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3.1 Developments in trade negotiations II: Economic Report on Africa 2007

Written by: United Nations Economic Commission for Africa

Article Overview: WTO trade negotiations evolving since 2001

3.1 Developments in trade negotiations II: Economic Report on Africa 2007

The 2001 Doha Development Round of WTO trade negotiations saw ups and downs
in the deliberations up to July 2006 when progress stalled. Talks have resumed since
then informally and on a low-key basis but the prospects for a breakthrough still
appear dim.

The Doha Development Round

The Declaration of the Fourth Ministerial Conference in Doha provided the negotiation
mandate for the Round. Developing countries, among them African countries,
considered development dimensions to be crucial in fulfilling the Doha mandate
which was to reform the multilateral trading system and improve their prospects
in global trade. The pro-development agenda was expected to address the skewed
nature of the division of global trade benefits, with most gains going to the developed
countries. The Doha mandate was supposed to put development at the centre
of the discussions with achievement of this mandate to the satisfaction of developing
countries the yardstick with which success would be measured.

A fundamental expectation with the Round, therefore, was that it would correct the
remaining imbalances in trade rules in favour of developing countries and improve
rules to provide developing countries with genuine market opportunities. Negotiations
on services and agriculture were programmed by the “in-built agenda” clauses
of the Marrakesh Agreement. Importantly for African countries and the African,
Caribbean and Pacific (ACP) countries, the Doha meeting also secured a waiver for
the transitional arrangements of the Cotonou provisions for EU-ACP countries.

The waiver permitted the legal application of the Cotonou preferential trade regime,
until its expiry on 31 December 2007. The Doha mandate evolved and was finetuned
with the subsequent Ministerial Conferences in Geneva, Cancún, and Hong
Kong, in 1998, 2003 and 2005, respectively.

The Cancún Ministerial Conference of 2003

In Cancún, in September 2003, the Fifth WTO Ministerial Conference that was
intended for stock taking of positions again ended in a deadlock. The main contentions
crystallized around the unresolved “Singapore issues”: investment, competition,
government procurement and trade facilitation. There was also deep disagreement over the treatment of cotton and other agricultural commodity and
subsidy issues.

The July Framework Agreement of the WTO General Council

It took member States until July 2004 to achieve any substantial progress on the
issues that had stalled the negotiations in Cancún in 2003. After several weeks of
intense deliberations, the member States agreed on a text that represented significant
progress in clarifying the modalities.

The July Framework Agreement showed progress on agriculture, the Singapore issues
and, to some extent, on Non-Agriculture Market Access (NAMA). The text of the
July Framework Agreement dropped the Singapore issues with the exception of trade
facilitation. With regard to agriculture, advances were achieved on the three pillars
identified, with special and differentiated treatment (S&D) featuring in all aspects.
Domestic support measures were to be reduced using a tiered formula, implying
steeper reductions for the highest level of subsidies. On export competition, the
Framework Agreement stipulated reduction of export subsidies, with a view to phasing
them out, even though no date was proposed for their concrete elimination.

The choice of a tiered formula was also retained for market access. Least Developed
Countries (LDCs) were exempted from all tariff cuts. It was further decided that
treatment of cotton, one of the causes of contention in Cancún, would be treated
under the agriculture negotiations; a sub-committee was created to address this issue
“ambitiously, expeditiously and specifically”.

The text of the July package was less clear concerning the choice of a particular
formula for NAMA reductions. Negotiations had been delayed by the late progress
achieved on agriculture, with many members refusing to invest too much effort in
NAMA while the outcome of the negotiations in agriculture was still unknown. The
July Framework also defined new deadlines for further advancing the negotiations.
However, most of the interim deadlines were missed and not much happened in
2005. The little progress achieved up to the WTO Ministerial Conference']);"> Sixth WTO Ministerial Conference in
Hong Kong in December 2005 included a system to assess the ad-valorem equivalent
of non-ad-valorem tariffs. Other important issues remained unresolved.

Sixth WTO Ministerial Conference in Hong Kong

This WTO Ministerial Conference']);"> Sixth WTO Ministerial Conference resulted in the Hong Kong Declaration in
December 2005 that outlined further progress in the negotiations, although it failed
to bridge significant gaps. The main developments brought about by the Declaration
included an end date of 2013 for agricultural export subsidies, and end of 2006 for
cotton subsidies. Precision was also added to the modalities on agriculture, notably
the number of bands for the tiered formulae. Progress was also made on the definitions
of sensitive products, special products and special safeguard mechanisms. The
Declaration chose a Swiss formula for tariff reduction under NAMA.

With regard to agriculture and NAMA, the Hong Kong Declaration set out a deadline
for establishing modalities, particularly on the depth of tariff cuts and domestic
subsidies reduction by 30 April 2006, with a view to establishing detailed schedules
of commitments by 31 July 2006. On services, the Declaration called for improved
offers and included a timeline to do so.

Another major highlight of the Declaration of particular importance for many African
countries was the decision to grant duty-free and quota-free (DFQF) market
access to LDCs. This extended to 97 per cent of products but notably excluded some
textile and garment products. Such market access was to be granted to LDCs by
developed countries and also by developing countries in a position to do so.
The Sixth Ministerial Conference in Hong Kong also resulted in an agreement for
transparency on rules for regional integration. Finally, the Hong Kong Declaration
also called for the creation of a task force on Aid for Trade. Discussions on Aid for
Trade had developed during the course of 2005 in parallel with the WTO process.
The pause in the negotiations: July-November 2006

The Hong Kong Declaration had set several deadlines for reaching agreement on
modalities. These deadlines were all missed during the first trimester of 2006 and, by
the end of June 2006, a meeting of Ministers and Heads of Delegations was called
in Geneva. Despite intense discussions on agriculture and NAMA, no agreement
on modalities was reached. The issue was discussed at several levels including during
the G-8 meeting in July 2006. Finally, after another unfruitful attempt to break the
deadlock during a G-6 meeting, Pascal Lamy, the Director-General of WTO, on
27 July 2006, called for the talks to be suspended as, in his view, there was need for
reflection and “quiet diplomacy.”

The deadlock in WTO negotiations appeared to be primarily associated with disagreement
over the levels of demand and offers on agriculture. In particular, it seemed
that EU and USA would not agree on the levels of necessary concessions with regard
to market access against reductions in domestic support.

The suspension of the talks was clearly a setback for the multilateral process, prohibiting
the international community and especially poorer countries from gaining
significant improvements in the multilateral trading system. This freeze in negotiations
was all the more worrying in light of the expiration of the Trade Promotion
Authority (TPA) or “fast-track” at the end of 2007. This constitutes a de-facto
deadline for the current Round.10

From July to November 2006, there were no official negotiations. On 16 November
2006, however, the WTO Director-General called for an informal trade committee
meeting to re-launch the consultation process, as there appeared to be a consensus
that WTO members were keen to revive the negotiations. The section below explores
the achievements so far in the Doha Round from an African perspective.

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Article Tags: African countries, agriculture, agriculture negotiations, Doha, Doha Development Round The Declaration, Fourth Ministerial Conference, global trade, Ministerial Conference, Ministerial Conferences, The 2001 Doha Development Round, trade facilitation, WTO



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