The Doha Development Agenda Round. What has happened so far, where we are now and what s ahead Giovanni Anania Department of Economics and Statistics University of Calabria, Italy 1
the negotiations on agriculture, from Seattle ( December 1999) to Bruxelles (May 2005) where we are today the plan what has been agreed, what s left to be decided 2
from Marrakech to Doha the 1994 UR Agreement on Agriculture (art. 20): commitment to start a new negotiation on agriculture by the end of 1999 III WTO Ministerial Conference [Seattle, Nov. 30 Dec 3, 1999] meant to launch the new round failure! no agreement emerges agriculture was not the reason of the failure 3
from Marrakech to Doha only negotiations on agriculture and services started, early in 2000, with a very limited agenda until the IV Ministerial Conference in Doha (Nov 2001) nothing really happened in the negotiation ( exchanges, analytical work).this because of several factors -- because countries did not want to start negotiating before a broader agenda was in place, but also to wait for the new Farm Bill in the U.S. and for the MTR of Agenda 2000 in the EU 4
Doha (November 2001) Agreement to start a new round! with a development agenda! international trade can play a major role in the promotion of economic development and the alleviation of poverty. The majority of WTO Members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration. 5
Doha (November 2001) Agreement to start a new round! but with a very limited agenda agriculture services market access for non-agricultural products trade-related aspects of intellectual property rights (TRIPS): notification and registration of geographical indications for wines and spirits Declaration on access to medicines 6
Doha (November 2001) Agreement to start a new round! but with a very limited agenda main issues which have been left out: trade and labor standards trade and environment all Singapore Issues (decision postponed at V Ministerial) 7
the Singapore Issues trade and investment (a framework to secure transparent, stable and predictable conditions for long-term cross-border investment) trade and competition policy transparency in government procurement trade facilitation (to further expedite the movement, release and clearance of goods) 8
the Doha declaration and agriculture commitment to a negotiation aimed at: substantial improvements in market access reduction, with a view to phasing out, all forms of export subsidization substantial reductions in tradedistorting domestic support taking into account non trade concerns and the need for the agreement to include a special and differential treatment for developing countries 9
the Doha declaration and the timing of the negotiations on agriculture agreement on the commitments ( modalities ): by 31 March 31 2003 country-specific detailed commitments ( schedules ): by the 5th Ministerial Conference (Cancun), September 2003 [ peace clause expires 31 December 2003] round ends 1 January 2005 ( single undertaking ) 10
the negotiation starts ( slowly) from Doha to Cancun Agenda 2000 MTR, Communication (July 2002) EU proposal for the modalities (January 2003) Harbinson s draft of modalities (March 2003) March 31 deadline for modalities unmet Agenda 2000 MTR (June 2003) August 2003: US-EU joint proposal G-16 ( G20) joint proposal 11
Cancun (September 2003) September 13, 1 pm: draft text by Derbez (everybody dislikes it, main concerns focus on Singapore issues and agriculture) 7 pm-1:30 am: Head of delegations meeting 1:30 am-3:30 am: green room meeting (9 countries) ( standstill on SI) September 14, 8 am-3 pm: green room meeting (30 countries) focusing on SI (EU agrees to step back on competition and investments; African Union and Japan/SK say no, for opposite reasons) 4 pm: Head of delegations meeting, Derbez brings the Conference to end 12
Cancun (September 2003) Failure! the failure occurred on the Singapore issues, but agriculture could have very likely been the reason for the failure; but negotiations did not get to the point to find out if a way out for agriculture existed or not ( mixed signals exist) this time the main conflict was between developed and developing countries (with some free riding..) 13
Cancun (September 2003) Failure! developing countries took a strong negotiation stand on the SI (hard to understand once competition and investment had been dropped; meant to drive to the failure?) the EU could not give away on the SI more than it did without loosing its (negotiating) face (clear to everyone) 14
Cancun (September 2003) Failure! developing countries believed the DDA was really a development agenda round, tried to make WTO work for the poor, and asked for way too much with respect to what developed countries could be assumed to be ready to give away [ naïve or forward looking strategy?] developed countries: business as usual approach to negotiations, underestimation of climate, firm on rhetoric 15
