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Mr President,

As the members of the Storting know, the WTO General Council adopted a framework for further negotiations on 1 August. This was an important breakthrough in the WTO process and has attracted a great deal of notice. In the light of the WTO’s significance for Norway and the breakthrough achieved last summer, I requested the opportunity to address the Storting on the status of the WTO negotiations. In particular, I would like to give you:

• an account of what the government has done to help get the negotiations under way again in Geneva;
• ·
• a summary of the most important decisions that were made in Geneva;
• an overview of the opportunities they provide and the challenges they pose to Norway; and
• ·
• a brief outline of the further course of the negotiations in the WTO.

Mr President,

The Ministerial Conference in Cancún, Mexico, in September 2003 was intended to provide the necessary political clarification for the final phase of the negotiations. That is not what happened. Instead the negotiations broke down.

This was precipitated by the developing countries’ strong opposition to negotiating the “Singapore” issues, particularly investment and competition. However, the real reason was the disagreement in the agricultural area.

The USA and the EU, which are major exporters of agricultural products, were not willing to reduce their subsidies unless they were given greater access to important developing country markets in return. A new group of developing countries led by key actors such as Brazil, China, India and South Africa – known as the G20 – came on the scene in Cancún and demanded extensive access to industrial country markets and larger reductions in these countries’ trade-distorting domestic support. At the same time, they showed little willingness to open their own markets.

After Cancún and several other broken deadlines, few believed it would be possible to make rapid, genuine progress in the negotiations. At the same time we were all aware of the importance of this. For many groups a great deal was at stake. For us it was a matter of the WTO’s future as a credible trade-promoting organisation.

Therefore, in the months between Cancún and last summer’s meetings in Geneva, considerable efforts were made to get the negotiations back on track. The USA, the EU and the G20 have all taken important initiatives.

Norway has not just been sitting back and waiting either. I myself have visited the USA, Japan, Malaysia, Indonesia, Singapore, Thailand, South Africa, India and Kenya in connection with the WTO. I have also had talks with the WTO Director-General and taken part in WTO meetings in Paris and Davos. The WTO negotiations have also been a regular item on the agenda when ministers from other countries visit Norway.

Mr President,

I have primarily used these meetings to explain and elaborate on Norway’s positions. I have among other things stressed the significance of agriculture for important non-trade concerns, such as food security, rural development and the cultural landscape. I have emphasised that as a small country, Norway has very little influence on world market prices.

Many countries have expressed understanding for our situation and the need for flexibility so that we can maintain a viable agricultural sector in the future as well. The considerable problems the Cancún proposal for a tariff cap, i.e. a limit on the maximum tariff rates a member state may impose, would present for Norway, have not gone unnoticed either.

I am, however, in some doubt as to how deep this understanding goes when it is weighed up against their own interests. This is fairly evident when they point out how difficult it would be to safeguard our need for flexibility without allowing the major countries to use the same strategy to avoid opening up their own markets. Or as former South African Minister of Trade and Industry Alec Erwin put it at our meeting in Cape Town in March, how can we create a small window of exemptions for Norway without at the same time giving the EU a whole door?

It has been advocated in some quarters, including here in the Storting, that Norway and the developing countries should form an alliance on the right to maintain a national agricultural production. I do not think this is really an option. My talks show that what the developing countries want is both access to rich countries’ markets for their products and the possibility of protecting their own agricultural sector. The developing countries want to protect themselves by means of special arrangements, such as by not opening their domestic markets to certain products that are particularly important for their development. This is in keeping with the thinking behind the Doha Round: the developed countries should take on greater obligations than the developing countries.

We have actively opposed the proposal for a tariff cap together with, among others, Japan, Switzerland, Iceland and South Korea in what is known as the G10. One of the main arguments cited by the agriculture-exporting countries is, however, that the highest tariffs in the industrial countries are imposed precisely on the products that are most important to them, e.g. meat and grain. The challenge is, therefore, to come up with ideas of how we can provide greater market access – which we have committed ourselves to doing both in the WTO Agriculture Agreement and through the Doha Declaration – while at the same time maintaining sufficiently high tariff rates for our core products.

In my talks I have also attached great importance to safeguarding our offensive interests, particularly in questions concerning lower tariffs on industrial goods and fish, improved market access in the services area and tightening the rules governing the use of anti-dumping measures.

