The failure to reach agreement on the outline of a “first approximation” at last July’s WTO General Council meeting has placed WTO members in a very critical situation in the run up to the 6th WTO Ministerial Conference (MC6) in Hong Kong December 13-18, 2005. With less than three months before the MC6 members will have to discuss and agree not only on the definition of modalities for the core areas of negotiations, such as agriculture, services and non-agriculture market access (NAMA), but also on the level of political ambition that is expected for the MC6 if they are to achieve greater liberalization.
Given the short time frame, lack of transparency and inclusiveness in WTO processes, and the complexity of the negotiating agenda, it is expected that the negotiations will be extremely intense with even more pressure being exerted on members to reach agreement. Developing countries, particularly those with small delegations, are at a disadvantage since they lack the capacity to attend the numerous parallel meetings at different levels, and evaluate and articulate their own positions in order to effectively influence the outcome of the negotiations in their favor.
It is vital that developing countries assess the state of play in current negotiations and evaluate (or re-evaluate) their objectives and priorities for the MC6. This is particularly important since the current tendency is for negotiating groups to address and discuss proposals on key negotiating issues that are of particular importance to developed members, while delaying or even ignoring the discussion of those issues that are of critical importance for developing members.
In this context, it is worthwhile to summarize the current negotiating situation and analyze the contentious issues that negotiators will need to overcome in order to reach a deal before the MC6. For groups critical of the liberalization agenda and fearful of the negative implications greater liberalization in agriculture, services, industrial goods, and intellectual property will have on the development opportunities and policy space for developing countries, a breakdown in negotiations leading up to MC6 could stall the process and allow for the creation of trade policies that will genuinely benefit the poor and working classes in both developing and developed countries.
Agriculture
Market Access: Structuring a tariff reduction formula continues to be the main task for WTO members. The G20 led by Brazil and India proposed a “linear proposal” (in contrast to the Swiss “non-linear proposal”) which would mean that all tariffs lines would be subject to formula reductions, but with different rates of liberalization. The EU and the US have expressed that this could be a good framework for further negotiations, but there is still a lot of resistance among some members of the G10 - particularly Japan, Switzerland and Korea. Also, there is resistance to the G20 proposal from some developing members, including the African Caribbean and Pacific Group (ACP).
Domestic Support: There has been hardly any movement in this area though it is of crucial importance to developing countries. Rather, there have been many questions and few answers for developing countries on the topic of subsidies.
Export competition: The main task for the MC6 is to define a date for eliminating all forms of export support. A contentious issue revolves around the practice of dumping surplus food through the use of food aid. Members are demanding that developed countries, particularly the US, do not use their food aid programs in any system of commercial sales, thereby distorting local markets. To date, no strategy or proposal has been put forward.
Special products (SPs) and Special Safeguard Mechanism (SSM): These were proposals put forward by developing countries members to exempt certain sensitive products from tariff elimination and respond to import surges which destabilize local economies. There is hardly any discussion about the process of designation and the indicators that are going to be used for identifying SPs and applying SSM. Furthermore, the discussion on SPs and SSM is now being treated as an “other contentious issue” and has been conditioned on the “advancement” (i.e. movement toward greater liberalization) of other areas of negotiations such as market access.
Agricultural production and food security are of prime importance to women both as food producers and as those mainly responsible for family nutrition. The WTO disciplines on agricultural trade liberalization have sacrificed food sovereignty in favor of profit-driven transnational agribusiness. IGTN supports food sovereignty for all nations and peoples. Ultimately, agriculture should to be taken out of the WTO. In the meantime however,
IGTN supports the proposals on Special Products (SP) and Special Safeguard Mechanism (SSM);
IGTN calls for a new mechanism for the reduction of domestic support without jeopardizing appropriate support for small farmers in the South and family farmers in the North;
Anti-dumping mechanisms in the AoA must be strengthened and strictly enforced to the advantage of developing countries;
The use of commercialized food aid as a dumping method must be stopped without prejudice to emergency humanitarian food aid;
All market access formulas must have built-in mechanisms to protect local agriculture, food security and rural livelihoods.
