Theme: The conditions for a ‘Development’ round are more stringent than those for a successful trade round: the outcome must do more than increase world welfare (the normal condition for successful round). It must significantly improve the welfare of poor people and it must encourage the participation of poor countries in the international system.

Introduction: a development round?

We will assume here that negotiations continue, on the basis of the proposals left pending at the end of Cancún.  We will not attempt to judge where the settlement will fall, but rather to indicate the type and distribution of effects from some of the proposals. It is not yet clear whether development objectives will be a major element of any settlement. The arguments being used are about trade advantages or losses. Non-trade considerations, whether those of the countries like the EU or Japan which were promoting them as a justification for agricultural protection or those of development have become less prominent. The exceptions are in the discussion of the public health aspects of the Intellectual Property negotiations and in the new proposals for a ‘compensation’ or ‘aid for trade’ component of any settlement.  Although the request by some West African cotton exporters for compensation was treated separately from the agricultural negotiations, the basis of the request was a perceived distortion in trade (subsidies by the US), not development. The developing country groups, however, are still putting forward ‘development’ as a necessary component of any settlement, and some external reports (e.g. International Development Committee 2003) are also still stressing this.  The continuing threats to world security are, however, being cited as important reasons for reaching a settlement that helps countries to raise their incomes. The Doha Ministerial Conference itself was strongly affected by the terrorist attacks of 11 September 2001.  Development in this context becomes an instrument, not an end (c.f. IDC 2003).  

Developing country positions

In the past, the positions of many of the developing countries, particularly those of Least Developed or African countries, embodied in joint declarations: G77, Africa, Least Developed, or regions like SADC or COMESA, or other groupings like the ACP, tended to be vague statements of what an outsider would consider normal developing country positions (more access, no reciprocity, S&D...), not detailed statements of particular interests.  Some of these continue to emerge, particularly from groups which are coming together for the first time (for example the Arab countries). But some of the group positions both pre-Cancún and at Cancún have been much more detailed, notably those by ACP countries (on issues particularly relevant to them, like preference erosion and the rules for regional groups) and by the Least Developed (on compensation for loss of preferences).

These groups have been supplemented by a return to the use of ad hoc groups for particular issues (the G20+, the traditional lead developing countries plus others on agriculture, those interested in special products, the landlocked) as well as detailed individual country positions that are no longer simply compilations of their group commitments (see Page 2002, WTO for a history). It was a cross-group and cross continent set of developing countries which called for development to remain ‘central’ ‘to the Doha package’, and stressed the need for a balanced package that provided ‘gains for all Members’ (Argentina, Bolivia, Botswana, Brazil, Chile, China, Colombia, Cuba, Dominican Republic, Ecuador, El Salvador, Gabon, Guatemala, Honduras, India, Malaysia, Mexico, Morocco, Nicaragua, Pakistan, Paraguay, Peru, Thailand, Uruguay, Venezuela, Zimbabwe, TN/C/W/13). The issue of compensation (discussed in more detail below) is probably the major example of a new issue brought to the table by developing countries, as a result of increasingly careful assessment of their possible gains in the existing agenda. These changes mark a new skill and familiarity with the process.

Agriculture

The problem

This is the central issue of the negotiations.  Agriculture remains the most protected sector in world production, with a complex system of interventions, to protect production in certain countries, and then to counter that protection through countervailing barriers or preferences.  This means that any reform will have major but complex effects, both positive and negative, on those who lose or gain from the current arrangements.  The average bound tariff is ‘62%, compared to 29% for industrial products’ (WTO, World Trade Report 2003, p. 127).  Although some applied rates are below those that are bound, the averages for these are also very different: 17% for agriculture and 9% for industrial. 

It is also a sector in which non-economic motivations are important. Concepts like ‘multifunctionality’ or ‘non-trade concerns’ are used in the EU and some other developed countries to suggest that agriculture has a role in preserving natural or cultural environments. Beliefs about the role of agriculture in development or in the livelihoods of the poor in developing countries influence some observers.  Therefore, calculating the economic costs and benefits from any change, and trading these off against benefits or costs in other sectors, may not be accepted. 

The structure of tariffs also makes negotiations difficult: while the average for developed countries is normally substantially lower than that for developing, the structure tends to be fairly flat in most developing countries, but with some very high peaks in developed.  Any formula that concentrates on high averages will hit developing countries, while one which focuses on peaks will hit developed countries. 

The fact that agricultural products are a declining, and now in some cases small, share of developing country exports does not mean that this is a declining issue. While different income elasticities would be expected to cause faster growth in manufactures trade than in agriculture, the differences observed are much greater than could be explained in this way.  The much higher protection for agricultural trade is itself an important reason for this difference in pattern.  And for sub-Saharan Africa the share of manufactures is still only about a quarter.  For them, and in particular for Least Developed countries, the pattern of agricultural trade restrictions remains a vital trading interest (Page, Hewitt, 2001). For some developing countries, however, the tariffs and domestic subsidies by developed countries offer opportunities because they receive preferences or special access.  Agriculture has also, like access to medicines, acquired the status of a test of negotiating commitment.

