An update on Doha Development Agenda

1. An update on Doha Development Agenda Presented at: Media Workshop on Doha Development Agenda and Nepal's Concerns 18-19 July 2008 Organized by Pro Public, SAWTEE and SEJON Presented by: Ratnakar Adhikari President, SAWTEE

2. Presentation outline • Background • Post-Doha developments • Major decisions at Hong Kong • Post-Hong Kong scenario • Recent developments • Interests and coalitions • What next?

3. Background - I • WTO’s inception (1995) • Efforts to launch a new round of trade negotiations known as “millennium round” (since 1999) • Seattle Ministerial Conference (Nov-Dec 1999) failed to launch such round after the collapse of the ministerial • Major differences • Developed countries: wanted to include “new issues” • Developing countries: wanted the “implementation issues and development concerns” to be addressed and were opposed to the inclusion of “new issues” in the WTO

4. Background - II • Efforts to launch a new round gained momentum in the run up to the Doha Ministerial Conference • However, differences persisted till September 2001 • Event of 9/11 created a need to show “global solidarity” on international issues • Some differences were ironed out in the run up to Doha (as measured by the number of “square bracketed” texts) • Ministerial again saw a North-South divide on the similar line • Finally, after the extension of the conference by a day, it was decided to launch the Doha Development Agenda (DDA; not a “round” as previously called)

5. Post-Doha developments • Deadlines set for resolving a number of issues got missed • Cancun ministerial conference (which was supposed to be a mid-term review of DDA) failed • In July 2004, General Council agreed to a “minimalist” agenda known as “July Framework” to be covered under the DDA, while not negating other issues • Decisions made at Hong Kong Ministerial and post-Hong Kong discussion reflect similar preferences

6. Major decisions at Hong Kong – I • July Framework issues • Agriculture • Phasing out of export subsidies by 2013 • Domestic support to be divided into four bands; higher subsidies should be reduced faster • Tariff reduction - tiered formula • Various exceptions (sensitive products, special products, special safeguards mechanism) to be maintained • Non-agricultural market access (NAMA) • Swiss formula [t1 = (a x t0)/(a + t0)]to be adopted for tariff reductions • Less than full reciprocity principle to be maintained • “Preference erosion” a major concern

7. Major decisions at Hong Kong - II • Services • Extensive commitments expected on Mode 3 (FDI) • Mode 4 (movement of people) focuses on “elites”; no mention of “unskilled” or “semi-skilled workers” • Mention of LDCs Modalities in passing • Trade facilitation • Works done towards improving and clarifying relevant aspects of GATT Articles V (transit right), VIII (fees and formalities) and X (transparency) have been recognized • Reiteration of commitment to provide technical assistance to developing countries and LDCs

8. Major decisions at Hong Kong - II • Development dimension • Gradual sidelining of “implementation issues” and “Special and differential treatment” (S&DT) • Reporting deadline of 31 December 2006 • S&DT for LDCs • Waiver requests to be expedited (60 days) • Duty-free quota-free market access • Coherence on conditionalities • Trade-Related Investment Measures • Trade-Related Technical Assistance

9. Major decisions at Hong Kong - IV • Issues outside July Framework • Aid for trade • To address the concerns of “preference erosion” • Mainly to help overcome supply-side constraints • Formation of Task Force • Intellectual property rights (IPR) • Decision on extension of deadline for TRIPS implementation (one week prior to HK ministerial) • TRIPS-CBD linkage: no meaningful decision • Rules negotiations • Trade remedy measures • Regional trading arrangments

10. Post-Hong Kong scenario • Differences persisted in the aftermath of the Hong Kong Ministerial - particularly on agriculture and NAMA • Trade ministers of six members (Australia, Brazil, European Union, India, Japan and United States) tried to hammer out a deal, but did not succeed • On 24 July 2006, Director-General of the WTO suspended the DDA negotiations • After a lull, negotiations resumed in mid-2007; but discussions gained momentum since late 2007 • Due to impending US elections and the relatively harsh stand of democratic candidates on trade issues, WTO DG and members want to conclude DDA as soon as possible

11. Recent developments – General • A mini-ministerial planned from 21 July 2008 (next week) • Members are divided on the prospects of being able to achieve a breakthrough • Agriculture and NAMA are still the crucial issues that determine success or otherwise of the conference • Other issues of significance include: • Services • IPR • Aid for trade

12. Recent developments – AG (I) • Revised draft modalities for agriculture (TN/AG/W/4/Rev.3) issued on 10 July 2008 include the following: • Tiered formula for the reduction of Overall Trade-distorting Domestic Support (OTDS) in 5 to 6 years: • > $60 billion: 75-85% reduction • > $10 billion < $60 billion: 60-73% reduction • < $10 billion: 50-60% reduction • Tiered formula for market access with deeper cuts in higher tariffs

13. Recent developments – AG (II) • Simplification of tariff (specific to ad valorem) • Sensitive products: 1 percent to 2 percent tariff lines can be bound at > 100% provided import quotas are expanded • S&DT include: • Special products: No reduction in upto 6% tariff lines • Special safeguards: Tiered approach followed (25-50% additional duty depending on volume of import surge). • Relaxed requirement for recently acceded members (RAMs) • No commitment for LDCs • Reiteration of duty-free quota-free decision agreed at Hong Kong

14. Recent developments – NAMA • Although the draft modalities for NAMA (TN/MA/W/103/Rev.2) was issued on 10 July 2008, this version keeps some of the issues unchanged from the earlier draft issued in May • Major issues of the latest draft include: • Swiss formula coefficients (value of a or x, y or z): • For developed countries (a): 7-9 • For developing countries: (x) 19 – 21; (y) 21 – 23; or (z) 23 – 26%, depending on how much flexibility they want • Substantially increasing binding coverage (upto 90%) • LDCs are not required to reduce tariffs, but should increase binding coverage • Sectoral initiative • Zero to zero (with some flexibility for developing countries) • Needs participation from a critical mass of countries (90-99% in trade volume)

15. Recent developments – Others • Services • Signaling conference to be organised soon • No major movement on mode 4 (esp. unskilled category) • Aid for trade • Task force report submitted • Regional and global reviews completed • WTO will play the coordination/survilence role • IPR • On 26 May 2008, a joint modality draft proposed by Brazil, EU, India and Switzerland, which includes: • Disclosure requirement (TRIPS-CBD) • Create and maintain a multilateral register for geographical indication on wines and spirits

16. Interests and Coalitions

17. What next? • Progress depends on mini-ministerial • Outcome on Agriculture and NAMA modalities will determine the success of the DDA • Political commitment from EU/US will be critical, but recent change in Indian political landscape might also alter its positions • Failing to achieve breakthrough during the mini-ministerial means that DDA will be in limbo for a few years, which may lead to: • proliferation of RTAs and BTAs; or • resurgence of protectionist tendency

18. Thank you