Do you think ‘development’ was a major casualty during the Hong Kong Ministerial Meeting of the World Trade Organisation (WTO), and that the Doha Development Agenda is turning out to be about everything but ‘development’? Are LDCs disillusioned about the WTO and the Doha Development Agenda, or do they remain optimistic?
The Hong Kong Ministerial Declaration does not adequately reflect the pro-development promises of the Doha Development Agenda. The bracketed texts of the latest Geneva draft were ‘cleaned’ largely in favour of the developed countries. Indeed, from the perspective of Least Developed Countries (LDCs), the adopted declaration was of less value than the Geneva text.
Among the developing countries, the G20 succeeded, to some extent, in withstanding the pressure of developed countries and in extracting limited dividends, particularly in the case of export subsidies in agriculture. LDCs, as a group, received a dubious market access deal. The ambitions of LDCs like Bangladesh, Cambodia and Nepal remain largely frustrated. Annexure F of the Ministerial Declaration contains certain LDC-specific Special and Differential (S&D) treatment proposals, most of which are of an esoteric nature.
LDCs are thus having great difficulty in discerning the ‘development content’ of the Hong Kong Ministerial, but they remain energised to strive for effective gains from the last lap of the round. LDCs are disappointed with the Hong Kong outcome, but not despondent.
Duty-free, quota-free (DFQF) market access for LDCs is being flaunted as the most development-friendly outcome of the Hong Kong Ministerial Meeting. Do you view this as an attempt to hoodwink the global community into believing that ‘development’ is at the heart of global trade?
DFQF market access for all products of LDCs was to be the major element of the ‘development package’ of the Hong Kong Ministerial. Regrettably, the Ministerial outcome did not live up to the much-hyped promise.
The Hong Kong Declaration does not provide for full and immediately-effective DFQF market access for LDC exports. The value of this proposal will greatly depend on what gets into the 3% exclusion list (whereby a country can keep certain products outside the DFQF list). Going by the remarks the chairman of the Ministerial made during his concluding speech, the modalities of the exclusion list will be thrashed out in Geneva in 2006. There is also no completion deadline for the phasing out of exclusion list items. It is difficult to imagine that developed countries such as the US, which opposed the idea of 100% DFQF market access for LDCs in Hong Kong, would be ready to demonstrate a high degree of flexibility in negotiations pertaining to modalities on the exclusion list. For that matter, this is also true as regards fixation of the ‘rules of origin’ criteria.
On the other hand, the present language of the DFQF proposal about its predictability is anchored in a vague term -- ‘access on a lasting basis’ -- and does not provide for a binding commitment (which would have meant that an eligible member not fulfilling the directive could be brought to dispute settlement).
There are reports that apart from developed countries such as the US and Japan, many developing countries were also behind blocking the proposal of providing DFQF market access to LDCs on all products. How acceptable do you think the DFQF package is to developing countries in general? Do you foresee any contradictions within the South on this count in future?
It is well known that the US and Japan are the two major countries that opposed full DFQF market access for LDC products. It is also no secret that the major motivation behind the US opposition is guided by its concern for its domestic non-competitive textile industry. Indeed, the US was not ready to offer the deal to the Asian LDCs that it has given to African and Caribbean low-income countries under the Africa Growth and Opportunity Act (AGOA) and the Confederation of British Industry (CBI).
On the other hand, the EU and some other developed countries did express their explicit support for DFQF market access for all LDC products. The latter group could do so as they have already offered such access for LDCs through their autonomous schemes.
It may be also mentioned that it is not very clear to what extent the major developing countries lent their unequivocal support to full preferential access during the Green Room and sideline meetings.
In this connection, the open and assertive stand taken by some clothing-exporting non-LDC developing countries was most curious. Pakistan, and to some extent Sri Lanka, opposed the DFQF deal for LDCs, which effectively meant undercutting the ambitions of the South Asian LDCs. The competitive nature of the trade patterns of clothing-exporting non-LDCs and LDCs remains an open empirical question. As a matter of fact, LDCs are not major competitors in the apparel/textile categories exported by Pakistan and Sri Lanka. It is understood that the US$ 400 billion global textile and clothing market is big enough to accommodate an incremental market share for many developing countries.
