WORLD TRADE  
ORGANIZATION  TN/C/5 
28 July 2005 
 (05-3430) 
Trade Negotiations Committee  
  
 
REPORT BY THE CHAIRMAN OF THE TRADE NEGOTIATIONS COMMITTEE 
TO THE GENERAL COUNCIL 
  
 The following report is being made by the Ch airman of the Trade Negotiations Committee, on 
his own responsibility, to the Gene ral Council at its meeting on 29 Ju ly 2005.  This report is not 
intended to be a document for negotiation or discussi on in its own right.  Rather, it is intended to aid 
reflection during the summer recess, to suggest a fo cus for the intensive work  in the autumn, and to 
help participants along the critical path to the Si xth Ministerial Conference to be held in Hong Kong, 
China in December 2005. 
 
_______________ 
 
 
I. INTRODUCTION 
 I would like to start by recalling the Decision adopted by the General Council on 
1 August 2004, which, within the overall Doha manda tes, provided the basis of the work that the TNC 
and the bodies established by it have been undertaking since last summer.  This basis was at differing 
levels of detail across the negotiating agenda.  In so me areas, frameworks were agreed for establishing 
modalities.  In other areas, Members' commitment  to progress was reaffirmed.  In addition, 
negotiations were launched on Trade Facilitation.  Most importantly, emphasis was given to the 
Members' resolve to complete the Doha Work Programme fully and to conclude successfully the 
negotiations launched at Doha.  Th is is the overarching goal towards which we have all been working 
since last July.   The focus of my present report, at the eve of th e summer break, is to look at how far we have 
come towards that goal and how far we have yet to go .  I would also like to make some suggestions as 
to how I believe Members can achieve it. 
  I would also like to underline the enormous am ount of effort which has been put into the 
negotiations in the first half of this  year.  I would first like to pay tri bute to the constant support I have 
been able to count on from the General Counc il Chairman, Ambassador Amina Mohamed.  Her 
dedication to moving the negotiations forward during this very important period has been invaluable, 
and I believe the process has benefited from the close le vel of coordination that we have developed.  I 
would also like to offer my sincere thanks to the Chairpersons of the negotiating groups.  Quite 
clearly, their efforts as Chairs to lead participan ts through the complicated process of the vast amount 
of technical work which has been accomplished deser ve to be recognized.  Finally, let me thank the 
participants.  All officials from all delegations w ith whom I have had the honour of working have 
shown a high degree of professionalism and commitme nt to the multilateral trade negotiations.  I am 
most grateful for that.   Indeed, a vast amount of work has taken place over the last six months.  The negotiating groups have met formally with in creasing frequency as we have neared this mid-year marker.  The 
TNC has maintained its oversight role, meeting fo rmally on four occasions.  These formal meetings TN/C/5 
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 have been complemented by an increasing level of info rmal activity.  I have held informal meetings at 
the level of Heads of Delegations on three occasi ons, as well as a good number of consultations in 
various formats.  I have also held regular coor dination meetings with th e negotiating group Chairs, 
which have also benefited from the presence of th e General Council Chairman.  We have also been 
fortunate to have a significant level of interest from Ministers, who have met in different groupings 
during this period.  These meetings, such as the recent LDC Ministerial Meeting in Zambia, the 
meeting of Ministers of Trade of the African Union, the meeting of APEC Trade Ministers and the meeting of OECD Ministers, have  provided our process in Geneva w ith solid support.  In other 
gatherings, including meetings of Ministers from gr oupings such as the G33, the G10, the G20 and the 
Cairns Group and those sometimes referred to as mini -Ministerial meetings, have focused on specific 
issues in the negotiations in an attemp t to inject impetus into our work. 
  In the early part of this year, we set ourselves targets looking forward to Hong Kong and beyond.  As I had announced at the TNC mee ting in December 2004, I undertook a process of 
collective reflection in January and February of th is year, which involved consultations covering the 
broad spectrum of the membership.  From this pr ocess and from a gathering of some Ministers in 
Davos, it quickly became apparent that there was a strong desire to keep ambitions for Hong Kong 
high, so that the results from that Conference would take us into the end-game of the Round.  I sensed 
the commitment on all sides, and I still sense it, to  work towards an ambitious outcome so that the 
Round could conclude in 2006.  
 Let me recall that we started the year with a high level of convergence on the need for a 
substantial breakthrough in Hong Kong in five key areas.  These areas had first been mapped out by a 
number of Ministers at their gathering in Davos in  January, and my subseque nt consultations across 
the broad spectrum of the membership confirmed the importance of such a focus.  The areas which I 
set out at the TNC meeting in February were: 
• modalities in Agriculture 
• modalities in NAMA 
• a critical mass of market opening offers in Services 
• significant progress in areas such as Rules and Trade Facilitation, and 
• a proper reflection of the Development Dimension. 
  Hong Kong must therefore set the stage for the final phase of negotiations.  For this to 
happen, Ministers will have to take a number of decisions, notably establishing modalities for 
Agriculture and Non-Agricultura l Market Access (NAMA), and pr ovide the political guidance and 
impetus necessary for the work to move into the fina l phase in all areas, respecting the principle of the 
Single Undertaking. 
  In my consultations, I also detected a strong sense of commitment at every level to flesh out 
the frameworks contained in the July 2004 Decision,  to strike a balance across all subjects and to 
ensure that the negotiations contribute to developm ent in a meaningful way, in line with the Doha 
mandate. 
  However, I warned at the time that we all had to  be aware of the scale of the task this implied, 
because there were some potentially intractable problems ahead, and we should not underestimate 
them.  I stressed that participants had to get down to real negotiations in all areas, meaning real give-
and-take, and that they had to do this immediately.   This search for compromise is, after all, what 
these negotiations are all about.  This view has re cently been echoed by the President of Rwanda, 
H. E. Paul Kagame, at our 10
th Anniversary Symposium in April.  He said that "the search for 
compromises is of paramount importance.  And let no  one think that flexibility and a predisposition to 
compromise is a sign of weakness or a sell-out.  Rather, it should be seen as a willingness to advance  TN/C/5 
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 our common interests, resulting in a win-win situation".  President Kagame suggested this should be 
the message to the G8.   My warning in February and my subsequent wa rnings about the slow pace of the negotiations 
do not seem to have been well heeded.  At a Minister ial gathering in Paris in May, I warned that, at 
the current pace, we were not going to make it by Ju ly, and possibly not by December, and I urged the 
Ministers present to take the action necessary so that  real progress would be made.  However, at the 
most recent gathering of Ministers in Dalian, Chin a, I had to report that progress remained far from 
sufficient.  I told them I regretted that the warn ing I gave them in May and those I had given to 
negotiators in several TNC meetings  seemed more valid than ever. 
 
