Communication from the Commission to the Council and to the European Parliament - Reviving the DDA Negotiations - the EU Perspective
Date: 2003-11-26
Institutions: European Commission
Subjects: World Trade Organisation, developing countries, international negotiations, liberalisation of trade, trade agreement, trade cooperation

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 26.11.2003
COM(2003) 734 final

COMMUNICATION FROM THE COMMISSION
TO THE COUNCIL AND TO THE EUROPEAN PARLIAMENT

Reviving the DDA Negotiations – the EU Perspective

Executive summary

The  Communication  assesses  the  state  of  play  of  the  WTO  Doha  Development  Agenda
negotiations in the light of developments since Doha and of the Cancun Ministerial Meeting,
and outlines how the EU could best contribute to a successful relaunch of negotiations.  It is
based on the reflections and consultations that the Commission has engaged in since Cancun.

The Communication concludes that the basic  rationale  for  the  DDA  remains  valid,  and  that
the  EU’s  objectives,  set  out  in  earlier  Council  conclusions,  should  be  maintained.  It  also
concludes  that  the  EU  should  support  the  early  re-launch  of  the  DDA  and  should,  together
with  other  WTO  Members,  participate  constructively 
this  end.  The
Communication does however suggest that, in order for a relaunch to be successful, all WTO
Members must be prepared to adjust or refine their approach in a number of specific areas.

in  efforts 

to 

As  far  as  the  EU  is  concerned,  it  is  suggested  that  we  now  be  ready  to  explore  alternative
approaches to negotiating the  Singapore issues of investment,  competition,  trade  facilitation
and  transparency  in  government  procurement,  possibly  through  removing  them  from  the
single undertaking of the negotiations and through negotiating them as plurilateral agreements
if necessary. While maintaining our substantive objectives, it also suggests a slight adjustment
of  the  approach  on  trade  and  environment  and  geographical  indications  aimed  at  reducing
reticence to negotiations in these areas.

On  agriculture,  the  Communication  confirms  the  EU’s  continued  readiness  to  make
significant  commitments  provided  that  our  trading  partners  also  show  real  movement.  A
specific initiative on cotton within the context of the agriculture negotiations is also proposed.

On services and non agricultural market access, the Communication suggests the EU should
maintain its high level of ambition, and that other delegations should make a real contribution
to negotiations according to their capacities.

The  Communication  also  proposes  that  on  rules  for  Anti-dumping,  Subsidies  and  Regional
Trade  Agreements,  the  EU  should  seek  ambitious  results,  while  on  a  range  of  trade  and
development issues, we  should  work  for  outcomes  that  genuinely  support  the  integration  of
developing countries as opposed to measures that perpetuate the development gap.

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Introduction

Following the failure of the Cancun  conference, WTO  Members,  in particular the  EU, have
devoted  considerable  time  in  trying  to  comprehend  the  reasons  for  that  failure.Mature
reflection suggests a mixture of reasons. One was certainly procedural: in some respects the
Cancun  meeting  began  on  track,  and  only  fell  apart  at  the  last  moment.  But  there  are  also
solid grounds for believing that there were serious underlying problems behind the failure of
Cancun,  which  will  have  to  be  addressed  if  the  Doha  Development  Agenda  is  going  to
succeed as a negotiation. Developments such as the emergence of new groups such as the G20
and the G90, driven by concerns that their priorities were not being given sufficient attention;
the reluctance of  a  number  of  Members  either to engage  in  further  trade  liberalisation  or  to
extend the WTO rule-book; differences in substance that remained too wide to be bridged in
the time available; the importance (and fear) of China and her huge exporting potential; and
systemic problems in the operation of the WTO itself cannot be ignored or brushed aside.

Given  this  mix  of  factors,  and  indeed,  the  dramatic  and  important  nature  of  the  Cancun
collapse, many have also spent an equally considerable amount of time in assessing how and
under what conditions the DDA negotiations could be re-launched. For our part, over the last
two  months  the  Commission  has  engaged  in  an  extensive  process  of  reflection  and
consultation  with  Member  States,  in  the  133  Committee  and  elsewhere;  with  the  European
Parliament;  with  a  broad  range  of  civil  society  representatives  (NGOs,  business  and  trade
union representatives); and with our third country partners, in order to better understand views
and build a sense of what needs to be done if the process launched at Doha is to move forward
again. The Commission has, in carrying out this review, posed a series of general questions:
about  the  scope  for  pursuing  new  rule  making  in  the  WTO,  and  the  relationship  of  “rule
making” to “market access” negotiations; about the extent to which more emphasis should be
given in the future to bilateral and regional trade negotiations; on the best means to further the
developmental objectives of the WTO and the Doha agenda; and on the need for improving
the workings of the WTO as an organisation. A brief word on each of these questions, and the
conclusions we have drawn following our consultations:

– 

– 

On “rule-making” and its relation to “market access” negotiations, it is clear to
the  Commission  that  the  EU  should  continue  to  insist  on  a  strong  continuing
rules-making  component  in  the  multilateral  trading  system.  If  we  are  serious
about “harnessing globalisation”, we cannot dismiss the importance of rules in
the WTO or those developed in other areas of international policy making. In
any  case,  existing  rules  in  areas  such  as  agriculture  or  trade  defence,  for
example, show how fundamentally intertwined rule-making and market access
continue to be within the WTO. Further rule making accompanied by improved
market  access  should  help  to  sustain  higher  rates  of  global  economic  growth
and  poverty  reduction,  in  addition  to  helping  developing  countries  better
integrate into the world economy.

On  the  question  of  balance  between  multilateral  and  bilateral  /  regional
negotiations,  the  results  of  our  consultations  are  very  clear:  multilateral
negotiations should remain the European priority. There is widespread support
for  this  notion  in  all  parts  of  the  Commission’s  authorizing  environment  –
Member States, the Parliament, business, trade unions and civil society.

– 

On  the  question  of  development,  much  has  been  done  before  Doha,  at  Doha
and since to ensure that the new Round supports development objectives.  But

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several developing countries, the G90 in particular, have so far been sceptical
of the benefits that the Doha Development Agenda can bring to them, notably
in terms of further market opening in sectors like agriculture. Most obviously,
there has been concern over the impact of further multilateral trade opening on
the  preferential  market  access  that  some  developing  countries  enjoy  in  a
number  of  developed,  “northern”  markets.  Some  developing  countries  have
also expressed reservations about engaging themselves in further liberalisation,
or of adopting stronger multilateral rules.

