RNM UPDATE 0506

April 21, 2005

Prepared by the Communications Division of the Caribbean Regional Negotiating Machinery (CRNM), this
electronic newsletter focuses on the RNM, trade negotiation issues within its mandate and related activities.

- ACP REAFFIRMS CUTTAREE AS CANDIDATE FOR TOP WTO POST

- FORUM CONSIDERS COMPETITIVENESS OF GUYANA TEXTILE SECTOR

- EXPERTS GROUP REFINES REGIONAL APPROACH TO FORMULA FOR WTO NAMA

TALKS

- GAO REPORT CRITICIZES FTAA CO-CHAIRS FOR IMPASSE IN AMERICAS-WIDE TRADE

TALKS

- BRAZIL: FTAA “OFF THE AGENDA”

- WIPO DEVELOPMENT AGENDA

- NEWS BRIEFS

- UPCOMING EVENTS

ACP REAFFIRMS CUTTAREE AS CANDIDATE FOR TOP WTO POST

Mauritius Foreign Minister Jaya Krishna Cuttaree has the official backing of the African, Caribbean
and Pacific (ACP) Group, as regards his candidature for the World Trade Organization (WTO)
Director General post. “Nominated by the Government of Mauritius, Minister Cuttaree continues to
enjoy the full support and endorsement of ACP countries at this juncture in the process for the
selection and appointment of the next WTO chief,” diplomatic sources told RNM UPDATE. A
senior Caribbean trade official confirmed to RNM UPDATE that by virtue of the large number of
ACP countries that are WTO Members, “Minister Cuttaree has considerable representative
support.” The membership of the ACP Group comprises seventy-nine countries, fifty-six of which
are also members of the WTO, with the remainder at various stages of accession. Collectively,
developing countries account for over two-thirds of WTO Members.

The ACP Group first endorsed the candidature of Minister Cuttaree for the top WTO post at the
Eightieth Session of the Council of Ministers of the ACP Group of States in Brussels, convened
November 29 to December 3, 2004.

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On April 15, on the occasion of an Informal Meeting of Heads of Delegations, a troika of top
Geneva-based Officials who are guiding the process to select a successor to current WTO
Director-General Supachai Panitchpakdi concluded that the Brazilian candidate, Luiz Felipe de
Seixas Correa (who also received the backing of India and China), was the least likely to attract
consensus. Under the 148-member body’s selection rules, the candidate with the least support is
asked to withdraw. Brazil did not immediately withdraw its candidate, signalling it wanted more
time for consultation and to consider its response; a request that was rejected by the Chairperson
of the selection panel and Kenyan Ambassador to the WTO, Amina Chawahir Mohamed. Concern
was expressed at the meeting as regards the Report of Ambassador Mohamed to WTO Members
on the outcome of the first stage of consultations. Some countries decried the fact that the
selection panel had not indicated exactly how much support each candidate had garnered.
According to sources, the selection panel took the approach of not revealing numbers,
emphasizing the process was not an election, but an attempt to build consensus. Members have
expressed concern over the lack of transparency implicit in the selection process, with some
questioning the motives of the selection panel that ‘ranked’ the candidates, yet were not willing to
reveal the number of votes.

At the close of the first round of consultations, three candidates vying to head the WTO were said
to enjoy broad support from the membership, and were ranked in the following order: former
European Union Trade Commissioner Pascal Lamy, Minister Cuttaree and Carlos Perez del
Castillo of Uruguay. Authoritative sources told RNM UPDATE that had the votes been revealed,
the outcome of the first round may not in fact have identified Lamy as the front-runner. A source
said “Lamy received fewer votes than Cuttaree as regards the first choice. And since some had
Lamy as their second choice, this explains why his support was larger than Cuttaree in preferences
and breadth of support, because most Members who expressed support for Cuttaree did not state
a second preference.”

While declared the front-runner in the race, a number of countries expressed reservations about
Lamy assuming the helm of the Geneva-based organization. In comments to the Press April 19,
Cuttaree refused to speculate on whether those countries would support his own candidacy.
Reportedly, Cuttaree acknowledged, though, that he expected the final round of consultations on
WTO Director-General candidates would be a race between Lamy and himself, suggesting that the
Uruguayan candidate would be eliminated in the next round.

