This new position has indeed had a major impact on the conduct of the negotiations. Although transatlantic tensions still exist, often over issues such as regulations regarding biotech food and the use of place names for trademarks, the past five years has seen a noticeable convergence of EU and US positions on agricultural trade rules. The conflicts that are prolonging the Doha Round agricultural talks are more often between the US and the EU on the one hand and developing countries on the other. Both the US and the EU have agreed that there will be significant cuts in tariffs, subject to partial exclusions for sensitive products, and major reductions in the allowable level of trade-distorting domestic support. The elimination of export subsidies is no longer a significant point of contention, although there are still differences in the area of food aid.

The main reason why the EU can be so much less defensive in its approach to trade talks is in the progress it has made with domestic reform of agricultural policy. The MacSharry reforms of 1992 allowed the EU to agree to disciplines on domestic and export subsidies in the Uruguay Round Agreement on Agriculture (URAA), as well as resolving the oilseed controversy. Cereal prices were cut to bring them closer to world prices and oilseed hectarage was restrained. Payments that were made in compensation for price cuts were placed in the Blue Box, and thus avoided mandated reductions. Support given through administered prices also declined, in part as a result of the use the difference between these prices and fixed reference prices for the calculation of the subsidy element. So the partially-reformed CAP had no difficulty staying within the bounds of the EU’s schedule of subsidy reductions in the first few years.

Further reforms have had a similar impact, lowering the level of trade-distorting subsidies and making it easier for the EU to contemplate and accept further restrictions on agricultural policies in the WTO. In this connection, the changes in 1999 (the Agenda 2000 reforms) and the subsequent significant changes in 2003 and 2004 under the leadership of Commissioner Fischler have continued and developed the approach taken by MacSharry. Price support has been removed or weakened for many commodities, and payments are now made to farmers on the basis of historical production of a wide range of products with no obligation to produce any particular product to claim payment. This “Single Farm Payment” has made the CAP significantly more consistent with the “tariffs and decoupled payments” model that underlies the URAA.

To what extent would a successful conclusion of the Doha Development Agenda (DDA), along the lines of the modalities in the Revised Draft Modalities paper of February 8, 2008, require further changes in the Common Agricultural Policy? Will those changes be made easier by corresponding disciplines on the domestic programs of other countries? How much increased market access is likely to be generated as a result of cuts in tariffs that would be required of the EU? Can the EU expect to expand its own exports of agricultural products as a result of the tariff cuts of others? Will the termination of the EU’s use of export subsidies to balance its internal market have any significant impact on price levels and on world market conditions? And to what extent will the modification of the export policies of competitors help the EU to move away from export subsidies? What other issues will the EU insist on as it moves towards a package that is acceptable to Member States?

This paper attempts to address these issues, as a way of exploring the domestic and international implications of a Modalities agreement. The first section of the paper gives some background information on the nature of the CAP as it relates to the disciplines introduced in the URAA. This section is useful to give some perspective on the potential impact of the DDA as it relates to the recent development of the CAP. A second section reviews briefly the main “offensive” and “defensive” positions of the EU, so as to be able to evaluate the extent to which the modalities draft addresses these issues. This perspective is relevant to the political reactions that will determine the acceptability of the Modalities. The next three sections discuss in more detail the implications of the domestic support, market access and export competition modalities, and give an interpretation of the WTO disciplines as a constraint on future policy developments. A final section attempts an overall assessment of the impacts of the suggested modalities on the EU and on its negotiating interests.

The imposition of additional WTO disciplines on domestic support is a major issue for the United States. Higher world prices for major export commodities have reduced the amount of support provided to U.S. farmers in recent years but the long drawn-out process of trying to conclude a new Farm Bill reflects the continued political importance of farm programs. Analysis of the most ambitious provisions of the draft modalities suggests that if a relatively high price environment continues the United States will be able to adapt to the new WTO domestic support commitments by making modest adjustments in its domestic policies. There are issues with a limited number of commodities. Cotton poses problems for meeting product-specific bindings on blue box support and dairy and sugar pose problems for meeting product-specific AMS commitments. These could be addressed by changing support programs in order to reduce notified support.

The strengthened disciplines on domestic support would have the effect of squeezing out a lot of the “water” in the amount of support that the United States can provide to U.S. farmers and stay within its WTO commitments. The United States would still have the option of changing the composition of support – expanding the use of the green box and making use of non product-specific support up to the limit imposed by de minimis and the overall OTDS binding. Nevertheless, significant reductions in the OTDS and the total AMS severely constrain the room to maneuver for support that is most closely linked to prices. However, if the optimistic price environment assumed by the U.S. Department of Agriculture does not materialize, limits on the total AMS and some product-specific AMS limits could well be exceeded unless alternatives to current support policies were found.