Against  this  background, the Commission  has  sought  to  identify  clearly  what
kinds of outcomes will genuinely promote development: what in other words a
“development Round” should and should not be about. In our view, the WTO
is not a structurally unfair system that needs to be rebalanced. We believe that
the  WTO  and  previous  Rounds  have  not  worked  against  the  interest  of
developing  countries.  Nor  should  the  Round  be  geared  to  removing  all
responsibility  from  all  developing  countries  to  contribute  to  a  successful
market-opening  outcome,  including  the  important  dimension  of  improved
“south-south” trade. And it should not be ignoring the necessity to update the
WTO rule-book (since developing countries as much as  any can benefit from
the security that multilateral rules provide), or absolving developing countries
from  new  WTO  rules,  which  would  create  precisely  the  same  two  tier  WTO
which  many  developing  countries  have  expressed  fears  about.  The  Doha
Development  Agenda  has  instead  to  enhance  further  the  integration  of
developing countries, particularly the poorest of them, into the world economy,
through  progressive  market  opening  and  the  progressive  assumption  of
stronger  rules,  in  keeping  with  the  implementation  capacities  of  developing
countries. The biggest developmental gains will, after all, come from ambitious
trade opening and the strengthening of multilateral rules. The DDA thus has to
ensure  that  the  negotiations  more  generally  work  fully  in  the  interests  of
development. These arguments are set out at greater length below.

– 

Finally, and more briefly, on the question of WTO reform, the Commission has
consulted widely on what specific improvements are needed to the functioning
of the WTO. We have concluded that a relatively modest, but feasible, package
of reforms, focusing first and foremost on the preparation and management of
Ministerial  conferences,  and  other  means  to  improve  the  efficiency  and
inclusiveness  of  WTO  negotiations,  is  the  way  to  move  forward.  The
Commission will raise further, more systemic questions in due course with the
Consultative Group on WTO reform established by the WTO Director General.

During this period of reflection, the October European Council also invited the Commission
both  to  reflect  on  the  EU  strategy  and  to  explore  with  key  WTO  players  the  possibility  for
future  progress  in  the  DDA.  At  the  same  time,  the  European  Council  clearly  laid  down  a
framework for this reflection: the unchanged EU's commitment to the multilateral approach to
trade policy, on the one hand, and the commitment by all WTO Members as an indispensable
condition for any successful resumption of negotiations, on the other hand.

So in concluding this process of reflection and consultation, the Commission arrives firmly at
one  single  basic  premise:  that  the  WTO  must  remain  the  principal  forum  for  trade  opening
and  the  strengthening  of  trade  rules,  as  the  multilateral  approach  to  co-operation  on  trade
matters,  based  on  the  principles  of  transparency  and  non  discrimination,  remains  the  most
effective  and  legitimate  means  to  manage  the  globalisation  process  and  trade  relations

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between countries. Along with, and in cooperation with other key international organisations,
the WTO will continue to have a critical role to play in the management of globalisation and
in the pursuit of sustainable development in all its aspects. The EU for its part should aim at
improving  further  the  coherence  between  the  WTO  and  these  other  organisations  in  the
interests of more coherent international governance in the economic, social and environmental
fields.

If so, where next? It is clear that there are relatively few EU constituencies who are opposed
to  any  form  of  multilateral  trade  round.  We  rule  the  “no  Round”  option  out  as  unfeasible,
undesirable  and  out  of  line  with  basic  EU  interests.  But  should  we  conclude  that  the  Doha
Development Agenda needs to be closed, in order to start afresh with a wholly new mandate,
and that we should then look for an early WTO Ministerial meeting to launch a new Round ?
This, too, we reject.  It would be a recipe for a major delay in the conclusion of any Round,
indeed even a launch of a new Round itself could be highly problematic over the next year.

Moreover, we believe that the Doha Declaration itself remains valid. The initial justification
for launching the Doha Round remains unaffected by developments before or at Cancun. The
negotiations still offer great potential to foster long-term economic growth, to stimulate trade
and investment, and to promote sustainable development, and the DDA has an important role
to play in our efforts to attain the Millennium Development Goals.

Our conclusion  therefore is that the EU should support the early  re-launch of  the DDA  and
should, together with other WTO Members, participate constructively in efforts to this end.

Clearly, however, future negotiations will not be successful if we or others ignore the lessons
of  Cancun  or  pretend  that  we  can  simply  pick  up  the  issues  where  they  were  left  on  14
September without any further reflection. As stressed by the European Council, all Members
of the WTO have to be willing to reflect on their approach and come back to the negotiations
in  a  constructive  spirit,  one  that  demonstrates  anew  a  basic  commitment  to  multilateralism.
The  EU,  for  its  part,  both  before  and  at  Cancun,  moved,  often  repeatedly,  on  all  important
issues, many of which are very sensitive for European interests. It should continue to do so.
However,  movement  in  a  negotiation  is  not  an  aim  in  itself,  but  a  tool  to  facilitate  a
compromise  where  our  own  interests  are  also  met:  we  do  need,  therefore,  commensurate
movement  from  other  participants,  which  was  and  still  appears,  unfortunately,  by  and  large
insufficient or absent altogether. Negotiation is a two way street.

The  process  of  reflection  that  the  Commission  has  carried  out  so  far  suggests  that  the
fundamental  objectives  that  the  EU  set  for  itself  before  Seattle,  as  defined  in  the  Council
Conclusions  of  October  1999  and  re-visited  and  re-affirmed  in  subsequent  Council
Conclusions, have stood the test of time. What  has appeared in need of  some review is our
strategy to achieve those objectives: the need to refine and sharpen our negotiating approach
in a number of areas; take account of the manner in which discussions have developed over
the  past  few  months  or  at  Cancun  itself;  and  take  account  of  developments  within  the  EU
itself (notably the successful mid-term review of the CAP). On this basis, we should be able
to continue to play a full and constructive role in any re-launch of negotiations.

The remainder of this Communication therefore identifies, in relation to the different areas of
the  DDA,  what  is  needed  from  ourselves  and  from  our  trading  partners  -  who  also  need  to
show their commitment to the negotiating process. For our part this Communication takes into
account  the  discussions  held  with  all  European  constituencies,  including  in  particular  the
Member States in the 133 Committee and Members of the European Parliament. Orientation
discussions  have  been  already  held  on  a  number  of  topics.  The  paper  in  particular  suggests

5

areas  where  the  EU  itself  could  further  refine  its  approach  in  order  to  contribute  to  the
resumption of work.

Agriculture

Negotiations  on  Agriculture  were  launched  in  Doha  on  a  broad  and  balanced  platform
covering substantial reductions in trade-distorting support, in export subsidies, improvement
in market access, special treatment for developing countries and non-trade concerns, as part of
a wider, single undertaking of the Doha Development Agenda.

The  EU  has  from  the  outset  taken  a  pro-active  role  in  the  negotiations  and  unreservedly
supported  the  implementation  of  the  Doha  Declaration.  The  recently  adopted  reform  of  the
CAP  and  proposals  for  reform  in  other  sectors  are  the  best  proof  that  for  the  EU  the  path
towards less trade-distorting support need not be an external constraint, but a desired policy
orientation.  Internally,  the  path  chosen  meets  the  domestic  challenges  of  promoting
competitiveness for EU agriculture while at the same time meeting the highest environmental,
quality and animal welfare standards that our citizens expect. Externally, the  reform process
in turn enables the EU to contribute to the Doha negotiations through an approach based on
further,  significant  trade  opening  and  support  for  sustainable  development.  The  process  of
CAP reform thus in a sense has anticipated on the achievement of the Doha objectives.  It is
now  essential  that  others  also  follow  the  path  of  reform,  at  least  as  the  result  of  the
negotiations.

