline for agriculture trade negotiations Members

were required to agree objectives for further liberalizations within each of the three

pillars2 to be drafted into Modalities by March 2003. These Modalities were meant to

be adopted by the WTO membership at the 5th Ministerial meeting scheduled for

September 2003 in Cancún, Mexico. The crucial importance of Modalities in WTO

1 Third WTO Ministerial Conference held in Seattle, USA in 1999. 2 Market access, domestic support and export subsidies.

165

negotiations originates from the fact that these documents, in effect, determine the

scope of the issues being negotiated in the Round. Modalities start as broad

parameters adopted by WTO Members as a template for the negotiation of specific

obligations. These Modalities are based on the mandate or ―Declaration‖ of each

Round. Modalities then form the basis of the concrete negotiations (in both qualitative

Export competition and quantitative terms) and are modified and concrete figures

agreed upon as the negotiations progress. With the inclusion of commitments based

on Members‘ proposals, draft Modalities continue to be negotiated until a final

agreement is reached, by consensus, among all WTO Members. At this point, certain

parts of the Modalities become legally binding, forming the basis for the

implementation of the various WTO agreements. As seen with the URAA, agriculture

modalities have serious implications for the quality of outcomes from multilateral

trade negotiations.3

In addition, the WTO negotiation atmosphere was further exacerbated by

underlying tensions between developing and industrialized countries over the selection

of the director general of the organization. In 1999, after Renato Ruggiero stepped

down as director general in April of that year, the WTO was thrown into a bitter and

protracted leadership crisis over a stale-mate among the Members regarding the

selection of his replacement.4 Basically, developing countries wanted the director

3 In the Uruguay Round developing country Members were not as adept as industrialized Members at

negotiating the technicalities of the Modalities. Therefore, still bitter from the negative experience of

the Agriculture Modalities, developing countries were reluctant to commit to draft Modalities too hastily in the DDA negotiations. The UR Agriculture Modalities were paltry when compared to the

DDA‘s current 2008 Agriculture Draft Modalities, which is 43 pages long—but with well over 100

pages of appendices. The voluminous nature of the document is indicative of Members‘ determination

to leave little or no room for ambiguity in the implementation of the rules in practice. 4 WTO Members agree to the appointment by consensus. Until that point, all GATT/WTO director

166

general to be from a developing country for the first time and, therefore, supported

Supachai Panitchpakdi of Thailand, while industrialized countries supported Mike

Moore from New Zealand. To break the deadlock, at the end of June Australia

proposed that each candidate serve as director general consecutively. Therefore, Mike

Moore served as WTO director general from 1999 to 2002, whereas Supachai

Panitchpakdi served as WTO director general from 2002-2005. The impact of the

leadership crisis as a divisive factor among WTO Members can be clearly traced from

the 1999 Seattle Ministerial through to the 2003 Cancún Ministerial.

By 2003, there was a lack of consensus among WTO Members in the

agriculture negotiations over both the process to be adopted in determining modalities

as well as the content of the proposed modalities. The reaction of Members to a series

of papers released by the then Chairperson of the agriculture committee, Ambassador

Stuart Harbinson, from December 2002 to March 2003 was indicative of the wide gap

present between Members‘ positions at the time. A summary report, the ―Harbinson

text,‖ was released on March 18, 2003 by Ambassador Harbinson in an attempt to

propel WTO Members forward in the negotiation process.5 This text was an

―overview‖ document based on Members‘ proposals as well as informal negotiation

meetings held from 2001 to 2003. However, the negative response to the document

from Members across the board ended any prospects of draft Modalities being formed

by the March 2003 deadline in time for the Cancún Ministerial only a few months

away.

generals had been Europeans. 5 World Trade Organization, TN/AG/10, re-circulated on 7 July 2003.

167

Until this point in the negotiations, the Chairman had merely been receiving

proposals from the majority of the WTO Members submitted over a two year period

since the Round commenced in 2001. Members submitted proposals in their

individual capacities or in ad hoc groupings on issues covering every aspect of the

three pillars in agriculture (market access, domestic support and export subsidies),

SDT for developing countries and non-trade concerns. In fact, this period witnessed

rising levels of agitation from developing country Members, as these Members

contended that the agriculture negotiations had so far focused primarily on the

interests of the industrialized countries. Industrialized Members also lamented the

overcompensation being given to developing countries and their issues in the overview

text.

During this same period (between March and July 2003), tensions surrounding

contested cotton subsidies had eventually resulted in Brazil instituting a dispute

against the United States before the WTO Dispute Settlement Body in March 2003.6

As the developing countries gathered bargaining momentum on the cotton issue

through the dispute, four West African cotton exporters—later known as the Cotton

4—became increasingly vocal in their demands for fair trade in cotton. The Cotton 4

presented their first proposal, “Poverty Reduction: Sectoral Initiative in Favor of

Cotton,”7 in May 2003. The Cotton 4 took a distinctly normative approach and

6 In September 2002, the government of Brazil requested consultations with the US government,

pursuant to Article IV of the DSU, regarding allegedly illegal subsidies to US upland cotton. However,

in March 2003 after a series of deliberations between the parties on this issue, Brazil requested the establishment of a dispute settlement panel by the Dispute Settlement Body (DSB). 7 Joint proposal by Benin, Burkina Faso, Chad and Mali, World Trade Organization, TN/AG/GEN/4

(first presented in May 16, 2003)[hereinafter Cotton Initiative]. The proposal became a Cancún

Ministerial Conference document (WT/MIN(03)/W/2/Add.1 and WT/MIN(03)/W/2). The Cotton

Initiative led to the creation of a Cotton Sub-Committee within the Special Session of the Committee on

168

complained to WTO Members and the international media about the plight of poor

West African cotton farmers. The group specifically singled out the United States

cotton trade policy and repeatedly ―named and shamed‖ the US government, thereby

succeeding in creating widespread awareness of the cotton issue within the US and the

international community as a whole. For example, on June 10, 2003 in an

unprecedented move at the WTO, the President of Burkina Faso, Blaise Compaore

addressed the WTO Trade Negotiations Committee on the plight of the poor WCA

cotton farmers, highlighting the negative impact of contested industrialized country

cotton subsidies on the WCA region. This personal touch was extremely effective

with the Members and the C4 gathered tremendous sympathy and support for its

initiative across the board.

Lacking external weight and resources, rather than pursuing litigation against

the US along with Brazil through the WTO Dispute Settlement Mechanism (DSM),

the C4 had weighed its options, considering the futility of a successful litigation

outcome – a WTO Panel decision in its favor against the US – due to the inability of

such small countries to effectively apply WTO remedies against stronger Members

(upon whom they rely for trade and aid) without hurting their own economies.

Therefore, the tactic of moral suasion in the court of public opinion was the most

appealing strategy for the group at the time.8

Agriculture to focus on cotton as a specific issue in the agriculture negotiations. The Cotton Initiative

was again presented in 2005 at the Hong Kong Ministerial meeting and in March 2006. 8 Olajumoke Oduwole, Nothing Ventured, Nothing Gained? A Case Study of Africa‟s Participation in WTO Dispute Settlement, 2:4 Int. J. Private Law 358, 362 (2009). (Arguing that the effectiveness of the

DSU turns on the nature and structure of remedies available to aggrieved parties. Currently, the DSU

adopts a three-step remedy approach to trade disputes comprised of compliance, compensation, and

retaliation. One of the major factors responsible for the current apathy from LDCs to the WTO DSM is

the inadequate range of remedies available under the system).

169

As the summer months progressed this turmoil and friction between

industrialized Members and developing country Members was sustained in the few

months leading up to the Cancún Ministerial meeting in September. In July 2003, at

the instance of WTO Members during the WTO Mini-Ministerial meeting held in

Montreal, Canada, the United States and the European Union came together to draft a

framework for the agriculture negotiations in an attempt to facilitate the negotiation

process in preparation for the Ministerial Conference.9 However, the release of their

framework proposal on August 13 scandalized developing countries across the board.

The controversy centered on the document articulating a negotiation agenda that

leaned heavily towards the agriculture interests of the two superpowers, while failing

to elaborate on key development-related issues as part of the framework to be adopted.

Immediately, several large developing countries led by Brazil, India, Argentina and

South Africa reacted vehemently to the framework. In addition, the Cotton-4 were

distressed that their Cotton Initiative, released in May, was barely mentioned in the

framework as being ―of interest.‖ Overall, the pessimism felt by developing countries

was palpable.

According to the developing countries, this US-EU framework proposed an

ambiguous and cosmetic arrangement to codify the industrialized superpowers‘ own

internal reforms or interests. The developing countries went on to add that the US-EU

framework was poised to set the DDA agriculture negotiation agenda to the detriment

of developing country agriculture interests in the Round. In their own defense, the US

and the EU stated that they had merely run out of time to include development

9 World Trade Organization, JOB(03)/157 (restricted), 13 August 2003.

170

elements into their document and that they believed it was preferable for developing

countries themselves to devise their own provisions in this regard. As a result, in the

succeeding weeks, the developing countries responded to the situation by forming

several coalitions to address the issues raised as well as the issues omitted by the US-

EU agriculture framework ahead of the Cancún Ministerial in September.

Thus, developing countries began holding emergency meetings in different

clusters in Geneva and around the world to mobilize support for the upcoming

Ministerial. The G-20 nucleus was formed in Geneva during some of these

preparatory meetings for Cancún and formally crystallized into a developing country

bargaining coalition on August 20, 2003 largely at the instigation of Brazil.10

Building

on the foundation of the recently formed IBSA coalition of large developing countries,

the G-20 primarily comprising developing country Cairns Group members – in

addition to the significant weight of China and India – the two largest developing

country economies, was formed. The group‘s strategy was to gather enough members

as quickly as possible to form a group with enough ―external weight‖ or economic

influence to challenge and block the US-EU framework. G-20‘s first proposal adopted

the US-EU framework format, but rejected all of the tariff figures proposed therein.11

The group released its proposal on August 20 and again on September 4, 2003 for the

sole purpose of blocking the US-EU framework from being included in the declaration

of the upcoming ministerial conference.

10 The date of inception of the group is one of the rationales behind the group‘s name, since there are

now 22 members. 11 World Trade Organization, JOB (03)162 (restricted), 20 August, 2003. Re-circulated as

WT/MIN(03)/W/6, including Add.1 and Add.2, 4 September, 2003; 30 September, 2003.

171

Concurrently, a group of 6 similar-minded developing , anxious to protect their

poor rural farmers, also began meeting just prior to Cancún. While its origins were

not as explicit as those of the G-20, this group ultimately grew into the G-33 at

Cancún a few weeks later. The group focused on two specific issues: the designation

of Special Products (SP) by developing country Members and the need for a Special

Safeguard Mechanism (SSM).

Therefore, in the months prior to the 2003 Cancún Ministerial, larger

developing country Members, in particular, had already realized that unless they

united and remained cohesive in the face of this imminent threat, there would be no

progress on issues important to them in the agriculture negotiations. Thus, countries

with divergent trade interests put aside their differences to come together to achieve a

common goal.

7.2.1 Cancún

At Cancún a few weeks later, for the first time, an overwhelming majority of

developing countries had decided that unless they worked together there would be no

meaningful progress for them in the DDA Round. The Cancún Ministerial Meeting

took place between September 10 -14, 2003 in Cancún, Mexico. The conference

deliberations were to be based on a text circulated to WTO Members, drafted by the

then General Council chairperson Carlos Pérez del Castillo, which had substantially

adopted the US-EU framework for the agriculture negotiations. By this time

developing countries were already irritated by the political climate surrounding the

DDA, with the growing perception that industrialized countries were unwilling to

172

implement the provisions in Paragraphs 13 and 14 of the Doha Declaration. These

two paragraphs dealt with agriculture and expressly stated that the trade as well as the

development components of the sector should be addressed.

Therefore, the major objective of the G-20 coalition was to preclude the

adoption of the US-EU framework provisions at the Cancún Ministerial Conference.

The group also sought to voice the developing world‘s perspective in the DDA

agriculture negotiations by uniting developing countries. This swift and strong

reaction from developing countries was based on past experience from the conclusion

of the Uruguay Round in 1994.12

During the Cancún Ministerial Conference, the G-

20 successfully opposed the adoption of the US-EU framework. The group presented

a counter-framework of its own based on the US-EU framework model, inserting

square brackets to highlight areas of disagreement.13

Although the coalition‘s original

focus was clearly to preclude the adoption of the US-EU framework by the WTO

Agriculture Committee, subsequently, the coalition underwent a metamorphosis

during the Cancún Ministerial into what came to be seen as a harmonizing influence in

the agriculture negotiations. Being a heterogeneous group, the G-20 coalition was a

rallying point for a broad spectrum of developing country interests; the group also

sought to strike a balance between agriculture and other areas of the DDA

negotiations, such as the non-agriculture market access (NAMA). Several major

members of G-20 formed a parallel group in this area, called NAMA 11, which

12 After a sustained period of the then GATT Contracting Parties being unable to reach a final

agreement, the US and the EU reached a private compromise over a two-year period in meetings, which came to be known as ―the Blair House Accords,‖ paving the way for the Uruguay Round‘s completion. 13 World Trade Organization, WT/MIN(03)/W/6; JOB(03)/162/Rev.1, 4 September 2003, Ministerial

Conference Fifth Session Cancún, 10 - 14 September 2003, Joint Proposal by Argentina, Bolivia,

Brazil, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, India, Mexico,

Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand and Venezuela.

173

operated in a complementary manner with similar tactics and objectives. With its new

credibility, the G-20 went on to expand its scope of influence into a balanced,

proactive coalition working towards the completion of the Round.

After having been ignored by the US-EU framework, the Cotton 4 re-

circulated its Cotton Initiative just prior to Cancún, seeking renewed attention on the

cotton issue during the meeting.14

At Cancún the G-33 matured fully, gaining over 40 members, and continued to

focus exclusively on promoting SP and SSM in the Round. Strongly linked to SDT in

the area of food, the designation of ―Special Products‖ entails allowing developing

countries to determine and categorize specific agricultural products into a protected

class to mitigate hardship in food and livelihood security and rural development needs

in developing countries. Furthermore, the group sought to establish a ―Special

Safeguard Mechanism‖ to address import surges that could destabilize domestic

markets, thereby causing serious harm to local farmers. These issues appealed to a

broad base of developing countries with protectionist interests in agriculture.

Furthermore, many smaller developing countries, traditionally passive in negotiations,

took the bold step of joining a coalition for the first time to directly challenge stronger

countries.

Thus, developing countries were actively advocating issues of interest to them

and coordinating with each other throughout this period. Although the G-20 was

striving to block the US-EU framework, in a strange twist of events, the ―Singapore

14World Trade Organization, TN/AG/GEN/6, August 4, 2003. WTO Negotiations on Agriculture,

Poverty Reduction: Sectoral Initiative in Favour of Cotton, Proposal on Implementation Modalities,

Joint Proposal by Benin, Burkina Faso, Chad and Mali.

174

issues‖ were tabled impromptu before the WTO Membership, taking many Members

by surprise because this controversial matter was not expected to be discussed at

Cancún. At the WTO Ministerial Conference held in Singapore in 1996 some

Members had advocated the launch of work programs on the inclusion of four new

issues within the ambit of the WTO. These areas were investments, competition,

government procurement and trade facilitation. The inclusion of these issues had been

raised at the 1996 Ministerial Conference in Singapore as well as at the 1999 Seattle

Ministerial Conference but had been soundly rejected by majority of the Members on

both occasions. Developing countries, in particular, were adamantly against the

inclusion of these issues under WTO rules because of the view that they would be at a

competitive disadvantage compared to industrialized countries in these areas.

Therefore, the developing countries saw the introduction of the Singapore issues at the

Cancún Conference as an attempt to distract developing countries from the agriculture

issue.

Furthermore, behind the scenes, industrialized Members had been holding

meetings with developing country Members in an attempt to break up or fragment15

the newly formed coalitions.16

Based on these meetings, some developing countries

chose not to join the coalitions, for instance, Uruguay, an active Cairns Group member

was conspicuously absent from G-20 at Cancún, which has been attributed to the

country‘s close relationship with the US at the time. Other countries such as Chile

were also under considerable pressure from the US not to join the coalition.

15 See supra pp.31-33. 16 Per Interviewee 10

175

Consequently, at this point, one more developing country coalition – the G-90

– was formed. The G-90 emerged as the umbrella body of three pre-existing

developing country coalitions with an overarching interest, primarily to prevent the

adoption of these Singapore issues. The major objective of this coalition was to give a

voice to the developing world.17

The group comprises the Africa Caribbean and

Pacific (ACP) Group, the African Group, and the Least Developed Country (LDC)

Group – which were all pre-existing WTO developing country coalitions, formed prior

to or at the beginning of the Round. Therefore, developing countries, already adamant

in the past that these issues should not be included in the Doha Round, successfully

precluded the inclusion of three of the Singapore issues into the Doha negotiations

during the Cancún Ministerial meeting. Trade facilitation was conceded.

With G-90, particularly as the group was not tied to a specific issue or even to

agriculture alone, the level of coordination and communication among these three pre-

existing coalitions was novel and helpful in the presentation of a unified, if broad,

developing country stance at Cancún. At the conclusion of the conference, the

conference chairperson circulated a draft declaration on September 13, known

unofficially as the ―Derbez text,‖ but several WTO Members rejected the draft

because it did not adequately represent their interests. By this time, each of the four

agriculture developing country coalitions – C4, G-20, G-33 and G-90 – was well

crystallized with clear positions on the negotiation interests and each of the coalitions

confidently rejected the Derbez text, precluding any hope of real progress in

agriculture negotiations. Overall, by September 14, the Cancún Ministerial meeting

17 Per Interviewee 4

176

ended in a deadlock primarily because of G-90‘s position regarding the Singapore

Issues – which the group vehemently rejected (although trade facilitation was

conceded at the time). As a result, no consensus was reached among the Members at

this meeting, and significantly, no ministerial declaration could be issued at the

conclusion of the conference. Thus, with regard to overarching development issues,

G-90‘s strategy is based on a ―numbers game‖ that completely overwhelms the WTO

with the sheer volume of its Membership, making the group members seem simply too

many to ignore. Therefore, in spite of the fact that G-90 members consist of the

smallest WTO members, with no external weight and very limited resources, the

import of the group‘s representation of a significant number of WTO Members was

not lost on the WTO.

According to one developing country interviewee, ―each alliance or group

plays an important role in each moment…different groups affect the negotiations

differently. For example, the G-90 declaration - each alliance plays specific and

important roles periodically.‖18

7.2.2 The July 2004 Package

As a result of the developing country coalition activity at Cancún, a deadlock

occurred and the DDA negotiations were temporarily suspended for six months, but in

March 2004 Members decided to resume negotiations. However, as tensions slowly

ebbed among Members, it was agreed that negotiations on the agriculture framework

18 Per Interview 9

177

would be pursued first, before an attempt was made at negotiating the Modalities on

Agriculture.

During the negotiation interval, the four developing country coalitions had

concurrently been preparing and submitting various proposals and position papers

articulating their agriculture interests in the Round. Although agriculture was not the

primary cause of the Cancún deadlock, the developing country coalitions now realized

that they could strategically influence the outcomes of negotiation meetings by

working together, having experienced firsthand how their coalition strategies affected

the Cancún Ministerial meeting. As a result, the tone of the 2004 negotiations was

much less contentious than the Cancún Ministerial. While Cotton 4 primarily utilized

moral suasion and the international community at large to draw attention to the cotton

issue, the G-20 became known as the ―voice of reason‖ in the negotiations for

proposing and maintaining a collaborative position catering to diverse interests.

According to one interviewee, ―C4 issues are bleak but the group has rhetoric. C4‘s

public campaign is very effective. They have been able to generate the interest of the

entire membership for their issues.‖19

Although all WTO Members and groups were still firm in their respective

resolves, Members were unanimous in wanting the Round to advance. The Five

Interested Parties (FIPs), comprising Australia, Brazil, the EU, India and the US, were

instrumental to the negotiations during this period. These Key Members arranged

unofficial meetings on the sidelines of the formal WTO meetings to help facilitate an

19 Per Interviewee 16

178

agreement. Interestingly, this was the role traditionally played by the ―Quad‖20

in

GATT/WTO negotiations prior to this time – but the FIPs was remarkably different in

having two developing country members – India and Brazil. With the inclusion of two

developing countries in an inner caucus grouping for the first time, developing country

Members were encouraged by the implicit influence that this variation signified.

Developing country Members were also now more convinced that their issues would

genuinely receive greater attention from leading industrialized Members.

Therefore, during the intensive negotiation period from March to July 2004

Key Members and coalitions negotiated among themselves until a framework was

finally agreed upon. The July 2004 Framework agreement was reached literally at the

very last minute of the July meeting, a few hours after midnight on August 1, 2004.21

During this negotiation period, the G-20 members met frequently to refine

their negotiation positions. Spearheaded by its lead members, the G-20 invested in

rigorous technical analysis and engaged in meaningful internal negotiations, which

yielded a balanced perspective. Being heterogeneous in nature, the group became

respected by WTO Members for its well thought out positions. Based on rigorous

analysis from their studies and internal compromise, the G-20 was able to originate

viable alternatives to the US-EU proposal, particularly in the area of market access.

The July 2004 Framework adopted the G-20‘s ―Tiered Formula,‖ which the group

proposed as an alternative to the US-EU ―Blended Formula‖ for market access. The

G-20 succeeded in producing some systemic change by redefining Members‘

perceptions of the balance of power in the WTO with novel ways of working and

20 The Quad consists of the four leading industrialized countries – Australia, the EU, Japan and the US. 21 citation

179

thinking by developing countries in multilateral trade negotiations.

The Cotton-4‘s Cotton Initiative was also adopted. The framework document

reaffirmed the WTO General Council‘s commitment to the importance of the Cotton

Initiative and recognized the need to address both the trade as well as the development

aspects of the issue.22

Moreover, in an addendum to the July 2004 Framework, the

WTO General Council went on to state that ―[cotton] will be addressed ambitiously,

expeditiously and specifically, within the agriculture negotiations.‖ In addition, a

subcommittee on cotton was created to prioritize the cotton issues.23

Thus, the cotton

issue was now on its way to being placed firmly on the DDA agriculture negotiation

agenda with the inclusion of the above as part of the Hong Kong Declaration in

2005.24

At this juncture the ―development aspect‖ of the Cotton Initiative was

separated from the ―trade aspect‖ of the cotton issue in the negotiations. The Cotton 4

continued to follow each stream closely and aggressively, holding out both areas of

the cotton issue as an emblem and a test. It was an emblem of developing country

empowerment within the WTO and a test as to the level of commitment which the

WTO membership is prepared to make in the DDA regarding this issue, thus, claiming

that cotton ought to be addressed in a comprehensive manner that links trade with

domestic support in industrialized countries.

The G-33‘s proposals were also included in the Framework in general terms

for negotiation in the draft Modalities at a later date.

22 World Trade Organization, Doha Work Programme-Decision Adopted by the General Council on 1

August, 2004, WT/L/579, dated 2 August 2001 23 World Trade Organization, Ministerial Conference Sixth Session, Hong Kong, Doha Work

Programme Ministerial Declaration adopted on 18 December, 2005, dated 22 December 2005,

WT/MIN (05)/DEC, Paragraph 4 p.1; July 2004 Framework, Annex A, Framework for Establishing

Modalities on Agriculture, paragraph 4, page A-1 24 Sixth WTO Ministerial meeting held in December 2005 in Hong Kong.

180

While the component coalitions of G-90 (AG, ACP, and LDC) were present

and active during these negotiations, the G-90 itself did not assume any formal role in

the negotiations at the time, but rather, simmered in the background just below the

surface of the negotiations. As a result, the entire Framework had numerous

provisions for special and differential treatment (SDT) for least-developed countries

and developing countries in general, all of which are of interest to the group.

Significantly, since all WTO agreements are reached by consensus, the main concern

of WTO Members at that point was how to ensure that overarching developing

country issues were adequately addressed. In this way, Members sought to prevent a

repeat of the Cancún episode by precluding a block opposition by the G-90 to the

proposed deal. Therefore, the imminent threat of a blocking action by G-90 was a

credible one that helped shape the dynamics of the July 2004 Framework agreement

and beyond.

Having concluded a framework for negotiating the Draft Modalities on

Agriculture through a mutually agreeable process, WTO Members then turned to

preparing a distillation of the July 2004 Framework into an official Ministerial

Declaration at Hong Kong in 2005. The four developing country coalitions were still

alert and active during this period. The main goal of each coalition was to ensure that

its issues were inserted into the Ministerial Declaration (which was to form the agenda

for the substantive DDA agriculture negotiations).

181

7.2.3 The Hong Kong Ministerial

In December 2005 the 6th WTO Ministerial Conference was held in Hong

Kong. After July 2004, in preparation for this meeting, WTO Members first allowed

the new EU Commissioner to take office. Similarly, a new US trade representative

(USTR) had to be confirmed after the US presidential elections. Although by 2005 the

Five Interested Parties (FIPs) had basically ceased to meet in the agriculture

negotiations, other elite facilitation groupings, including the ―new Quad‖ comprising

Brazil, EU, India and US, continued to meet regularly. This trend continued to signal

the enhancement of developing country Members‘ bargaining status because India and

Brazil, while not the largest developing country Members, had both assumed active

leading roles among developing countries for decades. Therefore, being included in

such an elite group legitimized the changing international trade negotiation dynamics

towards a more inclusive system. Moreover, at the time, China had only recently

acceded to the WTO and was still taking a backseat in the process as the country

adapted to the WTO system.

Developing country agriculture coalitions prepared thoroughly for this

meeting, knowing that the issues included in the Hong Kong Ministerial Declaration

would likely be incorporated into the agreed upon DDA Modalities on Agriculture.

The critical importance of the conference was the fact that the coalitions and Members

that succeeded in finalizing the inclusion of their issues in the Ministerial Declaration

could expect a minimum level of outcomes from the Doha Round, even if further

dilution of their positions occurred over the course of negotiations. Accordingly,

182

Cotton-4, G-90, and G-20 each issued position papers in 2005 in advance of the Hong

Kong Ministerial.25

The level of preparation invested in the negotiations by

developing countries was truly novel. While coalitions such as the G-20 were self-

reliant and confident about their technical capacity, the other groups were also not

deterred by their internal limitations. Rather, the Cotton-4 and G-33 appeared to have

benefitted from external technical assistance from interested stakeholders in civil

society (NGOs) in fine tuning their articulated interests.

