WORLD TRADE  
ORGANIZATION   
WT/COMTD/W/129 
5 May 2004 
 
 (04-2003) 
Committee on Trade and Development Original:   English 
  
 
PRIMARY COMMODITIES – PROPOSAL FOR A WAY FORWARD 
 
Communication from Switzerland 
 
 
 The following communication, dated 30 April 2004,  is being circulated at the request of the 
Delegation of Switzerland.  
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1. Background 
1. Kenya, Tanzania and Uganda have initiated an  important discussion on the developments and 
problems of production and trade in commodities.
1  Similarly, several Western African WTO 
Members launched a discussion and made specific interventions and proposals at WTO on cotton.   
2. Switzerland recognizes the importance and releva nce of the long term decline of certain 
commodity prices and, equally, the high volatility of prices.  In many cases this affects the income of 
already poor families in a number of commodity-dependent developing countries.  Both from a development and from a trade perspectiv e international action is required. 
 
3. Switzerland is hopeful that the ongoing negotiati ons at WTO will lead to improved market 
conditions for many commodities.  Yet it is essential that these negotiations be well informed about 
the technical, economic and commercial factors that influence commodity decline and volatility.  This 
will allow for a sound analysis and choice of instru ments in the negotiations.  Therefore, Switzerland 
considers that a structured discussion in the WTO coul d be beneficial.  It would serve to highlight the 
commodity issues and increase the awareness of negotiato rs as well as of the public on the options to 
use the dynamic export potential of commodities.  This submission aims to  suggest a procedural 
framework to get such a discussion started.    
2. Frame for a Focused Discussion 
4. According to its Terms of Reference
2, the CTD is to serve as a focal point for consideration 
and coordination of work on development in th e WTO, and to assist developing countries, in 
particular LDCs, in the expansion of their trade and investment opportunities.  Consideration of the 
trading environment for primary commodities w ould, in our view, fall under this mandate.  
 5. We view the objective of a discussion on pr imary commodities in the CTD as follows:  
 
                                                      
1 WT/COMTD/W/113  
2 WT/L/46  WT/COMTD/W/129 
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 - to further raise awareness of the proble ms surrounding trade in commodities and of 
the interlinkages with current negotiations  as well as with existing WTO rules among 
all delegations;  
- to prepare the grounds for the delegations c oncerned to bring in substantial proposals 
in the relevant negotiating bodies.  
In order to avoid fruitless debates, it is suggested for the CTD not to aim at making agreed 
recommendations to be addressed to the nego tiating bodies.  Instead, the outcome of the 
discussions could be factual summaries and possi bly a number of conclusions drawn by the 
Chair in his personal capacity. 
6. In contrast to the negotiations taking place in  parallel, the CTD approach would provide a 
forum for an in-depth discussion of the fundame ntal problems in the commodities' sector.  This 
approach would be complementary to and not dupli cate the discussions in the negotiating bodies such 
as on agriculture and non-agricultural market access.   7. Thus, the proposed way of proceeding would not directly and immediately affect the on-going 
negotiations in the Doha-Round.  However, it woul d provide a good knowledge on the mechanisms at 
work and on the trade instruments that could contribu te to arrest the long-term decline of prices and 
reduce short-term volatility.  In that way the di scussions on commodities would contribute to a more 
sustainable outcome of the negotiations.  8. While not losing the overall picture of commodity markets and instruments, discussions 
should focus on those topics and instruments that are or might be relevant in the work of WTO. 
 9. In order to make sufficient progress in these di scussions before WTO negotiations enter into 
specific proposals, it would seem advisable to sche dule two or more additional meetings of the CTD 
in an informal mode (or alternatively workshops  under the auspices of the CTD) before the end 
of 2004, the first taking place before the summer br eak. "Commodities" would have to be the sole 
item on the agenda.   10. A pre-condition for an informed discussion might be to grant ad-hoc observer status for these 
meetings to international organiza tions working in the field of primary commodities.  The specialized 
agencies could be invited to present their view on pre-defined topics/instruments (by way of written 
contributions well in advance of the meeting, and w ith oral presentations to stimulate the discussion at 
the beginning of the meeting).  It should be consid ered as well to invite  representatives of some 
important international traders to specific meetings .  Their contribution would be to inform Members 
on market and investment trends in specific commodity sectors and on the commercial practices affecting prices and volatility. 
 
