WTO IS ALL ABOUT GIVE AND TAKE: JAITLEY
(Text of keynote address at FICCI-UNCTAD Seminar on "Reflections
on post-Cancun Agenda : The way ahead" - 22 October, 2003, New Delhi)

I am extremely grateful to FICCI and UNCTAD for having organised this meeting to discuss the post-Cancun scenario as far as the multilateral trading system is concerned.

I do remember that on the 14th of September, the Hon. Minister from Mexico who was presiding over the Conference adjourned the Conference for want of a possibility of a consensus. After discussing with some of my colleagues, we realised that there would be obviously three phases, post-Cancun.

The first would be the knee-jerk reaction which will include the blame-game and we decided consciously not to participate in the blame-game. The second would be a lull and I think, we are now going through that period and the third obviously would be the engagement process because there is no substitute to it.

Let me reaffirm India’s position that we do believe that a rule-based multilateral trading system has to be a fair system and India is completely committed to strengthening it. We also see our own role as being proactive; we see India slowly but surely emerging as a global player and therefore, a lot of changes which are taking place, we see in the long run, working to our advantage. And it is precisely for this reason that till the very end, India along with several other countries which were thinking on similar lines with us, were actively involved in the engagement process even at Cancun and we wanted to avoid a stalemate at all costs.

Let me start off by just reacting to one or two statements and reactions which have come. Dr. Mitra had just referred to it. Firstly, whether the 13th September draft could be the starting point of a future dialogue. Even though I said that India consciously never decided to participate in the blame-game and we did not do so, we have not pointed fingers at countries or at blocs, but yet we have said and I wish to reaffirm that 13th September draft was the primary cause of the stalemate at Cancun.

The 13th September draft completely failed to gauge and accommodate the mood of the participating countries.

In fact, on several issues it ran contrary to that mood. If we analyse what the issues were at Cancun, there were three principal issues being discussed even as there were several other issues, on which the controversies were much less and the disagreements were much less, and perhaps we could have left Cancun with an agreement on some of those issues. But the three issues which were occupying the mind space were agriculture and if I put a second subhead to agriculture - cotton, and the Singapore issues.

On agriculture, the pre-Cancun and the first four days of debate at Cancun was primarily on correction of trade distortions. The trade distortions were not merely export subsidies, as referred to by Dr. Jha, but also domestic support or subsidies. In fact, at one stage, the EU wanted to even take a stand and they did take a stand, that in the Doha Agenda, there was no commitment to eliminate the export subsidy, which was strongly contradicted by G-21, including India, and that was on a particular phraseology in that paragraph, as far as elimination of export subsidies is concerned. But then export subsidies, which obviously are the most distorting kind of subsidies, are not the only trade distortions. Domestic support
subsidies of various categories also distort trade and they hugely distort trade.

The 13th September draft only had marginal references about reduction of these subsidies. And when it came to developing countries reducing tariff, the 13th September draft, effectively involved higher reduction of tariffs by the developing countries as against the developed countries. Now, the effect of subsidies is that they tend to encourage larger production and they encourage cheaper production. The huge quantums and cheaper quantums spill over into the world market and even if they do not enter developing countries, the obvious impact is that they depress prices in developing countries. So, agricultural products’ prices get depressed in our economies, even if the products do not enter India, on account of the distortion that is created. In case the tariffs are further lowered, then the second level of protection is also gone. So, not only the prices of our products are going to be depressed, the distorted priced-products are going to enter your market.

We made various calculations on the formulation on the 13th September draft. I can tell you from India’s point of view that it was scary due to the kind of reductions we would have had to face, in the face of no substantial reduction in subsidies.

The second, in relation to the Singapore issues, the 13th September draft was even more curious. The Agenda of Doha was very clear on this and this was Mr. Maran’s personal contribution to the Doha Draft – that, negotiations on modalities for the Singapore issues would commence only after explicit consensus is reached at the next Ministerial Conference. Now, every decision of the WTO is by consensus. The Doha Draft could have avoided mentioning it but as against consensus or implied consensus or obvious consensus, Doha chose to refer to it as explicit consensus. Explicit consensus means that the 146 members – now 148 members – have to explicitly say yes, and only then, modalities could begin.

