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Viewing cable 05PRETORIA4756, SOUTH AFRICA: CHIEF NEGOTIATOR ADDRESSES WTO ISSUES

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Reference ID Created Released Classification Origin
05PRETORIA4756 2005-12-02 15:04 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Pretoria
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 03 PRETORIA 004756 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR AF/S, AF/EPS, EB/TPP/MTA AND BTA 
DEPT PLEASE PASS TO USTR 
COMMERCE FOR ITA/JDIEMOND 
USDA FOR FAS/ETERPSTRA, KROBERTS, AND FAS/ITP 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR ECON SF
SUBJECT: SOUTH AFRICA: CHIEF NEGOTIATOR ADDRESSES WTO ISSUES 
 
REF: A. PRETORIA 4607 
     B. STATE 211956 
     C. STATE 210829 
     D. STATE 209236 
     E. STATE 208981 
     F. STATE 207068 
     G. STATE 204611 
     H. STATE 199861 
     I. STATE 199791 
 
1. (SBU) Summary. Chief Trade Negotiator Xavier Carim told 
Econoff that the United States' proposal on agriculture had 
helped it reclaim the moral high ground in WTO negotiations 
and put the EU on the defensive.  Nevertheless, analysis 
indicated that the United States could actually increase its 
level of domestic subsidies under the proposal.  Carim 
assured Econoff that despite lowered expectations for the 
Hong Kong Ministerial, South Africa was continuing to apply 
pressure on the EU to improve its agricultural offer.  Carim 
lamented the fact that South Africa had not yet submitted a 
services offer, but said that he expected it to be submitted 
soon.  On services negotiations, Carim said that the 
discussion of quantitative targets for developing countries 
was "worrying" and "threatened to change the framework of 
GATS negotiations."  He also said that South Africa was 
uncomfortable with the line that LDCs should not be looking 
to the developed countries for greater market access, but 
rather to the larger developing countries, such as South 
Africa.  He said that South Africa and other developing 
countries wanted to "reclaim the aspect of development" in 
the Doha Round.  End Summary. 
 
2. (SBU) South Africa's Chief Director for Multilateral Trade 
Negotiations, Xavier Carim, sat down with Econoff for an hour 
and forty-five minutes on December 1 to discuss a number of 
issues related to Doha Round negotiations and talking points 
from the United States.  Carim opened by saying that while 
there was much in agreement between South Africa and the 
United States, there were "a couple of differences."  He 
particularly wanted to highlight his interest in finalizing a 
TRIPS and Medicines deliverable for the Hong Kong 
Ministerial, his displeasure at U.S. and EU efforts to sow 
dissension among developing countries, and the internal 
difficulties that South Africa had in submitting its services 
offer.  When it came to geographical indications, Carim said 
that South Africa was "on side" with the United States. 
 
Agriculture 
----------- 
 
3. (SBU) Carim told Econoff that the United States' proposal 
on agriculture had clearly helped it to reclaim the moral 
high ground in WTO negotiations.  There was the sense, he 
said, that the United States had lost the high ground when 
the 2002 Farm Bill increased subsidies, brought back 
deficiency loans, and instituted counter cyclical payments. 
A joint U.S.-EU paper on agriculture followed that, according 
to Carim, "led to the failure in Cancun."  In contrast, the 
United States' October proposal, setting forth specific 
figures, was a major move.  Thus far, Carim thought that the 
United States had played a constructive role in negotiations, 
and had managed to re-establish negotiating credibility. 
 
4. (SBU) Carim said that South Africa viewed the U.S. 
proposal on agriculture in the context of ongoing 
negotiations.  While analysis indicated that the United 
States could actually increase its level of domestic 
subsidies under the U.S. proposal, he said, "We knew that 
under the July Framework counter cyclical payments could be 
moved into the Blue Box."  He added, "We also know that 
counter cyclical payments are not the same as set asides." 
There was more negotiating to do, including on definitions 
and box criteria. 
 
5. (SBU) Carim said that he understood that for the United 
States to eliminate export subsidies and reduce domestic 
support, it needed other countries to offer greater market 
access.  However, the only defense that developing countries 
had against subsidized imports came in the form of tariffs. 
The question was which side should move first?  Carim felt 
that developed countries had to move first by declaring 
reductions in subsidies.  Only then could developing 
countries determine how much they could reduce tariffs. 
 
6. (SBU) Carim noted that the EU was clearly on the defensive 
after the United States submitted its proposal on 
agriculture.  The EU's offer of October 28 simply did not 
measure up.  He assured Econoff that South Africa was 
continuing to apply pressure on the EU to improve its offer. 
He noted strong statements recently made by the Africa Group 
in Arusha, the Africa Caribbean and Pacific Group in 
Brussels, and Commonwealth Heads of State in Malta.  He said 
that South African ministers were also aware of the need to 
press the EU at the political level, and that he and his 
colleagues continued to press EU counterparts at different 
levels. 
 
7. (SBU) Carim did not think that lowering expectations for 
the Hong Kong Ministerial necessarily reduced the pressure on 
the EU to submit a better offer on agriculture.  That said, 
the notion of lower expectations for Hong Kong did not make 
South Africa happy.  It was a reality, however. 
 
Services 
-------- 
 
8. (SBU) Carim said that he had the opportunity to discuss 
services in passing with William Jackson of USTR at the 
meeting of the Africa Group in Arusha the previous week.  He 
added that Jackson's presentation in Arusha on how the WTO 
related to Africa was very useful.  Carim lamented the fact 
that South Africa had not yet submitted its services offer, 
but said that he continued to expect it would be submitted 
soon.  All the substantive work had been completed.  What 
remained was "procedural, a political assessment." 
 
