Info Service on WTO and Trade Issues (Jun14/04)
US has its way, Doha Round is dead as dodo
Geneva, 11 Jun (Chakravarthi Raghavan*) - Judging by reports on the day-long closed door Swiss-hosted meeting of a select group of trade envoys at the so-called ‘retreat' to formulate and agree on a post-Bali work programme for concluding negotiations on the Doha Development Round (DDR), it is apparent that the DDR Single Undertaking may be as dead as a dodo.
It is becoming more and more clear that the only leverage developing countries have to force the United States and the European Union to come to the table, and live up to their Marrakesh and Doha Round commitments on agriculture, will be for developing countries to block further progress on the draft Trade Facilitation accord.
Very little has come out of the closed-door meeting outside of Geneva, but a report in the Washington Trade Daily (WTD) provides a comprehensive, and yet concise report.
According to the report, those present were envoys from the United States, the European Union, China, Japan, Canada, Australia, Brazil, South Africa, India, Mexico, Colombia, Chile, Pakistan, Norway, New Zealand, Jamaica and Switzerland.
The WTO Director-General, Mr. Roberto Azevedo, was not at the meeting, his participation apparently was not acceptable to all participants.
[The meeting of envoys of key countries among themselves, without the D-G, had been a practice which began from around the time of the failed Cancun Ministerial meeting, and became more or less systematised until very recently. The ‘retreat' last week was thus a return to practice.]
It is notable that except for South Africa, there was no other African envoy. Currently, Lesotho is African Group coordinator, Uganda is Least Developed Countries (LDCs) coordinator, and Kenya is the coordinator for the ACP (African, Caribbean and Pacific) group, taking over this year from Jamaica (the coordinator till Bali) which was at the meeting.
According to the WTD report, the US made clear at the meeting that it would not take the 2008 agri-modalities text, even as basis for further negotiations, since its domestic constituencies will not accept what is on the table in agriculture at this juncture.
In what would put to shame a famous information minister of an European country before and during World War II, the US ambassador to the WTO, Mr. Michael Punke, blandly insisted that new realities must be taken into account, and asserted that the ‘new realities' was that China and India are the subsiders distorting agricultural trade.
According to the French civil society activist, Jacques Berthelot, in a paper he has posted on 16 April at the Solidarite website (http://www.solidarite.asso.fr/Papers-2014), the United States, from inception of the WTO, has been consistently under-notifying or not notifying its various subsidies and support programs, and has placed (contrary to WTO rulings) some of its illegal subsidies into the new ‘green box'.
In his paper, Berthelot shows that the United States' actual annual total AMS subsidies have exceeded the notified AMS by an average of $2.563 bn from 1995 to 2000, by $4.313 bn from 1995 to 2004 and by $12.574 bn from 2005 to 2011. Also, the actual total AMS has even exceeded the bound allowed AMS of $19.103 bn in 2005, 2006, 2009 and 2011 and the average margin of the allowed total AMS less the actual AMS has shrunk from $6.139 bn in 1995-2000 to $4.287 bn from 1995 to 2004 and has disappeared, at -$76 m, from 2005 to 2011 (p. 18 and Table 10, pp18-19).
At the retreat, the United States, having got what it wanted out of the Round at Bali, in the shape of the Trade Facilitation Agreement, subject only to the pending exercise of adoption of the legal text and a protocol for incorporating it into Annex IA of the WTO Agreement, is refusing to consider any give on its part in Agriculture, the most heavily subsidised and trade-distorting element - despite the various box-shifting of the support programmes. The US envoy, Mr. Punke, is reported as telling others that the US does not even want to talk about it till the US-mid-term elections in 2014.
It is clear that the US and EU, far from reversing course on agricultural support, in return for the onerous price paid in advance at Marrakech by developing countries, has just done some box-shifting to provide increased support under various heads to its dwindling minority employed on farms, and now wants ‘market access' for its heavily supported agricultural products in China and India, where the farmers are still engaged in subsistence farming.