 Let me also recall the focus on trade at the r ecent meeting of the G8 at Gleneagles.  I gave 
them, and other Leaders who were present, a very fr ank assessment of where we stand.  In response, 
the Leaders pledged themselves to work to increase momentum towards their goal of an ambitious 
and balanced outcome in the negotiations, which is their highest common priority in trade policy for 
the year ahead.  They called on all Members to wo rk with greater urgency to bring these negotiations 
to conclusion by the end of 2006.  They saw th e Hong Kong Ministerial in  December as a critical 
stepping stone towards that goal.   July has been seen by many as a marker date in the process of preparing for Hong Kong when 
Members should be able to judge whether they are on course for a significant outcome in December.  
This report is intended to help them to formulate that  judgement.  It is also intended to bring together 
the reports and assessments by the Chairs of the negotiating bodies, and to offer a consolidated 
overview of the state of play in the Round.   II. OVERVIEW OF PROGRESS 
 I would now like to give you my assessment of progress overall.  First, the positive side of the 
ledger.  I am glad to report that our ambitions re main high, as they should do.  We have a good level 
of engagement, both in Geneva, which is the b ackbone of the negotiations, as well as among Ministers 
and Senior Officials when they gather around the worl d.  Much useful work has been done to clarify 
options and build understanding.  The political c hoices in key areas such as Agriculture and NAMA 
are now clearer.  Some problems, like the issue of ad valorem  equivalents (AVEs) in Agriculture, 
have been resolved – even if belatedly.  In some areas which do not usually attract as much attention, 
like Regional Trade Agreements, the progress so far this year has been genuinely encouraging. 
  I regret that the negative side of the ledger  outweighs the positive.  My frank assessment is 
that we have a long way to go to achieve the goals I r ecalled earlier.  The fact is that since July of last 
year, the progress made has been insufficient.  Most often, the progress we have been able to make in 
the key areas, even on what should be the less difficu lt issues, has been at a high cost in terms of the 
time and negotiating resources it has taken.  The AVE i ssue is a good example of this – we lost some 
months trying to resolve this "gateway" issue, and now that it is unblocked, it still remains difficult to 
advance the negotiations on the most fundamental el ement of the agricultural market access package, 
the tiered formula for tariff cuts.  This delay has cost us any hope of agreeing on a "first 
approximation" of modalities in Agriculture by th e end of July, and it has slowed progress on other 
sectors as well.   From the overview of the individual areas of the negotiations I will now give, it can be seen 
that the advances are uneven across the different negotiating areas, and progress within specific areas 
has been sporadic.  Throughout 2 005, we have enjoyed a good level of political impetus into our work 
in Geneva, with Ministers meeting on several occasions , but we appear to have had a problem turning TN/C/5 
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 this impetus into real and steady progress in our wo rk.  At times, it has even appeared that we have 
backtracked on the advances made when some Ministers have met.   Let me now turn to the individual negotiating areas.  First, Agriculture
1.  The objective for 
Hong Kong is to establish modalities for the furthe r commitments in the areas of market access, 
domestic support and export competition.  The Doha  mandate and the July 2004 Framework have 
been, and will continue to be, the basis for the preparatory work.  While over the past months 
Members have engaged in a very intense process of  consultation and negotiatio n, progress to date has 
been clearly insufficient so as to be  on schedule on our way to Hong Kong. 
 
 Having said this, I wish to recognize that over the past couple of weeks major players have 
come forward with concrete and specific proposals in all areas under negotiation.  These are valuable 
inputs.  What has been hampering our work in Gene va is not so much a dearth of ideas but a certain 
reluctance on the part of key players to engage in real negotiations on the proposals put on the table.  This must change and it must change immediately. 
 
 The shared political commitment by the Minist ers participating in the Dalian meeting to 
accelerate the negotiations has been a very welcome input to generate momentum as has been the 
agreement to proceed, in the mark et access and domestic support pilla rs, incrementally to negotiate 
structure, without prejudice to the final outcome of the whole package.  What is now required is 
determined follow-up on the ground in Geneva , taking cross-linkages firmly into account. 
 
 At this stage, market access
 is the area in most urgent need of movement.  In his recent 
Assessment the Chairman of the negotiations on Agri culture has clearly identified where, as an initial 
step, we must get convergence now: the structure of  the tiered formula for tariff cuts coupled with 
further elaboration of certain flexibilities, in particular the selection and treatment of sensitive 
products and of Special Products (SP).  At last ma ny participants are beginning to acknowledge the 
need to abandon long held positions and to mo ve to the middle ground among the various 
formulations which have been proposed.  Action must follow.   Settling the structure of the tiered formula is not only important in its own right, but also 
because it is the pre-condition for any meaningful a ttempt to sort out the many other issues in the 
market access pillar.  They include a wide range  of politically sensitive and technically complex 
matters such as the new Special Safeguard Mechanis m in favour of developi ng countries (SSM), tariff 
escalation, tariff simplification, tariff quota administration, preference erosion and tropical products.   Significant further progress is also urgent ly needed in domestic support and export 
competition.  In domestic support
, the next logical step to be achieved is convergence on the structure 
of the reduction commitments, partic ularly with respect to the tiered formula for reductions of the 
Final Bound Total AMS.  On Blue Box criteria, we  must move quickly when negotiations resume to 
make progress.  While the review and clarification of the Green Box may take some time, early progress on the proposals on the table aimed at making this Box more development-friendly could be 
another important ingredient in gene rating dynamism in the negotiations. 
 