Rather  than  camping  on  its  initial  negotiation  proposals,  the  EU  has  therefore  already
responded to the call for leadership from the WTO at large by demonstrating its capacity to
reform. At the demand of other Members it also presented in the latter stage of preparation of
the  Cancun  Ministerial  a  joint  proposal  with  the  US  that  built  important  bridges  between
opposing positions  of WTO  members. The new  concepts developed  at  that stage  on how to
reduce  trade-distorting  domestic  support,  on  market  access  and  on  export  subsidization,  are
concepts  that  should  not  be  lost  as  they  provide  the  foundations  for  a  balanced  and  fair
outcome  of  the  negotiations.  Unfortunately  the  same  cannot  be  said  about  many  other
important players. The onus is now on them to show similar determination for real progress
leading to the successful outcome of the negotiations.

What  is  our  position  in  the  different  areas  of  negotiation,  and  what  do  we  believe  other
countries  should  do  to  get  to  an  agreement?  First  and  foremost,  the  negotiations  can  only
succeed if they are faithful to the Doha Declaration. More specifically:

On  domestic  support,  trade-distorting  support  should  be  substantially  reduced  from  bound
levels.  Conversely,  support  with  no  or  little  trade  effects,  that  addresses  key  policy  goals
crucial  to  the  sovereign  rights  of  Members,  as  is  the  case  for  green  box  support,  cannot  be
subject  to  any  capping  or  reduction.  The  notion  that  we  or  others  should  reduce  green  box
support is unacceptable. This would amount to putting external constraints on internal policies
having no trade distorting impact.

The real focus of the negotiations should be on what distorts trade, first and foremost on the
amber box and export subsidies. The EU therefore should call for substantial reductions in the
amber  box,  the  most  trade  distorting  form  of  support  that  is  linked  to  production  or  prices.
The  de  minimis  threshold  should  also  be  reduced  so  as  to  keep  it  as  a  real  exception.  In
addition,  the  EU  should  support  specific  disciplines,  including  a  cap,  on  blue  box  support,
although  this  is  clearly  less  trade-distorting  as  it  is  based  on  fixed  entitlements.  Again,  it
should be noted that the  EU  has  moved  in  this  area, and the  cap of  5%  of  total  agricultural

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production  we  have  proposed  should  constitute  the  limit.  Flexibility  now  has  to  come  from
others  with  the  clear  recognition  of  the  distinction  between  the  different  trade  distorting
impact of different policies.

Further on domestic support, the EU accepts that DCs should have more flexibility to address
their developmental needs, including the  needs  of  poor  farmers  and  the  right  to  continue  to
sustain  sound  rural,  agricultural  and  food  policies.  But  while  the  EU  has  always  supported
special  treatment  for  developing  countries  in  the  area  of  domestic  support,  it  considers  that
such  treatment  should  be  targeted  particularly  to  the  poorer,  less  competitive  developing
countries as opposed to the most advanced. This appears to us the most appropriate means to
fulfil the development objectives of the Doha declaration.

On  market  access,  further  gradual,  substantial  trade  liberalization  is  beneficial  to  all,
developed and developing countries alike. The developed countries should make the biggest
contribution  to  most  trade  liberalisation,  but  that  will  not  suffice.  Development  of  trade
among  developing  countries  is  also  essential  ,  as  those  are  the  countries  where  demand  for
food is expected to rise, and where most of the future growth in and benefits from trade are
likely to arise.

Most  WTO  Members  have  particular  sensitivities  in  some  sectors,  which  explains  why  the
mixed  UR  formula/Swiss  formula  approach  constitutes  the  right  compromise  on  tariff  cuts,
(which  should  be  made  starting  from  bound  levels  of  tariffs),  and  why  a  special  safeguard
designed  to  meet  genuine  needs  is  important  for  developed  and  DCs  alike.  On  TRQs,  it
should  be  noted  that  their  distribution  across  the  membership  is  very  uneven,  reflecting  the
situation prevailing at the end of the Uruguay Round, and therefore proper burden sharing of
further market opening can be achieved only if all countries are put on the same footing, with
appropriate special treatment for developing countries. Preferential access for the weakest of
the DCs, in combination with sound economic policies and supply capacity, can be vital for
their integration in world markets. Ignoring this fact is ignoring the lessons of Cancun.

But while we should be ready to re-confirm what the EU is prepared to do, other countries -
including  the  largest  and  most  advanced  developing  countries  -  should  also  provide
preferential access in their markets to the larger number of developing countries in need. The
EU’s  EBA  initiative  should  be  followed  by  others,  and  we  consider  that  in  addition  to  the
OECD  countries, the  G20 should, for example, be invited to  offer  trade  preferences  to  G90
countries. Last but not least, the EU should maintain its demand for an end to usurpation of
certain selected EU GIs. Failure to do so will negate valuable export potential to the EU and
other countries, which can only have a negative impact on the negotiations in this area.

As regards export competition, the EU’s position has been very clear in asking that all forms
of export competition need to be addressed in a strict, parallel manner. The EU has made very
substantial proposals in this area, such as our offer to eliminate export subsidies on a list of
products  of  interest  to  developing  countries.  Other  Members,  however,  have  tried  to  ignore
the  Doha  Declaration  by  trying  to  exempt  their  own  export  competition  instruments  from
significant, binding disciplines. Rather than attempting to re-write the Doha Declaration, other
Members  should  respond  positively  to  EU  initiatives,  including  the  offer  regarding  export
subsidies.

In respect of non-trade concerns, the EU should continue to try to address all issues related to
agriculture trade rules rather than only the commercial aspects. Protection of the environment,
animal welfare, rural development are legitimate societal goals (cf under “Domestic support”
above).  To  ignore  them,  as  some  Members  do,  can  only  reduce  public  support  for  further

7

trade  liberalisation.  To  respond  to  them  in  a  non-trade  distorting  manner  is  the  correct  way
forward.

On cotton, the EU should support an effective and specific solution in the WTO to the plight
of the African countries, taking in account the discussions in the Council in recent weeks. In
the framework of the agriculture negotiations, an initiative on cotton should contain three key
elements: an explicit commitment to grant duty free and quota free market access for cotton
exports from least developed countries, as the EU already provides through the “Everything
But  Arms”  initiative;  substantial  reductions  of  the  most  trade-distorting  forms  of  domestic
support; and elimination of export subsidies within a stated timeframe. The Commission has
proposed such  changes to our domestic  support in the  framework of  reform of its Common
Market Organisation for cotton, and intends to include cotton amongst products of interest to
developing  countries  in  the  list  for  which  EU  export  subsidies  would  be  eliminated.  This
initative, while  being integrated  within  the  agriculture  negotiations,  could  receive  a  specific
treatment, for example a specific timeframe for implementation.

Flanking  support  measures  should  be  pursued  in  parallel  by  the  EU  and  other    partners,
including  the  relevant  international  organisations,  with  a  view  to  supporting  modernisation
and  restructuring  in  the  least  developed  cotton  producing  countries.  The  Commission  will
soon  follow  up  on  the  Council  Conclusions  of  18  November,  and  will  propose    concrete
orientations addressing the concerns of developing countries in the area of cotton.

