TWN Info Service on WTO and Trade Issues (June 07/21)
26 June 2007
conclusions can be drawn from the collapse of the G4 talks in
Second, the developing countries were going to get little or no benefit. Third, the developed countries were pressing India and Brazil to open wide their markets to industrial products by cutting their tariffs very steeply, at rates far higher than what the EU and US were themselves willing to do.
finally the talks failed because of a clash of paradigms of what the
Round is all about. The
is an analysis of the G4
Clash of positions and paradigms that led to G4 collapse
the immediate aftermath of the collapse of the G4 talks in
the configuration in relations between the four (the
the EU had been pushing the
EU and US were amenable to each other's "lowering of ambition",
or to "forgive each other's sins." And then they combined
to be tough on
their statements, the EU and US have claimed how "flexible"
both of them had been, and how inflexible
A different view came from Brazilian Foreign Minister Celso Amorim at his Potsdam press conference after the talks collapsed: "In a way, we are having a Cancun II in which two developed countries have found a common level of comfort for themselves by lowering ambition in developed countries' agricultural market access and by lowering ambitions in OTDS - yet keeping high ambitions in NAMA and special products and other areas. We came to a conclusion we are pursuing a decline - not a Development Round."
was referring to the deal on agriculture made by the
Towards the closing stages of the Uruguay Round too, the EU and US had got together in their Blair House accord on agriculture to forgive each other's sins, and continued their united approach to get developing countries to give up their resistance to introducing new agreements in services and intellectual property into the WTO.
EU-US get-together, in their joint paper on agriculture in August 2003,
The second conclusion is that with the US-EU rapprochement, the developing countries are going to benefit very little or nothing from the "lowered ambition" of the giants in agriculture.
heart of the
the $17 billion it mentioned at
said that if the OTDS level the
the USTR said is only partially true. In 5 recent years the
agriculture domestic support simulations paper (JOB(06)/151 dated 22
May 2006) prepared by
Thus, an offer of a cap at $17 bil does not reflect a decrease especially when compared to the 1995-1997 levels of a decade ago, and also allows for a large amount of "water" if the 2006 level was $10.8 bil.
any case, as the Indian Minister has correctly stated several times,
and repeated at his
"The flaws have no exchange rates," said Kamal Nath. "Correcting flaws and distortions have no exchange rates."
he meant was that the
This is the third conclusion, that the US and EU are now wrongly portraying the G4 collapse as the fault of two inflexible developing countries that are not willing to give anything in return for their own generous offers.
Firstly, the EU and US offers are anything but generous. They had already claimed to have liberalised agriculture in the Uruguay Round, in exchange for which they had exacted from developing countries the entry of services and TRIPS into the WTO system.
The developing countries found that the claim of agricultural liberalisation was bluff because of the many loopholes in the Agreement on Agriculture that allowed domestic subsidies not only to continue but also increase.
Key loopholes remain, so that even if the allowed OTDS of both parties go below their present applied levels, they can have recourse to the so-called "non trade distorting" subsidies in the Green Box, without limit.
"In effect, the EU and US are offering nothing, and for their offer of zero they are trying to extract blood from the developing countries in NAMA and services as well as in agriculture market access," said Chakravarthi Raghavan, a long-time analyst of WTO developments.
Developing countries, he said, have paid a price thrice over, once at Punta del Este in launching the Uruguay Round, the second time at Marrakesh in taking upfront new commitments (in TRIPS, Services, and a range of new GATT disciplines) in return for promise of the developed world of a change in direction in agriculture, in a long-term process of bringing that trade into GATT disciplines, and again at Doha for further negotiations on services, Nama etc. Now they are asked to pay a price for the fourth time!
developed countries have given to themselves a coefficient of 10, which
implies an average cut of only 28% for the EU 24% for the
the demands made of the developing countries also to the 50% average
cut that the EU offered in agriculture in
Mandelson replied: "You are confusing percentage cuts. It's a completely different concept in numbers and tariff cuts. What we were asking developing countries to do is not unreasonable."
This reply shows that the developed countries want the agriculture talks to be conducted in terms of percentage cuts which are easily understood by all, while conducting NAMA negotiations in terms of a Swiss formula and coefficients, which disguise that the coefficients they are demanding developing countries to undertake imply very deep cuts, far deeper than what the rich countries are willing to undertake themselves especially in NAMA but also in agriculture.
Finally, a conclusion can also be drawn that the US and EU on one hand and Brazil and India on the other were operating under two different and contrasting paradigms, which eventually led to the collapse of the G4 talks and perhaps of the G4 itself.
this cannot be equated with development or the Development Round. Schwab
tried to resolve this clear contradiction by telling the media in
Bhatia, the deputy USTR, told the BBC: "The US and EU were ready
to make concessions but not
Mandelson said: "We were not able to get commercially meaningful changes to the tariffs of the emerging economies as a reasonable return on what we are paying into the Round."
are many flaws in the
Secondly, as Kamal Nath said, a Development Round implies new trade flows for developing countries, into markets of developed countries, and not the other way round.
"Development content clearly specifies who are the givers and takers in this Development Round. Now (with the demands of the rich countries), the givers become the takers and the takers have become the givers."
And thirdly, the insistence that developing countries have to cut tariffs below their present applied rates ignores the fact that many developing countries, including India and Brazil, have already liberalised autonomously and significantly in recent years, so that many of their applied tariffs are significantly below the bound rates.
In the WTO, it is recognised that "credit" should be given to countries that undertake such autonomous liberalisation. In fact these countries have already been creating "new trade flows" by lowering their applied tariffs.
But instead of crediting or even appreciating these countries' actions, the EU and US demand is seeking to penalise them by discounting that they have already liberalised autonomously and by demanding that there now be cuts to the bound rates that must go below the applied rates.
These countries are being penalised because if they had not autonomously liberalised their applied rates would not be so low today, and they would not face the pressure to cut the bound rates to below the already lowered applied levels.
All these lead to the conclusion that the developed countries were never interested in development or the interests of the developing countries when they launched the Doha Work Programme in 2001.
They had to call it the Doha Development Agenda and later the Development Round to entice the developing countries to join in the launch of a new round. Now, the developing countries are calling the bluff of the developed countries and asking that the outcome of the Round really have a development content.
And in answer, the US and EU are saying that they want "new trade flows" from developing countries in order for their offers in agriculture to stand. And their agriculture offers are nothing to shout about, and in some important elements, even really nothing.
The USTR has had to resort to saying that "new trade flows" (read significant cuts to applied rates of developing countries) is what lifts poor countries out of poverty.
But the poor countries think otherwise, which is why the great majority of them have defensive interests in the negotiations, and are fighting to limit the degree of liberalisation they have to undertake.
clash of perceptions of what is development and what is anti-development
in the proposals of this "Development Round" is what led to
this new crisis and impasse in the