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June 14, 2007
Prepared by the Information Unit of the Caribbean Regional Negotiating Machinery (CRNM), this electronic newsletter focuses on the RNM, trade negotiation issues within its mandate and related activities.
- WTO Update – Agricultural Market Access - US Bipartisan Deal: A Facilitator of Affordable Access to Pharmaceuticals - The Outcome of the CARICOM–SICA Preparatory Meeting - Creating a 20/20 Vision - NEWS BRIEF - UPCOMING EVENTS
WTO Update – Agricultural Market Access WTO Director-General Pascal Lamy since the start of the year has been trying to induce consensus amongst the WTO Members to break the impasse that has impeded progress in the Doha Development Round (DDR). Evoking political will more so than the process of disaggregating the technical issues has been the real challenge in this exercise to clinch a deal, optimistically, by the end of July 2007. Therefore, political dialogue amongst the WTO Members has been an important parallel in this process. Particularly amongst the four major trading powers, or G4 (Europe, India, The United States and Brazil), convergence on the issue of Agriculture especially could be the defining impetus to bring the DDR into alignment. Much is hinged on the upcoming G4 meeting scheduled June 19-22, 2007. Notwithstanding the need to advance progress in this regard, the small and vulnerable developing countries of the Caribbean would be guarded against proponents of this process that may seek a deal at all cost, irrespective of whether the deal is congruent with the mandate of the DDR. The G4 meeting is expected to be ‘decisive’, that is, conclusive on whether a deal can be reached. A look at the progress of recent negotiations on agriculture so far indicates that progress at the G4 level will be very difficult to achieve.
The Current WTO Negotiations in Agriculture The primary influence on the current negotiations has come from a controversial report presented on April 30, 2007 by the Chairman of the Special Session of the Committee on Agriculture, Ambassador Crawford Falconer. The report is seemingly predicated on a motive to challenge negotiators and galvanise them into focused and decisive action. While the report addressed the three main issues related to the agriculture debate in negotiations – Market Access, Domestic Support and Export Competition, the discussion on Market Access presented some issues of particular interest and concern to the Caribbean. These issues are outlined in the following negotiations update on market access. Market Access The Chair’s submission on market access can be disaggregated into two issues A. The interpretation of the treatment of Special Products B. The approach to tariff reduction
A. The Interpretation of the treatment of Special Products (SPs) The Hong Kong Ministerial Mandate provided for a framework where WTO developing countries for reasons related to food security, the protection of farmer livelihood and rural development needs could self-designate Special Products. SPs could be afforded more flexible treatment, that is, these products could be subjected to smaller tariff reduction than those required for other agricultural products. On this matter, identifying what would constitute as an acceptable level of tariff reduction for SPs is precisely the source of contention. Ambassador Falconer espoused an opinion in his report that flexibility afforded to special products could not be interpreted as an accommodation of the complete exemption of these products from tariff reduction. In contrast, the view of developing countries, including the Caribbean, is that, in this context, this is a narrow interpretation of ‘flexible treatment’ which undermines the intended purpose of the facilitating framework for SPs. In addition to interpretive matters, the report also opined that only a limit of 5-8 percent of the number of tariff lines could be designated as ‘special’. This is a significant departure from what was agreed and specified at the level of the G33, where a minimum of 20 percent of tariff lines is considered appropriate to bring realistic benefit to developing countries. B. The Approach to tariff reduction The US, under pressure from the EU to cut domestic support to the agricultural sector, advocates that tariff reduction is really the gravest issue, and that the Europeans need to reduce their highest tariffs by at least 83 percent. The EU is at this point unwilling to reduce their highest tariffs beyond