9. (SBU) Carim wanted to respond to a recent statement made 
by a USTR official to the effect that one of the biggest 
disappointments so far in the Doha Round was South Africa's 
failure to submit a services offer.  Carim explained that 
preparing the offer had been a difficult process internally 
for South Africa.  There had not been a good domestic 
understanding of trade-in-services nor of the WTO.  There was 
no statistical base upon which to structure an analysis.  He 
felt that there was a lot more work for him to do at home in 
this area, and noted that local industry was "a long way" 
from producing the type of sophisticated analysis that the 
U.S. Coalition of Service Industries (CSI) was capable of. 
(Note: Carim said that CSI had requested a meeting with him 
in Hong Kong and that he would try.)  Carim added that there 
was also the notion that now was not necessarily the time to 
submit a services offer, given the inadequacy of EU offer on 
agriculture and the fact that other countries had not stepped 
up to the plate. 
 
10. (SBU) Carim said that the discussion of quantitative 
targets for developing countries was "worrying" and 
"threatened to change the framework of GATS negotiations." 
He said South Africa had enough difficulty in putting its 
initial offer on the table, and could not now try to match 
quantitative targets.  He pointed out that compared to other 
countries, South Africa had already made substantial 
commitments in the Uruguay Round.  Fortunately from his 
perspective, he believed that the offending reference to 
quantitative targets had been removed from papers prepared 
for the Hong Kong Ministerial. 
 
Development Dimension 
--------------------- 
 
11. (SBU) Carim said that he thought that the development 
dimension of the round was getting lost in negotiating 
details and the immediacy of certain issues.  For this 
reason, South Africa and other developing countries wanted to 
"reclaim the aspect of development" in the Doha Round.  In 
fact, this was the theme of a recent speech by Deputy 
Minister for Trade and Industry Dr. Rob Davies (Septel). 
 
12. (SBU) Carim said that while development was the mandate 
of the Doha Round, over time different approaches and 
concepts had eroded it.  He felt that certain key points 
needed to be reinserted into the dialogue.  Doha should 
provide better market access for developing countries across 
the board.  Critical to achieving this was the removal of 
trade distortions in agricultural through the elimination of 
export subsidies and the reduction of domestic subsidies.  To 
increase developing country access to nonagricultural 
markets, tariff peaks and tariff escalations on products of 
export interest to developing countries needed to be 
eliminated or reduced. 
 
13. (SBU) He added that the EU was acting as if it were time 
to negotiate on nonagricultural market access and services 
issues.  However, EU demands for nonagricultural market 
access were excessive, hardly warranted by its proposal on 
agriculture.  Carim said that the EU's approach was a "recipe 
for an antidevelopment round."  He believed that a 
negotiating framework was needed to achieve a market outcome. 
 Along these lines, developing countries had distributed a 
paper in Geneva on bringing back the development agenda. 
 
Divide and Conquer 
------------------ 
 
14. (SBU) Carim told Econoff that one point that made South 
Africa uncomfortable was the line that LDCs should not be 
looking to developed countries to make greater tariff cuts, 
but rather to large developing countries, such as South 
Africa.  He mentioned the AGOA meeting in Senegal, where the 
United States was trying to align itself with subSaharan 
African countries, and the effort by the EU and the United 
States to argue that further reductions in developed country 
tariffs would only erode LDC trade preferences.  He said that 
this sort of talk was part of an effort to shift the focus 
away from the major powers and toward the advanced developing 
countries.  "It created divisions among developing countries 
and confused the message," he said.  "The ACP shouldn't put 
pressure on (the larger developing countries) not to lose 
trade preferences." 
 
15. (SBU) Carim asserted that advanced developing countries 
were prepared to make offers according to "proportionality," 
i.e., their capability to do so.  He agreed that advanced 
developing countries did have an important role to play.  He 
realized that a number of LDCs and smaller developing 
countries were vulnerable, and did not possess the productive 
capacity or infrastructure to take advantage of market access 
provided by the Doha Round.  He also realized that some LDCs 
would incur adjustment costs stemming from the loss of trade 
preferences.  In this vein, Carim viewed as useful USTR 
Portman's suggestion to scope the costs of trade preference 
losses. 
 
16. (SBU) Carim added, "Bearing in mind that we are SACU (the 
Southern African Customs Union), and that SACU contained one 
LDC, South Africa should nonetheless be looking for ways to 
assist LDC's."  Carim claimed that South Africa had already 
made substantial agricultural and nonagricultural market 
access offers.  Noting Brazil and India's recent announcement 
on LDCs, Carim was sure that these countries were also 
willing to do more. 
 
TRIPS and Medicines 
------------------- 
 
17. (SBU) Carim said that he wanted to see the medicines 
issue as it related to TRIPS resolved in time for the Hong 
Kong Ministerial.  He explained that with U.S. involvement, 
the issue was resolved in August 2003.  Two and a half years 
later, however, the resolution still has not been translated 
into the legal text of TRIPS.  There were some procedural 
issues around the fact that reference was made to the 
Chairman's statement in the text of the agreement.  The 
preamble needed to be changed and some other text shifted 
around.  He said that over the weekend, involved parties 
agreed that the Chairman would simply re-read the same 
statement made in 2003.  The problem was that some countries, 
such as Brazil and India, had not been as involved as they 
might have been.  South Africa was speaking to Brazil and 
India, as it was to members of the Africa Group.  Carim hoped 
that it was not too late for this to be a deliverable for 
Hong Kong. 
 
Geographic Indications 
---------------------- 
 
18. (SBU) When it came to geographic indications, Carim said 
that South Africa was "on side" with the United States.  He 
specifically said that South Africa "was burnt" on 
geographical indications in its bilateral trade agreement 
with the EU, and the whole notion of expanding this in to the 
WTO "did not sit well." (REF D) 
TEITELBAUM