Doha Round Latest Developments

1. Doha Round Latest Developments Ahmed Farouk GhoneimAss. Prof., Cairo UniversityEmail address: aghoneim@gmx.de

2. Overview • Doha “Development” Round was launched in 2001 at Doha, Qatar with the aim to focus on the needs of developing countries. • Progress has been slow with periodic crises and series of missed deadlines. • Cancún Ministerial meeting (2003) ended without agreements which resulted in loss of momentum

3. Overview • Hong Kong (2005) WTO Ministerial in December – avoided collapse, but other than a limited ‘development package’ saw little progress • Attempts to finish the round by mid 2007 (before the expiry of US Trade Promotion Authority TPA)__ a defacto deadline for the Round • However, the Round was suspended when negotiations failed to agree on how to structure an agreement that would achieve agriculture sector liberalization • If talks didn’t resume, the Round could remain stretched out (frozen) till 2009!

4. Overview • Consequences of suspension: • Loss of potential gains from the ‘Development’ dimension of the talks. • Continuation and acceleration of bilateral and regional trade deals; and • An increase in the number of WTO dispute cases, particularly those issues that could have been addressed within the Doha Round talks, such as agricultural subsidies.

5. Some Important Dates

6. Negotiations are held under the Trade Negotiating Committee • Special sessions of: Services council/TRIPS council/ Dispute Settlement Body/Agriculture Committee and Cotton sub committee/ Trade and Development Committee/Trade and environment Committee • Negotiating groups on: Market access/Rules/Trade facilitation

7. Market Access: Agriculture • 3 pillars for agricultural support: elimination of export subsidies, easing of tariffs and quotas and reducing trade distorting domestic support. • July 2004: • Domestic subsidies: to be reduced by means of a “tiered” or “banded” approach applied to achieve “harmonization” in the levels of support. • Tariff reduction: will utilize a tiered formula with a harmonization component, but with some exceptions for “import sensitive products.” • Export subsidies: EU finally agreed to their elimination.

8. Market Access: Agriculture • Hong Kong 2005, members agreed: • to eliminate export subsidies (as well as export measures) by 2013 • to eliminate cotton export subsidies by 2006 • to cut trade distorting domestic support programs (3 band methodology) [% subject to negotiations] • to achieve a tariff cutting formula by April 2006 [not met]

9. Market Access: Agriculture • July 2006, the mini-ministerial meeting in Geneva was unsuccessful: • Disagreement on sensitive products, special products, and the special safeguard mechanism (3-S flexibilities) • Major conflicts: US insisted that it will not improve its offer on domestic subsidy reduction unless the EU improves considerably its market access offer and the G-20 countries show a willingness to open their markets not only to agricultural products but to industrial products and services as well).

10. Market Access: Agriculture • Key sticking points remain and a wide range of conceptual and technical issues need to be resolved! • The E.U. and the G-20 (primarily developing countries keenly interested in exports) refused to eliminate exceptions from their commitments to cut agriculture tariffs. • The E.U., and Brazil, and India (representing the G-20 in Geneva) maintained that the United States had not committed to cut enough in domestic support spending. • US insisted that its proposed cuts in domestic spending were significant, and that without meaningful reductions in tariffs, trade in agricultural goods would remain nearly as restricted as it would be without a WTO agreement.

11. Market Access: Agriculture • Meaningful progress means: • EU needs to facilitate market access (deeper tariff cuts+ improving market access for sensitive products) [negotiations were positively affected by CAP reform which only addressed domestic support] • US needs to cut its trade distorting domestic support • Developing countries need to harness their demand on Special and Sensitive Products and the Special Safeguard Mechanism.

12. Market Access: Agriculture • Bilateral discussions between EU & US [conflict regarding “geographical indications”] • Bilateral discussions also involved key players like Australia which has puts its constructive “5 & 5” approach: • EU should do more on tariff cut (an average of 59 % which is 5 % more than the G20 proposal) • US should do more on domestic support (needs to be cut by 5 billion - from US$22.6 billion to around US17.6 billion or less) • While both the US and the EU have indicated room for flexibility, neither endorsed the proposal.