I recollect the 12th evening, when I met the Facilitator, the Canadian Minister. Since India was known for its opposition to the Singapore issues, it was a brief conversation and he said that I am in a problem, will you bail me out? I said, you do not have a problem; your job is the easiest, because Doha mandates an explicit consensus and obviously there is no explicit consensus. All you have to say is I am here, sitting right in front of you and saying no. So, even one ‘no’ is enough to defeat an explicit consensus. But the curious fact about the Singapore issues is a lesson of Cancun which we all have to learn if we want the dialogue to continue fruitfully. Singapore issues make a very interesting case study not because of the content of the issues, but with regard to the transparency, the participatory character of the dialogue and even the other pressures which came into the dialogue. Can all these together lead to a meaningful, multilateral discussion? When Mr. Maran started opposing some of the Singapore issues, he almost found himself isolated, and towards the end, he was alone; and people called it a splendid isolation. But I would say that it was a great tribute to a man who was unwell, who sat through the night and said that
I am not agreeing and got these words ‘explicit consensus’ included in it.

Now compare what happened in Doha and Cancun – the Malaysian Minister and I addressed a letter, on behalf of 29 countries, and suddenly, we found that 29 becoming 69. When on Singapore issues we rejected – India was the first to speak against the Singapore issues - the 13th September draft, if we had taken the head count of the countries opposing, it should well have been in three figures. How did this ‘one’ of Doha, becomes such a large number as far as Cancun is concerned? What happens to the participatory character? One of the obvious effects was that if you offer trade preferences, if you offer other agreements, you may temporarily win over, but that is not how a long-term dialogue can go on. You had by that time 69 countries, which had officially given in writing saying that we do not agree.

If such a large part of the WTO membership does not agree, how is the 13th September draft produced, which says that modalities will now very shortly commence on investment, and immediately commence on trade facilitation and transparency in Government procurement. The only issue amongst the Singapore issues left out was competition policy because one of the important WTO members had serious reservations on competition policy. Now, one does not have to go very deep to see the method or how this draft came about. So as against an explicit consensus requirement, the draft wanted to push at least three of the four issues, in the face of a very large opposition by a number of countries.

On cotton again, four African countries are predominantly a one-crop nation whose economies have been very badly, adversely affected on account of huge cotton subsidies to 25,000 farmers in one country – they receive a subsidy of $3.7 billion annually. The amount of $3.7 billion annually is the subsidy which is shared amongst 25,000 farmers. The effect of that is to distort cotton prices which effects the economies of Mali, Burkina Faso, Benin and Chad.

So, para 27 of the 13th September draft again spoke in terms of a study to be undertaken and almost the feel of para 27 was that some of the countries should be aided and advised, and then persuaded for crop diversification, because subsidies in any case cannot be reduced. If this is the kind of the 13th September draft, let me only repeat my first reaction, immediately when the draft came to the larger meeting there, that on agriculture it expected larger gains from developing countries, rather than developed countries. Their subsidies are broadly maintained or very marginally touched; our tariffs are hugely cut as against them. I said that it is a draft which is completely loaded in favour of the developed countries. On Singapore issues, in the face of a requirement of an explicit consensus, three out of the four issues are pushed. The only one left back is the one on which the US had reservations. On Cotton, again the entire logic seems to have been turned. Therefore, if this draft were to be negotiated and finally approved, this would actually amount to completely burying the development part of the Doha Agenda. Then perhaps one has to accept that the only development in this draft would refer to the further development of the developed world.

It is obviously clear to me that this draft cannot be a starting point of any further negotiation. Secondly, it is also seen that the consensus element has become negligible. But all that I have to say is that we all want the discussion process to go on, the engagement to go on, the multilateral system to go on, and therefore, it is necessary that views and aspirations which are reasonable, as far as the large part of the least eveloped countries and developing countries are concerned, they are accommodated in the draft. Now, to accommodate them, if fairness is practised, consensus would certainly work. But if there were a complete absence of fairness, then consensus would normally run into difficulties.

I also see some positive things that have taken place in Cancun. Let me first of all say that I do not subscribe to those who believe that the stalemate at Cancun itself means that Cancun is a failure. Cancun was not a process where a new round was beginning. Cancun was not a process where the round was to conclude. Cancun was stocktaking; it was a mid-way point during the Doha development round. So, you have to have a stocktaking of which way the entire negotiations are going . Cancun had, therefore, to set a direction.