60 percent, whereas that country is advocating that the US reduce domestic support to $15 billion, instead of the $22 billion cap as proposed by the US. During the G4 meeting, Europe and the US would have to concede to a level of compromise on reducing domestic support on one hand and tariffs on the other. Developing countries, specifically the Members of the ACP favour a formula (under the tiered approach) used for tariff reduction that creates an overall average cut of 36 percent for developed countries, and 24 percent for developing countries. However, Ambassador Falconer has suggested that in order for a deal to be possible, the overall average cut would have to be at least 50 per cent. Furthermore, for the Chair, under the tiered approach, when the principle of proportionality is applied to work out the tariff reduction commitments of developing countries relative to developed countries, developing countries would have to reduce their tariffs by two-thirds of that which is determined for developed countries. When calculated, this would mean that the overall average cut for developing countries would be 33 percent, which is much higher than that proposed under the ACP tariff reduction formula. This tariff reduction commitment would present significant issues for the small and vulnerable economies of the Caribbean. The report went on to propose an entirely different alternative to the tiered approach for developing countries. He has suggested that developing countries “Drop the tiered approach, drop the complicated flexibilities, two-third proportionalities, all the ‘specials’ debate and instead go for a straight overall average cut target”, provided that a minimum cut is specified on each tariff line. This approach would be similar to the Uruguay Round tariff reduction formula. However, even though the simplicity of this approach may appear to be an attractive alternative, developing countries must be cautious. Ambassador Falconer is heavily implying that the trade off for a more palatable tariff reduction approach would be, inter alia, the surrender of emphasis on SPs – a critical component in the arsenal of Special and Differential Treatment, which is inextricably linked to the substance of the Doha Development Agenda (DDA). It is critical therefore that concessions made to forge a deal during the dialogue at the G4 meeting do not include compromises on the substantive development agenda of the DDR. Conclusion The Caribbean and indeed developing countries will watch with interest as the dialogue continues on Agriculture to break the impasse that impedes the DDR. In particular, the developing country community will continue to be hopeful that consensus can be reached but not at the expense of maintaining the integrity of the DDA.
US Bipartisan Deal: A Facilitator of Affordable Access to Pharmaceuticals The recent bipartisan deal struck in Washington included provisions, in addition to those relating to labour and environment protection standards, related to intellectual property rights and access to medicines. Firstly, one new provision makes it easier for generic pharmaceutical manufacturers to access and utilize the scientific and technical innovation of new drugs in order to allow quality generics to enter the market more quickly. This change was made possible by amending the time frame within which a manufacturer of generic drugs may not use the clinical test data of an innovative drug manufacturer, which is otherwise referred to as the ‘data exclusivity’ provision. The management of the process of access to scientific innovation in the health sector especially, is critical to the question of who controls and who benefits from developments of scientific innovation. This is not to suggest that the rights of innovative drug manufacturers to protection of the time, money and effort that has been invested in that scientific innovation should be dismissed. However access to the information related to new drugs impacts the availability and affordability of new medicines of a high standard, which would be especially an issue of concern for the governments and consumers within the developing countries of Colombia, Panama and Peru that are the US FTA Trading Partners. Secondly, the new provisions also seek to protect the rights of innovative drug manufactures but without prejudicing the marketing or production of generic varieties. Therefore while the new provisions seek to strengthen the expeditiousness of judicial processes related to patent infringement, especially in the FTA Trading Partner countries, the deal now eliminates the regulatory requirement that mandates a drug regulatory body to withhold the approval for generic drugs until that agency can verify and certify that the marketing of the generic would not undermine the patent rights of an innovative drug manufacturer. Provisions also ensure more expeditious patent approval processes. Simultaneously, the provisions prevent the mandatory extension of patent terms which may occur because of any unreasonable delays in the patent approval and regulatory processes. This therefore prevents large branded pharmaceutical companies from taking advantage of regulatory and administrative deficiencies that may exist in the US FTA Trading Partner, and prevents these companies from having greater intellectual property rights than they are allowed to have under US law within the US. Greater facilitation of this is also made possible with the provision for cooperation and assistance between the US and its FTA Trading Partners. According to the CEO of the Generic Pharmaceutical Association, the new trade policy proves that balance between fostering drug innovation on the one hand, and ensuring access to affordable drugs in the US and internationally on the other, can be achieved in US FTAs. The facilitation of market penetration of high quality generics engenders greater competition in the pharmaceutical market, which lowers consumer prices while simultaneously encouraging innovation in that industry. CARICOM, as a developing region, would regard affordable access to medicines as an important factor in the successful pursuit of the Millennium Development Goals, especially as they relate to