The positions

In August 2003, the ACP countries (WT/MIN(03)/4) asked for improved market access, including duty and quota free access for the Least Developed, and elimination of export subsidies. They also demanded ‘a programme to support the enhancement of the supply capacities in the agricultural sectors of ACP states’ and ‘a financial compensatory mechanism to cover the revenue losses resulting from export subsidies by developed countries’, as well as ‘attention to the serious problem of commodity dependence’; and explicitly supported the West African initiative on subsidies.  The Least Developed (June 2003 WT/L/521) asked for duty and quota free access and exemption from any commitment to reduce their tariffs, and explicitly cited ‘export subsidies...to products of export interest to LDCs’ as the target for phasing out.  They also requested ‘compensatory and other appropriate mechanisms to fully address the impact of erosion of preferences, including measures that promote exports of LDCs’. At Cancún, the consolidated Africa/Least Developed/ACP position requested improved access,  reduction of domestic and export subsidies, a new category of special products of interest to developing countries, and maintenance of preferences as far as possible (WT/MIN(03)/W/17) combined with ‘appropriate mechanisms to address erosion of preferences to assist preference receiving LDCs to adjust, improve competitiveness and diversify their export baskets’ (amendment circulated 13 September).  Addressing preferences had been envisaged in the Harbinson text (TN/AG/W/1 Rev 1), but was not in the 24 August or 13 September Chair’s drafts.

The G20+ position focused on access and subsidies, and had only a vague reference to preferences.  The US, EU, and G10 (Japan, etc.) positions offered less on access or subsidies.  Subsidies by developed countries help consumers of those products, at home and abroad, but hurt competitors.  On food, both results are significant.  Hoekman, Ng, Olarreaga 2002, p. 30, show that 18% of LDC exports are of goods that at least one WTO member subsidises (the figure is only 3-4% for other countries).  For 17 countries the percentage of exports affected exceeds 50%; for another 20, it is more than 20%. 

These countries would not necessarily gain if the subsidies were removed:  some might still be uncompetitive, and some sugar producers benefit from subsidies (because of quotas). Some, however, most would face less serious barriers, and some would gain significantly.  They are concentrated among the poorer African countries, Central America and the Caribbean, as well as Latin American. On the import side, where subsidies could be considered an advantage, only two have more than 20% of imports affected by subsidies. 

The issues has been most effectively raised in cotton by four West African countries, Benin, Burkina Faso, Mali and Chad, citing the cost to them of subsidies, notably by the US. Cotton is between 5 and 10% of their GDP, and more than 60% of exports (Goreux 2003).  They requested, in addition to any negotiations on subsidies in the Doha context (which could not take effect until at least 2005) an interim settlement reducing subsidies to cotton over the three years 2004-6, and until that was complete, compensation for Least Developed cotton producers based on the estimated losses suffered (TN/AG/GEN/6), paid by the countries subsidising their cotton. 

In sugar, where the subsidies are combined with special arrangements for imports from some countries, ACP and Least Developed gain. Some EU sugar subsidies have already been challenged, by Brazil. Even before the emergence of the G20+, this brought Brazil into conflict with the ACP and Least Developed.

The first proposals for the modalities of a settlement came from the Chair of the negotiating group, Harbinson (TN/AG/W/1, Rev 1). This provided for higher reductions in higher tariffs (with three bands), in contrast to the Uruguay Round formula, of a single average, with minimum cuts, which had allowed sensitive products to remain highly protected. None of the chair’s drafts has done more than mention non-trade concerns or multifunctionality.

Following inconclusive debate between May and July, an informal ‘mini-ministerial’ meeting (see below on process) asked the US and EU to submit a revised proposal.  This ‘blended’ version gave smaller cuts in tariffs, and completely omitted reference to the Least Developed countries (EC, 13 August 2003). There was therefore a significant reduction in the possibility of bringing high peaks down.  The version in the draft declarations (JOB(03)/150/Rev.1 and Rev.2) was based on this tariff structure, but restored the exemption of Least Developed countries.  Developing countries would face the same formulae, but smaller cuts and no maximum.  The EU/US proposal included a provision asking developed countries to provide duty-fee access for some imports from developing countries (apparently here meaning, including Least Developed countries). The draft text called for access for Least Developed, but only as a ‘best endeavours’: ‘should’, not ‘shall’. The G20+ continues to press for greater cuts, and particularly from developed countries. 