Cancun was a failure if the only yardstick is that it failed to produce a document, but then Cancun also gave a direction, Cancun also had a situation where developing countries, poorer countries asserted their views, Cancun was also a process where genuine concerns of a very large section of the poorer world were highlighted. So, the future success of this multilateral process will certainly have to take all these things into consideration.

I think two important points are additionally being missed out – one is Cancun and another, pre-Cancun – which are again positive. The pre-Cancun resolution of some of the outstanding issue on TRIPs, that has been resolved in favour of public health considerations. It is again a very positive development which cannot be lost sight of in the stalemate at Cancun. Here you had an issue which arose out of the original
TRIPs agreement and the Doha Declaration. The original TRIPs agreement categorically said that weighing the interests between intellectual property protection and public health considerations, countries which have an adequate manufacturing capability in medicine can produce predominantly for their own use those medicines which are required for various public health considerations. There was obviously no dispute on this. But the dispute was on countries without an adequate manufacturing capacity and mainly it meant poorer countries, African countries, which do require cheaper medicines and can also issue compulsory licences required for their own use.

For two years, post-Doha, we had struggled for a solution. There were various formulations which were suggested, and finally the one which found favour was this. And India played a proactive role in this. In fact, our Ambassador said in a particular meeting which found a solution to this that a country which is issuing a compulsory licence will have to intimate the TRIPS Council and there will be a separate packaging so that the products meant for the poorer countries do not get diverted to developed country markets. Thus, the TRIPs issue got resolved.

I also found that as far as Non-Agriculture Market Access is concerned, even though the draft declaration was more general in tone , there was a broad consensus in favour of that declaration.

Both on the issue of TRIPs and NAMA for industrial goods, I think, there is an important lesson for us in India to be learnt. As we have grown as a multilateral player, how does Indian society as such respond to such negotiations and development? I think, our business community is substantially maturing. Our negotiators both in Geneva and Delhi are maturing. We have had our own learning experience. One great evidence of maturity was that when I negotiated with a large number of political parties before going to Cancun, I found a larger national consensus developing. Even on issues where some flexibilities were required for negotiators, I found a level of maturity amongst most of our political parties building up.

But I think, there are two areas which require a correction, and this requires a serious introspection for us in India. One is that you will always have isolated reactions. But isolated reactions do not reflect a national mood. When we negotiated a final settlement on TRIPs, and we had a general welcome by the Indian industry and the Indian drug industry, I could see an isolated reaction – why are we agreeing to the separate packaging and separate shape? The tendency even in our media was to play up such isolated reactions. Even though the substance may be very fragile in them, they always end up putting pressure on our negotiator. I told some of my friends that if you expect our negotiators at Cancun or Geneva to start having this type of a logic rather than build up the kind of consensus we were trying to build, we will precisely require one minute to get isolated. That is not a very happy situation for us at a multilateral forum.

Similarly on the non-agricultural market access, I seriously urge the Indian industry to reflect on the fact that even though the draft proposal made non-mandatory as far as zero-for-zero was concerned, but some of the areas of industry which were picked up for zero-for-zero duty regime were those which are very favourable to India. So, in any negotiation, a society has to be a mature society, always ready for a give and take.

So, if you gain in six areas and you do not gain in one area, then you must find your core competence in those six areas and not in the seventh area. That is how the economies world over are growing. But to halt the entire process because 6 areas suit us and the 7th does not, would never be a mature form of negotiations. These are very interesting opportunities for us for introspection where we have to decide what is the kind of discourse on multilateral trade issues in India which we have to carry on. What is the direction of the discourse which we want to take ? It is obvious in a globalised world that there would be some areas which would not suit us and where you will have to import cheaper products. But there will be areas where you will be dominating the world market; so, you have to weigh your own possibilities. You have to have a mature set of negotiations in these areas. I think, as far as business communities are concerned and our friends in public life politics and the media are concerned, this level of maturity has to come in our negotiations. Every free trade agreement that we enter into will have areas of our strength, and will have areas where our trading partners are going to be strong. So, do we halt the process or do we have the maturity to carry forward the process? There will be no agreements possible, multilaterally or bilaterally which is a one-way agreement where only you gain and others do not. One has to realise that this is a process by which as trade increases, areas have to be found which give a larger picture where there is a win-win situation for all.

