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Doha and EPA Negotiations

Doha and EPA Negotiations. Turin 22-23 May 2008. Doha round. November 2001 Development Round Covering Agriculture, NAMA, Services, Special and Differential Treatment, Rules and Singapore Issues Labour is not part of the Doha Round

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Doha and EPA Negotiations

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  1. Doha and EPA Negotiations Turin 22-23 May 2008

  2. Doha round • November 2001 • Development Round • Covering Agriculture, NAMA, Services, Special and Differential Treatment, Rules and Singapore Issues • Labour is not part of the Doha Round • Agriculture is the main issue and the area with most distortions

  3. Progress • From Doha to Cancun • Cancun to July 2004 • Followed by Hong Kong • Present situation • Progress has been slow • Singapore issues have dropped off, except for Trade Facilitation • Tensions between development and market access

  4. Agriculture • Elimination of export subsidies. End-date was set in Hong Kong (2013) • Market access: tiered formula, with countries in different bands, but also Sensitive products, tropical products and preferences • Special products and Special Safeguard Mechanism • Domestic support: reduction of trade distorting domestic support

  5. Agriculture: domestic support • Green box (not trade distorting): not limited but limits are sought by developing countries • Blue box (minimally trade distorting: support linked to production but subject to production limits): New criteria and limits for blue box to be decided upon. • Amber box (trade distorting): to be reduced

  6. Update Agriculture • Key issues are domestic support and tariff reduction • US to reduce domestic support • EU and G-10 to reduce tariffs and to limit Sensitive products • Tropical products versus preference ersosion • Special products are crucial: criteria of food security and livelihood security

  7. NAMA • Reduction of trade barriers in non-agricultural goods: tariffs and non tariff barriers • Non linear formula for tariff reduction: Swiss formula • Tariff binding • Bound rates versus applied rates • Sectoral approach

  8. Which products are included in NAMA? • Manufactured goods such as textiles and clothing, electronics, machinery, glassware, plastic and rubber products, chemicals, vehicles and metal products, • Natural resources such as iron and steel, aluminium, copper etc. • Forestry products, wood and wood products and paper and paper products • Fish and fishery products

  9. What does the Swiss formula? • The Swiss formula is applied to all tariff lines (products), no line is excluded (except for flexibilities) • No average cut is allowed as was the case in the Uruguay round when you could cut for example some tariff lines by 20% and other by 40% as long as the average cut was 30% • A coefficient of 30 would cut tariffs by around 50%. A coefficient of 10 would cut tariffs by around 75%

  10. Flexibilities • The flexibilities are defined in paragraph 8 of the July framework • Flexibilities allow for either exemptions of tariff cuts for a specific percentage of tariff lines, or for lower cuts for a specific percentage of tariff lines. • The exact percentages still have to be decided upon. • NAMA universe: between 5,000 and 8,000 tariff lines, so Paragraph 8 will allow a to differentiate between 250 and 800 sensitive tariff lines (products)

  11. State of negotiations • The main demandeurs are the EU and US • They want the developing countries to make cuts of up to 60% in their bound rates (coefficient of 15) • Some developing countries are grouped in the NAMA 11. There position is that there should be a difference of 25 points between the coefficient for developed and developing countries • The EU and US do not want to give more flexibilities than currently in brackets • The NAMA 11 considers the percentages for flexibilities in brackets as a bare minimum

  12. State of negotiations • A first draft modalities text was tabled in July 2007 by the Chair. • The G-110 issued a statement that asks for revision of the draft modalities. • A revised draft text was released in February. • And the last version came out on 19 May. • There is a lot of pressure on developing countries to go along with deep tariff cuts

  13. ITUC simulations: Main results • All sectors will see a substantial reduction of bound and applied tariffs, with no possibility to protect those that need higher tariffs. • Flexibilities are very low at the moment. • Many jobs are potentially at risk • Jobs are in the formal economy, with a certain level of protection and rights • Countries have different tariff structures and different industrial structures but are treated similar • Low binding of tariffs hampers policy space and industrial development

