Too Much, Too Fast: What Happened To The Doha Development Agenda?

CONTENTS

I. The train has departed: who is left behind?II. Mini-Ministerial in Mombasa: HighlightsIII. AGRICULTURE: the never-ending story of ad valorem equivalentsIV. NAMA: negotiations enter a new phaseV. PROCESSES: informal meetings taken to a new level VI. IMPORTANT DATES TO REMEMBERVII. DOCUMENTS

THE TRAIN HAS LEFT THE STATION: WHO IS LEFT BEHIND?

WTO Members have leapt into high gear as they speed towards the 6th Ministerial Conference to be held in Hong Kong in December. Not only is the number of meetings in Geneva on the increase, but so too are the informal meetings, usually held elsewhere. It is quite normal for things to get busy a few months before a Ministerial Conference but many delegates have remarked that this year the acceleration has started extraordinarily early. Members offer several reasons for this greater sense of urgency. First, the U.S. fast-track negotiating authority, which forces Congress to accept or reject trade deals without amendment, runs out in 2007. Without fast track, the U.S. negotiators have much less assurance that Congress will ratify the deal they broker, making other members more reluctant to make significant offers. Fast track can be renewed, but the legislation will not pass easily in the current political climate.

A second reason is a sense of fear among the membership about the fragility of the WTO and nervousness over how many more failures or collapses the institution can stand. Third, many WTO Members would like to see the key issues decided before the Ministerial Conference, away from the public eye. This relieves the pressure on Ministers when they meet in Hong Kong and makes it harder for different advocacy groups to affect the negotiations. The July General Council this year will be key because of this new impetus to work out of the public eye. Members are working hard towards a so-called “July Approximation,” or draft modalities, that would lay strong foundations for the Ministerial agreement.

In terms of process, the G20 (a group of developing countries working together on agriculture) is strengthening and reinforcing its alliance and reaching out to other developing country groupings. There is also increased discussion among developing countries to form their own group in relation to the non-agricultural market access (NAMA) negotiations. This is vital to counter the aggressive push - particularly by U.S., EC, Switzerland, Norway and New Zealand - for ambitious industrial tariff reductions in developing country markets. The extent to which these various developing country groupings take up strong developmental proposals and positions will be essential in determining whether the Doha Round will be a “development” round or not.

The chances of securing a “development” round are remote. The pace of the talks in itself is a big problem. Rapid and intense negotiating processes favour big trading powers both in the North and in the South, who have much greater capacity to follow, participate, analyse and contribute to the formal and informal negotiations. Smaller delegations find it increasingly difficult to follow the negotiations, let alone analyse the implications or provide input. This month, for example, the NAMA and agriculture negotiation sessions were held simultaneously. This put enormous strain on small delegations. This load is on top of the informal processes held outside Geneva, where key decisions are made but where smaller delegations are often excluded. There is now small progress in some areas of the negotiations, especially in agriculture and NAMA. There is less progress in services (see Geneva Update March 8, 2004). Delegations need time to digest the developments and determine whether their interests are adequately reflected in the proposals.

MINI-MINISTERIAL IN MOMBASA: HIGHLIGHTS

On March 2-4 Kenya hosted a mini-Ministerial. Mini-Ministerials are unofficial meetings hosted by a WTO member country, and are used to try and move the negotiations forward with a selected group of WTO members. The meetings are exclusive and totally lack transparency yet are key in moving issues forward.

Agriculture, services and NAMA were the main issues discussed at the mini-Ministerial. On agriculture, the countries agreed to finalise the AVE conversion methodology by the March agriculture session and to submit initial calculations by the April agriculture session. On NAMA there was agreement to focus on a non-linear formula for industrial tariff reductions. The services discussion reaffirmed the May deadline and urged countries to submit initial or revised offers.

Discussions on development issues were very weak. Members simply emphasized the need to solve the outstanding special and differential treatment (SDT) proposals. Development issues are increasingly being relegated to the periphery of the negotiations and expose the lack of political will on the part of the membership to make this a development round.

Importantly, the five interested parties (FIPs) or non-Group of 5 (NG5) process has started again with several side meetings taking place before and during the Kenyan mini-Ministerial. The FIPs are the U.S., EC, Brazil, India and Australia. The Group first appeared in the run up to the July General Council last year. They thrashed out a framework agreement on agriculture that provided the basis for the final agreement in the July Package. Serious concerns remain about the untransparent and exclusive nature of this group, especially in light of their role in securing the July Framework. Some sources in Geneva say this type of process - possibly with the addition of a few more key countries - is considered as a possible model for other areas of negotiations, such as NAMA. This approach to negotiations shows the continued tendency for WTO Members to conduct negotiations that claim to be on behalf of everyone, yet only reflect the interests of the biggest powers. A multilateral trading system that wants just trade rules depends on a negotiation process where every Member’s concerns and interests are taken on board. Civil society groups must continue to insist on a more transparent and inclusive process.