I still feel that the core of future negotiations, post-Cancun lies in finding a solution to agriculture. On agriculture, the realisation must come that the world is not uniform. The world is not equal. You have 650 million people in India dependent on agriculture for livelihood. For our farmers, it is a livelihood concern; it is a food security concern; most of our farmers are subsistence farmers. You have approximately 2 million farmers in the US and about 5 million of them in the EU. So, by sheer numbers, our concerns are different; the plight of our agricultural farmer is different.

It is only then that it is possible for developing countries also to realise the virtues of liberalisation in agriculture. It is often said that we need domestic reforms. But with almost one billion a day of subsidies, and our domestic prices being depressed, people in the media and governance have occasionally toyed with the idea of taking out the public procurement system. It is not only the political compulsion, but also the impact of the distortion which would take place that need to be considered when you get into the process of domestic agricultural reform. So, to enable us to further domestic agricultural reform, it is equally important that distortions globally also start getting corrected. Without this, to have the entire process of correction domestically is a lot more difficult. It is politically more difficult.

It is in this background that our concerns were represented and discussed with important trading partners like the US and the EU. Then, we had the August draft by the US and the EU, post Montreal. And that was a draft which did not satisfy our aspirations at all; and therefore, we were agreeable at one stage for a cut
based on the Uruguay round formula as far as tariffs were concerned, provided there were substantial cuts in subsidies.

I have seen statements saying that there are countries within G-21 which have a more offensive interests and there are countries which have a more defensive interest on agriculture. Well, till a few weeks before Cancun, the EU and the US had completely divorced interests as far as agriculture is concerned. They converged to prepare a common draft paper. That led to the developing countries converging together for a common draft paper which accommodated both the kinds of interests. I think, it is a realisation which has to come to the developed world, that the reforms would have to really start by first correcting the distortions which have affected the market. Then it will be easy for developing countries to carry out both their domestic reforms and also more trade liberalisation.

Just a few words on the Singapore issues. A very large number of countries had serious apprehensions and so, they wanted clarifications. These clarifications are extremely important. On investment, for instance , which is the principal among the Singapore issues, there were serious doubts, as to what all it would encompass. Would it be a pre-establishment investment, will it be a post-establishment investment? What is the scope of the dispute settlement mechanism? There are several issues which had to be clarified. We felt that there had not been an adequate discussion on this. But after the EU, on day-5, was ready to pull back as far as investment and competition are concerned and there was some kind of a liberal attitude being shown with regard to transparency in Government procurement, we felt that perhaps that was the opportune time to re-start the green room discussions on agriculture.

We could perhaps leave Singapore issues at that, and discuss agriculture and see if we can move further on that. But one of the questions which would always remain unanswered as far as my own mind is concerned was that once investment had gone off the table – it was no longer on the table, competition was no longer on the table, on transparency in Government procurement, we did not know what was happening, perhaps that had to be discussed a little more. At that stage, for the Conference to get stalemated on the Singapore issues, has left an unanswered question in my own mind and I had no answer to it. Perhaps, the Chairman of the Conference, who is a very experienced negotiator himself, had various inputs and he found that the going would be difficult in spite of what had happened, and therefore, he chose to adjourn the Conference because further progress could not take place.

But I think, it is possible for us to re-start discussing the Singapore issues from where we had left them on the 14th. It is possible for us to discuss the agricultural issues, keeping various concerns in mind. As I mentioned, we had not participated in the blame-game of pointing out fingers at various countries. It was very easy for us to do so. Somebody mentioned that the participating countries comprise those who would not do and who cannot do. I think, the simpler assessment was that the participating countries on agriculture comprised those who subsidise and those who cannot subsidise. That is the more obvious distinction amongst the participating countries; but this would not lead us anywhere. Therefore, one of the realisations which had to come is that a draft like the 13th September draft was primarily responsible for consensus eluding us. One of the important factors in the Cancun Agenda was trade-distorting subsidies, that Agenda cannot be wished away either by negotiations or by pressure, that Agenda has to be answered, that Agenda holds the key to further progress as far as negotiations on agriculture are concerned.

