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TWN Info Service on WTO and Trade Issues (Oct04/10)

19 October 2004

Third World Network

DEVELOPING COUNTRIES AT UNCTAD CALL FOR THE WTO DOHA PROGRAMME TO REALISE (NOT JUST REFLECT) DEVELOPMENT

The Trade and Development Board at UNCTAD (meeting for the first time since UNC TAD XI in June) heard statements from representatives of many developing countries during a one-day session on the post-Doha work programme on 8 October.

Among these was a lengthy and detailed statement by the Group of 77 and China, which was presented on their behalf by Brazil.

A common theme from the developing countries’ presentations was that the WTO General Council’s July decision is only the starting and not the end point for further negotiations in the Doha work programme and that the development objectives have to be realised  and not just reflected in its outcome and its various issues.

Many countries stressed the need to operationalise the concept of adequate policy space for developing countries, in the face of constraints posed by multilateral rules and negotiations.  This had been a major bone of contention before and at UNCTAD XI, and the concept was eventually adopted in the Sao Paulo Consensus. 

Among the key concerns raised by various countries were problems in the July Decision text on non-agriculture market access (that several countries said could cause deindustrialisation and revenue loss), the need to give higher priority to implementation and special and differential treatment (SDT)  issues, and the need to avoid new forms of protection when the textiles quota system stops at the end of the year.

Below is a report of the session.

With best wishes

Martin Khor

TWN

 

 

Developing countries call for Doha outcome to realize, not just reflect development aims

Report by Martin Khor, Geneva, 10 October 2004

The WTO General Council’s July decision is only the starting and not the end point for further negotiations in the Doha work programme, and the development objectives have to be realised  and not just reflected in its outcome and its various issues.

This was a common theme in the presentations of developing countries at the Trade and Development Board whole-day session on 8 October 2004 on “review of developments and issues in the post-Doha work programme of particular concern to developing countries.”

Among the key concerns raised by various countries were problems in the July Decision text on non-agriculture market access (that several countries said could cause deindustrialisation and revenue loss), the need to give higher priority to implementation and special and differential treatment (SDT)  issues, and the need to avoid new forms of protection when the textiles quota system stops at the end of the year.

Another common theme by developing countries was the need to operationalise the concept of adequate policy space for developing countries, in the face of constraints posed by multilateral rules and negotiations.  This had been a major bone of contention before and at UNCTAD XI, and the concept was eventually adopted in the Sao Paulo Consensus. 

The session had started with presentations by Lakshmi Puri, director of UNCTAD’s International Trade Division and WTO director-general Supachai Panitchpakdi (see report in SUNS, 11 October).

Then Brazil made a detailed presentation on behalf of the Group of 77 and China.  Its deputy ambassador, Paulo Mesquita,  said the July decision was an achievement that enabled  the WTO to go forward after the Cancun failure and showed a commitment by WTO members to sustain multilateralism.  But, he stressed, it was far from the end of the Doha negotiations but marked a new challenging stage focusing on details, specifics, formulae and numbers relating to modalities, market access conditions and rule making.

For the G77 and China, the post July package negotiations should achieve 13 goals.

First and foremost is the need to ensure an open, transparent, inclusive, democratic and more orderly process and procedures, including in the decision-making process, so that developing countries’ vital interests are duly reflected in the outcome of negotiations.

Process and substance are inseparable and the participatory approach is incumbent in achieving balanced outcomes.

Second, the technicality of negotiations should not mask the development promises of Doha to put development at the center of the Doha work programme.  That commitment must be delivered through the agriculture, NAMA and services negotiations.  Some key development issues of concern include commodities, cotton, preference erosion, deindustrialisation and revenue losses, food security, rural development, access to essential services and public interest issues.

Brazil said the G77 and China attached utmost importance to implementation issues and the SDT review.  “These issues are litmus tests for the development dimension of the multilateral trading system;” said Mesquita.  “We need to redouble our efforts to find an appropriate solution and take action by the specific date,” said.  The SDT review should result in legally enforceable, commercially meaningful and development-oriented outcomes.  It should be highlighted that progress so far has been limited to process-related issues.

