[DEBATE] : Bumpy road to WTO end-April deadline

[Riaz K Tayob]

TWN Info Service on WTO and Trade Issues (Apr06/8)
9 April 2006
Third World Network
www.twnside.org.sg <http://www.twnside.org.sg>*
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*No easy road to WTO's end-April deadline*
**

*The WTO's Director General Pascal Lamy is travelling over the world
visiting key capitals in an effort to get countries to agree to some deal
that would come together at the end of April.*
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*The mechanism for this is a Ministerial Green Room of some 30
members to be held at the WTO HQ in Geneva 29 April to 5 May.*
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*But the road to end-April is bumpy.  The meeting in Rio of the
Ministers of Brazil, EU and US did not produce a breakthrough.
Lamy's visit to India was interesting, with protests by farmers and
a seeming rebuff by the Indian Minister to the Director General's
insistence that India make an offer to cut its industrial tariffs at the
applied rate.  In the US, an important congressman said that there
was no hope for the Doha Round due to irreconcilable differences.*
**
*Below is a report on the plans for end-April and Lamy's visit to
India.*
**

*With best wishes
Martin Khor
TWN*
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*-------------------------*
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*No easy road to WTO's end-April deadline*
**
*By Martin Khor (TWN), Geneva, 6 April 2006*


The WTO's Director General Pascal Lamy by all accounts is sticking
to the end-April deadline for reaching agreement on modalities for
agriculture and non-agriculture market access (NAMA).

Lamy was greeted with some skepticism when he first announced his
determination not to move the deadline (set by the Hong Kong Ministerial) to
July, which according to wide belief is the "real deadline" for finalizing
the modalities, if the Doha negotiations are to end on time in December.

During his visit to India this week, Lamy stuck to April as the "moment of
truth" for the Round. However, new hurdles have come up in recent days to
make the prospect of an end-April success more distant.

At a "Green Room" meeting of several Ambassadors before his India trip, Lamy
confirmed that he intended to convene a meeting of some 30 Ministers in
Geneva within the period 29 April to 5 May.

The "mini-Ministerial Super Green Room" may not aim to resolve all
outstanding problems, but could be used to reach agreement on the sticky
market-access issues in agriculture and NAMA of tariff-cutting formulae,
numbers and coefficients as well as the extent of flexibilities (for
exceptions from the formula reductions). If this succeeds, then other issues
can be resolved later.

But it is doubtful if this would be acceptable to many WTO members who have
been insisting that their own serious concerns be settled at the same time
as the formulae. These include treatment of special products and special
safeguard mechanism for developing countries in agriculture, treatment of
small economies in NAMA, and the problems facing preference receiving
countries whose preference margins would be affected by rapid
liberalization.

"The end-April plan is taking shape as a repeat of the July package of
2004," said a developing country Ambassador. "Lamy hopes that 30 Ministers
in a Green Room will reach a deal and that it would then be formalized
through a General Council meeting."

This is premised on the belief that the majority of Members who are not
invited to the Super Green Room will quietly accept whatever comes out of
it. But at the Trade Negotiations Committee meeting last month, the
influential Group of 33 (representing over 40 developing countries) had
issued a compliant against the exclusive decision-making process and warned
that this affected legitimacy and may cause difficulties for the Round's
success.

There is the other big issue of whether a deal is possible, even within a
Green Room meeting of a few Ministers.

Lamy had a tough time in India. His message in Delhi, that India, Brazil and
South Africa must relent on industrial tariffs in order for the US and EU to
move on agriculture did not go down well.

This is especially since he bluntly added that India would have to cut its
applied industrial tariffs. This is similar to the demand being made by the
EU, US, Japan and other developed countries, a demand that has been rebuffed
by the developing countries who say that negotiations must stick to
reduction of bound (and not applied) rates, which has been the traditional
practice of GATT and WTO, and which is in the mandate of the July 2004
framework on NAMA.

The massive distortions in agriculture have been a legacy of the success of
the rich counties in having agriculture exempted from the GATT rules for
over four decades, and of the loopholes in the Agreement on Agriculture
which allow continuance of high protection in the North.

The developing countries have already paid heavily and unfairly in the
Uruguay Round (by accepting the TRIPS, TRIMS and services agreement and by
agreeing to give up quantitative restrictions and to cut their own tariffs
and curb their subsidies in agriculture) for this "concession" of the North
in agriculture.

And now they are being asked by developed countries to pay very heavily yet
again (with drastic tariff cuts in NAMA, more tariff reductions in
agriculture, and new negotiating methods to pressurize them to open up in
services), in exchange for the developed countries to consider liberalizing
their agriculture, which they should have done many decades ago without all
this "payment" in the first place.

Lamy, by asking India to cut not its bound but its applied tariffs in
industrial products, is taking on the line of the rich nations. He is
implying that India (and thus other developing countries as well) should
accept a low coefficient in the Swiss formula in NAMA, which in the case of
India would lead it to cut industrial tariffs by 50-70 per cent or more.

In exchange for this, the EU and US would be asked to cut their "bound"
agricultural subsidies and tariffs substantially. But what this means in
real terms (even after the numbers are put in) is uncertain, because so many
loopholes in the agriculture agreement would remain that would allow new
barriers to creatively come up (such as shuffling domestic subsidies to
permitted categories like the "Green Box") to block market access.

