| |
|
|
| |
|
         
|
Fact Files World Trade Organization
Contents Preface
1.
Profile: World Trade Organization Preface The world Trade Organization (WTO) born a decade earlier on 1st January 1995 is an international body and is a step towards globalization. It aims at promoting free trade at a global level by abolishing tariffs and other barriers in the way of liberalizing trade. It was the outcome of negotiations in ministerial meetings that took place between 1986-94 known as the Uruguay Round. The WTO agreements reached during this period are also called the “Final Act of the 1986-1994 Uruguay Round of trade negotiations.” Of these, Marrakesh Agreement 1994 establishing the WTO is included in the Factfile (Chapter 2). In November 2001 WTO members meeting in Doha, Qatar, adopted a “Ministerial Declaration” (Chapter 6 of the Factfile). It provided “the mandate for negotiations” on a number of subjects including opening markets to agricultural and manufactured goods and implementation of the agreements. The negotiations collapsed at the WTO ministers’ meeting at Cancun in September 2003. There was a damaging rift between rich and poor countries, which “accused the rich nations of protecting their farmers through subsidies, and then dumping their goods on poor countries at knockdown prices, undermining local farmers.” In July 2004, the WTO General Council in Geneva adopted a compromise draft known as “July Package” (Chapter 9 of the Factfile). Still negotiations lie ahead on the July framework. The success of the WTO would largely depend if its regulations ensure justice and fair play to developing countries. For instance, as far as agricultural negotiations, the developed nations must focus on the interests of the poor countries and concentrate on improving the condition of developed and least-developed countries (LDCs) “both in terms of market access and technical assistance”. The SAARC countries have been cooperating with each other at WTO conferences in the past. During the last commerce ministers conference in Islamabad on 22-23 November 2004 they have emphasized the need for a common position on the issues of mutual concern at meetings of the WTO. The WTO regime comes into effect from 1st January 2005. In a world free of quotas on textiles and clothing exports, Pakistan has to make a serious effort to improve the quality of its goods to compete in the open market. The advice of Mr. Martin Khor, Director Third World Network to developing countries is worth quoting: …to get prepared with far-sightedness, develop expertise, involve civil society organizations, create enabling environment wherein people take interest in WTO matters, create a core team of officials who are experts on WTO matters, highlight issues through media, educate trade and industry about the changing world, produce goods and services of international quality, and to take positions on various issues in league with other like-minded countries.[1] Noor ul Haq
Islamabad [1] http://worldtradereview.com/webpage.asp?wID=104 retrieved on 20 January 2005.
The World Trade Organization (WTO) is an international body whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers. As such, it has become closely associated with globalisation. The WTO is the only international agency overseeing the rules of international trade. It administers and polices existing and new free trade agreements, settles trade disputes between governments and organises trade negotiations. WTO decisions are absolute and every member must abide by its rulings. So, when the US and the European Union are in dispute over bananas or beef, it is the WTO, which acts as judge and jury. WTO members are empowered by the organization to enforce its decisions by imposing trade sanctions against countries that have breached the WTO rules.
Based in Geneva, the WTO was set up in 1995, replacing another international organization known as the General Agreement on Tariffs and Trade (GATT). GATT was formed in 1948 when 23 countries signed an agreement to reduce customs tariffs. The WTO has a much broader scope than GATT. Whereas GATT regulated trade in merchandise goods, the WTO also covers trade in services, such as telecommunications and banking. Membership of the WTO now stands at 147 countries. China formally joined the body in December 2001 after a 15-year battle. Russia wants admission, but must first convince the EU and US that it has reformed business practices. The highest body of the WTO is the Ministerial Conference. This meets every two years and, among other things, elects the organization's chief executive - the director-general - and oversees the work of the General Council. The General Council is in charge of the day-to-day running of the WTO and is made up of ambassadors from member states who also serve on various subsidiary and specialist committees.