In general, it is noteworthy that the developing country agriculture coalitions

each continued to meet frequently during the months leading up to the meeting. The

Ministerial was also characterized by preparation sessions and briefing sessions

organized by each coalition immediately before and during the Ministerial.

Interestingly, the chain of communication between the four developing country

agriculture coalitions was so strong at the time that these groups were able to

harmonize their positions and freely exchanged information during the negotiations.

At this point, despite conflicting developing country Member agriculture interests, all

of the developing country coalitions worked towards the common objective of setting

an acceptable negotiation agenda. The duplication in coalition memberships, and the

synergies which this provided, was actively leveraged by developing countries to their

advantage. This period revealed that these coalitions recognized it to be strategically

prudent for developing country coalitions to align as much as possible and remain

unified, to achieve their common desired outcomes.

25 World Trade Organization, TN/AG/SCC/GEN/1 April 7, 2005 (Cotton 4); WT/MIN(05)/8, December

13, 2005 (G-90); WT/L/621 September 27, 2005 (G-20).

183

Coalition members expressed the view that developing country coalitions were

very well prepared and functioned very efficiently in Hong Kong. According to one

interviewee, ―in Hong Kong the developing countries played (the negotiations) very

well. Daily briefings for G-110 members, (and issuing) joint communiqués.‖26

Led

by G-20, all the developing country groups had combined daily briefings (i.e. G-20,

G-33 and G-90 as G-110 members) and issued joint statements as unified developing

countries during the period.27

―Although there was divergence, (the coalitions)

coordinated politically and communicated effectively. Even in SSM, on a technical

level they tried several times to compromise. No agreement was reached but the effort

was there. They have no outward position on NAMA and SSM but they exchanged

views on these issues and had internal understanding.‖28

The Hong Kong Declaration adopted the provisions of the July 2003

Framework regarding cotton and went on to establish a Sub-Committee on Cotton to

prioritize the issue further. In line with G-20‘s proposal, the Declaration sought a

balance between agriculture and non-agriculture market access (NAMA), in line with

the recognition of the need for all WTO Members to compromise in both areas, which

was a position of particular interest to the industrialized Members.

Although the G-33 was also able to secure the broad inclusion of its issues into

the Hong Kong Declaration, there was still significant divergence among Members on

26 Per Interviewee 14 27 World Trade Organization, Bhurban G-20 Ministerial Declaration, WT/L/621, September 2005,

Paragraph 10 (―Ministers stressed the need to give priority to strengthening alliances between the G-20

and other developing country groups. Ministers welcomed the invitation to the coordinators of the G-33, Least Developed Countries (LDCs), the African Group, ACP countries, and CARICOM. Ministers

emphasized that the G-20 should continue to work together with other groups, including the G-90, and

individual Members with the aim of strengthening convergences and ensuring that the development

dimension of the Doha work programme is achieved.‖) 28 Per Interviewee 14

184

these two issues. At this juncture, the G-20 2005 Communiqué ahead of Hong Kong

expressly mentioned the coalition‘s broad support for G-33 and the SSM issue in an

attempt to give the issue more traction with the Members.29

After Hong Kong, in terms of the negotiation process this period was

unremarkable in the sense that developing countries continued to utilize the lessons

learned since 2003 to advance their interests. Having successfully influenced the

agenda-setting process, developing country Members then began to prepare for the

negotiation of the Doha Round Modalities on Agriculture. However, as the four

developing country coalitions matured within the agriculture negotiations, there

remained extremely wide gaps in the negotiation positions of all the Key Members

across the various DDA negotiations.

7.3 Phase 2 - The Doha Round Draft Modalities on Agriculture (2006-2008)

After the Hong Kong Declaration, WTO Members began the substantive

negotiations for the Round. The Key Members agreed that they would try to form a

―core‖ agreement on the level of ambition which can be reached in the Doha Round.

That is, on agriculture these countries would agree to an outline regarding what could

be achieved on all the broad categories of the agriculture issue (market access,

29 World Trade Organization, Bhurban G-20 Ministerial Declaration, WT/L/621, September 2005, Paragraph 11 (―Ministers reiterated that Special Products and the Special Safeguard Mechanism are

integral elements of the negotiations and welcomed the initiative of the G-33, to which the G-20 is

prepared to contribute, to develop a list of indicators for the designation of Special Products based on

the criteria of food security, livelihood security and rural development needs.‖)

185

domestic support and export subsidies). The precise details would then be negotiated

among WTO Members by consensus.

The main catalysts of the DDA negotiations at the time - the G-4 or the new

Quad (comprising the EU, the US, Brazil and India), which had earlier worked with

Australia as the Five Interested Parties (FIPs), again expanded to form the G-6 with

the addition of Australia and Japan. In February 2006, the G-6 decided that the

process of negotiations on modalities would be facilitated using simultaneous

simulations on market access in Agriculture and non-agriculture market access

(NAMA). Therefore, from this point onwards the agriculture negotiations and NAMA

negotiations were formally linked at the WTO secretariat. In fact, the Chairs of the

Agriculture and NAMA negotiating committees decided to hold their meetings in the

form of intense Agriculture and NAMA ―weeks‖ that ran concurrently.

Likewise, in the NAMA negotiations a group of developing countries had

formed a coalition called the NAMA 11 seeking flexibilities to limit market opening in

developing countries with regard to industrial goods trade.30

The Text on Agriculture produced by the then agriculture Chair, Crawford

Falconer, followed the same structure of his earlier papers. The Chair simply reflected

Members‘ views, stipulating the areas of divergence, which remained a significant

number at the time. In keeping with its role as the forerunner developing country

coalition, the G-20 produced detailed commentary on the text, which was shared with

the G-110. The G-20 was of the view that the Chairperson‘s text was a fair

30 NAMA 11 comprises 10 WTO Members with conservative interests in the NAMA negotiations.

These are Argentina, Brazil, Egypt, India, Indonesia, Namibia, Philippines, South Africa, Tunisia, and

Bolivarian Republic of Venezuela.

186

representation of the position of members (unlike the Derbez text for example) and

this type of knowledge sharing improved communication among developing countries

themselves, and between developing countries and the WTO. Moreover, the larger

developing countries were actively engaged in the agriculture and NAMA negotiations

as industrialized Members tried to gain increased market access to developing

countries in NAMA (and agriculture) in lieu of any concessions given in the

agriculture negotiations.31

Both the US and the EU tried to move their position

towards the G-20‘s ―Tiered formula,‖ which formed the basis of the Hong Kong

Declaration text. However, both of the industrialized superpowers encountered

considerable difficulty from their domestic agriculture constituencies that precluded

more flexibility on their part. The US trade representative (USTR) was constrained by

an increasingly protectionist US Congress that was facing an election in November

2006.32

The EC Commissioner also faced similar issues, having been warned not to

exceed the Common Agricultural Policy (CAP) limits in the negotiations.

At this time, with the exception of India, Brazil and a handful of other large

developing countries, most developing country Members were effectively excluded

from actively participating in the negotiations. Not being part of the G-6, they had

little access to have any impact on the ―core agreement‖ negotiations on the central

issues of the Round. Moreover, the core agreement negotiations spanned the entire

Doha Round and was not limited to agriculture alone. Thus, the four case study

31 Hong Kong Ministerial Declaration, Paragraph 24 effectively linked the agriculture and NAMA

negotiations. 32 Robert Wolfe, Sprinting During a Marathon: Why the WTO Ministerial Failed in July 2008, Groupe

d‘Economie Mondiale (GEM) Working Paper 1 (April 2009).

187

coalitions also appeared to be dormant at the time. Otherwise, this could have been a

frustrating period for these coalitions in the negotiations because the agriculture

coalitions were basically sidelined. For instance, although Cotton-4‘s issues are

central to the agriculture domestic support negotiation, this group was ignored by the

US, which has refrained from presenting its own proposal on cotton up until now.

However, it is noteworthy that the larger developing countries – Brazil and

India – in their capacity as prominent developing country coalition leaders continued

to speak up for the rest of developing countries on the issue of agriculture as well as

other areas during the core agreement negotiation period. For instance, India stated

that the G-33 and the G-20 represented 90% of the world‘s farmers yet the EU and the

US captured 50% of the world trade in agriculture, with only 2 to 5% of their

population employed in the agriculture sector, pointing out that this situation was only

possible due to the huge subsidies being deployed in the developed world.

Perhaps counter intuitively, despite this seemingly unproductive period for

developing country coalitions, agriculture continued to remain the most important

aspect of the DDA negotiations since the agriculture issue dictated the negotiation

pace for all other DDA issues. Furthermore, the coalitions also strove to retain

relevance by issuing a number of proposals and position papers regarding their

respective interests during the period. Having achieved significant input into the Draft

Modalities, although it was a quiet period for the developing country coalitions, the

issues they represented continued to command the attention of the entire WTO

membership.

188

In May 2006 the G-33 and the G-90 issued a joint position paper on the SP and

SSM issues, which was still being treated by Key Members in the broadest of terms.

Eventually, in a tactical maneuver designed to generate some traction on the issues,

the G-33 delinked the SP and SSM issues in December 2007 and pursued each issue

independently – a move that succeeded in generating significant progress on the SP

issue, thereby leaving the group to contend primarily with the more controversial SSM

issue.33

As Members once again turned to the negotiation of modalities by 2007,

agriculture remained by far the most contested area in the ongoing DDA negotiations.

Despite all attempts by the then Chairman, Ambassador Falconer, to engage in

unilateral talks in an attempt to broker an agreement between Key Members, progress

remained extremely slow. In an attempt to move negotiations forward, in July 2008

WTO Director General, Pascal Lamy, called for a Mini-Ministerial in Geneva to be

attended only by ministers from the Key Members (G-6 and China). China, Brazil and

India purportedly represented themselves as well as developing country interests.

However, the meeting ended in a stalemate purportedly due to disagreement over the

dynamics of the SSM for developing countries. The two main protagonists in the 2008

Mini-Ministerial were the United States and India. Indonesia, the G-33 coordinator,

was excluded from the meetings along with the rest of the WTO membership.

On the negotiation of a special safeguard mechanism, the US has contended

that in addition to ease of use and effectiveness, the SSM should not ―choke‖ trade.

Therefore, the US advocated an SSM that is transitional and temporary (limited to the

33 Per Interviewee 21

189

duration of the Doha Round implementation period), and that applies to true surges

and accused India and G-33 of being inflexible in the negotiations.34

Highlighting the

need for a ―good‖ agreement, the US has stated that a mechanism that will, in effect,

raise tariffs across the board would not be beneficial at this time. While many WTO

Members who are aggressive exporters agree with the US argument on SSM, the fact

that there has been a prolonged period of a lack of meaningful political engagement in

the negotiations on the part of the US (due to its own domestic distractions) has

significantly weakened its credibility in the WTO. It is apparent that the US trade

representative (USTR) does not have the political backing to reach an agreement in the

Doha Round, and as a result, many WTO members are extremely frustrated by the US

conduct in international trade negotiations.35

Capitalizing on the increasingly disgruntled feelings of other Members towards

the US, India has attempted to place the blame for the 2008 Mini-Ministerial meeting

stalemate firmly on the US. India asserted that it was prepared to be ―flexible‖ with its

demands, but not at the expense of small developing countries.

During the 2008 Mini-Ministerial meeting deadlock, the EU unsuccessfully,

attempted to intervene between US and India to broker a deal on SSM, although this

issue was merely viewed as the first of many difficult issues to be discussed at the

meeting.36

Furthermore, in an attempt to find a middle ground on this issue, the point

has been made by several Members, such as Chile and Egypt that an import surge is

not problematic per se because it is possible to have an import surge driven by

34 Per Interviewee 15, Interviewee 13 35 Per Interviewee 4 36 Per Interviewee 18

190

increased demand without a concurrent decrease in local prices.37

However, the fact

that the G-33 seems to want a mechanism that can be utilized by developing countries

at virtually any time purportedly in order to protect rural farmers and domestic

markets (food security, livelihood security and rural development), is difficult for

some Members to accept. In particular, aggressive developing country exporters,

exemplified by the Cairns Group, such as Uruguay and Argentina, have stated that the

G-33 are not asking for a safeguard, but essentially for a waiver that could potentially

be triggered indiscriminately to block legitimate trade.38

Therefore, it became apparent that India was speaking for itself at the

negotiation meetings. While it remained unclear whether India was advancing its own

domestic agenda or expressing dissent as the purported voice of the G-33, it was

obvious that India had distanced itself from the balanced position of the G-20.

Developing country Members not privy to the meeting saw this development as being

indicative of fragmentation within the G-20 leadership.

On the other hand, Brazil, as the G-20 coordinator retained the balanced

position of the group by not expressly dissenting on the SSM issue, despite the

country‘s own domestic interests. While Brazil (qua G-20 coordinator) tried to retain

the coalition‘s cohesion, the SSM issue is actually not of interest to the country‘s

liberal position in agriculture. Thus, Brazil, as an exporter, was not averse to the

proposal on the table because it benefited the country‘s own trade interests, and so

appeared to have assumed a much more passive role in the meetings. However,

37 Per Interviewee 13 38 See supra pp. 144-46 (G-33 arguments about food security, livelihood security and rural

development).

191

according to some, India did not appear to want the agreement, allegedly due to its

own domestic agenda and, therefore, rigidly allowed the disagreement over the

dynamics of the SSM for developing countries to escalate until talks came to a

standstill.39

In the end, the G-33 was considered by many as providing a voice for

very small countries that had fed into the argument, introducing recognizable

development issues into trade talks.40

Consequently, although a majority of the coalition members in both the G-20

and G-33 have sought to maintain a united front,41

some interviewees were of the

opinion that while coalition interests were being pursued by India and Brazil up to a

point, and by China to a far lesser degree,42

fragmentation was occurring between

Brazil and India (as is common among coalition members during the end game) due to

each country‘s diverging trade interests.43

This strain was apparent to all Members

during the briefing sessions after the Mini-Ministerial meetings; some interviewees

have gone so far as to say that the collaborative relationship between India and Brazil

has not been the same since then.44

This is because in the past India and Brazil had

both gone to great lengths to project their united stance by conducting joint briefing

sessions for G-20 members as well as other developing country Members as a show of

39 Per Interviewee 18, Interviewee 5, Interviewee 6 (A number of Interviewees speculated on the

motives of India for not wanting to reach an agreement and end the Doha Round in 2008). 40 Per Interviewee 3 (―G-33 too essentially vetoed the July 2008 package negotiation dynamics both

ways.‖) 41 Per Interviewee 5 (―In July 2008 there was a difference between G-33/G-20 members and non-G-

33/G-20 but they realized that they needed to stick together as much as possible and support each other. Countries agree internally to disagree. They knew that if they didn‘t stay together they wouldn‘t make

a difference. Efforts were made to divide them but they wanted to conclude Doha.‖) 42 Per Interviewee 14 43 Per Interviewee 2 44 Per Interviewee 1

192

solidarity.45

In this instance, although the briefing session was held, it was glaringly

obvious to Members that the dynamics between the two countries had begun to

change.

As a result, different views were expressed by interviewees regarding the

strategies of the various coalitions. Some interviewees contend that the rigid approach

of the G-33 does not work, preferring the collaborative G-20 approach.46

Others were

of the opinion that but for India‘s firm position, the Round would have been concluded

in 2008 to the detriment of smaller developing countries. Furthermore, some smaller

G-33 members even took the dissenting view that the fact that an agreement was

almost reached in 2008 is evidence of ―agency costs‖—indicating that at the end of the

day these larger countries were still speaking as individual countries and promoting

their own domestic trade agenda, as opposed to the coalitions‘ agreed upon agenda.47

Therefore, it becomes apparent that despite the general perception that

agriculture is mainly a ―North-South‖ issue, there is a widening wedge between

developing country Members in this area. The SSM architecture issue which may

eventually be the determining factor in the fragmentation of developing country

coalitions is only one of the many difficult issues in which developing countries may

potentially diverge.48

Based on the interview data, the consensus is that the gap

between the developing country Cairns Group members and the G-33 members may

dislodge the cohesion within the G-20 coalition in particular, (where these two group

45 Per Interviewee 9 46 Per Interviewee 16 47 Since these smaller countries‘ interests might have been marginalized or sacrificed in the process of

reaching a consensus. 48 Another example of divergent interests among developing countries is the GSP, which pits ACP

countries against the Tropical Products group on Latin American exporters.

193

interests coincide), thereby dislodging the finely balanced unity that we have seen thus

far from developing country Members in this Round.49

Significantly, India as a

leading developing country and the G-33 as a coalition both lost some credibility in

July 2008 (after the stalemate) because many WTO Members did not agree that the

SSM issue should be the determining factor for concluding the Doha Round.50

However, in recent times theG-33 has tried to regain its footing in the negotiations

through additional proposals, but the effect of these proposals, if any, would not be

seen until further negotiations take place.51

To date, the July 2008 Mini-Ministerial has been held out as the closest

opportunity of reaching a Doha Round agreement since the commencement of the

Round. Some interviewees saw this as a good opportunity that broke down due to the

lack of time and other political considerations.52

Although overall, substantial

progress has been recorded in the agriculture negotiations since 2003, since most

issues have now been agreed upon, except for a handful of the most difficult issues,

the current status of the negotiations tend to be perceived differently. After one week

of intensive closed-door negotiations from July 21–29 2008, the meeting ended over

SSM, only the first of many, leaving all the other thorny areas, such as cotton,

untouched, and in the process breeding further doubts about the viability of the

DDA.53

To make matters worse, the former Chairman of the Agriculture Committee,

Ambassador Crawford Falconer, did not release the current version of the Draft

49 Per Interviewee 2, Interviewee 9, Interviewee 7, Interviewee 3 50 Per Interviewee 18, Interviewee 5 51 Per Interviewee 22 52 Per Interviewee 2 53 Robert Wolfe, Sprinting During a Marathon: Why the WTO Ministerial Failed in July 2008, Groupe

d‘Economie Mondiale (GEM) Working Paper 3 (April 2009).

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Modalities on Agriculture until December, 2008. As expected, the revised draft, the

fourth in one year,54

contained no real surprises since minimal new progress had been

attained during the meeting.

However, despite the 2008 setback, the recurring common tactical strategy

with all four developing country agriculture coalitions has been the cohesion that they

have strived to maintain throughout the negotiation process, thereby avoiding

fragmentation. According to one interviewee, ―unity is of utmost importance in these

coalitions so it is extremely important that everyone is on board. If one or two

countries differ with the position, it‘s better not to present it.‖55

Therefore, for

developing countries in the current Round the import of maintaining cohesion appears

to be significant.

7.4 Phase 3 - Towards the Doha Round “Endgame” (2009-2010)

At the end of the Seventh WTO Ministerial Conference held in Geneva in

December 2009 WTO Director General, Pascal Lamy, strongly urged world leaders to

forge ahead towards the completion of the Doha Round in 2010 by demonstrating

sufficient political engagement in the process. In response, world leaders agreed to

meet again in March, 2010 to conduct a ―Stock Taking‖ exercise regarding the

progress of the Round.56

54 Previous drafts were released in February, May and July 2008. 55 Per Interviewee 11 56 World Trade Organization,

http://www.wto.org/english/news_e/news09_e/tnc_chair_report_17dec09_e.htm (last visited March 11,

2011).

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However, at the end of an informal Senior Officials Green Room meeting in

February 2010,57

where select officials met with the Director General to discuss the

―State of Play‖ of the negotiations, it was noted by the G-20 member delegates

interviewed that the interim bilateral negotiations that had been expected to pave the

way for a productive meeting in March had not been successful. In general, the level

at which negotiations are held is indicative of the amount of political weight that the

meeting commands, signaling the likelihood of movement in the negotiations.

Therefore, it was already apparent before March 2010 that the Doha Round was

unlikely to be concluded in 2010. This failure was due to the problem of a lack of

political will on the part of the United States to engage meaningfully in the process

which had already resulted in the Stock Taking meeting being downgraded from the

proposed ministerial level meeting to a meeting at the senior official level – much to

the dissatisfaction of other Members.58

Furthermore, in preparation for the exercise, G-20 members were briefed that

although the proposed agenda for the March Stock Taking meeting was not clearly

defined, three scenarios had emerged with respect to how Members could proceed

with discussions in the Stock Taking exercise.59

It had become apparent from the

57 World Trade Organization, http://www.wto.org/english/news_e/news10_e/agng_03mar10_e.htm (last

visited March 11, 2011). 58 Furthermore, although the Director General also tried to highlight the post-Stock Taking negotiation,

advocating political engagement at ministerial level in order to stimulate the process, the US

vehemently opposed any discussion in this direction as being preemptive of political level talks. 59 Option 1 entailed proceeding with ―business as usual‖ that would involve maintaining bilateral and

pluri-lateral talks concurrent with the multilateral process in Geneva. This option encouraged Members

to continue working on improving the Draft Modalities text in readiness for final engagement at a political level. However, many developing country delegates at the Green Room meeting did not like

this option because it gave a ―false impression‖ of progress in the negotiations. The second option

involved the possibility of agreeing to an ―early harvest,‖ which refers to securing and finalizing any of

the progress made so far in the DDA negotiations. This option was proposed by the WTO in the hope of

sending a signal to the world in March that the WTO is still working and productive. However,

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deliberations at the Senior Officials‘ Green Room meeting that the least popular

scenario for developing country negotiators (option 1 – ―business as usual‖), was the

most likely option to prevail at the Stock Taking exercise scheduled for the next

month. Unsurprisingly, therefore, the March 2010 Stock Taking exercise was

substantively unproductive due to the Key Members‘ continued lack of political will

to move the process forward towards the completion of the Round.60 Accordingly, all

outstanding areas listed in the Chairperson‘s report to Trade Negotiations Committee

(TNC) on March 22, 2010, remained unaddressed.61

Expressing skepticism in advance of the meeting, several developing country

delegates from all four coalitions complained that the entire exercise was a tactical

error on the part of the Director General in an attempt to jump-start negotiations,

because in their opinion, these artificial deadlines – in this case the March meeting –

erode the credibility of the negotiation process. Although the Director General‘s good

intentions as well as his understanding of the issues were not in question, the growing

perception among both developing country and industrialized country delegates was

that Mr. Lamy may be jeopardizing the process by ―forcing talks‖ and trying to broker

a deal before the political climate is right.

although many delegates felt that this option would be desirable, they expressed the view that it would

be difficult to accomplish because the process for identifying the criteria for determining which areas of

the text are eligible for early harvest remains unresolved. The third and final option proposed was for

Members to concentrate on the ―difficult issues,‖ in which there is currently no agreement in the

negotiations, identify these thorny issues and draft these issues into textual form for insertion into the

Draft Modalities. However, this option was also considered to be problematic because of the challenges in determining which areas are critical enough for discussion. 60 World Trade Organization,

http://www.wto.org/english/news_e/news10_e/tnc_dg_stat_22mar10_e.htm (last visited March 11,

2011). 61 World Trade Organization, TN/AG/25, 22 March 2010.

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Therefore, the challenge was now one of credibility in the multilateral

negotiation process. Delegates stated at the time (March 2010) that they would prefer

less publicity for the Round. Instead, they preferred that negotiations continue

discretely in Geneva, pending a favorable change in the political climate.62

In their

view, forcing premature negotiations could lead to another stalemate, which might

necessitate the suspension—and ultimate death—of the Round. ―Will prolonging the

negotiations actually help in ultimately reaching an agreement? If the answer is ―yes,‖

then it makes sense to continue —but if more time will not ameliorate the negotiation

situation in the Doha Round—then what?‖63

Moreover, it was difficult to foresee a meaningful political negotiation in 2010

or even in 2011 because the issues hindering such a discussion were likely to persist

for some time to come.64

Although there is likely to be sustained political pressure

mounted on the US, in particular, to bring the country to the negotiation table, there

are a few significant areas in the agriculture negotiations other than the SSM issue,

such as cotton, that require delicate handling. The US Trade Representative and

India‘s Commerce Minister held bilateral talks to explore a way forward for the Doha

Round. However, the USTR has emphasized that without evidence of new export

opportunities for American businesses, the administration would not be able to

convince Congress to endorse the deal.

In the interim, while informal discussions will undoubtedly continue in

Geneva, the main focus of the WTO should be on how best to restore credibility to the

62 Per Interviewee 63 Per Observation 1 64 Attributed to factors such as the lack of US political engagement due to domestic priorities and the

global financial crisis.

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negotiation process, and the multilateral trade system as a whole in light of the events

of the past decade. As at the end of the March 2010 Stock Taking Exercise, the Doha

Development Agenda was no closer to establishing a path towards its completion, and

substantively that remains the status even today, in January 2011. As we wait for the

required political engagement from all countries in order to conclude the ―single

undertaking‖ agreement, the agriculture negotiations continue to occupy center stage

in the DDA negotiations.

7.5 Developing Country Coalition Strategy: An Analysis

The description of the Doha Round agriculture negotiations process from

March 2003 to March 2010 has been instructive. Based on the qualitative data

obtained for this purpose, this chapter has described the DDA agriculture negotiations,

tracing the evolution of the case study coalitions. Despite the fact that each of the four

coalitions deployed different tactical strategies during the course of the negotiations,

the role that the developing country coalitions assumed in the course of the agriculture

negotiations is self evident.

In Chapters 5 and 6 we have learned that the Cotton 4 is a small, tightly-knit

coalition that focuses on a single issue – cotton – within the agriculture negotiations.

The group‘s main tactical strategy could be identified as moral suasion because

throughout the study period C4 has repeatedly relied on and utilized the legitimacy of

its cause to its advantage. The group has drawn attention to the adverse effects of the

contested cotton subsidies on the lives of millions of poor people in West and Central

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Africa. The fact that the contested cotton subsidies have actually been ruled to be an

infringement of WTO rules in the US Upland Cotton case instituted by Brazil further

boosted the legitimacy of the group. The C4 took a calculated step to abstain from the

litigation since the group is comprised of four least-developed countries heavily reliant

on industrialized countries for trade as well as aid. By far the majority of developing

countries are unable to effectively deploy WTO dispute settlement mechanism (DSM)

remedies against industrialized countries in the event of a successful dispute.

However, the Cotton 4 was able to free ride on Brazil‘s successful litigation on this

issue without fully engaging in the dispute settlement process.

Although the C4 is glaringly lacking in external weight and resources, its

members all share several common features, including socioeconomic profile,

geographical location and colonization history. Therefore, perhaps most significantly,

the group remains completely united internally because the interest of all four

members in the cotton issue is identical. Thus, there is no fragmentation within the

group due to a divergence of interests.