AGRICULTURE: THE NEVER-ENDING STORY OF AD VALOREM EQUIVALENTS

For almost seven months, the issue of converting specific duties (X dollars per tonne of import) into percentage duties, or ad valorem equivalents (AVEs) (X percent of the value of the import), has dominated the agriculture negotiations (see Geneva Update October 2004, December 2004 and February 2005, for further details). Despite the agreement in Mombasa to finalise the issue, Members failed to meet the deadline at this month’s agriculture session. The negotiations remain stalled and Ambassador Groser, Chair of the Special Session on Agriculture decided to postpone a final meeting scheduled for Friday 18th March due to lack of agreement. The block is created by the EC and the G10 (including Switzerland, Norway, Korea and Japan), who have a lot of specific tariffs that will have to be converted. The EC has the highest number of specific tariffs to convert. They see the process as a major concession. In exchange, they are demanding more progress in issues of importance to them, including NAMA and services.

The conclusion of the AVE issue is intended to pave the way for the most important issue in the market access negotiations: the formula for reducing tariffs on agricultural products. Central to the formula, is the treatment of sensitive products. Sensitive products were agreed to in the July Framework and are a category of products available for use by all members reflecting their sensitivities in certain products. These products will be subject to lesser reduction cuts than other products. Preliminary discussions are focusing on the kind of formula cut for sensitive products and on the possibility of countries expanding tariff rate quotas (TRQs) on sensitive products. TRQs are a quota system predominantly used by developed countries where a certain quantity of a product is allowed to enter the market at a low or zero tariff rate. Developing countries argue that if TRQs are sufficiently expanded then the formula applied to the sensitive products could be less ambitious. These discussions have also exposed that developing countries are unlikely to benefit from the provisions on sensitive products since they do not use TRQs.

Most countries would like to see progress towards a formula for tariff reduction before discussing the other key issues, including special products and the Special Safeguard Mechanism (SSM) for use by developing countries. Whether all the outstanding issues can be discussed in sufficient detail to enable Chair Groser to deliver draft modalities in time for the July General Council remains uncertain.

On domestic support reductions (the amber box rules), members agreed to primarily target those members with high levels of support that have a measurable impact on world markets, such as the EC, rather than members with the highest level of support relative to the size of their agricultural sector as a whole - such as Switzerland and Norway- but whose policies do not have much impact on world markets.

The blue box was previously confined to production-limiting programmes. Last July, negotiators agreed to consider the inclusion of programmes without production limits. The G20 is now arguing that any programmes included in new blue box disciplines must be visibly less trade-distorting than those in the amber box. The G20 is also trying to reintroduce the criterion of limiting production for the blue box. The G33 also presented a paper arguing that developing countries should not be required to reduce their de minimis levels.

On export competition, progress has been better. Chairman Groser considers it likely that he can prepare a “first approximation” of modalities by July except on the issue of food aid, which has not yet been discussed. Export competition discussions include export subsidies, export credits and state trading enterprises. Progress on export credits and state trading enterprises is crucial to showing the EC that there is sufficient parallelism for them to eliminate export subsidies.

NAMA: NEGOTIATIONS ENTER A NEW PHASE

After a relatively long period of inactivity, the March 14-19 NAMA negotiating session was flooded with proposals from the U.S., EC, Canada, Norway, Hong Kong, China, New Zealand, Mexico, Chile, Colombia, the ACP and the African Group. Momentum is definitely gathering as members agreed to focus on the formula for reducing industrial tariffs. The proposals submitted on the formula (one each from the U.S, Norway and EC and a joint proposal from Mexico, Chile and Colombia - see references below) all propose a single formula with different variables, known as coefficients, for developed and developing countries. The formula is most commonly known as the non-linear formula but is also referred to as the ‘Swiss’ formula or the harmonizing formula. It implies steep tariff cuts for products with high tariff levels and relatively lower cuts to already lower tariffs. This has the effect of reducing tariff peaks and avoiding very low tariffs on some products to ensure that other tariffs are cut.

The purpose of a single formula is to make tariff structures uniform. However, this objective defies the logic of industrial development: countries need to protect certain products and allow access for other products to develop their industrial base. Having national policy space to do this is essential. Development is not well served by a push for uniformity. The general acceptance by countries to work towards a formula, in particular a single formula with numerous coefficients, is particularly worrying given the continued concern raised by developing countries about the threat of de-industrialisation posed by the adoption of a single formula to reduce all industrial tariffs. The loss of policy space that will result form such steep tariff cuts

The U.S. proposes a Swiss formula with 2 coefficients (one for developed and one for developing countries) but argues that the difference between the two coefficients must not be too great “to provide real market access.” The EC also proposes a Swiss formula but imposes conditions for the varying coefficients based on commitments developing countries make on binding tariffs at a particular level and on giving up other flexibility to determine import policy.