With respect to market access, while U.S. agricultural tariffs are relatively low on average there are some high tariffs on products such as sugar, meats, dairy products and beverages and tobacco. The relatively low tariff average means that around 90 percent of the tariff lines fall in the first band of the proposed tariff-cutting formula in the draft modalities, and hence are subject to the lowest proposed reductions. Despite this, the cuts in agricultural tariffs resulting from application of the formula are relatively substantial, with the trade-weighted average MFN applied rate falling from 7.9 percent to 3.5 percent. Application of the proposed tariff escalation formula has virtually no impact on the average tariff, while application of the tropical products formula would reduce the post-round tariff from 3.5 percent to 3.2 percent with the largest impact on sugar, dairy products and tobacco. The sensitive product option is likely to have a relatively small impact on U.S. tariffs. This is largely because of the requirement for a minimum average-cut of 54 percent on all products, including sensitive products. As the number of sensitive products subject to smaller-thanformula cuts increases, cuts on other products must be increased proportionally to meet the 54 percent average requirement.

With respect to market access for the United States, we find that the proposed tariff formulas in the modalities would sharply reduce average tariffs facing U.S. exports – from 15.7 percent to 9.6 percent. Most of this reduction comes from a sharp fall in the tariffs applied by other industrial countries. The provisions of the tariff formula for developing countries; the higher binding overhang; and lower initial rates of applied protection imply a much smaller reduction in the tariffs facing U.S. exports in developing countries. The sensitive and special product exceptions have a relatively small marginal impact on the tariff average.

The elimination of export subsidies used by other countries (particularly, the European Union) has been a major U.S. objective in the current round of WTO negotiations. This would require the elimination of two U.S. programs (EEP and DEIP) that have not been active in recent years. The draft modalities would also require changes in U.S. export credit programs, but these have already been modified to bring interest rates in line with those charged by commercial lenders. Some additional modifications in financing terms would probably be required to ensure full cost recovery. Activity under U.S. food aid programs has been declining in recent years. The draft modalities foresee reduced emphasis on the provision of in-kind aid. This can be expected to result in less support for food aid programs among farm groups and increasing difficulties in obtaining Congressional appropriations for food aid programs.

The analysis in this paper concludes that the EC’s interpretation of Article 46 of the Cotonou Agreement is not only over-ambitious but largely incorrect. In this regard, it is submitted that to give effect to Article 46 of the Cotonou Agreement does not require substantive IP rules in the EC-Pacific EPA or the EPAs in other regions. At the best, general provisions on whether and how those Pacific countries that are not WTO Members would adhere to the TRIPS Agreement in terms of Article 46.2 of the Cotonou Agreement would suffice. There is no other mandatory requirement under Article 46 of Cotonou. Other matters to consider would include whether:

• On the basis of empirical evidence the Pacific countries levels of development are consistent with joining the four conventions mentioned in Part I of the TRIPS Agreement; and

• It is necessary and beneficial, especially to the Pacific countries, to conclude agreements for protecting trademarks and geographical indications.

The objectives proposed by the EC Non-Paper, that is ensuring an adequate and effective level of IP protection and strengthening regional capacity to deal with IP, are also difficult to rationalise as justifying substantive provisions in the EPA. This is because first, the EC provides no reasoned basis or evidence that the TRIPS standards are insufficient to ensure an adequate and effective level of protection of IPRs in the Parties and second, because there is no basis to argue that a regional approach to IPRs in the Pacific needs to be introduced and fostered based on legal obligations owing to the EC. In sum, both the objectives suggested by the EC for an IP Section in the EPA with the Pacific countries, in the absence of further explanations and/or evidence, offer little or no justification for including IP in the EPA beyond the minimum level required by Article 46 of the Cotonou Agreement. In particular, the proposed objectives do not offer a basis for clarifying and complimenting the TRIPS provisions on the various issues listed in the Non-Paper as possible elements. In this context, the paper arrives at the following conclusions and recommendations with respect to each of the eight elements proposed by the EC as the basis for an IP section in the EC-Pacific EPA. On:

WIPO Internet Treaties & Protection of Computer Programmes & Databases

1. Considering the lack of empirical evidence on the advantages of the Internet treaties, taking into account the minimum requirements of the Cotonou Agreement regarding the protection of performers and producers of phonograms, there is no convincing case for the inclusion of detailed rules in the EC-Pacific EPA on these issues. Benefits for the Pacific countries are at best uncertain and hence this element should not be considered for inclusion.