Furthermore, the group has made remarkable use of effective communication

in lieu of adequate resources. The C4 has been able to favorably convey its position to

the rest of the WTO membership as well as to the international community at large,

bringing unprecedented attention to the cotton issue. As a result, the C4 has already

achieved its agenda-setting goal in this area, with the cotton issue receiving

extraordinary recognition in the negotiations. Consequently, a sub-committee on

cotton was expressly created as a result of the group and the cotton issue is being

approached from both a trade and a development angle.

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Interestingly, Cotton 4 was able to capture and retain the attention of the

international media and civil society, which have remained extremely sympathetic and

loyal to advocating the group‘s interests throughout the Round. In particular, the

international media succeeded in gaining sympathy for the C4 from several advocacy

groups within the US itself. Until now, the US, while expressing disagreement with

the C4 proposal, has had its hands tied and remains unwilling to place its own

counterproposal on the table. This reluctance on the part of the USTR to tender a

proposal on cotton is to an extent indicative of the effectiveness of the ―name and

shame‖ strategy so far adopted by the C4. The US silence could perhaps be attributed

to the anticipated strong domestic backlash from cotton farmers and advocacy groups

on both sides of the issue. The amount of publicity which the group has received has

also acted as a buffer between C4 members and the large industrialized countries

whose subsidies are being contested. The group enjoys the unanimous support of all

developing country Members as well as many industrialized Members. Such goodwill

capital has precluded any overt attempts by the US at fragmenting the group via the

exertion of undue pressure, be it in the form of a ―carrot‖ or a ―stick.‖

In the negotiations, the group has leveraged analytical support from civil

society in its later proposals to compensate for the limited resources and technical

capacity of its members.

The Cotton 4 has been tenacious in its resolve to attain more favorable trade

rules for cotton in the Doha Round. Overall, although on the face of it the Cotton 4

could easily be underestimated because of its size and obvious limitations, (and indeed

was underestimated by the US-EU in their 2003 framework proposal), this coalition

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has clearly demonstrated that even with very limited resources, small developing

country Members can influence the negotiations significantly.

On the other hand, the G-20 is a much more heterogeneous group, and its

members are known for their divergent interests on important issues in the agriculture

negotiations. The group‘s interests span the breath of the agriculture negotiations.

Tactically, while the group originated as a reactionary blocking coalition in response

to the 2003 US-EU framework proposal, the G-20 quickly found its niche in the Doha

agriculture negotiations as a facilitator. As a result, the G-20‘s main strategy could be

described as a balancing factor to bring about systemic change.

After its initial blocking agenda, the group progressed to an important agenda

setting role by proposing a well-designed alternative to the US-EU proposal.

Externally, the G-20 portrayed a persona and soon acquired a reputation for being a

highly collaborative bargaining group willing to engage in negotiations that could

yield a beneficial agreement for all WTO Members, both in the agriculture

negotiations and in other areas of the Round. This reputation lent further credibility to

the G-20 among developing country Members and the group has been instrumental in

ensuring that there has been good communication flow and knowledge sharing

between developing country coalitions in this Round.

Internally, the group has ample resources and technical capabilities because it

enjoys the benefit of having all the large developing countries as part of its

membership. With the fast-emerging middle powers – China and India – both within

its membership, along with other large developing countries such as Brazil and

Mexico, the G-20 enjoys significant external weight. This depth of membership

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translated into superior technical capacity and enabled the coalition to produce

technically sound proposals challenging the industrialized superpowers‘ position and

tendering a viable alternative based on rigorous analytical data that was largely

accepted by the WTO Membership as the basis of the current Draft Modalities in

Agriculture.

The internal fiber of the group is woven together through tough internal

compromise, and decisions are reached by consensus. Considering the heterogeneity

of the group, with leading members from both the liberal and conservative spheres of

the agriculture negotiations, the group‘s strength has been derived from its ability to

reach viable compromises that can be presented to the general Membership as

templates for agreements. In the agriculture negotiations, the cohesion required of the

group mirrors to an extent the collaboration required of WTO Members to reach an

agreement in this area because of the G-20 members‘ divergent interests.

However, in the last few years, the group has assumed a less prominent role in

the negotiations and the cohesion of the group, which may constitute its greatest asset,

appears to be waning. As described in the negotiation process, since the 2008 Mini-

Ministerial the main concern for the G-20 centers on the relationship dynamics of the

three large members – Brazil, India and China. While Brazil has a liberal position

(aligning with its Cairns group interests) and was basically prepared to accept the

agreement on the table and conclude the Round in 2008, India, with its more

conservative position (aligning with its G-33 interests), did not allow the negotiations

to go further. There has been speculation about the underlying domestic motives of

India for circumventing the 2008 deal because it was considered to be an unfavorable

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deal for the country at the time. As the representatives of developing countries in

smaller meetings such as the G-7, the differences between India and Brazil are merely

indications of the fragmentation occurring between the developing country Members

as a whole in the WTO agriculture negotiations. As discussed above, the divergence

among developing countries spans from liberal Cairns group exporters conflicting

with the defensive G-33 or net food-importing developing countries (NFIDCs) or the

Tropical Products group of Latin American exporters challenging ACP preferences.

Many of these conflicting or competing interests among developing countries remain

unresolved in the Round. While some of the group‘s members will undoubtedly

benefit from a Doha agreement based on the agreed upon negotiated areas to date,

many others prefer to retain the status quo ante – the current agreement as agreed in

the Uruguay Round. As a result, the G-20‘s coalition model, while extremely

effective at the agenda-setting stage of the negotiations, appears to be less beneficial to

developing countries in the end game because of their significant divergence.

Therefore, although many WTO Members have expressed an appreciation for

the G-20‘s collaborative negotiation strategy, the G-33, with its distributive

negotiation strategy, also constitutes a highly effective advocate for certain developing

country interests. The G-33 is a large, issue-specific group of developing countries.

Although the group boasts of a broad spectrum of members ranging from large

economies, such as Korea, China and India, to the most impoverished LDCs and

SVEs, all its members are united in their interest in the SP and SSM issues for the

protection of their agrarian populations. Externally, having struggled to place its

interests on the negotiation agenda, the group has remained unshakable in its resolve

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to obtain a favorable SSM for developing countries, having already obtained favorable

results on the SP issue. This determination has earned the G-33 a reputation for being

―rigid‖ and ―inflexible‖ among its liberal opponents in the WTO. However, the fact

that the G-33 maintained its bargaining position (as presented by India in the 2008

Mini-Ministerial), refusing the deal on the table signifies that many of the G-33

members preferred to remain with the status quo than to accept an agreement which

they considered unfavorable to their interests.

Internally, although the G-33 has substantial economic weight, and an

impressive membership comprising 46 countries, the group is not known for

technically rigorous analysis or for generating innovative or workable ideas to solve

the problem. Rather, the group stands on ideas relating to the poverty and

development challenges and has relied on some assistance from civil society in data

analysis for its proposals. Thus, the G-33 appears to remain on one end of the

negotiation spectrum, with little room to bridge its conservative humanitarian position

with other Members. Despite the fact that the essence of the WTO is to promote trade

liberalization among members, the organization has long formally recognized the need

to harmonize development considerations into the liberalization of international trade.

Therefore, in determining the group‘s position, the only variation in the G-33

members‘ interests in SP and SSM results from economic disparity between the

members, which affects the level of compromise which the group can present at the

negotiations. However, since the coalition‘s positions are agreed upon by consensus,

the group generally resorts to the lowest common denominator position, thereby

further cementing the cohesion of the group.

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At present, the G-33‘s main challenge is again one of leadership. The group‘s

official coordinator (Indonesia) has found itself sidelined in the negotiations, with

India assuming the de facto leadership role. This situation manifested itself because of

the leadership role that India plays as a Key Member in G-7 negotiation, leading to

some tension within the group. While some G-33 members consider India a good

representative of the coalition for resisting the 2008 deal, others coalition members

view the country as having an agenda of its own, separate from that of the group.

Moreover, although all the developing countries, particularly the larger

developing countries, saw the wisdom and benefits of cohesion through coalitions at

the beginning of the Round, towards the end game, the individual country positions

have indeed appeared to filter into the coalition negotiation equation. Furthermore, the

larger developing countries, in particular, remain cognizant of their trade interests in

other areas of the Round, such as non-agriculture market access and services, and

several WTO Members felt aggrieved that the 2008 negotiations failed, leaving the

Round unconcluded. For instance, China, although a member of both G-20 and G-33,

has remained largely passive in the agriculture negotiations. In my opinion, this

behavior stems from the fact that the country‘s main economic interests lie elsewhere.

Therefore, while China has poor rural farmers and conservative interests in

agriculture, the country declined to speak on behalf of the G-33 or any of the other

coalitions during the 2008 Mini-Ministerial. Although classified as a developing

country, after the US, China‘s economy is the second largest in the world today (ahead

of the EU), and agriculture forms only a minute percentage of the country‘s trade

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interests. Therefore, China‘s focus and priority in the Doha negotiations is

undoubtedly on other strategically beneficial areas that the agriculture negotiations.

With the strong undercurrent of divergence between developing country

members in the agriculture negotiations as well as other areas of the Round, in

general, a large number of developing countries are able to agree on any given

position only when they face a common, over-arching dilemma. Indeed, this was the

setting under which long discussed collaboration among smaller developing countries

crystallized into the G-90 in 2003.

Traditionally, the level of competition and distrust among smaller developing

countries is high because of their economic limitations (many are based on a single

primary product), with over-reliance on common industrialized Member trading

partners such as the EU. As a result, these countries are rarely able to unite on any

given position since such coalitions could be easily fragmented; furthermore, many

small country coalitions are overlooked and underestimated by the multilateral trade

system. However, one of those rare occasions when these countries collaborated, and

perhaps even more significantly held their ground to achieve a common objective was

observed at the Cancún Ministerial Conference in 2003. ACP, AG and LDC united

with the common objective of blocking the inclusion of the Singapore issues in the

Doha Round agenda and were able to remain cohesive and resist external pressure to

back down from their position. The tactical strategy of this umbrella group was based

on sheer numbers, comprising a third of WTO Members.

Although lacking in external weight and resources, the G-90 was a highly

effective blocking coalition at Cancún. Despite the fact that the group is non-technical

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in nature and has not initiated any agenda setting positions, small developing countries

learned that they too can have a voice in multilateral trade negotiations. As a result,

by 2004 the interests of each of the composite coalitions in the G-90 were given full

attention in order to prevent a repeat blocking incident from occurring during the

negotiations for the July 2004 framework. Therefore, even the latent possibility of a

developing country block became a credible threat in the negotiations. Thus, the G-90

assumed a role of an effective defense mechanism for developing countries with

regard to over-arching systemic changes.

In sum, from the above discussion it becomes apparent that the coalitions

under review fall into two categories. While Cotton 4 and G-33 are issue specific

coalitions, the G-20 and G-90 take a more holistic approach to the negotiation of

agriculture trade issues.

The membership of both Cotton 4 and G-33 are also substantively

homogeneous, despite the fact that these two coalitions vary in size, because members

share a common interest in the issues being addressed by each coalition. However,

notwithstanding these notable similarities, the negotiation strategies of the two

coalitions still differ significantly. While Cotton 4 has negotiated its position

regarding poor West African cotton farmers primarily on a normative or moral

platform, G-33 has negotiated the same overarching principles regarding food

security, livelihood security and other non-trade concerns but from a position less

consistent with the WTO's trade liberalization principles regarding its demands. So

far, as chronicled in Chapter 8, the reaction of other WTO Members, particularly

industrialized country Members, to these different negotiation strategies exhibited by

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the two coalitions – to essentially similar ―trade and development‖ issues – has been

intriguing.

To date, the Cotton 4 has generated an unprecedented level of interest and

attention for the cotton issues, while the perception of progress of the G-33 appears to

be mixed. The strategic decision to separate the proposals for the SP and SSM issues

may have been critical to the group‘s relevance and continued existence. While WTO

Members have informally conceded on the SP issue, the SSM issue is still highly

contested from several quarters.

Likewise, although the G-20 and G-90 have both undertaken a systemic

change in agriculture trade, as the rules pertain to developing countries in particular,

the effect of the heterogeneous composition of these coalitions is also quite distinct.

Although the G-20 has only 23 members compared to the G-90‘s 65 official WTO

Members, the former coalition has substantial external weight with large countries

such as China, India and Brazil among its members, in spite of their divergent trade

profiles and interests. In effect, the G-20 has assumed a balancing role in the DDA

agriculture negotiations because the coalition has strategically sought compromise

among the diverse interests of its own members as well as among WTO Members at

large. The G-20 has also gained a reputation for contributing technically sound

proposals, based on rigorous data, which promise to yield positive systemic changes

for the WTO.

With the G-90, some critics have said that despite the group‘s large numbers, the

group does not command serious attention owing to the high risk of fragmentation and

lack of external weight. However, even if the G-90 is unable to command the same

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level of credibility as the G-20 among Members, the coalition has proven to be a

formidable force as a blocking group in WTO negotiations from their sheer numbers.

Further to the comparative analysis of the four developing country agriculture

coalition negotiation strategies in the Doha Round agriculture negotiations, some

interesting trends have emerged regarding these coalitions. Chapter VIII concludes

the study by identifying and discussing some of the lessons learned about developing

country coalitions during the negotiations, along with some recommendations for

developing country coalition strategy in the future.

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CHAPTER 8

8.0 IMPORT OF DEVELOPING COUNTRY COALITION STRATEGY–

DOHA AND BEYOND

8.1 United We Stand? Key Lessons Learned

This study has described how developing-country WTO Members have

deployed coalition strategy as their principal negotiation tool in the ongoing Doha

Round agriculture negotiations. A careful examination of the negotiation process

from March 2003 to March 2010 has illuminated the critical role that developing

country coalitions have assumed in the negotiation process, and, indeed, why these

countries felt compelled to resort to coalition strategy in this particular Round. Based

on the analysis of the four nested cases above, the significance of the role assumed by

these coalitions in the agriculture negotiations is clearly not in doubt. Furthermore,

the study lends itself to the identification of certain attributes of developing country

coalitions, which warrant closer attention. These elements are presented below in the

form of three main lessons learned during the course of the study. Developing country

policy-makers and negotiators could benefit from the application of these guiding

principles as they continue to engage in multilateral trade negotiations as repeat

players in this Round as well as in the future.

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1. Preparation

For developing country coalitions, in particular, preparation as a bargaining

strategy encompasses the clear articulation of each country‘s interests and position.

To achieve this objective, internal negotiation among the group‘s members to reduce

conflicting positions and promote cohesion is warranted. A well-prepared coalition

can then effectively communicate its harmonized position in order to achieve its

desired outcomes. Moreover, the rigorous internal negotiation process required for the

harmonization of coalition members‘ positions into a common position ensures that

coalition members remain focused and committed to the group‘s agreed upon

negotiation goals. Preparation is, therefore, an essential element of the negotiation

process, both for the coalition as well as the individual members of each coalition.

From the study, it is now clear that developing country coalitions would do

well to strive to ensure that from the inception of the negotiation process, issues of

importance to them are included in the negotiations agenda. Conversely, these

countries would also benefit from actively pursuing the exclusion of issues perceived

as being detrimental to their interests from the negotiating table.

Once states have effectively prepared their positions through internal

negotiations, effective preparation enables coalitions to pursue the agenda setting

function in multilateral trade negotiations. Therefore, the agenda setting function of

developing country coalitions is paramount as they prepare to undertake multilateral

trade negotiations.

In fact, the articulate presentation of coalition interests and positions, coupled

with effective communication of these positions to other WTO Members as quickly as

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possible is fundamental in the early stages of negotiations. In the current Round some

developing country coalitions were insistent on the addition of issues, such as the

implementation of UR agreements, Special and Differential Treatment (SDT) and

Agriculture to the Doha Round negotiation table. However, active collective

preparation could have expedited the negotiation process as well as the progress

achieved thus far in the Doha Round.

Furthermore, developing country coalitions were equally committed to

blocking the inclusion of specific issues from the Doha negotiation mandate, a task

that was achieved on at least one specific occasion by the G-90. Such issues included

labor rights and intellectual property as well as the highly controversial Singapore

issues. However, the fact that a ―built in‖ agenda already existed in some of the UR

agreements, with specific issues to be negotiated already incorporated into the trade

talks, may or may not have limited these developing country Members‘ bargaining

space during the current Round. While most developing country coalitions emerged

as reactionary groups under Doha, coming together to address a common problem, in

the future, coalitions may be formed proactively to marshal identified interests and to

actively push developing country agendas in the negotiations.

Consequently, the importance of articulate presentation of coalition interests

and effective communication of these positions in multilateral trade negotiations

cannot be overemphasized.

As the Doha agriculture negotiations progressed, the advantages of adequate

preparation on the part of developing-country coalitions were particularly apparent at

the Hong Kong Ministerial Conference. Building on the experience gained from

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active preparation and collaboration negotiating the July 2004 framework, in 2005,

developing country coalitions remained engaged in the negotiation process, focused on

their own issues and positions, and cohesive during the planning preceding the Hong

Kong Ministerial Conference. An identifiable common thread in all four of the

coalitions studied was their members‘ conscious emphasis on unity and coherence

within as well as between their groupings – which has not always been the case in the

history of developing country coalitions in the GATT/WTO. I argue that in this

Round, one of the tangible results of better preparation has been that developing

country coalitions have exhibited an unprecedented commitment to remaining united

during the DDA negotiations as a result of members engaging in often difficult

compromises, and, thus, have so far avoided fragmentation.

2. Resources

One novel feature of developing country coalitions in the current Round has

been the creative utilization of available resources in the bargaining process. While

resources are a fundamental requirement for any coalition to pursue its objectives, in

this instance, developing country coalitions have deployed more resources toward the

achievement of their negotiation goals than in previous Rounds. By resources I refer

to all types of human and financial resources, including goodwill capital.

The significance of the external weight of developing country coalitions has

been extensively discussed in the study. The bargaining advantages of coalitions with

one or more members who are part of the G-7 (WTO‘s Key Members) were observed

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during the negotiation process. Indeed, G-20 and G-33 have consistently commanded

the full attention of WTO Members in the negotiations primarily because of the

leadership roles assumed by Brazil and India in the core talks. Furthermore, even the

mere support of developing country Key Members – China, India and Brazil – has

been instrumental in propelling Cotton 4 into the limelight. In fact, the role of Brazil,

through its instigation of the US-Upland Cotton dispute as well as its proposals on

cotton and in support of the group was crucial to the proper articulation of the cotton

issue.

Following in the steps of its precursor, the Cairns group, the G-20 has utilized

its technical expertise to produce technical proposals in the agriculture negotiations.

While the Cairns Group was a cross over coalition with three industrialized country

Members, it is apparent that the Latin American Cairns Group members which form

the majority of the G-20 membership had learned some important lessons from the

Uruguay Round agriculture negotiation experience. The coalition has consistently

delivered sophisticated, well-written and technically- sound proposals, which became

known for their analytical rigor and balanced perspective. However, the G-33‘s

proposals remain largely ideological, with limited analytical rigor, despite the benefit

of developed or emerging economies, such as Korea, China and India, among its

members. The group is not known for its technical capabilities and may be perceived

as leaning too heavily on NGOs for the analytical studies that form the basis of its

proposals.

In addition to technical capital, developing country coalitions in this Round have

utilized their human capital in several interesting ways. The G-90, although lacking in

216

financial resources, was able to communicate effectively with other groups and

present several non-technical position papers to highlight its interests during the

course of the study period.

The C4, despite its meager resources, utilized innovative tactics (staging a

presidential address to the WTO on the issue) and has fully harnessed the goodwill

that their Cotton Initiative enjoys from an overwhelming majority of the WTO

Membership. Indeed, all developing country Members and developing country

coalitions unanimously support the group. Furthermore, the C4 successfully cultivated

civil society stakeholders in this area and has benefitted from technical support and

pro bono legal advice. Perhaps most significantly, C4 took the battle to the court of

public opinion by engaging the international press on the plight of the poor West

African farmers in a tactical maneuver to ―name and shame‖ the US. Thus, even with

very limited resources, the C4 was able to significantly impact the negotiations.

Therefore, I contend that despite financial and human resource constraints, which

typically plague developing country groupings, the current Round has demonstrated an

interestingly wide variety of resources that developing country coalitions can bring to

bear in multilateral trade negotiations.

3. Legitimacy

Developing country coalitions should strive to demonstrate the legitimacy of

their negotiation interests through ―principle-based‖ negotiation. Therefore, coalitions

should strive to demonstrate the legitimacy of their negotiation interests by

highlighting aspects of their interests that are consistent with the underlying objectives

217

of the WTO regime as stated in the Marrakesh. The importance of legitimacy or

credibility for developing country coalitions is that it allows the group‘s members as

well as other WTO Members to align with a coalition‘s bargaining interests, thereby

engendering favorable negotiation outcomes.

The Cotton 4 is a classic example of a coalition that appeared to be correct in

its position, despite the fact that the group produced little or no technical analysis with

its proposal. Although C4‘s legitimacy was greatly enhanced by the favorable Panel

decision in the Brazil dispute, the group on its own drew on normative sensibilities of

WTO Members to entrench its legitimacy. The G-20 also acquired credibility

through its collaborative and objective proposals.

The credibility of a developing country coalition may also require that

individual members within a coalition defer to a broader coalition or systemic goal in

the interest of majority of the group‘s members. For instance, the divergence between

developing country exporters and importers within the G-20, as demonstrated by the

noticeable strain between Brazil and India in 2008, was palpable. However, these

countries have continued to exercise due restraint in the negotiations in pursuit of the

group‘s overarching interests. Indeed, the typical dissipation that was expected from

developing countries in Cancún did not occur because of the legitimacy of developing

country coalitions in the Round. Furthermore, Brazil and liberal G-20 members

including and Argentina, Uruguay among others demonstrated restraint by resisting

the temptation to defect and fragment the G-20 group in 2008 when they were faced

with a deal favorable to their own domestic trade interest.

218

These three elements – preparation, resources, and legitimacy – have been

identified through a careful analysis of the DDA agriculture negotiation process. They

are offered as a guide for developing country coalitions, in general, and current

coalitions as they engage in further negotiations in the Round. While these features

may appear to be obvious, the comparative descriptive analysis of the four coalitions

in this study has revealed some of the strengths as well as shortcomings of developing

country coalitions today.

Unlike previous Rounds, developing countries, in general, have grouped

together because early in the course of the Round these countries had determined that

their interests would be best served by staying together. This determination to remain

united speaks to the level of engagement that developing countries have devoted to

this Round. Thus, the achievements of these developing country coalitions in the

current Round, unlike the previous passivity of the majority of developing country

Members, is indicative of what these countries can achieve in the multilateral trading

system through such concerted efforts.

8.2 Negotiation through Litigation

In some ways, the research has now come full circle. It is interesting to note

that the origins of this study are rooted in an attempt at proffering an alternative to

litigation under the WTO Dispute Settlement Mechanism (DSM) for developing

countries. Yet, despite the improvements in agriculture rules resulting from the

Uruguay Round Agriculture Agreement (URAA), agriculture litigation among

Members remains high. The sustained proliferation of agriculture disputes in the

WTO is indicative of the continued differentiation of agriculture international trade.

219

In fact, there have been several high profile WTO agriculture cases spanning the

sector and developing countries have been at the center of at least three of these

disputes – the EU bananas dispute, the US cotton dispute and the EU sugar dispute.

Therefore, litigation appears to have assumed a complementary role to trade rules

negotiations.

Today, with the protracted lull in the Doha negotiations, developing and

industrialized Members alike are resorting more frequently to litigation in an attempt

to position themselves in good stead for favorable outcomes in the negotiations

through Dispute Settlement Body (DSB) panel reports.

8.3 The Journey Ahead: 2011 and Beyond

Since July 2008, the Doha Round has been adversely affected by two major

factors—the depressed global economy and the lack of some Key Members‘ political

engagement in the negotiation process.

Due to the recent global financial crisis, which was an unforeseen event at the

beginning of this Round, even prosperous, industrialized countries have been shaken

by high levels of unemployment and bankrupt economic sectors. With the rise in food

prices experienced in recent times, food and livelihood security issues have become an

even greater concern for many developing countries, particularly net food-importing

developing countries (NFIDCs). Hence, as countries around the world struggle for

economic survival, the multilateral trade negotiation arena is even more challenging

than it was at the beginning of the Round. In times of economic difficulty, Members,

generally exhibit increased protectionist tendencies and have began to rethink even the

negotiation of current issues through this lens. In fact, as the 2008 global financial

220

crisis is finally now beginning to show some signs of abating, the major industrialized

Members, the US in particular, remain preoccupied with the repair of their own

domestic economic challenges; the multilateral trade system has been relegated to the

background for quite some time now.

However, even before the current malaise affecting the multilateral system,

there had been a disturbing trend occurring over the last decade. The incidence of

bilateral, plurilateral and regional agreements outside of the WTO has grown

exponentially. The growing wealth in some developing countries has increased their

capacity to negotiate with industrialized countries as well as with each other. With the

extended delay in the WTO negotiations, several WTO Members have been entering

into such. Thus, leading industrialized countries, such as the EU, US and Japan as

well as emerging markets groupings, such as ASEAN are taking center stage in this

new trend. In addition to the well known Economic Partnership Agreement (EPA)

model entered into by the EU with trading regions around the globe, going forward,

New Zealand, Thailand and Singapore are examples of countries that might take a

more active role in facilitating and coordinating future trade initiatives. Indeed, the

recent flurry of activity around the ―Trans-Pacific Partnership,‖ particularly with the

US, Australia and more recently Malaysia, negotiating to join the group has raised

eyebrows about the future direction of multilateral trade. In the likely event of other

countries following a similar direction in their trade policies, the WTO may lose

influence as the organization‘s credibility has suffered considerably in the course of

this Round. As a result, highly contentious issues in the WTO negotiations, such as

market access, may migrate elsewhere, thus eroding the relevance of the organization.

221

The implications of this trend for smaller developing countries, in particular, gives

cause for concern since these countries enjoy a significant amount of protection under

current WTO rules.

Yet, the WTO Director General, Pascal Lamy‘s strong urging to world leaders

to forge ahead toward the completion of the Doha Round in 2010 by demonstrating

sufficient political engagement in the process at the last WTO Ministerial Conference

held at the end of 2009, went unheeded. Consequently, the problem of a lack of

political engagement on the part of key WTO Members has persisted until now; as a

result, there has been no significant progress in the negotiation in almost three years

despite further persistent calls from the WTO secretariat.

