Global Trends by Martin Khor

Monday 30 June 2008

WTO mini Ministerial planned for July

Last week’s announcement that a small Ministerial meeting is being planned to start on 21 July has received mixed reactions as many are worried of a failure if the existing differences on many issues are not settled first.

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A meeting of selected Trade Ministers will be held on 21 July at the World Trade Organisation in a risky attempt to get the WTO to finalise the main elements or “modalities” of  issues in the Doha Round.

This was announced by the WTO’s Director-General Pascal Lamy last week.  Although such a “mini-Ministerial” had been expected for a long time, there were mixed feelings about the decision.

This is because of the many key differences that still exist between the countries on a range of issues, including agriculture, the industrial sector, services and intellectual property.  Diplomats are afraid that if the gaps remain in the next few weeks, then a mini-Ministerial held on the date suggested may end up in failure.

In the WTO’s short history, there have been many occasions when meetings of Ministers, whether formal or informal, ended in unceremonious collapse. This is bad for the organisation’s image. Besides, diplomats are reluctant about recommending to their Ministers to come to a meeting that has a good chance of failure.

"There are many unanswered questions at this stage, on substance, on when the texts for the meeting will be ready, and on the process before and after the texts are issued," said a senior capital-based official.

Lamy had assessed that there would be more than a 50% chance of success if a Ministerial is held in July, and less chances after that.

Ambassador Sun Zhenyu of China said that by the time of the meeting, this figure must be higher, as no one wants failure. The next two weeks would thus be crucial to determine if the chances of success can improve. "There is a danger of failure if the chances do not improve before the meeting is held."

Ambassador Ujal Singh Bhatia of India stressed that the aim is not to have a Ministerial per se but to have a successful ministerial.  Consultations in the next weeks must resolve the outstanding issues, and then texts have to be produced reflecting the understandings.

Only then can a definitive date be settled on for a Ministerial meeting, he said.

Among the issues in agriculture where agreement has been difficult to achieve are:

·        The cuts to developed countries’ maximum allowed level of overall trade-distorting domestic subsidies.

·        The cuts in tariffs for developed and developing countries, and the flexibilities for developed countries in having more lenient cuts of “sensitive products.

·        The number of “special products” that developing countries can designate as important to their food security and farmers’ livelihoods, and how lenient the tariff cuts will be for these items.

·        Setting up a special safeguard mechanism which will allow developing countries to raise their tariffs above the bound rates when there is a surge of imports or a fall in prices.  The dispute is over how much of a surge or a price decline is to happen before a mechanism can be effected, and the extent of extra duty that a country can apply.

On industrial tariffs, the unresolved issues include:

·        By how much should developed and developing countries cu their tariffs.

·        The flexibilities allowed to developing countries to exempt from or have more lenient reduction in tariffs for a small percentage of their industrial products

·        Whether to agree to requests from certain countries for extra flexibilities and lower tariff cuts.

Developing countries such as Brazil and Argentina have been upset that they are being asked to undertake more obligations than the developed countries which have cleverly proposed many measures that provide an escape or dilution from meeting their commitments to cut subsidies or tariffs in agriculture.

In addition, the current drafts indicate that developing countries are being asked to cut their industrial tariffs by a greater percentage than the developed countries, which is considered very unfair to the developing countries.

Over a hundred developing countries also want an amendment to the WTO’s patent laws to prevent the misappropriation of their genetic resources and traditional knowledge by companies that patent these resources and knowledge.  But this is resisted by most developed countries.

Another problem is that the United States’ 2008 Farm Bill is expanding the subsidies that the US can provide to its agriculture, and the fear that whatever is agreed to in the WTO talks by the Bush administration may not be adopted by the next President or Congress.

With all these unsettled issues and problems, why the hurry to hold a high-profile meeting, expected to be attended by 25 to 30 invited Ministers?

The main reason seems to be a perceived need to conclude the modalities and main elements of an eventual final deal, before the US Presidential elections because the next President could be more protectionist.  Another reason is that many present Ministers may be changed soon and would like a deal made before they leave.

There is however still a possibility that a Ministerial may not be held in July, if there is a perception nearer the date that not enough progress has been made.