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Trade ministers meet in Geneva
Trade ministers from around the world descended on Geneva on 30 November - 2 December for the WTO’s first formal Ministerial Conference in four years. The ministerial was intended to review the WTO’s activities and discuss the institution’s role in aiding recovery from the global economic crisis. It was not billed as a meeting for advancing the troubled Doha Round negotiations.
However, WTO members agreed to launch another push for a deal in the Doha Round negotiations, with a ’stocktaking’ exercise by March 2010 to determine whether the long-running talks can be brought to a close by the end of the year.
A sense of déjà vu is forgivable. WTO members had previously vowed to conclude the talks by the end of 2005, 2006, 2007, and 2008. Most of these years were marked by informal or formal deadlines for framework agreements on agriculture and industrial goods trade. All were pushed back - and ultimately missed.
Nevertheless, senior officials are scheduled to meet in Geneva later this month to chart a course forward for the negotiations in the new year.
“Ministers reaffirmed the need to conclude the round in 2010 and for a stocktaking exercise to take place in the first quarter of next year,” said the conference chair, Chilean Finance Minister Andrés Velasco, in his summary of the three days of discussions. He reported “strong convergence on the importance of trade and the Doha Round to economic recovery and poverty alleviation in developing countries.”
It is unclear what this stocktaking exercise would look like, what it would try to accomplish, or whether ministers would be involved. It could conceivably be anything from a full-fledged attempt for deals on ‘modalities’ - formulae and figures for tariff and subsidy cuts, a prerequisite for a full Doha deal - to a lower-key examination of the state of the talks, to quiet recognition that the end-2010 target is unachievable.
WTO Director-General Pascal Lamy said that this stocktaking would be necessary to measure whether concluding the round in 2010 “is doable or not.” Lamy said that some sort of “breakthrough” would be necessary by the “end of the first quarter” for the negotiations to be wrapped up by the end of the year.
South-South trade deal agreed
In a move significant for reasons political as much as economic, 22 developing nations approved a framework deal on 2 December, the final day of the WTO ministerial conference, to cut tariffs by a fifth or more on a substantial majority of each others’ exports.
The decision established the ministers’ agreement on the framework for a new round of tariff cuts under the Global System of Trade Preferences among Developing Countries (GSTP), a South-South trade scheme negotiated under the auspices of the UN Conference on Trade and Development (UNCTAD).
In addition to Argentina and Brazil, signatories include Egypt, Indonesia, Morocco, and Mexico, both North and South Korea, and some countries still trying to accede to the WTO, like Algeria and Iran. The GSTP, which entered into force in 1989, has 43 members. Only 22 of them participated in the just-concluded negotiations, which started in Sao Paulo in 2004. China and South Africa are not part of the GSTP, and thus have not been participating in the talks.
With the framework in place, each participating country will now begin drawing up a list of products that will face extra tariff cuts. Those lists must account for at least 70 percent of each country’s total number of agricultural and industrial tariff lines that are not already bound at zero. While approving each other’s lists, countries will have the chance to seek additional tariff concessions through a ‘request-offer’ process. Least-developed countries wishing to join the agreement would be eligible for special and differential treatment, possibly in the form of a greater margin of preference. Argentina indicated that the group hoped to conclude these negotiations by September 2010.
Crucially, tariff cuts negotiated under the GSTP will not be extended to other countries. What this means in practice is that India could end up levying a 10 percent duty on car parts imported from the US, while identical parts from Brazil face a tariff of 8 percent or less. This departure from the WTO’s non-discrimination principles is sanctioned by the Enabling Clause of the General Agreement on Tariffs and Trade, which authorises such preferential trade arrangements among developing and least-developed countries.
Banana deal ripe
The long-running dispute over trade in bananas was being settled, as TNI went to press. The agreement, which would cut EU tariffs faced by Latin American banana exports, has sparked concern among ACP group of states, which face a future of declining exports to the EU.
The draft deal is expected to cut the EU tariff faced by Latin American exporters to €114 per tonne, from the current €176 per tonne over a period of eight years. The tariff cuts would begin with an immediate ‘down payment’ cut of €28 per tonne.
One recent study by Professor Giovanni Anania of the University of Calabria looked at the implications of the July 2008 accord and projected that EU banana imports would increase by 6 percent between 2005 and 2016. ACP exports to the EU would decrease by 14 percent over the same period, while there would be a 17 percent increase in exports from other countries, largely Latin American.
To help soften the blow to ACP banana producing countries, the EU has indicated that it will provide €190 million as ‘Banana Accompanying Measures’ - or BAMs - to help these countries restructure their economies.
One negotiator who is close to the negotiations indicated that the ACP had initially sought compensation of €500 million, while the EU offered a lower figure of around €100 million. The latest proposal from the EU would provide up to €190 million, plus an additional €10 million if these “should become available in the course of the annual budget procedure.” However, the source reported that “the EU has said it can’t go beyond that”.
Talks are continuing on the specific cuts that would be undertaken by ‘tropical products’ - for which Latin American countries in particular seek faster and deeper tariff cuts in the Doha Round - and also on products likely to be affected by preference erosion, for which ACP countries are seeking the opposite treatment. However, an agreement in principle has been reached on these products.
Rules Group discusses sensitive issue of RTAs
The chair of the WTO’s Negotiating Group on Rules convened a meeting of senior capital- and Geneva-based officials on 25 November to offer a run-down of the state of play in the talks and try to build some momentum for the group’s negotiations. The one-day meeting marked the first such high-level gathering devoted to the rules talks since the chair of the group, Ambassador Guillermo Valles Galmés of Uruguay, released a full draft text in late 2007.
The rules group is charged with negotiating disciplines on a range of topics: fisheries subsidies, anti-dumping, horizontal subsidies, and regional trade agreements, or RTAs. The latter topic, however, has fallen by the wayside recently; members have not officially broached the subject since early 2007. Delegates “have no appetite” for butting heads over the very sensitive questions related to RTAs, the chair has said. But now he is hoping to get the issue back on the agenda.
In 2002, members created a “roadmap” for the work of the Committee on Regional Trade Agreements, which was founded in 1996. A decade later, members agreed on a transparency mechanism for RTAs, which sets out a series of notification requirements for members that sign on to such deals. Since then, though, the RTA talks have languished, despite the urging of the chair.
Regional trade agreements, along with their bilateral counterparts, have flourished in recent years, even as multilateral trade talks have continually stumbled. Some say that the preferential trade deals do more harm than good. Columbia University professor Jagdish Bhagwati dubbed the deals “termites in the trading system” in his book of the same name; he blames the pacts for clogging and confusing the rules that govern cross-border commerce.
RTAs remain a politically touchy subject at the WTO. Members are reluctant to define the nature of the relationship between RTAs and the WTO, and to give a precise definition for many of the terms - such as “substantially all trade” and “neutrality” - that could have far-reaching implications for their economies.
But despite any underlying tensions, senior officials at the Rules meeting largely steered clear of any potentially inflammatory statements.
This information has been summarised from ICTSD’s Bridges Weekly Trade News Digest
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