In November 2010 the heads of government of Germany, Great Britain,

Indonesia and Turkey commissioned a report from a group of experts with regard to

specific actions required from WTO Members to combat protectionism and to boost

global trade.1 This report was released in January 2011 and has recommended an

inflexible and binding deadline for the completion of the Round by December 2011,

which should be binding at the level of Heads of Government. The thinking behind

this recommendation stems from the fact that much of the Doha Round negotiations

have already been concluded, leaving only a handful of difficult issues, such as cotton

and SSM requiring renewed political will. Moreover, the Doha Round is poised to be

the most ambitious liberalization agreement in history, which benefits everyone,

particularly developing countries.

1 High Level Trade Experts Group Interim Report, (Bhagwati & Sutherland co-chairs), The Doha

Round: Setting a Deadline, Defining a Final Deal (January 2011).

222

Again, at the recently concluded World Economic Forum annual meeting in

Davos, Switzerland at the end of January 2011, once again Mr. Lamy earnestly called

for renewed invigoration of the Round. Therefore, perhaps in the near future,

developing country trade negotiators may be called upon to decide between forfeiting

the Round or accepting a ―well-fought‖ compromise. In order to make an informed

decision, developing country negotiators need to carefully consider the potential gains

being offered by liberalization in the DDA from a fresh perspective based on recent

world events to advise their constituents on the best course of action to achieve the

conclusion of the Round.

223

8.4 Conclusions

At present, a Doha Round Agriculture Agreement based on the current 2008

Revised Draft Modalities on Agriculture appears, on the face of it, to benefit

developing countries, when compared to the Uruguay Round Agriculture Agreement.

Therefore, the new collective voice of the developing country Members displayed

through the adoption of coalition strategy in the Doha Round may prima facie be

considered an effective bargaining strategy – in the event that the Round is concluded.

In a sense, the WTO is working as it should in representing the present outlay

of the political economy of international trade. Negotiations ought to reflect the

global economic realities, but should also take into consideration the economic

challenges of poor Members. Also, industrialized countries may be required to accept

an asymmetrical outcome at their expense in favor of large developing countries such

as China, India and Brazil – despite the strong resistance from their affected domestic

constituencies. More than any other time in history, the voice of the developing world

is being heard in the negotiation process, although yet to be translated into negotiated

outcomes.

Despite its flaws, the multilateral trading system is extremely important for

developing countries. Therefore, effective participation in WTO negotiations has

proven to be vital to achieving their strategic goals. The recurring upheaval in the

WTO negotiations does not speak well for the multilateral trading system as a whole.

However, although the credibility of the WTO may arguably have been eroded in its

recent times, no Member wants to see the organization decrease in stature in favor of a

multiplicity of regional and bilateral preferential trade agreements. Regardless of the

224

difficulties currently being experienced in the negotiation of new trade rules, the

adjudication and implementation of existing trade rules remain highly relevant to all

Members today. As we wait for the required political engagement from Members in

order to conclude the DDA ―single undertaking‖ agreement, the agriculture

negotiations continue to occupy center stage in the Round.

This research study has described and compared how each of the four

developing country agriculture bargaining coalitions has behaved in the WTO Doha

Round agriculture negotiations during the study period. The DDA agriculture

negotiations have been a fertile ground for investigating the phenomenon of these

developing country coalitions in the current Round. Indeed, there are many lessons to

be extracted from the DDA‘s agriculture agreement negotiation process. Developing

countries, in particular, having learned from the mistakes of the Uruguay Round, have

pursued novel negotiation strategies by forming coalitions and leveraging on each

other for strength. This descriptive analysis has provided rich contextual information

about developing country coalitions in the WTO agriculture negotiation process alone.

While the findings of the study may not be extrapolated into a generalizable theory

across negotiation areas, the broad principles could apply to developing countries as

they negotiate in other areas in the Round. For instance, we have witnessed the

NAMA 11 coalition applying similar tactics to that of the G-20 in the NAMA

negotiations. These findings could also form the foundation for further research in the

area of international agriculture trade in the future. Specifically, developing country

policy-makers could benefit from an in-depth study on coalition strategy as it pertains

225

to individual countries, which could act as a guide as they consider all the

ramifications of coalition membership as a part of their WTO bargaining strategies.

227

Appendix I - Cotton 4 Proposals and Position Papers

WORLD TRADE

ORGANIZATION

TN/AG/GEN/4

16 May 2003

(03-2613)

Committee on Agriculture

Special Session

Original: French

WTO Negotiations on Agriculture

Poverty Reduction: Sectoral Initiative

in Favour of Cotton

Joint Proposal by Benin, Burkina Faso, Chad and Mali

Summary

Cotton plays an essential role in the economic development of West and Central African

countries (WCA). Cotton production accounts for 5 to 10 per cent of the gross domestic product (GDP) in Benin, Burkina Faso, Chad, Mali, and Togo. It occupies an important place

in their trade balance, with around 30 per cent of total export earnings and over 60 per cent of

earnings from agricultural exports. Over 10 million people in the region depend directly on cotton production and several millions more are indirectly affected by the problems now

encountered in this sector. Consequently, cotton occupies a strategic position in the

development policies and poverty reduction programmes of WCA countries.

Cotton producers in WCA countries have made strenuous efforts to ensure that their production is competitive and to liberalize the sector. As a result, they are among the most

competitive producers, and the cost of producing 1 kg. of cotton in the WCA countries is

substantially lower than in other producing countries. They have also made the necessary adjustments to adapt their economies to the WTO's objectives.

Until now, the impact of such reforms on development in the WCA countries has been

virtually nullified by the fact that certain Member countries of the WTO continue to apply

support measures that distort global market prices, contrary to the basic objectives of the WTO. The WCA countries consider it essential that countries which continue to distort

competition through subsidies make their own necessary adjustments.

Studies have shown the impact which the elimination of domestic subsidies and export subsidies would have on cotton prices and global markets. If these subsidies were eliminated,

cotton production in WCA countries would be highly profitable and could act as an important

catalyst for poverty reduction in the countries concerned.

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Appendix I continued

The signatory countries emphasize that the objective of the Doha Development Agenda is to

establish a fair and market-oriented trading system, including reforms to correct and prevent restrictions and distortions in world agricultural markets. During the Doha Round, a

commitment was also made to take into account the needs and interests of developing

countries, particularly the poorest among them. This initiative is a practical manifestation of the Doha objectives for cotton, which plays an essential role in development and poverty

reduction in WCA countries. The signatory countries therefore call for the following:

Recognition of the strategic nature of cotton for development and poverty

reduction in many LDCs;

complete phase-out of support measures for the production and export of

cotton.

In order to take into account the urgent need to restore a global market that functions according to the

WTO's principles and thus combat poverty in WCA cotton-producing countries, the signatory countries

call for the following:

Establishment at Cancún of a mechanism for phasing out support for cotton

production with a view to its total elimination (early harvest): at the

Ministerial Conference in Cancún, there should be a decision on immediate implementation, providing for substantial and accelerated reductions in each

of the boxes of support for cotton production. This decision should set a

specific date for the complete phase-out of cotton production support measures.

Transitional measures for LDCs: until cotton production support measures

have been completely eliminated, cotton producers in LDCs should be offered financial compensation to offset the income they are losing, as an integral part

of the rights and obligations resulting from the Doha Round.

The elimination of subsidies for cotton production and export is the only specific interest of WCA

cotton-producing countries in the Doha Round. Any outcome of the negotiations that does not help to

ensure respect for the principles of free trade and competition in global trade in cotton will be seen by

the WCA countries as unbalanced, unfair and contrary to the objectives approved by all the Member

countries at Doha.

Context

Importance of cotton in West and Central African countries

Cotton plays an essential role in the economies of West and Central African countries (WCA). In the

countries most concerned such as Benin, Burkina Faso, Chad, Mali and Togo, cotton production

accounts for 5 to 10 per cent of the gross domestic product (GDP).1 Their exports are dominated by cotton: around 30 per cent of total export earnings and over 60 per cent of earnings from agricultural

1 "The contributions of cotton to economies and food security in developing countries", P. Fortucci,

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Appendix I continued

exports. This performance is the result of substantial investment and restructuring of the cotton sector

over the past two decades.

Since the early 1980s, production in WCA countries has increased fivefold, rising from 200,000 tonnes

to almost one million tonnes. The WCA countries are the seventh largest global producer after China,

the United States, India, Pakistan, Uzbekistan, and the European Union. With around 15 per cent of

global exports, they are the second largest exporter after the United States, almost on a par with

Uzbekistan. In addition, in the light of international standards, the WCA countries produce high-quality

cotton and its production costs are among the lowest in the world.

Although cotton only plays a minor role in the economic activities of industrialized countries, it is of vital importance in many WCA countries. It has made it possible to improve the physical and social

infrastructure in cotton-producing regions (rural roads, schools, health centres, etc.). The expansion of

cotton production is also responsible for the improvement of health in the cotton-growing regions. It

has been shown that cotton/maize rotation results in a better diet than simply growing cow pea plants.

In addition, surveys of households in Benin, Burkina Faso and Mali have shown that poverty levels fell

more rapidly in areas where cotton production had developed rapidly than in other regions.

Cotton therefore occupies a strategic position in the development policies and poverty reduction

programmes of the WCA countries. Over 10 million people depend directly on cotton production and

several millions more are indirectly affected by the problems now encountered in this sector. Likewise,

many international aid commitments are jeopardized because of the problems faced by cotton on global

markets.

Restructuring of the cotton sector in the WCA countries

In the WCA countries, the cotton sector is an encouraging example of reform and restructuring.

Producing countries have worked with international financing agencies and other institutions in order to

meet the international markets' quality and profitability requirements. The aim of the reforms is quite

clear: restructuring of State marketing bodies; better loan mechanisms for farmers; introduction of

competition in the sector. Although there is still some way to go, these changes have had a noticeable

positive impact.

Cotton producers in the region are among the most competitive in the world. In the United States, the

cost of producing 1 kg. of cotton is 50 per cent higher than in the WCA countries.2

The WCA countries emphasize that they have made the necessary, sometimes painful, adjustments in

order to adapt their rural economies to global market requirements. In undertaking these reforms, they

have shown their determination to become integrated in the global market and observe the WTO's rules.

The results of these reforms have been virtually nullified by the refusal of other cotton-producing countries to accept market forces and competition, as defined in the WTO's objectives, by maintaining

high levels of support for production and export. African cotton producers have no development

alternative, particularly because of their poverty and their land-locked position. Consequently, they

consider that a solution to the problems affecting cotton would enable the multilateral system to show

that the objectives fixed apply to all Member countries and take into account the vital interests of the

most vulnerable among them.

FAO, Rome, July 2002. 2 "Préjudices causés par les subventions aux filières cotonnières de l'AOC", March 2003, L. Goreux.

230

Appendix I continued

Nature and scope of subsidies applied by competitors

In July 2002, the International Cotton Advisory Committee (ICAC) indicated that 73 per cent of global

production of cotton required direct financial support from governments. Five years previously, the

support only concerned 50 per cent of production. Support given to the cotton sector by the United States, China and the European Union was estimated at US$ 6 billion in 2001/023, which corresponds in

value terms to all global exports during that year. These figures clearly show that the WTO objectives

of phasing out production and export subsidies have not been achieved in the case of this product. The

classification of subsidies in the various WTO boxes is a major problem because the description of each

box is often a matter of interpretation.

Almost half of the direct domestic support received by cotton producers is given by the United States

(US$2.3 billion in 2001/02). The ICAC has estimated that American cotton producers will receive a

total of US$3.7 billion this year. American domestic support policies include a large and complex

range of programmes. Moreover, the United States gives direct aid for cotton exports.

In recent years, China's support for its cotton sector has decreased. Nevertheless, the ICAC has

indicated that support by China was around US$1.2 billion in 2001/02. Following China's accession to

the WTO, the support mechanisms are being reorganized and export subsidies should be abolished.

The European Union gives producers in Spain and Greece around US$700 million through a ceiling

price support mechanism. In 2001/02, Spanish cotton producers received support corresponding to 180

per cent of global prices and Greek producers 160 per cent, compared with 60 per cent for American

producers. These are the highest subsidies in the world per kilo of cotton.

The contrasts are striking. The subsidies given to American cotton producers are 60 per cent more than

the total GDP of Burkina Faso, where over 2 million people depend on cotton production. One half of

cotton subsidies to American producers (around US$1 billion) goes to a few thousand farmers who

cultivate around 1,000 acres of cotton and are thus well above the poverty threshold. In the WCA

countries, on the other hand, these subsidies penalize one million farmers who only have five acres of

cotton and live on less than US$1 per person per day.

Impact of subsidized competition on the global cotton market and on the export

opportunities of the WCA countries

The very high levels of support given to cotton producers in certain Member countries of the WTO are

one of the direct and major causes of the problems faced by global cotton production. They artificially

increase supplies on international markets and bring down export prices. It has been established that

there is a link between large-scale subsidies and the collapse in global cotton prices over the past

decade.

The sharpest fall was between May 1995 (US$2.53/kg.) and October 2001 (US$0.82/kg.). This was

followed by a recovery and the price reached US$1.25/kg. in January 2003. In addition, producers in the more developed countries could relatively easily introduce competitive substitute crops, whereas

this possibility is practically non-existent in the WCA countries.

Over 90 per cent of the cotton produced in the WCA countries is for export. From 1999/2000 to

2001/02, production increased by 14 per cent, but export earnings fell by 31 per cent.

3 Document of the Netherlands delegation at the OECD.

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Appendix I continued

Effect of the elimination of subsidies on WCA producers

A number of studies have analysed the effect of eliminating domestic subsidies on the global cotton

market. The estimates were made on the basis of an econometric model prepared by the ICAC. The

ICAC study has shown that, if American domestic subsidies were eliminated, there would be a positive

impact on global cotton prices (US$0.12/lb in 2000/01 and US$0.22/lb in 2001/02). Extending this

hypothesis to elimination of direct subsidies worldwide shows an even more positive effect (US$0.17

for 2000/01 and US$0.31 for 2001/02). Although the impact of price increases on supply and demand

would lower these figures somewhat, under such circumstances cotton from WCA countries would be

highly profitable.

A recent study evaluated the loss in export earnings for WCA countries as a result of subsidies by the

United States, China and the European Union in 2001/02 at US$250 million.4 This figure does not take into account the indirect effects on all those who sell goods and services to cotton producers nor the

knock-on effect on the rest of the economy. The combined direct and indirect effects would be some

US$1 billion a year. This is the amount of the losses currently suffered by WCA countries due to the

subsidy practices of competitor countries.

The best hope for the survival and development of the cotton sector in the WCA countries is a

substantial reduction, or even complete elimination, of domestic support and export subsidies granted

by the other Member countries of the WTO.

Proposals

The specific issues raised by this initiative are currently the subject of procedures under the WTO's

dispute settlement system. At best, the dispute mechanism will only resolve part of the problem.

Without prejudging the outcome of these procedures, the signatory countries call for a systemic solution

to the cotton problem within the framework of the new Doha Round trade negotiations.

The signatory countries emphasize that the objective of the Doha Development Agenda is to establish a

fair and market-oriented trading system. The agenda provides for fundamental reform encompassing

strengthened rules and specific commitments in order to correct and prevent restrictions and distortions

in world agricultural markets.

Through this initiative, the signatory countries are pursuing that objective and turning it into concrete

action so as to ensure that the objective is fully met in the case of cotton, which is of strategic

importance for their development and their struggle to reduce poverty. They call for a lasting and

immediate solution in conformity with the principles of the WTO. The solution should be applicable

and applied by all the Member countries of the WTO and should respond to the vital interests of the

most vulnerable countries in accordance with the undertakings given at Doha. The signatory countries

consider that the solution of the cotton issue will show how serious were the undertakings given at

Doha and will thus be an essential element of the objectives for the new round of negotiations.

General positions concerning agricultural disciplines

Accordingly, in general, the signatory countries:

Support the joint position of the WAEMU countries5, the proposals by

Burkina Faso6 and the African Group

7 concerning domestic support, export

competition and market access for agricultural products.

4 "Préjudices causés par les subventions aux filières cotonnières de l'AOC", March 2003, L. Goreux 5 G/AG/NG/W/188.

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Appendix I continued

Call for a strict and mandatory definition of the various subsidy boxes. They

will be unable to accept any outcome of the negotiations that allows the WTO

disciplines to be circumvented by reclassifying subsidies from one box to

another. A substantial reduction in the orange and blue boxes, export subsidies, and the de minimis level in developed countries would be a step in

the right direction.

General measures in favour of cotton

The Declaration adopted by the Ministers of Member countries at Doha puts the needs and interests of developing countries at the forefront of the new negotiating round. The revised draft of modalities for

new commitments by the Chairman of the special sessions of the Committee on Agriculture recognizes

the principle of "special products" for developing countries and envisages special measures in their

favour. These products are deemed to be "special" by reason of their importance for "food security,

rural development and/or livelihood security".

The signatory countries call for the following:

Extension of the concept of "special products" – currently restricted to

defensive measures – to the offensive interests of developing countries, in

other words, where export of such products is essential for agricultural development or the survival of the rural population in LDCs, as is the case for

cotton.8

Explicit recognition that cotton is a "special" product for development and

poverty reduction in LDCs and, as such, benefits from special treatment in

order to ensure fair access to global markets.

Total elimination of border measures, domestic support, and all forms of

subsidies for the export of cotton.

Such measures will ensure that the negotiations take into account export products that are of vital

importance to the LDCs and that the latter may take full advantage of the liberalization of the global

agricultural market, even if their exports are not very diversified.

The signatory countries recognize the need to take into account considerations other than those of a

trade nature. The justification for the green box is not questioned. Whereas cotton clearly has non-

trade objectives in developing countries – due to its role in food production, rural development and

poverty reduction – this is not the case in industrialized countries. In the latter, cotton does not have

any role related to food security or protection of the countryside neither is it essential for the livelihood

of a decentralized or agricultural population. Cotton production can easily be replaced by other

agricultural products that are more profitable on global markets.

6 G/AG/NG/W/185. 7 G/AG/NG/W/142. 8 The signatory countries consider that the exceptions proposed as regards tariff reductions and support

(defensive measures) are of little use if their exports are penalized on global markets because of support

by other Member countries of the WTO (offensive interests).

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Appendix I continued

Emergency measures in favour of cotton-producing LDCs

For the signatory countries, survival of the cotton sector and their poverty reduction strategy requires an

urgent solution. They cannot await the end of the negotiations and the deadlines for implementing their

results.

The signatory countries therefore call for the following:

In Cancún, the establishment of a mechanism to phase-out support for cotton

production with a view to its total elimination ("early harvest"): a decision to be implemented immediately, providing for substantial, specific and

accelerated reductions for each of the types of support for cotton production

and export, to be taken at the ministerial conference in Cancún. The decision should fix a specific date for the total phase out of support for cotton

production. An adequate reference period, which will ensure an effective and

non-theoretical reduction in such support, should be chosen9.

This requirement is in conformity with the fundamental

principles of the WTO, as well as the undertaking by Ministers in Doha

set out in paragraph 13 of the Declaration. The signatory countries call

for special treatment to strengthen the disciplines of the multilateral

trading system. Statements of good will, non-binding commitments,

exceptions and additional transitional periods are insufficient if outlets

for competitive exports by LDCs on global markets are nullified by the

various forms of support for production and export.

Transitional measures for LDCs: The signatory countries recognize that the

total elimination of domestic support for cotton production and border

measures will take some time. Until support for cotton production has been

completely phased out, financial compensation should be given to cotton-

producing LDCs to offset their loss of revenue.

In principle, compensation in the WTO is through two instruments. First of all, supplementary

concessions are offered for other products. This mechanism cannot apply to cotton-producing LDCs

because they only have a few other export products and, in most cases, these already receive preferential access. Secondly, customs tariffs are increased on imports. The signatory countries are not

in favour of this solution because it rights a wrong through another wrong. In addition, this solution has

a greater impact on countries which impose such customs tariffs inasmuch as the majority of their

imports are essential for development and poverty reduction. These two instruments are therefore

counterproductive for cotton-producing LDCs.

The only practicable short-term measure is contractual financial compensation as an integral part of

rights and obligations, as well as the balance of commitments resulting from the Doha Round. The

signatory countries therefore call for the following: a transitional measure in the form of financial

compensation for cotton-producing LDCs to offset the injury caused by support for production and

9 The reference period proposed (1999-2001) corresponds to a period during which cotton prices were

at their lowest levels, whereas subsidies had reached a ceiling. It cannot therefore be a reference period

for support for cotton production.

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Appendix I continued

export. Such financial compensation should be calculated in proportion to the subsidies granted by

countries which support their cotton production. It will decrease (terminate) as and when these

subsidies are reduced (abolished).

Reliable studies have calculated the amount of support for production and exports in different

producing countries, as well as the effect of this support on WCA countries. The signatory countries

call for the following:

When defining the total amount of compensation, the direct and indirect

effects of support for cotton production on the economies of LDCs should be

taken into account.

The compensation should be sufficiently high to constitute an additional

incentive to decrease or phase out subsidies as soon as possible.

The unit amount and the total amount of subsidies should be taken into

account when dividing the compensation among countries which subsidize

production.

Signed:

For the Republic of Benin For Burkina Faso

H. E. Mr Samuel AMEHOU

Ambassador, Permanent Representative to

the WTO, Geneva

H. E. Mr Kadré Désiré OUEDRAOGO

Ambassador, Permanent Representative to

the WTO, Brussels

For the Republic of Chad, For the Republic of Mali,

H. E. Mr. ABDERAHIM YACOUB N'DIAYE

Ambassador, Permanent Representative to

the WTO, Brussels

H. E. Mr. Sinaly COULIBALY

Ambassador, Permanent Representative to

the WTO, Geneva

__________

235

Appendix I continued

WORLD TRADE

ORGANIZATION

TN/AG/GEN/6

4 August 2003

(03-4111)

Committee on Agriculture

Special Session

Original: French

wto negotiations on agriculture

Poverty Reduction: Sectoral Initiative

in Favour of COTTON

Joint Proposal by Benin, Burkina Faso, Chad and Mali

Proposal on Implementation Modalities

CONTEXT In connection with the search for lasting solutions to the damage they are suffering as a result of the

agricultural subsidies accorded by certain cotton-producing developed countries, on 31 April 2003

Benin, Burkina Faso, Chad and Mali submitted to the WTO the document entitled Poverty Reduction:

Sectoral Initiative in Favour of Cotton (TN/AG/GEN/4).

As the objective of the Doha Development Agenda is to develop a fair and market-oriented trading system, including the reforms to correct and prevent distortions in world agricultural markets, the

African countries most affected by these subsidies, all LDCs, have submitted the sectoral initiative to

the competent WTO bodies with a view to seeking, with the parties involved and with WTO Members

as a whole, fair and appropriate solutions to the problem.

PROPOSED SOLUTION

As a solution to the above problem, the co-sponsors of the initiative call for the adoption, by Cancún at

the latest, of the following decisions for immediate implementation:

In Cancún, the establishment of a mechanism to phase out support for cotton

production with a view to its total elimination "early harvest";

transitional measures in the form of financial compensation for

cotton-producing LDCs to offset their loss of revenue, until support for

cotton production has been completely phased out.

236

Appendix I continued

Proposed implementation modalities

Complete elimination of cotton subsidies

The complete elimination of support for cotton production and exportation is unquestionably the only

measure that would enable cotton to fully develop its potential and, in particular, to enhance its essential

contribution to poverty reduction in the countries concerned.

The co-sponsors of the sectoral initiative are aware of the fact that the countries that heavily subsidize

their cotton production, of which there are few, cannot withdraw all of their support overnight: they must prepare their producers and promote the necessary domestic adjustments.

The studies that have been conducted indicate that these adjustments should be possible without too

much "suffering", within a reasonable period of time.

This is why the co-sponsors of the initiative advocate the total elimination of all cotton subsidies over a

relatively short period of three years, from 2004-2006. It could take the form of a gradual decrease, in

equal annual portions, i.e. a reduction by one third (33.3 per cent) per year of all of the cotton support

measures.

Thus, by the end of the three-year period, i.e. by 31 December 2006, the cotton subsidies will have been

completely eliminated and the free market for international trade in cotton restored.

In the long-term, in a market economy, these adjustments will be beneficial not only to the cotton-

producing countries of West and Central Africa, which will be able to profit fully from their comparative advantages in the cotton trade, but also to the countries which have reduced or abandoned

their "uneconomical" production of cotton for other products and sectors where they have comparative

advantages and where they are competitive without having to resort to subsidies.

Transitional compensation mechanism

The proposed compensation mechanism reflects the need to act immediately in what is an emergency

situation for the co-sponsors of the initiative. Transitional compensation will be linked and limited to

the subsidy reduction period – in other words, the longer the period, the greater the overall amount of

compensation to be paid.

The mechanism will serve to compensate cotton producers for the losses suffered as a result of the

subsidies as long as the subsidies exist. It is in fact only a stop-gap solution in relation to the benefits

that will result from the restoration of the free market.

However, it is a transitional measure that makes sense: it will enable cotton producers in the countries

affected to maintain their production and it will encourage them to make the necessary investments to adapt to the evolution of the market and improve their competitiveness.

The beneficiary LDCs will undertake to ensure that the compensation received is effectively handed

over to the local cotton producers' associations which will themselves be responsible for monitoring the

utilization of the funds and ensuring transparency.

More than anyone else, it is the cotton producers or the village groupings in the cotton growing areas

that are in a position to decide how best to use the funds in order to ensure the preservation of their

asset, cotton, until such time as they can truly benefit from their full participation in the free

international cotton market.

237

Appendix I continued

By assuming this responsibility and participating directly in the implementation of the compensatory

mechanism, the local associations will also be given the possibility of building up their capacity and

broadening their experience in self-management.

Calculation and distribution of the compensation Simple principles are proposed both for the "paying countries" (the countries that subsidize cotton) and

the beneficiary countries (cotton-producing LDCs suffering losses in export revenue as a result of the

cotton subsidies granted by other countries).

The four following principles are proposed:

First, the annual amount of compensation to be paid must correspond to the

estimated losses suffered, calculated on the basis of a reference period

covering three years of cotton production: 1999-2000, 2000-2001 and

2001-2002. A recent study, already mentioned the submission on

cotton, estimated the average annual loss in export revenue by the

countries of West and Central Africa at about 250 million dollars. This

figure corresponds more or less to direct losses. If indirect losses were

included, i.e. losses suffered by persons living indirectly on cotton

production and exports, the figure would apparently be multiplied by

four, bringing the total amount of losses to approximately 1 billion

dollars.