A second round of consultations, based on a revised slate of the three remaining candidates, is set
to start today (April 21). The information received from Members in the first round of consultations
will no longer be valid, and therefore will not be used in the second round. The selection panel
troika will be available to meet with individual delegations at the Head of Delegation level, for five
minutes each, at the following times: Thursday, April 21: 10:00am-12:30pm; Friday, April 22:
10:00am-11:30am / 3:00pm-6:00pm; Monday, April 25: 10:00am-12:30pm; Tuesday, April 26:
10:00am-12:30pm / 3:00pm-6:00pm; Wednesday, April 27: 3:00pm-6:00pm [with further
consultations in this round to be scheduled as necessary]. Member States are once more going to
be asked to indicate “What are your preferences?”, on the basis of the revised slate of candidates.

CARICOM countries with resident missions in Geneva requested further clarification from the Chair
on how she will include the participation of non-resident Members. Ambassador Mohamed gave

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the assurance that every effort will be made to include non-residents in the process, be it through
contact by fax or telephone.

RNM UPDATE 0505 (April 12, 2005) reported on differing views in Geneva over signalling
preferences, with one camp in favour of such an approach and the other strongly against such a
methodology for “confessionals”, arguing that the process should be guided by the expression of
preference for a single candidate. An informed source told RNM UPDATE that the call for listing of
preferences is a ploy to “split unity” in the camp backing a certain candidate.

The process for the selection of a successor to Supachai Panitchpakdi comes to a close at the end
of May.

FORUM CONSIDERS COMPETITIVENESS OF GUYANA TEXTILE SECTOR

The Guyana Ministry of Foreign Trade and International Cooperation, in collaboration with the
Ministry of Tourism, Industry and Commerce, convened a Workshop, April 20, under the theme:
“Impact of the Expiration of the WTO Agreement on Textile and Clothing: Meeting the
Competitiveness Challenge.”

The overriding aim of the workshop was to discuss the major constraints facing the textile and
clothing sector, and develop a draft Action Plan outlining ways in which all stakeholders can
collaborate to overcome the constraints faced by Guyana’s clothing and textile firms - especially in
view of the competitive threats from the expiration of the Agreement on Textiles and Clothing
(ATC) in December 2004.

The workshop brought together industry representatives, officials from government and regional
organizations, as well as other relevant stakeholders, including representatives of the banking,
transportation and energy sectors.

EXPERTS GROUP REFINES REGIONAL APPROACH TO FORMULA FOR WTO NAMA TALKS

Organized by the Caribbean Regional Negotiating Machinery (RNM) for Member State Officials,
the Second Technical Working Group (TWG) on Non-Agricultural Market Access (NAMA) was
convened in Bridgetown, Barbados, April 14 to 15, 2005. Under review at the meeting were
modalities for negotiations on NAMA in the WTO Doha Round. The TWG reviewed the state-of-
play in the WTO NAMA negotiations on modalities, and identified the main issues of interest to the
Caribbean. Taking into consideration the new proposals on formulas, the TWG examined the
various formulas, including the non-linear formula. The specifics required in a formula to address
tariff peaks, high tariffs and tariff escalation and at the same time incorporate Caribbean concerns
for special and differential treatment and less than full reciprocity in reduction commitments in the
formula were considered. The consultation also advanced a regional position, in light of the
decision of WTO Members to reach a “first approximation” by July 2005.

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While the meeting recognized the need for continued technical work, there was consensus that the
Caribbean is clearer on an approach and a choice for a formula to suit its interests. RNM WTO
Director Dr. Anthony Peter Gonzales said recommendations on an approach as regards a formula
will be presented to a May meeting of the Sixth Special Meeting of the CARICOM Council for Trade
and Economic Development (COTED) on External Economic Negotiations next month.

In addition to reviewing the Regions’ approach to a formula, the meeting discussed defining and
measuring tariff revenue dependency. The sectorial component to the negotiations and preference
erosion also featured in deliberations.

The first TWG on NAMA was convened in Port of Spain, Trinidad & Tobago, February 23.

GAO REPORT CRITICIZES FTAA CO-CHAIRS FOR IMPASSE IN AMERICAS-WIDE TRADE

TALKS

A Report published last month by the United States Government Accountability Office (GAO) - an
investigative arm of Congress - blames the US and Brazil for the impasse in troubled Free Trade
Area of the Americas (FTAA) talks (for details on the stalled FTAA process, see RNM UPDATE
0505, April 12, 2005 - DELAY IN RESUMPTION OF HIGH-LEVEL TALKS RAISES RENEWED
CONCERNS OVER FTAA PROCESS). Entitled FTAA: Missed Deadline Prompts Efforts to
Restart Stalled Hemispheric Trade Negotiations, the scathing Report draws on perspectives
gleaned from interviews with a variety of government officials of FTAA negotiating countries, trade
experts and representatives of private sector groups. Concern was expressed that the US-Brazil
Co-Chairmanship has had “limited success”, as regards the overall dynamics of the negotiating
process, scheduling and chairing of senior-level meetings, and facilitating consensus. This view
was reinforced by what the Report notes are misgivings revealed to the GAO by US and Brazilian
officials, in connection with what is described as a Co-Chairmanship that has “complicated
progress” in FTAA talks. Perhaps most instructive in this assessment, the GAO cites United States
Trade Representative (USTR) views that the “Co-Chairs still do not agree on the pace and
direction for the FTAA.”

