|DESA News Vol. 11, No. 5||May 2007|
Success or failure of trade talks by December 2007 will have important ramifications for review of the Monterrey Consensus in Doha next year
World leaders rallied around the issue of financing development in Monterrey five years ago. While standing up for an equitable trading system, they also committed to debt relief, development aid and reform of institutions. The message was that aid and trade must go hand in hand if the benefits of globalization are to reach the world’s poorest citizens. Yet five years on, despite a significant breakthrough in debt cancellation, uncertainty over the fate of the Doha trade negotiations remains. With the review of the implementation of the Monterrey Consensus in Doha on the horizon in 2008, the world has yet to come to terms with the immense disparities that characterize the global economy.
It was at a delicate moment in the world trade talks that the spring high-level meeting of the Economic and Social Council with the Bretton Woods institutions, the World Trade Organization and the UN Conference on Trade and Development unfolded in New York on 16 April. As in previous years, the Council emphasized the need for coherence, coordination and cooperation for the implementation of the Monterrey Consensus as agreed at the International Conference on Financing for Development held in 2002 in Monterrey, Mexico. At the heart of the discussion was the resumption in January this year of the long-stalled Doha trade talks with numerous calls for a speedy and successful conclusion of the current round of negotiations.
The realization of the “Doha Development Agenda” of multilateral trade negotiations, coupled with effective use of trade and investment policies, was the theme of one of four simultaneous roundtables held during the one-day conference of leaders in finance and trade. Other roundtable themes were aid effectiveness and innovative financing for development; the participation of developing countries in decision making, and good governance. In their plenary addresses, the Secretary-General Ban Ki-moon, along with the President of the Council, Dalius Čekuolis, and President of the General Assembly, Sheikha Haya Rashed Al Khalifa, all described these issues as crucial to achieving the objectives of the Monterrey Consensus and the internationally agreed development goals, including the Millennium Development Goals.
“Trade is a crucial component of the development partnership forged in Monterrey because the benefits accrue to all partners and are much greater and more permanent than either official assistance or debt relief,” said the Secretary-General in his last report on follow-up to and implementation of the outcomes of the International Conference on Financing for Development. In particular, the 2002 Monterrey Consensus stressed that a universal, rule-based, open, non-discriminatory and equitable multilateral trading system, along with trade liberalization, investment and technology, can spur development worldwide and fight poverty, “benefiting countries at all stages of development.”
Similarly, when WTO members launched the Doha round during their fourth Ministerial Conference in Doha, Qatar, in November 2001, they designated it a development round. The round would seek “to ensure that developing countries, and especially the least developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development.” A note of the Secretary-General prepared for the meeting suggests that the designation of the current round of trade talks as the “development round” is akin to “recognition that there remain rules and disciplines, imbalances that penalize developing countries, and that these must be corrected.”
On industrial tariffs, for example, the current round has set up a reduction formula intended to put an end to high import tariffs on products in which developing countries have a comparative advantage. Members have also agreed in principle that this round should bring about “effective cuts” in trade-distorting agricultural subsidies in developed countries. They have also committed to eliminate the most damaging type of subsidies: export subsidies by 2013, with a large part of them gone by 2010.
Agriculture is at the core of the current round. Yet last year in July, talks broke down on issues connected primarily with agriculture. Divergent positions revolved around issues of market access, domestic support, sensitive products, special products and special safeguard mechanisms. Moreover, the United States was opposed to major concessions on farm subsidies, while India, Brazil and other developing nations were reluctant to lower tariffs on industrial goods. The European Union for its part was reluctant to consider improve market access by lowering tariff barriers.
In a resolution dated on 20 December 2006, the General Assembly would consider the indefinite suspension of the WTO trade talks “a serious setback” for the Doha round and called on countries to return to the negotiations table sticking to their development commitments.
A group of about thirty ministers responded to concerns, injecting new life to the negotiations in January this year which was seen as a sign for cautious optimism to many participants in the Council’s spring meeting. In an attempt to overcome the deadlock, four key players – the United States, the European Union, Brazil and India – met in April in New Delhi. The so-called G-4 group also met Japan and Australia, with which they form the G-6, as they probed and prodded for a solution. Eventually they set themselves a deadline at the end of 2007 for the negotiations to be concluded while encouraging the drafting of a new text for the negotiations.