13. Market Access: Non-Agriculture Market Access (NAMA) • It aimed to reduce or eliminate tariffs on industrial or primary products, with a focus on “tariff peaks, high tariffs, and tariff escalation.” as well as non-tariff barriers (NTBs) • In Doha negotiators agreed to reach modalities by May 2003 [Not met]. • NAMA was not discussed in Cancun • The July 2004 Framework Agreement adopted the use of a non-linear tariff reduction formula applied on a line-by-line basis • In Hong Kong Ministerial it was agreed to use a Swiss formula. No agreement on the specific equation or coefficients, but agreed that April 30, 2006 is the deadline to resolve these modalities [Not met] • The Framework Agreement also agreed that tariff reductions would be calculated from bound, rather than the applied, tariff rates.

14. Market Access: Non-agriculture Market Access (NAMA) • Negotiators agreed to provide tariff-free and quota free access for LDCs by 2008. However, this agreement provides the caveat that 3% of tariff lines can be exempted as sensitive products such as textiles, apparel, and footwear. • No agreements have been reached on what modalities are to be used in negotiating reductions of NTBs • Geneva summit failed to reach an agreement on NAMA modalities. • Developing countries have been unwilling to commit on NAMA without agreement on agriculture, but now some developed countries are tying further agriculture progress to NAMA. • The most recent meeting was held 22-25 January 2007 focused on NTBs, tariff schedules, and conversion of specific tariffs into ad valorem equivalents.  • Consultations were also held on the treatment of members who have recently acceded to the WTO

15. Market Access: Services • Since 2000, services negotiations have been going slowly • One area of controversy was “Mode IV” (Developing countries vs. US opposition) • Negotiations aimed at liberalizing global services markets have been resumed (Jan-Feb 2007). • Australian negotiators held discussions with officials from approximately 20 key trading partners, urging improved market access offers in sectors of priority interest. • Further negotiations are planned ahead of a deadline for WTO members to submit further offers of market opening (possibly in March or April) .  • There is continuing controversy over “request/offer” versus sectoral approach.

16. Development Issues: Trade Related Intellectual Property Rights (TRIPS) • A major topic at the Doha Ministerial regarded the WTO Agreement on TRIPS • No TRIPS Council Special Session meetings • Meeting of the regular TRIPS Council focused on enforcement (October 2006) • Inclusion of enforcement as a standing item on the TRIPS Council agenda continues to be controversial, particularly among some developing countries. 

17. Special and Differential (S&D) Treatment • In the Doha Ministerial Declaration, the trade ministers agreed that all S&D treatment provisions “...be reviewed with a view to strengthening them and making them more precise, effective and operational.” • WTO Committee on Trade and Development needed to: • Identify the S&D treatment provisions that are already mandatory and those that are non-binding. • Investigate ways to make S&D provisions more effective and assist developing countries to make best use of them

18. Special and Differential (S&D) Treatment • Negotiations were divided between developed/ developing countries • Developing countries: • negotiate on changes to S&D provisions, keep proposals together in the Committee on Trade and Development, and set shorter deadlines. • claimed that the developed countries were not negotiating in good faith • Developed countries: • wanted to study S&D provisions, send some proposals to negotiating groups, and leave deadlines open. • argued that the developing countries were unreasonable in their proposals.

19. Special and Differential (S&D) Treatment • By the Cancun Ministerial, developing countries had offered about 85 proposals on S&D provisions, but developed countries had agreed to only a handful of these. • At Hong Kong, members agreed to five S&D provisions for LDCs, including the tariff-free and quota-free access for LDC goods described in the NAMA section.

20. Implementation Issues • Developing countries claimed that: • they have had problems with the implementation of the agreements reached in UR. • they have not realized certain benefits that they expected from UR • At the Doha meeting, the Ministerial Declaration directed a two-path approach for such issues. • Outstanding implementation issues are found in the area of market access, investment measures, safeguards, rules of origin, and subsidies and countervailing measures, among others.

21. Implementation Issues • Little progress has been made on implementation issues. • At Hong Kong, a deadline of July 31, 2006, was given for the General Council to review progress on implementation issues, and take appropriate action (not met).

22. Trade Facilitation • It is one of Singapore issues ( transparency in government procurement, trade facilitation (customs issues), trade and investment, and trade and competition ) • In 2001, the Doha Ministerial Declaration called for further clarification to be undertaken on the four Singapore issues before Cancun. • But at Cancún, deadlock over the Singapore issues was a contributing factor in the breakup of that summit. • In July 2004 it was agreed that to drop three of the Singapore issues (government procurement, investment, and competition) and negotiations would begin on trade facilitation.

