Indian Council for
Research on International Economic Relations (ICRIER) organized an
International Conference on WTO and the Doha Round: The Way Forward, on
April 6 and 7, 2006 at the ITPO Conference Hall,
Inaugurating the
conference, Mr. Kamal Nath said, “it is important to acknowledge the
achievements that were made in the
Addressing the
Conference Mr. Lamy said, “
Mr. Lamy highlighted
the fact that the DDA was aimed at focusing on development and correcting the
imbalances in the trading system. He stressed that the end of the Doha Round
was fast approaching and it will require hard work, determination and nerves to
focus on the final goal for strengthening the multilateral trading system. He
mentioned that currently only 60% of the package had been achieved. He said the focus of negotiations today was
on reaching an agreement by the end of April on three key areas relating to
quantum of reduction in agricultural subsidies, agricultural tariffs and
industrial tariffs.
Mr. Lamy warned that
there will be many losers in the Round from developing countries especially,
the smallest and weakest countries and the WTO itself. He hoped that given what
is at stake,
Key issues deliberated at the four substantive
sessions: Agriculture, Non-agricultural market access, Services, and Rules
1. Agriculture
Doha Round is a
Development Round and its main agenda is to ensure a level playing field for
all countries. This round was intended to reach a convergence over three major
issues by 30 April, 2006: agricultural domestic subsidies, agricultural market
access, and NAMA. The main issues under the three pillars of agriculture and
the suggestions on them are as follows:
• Domestic Support
o Tiered formula for cuts in overall Trade
Distorting Support (to say 5% of value of production).
o Additional effort in AMS reduction by
developed country members in the bottom band.
o Reduction in de minimis for developed
countries.
o Strengthening criteria on blue and green box
to prevent box shifting.
o Proposal for limiting direct payments to
small farmers in the Green Box criteria.
o Assessment of the developed countries’
proposal for cuts in domestic support for effectiveness and creation of real
commercial opportunities.
• Market
access
o Progressive reduction, through a tiered
formula.
o Formula to address tariff escalation.
o Capping
o Assessment of credibility of self selection
of Special and Sensitive Products (need to keep these to a minimum)
o Reliance on Special Safeguard Mechanism
(SSM).
o Determining
basis for the quantity based and price based SSM
• Export Competition
o Maintenance
of suggested period of 5 years for elimination of direct export subsidies
o Strict
adherence to discipline on export credit for under 180 days
o Fundamental
changes in food aid with clarity on type of food aid to be permitted in non
emergency situations.
o Limiting
monopoly powers of exporting State Trading Enterprises (STEs) while
acknowled-ging that these were an important development instrument for the
present day developed countries and hence have a key role to play in developing
countries as well.
Strategies and Options
Ahead
Developing Countries’ offer of tariff cuts must be
conditional on steep cuts in domestic support by the
Domestic support disciplines must be simplified. The
current structure based on the three boxes is complex and ambiguous.
US need to move forward on domestic support, EU on
market access and
Within the framework
of WTO,
Time has almost run
out but whatever is agreed upon must be carefully implemented so that mistakes
from the Uruguay Round are not repeated.
Offensive and
defensive steps of various countries and groups must be in balance to pave the way
forward. It would be a collective mistake to postpone the negotiations. Even
though developing and developed countries differ in many ways and cannot be
directly compared on several counts, if the negotiation is disciplined, it
could ensure that all countries gain.
2.
Non-Agricultural
Market Access
• Outstanding Issues
o Co-efficient of the Swiss
formula
o Unbound tariffs
o S & DT
o Social harmonization
o Preference erosion
o Issue of newly acceding
countries
o LDC vulnerability, especially
of small island states
The Way Forward: Issues and Concerns
o Choice of coefficient is important. If
tariff cuts are applied on the lines of the Swiss formula, the maximum tariff
will fall below the coefficient agreed upon. Further, choice of coefficient
should be such that peak tariffs on products of developing country export
interest reduce to accord real access to developed country markets
o There is a need to resist any move by trade
partners (insisting on this change so as to ensure improvements in ‘real’
market access) to change the basic mandate of WTO by which commitments are to
be taken from bound levels. Use of applied rate as base for tariff cuts would
mean that developing countries would in future hesitate to introduce unilateral
liberalization measures; WTO encourages Members to go beyond MFN commitments.
India should therefore resist, and take the stance that cuts will be made from
bound rates, though choice of coefficient may lead to cuts that go below the applied
rates.
o Credit for unilateral liberalization
undertaken since the conclusion of the Uruguay Round is due to
o Paragraph 24 Issues: Given the clear mandate
in the Hong Kong Declaration for harmonizing levels of ambition in Agriculture
& NAMA, identifying this level of ambition appropriately is important.
o
o ‘Less than full reciprocity’ in cuts is a
basic pillar of WTO which cannot be ignored or negotiated. New proposals are
being made to evaluate the perpetuation of protectionist tendencies in the
developed world aimed at shielding, in Prof Debroy’s words, “newly declining
(developed) countries” and the “refusing to develop countries”. India belongs
to neither group, and should not compromise on the principle of less than full
reciprocity.
o Unbound products: flexibility allowed in the
NAMA framework is needed to address domestic sensitivities. While there seems
to be a convergence on use of a constant mark up on applied rates and use of a
nonlinear formula, the degree to which this is allowed is yet to be finalised.
