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Africa: Trade Disconnect

AfricaFocus Bulletin
Jun 29, 2007 (070629)
(Reposted from sources cited below)

Editor's Note

International trade talks are again on the edge of collapse after failure of the G4 (United States, EU, Brazil, and India) to reach agreement at a side meeting in Potsdam, Germany. Developing countries are increasingly vocal in their refusal to make new commitments for opening their markets without meaningful concessions from industrialized countries on such issues as agricultural subsidies.

As the G4 meeting collapsed, there was a clear split between the U.S. and the EU on the one side and Brazil and India on the other. At the same time, a very wide coalition of developing countries, calling itself the "G90 Plus," issued a critique of both the substance and process of the negotiations.

Given that developed countries seem unwilling to make serious compromises, critics welcomed the unity of developing countries, and noted that a bad result would be worse than no conclusion at all. Speaking to Inter Press Service, Eileen Kwa of the Thailand-based Focus on the Global South, said "I don't think the WTO is going to really affect world trade. I mean world trade has been increasing exponentially in the last few years without any round. So that will continue. So I don't think that this collapse is going to affect world trade." The round was not going to be a gain for the majority of developing countries, particularly in Africa, she added.

This AfricaFocus Bulletin contains excerpts from two recent background articles on the trade talks impasse from Martin Khor, of the Third World Network. For the complete articles and much additional background, visit http://www.twnside.org.sg

For earlier AfricaFocus Bulletins on trade issues, go to http://www.africafocus.org/tradexp.php

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"G90 Plus" developing countries issue Declaration on Doha talks

TWN Info Service on WTO and Trade Issues (June 07/22)

By Martin Khor (TWN), Geneva 21 June

Third World Network
http://www.twnside.org.sg

Major groupings representing a majority of developing countries in the WTO on Thursday issued a Development Declaration warning that development concerns have been left behind in the rush to agree to a deal in the Doha Round.

The alliance of groups and countries, calling themselves the G90-Plus, said that the multilateral system in the WTO cannot be a rubber stamp to legitimise decisions made by a few, referring to the G4 (US, EU, Brazil and India), whose Ministers have been meeting in Potsdam, Germany. ...

The "G90 Plus" comprises the ACP (Africa, Caribbean and Pacific) Group, the Africa Group and the Least Developed Countries (LDC) Group, and Bolivia and Venezuela.

A press conference announcing the Declaration was held this afternoon, and was addressed by Ambassador Gail Mathurin of Jamaica (who chairs the ACP Group), Ambassador Love Mtesa of Zambia (who chairs the LDC Group), and a representative of Uganda (which chairs the Africa Group).

Amb. Mathurin said that the G90 was a combination of important developing country groupings that had come together previously and now to take common positions on the Doha negotiations. As a few other countries had also joined in the new Declaration, the alliance could be termed G90-Plus.

She stressed the importance that the views of the majority of developing countries be reflected in the draft modalities that are now being prepared by the Chairs, and in the intense negotiating process in the coming weeks.

The G90 Plus document is entitled "Declaration on Development Concerns and Issues in the Current WTO Negotiations".

According to the Declaration, "it is imperative if the Round is to be completed that the concerns and issues that matter to a majority of developing countries are dealt with satisfactorily and that our development interests are truly addressed and promoted."

It added that critical issues for developing countries have been marginalised or left behind as the negotiations proceeded. They warned that WTO members should not be rushed into agreements because "content cannot be sacrificed for timelines" and "it is more important to get the agreements right than meet deadlines."

The Declaration dealt with both the negotiating process and the substance of the negotiations.

On the process, the Declaration stressed four principles: participation and transparency, the need for full and not partial modalities, balance between obligations and benefits and less than full reciprocity.

On participation, the G90 Plus said that a major positive feature of the multilateral trading system is the principle that it allows all trading partners the opportunity to participate in making the rules. The legitimacy of the WTO rests on whether this principle is adhered to.

"We have been concerned that the recent negotiating process has been less than transparent and participatory. Although it is widely known that important negotiations are taking place in the G4 process, the vast majority of members have little or no knowledge of the progress and content of different stages of the negotiations.

"Although two developing countries are part of the G4, we cannot expect them to carry the responsibility of representing the views and positions of all developing countries.

"We have been told that the Geneva multilateral process is central, but without knowledge of the political or technical aspects of the G4 negotiations, it is not possible for the majority of members to prepare themselves or provide inputs.

"We are concerned that members may be faced with texts arising from small plurilateral processes and requested to consider them at very short notice and to adopt them for the sake of the system. As we are the majority of members of the system, we have the right to know what is going on and to be given the opportunity to participate."

The G90 Plus thus called for a much more transparent and participatory overall process. "The multilateral process with full participation of all members in discussion and in preparing the drafts and final texts must be central. The multilateral system cannot be used to rubber stamp and legitimise the decisions made by a few members."

On the need for full modalities, the G90 Plus said that the Doha Work Programme outcome is a "Single Undertaking." All issues that are important to members must be considered in a balanced and equitable manner.

"The modalities and solutions for all issues therefore have to be considered and settled simultaneously," said the Declaration. "It is unfair to seek a deal first on so-called "core issues" and to promise that "other issues" be settled later.

"Firstly, it is a matter of subjective interpretation what the "core issues" are because different members have different priorities. Secondly, there is a concern that "other issues" will be left aside after the so-called "core issues" are settled."