On implementation issues, the G77 and China said that “difficulties that developing countries experienced in implementing the WTO agreements should be redressed before undertaking further obligations.”  The July decision states that action should be taken on both issues by July 2005, and “yet another time this deadline should not be missed,” said Brazil.

On NAMA, the G77 and China emphasized that the framework contains the “initial elements” for modalities and that additional negotiations are required.  “This implies that the formula, the issues concerning the treatment of unbound tariffs, the flexibilities for developing countries, the issue of participation in the sectoral tariff component and the preferences will need to be negotiated,” said the G77 and China, adding that negotiations should take into account SDT and address specific development concerns of developing countries including concerns over deindustrialisation and revenue implications.”

On agriculture, the G77 and China called for a credible date for eliminating export subsidies, substantial reductions in domestic support and effective SDT and specific development needs of developing countries in all three pillars.   On cotton, the subcommittee on cotton should monitor progress to fulfill the commitment to address the issue ambitiously and expeditiously.

The G77 and China noted with great concern that many developing countries remain marginalized in trade and are vulnerable to external shocks.  Special attention, including under the Doha negotiations, should be paid to the commodity sector which is the mainstay of the economy for many countries.  the July decision provides that commodity issues will be taken into account within the agriculture negotiations.   Some commodity issues should be addressed by WTO and other issues by other organizations.

On textiles and clothing, the G77 and China said the elimination of the quota system should not be replaced by new protectionist measures.  Whilst many developing countries could benefit from the integration of textiles and clothing trade into the WTO regime, some are expected to incur losses in market share with negative poverty and development implications.  “While observing the basic multilateral trading rules, the international organizations and developed countries should extend assistance to these countries in their adjustment process.”

On services, the G77 and China said negotiations should ensure effective commitments on services sectors and modes of supply of export interest to developing countries.  In particular,  liberalization under Mode 4 needs to be achieved through high quality offers that delink mode 4 from mode 3 commitments, address economic needs tests, clarify regulation regarding work permits, visas and other administrative regulations, make progress on article VI.4 disciplines, recognition of qualifications and enlarge the scope of commitments in the developed countries’ initial offers to all categori4es and levels of skills including to semi or less skilled workers.

The G77 and China also welcomed the modalities for trade facilitation that provide that the extent and timing of entering into commitments shall be related to the implementation capacities of developing countries and that implementation will not be required if required support for infrastructure is not forthcoming and where they lack the necessary capacity.

The G77 and China also noted with satisfaction the milestone decision in June 2004 to launch a new round ofg negotiations under the GSTP, as this could boost interregional South South trade and investment.

The group also said UNCTAD plays a particularly important role in supporting developing countries in trade and the trade negotiations, and called on it to continue to support the developing countries in many areas, including in “development benchmarking” in trade negotiations. 

Nigeria, on behalf of the Africa Group, said the African countries view that as part of promoting development, there is a need to improve supply capacity, and the policy space of developing countries should not be constrained or hampered by international rules.

It welcomed the impetus of the July package since multilateralism is preferred to bilateralism.  Bilateral and regional agreements should be building blocks to multilateral process and should not be used to extract WTO-plus concessions from developing countries.

The Africa Group said that the July package had provided only rather modest outcome in respect of the development issues of SDT and implementation.  Whilst new deadlines provided are welcome, the Group noted that previous deadlines on these issues have been missed before.  It said that the WTO must address implementation issues before expanding the scope of new commitments.

On NAMA, Nigeria said that it was common knowledge that the Africa Group had difficulties with the Derbez text, especially with the non linear formula and the sectoral approach.  It forsaw that the text would bring problems for the African countries, with the danger of generating further deindustrialisation.

On agriculture, while progress is welcome, it is necessary to ensure the outcome is balanced and contains flexibilities for developing countries.  It warned that there should not be Box shifting in domestic support as this would offset progress.  Flexible rules for designing special products and special safeguard mechanisms for developing countries is important.

It also stressed the importance of addressing the cotton issue, with specific measures given to cotton with a special status.  It was also urgent that the problems of commodity dependent countries is resolved.

Pakistan, on behalf of Asia Group and China, said that the Asian group reiterates the pertinence of legitimate policy space for developing countries to pursue an proactive, strategic mix of trade and development policies suited to initial conditions, dynamic comparative advantage and changing needs and circumstances.

