SUBJECT: WTO DIRECTOR GENERAL DECISION NOT TO

UNCLAS SECTION 01 OF 03 STATE 131354

SIPDIS
PASS USTR FOR SCHWAB
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EEB/TPP/MTAA FOR CRAFT
USDA/FAS/ITP
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USDOC FOR ITA

E.O. 12958: N/A
TAGS: ETRD WTRO USTR
SUBJECT: SUBJECT: WTO DIRECTOR GENERAL DECISION NOT TO
CONVENE MINISTERIAL


1. (U) SUMMARY: WTO Director General Pascal Lamy announced
on December 12, 2008 that there are still significant gaps on
a number of outstanding issues in the ongoing Doha Round
negotiations and that he does not see the basis for convening
a meeting of Ministers in Geneva before the end of the year.
The U.S. is disappointed that Members have been unable to
establish a basis for a productive Ministerial that would
lead to an ambitious and balanced Doha outcome. Work will
begin this week, continuing into the New Year, on next steps.
Set out below is background on the current status of the
Doha Round negotiations. Also included is the statement by
USTR Susan Schwab on the decision not to call Ministers to
Geneva, which Posts may draw from as needed. Posts may also
draw from "Qs and As" as needed to provide verbal responses
to questions. END SUMMARY.

Background


2. (U) The WTO Doha Round negotiations have been at the
center of U.S. trade negotiating efforts since the
multilateral round was launched in Doha, Qatar in November

2001. The United States played an instrumental role in
launching the negotiations and has led efforts to advance
them towards a successful conclusion. After Cancun, the
United States led the effort to ensure the negotiations moved
ahead; the July 2004 mini-ministerial was the result of U.S.
efforts to bring the negotiations back on track--resulting in
the July "Framework-Agreement." In October 2005, the United
States tabled a comprehensive proposal for the agricultural
negotiations to eliminate all tariffs and subsidies in a
two-phased process, and over the next two years worked in
various formal and informal processes to advance discussions.
In September 2007, the United States publicly stated in
Geneva that it was prepared to negotiate within the range of
subsidy reductions in the draft agriculture text, provided
that the other leading nations did the same with respect to
new market access for agricultural and industrial goods.
President Bush has personally and actively led U.S. efforts
to press the Doha Round forward, and led the push in the G-20
Summit to gain commitments to achieve modalities before the
end of 2008. In short, no country has worked harder to bring
the Round to an ambitious conclusion.


3. (U) New momentum was injected into the negotiations in
mid-November following the G-20 and APEC Leaders' political
commitments to conclude modalities in agriculture and
nonagricultural market access (NAMA) before the end of 2008,
establishing the framework for an ambitious conclusion to the
Doha Round in 2009. In recent weeks, intense negotiations
have been ongoing at the senior official level in Geneva and
at the Minister level in capitals to achieve the convergences
needed for Ministers to meet to agree on modalities in
agriculture and NAMA. The hope had been that such a meeting
could take place before the WTO General Council meeting of
December 18-19.


4. (U) New negotiating texts were issued on December 6,
2008 by the Chairs of the Agriculture and NAMA negotiating
groups. However, the revised texts did not resolve the most
difficult outstanding issues, and some issues showed signs of
destabilizion since July.


5. (U) At an informal Trade Negotiations Committee meeting
with the heads of delegations on December 12, 2008, WTO
Director General Lamy announced that after extensive
consultations with WTO Members, there are still significant
gaps on a number of outstanding issues in the agriculture and
NAMA modalities negotiations and that he does not see the
basis for convening a meeting of Ministers in Geneva before
the end of the year. Lamy noted his intention to consult
with Members on how to assemble the political will in the New
Year, including an informal "Green Room" meeting on December
16 to discuss how to move forward.


