Challenges In Store for Future WTO Negotiations
Developing countries' willingness to open markets viewed as ''crucial''
WASHINGTON, DC - 08/10/04 - By all accounts the deal reached in Geneva allowing the stalled World Trade Organization (WTO) negotiations to proceed was the easy part, an indicator of the difficulties ahead, according to trade correspondent Bruce Odessey in the Washington Wire.
Launched in 2001, the negotiations - formally called the Doha Development Agenda - collapsed at the September 2003 WTO ministers' meeting in Canc?exico, and stalled for nearly another year as US Trade Representative Robert Zoellick and others traveled the globe trying to revive them.
Finally, after two weeks of marathon General Council negotiations, Odessey reports, representatives of the WTO's 147 member governments on July 31 approved a framework agreement, including the long-elusive framework for agricultural trade, for their negotiators to move ahead with the really hard bargaining.
Every negotiating deadline set in 2001 had passed un-met except the original deadline for completing negotiations by the end of 2004, which was swept aside by the new framework agreement.
According to participants at the General Council meeting, a hastily crafted paragraph in the framework agreement can be read as setting no deadline for concluding the negotiations although it does schedule the next ministers' meeting for December 2005 in Hong Kong.
Although some WTO work should resume after this month, participants said, serious negotiations, especially on the contentious agricultural issues, are unlikely to start up again until spring 2005, well after the US general elections in November and a scheduled change in European Union (EU) representation.
The final agricultural framework followed closely a text settled July 28 by five parties - the US, the EU, Brazil, India and Australia - despite complaints from food-importing countries including Japan and Switzerland and from many developing countries, participants said.
Grumbling persisted about other parts of the framework agreement as well, one participant said, yet the WTO parties "swallowed hard" to accept it, each eager to avoid taking blame for killing the negotiations outright.
Whether the negotiating round succeeds will depend to a great extent on whether developing countries except the poorest ones, which are exempted, are willing to open their markets meaningfully to imports of agricultural and industrial goods, participants said.
The market access provisions of the agriculture framework - especially difficult for developing countries - are much less specific than provisions aimed mostly at wealthy countries for eliminating export subsidies and reducing domestic subsidies.
Vague language requires "substantial improvement in market access."
Still to be negotiated are the hard numbers, including the initial tricky business of dividing tariffs into different bands for different levels of reduction and agreeing on how to give special treatment to developing countries and to politically sensitive products in all countries.
The market access language does require bigger cuts for higher agricultural tariffs but not elimination of tariffs, making possible some continued protection for politically sensitive commodities such as sugar in the US.
At US insistence, the agriculture framework requires elimination of export subsidies by a certain date still to be negotiated. It requires also elimination of export credits with repayment schedules of more than 180 days, but only negotiation of disciplines for shorter-term export credits, giving the US scope to continue part of its program.
The framework also requires disciplines on state trading enterprises such as the government-sanctioned monopoly Canadian Wheat Board and on food aid that would displace commercial food sales.
Trade-distorting domestic support would be cut substantially under the agriculture framework, with bigger cuts required for higher levels of support, a step toward harmonization on which the US insisted to whittle down the existing huge EU advantage.
Parties would have to reduce their trade-distorting domestic support by 20% from bound levels - the top levels under existing WTO agreement - in the first year of any eventual agriculture agreement; such first-year reduction would have little effect on US spending, which already falls below bound levels.
Some language in the framework seeks to restrict what are called "blue box" subsidies, which include programs aimed at limiting agricultural production. Such support would be capped at 5% of a country's average total value of agricultural production during some historical period to be negotiated.
The "blue box" provisions would allow continued counter-cyclical payments to farmers (when market prices fall to a low level) under the 2002 US farm bill because they would be unrelated to current production, participants said.
Under the existing WTO agreement, "de minimis" domestic subsidies - those not counted in calculating overall trade-distorting support - are subject to a cap. Under the framework, they would be subject also to reduction except for developing countries such as India where the spending is aimed mostly at subsistence farmers.
A deal was worked out on the controversial cotton subsidies issue between the United States and four sub-Saharan African countries: Benin, Burkina Faso, Chad and Mali. Even though the issue will remain as part of the overall agriculture negotiations - the African countries had wanted it separated for accelerated resolution - a special subcommittee will form to make sure it is considered "ambitiously, expeditiously and specifically."
Less complete than the agriculture framework was that for industrial tariffs, what WTO calls nonagricultural market access (NAMA).
Developing countries succeeded in adding language to the start of the NAMA text offered at Canc?ating their objections.
It requires that "additional negotiations are required to reach agreement on the specifics of some of these [initial] elements" including the formula for reducing tariffs, rules for participation in initiatives aimed at tariffs in single industrial sectors and additional flexibility for developing countries.
In his August 1 press conference in Geneva, US Trade Representative Zoellick said the additional language does not abandon the Canc?ements but only allows some modification. He viewed the framework as preserving the US interest in achieving bigger cuts for the highest tariffs, keeping the option for sectoral initiatives and placing disciplines on non-tariff barriers.
The framework sets a deadline of October 31 for submitting notices of non-tariff barriers countries want included in negotiations.
The services framework was little changed. The language was given more prominence than in earlier drafts, and a May 2005 deadline was set for revised offers.
The framework makes little change from earlier language, reiterating the importance of development to the negotiations. It sets a July 2005 deadline for the Committee on Trade and Development to report back to the General Council with recommendations on special and differential treatment for developing countries and on flexibility in implementation of existing WTO obligations for those countries.
Notable during the meeting was a division between more advanced developing countries in Latin America and East Asia on one side and poorer African, Caribbean and Pacific countries on the other. They compromised and agreed to change from "shall" to "should" language stating that the concerns of small, vulnerable economies "be taken into account, without creating a sub-category of members."
Participants said the more advanced countries aimed to prevent preferential agreements for some poorer countries from becoming entrenched in the trading system.
Differentiation among developing countries could emerge as another issue in negotiating a final WTO agreement.
The four so-called Singapore issues were reduced to one issue for the remainder of the Doha round. The members agreed to launch negotiations on trade facilitation - rules streamlining customs procedures for "expediting the movement, release and clearance of goods" at the border.
Dropped for now were the three other issues: transparency in government procurement, trade and investment, and trade and competition policy.
To the dismay of some developing country opponents, however, the General Council has kept them alive for future negotiations.
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