· Founded: 1995 · Members: 148 states (as of December 2004) · Budget: 125 million US dollars · Staff: 601 · Key players: US, the EU, Japan
Leader: Director-General Supachai Panitchpakdi
Mr Supachai began his three-year term as head of the WTO in September 2002. He ran for the post in 1999, but the US opposed his candidacy and forced a compromise under which he and his predecessor, New Zealand's Mike Moore, shared the six-year term. A former Thai deputy prime minister and commerce minister, Mr Supachai is the first WTO director-general to come from a developing country. He is a respected economist, and played a key role in leading Thailand out of the Asian currency crisis. Though he is a long-time supporter of free trade, Mr Supachai contends that developing countries have not got a fair deal in previous trade talks. He has called for the benefits of free trade to be evenly spread, rather than concentrated in advanced economies. Expectations are high among developing nations that Mr Supachai will champion the poorer economies and give them a stronger voice in Geneva. Mr Supachai was born in 1946. He studied economics in the UK and in the Netherlands and was elected to the Thai parliament in 1986. His manner is described as thoughtful, cautious and diplomatic. He is known in his native country as Dr Sup.
The WTO has been the focal point of criticism from people who are worried about the effects of free trade and economic globalisation. Opposition to the WTO centres on four main points: · WTO is too powerful, in that it can in effect compel sovereign states to change laws and regulations by declaring these to be in violation of free trade rules. · WTO is run by the rich for the rich and does not give significant weight to the problems of developing countries. For example, rich countries have not opened their markets to agricultural products or textiles and clothing imports from poor countries. · WTO is indifferent to the impact of free trade on workers' rights, child labour, the environment and health. · WTO lacks democratic accountability, in that its hearings on trade disputes are closed to the public and the media. Supporters of the WTO argue that it is democratic, in that its rules were written by its member states, many of whom are democracies, who also select its leadership.
They also argue that, by expanding world trade, the WTO in fact helps to raise living standards around the world. <http://news.bbc.co.uk/1/hi/world/europe/country_profiles/2429503.stm>
Marrakesh Agreement Establishing the World Trade
|
|
Director-General |
Office of the Director-General:
Council and Trade Negotiations Committee Division: Information and Media Relations Division |
|
Deputy Director-General |
Administration and General Informatics Division
Language Services and
Trade and Environment
Trade Policies Review Division: |
|
Deputy Director-General |
Development Division:
Economic Research and
Training and Technical Technical Cooperation Audit Textiles Division |
|
Deputy Director-General |
Accessions Division:
Agriculture and Commodities
External Relations Division:
Intellectual Property Division: |
|
Deputy Director-General |
Legal Affairs Division:
Market Access Division:
Rules Division:
Trade and Finance and Trade Facilitation Division:
Trade in Services: |
<http://www.wto.org/english/thewto_e/whatis_e/tif_e/org4_e.htm>
Doha WTO Ministerial 2001: Ministerial Declaration
Ministerial Declaration
Adopted on 14 November 2001
1. The multilateral trading system embodied in the World Trade Organization has contributed significantly to economic growth, development and employment throughout the past fifty years. We are determined, particularly in the light of the global economic slowdown, to maintain the process of reform and liberalization of trade policies, thus ensuring that the system plays its full part in promoting recovery, growth and development. We therefore strongly reaffirm the principles and objectives set out in the Marrakesh Agreement Establishing the World Trade Organization, and pledge to reject the use of protectionism.
2. International trade can play a major role in the promotion of economic development and the alleviation of poverty. We recognize the need for all our peoples to benefit from the increased opportunities and welfare gains that the multilateral trading system generates. The majority of WTO members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration. Recalling the Preamble to the Marrakesh Agreement, we shall continue to make positive efforts designed 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. In this context, enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building programmes have important roles to play.
3. We recognize the particular vulnerability of the least-developed countries and the special structural difficulties they face in the global economy. We are committed to addressing the marginalization of least-developed countries in international trade and to improving their effective participation in the multilateral trading system. We recall the commitments made by ministers at our meetings in Marrakesh, Singapore and Geneva, and by the international community at the Third UN Conference on Least-Developed Countries in Brussels, to help least-developed countries secure beneficial and meaningful integration into the multilateral trading system and the global economy. We are determined that the WTO will play its part in building effectively on these commitments under the Work Programme we are establishing.
4. We stress our commitment to the WTO as the unique forum for global trade rule making and liberalization, while also recognizing that regional trade agreements can play an important role in promoting the liberalization and expansion of trade and in fostering development.
5. We are aware that the challenges members face in a rapidly changing international environment cannot be addressed through measures taken in the trade field alone. We shall continue to work with the Bretton Woods institutions for greater coherence in global economic policy-making.
