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TWN Info Service on WTO and Trade Issues (Apr06/2)

3 April 2006
 

Developing countries voice concerns on state of WTO talks


Many developing countries and their groupings have voiced their concerns on the current status of the WTO Doha negotiations during a meeting on Tuesday 28 March of the WTO's Trade Negotiations Committee, which oversees the negotiations of the Doha work programme.

Many expressed concern about the lack of progress in the negotiations after the Hong Kong Ministerial. A major grouping, the G33 also expressed unhappiness over the negotiating process.

It said "a very small group" have a disproportionate role in setting the direction of the process, and warned that "lack of ownership of the process will undermine the legitimacy of any outcome and risk a new failure for the organization."

It said the needs of developing countries are being continuously undermined and marginalized in the agriculture negotiations.

Another area attracting sharp concerns was NAMA, with several developing countries unhappy and frustrated with the extreme demands made on them to slash their industrial tariffs and give up or dilute the flexibilities in the framework.

Below is a report of the TNC meeting.


With best wishes
Martin Khor
TWN

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Developing countries voice concerns on state of WTO talks

By Martin Khor (Geneva, 29 Mar 2006)


Many developing countries and their groupings have voiced their positions on the current status of the WTO Doha negotiations, thus providing an insight on the issues of concern to them, as pressure is placed on the WTO members to meet the end-April deadline for achieving modalities in agriculture and non-agriculture market access (NAMA).

The developing countries' concerns were raised during a meeting on Tuesday 28 March of the WTO's Trade Negotiations Committee, which oversees the negotiations of the Doha work programme.

Many members expressed concern about the lack of progress in the negotiations after the Hong Kong Ministerial. A major grouping, the G33 (representing 42 countries concerned about food security and farmers' livelihoods in developing countries), also expressed unhappiness over the negotiating process.

It said "a very small group" have a disproportionate role in setting the direction of the process, and asked the Director General to take their concerns very seriously. It warned that "lack of ownership of the process will undermine the legitimacy of any outcome and risk a new failure for the organization."

It also complained that the needs of developing countries are being continuously undermined and marginalized in the agriculture negotiations, a trend that openly contradicts the Doha Development Agenda.

Another area attracting sharp concerns and criticisms was NAMA. Some developing countries expressed their unhappiness with the way the NAMA negotiations are proceeding.

Several were critical of the developed countries placing intense pressure on developing countries to open up their markets for industrial products, and of using misleading arguments or even attempting to change the mandate and the goalposts, at this late stage of the negotiations.

The Ambassador of India, Ujal Singh Bhatia, said India was especially concerned about the direction the NAMA negotiations have taken. "There is a concerted attempt on the part of some members to redefine the mandate," he said. "We have noted with concern the attempts of some members to redefine the parameters of less than full reciprocity in reduction commitments and special and differential treatment through creative interpretations.

"An additional criterion of judging ambition by the extent of reduction in current applied tariffs is sought to be introduced, even though it has no basis in the mandate. Such an attempt consciously seeks to ignore the autonomous liberalisation undertaken by us and the enhanced market access provided every year.

"In short this is an attempt to shift the goal posts at the end stage of the negotiations. A satisfactory outcome consistent with the development objectives of the Round can only be achieved if we adhere strictly to the mandate given by Ministers and respect past practices of tariff reduction in the GATT and WTO."

The Ambassador of the Philippines, Manuel Teehankee, similarly criticised attempts by developed countries to make use of applied tariff rates as the basis for negotiating reductions in industrial tariffs.

Regarding certain approaches being taken in the NAMA negotiations, said the Philippines Ambassador, "We have to state that the focus on applied rates or cuts on the applied rates will not "cut it" if I may use a pun, and that the arguments in support of such cuts from applied just do not hold water.

"The history of the GATT-WTO rounds of negotiations bears out the fact that end-results and reciprocity are measured by percentage cuts from the bound rates. All these theorizing on approaches and the opposing philosophical differences should give way to pragmatism and to parallel high ambition in both NAMA and Agriculture to achieve enhanced market access for developing countries as called for in the Hong Kong Declaration."

The Philippines also reiterated the need to find a pragmatic solution for countries with low applied and unbound duties, as these countries have been providing real, effective and actual market access.