More generally, the Commission intends to use these ideas as an illustration of how the wider
commodities issue could be dealt with. The Commission is committed to providing input for
an EU perspective on commodities and will produce an EU action plan no later than January
2004. Within the WTO, the EU should support such commodity initiatives aiming at raising
the profile of the issue as proposed by preparatory texts to the Cancun conference.

On  the  Peace  Clause,  finally,  comprehensive  negotiations  on  agriculture,  resulting  in  an
agreement acceptable to all Members, risks being undermined if Members use litigation in an
attempt  to  challenge  subsidies  granted  consistently  with  the  Agreement  on  Agriculture.
Protection  for  such  subsidies  must  be  maintained.  Since  however  the  existing  peace  clause
will no  longer  be in  force next  year, a  strategic choice  has to be made  by Members,  and  in
particular  by  the  export  oriented  Members,  between  two  alternative  routes  that  are  largely
mutually exclusive : either they believe that multilateral negotiations are the way forward to a
fair and market oriented trading system, or they believe WTO litigation is the way forward.

To conclude, the positions outlined above reflect a considerable movement, largely thanks to
the  successive  reforms  of  the  CAP.  This  has  been  used  by  the  Commission  in  the
negotiations, but so far, with the exception of the US, to no avail in terms of moving others
away from entrenched positions. The EU should continue to play a full and constructive role,
and  will  continue  to  provide  positive  signals  through  the  continuation  of  its  own  internal
reforms in agriculture, as described in recent orientations for reform in cotton, sugar, olive oil,
and tobacco. A successful outcome of the negotiations will however only be possible if other
major  players  are  ready  to  show  the  same  degree  of  determination  to  arrive  at  a  fair
compromise.

Non Agricultural Market Access

Negotiations on  tariffs  and  non-tariff  barriers  to  trade  in  non-agricultural  products  remain  a
priority for EU industry and our fundamental objectives in this area remain sound. This is a
subject in which the EU has significant potential trade gains. The negotiating process leading

8

up to Cancun and at Cancun itself, however, was disappointing: the “modalities” for further
negotiations  that  were  emerging  at  Cancun  could  have  resulted  in  rather  modest  further
market opening overall, with very little  balance  between the  commitment of different  WTO
Members. In fact, the proposed modalities  were so riddled with exclusions  and exemptions,
that they might well have resulted in a very low level of engagement, especially on the part of
some influential  developing  countries, including the more advanced  and  competitive  among
them.  While  there  is  no  question  of  developing  countries  undertaking  market  access
commitments  resulting  in  tariff  levels  similar  overall  to  those  of  developed  countries,  the
extent  of  the  imbalance  would  have  denied  meaningful  market  access  not  only  to  our
exporters, but to those of other developing countries as well, even though the greatest gains
from further liberalisation will come from more South-South market opening.

Thus,  modalities  of  the  type  on  offer  at  Cancun  –  but  not  accepted  by  Members  -  cannot
constitute a balanced basis for progress when negotiations resume. We, and many others, will
have  difficulty  in  moving  to  a  final  phase  of  the  negotiations  on  non-agricultural  market
access that  does  not hold out  real  prospects  of  effective  improvements  in  market  access  for
our exports, in terms  of  reductions in both  bound and applied rates and strict disciplines on
non  tariff  measures.  Nor  can  we  accept  an  approach  that  would  allow  developed  country
partners  to  shelter  important  sectors  from  liberalisation.  Given  that  70%  of  the  trade  of
developing countries is in industrial products and that they raise the highest barriers between
themselves,  important  trade  and  development  benefits  will  only  be  found  if  there  is  serious
market  opening  within  the  developing  world,  particularly  on  the  part  of  the  more  advanced
developing economies, who are perfectly able to make a meaningful contribution. Indeed, the
concern of several weaker developing countries about the impact of preference erosion can to
a considerable extent be mitigated through the creation of new markets for their goods in the
South.

Modalities for resumed non-agricultural market access negotiations must therefore ensure that
the concept of “less than full reciprocity” does not equate to non participation of developing
country  Members  in  the  liberalisation  process,  but  instead  reflects  the  genuine  capacity  of
Members  at  different  levels  of  development  to  contribute.  As  to  the  question  of  erosion  of
preferences more generally, while there is no easy solution, developed WTO Members should
at the very least pursue some of the EU example, such as duty and quota free access for Least
Developed  Countries’  exports  or  at  least  minimum  overall  access  for  developing  countries’
exports. (More on this in the “development” section below).

On  this  basis,  when  negotiations  resume,  the  Community  should  make  it  clear  that  the
approach set out in its previous submissions to the negotiating group remain valid. It should
insist on an approach that maintains the justifiably high levels of ambition set out in the Doha
mandate,  and  which  ensures  that  all  Members  contribute  to  this  process  according  to  their
level  of  economic  development  and  capacities.  This  approach  should  remain  anchored  to  a
simple,  single,  non  linear  tariff  reduction  formula  applied  to  all  tariff  lines,  and  result  inter
alia  in  the  elimination  of  tariff  peaks  and  significant  improvements  in  tariff  bindings.
However,  it  should  also  cater  for  sectoral  negotiations,  over  and  above  the  results  of  a
formula, on products of special interest to developing countries, as well as on other products
of  particular  EU  interest.  In  this  regard,  the  Community  should  maintain  its  proposal  to
negotiate, over and above the agreed tariff formula, further reductions in textiles and clothing
tariffs  to  as  close  to  zero  as  possible,  on  a  reciprocal  basis.  The  modalities  must  also
adequately  reflect  the  interest  of  the  Community  and  many  other  Members  in  seeing
meaningful  disciplines  on  non-tariff  barriers,  and  the  commitment  made  by  all  in  Doha  to
negotiate the reduction or elimination of market access barriers to environmental goods. The
EU’s aims should remain unchanged in this regard.

9

Services

The services’ negotiations are another key priority for the EU and are clearly one of the areas
of the negotiations where the EU has much to gain. Services should therefore be maintained at
the  top  of  the  EU’s  negotiating  agenda.  Further  opening  in  services  trade  offers  major
potential benefits, however, not only to the EU but indeed to all countries irrespective of their
levels  of  development.  This  opening  can  and  should  be  entirely  consistent  with  the  full
maintenance and protection of public services in the EU  and  elsewhere. Yet  progress in  the
negotiations  up  to  Cancun  has  been  very  disappointing.  Few  developing  countries  have
engaged  in  the  request  and  offer  negotiations,  while  amongst  the  developed  Members  the
quality  of  offers  has  been  extremely  inadequate,  with  the  EU  alone  among  the  bigger
Members in making a meaningful offer, including on Mode 4.

A major step change is therefore needed as and when negotiations resume, in order to reflect
adequately the importance of these negotiations in themselves and for the overall balance of
the DDA. To this end, a much greater level of engagement from all WTO Members is needed,
which should be reflected in the submission of meaningful offers by those Members that have
not  yet  done  so,  as  well  as  by  substantially  improvement  in  the  offers  already  on  the  table.
The  services  negotiations  should  also  put  greater  energy  in  fulfilling  the  Doha  mandate  to
negotiate the reduction or elimination of market access barriers for environmental services.

