WTO Negotiations: briefing; Committee Report on public hearings on Industrial Policy: adoption

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
5 June 2002
WTO NEGOTIATIONS: BRIEFING; COMMITTEE REPORT ON PUBLIC HEARINGS ON INDUSTRIAL POLICY: ADOPTION

Chairperson:

Committee Report on Hearings on Industrial Policy
Doha Negotiating Agenda PowerPoint Presentation

SUMMARY
The presentation focused on the six areas that have been earmarked for immediate negotiations. Under "Agricultural Issues", market access with regard to tariffs were discussed, as well as domestic support, subsidies and the timetable for these negotiations. With regard to "Services", market access, the rules applicable to all services and the relevant key players. The negotiations on "TRIPS" will deal with compulsory licensing under the Public Health Declaration, geographic indicators regarding the registration of wines and spirits and the effect of Article 27(3)(b) on the patenting of animals. Under "Non-Agricultural Market Access" the negotiations will focus on tariff peaks and escalations and non-tariff barriers. The "Rules" negotiations will deal with issues such as anti-dumping and regional trade agreements, and the negotiations on "Trade and Environment" will focus on the mandate and circumscribed negotiations.

The presentation also discussed the development of an African position, the adoption of a phased approach to this matter, the establishment of a NEDLAC Task Team to address this issue and the challenges and strategies to be employed in this regard.

The discussion on the presentation highlighted the manner in which to identify a common African position in this regard, and the difficulties experienced here; the support given to the South African position by other African states; the problems in quantifying the South African achievements in the WTO; the differing views of South Africa and the rest of the African states on Article 27(3)(b) and the problem with the current international negotiating system which disadvantages developing countries, and the measures in place to address this.

MINUTES
Adoption of Committee Report
The Chair noted that Members agreed to the adoption of the Report on the Public Hearings on Industrial Policy.

WTO negotiations: briefing
Mr Xavier Carim: Chief Director: Multilateral Trade Negotiations ITED from the Department of Trade and Industry gave the presentation.

Mr Carim informed Members that the Department is currently gearing up its capacity with regard to establishing a domestic strategy for South African trade. The aim is to raise the profile of South Africa in the World Trade Organisation (WTO), and it has increased its representation by 400% over the last two months. This is part of a continuing effort to recruit more personnel.

The slide entitled "Scope of Negotiations" outlines the six areas that have been earmarked for immediate negotiations: agriculture, services, intellectual property rights in terms of the Trade Related Intellectual Property Rights (TRIPS) agreements, industrial tariffs, rules regarding anti-dumping, subsidies, regional arrangements and fisheries and the concerns with trade and the related effects on the environment.

The following slide deals with special and differential treatment regarding trade relations, as well as dispute settlements which involve dispute negotiations aimed at improving the current dispute settlement procedure mechanism.

The slide entitled "Possible Negotiations" deals with the four areas in which negotiations could be engaged at the fifth Ministerial Conference from 10^th to 14^th September 2003: trade and investment, trade and competition, transparency in government procurement and trade facilitation.

As far as the slide entitled "Context (current)" is concerned, it has to be noted that until the Doha ministerial negotiations here were fairly constrained. Focus has since been given to negotiating procedures, with the result that negotiations have picked up fairly quickly, especially in the agricultural sphere. It is expected that these matters will be finalised by the end of June 2002.

The following three slides outline the negotiating agenda for the agriculture sector, and the slide entitled "Agriculture (1)" provides that the following issues will be addressed: market access with regard to tariffs and non-tariff barriers (NTBs), the possible phasing down of commitments for domestic support, reduction of exports subsidies, non-trade concerns such as environment, rural development etc. and the matter of special and differential treatment.

The slide entitled "Agriculture (2)" lists the 2002 Timetable for special sessions, and the matters to be discussed during the months of June and September.

The following slide outlines the 2003 negotiating timetable, and the matters to be discussed during the months of January to March in that year.

