TWN Info Service on WTO and Trade Issues (Oct07/13)
13 October 2007
Trade and Development Board of UNCTAD on Monday 8 October held a discussion
on developments and issues in the post-Doha work programme of particular
concern to developing countries, at which the developing countries stressed
the importance of the development dimension as well as voiced their
views on various aspects of the current
Below is a report on the session. It was published in the South North Development Monitor (SUNS) on 9 October and is reproduced here with the permission of the SUNS. Any republication or re-circulation requires the prior permission of the SUNS (email@example.com).
Board debates post-Doha work programme
Trade and Development Board of UNCTAD on Monday held a discussion on
developments and issues in the post-Doha work programme of particular
concern to developing countries, at which the developing countries stressed
the importance of the development dimension as well as voiced their
views on various aspects of the current
The Trade and Development Board (TDB) is currently holding its fifty-fourth session from 1-11 October.
In introducing the agenda item on the post-Doha work programme, UNCTAD Secretary-General Dr Supachai Panitchpakdi said that at this particular juncture in time, he thought that "all those of us who are working in the multilateral system should be as united as possible in lending our fullest possible support to the ongoing Doha negotiations that are being conducted towards a successful conclusion."
Although globalization and liberalization had been providing positive results for some parts of the world and some parts of the population, the results had not always been equal. There was a need to make globalization inclusive, to put a human face on world economic growth, Supachai said.
He cited an editorial in a newspaper last week that said that if Doha dies, it would take years to revive and that would be a blow to the world's poor. We have to see to it that the stakes of the poor remain embedded in the Doha round, he stressed. There is need to maintain the so-called development dimension in the round.
Agriculture continues to be the lynch-pin of the negotiations, said Supachai. At the same time, there have been discussions about labour-intensive implications of the services industries that are undergoing substantial growth within the developing countries themselves.
He emphasized that services negotiations should not be underestimated. Liberalization in Mode 4 (movement of natural persons) is of great consequence to poor countries.
Supachai said that the Global System of Trade Preferences (GSTP) has simplified the modes of negotiations, and he expressed hope that the GSTP could also be a driving force towards full multilateral negotiations at the WTO. He also said that Aid-for-Trade is a crucial matter that needs to be operationalized as soon as possible.
WTO Deputy Director-General Valentine Rugwabiza said that the WTO's main contribution to growth and development is the current Doha round of multilateral trade negotiations. In terms of market opening and strengthened international rules, it promises to have a greater impact than the Uruguay Round.
So our challenge today and for years to come is to make sure that the new opportunities that hopefully will result from the Doha Development Agenda - whether duty-free and quota-free access to developed and developing country markets, the sharp reductions in agriculture subsidies in rich countries, including those on cotton, the elimination of export subsidies, the disciplines on fishery subsidies or the new rules on trade facilitation - translate into trade realities for the LDCs but also for many developing countries, she said.
The Doha Development Agenda is again at a defining moment, negotiations are in full multilateral gear. Intensive text-based negotiations are taking place in the decisive area of agriculture and non-agricultural market access (NAMA). These texts had a galvanizing effect on Members, they have certainly realized that what remains to be done, even though very complicated and too technical, is far less than what's already on the table, she said.
She added that agriculture is an extremely important area for many developing countries with the potential for providing enhanced export opportunities. Agreement over a procedure to define sensitive products remains a threshold issue with important bearings on the treatment (also to be agreed) of sensitive tariff lines and the design of an adequate compensation mechanism, and thus on the overall level of ambition of the market access pillar.
The senior WTO official said that in the non-agricultural market access negotiations, since 70% of developing countries' exports are accounted for by manufactured products, they have a positive interest in enhanced market access, including by seeking the reduction of tariff peaks and escalation that could lead to higher value addition in these countries.
She noted that the draft modalities paper in the NAMA negotiations has been the subject of a lot of critical comments from Members, which means that at this stage, much still remains to be done in that area.
The Doha Development Agenda is the biggest challenge for the WTO since its creation in 1995. It is a challenge to achieve what was started in the Uruguay Round: a more level playing field in areas of particular interests to developing countries, such as agriculture and services. Now, we've reached the most difficult part of the process, and it will take a great deal of political courage and commitment to conclude this round successfully, she concluded.
Honduras, speaking on behalf of Group of 77 and China, said that in terms of the WTO, we are at a crossroads where the credibility and long-term viability of the current multilateral trading system could undergo serious challenge. At the same time, there is the opportunity for the Multilateral Trading System (MTS) to strengthen its legitimacy and credibility by arriving at a development-oriented outcome in the rules it negotiates and in the content of the agreements as we have all come to expect and hope.
For the United Nations and UNCTAD, said the G77, we see the pressing need to strengthen its role at the centre not only of development, but also of global economic governance. Indeed, these are times when the multilateral trading system is under challenge, and at the same time its inter-connectedness with the global financial and monetary system is becoming increasingly clear.