African and Least Developed would not be directly affected by any reductions agreed in the WTO (See ILEAP 2003). Most exports already face either 0 MFN rates or preferential rates.  This applies also to other ACP countries in EU markets.  Many other developed countries offer preferences, and a significant proportion of agricultural exports occur within African or Latin American regions, again under non-MFN rates or 0 tariffs. 

There would be significant benefits to developing countries in Latin America and Asia (including India and Brazil) because even where there are GSP provisions, these tend to be of minor importance in the agricultural products of interest to them.  For Brazil, under the Harbinson proposal, there would be significant gains in access relative to, for example, the African countries examined above (trade ‘undiversion’), as well as any trade creation effects in the market countries.

If there is a settlement along the lines of the current draft proposal, with or without the G20+ proposal, there is unlikely to be any major direct change, in either imports or exports, for African or Least Developed countries, although they could lose market share. There would be important gains for other developing countries. 

Preference erosion

This problem was recognised in external assessments of the Uruguay Round, but not in the negotiations. The moves since 2000 to improve preferences, particularly by granting free access to Least Developed Countries, have increased their advantage, and therefore have also increased the potential loss.  Preferences in food, unlike those in manufactures, seem to be intended to give poor countries additional revenue, partly through the increase in market share, sometimes through higher prices, either to relieve poverty directly or to provide them with ‘rents’ with which to finance other types of development.  Any of the very high tariff sectors may produce these effects, but in practice it is sugar and tobacco that are the main sectors where this is important.  This problem did not seem to be recognised in any of the early positions on agriculture (in manufactures, see below, it was raised), although at least one paper (IMF, 2003) presented some striking results as early as February.  Estimating the effect of a 40% cut in both agricultural and industrial product tariffs in the EU, US, Japan, and Canada, and assuming that Least Developed countries had free access, it found that Malawi would have a loss of 11.5% of total exports, 4 countries between 5 and 10%, and another 10 countries from about 3% to 5%.  The actual value of the exports lost was in total $530 million (of which $222 was for Bangladesh), so that the numbers are not large on a world economy scale.[1] Calculations by ODI for the African Union (Gillson, Page, 2003) of the effects of increased competition from Brazil under the Harbinson proposals found of the 10 African countries examined, Malawi would lose 17% of its total exports, one, Uganda 3%, one 2%.[2]  Exporters of products which already face 0 MFN duties, like coffee, or with a high share to other developing countries, have less to lose. 

By June, these effects were starting to be recognised, by the countries concerned and by observers (IDC, 2003). Even the countries affected have in most cases been careful to say that the answer is not to prevent agricultural liberalization, but to retard the erosion and assist countries to adjust. Maintaining ‘to the maximum extent technically feasible’ nominal margins of tariff preferences (Harbinson, TW/AG/W/1/Rev.1) is clearly impossible to reconcile with any tariff cut when countries already have 0 tariff access, and unacceptable to countries like the G20+ which are attempting to increase their access.  His proposed two year moratorium for ‘tariff reductions affecting long-standing trade preferences in respect to products which are of vital export importance for developing country beneficiaries’ would impose the cost of the preferences on other developing countries.  There has therefore been increasing pressure (discussed in the section on transfers, below) for financial compensation for the losses.

Non agricultural market access

The problem

This is a less quantitatively important issue than agriculture because barriers are lower, and the current structure of protection is less complex.  Although in fact most exports from developing countries are non-agricultural, these do not excite the same pre-conceptions about livelihoods and poverty that agricultural exports do, and no developed countries would now admit to protecting industries for social reasons.

The question of whether Least Developed countries should be exempt from both tariffs on their exports and obligations to reduce their own tariffs is again an issue.  As in agriculture, there is concern by some low income non-Least Developed countries about competition. South-south trade is most important in Asia, which accounts for two thirds of it. There are also fewer regional arrangements there to reduce tariffs to other developing countries. As was found for the Uruguay Round, therefore (Page, Davenport 1994), liberalisation by developing countries, and in particular by the more advanced East Asian economies, is likely to be more important for the Asian countries than for African or Latin American, and liberalisation by African and Latin African countries is unlikely to have a major effect on other developing countries.

Developing country positions

Least Developed countries, and many of the other groups, have concentrated on ensuring that the commitment to provide them with duty and quota free access is met. South Africa (TN/MA/W/42) stressed the affect of controls on clothing and textiles on jobs in developing countries, as well as noting the need for time to adjust and for support to preference-dependent countries.  As South Africa is not in this position, this is an interesting alliance with other African countries. 