 In export competition
, while export credits will also require  further work, the immediate focus 
should be on further elaboration of  parallelism with respect to exporting state trading enterprises and 
food aid.  On exporting state trading enterprises, pr ominence at this stage should be given to detailing 
the trade-distorting practices to be eliminated in pa rallel with all other forms of export subsidies and 
the scope of entities to be covered.  Subsequently, the issue of the future use of monopoly powers will 
have to be negotiated, taking duly into account  the Framework provision regarding state trading 
                                                      
1 The Chairman of the Special Se ssion of the Committee on Agriculture  has circulated his assessments 
of the state of play in the Agriculture negotiations in the following documents:  Job(05)/126 and Job(05)/163.  TN/C/5 
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 enterprises in developing-country Members.  As for f ood aid, it must be made absolutely clear that the 
new disciplines under negotiation to prevent co mmercial displacement will not in any way 
compromise the provision of genuine food aid.  This should not be difficult because it is common ground among Members.  The differences begin on the question where to dr aw the line at which 
genuine food aid ends and commercial displacement begins.  The future work in this area should 
focus, in the first instance, on alleviating the key concerns of recipient countries by developing rules 
for a safe harbour, especially with respect to emergency food aid.   As agreed in Doha, operationally effectiv e and meaningful provisions for special and 
differential treatment in favour of  developing-country Members will have to permeate all areas under 
negotiation and will have to be progressively developed as the ne gotiations proceed.  Non-trade 
concerns will have to be taken into account as stipulated in the Doha mandate. 
  A final word on the important matter of Cotton
.  As agreed last July, the trade aspects of this 
issue are to be addressed ambitiously, expeditiou sly, and specifically, w ithin the agriculture 
negotiations.  Substantive progress on both the trad e and development aspects has been and remains 
an imperative for a successful meeting in Hong Kong.   Work on the trade aspects
 in the Sub-Committee on Cotton is now well underway and has 
seen the tabling of an ambitious proposal by the African Group on elements of modalities in 
connection with the Sectoral Initiative in favour of Cotton. 
 
 Important developments are also  being registered from other Members, including the proposal 
by the European Communities to fa st track discussions and "front load" the implementation of an 
agricultural deal with respect to cotton, and info rmation from the United States on recent steps taken 
to remove the subsidies which, in the recent Co tton dispute with Brazil, had been ruled to be 
inconsistent with its obligations under the Agriculture and Subsidy Agreements. 
  While differences remain, there is a clear rec ognition of the need to advance the agriculture 
negotiations with cotton in mind.  All Members ha ve noted with care the urgency and the special 
significance of cotton and are trying to identify ways  of meeting the concerns of African proponent 
countries and other cotton producing developing countries. 
 
 With regard to the development assistance aspects
 of Cotton, I initiated immediate action for 
the implementation of these aspects of the cotton-rela ted decisions in accordan ce with the July 2004 
Decision.  The principal parties agree that there is positive evolution and concrete progress, although 
much remains to be done.  Bilateral donors and the relevant multilateral institutions have moved 
expeditiously to clearly reflect cotton sector prio rities in their programmes with active implementation 
now underway.  Proponent countries have also demo nstrated speed and commitment with on-going 
domestic reform efforts.  Their priorities are now re flected in their Poverty Reduction Strategy Papers 
(PRSPs).  At the same time, I am conscious that much remains to be done.  Bilateral donors, agencies 
and the proponents need to step up their coordination efforts.  Furthermore, th e continuing decline and 
volatility in cotton prices warrant urgent res ponses through the design and implementation of 
commodity price stabilization schemes, enhanced productivity and efficiency within the overall 
framework of domestic reform in the cotton prop onent countries and continuing efforts to increase 
complementarity between the trade and developm ent aspects of the Cotton issue in the Doha 
negotiations.  
 Let me now turn to Non-Agricultural Market Access  (NAMA).  Here, the objective for 
Hong Kong is to establish modalities for the reduction or, as appropriate, the elimination of tariffs, 
including the reduction or elimination of tariff peaks, high tariffs and tariff escalation, on non-
agricultural products.  This should be done in a way that fully takes into account the special needs and 
interests of developing and least-developed country  participants, including through less than full TN/C/5 
Page 6  
 
 reciprocity in reduction commitments.  Paragraph 16 of the Doha Ministerial Declaration and the July 
2004 Framework have been guiding the intensive discu ssions taking place in this area.  Unfortunately, 
like in Agriculture, and probably b ecause of it, progress has been insufficient and much remains to be 
done before Ministers depart to Hong Kong.   
 One of the main problems we have been facing in this area is that some Members do not want 
to discuss numbers without first having a define d structure, while other Members have problems 
discussing the structure without first having the numbers .  This "chicken and egg" situation has been 
impeding progress.  Clearly, it is not possible to a dvance on any issue if every single detail is kept 
variable.  This vicious circle can only be broke n if Members proceed with the necessary conditional 
trust and show a genuine willingness to negotiate. 
  It would be unfair to say all this without ad mitting that the developments of the last week 
have given me some hope.  Maybe we are not where we  thought we would be at this stage, but it is 
also true that some progress has been made in areas where Members have managed to translate the 
political will expressed by Ministers at Dalian into pragmatism in Geneva.  Although not achieving 
any breakthrough this week, the positions on some key ar eas seem to be closer.  There also appears to 
be a general understanding of the need to leave on ly a bare minimum of decisions to be taken by 
Ministers at Hong Kong.  We cannot expect them to so lve all the details in all the areas in such a short 
period of time, and I perceive a genuine interest fro m the Members to work with a view to avoiding 
such a situation.  Indeed, adequate preparatory wo rk should urgently be carried out in the coming 
months.  So, the question is how best to move forward. 
  On 8 July, the Negotiating Group Chairman circulated a detailed commentary
2 describing the 
work that has been undertaken on the various elements of the NAMA framework, as well as his 
assessment on the state of play.  He has al so recently circulated an additional text3 supplementing his 
commentary and giving his views on how to move forwar d.  Rather than speaki ng about all the issues 
detailed therein, I would like to focus on the two most critical issues:  the formula and the treatment of unbound duties.   At this stage, the formula
 is the element where movement is most urgently needed.  Setting its 
structure is not only important in itself, but also because many other important issues revolve around 
it.  Like many of you, I was expecting to be able to have a consensus on the structure of the formula 
by now, but we are not there yet.  On the other ha nd, it would appear that we are not too far away 
from it.  To make progress on this issue, it is es sential to move away from the "chicken and egg" 
situation that I mentioned before.  One interesting asp ect is that divergences seem to be mainly related 
to the balance between the level of ambition and th e flexibilities, rather than the structure of the 
formula itself.  The Chairman has suggested that the way out of this situation is to engage as soon as 
possible on the actual numbers, and I fully endorse that.  A balance between ambition and flexibilities 
will only be found if we go deep into the numbers an d engage in real discussions and trade-offs.  This 
number crunching exercise should also lead us to a deeper understanding of the concerns and 
expectations of the different Members and, most importantly, will ensure that political masters are 
duly prepared when the time for final decisions come. 
 
