TWN Info Service on WTO and Trade Issues (Apr11/09)
29 April 2011
Third World Network

Crunch time arrives for WTO's Doha talks
Published in SUNS #7137 dated 27 April 2011

Geneva, 26 Apr (Martin Khor*) -- The differences among key countries in the World Trade Organisation's Doha trade talks are so wide as to be unbridgeable in at least one major area, and the time has come to decide on what to do about the talks overall - to continue trying to get a deal this year, to admit failure and close the talks, or something in between.

This seems to be the message coming out of the 600-plus pages of a document issued by the WTO Secretariat on 21 April that contains reports on the state-of-play of the negotiations in nine issues, plus assessments by the Director-General Pascal Lamy.

On 29 April, the WTO's Trade Negotiations Committee (TNC) will meet in an informal session to hear what delegations have to say about the reports and the latest crisis-like situation.

The failures in recent weeks to make progress (including by a group of 11 members and in bilateral talks between the US, on one hand, and China, Brazil and India, on the other hand) have deepened the impasse. The inescapable conclusion is that these talks will not complete in 2011, the deadline set by political leaders such as at the G20 Summit in Seoul at the end of last year.

There have been many missed deadlines since the talks began in 2001. But there is now a serious feeling that if they do not complete this year, they may never complete at all, because political events (especially the United States elections) in 2012 and beyond will make it impossible for a deal to be struck.

The Brazilian ambassador Roberto Azevedo, expressing frustration at the pressures put on big developing countries by some developed countries, had put it this way at a recent TNC meeting: "If this view (that developing countries have to make even more concessions) prevails, then we have not reached the end-game, we have reached the end of the game."

In his 21 April report, Lamy had focussed on the impasse in reductions in industrial tariffs (known as the NAMA issue) and found the gaps between developed countries and major developing countries (China, India, and Brazil) to be "not bridgeable today."

The specific problem is that the US in particular is demanding that these three developing countries cut their tariffs to zero (or near zero) for three sectors (with the stress on chemicals, electronics and industrial machinery).

The super-liberalisation in these "sectorals" is supposed to be voluntary, but the US wants it to be mandatory for the big developing countries.

The latter, in turn, think they are unfairly picked upon to carry the whole burden of the Doha talks. They already have to slash their industrial tariffs significantly; with the extra load of the sectorals, the local industries would be seriously damaged.

However, it is misleading to point to the differences on sectorals as the cause of the crisis. On one hand, the US has clarified that it also wants more out of the developing countries in other sectors too (agriculture and services). On the other hand, the major developing countries resent being picked on as the ones blocking the deal. To them, the demands on sectorals is the last straw on the camel's back, epitomising the gross inequalities that characterise all the issues in the Doha package.

Although Doha started as a "Development Agenda" with a pledge that developing countries' interests would be at the centre, ironically, there is hardly any development content left in the Doha elements. This is evident from a review of the 600-plus pages of the 21 April texts and reports.

The real core of the documents comprises the draft texts on agriculture and NAMA, accompanied by reports of the Chairs of the negotiating groups on these two issues. The texts are the same as the ones issued by the Chairs in December 2008; in other words, the present Chairs have not tried any amendments, since there has been no progress in the talks on these two issues.

However, the two December 2008 texts did not emerge from actual negotiations. They were revised from previous drafts and especially from the one-page paper of the WTO Director-General Pascal Lamy of 25 July 2008, which he had presented to the inner group of seven Ministers (called the G7) during the mini-Ministerial meeting that closed without an outcome.

The two papers contain the imbalances as between developed and developing countries, and between agriculture and NAMA, that were in the previous documents, as well as new imbalances contained in the Lamy paper of 25 July 2008.

The papers on agriculture and NAMA cater to the sensitivities of developed countries, which are given many types of flexibilities to avoid actual cuts to their agricultural subsidies or painful cuts to their applied tariffs. On the other hand, many developing countries are required to take commitments, some of them proposed by developed countries only months before the July 2008 Mini-Ministerial and which had been strongly opposed by developing counties and thus had not enjoyed any consensus.

These proposals, however, have been placed in the texts by the Chairs. The two texts oblige developing countries to cut their tariffs significantly (especially in NAMA) and drastically reduce their policy space for future development strategies.

The agriculture report mainly reaffirms the 2008 text, under which the developed countries will be allowed to continue their high domestic subsidies (though the nature may change). They can also shelter their "sensitive products" from steep tariff cuts through an agreed formula.

In contrast, developing countries have to cut their farm tariffs more steeply and widely than they did in the previous 1996 Round. And the new special safeguard mechanism for these countries to use to prevent import surges (that damage local farm production) is so weak that it is practically of no use.

The report on NAMA reaffirms the December 2008 text. Under this, some major developing countries have to cut their industrial tariffs by 50-70%, while developed countries' cuts are only around 25%. On average, developing countries affected by the agreed formula will have average applied tariffs of 11-12% after the cuts, which will be damaging to their domestic industries.

But on top of these already onerous obligations, the US, backed by other rich countries, is now demanding that China, India, Brazil and others agree to super-liberalisation in the "sectorals".

The 21 April report shows that in services, the developing countries are also under pressure to open up to foreign competition in many sectors such as finance, telecoms and retail trade. But the developed countries are unwilling to open up in labour services. Many are in fact tightening their quota of visas for foreign workers and professionals from developing countries.

At the 29 April WTO meeting, it is unlikely that countries will stop the Doha talks altogether, though they may accept that the 2011 deadline cannot be met. A suspension of talks -- at least in some areas -- is an option, though the question is when are they to resume and under what conditions.

The meeting may also decide on the status of the 600-plus page document. Will future negotiations be based on this, or are other relevant documents just as valid, such as existing proposals that are not adequately reflected in the reports, and new proposals?

Since the main papers are reports by Chairs and not made or endorsed by Members, and since the main draft texts on agriculture and NAMA are also by the Chairs, which have not been properly discussed let alone endorsed by Members, it would be logical for the 21 April documents to be only reference papers which do not enjoy special status.

All other relevant documents including Members' proposals should still be on the table, when and if the talks resume.

(* Martin Khor is the Executive Director of the South Centre.) +