LEAST DEVELOPED COUNTRIES SOLIDIFY DOHA POSITIONS AT MASERU

UNCLAS SECTION 01 OF 03 MASERU 000075

SIPDIS

SENSITIVE
SIPDIS

DEPT ALSO FOR AF/EPS, AF/S;
PASS TO USTR

E.O. 12958: N/A
TAGS: ETRD ECIN ECON BEXP BTIO LT
SUBJECT: LEAST DEVELOPED COUNTRIES SOLIDIFY DOHA POSITIONS AT MASERU
MINISTERIAL MEETING


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1. (U) SUMMARY: The Kingdom of Lesotho's Ministry of Trade and
Industry hosted a Least Developed Countries (LDC) Trade
Ministers' Conference February 27-29 in Maseru. During the
conference, which produced a "Maseru Declaration" on LDC
positions, trade representatives from 36 developing nations
reviewed progress made in the Doha Development Agenda Round
(DDA) since the most recent meeting of LDC's in 2005 and
reaffirmed LDC positions. The ministerial consisted of over
three days of closed and open meetings, including an address by
Lesotho Prime Minister Mosisili and LCD consultations with
trading partners including the United States, the EU, and WTO
Director General Lamy. Delegates deliberated a wide range of
issues, including Duty Free Quota Free (DFQF) market access,
Agriculture, Non-Agriculture Market Access (NAMA),Trade
Facilitation, Trade in Services, and Trade Related Intellectual
Property Rights (TRIPS). The meeting concluded with an open
dialogue with major trade negotiating partners and the issuance
of the "Maseru Declaration" which largely reiterated and
consolidated previous positions, and on some issues (like cotton
and DFQF) continues to run counter to U.S. views. Deputy U.S.
Trade Representative Ambassador Peter Allgeier made a statement
effectively outlining the USG commitment to complete the DDA
talks in 2008 and to work with LDCs -- especially Africans -- to
address key issues including preference erosion, DFQF, cotton,
trade facilitation, and Aid for Trade. End Summary.

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Prime Minister Mosisili Encourages LDCs Graduation
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3. (U) Lesotho Prime Minister Pakalitha Mosisili inaugurated
the February 2008 meeting of LDC Trade Ministers, attended by
Deputy U.S. Trade Representative Ambassador Peter Allgeier and
A/USTR for Africa Florie Liser, by calling on the Least
Developed Countries to undertake all available measures to
graduate from their current LDC status. Only through
development and consolidation of the legal framework, private
sector, and human capital, Mosisili declared, would LDCs be able
to escape the scourges of "high unemployment...widespread abject
poverty, and disease."


4. (U) Offering Lesotho as an example of a typical LDC,
Mosisili detailed a number of challenges including potential
loss of revenue due to tariff cuts, lack of diversification, and
a low national savings rate. Most importantly, he pointed out
that the greatest challenges to achieving full integration of
LDCs into the multilateral framework are supply-side constraints
and other limitations to competitiveness. Finally, Mosisili
urged incorporation of targeted programs in the DDA, such as Aid
for Trade and the Enhanced Integrated Framework to help LDCs
address trade inequities.

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DDA Discussion
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5. (U) H.E. Maruping, Lesotho Ambassador to the WTO, led the
general working discussion of the DDA. While Maruping stressed
apparent progress in several key areas - such as NAMA and
Agriculture - he also highlighted key questions facing the LDCs,
i.e., the scope, speed, and substance of the negotiations. In
addition, Maruping questioned whether the LDCs should
immediately emphasize the horizontal process or instead focus on
specific negotiating areas such as rules and services.
Regarding the speed of negotiations, Maruping suggested that
member nations would have to decide if adherence to a fixed
deadline trumped substance.


6. (U) A number of LDC representatives voiced concern regarding
the slow progress on a number of issues, including DFQF,
simplified rules of origin, special and differential treatment
(S&D),and Special Safeguard Mechanisms (SSM) for Agriculture.
Issues such as capacity building, Aid for Trade, and technical
assistance often surfaced. For example, Seriba Ouattara, the
Ambassador to the WTO for Burkina Faso, pointed out to Embassy
Maseru EconOff that for many reasons capacity building should be
raised to the top of the agenda.

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Agriculture
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7. (U) During the agricultural discussions, numerous
representatives stressed that the working texts do not address
the monitoring of DFQF preferences, arguing vociferously that
these items should be included in the modalities. Agreeing that
developed countries' lists of sensitive products should include

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products of export interest to LDCs - coupled with a longer
implementation period of 15 years and with serious back-loading
- LDC representatives noted agricultural preference erosion as a
high priority. (NOTE: Regarding preference erosion, most
delegates also agreed that developing countries, as opposed to
LDCs, may seek an implementation period longer than 15 years.
END NOTE.) Additionally, delegates reached consensus that both
tropical and diversification products should be discussed
together, as well as that export credits, international food
aid, and state trading enterprise issues still remained on the
table.

