Doha Round at Crossroads

1 May 2008

Reactions to the latest draft negotiating texts on agriculture and industrial market access point to a difficult time ahead if a preliminary Doha Round deal is to be struck in June or early July.

The two papers, released on 19 May, reflect a persistent gap in positions on the main points of contention rather than a tendency toward convergence. At the time of writing, agriculture negotiators had agreed to extend efforts to bridge differences into the second week of June, while multilateral meetings on industrial goods were temporarily suspended as ‘pointless’. An informal meeting of key ministers in Paris on 5 June was expected to give an indication of how the Doha Round end-game was likely to play out.

Contradictory Views on Balance

The 2005 Hong Kong ministerial conference instructed negotiators to “ensure that there is a comparably high level of ambition in market access” for agriculture and industrial goods. However, India’s Commerce and Industry Minister Kamal Nath noted that many developed countries still refused to cap their agricultural tariffs even at levels of 100-150 percent at the end of the Doha Round, but expected developing countries to bind their industrial tariffs at 26 percent or below for almost all products. Argentina’s chief trade negotiator Alfredo Chiaradia also said that the revised texts showed “greater ambition on industrial goods for developing countries than there is on agriculture for developed countries.”

In contrast, the EU and the US strongly insisted that emerging economies must offer more on non-agricultural market access (NAMA) before a deal could be envisaged. EU spokesperson Peter Powell said that unless ministers meeting in Paris gave instructions to senior negotiators to ‘start real and genuine negotiations’ in Geneva, the Doha Round would “face a situation of stalemate and suspension.” US Trade Representative Susan Schwab also warned that the talks were ‘at a crossroads’ and that much would depend on the signals emerging from Paris.

Agriculture: Few Changes but Clearer Options

The May agriculture text leaves largely unchanged the hotly contested ranges of figures suggested in earlier drafts for domestic subsidy and tariff cuts. These issues have not been discussed at the WTO in recent weeks, and it is widely accepted that they can only be resolved at ministerial level. Many negotiators have expressed concern over the effect that the newly approved US farm bill could have on those talks.

The new draft includes a complicated compromise elaborated by six countries on estimating domestic consumption of sensitive agricultural products. This highly technical issue is important to farm exporters, because mandatory expansion of import quotas for sensitive products will be based on domestic consumption. A number of countries have complained that the compromise caters too much to the special interests of a few key importers. Not enough to everyone’s liking, however. Intent on keeping intact its supply-managed dairy, poultry and egg sectors, Canada – an active participant in the group that authored the agreement – now maintains that it “firmly opposes proposals for any over-quota tariff cuts or tariff quota expansion for sensitive products.”

The revised text presents two ‘either/or’ options for the special safeguard mechanism (SSM) under which developing countries will be allowed to temporarily raise tariffs to guard against import surges or sudden price declines. Minister Nath objected to the level of price and volume triggers that must be met before additional duties can be imposed, as well as the “absurdly low number of products (3-8, ed.) for which the SSM could be invoked during a year.” There was ‘no way’, he said, that developing countries could accept the SSM provisions in their present form.

The new draft also reflects continuing lack of convergence on the number and treatment of the ‘special’ products (SPs) that developing countries will be allowed to shield from standard tariff cuts on the basis of their food and livelihood security an rural development needs. The G-33 coalition of developing countries has strongly objects to the range of figures included in the text on the number of SP tariff lines and the tariff cuts required for the products. On 3 June, chair Crawford Falconer said that Members had made ‘incremental progress’ that was likely result in a revision of his May draft, clarifying language and simplifying options for senior officials and, ultimately, ministers (see page 5 for details on the agriculture text).

NAMA: A Text in Search of a Negotiation

The 19 May revision of the non-agricultural market access (NAMA) modalities contains few surprises. It does, however, offer a more detailed elaboration of a possible ‘sliding scale’ between the depth of general tariff cuts and the use of exceptions for developing countries. The text also adds options – all in brackets denoting lack of consensus – on the treatment of developing country customs unions, the implementation period for tariff cuts for recently acceded Members such as China, and an ‘anti-concentration clause’ that would limit the extent to which developing countries could shield products in a single sector from tariff cuts.

Developing country criticism of the NAMA draft has focused most strongly on the fact that the May revision would still require them to make a proportionately greater tariff reduction effort than developed countries. Both Argentina and India stressed that the new text ignored the core mandate of the Doha Round that ‘less than full reciprocity in reduction commitments’ would be required from developing countries. Minister Nath rejected the entire notion of linking developing country tariff cuts to the use of flexibilities. He also objected to the possibility that developing countries be allowed to maintain higher average tariffs in exchange for participating in more exacting, but voluntary, sectoral liberalisation schemes.

US WTO Ambassador Peter Allgeier quipped that judging by the draft, the acronym NAMA meant ‘no additional’ rather than ‘non-agricultural’ market access. He also warned that in order to salvage a Doha Round agreement, Members should negotiate “a very different outcome than is suggested in this paper.” In a similar vein, Commissioner Mandelson told the European Parliament that “any developed or emerging economy that thinks it can come to the Doha table empty-handed on industrial goods will go home the same way because on that basis I could not sell a political deal in Europe and I would not try.”

On 2 June, chair Don Stephenson noted that a week of NAMA meetings had made divergences worse and that no real negotiations had taken place. He said it would be ‘pointless’ to continue the process under the circumstances, and urged negotiators to engage in a serious effort to bridge positions in informal groups of WTO delegates and capital-based senior officials, expected in Geneva in the second week of June. Ambassador Stephenson added that he was prepared to resume chairing meetings ‘in any format’ if Members had tentative convergence to share or helpful proposals to put forward. Earlier, he had warned that the 19 May text would be revised only if there was ‘real convergence’ to record.

Moving into Higher Gear, but When?

At the time of writing, it was unclear when senior officials would start considering the agriculture and NAMA drafts in tandem rather than in separate negotiating groups. In any case, once this ‘horizontal’ process has run its course, ministers were expected to converge in Geneva in what many saw as the last chance of securing a conclusion to the Doha Round this year. The exact dates of the ministerial were yet to be decided. Meanwhile, the chairs of the services and rules negotiations have released ‘comfort texts’ aimed at reassuring Members that their concerns will be addressed in the final phase of the round.

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