Info Service on WTO and Trade Issues (Sept08/06)
Many issues besides SSM remain unresolved in the
Penang, 9 Sep (Martin Khor) -- When the Mini-Ministerial talks collapsed at the WTO at the end of July, media attention had focused on the deadlock on special safeguard mechanism (SSM) and to some extent on the cotton issue which was never discussed at all. But these were by no means the only outstanding issues when the talks came to an end.
In particular, the issue of non-agricultural market access (NAMA) was far from being settled, with at least four major contentious elements still outstanding and ready to boil over. These were the coefficients in the "Swiss formula" for cutting tariffs, the flexibilities from the full application of the formula for developing countries, the "anti-concentration clause" that would further constrain the already meager degree of flexibilities, and the "sectoral initiatives".
The Lamy draft basically uses the coefficients and flexibilities of the Chair's 10 July text. This text is extremely imbalanced and violates the LTFR principle, which was mandated in the Doha Ministerial Declaration. It requires the developing countries to undertake tariff reductions by more than developed countries. It also cuts the developing countries' bound tariffs very deeply, thus reducing many applied tariffs, and/or seriously reducing policy space to make use of tariffs for industrial development.
Lamy draft proposed coefficient 8 for developed countries, which would
mean that the average bound tariff of the three major developed countries
would be reduced by about 28% (i. e. EU by 33%, US by 29%,
It proposed that developing countries could choose between three options in coefficients, each coefficient being linked to a particular set of "flexibilities" (i. e. that a percentage of tariff lines be excluded from tariff cuts, or that another and higher percentage of tariff lines be cut by half of the formula cut).
this scheme, coefficient 22 is the central coefficient in the Lamy draft;
it would reduce the average tariff of developing countries like
For this central coefficient, the flexibility is very little: either (i) 10% of NAMA tariff lines be cut by half of the normal formula cuts, but restricted to 10% of the value of NAMA imports; or (ii) 5% of NAMA tariff lines are exempted from any tariff cut, but this is also restricted to 5% of the total NAMA import value.
Another contentious issue was the "anti-concentration clause". This issue arose very late in the negotiations, appearing only in the NAMA Chair's report of July 10. Developed countries (the US, EU, Japan) insisted that the already restricted flexibilities for developing countries would be further limited so that developing countries could not exclude a sector or too much of a sector from the full force of the formula cut.
Lamy draft of 25 July proposed that 20% of tariff lines with at least
9% of the total import value in any sector or HS chapter must be subjected
to the full formula cuts. Within the G7,
"Sectorals" was another controversial and unresolved NAMA issue. The developed countries have been pressing for "sectoral initiatives" in which a "critical mass" of countries agree to reduce their tariffs to zero in various sectors. It is not mandatory for developing countries to participate in these initiatives.
the developed countries were particularly pressurising large-sized developing
the preceeding months' negotiations, developed countries were pressing
for the linking of participation in sectorals to the degree of flexibilities
or even to extra points in the coefficients. This was objected to by
this linkage was maintained in the Lamy draft. But an even greater sticking
point was that the Lamy draft for the first time also includes the new
obligation that certain countries (listed in an Annex Z) have committed
to participate in negotiations in at least 2 sectoral tariff initiatives.
This seems to contradict the "non mandatory nature of sectoral
initiative", which is also stated in the paragraph of the draft.
In the G7 meeting,
CONTROVERSY ON US' AGRICULTURAL SUBSIDY REDUCTION
big issue was the level of commitment of the developed countries, particularly
the start of the week, the
Schwab angered the developing countries by conditioning her "offer"
of $15 billion with the acceptance of the other WTO members of a kind
of "peace clause" whereby the
appeared to be a demand not only for a revival of an earlier "peace
clause" (which has expired, thus opening US subsidies to legal
challenge at the WTO) but to even have an expand scope in the new peace
clause. Critics pointed out that this would have allowed the
responded to the
$14.5 billion level was just a little below the $15 billion US offer,
and still far below the estimated 2007 actual OTDS of $7-8 billion.