However, as a factor inhibiting progress in FTAA talks, the difficulties being experienced as a result
of the Co-Chairmanship is only one aspect of two mechanisms intended to facilitate progress, but
that according to the Report has also failed to do so. The other aspect of the mechanism is the
negotiating structure or tiered approach to negotiations agreed to at a key FTAA Ministerial
Meeting in Miami, in November 2003. The Report characterizes the two-tier structure as hindering
progress on the accord under negotiation. Intended to facilitate US-Brazil compromise by
fashioning a lower tier with a common set of rights and obligations applicable to all and an upper
tier or plurilateral component comprising additional obligations not applicable to all, the two-tier
structure has failed to do so, the Report says. Intended to cater to sharply divergent ‘visions’ of the
FTAA, “the new negotiating framework added new complications to the negotiations without
resolving the US-Brazil centred dispute over the FTAA’s ambition,” the GAO maintains.

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The Report documents the faults of the two-tier structure as follows: i) the goals and nature of the
new approach of FTAA negotiations for an accord, brokered in Miami, continue to be subject to
differing interpretations, as the substantive content of the accord under negotiation post-Miami was
“left largely undefined”; ii) related to the first point, trading off offensive and defensive interests in
the two-tier framework is more complicated to undertake, to the extent that the content and
obligations of each tier remains undefined; and, iii) the strategies for instituting the two-tier
structure, on the part of the US and Brazil, remain at odds. The feasibility of operationalizing the
two-tier approach remains in question, given that the US and Brazil remain riven on key issues, the
Report suggests; maintaining that it is the view of some FTAA country Officials that the tiered
approach needs to be rethought. The Report suggests further, that several FTAA country Officials
acknowledge the two-tier approach has failed to propel the FTAA process forward, “nor […had it…]
provided members with a workable roadmap for resuming pursuit of an FTAA. In particular, the
two-tiered structure has not resolved differences in vision over the FTAA’s ambition, and some
experts felt it has complicated the task of striking an acceptable balance of rights and obligations
among FTAA nations.”

However, the Report also maintains that two additional factors are impeding progress in FTAA
talks. The first is what the Report cites as the inability of the US and Brazil to bridge differences on
key negotiating issues. The inability to accommodate each others differing negotiating priorities
continues to be the basis for the on-going impasse in hemispheric trade negotiations, the Report
says. Agriculture and Intellectual Property issues rank amongst the most contentious between the
two sides. Momentum in FTAA talks has also suffered as a result of a focus on the bilateral and
multilateral trade negotiation tracks, according to the Report. As a second factor impacting FTAA
talks, prospects of “more immediate progress” in bilateral arenas the US has engaged and WTO
Doha Round talks compelled a re-thinking and prioritisation of focus away from hemispheric trade
talks.

For its part, the Office of the USTR responded to the Report by criticizing its portrayal of progress
in FTAA talks, and the role of the US and Brazil in the current impasse.

The Director-General of the RNM, Ambassador Dr. Richard Bernal, has said of the Report it
presents a balanced summary of the views expressed by a variety of Officials of FTAA negotiating
countries. “It is now up to the FTAA Co-Chairs to find ways to address and overcome the
fundamental problems in the FTAA process highlighted in the GAO Report, if there is to be a
successful resumption of FTAA negotiations,” Ambassador Dr. Richard Bernal told RNM UPDATE.

BRAZIL: FTAA “OFF THE AGENDA”

Talks for a proposed FTAA accord, already crippled by an unrelenting stalemate between the
Brazilian and United States Co-Chairs, received a major blow yesterday. In a speech to a
gathering of labor leaders in Brasilia, Brazilian President Luiz Inacio Lula da Silva announced that
the Americas-wide trade pact is “off the agenda” for Brazil. These remarks come just days before

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a planned visit to Brazil by US Secretary of State Condoleezza Rice, at which time troubled FTAA
talks are said to be on the agenda for consultations.