The formula proposals made so far have been rejected by most developing countries. India, Brazil, South Africa, Argentina and China have recently indicated their preference for a ‘Girard formula’ which is still a non-linear or harmonizing formula but which incorporates average tariff levels of each country when determining the different coefficients. These five countries are becoming increasingly active on NAMA and are in the process of setting up a developing country grouping. There are rumours of the creation of a new G5 on NAMA but the countries are still deciding whether their differences can be resolved and are exploring the possibility of a broader alliance. There is a strong sense that since almost all members of the African Group and the LDC Group will be exempt from applying the reduction formula, that it is important for other developing countries to be more active, especially on the question of the formula.

Other proposals include the suggestion by the U.S. and Canada for sectoral initiatives where they envisage achieving a critical mass of Members to participate in a given initiative and then implementing the initiative on a multilateral, most-favoured nation (MFN) basis. The African Group submitted a proposal with preliminary ideas for the treatment of preferences and for addressing non-tariff barriers (NTBs) linked to preferences. The ACP Group submitted a paper establishing a series characteristics and relationships to determine which countries are ‘vulnerable to preference erosion.’

Also present in Geneva for the NAMA session was a U.S. business lobby delegation from the National Foreign Trade Council (NFTC), which represents more than 300 U.S. companies and is pushing for very ambitious reductions in developing country tariffs on manufactured goods. Their proposals can be viewed on-line, at {http://www.nftc.org/default/trade/wto/Final%20NFTC-WTO%20Tariff%20Analysis.pdf}

PROCESSES: INFORMAL MEETINGS TAKEN TO A NEW LEVEL

The formal processes taking place inside the WTO are being supplemented by a rapidly expanding number of informal meetings outside Geneva. The various informal meetings include mini-Ministerials, Senior Official Meetings (SOMs), Five Interested Parties’ (FIPs) meetings and country group meetings.

Aside from the Kenya mini-Ministerial, India hosted a G20 Ministerial on March 17-18 (see reference for G20 Ministerial Declaration below). The meeting was a chance to consolidate the G20 position on agriculture including a call to eliminate export subsidies within five years. They used the opportunity to outreach to other developing country groupings including the G33, ACP Group, Caribbean Community and Common Market (CARICOM) and LDC Group, to establish a more inclusive and transparent process. There was also a brainstorming session on other issues, including services and NAMA.

In April, Japan will host a mini-Ministerial on NAMA alongside an ASEAN (Association of South East Asian Nations) meeting and Canada will host a Senior Official Meeting in Geneva just prior to the WTO Symposium, in mid-April.

The rapid pace of the negotiating process is a cause for concern. Developed countries are increasing the pressure for concessions however the further the negotiations progress, the fainter the hope for development. This round is becoming less and less about development and more about the interests of the industries from the north. Civil society needs to increase support for the development calls of the south and increase pressure on the big trading powers. Civil society groups should pay close to attention to the processes taking place both within and outside Geneva and maintain pressure and presence at each step of the way. Groups should take note of when informal meetings are taking place in their countries and prepare to mobilize and put pressure on their governments.

IMPORTANT DATES TO REMEMBER

March 30-April 1 Cairns Group Ministerial, Cartagena, Colombia

April 10 NAMA Mini-Ministerial, Japan (next to ASEAN Meeting)

April 13-19 Negotiating Group on Agriculture

April 18-19 Senior Officials Meeting, Geneva (hosted by Canada)

April 20 G33 Ministerial, Jakarta

April 25-29 Negotiating Group on Market Access

May 3-4 Mini-Ministerial, Paris (next to OECD Meeting)

mid-May Africa Union Ministerial, Cairo

DOCUMENTS

Several of the proposals on NAMA are available at {www.wto.org}, Document numbers TN/MA/W/49-53 and TN/MA/W/7/Add.1

The US proposal on NAMA is available at:

{http://www.tradeobservatory.org/library.cfm?refid=69828}

The G20 Ministerial Declaration is available at:

{http://www.tradeobservatory.org/library.cfm?refid=69877}

The G20 proposal on the blue box and the G33 proposal on de minimis support will soon be at {www.tradeobservatory.org}

Carin SmallerProject Officer, Trade Information ProjectInstitute for Agriculture and Trade Policy, Geneva Office