6. We strongly reaffirm our commitment to the objective of sustainable development, as stated in the Preamble to the Marrakesh Agreement. We are convinced that the aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, and acting for the protection of the environment and the promotion of sustainable development can and must be mutually supportive. We take note of the efforts by members to conduct national environmental assessments of trade policies on a voluntary basis. We recognize that under WTO rules no country should be prevented from taking measures for the protection of human, animal or plant life or health, or of the environment at the levels it considers appropriate, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, and are otherwise in accordance with the provisions of the WTO Agreements. We welcome the WTO´s continued cooperation with UNEP and other inter-governmental environmental organizations. We encourage efforts to promote cooperation between the WTO and relevant international environmental and developmental organizations, especially in the lead-up to the World Summit on Sustainable Development to be held in Johannesburg, South Africa, in September 2002.
7. We reaffirm the right of members under the General Agreement on Trade in Services to regulate, and to introduce new regulations on, the supply of services.
8. We reaffirm our declaration made at the Singapore Ministerial Conference regarding internationally recognized core labour standards. We take note of work under way in the International Labour Organization (ILO) on the social dimension of globalisation.
9. We note with particular satisfaction that this conference has completed the WTO accession procedures for China and Chinese Taipei. We also welcome the accession as new members, since our last session, of Albania, Croatia, Georgia, Jordan, Lithuania, Moldova and Oman, and note the extensive market-access commitments already made by these countries on accession. These accessions will greatly strengthen the multilateral trading system, as will those of the 28 countries now negotiating their accession. We therefore attach great importance to concluding accession proceedings as quickly as possible. In particular, we are committed to accelerating the accession of least-developed countries.
10. Recognizing the challenges posed by an expanding WTO membership, we confirm our collective responsibility to ensure internal transparency and the effective participation of all members. While emphasizing the intergovernmental character of the organization, we are committed to making the WTO's operations more transparent, including through more effective and prompt dissemination of information, and to improve dialogue with the public. We shall therefore at the national and multilateral levels continue to promote a better public understanding of the WTO and to communicate the benefits of a liberal, rules-based multilateral trading system.
11. In view of these considerations, we hereby agree to undertake the broad and balanced Work Programme set out below. This incorporates both an expanded negotiating agenda and other important decisions and activities necessary to address the challenges facing the multilateral trading system.
WORK PROGRAMME
Implementation-related Issues and Concerns
12. We attach the utmost importance to the implementation-related issues and concerns raised by members and are determined to find appropriate solutions to them. In this connection, and having regard to the General Council Decisions of 3 May and 15 December 2000, we further adopt the Decision on Implementation-Related Issues and Concerns in document WT/MIN (01)/17 to address a number of implementation problems faced by members. We agree that negotiations on outstanding implementation issues shall be an integral part of the Work Programme we are establishing, and that agreements reached at an early stage in these negotiations shall be treated in accordance with the provisions of paragraph 47 below. In this regard, we shall proceed as follows: (a) where we provide a specific negotiating mandate in this declaration, the relevant implementation issues shall be addressed under that mandate; (b) the other outstanding implementation issues shall be addressed as a matter of priority by the relevant WTO bodies, which shall report to the Trade Negotiations Committee, established under paragraph 46 below, by the end of 2002 for appropriate action.
Agriculture
13. We recognize the work already undertaken in the negotiations initiated in early 2000 under Article 20 of the Agreement on Agriculture, including the large number of negotiating proposals submitted on behalf of a total of 121 members. We recall the long-term objective referred to in the Agreement to establish a fair and market-oriented trading system through a programme of fundamental reform encompassing strengthened rules and specific commitments on support and protection in order to correct and prevent restrictions and distortions in world agricultural markets. We reconfirm our commitment to this programme. Building on the work carried out to date and without prejudging the outcome of the negotiations we commit ourselves to comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support. We agree that special and differential treatment for developing countries shall be an integral part of all elements of the negotiations and shall be embodied in the schedules of concessions and commitments and as appropriate in the rules and disciplines to be negotiated, so as to be operationally effective and to enable developing countries to effectively take account of their development needs, including food security and rural development. We take note of the non-trade concerns reflected in the negotiating proposals submitted by Members and confirm that non-trade concerns will be taken into account in the negotiations as provided for in the Agreement on Agriculture.
14. Modalities for the further commitments, including provisions for special and differential treatment, shall be established no later than 31 March 2003. Participants shall submit their comprehensive draft Schedules based on these modalities no later than the date of the Fifth Session of the Ministerial Conference. The negotiations, including with respect to rules and disciplines and related legal texts, shall be concluded as part and at the date of conclusion of the negotiating agenda as a whole.