Modalities

The initial proposal used a formula designed to produce maximum reductions for tariffs which are high relative to a country’s own average.  This does not directly meet the objective of reducing peaks (high in absolute terms) and does not put higher cuts onto countries whose general level of tariffs are high.  The formula was interpreted as favouring developing countries, because on average their bound tariffs are higher, but the distribution of bound tariffs does not correspond to level of development, and there are exceptions in both directions to any simple rule.  Least Developed countries were to be completely exempt from making cuts. It did not deal satisfactorily with non-tariff barriers or specific tariffs.  The draft ministerial text did not choose among the formulas, but did suggest ‘less than full reciprocity’. The draft text strengthens the provision in the original proposal for requiring countries with a high share of unbound tariffs to bind these ‘at an average level that does not exceed the overall average of bound tariffs for all developing countries after full implementation of current concessions’.  Least Developed are to increase their level of binding. As in agriculture, the liberalisation by developed countries may not have a significant further effect on Least Developed countries, but could help developing countries. 

Preference erosion

It is in manufactures that there is greatest awareness of preference erosion (c.f. UNCTAD 2003). It is not clear that this is where the effects will be greatest, but the potential impact on non-quota controlled textile and clothing exporters of removal of quotas has been on the agenda since the negotiation of the end of the Multi Fibre Arrangement in the Uruguay Round (Page, Davenport 1994) and, of course, some of the countries affected, notably Mauritius and Bangladesh, are among the most vocal and skilled negotiators. The initial calculations made of the effects of the end of the MFA found that Mauritius, Bangladesh, Sri Lanka, and the Maldives were likely to be the most serious losers, at up to 15% of their exports.  The major gains would go to India, China, Pakistan, and perhaps Korea.  These effects are still largely in the future because the way in which the MFA ended was heavily backloaded, with the full liberalisation postponed until 2005. Mauritius, among the serious losers on both agriculture and non-agriculture, had pointed out in January (TN/MA/W/21) that countries with preferences could face ‘major set backs in their development efforts’, and suggested that erosion ‘should be duly compensated’. By July and August, it was becoming recognised that trade measures might not be a feasible compensation method. 

The draft ministerial texts, unlike the earlier proposals, mentions preference erosion, but only among ‘challenges…to take into consideration’. As with some of the tariff proposals, the EU/US/Canada text had actually gone further than the negotiating group chair’s draft:  ‘We shall work with Bretton Woods Institutions to establish or enhance programmes to address adjustment needs of Members whose exports are significantly affected by erosion of preferences’. 

Services

Negotiations on services still take place under the system that preceded formulas in goods, of bilateral negotiations between countries ‘requesting’ specific trading partners to open specific sectors, and then countries ‘offering’ to open sectors, with the opening being normally on an MFN basis, so that general conclusions will be rare. General special treatment for developing countries has taken the form of asking for less opening, not offering preferential access as in goods. There is not yet any commitment to exclude Least Developed countries from all commitments; developed and developing countries have issued requests to them. Shortly before Cancún, there was a proposal for ‘modalities for the Special treatment for Least Developed’, but this did not offer specificities. Services, including some where negotiations are in place such as tourism, are important to some developing countries, including the Least Developed.  Developing countries, particularly those which are landlocked or with limited transport resources, also have strong interests in more efficient and less restricted transport and communication services. 

Positions

The Least Developed countries have asked for liberalisation under Mode 4, access for labour, noting the estimates of the good effects of a temporary visa scheme, and asked for technical assistance in improving access. This is the type of service which was most restricted, and within it, it is more restricted for less skilled workers. The ACP countries had a similar, but less specific, request on this.  India also supports this. Zambia, with other Least Developed, has made a proposal for special treatment for LDCs. One proposal is for full access for LDCs (by analogy with the opening of markets for their goods).  On their own opening, Least Developed countries have asked for special consideration. 

Most developing countries have not participated actively in making offers and requests, although they are now preparing them.  By June 2003, only India and Colombia had tabled requests on Mode 4. The draft text calls for ‘intensifying our efforts and continuous exchange of requests and offers’ (it was not discussed in Cancún).  Its only specific mention is to ‘note the interest of developing countries, as well as other Members, in Mode 4’. 

Intellectual Property, public health and geographical indications

Trade Related Aspects of Intellectual Property were added to the coverage of the WTO in the Uruguay Round and the effect of this on developing countries has been a major symbolic issue, although the effects are not quantified.  The remaining questions prominent in current negotiations are related to the use of ‘geographical indications’ (Bordeaux wine, Darjeeling tea), especially outside wines and spirits (currently the only areas regulated by the WTO), and some issues in patenting life forms and traditional knowledge.  These raise important issues of principle, but the issue most expected to have most effect on developing countries in the short-term, access to pharmaceuticals outside the patent system, was settled in August 2003. The new rules could be important in allowing exports from developing countries with a pharmaceutical industry to those without, although there is evidence that countries have not used licensing even when it has been allowed and that they have received cheap drugs under other arrangements.  If they do lower the prices at which Least Developed countries can obtain drugs, there could be important effects on health, especially in the major diseases.  It will probably increase exports, and therefore, income in some of the major developing country producers of generic pharmaceuticals, including Brazil and India.

