Report 3 on UNCTAD meetings: Doha talks should resume but on development basis

9 October, 2006

The World Trade Organisation's Doha negotiations should resume as soon as possible, and on the basis of the development mandate and principle so that the developing countries will really benefit, according to many developing countries individually or through their groupings.

This message emerged during discussions on the post-Doha developments at the Trade and Development Board of UNCTAD on 27 September, at which several Ambassadors were present, as well as the UNCTAD Secretary General and the WTO Director-General.

The Group of 77 and China, represented by Pakistan, said the discussion on the Doha work programme in UNCTAD through the past years had helped retain the development context of the WTO talks. Never has the situation been as grave as now, as the suspension of talks has also halted the development issues, and has put on hold the progress made as well as existing deadlines.

It urged that the issues could be discussed in UNCTAD, which could be a catalyst to resuming the talks at the WTO. It added that the suspension must be seen and remedied through the perspective of the development objective.

Ambassador Clodoaldo Hugueney of Brazil said the talks should resume as soon as possible. There is only a short window of opportunity to achieve results. There are two central areas, agriculture and development , in the negotiations.

Brazil said it would be unfortunate if the first trade Round that put agriculture at its centre were to fail, and this could not be accepted. He agreed with Lamy that some space is now needed for quiet diplomacy.

He also agreed that the blocking issue is agriculture and that major players have the major responsibility to unblock the talks. We must see movement in agriculture, in market access, and see real effective cuts in domestic subsidies, he added.

Brazil also said "we can't have a dollar for dollar exchange between domestic subsidies and market access in agriculture." It added that the major players with billions of dollars of subsidies have to move to unblock the talks. Brazil would do its part in agriculture, NAMA, services and rules, especially anti-dumping.

Brazil concluded that it wanted an outcome that is both ambitious (as this is the only way to deliver the ambitious development package) and that is balanced.

Ambassador Baboo Servansing of Mauritius, speaking on behalf of the ACP Group, said we should not underestimate the consequences of a failure of the talks.

A successful conclusion can be achieved only if there is a "win outcome for development. Any other option should be ruled out. Developing countries are not part of the problem in the present impasse but they want to be part of the solution in a successful conclusion of the round."

The ACP Group called for the mainstreaming of the development dimension into the talks. In what is named a "development round", market liberalization cannot be the only determinant of success and neither will any spin-doctoring that equates liberalisation with development be conducive to a development outcome.

Market liberalization if not properly managed will not lead to a balanced result, but will only accentuate the marginalization of the many and create a skewed system of winners and losers. "We therefore need a blended approach that will deliver on market opening and at the same time create the policy space and flexibility for the small and the weak to exist and catch up at their pace."

Ambassador Servansing said the ACP Group is facing numerous challenges already as a result of the previous rounds and the mutations in the global economy, necessitating for most of them adjustment measures and new policy orientations.

"The result of this current round of negotiations would further add to their burden. And yet the ACP has adopted a very constructive and collaborative spirit in all areas of negotiations with the spirit of furthering the objective of the development agenda," he said.

"It is crucial that the development dimension of the Doha Development Agenda be fully reflective of the concerns and interests of all developing countries and this dimension permeates the outcome of the negotiations to ensure a collective ownership at the end."

He added that we have been often lured by potential global gains while in reality small developing countries such as the ACP countries have been left behind or subsumed in aggregate trade performance and the share of trade is highly skewed in their disfavour.

While redressing global imbalances there is need to ensure that all developing countries benefit from a fair share of global trade. It would be counter-productive to address the concerns of some while creating problems for others. "This is why the ACP countries have been calling for full modalities in all areas of the negotiations and covering all the elements raised."

Inability to benefit from trade liberalization is partly due to supply capacity constraints of ACP countries. It would be unwise for the system to deliver on market access if developing countries don't have capacity to tap into the new opportunities.

"In fact many developing countries have had a defensive approach in the negotiations because of this lack of capacity. The question is: Are all developing countries ready to face the challenges of further opening up of markets or further multilateral commitments as being proposed in the current negotiations?"

The Group said that in agriculture it is regrettable that the impasse is being narrowed to the "triangle of issues." While focusing on establishing a so-called balance among key players involved in the triangle, "we are forgetting the interests of the most vulnerable developing countries, which are the majority of the WTO membership.

"We are forgetting that the real objective of this Round is about Development. In the collective efforts to revive the Round there is currently tremendous pressure in some quarters to increase the level of ambition in agricultural market access as the prerequisite to unlock the negotiations.

"Yet it should be noted that high ambition would in effect benefit only a handful of competitive developing countries and would simply phase out the most vulnerable ones.

"From the ACP perspective, an equitable outcome in agriculture negotiations can only be achieved through, inter alia, a "moderate and reasonable" level of ambition in the tariff reduction formula, concrete trade and non trade solutions to the problems of preference erosion, duty free and quota free access for LDCs, full implementation of the framework agreement on SP and SSM, meaningful result on cotton, commodities and net food importing developing countries related issues."

In NAMA, said Ambassador Servansing, "the level of ambition proposed has been a major concern for the ACP Group, hence their repeated calls for less than full reciprocity in reduction commitments, adequate flexibilities and special and differential treatment.