improving health and reducing poverty. Therefore this new precedent in US trade policy would be of interest to CARICOM, especially if it positively considers engaging in an FTA with the US. The Outcome of the CARICOM–SICA Preparatory Meeting Consistent with the mandate that was established in the Joint Declaration of the Second Summit of Heads of State and Government of SICA and CARICOM dated May 12, 2007, a preparatory meeting of high official was held in Panama May 30, 2007 to discuss a FTA between both regions. Discussions included issues related to:
• • •
the legal format that would constitute the Agreement especially in light of the consideration that CARICOM already has a bilateral agreement with Costa Rica, a member of SICA; the amendments and revisions that must be incorporated to align the integration of the other SICA members into the framework of the Costa Rica – CARICOM FTA; market access such as rules of origin and customs rules and administrative procedures.
The Meeting provided opportunity for both sides to exchange relevant information. The CARICOM delegation provided a briefing on the CARICOM Costa Rica bilateral agreement and the status of ratification of that agreement in the CARICOM Member States. During the meeting, representatives from both sides exchanged information regarding the preparatory phase of the negotiations, and they took stock of the format of their respective negotiating structures. Additionally, representatives reached agreement that Central American countries will forward to the CARICOM Secretariat, their concerns on legal issues related to the existing FTA between CARICOM and Costa Rica by June 1, 2007. They further agreed that additional information exchange will be facilitated by the CARICOM Secretariat and the Pro Tempore Chair of Central America. As Dominican Minister of Foreign Affairs, Charles Savarin indicated while addressing the opening of the Twenty-Third Meeting of the CARICOM Council for Trade and Economic Development (COTED) in Castries, Saint Lucia, this new negotiation process between CARICOM and Central America will present “increased demands on [our] limited resources and capacity whether it is time, financial and human. However establishing these external links is a critical part of the current international environment in which we are operating.” Indeed strengthening external relations with our hemispheric partners is in the interests of CARICOM States. CARICOM and Central America as relatively small and vulnerable States share common challenges when confronting globalization especially in regard to their shared economic openness and vulnerability to natural disaster, climate change and hemispheric security challenges. In this regard, cooperation between the two regions is a logical step. Creating a 20/20 Vision The outcome of the upcoming Conference on the Caribbean: A 20/20 Vision will be significant to the mapping of future US – CARICOM relations. It is expected that CARICOM will pursue dialogue during such time that will engender consideration of expanded areas of partnership and
cooperation in a manner that would foster meaningful and productive benefit to the modern development of CARICOM economies and the betterment of the quality of life of CARICOM people. To this end, CARICOM will place emphasis on assistance, through increased investment and technical support, in the timely achievement of its Millennium Development Goals, the improvement of its human resource capacity and the development of innovation and technical competence of the region in the sphere of science and technology. CARICOM interests in this dialogue would invariably include seeking cooperation, investment and technical support in the development of critical sectors (including tourism, financial services, cultural industries, energy) earmarked as essential to the achievement of economic development of CARICOM Member States. Especially important to CARICOM would be the exploration of the development of a new and relevant trade facilitating instrument that would improve and secure, over the long term, positive trade and investment flows between the Region and the US. Options in this regard include but are not limited to the redevelopment of the Trade and Investment Council (TIC) and a FTA. Governance, the preservation of Democracy, and Security will also be part of the agenda and will undoubtedly be a priority of the US Government. In this regard, addressing terrorism, money laundering and other trans-border crime, drug and human trafficking ill be high on the agenda. In this regard, CARICOM would seek to attain greater technical and infrastructural support to strengthen and consolidate existing security and regulatory initiatives and to create new ones.