 There has been some movement with respect to  the treatment of unbound duties.  We seem to 
have increasing convergence around the use of a non-lin ear mark-up approach.  This is, of course, on 
the understanding that a pragmatic, equitable, soluti on is found to deal with the sensitivities of some 
Members concerning unbound tariffs at low applied ra tes.  However, we should not forget that we 
also need to bring on board other Members who ha ve sensitivities concerning their unbound tariffs at 
                                                      
2 Contained in document Job(05)/147. 
3 Contained in document Job(05)/147/Add.1.  TN/C/5 
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 high applied rates.  Solving this issue would constitu te a big step forward and should clear the way for 
better discussions on the formula.   Although many of the other technical issues
 require considerable work, I believe the 
immediate focus should be on solving the issues of product coverage and the calculation of ad 
valorem  equivalents.  Ministers at Dalian expressed their determination to deal with them 
expeditiously, and an early harvest on  them will certainly demonstrate that we are here to do business.  
As I said before, we need to clear the path on as ma ny issues as we can in order to concentrate on as 
few issues as possible in Hong Kong.  To conclude , I cannot stress enough the need to translate good 
political will into practical consensus in Geneva.  We  need to multiply our efforts in this area which 
represents almost three quarters of the world trade in goods. 
  Turning now to Services
4, I am pleased to report that the pace of the services negotiations has 
shown moderate signs of improveme nt, which is reflected in the number of initial and revised offers  
submitted over the past two months.  So far, 68 initial and 24 revised offers have been submitted.  The 
May date for the submission of revised offers  has motivated governments who had not submitted 
initial offers to do so.  During the two months of  May and June, 16 initial offers were submitted.  
Adding the 24 revised offers, the total number of all offers submitted during the l ast two months is 40.  
Considering that the total number of offers submitt ed in the first two years was 50, it could be said 
that the pace of submitting offers has recently picked up.  
 Notwithstanding the improvement in the numbers  of offers, it is widely acknowledged that 
the overall quality remains unsatisfactory.  Few, if any, provide new business opportunities to service 
suppliers.  Most Members feel that the negotia tions are not progressing as well as they should. 
  At the last meeting of the Special Session, Me mbers were invited to express in specific terms 
their aspirations in these negotiations.  The discu ssion was extremely useful in clarifying what 
participants are aiming at, on a sector-by-sector and modal basis and through the identification of the 
main barriers and/or issues that need to be addr essed.  There were also inte rests expressed in relation 
to specific modes of supply.  Annex 1 to the repor t by the Chairman of the Services Special Session 
contains an account of such interests expressed by Members individually.  However, given the nature 
of the request/offer process, the overall expectation should be that the final outcome of the market 
access negotiations on services will include commitments  by a critical mass of Members in each of 
the sectors and modes of supply identified.  The ul timate test will be the final acceptability of the 
package to all Members.   Let me recall that GATS Article XIX sets out that these negotiations are being conducted with 
a view to achieving a progressively higher  level of liberalization.  In other words, Members should be 
contemplating real policy and regulator y reforms leading to market opening. 
  In the negotiations on rule-making
 in Services, some progress has been on Domestic 
Regulation.  However, I understand that there is a ne ed to intensify the work in the other rule-making 
areas and I suggest that consultations should be held in this regard. 
 
 There is obviously a tremendous amount of work  that needs to be accomplished after the 
summer break and I would strongly encourage particip ants in the Special S ession to accelerate their 
activities significantly in the run up to Hong Kong.  
 Let me now turn to the Negotiating Group on Rules .  There can be no doubt that a 
substantial result in Rules is one of the pillars of  a successful DDA.  While the area of anti-dumping is 
                                                     
 
4 The report by the Chairman of the Special Session of the Council for Tr ade in Services is contained in 
document TN/S/20 and a paper on the Organization of Future Work is contained in document Job(05)/164.   TN/C/5 
Page 8  
 
