WTO HEADS OF DELEGATION MEETING - NOVEMBER 10, 2005

UNCLAS SECTION 01 OF 03 GENEVA 002781

SIPDIS

PASS USTR FOR DWOSKIN
EB/OT FOR CRAFT
USDA FOR FAS/ITP/SHEIKH, MTND/YOUNG
USDOC FOR ITA/JACOBS

E.O. 12958: N/A
TAGS: ETRD WTRO USTR
SUBJECT: WTO HEADS OF DELEGATION MEETING - NOVEMBER 10, 2005



1. Begin Summary. Following a report by Director-General Lamy
on the lack of movement in recent informal consultations, WTO
heads of delegation decided on November 10, 2005 to
"recalibrate" their expectations for the upcoming Ministerial
Conference in Hong Kong, China. At the same time, they also
stressed their conviction to maintaining a high level of
ambition for the negotiations as a whole as well as the
importance of using the Hong Kong meeting as an intermediate
step in reaching a high-quality agreement by the end of next
year. Several delegations said they would intensify their
negotiating efforts prior to Hong Kong and urged others to do
the same.


2. There was disagreement, however, over the nature of texts
for Hong Kong. Some such as Australia called for primarily
factual texts identifying areas of convergence and divergence,
saying the remaining gaps appear too wide to be bridged by
chairs in numbers or a range of numbers. Others, including
the United States and Hong Kong China, felt chairs should have
greater flexibility in bridging gaps and empowering Members to
stretch toward the ambitious agreements they are asking for.
In his conclusion, Lamy expressed the view that chairs should
be able to decide an approach on a case-by-case basis in order
to maximize the potential for progress.


3. In substantive themes, the EC found its immobility on
agriculture criticized by many Members, with Brazil blaming
the lack of trust in negotiations to a situation in which one
partner makes a proposal but a key partner responds that it
cannot move because it is already at its bottom line. Many
Members expressed the view that development should be a key
theme in Hong Kong. Egypt (for the Africa Group) argued that
development is being neglected and criticized recent proposals
for creating few new commercial opportunities for Africa. The
EC and China called for development deliverables in Hong Kong,
both mentioning cotton and duty-free quota-free market access
for LDCs and China adding TRIPS/public health. END SUMMARY

Lamy's Remarks


4. Director-General Lamy opened with some thoughts about
process. He recognized that some delegations are unhappy with
his exclusion of certain participants from recent informal
consultations. He apologized for any hard feelings, saying he
is committed to a transparent and inclusive process and no
offense was intended to anyone - his goal, he explained, was
simply to try to find a consensus among the smallest of
concentric circles that could then be broadened to the overall
membership. He regretted a "trust deficit" among Members
handicapping the entire negotiation.


5. Turning to substance, Lamy reported "some bad news and a
little good news." In terms of bad news, there has not been
enough convergence in recent consultations to reach full
modalities on all of the elements in the July 2004 framework.
The question now, he said, is whether Members should try for
full modalities by Hong Kong - "if we try this jump and we
miss it," he warned, "we might lose what has already been
achieved." The alternative, he explained, is to "recalibrate"
expectations for Hong Kong to what can reasonably be achieved.


6. In terms of good news, Lamy felt that no Member wants to
reduce the level of ambition for the round as a whole. There
is clearly the will to achieve ambitious results, he said, and
when there is a will there is a way - "we just have to find
that way." He pointed out that what has already been achieved
in the negotiations is not negligible; much more is needed, he
emphasized, but if what has already been achieved is lost
Members would have a big problem. In informal consultations,
everyone is expressing the clear desire to preserve what has
been accomplished so far.


7. If Members do decide to recalibrate their expectations for
Hong Kong, Lamy urged them to carefully reflect about process
so there is not a lessening of ambition for the overall
negotiations. By Hong Kong, Lamy felt there still could be a
range of numbers or parameters in key areas, together with
corresponding texts on rules so the overall package is
balanced and can consolidate the progress achieved since the
July 2004 frameworks. Lamy then posed two questions to
Members on the way forward:

- First, do Members agree with his assessment of the
situation?

- Second, do Members agree on the need for an intermediate
stage in Hong Kong before an attempt is made to reach full
modalities?

Member Statements


8. More than thirty Members made statements, using words such
as "sobering", "realistic", and "disappointing" to describe
Lamy's diagnosis but agreeing with him that expectations for
the upcoming Ministerial Conference must be recalibrated. At
the same time, many Members underscored the importance of
maintaining a high level of ambition for the negotiations as a
whole. Ambassador Allgeier emphasized that the Hong Kong
meeting must be as substantive as possible and serve as a
launching pad to a high-quality agreement by the end of next
year, and he affirmed that the United States would intensify
its efforts in the run-up to Hong Kong. Other Members hit
similar themes:

- Ambassador Gosper of Australia stated that any
recalibration must not compromise the ambition set out in
the Doha Declaration.

- Ambassador Valles Galmes of Uruguay recalled previous
recalibrations in July 2004 and July 2005 and warned of
diminishing overall expectations.

- India's ambassador described Lamy's assessment as "somber"
and said it would go along with recalibration but was not
a demandeur of it.

- Chile, China, and Hong Kong China emphasized the
importance of maintaining the intensity and avoiding
slippage in the negotiations.