The slide entitled "Services (1)" provides that the service negotiations will focus on defining this matter and the Department's commitment to it with regard to various services, multi-lateral disciplines regarding the regulation of services and government subsidies.

As far as the "Services (2)" slide is concerned, it outlines the timetable for negotiations on this aspect from the end of June 2002 to the end of March 2003, as well as the ongoing negotiations. The key players in this regard are the Department, the departments of Communications, the Treasury, Transport, Education and Training, Minerals and Energy and Health.

The following four slides deal with the areas in which negotiations will be engaged regarding the TRIPS agreement, and slide entitled "TRIPS (1)" provides that the matter of compulsory licensing without the requisite manufacturing capacity in terms of the Public Health Declaration will be considered. Negotiations will also be engaged regarding the register of geographic indicators for wine and spirits, and the possible expansion of a list of products for higher protection will be discussed.

The "TRIPS (2)" slide provides that negotiations will be conducted on Article 27(3)(b) of the TRIPS agreement, which deals with issues such as the exclusion of plants and animals from patentability and the implications on the biotechnology industry, biodiversity, food security and the protection of traditional knowledge.

The slide entitled "Non-Agricultural Market Access (1)" provides that negotiations will be engaged regarding tariff peaks and escalations, high tariffs and special and differential treatment. "Non-Agricultural Market Access (2)" deals with the modalities to be discussed in this regard, and include the "request and offer" approach would be most popular, yet this approach is quite difficult in a multi-lateral regime. This matter is being discussed.

As far as the slide entitled "Rules (1)" is concerned, it provides that negotiations will be engaged to clarify and improve the disciplines regarding anti-dumping, subsidies and countervailing measures and regional trade agreements. These negotiations would be dealt with in various phases.

The following two slides deal with the negotiations on trade and the environment, the mandates and circumscribed negotiations, as well as the timetable for 2003.

The remaining four slides in the presentation outline the way forward, and the slide entitled "Developing SA's Negotiating Position" provides that a formal consultative process has to be established to address these concerns, so that key stakeholders can be identified, as well as the negotiating issues in the six negotiating groups to be determined.

The following slide deals with the phasing in of this process from September 2002 to after March 2003.

The slide entitled "NEDLAC Task Teams" details the establishment of this task team mandated to define South Africa's negotiating position, and will focus on interaction around negotiating issues in the various WTO negotiating bodies.

The final slide in the presentation entitled "Challenges, Strategy and Linkages" makes it clear that a huge challenge awaits South Africa on the international trade front, and a concerted effort has to be made to bring in all stakeholders as well as a research unit, which would probably involve universities, to develop an African position and negotiating mandate.

Discussion
Mr P Nefolovhodwe (ANC) referred to the "African position" mentioned by Mr Carim, and contended that all African states do not share the same economic issues. The question thus arises as to the consolidation of a single African position in this regard, and whether the common issues should first be identified or whether those issues which the African states do not share should then be disregarded. It seems that this would, once again, weaken the African position.

Mr Carim replied that the primary difficulty experienced in this regard has been the capacity within the particular African country to define its own interests in the negotiations. A further problem lies in the fact that these countries in many cases adopt a position within the negotiating process that does not reflect its own interest. This has been the case with South Africa in recent times, as it seems to follow the Pakistan and Indian position without devising its own economic interest.

It has to be emphasised here that a technical capacity programme has been established to enable Africa to develop its own strategy to suite its economy. It is this common African position that forms the basis for the development of an alliance between African states, yet it has to be recognised that the states cannot and do not agree on every single aspect and issue. The intention is thus to establish issue-based alliances over a variety of issues.

Mrs B Ntuli (ANC) requested Mr Carim to provide Members with a written document before February 2003, detailing a comprehensive review on the agricultural aspect outlined during the presentation.

Mr Carim responded that this would not be possible because the first draft of this document will only be available at the end of 2002, and Members would be supplied with copies at that time.