Second, the above-mentioned amount of the overall compensation would be

directly linked to simultaneous efforts on the part of the countries

called upon to contribute to the compensation fund to reduce their

subsidies. In a nutshell, the decrease in subsidies, at a rate of about 33

per cent per year according to our proposal, would lead to an equivalent

decrease in the amount of the annual contribution to be paid to the

compensation fund.

Third, the contribution (percentage) of the countries that subsidize their cotton

and are hence called upon to contribute to the transitional compensation

fund would be calculated on the basis of their respective shares in the

total amount of subsidies granted to cotton worldwide, as published in

the annual statistics of the International Cotton Advisory Committee

(ICAC). According to the above principle, the contributions of the

"paying countries" would decrease in proportion to their effective

efforts to reduce their cotton subsidies.

Fourth, the share to be allocated to each beneficiary LDC would be calculated

on the basis of its respective share in total cotton production by that

group of countries, as published in the ICAC annual statistics.

__________

238

Appendix I continued

WORLD TRADE

ORGANIZATION

TN/AG/SCC/GEN/1

7 April 2005

(05-1452)

Sub-Committee on Cotton Original: French

OUAGADOUGOU DECLARATION ON THE COTTON SITUATION SINCE

THE ADOPTION OF THE JULY 2004 PACKAGE

Communication from Burkina Faso

The following communication, dated 21 March 2005, is being circulated

among Members and observers, for information purposes, at the request of the

delegation of Burkina Faso.

_______________

1. We, the Ministers for Trade and Agriculture of Benin, Burkina Faso, Mali and

Chad, in attendance at the third annual meeting of the African Cotton Association

(ACA), held in Ouagadougou from 10-12 March 2005, have examined the state of the

cotton sector and reviewed the progress made in the negotiations on the sectoral

initiative in favour of cotton since the adoption by the WTO General Council of the

July 2004 framework agreement.

2. Two years after the submission of the proposal, it is clear that despite the

chosen strategy favouring dialogue with the industrialized countries responsible for

granting massive subsidies in support of their cotton sectors, and the flexibility of the

proponent countries and their allies who accepted, in a spirit of compromise, that the

issue be examined within the framework of the negotiations on agriculture, nothing

has changed for African cotton producers.

3. Instead, we are faced with a proliferation of conferences on "development

aspects", none of which have yet yielded any concrete results, except for the one

organized by the European Union within the framework of its partnership with African

cotton-producing and -exporting countries. These conferences seem to steer the

239

Appendix I continued

attention of the African cotton-producing countries away from their real concerns by

addressing issues such as competitiveness and research, when in fact the reforms

undertaken by these countries have made the cotton sector one of the most competitive

in the world, with the lowest production costs and fibre of an undisputed quality.

4. While these conferences provide diagnoses and devise strategies and action

plans, millions of African cotton producers continue to wait, in extreme poverty and

with less than one dollar a day, for concrete action in their favour.

5. As regards the state of negotiations within the WTO, we welcome the creation

of the Sub-Committee on Cotton and its clear mandate to examine "all trade-distorting

policies affecting the sector in all three pillars" and to "report periodically to the

Special Session of the Committee on Agriculture" (WT/L/579).

6. The recent condemnation of US subsidies which violate WTO commitments

has confirmed, as if any confirmation were necessary, the legitimacy and validity of

our fight against subsidies.

7. However, we have observed attempts to drain the Cotton Sub-Committee of

substance by denying it its capacity to negotiate.

8. Deeply concerned by the worsening situation of cotton producers and, above

all, by the growing threat of demise facing the African cotton sector, we reaffirm our

determination to maintain our chosen strategy in favour of dialogue and multilateral

negotiation, and demand results consistent with the July mandate, namely that the

issue be addressed ambitiously, expeditiously and specifically under the three pillars

of market access, domestic support and export subsidies.

9. This firm stance in favour of dialogue should not be interpreted as a weakening

of the resolve of the sectoral initiative's signatory countries, which benefit from the

support of the African Union, the LDCs, the ACP countries and the G-90. We

reaffirm here our spirit of solidarity and our determination to work together, with

resolve and perseverance, in searching for solutions to the crisis within the African

cotton sector. We also reaffirm our determination to achieve an outcome which takes

the following into account:

- the urgency of finding a solution to the crisis in the African

cotton sector;

- the setting of a deadline for the reduction and total elimination of

subsidies;

- the pressing need to set up a rescue fund to support cotton

producers and so prevent the demise of the cotton sector, which would

240

trigger a human catastrophe of unprecedented proportions for the

millions of people whose livelihoods depend on the sector;

- the ambitious, expeditious and specific handling of the cotton

issue.

10. Moreover, we reaffirm our commitment to continuing the reforms undertaken

to further strengthen the competitiveness of the cotton sector.

11. We wish to pursue the negotiating strategy that has been implemented up to

now and hope that nothing will impede the recommended mechanisms.

12. We reaffirm our determination to work in such a way as to ensure that the

resolution of the cotton issue is one of the successes of the Hong Kong Ministerial

Conference. Only then can the present round of negotiations truly be described as a

"development round". Inertia or the blocking of the cotton issue by the developed

countries would be a bad omen and entail serious consequences for Hong Kong –

something we could not be held responsible for.

__________

241

Appendix I continued

WORLD TRADE

ORGANIZATION

TN/AG/SCC/GEN/7

12 January 2007

(07-0165)

Sub-Committee on Cotton Original: French

OUAGADOUGOU declaration on the sectoral

initiative

in favour of cotton

Communication from Burkina Faso

The following communication, which was received on 11 January 2007, is

being circulated among Members and Observers, for information purposes, at the

request of the delegation of Burkina Faso.

_______________

We, the Ministers of Trade of the co-sponsors of the Sectoral Initiative in

Favour of Cotton, meeting for consultations in Ouagadougou (Burkina Faso) on 8

January 2007 with the participation of the WAEMU Commission;

Stressing the vital importance of cotton to the economies of several African

countries;

Recalling the important decisions that the Members of the World Trade

Organization (WTO) adopted in July 2004 in Geneva and reaffirmed at the Sixth

WTO Ministerial Conference held in Hong Kong from 13 to 18 December 2005,

requesting that the cotton issue be addressed "ambitiously, expeditiously and

specifically";

Considering the adverse impact of the domestic support for cotton production

and the cotton export subsidies granted by the developed countries on the economies

and populations of the African cotton-producing countries;

Considering that the cotton industry in our countries is deteriorating day by

day to the point where it could well disappear, and that the socioeconomic difficulties

242

Appendix I continued

facing the cotton-producing populations are growing more acute, aggravating the

poverty and destitution in our countries, which are among the poorest in the world;

Stressing that the suspension of the negotiations is delaying the settlement of

the cotton issue, thereby adding to the damage caused to our countries and our cotton

producers;

Considering the recent decision of the Court of Justice of the European

Communities to do away with the system of decoupling between levels of support and

the production of cotton adopted in 2004;

Make an urgent appeal to WTO Members for a rapid, effective and full resumption

of the negotiations, including the negotiations on cotton.

Request, in that connection, the rapid implementation of the decisions adopted by

WTO Members on both the trade and development aspects of the cotton issue.

Urge the developed countries to eliminate subsidies and domestic support granted for

the production and export of cotton that distort the international cotton market.

Request the Director-General of the WTO, for the sake of the necessary coherence

between the trade and development aspects of the cotton issue, to speed up the process

of consultations on suitable approaches and mechanisms to deal with the income

losses resulting from subsidies and domestic support.

Urge the development partners to effectively implement the recommendations of the

WTO Regional Workshop on Cotton, held in Cotonou on 23 and 24 March 2004 with

a view to strengthening the cotton sector in the African countries.

Request, to that end, that the WTO Director-General organize, as soon as possible

during 2007, a meeting to review the status of the development aspects of the cotton

sector in conformity with the mandate provided by the Hong Kong Ministerial

Conference.

Express our serious concern as to the implications of the decision by the Court of

Justice of the European Communities to abandon the system of decoupling between

levels of support and the production of cotton adopted in 2004, since this represents a

serious setback as regards expectations of settling the cotton issue.

Call upon the European Communities to take appropriate action to ensure that the

cotton production regime within the EC is in line with the level of ambition of the

Doha Development Agenda.

243

Express our firm resolve to pursue the WTO negotiations with a view to reaching a

solution for cotton that is in keeping with the July 2004 Framework and the Hong

Kong Ministerial Declaration.

__________

244

Appendix I continued

WORLD TRADE

ORGANIZATION

TN/AG/SCC/GEN/10

WT/CFMC/26

4 November 2009

(09-5497)

Sub-Committee on Cotton Original: French

director-general's consultative framework

mechanism on cotton

Communication from Burkina Faso

The following communication, dated 8 October 2009, is being circulated, at

the request of the delegation of Burkina Faso, on behalf of the co-sponsors of the

Sectoral Initiative in Favour of Cotton (C4).

_______________

OUAGADOUGOU DECLARATION OF THE MINISTERS OF TRADE

OF THE CO-SPONSORS OF THE SECTORAL INITIATIVE

IN FAVOUR OF COTTON (C4)

We, the Ministers of Trade of the co-sponsors of the Sectoral Initiative in Favour of Cotton (C4),

meeting for consultations in Ouagadougou, Burkina Faso, on 8 October 2009;

Considering the vital importance of cotton to the economies of several African countries in general, and

the C4 in particular;

Considering the domestic support for cotton production and the cotton export subsidies granted by the

developed countries, and their adverse impact on cotton prices and on the economies and populations of

the African cotton-producing countries in general and of the C4 in particular;

Considering that the cotton industry in our countries is deteriorating day by day to the point where it

could well disappear, and that the socio-economic difficulties facing the cotton-producing populations

are growing more acute, aggravating the poverty and destitution in our countries, which are among the

poorest in the world;

245

Appendix I continued

Considering the reforms undertaken at great sacrifice in the cotton industries of the C4 countries to

make the sector competitive, the positive impact of which has been reduced to nought by the massive

subsidies granted by certain developed countries to their cotton producers;

Recalling the decisions that the Members of the World Trade Organization adopted in July 2004 in

Geneva and reaffirmed at the Sixth WTO Ministerial Conference held in Hong Kong from 13 to 18

December 2005, calling for the cotton issue to be addressed "ambitiously, expeditiously and

specifically";

Considering the Declaration of the African Trade Ministers at the 8th AGOA Forum held in Nairobi

from 3 to 6 August 2009, the Ministerial Declaration of New Delhi of 4 September 2009, and the G-20

declarations of l'Aquila and Pittsburgh calling for the conclusion of the Doha Round by 2010 at the

latest;

Considering the actions undertaken and statements made by the C4 Coordinator in Washington (July

2009), Nairobi (August 2009) and New Delhi (September 2009) to explain the concerns of the African

cotton-producing countries:

(a) Launch an urgent appeal to WTO Members for a rapid,

effective and full resumption of the negotiations, including the

negotiations on cotton, on the basis of the proposals contained in the

C4 submission (TN/AG/GEN/22-TN/AG/SCC/GEN/6 of

16 June 2006) as well as the additional disciplines appearing in the

Draft Modalities for Agriculture (document TN/AG/W/4/Rev.4 of 6

December 2008);

(b) urge the developed countries to eliminate domestic support

granted for the production of cotton that distorts the international

market, as well as all export subsidies;

(c) ask that the Hong Kong Ministerial decision to address the

cotton issue ambitiously, expeditiously and specifically be respected

while maintaining coherence between the trade and development

aspects of the issue, and that any decisions resulting from the

negotiations be diligently implemented;

(d) encourage the WTO Director-General, for the sake of the

necessary coherence between the trade and development aspects of the

cotton issue, to continue the process of consultations on suitable

approaches and mechanisms to deal with the income losses resulting

from subsidies and domestic support;

(e) emphasize, in the context of the current energy, food, financial

and economic crises affecting our countries, the need to examine the

cotton issue on the basis of an early harvest;

246

(f) request a solution for cotton based on a systemic approach with

ambitious results accompanied by clear and precise figures;

(g) request that the modalities achieved in the latest negotiating text

of 6 December 2008 be consolidated without any attempts at

backtracking;

(h) request the United States and the European Union to submit

concrete counterproposals so that we can negotiate on the levels of

elimination or substantial reduction of domestic support measures that

distort trade in cotton;

(i) reaffirm our flexibility and willingness to work towards

narrowing the gap between the different positions with a view to

finding a satisfactory solution to the cotton issue;

(j) express our firm desire and our determination to continue the

negotiations at the WTO with a view to concluding the Doha Round by

2010.

Done at Ouagadougou on 8 October 2009

For Benin For Burkina Faso

(signed) (signed)

Samuel AMEHOU Mamadou SANOU

Ambassador Representing the Minister of Trade,

Minister of Trade Business Promotion and

Handicrafts

For Chad For Mali

(signed) (signed)

Mahamat Ali HASSAN Ahmadou Abdoulaye

DIALLO

Minister of Trade and Industry Minister of Industry,

Investment and Trade

__________

247

Appendix II - G-20 Proposals and Position Papers

WORLD TRADE

ORGANIZATION

WT/MIN(03)/W/6

10

4 September 2003

(03-4609)

MINISTERIAL CONFERENCE

Fifth Session

Cancún, 10 - 14 September 2003

Original: English

AGRICULTURE - FRAMEWORK PROPOSAL

Joint Proposal by Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica,

Cuba, Ecuador,

El Salvador, Guatemala, India, Mexico, Pakistan, Paraguay, Peru, Philippines, South

Africa, Thailand and Venezuela

The following communication, dated 2 September, has been received by the

Director-General from the Permanent Mission of Brazil.

_______________

I have the honour to refer to document Job(03)/162/Rev.1 which contains a

framework proposal for the agriculture section of the draft Ministerial Declaration.

On behalf of the co-sponsors of the document – Argentina, Bolivia, Brazil,

Chile, China, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, India,

Mexico, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand and Venezuela

– I request that it be circulated as a formal document of the Fifth Ministerial

Conference.

_______________

10 The text reproduced below was previously circulated as JOB(03)/162/Rev.1.

248

Appendix II continued

Members reconfirm the objectives as established in paragraphs 13 and 14 of the Doha

declaration, including the objective to establish a fair and market-oriented trading

system through fundamental reform in agriculture. Members recognize that reforms in

all areas of the negotiations are inter-related, that operationally effective special and

differential treatment for developing countries will be an integral part of the

negotiations, and that non-trade concerns should be taken into account as provided for

in the Agreement on Agriculture.

Ministers agree to intensify work to translate the Doha objective into reform

modalities, including by adopting the following approaches for reduction/elimination

commitments and related disciplines on key outstanding issues on market access,

domestic support and all forms of export subsidies and stress their commitments to

submit comprehensive draft schedules in time to conclude negotiations by 1/1/2005.

In that context, Ministers agree as follows:

1. Domestic Support:

The Doha declaration calls for "substantial reduction in trade-distorting

domestic support". All developed countries shall achieve substantial reduction in trade

distorting support with Members having the higher trade distorting subsidies making

greater efforts.

1.1. Substantial reductions shall take place under the following parameters:

(i) Reduce all trade-distorting domestic support measures in the

range of []% - []%, on a product specific basis. The difference between

the upper and lower limits shall be no greater than [ ] % points.

Products which benefited from levels of domestic support, above the

average, during the period [….] shall be subject to the upper levels of

reduction Regardless of the percentage reduction applied in each case,

a first cut of not less than [%] of such reduction shall be applied to all

trade distorting domestic support measures within the first 12 months

of the implementation period.

(ii) For products benefiting from domestic support which are

exported and which have accounted, on average over the last […]

years, for more than [%] of world exports of that product the domestic

support measures shall be subjected to the upper levels of reduction,

with a view to elimination.

(iii) Eliminate article 6.5 of the Agreement on Agriculture.

249

Appendix II continued

(iv) Reduce de minimis by [ ]%for developed countries

(v) The sum of AMS support and de minimis shall be subject to a cut of at

least [ ]%

1.2. Green box direct payments (paragraphs 5 to 13 of Annex 2 of the AoA) shall

be, as appropriate, capped and/or reduced for developed countries. Additional

disciplines shall be elaborated and agreed upon.

Special and Differential Treatment

1.3. The scope of art. 6.2. of the Agreement on Agriculture shall be expanded, so as

to include focused and targeted programmes.

1.4. Maintain de minimis at the existing levels for developing countries

2. Market Access:

2.1. The formula applicable for tariff reduction in developed countries shall be a

blended formula, under which each element will contribute to substantial improvement

in market access for all products, in an effective and measurable way. The formula

shall be as follows:

(i) []% of tariff lines subject to a []% tariff cut. With a view to

addressing tariff escalation, a factor of [] will be applied to the tariff

rate cut of the processed product, in case its tariff is higher than the

tariff of the product in its primary form;

(ii) []% of tariff lines subject to a Swiss formula coefficient [];

(iii) []% of tariff lines shall be duty-free.

2.1.1 The total average tariff cut of items I) and ii) above shall be at least [ ] % and,

in any event, significantly higher than the tariff cut in I).

2.2 For the tariff lines that exceed a maximum of []% Members shall reduce them

to that maximum.

2.3 Tariff rate quotas shall be expanded by []% of domestic consumption and in

quota tariff rates shall be reduced to zero. Strict rules for their administration will be

agreed to. Larger expansion or creation of TRQs could be the result of a request and

offer process.

250

Appendix II continued

2.4 The Special Agricultural Safeguard (SSG) for developed countries shall be

discontinued.

2.5 All developed countries shall provide duty-free access to all tropical products

and others mentioned in the Preamble of the Agreement on Agriculture as well as to

other agricultural products representing at least []% of imports from developing

countries.

Special and Differential Treatment

2.6 Having regard to their rural development and food security needs, developing

countries shall benefit from special and differential treatment, including lower tariff

reductions and longer implementation periods, as well as from the establishment of

Special Products (SP), under conditions to be determined in the negotiations. The

formula applicable for tariff reductions shall be as follows:

(i) all tariff lines subject to a []% average tariff cut and a minimum cut of

[]%;

(ii) there will be no commitments regarding TRQ expansion and

reduction of in quota tariff rates for developing countries;

2.7. Under conditions to be determined in the negotiations, a special safeguard

mechanism (SSM) shall be established for use by developing countries, the scope of

which would depend on the impact of tariff cuts as per 2.6 above.

3. Export subsidies:

3. 1 With regard to export subsidies budgetary and quantity allowances:

- Members shall commit to eliminate over a [x] year period

export subsidies for the products of particular interest to developing

countries […];

- Members shall commit to eliminate over a [y] year period

export subsidies for the remaining products.

3.2 With regard to officially supported export credits, guarantee and insurance

programmes, disciplines shall be implemented on a rules based approach, without

prejudice to existing disciplines on the prevention of circumvention of export

subsidies commitments and taking into account paragraph 4 of the Decision on

Measures Concerning the Possible Negative Effects of the Reform Programme on

251

Appendix II continued

Least Developed Countries and Net Food Importing Developing Countries. The rules

based approach shall, inter alia, identify and eliminate the subsidy component.

3.3. Additional disciplines shall be agreed in order to prevent commercial

displacement through food aid operations.

Special and Differential Treatment

3.4. The provisions on paragraph 9.4 shall be continued.

4. Other

4.1. Under conditions to be determined in the negotiations, the question of

preference erosion shall be addressed.

4.2. The particular concerns of recently acceded members and Least Developed

Countries shall be effectively addressed.

__________

252

Appendix II continued

WORLD TRADE

ORGANIZATION

WT/L/559

23 December 2003

(03-6754)

Original: English

G-20 Ministerial Communiqué

Communication from Brazil

The following communication, dated 15 December 2003, from the Delegation

of Brazil is being circulated to Members.

_______________

G-20 MINISTERIAL COMMUNIQUÉ

The G-20 Ministerial Meeting was held in Brasília on 11 and 12 December in

order to exchange views and coordinate positions on how to proceed with agricultural

negotiations and on how to achieve progress in the Doha Round. Delegations from the

following countries attended the meeting hosted by Brazil: Argentina, Bolivia, Chile,

China, Cuba, Egypt, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay,

Philippines, South Africa, Tanzania, Venezuela and Zimbabwe. A representative from

Ecuador also attended the meeting. CARICOM was also represented in the meeting.

WTO Director-General Supachai Panitchpakdi and European Union‘s Trade

Commissioner Pascal Lamy met with the G-20 Ministers, as special guests.

The G-20 engaged in a constructive dialogue with the WTO Director-General

Supachai on how to move forward the negotiations in the light of the discussions in

Geneva and that the DG has maintained with several major players. The G-20 also

had a positive and open dialogue with Trade Commissioner Pascal Lamy, of the

European Union, on the respective positions on agriculture with a view to consider

new possible approaches to make progress in the negotiations.

Ministers reiterated the importance they attach to the WTO and to the

multilateral rules-based trading system. In particular, they reaffirmed their

253

Appendix II continued

commitment to the successful and timely completion of the Doha Development

Agenda based on the fulfilment of the mandate agreed to during the IV WTO

Ministerial Conference. A successful conclusion of the negotiations will promote

growth in world trade and a more positive integration of developing countries in the

multilateral trading system.

G-20 Ministers called on all WTO Members to approach upcoming negotiations with

an open spirit and readiness to reach consensus that will pave the way for an effective

liberalization of agricultural trade capable of reflecting the needs and sensitivities of

developing countries and the interests of the international community as a whole.

The negotiations on agriculture are central to move the Doha Round to a

successful and timely conclusion. Trade in agricultural products continues to be

hindered by all sorts of barriers and distortions. True liberalization in agricultural

trade and reform that address these barriers and distortions would be a major

contribution to the development objectives of the Round. Furthermore, this will assist

in dealing with the deterioration of commodity prices. The elimination of barriers and

distortions in agricultural trade could also contribute to the economic transformation,

reduction of poverty and the promotion of social and political stability in developing

countries.

Ministers highlighted that, by bringing together developing countries from

Africa, the Americas and Asia, with different agricultural structures and orientations

within a common negotiating platform, the G-20 has substantially contributed to

making the WTO process more inclusive. The G-20 is prepared to continue to play an

important role in that respect and to extend its cooperation with other groups. The

Ministers also called on WTO Members to give effective and substantive

consideration to the concerns of LDCs – as expressed before and since Cancún.

Ministers recognized the situation faced by countries dependent on preferences

and, under conditions to be determined in the negotiation, are open to consider

approaches to deal with this matter.

Ministers took note of the Cairo Declaration adopted at the Mini-Ministerial

Meeting of African countries which recognizes the large areas of convergence

between the African Group and the G-20. They felt that closer cooperation between

the two groups should be pursued. Ministers underlined the economic, social and

political importance of cotton for a large number of African countries. They called

upon WTO Members to think in innovative ways to address this problem within the

Doha mandate.

The G-20 is a coalition of countries, which has been formed to address the

concerns of its members that are also common to most developing countries relating

to:

254

Appendix II continued

- the elimination of practices that distort agricultural trade and

production;

- the search for substantial improvement in market access; and

- the rural development, food security and/or livelihood security needs.

Note was taken of the Chairman of the General Council‘s consultations in line

with the Ministerial Conference instructions. The prospect for an agreement,

however, continues to elude WTO Members. In agriculture, in particular, Ministers

underlined that the only way for a successful outcome of the discussions is to achieve

a fair basis for the negotiations, which neither pre-determines their outcome, nor

implies a reduction in the level of ambition of the Doha mandate.

Ministers reiterated the need to preserve the integrity of the Doha Development

Agenda and emphasized that any reinterpretation or dilution of the mandate would

affect the delicate balance among the various negotiating fronts and would jeopardize

the development focus of the work programme.

The G-20 took note that the text contained in document JOB (03)/150/Rev. 2 was the

subject of extensive consultations and concerns expressed by many delegations,

especially from this Group. The G-20 insists that, in the process of reaching

agreement on a final set of modalities, the level of ambition of the Doha mandate

remains the guiding principle of the negotiations. In such a process, any framework in

order to be viable should be consistent with the Doha mandate, and lead to the

establishment of modalities capable of ensuring that negotiations in agriculture would

result in substantial reductions in domestic support, substantial increase in market

access, phasing-out of all forms of export subsidies and operational and effective

special and differential treatment that takes into account rural development and food

security concerns of developing countries. Moreover, the particular concerns of

recently acceded Members should also be effectively addressed in this context.

The G-20 is ready to contribute to the success of the Doha Round in general

and, in the area of agriculture, in particular. The biggest trading countries, which are

responsible for the main distortions in agricultural trade, should set the example, as to

permit further strides in the attainment of the long-term objective of a fair and market-

oriented agricultural trading system.

Reaffirming their engagement in the trade negotiations and pledging their

support to the efforts undertaken by the Chairman of the General Council and by the

WTO Director General, Ministers emphasized their willingness to contribute to the

prompt resumption of the talks in the negotiating bodies so as to permit progress to be

achieved during 2004, with a view to completing the Round within its original

timeframe, as any delay will come to the detriment of developing countries, LDCs and

255

Appendix II continued

all WTO membership. It is the view of the Group that this will require intensification

of the negotiations as of early 2004.

Ministers instructed their representatives in Geneva to develop a work

programme for the Group based on the discussions held in Brasília and on this

communiqué.

Ministers agreed to meet again whenever necessary to consider progress in the

agriculture negotiations and to coordinate the G-20 positions. They considered that

the next meeting could be held on the occasion of UNCTAD XI in June 2004, or at an

earlier date, should progress in the negotiations so warranted.

Brasília, 12

December 2003.

__________

256

Appendix II continued

WORLD TRADE

ORGANIZATION

TN/AG/GEN/9

7 May 2004

(04-2059)

Original: English

Communication from the G-2011

The following communication, dated 7 May 2004, has been received from the

Permanent Mission of Brazil, with the request that it be circulated to delegations.

_______________

"The Blended Formula"

A Fundamentally Flawed Approach to Agricultural Market Access

The US and the EC put forward "the Blended formula" for tariff reductions in the

Joint Text presented on 13 August 2003, which was carried forward to the Derbez Text. "The

Blended formula" encompasses, on a self-declaratory basis, a proportion of tariff lines subject to the Uruguay Round tariff reduction formula; a proportion of tariff lines subject to the

"Swiss" formula and a proportion of tariff lines to be made duty-free.

Following failure to agree on a framework text in Cancun, the G-20 undertook an overall assessment of "the Blended formula". The conclusion was that its structural flaws

would prevent proper delivery on the Doha mandate for market access. It is a meticulously

structured approach to accommodate the interests of the proponents and detrimental to the

interests of the majority of the Membership.

Criticism of "the Blended formula" falls into two main categories:

I. "The Blended formula" fails to deliver "substantial improvements in market access", especially for products protected by tariff peaks.