Services
15. The negotiations on trade in services shall be conducted with a view to promoting the economic growth of all trading partners and the development of developing and least-developed countries. We recognize the work already undertaken in the negotiations, initiated in January 2000 under Article XIX of the General Agreement on Trade in Services, and the large number of proposals submitted by members on a wide range of sectors and several horizontal issues, as well as on movement of natural persons. We reaffirm the Guidelines and Procedures for the Negotiations adopted by the Council for Trade in Services on 28 March 2001 as the basis for continuing the negotiations, with a view to achieving the objectives of the General Agreement on Trade in Services, as stipulated in the Preamble, Article IV and Article XIX of that Agreement. Participants shall submit initial requests for specific commitments by 30 June 2002 and initial offers by 31 March 2003.
Market Access for Non-agricultural Products
16. We agree to negotiations, which shall aim, by modalities to be agreed, to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. Product coverage shall be comprehensive and without a priori exclusions. The negotiations shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments, in accordance with the relevant provisions of Article XXVIII bis of GATT 1994 and the provisions cited in paragraph 50 below. To this end, the modalities to be agreed will include appropriate studies and capacity-building measures to assist least-developed countries to participate effectively in the negotiations.
Trade-related Aspects of Intellectual Property Rights
17. We stress the importance we attach to implementation and interpretation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) in a manner supportive of public health, by promoting both access to existing medicines and research and development into new medicines and, in this connection, are adopting a separate declaration.
18. With a view to completing the work started in the Council for Trade-Related Aspects of Intellectual Property Rights (Council for TRIPS) on the implementation of Article 23.4, we agree to negotiate the establishment of a multilateral system of notification and registration of geographical indications for wines and spirits by the Fifth Session of the Ministerial Conference. We note that issues related to the extension of the protection of geographical indications provided for in Article 23 to products other than wines and spirits will be addressed in the Council for TRIPS pursuant to paragraph 12 of this declaration.
19. We instruct the Council for TRIPS, in pursuing its work programme including under the review of Article 27.3(b), the review of the implementation of the TRIPS Agreement under Article 71.1 and the work foreseen pursuant to paragraph 12 of this declaration, to examine, inter alia, the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, and other relevant new developments raised by members pursuant to Article 71.1. In undertaking this work, the TRIPS Council shall be guided by the objectives and principles set out in Articles 7 and 8 of the TRIPS Agreement and shall take fully into account the development dimension.
Relationship between Trade and Investment
20. Recognizing the case for a multilateral framework to secure transparent, stable and predictable conditions for long-term cross-border investment, particularly foreign direct investment, that will contribute to the expansion of trade, and the need for enhanced technical assistance and capacity-building in this area as referred to in paragraph 21, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that session on modalities of negotiations.
21. We recognize the needs of developing and least-developed countries for enhanced support for technical assistance and capacity building in this area, including policy analysis and development so that they may better evaluate the implications of closer multilateral cooperation for their development policies and objectives, and human and institutional development. To this end, we shall work in cooperation with other relevant intergovernmental organizations, including UNCTAD, and through appropriate regional and bilateral channels, to provide strengthened and adequately resourced assistance to respond to these needs.
22. In the period until the Fifth Session, further work in the Working Group on the Relationship Between Trade and Investment will focus on the clarification of: scope and definition; transparency; non-discrimination; modalities for pre-establishment commitments based on a GATS-type, positive list approach; development provisions; exceptions and balance-of-payments safeguards; consultation and the settlement of disputes between members. Any framework should reflect in a balanced manner the interests of home and host countries, and take due account of the development policies and objectives of host governments as well as their right to regulate in the public interest. The special development, trade and financial needs of developing and least-developed countries should be taken into account as an integral part of any framework, which should enable members to undertake obligations and commitments commensurate with their individual needs and circumstances. Due regard should be paid to other relevant WTO provisions. Account should be taken, as appropriate, of existing bilateral and regional arrangements on investment.
Interaction between Trade and Competition Policy
23. Recognizing the case for a multilateral framework to enhance the contribution of competition policy to international trade and development, and the need for enhanced technical assistance and capacity-building in this area as referred to in paragraph 24, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that session on modalities of negotiations.
24. We recognize the needs of developing and least-developed countries for enhanced support for technical assistance and capacity building in this area, including policy analysis and development so that they may better evaluate the implications of closer multilateral cooperation for their development policies and objectives, and human and institutional development. To this end, we shall work in cooperation with other relevant intergovernmental organizations, including UNCTAD, and through appropriate regional and bilateral channels, to provide strengthened and adequately resourced assistance to respond to these needs.
