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

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WTO Doha round negotiations
Published: The Kathmandu Post, 14 April 2006
By: Navin Dahal

Negotiators gathered for the World Trade Organi-zation's (WTO) Sixth Ministerial in Hong Kong during 13-18 December 2005, seemed to agree on one thing - failure in Hong Kong was not affordable. And they indeed were able to make the Ministerial a technical success and issue a declaration. The major decisions on modalities to reduce tariffs in agricultural and industrial goods and domestic support in the agricultural sector, the crux of the negotiations of the ongoing round, were however, postponed to 30 April 2006. This was expected as Pascal Lamy, Director-General of the WTO, himself had said that the result of the Hong Kong Ministerial could have been only one of the two - either a modest success or a failure.

The negotiations resumed in Geneva after Christmas and New Year holidays but while the 30 April deadline approaches, the modalities are far from finalised. It now seems inevitable that the deadline, like many other deadlines in the WTO negotiations, will be missed. The moot question is whether developing countries will again have to sacrifice their 'development interest' to complete the Doha Round on time to salvage the multilateral trading system or they will remain steadfast and compel the developed country members to make the concessions required to make the round truly a development round.

For this to happen three things are crucial - the policy space of developing countries in terms of implementing industrial promotion measures is preserved; northern agriculture is reformed to end subsidies and provide access to agriculture exports of developing countries and opening of services sectors is accompanied by liberalisation of 'Mode 4 - Movement of natural persons' in developed countries and support to the developing countries to put in place effective regulatory mechanism and infrastructure to benefit from services liberalisation.

It is a well known fact that most of the developed and advanced developing countries industrialized behind high tariff barriers. By demanding high tariff cuts in developing countries, developed countries are not only ignoring 'the less than reciprocal' treatment that was promised for developing countries but are also refusing to allow them the same tools that they used while at similar levels of development. Deve-loped countries must thus allow developing countries the policy space to use tariffs selectively for industrial promotion. Developing country exports face proportionally high tariffs in the developed countries.

Their exports are also subjected to 'tariff peaks' and 'tariff escalations' in the developed countries. Added to these are non-tariff barriers in various guises that prevent access to the developing country exports in the developed country markets. There is no other way to make the Doha Round successful without easing these market access barriers.

Subsidies and distortion in agriculture sector in the developed countries remain one of the most controversial issues in the Doha Round. The present proposals being forwarded by the European Union (EU) and the United States of America (USA) are not going to address these distortions.

As the applied rates of tariffs in developed countries are much below the bound levels, the tariff cuts have to be above 70 percent to be effective. A 60 percent cut in the highest tier proposed by the EU is thus not adequate and will not require the developed countries to lower their applied rates.
Developed countries can also exclude exports from developing countries if more than 1 percent of the product lines are included in the sensitive list - products that are subjected to proportionately lower levels of tariff reductions. On domestic support too, cuts in excess of 70 percent will be required to make them effective.

Services are a relatively new entrant in the multilateral trading system and much remains to be done to liberalise the international trade in services. Unlike the goods sector, services are not traded across borders and thus are not protected by tariffs. This adds to the complexities of liberalizing this sector. Special and differential treatment to developing countries in services liberalisation is also inherently different from those in goods sector. This was precisely the reason that 'request and offer' was the modality chosen for services liberalisation.

The Hong Kong Ministerial, by allowing members to negotiate liberalisation of the services sector through plurilateral requests, put the developing countries flexibility to selectively liberalise the services sectors at risk. This round has so far also failed to address the needs of the developing countries such as those to improve the regulatory capacity and put in place the physical and human infrastructure to benefit from services liberalisation.
Negotiators from 149 member countries of the WTO seemed relieved at saving the Doha Round in Hong Kong. They will, in particular those from the developed countries, now have to show courage and determination to conclude the Round by the end of this year and yet achieve the development goals it set to achieve.

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