The Hindu Business Line, December 07, 2005
By Pradeep S. Mehta & Pranav Kumar
The release of the WTO draft text document does not mean that the deadlock over agriculture and other issues has been resolved. Members are still at loggerheads over several issues pertaining to market access, and special and differential treatments to developing countries. Going by the elements of the text, there is hardly any substantial movement since July 2004, and expectations from the Hong Kong Ministerial are few, say Pradeep S. Mehta and Pranav Kumar.
THE much-awaited Draft Ministerial Text (DMT) has been released. It was expected to be out after the General Council meeting of the World Trade Organisation (WTO) in July, but due to serious differences between developed and developing countries over liberalisation of agriculture, that did not happen.
However, the release of the text does not mean that the deadlock over agriculture and other issues has been resolved. Members are still at loggerheads over several issues pertaining to market access, and special and differential treatments to developing countries.
Only a fortnight ago the WTO Chief, Mr Pascal Lamy, in his report to the heads of delegations indicated that members have to settle for a less ambitious outcome from the Hong Kong Ministerial. He, however, warned, in his report, that by recalibrating there was a possibility that the immediate pressure on members to move forward might be lessened.
But he probably was left with no option, as he waited, perhaps too long for forward movement and convergence on contentious issues. Since a DMT is required for deliberations by members, the WTO Director-General and the Chairman of the General Council released the text for consideration by members.
Going by the elements of the text, there is hardly any substantial movement since July 2004 and expectations from the Hong Kong Ministerial are few. Two things are to be resolved: Dates for establishing modalities and based on them submission of a comprehensive draft schedule.
One wonders why Mr Lamy did not propose something on his own by considering the concerns of different groups/alliances? Not very long ago, when he was chief trade negotiator of the European Union, he had strongly defended the current regime of high support-based EU agriculture, which the Southern countries, led by G-20, are hoping to dismantle.
If he chose to do a balancing act between the South and the North, he might have been accused of takingsides with the developed countries. He, therefore, preferred to include the report by the Chairman of the Special Session of the Committee on Agriculture as an annexure, urging members to take further action. In this, Mr Lamy played the role of an honest umpire, thus belying speculation that he would be partisan.
The Chair’s report on agriculture makes it clear that full modalities will not be achieved at Hong Kong, as members did not want even the suggestion of any implicit or explicit agreement where it did not exist. Nevertheless, the report has listed areas in which some degree of convergence has been achieved and has urged members to build upon them.
However, the bigger issue is who will make the first move, as most of the commitments by members are conditional. What is most disappointing about the Chair’s report is the persisting disagreement between members on designating special products and access to the Special Safeguard Mechanism. These two issues are known to have major gains for developing countries, following the July Framework Agreement.
As regards non-agricultural market access (NAMA), the situation is no different and the language is similar to the one proposed by the WTO Director-General on agriculture: Members are to decide dates for establishing modalities and, based on them, submission of a comprehensive draft schedule. According to the report by the Chairman of the Negotiating Group on Market Access to the Trade Negotiating Committee (TNC), members, on the issue of the tariff reduction formula, have broadly agreed on a non-linear Swiss-type formula. This is the only forward movement since the adoption of the NAMA framework in July 2004.
The NAMA text of the Doha Development agenda very clearly states that for developing countries it would be “less than full reciprocity in reduction commitments”. Unfortunately, developed countries have their own interpretation of measuring it.
While, some developing country members believe that this means less than average percentage cuts (as translated through a higher coefficient in the formula, than those undertaken by developed country members), thedeveloped country members have indicated that there are other measurements of less than full reciprocity in reduction commitments, including the final rates after the formula cut which, in their markets, would be less than in developing country markets. In addition, developed country members are also trying to include least developed countries’ (LDCs) exemption from tariff cuts in measuring “less than full reciprocity in reduction commitments”. All these make the simple arithmetic unnecessarily more complex and dilute the very purpose of this clause.
The services text also does not give any clear direction. The situation of services negotiation is different from the other two subjects of trade liberalisation, namely, agriculture and non-agricultural products. In services, there are no negotiations for any formula to dismantle existing barriers in trade. The DMT on services suggested some additional approaches to realise the goal set out in the Doha Development Agenda vis-à-vis services trade liberalisation.
Besides, the request-offer approach members have been urged to pursue negotiations on a plurilateral basis in accordance with the principles of the General Agreement on Trade in Services (GATS) and the Guidelines and Procedures for the Negotiations on Trade in Services. But it is doubtful that this new additional approach will speed up negotiations or improve members’ commitments in their offers.
What is lacking in the post-Doha negotiations is that no concrete measures have been taken to operationalise the clause: “Particular attention will be given to sectors and modes of supply of export interest to developing countries”, which is the Mode 4 and labour-intensive services.
Some of the developing countries have asked for temporary “GATS Visa” in view of the concerns of both developed and developing country members, but that has found no mention. The issue of “GATS Visa” is more relevant today in the context of rising security concerns of developed country members.
The DMT delves into other issues such as trade facilitation, special and differential treatment, implementation, trade and environment, trade related aspects of intellectual property rights (TRIPS) and public health, LDCs, technical cooperation, and so on. However, the progress on all these issues is highly dependent upon substantial movement on the core issues of trade liberalisation, particularly agriculture, an issue that took the Doha round hostage.
Interestingly, Mr Lamy has included four new issues, which are not in the main Doha Development Agenda. They are commodities, coherence, aid for trade and accession.
These are welcome, provided they come in addition to development promises of Doha Agenda. Aid for trade, in particular, could be helpful for LDCs in building their supply-side capacity and also to overcome some of the potential negative impacts as a result of future tariff reductions under NAMA and reduction in farm subsidies by the North. The tariff reduction under NAMA negotiation may erode their margin of preferences and reduction in farm subsidies may result in a rise in their farm import bill.
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