Uphill Task To Meet Ambitious WTO Negotiating Timelines

UPHILL TASK TO MEET WTO's DEADLINES FOR HONGKONG

Below please find an article on the deadlines set for the Hong Kong ministerial meeting of the WTO and the uphill task it will take to meet these deadlines, given the differences that remain among the WTO members on the various key issues.

Martin KhorTWN

------------------------------------------------------------

Even as cautious optimism was being projected from a mini-Ministerial meeting of 23 WTO members at Davos on 29 January, WTO members remain divided on most of the key issues in the Doha programme, and it is uncertain what can be achieved, or even what is expected to be achieved, at the Hong Kong Ministeial conference this December.

In the first week of February, negotiations resumed at the WTO after the year-end break, with week-long discussions on non-agriculture market access (NAMA) that started Monday. Next week will see resumption of negotiations on agriculture as well as trade facilitation.

The delegations will have a difficult time trying to bridge the many gaps in positions on the key issues as well as in the balance between the issues. This will be complicated by the “political process” of the many mini-Ministerials that are being planned in which only a few members are invited, and by the process of selecting the next WTO Director-General which is expected to occupy considerable time and attention of the members at least in the next few months.

The Davos mini-Ministerial was described by the chair, the Swiss Economy Minister Joseph Deiss, to be a “kick start to the political process to put negotiations on the right track.”

In his personal summary after the meeting, Deiss identified five key areas that need resolving: agriculture, NAMA, services, special and differential treatment and rules (including trade facilitation). He said that for the Doha programme to have a “final result” by 2006, the Hong Kong meeting would have to show concrete progress on modalities for agriculture and NAMA, a critical mass of offers in services, significant progress in rules and trade facilitation, and a “proper reflection” of the development dimension.

For that to happen, draft texts or first approximations should be available by August, divergences would be narrowed and a “workable basis for Hong Kong” (presumably a draft Ministerial Declaration) would have to be ready by autumn and only a “few major political issues” should be referred to the Ministerial.

Trade officials who were at Davos said that according to this timetable, for the Doha programme to end in 2006, there had to be basic agreement on formulae, numbers, and dates in the modalities on all three pillars of agriculture and on NAMA by the Hong Kong ministerial, and that much of the work had to be done by July, when there should already be agreement on ranges and approximations of figures for agriculture and NAMA.

It would be too risky to leave the major work for September to November, say the officials, and if there cannot be significant narrowing of differences by July, the targets for what to achieve in Hong Kong may have to be lowered, said the officials.

According to this view, it is better to lower the expectations for the Ministerial than to maintain an unrealistically high ambition level, and to take key and controversial decisions to Hong Kong and face the possibility of another Cancun-like breakdown, if agreement cannot be reached there.

However the format or route mapped out at the Davos meeting on how to get decisions made “efficiently” by July and by Hong Kong may itself be controversial and not looked at approvingly by many members.

At least some of the Ministers present at Davos appear set to continue and expand the use of “mini Ministerials” and other exclusive mechanisms to inject the political element into the negotiations en route to Hong Kong.

The practice of the “informal” mini-Ministerials has previously given rise to charges of exclusivity in WTO decision-making (dominated by major developed countries, with a few influential developing countries invited to participate) with the majority of the members not being able to take part or even to know what is happening.

Even the Sutherland report on the “Future of the WTO” criticized the mini-Ministerials for being ineffective and causing resentment. [However its own proposal, to create a Ministerial-level “consultative body” of 30 members (including permanent membership for major developed countries), would in fact institutionalize and legitimize the mini-Ministerials and cause even more resentment.]

The Davos meeting was attended by Switzerland, EC, USA, Canada, Australia, New Zealand, Norway, Japan, Korea, Argentina, Brazil, Chile, Egypt, Hong Kong, India, Indonesia, Kenya, Malaysia, Mexico, Pakistan, Singapore, South Africa and Thailand.

There will be a flurry of mini-Ministerials following up from Davos, including a meeting in Kenya on 2-3 March, and on the side-lines of the OECD Ministerial meeting in Paris at the beginning in May. The APEC trade ministers’ meeting in Seoul, Korea in June has also been mentioned as an occasion for a meeting on the WTO agenda.

Trade officials said some of the Ministers in Davos also favoured making use of some General Council meetings in Geneva this year to involve some Ministers and capital-based senior officials as participants, similar to the format of the July 2004 General Council process which adopted the “July package”.

At that meeting, the Ministers of most developed countries were present but only a few Ministers from developing counties. At the “Green Room” and other informal meetings, the Ministers from developed countries, particularly the EU Trade Commissioner and the US Trade Representative, were able to have a disproportionately large influence, and some diplomats and observers believe this was partly due to the absence of most developing countries’ Ministers.

The timeline announced at Davos by Deiss must be considered very optimistic, considering the technical and political complexity of the Doha issues, the still deep divides between members especially on agriculture and NAMA, and the lack of any progress for so long on the “development issues” of SDT and implementation.

At a deeper level, there is also a continuing difference of basic perspectives between developed and developing countries of the nature and effects of the WTO rules and what the Doha programme is supposed to achieve in terms of balance, and development goals.

The flurry of mini-Ministerials being planned, and the possible re-use of the General Council process to incorporate Ministers and senior officials, is an attempt to get political decisions made to overcome the real and deep differences.