The developing countries did assert. Now, one obvious question that is always asked is this - and during the 5-days of Cancun, I was asked this question every morning, ‘Will G-21 or G-22 hold together today?’ And my answer always was, ‘Why do you not ask me questions about the non-merit in the contention of what G-21 is saying?’ So, our questions were not with regard to the substance of what G-21 is saying. The question was with regard to the survival of G-21 itself. I think it would be better to call it G-X from now onwards! This is because the numbers - game, whether it is in three figure or two figure or one figure - is not very relevant. There are key players as far as G-21 is concerned. We have been in touch with each other. I think G-21 represents an important idea. And that idea really caught on.

I must say here to the fairness of the western media that in editorials and articles in large parts of the media both in England and the US the contentions raised by the G-21 favour. That is what even those economies will really have to address. G-21 did hold together as far as Cancun is concerned. I think it is an important gain as far as Cancun is concerned that investment and competition went off the table. Even if somebody does try to bring them back on the table, I feel the legitimacy of those issues, for a multilateral agreement has been very seriously dented.

How do we move forward now ? The lull needs to be broken soon. Time need not be wasted on the blame-game. We have to really pick up the thread from where we had left. Our representatives in Geneva would be meeting; some of the meetings have already started. Bilateral discussions between important players will have to start. After that, we have to broadly realise as to where the real problem lies. Unless we are able to address the problem, it will be difficult for us to find an adequate solution for it. The discussion process would have to be participatory. I repeatedly say that it will have to be participatory and transparent because we do not want a situation where a majority of the WTO membership say no to Singapore issues and you have a draft produced which says that all right, we are starting negotiations on the Singapore issues. WTO will be difficult if it is only to be driven by the richer countries. I think Cancun is important in that the equilibrium also has somewhat changed. Therefore, participation of others in this entire process would have to go on.

Once we are able to pick up the thread from where we had left off, I think it would be extremely important for us to make a few strides, at least on some of the issues, even if we cannot resolve all the issues which are outstanding at the moment. With regard to India’s position, let me just end by repeating what I had said during the course of my brief talk. We have been maturing as a society when we have been taking on these negotiations. Now we have to realise that multilateral negotiations are all about first watching your own interest. As I had said earlier, WTO is a market; it is not a place of charity. In a market you have to pay for what you get. Since you have to pay for what you get, you have to go and try to get the best that suits your own interest. In the whole process, your negotiating ability will have to depend on where your interest largely lies. WTO cannot be a ‘take-take’ situation; it has to be a ‘give and take’ situation. That is where your negotiating abilities are at stake. But if we have a domestic opinion that even if you take nine and give one, it would not be acceptable, then our negotiators will always be under pressure. Therefore, as a mature society, we will have to realise that in this process the give and take situation will have to go on. But there are areas which are very difficult for us to have flexibilities on. I must straightaway say that one such area is agriculture, because it has social ramifications in India. In the current distorted environment which exists, our flexibilities will be very limited. But there are areas where we will have to always negotiate with some element of flexibility so that we can engage as an emerging economy and an emerging global player. There are large areas where our interests also lie in strengthening the entire multilateral trading process.

Thank you very much for your patience.

      FUTURE OF MULTILATERALISM AND INDIA’S ROLE

“India is committed to multilateralism. India has been playing a very important role as far as multilateral dialogue is concerned and we are extremely anxious that the stalemate at Cancun gets resolved as expeditiously as possible. India has played a very vital role in resolving the issue of stalemate over TRIPS. We achieved it a week before the Cancun dialogue. As far as the market access of non-agricultural commodities are concerned, we thought that it was one area where even at Cancun we could have made progress but unfortunately other agenda occupied the space and, therefore, much progress could not be made. In the services sector, India is extremely anxious to make sure that the dialogue proceeds at a faster pace. Agriculture certainly holds the key and here there are still areas that require to be sorted out. We, in India, believe that agriculture is a matter of political and social sensitivity, given that a large section of our population depends on agriculture for livelihood. Most of these farmers for whom it is a question of food security are involved in subsistence farming and, therefore, the distortions in agriculture make it extremely difficult for our agriculturists to compete with highly subsidised farming. When our agriculturists have to compete with the highly subsidised competitors abroad, it is not the farmers of those countries that they are competing with, it is really the finance ministers of those countries that they are competing with. That really becomes unfair competition. And, therefore, while market access in agriculture will gradually grow, we need to see greater contribution to this area being made by developed economies, particularly in the matter of removing the market distortions in agriculture. We were making considerable headway even in Cancun as far as Singapore issues are concerned and I think it is extremely important that we start a dialogue from where we left behind in Cancun…. India remains fully committed to strengthening the multilateral process and to see it is carried to its logical conclusion”.