Even though I increasingly saw signs in these talks of a willingness to negotiate, I must admit that there was a long period when I doubted whether it would be possible to reach agreement last summer. The fact that it nonetheless proved possible was, I believe, essentially due to a general recognition that, in the long term, a weakened WTO would not be in any country’s interests.

Mr President,

As regards the outcome of the negotiations in Geneva, I would like to point out – not least in the light of the Norwegian debate – that the General Council decision is not a finished agreement. What has been decided is the principles and guidelines for further negotiations, not a final package. Therefore it is rather surprising that certain parties have already begun making pronouncements about dramatic consequences, for example for Norwegian agriculture, in this phase of the negotiations.

There is a long way to go, and we must not anticipate the course of events. We will have to continue negotiating on most of the numbers in all the areas before we can draw any conclusions, either positive or negative.

In this connection it is important to bear in mind that the Doha Round is a “single undertaking”, i.e. nothing is agreed until everything is agreed. This means that we must accept the whole negotiating package. We cannot discard the parts we do not like.

Norway decided to join the consensus in Geneva because the government regards the decision as a decisive step towards the completion of the Doha Round. We will, of course, continue to actively promote our priority aims in all the negotiating areas. At the same time we must help to achieve a result that everyone can live with.

I will make no secret of the fact that this could involve difficult choices. But given the long-term significance of the WTO system for stability, economic growth and prosperity, the government’s clear aim is that Norway should contribute actively to, and not impede, solutions that can bring the Doha Round successfully to completion. As a country with a small, open economy, Norway is dependent on the development of binding rules for international trade, so that the principle of “might is right” is not allowed to prevail. A situation that is even more heavily dominated by bilateral or multilateral free trade agreements of limited scope is not in Norway’s interests.

As regards acceptance of the agriculture framework in particular, this was thoroughly discussed at ministerial level in Geneva, among other things in the G10. There was general agreement in this and other groups on the proposals that were on the table late on Saturday 31 July. If Norway had not joined in the consensus, it would not have been understood. Nor would it have served Norwegian interests.

I have noted that although there was some criticism of the outcome in Geneva, the critics have hesitated to claim that Norway, as the 147 ^th> and last country, should have toppled the negotiations. But of course, in the end that is what the problem was.

The framework sets out guidelines for further negotiations on agriculture, fish products and other industrial goods and trade facilitation. Negotiations will also continue on other areas of great importance to Norway, such as improved market access in the services area and tightening the rules governing the use of anti-dumping measures. So far the framework negotiations have in practice blocked any further progress in these areas. This perspective is important for Norway. In Geneva all the focus was on agriculture, but the result means that we can now move on and can focus more on what Norway regards as offensive areas. This opens up important opportunities for Norway.

In the government’s view, the guidelines set out in the framework will enable us to adequately safeguard Norway’s interests in these negotiations. It also takes ample account of the developing countries’ interests and gives them a better basis for participating in freer world trade.

Mr President,

I would now like to give you a brief account of the main features of this framework, particularly in the areas that are most important to Norway.

I will begin with agriculture, which has been, and will continue to be, the most difficult negotiating area.

Here I would like to remind you that according to the Doha mandate, which was accepted by all the WTO member states, the negotiations are to result in substantial improvements in market access; substantial reductions in trade-distorting domestic support; and reductions of all forms of export subsidies, with a view to phasing them out. The question is not whether there will be any changes in the policy environment, but what changes. Special treatment is to be given to the developing countries in all elements of the negotiations, and account is to be taken of non-trade concerns.

The consultations on agriculture last summer were extremely complicated right to the last. But I would maintain that the result achieved in Geneva is considerably better for Norwegian agriculture than the one on the table in Cancún last autumn. It provides a good basis for negotiating on Norway’s main priorities in the next phases, and will thus make it possible for us to maintain a viable agricultural sector in Norway. This is an important aim for the government.

The most difficult issue from Norway’s point of view is the paragraph on market access. As I said at the beginning of my address, Norway has attached great importance to avoiding a maximum level for tariffs. As was expected, this was extremely difficult because none of the main actors in the negotiations were opposed to a maximum level. However, on this point the text no longer states that a maximum level shall be introduced, but that the role of such a tariff cap will be further evaluated. This provides an opportunity that the government will actively take advantage of to avoid a tariff cap.

