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Africa: Trade Talks Analysis, 2
AfricaFocus Bulletin
Dec 16, 2005 (051216)
(Reposted from sources cited below)
Editor's Note
Having failed to come up with a joint proposal on agriculture that
begins to satisfy the demands of developing countries, Europe and
the United States have proposed a "development package" that they
hope will preserve some image of success in the World Trade
Organization ministerial conference in Hong Kong. But critics say
whatever the face-saving agreements reached by the weekend, the
results will clearly show no progress at all for poor countries in
what was supposed to have been a "development round."
This AfricaFocus Bulletin contains two short articles from Third World Network,
one the summary of a workshop with Tetteh Hormeku,
coordinator of the Africa Trade Network, focusing on the latest
"development package," and the other an account of the December 13
statement on agriculture by the G20 group of developing countries,
which includes, among others, Brazil, Egypt, India, Nigeria, South
Africa, and Tanzania.
Another Bulletin sent out today has a summary analysis of the
issues being discussed at the WTO Ministerial conference, also from
Third World Network (TWN).
TWN has much additional information and analysis on its website at
http://www.twnside.org.sg
For a full list of earlier AfricaFocus Bulletins on trade issues,
see http://www.africafocus.org/tradexp.php
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
The "Development Package" That Isn't.
By Tetteh Hormeku, Coordinator, Africa Trade Network
TWN Info Service on WTO and Trade Issues
16 Dec 2005
Third World Network
http://www.twnside.org.sg
The "development package" touted by the European Union and the
United States is dangerous and will prevent real development for
Africa. This was the conclusion by Tetteh Hormeku of the Africa
Trade Network in a presentation made at a TWN panel discussion on
"Services, NAMA and Agriculture: What is at Stake?" Below is a
summary of his presentation.
WTO Director General Pascal Lamy and European Trade Commissioner
Peter Mandelson are pushing for early agreement on the development
package to demonstrate their "good faith". The failure of the Doha
Round so far to deal head on with development has led to this
flurry of activity. What is this package and what is it not?
There are two central features of the development package in the
Ministerial text. First, the supposed "special and differential
treatment" (SDT), as it applies to LDCs. Secondly the aid for trade
promise.
Before the Seattle Ministerial Conference, developing countries
began to complain that after conclusion of Uruguay Round, the
process of implementing the agreements resulted in difficulties to
their economies which can only be addressed if WTO rules are
corrected and rebalanced.
SDT was supposed to be part of the integral rules of GATT as well
as the new Uruguay Round rules which allowed developing countries
to adopt less onerous obligations than developed countries because
they have different levels of development and different capacities.
The history of SDT predates the Uruguay Round. Countries at
different stages of growth and development should not assume the
same level of responsibilities in international agreements as these
are unequal partners. But by end of the Uruguay Round the spirit of
SDT was reduced to a narrower concept: developing countries had to
essentially accept the same obligations as developed countries, and
may be exempted from implementing some measures, as well as allowed
different time scales. But almost all obligations would be adopted
by them.
SDT provisions in the final agreements are mostly "best endeavour"
clauses and developing countries cannot hold developed countries to
them or enforce them. Thus in Doha, developing countries asked for
effective SDT implementation, to move away from simply longer
timeframes for implementing obligations, to fully integrating SDT
into the architecture of the WTO.
Over 200 proposals were made relating first to strengthening SDT
and second to resolving implementation issues. Since the Round has
been launched, all discussions on SDT and implementation issues
have made no progress except on 22 issues which are widely
described as of having little or no commercial value.
In an attempt to attain a more balanced package in time for the
July approximation this year, 5 proposals specific to LDCs were
selected for inclusion into the package. Out of these, the two
most valuable -- duty free and quota free access for LDC products,
and exemption from TRIMS obligations -- are subject to interminable
controversy.
On the issue of duty free and quota free market access, the demand
by LDCs for these to be made legally binding and enforceable in the
WTO continue to be resisted by both the EU and US. These developed
countries prefer the continuation of the current situation where
duty free and quota free status exists as unilateral offers which
they can change any time they wish.
The most farcical saga is being played out. For example, the US
and EU argue that there will be MFN problems if this status is
bound in the WTO. In the Geneva negotiations the EU offered cold
comfort by saying that although they won't be bound they are
sincere and will honour their offer. An LDC can resort to the
European Court of Justice to enforce any non-compliance. At one
point the US and EU even argued over what "binding" means.
As the moment the US is insisting on two things: first, not
extending duty free and quota free access to all products, which
makes the concession useless since this allows for market access
for products that LDCs don't produce. For instance, giving duty
free access for computers to an LDC is meaningless. Secondly, they
want to reserve the right to exclude countries, an insistence which
led to some of the most heated moments in the negotiations in HK so
far. A strong letter of protest has been submitted by Zambian
Minister of Trade and Industry, Mr. Deepak Patel, who is the Chair
of the LDCs Group.