Developing countries need to take a full part in this effort, in particular by  fostering  greater
opportunities for South-South trade and by opening further those services sectors that provide
the key infrastructure for economic development and growth. It is only through participation
in the negotiations, not by  standing aside,  that developing  countries can achieve sustainable
growth.  Development  cooperation  can  play  an  important  part  here,  both  in  identifying
developing  countries’  export  interests  and  in  assisting  them  through  capacity  building
measures to put in place the appropriate regulatory structures and policies important in several
services sectors to ensure a sound regulatory framework within which trade opening can take
place.  Obviously  the  EU  will  have  to  continue  contribute  to  this.  A  new  impetus  is  also
needed in  the negotiations on rule making in services, both in areas of interest for the EU and
developing countries.

Singapore Issues

It  is  of  crucial  importance,  for  developed  and  developing  countries  alike,  to  create  optimal
conditions  for  cross  border  trade  (trade  facilitation),  to  encourage  a  climate  attractive  to
productive foreign direct investment, to promote fair competition and of the procurement of
the best goods and services for its citizens at decent prices. There remains deep disagreement
among  WTO  Members,  however,  about  the  appropriateness  of  making  rules  on  these  four
matters at a multilateral level in the WTO and, since Cancun, within the single undertaking of
the DDA.

The EU sees no reason to abandon the fundamental and long run objective of creating rules
for  these  four  issues  as  key  drivers  of  the  global  economy.  Nor  should  we  shy  away,  as  a
matter of principle, from the WTO as a forum for rule-making.  The question now, therefore,
is  how  can  WTO  Members  build  a  shared  basis  for  doing  business  on  these  issues  in  the
WTO.

Some have argued that all four issues should be removed from the DDA, in a bid to “clear the
air”: if the EU  were to accept this, it would set the clock back many years for the essential
development  of  international  rules  in  these  areas.  Others  have  argued  that  WTO  Members

10

should settle for negotiations on trade facilitation alone, a subject on which there seems to be
no deep seated opposition, and drop the other items entirely.  While this  judgement on trade
facilitation  may  well  be  true,  for  the  rest,  again,  we  should  reject  as  unacceptable  such  a
radical shift from the agenda of Doha.

In  seeking  to  build  a  practical  foundation  for  WTO  work  on  the  Singapore  issues,  the  EU
should start therefore from the premise that it remains desirable to pursue the four Singapore
issues within the single undertaking. Yet if, as appears likely, agreement on modalities within
a single undertaking remains elusive, then the WTO must find a way to handle these matters
on some other basis. The EU should therefore explore with an open mind the possibility that
the wish of some WTO members to participate in negotiations on Singapore issues could still
be accommodated, while accepting that others do not take part in or even explicitly exclude
themselves from the negotiations.

The  Community  should  now  therefore  consider  each  of  the  four  issues  strictly  on  its  own
merits, and no longer insist on each issue being treated identically if there is no consensus to
do so. It should explore the potential for negotiating some, or even all four Singapore issues,
outside  the  Single  Undertaking,  and  to  the  extent  necessary  on  the  basis  of  participation  in
negotiations  and  adoption  of  the  final  results  on  a  voluntary  basis,  by  interested  Members
only. Following this, the Commission will have to assess, based on the level of interest, and
number of countries wishing to take part, whether such negotiations would provide real added
value.  And  to  the  extent  that  implementation  of  any  future  commitments  remains  a  real
concern  for  developing  countries,  notably  the  weakest,  the  Community  and  other  partners
should continue to give priority to technical assistance and development aid in these areas.

Exploring  this  approach  seems  to  us  to  be  the  only  way  to  develop  rules  on  the  Singapore
issues while accepting that not all Members  may be ready to take this step now  or in the near
future.  It  also  appears  to  be  the  only  way  that  might  enable  negotiations  to  be  launched  on
these  subjects  while eliminating, once  and for  all, the false logic  of  the  proposition  that  the
EU should somehow “pay” for these issues.

Trade and Environment

The  relationship  between  trade  liberalisation,  trade  rule  making  and  action  at  all  levels  to
protect the environment lies at the heart of many worries expressed in Europe concerning the
development  of  the  global  economy.  Some  fear  that  the  WTO  can  become  an  obstacle  to
environment  policy  making.  Other  European  constituencies  fear  that  over-regulation  in  the
pursuit  of  environmental  protection  is  itself  becoming  an  unnecessary,  disproportionate  and
perhaps protectionist burden for world traders, including for traders in developing  countries.
Some  trade  policy  experts  argue  that  there  is  no  real  problem  in  the  trade-environment
interface,  and  yet  repeatedly  in  the  last  decade  this  interface  has  become  a  focus  for
opposition to trade policy making and for concern about global governance. These  concerns
are not simply expressed in Europe but world-wide although the EU is among the very few to
have drawn the conclusion that the WTO should clarify these complex issues.

There is no controversy among the members of the WTO as to the importance of environment
protection.  There  is  no  controversy  as  to  the  need  for  non  protectionist  and  least  trade
restrictive domestic and international regulation  in  pursuit  of  environment  protection.  There
is, however, controversy as to whether anything needs to be done today, in the WTO, in order
to  contribute  to  a  better,  and  mutually  supportive,  relationship  between  the  trade  and
environment legal and policy systems.

11

The  current  relationship  between  trade  and  environment  legal  and  policy  systems  is  one  of
unstable  equilibrium.  The  findings  of  the  WTO  Appellate  Body  have  contributed  over  the
years to the maintenance of this equilibrium, at least so far.  It remains in the interest of the
EU, and remains an important element of the WTO’s pursuit of its sustainable development
goal, to use the Doha mandate on trade and environment issues to make that equilibrium more
stable  and  predictable.  Any  other  choice  would  undermine  the  WTO’s  legitimacy  and
credibility  by  demonstrating  either  a  lack  of  confidence  in  the  trade  community’s  ability  to
handle cross-cutting issues appropriately, or a lack of commitment to the pursuit in the WTO
of the Johannesburg commitments. Given this mandate, the EU cannot accept the extinction
of trade and environment negotiations in the DDA.

On  the  relationship  between  the  two  bodies  of  international  law:  Multilateral  Environment
Agreements (or MEAs) on the one hand, and the WTO on the other,  the EU has tabled ideas
both for a legal approach to fulfilling this mandate and for broader political concepts, whose
general  formal  acceptance  by  the  membership  could  contribute  to  the  definition  of  a  more
stable  and  mutually  supportive  interface  between  trade  and  environment  policies.  Without
abandoning either track, given the dynamics in Geneva, it seems useful to focus more on the
political principles for the moment, and to explore whether these could provide the foundation
for  progress.  This  is  also  the  general  message  that  we  are  receiving  from  European  civil
society.

