South African Statement to the World Trade Organisation (WTO) Trade Negotiating Committee, by the Minister of Trade and Industry, Mr Mandisi Mpahlwa, Geneva

Let me at the outset indicate that the NAMA 11 Group of developing countries have issued a Communiqué outlining our common perspectives and positions on the third revision of the NAMA modalities Text of 10 July 2008. That Communiqué is available in this room. Let me also indicate that South Africa fully endorses the positions articulated in the interventions made by Brazil on behalf of the G20 [by Côte d'Ivoire on behalf of the Africa Group and by Australia on behalf of the Cairns Group].

Mr Chairman
South Africa is a strong proponent of multilateralism, and our core objective in the Doha Round has been to work to strengthen the global rules-based trading system in manner that supports the development aspirations of developing countries. In our view, an equitable and balanced trading system that fully takes into account developmental prospects would enhance the legitimacy and stability of the system. South Africa supported the launch of the Round on the basis of the mandate of the Doha Declaration that aimed to "place the needs and interests of developing countries at the heart of its work programme."

We are concerned that this injunction that we all agreed to is under threat, and therefore we believe it is necessary to reclaim the development content of the Doha Development Round. It is our view, and one shared by a great many other WTO members, that while it is of great importance that we conclude the negotiations as soon as possible this cannot be at the expense of the Round's developmental content.

In this respect, we still require an unambiguous indication that this Round will deliver meaningful outcomes in the agriculture negotiations that would lead to reform of international agricultural trade rules that allow developing countries to realise their comparative advantage as a basis for wider development. This will be the essential measure of the developmental content of the Round.

A suggestion heard repeatedly is that slow progress in negotiations on NAMA is holding up an early conclusion of the Round. The reverse is true. Substantial progress in agriculture remains the key to this Round, and its outcome will set both the pace and ambition for the other important negotiating issues. While important progress has been achieved in the agricultural negotiations, many key issues are outstanding. This includes securing meaningful and real reductions in trade distorting domestic subsidies in developed countries so as to open up production and trade opportunities to more competitive farmers in the developing world, including those in Africa. This has become more urgent with the global food crisis and, paradoxically, easier to achieve because global food prices are at record high levels.

We also require an outcome that offers greater clarity and precision on the level of tariff reductions in agriculture. Currently, the range of outstanding issues and loopholes built into the negotiations gives little comfort that the outcome of tariff reductions will result in significantly enhanced access to the markets of developed countries on agricultural products of export interest to developing countries. South Africa's assessment of implications of the agricultural modalities text for our export and development prospects is not heartening. There is no indication that South African farmers will obtain any new access into the agricultural markets of the developed countries as a result of the application of the range of flexibilities set out under the agricultural market access pillar. When we assess the proposed range of cuts on Overall Trade Distorting Support, it is clear that there would be no cuts in actual spending. Lowering the ceiling may have some value if food prices begin to fall and support levels begin to increase but there is no basis to suggest that the agricultural reform process in this Round will be anything more than moderate.

Mr Chairman
Let me turn briefly to the issues of process we have embarked on this week. Our overriding concern is that this week may not allow sufficient time for real negotiations on the range of issues that need to be settled. Our experience in the NAMA negotiations over the last two years is that the texts that have emerged at various points have consistently ignored the positions and views we have expressed as the NAMA 11. This is an issue that the entire NAMA 11 Group is deeply concerned. It would be very difficult to accept a process that delivers an outcome where our positions are either ignored or not accommodated in any meaningful way.

Herein lies the fundamental imbalance between the agriculture and NAMA modalities texts. In contrast to the logic of NAMA negotiating process and its textual iterations, the agricultural negotiations have been conducted through a carefully constructed "bottom-up" process whereby the positions of all WTO members can be found in the agricultural modalities text. This has allowed for an evolving negotiating outcome where the agricultural text captures what is agreed among the WTO members. The result has been a complex agriculture modalities text with a range of outstanding issues still to be negotiated. A second characteristic of the agriculture modalities text is that it is replete with flexibilities designed to accommodate the specific difficulties of particular developed countries. In some measure, the convergence achieved is based on the constructive approach and positions of the G20 that have aimed to find accommodation and convergence among the key players in order to advance the process.