Services
Developed members keep saying that there has not been progress in this area and that the quality and the quantity in regard to revised offers should be improved (i.e. greater liberalization in more sectors). To date, 70 initial offers have been presented with around 30 revised offers, the majority of which are from developing country members. The US and EU are pushing for greater liberalization in services with the EU proposing the use of benchmarking to establish quantitative and qualitative criteria for service offers to be considered valid. Benchmarking would promote considerable and significant market opening.
Mode 4, the movement of service providers, remains one of the main areas of interest for developing countries, India, Brazil, and South Africa among others. Negotiations are not showing any movement as developed countries are reluctant to discuss Mode 4, arguing it is an immigration issue and not a trade issue.
Continued pressure for progressive liberalization is reducing the flexibility and policy options available to developing countries and developed countries alike and opens the way for privatization of services. Services in the hands of transnational corporations have become less accountable to the citizens. The private sector is a for-profit sector that has no obligation to provide services to rural areas or people in poverty such that the redistribution function of public provision is being lost. Those most deeply affected are economically disadvantaged areas and people, particularly women. Because of the profound impacts GATS is having on access to essential services, IGTN believes GATS should be situated within a human rights framework, including the right to development. Ultimately, the GATS text should be renegotiated with an emphasis on protection of essential services, the strategic importance of key service industries to development and greater legal and semantic clarity in the content of the agreement. In the context of the MC6 :
IGTN calls on ministers in Hong Kong to allow for a priori exclusion of essential services from the GATS negotiations because universal access to these services, such as water, health and education, is critical to social reproduction;
IGTN calls on negotiators to exercise full flexibility in determining their requests and offers;
Ambiguities in the GATS, both legal and semantic, must be clarified, especially in the negotiations on rule-making on subsidies and safeguard mechanisms;
Labor mobility under Mode 4 should not become a bargaining chip used by developed countries to gain even more concessions for liberalization from developing countries;
Declare a moratorium on GATS negotiations until a development, social and gender impact assessment is completed.
Non Agriculture Market Access (NAMA)
The key issues under current negotiations are the definition of a formula for tariff reduction, the sectoral initiative for total elimination of tariffs “zero for zero”, the issue of Non-Tariff Barriers (NTB) and binding tariffs for countries who have less than 35% of their tariff lines currently bound.
The Pakistan proposal of a “Swiss type” formula was welcomed by some developed countries and showed some movement in the area of structuring a formula for tariff reduction. Pakistan proposed a formula that used different coefficients for calculating the tariff reductions for developed and developing countries. India and Brazil rejected this proposal stressing the need for multiple coefficients to take into account the different needs of developing countries. Despite these objections, it seems that the Swiss type approach is prevailing and differences in this area could be overcome.
Current NAMA negotiations cover the traditional aspects of tariff reduction, the expansion of sectoral coverage of tariff bindings through the determination of a percentage of sectors that will have a binding, and the elimination of tariff escalation and tariff peaks. IGTN is particularly concerned that these proposals would remove any remaining flexibility developing countries may have to regulate the pace and scope of their industrial development as well as to protect their natural resources and domestic industries. Developing countries are now being prevented from pursuing an industrialization strategy that uses a combination of trade policies and domestic investment policies similar to those used by developed countries when they were still at their early stage of development. In terms of engaging with negotiators at the MC6:
IGTN does not support the non-linear formula for tariff reduction. The non-linear approach is particularly dangerous for economies that do not have a well-established industrial base;
IGTN calls on developing countries to resist expanding the sectoral coverage of tariff bindings;
Disciplines on non-tariff measures should concentrate on designing an appropriate and effective mechanism for identification, examination and categorization of non-tariff measures (NTM)[1] as well as transparency and clearer rules for its implementation.
Sixth WTO Ministerial Conference - Hong Kong 2005
With a deadline of 2006 looming to finalise the WTO's Doha Round of free trade talks, disputes over agriculture threatens to permanently derail the four-year-old blueprint for breaking down barriers to global commerce. See the Choike special coverage of the meeting to be held 13-18 December 2005 in Hong Kong, China. |
