WTO Ministerial Section • Volume • Number • 30th November 2005
Rich countries seeking “round for free,” say nine developing countries
Nine developing countries have launched an initiative to “reclaim the developmental objectives of the Doha Round.” Ambassadors from several of them told a 28 November press conference that some rich countries had been systematically frustrating both the offensive and defensive interests of developing countries in the multilateral trading system, thus threatening their prospects for development. Specifically, they said that the EU and other developed countries were making demands “disproportionate” to developing countries’ ability to liberalise — while offering little in the way of meaningful liberalisation themselves. South African delegation chief Faizel Ismail said that these demands failed to reflect the principles of less-than-full reciprocity and special and differential treatment (S&D) for developing countries — principles, he argued, that are central to the Doha Round.
Argentina, Brazil, India, Indonesia, Namibia, Pakistan, the Philippines, South Africa, and Venezuela made a submission to the Committee on Trade and Development (CTD) meeting earlier that day stating that “the recent proposals of some major developed countries have attempted to sow division among developing countries, re-interpret the framework and trajectory of the negotiations and, in a self-serving manner, narrow, limit and — ultimately — undermine the developmental objectives of the Doha Development Agenda.” The ambassadors said afterwards that “the debate on development has been hijacked by some developed countries” that purport to be speaking for developing countries. The group’s paper sought, therefore, “to reclaim the developmental objectives and trajectory of the negotiations.”
Developing countries face unreasonable demands for limited concessions
Pointing out that development emerged as the focus of the Doha agenda because it is “an essential stimulus for global economic growth,” the paper submitted to the CTD said that the “strategic objective for the negotiations is thus for developed countries to undergo structural adjustment by reducing a range of protective and support measures in inefficient sectors in their economies.” It contends that these measures — tariffs and subsidies in agriculture, and high tariffs on certain industrial products — give rise to enormous trade distortions that limit developing countries’ opportunities to increase exports, thus inhibiting their integration into the global economy.
The countries reiterated that agriculture was the central issue in the negotiations, since it is the sector with the largest distortions. However, developing countries cannot, Ismail emphasised, be asked to pay for market opening in the form of “onerous and burdensome obligations on industrial products and services” that are not commensurate with their level of development.
Yet, the ambassadors complained, this was precisely what was happening. The non-agricultural market access (NAMA) demands made by the EU in its 28 October proposal would require developing countries to cut tariff ceilings by as much as 75 percent, placing “enormous burdens of adjustment” on their industrial sectors (see BRIDGES Weekly, 2 November). Indian Ambassador Ujal Singh Bhatia suggested that cuts of that magnitude would deny developing countries even a limited amount of policy space and tariff protection that they might use to promote industrialisation. In comparison, the group said, the EU’s offer of a 39 percent average reduction in farm tariffs, with lower cuts for sensitive products, would not result in any meaningful new market access.
Moreover, they saw the NAMA tariff cuts that the EU and other rich country Members were offering to make as insignificant relative to their existing industrial tariff structures, and potentially unlikely to result in improved access for products of export interest to developing countries. In effect, the group contended, rich countries were seeking a “round for free.”
To bolster their argument that rich countries are consistently avoiding liberalisation in sectors of offensive interest to developing countries, the diplomats pointed to persistent limitations on the temporary movement of workers from developing countries to provide services in developed ones. Many trade scholars contend that the so-called ‘temporary movement of natural persons,’ or Mode 4 under WTO services rules, is the part of the multilateral trading system that offers the greatest potential returns for developing countries.
Not all developing countries will gain — but how to address this?
In recent weeks, EU Trade Commissioner Peter Mandelson has sharpened his criticism of WTO Members who are pressing the EU to make deeper cuts to its farm tariffs, arguing that doing so would erode trade preferences on which some poor countries rely. “This is a round for all developing countries, notably poor and needy ones, not just for competitive agriculture producers who sometimes seem to want to hog all the benefits for themselves,” he told the EU Parliament Trade Committee on 23 October. Although he conceded that they did not go as far as the US’ demands on agriculture, Mandelson said that “the G-20 proposals of better-off developing countries would benefit them but would have devastating effects on the agriculture trade of poor countries in Africa, the Caribbean and the Pacific (ACP).”
The sponsors of the paper, some of them G-20 members, countered that the EU’s “proposal to delay liberalisation in areas of its own sensitivity with the excuse of helping preference dependent countries” was “self-serving.” Nevertheless, they did recognise that not all developing countries stood to gain from the Doha Round “in the short to medium term,” and that a number of them “including small, weak and vulnerable countries and least-developed countries (LDCs) will face significant transitional costs, especially those countries that are preference dependent.”
To help likely ‘losers’ from the Doha Round adjust to trade liberalisation, the nine developing countries called for the creation of an ambitious aid-for-trade package at the Hong Kong Ministerial Conference in December, along with a fund to help them cope with the impact of preference erosion. They said that developed countries should provide quota- and duty-free market access to LDC products, as should developing countries to the extent of their ability, and that Members should reach an agreement in Hong Kong on how to amend WTO rules in accordance with five agreement-specific LDC S&D proposals (see BRIDGES Weekly, 23 November 2005). In spite of the sharp differences in rhetoric between the two camps, there is some overlap between the recommendations of the nine countries and a development package that the EU has been espousing.
Unlike the EU, however, other elements of a development package outlined by the nine countries included greater mode 4 liberalisation in the Doha Round services negotiations to allow workers to temporarily move from developing to developed Member countries. They also lobbied for WTO rules that they perceive to be biased against poor countries to be modified. For instance, they would like to see disciplines on intellectual property modified so that they take into account community ownership over traditional knowledge.
The group appealed to developed countries to take negotiating positions that reflect the developmental core of the Doha mandate, warning that an “imbalanced outcome in the Doha Round” — one that asks far more of developing countries than it gives them — would “exacerbate the crisis of legitimacy of the WTO.”
ICTSD reporting; “Developing states fiercely attack rich over trade,” REUTERS, 28 November 2005.