WTO still relevant to poor countries
Sep 24, 2006
After five years of tenacious engagement, it’s back to the drawing board for the World Trade talks — the Doha Development Agenda, or DDA. Its launch in 2001 was greeted with optimism especially from the poorer members of the World Trade Organisation (WTO), because development was finally placed
After five years of tenacious engagement, it’s back to the drawing board for the World Trade talks — the Doha Development Agenda, or DDA. Its launch in 2001 was greeted with optimism especially from the poorer members of the World Trade Organisation (WTO), because development was finally placed at the core of the negotiations. The negotiations appeared at risk after the Cancun Ministerial in 2003 ended without an agreement. A missed opportunity, but, on a positive note, Cancun saw the birth of powerful coalitions of developing countries, the G20 and G90.
Subsequently, whirlwind diplomacy by the then EU Trade Commissioner, Pascal Lamy, resulted in a new negotiating platform in July 2004, with which all members were reasonably satisfied. The next frontier was Hong Kong in 2005, where the poorer members — notably Least Developed Countries (LDCs) succeeded in getting a commitment by all developed countries to grant LDCs duty and quota free access to their markets. Developed countries also committed to a meaningful “Aid-for Trade†package.
This was no mean feat, considering that LDCs comprise only 32 out of the total 149 members of the WTO. The EU strongly supported LDCs on these points, as it has provided duty free and quota free access to LDCs since 2001 and has long prodded other developed countries to do the same. In addition, both the European Commission and EU member states had committed to increasing their total contribution to trade related assistance to Euros 2bn per year by 2010. At a press briefing after Hong Kong, Uganda’s Minister of Trade and leader of the delegation concluded that “overall, the conference achieved some of its objectives†and that “trade talks are moving in the right directionâ€. Yet seven months after Hong Kong, the talks have been suspended. What happened?
In a nutshell, the DDA was bogged down by exactly the same sticking points as the previous rounds: market access and agriculture. By July 2006, the stakes were clear: EU should open their farm markets and eliminate export subsidies; US should cut their farm subsidies; big middle income countries such as India, Brazil and China should cut their industrial tariffs. LDCs like Uganda were exempted from commitments since this was, and still is meant to be a “Round for free" for LDCs.
The DDA could have delivered all this, and the EU made an extraordinary effort to get a result. The EU offered one 100 per cent elimination of export subsidies. This would reduce EU exports of sugar by five million tonnes, of fresh milk by eight million tones and poultry by a quarter. By eliminating export subsidies in the DDA, the EU would lock in the far-reaching reforms of its Common Agricultural Policy (CAP), and open markets for others. All this in exchange for promised reforms in the US domestic support system and tariff cuts by middle income countries. As the current EU Trade Commissioner, Peter Mandelson, said, “This is more, much more, than anyone would have expected from the EU.†Unfortunately, this was not enough to move other developed countries, particularly the US, in the same direction.
Paradoxically, if talks do eventually collapse, the biggest losers of this round will be the LDCs. The DDA has potential to deliver a substantial deal for development. WTO members could sign off on a multi-billion euro new package of capacity building in “Aid for Trade†that will help build roads and ports, and enhance LDCs’ ability to meet export standards that hamper their participation in global trade. The Hong Kong agreement on duty free quota free market access to all developed country markets for all LDCs could be implemented. If other countries matched the EU in offering duty free and quota free access for all countries and all products, the DDA will have demonstrated that global trade can deliver market-based poverty reduction.
Ends
Subsequently, whirlwind diplomacy by the then EU Trade Commissioner, Pascal Lamy, resulted in a new negotiating platform in July 2004, with which all members were reasonably satisfied. The next frontier was Hong Kong in 2005, where the poorer members — notably Least Developed Countries (LDCs) succeeded in getting a commitment by all developed countries to grant LDCs duty and quota free access to their markets. Developed countries also committed to a meaningful “Aid-for Trade†package.
This was no mean feat, considering that LDCs comprise only 32 out of the total 149 members of the WTO. The EU strongly supported LDCs on these points, as it has provided duty free and quota free access to LDCs since 2001 and has long prodded other developed countries to do the same. In addition, both the European Commission and EU member states had committed to increasing their total contribution to trade related assistance to Euros 2bn per year by 2010. At a press briefing after Hong Kong, Uganda’s Minister of Trade and leader of the delegation concluded that “overall, the conference achieved some of its objectives†and that “trade talks are moving in the right directionâ€. Yet seven months after Hong Kong, the talks have been suspended. What happened?
In a nutshell, the DDA was bogged down by exactly the same sticking points as the previous rounds: market access and agriculture. By July 2006, the stakes were clear: EU should open their farm markets and eliminate export subsidies; US should cut their farm subsidies; big middle income countries such as India, Brazil and China should cut their industrial tariffs. LDCs like Uganda were exempted from commitments since this was, and still is meant to be a “Round for free" for LDCs.
The DDA could have delivered all this, and the EU made an extraordinary effort to get a result. The EU offered one 100 per cent elimination of export subsidies. This would reduce EU exports of sugar by five million tonnes, of fresh milk by eight million tones and poultry by a quarter. By eliminating export subsidies in the DDA, the EU would lock in the far-reaching reforms of its Common Agricultural Policy (CAP), and open markets for others. All this in exchange for promised reforms in the US domestic support system and tariff cuts by middle income countries. As the current EU Trade Commissioner, Peter Mandelson, said, “This is more, much more, than anyone would have expected from the EU.†Unfortunately, this was not enough to move other developed countries, particularly the US, in the same direction.
Paradoxically, if talks do eventually collapse, the biggest losers of this round will be the LDCs. The DDA has potential to deliver a substantial deal for development. WTO members could sign off on a multi-billion euro new package of capacity building in “Aid for Trade†that will help build roads and ports, and enhance LDCs’ ability to meet export standards that hamper their participation in global trade. The Hong Kong agreement on duty free quota free market access to all developed country markets for all LDCs could be implemented. If other countries matched the EU in offering duty free and quota free access for all countries and all products, the DDA will have demonstrated that global trade can deliver market-based poverty reduction.
Ends