President Lula’s announcement was greeted with trepidation by FTAA watchers, given that Brazil is
a linchpin in FTAA negotiations. “It is an ominous sign that the Brazilian’s are raising the stakes,
clearly in response to their growing frustration with not being able to get their interests across in the
talks,” a top trade official involved in FTAA negotiations said of the Brazilian President’s remarks.
This is the strongest expression yet of the growing disquiet of the Brazilian Government with the
trajectory and substance of FTAA talks.

Similar sentiments reflecting a dissatisfaction on the part of Brazil with the FTAA process have
been expressed in recent months by top Brazilian envoys, as was the case on the occasion of a
meeting of South American Foreign Ministers, where Brazilian Foreign Minister Celso Amorim
declared that WTO Doha Round negotiations are Brazil’s fundamental and main priority; more so
than FTAA talks.

President Lula couched his remarks in the context of a lower priority being given to FTAA talks,
rather than an outright abandonment by Brazil of the FTAA process. The Brazilian President
underscored, however, that on the totem-pole of priorities, strengthening Mercosur and the nascent
South American Community of nations is receiving higher priority (for details on the South
American Community, see RNM UPDATE 0420, December 14, 2004: VISION BECOMES
REALITY, LANDMARK SUMMIT ADVANCES AN INTEGRATED SOUTH AMERICAN SPACE).

In addition to competing visions of the final hemispheric trade accord, Brazil and the United States
are struggling to bridge differences on key negotiating issues. This was the central finding of a US
GAO Report, cited in this issue of RNM UPDATE. The inability to accommodate each others
differing negotiating priorities continues to be the basis for the on-going impasse in FTAA
negotiations, the Report says. This disjuncture in negotiating positions is particularly evident in
Agriculture liberalization. As reported in RNM UPDATE 0503 (February 28, 2005 - AMERICAS-
WIDE TRADE TALKS RECEIVE IMPETUS), consistent with its position as a growing agricultural
exporter, Brazil’s longstanding position in Agriculture and a cornerstone of its trade policy is to
shape market access rules by pressing for the elimination of export subsidies, and advance efforts
to address domestic price supports (a position being advanced at the WTO level, too). Due to a
stance stemming from the defensive orientation of its trade policy in respect of Investment,
Services, Government Procurement, and Intellectual Property, Brazil has traditionally resisted
going beyond WTO commitments in these areas, arguing for these issues to be jettisoned from
talks for the Americas-wide pact. For its part, the United States has had a robust level of ambition
as regards Investment, Services, Government Procurement, and Intellectual Property in the FTAA,
while favoring dealing with domestic agricultural subsidies and anti-dumping in the WTO theatre.

WIPO DEVELOPMENT AGENDA

“Promotion of intellectual property protection alone is not sufficient, if unaccompanied by policies

that respond to the specific development needs of each country.” This is the main thrust of the
Friends of Development that have proposed a new Development Agenda for the activities of the

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United Nations World Intellectual Property Organisation (WIPO). Elaborating on their original
proposal at a WIPO Inter-sessional Inter-Governmental Meeting (IIM) held April 11 to 13, the
fourteen Member Group - that includes the Caribbean countries of the Dominican Republic and
Cuba - amongst other things called for a review of WIPO’s mandate, to ensure that it incorporates
the UN’s overall commitment to the Millenium Development Goals, for example.

Counter proposals by the US and Mexico suggest, instead, that these concerns should be
addressed through improvements to the technical assistance provided by WIPO, rather than
diluting the focus of the WIPO mandate. The US, in particular, pointed to the existence of other
agencies within the UN system with a development mandate such as the United Nations
Development Programme (UNDP) and the United Nations Conference on Trade and Development
(UNCTAD).

In order to meet the July 30 deadline to craft a final submission for consideration by the WIPO
General Assembly in September, it was agreed to hold the next session of the IIM on June 20 to
22, and a third session in July. The Chair, Ambassador Rigoberto Gauto Vielman of Paraguay,
has invited Members, Inter-Governmental Organisations and Non-governmental Organisations to
submit “operational and actionable” proposals before the June Session.

The debate about the relationship between the strength of protection given to Intellectual Property
rights and its enforcement and an economies’ level of development has also been raised within the
WTO TRIPS Council and in the negotiation of other trade agreements. The outcome of the WIPO
discussions are, therefore, likely to have some influence on the current direction of these
negotiations.