Cancun (September 2003) failures are not uncommon in multilateral negotiations (Bruxelles in the UR; Seattle), are not the end of the world, on the contrary, they are part of the process the failure in Cancun, however, was different from the previous ones: for the first time developing countries were real players and proved their concerns have to be taken into consideration for an agreement to be reached! 16
the negotiations after Cancun: the actors/the acronyms U.S. EU G-10 [Swizerland, Japan, Bulgaria, Norway ] Cairns [Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, Philippines, South Africa, Thailand, Uruguay] G-33 [China, Cuba, India, Ivory Coast, Pakistan, Sri Lanka, Turkey, ] G-20 [Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, India, Indonesia, Mexico, Pakistan, Paraguay, Peru, Philippines, South Africa, Venezuela, ] G-90 [ACP, Least developed countries] FIP (Five Interested Parties) [U.S., EU, Australia, Brazil, India] 17
from Cancun to Geneva for several months nothing happens Timothy Groser (NZ) replaces Stuart Harbinson as chair of the Committee on agriculture the peace clause expired 1 Jan 2004 decision to re-start from agriculture letter by Zoellick (US) (Jan 2004) letter by Lamy and Fischler (EU) (May 2004) many, many meetings ( role of FIP in moving things ahead grows) 18
the August 2004 agreement (Geneva, General Council) the most important achievement is the fact that an agreement was reached, by itself it gave a strong political signal, confirming a consensus on the legitimation of the Wto and allowing the round to restart the agreement reached is much less ambitious with respect to the one which was attempted in Cancun, where the proposals were defining in details the structure of the commitments (leaving out only the numbers defining the amount of the reductions ) 19
the August 2004 agreement SI: only one, trade facilitation, will be part of the negotiation on agriculture only general indications on the modalities (no details whatsoever ) while identifying many flexibilities in the modalities to be defined, to allow developed countries defend from the agreement to be eventually reached their policies for most politically sensitive commodities 20
the August 2004 agreement market access tariffs will be reduced using a tiered formula cuts be applied to bound rates deeper cuts in higher tariffs each member will designate an appropriate number, to be negotiated, of sensitive products (lower than otherwise tariff reduction will apply, but TRQ expansion) tariff escalation will be addressed preference erosion will be addressed 21
what happened afterwards and where we are now market access tariff reduction what are we looking for? something like ( example!): tariffs > 90% : average reduction of 60% in five years, with a minimum reduction of 45% tariffs between 90% and 15% : average reduction of 50% in five years, with a minimum reduction of 35% tariffs < 15% : average reduction of 40% in five years, with a minimum reduction of 25% (Harbinson s draft, March 2003) 22
what happened afterwards and where we are now market access [ where the problems are!!] what needs to be decided? (the main issues ) the tiers negotiation did not start yet the tariff reduction formula UR formula (average unweighted percent reduction, with a minimum percent reduction) [EU, G-10] vs. Swiss formula (higher tariffs reduced by a larger amount, a maximum tariff) [US, G-20] 23
what happened afterwards and where we are now the Swiss formula (higher tariffs reduced by a larger amount, a maximum tariff) [ t max * t initial ] t final = ------------------------ t max = 25% [ t max + t initial ] t initial = 500% t final = 23.8% (-95.2%) t initial = 200% t final = 22.2% (-88.9%) t initial = 30% t final = 13.6% (-54.7%) t initial = 20% t final = 11.1% (-44.5%) 24
what happened afterwards and where we are now the tiers (how many? how defined?) the tariff reduction formula (Swiss? UR?) the (real) issue is not how to reduce tariffs, but by how much, and this is not implied by the formula chosen, but depends on the coefficients/numbers in the formula to assess the trade liberalization power of a proposal one needs to have the tiers, the formula and its parameters a negotiation which does not consider all elements at once is very likely frustrating and will take much more time and energies 25
what happened afterwards and where we are now market access the conversion of specific tariffs ($250 per t) in ad valorem tariffs (15% of value) [the AVE issue ] 26
what happened afterwards and where we are now the AVE (ad valorem equivalents) issue it took several months to agree on a formula to transform specific ( $250 per t) tariffs in ad valorem tariffs ( 15% of value) a compromise agreement reached 4 May: where UV for filtered products is the weighted average of the unit values of the commodity obtained from the Wto s IDB and the UNCTAD Comtrade data bases, using 17.5/82.5 as weights (40/60 for processed products). AVEs for sugar remains to be settled AVE = t specific / UV 27
what happened afterwards and where we are now the AVE (ad valorem equivalents) issue: a (real) technical issue with relevant political implications! behind every technical issue lies a political question, but underlying every political issue are technical issues which our ministers cannot possibly be expected to resolve (Tim Groser) 28