6. (U) The United States is disappointed that Members have
been unable to establish a basis for a productive Ministerial
that would lead to an ambitious and balanced Doha outcome.
It is especially disappointing during this time of global
economic turmoil. At the same time, as Lamy noted, calling a
Ministerial would run an unacceptably high risk of failure
that could damage not only the Round but the WTO system as a

STATE 00131354 002 OF 003


whole. In response to Lamy's announcement that he was not
calling a Ministerial, U.S. Ambassador to the WTO Peter
Allgeier remarked that "I think it is the prudent thing to do
given the gaps we have seen. We are deeply disappointed we
have not reached that stage yet."

STATEMENT BY USTR SCHWAB


7. (U) Ambassador Susan Schwab stated on December 12:

"The U.S. has shown flexibility repeatedly in the past
several weeks to achieve the convergence among WTO members
necessary to convene a ministerial. I am therefore
disappointed, but respect the decision by the Director
General to not call a ministerial at this time.

Due to numerous outstanding issues voiced by several WTO
members, it became apparent that the gaps were too large to
bridge at this time. There were several significant
unresolved issues on the table that needed to be addressed
for a deal on modalities to come together.

The U.S. remains committed to working with the WTO and our
trading partners to reach a successful Doha outcome, one that
fulfills the promise of this round."

QUESTIONS AND ANSWERS, FOR VERBAL USE BY POSTS


8. (U) Posts may draw from the following "Qs & As" for
verbal responses to questions.

Q: Is this the end of the Doha round negotiations?

A: No, the Doha Round will continue. The U.S. remains
committed to achieving a successful result in the Doha Round
negotiations, and we will continue to work with others in
Geneva toward advancing the negotiations.

In order to achieve further progress, WTO Members,
particularly advanced developing countries, must follow-up on
the Doha political commitments made by G-20 and APEC Leaders
and provide the contributions and flexibility necessary to
produce a market-opening modalities package that would lead
to an ambitious conclusion to the negotiations.

There is a long-standing record of trade rounds continuing
through transitions in presidential administrations.

Q: Is it true that the impasse is just about one or two
issues involving U.S. demands?

A: No, there is a wide array of significant issues involving
a number of WTO Members.

For example, in agriculture,

--There are still wide gaps on the treatment of sensitive
products, that is, products sheltered against full tariff
cuts, of great significance to Japan and Canada.

--India also raised new issues relating to its subsidies
programs and sought greater flexibility in the area of
special products, that is, products sheltered from cuts.

--On the Special Safeguard Mechanism, there have been a
number of compromises put on the table since September. The
U.S. was willing to accept them, but China and India rejected
them all.

--The long-standing issue of bananas appears to have moved
backwards since July, with the European Union and the Latin
American countries digging-in.

In NAMA,

--Several developing countries (South Africa, Argentina,
Venezuela) are making special, individual, flexibility
requests that go beyond the flexibilities already available
to those developing countries making cuts.

--Several developing countries continue to have strong
disagreements among themselves on the issue of preference
erosion, that is, the effect of developed country tariff cuts
on countries that already have preferential access to these
markets.


STATE 00131354 003 OF 003


Q: Why is the U.S. making new demands on sectorals, and
trying to "rebalance" the July 25 package?

A: On sectorals, the U.S. has merely been seeking what was
on the table in the July 25 package--that is, meaningful
assurances from the leadership group of the WTO (the G7) on
two sectorals that likely can achieve a critical mass of
participants among the major producing and exporting
countries. We have shown flexibility and creativity in how
such assurances could be fashioned. In contrast, Brazil,
India, and China would not agree to identify specific sectors
on which they would be willing to negotiate.

The U.S. position is driven by the Ministers' decision at
Hong Kong (paragraph 16): "We instruct the Negotiating Group
to review proposals (for sectoral initiatives),with a view
to identifying those which could garner sufficient
participation to be realized."

End Points


9. (U) Please contact Bruce Hirsh (202-395-9610 or
bhirsh@ustr.eop.gov) or Dawn Shackleford (202-395-9461 or
dshackleford@ustr.eop.gov) via phone or email with any
questions or requests for further background.
RICE