25. In the period until the Fifth Session, further work in the Working Group on the Interaction between Trade and Competition Policy will focus on the clarification of: core principles, including transparency, non-discrimination and procedural fairness, and provisions on hardcore cartels; modalities for voluntary cooperation; and support for progressive reinforcement of competition institutions in developing countries through capacity building. Full account shall be taken of the needs of developing and least-developed country participants and appropriate flexibility provided to address them.
Transparency in Government Procurement
26. Recognizing the case for a multilateral agreement on transparency in government procurement and the need for enhanced technical assistance and capacity building in this area, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that session on modalities of negotiations. These negotiations will build on the progress made in the Working Group on Transparency in Government Procurement by that time and take into account participants’ development priorities, especially those of least-developed country participants. Negotiations shall be limited to the transparency aspects and therefore will not restrict the scope for countries to give preferences to domestic supplies and suppliers. We commit ourselves to ensuring adequate technical assistance and support for capacity building both during the negotiations and after their conclusion.
Trade Facilitation
27. Recognizing the case for further expediting the movement, release and clearance of goods, including goods in transit, and the need for enhanced technical assistance and capacity building in this area, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision to be taken, by explicit consensus, at that session on modalities of negotiations. In the period until the Fifth Session, the Council for Trade in Goods shall review and as appropriate, clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 and identify the trade facilitation needs and priorities of members, in particular developing and least-developed countries. We commit ourselves to ensuring adequate technical assistance and support for capacity building in this area.
WTO Rules
28. In the light of experience and of the increasing application of these instruments by members, we agree to negotiations aimed at clarifying and improving disciplines under the Agreements on Implementation of Article VI of the GATT 1994 and on Subsidies and Countervailing Measures, while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives, and taking into account the needs of developing and least-developed participants. In the initial phase of the negotiations, participants will indicate the provisions, including disciplines on trade distorting practices, that they seek to clarify and improve in the subsequent phase. In the context of these negotiations, participants shall also aim to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries. We note that fisheries subsidies are also referred to in paragraph 31.
29. We also agree to negotiations aimed at clarifying and improving disciplines and procedures under the existing WTO provisions applying to regional trade agreements. The negotiations shall take into account the developmental aspects of regional trade agreements.
Dispute Settlement Understanding
30. We agree to negotiations on improvements and clarifications of the Dispute Settlement Understanding. The negotiations should be based on the work done thus far as well as any additional proposals by members, and aim to agree on improvements and clarifications not later than May 2003, at which time we will take steps to ensure that the results enter into force as soon as possible thereafter.
Trade and Environment
31. With a view to enhancing the mutual supportiveness of trade and environment, we agree to negotiations, without prejudging their outcome, on:
(i) the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs). The negotiations shall be limited in scope to the applicability of such existing WTO rules as among parties to the MEA in question. The negotiations shall not prejudice the WTO rights of any Member that is not a party to the MEA in question;
(ii) procedures for regular information exchange between MEA Secretariats and the relevant WTO committees, and the criteria for the granting of observer status;
(iii) the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services.
We note that fisheries subsidies form part of the negotiations provided for in paragraph 28.
32. We instruct the Committee on Trade and Environment, in pursuing work on all items on its agenda within its current terms of reference, to give particular attention to:
(i) the effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them, and those situations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development;
(ii) the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights; and
(iii) labelling requirements for environmental purposes.
Work on these issues should include the identification of any need to clarify relevant WTO rules. The Committee shall report to the Fifth Session of the Ministerial Conference, and make recommendations, where appropriate, with respect to future action, including the desirability of negotiations. The outcome of this work as well as the negotiations carried out under paragraph 31(i) and (ii) shall be compatible with the open and non-discriminatory nature of the multilateral trading system, shall not add to or diminish the rights and obligations of members under existing WTO agreements, in particular the Agreement on the Application of Sanitary and Phytosanitary Measures, nor alter the balance of these rights and obligations, and will take into account the needs of developing and least-developed countries.
33. We recognize the importance of technical assistance and capacity building in the field of trade and environment to developing countries, in particular the least-developed among them. We also encourage that expertise and experience be shared with members wishing to perform environmental reviews at the national level. A report shall be prepared on these activities for the Fifth Session.