what happened afterwards and where we are now market access tariff caps? TRQs (volume, in-quota tariff, administration) market access for least developed countries preference erosion EBA for all developed countries? [EU] tropical products least developed countries market access Special Safeguard Mechanism 29
the August 2004 agreement domestic support higher levels of trade distorting domestic support to be subject to deeper cuts, using a tiered formula overall (amber box + blue box + de minimis), amber box and de minimis trade distorting support subject to specific reduction commitments; cuts to be applied to bound levels 20% cut in the first year of implementation blue box: modified; support capped at 5% of value of production; flexibility for countries with large share of support in this box green box: reviewed and clarified 30
what happened afterwards and where we are now domestic support [ not a stumbling block] what needs to be decided? (the main issues ) green box ( reviewing and clarifying ) negotiation did not start yet a development (green) box? blue box further review? capped product by product? [G-20, Australia] 31
what happened afterwards and where we are now domestic support [ not a stumbling block] what needs to be decided? (the main issues ) tiers, reduction formula and parameters (for overall support and for amber and de minimis components) negotiation did not start yet special and differential treatment negotiation did not start yet 32
the August 2004 agreement export competition the following will be eliminated, in parallel, by a credible end date, to be agreed: export subsidies subsidized export (credit) financing trade distorting practices of exporting State Trading Enterprises improper forms of food aid which displace commercial purchases flexibility: phasing will take into account internal reform steps of members 33
what happened afterwards and where we are now export competition [ the main issues have been already solved] Groser ready to draft first approximation of modalities text subsidized export (credit) financing: repayments within 180 days, minimum interest rate State Trading Enterprises: no public financing, including underwriting of losses food aid: in grant and cash form only - i.e. no credit, no in-kind - except during emergencies (?!) 34
what happened afterwards and where we are now export competition what needs to be decided? (the main issues ) the credible end date negotiation did not start yet 35
the August 2004 agreement the cotton initiative to be part of the negotiation on agriculture Special and Differential Treatments for developing countries and least developed countries issues of interest but not agreed (no consensus on the fact these have to be part of the agreement ): sectoral initiatives, differential export taxes, geographical indications VI Ministerial in Hong Kong in December 2005, ma no indication given of the expected end date for the the round 36
what s ahead? the current plan is to try to agree on a first approximation of the modalities before the August break, in order to reach consensus on an advanced draft before the 13-18 December Ministerial in Hong Kong, and then find there the political compromise on the (hopefully few) unresolved issues 2 Committees on agriculture: 30/5-3/6 and 11-15/7 a mini-ministerial in China in July 37
what s ahead? if modalities are agreed in Hong Kong, the negotiation on agriculture is concluded and an agreement can be signed within months US: Trade Promotion Authority ( fast track ) will likely extend through 1 July 2006; new Farm Bill EU: sugar reform, fruit and vegetables reform, enlargement to Romania and Bulgaria, budget developments 38
what s ahead? who will be the main actors drafting the final agreement? forget the UR! (bilateral US-EU deal) the FIP? will the Cairns group play a role? will the G-20 group hold until the end? what will be its role and strategy? what will be the role and strategy of China? what will be the role and strategy of small developing and least developed countries (the DDA )? 39
what s ahead? what kind of DDA Agreement on agriculture? current domestic support reduced? current market access increased? direct and indirect export subsidies eliminated by 2012? effective S&DT component for poor developing and least developed countries? less far reaching S&DT for more developed developing countries? cotton initiative implemented? geographical indications on board? or a less ambitious agreement? 40
what s ahead? which factors will influence what s going to happen? the assessment by the (most important) developing countries of a relatively unambitious agreement with respect to the expectations vis a vis no agreement (how much un/ambitious? remains to be seen) the climate in international relations developments at the other negotiating tables the new Farm Bill (2008), developments in the Cap ( the agreement will have to be compatible with policy choices which took place) 41
what s ahead? an agreement in 2006? in 2007? in 2008? 42