WTO: NEGOTIATING FRAMEWORK AGREED AT ELEVENTH HOUR

After almost a year of stalled talks following the breakdown of talks at the last Ministerial meeting in Cancun (see BRIDGES Trade BioRes, 19 September 2003), WTO Members on 31 July agreed on a framework package to keep the Doha Round trade negotiations alive. While many WTO Members welcomed the agreement, civil society groups expressed strong criticism, in particular with regard to the 'undemocratic' negotiating process.

The 31 July framework emphasises the need to push ahead with the talks in five areas, namely agriculture, non-agricultural market access, development issues, trade facilitation and services, while simply reaffirming Members' commitment to the rest of the Doha mandate, including intellectual property, dispute settlement, rules and environment. In recognition of the limited progress made so far in the Doha Round, Members postponed the 1 January 2005 deadline for concluding the talks to an as-yet unspecified date, at least until the sixth WTO Ministerial Conference to be held in Hong Kong in December 2005.

Agriculture - "The beginning of the end of subsidies"?

Among the priority issues, the framework for future agriculture negotiations, adopted as a separate Annex, was widely seen as the main breakthrough. Among the significant decisions, Members agreed to phase-out export subsidies and export credits by an as-yet unspecified date. Such subsidies allow farmers, in particular from developed countries, to sell surplus production in foreign markets at prices, which do not reflect the true cost of production. Developing country farmers are often not able to compete with these subsidised agricultural goods.

Moreover, Members included a new category of 'special products' to be designated by developing countries, which would be subject to more flexible treatment based on the criteria of food security, livelihood security and rural development needs. Detailed modalities for selection and treatment of these products will be elaborated during the negotiations. In addition, Members agreed to work towards eliminating trade-distortive practices in food aid in an effort to prevent "commercial displacement". The distribution of food aid has often been criticised as a way of dumping surpluses into poor countries' markets.

Most WTO Members welcomed the agriculture text. "This is the beginning of the end of subsidies," said Brazilian Foreign Minister Celso Amorim. A developing country delegate described the agreement as a 'major-breakthrough' and a 'remarkable turn-around' from Cancun. Nevertheless, many Members acknowledged that the text simply laid down the basic pillars and a 'framework' for conducting future talks. Negotiations on modalities of substance, much of which has been left undetermined, will be a 'real challenge' that Members have yet to confront.

Cotton now part of broader ag talks as priority issue

Discussions also continued on the 'cotton initiative', a proposal by Benin, Burkina Faso, Chad and Mali to eliminate cotton subsidies worldwide (see BRIDGES Trade BioRes, 2 June 2003). Following a deal struck between the US and the four Western African countries on 29 July, Members agreed to make discussions on cotton an integral part of the agriculture negotiations rather than treating the issue on a separate track. In order to address the issue "ambitiously, expeditiously, and specifically", a special sub-committee will be established as part of the effort to "ensure appropriate prioritisation of the cotton issue independently from other sectoral initiatives".

Commenting on the text, Senegal's Minister of Commerce Ousmane Ngom described the agreement as "an important step in the right direction". The US cotton industry, however, criticised the deal. National Cotton Council Chair Woody Anderson said, "Efforts in the WTO negotiations to target US cotton are unfair and threaten the round". Celine Charveriat of Oxfam criticised the agreement for failing to address the issue of US cotton subsidies, calling the deal a "serious betrayal of developing countries", in particular in light of the recent WTO ruling against US cotton subsidies (see BRIDGES Trade BioRes, 25 June 2004).

Members welcome agreement, while civil society groups remain critical

WTO Director-General Supachai Panitchpakdi welcomed the framework text as a "truly historic" achievement. Many of the major players also expressed their satisfaction with the deal. "The Doha Round is back on track," said EC Trade Commissioner Pascal Lamy, cautioning, however, that "we have only walked half of the way". According to US Trade Representative Robert Zoellick, "We have laid out a map for the road ahead, adding that "the speed limits for how far and how fast we will lower trade barriers" remained to be negotiated. Brazil's Foreign Minister Celso Amorim described the agreements as "a good deal for trade liberalisation" as well as "a good deal for social justice". This more than adequately addresses India's concerns," said India's Commerce Minister Kamal Nath, referring in particular to future reductions in domestic support.

However, many civil society groups sharply criticised the 31 July deal. They pointed to what they saw as a secretive and undemocratic process of negotiations, which they said had excluded civil society organisations and even many governments. Friends of the Earth International accused governments of turning a "blind eye to potential environmental and social implications" of trade liberalisation. They singled out the non-agricultural market access negotiations in particular, which they warned could deepen deindustrialisation in poor countries, forcing them to rely more heavily on unsustainable and harmful exports of natural resources. Celine Charveriat of Oxfam lamented the lack of "cast-iron commitments" and a "clear timeline for reform", adding that "if rich countries do not immediately put their promises into action, this declaration will become just one more stage in a long journey of disappointment and deception."

For a more detailed assessment, see BRIDGES Weekly, 3 August 2004.

ICTSD reporting; "Round-the-clock meetings produce 'historic' breakthrough," WTO, 31 July 2004; "WTO agrees to framework pact," HINDU, 31 July 2004; "Subsidies deal revives stalled Doha trade talks," FT, 2 August 2004; "Trade Talks Progress, Enviros Try to Shield Natural Resources," ENS, 2 August 2004; "Doha round enters stage of convalescence," TERRAVIVA, 2 August 2004; "WTO deal endangers environment, development", FOEI, 1 August 2004; "International Groups Denounce World Trade Pact," ONEWORLD, 2 August 2004.