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TWN Info Service on WTO and Trade Issues (Nov07/25)

28 Nov 2007


No Doha breakthrough before year-end, says Lamy

The WTO Director General has stated that there will not be a breakthrough in the Doha negotiations before the end of this year.

At the General Council meeting on Aid For Trade, developing countries stressed that the aid should not be a substitute for development content in the Doha negotiations, and the aid should be "additional."

The following report was published on 23 Nov in the SUNS.  Any reproduction of this article requires the permission of SUNS (sunstwn@bluewin.ch).

With best wishes
Martin Khor
TWN


No Doha breakthrough before year-end, says Lamy
Geneva, 22 Nov 2007:  By Kanaga Raja
SUNS 23 Nov 2007

The Director-General of the World Trade Organization, Pascal Lamy, said on Wednesday that he did not expect a breakthrough in the Doha negotiations before the end of this year.

Lamy, however, was of the view that it was possible to conclude the negotiations next year.

Lamy's remark, on the conclusion of the Doha Round, came in response to questions at a media briefing following a General Council session that debated the issue of Aid for Trade.

The Council session concluded a two-day first global review of the Aid for Trade initiative, launched at the Hong Kong Ministerial Conference in 2005, and aimed at expanding the trade capacity of developing countries.

According to a trade diplomat who attended the Council session, the general message from the developing countries was that Aid for Trade should complement the Doha Round and not be a substitute for it. Also, money provided by the donors for Aid for Trade should be new additional funds.

India, in a statement at the General Council, while welcoming the fact that donors have reconfirmed their Hong Kong Aid for Trade pledges, expressed hope that the actual disbursement figures "do not disappoint us and we are able to meet the total Aid for Trade target of $30 billion by 2010." (see below.)

(It is now becoming obvious that no major breakthroughs can be achieved by December. The Chairs of the agriculture and non-agricultural market access negotiations were to have issued their revised draft modalities texts sometime mid-November but some media reports are saying that these are now expected in February.

(Media reports are quoting trade diplomats and officials as saying that an initial deal might be likely January or February 2008 with a final deal being inked in 2009. Even US Trade Representative Susan Schwab has been quoted in the media as saying that a Doha Round deal could be achieved before President George W Bush leaves office in January 2009.

(Recently, on 15 November, after a G20 meeting and the larger groupings of developing countries, both Brazilian Foreign Minister Celso Amorim and Indian Commerce Minister Kamal Nath, adverted to the US administration not having any Trade Promotion Authority, and asked the US to provide a road-map on the TPA issue.

(According to trade observers, though Susan Schwab has been trying to assure them that the US Congress will agree to a Doha deal, if it is concluded here, both Brazil and India, after soundings of their own in Washington, appear to have realised that it is unlikely that Congress would provide any such authority to the Bush administration. Hence, their publicly raising the TPA issue.)

Asked at the media briefing whether there was no hope for a breakthrough in the Doha talks before the end of this year, Lamy said: "I don't expect what you call a breakthrough, which would be a major development in the negotiations, that would materialize by a sort of formal agreement before the end of this year."

"It is cooking, it is moving," he said, adding "I think those of you who follow both agriculture and NAMA negotiations know that. It is on the front burner. No doubt about this but it takes a bit of time."

"And the conventional wisdom and the sort of view we have established is that rather than producing half baked compromise proposals - the final baking which might be bumpy - members prefer a good long, sometimes slow, cooking which will take us into next year, both for the production of compromise papers... for their adoption."

Asked as to whether a deal can be concluded next year, Lamy was of the view that it was possible, adding that whether modalities on agriculture and NAMA take place in the beginning of next year before completing the rest of the agenda is something we have in mind.

Lamy told the media that this was the first time that international organizations have gotten together in the WTO to send a strong message that they stand together in moving forward on Aid for Trade.

According to the Director-General, the WTO is a core business about creating trade opportunities through market opening and equitable disciplines, and that Aid for Trade "is about generating trade flows and making through various capacity improvements, trade feed into growth and growth into poverty alleviation for developing countries."

Lamy also maintained that the Aid for Trade initiative is separate from the Doha Round. "It's a distant separate agenda from the Round... There is no ex-ante conditionality of any sort between the Round and Aid for Trade..."

Lamy spoke of enhancing donors' contribution and mobilizing more resources for Aid for Trade. In this respect, he mentioned a figure of $20 billion for 2002-2005 and that commitments that have been confirmed by donors have taken the figure to the tune of $30 billion by 2010.

(A document by the OECD on Aid for Trade that was distributed at the global review said that between 2002 and 2005, donors committed on average $21 billion per year on aid-for-trade categories more closely related with aid for trade. This included $11.2 billion to build economic infrastructure, $8.9 billion to promote productive capacities, and $0.6 billion for increasing the understanding and implementation of trade policy and regulations. The document also said that if the recent annual growth rate of aid for trade - 6.8% - continues, this would deliver an additional $8 billion by 2010, with total aid-for-trade commitments reaching $30 billion. According to the document, next year's report will also contain data on disbursements.)

As to whether this would suffice to match the commitments taken by the G8 in Gleneagles, Lamy said "probably not. But for the moment... we are on track in terms of commitments."

He also mentioned the huge involvement of recipient countries who now have taken new steps to clarify their priorities, stabilize them and discuss a number of these priorities at the regional level.

Among the priorities that have come up repeatedly are infrastructure, transport, energy, telecoms, customs facilitation, trade finance, and sanitary and phyto-sanitary standards, he said, adding that "we now need to dig together with other international organizations."