A focus on governance principles could also have the advantage of providing an “opening” to
a dialogue on ways to improve the dispute settlement mechanism for MEAs through inter alia
better and clearer environmental input from experts, which has been a long standing issue on
the  agenda of the WTO Committee on Trade and Environment (or CTE). In this connection,
possible  options  to  be  explored  could  include  more  systematic  recourse  to  article  13  DSU
(according  to which  each  panel  has  the  right  to  seek  information  and  technical  advice  from
any individual  or body  which it deems  appropriate). The 1996  CTE report  to the Singapore
Ministerial  already  recognised  “the  benefit  of  having  all  relevant  expertise  available  to  all
WTO  panels  in  cases  involving  trade-related  environmental  measures,  including  trade
measures taken pursuant to MEA’s”. In addition, the regular invitations by the CTE to certain
key MEA Secretariats to observe negotiating sessions marks a useful improvement of WTO
practice since Doha. However, the DDA mandate on MEA observership, which instructs the
CTE to negotiate criteria for granting observer status for MEA Secretariats, is much broader
than this.  In addition, the CTE debate on this should be held independently from the ongoing
debate in the General Council  on observerships in the WTO, which has made no progress for
a long time (due to the political implications surrounding the status of the Arab League). Our
ideas to deal with that broad DDA mandate have yet to receive detailed analysis in Geneva:
this should be a stronger focus of work from now on.

On market access-related issues, the work on environmental services requires a political push.
On  environmental  goods,  it  needs  to  be  made  clearer  to  our  trading  partners  that  the  EU  is
looking for an acceptable outcome reflecting the interests of both developed and developing
countries.  There  is  no  question  of  the  EU  embarking  in  some  sort  of  frontal  assault  on
established  orthodoxy  in  the  goods  area  in  Geneva.  Nor  can  there  be  any  question  of
importing  countries  being  asked  to  sacrifice  the  integrity  of  their  domestic  regulatory
autonomy in order to boost imports from other countries in contravention of environmental or
other standards. There should, however, be scope between these  extremes for improving the
conditions  of  trade  in  environmental  goods  within  the  non-agricultural  market  access
negotiations.

12

The EC also intends actively to contribute to discussions on Trade and Environment  related
assistance,  whether  in  the  CTE  or  in  the  Committee  on  Trade  and  Development  (or  CTD)
with  the  aim  of  fostering  WTO  activities  in  this  particular  field,  in  close  cooperation  with
other international organisations.

In  the  rules  area,  the  work  on  subsidies  in  the  fisheries  sector  is  central  to  our  trade  and
environment philosophy and also admitted by most to be core business for the WTO. The EU
must continue to be a leading player here.

Finally, the EC should also further  consider how to render more operational   paragraph  51
from the Doha Declaration, which instructs the  CTD  and  CTE to act as a  forum to  identify
and  debate  developmental  and  environmental  aspects  of  the  negotiations,  so  as  to  ascertain
whether  and  how  environmental  objectives  are  being  appropriately  reflected  in  the
negotiations.

Geographical Indications

The global economy has not produced  global demand for the same product everywhere. On
the  contrary,  very  many  products,  from  food  and  drink  to  handicrafts,  are  crafted  to  reflect
local strengths and to meet the specific needs of local markets.

The notion that a local product should brand itself on the basis of its provenance is universally
accepted as a potentially useful tool for business development. It even lies at the heart of the
development  of  wine  production  in  many  new  global  players  during  the  last  20  years.  It
equally  lies  at  the  heart  of  rural  development  policy  in  many  countries,  the  most  notable
recent  example  being  Thailand.  So  called  GIs  are  a  marketing  tool,  a  store  of  value  and  a
source  of  legitimate,  proprietary  pride  for  those  who  produce  in  a  way  that  builds  on  the
strength of their local  roots. This proposition is  widely  shared  by  the  developing  as  well  as
developed countries.

More controversial is the best global legal framework within which to empower businesses to
develop GI strategies should they so wish. More controversial still is the potential adjustment
costs where the development of a better legal framework  creates  not  just long-term benefits
for  everyone  but  short-term  adjustment  challenges  for  those  who  may  be  prevented  from
developing certain strategies or required to adjust established strategies.

No one therefore can argue that GIs are a matter of universal consensus. But they are a matter
of global  economic potential, and  a negotiation to further develop the  existing framewok  in
the WTO can enable all the players to balance off the costs and benefits so that all can gain.
Three  key  issues  lie  before  us:  whether  the  current  regime  for  the  protection  of  wines  and
spirits GIs, which has stood the test of time since the creation of WTO, can now be developed
over  a  suitable  transitional  period  through  the  establishment  of  a  register  for  all  wines  and
spirits  GIs  world-wide.  A  second  issue  is  whether  the  tried  and  tested  wines  and  spirits’
regime should not be extended to other products. Finally, in the agriculture context, there is a
question whether we can address multilaterally the rolling back of certain GI use in countries
where the GI was not originated: this is provided for in the TRIPS agreement, but has so far
been pursued in bilateral and not in multilateral negotiations.

The  EU  has  pursued  a  clear  and  coherent  commercial  strategy  on  this  cluster  of  issues.
Nevertheless, there continues to be a very substantial gap between the EU’s ambitions in this
field and the willingness of an important number  of WTO  Members to accept a meaningful
outcome. Since it is clear that the EU cannot accept the proposals of some partners to abandon

13

this part of the negotiating agenda agreed at Doha, either in the context of IPR as such, or in
the context of agriculture, we have to intensify our work to build sufficient trust on the part of
our partners to persuade  them  to  show  the  necessary  flexibility. Persuasion  and  pragmatism
are the tools we need to employ in this task.

The EU  has signalled  already  its  willingness to  offer  significant  flexibility  as  to  the  precise
arrangements for the creation of a multilateral register.  Our position is clear: we are looking
for a binding register, but with a carefully defined start-up phase of appropriate length.  We
believe that we should be able to bridge the gap with other WTO members, who are currently
limiting  their  ambitions  to  a  non-binding  register  with  a  mechanism  for  its  future  evolution
towards  full  legal  status.  The  launch  of  negotiations  on  extension  is  an  important  EU
objective  in  its  own  right,  but  is  also  the  key  to  create  broader  interest  in  the  overall  GI
process in the WTO. Developing countries, in particular, are identifying a  growing  range of
GIs that could be of interest to them, both at home and on export markets. It will be important
to signal to these countries that the EU will continue to support negotiations on extension of
GI protection that offers developing countries a concrete chance to pursue their own interests
in this field, and not something that is exclusively geared to the protection of EU interests.

As regards the list of GIs transmitted to our partners before Cancun, it is important for the EU
to  finalise  rapidly  any  additions  needed  to  take  account  of  enlargement,  and  to  pursue  a
reasonable  and  contained  approach  to  this  negotiation.  We  shall  have  to  make  it  clear,
however, that the progress on this list is not a substitute for progress on a multilateral register,
or  on  the  extension  of  IPR  protection  for  other  GI  products  and  that  all  concrete  results  on
three sets of issues need to be obtained.