The symbolic importance of the issue was that it was seen as a test of the commitment of developed countries to offer ‘development’ as well as trade negotiations in the Doha Round.  The declaration at Doha had made it clear that developing countries could licence production of medicines for public health crises within their own countries; the issue remaining was what analogous rights could be given to countries which do not produce these to import under the same circumstances. The outcome, that countries could import ‘generic’ drugs, met the substance of developing countries’ request, but that it was delayed for 8 months beyond the target date of December 2002 and that some countries were obviously reluctant to grant it suggested that the commitment to ‘development’ was not going to be central to the Doha process.

Geographical indications are potentially an important marketing device, so could eventually have income effects, including for some developing and Least Developed countries.  This issue divides both developed and developing countries, as some developed countries want to be able to continue to use names such as Parma ham for non-traditional suppliers, while some developing countries want to protect their own national assets before they are copied elsewhere (Malawi, 2003).  It has even divided its principal supporter, the EU, and only at the end of August did the members reach agreement on the goods for which they would request protection. 

Singapore issues

For all four of these, investment, competition policy, government procurement, and trade facilitation, there are few examples, in any country, of strong public or interest group support or opposition.  They have acquired symbolic importance, as markers of support for ‘coherence’ in the international system or of opposition to increased burden of compliance, but evidence on their practical impact, positive or negative, is very limited.  Their importance for development in the Doha negotiations, therefore, is found  mainly in their linkage to the prospects for a successful outcome on the other issues, but also in their impact on the process of negotiations.  The Doha provision that negotiations on issues on which there were clear divisions would begin on the basis of ‘explicit consensus’ on their modalities placed a serious, perhaps fatal, strain on the concept of ‘consensus’ in WTO negotiations, and the almost complete divide between developed and developing countries’ positions on these issues helped to polarise the Cancún negotiations in a way not seen in the last 20 years. 

Trade facilitation is a mixed area of negotiations, including increasing regulation and standardisation of customs rules and practices, with the objective of simplification, and attempts to improve the performance of customs administrations and port or transport facilities in developing countries either by setting targets or by providing technical assistance.  To the extent that it increased the efficiency of trade, any progress could eventually have important effects, particularly on land-locked countries where the extra costs of trading are estimated to be as much an obstacle as tariffs. To the extent that the ‘inefficiencies’ are intentional barriers to imports, however, new rules would reduce countries’ policy freedom. Most of the efficiency effects are obtainable by countries’ unilateral action (with aid).

High estimates for savings from customs and trading simplification were first used to justify some of the measures that created the Single European Market (EC, 1988), and have been prominent in discussions in APEC.  Savings of between 1 and 10% are estimated, depending on what assumptions are made about what can be done, through either rules or efficiency reforms (c.f. Francois, van Meijl, van Tongeren, 2003). The costs and awareness of trading barriers have been increased by the new measures put in place to meet security concerns, most notably the new US Container Security Initiative which came into effect in 2003 (World Bank, 2003, pp. 82-7). It will be supplemented from October 2003 by new regulations on food exports to the US, which may be particularly burdensome on foods which undergo several stages of processing, in different places, and thus discourage value added (AFP, 2003, Australia). 

Some aspects of investment are covered by existing WTO commitments, in TRIMS (Trade Related Investment Measures) and services (many of the provisions in GATS on entry of service providers are de facto about investment).  The published proposals are still very limited because most of the discussion has been about whether, not what, to negotiate, but raise issues of transparency, certainty, discrimination for or against foreign investors, and treatment of investors once they have entered the country.  There is little evidence from existing agreements that the economic effects would be large.

In competition policy, there are two types of issues: regulation of international cartels (which are judged to be outside the control of even large countries) and tackling ‘hard core’ cartels (many, but not all, of which are international) (Federal Trust 2003 for more details).  If a strong agreement were adopted and enforced, it could affect some commodity markets, and have a major effect on the share of commodity income received by some developing country exporters. 

The discussion on government procurement centres on ensuring transparent procedures, not regulating what the procedures are or forcing countries to admit foreign bidders, so that any effects would be likely to be small. 

Positions on the Singapore issues

Developing countries, with only a few exceptions, have opposed negotiations on all of these, although not opposing work to define them and, in the case of trade facilitation, identification of needs.  The Least Developed countries want further work on whether there is a link between policy and increased investment flows, and what the benefits might be from WTO intervention on competition policy and government procurement, but no negotiations yet.  Other developing countries’ positions are similar; some envisage later negotiations even more explicitly.  Until the final day of Cancún, the EU formally supported negotiation on all four as an essential part of any settlement, but individual governments had begun to modify this ( e.g. UK where the ministers of trade and development both said in July that they were not a priority; Germany, France and Italy by August, Bridges 28 August 2003), and in the initial days of Cancún several developed but non-EU governments began joining outside commentators in suggesting ‘unbundling’, that they needed to be considered separately and on their own merits.  This took up language from the various developing country position papers. 