A minimum 5% of product lines need to be kept out of reduction commitments;
however, the panel felt that India could concede to give up the demand of
applying less-than-formula-cuts for certain items.
o The definition of ‘new goods’ is unclear
even in the Indian context and the categorization of certain
refurbished/remanufactured goods is still ambiguous. The government needs to
make necessary changes in domestic Foreign Trade Policy to address of the
issue.
o Discussion on Sectorals being non-mandatory
as per the
o In the final outcome, it was agreed that
countries (in particular developing ones like
3. Services
The negotiations in
services started in January 2000 and became an integral part of the Doha Round.
Although the services negotiations started much ahead of the negotiations in
agriculture and NAMA, progress has been slow. Moreover, negotiations in
services are more complex than NAMA and agriculture, wherein once the formula
is decided upon the rest of the negotiations fall in place. However, in services
intense negotiations on cross-cutting issues across different sectors are
required to arrive at a consensus. Services negotiations in the Doha Round are
significantly behind schedule.
Since the beginning of
the current Round,
In
During the March-April
services cluster, Members sought detailed clarifications on what the requests
entailed, described their current policy regime and indicated the extent to
which the requests could be met.
The requests are
dominated by developed countries and many developing countries are defensive
about participating in the negotiations. The seminar called for greater
participation from developing countries in the services negotiations. It also
called for greater cooperation among developing countries and technical
assistance from large developing countries to others.
It highlighted the
need to address domestic regulations. Many barriers faced by professionals in
developed country markets are related to domestic regulation such as
qualification and licensing requirements.
On their part, even proactive developing countries such as India are not
able to make commitments in certain sectors since the regulatory regime is
still evolving.
It was pointed out
that the coverage of Mode 4 needs to be widened to accommodate interests of
other developing countries. There should be greater cooperation between sending
and receiving economies so that ambiguity regarding the quality of workforce,
security issues, etc. can be resolved.
Along with market
access commitments, the focus should be on securing national treatment
commitments.
4.
Rules
Doha Round has a limited
mandate to clarify and improve existing articles in the agreements on
anti-dumping, subsidies and safeguards, and rules on RTAs. The discussions were
however focussed on AD, ASCM & fisheries subsidies.
Way forward suggested:
o AD needs to balance interests: There
is a need for a pro-exporter bias to redress the damage caused by the abuse of
these provisions by
o Anti circumvention (the sweeping
proposal by US): Ambiguity of wording raises the possibility of misuse and abuse.
Hence there is a need to ensure predictability and put in place fair rules that
clearly define the balance of rights and obligations, and call for
circumspection and care.
o New
Shipper Review: It is important to retain the requirement of accelerated
review, and if possible, refine the requirement of bona fide commercial
sales. Flexibilities are needed to prevent abuse and improve transparency.
o Sunset
Reviews: There is a need to limit subjectivity and improve transparency of
‘likelihood tests’ and provide clear definitions of methods of calculation etc.
Automatic termination of sunset review duty needs to be pushed for, ideally
after 5 years, but definitely after say 7-10 years. One view was that if duty
is allowed to continue, new duty from date of expiry should be imposed, and
imposition of retrospective duties should not be allowed.
o Dumping
Margin: Currently, de minimis rates are at 2% which need to be raised to
5%. Further, whereas now the rate is applied on percentage of total imports, it
should be calculated on percentage of total domestic consumption. To discourage
small margin initiation misuse, cumulation of markets for the purpose of
initiation should not be allowed.
o Lesser
Duty Rule:
o ASCM:
The export competitiveness issue is of pre-eminent importance. A clarification
of what is a ‘reasonable and effective verification system’ needs to evoked in
our favour.
o ‘Prohibited
Subsidies’: A clearer definition is needed on what is prohibited. This new
development is a cause for concern as further erosion of policy space is being
envisaged. Also, application of Prohibition Rules should not apply to
developing countries, especially the Annex 7 countries as in the case of export
subsidies.
o Fisheries
Subsidies: These are important for overall balance in rules negation. However,
there is a need to ensure that we:
• protect
interests of small fishermen;
• protect
support for deep sea fishing;
• exclude
disciplining of inland fishing.
While Summing-up the Conference, Session Chairman, Mr. Gopal K Pillai
highlighted the urgency of remaining engaged in the multilateral negotiations.
He stressed that though many issues remain unresolved, a negotiated deal is
still possible. This would however require all Members to move away from their
extreme positions and make adjustments albeit without compromising on the core
issues of concern.
He stressed that of
the two main areas of focus, viz. agriculture and NAMA, agricultural
negotiations in DDA are only in their second round; consequently, one can’t
expect miracles. However, WTO Members could use this opportunity to discipline
domestic agricultural policies, especially vis-à-vis the different boxes of
subsidies and direct payment issues; sensitive products and SSM; tariff caps
and tariff peaks in items of export interest to developing countries. Domestic
sensitivities in agriculture vis-à-vis livelihood issues need to be respected.
In comparison, for countries like
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