Rules, including those covering Regional Trade Agreements

The negotiations  on rules (anti  dumping,  subsidies  and  regional  trade  agreements)  were  not
discussed  at  Cancun.  When  work  on  the  DDA  resumes,  these  negotiations  should,  in
accordance with the Doha mandate, move into a more intensive negotiating phase.

Both on anti  dumping  and subsidies, the EU  continues to have a basic  economic  interest  in
stronger disciplines that will reduce the scope for the rise in protectionist and trade distorting
measures  that  we  have  witnessed  in  recent  years.  This  should  remain  our  approach  to
negotiations.  The  EU  has  long  pursued  the  aim  of  balanced  trade  defence  rules,  with  the
objective  of  protecting  European  industry  from  the  effects  of  unfair  practices,  but  without
falling into the trap of countering a trade distortion with another trade distortion. As a result,
EU trade defence mechanisms have always applied stricter criteria and have included stricter
provisions than those of other WTO Members, and continue to do so (e.g. mechanisms such
as  the  “lesser  duty  rule”).  The  positions  taken  by  other  Members  on  these  issues  and  the
outcome  of  Cancun  only  reconfirm  the  need  to  negotiate  ambitious  and  trade  liberalising
improvements to these rules. Our objectives  in  the  subsidies  area  are  similar,  where  too  we
seek improved and more transparent disciplines, including in the area of fisheries. Here too it
is time to move to a more substantive phase of work.

As  regards  Regional  Trade  Agreements,  the  EU’s  experience  shows  that  these  agreements,
provided  they  adhere  strictly  to  the  conditions  laid  down  in  Articles  XXIV  GATT  and  V
GATS,  can contribute  to the  functioning  of  the  multilateral  trading  system.  The  recent  drift
towards very partial, sector specific “free trade areas” between some Members is, however, a
matter  of  concern.  The  EU’s  position  has  been  based  on  the  need  to  clarify  the  margins  of
ambiguity  in  these  rules,  so  as  to  strengthen  the  complementarity  of  bilateral  and  regional
liberalisation with multilateral liberalisation. In the wake of Cancun, an increasing number of

14

WTO  Members  appears  tempted  to  pursue  RTAs/FTAs  as  an  alternative  to  multilateral
liberalisation.  Worse still, this trend  also  extends to  a  number  of  bilateral  tariff  agreements,
hitherto  justified  under  the  Enabling  Clause,  the  role  of  which  should  be  re-examained  to
ensure that arrangements established under it are brought under stronger multilateral control
and  are  more  transparent  This  makes  it  even  more  imperative  to  clarify  the  applicable
standards, and to tighten multilateral scrutiny of these putative RTAs, so as to ensure that any
such agreements are genuinely trade liberalising and supportive of multilateralism, and do not
distort  markets,  restrict  trade  with  other  Members,  or  undermine  MFN-based  liberalisation.
The  EU  should  firmly  reject  any  attempt  either  to  weaken  the  rules  governing  RTAs  or  to
argue that they should escape multilateral disciplines in the first place.

More generally the EU has, following Cancun, posed the question as to whether it should now
give more priority to bilateral and regional FTAs. Many WTO Members – including the US
and some Asian developing countries – have announced that they will seek to intensify their
networks of FTA relations in parallel with the WTO negotiations, or as a possible alternative,
given the absence of progress at the multilateral level. The question is whether the EU should
follow suit, or whether a major shift in our policy would disrupt multilateralism or be inimical
to our own interests. The conclusion we draw is that the broad lines of our current policy and
negotiating  programme  should  remain,  and  that  in  order  not  to  undermine  progress  in  the
DDA we should be careful not to shift the balance significantly further towards bilateralism.
At the same time we also concluded that this continuity in approach was quite consistent with
a  possible  expansion  of  our  network  of  bilateral  and  regional  agreements  if  persuasive
economic or other reasons present themselves. This will require periodic reassessment.

Development Issues

In  the  aftermath  of  Cancun,  a  number  of  voices  have  questioned  whether  the  DDA  is  truly
capable of delivering its promises for development and/or whether WTO Members are truly
committed  to  the  development  dimension  of  the  DDA.  The  integration  of  developing
countries into the world economy is a necessary condition for development. Such integration
will  be  deeper  and  fairer  if  anchored  in  the  multilateral  trading  system.  To  this  end,  the
potential  of  the  Doha  Development  Agenda  remains.  The  process  so  far  has  been  far  from
easy,  however,  and  WTO  Members,  both  developed  and  developing,  have  at  least  partly
fallen into the trap of looking at the development dimension of the DDA through the lenses of
the very narrow notion of “special and differential treatment” that prevailed under the GATT
and that has proven ineffective over the years. The critique of this notion has advanced at the
theoretical level in the WTO, but this has not sufficiently filtered through to the negotiating
process.

The  EU  should  therefore,  when  negotiations  resume,  work  hard  to  secure  genuinely  pro-
development  outcomes  in  all  areas  of  the  Doha  work  programme,  in  line  with  the  stress
placed  on  this  in  earlier  Council  Conclusions.  The  lines  of  action  to  achieve  this  outcome
remain those identified by the Commission in the September 2002 Communication on Trade
and  Development,  and  subsequently  endorsed  by  the  Council:  (a)  market  access,  (b)
multilateral  rules,  (c) 
the
mainstreaming of trade related assistance into Poverty Reduction Strategy Papers and similar
strategies.  It  is  evident  that  the  biggest  developmental  gains  of  the  DDA  will  come  from
ambitious  trade  liberalisation  and  the  strengthening  of  multilateral  rules.  At  the  same  time
Cancun has shown the persisting limitations to the capacity of the poorer developing countries
to negotiate effectively and in a timely way even on issues of great importance to them.

trade-related  assistance  and  capacity  building, 

including 

15

As far as market access is concerned, there is an ever growing wealth of evidence, as noted in
the  preceding  sections  of  this  Communication  on  agriculture,  services  and  non  agricultural
market access, that development gains will only be reaped if developing countries themselves
also make a contribution to the liberalisation process according to their level of development,
and begin to open markets to each other. Economic growth and integration will not take place
through non-participation.

Equally  compelling  is  the  evidence  that  development  will  also  be  best  served  if  developing
countries  progressively  commit  themselves  to  stronger  multilateral  rules,  and  benefit  from
similar  commitments  taken  by  others,  rather  than  by  seeking  permanent  exemption  from
WTO  disciplines.  The  original  role  of  exemptions  and  transitional  periods  was  to  allow
developing  countries  the  time  to  implement  rules  that  should  in  principle  benefit  them  as
much as they benefit developed countries, but which would in the short term unduly stretch
their  resources.  This  has  been  all  too  often  forgotten:  developing  countries  have  too  often
relied on exemptions and transitional periods to postpone indefinitely the assumption of new
obligations.  Developed  countries  have  too  often  found  it  convenient  to  grant  developing
countries  exemptions  and  transitional  periods  instead  of  taking  a  hard  look  at  whether  the
rules being negotiated were indeed suitable for all Members, albeit in different time horizons.