The tariff structures of developed countries are characterized by clusters of very high tariffs (tariff peaks) while the majority remain at fairly low levels or even duty-free.

11 Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, India, Indonesia, Mexico, Nigeria, Pakistan,

Paraguay, Philippines, South Africa, Thailand, Tanzania, Venezuela, Zimbabwe.

257

Appendix II continued

The Blended formula" enables Members to define, on a self-declaratory basis, the tariff lines to be subjected to the Uruguay Round formula. Coupled with the average

reduction element of the Uruguay Round formula, this would most likely lead to a situation in

which those tariff lines of higher commercial interest to many Members would be subject only

to minimal cuts - creating an unacceptably large self-declaratory opt-out mechanism.

Given their typical tariff structures, the role of the Swiss- and the duty-free

components of "the Blended formula" in most developed countries is merely symbolic.

The likelihood of increased market access for the tariff lines subject to Tariff-Rate Quotas (TRQs) also remains uncertain.

II. Inequitable results arise from the application of "the Blended formula" on the

different tariff structures of developed and developing countries.

The use of the Swiss formula for a specific range of tariff lines in

homogeneous tariff structures (i.e., with little tariff dispersion) as found mainly in developing

countries will lead to higher tariff reductions by those countries. Simulations undertaken using various plausible assumptions with regards to the Swiss formula revealed that Members

entitled to "special and differential treatment" will be required to make proportionally higher

average tariff reductions than developed Members.

Unlike in developed countries, where the role of the Swiss- and duty-free

components of "the Blended formula" is symbolic, for developing countries with

homogeneous tariff structures, those components would entail very substantial tariff reduction commitments. Consequently their rural development, food security and/or livelihood security

needs would be overlooked.

In addition, "the Blended formula" does not provide for the special concerns

expressed by newly acceded countries and many other developing countries, including LDCs.

The S&D provisions currently under discussion will not compensate for these

flaws of "the Blended formula".

III. Conclusion

The structural flaws of "the Blended formula" would prevent proper delivery

on the Doha mandate for market access. There is a shared feeling that "the Blended

formula" is biased in favour of the tariff structures of its proponents, enabling them to

maintain the protectionist status quo, since the highest tariffs would be subject to the

lowest tariff reduction. In view of the difference between the tariff structures of

developed and developing countries, "the Blended formula" would impose an overly

onerous burden of tariff reduction on developing countries. At the same time, it would

enable developed countries to protect their tariff peaks on products of export interest

to several Members, while the application of the Swiss- and duty-free components on

their cluster of already low tariffs would result in minimal tariff reductions.

__________

258

Appendix II continued

WORLD TRADE

ORGANIZATION

WT/L/575

18 June 2004

(04-2642)

Original: English

G-20 MINISTERIAL COMMUNIQUÉ

Communication from Brazil

The following communication, dated 16 June 2004, from the Delegation of Brazil is

being circulated to Members.

_______________

G-20 MINISTERIAL COMMUNIQUÉ

12 June 2004

"Ministers from the G-20 met in São Paulo on 12 June, on the occasion of UNCTAD XI. Delegations from the following countries attended the meeting, which was hosted by Brazil: Argentina, Bolivia,

Chile, China, Cuba, Egypt, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, South

Africa, Tanzania, Thailand, Venezuela and Zimbabwe.

World Trade Organization Director-General, Dr. Supachai Panitchpakdi, and Ambassador Tim Groser,

Chairman of the Special Session of the Committee on Agriculture, took part in the meeting as special

guests. Ministers also interacted with the Minister of Cooperation and Trade of Guyana, and

coordinator of the G-90, Clement Rohee, who reciprocated the participation of Minister Amorim in the

Georgetown Ministerial Conference of the G-90, held on 3 June 2004. At that occasion, recalling the

common interests of both groups, Minister Amorim called upon the G-90 to cooperate closely and act

together with the G-20 in order to translate the Doha Development Agenda into reality.

The meeting took place at a crucial moment in the Doha Round, as WTO Members seek to reach

agreement on a framework for agriculture negotiations by the end of July.

259

Appendix II continued

Ministers assessed the current stage of the Doha Round discussions, with special emphasis on

agriculture, and considered the next steps in the negotiation. Ministers reiterated that maintaining the

level of ambition of the Doha mandate remains the guiding principle of the negotiations. In this

context, any framework text must be fully consistent with the Doha mandate and lead to the

establishment of modalities capable of ensuring substantial reductions in trade-distorting domestic

support, substantial increase in market access, phasing-out with a view to elimination of all forms of export subsidies and operational and effective special and differential treatment, that takes into account

food and livelihood security and rural development needs.

Ministers recalled that since Cancun the G-20 has been carrying out intensive work on the three pillars

of the agriculture negotiations. Consultations were also held with a large number of WTO groups and

individual Members. Ministers welcomed the fact that the constructive engagement of the G-20 has

contributed, in recent weeks, to a greater convergence in the negotiations.

Ministers reiterated the importance they attach to the WTO and to the multilateral rules-based trading

system. Negotiations on agriculture are central to move the Doha Round to a successful and timely

conclusion. Trade in agricultural products continues to be hindered by all sorts of barriers and

distortions. True liberalization in agricultural trade must include reforms to address these barriers and

distortions. This would be a major contribution to the development objectives of the Round.

Ministers recalled that the interests and concerns of developing Members are paramount in the Doha Development Agenda and in the negotiations. Special and differential treatment for developing

Members must be fully reflected in the outcome of the negotiations. The concerns of least-developed,

small and vulnerable economies, net food importing developing countries and recently acceded

Members must be effectively addressed. The issue of preference erosion must also be fully taken care

of in the negotiations.

Ministers welcomed the progress in the negotiations of a credible end-date for the phasing out of all

forms of export subsidies, as called for by the Doha mandate. To achieve this, a precise, effective and

workable definition regarding timeframes and disciplines will be needed so as to ensure that we

eliminate direct export subsidies, as well as all forms of subsidies in export credits, food aid operations

and state-trading enterprises activities.

Ministers stressed that a number of important and sensitive issues remain to be tackled with regard to domestic support. With a view to fulfilling the Doha mandate in this pillar, substantial reductions in

support, stronger disciplines and effective monitoring are essential. For achieving substantial reduction

of domestic subsidies, there must be deep cuts in the sum of overall trade-distorting support, which calls

for, inter alia, clarity regarding the point of departure for reduction commitments in the Blue Box.

Improved disciplines in distorting domestic support are required to avoid product and box shifting. The

importance of accepting product-specific disciplines in the Amber and in the Blue Box was highlighted.

Enhanced monitoring mechanisms are essential to provide confidence that commitments by Members

will be fulfilled.

As far as the Green Box is concerned, Ministers stressed the importance of ensuring its non-trading

distorting nature, and, therefore, the need to clarify its criteria, while ensuring transparency and

accountability in its utilization.

Ministers noted that the membership of the G-20 reflects a range of different interests. Based on the

principles of transparency and inclusiveness, the Group has been successful in its efforts to take into

account the concerns of other Members outside the G-20 in its proposals, especially of other developing

countries and least developed countries. Accordingly, after comprehensive consultations with other

groups and intense technical work, the G-20 circulated a proposal on the main market access elements

260

Appendix II continued

for a framework on 28 May. The proposal identifies the elements of a possible tariff reduction formula,

as well as all other issues related to market access, including effective S&D provisions, such as a

special safeguard mechanism and special products for developing counties, as a necessary step towards the establishment of a framework.

Ministers welcomed the fact that the G-20 document has prompted renewed substantive discussions on

the market access pillar and allowed for a better understanding of each Members` positions and of the

real issues which have to be resolved.

Ministers reaffirmed their solidarity with West and Central African cotton producers and called for a

solution to the problem of cotton on a priority basis in the interest of all cotton-producing developing

countries.

Ministers highlighted the importance of addressing in the negotiations the strengthening of the

disciplines on export prohibitions and export restrictions in Article 12 of the Agreement on Agriculture.

Ministers recalled their commitment to the negotiations and pledged to continue to contribute to the

Doha Round. They also stressed that the successful conclusion of the negotiations is a common responsibility of all WTO members, but noted the special responsibility of those that account for the

main distortions in agricultural trade.

As they met on the eve of the inauguration of UNCTAD XI, Ministers took note, with satisfaction, that

after 40 years, UNCTAD´s mandate retains its validity and stressed that it should continue to contribute

to a better understanding of issues in the area of trade and development and to consensus building on

possible solutions to those questions.

Ministers expressed their common belief that the intensification of South-South trade should receive

priority consideration by all members of the Group. Increased trade flows among developing countries

would be a major contribution to enhance their integration into international trade as a whole. In this

context, they stressed the importance of launching a Third Round of Negotiations under the Global

System of Trade Preferences among developing countries during UNCTAD XI. They also recalled the

idea put forward by President Lula of the possible launching of a free trade area among G-20 members.

Ministers agreed to meet again whenever necessary to consider progress in the agriculture negotiations

and pledged to maintain a high level of coordination of G-20 positions as well as a constant dialogue

with other interested groups and Members, so as to ensure a positive outcome of the negotiations.

São Paulo, 12 June 2004"

__________

261

Appendix II continued

WORLD TRADE

ORGANIZATION

WT/L/621

27 September 2005

(05-4273)

Original: English

BHURBAN G-20 MINISTERIAL DECLARATION Bhurban, 9-10 September 2005

Communication from G-20

The following communication, dated 26 September 2005, from the G-20, is

being circulated to Members.

_______________

1. The G-2012

Ministers at their meeting in Bhurban, Pakistan, on 9-10 September

2005, reaffirmed their commitment to the multilateral trading system and to the

ongoing negotiations on Agriculture, which are central to the Doha Development

Agenda. They reiterated their commitment to conclude the DDA negotiations in 2006

in a manner that furthers their common goal of eliminating trade-distorting policies in

agriculture maintained by developed countries, and providing for substantial

improvement in market access for all products, in line with the level of ambition set

out in the Doha Ministerial Declaration.

2. Ministers reaffirmed the G-20‘s position on the three pillars of the agriculture

negotiations as contained in the Declaration adopted in New Delhi, India, on 19 March 2005. This position has been subsequently elaborated in a number of detailed proposals submitted by

the G-20 to the WTO. Its central elements are:

Domestic support - Any agreed formulae for overall reduction and in AMS

support should result in substantial and effective reduction in trade distorting

support. New disciplines on Blue Box and Green Box shall ensure that the

Blue Box will be less trade distorting than the AMS and that the Green Box policies are indeed non or minimally trade or production distorting. The

12 Argentina, Brazil, Bolivia, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria,

Pakistan, Paraguay, Philippines, South Africa, Thailand, Tanzania, Uruguay, Venezuela, Zimbabwe.

262

Appendix II continued

development dimension should be clearly reflected in the domestic support pillar. Developing countries without AMS should not be subject to any cut in

their de minimis support. Developing countries that allocate all or

substantially all their de minimis support to resource-poor or subsistence farmers are exempt.

Export Competition - An immediate standstill commitment on all forms of

export subsidies should give effect to the spirit of the July framework.

Moreover, all forms of export subsidies should be eliminated in a period no longer than five years.

Market Access - Agreement on the nature of the formula is the central

element of the structure in this pillar. G-20 Members believe that a linear tariff reduction formula within bands, preserving the overall proportionality

between developed and developing countries, is the best approach to achieving

substantial market access for all products, particularly those of export interest to developing countries. Other elements of the G-20 proposal that are

important include: tariff capping, the binding of all tariffs in ad valorem

terms, elimination of SSG by developed countries, and agreement on a very

limited number of sensitive products, where improvements in market access will result from a combination of tariff cuts and TRQ expansion on an MFN

basis.

Special and Differential Treatment for developing countries constitutes an

integral part of all elements of the negotiation. The G-20 is also determined to

make operational the provisions in the Framework on special and differential

treatment for developing countries so as to preserve the food security, rural development and livelihood concerns of millions of people.

3. Ministers directed their officials to pursue these proposals in the next phase of

negotiations. They also directed them to continue to elaborate upon the structural

aspects underlying these proposals within the mandate of the Group and commensurate

with requirements of the particular stage in the process.

4. Ministers reiterated that agriculture is the engine of these negotiations, that it is vital to

the economies of all developing countries and that their agricultural strategies support their

economic development and poverty alleviation programs.

5. Ministers reaffirmed their commitment to achieving full modalities by the Sixth WTO

Ministerial Conference, and, in this light, concluded that the lack of results last July has put the

DDA in a critical situation. There is no room for complacency or for treating the process in a business-as-usual manner.

6. Ministers called for the pace of the negotiations to be intensified. This should, when appropriate, include the definition of levels of ambition, through the use of concrete figures to

facilitate agreement on key elements of the three pillars. Ministers acknowledged that the G-

20 proposals have evoked constructive responses from many members. These proposals are a

263

Appendix II continued

reflection of an exercise in consensus building through the accommodation of the different

interests within the Group as they strike a balance between offensive and defensive interests.

It has been widely recognized that the G-20 proposals constitute a genuine middle ground.

They are technically consistent. They provide a basic structure on which to make progress towards consensus and remain on the table.

7. Ministers called on the developed countries in general and the major subsidizers in particular to respond to the G-20 proposals in a constructive way and to fully commit

themselves to the reform of their agricultural policies.

8. While supporting an intensification of negotiations, Ministers insisted that there is no

alternative to a bottom-up approach as advocated by the G-20. The format of meetings can

vary, but transparency and involvement must be maintained. Ministers stressed that only

through a genuine process of dialogue and negotiation involving the whole of the WTO membership can progress be achieved and results obtained that will be balanced and will entail

benefits for all.

9. While acknowledging that the round is conducted on the basis of a single undertaking,

Ministers cautioned against the insistence, specially by major subsidizers of the agriculture

sector, of trying to condition needed changes in their trade distorting domestic policies to concessions that would lead to

unbalanced results by imposing on developing countries a disproportionate and high burden.

Developing countries that do not apply such policies should not be expected to pay for the elimination of distortions that affect international trade in agricultural products.

10. Ministers stressed the need to give priority to strengthening alliances between the G-20 and other developing country groups. Ministers welcomed the invitation to the coordinators of

the G-33, Least Developed Countries (LDCs), the African Group, ACP countries, and

CARICOM. Ministers emphasized that the G-20 should continue to work together with other

groups, including the G-90, and individual Members with the aim of strengthening convergences and ensuring that the development dimension of the Doha work programme is

achieved.

11. Ministers reiterated that Special Products and the Special Safeguard Mechanism are

integral elements of the negotiations and welcomed the initiative of the G-33, to which the G-

20 is prepared to contribute, to develop a list of indicators for the designation of Special Products based on the criteria of food security, livelihood security and rural development

needs.

12. Ministers expressed their full support for provisions exempting LDCs from any reduction commitments and highlighted the need for steps to be taken to promote their export

capacities, including addressing supply constraints. Ministers stressed that it should be

ensured that LDCs make meaningful gains from reform of each of the three pillars in the current negotiations.

264

Appendix II continued

13. Ministers noted that work in the Sub-Committee on Cotton needs to be expedited so that early agreement can be reached on effective measures consistent with all aspects of the

Framework Agreement. They stressed the urgency to address this question not later than the

Sixth Ministerial Conference in the light of the current crisis affecting African cotton producers.

14. Ministers stressed that tariff escalation should be eliminated to allow developing

countries to diversify and increase their export revenues by adding value to their agricultural production.

15. Ministers emphasized that modalities for the fullest liberalization of tropical products and products of particular importance to the diversification of production from the growing of

illicit narcotic crops by developed countries must also be arrived at by the Sixth Ministerial

Conference.

16. Ministers emphasized that market access for products of export interest to developing

countries should not be impeded by the use of non tariff barriers by developed countries.

17. Ministers recognized that preferences, which are of importance to many developing

countries, are being eroded by both regional and multilateral liberalisation processes.

Ministers also agreed that, in accordance with the provisions of the ‗July Framework‘, preference erosion should be addressed in the negotiations. In order to accomplish that, the

development dimension in the multilateral trading system should be mainstreamed through (i)

expanded market access for products which are of vital export importance to the preference

beneficiaries; (ii) effective utilisation of existing preferences and (iii) additional financial assistance and capacity building to address supply constraints, promote diversification and

assist in adjustment and restructuring.

18. Ministers stressed that concerns of Recently Acceded Members must be effectively addressed through specific flexibility provisions in all pillars as part of the full modalities to be

achieved by the Sixth Ministerial Conference.

19. Ministers also stressed the importance of strengthening disciplines on export

prohibitions and restrictions provided under Article 12.1 of the Agreement on Agriculture.

Ministers directed their officials to pursue this subject promptly.

20. Ministers agreed that the concerns of small, vulnerable economies must also be

effectively addressed as part of the Work Programme mandated in paragraph 35 of the Doha Ministerial Declaration without creating any new categories of developing countries.

21. Ministers expressed appreciation for the contribution made by Dr. Supachai Panitchpakdi to the DDA negotiations as the Director General of the WTO. They also

welcomed the appointment of Mr. Pascal Lamy as Director General.

22. Ministers acknowledged the contribution of the former Chairman of the

Committee on Agriculture – Special Session, Ambassador Tim Groser, and welcomed

the new Chairman, Ambassador Crawford Falconer.

265

Appendix II continued 23. Ministers resolved to stay in close contact with each other to take stock of important

developments and to constantly assess the situation of the negotiations as the Hong Kong,

China Ministerial approaches. They maintained that to achieve substantial progress in Hong

Kong, the negotiating texts should be largely finalized well before the Sixth Ministerial to allow for adequate consideration by all WTO Members.

24. At the invitation of Pakistan‘s Minister of Commerce, Ministers held a retreat on 10 September. They held fruitful discussions on all aspects of the Doha Round.

25. Ministers thanked the Government and the people of Pakistan for their warm hospitality and generosity in hosting and organizing this Ministerial Meeting.

__________

266

Appendix II continued

WORLD TRADE

ORGANIZATION

TN/AG/SCC/GEN/9

26 March 2007

(07-1265)

Sub-Committee on Cotton Original: English

HIGH-LEVEL SESSION ON COTTON

15-16 MARCH 2007

Communication from the G-20

The following communication, dated 15 March 2007, is being circulated at the

request of the Delegation of Brazil on behalf of the G-20.

_______________

On the occasion of the WTO High-Level Session on Cotton (Geneva, 15-16 March 2007) and

recognizing the links between the elimination of trade-distorting cotton subsidies in developed countries

and the promotion of economic and social potential in the developing world, the G-20 reaffirms its full

commitment to address cotton ambitiously, expeditiously, and specifically, in the context of the Doha

Round.

The G-20 firmly believes that cotton is a crucial element of the overall agriculture agreement in the

Doha Development Agenda. Four years have elapsed since President Blaise Compaore of Burkina Faso

clearly articulated the central elements on cotton: (i) to reduce, with a view to eliminating, support to

cotton; and (ii) to adopt, as a transitory measure, a mechanism for the revenue losses in favour of least

developed countries (TNC, 10 June 2003).

Taking into consideration that cotton comprises high percentages of total exports and GDP for the

Cotton-4 nations and accounts for a significant part of rural incomes of poor farmers in the Western and

Central Africa region, as well as in other parts of the developing world, the G-20 is concerned about the

influence of subsidies on world prices and subsequent influence on the potential of agriculture trade to

reduce poverty.

The G-20 wants to highlight that trade-distorting subsidies from developed countries are at the root of

the critical situation of cotton for developing countries, which is one of the major inequalities in

agriculture international trade. Consequently a definitive solution that corrects unfair competition in

world markets will have a significant influence on agriculture negotiations in the Doha Development

Agenda.

267

Appendix II continued

MANDATE

The G-20 reaffirms its commitment to the mandate of paragraph 4 of Annex A of the July 2004

Framework Agreement to address cotton ambitiously, expeditiously, and specifically in relation to all

trade-distorting policies affecting the sector.

The Group recalls paragraphs 11 and 12 of the Hong Kong Declaration, which stresses "the

complementarity of the trade policy and development assistance aspects of cotton". The G-20 also

notes the necessity of searching for a "mechanism to deal with income declines in the cotton sector until

the end of subsidies" and establishing cotton-specific assistance and cooperation programmes geared

towards enhancing productivity and efficiency in African cotton-producing countries.

The G-20 also recalls its Proposal on Domestic Support (12 October 2005). The work in the Sub-

Committee on Cotton needs to be expedited so that early agreement can be reached on effective

measures consistent with all aspects related to cotton, in particular regarding domestic support and

assistance mechanism, of the Framework Agreement (2004) and the Hong Kong Ministerial Declaration (2005).

DOMESTIC SUPPPORT

The G-20 fully supports paragraph 11 of the Hong Kong Declaration addressing the overall objectives

in domestic support: "(…) as an outcome for the negotiations, trade distorting domestic subsidies for

cotton production be reduced more ambitiously than under whatever general formula is agreed and

that it should be implemented over a shorter period of time than generally applicable."

The Group supports the Cotton-4 proposal regarding the reduction in the specific measure of support

applicable to cotton (TN/AG/GEN/22).

In order to avoid trade-distorting subsidy concentration on cotton, the G-20 shares the Cotton-4

objective that product-specific AMS cap applicable for cotton shall amount to one third of the final

capping resulting from the historical average for that product.

The base period for product-specific AMS caps shall be 1995-2000.

Similarly, disciplines on blue box support will ensure that such payments are less trade-distorting than AMS measures and include product-specific provisions.

The G-20 and the Cotton-4 will work together with a view to address effectively the problem of

concentration of subsidies in cotton.

Special and differential treatment for developing-country Members shall be properly addressed.

EXPORT SUBSIDIES

The G-20 recalls the decision taken in Hong Kong regarding the elimination of all forms of export

subsidies granted to cotton by developed countries.

268

Appendix II continued

DEVELOPMENT ASSISTANCE

On the development assistance aspects of cotton, the G-20 supports the Cotton-4 position

(TN/AG/GEN/22), under paragraph 12 of the Hong Kong Declaration, in particular with regard to:

(i) the principle of the creation of a safety net for cotton producing LDCs in

Africa;

(ii) the decision that Members shall instruct their representatives at the World

Bank to seek the organization of a Bank's meeting, within the shortest

period of time, and to adopt a program along with the necessary financing

in time for inclusion in the single undertaking at the end of the Doha

Round negotiations; and

(iii) the supporting mechanism program shall be linked to strengthening the

productivity and efficiency of the cotton sector in Africa.

In this context, the G-20 recalls that several of its Members have been extending assistance to the G-4

and other cotton-producing countries in Africa. Those countries and other G-20 Members wish to

indicate their willingness to explore with beneficiary countries other forms of cooperation, either

bilaterally or through the African Union.

__________

269

Appendix II continued

WORLD TRADE

ORGANIZATION

TN/AG/SCC/GEN/9

26 March 2007

(07-1265)

Sub-Committee on Cotton Original: English

HIGH-LEVEL SESSION ON COTTON

15-16 MARCH 2007

Communication from the G-20

The following communication, dated 15 March 2007, is being circulated at the

request of the Delegation of Brazil on behalf of the G-20.

_______________

On the occasion of the WTO High-Level Session on Cotton (Geneva, 15-16 March 2007) and

recognizing the links between the elimination of trade-distorting cotton subsidies in developed countries

and the promotion of economic and social potential in the developing world, the G-20 reaffirms its full commitment to address cotton ambitiously, expeditiously, and specifically, in the context of the Doha

Round.

The G-20 firmly believes that cotton is a crucial element of the overall agriculture agreement in the

Doha Development Agenda. Four years have elapsed since President Blaise Compaore of Burkina Faso

clearly articulated the central elements on cotton: (i) to reduce, with a view to eliminating, support to

cotton; and (ii) to adopt, as a transitory measure, a mechanism for the revenue losses in favour of least

developed countries (TNC, 10 June 2003).

Taking into consideration that cotton comprises high percentages of total exports and GDP for the

Cotton-4 nations and accounts for a significant part of rural incomes of poor farmers in the Western and

Central Africa region, as well as in other parts of the developing world, the G-20 is concerned about the

influence of subsidies on world prices and subsequent influence on the potential of agriculture trade to reduce poverty.

The G-20 wants to highlight that trade-distorting subsidies from developed countries are at the root of

the critical situation of cotton for developing countries, which is one of the major inequalities in

agriculture international trade. Consequently a definitive solution that corrects unfair competition in

world markets will have a significant influence on agriculture negotiations in the Doha Development

Agenda.

270

Appendix II continued

MANDATE

The G-20 reaffirms its commitment to the mandate of paragraph 4 of Annex A of the July 2004

Framework Agreement to address cotton ambitiously, expeditiously, and specifically in relation to all

trade-distorting policies affecting the sector.

The Group recalls paragraphs 11 and 12 of the Hong Kong Declaration, which stresses "the

complementarity of the trade policy and development assistance aspects of cotton". The G-20 also

notes the necessity of searching for a "mechanism to deal with income declines in the cotton sector until

the end of subsidies" and establishing cotton-specific assistance and cooperation programmes geared

towards enhancing productivity and efficiency in African cotton-producing countries.

The G-20 also recalls its Proposal on Domestic Support (12 October 2005). The work in the Sub-

Committee on Cotton needs to be expedited so that early agreement can be reached on effective

measures consistent with all aspects related to cotton, in particular regarding domestic support and

assistance mechanism, of the Framework Agreement (2004) and the Hong Kong Ministerial Declaration (2005).

DOMESTIC SUPPPORT

The G-20 fully supports paragraph 11 of the Hong Kong Declaration addressing the overall objectives

in domestic support: "(…) as an outcome for the negotiations, trade distorting domestic subsidies for

cotton production be reduced more ambitiously than under whatever general formula is agreed and

that it should be implemented over a shorter period of time than generally applicable."

The Group supports the Cotton-4 proposal regarding the reduction in the specific measure of support

applicable to cotton (TN/AG/GEN/22).

In order to avoid trade-distorting subsidy concentration on cotton, the G-20 shares the Cotton-4

objective that product-specific AMS cap applicable for cotton shall amount to one third of the final

capping resulting from the historical average for that product.

The base period for product-specific AMS caps shall be 1995-2000.

Similarly, disciplines on blue box support will ensure that such payments are less trade-distorting than

AMS measures and include product-specific provisions.

The G-20 and the Cotton-4 will work together with a view to address effectively the problem of

concentration of subsidies in cotton.

Special and differential treatment for developing-country Members shall be properly addressed.

EXPORT SUBSIDIES The G-20 recalls the decision taken in Hong Kong regarding the elimination of all forms of export

subsidies granted to cotton by developed countries.