"The ACP members by applying the ambitious formula being proposed would face major adverse consequences on their industrialization process, employment and tariff revenue. While we understand the rationale for tariff dismantlement to a certain extent, we cannot at the same time discard completely the reality that industrial tariffs are crucial to some countries while framing their industrial development strategies and in generating revenue for development purposes.

"That is why the ACP has been calling for a tariff reduction approach that would allow our countries sufficient flexibility to pursue their industrial development objectives."

Ambassador Servansing said the ACP countries export a few products and mostly under preferential access to a few traditional markets. The erosion of these preferential accesses would be a major threat to their fragile economy. The approach they have adopted in the negotiations would allow them to manage a smooth transition without blocking the multilateral trade liberalisation process per se.

In the rules area, he added, the development dimension should transpire. The ACP countries are currently negotiating trade agreements with other partners and it is becoming apparent that the rules relating to regional trade arrangements should provide them with the requisite flexibilities and space tuned to their development needs and aspirations.

The trade facilitation negotiations should ensure that technical assistance and capacity building remain central. The duty and quota free market access decision in Hong Kong should be implemented and the cotton issue is also of vital interest.

On the process, the ACP Group believed an all inclusive and transparent process should guide the work. Geneva should remain the nucleus of the negotiations and side events can only feed into the process the requisite political impetus.

Ambassador Servansing said there are several areas where more technical work is needed and where developing countries need more assistance. These are areas one may wish to look at without losing sight that the ultimate aim is to get full modalities in all areas.

European Communities Ambassador, Carlo Trojan, said the suspension does not mean that the DDA has failed or that we need to go back to the drawing board. But the Round is at risk and the next few months is crucial. The question is to restart as soon as possible, as there is a window of opportunity to conclude between November and March.

He said the basis for resumption should be the July 2004 package and the Hong Kong Declaration, with no pulling back on the contents. We are at pains to restart and there is a lot to lose if we fail.

Trojan said the breakdown in July was due more to politics, as on substance "we were not that far apart." The domestic politics in certain countries was not right. As a result there was a different view of the exchange rate between NAMA and agricultural market access and domestic support.

The EU wants to get back to the table as soon as possible, said Trojan, adding that it would improve its offers on agricultural market access towards the G20 proposal, but added that this would only take place if others move to the "middle ground", referring especially to the US on domestic support.

He added that it is not only the US but other countries too that have to contribute. Emerging economies need to take their role. India and Brazil did not need to reveal more of their cards on NAMA, but that time will come. The LDCs have to do very little. On some development issues such as aid for trade, duty free quota free for LDCs, cotton and integrated framework, there is a desire to move forward.

The United States said it shared the disappointment over the suspension and was encouraged by the feedback at various meetings since July. It wants an ambitious outcome including in NAMA and services. Agriculture is a necessary but insufficient condition for success.

The US referred to suggestions that politics stood in the way of the talks but said that for it the issue is economic. The solution is substantial economic results for all. It said that its offer in agriculture domestic support was not "take it or leave it". But the domestic support issue would not succeed if there is no market access. It was not a dollar for dollar exchange that the US was seeking.

It added that the proposed cuts in market access that seem significant were not so in the end. In the tariffication exercise (of the Uruguay Round) tariffs had been set very high, much higher than the applied rates. The US is looking for meaningful results.

The US said its trade representative Susan Schwab had said at the Cairns Group meeting in Australia that the US is ready to cut its domestic support by more, if others are willing to do more too. What is needed is substance and not process.

Kenya's trade ministry permanent secretary said the suspension is of major concern. Although the Hong Kong Declaration injected momentum, positions remain polarized. The lack of agreement on agriculture had impacted on all other areas, including special and differential treatment and implementation. There should be immediate resumption of negotiations, and there should not be only lip service paid to development in the negotiations.

Malaysia's Ambassador to the WTO Mohammad Noor Yacob said although there had been many calls for the talks to resume, there had also been a reiteration of core positions, with each party asking others to shift their positions. A revision of positions had yet to happen and political heavy lifting is yet to be done.

Malaysia said that the Asean Ministers had recently called on all countries to adjust their position and that Asean was also willing to contribute to the process. It would not be good if the talks resume only to be followed by another deadlock.

China said it was willing to work constructively to help resume the negotiations. The suspension has given us time for reflection. It hoped that developed countries would show goodwill and make a substantial effort.

Ambassador Makarim of Indonesia said for the talks to resume it would require strong commitment from the developed countries. When the talks resume, they must be consistent with the Doha, July 2004 and Hong Kong mandates, placing developing countries at the heart of the Round.

Indonesia stressed the importance of special products and special safeguard mechanism in agriculture to address development concerns. "Without satisfactory results on these two issues, it would be difficult for Indonesia and the G33 to accept any outcome of negotiations."

Tanzania raised the concern that its farmers were being exposed to competition from subsidized imports that have led to the loss of jobs. It also said some international standards were wiping out the export opportunities of developing countries.

Argentina said there was need to resume the negotiations but this requires changes in the positions of developed countries. It stressed the need to adhere to paragraph 24 of the Hong Kong Declaration where the commitments in agriculture and NAMA have to be comparable.