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Africa: Trade Talks Analysis, 1

AfricaFocus Bulletin
Dec 16, 2005 (051216)
(Reposted from sources cited below)

Editor's Note

"Any expectations that developing countries or the public might have of Hongkong marking progress to achieving 'development' in the Doha negotiations have been very much dashed. The 'Doha Development Agenda' (DDA) got its nickname when the developed countries pressurised the developing countries to accept a new Work Programme at the Doha Ministerial in November 2001. To cover the fact that the programme was really aimed at opening the markets of the South, the WTO secretariat leadership and the major developed countries dubbed it the DDA." - Third World Network

This AfricaFocus Bulletin contains a summary analysis of the issues being discussed four years after Doha, at the Hongkong WTO Ministerial conference. The analysis is from Third World Network (TWN), an independent group monitoring trade and related issues that is based in Malaysia, with offices in Delhi, Montevideo, Accra, and Geneva.

Another Bulletin sent out today has two additional short articles from TWN, one the summary of a workshop with Tetteh Hormeku, coordinator of the Africa Trade Network, focusing on the latest "development package," and the other an account of the December 13 statement on agriculture by the G20 group of developing countries, which includes, among others, Brazil, Egypt, India, Nigeria, South Africa, and Tanzania.

TWN has much additional information and analysis on its website at

For a full list of earlier AfricaFocus Bulletins on trade issues, see

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Some Critical Issues in the Hongkong Ministerial

TWN Briefings for Hongkong, 1

Third World Network


When the WTO's Sixth Ministerial conference opens in Hongkong on 13 December, there will be lowered expectations of two types. First, it is now a foregone conclusion that the well-publicised ambition that the Ministerial will agree to "full modalities" in agriculture and non-agricultural market access (NAMA) will not be met. The Hongkong meeting will at best move some distance towards that, in the small group discussions of a few major players, or in the bigger Green Room of 30 members or so. The modalities will have to wait for a new deadline, now placed as March or April 2006.

But second, and more importantly, any expectations that developing countries or the public might have of Hongkong marking progress to achieving "development" in the Doha negotiations have also been very much dashed. The "Doha Development Agenda" (DDA) got its nickname when the developed countries pressurised the developing countries to accept a new Work Programme at the Doha Ministerial in November 2001. To cover the fact that the programme was really aimed at opening the markets of the South, the WTO secretariat leadership and the major developed countries dubbed it the DDA.

Even then, trade experts and development analysts had understood that this was WTO "double speak" and that there was very little of development content in the Doha programme. Today, four years later, it has become very clear that the developed countries, in their negotiating positions and stance, have dropped the pretence of having any development goals or even any pro-development sympathy at all in the main negotiations on agriculture, NAMA and services. They have also all but pushed aside the possibility of progress in the developing countries' attempt to re-balance the unbalanced WTO rules through the direct "development issues" of special and differential treatment and implementation issues.

As the development content disappears and the brutal face of greed for market access into the developing world shows itself ever more clearly, the double-speak is coming back to haunt the spin-masters of the WTO. Officials of developing countries and NGOs alike are asking: Where is the development in the Doha Development Agenda?

Last month, the Africa Ministers in their Arusha conference prefaced their Declaration with a section on Reaffirming Development. A few days later, a group of developing countries that included Brazil, India, Argentina and South Africa held a press conference and issued a paper criticising the developed countries for threatening the developing countries' development interests by making excessive market-access demands on them. They also called for the "reaffirming of Development" in the Doha Round.

There will be attempts at Hongkong to put a "development spin" to an otherwise lacklustre event, by announcing a "development package" comprising aid for trade, non-binding duty-free market access for LDCs, and a few other items. This may fool some people unfamiliar with the WTO negotiations. But it will be seen as a cynical "face saving" exercise by others. It will not prevent officials of many developing countries or the NGOs from expressing their frustration that the Doha negotiations have not lived up to its "development" name but have instead taken an anti-development turn.

Not only is there a disappointment that the promised benefits (especially in agriculture) of the Doha negotiations have not emerged. There is a deep-seated resentment mixed with fear that the Round is now mainly about the aggressive opening up of the markets of the developing countries, which will damage them economically and socially, and perhaps disastrously. The fear is that if negotiations proceed the way the developed countries are strongly pushing, the outcome will be counter to development goals, with millions of small farmers dislocated and thousands of local industries losing their business or disappearing. The resentment is that this will be done, cynically, in the name of a Development Agenda and now of a Development Round.