I would also like to call your attention to what the decision says about “sensitive products” in the agricultural area. Here, too, the text is better than the Cancún proposal from Norway’s point of view. Even though it is the highest tariff rates that are in principle to be reduced most, lower tariff reductions will be allowed for sensitive products. This will also give us an opportunity to maintain protection for products that are of great importance to Norwegian agricultural production. The number of sensitive products is to be negotiated.

It is, however, clear that the principle of substantially improved market access applies to all products, including those that are sensitive. This is to be achieved through a combination of tariff reductions and increased tariff quotas. At the same time the Geneva text specifies that the balance in this negotiation will be found only if the final negotiated result also reflects the sensitivity of the product concerned. The scope of the exemption for sensitive products and how increased market access is to be implemented for these products will be among the most important issues for Norway in the further negotiations.

As regards the question of reductions in support to agriculture, Norway’s priority was to avoid too great cuts in acreage and headage support. Here we managed to put through a special arrangement that is much more advantageous for Norway than it looked as if we would get in Cancún. In brief, the Geneva decision entails that, as a general rule, acreage and headage support is to be capped at no more than 5 per cent of the value of a country’s agricultural production. However, exemptions from the 5 per cent limit may be made for countries where an exceptionally large percentage of the support is in this category. This is very important as, with the main rule, Norwegian supports would have to be reduced by 87 per cent in relation to the current level. Let me point out, however, that we will have to negotiate on how much of a reduction we will in fact have to make in our acreage and headage support.

No maximum levels are envisaged for non-trade distorting support, such as environmental measures, research funds and vacation and replacement schemes. This is important in order to safeguard agricultural production. Such limits would among other things have reduced our room for manoeuvre in any future restructuring of our agricultural policy.

Moreover, the overall level of trade-distorting support will be reduced, which in Norway’s case applies among other things to price supports. The countries with the highest levels of support are to make the deepest cuts. The overall cut will be subject to negotiation. However, it is already agreed that the overall level of permitted support will be cut by 20 per cent in the first year in which the agreement is in force.

A final, important result in the agriculture area is that the member states agree to eliminate all forms of export subsidies on agricultural products. This was essential in order to achieve a result in Geneva. Let me remind you that the objective of eliminating export subsidies enjoyed broad-based support in the Storting during the debate on the white paper on globalisation last spring.

Norway does not have many allies in the agriculture area, which is why the co-operation in the G10 has been so important and positive for us.

Mr President,

So much for the agricultural area. The other negotiating area of great importance to Norway is market access for industrial goods.

Industrial goods include fish, and a text was adopted in Geneva that is the same in substance as the one on the table in Cancún. The guidelines it sets out are important for achieving an ambitious result. Tariff reductions are to be made according to a formula under which deeper cuts will be made in higher tariffs. Moreover, the efforts to eliminate tariffs in seven sectors of export interest to developing countries will be continued. Fish is one of these sectors.

This provides good possibilities for a real improvement in market access for Norwegian industrial goods and fish to important traditional and new markets.

Exports of various kinds of industrial goods, including fish, encounter high tariff barriers in many markets outside the EEA area, but it is fish and fish products in particular that encounter tariff barriers inside it.

However, it is clear that we still have difficult negotiations ahead of us.

Mr President,

The third main area in Geneva concerned the “Singapore” issues, i.e. trade facilitation, investment, competition policy and transparency in government procurement. It was agreed that negotiations should begin on trade facilitation, but not on the other three issues. This was a reasonable compromise.

Trade facilitation involves harmonising, standardising and simplifying formal procedures related to trade, e.g. in connection with the movement and clearance of goods at the border. Simpler and more standardised procedures will be more cost-effective and enhance efficiency in the economy.

The fourth main area was development. One of the major objectives in the Doha Round is to integrate the developing countries more closely into world trade, so that they are able to participate more fully in global economic growth. Provided that it is practised in a sustainable manner and benefits the entire population, greater participation in international trade will contribute substantially to growth and greater prosperity for the developing countries.

The government gives high priority to safeguarding the developing countries’ interests in the negotiations and to taking particular account of the least developed among them.

I am therefore pleased to note that the developing countries are increasingly making themselves heard in the WTO. Last summer’s decision would not have been possible without the active participation of individual developing countries and groups of such countries. The G20, the African group, the LDC group and the group of African cotton-producing countries have all made their influence felt during the past year. This is positive, and it was necessary in order to attain the results that have in fact been achieved.