DEVELOPMENT ASSISTANCE On the development assistance aspects of cotton, the G-20 supports the Cotton-4 position

(TN/AG/GEN/22), under paragraph 12 of the Hong Kong Declaration, in particular with regard to:

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Appendix II continued

(iv) the principle of the creation of a safety net for cotton producing LDCs in

Africa;

(v) the decision that Members shall instruct their representatives at the World

Bank to seek the organization of a Bank's meeting, within the shortest

period of time, and to adopt a program along with the necessary financing

in time for inclusion in the single undertaking at the end of the Doha

Round negotiations; and

(vi) the supporting mechanism program shall be linked to strengthening the

productivity and efficiency of the cotton sector in Africa.

In this context, the G-20 recalls that several of its Members have been extending assistance to the G-4

and other cotton-producing countries in Africa. Those countries and other G-20 Members wish to indicate their willingness to explore with beneficiary countries other forms of cooperation, either

bilaterally or through the African Union.

__________

272

Appendix III - G-33 Proposals and Position Papers

WORLD TRADE

ORGANIZATION

TN/AG/GEN/17

11 May 2006

(06-2316)

Committee on Agriculture

Special Session

Original: English

Joint Communication from the G-33, African Group, ACP, and

LDCs on Special Products and the Special Safeguard Mechanism

The following communication, dated 10 May 2006, is being circulated at the

request of the G-33, African Group, ACP, and LDCs.

_______________

1. The July Framework was explicit in its recognition that the balance in the

negotiations under the Doha Work Programme will be achieved only when the

modalities incorporate operationally effective and meaningful provisions for special

and differential treatment for developing country Members. It recognized the critical

importance of agriculture to the economic development of developing country

Members and that they must be able to pursue agricultural policies that are supportive

of their development goals, poverty reduction strategies, food security and livelihood

concerns.

2. The Hong Kong Ministerial Declaration marked the first step towards evolving

modalities in Special Products (SPs) and Special Safeguard Mechanism (SSM) agreed

to in the July Framework. Primacy was accorded to the self-designation of Special

Products guided by indicators based on the criteria of food security, livelihood

security, and rural development needs. Developing countries would thus attune their

selection of SPs with their domestic policies for food security, livelihood security and

rural development needs. Regarding SSM, two separately applicable import quantity

and import price triggers were agreed as the core of the modalities for the SSM.

3. In order to advance the discussions to an early conclusion, the G-33 has

presented comprehensive proposals covering each facet of the modalities for SPs and

SSM. The African Group, ACP, and LDCs support meaningful modalities to secure

simple and operationally effective instruments of SPs and SSM, which is also the

273

Appendix III continued

spirit in which these proposals have been presented by the G-33. Given the diversity

of agricultural systems among the countries represented in the G-33, African Group,

ACP and LDCs, by necessity these proposals seek to address their common concerns.

4. Suggestions and proposals made recently by some overtly export-oriented

Members of the WTO require the standard of substantial market access improvements

to apply to both SPs and SSM. Further, they seek to limit the scope of the SSM to the

extent that the mechanism becomes inoperable and to restrict SPs to a handful of tariff

lines. These proposals have thus necessarily invoked serious concern among the G-

33, African Group, ACP and LDCs. These countries together account for the vast

majority of people dependent on agriculture for livelihood and of the global labour

force/employment in agricultural activities. These four groups also contain within

them the bulk of rural and urban poor in the world for whom access to food at fair and

affordable prices remains at the heart of poverty alleviation programmes. The

interlinked and complex criteria of food security, livelihood security and rural

development cannot be viewed through the filter of export interests of a few developed

and developing country Members. The negotiating mandate cannot now be redefined.

5. Studies by eminent research bodies across the world confirm that reduced tariff

protection in developing countries, including under structural adjustment programmes,

have been the primary cause of import surge, with attendant decrease in employment

in agricultural activities, lowering of returns to farmers, and increased levels of

poverty in rural areas. The absence of income and insurance safety nets compounds

their problems leading to desperate and irreversible, actions by the afflicted farmers.

These studies conclude that the SSM must be simple, operable, and effective, and that

price triggers are as effective as volume triggers depending upon the emergency they

seek to address. Equally, for SPs, the studies conclude that the appropriateness of the

number of SPs and their treatment is clearly linked to the characteristics of the

agricultural sector of the designating developing country and the policies designed to

meet the three agreed criteria. Some other studies make it evident that modalities of

SPs and SSM aimed squarely to address these legitimate concerns of their proponents

will in no way undermine the export interests of the export-focused developed and

developing country Members. There is no justification for their alleged fears and

apprehensions regarding these instruments.

6. The G-33, African Group, ACP, and LDCs could not be expected to join

consensus on any package on agriculture unless their food security, livelihood security

and rural development needs are accommodated effectively and comprehensively

through the commitments called for from them in the market access pillar, in

particular the tariff reductions, SPs and SSM.

__________

274

Appendix III continued

WORLD TRADE

ORGANIZATION

TN/AG/GEN/27

17 December 2007

(07-5628)

Committee on Agriculture

Special Session

Original: English

G-33 PROPOSAL ON SPECIAL PRODUCTS

The following communication, dated 14 December 2007, is being circulated at

the request of the G-33.

_______________

DESIGNATION OF SPECIAL PRODUCTS

Mandate:

Special Products (SPs) shall be self-designated guided by indicators based on the criteria of food

security, livelihood security and rural development needs of individual developing country Members.

Approach for the Self-Designation:

Developing country Members shall have the flexibility to self-designate a guaranteed minimum number

[x] % of total tariff lines as SPs, which shall be higher than the number of Sensitive Products for

developing country Members. In addition, developing country Members shall have the flexibility to

self-designate an additional number [y] % of SPs provided that these are guided by indicators. Based

on this hybrid approach, developing country Members shall have the right to self-designate up to a

maximum 20% of total agricultural tariff lines as SPs.

TREATMENT OF SPECIAL PRODUCTS:

The G-33 underscores and reiterates that maintaining a no-commitment tier (zero cut treatment) must

remain a fundamental aspect for SPs. This is consistent with the Doha Mandate of providing maximum flexibility to developing country Members to address their food security, livelihood security and rural

development needs. The G-33 therefore will not be in a position to accept any design of SPs that does

not provide for such a tier or category.

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Appendix III continued

The G-33's graded approach to treatment provides the preferred practical and workable solution for all.

While emphasizing the fundamental importance of SPs in the first grade being exempt from any

commitments, the Group is ready to provide new proposals on the numbers of tariff lines in each grade

as well as enhancing the treatment for the two remaining grades, as follows:

Grade Percentage of

SPs Tariff Lines

Treatment (Cuts)

1 40 % 0 %

2 30 % 8 %

3 30 % 12 %

This new G-33 proposal represents a significant movement from the Group's previous position.

FOOTNOTE 3

The G-33 welcomes the treatment proposed by the Chair for Members entitled to utilize Footnote 3 of

Document TN/AG/W/4. This means that these countries will not be obliged to reduce their tariffs more

than 24% in average and that there will not be any obligation to apply any minimum reductions per tariff line. The Group is also of the view that for these Members the concept and the mandate of

Special Products shall be integrated into this solution through the inclusion of appropriate provisions in

the modalities text on SPs. At the same time, it should be explicitly clear in the next modalities text that

the Footnote 3 beneficiaries will not need to apply any indicators in the designation of their SPs.

EXCHANGE MECHANISM

Developing country Members may designate additional SPs by converting the unused Sensitive

Products allowance by a certain exchange rate.

Unused Sensitive Products allowances can be converted to SPs with an exchange rate of a ratio of 3:2.

ADDITIONAL FLEXIBILITIES

SVEs or other beneficiary Members which choose not to use Footnote 3 provisions shall have

additional flexibilities in the designation, number and treatment of SPs, in particular that they will not

need to apply any indicators in the designation of their SPs.

RAMs shall have additional flexibilities with the number and treatment of SPs.

__________

276

Appendix III continued

WORLD TRADE

ORGANIZATION

TN/AG/GEN/29

10 February 2009

(09-643)

Committee on Agriculture

Special Session

Original: English

G-33 PROPOSAL ON the Treatment of SSM provided to the SVEs

The following communication, dated 6 February 2009, is being circulated at the

request of the G-33.

_______________

No. 213/WTO/II/09

Geneva, 6

February 2009

Dear Ambassador Falconer,

Let me begin by reiterating that the G-33 acknowledges and appreciates your

persistent efforts in steering the process of Agriculture negotiations which, as it should

be, continues to be driven by substance. We reassure you that the G-33, as in the past,

will remain constructive and cooperate with you in finding a balanced and fair solution

to the outstanding issues in the modalities.

This communication from the G-33 seeks to respond to the question raised by

you in paragraph 5(b) of the document TN/AG/W/7 regarding the status of the SVEs

and whether a general solution for all developing countries will be applicable to the

SVEs as well.

It may be recalled that the discussion so far has focused on finding a general

solution for developing countries on the understanding that any specific treatment for

SVEs would emanate from the general solution for the developing countries.

However, with the general solution for developing countries not yet in sight and in

view of the question raised by you regarding SVEs, the Group had an in-depth

discussion on the matter and has reached the conclusion that the SSM for SVEs must

277

Appendix III continued

be suitable to their particular circumstances. The Group concluded that generalizing

the SSM treatment in any manner would be disadvantageous to the SVEs and

incompatible with their level of development.

In pursuance of the mandate in Paragraph 35 of the Doha Ministerial

Declaration and in order to address paragraph 5(b) of the document TN/AG/W/7, the

G-33, without prejudice to its positions on the general solution for other developing

countries, submits the attached proposal for your consideration.

As you would notice, there are just (3) three elements which are specific to the SVEs.

First, the triggers in paragraph 133 bis in the document are lower than what you have

proposed for developing countries in your draft modalities; second, the maximum

increase over the pre-Doha bound tariffs for SVEs could be 75 per cent of the current

bound tariff or 75 percentage points whichever is higher; and third, the maximum

number of tariff lines that could go beyond the pre-Doha bound levels is 30 per cent.

All other elements in this proposal viz those pertaining to price-based SSM,

data availability or mandatory cross check, among others, are existing G-33 positions

for all developing countries including SVEs and have previously been reflected in the

2 December 2008 G-33 letter to you as well as in the 27 July 2008 Joint Statement by

the G-33, African Group, ACP and SVEs.

I thank you for your kind attention and continued cooperation. Please accept

the assurances of my highest consideration.

Sincerely yours,

Erwidodo

Ambassador

H.E. Ambassador Crawford Falconer

Chairman, Committee on Agriculture in Special Session

The G-33 takes note of documents TN/AG/W/4/Rev.4 and TN/AG/W/7 prepared by Chairman

Falconer. The G-33 acknowledges the efforts of the Chairman to find balanced solutions in

the Agriculture negotiations and would like to express concern, particularly with regard to the

issues raised in paragraph 5(b) of the document TN/AG/W/7 on SSM.

The G-33 reiterates that the SSM must be a mechanism which is suitable for the particular

circumstances of their Members and each Members and that limiting the SSM, a priori, as is

the intent of some of the proposed modalities, is disadvantageous for its small vulnerable economies (SVEs) members and incompatible with our level of development.

278

Appendix III continued

The G-33 recalls that since July 2008, there have not been any discussions regarding the

specific treatment for SVEs on SSM. It was the understanding of the G-33 and its SVEs

members that emphasis would first be on finding a solution for developing countries before proceeding to look at the specific treatment for the SVEs. The G-33 presents this document to

emphasize the position of its SVEs members on various elements of the SSM. This

submission is made in pursuance of the mandate in paragraph 35 of the Doha Ministerial

Declaration to frame responses to the trade related issues identified for the fuller integration of the SVEs into the multilateral trading system and in order to address paragraph 5(b) and (c) of

document TN/AG/W/7 and is without prejudice to its positions on the general solution for

other developing countries.

The basis and the structure for the SSM to be agreed should be the one in the document

TN/AG/W/4/Rev.4.

In that regard, it should include a paragraph 133 bis for the SVEs, as follows:

133 bis

As regards the volume-based SSM, it shall be applied on the basis of a rolling

average of imports in the preceding three-year period for which data are

available (hereafter "base imports"). On this basis, the applicable triggers and

remedies shall be set as follows:

where the volume of imports during any year exceeds 110 per cent but does

not exceed 115 per cent of base imports, the maximum additional duty

that may be imposed shall not exceed 25 per cent of the current bound

tariff or 25 percentage points, whichever is higher;

where the volume of imports during any year exceeds 115 per cent but does

not exceed 120 per cent of base imports, the maximum additional duty

that may be imposed shall not exceed 40 per cent of the current bound

tariff or 40 percentage points, whichever is higher;

where the volume of imports during any year exceeds 120 per cent of base

imports, the maximum additional duty that may be imposed shall not

exceed 50 per cent of the current bound tariff or 50 percentage points,

whichever is higher.

In paragraph 144, the maximum increase over the pre-Doha bound tariff should be 75 ad valorem

percentage points or 75 per cent of the current bound tariff whichever is higher. Also, a maximum of

30 per cent of tariff lines in any given period should be allowed to go beyond the pre-Doha bound

levels.13

13 Bolivia is not in a position to support these numbers at this stage and remains with the pre-July

position of the Group.

279

Appendix III continued

Further, as a matter of abundant caution for the SVEs, the SVEs reiterates some of its existing positions

which hold good for SVEs as well as for other developing countries.

The provisions in the proposed paragraph 133 bis (a) to (c) are without

prejudice to Members‘ rights to raise their applied tariffs up to the level of

their current bound tariffs.

The triggers and remedies in paragraph 133 will apply for both within and over

the pre-Doha bound rates.

No mandatory cross check mechanism of any kind is acceptable.

For all developing countries‘ markets including SVEs and LDCs, depressed prices attributable to high

subsidies and market imperfections/failures can have a deleterious effect on domestic production and

markets. As such, the price-based mechanism is of crucial importance and a focused discussion on the

modalities for the price-based mechanism, including the flexibilities for SVEs, is called for as soon as

possible.

Finally, the G-33 emphasizes that both the volume-based SSM and price-based SSM have to be

designed in order to address their needs in a simple and effective manner, and that this will only be

achievable by extending additional and substantive special and differential treatment to the group.

__________

280

Appendix III Continued

WORLD TRADE

ORGANIZATION

TN/AG/GEN/30

28 January 2010

(10-0443)

Committee on Agriculture

Special Session

Original: English

Refocusing Discussions on the Special Safeguard Mechanism (SSM):

Outstanding Issues and Concerns on its Design and Structure

Submission BY the G-33

The following communication, dated 27 January 2010, is being circulated at the

request of the G-33.

_______________

Introduction

Paragraph 13 of the Doha Ministerial Declaration (DMD) requires that Special and Differential

(S&D) provisions in the agriculture negotiations must be "operationally effective to enable developing

countries to effectively take account of their development needs, including food security, livelihood

security and rural development". It is also imperative to recall the Mandate agreed in Hong Kong that

developing countries shall have recourse to both volume and price-based Special Safeguard Mechanism

(SSM).14 This is a fundamental S&D instrument for developing countries.

Recent discussions on the SSM have highlighted the gulf that persists in perceptions on the rationale,

structure and the design of the instrument. The proponents of the SSM have highlighted the need for an

effective, easy to operate instrument which addresses their development needs, in line with the mandate

in paragraph 13 of the Doha Ministerial Declaration. However, some members have focused on its

possible disruptive impact on trade flows. Based on this, they have sought to circumscribe the

functioning of the SSM by proposing disciplines which would prevent it from disrupting "normal

trade". The concept of normal trade has never been defined in the debate.

As a part of its constructive engagement, the G-33 considers it necessary at this stage to recall the

rationale for the SSM as originally mandated and from this, derive some conclusions regarding its

structure and design. This submission discusses some of the key concepts that have been raised over

time, in the discussions on SSM, including "normal trade", prorating, seasonality, crosscheck, duration

and spillover. This submission relies primarily on technical analysis conducted by the G-33 itself, and references some technical work already published by various agencies like the FAO, ICTSD, WTO,

South Centre, and Carnegie Endowment for International Peace. The experience of SSG usage by

developing countries is also drawn upon.

14 Hong Kong Ministerial Declaration contained in WT/MIN(05)/DEC dated 22 December 2005.

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Appendix III continued

Rationale

Two factors are central to the rationale of the SSM. The first concerns the objective reality of

agriculture in most parts of the developing world where the central preoccupation of the hundreds of

millions of people engaged in agriculture is that of survival, not trade. There are an estimated 1.1 billion

agricultural workers and about 1.5 billion food-insecure people living on approximately 500 million

agricultural holdings of less than 2 hectares worldwide. This accounts for 85% of the total world

agricultural holders.15 The second factor has to do with the distortions that characterize agriculture in most developed countries and which constitute the principal subject matter of the negotiations mandated

in Article 20 of the Agreement on Agriculture and Paragraph 13 of the Doha Ministerial Declaration.

It is important that the SSM is not viewed primarily through the prism of commerce. The correct

perspective is to view it as an instrument which allows developing countries to address their central

concerns of food and livelihood security and rural development while undertaking liberalization

commitments. It needs to be emphasized that in most developing countries, agriculture which provides

the bulk of employment, is not a commercial activity per se, but a way of life. Most agriculture

production in such countries involves small land holdings mainly producing for self consumption.

Subsistence agriculture is deeply mired in the vicious cycle of low investment and growth. Such

agriculture is also deeply connected with issues of poverty alleviation as about 75 per cent of the

world's poor live in rural areas where agriculture is the main economic activity. The last decade has witnessed many disquieting developments in developing country agriculture which reflect the interplay

between economic liberalization and the crisis of subsistence agriculture. Greater openness to

international markets has brought incessant price fluctuations which adversely impact on the food

security of the poorest sections of the population. The World Bank has estimated that due to high food

and oil prices in 2007 and 2008, the number of people living in extreme poverty may have increased by

130-150 million.16 Frequent food riots and farmer suicides have reflected the violent face of this crisis.

Greater reliance on imports has also led to large scale displacement of local crops in several countries

with the attendant impact on rural employment and food security. Several crops which are

environmentally well-suited to particular agro-climatic zones have also been displaced by cheaper

imports.

It is important to recall that trade in agriculture was kept out of the ambit of disciplines in the GATT for

seven Rounds preceding the Uruguay Round. The Uruguay Round made a modest beginning to introduce disciplines and recognized that "the long term objective of substantial progressive reductions

in support and protection resulting in fundamental reform is an ongoing process".17 Despite attempts at

reducing Trade Distorting Support in the context of the Doha Round of negotiations, these have yielded

minimal results. For example, loosely defined Green Box disciplines have created the possibility of box

shifting. Further, in market access, developed countries have been able to secure carve outs through

Sensitive Products, the retention and creation of TRQs, and non-application of a Swiss formula to tariff

reductions. Key issues such as tariff capping and tariff simplification remain to be negotiated. Based

on the current draft modalities, it is realistic to assume that the Doha Round will not make a serious

dent into the removal of distortions in agricultural trade.

15 Document Number A/HRC/9/23 dated 8 September 2008 of UN General Assembly. 16 World Bank, Global Economic Prospects-Commodities at the Crossroads, 2009, page 96. 17 Article 20, Agreement on Agriculture.

282

Appendix III continued

It is essential for the sustainability of the global trading system that the agricultural crisis in developing

countries is addressed urgently. The central policy intervention in this connection has to be to remedy

the huge investment deficit in developing country agriculture through national efforts as well as

multilateral interventions.18 While massive investments in physical infrastructure, appropriate

agricultural technologies, training, and the like are some of the major elements to address this crisis, it

is important that agricultural markets are not de-stabilized during this process and farmers are given the right incentives through well functioning markets. Developing country governments need a robust

SSM that would permit them to address the volatility in global markets leading to import surges or price

declines. In fact, drawing from the lessons of the food and financial crises – the impacts of which are

still ongoing - the architecture and modalities for the SSM need to be further strengthened.

The crisis in developing country agriculture is exacerbated by the severe distortions that persist in

global agriculture trade. Most of these distortions are related to the huge support given to agriculture in

developed countries. The OECD estimates that its members spend more than US$375 billion every

year on agricultural support.19 On average, more than a third of farm receipts in developed members of

OECD countries come from government programmes. The value of support is more than five times

higher than official spending on ODA and twice the value of agricultural exports from all developing

countries.

"Normal Trade"

Opponents of an operationally effective SSM have sought to introduce more and more conditions,

including for example, higher volume triggers, which are intended to prevent the disruption of "normal

trade". It is important to note that the issue of "normal trade" does not figure in the mandate for the

SSM. Neither is there any reference to "normal trade" in other Agreements such as the Agreement on

Safeguards, Agreement on Subsidies and Countervailing Measures and the SSG in the Agreement on

Agriculture. These Agreements seek to offset the harm to local producers from import surges, price

declines and subsidies. Thus, the principle on which they are based is to minimize the damage by

restricting imports on a temporary basis. Such measures imply that business cannot continue as usual.

The fact that some disruption to trade would occur due to application of these measures is inbuilt in

these Agreements. That the concept of "normal trade" is being raised in the context of the SSM, which

is meant only for developing countries, is therefore, a matter of concern to the G-33.

There is a significant variance in import growth rates amongst countries, and amongst products, making it difficult to arrive at a single average figure that would adequately represent the current and future

trading realities of all countries and all products.

An examination of the top ten globally traded products by quantity for the year 2007 has been carried

out (Annex 1). For these products, for the period 1987 to 2007, data is available only for six products.20

The examination reveals that the annual compounded import growth rates for these six products during

the period are in single digits. In fact for the staple products which are the main requirements of

developing countries, the growth is 0.8% for barley; 0.9% for wheat; 1.8% for milled rice; 2.6% for

maize and 4.8% for soybeans.

18 The Independent Evaluation Group of the World Bank in its report in 2007 indicated that the World

Bank's support for agriculture dropped from 33 per cent of its development aid in 1981 to only 8 per

cent in 2001. 19 OECD Report, "Agricultural Policies in OECD Countries: Monitoring and Evaluation 2009". 20 FAOSTAT, http://faostat.fao.org/site/342/default.aspx

283

Appendix III continued

Annual compounded import growth rate for the same period for the LIFDCs (Low Income Food Deficit

Countries)21

which consist of 77 developing countries, has also been examined. The import growth of

these six products for the LIFDC's also shows similar trends of single digit growth (except soybeans).

The growth is 5.3% for barley; 1.0 % for wheat; 4.8% for milled rice; 3.6% for maize and 21.2% for

soybeans.

The annual compounded production growth rates for these six products for the period 1987 to 2007 are also in single digits. The data reveals growth of –1.4% for barley; 1.0% for wheat; 2.8% for maize and

4.0% for soybeans. The data highlights that there is some correlation between growth in agricultural

trade and growth in agriculture production.

Thus, the arguments for tighter disciplines on the SSM on the basis of products which have short term

high growth which cannot be sustained over a period of time, are therefore faulty as they overlook the

global trends in agriculture production and trade growth over a reasonable period of time. Country and

product variations are also not considered while seeking for tighter disciplines. Further, the arguments

rely on value of agriculture products to project the growth rather than the quantity of products exported.

The value of an agricultural product depends on a number of factors including currency fluctuations,

demand and supply and opportunity cost while agriculture production is based on what is possible and

can be grown and sustained over a period.

The G-33 believes that the discourse around "normal trade" is therefore a distraction from a SSM that supports food security, livelihood security and rural development.

SSG & SSM

Since the SSM is not yet operational, the concerns regarding its frequent can only be assessed by

examining a similar instrument. In this regard, an examination of the functioning of the SSG, on whose

provisions the SSM is broadly structured, is relevant and instructive.

Out of the 39 countries that have access to the SSG, 22 were developing countries. A WTO

compilation shows that the SSG could be invoked on a total of 6,156 tariff lines.22 During the period

1995-2008, a total of 2433 SSG measures were notified.23 Out of this, developed countries accounted

for 1906 SSG measures (around 78%) as compared to 527 applications by developing countries (22%).

Between 2001 and 2008, developing countries used it only 465 times. The SSG measures were invoked

during 1995-2008 only by six out of the 22 participant developing Members. Out of these six, if

Chinese Taipei is excluded, the remaining five Members used the SSG only 171 times. An examination of the SSG usage by four developing Members (Barbados, Costa Rica, Nicaragua and the Philippines)

shows that while they could have used the volume based SSG 29 times during the period 2000-2004,

they actually invoked it only on one occasion. The above facts make it abundantly clear that most

developing countries, for various reasons, are not in a position to frequently use the SSG even though

the necessary technical conditions may be met.

Based on the above empirical behavior trends of developing countries in the usage of the SSG, it can be

safely predicted that developing countries will not be "trigger happy" while using the SSM as a mere

breach of the trigger cannot be presumed to mean invocation of the measure.

21 LIFDCs: FAO definition. See http://www.fao.org/countryprofiles/lifdc.asp 22 WTO document TN/AG/S/12 dated 24 December 2004. 23 Compiled from WTO website:

http://members.wto.org/ddf/agriculture/Regular_session_datasets_e.htm

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Appendix III continued

The above analysis raises a number of issues regarding the structure and design of the SSM. While

over the last 15 years the SSG has been an instrument regularly used by a number of developed

countries to protect the commercial interests of their agriculture sectors, the SSM has to perform a

qualitatively different function of protecting the livelihoods and food security interests of developing

countries by preventing damaging import surges and price declines. Therefore, its design has to be

much simpler than that of the SSG.

A comparison of the SSG and the SSM on the basis of the proposals in the Chair's text (Rev.4 and W/7)

clearly illustrates how the SSM provisions proposed are far more stringent than those of the SSG

(Annex-2). The major concerns include, inter alia, the following:

Limit on products and tariff lines on which the SSM can be triggered for above

the pre-Doha bound rates. In the SSG, there is no such limitation.

Data requirement of imports of preceding three years for the volume based

SSM. In the SSG, the data requirement is much more flexible.

Capping of remedies relative to pre-Doha bound levels and rates bound at the

Doha Round.

The application of the concept of Pro-rating. Pro-rating does not exist in the

SSG.

The cross-check mechanism for the volume-based SSM, which does not exist

for the volume-based SSG. There is also a cross-check for the price-based

SSM, which is more stringent than that for the price-based SSG.

Exclusion of Preferential Trade. The SSG is silent on preferential trade,

meaning that it can also be applied to preferential trade.

More constraints on duration of use of the SSM than the SSG.

Restrictive provisions for seasonal products in terms of duration and review

mechanism. In the SSG such conditions do not exist.