Development Issues: All but Disappeared

When the Doha talks were launched in 2001, the Trade Ministers in their Declaration proclaimed that the needs and interests of developing countries would be at the centre of the work programme.At the top of the agenda were two items directly involving development concerns - strengthening special and differential treatment for developing countries, and resolving the problems from implementation of the WTO agreements.

The proposals covered a wide range of issues relating to all the major WTO treaties. They were meant to begin the process of re-balancing the unbalanced rules arising from the Uruguay Round. Among the rules perceived to be unfair were those in agriculture, which allowed developed countries to maintain or increase their huge subsidies, whilst developing countries were obliged to reduce their tariffs, thus subjecting their farmers to unfair competition from artificially cheapened subsidised imports. There were more than a hundred proposals for each item, and the deadline for dealing with them was to precede the deadline for achieving negotiating modalities for liberalising agriculture and non-agricultural market access (NAMA) or industrial tariffs. Four years later, hardly any development-related proposal of significance from these two items have been resolved. Several deadlines have passed without success, and Hongkong is expected merely to set yet another deadline in 2006, which nobody believes will be met.

Then there was supposed to be a strong development dimension in the market access areas of agriculture, NAMA and services. Respect for this dimension would cover two things: increasing export opportunities for developing countries in markets of developed countries; and enabling developing countries to maintain policy space (through special and differential treatment) so that their firms and farms do not come under undue pressure to compete with cheaper imports and large foreign firms, when they are not yet ready to do so.

Unfortunately, as the Indian Commerce Minister Kamal Nath has recently implied, the WTO negotiations are now in danger of becoming not a Development Round but a Market Access Round. Developing countries are being pressed to open up all sectors of their economy.At the same time, the rich economies are still very reluctant to liberalise in the areas that the developing countries are able to benefit from, especially agriculture and the movement of labour (Mode 4 of the services agreement)..

This then is the tension at the heart of the deadlock in the talks that will be taken over to Hongkong. The developing countries want the rich countries to give up their subsidies and open up in agriculture, as they promised to do in the last Round, but in practice did not. But the developed countries, caught on the defensive, are instead aggressively pushing the developing countries to drastically open up their agriculture, industrial products and services.

Due to the impasse, expectations that the Hongkong Ministerial will produce full "modalities" (the formulae and numbers for reduction of subsidies and tariffs) have been lowered. But many developing country trade officials are worried that in the pressure cooker atmosphere of WTO Ministerials, the developed countries' Ministers and officials (and possibly aided by the WTO Secretariat leadership, if past record is any guide) will try to extract commitments from developing countries by putting pressure on their Ministers (or asking them to accept deals which sound nice but have negative content), while giving very little away themselves.


Agriculture should be at the centre of this Round, for it remains the sector containing most trade distortions, and the Uruguay Round's promise of liberalisation in the rich countries has yet to be fulfilled. The proposals by the US, EU and other developed countries have so far been inadequate. Independent experts in NGOs and many developing countries have found that there would be little if any real cuts in domestic support and little gain in market access, unless these offers are much improved.

At the same time, most of the proposals on the table would oblige the developing countries to cut their own agricultural tariffs at higher rates than during the last Round, especially since the tariff-reduction formula is likely to apply to all products, instead of the more flexible Uruguay Round approach of cutting by an overall average rate (so that there can be different reduction rates for different products).

The NGOs and farmers' organisations (and quite a few governments' officials) are furious that instead of being eliminated, the existing injustices of the WTO agriculture regime would actually worsen under this Round, since the rich countries can continue to "dump" their products below cost in developing countries, which are even less able to defend themselves from the artificially cheapened farm imports because they have to cut their tariffs even more sharply.

The European Union, picked on by most for not doing enough in agriculture, has led the charge of developed countries to have the developing countries open their markets also to industrial goods and services. Its expressed rationale is that there must be "balance", and the EU must get something in return to make it worthwhile for it to make "sacrifices" in agriculture.

Non Agricultural Market Access (NAMA)

And so the push is on to have the "Swiss formula" accepted without reservation in NAMA, and have it apply on industrial tariffs. It works in a way that cuts tariffs more deeply the higher they are, which suits the developed countries since their industrial tariffs are generally low. But developing countries, which have relatively high bound tariffs to protect their emerging industries, will be caught.

There is a coefficient in this formula, which determines how steep the tariff cuts will be. The lower the coefficient, the larger the cuts. The EU has proposed a coefficient of 10 to apply to all countries. The implications are very dramatic. All tariffs will have to go below 10 per cent. For example, an existing 50% tariff on a product will drop to 8.3% and an existing 20% tariff will fall to 6.7%. Even if a coefficient of 30 is selected (and this is rejected by the developed countries), the cuts will still be severe. An existing 50% tariff would have to be cut by 63% to 19%. Many domestic industrial firms in developing countries will not be able to survive the brutal competition from imports resulting from kind of drastic tariff cut.