Several participants in the spring meeting welcomed those decisions. But while progress in the Doha round is needed and welcome, the Secretary-General stresses in his note that all parties should also “keep a high level of ambition and not conclude the Round for the sake of concluding the Round.” As he stated in his plenary address to the Council, “We must ensure that the Round’s development promise is not compromised.”
The 2005 World Summit Outcome called on Member States to speed up work to implement the development dimension of the Doha work programme. Four key deliverables are needed to bring the talks to a successful and development-friendly conclusion, according to participants in the roundtable on trade. First, predictable new access for the exports of developing countries is required. Second, the terms of trade must level the playing field by putting in place strong rules able to prevent stronger States from arbitrary action against their poorer trading partners. Third, flexibility is needed in the the national policy space so that countries can benefit from trade liberalization while mitigating the cost of adjustment. Countries should not be forced to undertake commitments that they cannot implement. Lastly, technical and financial assistance should be provided to developing countries to enable a smooth transition to liberalized global trade.
When it comes to market access, least developed countries are set to be granted, under the current round, duty-free and quota-free access on 97 percent of all products, with the possibility of an eventual increase to 100 percent of goods and services. It may not sound like much but that 3 percent makes a big difference. Because developing countries export a narrow range of manufactures, says the Secretary-General in his note on coherence and coordination, the 3 percent exception could effectively prevent them from exporting manufactured goods that are vital to domestic industrial development.
“If development is to be the objective of the global trade system, market access is not enough,” stresses the Secretary-General’s note. Ambassador Ould Mohamed Lemine, President of UNCTAD’s Trade and Development Board, concurred that “trade liberalization is not a magic bullet.” Countries will need to improve their capacity to supply goods in the international market as well as the quality of those goods. Building productive capacity on a competitive basis, therefore, is pivotal to creating new trading opportunities, he said. Such structural change will also require an enabling environment for innovation, production and trade, he stressed, as well as “policy flexibility and policy space for experimentation, calibration and sequencing of economic reforms.”
Several participants in the roundtable on trade reminded delegates of the special situation of landlocked countries that must to depend on neighbouring States for quick and cost-effective transport of goods to the world market in order to take advantage of trade opportunities. Assistance in infrastructure development will be needed to cut transportation and insurance costs.
Trade liberalization can only be politically and economically sustainable if it is underpinned by policies that address deficits in capacity – human, bureaucratic and structural – as well as the equitable distribution of the benefits of freer trade, according to the note by the Secretary-General. Many of the roundtable discussants pointed out that the Aid for Trade initiative, considered at the sixth ministerial meeting on trade in Hong Kong is 2005, responds to this particular challenge. WTO Members endorsed the initiative and invited the organization’s Director General to create a task force to figure out ways to put Aid for Trade into operation, and to consult with governments, international organizations and development banks on mechanisms to secure additional financial resources for it.
Aid for Trade could cover anything from the training of officials to support for the articulation of national policy, compliance with trade obligations, infrastructure, and the building of productive capacity. Participants in the high-level meeting mentioned that Aid for Trade will reinforce the development facet of the Doha round if in practice it is predictable, does not create additional debt and supplements other forms of development assistance, while helping developing countries benefit from new market access, implement the new agreements, and reduce the cost of adjustment. The European Union announced, as part of a joint EU strategy on Aid for Trade expected to be adopted at the end of this year, that it was taking the initial step of implementing a 2 billion euro Aid for Trade commitment.
The Group of 77 for its part regards Aid for Trade as a good idea, but one of limited size and scope. Even if properly enlarged, its effects would not be felt for several years.
Valentine Rugwabiza, Deputy Director-General of the WTO stated that unless tangible progress is achieved in the next few weeks in Geneva in the areas of agricultural subsidies, agricultural tariffs and industrial tariffs, goverments will be in the position of “seriously contemplating the reality of failure of the round.”
Cristian Ossa, an adviser to the Financing for Development Office in DESA, says an obstacle to success is the political gain that developed countries enjoy in the short-term from keeping subsidies in place. However, in the long-term, “removing domestic forms of support such as subsidies would benefit taxpayers, and consumers, who would have access to agricultural goods with enhanced quality and lower cost.”
The success of the negotiations is within reach as long as all WTO members are engaged. “This is not mission impossible”, Ms. Rugwabiza concluded in her plenary address adding, “the real challenge is less technical than political.”
Additional information on financing for development, including the note by the Secretary-General on coherence, coordination and cooperation, and follow-up reports on the outcome of the International Conference on Financing for Development, is available at htpp://www.un.org/esa/ffd/.