 of course critical, the other issues such as subsid y disciplines including fisheries subsidies, and 
regional trade agreements, must also make their cont ribution to the overall balance.  To this end, the 
Rules Negotiating Group has substantially intensified its  work this year.  Regarding issues relating to 
the Agreements on Anti-Dumping and Subsidies and Countervailing Measures including fisheries subsidies, the Group's plenary formal and informal  processes have been supplemented with bilateral 
and plurilateral consultations c onvoked by the Chairman, which work on the basis of "third 
generation" submissions proposing specific changes  to Agreement text.  The objective of the 
consultation process is to help to identify areas of par ticular and salient interest  to participants and to 
encourage a concrete and precise discussion involvi ng real engagement with a view to identifying 
solutions.  This will give the Group the most realistic sense of areas in which some progress may be 
possible, and of the types of changes that might be acceptable to different Members. 
  Between now and Hong Kong the Group must , as indicated in the Chairman's report
5, further 
develop, intensify and supplement this plurilatera l consultation process, with political level input as 
necessary.  The process should be sharpened by limit ing work to precise textual proposals to improve 
the Agreements on Anti-Dumping and on Subsidies and Countervailing Measures.  An intense and 
rigorous process is needed to ensure that in Hong Kong we will have a solid basis for the final stage 
of the Round.  In this regard, I have noted the call by the Co-Chairs of the Dalian mini-Ministerial for 
text-based negotiations to begin as soon as possi ble, at the latest from Hong Kong onwards. 
  On the other track of work in the Rules Gr oup, namely RTAs, a draft "decision text" for a 
new process to improve RTAs transparency has b een developed by the Chairman on the basis of 
intense informal debate within the Group.  The tec hnical work on transparency is near completion, 
though detailed drafting and a few re finements are still needed, in par ticular on statistics and how to 
deal with RTAs presently under "examination" in  the Committee on Regional Trade Agreements.  
However, there are still divergences on the applica tion of the new process to RTAs notified under the 
Enabling Clause .  On systemic RTA issues, discussions  have only recently gained momentum, 
following the tabling of some specific submissions .  I understand that the debate, though attracting a 
lot of interest, has so far remained rather academic.   The negotiations on Trade Facilitation  are progressing well and are on schedule
6.  The aim is 
to produce all the main elements of an agreem ent on Trade Facilitation for political endorsement by 
Ministers in Hong Kong, and to complete the negot iations through legal drafting in 2006.  I would 
urge participants to make every effort to main tain the good atmosphere which has prevailed in these 
negotiations so far.   The first phase of the negotiations has involved tabling proposals on GATT Articles V, VIII 
and X, with the aim by July of having as clear a pi cture as possible of the scope of these negotiations.  
The result has been very positive, with about 35 propo sals to date.  More are expected to come in 
before the summer, but delegations should already ha ve a clear idea of the level of ambition that the 
proponents are aiming for.  I would note that devel oping countries have participated actively, with 13 
of them sponsoring or co-sponsoring about half of  the proposals on GATT Articles.  Reactions by 
developing countries to the proposals on GATT Articles have been generally very constructive.  They 
indicate that serious attention is being given to th ese negotiations in capitals, although at this stage not 
much is being given away about how acceptable th e proposals might eventually turn out to be. 
  The main challenge in Hong Kong will be to strike the right political balance between the 
level of ambition and the degree of political commitmen t to policy reform that will be acceptable in an 
eventual agreement.  Special and differential treatment and support for capacity building will be 
                                                     
 
5 Contained in document TN/RL/13. 
6 The report by the Chairman of the Negotiating Gr oup on Trade Facilitation is contained in document 
TN/TF/2.  TN/C/5 
 Page 9 
 
 
 important in that regard, and will need to be a pa rticular focus of attention this autumn since an 
insufficient number of proposals have been tabled  so far on these issues.  I believe that most 
developing countries are not looking for a free ride in these negotiations – they appreciate the economic and commercial benefits that improved Trade Facilitation rules and procedures can bring 
them – but many of them will need time and tec hnical and financial suppor t to implement reforms 
domestically. 
  Turning now to the Environment  negotiations
7, of the three areas covered by the paragraph 
31 mandate, there has been substantial engagement this year on paragraph 31(iii).  The focus on 
paragraph 31(iii) was without prejudice to other pa rts of the mandate, to which Members remained 
fully committed.  Under paragraph 31(iii), meaningful progress would need to be made in the coming 
months for any results to be achieved by the Hong Kong Ministerial Conference.  While numerous 
submissions have been tabled by Members, in cluding nine lists of environmental goods, there 
continues to be some divergence of views in the Special Session of the Committee on Trade and 
Environment on the overall approach to these negotia tions;  in other words, on whether to pursue a 
"list-based approach", a "project approach", or a combination of the two.  Also, undoubtedly, the pace 
of these negotiations is tied to de velopments in other negotiating gr oups, and in particular to the 
NAMA negotiations.  However, such linkages s hould not prevent progress from being made in 
defining the concept of an "environmental good" base d on the submission before the Special Session.  
In these negotiations, it would also be vital to id entify environmental goods that are in the export 
interest of developing-country Members, whilst be aring in mind the potential for these negotiations to 
deliver "environmental" as well as "trade" gains.  I am hopeful that the intensification of the Special 
Session's work after the summer break will l ead to tangible progress on paragraph 31(iii). 
  In the TRIPS  negotiations
8, I understand that since the beginning of this year, there has been 
evidence of an increased level of activity in the Spec ial Session, with the tabling of two submissions 
setting out the proposals of the main protagonists in le gal language.  This has been useful in clarifying 
to Members the thinking and proposals of the propon ents of these documents.  There also remains on 
the table a third proposal, submitted by Hong Kong, Ch ina.  However, positions remain as divided as 
ever, especially on the two key points of difference, namely those of legal effects and participation. 
  While there may be scope within the framework  of the Special Session for fruitful work of a 
technical nature on some aspects in the coming m onths, any progress on the key issues will require an 
input of significant new flexibility on the part of delegations.   With regard to the DSU negotiations , the work is progressing at a satisfactory pace for now, 
as reflected in the Chairman's report to the TNC
9.  In his report, the Chairman has indicated that the 
process will be intensified in the second half of the year with a view to presenting the results of the 
Special Session's work to Ministers in Hong Kong with the aim of making a positive contribution to 
the Ministerial Conference, even if these negotiations are not part of the Single Undertaking.  Of course, the emphasis in this work must continue to be on Member-driven efforts, and I would urge 
delegations to continue to work  constructively on the basis of the "bottom-up" approach actively 
promoted by the Chairman. 
 