In previous Rounds, neither developed nor developing countries were subjected to such a formula cut. The flexibility for developing countries to choose at which rates to liberalise their imports of industrial goods will be lost in this Round. Many government officials, as well as trade unions and NGOs are very concerned that should the proposals go through, industrial development will be foreclosed in most developing countries, with the loss of local firms and industrial jobs.


In services, there are already modalities for the negotiations, agreed to in 2001, known as the services guidelines and procedures. These preserve and extend the flexibilities in the WTO's services agreement that allow developing countries to commit to liberalise in only the sectors they choose, and to the extent they consider appropriate.Though other members may make requests to a country to open up, it is up to the country whether to make an offer to open up in the requested sectors, or not, or to what extent. The negotiations take place under the bilateral offer-request system.

In the past few months, several developed countries, led by the EU, have proposed to introduce many new negotiating methods that would undermine and potentially displace the bilateral system, the services guidelines and the structure and flexibilities in the services agreement itself.

The proposal is that a multilateral system of "benchmarking"be introduced, in which developing countries would have to commit to liberalise in a certain number of sectors (in the EU proposal, it is 57% of the services sub-sectors). Another proposal is that countries that are requested by others compulsorily take part in plurilateral and sectoral negotiations. For example, a group of countries that want others to open up their financial services can request countries whose markets they are targeting to join in negotiations for a plurilateral deal, and these requested countries have to participate.

These new methods are designed to make it easier to pry open the services markets of developing countries, by removing their present freedom to decide for themselves what commitments to make at the WTO. If these proposals go through, the developing countries will lose control of their services sectors, which include finance, distribution, telecommunications, energy, business and professional services, as well as social services.

Several developing countries have been fighting against the proposals which they see as an encroachment of their rights in the present WTO services regime, and a threat to their domestic services firms. But the developed countries are adamant to see their demands are met. So a big battle looms on this front at the Hongkong meeting.

Although the worst of the proposals - multilateral quantitative benchmarking, also known as quantitative targets - has been removed from the draft Ministerial text, the EU and other proponents are expected to re-introduce it in Hongkong, perhaps using yet another term to describe the same thing. And the rest of the proposed new methods - qualitative benchmarking of commitments in the services modes of delivery; the sectoral initiatives through "Friends" (in reality the main demandeurs) of the various sectors; and the plurilateral approach (where participation by the targetteed countries is made mandatory in the text) - all remain in the contested and controversial Annex C on services in the draft Ministerial text.


To sum up, many developing countries and social movements are frustrated that the WTO rules have perpetuated an unfair trading system which is in favour of the rich countries and their corporations, while laying developing countries open to ever more pressures to liberalise when their farmers and firms are not in a position to compete in the global economy, whether because the rules are unfair (thus allowing the rich to have high subsidies), or whether because the firms are too weak to face the onslaught of giant foreign firms.

The results of the unfair trading system include the loss of livelihoods and incomes of small farmers, loss of jobs due to de-industrialisation in many countries, continued obstacles to access to markets in rich countries and continuous decline in commodity prices and the poverty that is linked to that.

The Hongkong Ministerial meeting, coming at a strategically important moment in the Doha negotiations, might have had the potential to correct some of the imbalances and turn the corner towards development. But it looks as if the potential for doing something positive has faded or disappeared.

Instead, the Ministerial will most likely become a battle between the developed countries who want to use Hongkong to push their market-opening agenda further versus the efforts of developing countries to limit the damage to their economies from making such market-opening commitments.

It will also be a battle between the major developed countries that are on the defensive in agriculture trying to preserve their high protectionism of the sector versus the push by agricultural exporting countries to get the former to make some real market access offers.

Hongkong will also see an attempt by the WTO establishment to offset the embarrassment of not achieving progress in modalities, by putting on a "spin" that the developing countries, or at least the LDCs, are getting some benefits in advance through a "development package."

The Ministerial will thus be a mixed brew of unfulfilled expectations arising from slow progress in the negotiations, an attempt to offset this through a spin on development, a hard push by developed countries to "lock in" market opening commitments by the developing countries; and a lot of frustration from developing countries that fear they will be made the sacrificial lambs that have to open up their markets so that the major developed countries have a bargaining chip to get themselves off the hook. Not at all a bright prospect for a WTO Ministerial conference.

AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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