By contrast, the NAMA modalities text is highly circumscribed and prescriptive. The text sets out a narrow range of coefficients, and offers flexibilities that have a double constraint in terms of the percentage of tariff lines and trade volumes that can be covered. In these industrial tariff negotiations, the NAMA 11 group of developing countries has been at the centre of efforts to ensure an outcome that supports our common industrial development objectives. In this respect, we cannot accept proposals that reverse the principle of less than full reciprocity in favour of developing countries. We have witnessed a range of demands that would result in an outcome where many developing countries that are required to reduce their tariffs are being required to accept reduction commitments that are deep and in excess of the cuts to be borne by developed countries. These demands are inconsistent with the Doha development mandate and cannot be a basis for concluding the Round.

While the NAMA 11 Communiqué sets out in some detail the group's common positions, I thought it would be important to highlight three key aspects. First, NAMA 11 insists that the principle of less than full reciprocity in reduction commitments must be respected in agreeing to the spread of coefficients between developed and developing countries.

Second, the NAMA 11 reiterates that an adequate level of flexibilities is an essential element of the final package. We are deeply concerned that late in the day in the negotiations, we confront new proposals on anti-concentration and sectorals that will have the effect of further limiting the already limited flexibilities and raising the overall ambition for an outcome. This will create further imbalances in the negotiating process and, coming late in the negotiations, as they have, these proposals could lead to a breakdown in this process.

Third, the NAMA 11 acknowledge the efforts to address the situations of other developing country groups, including those with low binding averages, small, vulnerable economies, recently acceded members, and the least developed countries but cannot support attempts to require commitments from these countries that are beyond their development capacity.

Mr Chairman
I would want to acknowledge the fact that there is widespread recognition among WTO members of the historic injustice that South Africa suffered in the Uruguay Round when we were obliged to take the rate of tariff cuts agreed for developed countries. This means that South Africa, and other members of the Southern African Customs Union, maintain levels of industrial tariffs are uniquely lower than would otherwise be the case. The application of the agreed tariff cutting formula in this Round would result in cuts in applied industrial tariffs on a scale and depth that is greater than the tariff cuts that would be made by developed WTO members in either NAMA or agriculture.

South Africa has been offered the possibility of between one and six additional percent of tariff lines that could be subjected to half the formula. This is offered but not given in order to mitigate the fact that sixteen percent of our tariff lines will be required to take a 30 percent reduction on the basis of a Swiss coefficient of 35. Clearly, if the coefficient is to be reduced towards the ranges that are currently set out in the modalities text, then South Africa will need a greater percentage of lines to be covered under the flexibilities. Even with such flexibilities, South Africa will be making cuts in applied rates of on over 60 percent of our tariff lines at rates of between 30 to 40 percent in our most sensitive sectors.

Anything short of a significant expansion of the flexibilities and an appropriate increase in the level of coefficient will be politically and socially very difficult to accept in our country which has unemployment rates of between 23 to 26 percent and where we are straining to build a more diversified industrial base. Any outcome cannot be at the expense of our industrial development prospects or at the expense of deepening unemployment and poverty in our country.

Mr Chairman
Among of the most positive aspects of the Doha Round has been the emergence of alliances and groupings that collectively seek to achieve development-supporting outcomes. These alliances have made an historic contribution to the global trading system and have positively shifted the negotiating dynamic. We expect that these alliances will continue to demonstrate their strength in unity and, in this regard, we continue to work closely with the G20, NAMA 11 and Africa Group. South Africa remains engaged in this process and we are prepared to continue to negotiate towards a developmental outcome.

Thank you.