[Excerpts from keynote address of Arun Jaitley during a video conference with participants at the 4th India-EU Business Summit on 28 November, 2003]

     CANCUN MINISTERIAL AND BEYOND : AN UPDATE

Cancun Ministerial Conference of WTO

1. The Fifth Ministerial Conference of WTO held at Cancun, Mexico, during 10-14 September concluded     on 14th September 2003 without taking decision on various important issues including modalities on     agriculture negotiations and launching negotiations on Singapore Issues. The Ministerial Statement     that was circulated on the final day recognised that more work needed to be done in some key     areas to enable WTO member countries to proceed towards the conclusion of negotiations under     the Doha mandate. The Ministerial statement also instructed the officials to continue working on     outstanding issues with a renewed sense of urgency and purpose and taking fully into account all     the views expressed during the Ministerial Conference. The Chairman of the General Council of the     WTO, working in close coordination with the Director General, was asked to coordinate this work,     and to convene a meeting of the General Council at senior official level no later than 15th December     2003 to enable successful and timely conclusion of the negotiations.

2. We would certainly have preferred a Ministerial Declaration addressing our concerns, but this did not     happen. It is, however, important to note that at India’s initiative,two separate coalitions of     developing countries - on Agriculture and on Singapore Issues were formed during the run up to the     Cancun Conference. These coalitions were active during the entire Ministerial Conference and     remained effective and relevant to the negotiations till the end of the Conference.

3. The Conference could not end with a Ministerial Declaration because the draft text that the     Ministers had been asked to approve did not reflect the concerns of a large number of developing     and least developed countries. This was the case as regards major issues before the Conference     like Agriculture (the modalities for negotiations),Singapore Issues (start of negotiations based on     explicit consensus on Investment, Competition Policy, Transparency in Government Procurement and     Trade Facilitation) and Development Issues (Implementation Issues, Special and Differential     Treatment provisions, Cotton subsidies etc).

4. In particular, on the Singapore Issues in the absence of clarity on many elements related to these     issues a majority of the WTO membership had rejected launch of negotiations. However, ignoring     such concerns the Draft Ministerial Declaration of 13th September 2003 (the Derbez draft) proposed     launch of negotiations in Trade Facilitation and Transparency in Government Procurement. The     section on Investment assumed that negotiations would commence on the basis of a General     Council decision to be taken later. The text on Competition Policy on the other hand, referred to     possible negotiations, an obvious attempt to accommodate the interests of some developed     countries, the US in particular. There was no reference to further explicit consensus either in the     paragraphs on Investment or Competition Policy. There was no headway even after the European     Union, the main demandeur since 1996 on the Singapore Issues, offered to permanently take out its     proposal for negotiations on multilateral treaties in WTO on Investment and Competition Policies. A     number of Members refused to agree on negotiations on an agreement on trade facilitation on the     ground that uniform customs procedures would impose heavy costs and require administrative skills     that were beyond their ability. South Korea, on the other hand, opposed the removal of Investment     and Competition Policies from the WTO Work Programme.

5. On the issue of phasing out of cotton subsidies, an issue of particular concern to certain African     countries, the Draft Ministerial Declaration sought to deflect attention from the specific course of     action suggested by Benin, Burkina Faso, Chad and Mali by seeking to address the impact of     distortions that exist in the trade of cotton, man - made fibres, textiles and clothing to ensure     comprehensive consideration of the entirety of the sector.

6. The Conference Chairman then decided to end the negotiations among a small group of 30 countries     since, as he later said, it was his assessment that “a consensus  agreement would not be possible     on the ministerial declaration.” The Chairman took the decision even before intensive discussions     could begin on the more important issue of agriculture.

Post Cancun Scenario

7. After the failure at Cancun major WTO Members have been keeping studied silence in the WTO     forum on the way forward. Though the Chairman of the General Council of WTO has initiated     informal consultations, capital based officials have not started participating in the discussions in     Geneva. The negotiating groups set up after the Doha Conference for negotiations on issues like     Agriculture, Non Agricultural Market Access (NAMA). Services etc remain suspended.