Electronic Commerce
34. We take note of the work which has been done in the General Council and other relevant bodies since the Ministerial Declaration of 20 May 1998 and agree to continue the Work Programme on Electronic Commerce. The work to date demonstrates that electronic commerce creates new challenges and opportunities for trade for members at all stages of development, and we recognize the importance of creating and maintaining an environment which is favourable to the future development of electronic commerce. We instruct the General Council to consider the most appropriate institutional arrangements for handling the Work Programme, and to report on further progress to the Fifth Session of the Ministerial Conference. We declare that members will maintain their current practice of not imposing customs duties on electronic transmissions until the Fifth Session.
Small Economies
35. We agree to a work programme, under the auspices of the General Council, to examine issues relating to the trade of small economies. The objective of this work is to frame responses to the trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system, and not to create a sub-category of WTO Members. The General Council shall review the work programme and make recommendations for action to the Fifth Session of the Ministerial Conference.
Trade, Debt and Finance
36. We agree to an examination, in a Working Group under the auspices of the General Council, of the relationship between trade, debt and finance, and of any possible recommendations on steps that might be taken within the mandate and competence of the WTO to enhance the capacity of the multilateral trading system to contribute to a durable solution to the problem of external indebtedness of developing and least-developed countries, and to strengthen the coherence of international trade and financial policies, with a view to safeguarding the multilateral trading system from the effects of financial and monetary instability. The General Council shall report to the Fifth Session of the Ministerial Conference on progress in the examination.
Trade and Transfer of Technology
37. We agree to an examination, in a Working Group under the auspices of the General Council, of the relationship between trade and transfer of technology, and of any possible recommendations on steps that might be taken within the mandate of the WTO to increase flows of technology to developing countries. The General Council shall report to the Fifth Session of the Ministerial Conference on progress in the examination.
Technical Cooperation and Capacity Building
38. We confirm that technical cooperation and capacity building are core elements of the development dimension of the multilateral trading system, and we welcome and endorse the New Strategy for WTO Technical Cooperation for Capacity Building, Growth and Integration. We instruct the Secretariat, in coordination with other relevant agencies, to support domestic efforts for mainstreaming trade into national plans for economic development and strategies for poverty reduction. The delivery of WTO technical assistance shall be designed to assist developing and least-developed countries and low-income countries in transition to adjust to WTO rules and disciplines, implement obligations and exercise the rights of membership, including drawing on the benefits of an open, rules-based multilateral trading system. Priority shall also be accorded to small, vulnerable, and transition economies, as well as to members and observers without representation in Geneva. We reaffirm our support for the valuable work of the International Trade Centre, which should be enhanced.
39. We underscore the urgent necessity for the effective coordinated delivery of technical assistance with bilateral donors, in the OECD Development Assistance Committee and relevant international and regional intergovernmental institutions, within a coherent policy framework and timetable. In the coordinated delivery of technical assistance, we instruct the Director-General to consult with the relevant agencies, bilateral donors and beneficiaries, to identify ways of enhancing and rationalizing the Integrated Framework for Trade-Related Technical Assistance to Least-Developed Countries and the Joint Integrated Technical Assistance Programme (JITAP).
40. We agree that there is a need for technical assistance to benefit from secure and predictable funding. We therefore instruct the Committee on Budget, Finance and Administration to develop a plan for adoption by the General Council in December 2001 that will ensure long-term funding for WTO technical assistance at an overall level no lower than that of the current year and commensurate with the activities outlined above.
41. We have established firm commitments on technical cooperation and capacity building in various paragraphs in this Ministerial Declaration. We reaffirm these specific commitments contained in paragraphs 16, 21, 24, 26, 27, 33, 38-40, 42 and 43, and also reaffirm the understanding in paragraph 2 on the important role of sustainably financed technical assistance and capacity-building programmes. We instruct the Director-General to report to the Fifth Session of the Ministerial Conference, with an interim report to the General Council in December 2002 on the implementation and adequacy of these commitments in the identified paragraphs.