 I would now like to emphasize the importance of the Development Dimension , which is to a 
great extent the raison d'être of the Round and whic h must permeate all of the areas I have mentioned 
above.  I think we are all aware that if we want the WTO to work properly as an engine for growth 
                                                     
 
7 The report by the Chairman of the Special Se ssion of the Committee on Trade and Environment is 
contained in document TN/TE/12. 
8 The report by the Chairman of the Special Session of the TRIPS C ouncil is contained in document 
TN/IP/13. 
9 Contained in document TN/DS/12. TN/C/5 
Page 10  
 
 and development, it is indispensable that we conclude the Round successfully.  The potential for 
tangible development gains from these negotiations is real and attainable.  Market access is of course 
a central component – if developing countries are to  alleviate poverty and integrate themselves into 
the global economy, we know that more must be done to remove the barriers faced by their exports of 
goods and services.  However, developing countries mu st also take advantage of the opportunities the 
Round offers to benefit from ope ning up their own trade regimes, including to other developing 
countries.   We must ensure that the results of our nego tiations embody balanced rules, together with 
adequate technical assistance and capacity building to help developing countries implement the new 
agreements.  Our approach here must be, above a ll, pragmatic.  Strengthened coherence with other 
international organizations must also play its part , not only in the adjustments which will be necessary 
for many countries, including those which might suffer from erosion of preferences, during the implementation phase, but also during the negotiati ons themselves.  We need to see serious new 
commitments in this regard, and not just the repack aging of existing programmes.  The aim must be to 
address supply-side constraints which have pr evented developing countries from increasing and 
diversifying their exports.   Other elements of the Doha Development Age nda also have a specific development focus, 
although they lay outside the Single Undertaking of the negotiations.  These include the Work Programmes on Small Economies, Trade Debt and Fi nance and Trade and Transfer of Technology.  
These are valuable components of our work since Doha , and I am sure that progress in these areas will 
facilitate the successful evolution of the negotiati ons.  In the Work Programme on Small Economies, 
I would note that there is a strong degree of diss atisfaction among some Members at the lack of 
progress made so far.  
 Provisions for special and differential treatment (S&D) are recognized to be an integral part 
of the WTO Agreements, and it is clear to all of us  that the new agreements at the end of the Round 
will fully respect this principle.  The treatment of S&D in the July package last year helped us to 
move ahead in the negotiations more generally.  In a number of areas, clear signals have already been 
given of Members' intentions with respect to trea tment of least-developed countries.  I believe more 
can be done in this respect, even perhaps at Hong Kong,  in particular with regard to the predictability 
of their market access. 
  Let me now focus specifically on Special and Differential Treatment
10.  In the July 2004 
Decision, Members instructed the Committee on Trade and Development in Special Session to expeditiously complete the review of all outsta nding Agreement-specific proposals and report to the 
General Council with clear recommendations for a deci sion, by July 2005.  Members also instructed 
the Special Session to address all other outstandi ng work, including the cross-cutting issues, the 
monitoring mechanism and the incorporation of S&D treatment into the architecture of WTO rules, 
and report, as appropriate, to the General C ouncil.  Furthermore, the WTO bodies to which 
Category II proposals had been referred were asked to expeditiously address those proposals and 
report to the General Council with clear recommenda tions for a decision no later than July 2005. 
 
 Over the past year, work on S&D has continue d on the basis of the Ju ly Decision and within 
the parameters of paragraph 44 of the Doha Minist erial Declaration and paragraph 12 of the Decision 
on Implementation-Related Issues and Concerns.  In an attempt to make substantive progress, 
Members have considered different approaches to the work on S&D, including by looking at the 
underlying developmental issues that the proposals were seeking to address and then discussing the 
proposals on the basis of a possible categorisation into  thematic clusters.  A conceptual approach was 
                                                     
 
10 The report by the Chairman of the Special Sessi on of the Committee on Trade and Development is 
contained in document TN/CTD/12.  TN/C/5 
 Page 11 
 
 
 put forward in the Special Session along these lines, but Members were not able to agree on its 
modality.  Nevertheless work did start by ta king up the remaining LDC proposals as a matter of 
priority.   I acknowledge the work that Members have been carrying out on the LDC proposals over the 
past few months in an endeavour to finalise a po ssible package for the LDCs by July.  Members seem 
to recognise the need to provide support to the LD Cs and have expressed their commitment to finding 
solutions to the development challenges faced by th e LDCs.  I get a sense that, while Members agree 
that it is important to provide the LDCs with a certain degree of flexibility and assistance in 
implementing the WTO Agreements, there continues to  be a difference in perception about the nature 
and extent of this flexibility.  Clearly, Members will need to address these differences if further 
progress is to be made on the LDC proposals.  In this  connection, let me reiterate my call to provide 
the LDCs with predictability and security  through duty and quota free market access. 
  Even after addressing the LDC proposals, a lo t of work will still remains to be done.  
Members would need to continue to engage serious ly in addressing the remaining work if substantive 
progress is to be made by the Hong Kong Minister ial Conference.  They will need to address the 
remaining Agreement-specific proposals which are s till on the table and which represent key concerns 
to a number of developing-country Members.  There is also a need to address the outstanding issues, 
including the cross-cutting issues, the monitoring mechanism and the incorporation of S&D treatment 
into the architecture of WTO rules.  The nego tiating bodies and other WTO bodies to which certain 
Agreement-specific proposals have been referred, will also need to address these proposals with a 
renewed sense of urgency and ensure that c oncrete progress is made by Hong Kong.     
  What remains fundamentally important in m oving forward on S&D is for Members to convert 
their commitment towards solving the problems fa ced by developing and l east-developed countries 
into tangible and meaningful results.  Not making an y progress in this area will give credence to those 
who question the developmental thrust of the Round a nd could set back our efforts to further integrate 
developing and least-developed countri es into the multilateral trading system. 
  I would lastly like to make some remarks about Implementation , where under the terms of 
the July 2004 Decision, I have been undertaking cons ultations in my capacity as Director-General.  In 
fact, my work on implementation started at the e nd of 2002, when the outstanding paragraph 12(b) 
issues came to the TNC for appropriate action, in lin e with the Doha Ministerial Declaration.  Since 
then, I have been consulting on these issues, at the request of Members, and using a variety of approaches.  
 Throughout my work on these issues, I have expl ored not only procedural solutions, but also 
substantive ones, in line with the agreement by Mi nisters in Doha on appropriate action.  I have 
repeatedly made suggestions on possible approach es which I hoped would help move the process 
forward, most notably in the areas of Balance of Payments, Safeguards, Technical Barriers to Trade 
and TRIPS.  
 In line with the July 2004 Decision, I have repor ted in detail to the TNC at the start of its July 
meeting on my consultative processes since the adop tion of the Decision and I am making the same 
report separately to the General Council.  I do not inte nd to repeat the details of my report here, but I 
should stress that it shows that the situation has cl early not evolved significantly since I last reported 
in May.  I believe the reasons for this lack of  movement are well-known.  Among the outstanding 
paragraph 12(b) issues on which I have been c onsulting are some of the more intractable 
implementation issues.  However, I would say that  progress on any given issue has remained out of 
reach due largely, but not exclusively, to the difficult  political nature of the treatment of one particular 
issue – extension of geographical indications (GIs).  TN/C/5 
Page 12  
 