2. With respect to databases especially the protection through a sui generis right, EC’s own evaluation has shown such a right to have limited, if not, negative value. The economic value (impact) of the sui generis right is unproven 10 years since the promulgation of the Directive on databases. In light of such damning evaluation, it is difficult to see how such protection could benefit Pacific countries with their limited sophistication in electronic and other databases.

Well-Known Marks

3. Caution should be exercised in considering the application of the WIPO Joint Recommendations. The possible implications of elevating these soft law rules into treaty obligation should be addressed.

4. Regarding the adherence to the Madrid Protocol, while Article 46 of the Cotonou Agreement does not require such adherence, Pacific countries could consider adherence to the Protocol though more work needs to be done on the actual benefits that may accrue to them.

Protection of Geographical Indications

5. Only an empirical study can help Pacific countries make a determination of whether the advantages of protecting geographical indications outweigh the disadvantages and vice-versa.

6. Overall, since negotiations on geographical indications in the EPAs should be predicated on identification of products of interest to the Parties, before considering any commitments in this area, Pacific countries have to identify their products of interest, if any, and to consider the market value (potential) as well as other challenges that may arise. The enormity of this task suggests that this process can not be completed in the six months that remain before the end of the EPA negotiations.

Protection of Textile Designs

7. The protection of textile designs has the potential to benefit Pacific countries. However, the proposal to introduce new EPA obligations on areas of interest to the EC in the area of industrial designs while maintaining the TRIPS standard for textile protection does not make sense. There is little to gain for these countries from the proposed approach to textile designs protection.

Relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD)

8. Simply saying that the TRIPS Agreement should be implemented in line with the CBD would add little, if anything to the quest by developing countries and LDCs including Pacific countries to secure mandatory disclosure requirements. Since both the EC and the Pacific countries, by virtue of Article 46.2, agree to adhere to both the TRIPS Agreement and the CBD, it is implicit that they would have to implement the treaties in a mutually supportive way as they would do with any other treaties. It appears that the EC has placed this element into the Non-Paper essentially as a bargaining chip with no intention to move anywhere closer to what developing countries and LDCs are seeking on the subject.

Public Health

9. As in the case of the relationship between the TRIPS Agreement and the CBD, there is very little a provision such as that proposed by the EC would add to existing international obligations and objectives with respect to IP and health. The only value that could be added for Pacific countries with respect to the Doha Declaration and related decisions is if the EC agreed to provide the benefits under the 30 August 2003 Decision to all Pacific countries irrespective of their membership of WTO. It should be noted, however, that the Agreement of the EC to extent the benefits of the Decision to all Pacific countries should not be a basis for the EC to claim reciprocity vis-à-vis its interests on IP.

IPRs and Genetic Resources, Traditional Knowledge and Folklore

10. No positive and practical solution is offered by the EC’s proposal in the Non-Paper on this subject. The EC justifies it approach by taking refuge in the Cotonou Agreement Article 46.1 caveat that the EPA should not prejudice the position of parties in multilateral negotiations. Consequently, the proposed approach to genetic resources, traditional knowledge if implemented as proposed by the EC in other regions, would add no value and offer no benefit to Pacific countries.

Plant Variety Protection

11. For Pacific countries which do not have developed plant variety protection systems, it is difficult to see why they should take on more onerous obligations than required under the TRIPS Agreement. Unless, there is more compelling evidence there seems to be no basis to ask the Pacific countries to consider adherence to UPOV 91 which is TRIPS-plus.

Enforcement

12. Judging from the ECOWAS and CARIFORUM texts, and in light of the areas proposed to be covered on enforcement under the EPA with Pacific countries, the direction taken by the EC on enforcement would result in a range of specific problems and challenges for Pacific countries including the following, among others: loss of flexibility to determine appropriate method of implementing enforcement under TRIPS; lack of safeguards and balancing mechanism to protect the rights and freedoms of third parties including to prevent abuse of procedures by right holders; creation of liability for intermediaries; far-reaching and unproportional evidence gathering capabilities; and basing the assessment of damages on the consideration of extraneous factors.