Least-developed Countries
42. We acknowledge the seriousness of the concerns expressed by the least-developed countries (LDCs) in the Zanzibar Declaration adopted by their ministers in July 2001. We recognize that the integration of the LDCs into the multilateral trading system requires meaningful market access, support for the diversification of their production and export base, and trade-related technical assistance and capacity building. We agree that the meaningful integration of LDCs into the trading system and the global economy will involve efforts by all WTO members. We commit ourselves to the objective of duty-free, quota-free market access for products originating from LDCs. In this regard, we welcome the significant market access improvements by WTO members in advance of the Third UN Conference on LDCs (LDC-III), in Brussels, May 2001. We further commit ourselves to consider additional measures for progressive improvements in market access for LDCs. Accession of LDCs remains a priority for the Membership. We agree to work to facilitate and accelerate negotiations with acceding LDCs. We instruct the Secretariat to reflect the priority we attach to LDCs’ accessions in the annual plans for technical assistance. We reaffirm the commitments we undertook at LDC-III, and agree that the WTO should take into account, in designing its work programme for LDCs, the trade-related elements of the Brussels Declaration and Programme of Action, consistent with the WTO’s mandate, adopted at LDC-III. We instruct the Sub-Committee for Least-Developed Countries to design such a work programme and to report on the agreed work programme to the General Council at its first meeting in 2002.
43. We endorse the Integrated Framework for Trade-Related Technical Assistance to Least-Developed Countries (IF) as a viable model for LDCs’ trade development. We urge development partners to significantly increase contributions to the IF Trust Fund and WTO extra-budgetary trust funds in favour of LDCs. We urge the core agencies, in coordination with development partners, to explore the enhancement of the IF with a view to addressing the supply-side constraints of LDCs and the extension of the model to all LDCs, following the review of the IF and the appraisal of the ongoing Pilot Scheme in selected LDCs. We request the Director-General, following coordination with heads of the other agencies, to provide an interim report to the General Council in December 2002 and a full report to the Fifth Session of the Ministerial Conference on all issues affecting LDCs.
Special and Differential Treatment
44. We reaffirm that provisions for special and differential treatment are an integral part of the WTO Agreements. We note the concerns expressed regarding their operation in addressing specific constraints faced by developing countries, particularly least-developed countries. In that connection, we also note that some members have proposed a Framework Agreement on Special and Differential Treatment (WT/GC/W/442). We therefore agree that all special and differential treatment provisions shall be reviewed with a view to strengthening them and making them more precise, effective and operational. In this connection, we endorse the work programme on special and differential treatment set out in the Decision on Implementation-Related Issues and Concerns.
Organization and Management of the Work Programme
45. The negotiations to be pursued under the terms of this declaration shall be concluded not later than 1 January 2005. The Fifth Session of the Ministerial Conference will take stock of progress in the negotiations, provide any necessary political guidance, and take decisions as necessary. When the results of the negotiations in all areas have been established, a Special Session of the Ministerial Conference will be held to take decisions regarding the adoption and implementation of those results.
46. The overall conduct of the negotiations shall be supervised by a Trade Negotiations Committee under the authority of the General Council. The Trade Negotiations Committee shall hold its first meeting not later than 31 January 2002. It shall establish appropriate negotiating mechanisms as required and supervise the progress of the negotiations.
47. With the exception of the improvements and clarifications of the Dispute Settlement Understanding, the conduct, conclusion and entry into force of the outcome of the negotiations shall be treated as parts of a single undertaking. However, agreements reached at an early stage may be implemented on a provisional or a definitive basis. Early agreements shall be taken into account in assessing the overall balance of the negotiations.
48. Negotiations shall be open to:
(i) all members of the WTO; and
(ii) States and separate customs territories currently in the process of accession and those that inform members, at a regular meeting of the General Council, of their intention to negotiate the terms of their membership and for whom an accession working party is established.
Decisions on the outcomes of the negotiations shall be taken only by WTO members.
49. The negotiations shall be conducted in a transparent manner among participants, in order to facilitate the effective participation of all. They shall be conducted with a view to ensuring benefits to all participants and to achieving an overall balance in the outcome of the negotiations.
50. The negotiations and the other aspects of the Work Programme shall take fully into account the principle of special and differential treatment for developing and least-developed countries embodied in: Part IV of the GATT 1994; the Decision of 28 November 1979 on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries; the Uruguay Round Decision on Measures in Favour of Least-Developed Countries; and all other relevant WTO provisions.
51. The Committee on Trade and Development and the Committee on Trade and Environment shall, within their respective mandates, each act as a forum to identify and debate developmental and environmental aspects of the negotiations, in order to help achieve the objective of having sustainable development appropriately reflected.
52. Those elements of the Work Programme which do not involve negotiations are also accorded a high priority. They shall be pursued under the overall supervision of the General Council, which shall report on progress to the Fifth Session of the Ministerial Conference.
