WTO Ministerial Conference 13-18 December 2005 - Hong
focus by the United Nations Office of the High Representative
for Least Developed Countries, Landlocked Developing
Countries and Small Island Developing States
Agreement Reached on Incremental Advances in WTO Negotiations
By Bruce Odessey
Washington File Staff Writer
Washington - Trade ministers meeting in
Hong Kong have accepted an agreement that incrementally advances
long-stalled World Trade Organization (WTO) negotiations but
leaves most politically difficult decisions for 2006.
Ministers approved December 18 a final declaration aimed at
giving direction for concluding the negotiations, formally called
the Doha Development Agenda, by the end of 2006.
"After a needed rest, we need to immediately focus our
energy and commitment on advancing the work that has begun here
in Hong Kong," U.S. Trade Representative Rob Portman said
at a closing press conference just after midnight December 19.
"This conference made it clear that there is a consensus
among countries rich and poor, North and South, large and small,
that more open trade is the road to more prosperity," Portman
said. "This is an important consensus because there are
tough decisions to be made."
By all accounts the December 13-18 Hong Kong meeting did not
achieve the kind of breakthrough the United States had considered
possible months earlier but did produce some results, most of
them conditioned on successful conclusion of the Doha negotiations
with a comprehensive trade agreement.
AGRICULTURAL EXPORT SUBSIDIES AND COTTON
The final declaration requires elimination of agricultural export
subsidies by 2013, a date acceptable to the European Union (EU),
which accounts for about 90 percent of such spending. The United
States and developing countries had pressed for a 2010 deadline.
"I was willing on behalf of the U.S. to move forward with
the date of 2013 because I thought it was important for us to
make progress," Portman said.
On an issue especially important to West Africa, the declaration
requires elimination of export subsidies on cotton in 2006.
The U.S. Congress has been expected to repeal U.S. cotton export
subsidies already, possibly within days, in order to comply
with an adverse WTO dispute-settlement panel ruling.
The declaration would provide for duty-free, quota-free access
to cotton from the poorest least-developed countries, but only
once implementation starts on any final agreement reached in
the Doha negotiations.
It states as an objective that any negotiated cuts in domestic
support spending for cotton farmers in countries that have such
programs would have to go deeper and be implemented faster than
any other domestic agricultural subsidy cuts.
The U.S. delegation worked intensively with negotiators from
Burkina Faso, Benin, Mali, Chad and Senegal, countries that
had threatened to block any Doha agreement without satisfactory
resolution of the cotton issue.
"We all want to reduce subsidies and eventually eliminate
subsides" in agricultural goods, Portman said. "That's
our proposal, and the only question was whether we'd do it in
the context of the agriculture negotiations or pull cotton out
separately, and our view was the most effective way to get it
done is to keep it with the rest of agriculture."
DUTY-FREE, QUOTA-FREE MARKET ACCESS
The declaration requires the provision of duty-free and quota-free
market access for most products from the 32 least-developed
countries "by 2008 or no later than the start of the implementation
period" of any negotiated agreement.
It requires such access for at least 97 percent of products
as defined by the tariff schedule. The United States had pressed
for exceptions to duty-free, quota-free for specific products
that already trade competitively on the global market.
Portman said at the press conference the United States has not
decided on what products it might exclude from duty-free, quota-free
treatment. He did suggest sugar was one possibility. Earlier
in the week he suggested other possible exclusions, including
certain competitive textile products from Bangladesh and Cambodia.
The Doha negotiations have languished almost since they were
launched in 2001, with an impasse over politically difficult
agriculture issues blocking most other progress.
They are scheduled to conclude by the end of 2006, a deadline
of sorts for the United States, which has trade negotiating
authority from Congress only until July 2007.
WTO members had agreed in a July 2004 framework for negotiating
on agriculture on eliminating export subsidies but left the
deadline to further negotiation.
In parallel with export subsidy elimination, the declaration
also requires negotiated agreement by April 2006 on disciplines
for agricultural export credits and credit guarantees; on monopoly
state trading enterprises such as grain marketing boards in
Canada, Australia and New Zealand; and on food aid.
The declaration's language on food aid says any WTO-negotiated
rules would not prevent food from going to hungry people in
emergencies but would prevent displacement of commercial sales
by donations of excess commodities. The EU had been pressing
to restrict food aid to cash only, a position vigorously resisted
by the United States.
At a late December 18 meeting with other delegations, Portman
said the WTO should not limit delivery of food aid only to emergencies.
"We should be doing everything possible to promote the
most flexible flow of food to where it is needed," Portman
said. What is allowed as legitimate donations of food "must
be expanded to cover both emergencies and the needs of the most
vulnerable. Food aid can be the difference between life and
death for starving people."
DOMESTIC SUPPORT PAYMENTS AND TARIFFS
Even with agreement on export subsidies elimination, much more
difficult negotiations remain on the other major groups of agricultural
issues concerning domestic support payments to farmers and tariffs.
In October the United States had submitted a proposal for drastically
reducing agricultural tariffs and the most trade-distorting
domestic support. This attempt to rally support for robust results
at the Hong Kong meeting achieved little, as the EU subsequently
made a counter-proposal that analyses showed would produce little
or no real additional market access.
The declaration indicates little progress on the other major
agricultural issues, tariffs and domestic support. On tariffs,
it formally adopts existing working language setting four bands,
from highest to lowest, but sets no level of ambition -- or
target -- for cuts. The United States had pressed for deep cuts,
deepest at the highest level.
The declaration has no specific language on limiting the number
of sensitive products excluded from tariff cuts. The United
States had pressed for a limit of 1 percent of products, as
defined by the tariff schedule; the EU had sought 8 percent,
about 160 products.
On trade-distorting domestic support, the declaration adopts
some new language setting three bands for cuts but no specific
level of ambition. The sharpest cuts would have to be made in
the highest band, concerning the EU, the WTO member currently
allowed to spend the most money on domestic support, about 3-1/2
times the allowed U.S. level.
The United States and Japan, in the second band, would have
to make somewhat smaller cuts. Other countries, in the third
band, would have to make even smaller cuts.
In language worked out on EU demand, the declaration requires
that tariff cuts in industrial goods achieve "a comparably
high level of ambition" as agricultural tariff cuts.
The declaration indicates little progress on industrial tariffs.
It does set an April 30 deadline for establishing modalities
-- how far and how fast to open markets -- and a July 31 deadline
for countries to submit offers.
It adopts what is called a Swiss formula for the industrial
tariff cuts, requiring the sharpest cuts for the highest tariffs.
The United States had pressed more specifically for a Swiss
formula that had two coefficients, a higher one requiring deeper
cuts for the developed countries and a lower one for developing
countries. The declaration specifies no number of coefficients.
The declaration sets deadlines for the services negotiations,
requiring countries to make offers to open their markets for
financial services, telecommunications, express delivery and
other services by July 31, 2006. It requires countries to submit
their final complete list of proposed commitments on services
by October 31.
It also emphasizes the need to push that part of the Doha negotiations
for prohibiting fisheries subsidies that contribute to overcapacity