The Declaration said that S&D and Implementation Issues were once considered priority issues, but after Cancun they were not included in the so-called four key issues to resolve, and they have fallen aside, despite promises that they are equally important.

"We therefore cannot accept the concept that there will be "partial modalities" to be settled first (for instance, by end of July 2007), with only some issues included, while excluding others," said the G90 Plus. ...

The Declaration also stated that for developing country members, the level of obligations must be commensurate with the level of benefits to be obtained in the Round. There should not be a situation in which developing countries are asked to undertake obligations which are not matched by the same level of benefits, causing a net loss.

"For developing countries, there are serious concerns that the Round must not result in de-industrialisation or in more import surges in agriculture that adversely affect food security, farmers' livelihoods and rural development. This would defeat the purpose of the development objectives of the Round."

The G90 Plus said that many developing countries are unable to take advantage of opportunities arising from increased market access due to limited supply capacity.

"Many studies have concluded that most developing countries will gain little or nothing and many will be losers from existing proposals put forward by developed countries. These countries should therefore not be asked to undertake obligations that result in costs and losses which are not made up for by benefits."

The G90 Plus statement also called for the principle of less than full reciprocity (as affirmed in the Doha Declaration) to be respected. Developing countries should undertake less obligations than developed countries (for example, as measured by percentage reduction in tariffs).

Moreover, the principle gives developing countries the right "not be expected, in the course of trade negotiations, to make contributions which are inconsistent with their individual development, financial and trade needs."

...


Clash of positions and paradigms that led to G4 collapse

By Martin Khor, Geneva, 22 June 2007

Info Service on WTO and Trade Issues, Third World Network
http://www.twnside.org.sg

In the immediate aftermath of the collapse of the G4 talks in Potsdam, some interesting conclusions can be drawn about what happened and why.

Firstly, the configuration in relations between the four (the US, EU, Brazil and India) changed. The US and EU got together, had a rapprochement between themselves in agriculture, and united to press the two developing countries very hard on NAMA [NonAgricultural Market Access].

Before, the EU had been pushing the US to reduce overall trade distorting support (OTDS) while the US pushed the EU to cut its agricultural tariffs by more.

At Potsdam, the US offered $17 billion as its cap for OTDS (which is above the $15 billion the EU had asked for and the $12 billion demanded by the G20). The EU offered an average tariff cut of 50% in farm tariffs (below the 54% demanded by the G20 and far below the 60% demanded by the US).

The EU and US were amenable to each other's "lowering of ambition", or to "forgive each other's sins." And then they combined to be tough on India and Brazil on NAMA and on India on special products.

In their statements, the EU and US have claimed how "flexible" both of them had been, and how inflexible Brazil and India had been. In the blame game now going on, the two developed countries have thus attempted to throw the burden of the collapse of talks onto the two developing countries ...

A different view came from Brazilian Foreign Minister Celso Amorim at his Potsdam press conference after the talks collapsed: "In a way, we are having a Cancun II in which two developed countries have found a common level of comfort for themselves by lowering ambition in developed countries' agricultural market access and by lowering ambitions in OTDS - yet keeping high ambitions in NAMA and special products and other areas. We came to a conclusion we are pursuing a decline - not a Development Round."

Amorim was referring to the deal on agriculture made by the US and EU just before the WTO's Cancun Ministerial Conference of September 2003. That deal shocked Brazil (which had before that been working with the US and the Cairns Group to press the EU on its tariffs) and India (which thought it could work with the EU to get the WTO to accept a more lenient approach to tariff cuts). ...

The second conclusion is that with the US-EU rapprochement, the developing countries are going to benefit very little or nothing from the "lowered ambition" of the giants in agriculture.

...

But the $17 billion it mentioned at Potsdam was still grossly inadequate in the view of Brazil and India, and quite rightly so. Mr. Kamal Nath, the Indian Commerce Minister, told the media that the applied OTDS of the US was only $10.8 billion in 2006. He remarked: "And the offer is $17 billion, which is more than 50% of the current applied level. There is no equity, there is no logic in this. We can't correct the flaws."

...
This is the third conclusion, that the US and EU are now wrongly portraying the G4 collapse as the fault of two inflexible developing countries that are not willing to give anything in return for their own generous offers.

Firstly, the EU and US offers are anything but generous. ...

"In effect, the EU and US are offering nothing, and for their offer of zero they are trying to extract blood from the developing countries in NAMA and services as well as in agriculture market access," said Chakravarthi Raghavan, a long-time analyst of WTO developments. ...

All these lead to the conclusion that the developed countries were never interested in development or the interests of the developing countries when they launched the Doha Work Programme in 2001.

They had to call it the Doha Development Agenda and later the Development Round to entice the developing countries to join in the launch of a new round. Now, the developing countries are calling the bluff of the developed countries and asking that the outcome of the Round really have a development content.

And in answer, the US and EU are saying that they want "new trade flows" from developing countries in order for their offers in agriculture to stand. And their agriculture offers are nothing to shout about, and in some important elements, even really nothing.

The USTR has had to resort to saying that "new trade flows" (read significant cuts to applied rates of developing countries) is what lifts poor countries out of poverty.

But the poor countries think otherwise, which is why the great majority of them have defensive interests in the negotiations, and are fighting to limit the degree of liberalisation they have to undertake.

The clash of perceptions of what is development and what is anti-development in the proposals of this "Development Round" is what led to this new crisis and impasse in the Doha talks.


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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