En route shipments which had completed customs clearance at exporting

country are exempt from the SSM. This is not the case for the price-based

SSG.

Trigger price, remedy available and remedy ceiling for the price based SSM

are much more stringent.

It is remarkable that an instrument meant to address the development concerns of most developing

country members is sought to be burdened with conditions far more restrictive than those on the SSG

which is mainly being used by developed countries. The G-33 has always advocated for the SSM to be

more flexible than the SSG.

Additional conditions in Chair's Texts which weaken the SSM

The dynamic nature of agricultural production and trade makes it necessary for developing countries to

have access to a measure that is easy to implement and is responsive to the heterogeneous situations of

285

Appendix III continued

different crops across different countries.24 The SSM remedies need to be timely and sufficient to stop

the import surge that is taking place. Apart from the issues of triggers and remedies (which the G-33

will address separately), a number of proposals in the Chair's texts will require developing countries to

fulfill certain conditions before they can apply these remedies. These conditions like prorating,

seasonality, crosscheck, duration and spillover will obviously have an impact on the ease with which

the measure can be invoked. The G-33 has undertaken technical analyses of the justification and impact

of these conditions and will be making separate submissions to share its findings with Members. The

summary of the findings is however provided below.

Pro-rating

Pro-rating has been proposed for the SSM even though it does not exist for SSG. Two concepts of pro-rating have been introduced in the Chair's texts (TN/AG/W/4/Rev.4 and TN/AG/W/7), both of which

ensure the use of triggers which are always higher than would otherwise have obtained. Either of the

two proposed concepts can facilitate the continued increase in the triggers to very high levels over a

short period of time. Therefore, prorating substantially inhibits any subsequent use of SSM.

The G-33 reiterates that pro-rating is an additional layer of restriction for the SSM and therefore, rejects

the concept.

Seasonality The request of the G-33 on "Seasonal and Perishable Products" was for treatment identical to that which

obtains in the SSG. It must be noted that in the SSG the seasonal product provision relate to seasonal

products from the perspective of importers. It is the importing member that is entitled to use a "shorter

time period" in calculating the base period for volume based SSG, and "different reference prices for

different periods" for price based SSG. There are no separate shorter duration periods for seasonal

products. On the other hand, the Chair's text (TN/AG/W/7) looks at seasonality from the perspective of

exporters and stipulates a shorter duration of application.

The G-33's examination of export figures from several exporters found that while seasonality in

production may be the norm for certain products, it is not the norm for all products from all countries.

Thus, "seasonality in production" does not necessarily translate into "seasonality in trade".

Furthermore, amongst products that exhibited overall "seasonality in trade" patterns, examples were found where the "seasonality in trade" did not necessarily translate into individual bilateral trade

relations.

The G-33 is of the view that the current seasonality language for the SSM must be re-examined.

Retaining the language as it is in the Chair's texts not only fails to accurately reflect the current trading

patterns, but would unnecessarily complicate the use of the SSM.

Cross check The proposed modalities in the Chair's texts provide that the SSM cannot be invoked unless the following cross check provisions are applied:

(a) For the volume-based SSM, Members should not have recourse to exceeding

pre-Doha bound rates in cases where import surges are not accompanied by

price declines.

24 Actionaid Policy brief, "Structure, application and Scope of SSM for Developing Countries".

286

Appendix III continued

(b) For the volume-based SSM, imports are at a negligible level in relation to domestic

production and consumption.

(c) For the price based SSM, when import volumes are declining.

(d) For the price based SSM, if the volume of imports is manifestly declining or a negligible level

incapable of undermining the domestic price level.

A recent study by South Center25 indicates that in 85% of cases of import surges were not accompanied

by price declines. In addition an ICTSD26 study points out that the availability of the SSM will be more

than halved if so called market tests with price depressions are imposed. It must also be emphasized

that there can be several reasons for domestic prices not declining with import surges, including

possible displacement of local production.

The introduction of a mandatory cross-check would make it difficult for developing countries to apply

the SSM as they would need to first establish the "proof" of domestic price or volume changes. There may be considerable time lags between import surges and its impact on domestic markets. Further,

most developing countries have difficulty in capturing real time price data. Moreover, establishing the

domestic prices for each corresponding tariff line is very difficult. As a result, the SSM would be

unworkable for many developing countries.

The G-33's view is that a mandatory cross-check will seriously hamper the use of the SSM and limit its

effectiveness and timeliness of application in addressing a temporary import surge.

Duration and Spill over The Chair's text imposes conditions on the duration of remedies and how soon the SSM can be re-

invoked after its termination. In the context of duration, certain restrictive elements have been

proposed, in the event of the need for remedies to "spillover" beyond the end of the year in question.

The G-33 believes that the duration of remedies should be sufficient to ensure that the import surge or

price decline has been addressed. The duration should not be constrained to a calendar, financial or

market year.

Other Issues

There are a number of other conditionalities in the Chair's texts which have implications for the

effectiveness and timeliness of the SSM. Some of these include:

The Price-based and volume-based triggers shall be on the basis of MFN trade

only;

The Volume-based SSM cannot be applied if rolling average of imports in the

preceding three-year period is not available;

The level of triggers and remedies;

The exclusion of negligible trade from SSM coverage;

Limiting the SSM remedies to two consecutive periods; and

The SSM application limited by an "off" period.

25 South Centre, "The Volume Based SSM: Analysis of the Conditionalities in the December 2008

WTO Agriculture Chair's Texts‖ October 2009, SC/TDP/AN/AG/9. 26 ICTSD, "Implications of Proposed Modalities for the Special Safeguard Mechanism: A Simulation

Exercise‖ Issue Paper No.10

287

Appendix III continued

Price-based SSM As agreed in the Hong Kong Ministerial Declaration developing countries shall have recourse to both

volume-based and price-based SSM. However, since the issuance of the Chair's second draft modalities

in May 2008, discussions on the SSM have mainly centered on the volume-based SSM. Though the G-

33 has submitted its concerns on the price-based SSM27, there has been little or no discussion on this

issue. Further, several additional burdensome requirements and restrictions were included in the third

and fourth drafts of the Chair's modalities text which would render the SSM an ineffective mechanism.

WTO data reveals that the price-based SSG has been used much more frequently (74%) than the

volume-based SSG (26%), by both developed countries and developing countries.

The G-33 is of the view that the price-based SSM is an essential measure for developing countries. It

will be submitting a separate and more comprehensive technical paper on the elements of the price-

based SSM including the triggers, the reference price, remedies, pre-Doha cap, ad valorem duties and

preferential trade. There is a need for a comprehensive discussion on this measure.

Small and Vulnerable Economies (SVEs) and Least Developed Countries (LDCs) The G-33 would also like to reiterate that while a majority of developing countries face development

challenges due to their under-developed agriculture sectors, these challenges are even more acute for

the smallest developing countries. Additional constraints that the Small and Vulnerable Economies

(SVEs) face include limited resources, higher transaction costs due to poor infrastructure, limitations in

crop diversification, etc. These constraints make it even more difficult for SVEs to address the

challenges of food and livelihood security and make them more vulnerable to the adverse effects of

import surges and price declines. It is in this context that the G-33 had submitted a separate proposal

(TN/AG/GEN/29) on 10 February 2009, seeking enhanced flexibilities in the SSM for SVEs. The G-33

expects these proposals to receive due consideration.

The G-33 wishes to emphasize that the Least Developed Countries (LDCs) in the WTO are the poorest

and most vulnerable amongst us. As such, these economies deserve the most flexible treatment on all elements of the SSM, including unlimited product coverage, and unlimited remedies beyond the pre-

Doha bound rate. The G-33 fully supports LDCs' access to a simple, effective and operational

mechanism that takes into account the challenges faced by these countries.

Conclusion

The basic objective of this submission is to shift the focus of the SSM debate to the development

dimension of the Round. Recent global developments have highlighted the need for policy reform in

developing countries to strengthen food security and to address livelihood concerns of the poor, the

bulk of whom depend on agriculture for sustenance. For these reform initiatives to be successful, it is

necessary to ensure a stable policy environment. The SSM is an essential element for this purpose.

For the SSM to be successful in providing the required stability, it has to be simple, non-burdensome.

The analysis of the SSG usage clearly establishes that developing countries (unlike developed

countries) have been extremely restrained in their use of the instrument. There are various reasons why

such restraint can also be expected in the case of the SSM. Apart from the difficulties that most developing countries have in generating on-time data, many developing countries import agricultural

products to manage critical shortages.

It is clear from this analysis that much of the architecture proposed for the SSM in Chair' text and W/7

needs to be revisited. It is necessary to recall the mandate for the SSM, and to note that this instrument

27 G-33 Job document (08)/47 dated 3 June 2008.

288

was intended to be one tangible way of operationalizing S&D. The SSM must be easy to use and allow

developing countries to respond swiftly to market disruption. A strong, effective SSM is essential to

the achievement of a balanced outcome for many developing countries.

289

Appendix III continued

Annex 1

Table 1: Top 10 globally traded agricultural products by quantity (Source:

FAOSTAT)

Commodity Quantity

(tonnes)

Wheat 132832103

Maize 109684205

Soybeans 74402997

Cake of Soybeans 61365251

Pigs 30799813

Sugar Raw Centrifugal 28698463

Rice Milled 27433888

Palm oil 26043146

Barley 23611187

Sugar Refined 23091993

Table 1a: Annual compounded global import growth over 20 years

Quantity

1987-2007

Barley 0.8%

Maize 2.6%

Soybeans 4.8%

Wheat 0.9%

Palm oil 8.3%

Rice Milled 1.8%

Table 1b: Annual compounded import growth over 20 years (LIFDCs)

Quantity

1987-2007

Barley 5.3%

Maize 3.6%

Soybeans 21.2%

Wheat 1.0%

Wine 8.9%

Palm oil 9.1%

Rice Milled 4.8%

290

Appendix III continued

Table 2:

Annual compounded production growth rates over 20 years

1987-2007 1997-2007

Barley -1.4% -1.5%

Maize 2.8% 3.0%

Soybeans 4.0% 4.3%

Wheat 1.0% 0.0%

Palm oil 7.9% 7.8%

Paddy rice 1.8% 1.3%

_______________

291

Appendix III continued

Annex 2

Comparison of SSG and SSM

S.

No.

Concept being

compared

Article 5, AoA: SSG Doha Round Modalities on

SSM (Chair's texts

(TN/AG/W/4/Rev.4 and

TN/AG/W/7 hereinafter

refered to as Rev.4 and W/7)

1. Data

requirements

in volume-

based triggers

Data relating to volume

triggers to implement

SSG is expressed for the

"three preceding years

for which data is

available." Calculation

of additional duty also

takes into account the

volume change in

"domestic consumption

of the product

concerned in the most

recent year for which

data are available."

The language used in Para 133

of Dec. 08 Main Text for the

volume triggers does not qualify

the use the phrase "preceding

years with "for which data is

available".

2. Cross-checks

on Volume-

based triggers

No cross-checks exist. Cross-check mechanism

prescribed.

3. Price-based

triggers

Trigger price for

SSG under Art. 5 were

equal to the 1986-88

reference price. Since

the reference period is

"fixed", so is the

"reference price", which

Members were required

to notify.

The formula for

calculation of remedy is

based on 5 levels of fall

of the cif price below

the trigger price.

The reference price is a

"moving average" based on cif

import price relative to data on

"MFN-sourced price" for the

most recent preceding three year

period preceding year of

importation, for which data is

available.

Trigger & Remedy: When

CIF Import Price falls below

85% of "Reference Price", then

remedy will be 85% of the

difference between import price

and trigger price.

4. Data This was not an issue Provision on price-based triggers

292

S.

No.

Concept being

compared

Article 5, AoA: SSG Doha Round Modalities on

SSM (Chair's texts

(TN/AG/W/4/Rev.4 and

TN/AG/W/7 hereinafter

refered to as Rev.4 and W/7)

requirements

in price-based

triggers

since "trigger price" is a

"fixed price".

refers to calculation of the

reference price on the basis of

the most recent three- year

period preceding the year of

importation "for which data is

available."

5. Cross-checks

on Price-based

triggers

Members shall not take

action "as far as

practicable", where the

volume of imports of

the concerned product

are declining.

- This is a soft non-

binding obligation.

Rev.4

There is stronger, more binding

language for countries to not

take action when the volume of

imports is declining or is at

"manifestly negligible level

incapable of undermining the

domestic price level". (Para 137)

W/7

(i) Remedies not applicable

unless domestic price is actually

declining, unless "in exceptional

circumstances", the authorities

have "good reason to believe

that there would be at least an

imminent foreseeable decline".

(ii) If action is taken in "such

exceptional circumstances", then

there will be an "expedited

review by a standing panel of

experts".

6. Capping of

Remedies

relative to: (a)

pre-Doha

bound levels;

and (b) current

bound rates

(i.e., rates

bound at the

Doha round).

The additional duty

for the volume-based SSG

was capped at one-third of level of ordinary custom

duty (applied tariff) in

effect in the year in which

action is taken. No cap for price-

based SSG. Article 5 is silent on

whether remedies should be imposed on bound or

applied tariffs.

Rev.4

Principle that "pre-Doha

bound tariffs" cannot be

exceeded. The language used

suggests that the level cannot be

breached for both volume and

price- based triggers (Para 142).

However, the text also

provides that Maximum

Additional Duty could breach

the pre-Doha bound tariffs

provided certain conditions were

293

S.

No.

Concept being

compared

Article 5, AoA: SSG Doha Round Modalities on

SSM (Chair's texts

(TN/AG/W/4/Rev.4 and

TN/AG/W/7 hereinafter

refered to as Rev.4 and W/7)

In practice, importing

countries were allowed to increase tariffs above their

bound rates.

Doha Modalities:

Proposal that Article 5

would need to be

amended to reflect that

developed countries

using the SSG will not

breach the pre-Doha

bound tariff rates.

However, it is silent

on breaching by

developed countries of

the "current bound

tariffs" arrived at under

the Doha Round.

No limits on tariff

lines or number of

products under Art. 5;

although under

December Modalities

changes to Art. 5

pertain to commitment

to reduce no. of tariff

lines on which SSG can

be applied.

met. These conditions are

defined as a certain percentage

of "current bound tariff".

Differential rates were

specified for LDCs, SVEs and

other developing countries

(Paras 143-145.)

Limits were placed on no. of

products/ tariff lines: (Paras

143-145.)

Further limitation on other

developing countries: cannot use

SSM "for two consecutive

periods".

W/7

This text does not cross-refer

to the Main Text; instead the

proposal here is in relation to

SSM triggers "above bound

rate".

Proposal for a flat rate for all

developing countries in respect

of circumstances when the

maximum remedy can exceed

the "current bound tariff". The

thresholds for determining the

maximum additional duty are

defined as volume of imports in

any period.

294

S.

No.

Concept being

compared

Article 5, AoA: SSG Doha Round Modalities on

SSM (Chair's texts

(TN/AG/W/4/Rev.4 and

TN/AG/W/7 hereinafter

refered to as Rev.4 and W/7)

7. Limits on

Products &

Tariff Lines on

which

SSG/SSM can

be triggered.

All lines specified

under Article 5 can avail

of the SSG.

Rev.4 Limits have been suggested for the number of products on which

SSM can be invoked in any given

period above the pre-Doha bound tariff rates: 40% of lines for

LDC's;10-15% of tariff lines for

SVEs in any given period; and only

2-6 products in any given period for "other developing countries".

(Paras 143-145) W/7 The Suppl. Text states that a

country cannot invoke SSM on

more than 2.5% of tariff lines in any 12-month period.

8. Exclusion of

Preferential

Trade

SSG does not

differentiate between

MFN trade and

"preferential" trade.

Preferential trade excluded from

calculation of triggers and

application of safeguard measures

9. Duration of

Safeguards

(Products other

than Seasonal

ones);

Review

Mechanism

For volume-based

triggers, additional duty

can be maintained until

the end of the year in which it has been

imposed. There is no limitation

of number of consecutive periods for which SSM

may be imposed. There is no "review

mechanism".

Rev.4 The maximum period for use of

SSM is 12 months, from the initial

invocation of the measure. (Para 140) SSM can be imposed only in 2

consecutive periods; and where this

has occurred, consecutive application can be resorted to only

after a further 2 consecutive

periods. W/7 For SSM application "above bound

rate", the following has been proposed: Length of remedy should be

"4/8 months". It may be re-imposed after "4/8 months" (after lapse of equal period

of time). Review mechanism proposed

295

S.

No.

Concept being

compared

Article 5, AoA: SSG Doha Round Modalities on

SSM (Chair's texts

(TN/AG/W/4/Rev.4 and

TN/AG/W/7 hereinafter

refered to as Rev.4 and W/7)

by "standing group of experts" to

review application of SSM for 3 consecutive 12 month periods:

Ambit of review would be:

effective functioning of the SSM, whether it is affecting "normal

trade", or whether it is a response to

an "underlying more structural problem".

10. Seasonal

Products:

Duration of

SSM and

Review

Mechanism

There is no separate

period specified for

seasonal products. Duration would be applicable as highlighted

for all products in point 9

above.

Rev.4 The maximum period for use of

SSM is 6 months in the case of

seasonal products, or period to cover seasonality- whichever is

longer. (Para 140) SSM can be imposed only in 2

consecutive periods; and where this has occurred, consecutive

application can be resorted to only

after a further 2 consecutive periods. W/7 For SSM application "above bound

rate", the following has been

proposed: Length of remedy should be "4/8 months". It may be re-imposed after "4/8

months" (after lapse of equal period

of time). But if maintained in 2

consecutive 12 month periods for

total period of 12 or more months,

then cannot spill to next period. Review mechanism proposed

by "standing group of experts" for

SSM for seasonal products.

11. Shipments en

route

Art. 5 states that

exemption for en route

shipments from SSM

duty is applicable only

to volume-based SSM.

En route shipments (which had

completed customs clearance at

exporting country) are required

to be exempt from SSM, both

under price and volume based

296

S.

No.

Concept being

compared

Article 5, AoA: SSG Doha Round Modalities on

SSM (Chair's texts

(TN/AG/W/4/Rev.4 and

TN/AG/W/7 hereinafter

refered to as Rev.4 and W/7)

SSM.

__________

297

Appendix IV - G-90 Proposals and Position Papers

WORLD TRADE

ORGANIZATION

WT/MIN(03)/W/17

12 September 2003

(03-4833)

MINISTERIAL CONFERENCE

Fifth Session

Cancún, 10 - 14 September 2003

Original: English

Consolidated African Union/ACP/LDC Position on

Agriculture

Communication from Mauritius

The following communication, dated 12 September 2003, has been received

from the delegation of Mauritius.

_______________

The countries of the African Union (AU) and the African Caribbean and

Pacific (ACP) and the Least Developed Countries (LDCs) have agreed on the

following common negotiating positions on agriculture. These common positions

draw from the various Ministerial Declarations adopted by the Groups as well as

submissions made to the WTO and also from recent consultations here in Cancun.

The AU/ACP/LDC countries are concerned that the Draft Ministerial Text and

the relevant Annex on agriculture fall short of the objectives envisaged in the Doha

Declaration for further reform of agricultural markets. It is our view that further

reform for agriculture should aim to attain the objectives as set out in the Doha

mandate and that each Round of agriculture negotiations should aim at incremental

reform, both in terms of value and rule-making. We stress that the "Framework", and

the associated Modalities to be agreed upon, should address themselves fully on all the

three pillars, in a balanced and equitable manner. We reiterate that, in accordance

with the Doha mandate, S&D should be an integral part of all elements of the

negotiations on agriculture.

298

Appendix IV continued

Market Access

The Framework does not provide for meaningful tariff reduction by developed

countries and hence does not address the issue of high tariffs, tariff peaks and tariff

escalation. Furthermore, the proposed "blended formula approach" will allow

developed countries to place the products with high tariffs under the "import sensitive

category" and hence subject them to lower reduction commitments.

In this regard the AU/ACP/LDC countries call for:

Improved market access for our agricultural products and for developed countries to

reduce tariff peaks and tariff escalation;

A programme to support the enhancement of supply capacities in the agricultural

sector so as to take full advantage of market access opportunities;

The setting of an overall target for tariff reductions by developed countries,

Developed countries should address issues of non-tariff barriers, such as SPS and

TBTs, as well as other market entry barriers,

A more simplified and transparent tariff quota regimes that provide clear benefits to

these countries;

Bound duty free and quota free market access by developed countries for products of

LDCs,

No ceiling on level of maximum tariffs for developing countries,

Self selection of special products,

We reiterate the vital importance of long standing trade preferences for AU/ACP/LDC

states and call on WTO members to provide for the maintenance and security of such

preferences through flexible rules and modalities based on development needs. Accordingly, we call for the Framework on Agriculture to incorporate relevant

proposals from the Harbinson Text as well as development of a compensatory

mechanism to address erosion of preferences for these countries.

The Draft Ministerial Text and its Annex have not fully taken into account a variety

of developing and least-developed-country-specific concepts, such as the Special Products (SP) and Special Safeguard Measures (SSM), that are important to these

countries. We insist that the proposed Framework on Agriculture should fully

incorporate the proposals contained in the Harbinson's Revised First Draft Modalities.

299

Appendix IV continued

Domestic Support

All forms of trade-distorting domestic support measures by developed

countries to be substantially reduced;

The substantial reduction in the Amber and Blue Box measures, with a

view to their phasing out and elimination;

The capping of the trade-distorting element of Green Box support

measures provided by developed countries;

LDCs shall be exempt from reduction commitments under the

Agreement on Agriculture.

Export Competition

Substantial reduction of export subsidies, with a view to phasing out,

within a specified period;

In this regard, we welcome the proposal by the EC to eliminate

subsidies on products of interest to African countries. In this respect

these countries should be provided the leeway for self selection of

products to benefit from this proposal, and have the scope for product

diversification. We call on other developed countries to do like wise.

The provision of appropriate differential treatment in favour of LDCs

and NFIDCs in the development of disciplines on export credits as

provided for in the Marrakech Decision.

Other Issues

Food aid in emergency situations in these countries should be

addressed. Furthermore, food aid should be continued to meet chronic

food deficits and/ or development goals;

We reaffirm the Marrakech Decision on Measures Concerning the

Possible Negative Effects of the Reform Programme on LDCs and Net

Food Importing Developing Countries and call for its speedy

implementation.

__________

300

Appendix IV continued

WORLD TRADE

ORGANIZATION

WT/MIN(03)/W/20

12 September 2003

(03-4838)

MINISTERIAL CONFERENCE

Fifth Session

Cancún, 10 - 14 September 2003

Original: English

AU/ACP/LDC JOINT POSITION ON DEVELOPMENT ISSUES

Communication from Mauritius

The following communication dated 12 September 2003, has been received

from the delegation of Mauritius.

_______________

Special and differential treatment

AU/ACT/LDC countries express concern over the lack of tangible progress in

dealing with S&D work in the DDA. In as far as the Annex is concerned, the

proposals contained therein, while welcome, are neither of economic value nor

provide policy space for their countries in the conduct of their trade policy.

Ministers insist that the Draft Cancún Text:

• Should accurately reflect the lack of progress in dealing with S&D

work. As such Annex C should not be adopted as the proposals

contained therein are of no economic value and do not provide any

policy space for developing countries;

• should reaffirm that the Committee on Trade and Development in

Special Session, as established by the TNC, is the appropriate body to

deal with S&D issues;

301

Appendix IV continued

• should detail actions on all S&D proposals and set early deadlines to

accomplish them; and

• agreement-specific proposals should be addressed as a priority in post-

Cancún work before embarking on cross-cutting issues.

Implementation issues

The text admits that a number of issues and concerns remain outstanding.

Being a long-standing agenda pursued by developing counties, the lack of progress,

despite the political and negotiating capital expended by developing countries,

illustrates the lack of willingness by the developed countries to engage on issues of

interest to developing countries.

AU/ACP/LDC Ministers call for the:

• Completion of the work on implementation issues by the negotiating

groups as a matter of priority;

• setting up of a negotiating group, under the auspices of the Trade

Negotiations Committee, to address all remaining outstanding

implementation issues and put forward decisions for adoption by March

2004;

• the protection of traditional knowledge systems.

Small economies

The Draft Cancún Text, inter alia, reaffirms the commitment on the Work

Programme on Small Economies and urges Members to adopt measures that would

facilitate the fuller integration of small, vulnerable economies into the multilateral

trading system. In this regard, Ministers should direct that Members adopt

substantive, results-oriented trade related measures in favour of small, vulnerable

economies no later than 1 January 2005.

Trade, debt and finance

Ministers call for a more focused work programme to be undertaken by the

Working Group and instruct it to make recommendations for concrete action by 31

March 2004.

302

Appendix IV continued

Trade and Transfer of Technology

Ministers call for a more focused work programme that will include the

identification of elements for a possible multilateral agreement. Further, Ministers

instruct the Working Group to submit to the Sixth Session of the Ministerial

Conference clear recommendations on decisions that would allow for increased flows

of technology to developing countries.

Technical cooperation

At Doha, Ministers confirmed technical assistance and capacity-building "as

core elements of the development dimension of the multilateral trading system".

Developed countries undertook to provide technical assistance and capacity support to

developing and in particular, least-developed countries. Ministers call for a

reaffirmation of the Doha mandate and call on the development partners to adequately

finance all technical assistance programmes on a demand-driven basis. Further,

Ministers call for the delivery of targeted technical assistance and capacity-building

support to address the special needs of AU/ACP/LDC countries in post-war and

conflict situations.

LDCs

The implementation of the work programme on LDCs and the rejuvenation of

the Integrated Framework are two important elements to pursue on the relevant part of

the draft text. Moreover, the conflicting mandates of the six core agencies need to be

flagged for prompt action if the objective of the integration of LDCs into the

multilateral trading system is to be attained. In this respect, Ministers call for the

improvement of the Integrated Framework and closer coordination between the six

core agencies. Ministers also reiterate the need to grant bound duty-free, quota-free

market access for LDC products in developed country markets.

Ministers also call for the removal of brackets in paragraph 24 of the Draft

Ministerial Text.

Commodity issue

The long-term decline and fluctuations of the prices of commodities, and the

continued dependence of the AU/ACP/LDC countries on few commodity exports,

makes it imperative that they pursue an agenda on this subject in the WTO, with a

view to finding a lasting solution to this matter, which is at the core or their

development problematic. In this regard, Ministers call on the Committee on Trade

and Development to continue its work in this area and present recommendations to the

303

General Council by December 2003, with the proposal by Kenya, Uganda and

Tanzania as the basis of this work.

__________

304

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