The absence of coordinated and committed support on the part of all developing countries in favour of a full DFQF proposal contributed largely to diluting the final text. It now advises to take into account the impact of the DFQF measure on other developing countries at a similar level of development, and allows developing country members to phase in their commitments with appropriate flexibility. From the perspective of future negotiations, there is a strong need to evolve an improved understanding on the part of developing countries with respect to DFQF market access for LDCs.
Some experts have argued that LDCs have not come back empty-handed from Hong Kong, and that there are gains in the form of the ‘aid-for-trade’ package and the extension of the implementation period of the TRIPS agreement until July 1, 2013. Are these developments significant? DFQF market access has not been granted to all products of LDCs. Do these developments have the potential of controlling the consequent damage?
The immediate and real achievements of LDCs at Hong Kong are of limited value. Apart from the much-hyped DFQF market access deal, which is anyway of low significance, tentative progress was made in the case of export subsidy in cotton as well as in the case of certain S&D (Special and Differential) treatment provisions.
Aid-for-trade is an emerging concept. A governance structure for the proposed initiative is yet to be put in place; unless it is decided, the committed resources cannot be mobilised or disbursed. The Director General of the WTO is to constitute a taskforce that will provide its recommendations for the design of the governance structure. However, concerns regarding this initiative have already surfaced. These include the following:
- Are these new, additional and incremental resources, or are they being redirected from some other earlier commitments?
- Is there a double or triple counting of the resources committed under the Millennium Development Goals?
- Will these resources be subjected to policy conditionalities, which are usually practised by the international financial institutions?
- As these resources are for all developing countries, how will the share of LDCs be determined?
The implementation period of the Trade-related Intellectual Property Rights (TRIPS) agreement, which expires on January 1, 2006, has now been extended by another seven-and-a-half years (up to July 2013) with the possibility of further extension. It may be recalled that LDCs, taking note of their limited capacities, were asking for an extension of 15 years. They have now been asked to provide plans within the next two years for implementation of the TRIPS regime.
It may be added that at Hong Kong, LDCs have also been accorded an extension regarding Trade-related Investment Measures (TRIMS) for another seven years, ie, until 2013. LDCs will now be able not only to continue with the old TRIMS (subject to notification), but also introduce new ones. However, it is well known that LDCs are not being able to use these TRIMS due to opposition from the World Bank and the International Monetary Fund (IMF).
In any case, all these initiatives that could potentially benefit LDCs can hardly compensate for the real adverse impact of the truncated DFQF proposal adopted at the Hong Kong Ministerial.
Given the current outcome of the Hong Kong Ministerial, what will be the priorities of LDCs in future trade negotiations?
The current year (2006) will be a very critical year for LDCs since this is likely to be the last year of the Doha Round. The decisions embodied in the Hong Kong Declaration have added a note of urgency to LDCs to prepare adequately for this. To this end, LDCs need to reinvigorate their negotiating capacities. They definitely need to revisit their trade promotion and industrialisation strategies in the light of the Hong Kong outcomes.
The timelines extracted from the Hong Kong Declaration suggest that there will be a number of priorities for LDCs in the upcoming negotiations.
The first and foremost task will be to engage in negotiating the modalities of the exclusion list of DFQF market access. LDCs will have to identify the export items that they want to keep out of the country-specific exclusion list. The deadline for the submission of plans for the implementation of the DFQF initiative is September 2006 for developed countries, and December 2006 for developing countries. LDCs will need to discuss the modalities with these countries, keeping these timelines in mind.
The second most important priority will be with respect to services negotiations, particularly for Mode 4. Article 9(a) of Annexure C states that members shall develop appropriate mechanisms for the full and effective implementation of the LDC modalities, including identification of sectors and modes of supply of interest to LDCs. This is mandated to be done before July 31, 2006, ie, before the submission of the second round of revised offers.
Third, LDCs have to prepare their proposals for the ‘aid-for-trade’ taskforce. The taskforce will submit its recommendations to the Director General of the WTO by July 2006.
Other than these three immediate priorities, LDCs will have to refocus on some of the items on the unfinished ‘development’ agenda of the Hong Kong Ministerial. These include negotiating an acceptable solution for tariff preference erosion, discipline for food aid, and the S&D proposals on the table on which decisions are yet to be taken.
LDCs should not accept the Hong Kong outcome as the final deal under the Doha Round.
February 2006 |