While the Hong Kong Declaration calls for a linear markup (in treating reductions of unbound tariffs), "we wish to flag that a single markup will not necessarily provide a pragmatic solution to the problem and inequity that could result for countries with low unbound duties," said Ambassador Teehankee.

On flexibilities for developing countries, the Philippines joined other developing countries in affirming that said that paragraph 8 (which deals with flexibilities) of the NAMA framework of August 2004 should represent "a stand-alone provision that cannot and ought not result in any enhanced or separate coefficient for certain developing countries as a result of their use or non-use of paragraph 8 flexibilities.

"To allow, at this late stage of the negotiations, a special coefficient for a certain group of countries would lead to other groups of countries to also seek special coefficients, including those countries with low unbound and applied duties."

Recalling paragraph 24 of the Hong Kong Declaration that calls for enhanced market access for developing countries in particular, the Philippines said this means that developed countries must lead the way through increased ambition in both NAMA and Agriculture to deliver the market access opportunities to developing countries.

"In NAMA therefore, developed countries must consider a Swiss coefficient below 10 if we are to be faithful to greater ambition, which would then secure delivery of the development dimension of this round."

Jamaica spoke of the need to take account of the needs of small economies. On NAMA, it stressed the need to finalise the provisions for Para 8 flexibilities, which are required by developing countries to manage liberalization. It asserted that the Paragraph 8 flexibilities are "stand alone" provisions.

"It is our firm view that the principle of less than full reciprocity is intended to achieve a substantial difference in outcomes in reduction commitments of developed and developing countries," said Jamaica. It urged that the Hong Kong Declaration's paragraph 21 (which calls for establishing flexibilities for small and vulnerable economies) be respected, adding that modalities for paragraph 21 must be finalized and included in any April 30 modalities.

Two major groupings, the G20 and the G33, made statements on agriculture. Both stated deep concern with the lack of progress in the agriculture negotiations.

The Group of 33 (comprising 42 countries promoting food security, rural development and livelihood rights of small farmers in developing countries) made a statement read by Turkey.

The G33 registered its concerns with respect to "the conduct of the negotiations and the disproportionate role that a very small group of members seem to assume in establishing the direction of the process.

"We would like to stress the importance of building consensus through a bottom-up process guaranteeing transparency, inclusiveness, and the effective participation of all Members. We wish to underline that the lack of ownership of the process will carry a serious risk of failure for the organization."

The G-33 was also "deeply concerned" with the lack of progress in the agriculture negotiations and with the stagnation on market access, including SDT for developing countries.

"We feel that the specific needs of developing countries are being continuously undermined and are at the risk of being marginalized in the current agriculture negotiations. It is our considered opinion that this trend openly contradicts with Doha Development Agenda."

G33 reiterated its commitment to operationalizing SDT for developing countries across all aspects of the market access pillar. A core aspect of SDT has to be substantially lower overall tariff reduction commitment by developing countries as compared to those of the developed countries.

It stressed that the concepts of Special Products (SP) and Special Safeguard Mechanisms (SSM) are fundamental components of SDT.

Said the G33: "The Hong Kong Declaration is explicit and that developing country Members will have the flexibility to self-designate an appropriate number of tariff lines as Special Products guided by indicators based on criteria of food security, livelihood security and rural development needs. The Developing country members will also have the right to have recourse to a Special Safeguard Mechanism based on import quantity and price triggers".

The statement added that the G33 has made concrete efforts to move the negotiations forward on SP and SSM. The Group has submitted comprehensive and technically robust proposals on modalities on both SP and SSM, moving away from previously long held positions.

"We are ready to engage with other groups and players to identify the modalities that would ensure that SP and SSM provisions are operationally and effectively implemented by developing countries," said the G33.

"It goes without saying that, negotiations must be framed in strict compliance with the mandate on SP and SSM established in the Doha Declaration, the Framework agreement and the Hong Kong Ministerial Declaration. The G33 is determined to oppose the attempts aimed at reopening of that mandate."

The G20, represented by India, said that the Group views with concern the lack of progress in the negotiations. "We are far from achieving modalities in agriculture," it said, reaffirming its commitment to an outcome for the Round compatible with its main objective - development.

"As many developing countries enjoy more (and in many cases their only) comparative advantage in agriculture, substantial reductions in distortions in agriculture trade and substantial improvement in market access for products of export interest to developing countries are essential elements to fulfill the development mandate of this Round."