Ms.Valentine Sendanyoye-Rugwabiza, Deputy Director-General of the World Trade Organization, addresses the Economic and Social Council along with representatives of the Bretton Woods Institutions and UNCTAD on 16 April. A webcast of the special high-level meeting is available online at http://webcast.un.org/ramgen/specialevents/se070416am.rm.
Close to 80 government ministers gather in New York to explore policy measures on energy, climate change, air pollution and industrial development
Nearly five years have elapsed since the World Summit on Sustainable Development in Johannesburg and fifteen since the United Nations Conference on Environment and Development in Rio de Janeiro. This year, at its fifteenth session from 30 April to 11 May, the Commission on Sustainable Development will take up policy options for a cluster of four closely-interrelated issues that have emerged from these two summits: energy for sustainable development, industrial development, air pollution/atmosphere, and climate change and which were reviewed in depth by the Commission at its fourteenth session last year.
At the heart of this year’s proceedings is the Chairman’s draft negotiating text which came out of the Intergovernmental Preparatory Committee in March of this year and will serve as a starting point from which Member States can, through their negotiations, come together on an outcome document with specific policy options. The crucial issues at stake in these four themes affect the various groups of countries differently and the central task of the negotiation process will be arriving at a consensus outcome. According to JoAnne DiSano, Director of the Division for Sustainable Development, “A key challenge will be for governments to adopt policy decisions that will have an impact on implementation on the ground.”
At stake in the negotiations in the area of energy for sustainable development are the details of broad policy recommendations proposed in the Chairman’s text on such matters as access to energy, diversifying energy sources, energy services for the poor and removing environmentally harmful market-distorting subsidies. Kui-nang Mak, Chief of the Division’s Energy Branch, points out that ''Developing countries now have the extra burden of adapting to the adverse impacts of climate change while at the same time trying hard to lift their population from abject poverty through easier access to modern energy services."
Policy options for consideration under industrial development include the right to national industrial development strategies, enabling industrial development and diversification, enhancing the industrial skill base, and enhancing corporate environmental and social responsibility and accountability.
The policy options for air pollution and atmosphere cover the reduction of indoor air pollution, switching from traditional biomass to cleaner fuels, air quality standards for emissions from industry and transport, supporting the Marrakesh consultation process on sustainable production and consumption, expanding the use of cleaner fuels, vehicles and technologies, monitoring air pollution and human health, and assessing atmospheric pollution, and regulation to mitigate air pollution.
On climate change, policy measures include enhancing technology cooperation and information-sharing on climate change, enhancing carbon sinks through land-use management, afforestation and reforestation, integrating climate policies and supporting early warning, risk management, and disaster reduction, particularly for small-island developing states and least developing countries.
The negotiating text also calls for an integrated approach to the four themes, addressing in a balanced way the social, economic and environmental pillars of sustainable development and the mainstreaming of cross-cutting issues into policy approaches, programmes and development cooperation. Cross-cutting issues include greater access to sources of finance for developing countries, incentives for technology transfer, increased investment in research for cleaner energy and industrial technologies, and both enabling private sector investment as well as enhancing corporate environmental and social responsibility and accountability, increased education on and public awareness of sustainable development, as well as mainstreaming gender in all areas of sustainable development.
While there will be no formal five-year review of the Johannesburg, the current negotiations are an opportunity for member states and major groups to interpret the policy matters in this cluster of four related issues in the broader context of the Johannesburg Plan of Implementation and Agenda 21, the world’s long-range road maps for sustainable development. After all, the issues of energy for sustainable development, industrial development, air pollution and atmosphere, and climate change are a microcosm of the universe of Johannesburg Plan of Implementation and Agenda 21, which touches on virtually every aspect of those landmark documents.
For more information:http://www.un.org/esa/sustdev/csd/policy.htm
At the suggestion of the United Kingdom, the Security Council held an open debate on the relationship between energy, security and climate at its 5663rd meeting held on 17 April. A recording of the discussion is available online at http://webcast.un.org/ramgen/sc/sc070417pm.rm
H.E. Abdullah bin Hamad Al-Attiyah, Minister of Energy and Industry of Qatar and Chairman of the UN Commission on Sustainable Development's 15th session, and Joanne DiSano, Director of the DESA Division for Sustainable Development, brief journalists on the issues at the opening of the session on 30 April.