9. Members disagreed over the nature of texts for Hong Kong.
Australia called for primarily factual texts identifying areas
of convergence and divergence, saying remaining gaps appear
too wide to be bridged by chairs. Argentina, the EC, Brazil,
Switzerland, and others opposed the use of numbers in the
absence of agreement on full modalities. Hong Kong China felt
chairs should be free to advance the process in any way they
can, narrative or numerical. Ambassador Allgeier opined that
chairs must strike a delicate balance, representing Member
views on the one hand but also empowering them to stretch
toward the ambitious agreements Members are asking for.


10. The EC's agriculture stance was implicitly or explicitly
criticized by many Members. Ambassador Hugueney of Brazil
attributed the lack of trust to difficulties created when
proposals are made and the response from a key partner is that
it cannot move because it is already at its bottom line.
Costa Rica said it is looking for a sign from the EC that
ambitious outcomes are possible in all areas. Uruguay said
some Members are showing more flexibility than others and
added that the talks could be in trouble if some Members have
no room to maneuver - "if that is the case, recalibration
won't solve the problem."


11. Many Members hit development themes. On behalf of the
Africa Group, Egypt strongly argued there has been little
progress on issues of commercial importance for African
countries, citing preference erosion, cotton, TRIPS/public
health, and the five LDC-specific proposals as of critical
importance. Zambia (for LDCs),Tanzania, and Kenya all argued
that development should be the main theme in Hong Kong. The
EC and China called for development deliverables including
cotton and duty-free, quota-free market access for LDCs.
China also mentioned TRIPS/public health.


12. Many delegations including Chile, the EC, Hong Kong
China, and Switzerland stated that the Ministerial Conference
can still be a success by consolidating progress made since
the July 2004 package. Many Members used the term "launching
pad" to describe the Ministerial Conference's importance in
kick-starting the final phase of negotiations in 2006. Korea
and Singapore added that Lamy's transition to a more
integrated approach in the negotiations has been a positive
development. Other points made by Members that might be of
interest to Washington agencies include:

- India, Brazil, and China highlighted the need for balance
across issues, with India repeating Nath's statement that
the negotiations turn on more than one pivot.

- India, Egypt on behalf of the Africa Group, and Mexico
said they would oppose attempts to reinterpret existing
mandates in the negotiations.

- Singapore and Thailand saw the need for members to have a
program and list of priorities to give them a clear sense
for what they need to accomplish in 2006.

- Jamaica worried that progress on its priorities is lagging
and an intermediate step in Hong Kong could deepen
existing imbalances.

- The Philippines highlighted the importance of gaining
greater clarity on issues set out in annex B, paragraph 8
of the July 2004 decision.

- Bulgaria noted the importance it attaches to GIs and
expressed concern that Hong Kong, as an intermediate
stage, might lock in concessions made conditionally.

- Colombia stated that agriculture equates to development
and argued that more countries should recognize the gains
that will come from better market access.

- Argentina asked Lamy whether changing expectations for the
Ministerial Conference also meant a delay in the mid-
November target date for texts.

- The Democratic Republic of the Congo asked Lamy how he
planned to put development back at the center of the
negotiations.

Lamy's Assessment


13. Following Member statements, Lamy said he heard
widespread agreement that Members share his disappointment but
see a need to recalibrate their objectives for Hong Kong. At
the same time, however, they clearly do not want to reduce
their ambitions for the negotiations and want the Hong Kong
meeting to be a positive step toward completion of the
negotiations in 2006. There is also strong agreement on the
need for texts to prepare capitals for Hong Kong, he judged,
but he regretted the insistence on a bottom-up approach that
he felt implies a lack of confidence in the process.


14. There the consensus stops, Lamy felt, creating a problem
for chairs in devising texts. There seem to be two views -
one that chairs should prepare factual reports with no
numbers, and another that chairs should do whatever they can
to capture progress achieved since July 2004 and one way to do
that is to give them the option of including numbers. The
first view is defensive and tactical, he judged, while the
second is oriented toward narrowing gaps and covering as much
distance as possible. He concluded that chairs should be able
to decide an approach on a case-by-case basis in order to
maximize the potential for progress.


15. Then Lamy responded to the questions on timing (from
Argentina) and development (by Democratic Republic of the
Congo). On timing, Lamy said the date for some texts is
slipping, but it cannot go beyond late November if ministers
and capitals are to have sufficient time for review. On
development, Lamy emphasized that Hong Kong must reaffirm the
development aspect of the negotiations and credibly advance
issues such as S&DT and the package of LDC-specific issues,
but he repeated his view that progress here can be no
substitute for progress elsewhere and stressed that the
greatest development gains will come from the pillars of the
negotiations.


16. The EC asked whether Lamy's approach might "introduce
modalities through the back door" and cause confusion if
chairs issue texts that do not emanate from convergence among
Members. Lamy responded sharply, first "thanking" the EC for
so clearly expressing the suspicion that he'll be heavy-handed
in preparations for Hong Kong and then opining that "one
doesn't need to be clairvoyant" to understand why the EC
doesn't want numbers in texts. He urged Members to trust the
chairs they've appointed, to try to improve confidence in the
process, and to continue working hard to achieve balanced
texts by Hong Kong. Allgeier