Mr R Rasmeni (ANC) stated that the less developed African countries seem to support the South African position, and Mr Carim is requested to explain whether South Africa is indeed mobilising their support in this regard to create a stronger voice and negotiating power for the African continent.

Mr Carim answered that the less developed countries comprise the largest part of the African group, and therefore South Africa generally tends to support these issues because it is included in the group of interests. Yet it has to be recognised that South Africa does not speak on behalf of the less developed countries, and this is clearly illustrated by the very active role played by Lesotho in the WTO. South Africa therefore generally plays a supportive role.

Secondly, Mr Rasmeni questioned whether it is possible to quantify the achievements made by South African to date regarding its negotiations with the WTO, or as a group of developing countries.

Mr Carim replied that this is a very important concern, and this is primarily the reason for the call, in the presentation, to engage in extensive research on this matter. It is difficult to quantify these achievements because the process has not yet progressed to that point. Broad-based studies have however been conducted, which have been widely quoted, that indicate the possible welfare benefits to the global economy as a consequence of the reduction of tariffs. It is however not certain how or whether each country would access these benefits, as this depends largely on negotiations. Efforts are currently being made to gather empirical data and research on this matter.

The Chair contended that it has become apparent that when the stage of detailed negotiations is reached, the principles do not inform the process. It seems that the problem in this regard lies with the modalities, because the established modalities have created a negotiating system which is fundamentally skewed against the developing countries. Mr Carim is requested to comment on this.

Mr Carim agreed "absolutely" with the Chair. The problem with the canned peaches referred to in terms of the African Growth and Opportunities Act (AGOA) and General System of Preferences (GSP) is that these are offered unilaterally, and there is thus no negotiating on the terms of the agreement between the two parties. The result is that these products can be removed from the list once their manufacturer becomes competitive within the relevant market. The argument often made here is the WTO should then be used as a negotiating forum to address this problem, and here the modalities of such negotiations and the subsequent agreement reached becomes an important aspect. Many African countries prefer the "request and offer" approach as it allows them an opportunity to gain entry into the target market, but whether their continued success in that market it secured is the big question.

At the conference held in Uruguay the so-called "Swiss formula" was devised which reduced the tariffs, because the targets were higher than the average tariff peaks. Proposals were then submitted in an attempt to reduce the tariff peaks at a faster rate than the lower tariffs. This makes sense, because tariff matters are of particular concern or interest to countries, especially the less developed countries. Studies have been conducted on this matter, but extensive research is needed on its implications on developing countries.

Ms N Sigabi (DP) expressed concern with the African position on Article 27(3)(b) mentioned in the presentation, as there seems to be a difference of views on other matters, such as the fact that Zimbabwe does not share the same view with South Africa on Genetically Modified Organisms (GMO's). Mr Carim is requested to explain whether any modalities have been put in place to achieve the Article 27 objectives, such as the protection of patents. Members should be supplied with a written document on this matter.

Mr Carim agreed that there is a difference of view amongst the African countries regarding biotechnology and GMO's. Yet South Africa is not the only African country with an active GMO policy, as Kenya shares South Africa's view on this matter. It should also be noted that most African countries agree that biodiversity should be preserved, bioprivacy should be protected and the benefits of traditional and community knowledge should be shared. These matters should be addressed via TRIPS.

The Chair stated that both this Committee and the Department have to identify ways to collectively apply their minds to these issues, and consensus has to be reached in the relevant sector before a particular modality is decided upon, as to the extent to which the modality successfully givers effect to its objectives. The problem created here is the manner in which Parliamentarians are to relate to this matter, as this aspect was not mentioned in the presentation, and Parliamentarians have to be included in this process. Furthermore, Parliamentarians are part of various bodies in the WTO at an international level, and involvement has to be "jacked up" in this regard. Awareness of these issues also has to be improved, perhaps via public hearings as part of an ongoing process. The ultimate objective here is to strengthen the capacity of the African negotiating mandate.