3. Possible Content of the CTD Meetings  
11. There are two ways of approaching the discussion on commodity issues:  (i) trough an overall 
horizontal approach or (ii) through a sectoral or product by product approach.  It might be useful to start with a horizontal approach, and then select certain commodities to go into further details, 
e.g looking at the concrete market situation, such  as the level of demand, supply, market access and 
regional complementarities, as well as specificities of  the commodity, including infrastructure needs, 
product diversity, related processed goods and further value-added development.  Policy regimes in 
main importing and exporting markets, commercial and financial practices and investment trends 
would also have to be looked at.  For relevant commodities, it could be analyzed which factors are  WT/COMTD/W/129 
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 most relevant for price declines and volatility, an d which instruments best suited to tackle the 
problem.  12. The work in the CTD could consist in: 
 
(a) discussing the instruments to address the long  term decline in commodity prices and 
price volatility (a possible and not necessar ily exhaustive list of instruments is 
provided in the annex); 
(b) specifying the reasons for the success or failure of such instruments; 
(c) discussing the compatibility of those inst ruments with the WTO framework, and 
analyzing which of the instruments could be considered under the WTO; 
(d) discussing the possibilities of improving or redefining such instruments. 
13. Once a constructive discussion has developed and first conclusions are emerging, as a next 
step the following questions could be tackled:  
(a) Which are the negotiating commitments in the Doha Work Programme that have a 
direct impact or side effect on countries that export commodities?  
(b) Which WTO provisions help to address the problems related to trade in commodities 
and how could these provisions be made more  effective, in line with the Doha Work 
Programme? 
4. Next steps 
14. It is therefore proposed that the Committee asks the Secretariat 
 
- to organize a first meeting on commodities to analyze the reasons and factors which 
led to the current situation, and to review  the reforms and instruments in the trade 
area which have the potential to rever se the negative long-term price trends; 
- to invite the relevant international institu tions to attend the meeting and to prepare 
their contributions to be distributed well in advance of the meeting to enable delegations to get inputs from their experts; 
- to prepare additional background documen tation as deemed necessary and useful. 
15. In light of that discussion, commodities for case studies for subsequent meetings will be 
selected. WT/COMTD/W/129 
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 ANNEX 
  
The following instruments could be analyzed at th e commodity-related CTD meetings.  It is to be 
noted that this list is purely indicative and not necessarily exhaustive. 
A. I
NSTRUMENTS THAT ADDRESS THE LONG TERM DECLINE OF COMMODITY PRICES  
International trade liberalization 
 
 Impact of trade liberalization on the level of  international prices through the reduction or 
elimination of export subsidies as well as trad e-distorting domestic support for commodities. 
 Impact of tariff reduction in facilitating market access. 
 Impact of the reduction and subsequent elimin ation of tariff peaks and tariff escalation in 
stimulating domestic diversifi cation into value-added product. 
 
Enabling environment (legal framework and infrastructure) 
 
 Effect of the enabling environment on production productivity and market access. 
 Impact of the legal framework on investment and technology transfer through transparent and 
clear competition rules and efficient law enforcement. 
 
Internal market liberalization 
 
 Influence of domestic liberalization on the share of the export prices to the producers. 
 Identification of key trade support services for producers and appropriate providers of such 
services being public or private actors.  
 Preferential treatment for market access 
 
 Addressing the problems underlying the under-utiliza tion of the preferential market access 
treatment, especially the capacity cons traints in applying the requirements. 
 Impact of preferential treatment on product of  high interest to developing countries.  
 Regional integration 
 
 Impact of regional integration among developi ng countries through a reduction of tariff and 
non-tariff barriers.  
 Marketing Boards 
 
 Impact on producers of the institutional v acuum resulting from the dismantling of the 
marketing boards and related services deliv ery, and alternative ways for remedy. 
 
Geographical indications 
 
 Role of geographical indications in foster ing product differentiation and niche markets. 
  WT/COMTD/W/129 
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 B. INSTRUMENTS THAT ADDRESS THE VOLATILITY OF COMMODITY PRICES : 
 
National price stabilization schemes (incl. Marketing boards) 
 
 Under short-term price volatility, impact of well designed and implem ented national price 
stabilization scheme on income stability for concerned producers. 
BOP-measures 
 
 Use of import restrictions to increase monetary reserves. 
Export duties 
 
 Costs and benefits analysis to see the impact on producers' income. 
 For coherence, other instruments addressing l ong-term price decline and volatility, such as 
compensatory financing mechanisms, debt relief me asures, and internationa l diversification funds, 
commodity risk management instruments, contract farming etc. are also to be considered in the 
discussion although they have a less direct link to th e instruments that are presently included in the 
WTO framework.  This will be important because a re versal of trends, to be successful, will require 
coordinated and coherent action by gove rnments and international institutions. 
 
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