"When the port of Dar es Salaam is jammed, it is not only Tanzania who has a problem but it is also Botswana, Rwanda, Uganda, and that is the reality we have to cope with."

Lamy also spoke of the issues of monitoring and evaluation of aid flows and that it is also the benchmark against which progress can be measured. He noted that most of the technical work has been outsourced to the OECD.

Lamy also said that what he had heard over the two-day session was that developing countries also want to own the numbers. Most of the numbers that are produced until now are produced by donors and they are, as expected, influenced by the constituencies to which donors report.

"This is something we need to improve." he said, adding that "We cannot in looking at these numbers - whether they are financial flows, whether they are performance indicators, whether they are results indicators - rely on methodologies which are only donor driven. And there is progress to be made in this direction. That is one of the things we need to factor in our number crunching."

Lamy also noted that the formula of regional Aid for Trade reviews which worked well due to the heavy involvement of regional development banks in Africa, Asia and Latin America, will be replicated in 2008. (Three regional reviews took place in Lima, Peru for Latin America and the Caribbean; in Manila, Philippines for Asia and the Pacific; and in Dar es Salaam, Tanzania for Africa.)

Asked as to whether the planned increase of $30 billion will not be diverted from other sectors, Lamy said that there were no assurances of that but that it can be tracked by the debt numbers and the proportion of Aid for Trade in overall development assistance.

He noted that in 2002-2005 baseline period, Aid for Trade was a decreasing proportion of overall development assistance.

"We do not have yet indicators of performance or results that could link a certain volume of Aid for Trade to a certain volume of trade," he said.

Asked to comment over the fact that food aid has been used as a way of subsidizing agricultural exports by the developed countries, Lamy said that the question of whether development assistance is tied or untied is still open.

On food aid, that is an area where new disciplines will appear as a result of the Round. "This is an area where we will have binding rules that clearly go in the direction of cash, more than kind... The paper that Falconer (chair of the agriculture negotiations) circulated last week is much more disciplined than it used to be."

Meanwhile, India, in a statement at the General Council, pointed to two aspects of Aid for Trade which it believed are central to the credibility and sustainability of this initiative - issues of coherence and additionality of resources.

It said that ownership is critical to coherence. Aid for Trade can only work as an integral component of national development strategies. In such strategies, the focus is typically on poverty reduction and employment generation.

This implies, for instance, that creation of export enclaves in developing countries without strong linkages with the domestic economy cannot be a sustainable outcome. "We must continue to remind ourselves that the main focus has to be on development and not on exports per se. This is the internal dimension of coherence."

Aid for Trade is not an end in itself, said India, adding that Aid for Trade is only one instrument designed to facilitate the integration of developing countries into the global trading system. For this initiative to succeed, the overall trading environment has to be facilitative.

"Egregious measures like trade distorting subsidies in agriculture, tariff peaks and tariff escalation which invariably target developing country products, restrictions on the movement of natural persons and creative Non-Tariff Barriers designed to block market access for developing countries have to be urgently and effectively addressed to ensure a level playing field for developing countries."

On the issue of the additionality of resources, India said it was happy that donors, mainly the EU, Japan and the US have reconfirmed their Hong Kong Aid for Trade pledges and there have been new commitments from some countries.

It expressed hope that "the actual disbursement figures do not disappoint us and we are able to meet the total Aid for Trade target of $30 billion by 2010."

The overall aid environment at the moment is not very encouraging, said India. As the OECD pointed out, total Overall Development Assistance (ODA) levels net debt relief continue to decline. India also recalled that in 2005, G8 countries pledged to increase aid to Africa by $25 billion by 2010.

"It is disheartening to note IMF figures showing that official grants to sub-Saharan Africa have actually declined since 2005 as a share of its economy. OECD figures for 2002-2005 also reveal that the average share of Aid for Trade as a % of total sector aid declined from 35% to 32%."

"It is in this somewhat sombre background that we look forward to receiving OECD figures in next year's Review which will also incorporate actual disbursement figures to give us a fair assessment of the path we are actually treading on," said India.

India said that despite being a developing country, it has an ambitious programme for providing assistance to developing countries and LDCs. This is in addition to the ongoing Indian Technical And Economic Cooperation programme which over the last 40 years has provided technical assistance of over $3 billion to 156 countries.

India believed that its assistance programmes exemplify South-South cooperation, and in this respect it provided some instances of Indian assistance in its immediate neighbourhood such as Afghanistan, Nepal, Myanmar, Bangladesh, Bhutan and Maldives. It said that it also provides assistance to several other developing countries and LDCs in other parts of the world.

In a statement also on 21 November, Lesotho, on behalf of the LDCs, said that it is now generally accepted that Aid for Trade is about allowing developing countries, in particular LDCs, to address the challenges of, and to take advantage of more liberal trading environments.

Although the development of LDCs should not be completely reliant on aid disbursements, with proper planning, implementation, monitoring and evaluation, aid can play an important role in creating the necessary conditions to attract private sector investment, hence, the need for additionality of Aid for Trade, said the statement.

There is a need for both national and regional Aid for Trade strategies and implementation plans, as well as a need for an effective monitoring and evaluation mechanism, which this global review is a part of.

The international and regional development banks have a major role to play in both defining Aid for Trade strategies and in financing subsequent projects and programmes.

The LDCs stressed that for them, there should not be any conditionality attached to access the Aid for Trade. +

 


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