News and Analysis • Volume 14 • Number 1 • February 2010

5. No Early Harvest for LDCs’ Top WTO Priorities

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In October, least-developed countries outlined an ‘early harvest’ WTO ministerial decision that would grant them duty-and quota-free market access as of next year, but it was not adopted and such benefits now depend on the conclusion of the Doha Round.

The Dar es Salaam Declaration, adopted by trade ministers of least-developed countries (LDCs) in October, calls for ‘quick results’ on three core priorities: duty- and quota-free market access, preferential treatment for LDC services requests, and an ‘ambitious and rapid’ elimination of cotton subsidies.

WTO Director-General Pascal Lamy, who attended the meeting, said that there was no ‘early harvest’ mandate for the Doha Round and predicted that LDCs would have to have to wait until the entire round concludes before they can reap any benefits.

The Early Harvest Proposal

Duty-free and quota-free market access The 2005 Hong Kong Ministerial Declaration committed developed countries to providing duty-free and quota-free market access (DFQF) for all LDC products no later than the start of the Doha Round implementation period. Countries that face difficulties in granting full DFQF at that time must offer it to at least 97 percent of tariff lines and gradually increase coverage thereafter.

LDCs called upon developed countries to grant DFQF to at least 97 percent of their exports by 2010, and to broaden the coverage to all products at the start of the Doha Round implementation period. Developed countries should promptly inform them of the specific tariff lines that would be eligible, as well as establish a product-by-product timeline for granting DFQF to the 3 remaining percent.

The issue remains divisive, however, even among LDCs. For instance, Sub-Saharan beneficiaries of the African Growth and Opportunity Act - most are LDCs - are actively lobbying against proposed legislation that would give all least-developed countries full duty- and quota-free access to the US (Bridges Year 13 No.3 page 13). Some other developing countries also fear that DFQF access to all rich country market for all LDC products would have a negative impact on their exports.

Services WTO Members have already agreed on ‘modalities’ for special treatment of LDCs with regard to services trade (WT/S/13), but these lack firm timelines and specific commitments. In Dar es Salaam, LDCs asked for an immediate waiver of the GATS most-favoured-nation provision so that trading partners may offer least-developed countries’ services industries and service providers better market access than they do to those from other WTO Members.

Despite the modalities, some disagreement remains among the membership over preferential treatment for LDC service workers, as this is the key gain that many other developing countries are hoping to secure in the services negotiations.

Cotton This is on the Doha agenda due to four African LDCs’ efforts to highlight the devastating consequences that rich country subsidies are having on the world price of cotton. They have claimed that heavily subsidised cotton, particularly from the US, is displacing their exports despite low production costs.

In July 2004, WTO Members agreed that cotton would be addressed ‘ambitiously, expeditiously and specifically’ within the agriculture negotiations. Since then, virtually nothing has happened. The ‘cotton four’ - Benin, Burkina Faso, Chad and Mali - have proposed a formula that would phase out domestic support for cotton faster and more ambitiously than subsidies for other agricultural products. The US, which is the main country targeted here, has so far refused to enter into negotiations on numbers and timelines, insisting instead that the issue cannot be settled until a deal has been struck on agriculture as a whole, including on market access.

The Dar es Salaam Declaration requests that an ‘ambitious, expeditious and specific’ solution to the problem be included in an ‘early harvest’ agreement, together with a ‘safety net’ that would assist LDC cotton farmers faced with declining international prices in the wake of the global economic and financial crisis.

Acccession In addition, the ministers requested that LDCs’ accession to the WTO be placed on the agenda of the forthcoming ministerial conference.

Other Issues

The Dar es Salaam Declaration also stated that the Special Safeguard Mechanism (SSM) that will allow developing countries to raise tariffs to ward off import surges of farm products should be more flexible for LDCs, notably by letting them increase import duties beyond their current bound levels. The extent to which SSM tariffs may be raised is among the most controversial elements in the Doha Round agriculture negotiations.

As for the erosion of long-standing trade preferences, LDCs stressed that agreements on agriculture and industrial market access must not affect their export interests. They called for an ‘efficient mechanism’ that would minimise any negative effects that the ‘fullest liberalisation’ of trade in tropical products might have on LDC exports. The two main products concerned by the preference erosion versus tropical products debate are bananas and sugar (see related article on page 7).

LDC ministers also said that their countries should be completely exempt of any commitments to reduce or eliminate tariffs on environmental goods and services, and should be given a 10-year grace period before having to grant patents in this area. Environment-related technology and equipment should be provided to LDCs in grant form, the ministers said.