On the issue of the TRIMS (trade related investment
measures)Agreement, which prohibits the use of some performance
requirements such as the use of local content policies, LDCs want
to be able to obtain exemptions for existing and future TRIMS. LDCs
did not notify enough in the Uruguay Round because most of them had
not been aware and did not have the capacity to safeguard their
rights.
The increasingly marginalized issue of cotton also makes a mockery
of any development package. The US has offered to eliminate duties
but only when there is full agreement on full modalities for
agriculture. In the interim, money will come from the Millennium
Challenge Account (MCA) to address supply side constraints. Again
this promise rings hollow as most of the funds (if they
materialize) will be likely used to pay for services from the US to
"assist" African producers.
The other central piece of the development package is "aid for
trade" which is meant for developing countries (and not just LDCs)
to help improve production and other supply capacities. As it
stands now in the text, there is only a promise to hold a meeting
to discuss this at the WTO before the mid-2006.
The terms of this "aid for trade" are also not clear as to whether
it will come from new money or old money, whether it will be
concessional grants or loans. African countries say that there must
be clear criteria: the funds must be predictable, adequate and
unconditional with the countries themselves deciding what those
resources shall be used for. There are estimates that 80% of the
MCA funds has gone back to the US.
From discussions so far in Hong Kong, the aid is for trade
liberalisation. For instance it has been proposed that as part of
aid for trade, a fund be set up to compensate developing countries
for revenue losses arising from tariff reduction. Apart from the
absurdity of taking money from developing countries and returning
a part of it as a grant later, this ignores the problem of removing
the right of those countries to use tariff as a policy to support
and nurture local industry.
There are also serious concerns that the aid for trade package will
be used as a trade-off ploy. At this stage of the negotiations, the
entire development package looks more like a ploy to soften the
developing countries so that they will accept the extraction of
concessions from them. They are offered the promise of some funds
which may not be from new and additional resources (but may simply
be shifted from another aid box), so that they will agree to new
onerous obligations (such as huge tariff cuts in industrial
products, significant tariff cuts in agriculture, and a basic
change in the rules of negotiations in services) that would
jeopardize their development prospects. That is an unfair and
imbalanced bargain, and it is cynical to ask developing countries
to accept it.
Peter Mandelson has even told developing countries that he is
working hard for them, and in return they must give him services.
He has openly stated that he is not happy with the highly
contentious Annex C on services and wants it "strengthened." The
developed countries should drop this charade. They should not
impose new and onerous liberalization obligations on developing
countries that will cripple their economies. They should agree to
strengthened SDT measures and to resolving the implementation
issues. They should offer genuine assistance to developing
countries to help them build their capacity to produce, first for
the local market, and for exports. Unfortunately, this is not
what the "development package" is about.
G20 Ministers reaffirm "agriculture central to Doha Round,"
India and Brazil state positions
TWN Info Service on WTO and Trade Issues
December 13, 2005
Hong Kong 13 December (Martin Khor and Hira Jhamtani) -- The Group
of 20 developing countries held a Ministerial meeting Tuesday
morning and issued a G20 Ministerial Declaration reaffirming its
position that agriculture is the central issue of the Doha Round .
"As agriculture is the engine of the negotiations, the G20 expects
that Ministers in Hong Kong will provide a sound basis for making
progress in the negotiations, putting the process firmly on track,"
said the Declaration. "They should agree to a clear and specific
work programme in agriculture for 2006 so as to conclude the Round
by the end of the year. For this purpose, modalities will need to
be agreed no later than early April and draft schedules based on
these submitted no later than 3 months thereafter."
In reasserting the central place of agriculture in the Doha
negotiations, the G20 Ministers were countering the increasingly
strident position taken by the EU Trade Commissioner Peter
Mandelson who is canvassing that negotiations should focus equally
on other issues such as NAMA and services. He has been saying that
it was a mistake for the negotiations to have focused mainly on
agriculture in the past few years. Placed on the defensive and
being widely blamed for the EU not giving a good enough offer in
agriculture, Mandelson has tried to shift the blame to India and
Brazil for not offering enough in NAMA and services.
The G20 held a press conference, attended by the Trade Ministers of
Brazil, Egypt, Argentina, India and South Africa. "A development
round requires the removal of distortions in international
agricultural trade rules," said the Declaration. "The largest
structural distortion in international trade occurs in agriculture
through the combination of high tariffs, domestic support and
export subsidies that protect inefficient farmers in developed
countries. Removing these anti-development measures is a core
objective of the Doha Round as it will help in reclaiming the
development dimension of the DDA. It is for this reason that
agriculture is the central issue of the Doha Round."