NEWS BRIEFS Regional News Minister Savarin Calls upon COTED to be decisive Addressing the opening of the Twenty-Third Meeting of the CARICOM Council for Trade and Economic Development (COTED) in Castries, Saint Lucia, Dominican Minister of Foreign Affairs and Chairman of the Council (COTED), Charles Savarin, noted that in order to fulfill its mandate, it was crucial that COTED dealt with matters with on its Agenda with ‘requisite decisiveness and finality’ to avoid the perennial inclusion of certain items to the COTED Agenda. Highlighting the removal of restrictions for the creation of the single market as an example of a persistently recurring agenda item, the Minister asserted that finality must be brought to these issues so that the Caribbean could realize the benefits expected from the single market. Additionally in relation to the Single Market, Minister Savarin, while noting that trade in goods data must be supplemented by trade in services data to adequately illustrate the performance of the single market, he emphasized that intra-regional trade in goods indicators still provide a starting point to assess the degree to which the single market process was successfully instrumental in distributing benefits amongst Member States. From this perspective, he pointed out that OECS countries were still experiencing a negative balance in trade in goods. Therefore it is necessary
that services trade is compiled and assessed to deliver a final determination of whether the imbalance in trade in goods is matched by a positive balance in services trade. Guyana to build new ethanol plant Guyana has decided to advance its efforts to diversify its agricultural sector and to find additional ways of meeting its energy needs by building a ethanol plant which will be constructed by Global Energy Ventures. President Jagdeo when commenting on the new private venture was optimistic and noted in a meeting held at the Office of the President that “This could add a new sector to the economy. It could create thousands of jobs and therefore, we decided this may be an appropriate use of land along the Coast and possibly in the intermediate savannahs.” Brazil supports Antigua and Barbuda in row against the US over Internet Gambling Prime Minister of Antigua and Barbuda, Baldwin Spencer, said that assurances of Brazil’s support came from Secretary-General of the Ministry of Foreign Affairs of Brazil, Ambassador Samuel Pinheiro Guimaraes during bilateral talks on the fringes of the 37th meeting of the Organization of American Sates General (OAS) Assembly. He noted that, "We have repeatedly argued that no WTO member, no matter its physical size or its economic importance, should simply be able to withdraw its WTO commitments in any sector whenever it does not want to comply with the recommendations and rulings of the WTO's Dispute Settlement Body, and I am, glad that this argument has found particular resonance among some of the major trading partners of the United States.” Convening of the Second Joint Meeting of COFAP and COTED Ministers The Second Joint Meeting of the Council for Trade and Economic Development (COTED) and the Council for Finance and Planning (COFAP) was convened at the Crowne Plaza Hotel, Port-ofSpain, Trinidad and Tobago on Thursday, 7 June 2007. The Meeting of the Councils was preceded by a Meeting of Officials Preparatory to the Second Joint Meeting of the COTED and the COFAP at the Ambassador Hotel, Maraval, Trinidad and Tobago on Tuesday, 5 June 2007. The Second Joint Meeting was co-chaired by Hon. Charles Savarin, Minister of Foreign Affairs, Trade and Labour, Dominica on behalf of the COTED and Hon. Guy Meyers, Minister of Trade, Industry and Commerce, Saint Lucia on behalf of the COFAP. Discussions at the Meeting included issues related to the CARICOM Single Economy; the CARICOM Development Fund; the Regional Development Agency; the impact of tariff liberalization in the context of fiscal harmonization and external negotiations; the CARICOM Financial Services Agreement; the Caribbean Investment Code; the Caribbean Regional technical Assistance Centre; and the Community Competition Commission.