  In my consultations since July 2004, there have  been modest signs in some areas that progress 
would be possible and in some cases attempts we re made to build on the possible approaches I 
suggested in 2003.  However, my assessment is that , as long as the approach to the outstanding issues 
remains one in which all the issues are linked together, it will not be possible to resolve any of them, even those where a possible outcome might be at ha nd.  In a few cases, I would suggest that the time 
has come for us all to recognize that we have done as much we possibly can to move ahead on the 
content of the original proposal.   I have tried repeatedly to find ways to adva nce towards the appropriate action that Ministers 
in Doha instructed the TNC to take, but solutions in  that sense have just not been within reach because 
of the entrenched opposing positions of delegations, in particular on the issue of GI extension.  To me, 
this has been a source of frustration, and I know this  is also the case for a number of delegations.  In 
conclusion, I can only repeat my exhortation to all si des to make every effort to allow progress to be 
made in this area.  
 
III. THE CRITICAL PATH TO HONG KONG 
 It is vitally important that the level of ambition for the Hong Kong Ministerial remain high 
across the whole DDA mandate.   It is equally important that we get to Hong Kong well-placed to realize these ambitions.  
Otherwise not only the chances of finishing the Round in  the near future but also the substantive value 
of the Round itself could be put in question.   This puts a heavy burden on all participants to  make the most productive use possible of the 
very short time remaining in which to prepare the Mi nisterial.  In order to do so, it is essential that the 
work be tightly focused on resolving key probl ems which can unlock progress, and that it be 
organized in a coherent, flexible and effective way.   I would like to emphasize some points concerning each of these considerations.   First, I have already set out some key probl ems and priorities in specific negotiating areas.  
Among these I suggest that the following are absolu tely necessary to resolve urgently, early after the 
summer break, in order to unlock progress not only in the area concerned but also across the broader 
range of the negotiations:  
Agriculture 
 
General
 
 
• Given that we have both the structure of co mmitments and an agreed end point in export 
competition, it is crucial that the Member s urgently provide the guidance necessary to 
have the structure in place for the other two pillars:  internal support  and market access . 
 
Market Access  
 
• The urgent need is for convergence on key elem ents of the structure of the tiered formula 
for tariff reductions .  Progress here would unlock the ne gotiation on so many other issues 
of vital concern to the Members related to market access.  Many of them will require much time to elaborate in the September to December period. 
  TN/C/5 
 Page 13 
 
 
 Internal Support  
 
• Here the pressing need is for convergence on ke y elements of the structure of the tiered 
formula for cutting trade-distorting support,  particularly with respect to the Final Bound 
Total AMS . 
 
• We also need real progress on the issue of Blue Box criteria  and in the review and 
clarification of the Green Box criteria . 
 
Export Competition  
 
• We need progress on parallel commitments  in Exporting State Trading Enterprises and 
Food Aid in particular.  Additional progress on Export Credits is, of course, also 
important. 
 
 
Cotton  
 
• With respect to the "trade track" of the cotton negotiations, failure to achieve the 
minimum goals outlined above for the agricultu re negotiations would put in jeopardy the 
mandate for the work of the Cotton Sub-Committee which requires "ambitious, 
expeditious and specific commitments ". 
 
• Given the fall in world prices, urgent development assistance  is required in cotton-
dependent countries – particularly in the proponent countries where such a huge 
proportion of their output is sold onto world markets and thus fully exposed to such price 
variations. 
  
NAMA 
 
• We need to move beyond a debate about the structure of the formula and to actively 
engage in a discussion of numbers with a view to achieving an acceptable balance 
between ambition and flexibility for each Member. 
 
• Members should follow up on the recent positive developments with a view to forging a 
common understanding on the treatment of unbound duties. 
 
• Movement on these two issues will give us the necessary momentum which should be 
used to tackle effectively the other crucia l elements in the NAMA framework and to put 
together a full modalitie s package for Hong Kong. 
  
Services 
 
• Members have expressed serious disappointment with the progress of the Services 
negotiations.  The Hong Kong Ministerial will be a crucial occasion for Ministers to issue their final instructions for the conclusion of the Round.  We need agreement that the Hong Kong Ministerial should decide on the key elements necessary to produce a 
satisfactory outcome of commitments that go beyond current levels of liberalization
. 
 TN/C/5 
Page 14  
 
 • To achieve this, intensified work is requi red on a wide range of issues, including the 
following: 
- further identification of expectations by Members in all areas of negotiations, 
- means of intensifying the request-offer process, - use of complementary approaches as proposed by Members within the 
parameters of the GATS and the Negotiating Guidelines, 
- implementation of the Modalities for th e Special Treatment for LDCs in the 
Negotiations, 
- consideration of category II proposals on S&D treatment provisions, and - targeted technical assistance. 
 
 
Rules 
 
• We need more clarity and convergence on what is needed to ensure that all areas of the 
rules negotiation make sufficient progress by H ong Kong so as to form part of the overall 
balance that we have all demanded. 
 
