In the assessment of the World Trade Organisation (WTO), the Hong Kong Ministerial has served to put the Doha Development Round back on track. Do you agree with this analysis? In your opinion where does the Doha Development Round stand after Hong Kong?
Absolutely not. In fact, the Hong Kong Ministerial confirmed that the Doha Round is seriously off track in terms of being a ‘development round’. The Ministerial meeting was a lost opportunity to make trade fairer for poor people around the world. Rich countries put their commercial interests before those of developing countries. The small progress in agriculture was more than cancelled out by anti-development texts in services and industrial tariffs. Most of the difficult decisions were put off. The title ‘development round’ was always more aspiration than reality, but in Hong Kong we saw that for the most powerful countries, it had ceased to be even that.
Agricultural dumping was only marginally addressed in Hong Kong by way of an end-date for the elimination of export subsidies, while the core issue of domestic subsidies was bypassed yet again. Do you think there is sufficient ‘political will’ in the EU and the US to take on powerful domestic vested interests for resolving the agriculture deadlock?
The end-date of 2013 was later than what almost all countries wanted (an end-date of 2010). Besides, export subsidies are a relatively minor part of the farm support that leads to dumping; they are used mainly by the EU (subsidies in the EU amount to 2.5 billion), and constitute only 3.6% of overall EU farm support. They would have largely been phased out by 2013 in any case, under the Common Agricultural Policy (CAP) reform timetable.
The real battle is over domestic subsidies, and this debate is dominated by domestic politics and the agri-business lobbies in both the EU and the US. In the US, the Bush administration is facing record deficits and may look to lowering subsidy levels in forthcoming negotiations on the Farm Bill. The EU is split between countries that are net recipients of funding from the CAP, such as France, and those that are net donors, such as the UK. To reverse the usual politician’s cliché, this is not a matter of principle, it’s a matter of money! However, the WTO debate can play an important role. For example, the cotton ruling against US subsidies has strengthened the hand of the reformers in Washington.
Duty-free quota-free (DFQF) market access for LDCs, elimination of subsidies on cotton and aid-for-trade are being bandied about as development achievements at Hong Kong. What is your assessment of the ‘LDC package’ and the ‘development-friendly’ claims being made on account of it?
The ‘development package’ is no substitute for a ‘development round’. DFQF market access will be provided for all LDCs on a ‘lasting basis’ by 2008, for at least 97% of all products. The decision was a step back from the Doha mandate of full DFQF access, and much less generous than it sounds, as the key export products of most LDCs will be exempted. Almost 94% of tariff lines already enjoy access to the US at low or zero tariffs, and, in any case, LDCs tend to export a limited range of products. Three per cent comprises some 330 tariff lines, when 20-25 tariff lines currently account for some two-thirds of Bangladesh’s total exports. The US insisted on a ceiling of 97% of tariff lines precisely because the ceiling allows it to protect its textile and garment sectors from imports from countries such as Bangladesh, Cambodia and Nepal (which it tried to exclude altogether earlier in the meeting). That ceiling also allows Japan to continue to protect rice, fish, leather goods and footwear.
On cotton, the ‘Cotton 4’ group of Mali, Chad, Benin and Burkina Faso achieved limited progress on eliminating export subsidies and reducing other subsidies faster and further for cotton than for other crops. However, rather than being separately negotiated, cotton has become part of the wider agriculture negotiations. This is particularly outrageous, because both the ‘concessions’ fall short of the findings of the cotton dispute panel. In Hong Kong, US negotiators managed to turn a dispute settlement ruling against the US into a bargaining chip for which developing country negotiators were expected to make concessions in other areas!
On ‘aid-for-trade’, Oxfam’s overriding concern is that this is unlikely to involve significant new money on top of that already pledged earlier in the year. Instead, money already promised will be re-branded as aid-for-trade, and could be tied to concessions from aid recipients.
How do you interpret the current state of play in Non-Agricultural Market Access (NAMA)? Do you think the current formula approach to tariff binding that is under consideration would afford enough protection to the industries of developing countries?
Developed countries in Hong Kong pushed hard for a tariff-reduction formula (known as a ‘simple Swiss’ formula, although its simplicity is relative) that cuts higher tariffs more than lower ones. This puts developing countries at a disadvantage since their tariffs are generally higher, and is in direct contradiction of the ‘less than full reciprocity’ promised in Doha.
In Hong Kong, a new grouping, the so-called ‘core group’ comprising nine countries led by India and South Africa, sought to keep flexibilities for developing countries, while curbing northern tariff peaks and escalation. They successfully fended off text on a ‘simple Swiss’ formula, and managed to get some more general language (‘Swiss formula with coefficients’) that opens the possibility of using a different, more pro-developing-country formula, such as that proposed by the Argentina, Brazil, India (ABI) group. That battle now returns to Geneva in essentially the same state as it was prior to the Hong Kong Ministerial.
Overall, however, the Ministerial agreement is still essentially the unacceptable recipe for de-industrialisation that was so controversial in the July 2004 Framework Agreement negotiations. The history of almost all successful economies shows that most developing countries need to protect industries during their take-off periods, and lower tariffs as they develop. A bad NAMA agreement could therefore ‘kick away the ladder’ of development.
The outcome on services is certainly the most contentious component of the Hong Kong Declaration. Do you view qualitative benchmarking and the acceptance of a plurilateral approach as a backdoor entry to ultimately moving towards dismantling the flexible architecture of the General Agreement on Trade and Services (GATS) agreement?
That certainly seems to be the intention of the rich countries, led by the EU. They want to change the structure of the GATS negotiations half way through the round, moving away from the more development-friendly bottom-up approach agreed on by developing countries as the basis for including services in the WTO, and towards something more closely resembling other areas of negotiation. This has to be resisted -- many developing countries are only just developing modern service sectors, and they would be ill advised to surrender further policy space that they may need to use in their industrial policies as they seek to upgrade their economies in the service sector.
How do you think the negotiations will play out in the future? Do you visualise a repeat of the July 2004 process, where most decisions were taken behind closed doors by a few countries? In such a scenario, what do you think should be the role of civil society organisations?
In the short term, an attempted re-run of the July 2004 General Council looks likely. In order to try and reach the Hong Kong Declaration’s April 30, 2006, deadline for modalities in agriculture and NAMA, delegates will have to meet in the first few months of 2006 and there isn’t time or appetite to organise a full Ministerial. Oxfam has serious concerns about this. It is vital that any such decision does not seek to move negotiations behind the closed doors of the WTO, away from public scrutiny, and even from some ministers, as happened, to some extent, in July 2004. A General Council is not the place to make decisions of this gravity. If the WTO ignores these concerns, the task of civil society organisations will be to keep the spotlight on the decision-making process, even though access is more difficult in Geneva.
In the longer term, I think we are now in for a ‘long round’ stretching into the next decade. Under the US government’s Trade Promotion Authority (better known as ‘Fast Track’), Congress is only able to vote for/against trade agreements negotiated by the government, but not amend them. Fast Track runs out in June 2007, and without it Congressional consideration of a trade agreement is considered legislatively impossible. Given the time it takes to agree on modalities and then complete individual country schedules, I believe the round cannot now be completed before Fast Track expires. The mood in the US Congress is such that Fast Track is not expected to be renewed any time soon.
February 2006 |