At the end of the meeting, some countries insisted on negotiating on these before the more tractable (and, to developing countries, more important) issue of agriculture.  Then the EU offered to remove two from the WTO agenda completely.  The way in which the negotiations were organised and then the nature of the EU offer meant that  this  did not meet  the positions of the developing countries and could be held to confirm suspicions that the previous support for these was more a way of shifting negotiations away from agriculture than the result of economic analysis.  Negotiation on them had delayed, and ultimately was held to prevent, negotiation on agriculture.  The initial offer was to remove 'any two', and the proposal to remove them completely from the WTO agenda was not what developing countries had requested.

What is clear is that these are not strong economic interests (positive or negative) for any of the WTO members, so that a development assessment must consider whether a dispute over whether negotiations on one or more of them should begin should have been allowed to prevent agreement to negotiate on the central issues, of market access for agricultural and non-agricultural goods and services. It seems clear that countries are all potentially interested in the Singapore issues, if they are shown to be beneficial for development and if the necessary technical preparations are completed, but that they are not so crucial to any country’s economic interests that they need to be part of the Doha single undertaking. That no agreement was reached at Cancún suggests that it was other issues that were at stake, and perhaps that agreement on the others was (also) not so crucial that countries would compromise.

Compensation and transfers:  the new ‘new issue’

Some developing countries have already gained and are likely to gain if the Doha negotiations succeed.  India and Brazil could gain access on agriculture, non-agriculture and services, and benefit from the health declaration.  Some, particularly among the Least Developed plus some other preference-dependent, however, seem to have little to gain on any of these, and face potential losses which are a very high percentage of their export revenue.  Those whose exports are affected by subsidies in the developed countries will be strongly affected, some positively; others negatively, by any reduction in these.  Any gains on services or public health are likely to be smaller than some of the losses, so that it is now evident that there are some countries for which any conventional WTO package will be negative.  But the outcome for the world economy as a whole and for most people living in developing countries is likely to be strongly positive because the largest countries gain. There is, therefore an international interest in finding a way of transferring some of these gains to the losers, not only as a matter of equity and to ensure a ‘development’ round, but to secure the support of all countries as is required by the WTO’s dependence on decision by consensus. 

Losses as a result of other types of trade policy change have always been recognised as suitable for compensatory action in the WTO. When a regional trade area is formed, for example, non-member countries which lose market access can ask for compensatory tariff reductions in other areas. Similarly, if countries win a dispute, and the ‘offending’ country does not change its policy, compensatory actions can be requested. Compensation in both of these, however, means some other trade action. There is not any provision which allows monetary compensation.

At Cancún, both the IMF (Krueger 2003) and the World Bank (World Bank Cancún 2003) announced initiatives to help countries to adjust to liberalisation by others.  The IMF explicitly recognised that the few countries that feared damage by trade liberalisation needed an insurance against the potential losses.  The final draft declaration merely ‘noted’ these initiatives, but did not commit the WTO to finding its own mechanism to deal with the problem.  In customs unions (notably the two oldest surviving, SACU and the EU) the problem of compensating those who lose from measures which increase total welfare has, however, long been recognised as an essential element of trade liberalisation, and it is not clear whether this can be dealt with entirely from the financial institutions.  They will use criteria of a country’s total foreign exchange or development needs, not be tied to the results of specific trade measures, so that their actions are a blunt instrument.   The IMF Cancún position does mark an advance on its view in February (IMF 2003) that ‘any financing is best done in the context of existing medium-term adjustment and program financing facilities’, because it suggests a new facility. 

Negotiating process

Development is not only about economic outcomes, but about effective participation in international systems.  This suggests that as well as the outcome criteria, we should be looking at whether the process of the Doha Round is orientated towards encouraging, and making effective, participation by developing countries. In GATT negotiations before the Uruguay Round, there were no formal procedures, and de facto, in the early ones, the US dominated; by the 1970s, US-EU bilateral meetings were the forum. While the Uruguay Round saw some increase in formal negotiations, supplementing, if not replacing the EU-US bilateral meetings of previous Rounds, there was still a heavy emphasis on ‘informal’ meetings, ad hoc groups with virtually no rules of procedure or specification of who should attend. These not only become increasingly impractical with more and more inexperienced participants, but do not offer a clear path towards effective influence on the outcome.

In the final months before the Seattle meeting, there were procedures for including all countries at least occasionally in the consultations on the agenda for negotiations. This followed what had been established as the normal ‘informal’ procedure in negotiations in the Uruguay Round, of small committees which were effectively open to anyone who was known to have an interest. In 2001, the WTO and its major members still supported informal consultations. Although some developing countries continued to question their legitimacy, two successive competent chairs of the General Council were able to engage and be trusted by most of the delegations. This plus the general will to avoid a second failure meant that the system did not break down, but it remained weak.