23. Trade Facilitation • Negotiations revolved around the scope and obligations of the new disciplines (like freedom of transit, fees and formalities, and administrative transparency, technical assistance and trade capacity building) • Developing countries prefer optional guidelines with policy flexibility while developed favor the negotiation of a concrete rules-based system with appropriate accountability. • Although negotiations have proceeded in a constructive manner, no major breakthroughs in trade facilitation were announced in Hong Kong and the Ministerial declaration did not agree on a date for beginning text-based negotiations. • Trade Facilitation Negotiating Group met informally (30-31 January 2007) discussing proposals circulated by WTO Members to be considered for inclusion in an agreement on trade facilitation.

24. WTO Rules: Rules Negotiations • The Doha Round negotiations included an objective of : • “clarifying and improving disciplines” under the WTO Agreements on Antidumping (AD) and on Subsidies and Countervailing Measures (ASCM). • clarifying and improving disciplines on fisheries subsidies • clarifying and improving WTO disciplines and procedures on regional trade agreements. • The Declaration identified two phases for the work on trade remedies: “In the initial phase of the negotiations, participants will indicate the provisions, including disciplines on trade distorting practices, that they seek to clarify and improve in the subsequent phase.” • No deadlines were set for these phases. So far, countries are still essentially in the first phase.

25. WTO Rules: Rules Negotiations • US is a major opponent to including negotiations on trade remedies in the Doha Round. • Many countries have attacked the use of antidumping actions by the US and other developed nations as disguised protectionism. • However, many developing countries are now using antidumping actions themselves! • “Friends of Antidumping” have proposed more specificity or restrictions to the AD/ASCM Agreements in terms of definitions and procedures and reducing the incidence and amount of duties.

26. WTO Rules: Rules Negotiations • EU (a major user of trade remedies) agreed on many points in these proposals. • US submitted proposals on issues like transparency in antidumping procedures, expanding a list of prohibited subsidies and imposing disciplines on support to sales of natural resources. • US and the EU support limits on fisheries subsidies, but Japan strongly opposes such limits.

27. WTO Rules : Dispute Settlement • At Doha, trade ministers continued to call for a review of dispute rules (which was not finalized in UR). • The Ministerial Declaration directed that negotiations be held on improvements and clarifications of the Dispute Settlement Understanding (DSU). • Members are examining nearly all of the 27 Articles in the DSU.

28. WTO Rules: Dispute Settlement • In early May 2003, the chair of the working group issued a focused text with clear proposals that was accepted by most countries. • The US and the EU favored additional reforms that were not apart of the text. For example, the US has called for open public access to proceedings, and the EU had sought a roster of permanent dispute panelists.

29. Other Issues: Trade & Environment • Members continue discussions in the Committee on Trade and Environment Special Session (CTESS) on principal issues mandated for negotiation under Paragraph 31 of the Doha Ministerial Declaration: • Relationship between specific trade obligations in multilateral environment agreements and the WTO Agreement • Information exchange between MEA Secretariats and relevant WTO committees, and observer-status criteria, and • Market access for environmental goods and services.  Australia continues to participate in these discussions in CTESS.

30. Other Issues: Trade & Environment • The EU has said that its priorities include observer status for MEAs. • US is pushing for rules on fisheries subsidies and tariff reductions on environmental products.

31. Other Issues: Regional Trade Agreements(RTAs) • The Doha Round has mandated clarification of the rules relating to RTAs.  • The negotiations aim to clarify and improve disciplines and procedures under the existing WTO provisions applying to Regional Trade Agreements. • In the Negotiating Group on RTAs WTO members agreed to adopt the transparency mechanism. • The group met on 20 December 2006 to re-start discussions on substantive rules, specifically the definition of the term “substantially all trade”, a key element of the WTO rules on RTAs.

32. Compromises to solve the Deadlock 20-20-20 solution (WTO suggestion) Close to G20 proposals on farm tariff? EU Lower agriculture tariffs further Deeper domestic subsidies cut, accepts lower EU market access for agriculture A Doha Deal Offer better market access for industrial products and services 20$ billion farm ceiling? US Developing countries (G20): Brazil & India 20% tariff ceiling?

33. There is a six-month ‘window of opportunity’ between October 2006 and the end of March 2007 to restart the Round. In January 2007 the suspension was lifted. • Is extension or renewal of TPA possible? • If not, 2009 could be the “next plausible window of opportunity” for completing the Round.