Stating that only an ambitious outcome can deliver on the Round's development objectives, the G20 said "it is essential that the main subsidizers improve their proposals in domestic support. Their current offers in market access also do not provide the basis for achieving the results we strive for. We call on the developed countries to make such a decision promptly as already the negotiations have taken too long to conclude."

The G20 said that in domestic support, reductions must lead to effective and substantial cuts in all forms and in the overall levels of trade-distorting domestic support. This must be complemented by disciplines on the Blue Box to ensure such payments are less trade distorting than AMS, and on the Green Box to ensure the fundamental criteria of minimal trade-distortion are met.

The G20 added that on market access, the tariff reduction formula remains the main element to improve market access. The number and treatment of sensitive products must allow substantial improvement in market access for all products.

The G20 also reiterated that SDT remains an integral part of all the three agriculture pillars. It restated the premise of its market access position that developing country commitments would be less than two-thirds of the cut to be undertaken by developed countries. It welcomed the G33 contributions on special products and SSM.

In export competition, it recalled the Hong Kong agreement that all forms of export subsidies be eliminated by 2013 with a substantial part by the end of the first half of the implementation period, and said that "the next step is to work on their elimination as scheduled and on disciplines that can meet the requirement of parallelism."

The Africa Group, represented by Benin, said the NAMA negotiations must take into account the need to strengthen Africa's industrial base and to allow for policy space for African countries to develop new industries. Thus the tariff formula to be adopted must take account of the specific conditions of African countries, with adequate SDT. The problems of preference erosion and non-tariff barriers should also be dealt with.

The Group also stressed the need to deal with the preference erosion problem in agriculture, and hoped the 3April seminar on preference erosion would come up with some solutions. It also stressed the need of developing countries to have easy access to special products and SSM.

On cotton, the Group called for urgent action to deal with both the trade and development aspects, stressing the need to develop modalities to reduce domestic support and put in place a mechanism to deal with losses of cotton producing countries arising from the fall in international cotton prices.

The Group supported the co-sponsors of the cotton initiative and their 1 March 2006 paper which proposed modalities for reducing domestic support and implementation of a mechanism to deal with losses from the fall in the cotton price.

On Aid for Trade, the Group stressed the necessity that the resources to be mobilized should be substantial, additional and complementary to other existing initiatives, to allow beneficiary countries to overcome constraints they face in participating in international trade.

The aid for trade should not be conditional on expectations on the exports of products from those countries giving aid to those receiving the aid.

The areas to be covered by aid for trade should include strengthening the production capacity of beneficiary countries; development of infrastructure; improving human and institutional capacities; and dealing with adjustment costs arising from implementation of rules and mechanisms of international trade.

Jamaica said the Round's success will only be gauged by what it delivers in terms of development and its expectations are for clear development outcomes for small developing economies to continue to pursue their development objectives. Thus the interests of all parties must be taken into account.

In agriculture, the SP and SSM mechanisms are critical to give effect to the SDT principle, and Jamaica called for momentum towards tangible progress on these two key instruments.

Jamaica also highlighted the need to establish modalities to address preference erosion in an effective manner. "We do not accept that these issues should be treated as residual and they should be an integral part of any April 30 modalities."

India's statement also covered the issue of the TRIPS-CBD relation. It said the consultations on this had narrowed differences on how to introduce a disclosure requirement. The intensity of developing members' concern on this issue is even more apparent, and the constructive approach of a number of developed countries is encouraging.

"This should strengthen our resolve to deliver on the mandate of para 29 of the Hong Kong Declaration within the July time limit." It called on members to change gears and move towards a text based negotiation on this issue.

Meanwhile, the 18-member Cairns Group also expressed concern at the lack of progress in the agriculture negotiations, saying that the negotiations must deliver "more than paper reforms".

It said deep tariff cuts must be agreed in order to provide real commercial opportunities, and cuts to subsidies must reduce current spending. "Our farmers are expecting relief from protection and subsidies in this Round, not ineffective half measures."

It called for political leadership to unlock the current stalemate on domestic support and market access. "It would be dangerous to assume that the significant moves required by major Members can be left until the eleventh hour. They cannot. We need urgently to see movement, and we will not be pressured into accepting a modest outcome at the last minute."

 


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