the Lamy-proposed $14.5 billion allowable level is double the 2007 level,
allowable OTDS for the EU is to be cut by 80%. This is in line with
what the EU has said it would do (i. e. to be 10 points higher than
2004, the EU's applied level was Euro 57.8 billion (according to simulations
in a WTO paper). The CAP reform of the EU is already scheduling to drastically
reduce its OTDS within a few years (through changing the nature of subsidies
and expanding the Green Box category of subsidies. During the
lowering of the allowable and applied OTDS is also accompanied by a
rise in the Green Box support (which is not part of the OTDS). A large
part of the domestic support of the
While actual OTDS is cut, subsidies are shifted to the Green Box and total domestic support may not decline. Recent studies (e. g by UNCTAD India) have shown that the Green Box support can also be trade and production distorting.
international trade expert Bhagirath Lal Das has pointed out: "The
really significant escape route is the Green Box which amounts to US$50
billion and Euro 22 billion in 2000 respectively in the
The Lamy draft did not even mention the Green Box, while in the Agriculture Chair's text of 10 July, there is no limit proposed on the amount of Green Box support.
Thus, the cuts in allowable OTDS for US and EU may appear large (70%, 80%) but in fact will not reduce applied or planned reductions in OTDS and moreover these will be offset by an increase (in the case of the EU) in the Green Box. The subsidies should not be there in the first place due to the distortions they cause, and their reduction should not be "paid for" by developing countries through the high price in market access in NAMA and agriculture and services being demanded of them. In particular, the $14.5 billion level should not have been used as a "trigger" to demand such high obligations from developing countries in agriculture, services and NAMA.
SERVICES AND TRIPS
the G7 and the Green Room only focussed on agriculture and NAMA modalities,
there were also the side shows of services and TRIPS during the
A half day "services signalling conference" took place on 26 July, attended by about 30 countries. Developed countries insisted on this conference for them to gauge the level of commitment of selected developing countries (whose markets they were interested in) to give better offers, especially in Mode 3 (commercial presence).
major countries came out of the services meeting with satisfaction,
The Minister of Norway was asked to coordinate negotiations on three issues relating to the WTO's agreement on trade-related intellectual property rights (TRIPS): the register for geographical indications for wines and spirits; proposed extension for geographical indications; and the relation between TRIPS and the Convention on Biological Diversity.
was not much progress in these areas. In the TRIPS/CBD issue, about
a hundred developing countries, led by
Textual language was provided for all three issues on how to move the negotiations forward. The language for the disclosure issue had been watered down considerably in an attempt to get the support of the EU while in return the countries advocating the disclosure proposal would support the EU to have textual language on negotiations on the geographical indications issues.
possible outcome was always uncertain as the
the heat increased on
After the talks collapsed, the Brazilian Minister and the European Trade Commissioner said it was incredulous that the negotiations could have got stuck on an issue like the SSM, while such progress had been made on more complex and important issues like NAMA and agricultural subsidies.
This reveals an under-estimation of the importance that a majority of developing countries places on their defensive interests, since they also have little or nothing to gain from having increased market access to others' markets.
recent years, there has been an upsurge in the interest of these developing
countries to defend and promote their food security and farmers' livelihoods.
immediate future of the negotiations has come under a cloud. Many WTO
members called for an early resumption of the talks, after the August
summer break. Yet it was thought unlikely that serious negotiations
on key issues would take place until after the new
However, sufficiently successful efforts have been made during the WTO August break to get a few of the key parties to agree to meet again at the senior-official level. The talks starting this week is the result of that.
remains to be seen whether this will become another failed attempt,
or whether a breakthrough will result. The WTO's
In the meanwhile, developing countries would do well to review the key proposals on the table. The deal, as proposed in the two Chairs' texts of 10 July, and in the Lamy draft of 25 July, contains many imbalances that work against the developing countries' interests. The rate of exchange between what the developing countries will get and what they have to give up, is unequal. There is still time to change the equation.
(* This is the second part of a two-part article analysing the issues and factors that led to the failure of the "Mini-Ministerial" Doha talks at the WTO at the end of July. The first part was published in SUNS #6546 dated 10 September 2008.) +