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Cotton
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8. (U) LDC representatives appeared to unanimously agree that
reduction of trade-distorting domestic support for cotton was a
priority for all LDCs - not just the "Cotton Four" African
producers (Mali, Burkina Faso, Benin, and Chad). Therefore,
conference delegates reflected this sentiment in the Maseru
Declaration. (NOTE: The LDC position is virtually the same as
the Cotton Four position. END NOTE.) LDC representatives
expressed frustration with the continued reluctance of the U.S.
and the European Union to address their concerns on cotton
(septel).

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NAMA
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9. (U) LDC representatives discussed a number of
Non-Agricultural Market Access (NAMA) subjects, such as the lack
of certainty regarding coverage and timeliness for Duty Free
Quota Free (DFQF) market access. For example, delegates voiced
concern that there was still no established monitoring mechanism
regarding DFQF, i.e., its scope, the frequency of reviews, and
how Rules of Origin are addressed. (NOTE: A number of
representatives argued that DFQF market access without
simplified Rules of Origin would be of little value to LDC
exporters. END NOTE.)


10. (U) Delegates sounded reservations regarding the
elimination of certain tariffs - particularly fish and seafood
products - arguing that such developments would be disastrous
for a number of LDCs. Echoing the concern raised by Lesotho
Prime Minister Mosisili in his opening address, various
delegates maintained the importance of duties as a source of
revenue, economic development, and stability. Other delegates
stated that special considerations - or adjustments - regarding
tariff reductions should be made for developing countries who
are members of customs unions that include LDCs.


11. (U) Representatives also expressed concern that LDCs lacked
capacity to grapple with Non-Tariff Barriers (NTB) affecting
their exports, some noting challenges with meeting sanitary and
phytosanitary standards. Several delegates called for a
proposal advocating the elimination of all NTBs affecting LDC
exports.


12. (U) In addition to LDC access to all Special and
Differential Treatment provisions and exemption from reduction
commitments, the LDC representatives agreed that there would
have to be an agreement to incorporate trade and non-trade
solutions in the NAMA and agricultural modalities.

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Trade in Services
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13. (U) Arguing that maximum flexibility should be granted to
LDCs and priority given to their export interests, delegates
recognized "Mode 4" as a potential area of benefit for the LDCs,
through which member nations could make meaningful offers
regarding market access. Also, delegates agreed that targeted
technical assistance should be provided to LDCs in order to
build improved regulatory and institutional framework and help
address supply side constraints, particularly in key services
sectors that support trade.


14. (U) They also discussed exemption from Most Favored Nation
(MFN) obligations under the GATS agreement for LDCs.
Additionally, delegates called for the WTO to assist LDC states
in strengthening their capacity, efficiency, and competitiveness
of domestic services in accordance with Article IV of the GATS.



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TRIPS
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15. (U) Identifying the ratification of the TRIPS amendment,
and its resultant manufacturing capacity building, as a
priority, LDC representatives exhorted member states to submit
their "needs assessments." (NOTE: Only two countries by
January 2008 had submitted their individual technical needs
assessments. END NOTE.) The representatives also agreed to
ensure submission of bankable projects to donors and the WTO
Secretariat.

SIPDIS


16. (U) The Maseru Declaration commits LDCs to support the
amendment to the TRIPS agreement which mandates disclosure of
origin of biological resources and associated traditional
knowledge. LDC representatives intended to address what they
felt was misappropriation of patents and enhance development
benefits that should accrue to the LDCs.

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Trade Facilitation
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17. (U) Discussion of trade facilitation centered around
several key issues/challenges, including high implementation
costs of facilitation measures, proposals which go beyond
negotiating mandate (i.e., corruption),and Enhanced Technical
Assistance (ETA). Most representatives agreed that the ETA
should form the basis for LDC negotiations and capacity building
initiatives. Finally, the delegates emphasized that LDCs should
not be required to undertake mandatory trade facilitation
commitments until acquisition of the necessary capabilities is
complete - as defined by the LDCs themselves.

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Comment
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18. (SBU) Ambassador Allgeier and A/USTR for Africa Florie Liser
were both struck by the limited number of African Trade
Ministers with longevity in their positions and, as a result,
some Ministers had a less than comprehensive understanding of
key Doha issues. Former key ministers (from Lesotho, Ghana,
Kenya, and Burkina Faso) with institutional memory on important
Doha issues are now gone, and a new core group has not yet
evolved. This also has an impact on AGOA implementation,
reflected by an apparent lack of understanding of major
elements, such as products covered, rules of origin, etc. The
USG will need to determine more effective ways to establish new
relationships and provide critical background information to the
large number of new African Trade Ministers. End Comment.


19. (U) This cable has been cleared by USTR PColeman.
NOLAN