The negotiating process in 2003 has combined meetings and papers submitted in the formal processes in Geneva with ‘mini-ministerial’ meetings, of 20-30 trade ministers, from developed countries plus those developing countries seen as key for their size, for their special interests, or for their active participation in negotiations. There is no official recognition of the mini-ministerial; attendance is, formally, at the invitation of the host government, and there is no report back to the WTO.  It was at a mini-ministerial that the December draft on intellectual property was prepared and semi-accepted; it was then rejected in the formal procedures, although the US was represented at the mini-ministerial.  A mini-ministerial in July 2003 asked the US and EU to draft a compromise agreement on agriculture.  They did so, and presented it (and a draft for non-agricultural market access, prepared with Canada) to the Geneva processes, where it was, in part, embodied in the chair’s draft text, but then rejected by developing countries. There were, at the Director General’s initiative, continuous negotiations in the final two weeks in Geneva.

Even the formal negotiations still have large elements of uncertain or informal procedures.  On both agricultural and non-agricultural access, the chairs of the negotiating groups initially prepared detailed draft proposals on their own responsibility.  They were not based directly on any work in the groups, although the revisions then took more explicit account of the comments circulated, in the formal procedures of the groups.  But they also took account of other papers (for example, the US/EU agricultural proposal). In the draft text for Cancún the choice of which proposals to cite (for example, the decision to include only the two extreme positions on the Singapore issues:  negotiation or back to working groups for all of them) was the chair’s. 

At Cancún, the informal procedures were made as formal as possible, in that the official representatives of the informal groups were treated as their representatives, rather than having the chair choose, as in the past. But the absence of any formal means for the groups to adjust their negotiating positions was an important reason (combined with the absence of as competent a chair of the meeting as at Doha and as compelling a reason for the developed countries to compromise as the 9/11 attacks) that it was not possible to secure agreement. The presence of a large number of interests, within countries and among countries, now increasingly clearly asserted, means that if country representatives and then the international organisations are to represent these and be accountable back to them more formal structures will be necessary. The compression of the negotiations also made it more difficult for countries to consider the consequences of new offers, analyse their impact on national economies, and rearrange alliances. The structure of the meetings, with consultations on any new positions among groups of up to 60 countries, many with more than one interest represented within the country, requires more formal structures within the groups and/or more than the one hour typically available for consultation and consideration of positions.

The procedures which are currently in use would not be considered acceptable by any national governance standard, and can only be justified if it is believed that all countries have the same objectives, and that a skilled individual or group can therefore try to find the instruments to achieve these.  If there are different interests, as is the normal assumption in WTO negotiations about gains and losses and as is demonstrated here by the conflicts of interest on areas like subsidies and preference erosion, this model cannot be assumed to meet development criteria.

The context of a ministerial meeting, therefore of ministers presenting their countries’ positions firmly and openly, was not appropriate for a  technical function, of reviewing and setting detailed modalities that would permit agreements, including compromises, in the remainder of the negotiations.  The combination of the alignment of the US and EU against developing countries in agriculture with the perceived use of the Singapore issues to prevent progress on agriculture meant that there was an across-the-board North-South split.  There were no alliances like the Cairns group; no common interests between developed and developing like the EU-ACP support for achieving the waiver for Cotonou at Doha.  

But if the WTO forum is no longer able to meet the needs of trade negotiations, it is not clear that there is an effective alternative.  The experience of weak developing countries, for example the ACP with the EU or Central America’s negotiations with the US, suggests that developing countries will be at a greater disadvantage in bilateral negotiations than in mulitlateral.  For developed countries, this could be an additional reason for not negotiating seriously in the WTO. The larger developing countries, however, have shown more ability in these negotiations as well.  Mexico chose to negotiate NAFTA, and then preserved its access to more diversified markets by negotiating parallel agreements with the EU and (now in progress) Japan.  South Africa negotiated first with the EU and is now negotiating with the US.  Brazil, with or without the rest of MERCOSUR, is also looking in both directions.  The risk is an unstable system of some arrangements imposed by developed countries on their satellites and interlocking agreements with the middle-level countries (with all the disadvantages of trade diversion and inefficient rules of origin).

Questions for discussion

Will it be possible to negotiate  changes in access and rules which will bring significant improvements for most developing countries?  The reforms required in agriculture and also in movement of labour touch politically sensitive issues, not merely economic interests. 

Will it be possible to find ways of ensuring that no countries must suffer serious losses in order to achieve these benefits?  This is not only a normal constraint for any trade negotiation, but  essential in a 'development' negotiation, as those who will lose include some of the poorest, but those who will gain include far more poor people. 

