Global Trends by Martin Khor

Monday 25 July 2005

Crucial week for WTO talks

Blurb:   This week, the World Trade Organisation is holding crucial talks in an attempt to bridge differences in the Doha round, in an atmosphere of “crisis” that deadlines are being missed.   A breakthrough on key issues is seen to be increasingly unlikely.    


As the World Trade Organisation enters a critical week of activities today, key WTO officials are warning that the trade negotiations known as the Doha Development Agenda are in serious trouble.

This week will see a number of simultaneous meetings on topics such as agriculture and industrial tariffs, culminating in a General Council meeting on Wednesday and Friday.

Senior officials from various Ministries have arrived in Geneva for this week of talks, and Trade Ministers of some countries may also turn up.

Originally, the General Council was supposed to endorse a set of decisions on “first approximations” of modalities for eventual agreements on agriculture, non-agriculture market access (NAMA), services, trade facilitation and special treatment for developing countries.

In WTO jargon, “modalities” are the framework and principles, based on which detailed measures such as reductions in tariffs and subsidies are to be taken by each member country.

The current round of negotiations, which started in Doha in 2001, was to have finished by January 2005.  The new deadline is the end of 2006.  To meet this, the “modalities” have to be agreed on by this December when the WTO holds its Ministerial conference in HongKong.

The last conference held in Cancun in 2003 collapsed in acrimony, without the adoption of any agreement.  Since then the WTO has been picking up the pieces, making somewhat slow progress.

The WTO leaders do not want to take any more chances of having failed Ministerial meetings.  Thus, they scheduled that the General Council meeting this week wrap up the most important work and approve “first approximations” of the modalities.

But this plan has been derailed by continuing disagreements, and has been virtually abandoned.

Instead of a text agreed on by all members, the Council will now probably only receive and take note of reports by the chairpersons of the General Council and other WTO committees.

Last Thursday, the WTO Director-General Supachai Panitchpakdi warned that WTO members were faced with a “crisis of immobility.”   A meeting of Ministers of some key countries held two weeks ago in Dalian, China had failed to find common ground. 

"I have said before that my finger was hovering over the alarm button. Now I have pressed it. I urge you all to hear the alarm and to act upon it," Supachai said.

The main contentious issues facing this week’s talks are agriculture, non-agriculture market access, and special and differential treatment for developing countries.

In agriculture, developing countries are pressing the rich countries to eliminate their export subsidies by a specified date, and to significantly cut their domestic subsidies and high tariffs on farm products.

Developing countries are also being pressed to significantly reduce their agriculture tariffs, but they are reluctant to do so since cheap imports are already hurting their small farmers.

This week will see whether some agreement can be reached on a formula by which to cut agricultural tariffs of both developed and developing countries, and on how far different kinds of subsidies will be cut or have ceilings placed on them.

In addition, developing countries want exemption or lenient treatment for “special products” which are important for farmers’ livelihoods and national food security. 

On non-agricultural (mainly manufactured) products, there is a tussle going on over the formula to be used to cut tariffs.  The rich countries are pressurizing developing countries to drastically reduce their duties on imported industrial goods by adopting a “Swiss formula”, through which higher tariffs will be cut by sharper rates.

Many developing countries fear that the resulting cheap imports would damage or destroy local industries, and want assurance that there be coefficients in the formula that would cushion the steepness of their tariff cuts. 

The rich countries are however fixated on wanting to slash the tariffs and open up the markets of developing countries.

On special and differential treatment for developing countries, there has hardly been any progress since the Doha talks began in 2001.  From the almost one hundred measures that are being considered, it is now hoped that agreement is reached on even a few measures relating to the least developed countries.

Indeed, talks on the so-called “development issues” have not seen any progress and have increasingly been shunted to the background, which many people find shameful, since this is supposed to be a “development round.”

Instead, the WTO talks are all about “market access”, on how to open up the markets of one’s competitor countries and sell more to them, while avoiding putting your own farms and industries in danger.

Since the rich countries have greater trading and negotiating clout, they are adept at putting in clauses in negotiating texts that protect their home interests, while pressuring the developing countries to lower or give up their defences altogether.

Trade negotiations are a kind of war, and the WTO this week will experience another stage in this battle.

Other issues that will figure in this week’s talks include services, intellectual property and trade facilitation.