At the same time, the negotiations have increasingly revealed that the developing countries are not a homogeneous group that has common interests in important issues. Some countries have offensive interests and sufficient resources to participate actively in the negotiations. Others, such as the African countries and the LDCs, are very concerned about the consequences the negotiations could have for them, and about their ability to deal with the negotiating process. Thus, many of the poorest countries are concerned about getting through as many exemptions and special arrangements as possible, which is not without problems as the overriding aim is to create a consistent, coherent international trading system.

The developing countries also differ in their views on preferences, i.e. special arrangements that give groups of developing countries lower tariff rates than those imposed on a general basis. General tariff reductions will weaken the competitive advantage of developing countries that benefit from preferences for their exports to important markets. On the other hand, there are developing countries that do not benefit from such preferences and that therefore desire general tariff reductions. This conflict became very evident in Geneva last summer.

The developing countries’ interests were safeguarded in Geneva both through the general guidelines and through differential treatment. On the one hand these countries will attain increased market access for their goods and services through the general liberalisation of trade. On the other they will have greater possibilities of maintaining protection of their own markets than the industrial countries. This applies particularly to the least developed countries, which are not required to make tariff reductions.

The developing countries will also be allowed a longer period of time to implement a new WTO agreement. The WTO’s technical assistance and competence-building measures will also be intensified.

My impression is that most developing countries feel that the framework that has been adopted takes serious account of their interests.

Mr President,

I would also like to give you a brief account of two other negotiating areas that are of particular importance to Norway: services and rules. Since most of the WTO countries consider that the Doha mandate provides adequate guidelines for negotiations in these areas, they are only briefly mentioned in the Geneva decision.

As regards the services negotiations, it was decided that the member states should be given until the end of April 2005 to table revised offers.

There is, however, a challenge here in the sense that many member states have substantial trade barriers in certain services areas, and many have not yet tabled their first offer. Norway has submitted its first offer and will therefore co-operate actively with other member states to get more countries to follow suit. The most important service sectors for Norway are shipping, energy, telecommunications and financial services.

Norway gives high priority to the negotiations on revision of existing WTO rules, particularly as regards anti-dumping measures. The measures imposed against Norwegian salmon and trout exports in certain markets clearly demonstrate the need for such improvements. Our aim in these negotiations is to reduce the possibilities of employing such measures discretionarily and randomly and prevent their abuse for purely protectionist purposes. We share these aims with important countries such as Brazil, China, Japan and India. The main challenge for Norway and like-minded countries will be to prevent the increased market access achieved in the tariff negotiations from being undermined by anti-dumping measures.

Mr President,

The most important consequence of last summer’s decision in the WTO General Council is that full-scale negotiations can now continue. This is very important for Norway. If we had failed to reach agreement last summer, this could have undermined confidence in the global trading system.

We already note that the decision has led to a change in mood and tempo in Geneva. This is reflected in the tight negotiating schedule up to the end of the year and the constructive tone of the consultations.

At the same time it is unlikely that some of the difficult political issues will be clarified until well into 2005 at the earliest because of the forthcoming election in the USA and the scheduled changes in the EU Commission. Efforts are therefore currently focused on technical issues that must be resolved before the real negotiations on the elements of a final agreement can begin.

The next WTO Ministerial Conference will take place in Hong Kong in December next year. This is a confirmation of something that has been clear for a long time, namely that it will not be possible to conclude the Doha Round as originally planned by 31 December 2004. However, no new formal deadline has been set for completion of the round. It is difficult to say with any certainty how much progress can be made by December 2005. But few expect the negotiating round to be completed by then, and I would not be surprised if there were further delays.

Regardless of what course the WTO negotiation should take in the months ahead, Norway will participate actively in the process. We will continue to attach great importance to established alliances and forms of co-operation as a means of gaining acceptance for our views.

The government’s priorities in the negotiations remain unchanged. There is no need for us to change our course because of last summer’s decision, which I have just outlined.

At the same time we must help to achieve an overall result that everyone can live with. There is no reason to conceal that this could involve having to make difficult choices between our priorities in the final phase of the negotiations. Our aim must be to help to achieve an overall solution that is most advantageous for Norway’s interests as a whole. And as I said earlier today, given the significance of the WTO for stability, economic growth and prosperity, the government’s clear aim is that Norway should contribute actively to, and not impede, solutions that can bring the Doha Round successfully to completion.