NEWS BRIEFS

RNM Attachment Programme

The RNM has secured funding from the European Commission under the Project Management
Unit (PMU) to Support ACP Countries’ in negotiations for EPAs with the European Union. As a
component of this financing arrangement, the RNM is operationalizing an initiative called the
‘Professional Skills Attachment Programme’. Under the programme, interested Officials from RNM
Member States have the opportunity to be attached to the RNM for a period of up to three months,
and to take part in technical work being conducted by the RNM to assist CARIFORUM countries in
their participation in EPA negotiations. The RNM will cover return airfare from country of origin and
a stipend through the period of attachment. The RNM is inviting interested Member State Officials
to submit the following: (i) a Covering Letter, which includes a description of area(s) of interest and
expertise in trade issues/negotiations that the applicant is currently involved in and wishes to be
involved in during the period attachment with the RNM; (ii) Curriculum Vitae, that indicates the
current Government Ministry in which the applicant is employed, as well as age and nationality;
and, (iii) Letter of Support from nominating Government. Applications should be directed to: Ms.
Carol-Ann Kinch, Project Assistant, PMU Project, Caribbean Regional Negotiating Machinery
(RNM)-Barbados Office, 3rd Floor, The Mutual Building, Hastings Main Road, Hastings, Christ
Church, Barbados or by E-mail to: carol-ann.kinch@crnm.org

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S&DT Talks Suspended, a further Explanation

RNM UPDATE 0505 reported that Chairman Faisal Ismail, who is heading WTO Special and
Differential Treatment talks, suspended a special negotiating session, April 6; following objection to
separating Agreement-specific proposals from other cross-cutting issues. The last session was
suspended as the Chairman was proposing to proceed with the Agreement-specific proposals in
parallel with the crosscutting issues. Developing countries objected to this parallel track approach,
as they felt that they were not consulted on that approach. Neither were they in support of that
approach, as they prefer that Agreement-specific proposals be dealt with before treating with
crosscutting issues. Some of the countries that objected strongly were Kenya, India, Mexico,
Colombia, Peru and Malaysia. These developing countries also felt that they were not consulted
fully on the proposed classification of the issues into thematic clusters, namely: (i) enhanced
flexibility for developing countries in WTO rules; and, (ii) enhanced technical assistance and
capacity building for developing countries. They, therefore, would need time to consult with their
Capitals in that regard, it was argued. The Chairman’s intention was to discuss the Agreement-
specific proposals in each of their clusters, along with the underlying crosscutting issues related to
that thematic cluster. It is to be noted that the Chairman is supported by developed countries, in
this regard.

The Session was, therefore, suspended and consultations instituted by the Chairman. No
substantive discussion has taken place so far on special and differential treatment, as discussions
have been bogged down with disagreements over process.

CARIFORUM Trade Officials focus on Services/Investment in EPA Talks

A series of Services and Investment-related forums are on-going in Antigua through the period
April 18 to 27. The initial two meetings are preparatory. The final meeting slated for this cluster of
Services and Investment meetings as regards EPA talks is a negotiating encounter between
CARIFORUM trade officials and their EC counterparts.

From April 18 to 20 an EPA-centred Training Programme on Services and Investment for

CARIFORUM negotiators and Officials took place. This forum is being followed by a TWG on
Services and Investment, related to the regional integration dimension of EPA negotiations, from
today (April 21) to April 22. During the period April 25 to 27 a CARIFORUM-EC Technical Session
on Services and Investment related to the regional integration dimension of EPA negotiations will
be convened.

WTO ‘mini-Ministerial’ to be held in Paris

Described as an opportunity to discuss some of the core issues in the WTO Doha Round talks, an
informal ministerial meeting that will bring together a select group of WTO Member Trade Ministers
is set for Paris, May 4. In the lead up to the Sixth WTO Ministerial in Hong Kong, in December
2005, this ‘mini-Ministerial’ is one of a series of such informal meetings intended to give political
guidance to negotiators, and impetus to the process.

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RNM WTO Director now resident in Geneva

The RNM is pleased to inform that RNM WTO Director Dr. Anthony Peter Gonzales is now resident
in Geneva.

UPCOMING EVENTS

April 28 to 30: Second International Banana Conference (IBC II), “Reversing the Race to the Bottom”,
Brussels

May 4: Informal Ministerial Meeting of Select WTO Member Trade Ministers, Paris

May 4 to 5: TWG Meeting on Trade-related Issues related to the regional integration dimension of EPA
Negotiations, Barbados

For More Information Contact:

Nand C. Bardouille
Caribbean Regional Negotiating Machinery
3rd Floor, The Mutual Building, Hastings Main Road, Hastings, Christ Church, Barbados
Tel: (246) 430-1678
FAX: (246) 228-9528