Overall, it can be concluded that while there are a number of areas such as protection of traditional knowledge and folklore in which Pacific countries have a beneficial interest, the proposed elements on these issues add no value. Going by the textual proposals on these issues in other regions it is unlikely that Pacific countries could get positive commitments from the EC on these issues. Consequently, the combination of the time-factor (six months), the TRIPS-plus implications of many of the elements suggested by the EC in the Non-Paper, the challenges that would face non-WTO Pacific countries to even adhere to TRIPS and the general level of development in these countries, it is strongly recommended that Pacific countries do not agree to the inclusion of an IP section in the EC-Pacific EPA.

A number of Asian countries have developed UPOV-style laws or have joined and ratified UPOV. Whilst this helps satisfy their commitments to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), there have been various criticisms of the appropriateness of UPOV plant variety protection systems for developing country needs. The UPOV model provides a generic solution, meaning that initially it is likely to be easier to administer, but in the long run could end up only protecting the interests of large-scale commercial breeders and biotechnology companies. A number of these countries have utilised the flexibilities in UPOV and TRIPS to include additional elements in their laws that address their concerns. For example, they have included “disclosure of source and/or origin requirements” (in the Indian, Thai, Singaporean and Vietnamese laws), farmers’ rights elements (see the Indian law), prior informed consent (PIC) procedures and access and benefit sharing (ABS) arrangements. Some countries from the region have opted to develop truly unique laws for PVP – most notably India and Thailand. Across Asia a range of other related agro-biodiversity, community and indigenous rights laws are also being developed, which could see a broader range of rights-based approaches offering protections for indigenous and local communities, and over TK.

Drawing on the experiences of different countries throughout Asia, this paper suggests a range of potential components and elements that can be introduced into sui generis laws for PVP and TK. For simplicity, throughout the paper the main recommendations of each section have been summarised for consideration. Namely, countries might extend PVP coverage to cover domestic or extant varieties and farmers’ varieties (including both local and wild). They may wish to explicitly detail requirements for access to genetic resources, as well as benefit sharing arrangements arising out of their utilisation and commercialisation. Countries will need to carefully consider how to equitably distribute funds or other non-monetary benefits via appropriately administered funds, directly to communities (where the variety has a limited distribution), or by establishing beneficial projects for farmers. A range of other incentives could be offered (as part of a sui generis law or separately) by the government or other projects to actively promote the breeding, development and consumption of domestic, local and wild varieties. These could include government support of research and breeding programmes, support of traditional seed exchange networks, providing standard labelling and indicative marks, establishing “protected commons”, or by targeting consumers.

Prior informed consent procedures provide an important process for the respect of sovereign state control over genetic resources, as well as for local community or farmer control. Countries could explicitly detail elements such as those in the Bonn Guidelines (competent authorities, timing and deadlines, specification of use, procedural aspects, and mechanisms for consultation), or develop their own procedures to assure transactions are made under mutually agreed terms.

Additionally, treaties such as the International Treaty on Plant Genetic Resources for Food and Agriculture, and laws in countries such as India, provide impetus for the protection of farmers’ rights. These laws explicitly allow farmers to save, use, sow, resow, exchange, share, or sell their farm-saved seed. Sui generis laws may include elements for the protection of traditional agricultural knowledge, as well as the inclusion of farmers in decision-making and policy-making. Other elements which are relevant to farmers’ rights might include the restriction of potentially harmful technologies, and technologies contrary to the maintenance of public order. In India, for example, Genetic Use Restriction Technologies (GURTS) have been restricted by law. Deceptive or misleading marketing practices may also impinge upon farmers’ rights to food sovereignty, and such practices have been targeted by PVP laws in India and Vietnam.

It is likely that the protection of TK cannot be achieved through any singular means. Because we are generally referring to biodiversity-related TK here, the protection of genetic resources often entails protection of TK either explicitly or implicitly. Therefore a combination of the above components (i.e. a disclosure of source/origin requirement, ABS measures, PIC, promotion of local and domestic innovations, and farmers’ rights provisions) will have cumulative effects towards TK protection and promotion. Additional measures could include having accessible and clear databases and registries containing information on genetic resources, their distribution, associated TK, and potentially even associated customary protocols. The documentation or at least recognition of customary protocols could help strengthen community and indigenous rights, as could more explicit legal assertions such as those in the Philippines.

