The Doha Trade Negotiations and
Development

Background paper for the
Dialogue on Governance, Globalisation and Development
BARCELONA, OCTOBER 30 – 31 - 2003
by Sheila
Page
Sheila Page is main researcher of the Overseas Development Institute of London.
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).
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.
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.
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.
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.
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.
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’.
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.
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------------------------------------------------------------------------------------------------------------------------------
El
tema del desarrollo en las negociaciones comerciales de Doha
por Sheila Page
Overseas
Development Institute
Diálogo sobre Gobernabilidad,
Globalización y Desarrollo
Barcelona
ODI
111,
Westminster Bridge Road
London SE1 7JD
Fax:
+44 20 7922 0399
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