The United Nations, including through UNCTAD, must therefore ensure that we remain focused on the pursuit of systemic coherence, to ensure that the international economic architecture is conducive not just for economic growth, but also for development. No matter how development-friendly the outcome of the Doha round may be, its long-term effects may be dampened by excessive volatility in the international financial system, said the G77.
Hence, it is clear that for the MTS to be truly an engine of development, the other elements of the international economic architecture must work in synchronicity with it. In concrete terms, UNCTAD may not necessarily be the place to negotiate trade issues or reform of the international financial architecture, but it must be a place where these ideas are discussed and debated, with the results influencing constructively concrete processes in other forums.
The Doha round must conclude successfully. It is in our collective interest, said the G77. It is therefore also in our collective interest and desire to ensure that UNCTAD contributes to the round's success. Central to this success is arriving at an outcome that is satisfactory and fair for all sides, and all countries, developed and developing alike, must be able to participate fully and meaningfully in the negotiations process.
UNCTAD must therefore continue to support developing countries including LDCs in better understanding the various facets of the ongoing negotiations, both with respect to the current WTO member countries as well as those in the process of accession, and in providing them with a clear idea of the various policy options available which can advance their interest.
The preparatory process for UNCTAD-XII provides us with an excellent opportunity to continuously inspire the negotiations in the Doha round through our efforts to pursue consensus on key trade and development issues, said the G77, noting that the preparatory process for UNCTAD X, for example, served as a healing process in the wake of the Seattle WTO Ministerial Conference held in 1999, and facilitated positive movements towards the successful Doha WTO Ministerial Conference in 2001.
The outcome document of UNCTAD XII should help to forge agreement in the WTO on those outstanding issues which may remain in April 2008. In addition, the spirit of the agreement emanating from Accra should help propel the overall WTO machinery to move further in terms of ensuring that the MTS will truly be an engine of development.
Iran, speaking on behalf of the Asian Group, said that the group is confident that this timely review (of the recent developments in the WTO post-Doha work programme) by the TDB will contribute to consensus building for the early conclusion of the Doha round with clear and meaningful development dimension.
Referring to the draft modalities for agriculture and NAMA that was presented for the consideration of WTO members before the summer break, the Asian Group noted that the negotiations on these draft modalities as well as on other issues in the round have intensified. This is a welcome development, said the group.
At the same time, however, the rush to meet the self-imposed deadline to conclude the round in the next few months should not lead to the dilution of the development content in any way. In this context, there are already some disturbing signs which is affecting the credibility of the MTS.
The Asian Group said that although agriculture comprises only 8% of world trade, still large proportion of the Asian population is dependent on agriculture sector for their subsistence, and their future living standards will largely depend on boosting their level of income. Many Asian countries still face disadvantages in respect of having access to major agricultural markets due to high level of support as well as high tariffs administered by large agricultural producers in industrial countries.
The proposed reductions in the trade-distorting domestic support, coupled with an expanded Blue Box and a bottomless Green Box, will not lead to a real reduction and reform of agricultural subsidies in major developed countries. On the other hand, said the Asian Group statement, the features of two key instruments for food security, rural development and rural livelihoods, that is, Special Products and Special Safeguard Mechanism (SSM), are still not clearly spelled out as demanded by developing countries, particularly, the G33.
The Asian Group said that the interests and concerns of the developing countries in agriculture must be adequately addressed for a successful conclusion to the Round.
The Group also noted that almost 70% of the world merchandise exports is comprised of manufactures, which is a sub-set of non-agricultural products. Therefore, it is a priority for developing Asia that the ongoing negotiations on NAMA and its ultimate outcome fully take into account the principle of less-than-full-reciprocity (LTFR) in respect of their reduction commitment.
The Group expressed concern over the draft modalities on NAMA. These draft modalities, in its view, are not based on the principle of LTFR as agreed at Doha. Developing countries have already shown enough compromise by agreeing to a simple Swiss formula for tariff reductions. However, the proposed coefficients for a simple Swiss formula, if adopted, will lead to de-industrialization and substantial loss of revenue and policy space for developing countries.
The Asian Group urged its trading partners to respect the double proportionality, that is, the principle of LTFR and the similar level of ambition in market access in NAMA and agriculture. Furthermore, this should be accompanied by flexibilities that would allow them to make lower tariff cuts or to be exempted from new binding commitments on a number of tariff lines of special importance to developing countries in their efforts to promote development.
Also, said the Group, dealing with non-tariff barriers, sanitary and phyto-sanitary standards, and other entry barriers is critical to assure enhanced market access for agricultural market access and manufactured exports from developing countries.
Service trade is another important topic for developing countries, said the Asian Group. Developing Asia's export and imports of commercial services have witnessed dramatic rise, though with notable fluctuations in their annual growth rates. But still they need to have more open access to the services market. Also, the development dimension in services negotiations must be preserved.
The Asian Group also expressed concern at the lack of progress on the set of three issues that were labelled as "development issues". While an amendment of the TRIPS agreement to accommodate public health concerns was agreed in 2006, this has yet to come into force due to very few ratifications so far. Similarly, the negotiations on Special and Differential Treatment (SDT) provisions to make them more precise, effective and operational, and on Implementation issues, to redress the imbalances in several Uruguay Round Agreements, have been stalled.