To some  extent this  philosophy of “special and differential  treatment” has  been  distorted  to
the point of identifying the development dimension of the WTO with permanent exclusion of
developing countries from any meaningful obligations, in respect of both market access and
rules.  This  line  of  thought  has  been  especially  troublesome  in  the  DDA  discussion  on
implementation and special and differential treatment, which is all the more disturbing, given
the  potential  of  the  work  programmes  on  both  implementation  and  special  and  differential
treatment  to  contribute  to  development  if  they  are  approached  in  a  rational  and  critical
manner.  It  has  also  spilled  through  into  the  negotiations  on  agriculture  and  non-agricultural
market access.

The experience of two  years of work since  Doha suggests  that  both  subjects  have  lost  their
sense of direction and need to be restored onto a firmer footing and with a clearer sense of the
long term objectives driving them. Unless this sense of direction is restored Members of the
WTO  will  continue  to  be  frustrated  about  the  lack  of  practical  progress  on  SDT  and
implementation. This means at least three things. First, both work programmes will only lead
to serious results if formal negotiations take place. The EU was ready to support negotiations
in  Cancun  and  should  remain  ready  to  do  so  in  the  context  of  a  re-launched  DDA  with
satisfactory  overall  balance,  in  which  negotiating  groups  should  be  entrusted  with  dealing
with each SDT and implementation issue.

Second,  a  more  serious  focus  should  be  placed  on  finding  solutions  to  the  problems
experienced by the most vulnerable Members of the WTO – the Least Developed Countries,
small  economies,  landlocked  developing  countries  and  any  others  particularly  vulnerable  to
economic shocks or with particularly weak economies or infrastructure, or who remain highly
dependent on preferential access and revenues from tariffs. These Members are in the greatest
need of flexibility in the application of WTO rules, of development aid to remedy supply side
weaknesses, and of measures to improve their access to markets. Work should be guided by
the  principle,  embodied  in  the  WTO  rules,  that  as  Members  develop,  they  would  be  in  a
position to  assume  greater  commitments  and  make  a  greater  contribution  to  the  multilateral
system.  Nor  should  these  commitments  be  seen  merely  in  terms  of  mercantilistic  exchange
with  developed  countries.  There  is  no  reason,  for  instance,  why  at  least  the  more  robust
developing economies  should not extend to other  developing countries tariff preferences, or
extend to Least Developed Countries duty and quota free treatment. The G20 countries could

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be invited to consider what preferences they are ready to extend to the G90 countries. Such
improved  access,  together  with  support  for  supply-side  reforms  will  mitigate  the  impact,  if
any,  of  reductions  in  margins  of  preference  brought  about  by  further  multilateral  trade
liberalisation.

Third,  as  regards  the  negotiation  of  greater  flexibility  for  developing  countries  in  the
application of WTO rules – which is the core of the SDT work programme – the EU should
only support the principle of permanent waivers or exemptions from basic WTO provisions in
exceptional cases, limited to the LDCs and other similarly weak Members of the organisation,
and where this helps, rather than hampers, development.

Last  but  not  least,  it  is  not  enough  that  the  EU  and  Member  States  re-affirm  their  strong
commitment – political and financial – to trade-related assistance and capacity building, in the
WTO and elsewhere. This is an obviously necessary condition, but far from a sufficient one.
The WTO Technical Assistance programme has suffered from a number of teething problems,
from  a  mismatch  between  the  financial  resources  committed  by  WTO  Members  and  the
organisational  and  human  resources  capacity  of  the  WTO  itself  to  implement  it,  as  well  as
from insufficiently clear political guidance from WTO Members as to the strategic direction
of the programme.

Assurances need to be repeated as to the continuity of the financial commitment of developed
countries. However, the EU should also press for the WTO as an organisation to be given the
tools to do the job, beginning with more and better human resources. The WTO must become
better at identifying the needs of developing countries in this area, relying more on the work
of  WTO  bodies  and  Committees,  including  specific  input  from  the  Trade  Policy  Review
process,  and  bearing  in  mind  that  those  developing  countries  who  are  in  greater  need  of
assistance are those least able to articulate convincingly those needs. The focus of WTO-led
trade-related assistance must shift from explanation and  awareness  raising  to  tackling in the
very short-term the very real lack of negotiating  capacity  and  ability  to  participate  in  WTO
work, and laying the foundations for the implementation of future WTO agreements, together
with other multilateral institutions and bilateral donors.

Improvements to the Functioning of the WTO

Finally,  although  as  noted  above  the  failure  of  the  Cancun  ministerial  was  due  largely  to
substantive  differences  amongst  Members, 
important  organisational  and  procedural
shortcomings  also  contributed  to  the  breakdown.  WTO  Members  have  begun  to  recognise
that,  unless  these  organisational  shortcomings  are  quickly  remedied,  they  will  continue  to
impede any future efforts to resume, conduct and conclude negotiations. The EU for its part,
has asked the – far from rhetorical – question as to whether improvements are needed to the
functioning of the WTO. The EU should now put forward a number of improvements, notably
to  improve  the  preparation  and  management  of  ministerial  conferences,  with  the  aim  of
facilitating  more  efficient  negotiations  and  decision  making  amongst  an  ever-growing
membership. In doing so, the EU has focussed on changes that  could be introduced  rapidly,
without changing the basic rules or constitution of the WTO, and without distracting  in  any
way from the substantive negotiations.  For instance, it should be possible to agree in the short
term to a better definition of the role of the host of Ministerial conferences, or on the need to
appoint  “facilitators”  at  Ministerial  level  earlier  in  the  process.    Equally,  there  is  a  need  to
improve the ability of smaller (and non-resident) delegations to negotiate effectively both in
the  Geneva  process  and  at  Ministerial  meetings:  technical  assistance  is  certainly  part  of  the
solution here. The EU should raise the above mentioned proposals in the WTO in the coming

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weeks  so  as  to  ensure  that  the  necessary  changes  in  organisation  and  procedure  are  put  in
place in good time and actually facilitate the building of consensus, rather than hinder it.

Conclusions

This paper attempts to draw comprehensive conclusions from the Commission’s consultation
and  reflection  over  the  last  two  months,  taking  full  account  of  views  expressed    in  the  133
Committee, by  Members of the  European  Parliament  and  elsewhere.  It  also  responds  to  the
request of the European Council that the EU reflect on its multilateral strategy as part of an
effort to relaunch the Doha Round. It has tried to identify, in relation to the different areas of
the DDA, the actions needed from ourselves and from our trading partners, who also need to
show  their  commitment  to  the  negotiating  process.  And  this  document  tries  to  provide  an
answer at least in part to the four basic questions posed by the Commission shortly after the
failure of the Cancun meeting.

The  Commission  believes  that  the  approaches  outlined  in  this  paper  will  enable  the  EU  to
play its role in getting negotiations back on track, and this  time  on  a more  solid  basis. This
must  be  our  objective.  Following  further  discussions  in  the  Council  and  the  European
Parliament  on  the  approach,  and  taking  account  of  any  views  expressed,  it  would  be  the
intention of the Commission to use the approach set out in this document as a basis on which,
in cooperation with our WTO partners, to seek a relaunch of the Doha negotiations.

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