The need for right balance between international rules and policy space was an important element of the Sao Paulo consensus, said Pakistan.   Thus, it is important that the outcomes of WTO negotiations make an allowance for legitimate policy space available to developing countries, and this would be a key parameter of success of the Doha work programme

Pakistan said although this round is supposed to be a “development agenda”, the promises are yet to be delivered.  An early harvest of the development content is thus essential to restore the developing countries’ confidence.

In NAMA, the Group reiterated the importance of agreeing to a formula and approach that results in a fair and equitable outcome that takes developmental concerns on board, since tariff policy is a legitimate toll for economic development including industrial policy.

“This is quite apart from the fact that many developing countries continue to remain very much dependent on customs revenue as their main source of income”, said Pakistan.  Sectoral liberalization should remain voluntary.  The SDT paragraphs have to be strengthened.

On agriculture, Pakistan said the outcome must respond to the imperatives of providing food security, rural development and alleviation of poverty.  In domestic support, there must be stringent criteria for blue and green box subsidies to prevent box shifting, and a credible date for ending export subsidies is crucial.

On market access, the Group had concerns that the facility of “sensitive products” made available to all members could imply shielding numerous products of export interest to developing countries from the liberalization process.  However the Group highlighted the importance of the special products concept and the flexibilities that the special safeguard mechanisms will provide to developing countries.

The Group also said that full integration of textiles and clothing into GATT 1994 poses both challenges and opportunities, depending on the strength of the domestic sector in respective countries.  “We would however be seriously concerned if the abolition of these quotas is replaced with other non tariff barriers or the use of trade remedial instruments such as antidumping or safeguard measures.”

Ambassador Sha Zukang of China said the Doha agenda should contribute to international cooperation and sharing of the gains from globalisation.  But there would not be smooth sailing to these goals, as there is considerable divergence of views over many issues between developed and developing countries.  He said it is true that The July package provides direction for the next stage of negotiations but it only represents one step forward and everything depends on the next stage which could be very difficult.

Sha said trade was not an end in itself but a means to development, as stated in the Sao Paulo Consensus.  He added that the Doha agenda should not only reflect but also realize development.  “Developing countries are finding themselves in a vulnerable situation in the ongoing globalisation process.  Many development issues have not been effectively addressed.  Ads a result, developing countries especially LDCs are confronted with difficulties and obstacles in their efforts to integrate into the system. “

As a new WTO member, China is concerned with problems facing newly acceded members.  “having paid a huge accession price, new members are confronted with new burdens and challenges, which should be addressed in earnest.”

Ambassador Hardeep Puri of India said the UNCTAD XI process had imparted a positive impulse to the WTO negotiations and its July agreement.  Puri said future negotiations should put a stress on improved market access, price stabilization for exports, market entry barriers to goods and services from developing countries and the reduction to such barriers.

Future negotiations should also deal effectively with the development needs of developing countries and ensure that SDT and policy space to deal with their sensitive products remain an integral part of all elements of negotiations.

The textiles and clothing sector is key to developing countries.  In India, it provides employment to 37 million directly and 47 million indirectly.  Puri warned that the imminent end of quotas had already encouraged protection seeking interests to cry dumping and demand anti dumping actions, and these are often prompted by interested parties to preserve their corner of the market.

Imaginative use of rules of origin, mechanism of regional arrangements, arbitrary conditions imposed by powerful apparel contractors have all become instruments of intervention and protection, often to benefit textile producers in developed countries.

“We hope producers of textiles and clothing in developed countries will not seek such protection in the post ATC phase from imports and resort to new market entry barriers.”  He called on UNCTAD to play a watchdog role top consider how such practices could be addressed and assist affected developing countries.

He added that the integration of textiles and clothing trade presents countries with continuing challenges.  The process of trade reform has seldom been free from the pain of restructuring and adjustment.  The costs of adjustment in the case of textiles have been aggravated by the backloading of the reform process in the major countries, which violated the ATC in letter and spirit.  “We hope that further distortion of trade in this sector will not be perpetuated through some other means in the post ATC phase.  We will not be able to countenance replacing one distortion with another.”

 


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