The Asian Group called on its partners to re-engage in these negotiations with political commitment and a development mind-set. UNCTAD can and should play an important role in this exercise. UNCTAD should contribute to consensus building on the development dimension of the Doha round; monitor and analyse the developments in all areas of negotiations from a development perspective.
The capacity building role of UNCTAD in areas such as trade and development aspects of services, agricultural and industrial products, SDT, dispute settlement and rules etc that is based on deep research and analysis, will be critical to preserve the development dimension and to allow developing countries to meaningfully participate in these negotiations.
Argentina, speaking on behalf of the GRULAC, supported the G77 statement and said that for developing countries, the Doha round must produce expected results in development such as market access, industrial products, services, rules, fisheries subsidies, and trade facilitation.
In agriculture, GRULAC expressed concern over the reductions proposed in trade-distorting domestic support which it said would have an insignificant effect on production, as well as the expansion of the category of the Blue Box and the possibility of shifting support programmes between the different boxes.
It also called for the complete treatment of modalities in special products, the SSM, sensitive products, preference erosion, tropical products, tariff escalation and basic products. The NAMA negotiations demand coherence with the principle of LTFR, and balance with agriculture.
In services, GRULAC wanted to see significant trade commitments in Mode 4. The development dimension in the round also requires SDT that is solid and fully operational, said the group. In relation to the TRIPS/biodiversity agreements, the group expressed concern about the undue appropriation that could occur through the patenting of genetic resources and traditional knowledge.
India aligned itself with the statements of the G77 and of the Asian Group. It said that the parameters of the WTO negotiations are enshrined in the Doha Ministerial Declaration, the July 2004 Framework and the Hong Kong Ministerial Declaration. These are the fixed points of the negotiations and there should be no attempt to re-open the same or bring in new issues. "This Round is not only about freer trade, but also about fairer trade - free trade a luxury of the rich; fair trade a necessity of the poor," said India.
The Doha round is the Development Round. The Doha Development Agenda is one of the most ambitious attempts at ensuring that the issue of development is firmly at the core of the MTS, said India.
Development-oriented outcomes necessarily include: (1) top priority to SDT to developing countries; (2) a substantial and effective reduction in domestic support and tariffs in agriculture by developed countries, while enabling developing countries to protect and promote the interests of marginalized and small farmers; (3) allowing developing countries to make use of existing flexibilities in NAMA, to promote domestic industrial development, while developed countries commit to eliminate their non-tariff barriers; and (4) developing flexibilities for developing countries based on March 2001 guidelines and procedures for services negotiations.
India said that the success of the round is predicated on its development agenda; its outcome can be best gauged against deliverables achieved for developing countries. The round must address real problems such as unemployment, low purchasing power and poverty, and thereby bring a balance between a few haves and a large number of have-nots.
India said that since development issues lie at the heart of the current round of negotiations, the key to the negotiations, therefore, should be firstly, to ensure that this round delivers for development and secondly, helps developing countries to integrate into the world trading system and take advantage of opportunities since many developing countries also need assistance in building up their capacity to make use of multilateral trade liberalization.
Failure of the Doha round would weaken the WTO's role as the anchor of the global trading system and lead to weakening the momentum of multilateralism. The only beneficiaries of this failure will be protectionism and unilateralism, said India.
For India, it is important that the Doha round negotiations are brought to a successful conclusion. Such a conclusion can only be possible if we are faithful to the mandate and the outcome reflects a clear balance between market opening and the development needs of the majority of the membership. India said that it will obviously show flexibility to achieve such an outcome but the onus for movement is clearly with the large developed countries.
Ambassador Makarim Wibisono of Indonesia said that there is need for revision of the agriculture text. In the market access pillar, there is presently an ambition level that is too low for developed countries and too high for developing countries. The NAMA draft has imbalances as the ranges disregard the principles of LTFR and comparable ambition between agriculture and NAMA. Corrections are needed to the text.
Indonesia said that in other areas (services, rules, TRIPS) progress on flexibilities for developing countries are left behind. There is very limited progress on strengthening SDT provisions. Of the 88 agreement-specific proposals, there is only progress on a few, it said. This is ironic as this is supposed to be a development round.
Ambassador Mohamad Noor Yacob of Malaysia welcomed the release of the agriculture and NAMA Chairs' drafts. He said that members should not lose sight of the development dimension at the core of the round. Improved market access for developing countries' products is key due to small markets in their countries.
The United States said that no single country could make the round succeed but a few countries could halt the round. Consensus is possible but only within the ranges of reductions in the agriculture and NAMA Chairs' texts. Exporting countries' concern is that flexibilities (requested by importing countries) do not disrupt new market openings.
The US remarked that special products should comply with the Doha mandate on market opportunities and SSM should not disrupt normal trade. The US warned that all countries must accept the market-access ranges in the texts, and those that do not will face being in the spotlight for blocking the round.