South Asia Watch on Trade, Economics & Environment (SAWTEE)

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Salvaging the future of WTO
Published: The Kathmandu Post, 6 August 2004
By: Ratnakar Adhikari

Trade ministers of 142 member countries of the WTO agreed in November 2001 to launch the ninth round of multilateral trade negotiations – called Doha Development Round (DDR) in the Qatari capital, with a target to conclude the same by 1 January 2005. However, due to apparent lack of honesty on the part of developed countries, most of the deadlines set under the DDR were missed. When the trade ministers from 146 countries met at Cancun, Mexico in September 2003 – where a mid-term review of the DDR was supposed to be conducted – the divergence in positions of the developed and developing countries was so pronounced and the lack of commitment to move the DDR forward was so visible that they led to the collapse of the Ministerial itself.

At the close of the Ministerial, General Council (GC) was entrusted with the responsibility to convene a meeting by December 15, 2003 to take action necessary at that stage to enable the ministers to move towards a successful and timely conclusion of the negotiations. However, no decision could be reached within this deadline due to entrenched positions of members. Therefore, it was decided that members must agree to a framework for negotiations by July 31, 2004. Finally, an agreement has been hammered out within this deadline.

This agreement is considered historic in that for the first time in the history of multilateral trade negotiations, a major breakthrough has been made on agricultural trade – which has been, by far, the most contentious issue. The language in Annex A titled Framework for Establishing Modalities on Agriculture reveals slightly more flexibility and stronger language in favour of developing countries on market access compared to earlier texts. The text retains the tiered formula, which classifies tariffs into various bands for subsequent reduction from bound rates, the higher tariffs being cut more than lower ones.

Similarly, a proposal made by the EU, Japan and other protectionist countries to maintain "sensitive list" in which tariff cuts would not be that deep has also been extended to the developing countries as well. This provides a leeway for the developing countries to designate, subject to negotiations, some products as "sensitive" and make less-than-full reciprocal commitments to removing trade barriers.

On special and differential treatment (S&DT) relating to agriculture, the text retains the provisions on the flexibility for developing country Members to designate an appropriate number of products as Special Products (SPs) to be subject to more flexible treatment based on the criteria of food security, livelihood security and rural development needs. The GC Decision also provides access to a Special Safeguard Mechanism (SSM). However, it is not clear whether the 36 (mostly developed) countries which are already making use of SSM are to be allowed to maintain them or other countries will also have recourse to such a mechanism.

Cotton subsidies provided by the USA, which have affected livelihood of millions of farmers in West Africa, had become a controversial issue during the Cancun Ministerial. This issue has now been incorporated as a part of agricultural negotiations.

Frustrated by the developed countries’ approach to shift support from one heading to another in order to appear ‘WTO compliant’, the developing countries had long demanded strong rule on this. And now they have got it. Annex A also provides for capping product specific AMS at average levels, based on a methodology to be agreed, in order to prevent circumvention of obligations through transfer of subsidies between different support categories.

Singapore issues were another set of issues that had become highly contentious during the Cancun Ministerial. As per the recent decision of the GC, only one of the four issues, namely trade facilitation is up for negotiations, while other three issues – competition, investment and transparency in government procurement have been kept out of the negotiations under the DDR. Further, developing countries have managed to tie the implementation of the commitments to be negotiated under a possible agreement on trade facilitation to the receipt of technical assistance from the developed countries.

On the issue of non-agricultural market access (NAMA), the modalities are yet to be agreed, but the political commitment to start negotiations has been recorded. One major point in the NAMA text provided for in Annex B of the GC Decision is that developing countries are required to make less-than-full reciprocal commitments.

On the issue of services, which is provided for in the Annex C of the GC Decision, the deadline for tabling revised offers has been postponed till May 2005, thus providing more time for the developing countries to analyse the impact of opening up new services sectors.

However, there is no need to wholeheartedly welcome the agreement reached among WTO members, because the balance is still tilting in favour of the developed countries. First, the GC Decision has prepared modalities for negotiations only on five issues. Regarding existing commitments in the rest of the Doha mandate, including intellectual property, dispute settlement, rules, and environment, some of which are of critical significance to the developing countries, the agreement simply reaffirms continuing negotiations.

Second, some developing countries and non-governmental organisations have criticised the opaque and undemocratic nature of negotiations – with only the key grouping of Five Interested Parties (FIPs) – comprising the US, the EU, Brazil, India and Australia – exclusively deciding the fate of the entire WTO members on agricultural issues.

Third, there are still a number of grey areas even in the case of agriculture. For example, the EU having agreed to eliminate export subsidies is hailed as a major achievement by the developing countries, but lack of agreement on the deadline and this issue being left for further negotiations would mean the need for additional hard work to be put in by the trade negotiators.

Fourth, to the utter dismay of the developing countries, nothing significant could be achieved on the implementation and S&DT issues – which were included in the Doha Ministerial outcomes at their insistence. All that the GC did was to postpone the deadlines for reviewing the progress and taking appropriate actions on implementation related issues and concerns until July 2005. Similarly, on the S&DT issue, the GC set a new deadline of July 2005 for the Committee on Trade and Development to complete its review of the "outstanding" Agreement-specific proposals – the fourth such deadline.

In the context of this historic document having been signed, Nepal – the newest member of the WTO – should immediately constitute a Team of Experts to review the decisions and prepare the negotiating positions for the country in consultation with a range of stakeholders. Only then the interests of our stakeholders will be reflected in the negotiating position of the country, which will make it convenient for the government to sell the final agreement to their constituency. Further, Nepal should also identify alliances through which it could push its agenda in the upcoming negotiations.

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