CRNM Director-General addresses External Trade Negotiation Issues As the Caribbean region pursues the conclusion of the EPA negotiations and explores other options to shape trade relationships with international trading partners, CRNM has continued to engage with all stakeholders on issues related to the Regions external trade negotiations. The CRNM Director-General, Ambassador Richard Bernal, has participated in several discussions with stakeholders within the Region and across the Diaspora on EPA related issues. The Ambassador presented on the ‘The EPA as an Instrument for Development’ at the Wilton Park Conference on May 23, 2007. During that visit to London, the Ambassador also spoke to the implications of missing the deadline of the EPA negotiations when he delivered the lunch time Feature Address at a seminar series entitled ‘The Challenges of Completing international Trade Negotiations and their Implications for the Caribbean’. This seminar was hosted by The Caribbean Britain Business Council in partnership with Chatham House, on May 29, 2007 in London, England. In addition, on June 4, 2007 the Sugar Manufactures Association of Jamaica and the CRNM Director-General engaged in vigorous discussion on the treatment of sugar within the EPA. External trade negotiations are affected by the relationships between development, international environmental phenomena and Caribbean economic policy. Therefore during the UK/Caribbean Forum on Climate Change and the Caribbean Economy: Threats and Opportunities, Ambassador Bernal addressed the way in which these relationships inform the process by which the Region seeks to get the best trade deal possible with its international neighbours. The UK/Caribbean Forum was held in Trinidad on June 8, 2007. International News Ecuador lobbies for extension of preferences Ecuador is lobbying members of Congress to extend trade preferences, set to run out at the end of the month, that are intended to counter narcotics trafficking. These preferences, as indicated by Ecuador Foreign Minister Maria Espinosa, allow duty-free entry for apparel, cut flowers and other products, and support 300,000 jobs in Ecuador. A discontinuation would lead to economic and social instability within Ecuador. Espinosa said Secretary of State Condoleezza Rice offered support for extending the preferences for two years when she met with officials in Panama. Sources say that this reflects the State Department’s desire to prevent Ecuador and Bolivia from moving further to the orbit of Chavez, who is battling the U.S. for influence in Latin America.
UPCOMING EVENTS June
12-15: 13th Meeting of the TNG/OECS Ministers of Trade, St. Lucia 13-15: Eleventh Special Meeting of Council for Human and Social Development (COHSOD) [Health], Barbados 18: 8th RPTF Meeting, Brussels 19-21: Conference on the Caribbean: A 2020 Vision, Washington D.C. 19-21: Third World Services Congress, Bogotá 20-22: Preparatory Meetings and 8th Session of the ACP Parliamentary Assembly, Wiesbaden 23-28: Preparatory Meetings and 13th Session of the ACP-EU Joint Parliamentary Assembly, Wiesbaden, Germany 25-26: PRO€INVEST/TRINNEX, Enhancing Investment in Tourism: Promotion, Trade Arrangements and Public – Private Dialogue in Eastern and Eastern and Southern Africa, Kampala, Uganda 25-29: EC Seminar for senior administrators from Caribbean and Pacific countries and their umbrella organisations on EC import legislation in the area of Sanitary and Phytosanitary (SPS) issues, Brussels 28-29: Fifteenth Meeting of the Forum of Ministers and Officials Responsible for Culture Policies, Trinidad and Tobago 29: CRNM, Workshop on Labour Movement Issues in the OECS, Grenada
Recipients of RNM UPDATE are authorised to forward this newsletter to other addresses. We welcome suggestions for additions to our mailing list. If, on the other hand, you wish to be removed from the list, kindly inform us. For More Information Contact: Marsha Drakes Programme Officer-Trade Information Caribbean Regional Negotiating Machinery (RNM) 3rd Floor The Mutual Building Hastings Main Road Hastings, Christ Church, Barbados Tel: (246) 430-1678 Fax: (246) 228-9528 firstname.lastname@example.org
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