As far as the farmers in the developing countries who are asked to compete, it makes no difference to them from which source of governmental actions the US farmers (rather the giant agri-corporations that benefit the most by these programs) get support - money in the final analysis is totally fungible.
According to the WTD report, the industrialised country members at the ‘retreat' - especially the United States - made it clear that the Doha Round is not do-able as along as it is based on the existing draft modalities in agriculture, industrial goods and services.
The WTD said that "elaborate" discussions took place at the meeting on the three agriculture pillars - domestic support, market access and export competition - along with a formula versus a request/offer negotiating process in non-agricultural market access. The Doha agriculture negotiations chair, John Adank, reportedly offered members his assessment on the continuing differences among members over core agriculture issues.
He lamented the fact that there has been no change in members' positions despite several attempts made during 2008 and 2011 and now. The ambassador remarked that some members want "creative" solutions - though what would be involved was not spelled out, the WTD said, citing participants familiar with the meeting.
According to the report, the US (supported by the EU and Canada) insisted that its domestic constituencies will not accept what is on the table in agriculture at this juncture. It complained that India and China, in particular, are not willing to provide real market access. Both countries' insistence on "special products" and various flexibilities in agriculture will undermine market access by others. It also faulted India for increasing its subsidy payments.
The WTD said that in a sharp rebuttal, trade envoys from the Group-of-20 coalition - including Brazil, South Africa and China - reminded the United States that it is baseless to say that developing countries secured benefits for themselves in the 2008 draft modalities text while the industrialised countries bore the brunt of reduction commitments in domestic supports.
Developing-country trade envoys at the meeting said upwards of 70 percent of the Doha agriculture negotiations were spent on arriving at specific flexibilities for the United States in domestic supports - particularly the carve out of new "blue box" payments. A lot of negotiating time also was spent on market access issues pushed by the United States, the EU, Japan, Norway, Switzerland and Canada. And Switzerland, Norway and Japan managed to secure flexibilities to shield some 12 percent of their tariffs on sensitive products, the developing country envoys said.
Market access flexibilities for developing countries were only proportional to what the industrialised countries got, one developing-country envoy said.
The WTD said that during the discussion on domestic supports, there were sharp exchanges on increases in "amber box" measures in both India and China and trade-distorting effects of expanding "green box" measures. Canada insisted that the negotiations should not open up the "green box" program.
However, WTD said, another Cairns Group member reminded Canada that literature prepared by the group established that continued shifting of payments to the "green box" causes distortions in global farm trade.
During the discussion on industrial goods, non-agricultural market access negotiations chair Remigi Winzap admitted to no convergence by members on how to bridge the gaps between bound and applied tariffs, and that several industrialised and some developing countries made it clear that there will be no real market access in major developing countries such as India, Brazil, South Africa and China if the current formula-flexibility approach is followed.
The EU, Japan, Australia, Mexico and Canada, among others, supported the United States in calling for new approaches to remove the gap between bound and applied tariffs.
In sharp response, Brazil, South Africa, China and India said the level of ambition in agriculture was set by industrialised countries, followed by a "proportional" market access approach in industrials.
Developing countries at the retreat said they agreed in 2008 to make reforms in market access for industrial goods in a calibrated manner based on the revised draft modalities. The developing countries also maintained that they have suffered heavily due to the global financial crisis which caused massive unemployment in their countries.
On services, industrialised countries pressed for securing new market access. Developing countries - including Brazil and South Africa - said they have no problems with the current negotiating modalities that allow for a request/offer approach, and that there has been adequate progress in the negotiations. Some developing countries signalled their willingness to do more in services, but only in line with parallel progress in agriculture.
There was also reported criticism at the meeting from some members on why the plurilateral Trade in Services Agreement (TISA) negotiations were being pursued even though the overall level of progress in the Doha services talks was acceptable to most members. The industrialised countries assured that the TISA negotiations results would not be imposed on WTO members.
(* Chakravarthi Raghavan is the Editor Emeritus of the SUNS.)