 
Development 
 
Special and Differential Treatment
 
 
• We need to ensure that progress is made on all the remaining Agreement-specific 
proposals, especially the LDC proposals, and that  in that context to effectively address the 
issues of increased flexibility, market acce ss and capacity building for developing and 
least-developed countries, as is being sought in the majority of the proposals.  In particular, we need to provide LDCs with pr edictability and security in market access for 
their products.  
 
• Members also need to agree on what to do with the 28 Agreement-specific proposals that 
have already been agreed in principle. 
   There is, to be sure, serious and detailed e ngagement in practically all of the negotiating 
groups.  Too often, however, this is around the ma rgins of strongly-held positions which show few 
signs of softening.  In previous years it could ha ve been said that we had not yet really begun to 
negotiate.  This has changed for the better since 2004, but we have not yet reached the level of 
negotiation at which the convergence that opens up the concluding phase can be reached.  We must 
reach that level early this autumn at the very latest.  
 There is no mystery to the substantive problem s in these negotiations.  The technical issues 
have been exhaustively explored, the political c hoices have been identified and narrowed down.  
However, being understood apparently does not ma ke them easier to resolve.  I am seriously 
concerned that we are still seeing a tendency to wards brinkmanship among negotiators who should 
know better.  Recent experience, most painfully at Cancún, has taught us that a multilateral deal in 
today's WTO cannot be pushed through by a few Memb ers.  This lesson needs to be fully absorbed 
and acted upon.  I made the point to the G8 Leaders at Gleneagles, who understood it fully.   We must bear in mind that the principle that "nothing is agreed until everything is agreed" is 
the basis of the work we are undertaking, both in the Round overall and in our preparations for 
Hong Kong.  This is at the heart of the Single Undert aking.  It is also at the heart of any successful  TN/C/5 
 Page 15 
 
 
 negotiation, because it gives you as negotiators the freedom to show some possible flexibility in one 
or other area in order to move the process overall wh ile still protecting your fundamental interests.  I 
very much hope the work from now to Hong Kong will be approached in this spirit. 
  Secondly, it is important to be clearheaded about process issues.  Substance must always 
drive process, not vice versa.  The most carefully-p lanned process in the world will result in failure if 
there is not a shared willingness to reach convergen ce on substantive issues.  I urge participants, 
therefore, not to see the critical path to Hong Kong  in terms of the number, location or format of 
meetings at whatever level, but instead to keep th eir attention fixed firmly on what needs to be done 
and the most effective way to do it.  This means keeping a flexible and pragmatic approach to the 
negotiating processes, which will need to make full u se of all possibilities for progress.  I suggest that 
it will be easier for participants to do so if it is clear that the fundamental principles of transparency 
and inclusiveness will be respected fully, and if there is confidence that decisions can only be 
considered and taken by the membership as a whole.  Informal and flexible processes are essential for 
success, but they must be based upon a sense of community among all participants. 
 
 Implementing a substance-driven process requi res a close and continuing review of progress 
and rapid corrective action where necessary.  This argues for appropriate checkpoints to be set along 
the three-month period before the Ministerial.  Wh at form these might take and at what level they 
might be convened is for further consideration.  Th e main thing is to plan a basis on which to review 
progress and take any necessary action in sufficient tim e to avoid loading the Ministerial down with 
unresolved problems. 
  It seems to me that the first such checkpoint s hould be no later than mid-October.  By then we 
should expect to have reached, or be very close to reaching, agreement on the key strategic issues I 
identified above, especially those which will provide  the necessary structur es – such as tariff-cutting 
formulas – within which quantified commitments  can be made by Ministers at Hong Kong. 
  I also suggest that as far as possible this im portant exercise, and indeed all of the remaining 
preparatory work for Hong Kong, should take place in Geneva, where the main negotiating forum is.  
Meetings in other locations have an undeniable value, but they can also involve costs in terms of 
resources, time and transparency.  It will be more than ever important in the busy autumn ahead to 
avoid disconnects among different layers of negotia tion.  This could be assisted by having senior 
capital-based officials come to Geneva frequently, and by Ministers coming here at key moments to 
bridge differences as they did in July last year.  In addition, close and constant Ministerial support 
from capitals to the efforts of their negotiato rs in Geneva will continue to be essential. 
 
 As I have said before, what we need urgently is  not just a change of gear in these negotiations 
but also a change of attitude and approach.  The time for identifying options is gone;  the time for 
choosing among them is here.  This calls for leadersh ip, not just to make declarations but to make 
decisions.  We need continuous Ministerial involveme nt so that participants move beyond rhetoric 
and repetition to a more frank dialogue about their ke y political needs and what they can contribute if 
these needs are met.  And leadership must be direct ed towards concrete, specific results.  There is an 
urgent need in most negotiating areas to move ra pidly to text-based discussions where everyone is 
working from a common base rather than numerous competing ones.  I urge participants to engage directly with each other to produce such text s, not wait for Chairs to work miracles. 
  As I prepare to step down as TNC Chair, I th ank all participants for your co-operation over 
the past three years.  I hope that in the busy pe riod ahead all of you will keep in sight the real 
importance of what we are engaged in here.  Th is cannot be a perpetual negotiating machine which 
exists for its own sake.  It must be a means of  improving economic opportunities and helping to fulfil 
the hope of development.  Put in this perspective,  the problems in the negotiations cannot be allowed 
to defeat us. TN/C/5 
Page 16  
 
  
 We simply have to complete the Doha Round in 2006.  That is a real deadline.  To achieve 
that, we must have a substantively successful Mi nisterial Conference in Hong Kong in December.  
We have made some progress towards that goal but less, perhaps much less, than we wished.  We 
have accordingly left ourselves a lot to do.  We can without doubt still do it, provided that from now 
on we avoid complacency and brinkmanship and de dicate ourselves instead to a politically engaged, 
results oriented, decision making mode of operation immediately after the recess.  No one will follow 
your progress more closely than me and I will continue to support your efforts in every possible way.  
I am sure that well deserved success will attend your efforts.  
__________