8. The view of the European Communities (EC) appears to be that the initiative to revive the     negotiations should come from developing countries like Brazil and India, who as leaders of the G -     20 + Group on Agriculture, according to EC, were responsible for the outcome at Cancun. EC also     feel that the system of decision-making in WTO will have to change if we have to ensure that     Cancun is not repeated in the future. EC want G-20+ countries to share the burden of concessions     demanded by G-90 (LDCs/ACP/Africa Group).

9. The US, on the other hand, does not appear eager for an early resumption of negotiations,     presumably due to the forthcoming presidential elections. The interest of the US in Singapore Issues     is limited to Transparency in Government Procurement and Trade Facilitation;and on these they     have strong interest. As for Agriculture, the US would like to retain the entire amount they are now     giving as support to the farm sector.

10. The APEC meeting held at Bangkok in the beginning of November reiterated the US view that     further work in the agriculture sector may be carried out on the basis of the Derbez text (the draft     Ministerial text of 13th September 2003). EC, on the other hand, has serious reservations on the     provisions related to Agriculture in the Derbez draft.

11. The G-20 is still intact. The last meeting of the Group was held on 30 October 2003, where Brazil     and Argentina expressed themselves strongly in favour of no further flexibility by the Group.

12. As regards Singapore Issues, there is lack of clarity on the status of those issues, post Cancun.     Though EC stated in the Green room at Cancun that they would be agreeable to Investment and     Competition Policy being permanently taken out of the WTO agenda, they now take the position     that since no decisions were taken at Cancun, the position pre-Cancun would hold. The European     Commission has prepared a paper for consideration of their 133 Committees, where the Commission     has clearly recommended that Singapore Issues may be withdrawn from the single undertaking so     that EC is no longer regarded as a demandeur of these issues and would have to make no payment     for them. The ACP group is presently of the view that negotiation may concentrate on trade     facilitation alone. The CAIRNS Group has been treating Singapore Issues as a bargaining chip in     exchange for concessions in Agriculture, especially by EC.

13. Cotton subsidy is an emotive issue for African countries and a solution specifically on cotton is     needed by them. On the other hand, the US have great difficulty in making concessions on cotton.     They would prefer the cotton subsidy issue to be subsumed in the overall agriculture negotiations.     As far as we are concerned, any attempt to link the cotton issue with other forms of textiles,     particularly manmade fibres, carries with it the threat of undermining the Agreement on Textiles and     Clothing. Mauritius has been mediating between the US and African countries on this issue,     informally.

14. The post-Cancun scenario is still fluid and at this point of time it does not appear that the differing     points of views of WTO Members can be reconciled by 15 December 2003, the date fixed by the     Cancun Conference for the officials to meet at Geneva to continue the process. The solidarity that     emerged between the US and EU before Cancun appears weak though it would still continue.

15. We have been taking the stand that:

• All WTO Members should show genuine commitment to re-start of the multilateral process short    circuited at Cancun.

• The process of negotiations must be so conducted as to take into account concerns of developing    countries. This should include their ability to participate in the world trading system without pain.    Therefore, there should be differentiated commitments by developing countries, commensurate with    their abilities;

• The 13th September 2003 draft at Cancun was the major reason for the failure at Cancun, as it did    not take into account the concerns of developing countries on major issues like Agriculture,    Singapore Issues and development related issues. This draft (the Derbez draft) cannot, therefore, be    the starting point for re-start of negotiations 1unless the results of other deliberations at the    Ministerial Conference, including the Green Room process are also taken into account;

• The 15th December official level meeting at Geneva should not be an exercise in    brinkmanship.    There should not be any effort to force issues for quick decision (especially Singapore Issues), when    Members are not ready, and have not fully understood the implications of the issues in negotiations;    and

• Art. 9 of the Marrakesh Agreement establishing the World Trade Organisation (WTO) gives clear    guidelines regarding decision-making process in WTO. This process should be exhausted before    exploring alternative processes of decision-making. WTO is a Member driven organisation, and it may    not be appropriate to change its democratic character by transferring more powers to the    Secretariat or introducing multilevel decision-making process.

16. We will continue to work on the solidarity with the like minded countries built up during the run up    to the Cancun Conference on major issues like Agriculture (G - 20 +) and Singapore Issues (G - 16).

(Source TPD/Ministry of Commerce & Industry)