Diplomats from several developing countries have expressed considerable reservations about this format, as their countries would be disadvantaged, either because their Ministers would not be able to attend (as they are not invited to the mini Ministerials or do not have the resources to be at the Geneva meetings), or if present, they would not have sufficient grasp of the technicalities of the issues and would thus not be able to negotiate on an equal footing with the Ministers from developed countries.

As a result, the process envisaged could contribute to developing countries, especially the smaller ones, not being able to participate and to have the desired outcomes.

On the substance of issues, there is a clear North-South difference of perception on what kind of “balance” has to be achieved if Hong Kong or indeed the Doha programme is to succeed.

At Davos, the major developed countries claimed that they had made significant concessions in agriculture, especially citing the ending of export subsidies. In return, they demanded that developing countries had to make real commitments by opening their markets in NAMA and services, to the benefit of the developed countries’ enterprises.

The developed countries can be expected to continue to strongly advocate this line in the preparations for Hong Kong, whether in Geneva or other fora.

The developing countries, on the other hand, generally view the existing rules in WTO overall to be imbalanced against their interests./ They want a re-balancing of existing rules to take place, and to have a strong development dimension in the new agriculture, NAMA and services negotiations.

They do not see the developed countries’ agriculture commitments as being significant yet. For example, the end date for export subsidies is not yet agreed on. There is more than a suspicion that there would not be any effective cuts in their domestic subsidies (especially with the probable expansion of the Blue Box subsidies), and the question of the tariff-reduction formula is yet to be settled.

In any case, the developing countries had expected agricultural liberalisation in the North to be a result of the Uruguay Round, and they had already paid for that by agreeing to sign on to treaties on the “new issues” of TRIPS (intellectual property), services and TRIMS (investment measures).

It is now realized that the developed counties hardly liberalized but in some ways even increased their protection in agriculture, and yet they are asking the developing countries to “pay” again (by opening their markets in industrial goods and services) if they want to see subsidy reduction in the North.

From the developing countries’ perspective, it is unfair that they have to pay, and pay again. Moreover, many are concerned that they themselves are being asked to reduce their agricultural import tariff even before the Northern subsidies are ended or significantly reduced, thereby putting their small farmers’ livelihoods in jeopardy.,

Thus there are many deep-seated differences in agriculture, and unresolved issues, including in market access (the formula, special products and special safeguard mechanism for developing countries, sensitive products mainly for use by developed countries), domestic support (the redefinition of blue box, the need to control box-shifting, the reduction rates for amber box subsidies) and export subsidies (the end date for subsidies, the equivalent disciplines for export credits, etc).

In NAMA, the developing countries perceive they face a “united bloc” of the North that wants to drastically slash their industrial tariffs through a “non-linear formula” and a tariff-eliminating sectoral approach, and to also have them bind almost all their tariffs, and at low rates. These would take away the flexibilities and policy space that the developing countries have for their industrial development.

These NAMA issues (the choice of tariff-reduction formula or approach, the treatment of binding, the sectoral approach) as well as how to deal with preference erosion and non-tariff barriers, remain complex and difficult topics to negotiate. Also given the importance that the decisions will have on the industrial prospects of developing countries, it is unlikely that they can be resolved in a short time.

On services, the developed countries are also aggressively seeking to open up many sectors in the developing countries, while many of the latter are cautious in opening up because their domestic firms may be over-run by giant foreign service enterprises. Several developing countries also want to see progress in developed countries’ commitments in Mode 4, but there is so far little progress on this.

On the “development issues”, which were supposed to have the highest priority in what is dubbed the Doha Development Agenda, there has been hardly any progress since Doha or Cancun.

On special and differential treatment, there is no agreement on what to do with the 28 proposals in the draft Cancun Declaration, which several developing countries view as having little real economic value, and no progress on the other outstanding issues.

On implementation issues, there has been hardly any progress in resolving them. Instead the focus has been on the issue of extension of geographical indications, and the dispute on this one issue seems to have been a factor in relegating all the other implementation issues to the backburner.

Morevover, many developing countries’ trade diplomats have expressed concern that the “development dimension”, including the principles of special and differential treatment and less than full reciprocity, have been inadequately treated so far in the agriculture and NAMA negotiations.

From this development perspective, there is a real danger that the existing imbalances in the WTO rules will continue (especially in the absence of progress on strengthening SDT and on implementation issues) and will worsen (due to the neglect of the development dimension in current agriculture and NAMA negotiations).

In the dynamics of the negotiations from now to Hong Kong, a key question is the extent to which the developing countries will be able to advocate their interests adequately and to further the development dimension in the negotiations in what is after all now widely dubbed as the Doha Development Agenda or a Development Round.

Various developing countries’ groupings are planning to coordinate their preparations for the negotiations and the Ministerial. For example, the Group of 20 will meet in Delhi at Ministerial level on 18 March, and a meeting of the Group of 33 is also being planned in Delhi for 19 March. There will also be an African trade Ministers’ meeting in Cairo in mid-May.

With so much at stake, and with deep differences still on many of the issues of the Doha programme, as well as basic differences on overall perception of and approaches to what the “development agenda” and “development dimension” means in the WTO and the current negotiations, it will be an uphill task to meet the timelines being set - agriculture and NAMA modalities with figures in Hong Kong, basic agreement by July, including meaningful progress on SDT and implementation, and a clear development dimension in all the negotiating issues.