  14. Services • Four modes of supply • Request-Offer process • Initial offers must be tabled by WTO members who have not done so yet • Revised offers have to be tabled: several deadlines were passed • Plurilateral negotiations • Interests of developing countries have to be given special attention, including mode 4

  15. Sector pattern of commitments(Number of Members, March 2005, source: WTO)

  16. Modal pattern of commitments(Number of MA commitments in selected sectors, per cent, July 2000, Source: WTO)

  17. Services-Rules Negotiations on Rules: • Domestic Regulation: draft text: key issues: 1. Transparency in regulations and prior consultation and 2. Necessity test (regulatory requirements have to be relevant to the service supplied and regulations have to be based on objective criteria) • Emergency Safeguard Mechanism • Transparency in Government Procurement • Subsidies

  18. Services update • Levels of commitments are low, mainly reflecting the status quo • Not many commitments in mode 4, mainly high skilled and linked to mode 3 • Signalling conference planned • Possible benchmarking in text

  19. Development • Review of special and differential treatment provisions. • Implementation issues • Attention for concerns like food security, commodities, net food importers, rural development, livelihood and preferences

  20. Aid for Trade • Financial assistance for developing countries that face adjustment costs • Separate from the negotiations, although used as a means of pressure • Unclarity on amount of resources and whether this is new money

  21. Geneva Process • Small negotiating groups:G4, G6, G12 • Not enough time to consult the draft text and revised versions • Many negotiations take place simultaneously • Green room processes and pressures • Pressure due to fear for blame • Pressure on developing countries (aid, preferences etc.) • Divide and rule tactics (different groupings)

  22. Text based negotiations • Final agreement is set of texts in all negotiating areas • All members need to agree: consensus • Text in Agriculture and NAMA in June or July: final modalities • Text expected in Services, Trade Facilitation and Rules

  23. Expectations • Ambition in Agriculture is much lower than in NAMA • Political difficulties in the US and India (elections in 2008-2009). New US Farm Bill • Push for mini-ministerial to conclude Ag and NAMA modalities. Rest of the issues to be finished by the end of 2008 • If no deal by the end of the year negotiations will either inch forward next year or put on a hold till the right political moment

  24. Economic Partnership AgreementOverview Interim EPA: • Cover trade in goods only • Are viewed by the EC as a stepping stone towards full or comprehensive EPA • All EPA have been initialed and not signed (Situation in April 2008). Legally, initialing indicates an intention to sign • Different Interim EPAs have been initialed within the six negotiating blocs (PACP, EAC, ESA, SADC, West-Africa, Central Africa). The Caribbean is the only region that has initialed a full EPA

  25. Economic Partnership AgreementOverview Interim EPA: WTO compatible • Introduction of the principle of reciprocity for the first time in EU/ACP relationships • Article 24 GATT liberalization of a “substantial part of trade in a reasonable period of time” which has been interpreted as 80% over 15 years by the EU Have been initialed at the regional (Caribbean, EAC) sub regional (BLNS: Botswana, Lesotho, Namibia, Swaziland) or national level (Cote d’Ivoire, Ghana, Cameroun, Comoros, Mozambique, Madagascar, Mauritius, Seychelles, Zimbabwe, Fiji, Papua New Guinea)

  26. Economic Partnership AgreementsTrade – Special clauses Special clauses to be found in EPA • Rendez-vous or review clauses: Commitment to negotiate further liberalization or to review the agreed liberalization programmes in the near future (3 to 5 years) • Standstill clauses: Commitment not to increase the level of regulation on services in the future • MFN (most favoured nation) clauses: obligation for ACP countries to grant EU investors any more favourable treatment applicable as a result of ACP countries becoming part to a free trade agreement with any major trading economy (1% of world trade). Reciprocal obligation. The EU has the same obligation with any trading partner regardless of its share in world trade

  27. Economic Partnership AgreementOverview • Which countries have initialed an EPA (situation in March 2008) ? (Countries in italics are classified as LDCs.)

  28. Trade Union positions • TILS meetings • Position documents • Focus on NAMA • Agriculture • Services • Employment impact assesments-Decent Work • No Singapore issues • Access to medicines • New areas: food crisis, climate change

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