The Ministers added that the G20 had presented balanced and middle
ground positions in all areas of the negotiations, and these
proposals remain on the table as an appropriate basis for
completing the Round. "The G20 is prepared to negotiate
agriculture here in Hong Kong. We hope that others are prepared to
do so likewise."
At the G20 press conference, Indian Commerce Minister Kamal Nath
said that special products (SP) and special safeguard mechanism
(SSM) are integral parts of the agricultural package. They lie in
the livelihood needs and rights of developing countries and cannot
be negotiated in exchange of anything, and the only defensive
mechanism that developing countries have is tariff. He added that
export subsidy was the most trade distortive measure, "yet we have
difficulty in defining the end date. Let the US and EU say that
export subsidies will be eliminated in a certain number of years.
We have not come to Hong Kong to perpetuate the inequalities. We
need to correct this."
At a separate meeting with NGOs, Kamal Nath said it is not the
completion of the Round but its content which is important. The
content to be deliberated in the Doha round must not perpetuate
inequalities in world trade. " We cannot be hassled into an
agreement" he said. While the Ministerial will discuss problems of
LDCs and small states, the issue of "aid for trade" should not put
developing countries more in debt so that they have to increase
trade.
To correct world trade imbalance, he said, export subsidies must be
eliminated. On domestic support, it must be clear how "much less
will developed countries spend on subsidy instead of shifting
around the boxes". On NAMA, Kamal Nath said the issue is not just
market access but a reform of the dumping laws. " I do not care
what formula is used, whether Swiss or German, I want to see how
much the tariffs will be cut. If the EU cuts its tariff by only 24%
while India has to cut by 77%, then where is the development
content?"
He stressed that there is enough already of statements about good
intentions. "But let us now see specifics". Developed countries
cannot keep pocketing whatever they can get, but reducing to
statements whatever they have to give. In NAMA, for instance, the
negotiation content must take into account the need to protect
small, infant and large- employment industries in developing
countries. He added that the days are over when countries are held
to ransom in negotiations. And this is thanks to the input and
statements of civil society group. Indeed in the beginning of his
briefing he said there is a great difference between the Uruguay
round and the Doha round, in that this time civil society is more
aware of the issues and raising their voices as well as providing
inputs to negotiators.
Brazil's WTO Ambassador, Clodoaldo Hugueney, told a separate
meeting with NGOs that the G20 position is the same. "We haven't
seen movement in agriculture, so it is not justified for the G20 to
move." The US proposal on domestic support (in October) was
important as a first move, but insufficient to allow for real
reform in the US. He said the G20 stands for two things.
Firstly, there must be real and effective overall cuts in total
trade-distorting domestic support, and not just a cut in "water"
(i.e. the difference between the bound and applied levels).
Secondly, there must be disciplines, especially rules on the blue
box domestic subsidies, especially since the US wants a change in
the way the blue box is used. He stressed that if there is no
agreement on new disciplines, there would be no new box created.
There is need for product specific caps and specific price
disciplines, to control counter-cyclical payments. The G20 also
wanted a review of the Green Box subsidies, (i) to clarify that
their use in developed countries is really minimally trade
distorting, and (ii) to make it more user friendly for developing
countries.
On market access, Hugueney said the EU proposal is widely
considered as insufficient. The cuts for developed countries are
very small. In addition, the EU wants 8% of tariff lines
designated as sensitive products, or 300 of its 2200 tariff lines.
This is too excessive and unacceptable, as even if only 2% of
tariff lines is accepted it would already involve a very part of
the EU's agricultural production.
On export competition, Hugueney said that the G20 wants a
standstill on export subsidies to prevent an increase in the
meanwhile (which has tremendous dumping effects), and an early
end-date (2010). This should apply to all forms of export support,
including food aid and export credits.
He also stressed the importance of S&D for the G20. Developing
countries that don't have AMS domestic support should be exempted
from an overall cut and de minimis cut. There should be longer
implementation periods for all three pillars for developing
countries; proportionality in commitments; and the role of SP and
SSM is very important.
At the meeting, French economist Jacques Berthelot argued that
domestic subsidies that are given to inputs for exports (such as
feed for animals) should also be considered export subsidies. A
large part of the EU subsidy to cereals goes to animal feed. The
EU's exports for example of chicken and pork, contain high export
subsidy in the form of domestic subsidy of inputs into these
exports.
Hugueney said the G20 was aware of this linkage and had raised the
issue of disciplines on this. However there was "total resistance"
from the developed countries when this issue was raised.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
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