Countries may wish to draft different sui generis laws for PVP and TK protection. Indeed, a one-size-fits-all law may be inoperable or dysfunctional by attempting to resolve too many concerns. Countries also need to recognise that over- regulating agricultural genetic resources may have the negative consequence of discouraging innovation, and may be contrary to the historical interdependence between countries regarding the sharing of germplasm. National authorities will need to balance these factors against desires to ensure sovereign control of biological resources. Therefore a careful selection of the most pertinent sui generis components and elements would be prudent, in order to balance the promotion of agricultural innovations and the protection of broader public interests.

National authorities should continue to closely watch the regulatory development of PVP and biodiversity laws, particularly in India and Thailand. Both these countries are on the verge of advancing the implementation of sui generis laws, which has been a considerable challenge to date. The Thai PVP law (favouring liability rather than exclusive property protections) in particular presents a model which has fewer substantial administrative burdens, and would be suitable for most developing countries in Asia.

The paper begins by briefly outlining the current conceptions of the trade and sustainable development relationship, deriving from it an implicit definition of development. It then explores the definition of development offered by Sen. In the concluding section, it asks what implications this definition has for our conception of the trade and sustainable development relationship, and what types of policies might best orient trade and trade liberalization to support the reconstituted objective of sustainable development.

In this context, the first part of this paper will outline regulations affecting the import of GMOs and GM products in selected countries, including import restrictions, risk assessment provisions and labelling requirements. While most of the attention will focus on some of the major OECD countries, including the EU, the US and Australia/New Zealand, the paper will also review regulations in key developing countries in Asia, Latin America and Africa. The second part will look at possible conflicts between national import regulations and WTO rules, in particular regarding the current and proposed EU regulations. To this end, the section will briefly outline the relevant WTO agreements; assess the trade-restrictiveness of mandatory traceability and labelling requirements; evaluate whether GMO regulations covering substantially equivalent GM products might be trade-discriminatory; look at the role of precaution as a justification for an import ban on GMOs; and briefly discuss the Cartagena Protocol on Biosafety and how its provisions might impact on a possible dispute at the WTO.

ICTSD’s conviction that fashioning a dispute settlement system that is responsive to the sustainable development goals of societies in developing and least developed countries in the WTO is strongly shared and articulated by the writers. The WTO cannot and should not avoid being a forum through which developing and least developed countries can push their development goals forward, and a fortiori, neither should its dispute settlement process. Simply put, it would have failed if it does. By thinking through some of the fundamental reasons that contribute to the “rational decision” not to initiate disputes through the WTO, Professor Gregory Shaffer raises and proposes a set of responses to some of the most debilitating problems that confront developing and least developed countries. He assesses a number of strategies that some developing countries have used, and others could consider, to mobilize legal resources and overcome at least some of the challenges that they face. He also explains how WTO remedies are structured in favour of large developed countries, and how remedies could be modified so that the WTO legal system might better promote developing country participation, which, in turn, would better promote their development interests. Mr. Victor Mosoti’s paper looks at some of the issues that African countries have been concerned with. It answers, in the affirmative the question whether Africa indeed does need the WTO dispute settlement system. He asserts that this is so because, the system is not simply or solely about disputes, it is also about the steady evolution of a corpus of important international trade law principles whose effects and applicability will continue long into the future. The system is also a key element in the international architectural framework whose decisions have momentous, if potentially negative, development implications. This paper, while augmenting the views in the previous paper by Professor Gregory Shaffer, urges that African countries should therefore be at the forefront in the on going review of the system and should be more vigorously involved as third parties in various disputes that may be of interest to them. Finally Professor Asif Qureshi’s paper addresses the development dimension in the interpretation of the WTO Agreements. He asserts that this has hitherto neither been sufficiently articulated, nor coherently structured in the architecture of international trade agreements. Developing members have expressed dissatisfaction with the record of interpretation thus far in the jurisprudence of the WTO. The dissatisfaction has focused on the results of interpretation, the approaches to interpretation, the methodology involved in interpretation and the participants engaged in interpretation. Prof. Qureshi discusses the various ways in which the development objectives could be factored into the interpretive analysis.

It is not in doubt that the importance of the WTO dispute settlement system will grow, as more and more Members begin to engage in the process. There is a definite need to ensure that the sustainable development aspirations of the poorer Members are not smothered by an unsupportive and daunting legal system. This should be the objective of Members, whichever of the recommendations on the table for the review of the Dispute Settlement Understanding that they find favourable. In producing this collection, we have worked with the authors towards this objective, with roundtable discussions and conferences with various stakeholders. We at ICTSD look forward to the opportunity to further contribute to the capacity pool by bringing to the fore the often diminutive voices of sustainable development.