No wonder Lamy received a cool official reception and an unfriendly
reception from farmers and NGOs in Delhi.

Indian Commerce Minister Kamal Nath, responding to Lamy's lecture on the
need for India to cut applied rates, said that since the WTO negotiations
are taking place on bound rates, India does not want to shift the focus to
actual or applied rates, according to a Financial Express report.

"Since the developed world took its time in developing their industries
before opening up, India cannot be expected to act in haste. Our industries
need similar flexibilities", said Nath. "We cannot compromise the interests
of our small-scale sector and infant industries."

While Lamy warned the "moment of truth" would come in the next few weeks,
Nath in contrast said "while timeless and deadlines are important, this
cannot be at the cost of the development content of the Doha Round."

Lamy faced less polite criticism from farmers and civil society leaders at a
forum organized by UNCTAD and the Commerce Ministry. A protesting youth
leader got up at the meeting and threw black badges and papers towards Lamy
who was on the dais with an UNCTAD official and the Commerce Ministry
secretary, according to a press report.

Representatives of farmers' organizations and Devinder Sharma, head of the
Food Security Forum, told Lamy that the WTO had failed to get the developed
countries to reduce even a penny of their agricultural subsidy. Instead, the
WTO is forcing the developing countries to reduce their tariffs, giving
greater access for the West's agri-corporations.

With the removal of quantitative restrictions as a result of the WTO's
agriculture agreement, the Indian farmers are further pushed into debt as
agricultural imports increased, said the civil society leaders.

They accused developed countries of wanting to industrialise Indian
agriculture, thereby reducing small subsistence farmers to become farm
labour on their own land.

Among the demands voiced at the meeting with Lamy was for India to be
allowed to re-impose quantitative restrictions to check food imports, and
for agriculture to be taken out of the purview of the WTO.

Lamy admitted the agricultural subsidies of the developed countries are
unfair and have to be changed if the WTO talks are to succeed, said the news
reports.

Over 500 farmers protested against Lamy's visit and blocked his way to a
conference hall. The Indian Coordination Committee of Farmers' Movement
issued a statement saying Lamy's visit to Brazil and India was "an indicator
he wants to leaders of the G20, who have shown willingness to further their
own interests without regard to the interests of other countries both in
Geneva in July
2004 and at Hong Kong last December, to be ready to play the same game
during the negotiations in late April."

The statement criticized the present informal process of negotiations, under
Lamy's supervision, which excludes a large majority of member states in WTO
decision-making, which has "just become a secretive, closed-door activity
attempting to achieve progress on various contentious issues in the name of
all the 150 member states."

"In the last 11 years of the WTO regime, the Indian farmers and farming have
suffered a lot," said the statement. "During this period more than 50,000
farmers have committed suicide because of WTO induced policies of our
government."

The farmers' leaders said the 60 million farmers are being forced to compete
with highly subsidized, big and corporate farmers of the West. "With the
removal of quantitative restrictions, Indian farmers have been exposed to
cheap subsidized agricultural imports, which has devastated the rural
economy, forcing farmers to leave agriculture. Instead of helping poor
farmers of the Third World, the WTO is biased for the rich farmers and
corporations of the developed countries."

Lamy also met industry leaders at a meeting with the Federation of Indian
Chambers of Commerce and Industry (FICCI). In a letter to Lamy, the FICCI
president Saroj Poddar urged the WTO to keep developing countries' interests
in mind when framing rules on tariff reduction.

According to FICCI, the flexibilities provisions (in NAMA) are important to
address concerns of small-scale industries and sensitive sectors, and there
should be no trade offs between flexibilities and "less than full
reciprocity" in tariff commitments.

FICCI added that the attempt by developed countries to change the basis of
NAMA negotiations from bound duty to applied rate is a matter of concern.
"This is totally unacceptable to us because in the same July framework,
members agreed that tariff reduction commence from bound rates. We need to
stick to that."

With regard to demands from a few members that India give greater market
access, Poddar told Lamy that India already provided "real market access",
with peak customs duty having declined over the years to 12.5%, resulting in
a surge of imports. Indian industry wanted tariff reduction to be done in a
phased manner to allow industry necessary time and space for adjustment.

It is not only in India where there is skepticism about whether Lamy's push
to get quick results would succeed.

The US Congressman, Bill Thomas, who is chair of the House Ways and Means
Committee, said last Monday in Washington that opposition to the WTO's trade
agenda was mounting and may be too strong to overcome.

He said the Doha Round was beset by obstacles. "The US and EU have
irreconcilable differences and when you have irreconcilable differences, the
best thing you can do is to call it off." He said the US should not put most
of its resources on the Doha Round, but shift focus instead to bilateral
agreements. "The music has stopped, and we need to get off the
merry-go-round".

US Trade Representative Rob Portman is not upbeat either, saying on Tuesday
he was pessimistic the 30 April deadline would be met. Portman said he was
discouraged by the lack of progress at last week's meeting he had in Rio de
Janeiro with the EU's Trade Commissioner and Brazil's trade minister. On
Thomas's call to shift attention from the WTO to bilateral talks, Portman
said "We can do both."