Mr Carim informed Members that the role of Parliament was not included in the presentation, but would be included in the next version, as it has a strong role to play in the development of a national position.

There were no further questions or comments and the meeting was adjourned.

Appendix
Report on Meeting of Post-Doha Steering Committee convened by Inter-Paliamentary
Union and European Parliament, Brussels, 28-29 May 2002.

The Steering Committee was established in response to concerns expressed by Parliamentarians accompanying delegations to the World Trade Organisation (WTO) Ministerial meetings in Seattle and Doha that there was a need to create a forum for parliamentary input into, and ensure greater transparency of, WTO negotiations. The Inter-Parliamentary Union (IPU) had organized a conference of parliamentarians ahead of the Doha ministerial last year, which was attended on behalf of our Parliament by Mr. Mosheen Moosa, chair of the NCOP Select Committee on Economic Affairs. The meeting of parliamentarians at Doha, which we did not attend due to late notice and other responsibilities on the delegation, resolved to establish a Steering Committee, jointly convened by the IPU and European Parliament to plan further activities. The commencement of detailed negotiations following the adoption of the Doha Declaration and the scheduled next Ministerial meeting in Mexico at the end of 2003 formed the background to discussions in the Steering Committee.

A list of participants in the Steering Committee is attached. It will be noted that it comprises members of the European Parliament and some national parliaments in Europe plus parliamentarians from a number of developing countries. South Africa is not a member of the Steering Committee in its own right, but we participated, along with parliamentarians from some other developing countries, as part of the IPU delegation. Rob Davies was asked by the Speaker's Office to attend. An official from the WTO in Geneva and an advisor to the Mexican Parliamentary Union were also in attendance.

The Steering Committee began with a general discussion on issues requiring attention and the options for establishing a "parliamentary dimension of the WTO". It was agreed after discussion that the issues requiring attention were the substance of the detailed negotiations provided for in the Doha Declaration as well as the items on the Agenda of the next Ministerial in 2003. Some also argued that it would be important to provide a forum for parliamentarians to debate broader issues like globalisation, market access and development. On the parliamentary dimension", it was agreed that the Steering Committee should not try to set up any new structure or propose any formal model, but rather focus on organizing a conference at which this matter could be discussed.

It was agreed that the conference would take place over two days in February 2003 and be open to parliamentarians from WTO member countries and international parliamentary associations. The preferred venues (in order of preference) are the WTO premises in Geneva, elsewhere in Geneva, the European Parliament in Brussels. The proposed format of the conference is:

- Day One morning: Plenary Presentations on the State of Negotiations and Options for a Parliamentary Dimension (no debate from the floor).
- Day One afternoon: Break up into Commissions consisting of Panels dealing with issues in the negotiations and perhaps broad themes of development and market access.
- Day Two morning: Rappoteur's reports and plenary debate on issues raised in Commissions.
- Day Two afternoon: Plenary debate on the issue of a "Parliamentary Dimension"

It was agreed not to take formal country statements. In terms of participation, it was agreed that each participating parliament be able to nominate delegations of 4, with the possibility of extending the number to 6 based on specific requests and motivations largely based on questions of political balance. Each country's parliament would be expected to finance its own delegation's participation, although it was said that some formula would be found to address the needs of parliaments unable to find the resources to participate. Decisions would be by consensus, including any decision on the adoption of a final declaration.

It was agreed that the next meeting of the Steering Committee would be held in Geneva from October 14 - 15. Rappoteurs were appointed to prepare papers on particular topics for the next Steering Committee meeting viz. 1. A Parliamentary Dimension for the WTO, Mr Kobsak Chutikal from Thailand, 2. Market Access and the Stattis of Negotiations, Mr Ildefonso Guajardo from Mexico, 3. Development, Dr Kaire Mbuende from Namibia. The IPU leadership undertook to make contact with other international parliamentary organizations ahead of the next meeting, and the organizers indicated that they would write to participating parliaments to request that consideration be given to ensuring stability in participation on the Steering Committee.