Can the system adapt to permit realistic negotiations among a large number of countries, increasingly conscious of their own interests?  While the failure at Cancún may have been for issues of substance, not because of the institutional weakness, it is not clear that the system would have worked even if the divisions had been less profound. 

Bibliography

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Tema: Las condiciones de una ronda sobre desarrollo son más estrictas que las que requiere una ronda comercial fructífera: el resultado debe consistir en algo más que en incrementar el bienestar mundial (condición normal de una ronda fructífera). Tiene que aumentar de manera considerable el bienestar de los menesterosos y estimular la participación de los países pobres en el sistema internacional.

Introducción: ¿una ronda sobre desarrollo?

En esta ponencia partimos del presupuesto de que las negociaciones proseguirán a partir de las propuestas que quedaron pendientes al concluir Cancún. No vamos a tratar de calcular dónde se producirá el acuerdo, sino de indicar el tipo de repercusiones que tienen algunas de las propuestas y su distribución. Todavía no está claro si los objetivos de desarrollo serán un aspecto esencial del posible acuerdo. Las razones que se aducen se refieren a ventajas y pérdidas comerciales. Los argumentos no comerciales, ya sea los de países como los de la UE o Japón, que las defendieron como justificación de la protección a la agricultura, ya sea los relativas al desarrollo, han perdido importancia. Las excepciones hay que buscarlas en el debate acerca de aquellos aspectos de las negociaciones sobre propiedad intelectual que se refieren a la salud pública y en las nuevas propuestas de introducir en el acuerdo un componente de compensación o “ayuda para el comercio”. Aunque la petición de compensación que hicieron algunos exportadores de algodón de África Occidental se abordó aparte de las negociaciones sobre agricultura, tenía como punto de partida una aparente distorsión del comercio (las subvenciones de los EE UU), no el desarrollo. Sin embargo, los grupos de países en desarrollo siguen presentando el desarrollo como un componente necesario de un acuerdo y algunos informes externos (p. ej. el del Comité de Desarrollo Internacional de 2003) continúan insistiendo en ello. Las persistente amenaza a la seguridad mundial se considera, no obstante, una razón importante para alcanzar un acuerdo que ayude a los países aumentar su renta. La propia Conferencia Ministerial de Doha se vio enormemente afectada por los atentados terroristas del 11 de septiembre de 2001. En este contexto, el desarrollo se convierte en un instrumento, no en una finalidad (v. IDC 2003).

Las posiciones de los países en desarrollo

En el pasado, las posiciones de muchos de los países en desarrollo, especialmente las de los menos adelantados o de los países africanos, plasmadas en declaraciones conjuntas (G77, África, países menos adelantados o regiones como la SADC o el COMESA u otros grupos como los ACP), solían ser vagas exposiciones de lo que desde fuera se considerarían posiciones normales de un país en desarrollo (más acceso, ausencia de reciprocidad, trato especial y diferenciado, etc.), no exposiciones detalladas de intereses particulares. Siguen viéndose algunas así, especialmente de grupos que se están juntando por primera vez (por ejemplo, los países árabes). Pero algunas de las posiciones de grupo, tanto las anteriores a Cancún como las presentadas allí, fueron mucho más detalladas, especialmente las de los países ACP (relativas a cuestiones de particular importancia para ellos, por ejemplo la erosión de preferencias y las reglas de los grupos regionales) y las de los países menos adelantados (relativas a la compensación por pérdida de preferencias).

Estos grupos se complementaron con una fórmula anteriormente utilizada, los grupos ad hoc dedicados a cuestiones especiales (el G20+, los principales países en desarrollo tradicionales más otros para agricultura o productos especiales, países sin litoral, etc.) así como posiciones concretas detalladas de países que ya no son simplemente repertorios de sus compromisos de grupo (para un historial, véase Page 2002, WTO). Fue un conjunto de países en desarrollo de distintos grupos y continentes el que pidió que se mantuviera el desarrollo como algo “cardinal en el paquete de Doha” y que insistió en la necesidad de un paquete equilibrado que fuera “beneficioso para todos los miembros” (Argentina, Bolivia, Botswana, Brasil, Chile, China, Colombia, Cuba, Ecuador, El Salvador, Gabón, Guatemala, Honduras, India, Malasia, Marruecos, México, Nicaragua, Pakistán, Paraguay, Perú, República Dominicana, Tailandia, Uruguay, Venezuela y Zimbabwe, TN/C/W/13). El tema de la compensación (en el que profundizaremos más adelante) probablemente sea el principal ejemplo de una nueva cuestión puesta sobre el tapete por los países en desarrollo como resultado de una evaluación muy cuidadosa de sus posibles beneficios en la actual agenda. Estos cambios evidencian un oficio y una familiaridad con la negociación que son novedad.

Agricultura

El problema