Text of the Doha Ministerial Declaration, 20 November 2001
<http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm#services>
Mr. Martin Khor, Director Third World Network
(Mr. Martin Khor is the Director of Third World Network, a network of several NGOs in different parts of the developing world An economist trained in Cambridge University who has lectured in economics in the Science University of Malaysia, he is the author of several books and articles on trade, development and environment issues. He was formerly a Vice Chairman of the UN commission on Human Rights Expert Group and a consultant in several research studies under the United Nations.
He visited Pakistan during December 2002 and addressed a large gathering in Islamabad jointly organized by Consumer Network and Action Aid Islamabad. The World Trade Review interviewed Mr. Khor. The excerpts are published below).
Q: Why do you oppose the WTO?
A: We do need a multilateral trade system with rules, so that big countries will find it harder to bully weaker ones. But such a system must be based on fair rules that benefit the poorer countries. The WTO has the potential to be that multilateral system. But its rules are not fair for developing countries. Many agreements are damaging for the developing countries. If objectionable provisions of those agreements were corrected, there would not be reason for anybody to oppose them. Hence, our primary purpose is not to oppose the WTO per se or the need for a trading system, but that certain harmful aspects of such agreements are corrected, modified, or changed entirely.
Q: Which of the WTO agreements are harmful for the developing countries?
A: To my mind, the Agreement on Agriculture (AoA) and TRIPs are harmful for most of the developing countries. The AoA obliges developing countries to increase market access and phase out their subsidies yet developed countries have found a legal way to continue to block access to their markets and to expand their agriculture subsidies. The inflow of artificially cheap food imports now threatens farmers in developing countries and threatens food security. As a result, the number of people below poverty line is increasing in many developing countries. Of course not all of this increase is due to the unquestionably harmful effects of such agreements. However, it is also true that such agreements compound the problem and do not help the cause of alleviating poverty. Similarly, the TRIPS Agreement has caused an increase in the prices of medicines, which are rapidly becoming inaccessible for the common people. In my view, issues of poverty reduction and health improvements should take precedence over any issue raised by a pro-free trade position. TRIPS also facilitate bio piracy or the patenting by Western companies of biological resources and local knowledge of the developing countries.
Q: Why did developing countries accede to WTO membership if it was so damaging to them?
A: During negotiations in Uruguay Round, developing countries were largely unaware as to what were being negotiated. They were not prepared, as they did not have the capacity, or expertise, to understand the issues. Besides, they were misled by developed countries that perpetually painted a rosy picture of the post-WTO world, and successfully made the developing countries believe that the results of the Uruguay Round would bring enormous advantages to developing countries.
It is now very clear that developing countries were deceived, and agreed to become WTO members only because of their lack of a better understanding of the situation at hand. However, the developed countries cannot be solely held responsible for the ignorance of the developing countries, which is why it is imperative for the developing countries to rapidly get their act together if they are to survive within the changing world-economic system.
Q: What prevents developing countries from effectively participating in negotiations held under WTO?
A: The developing countries simply do not have the capacity to actively participate in the negotiations in their entirety. Lack of personnel, non-availability of technical information and data, and shortage of resources are some of the reasons. However there is now an improvement in their performance and many countries have knowledgeable experts and diplomats in the WTO. Unfortunately the decision-making system in the WTO is still dominated by the rich countries, which often put pressure on the developing countries and also manipulate meetings, especially Ministerial Conferences.
Q: It is generally felt that developed countries decide future programs, and that WTO ministerial meetings are convened primarily to get endorsement of such programs. How do you look at it?
A: This is largely true, unfortunately. The rich countries are very organized and usually act in concert, and are able to pressure most developing counties to toe their line, even if the decisions are against the developing countries' interests. Even when many developing countries take a joint position, the rich countries gang up (as at the Singapore and Doha Ministerial Meetings) and bully them into submission.
Q: What advice would you like to give to developing countries like Pakistan?
A: The advice I would like to give is simple in its suggestion, but requires much hard work and commitment for its implementation. That is to get prepared with far-sightedness, develop expertise, involve civil society organizations, create enabling environment wherein people take interest in WTO matters, create a core team of officials who are experts on WTO matters, highlight issues through media, educate trade and industry about the changing world, produce goods and services of international quality, and to take positions on various issues in league with other like-minded countries. Only in this way will Pakistan, and indeed all developing countries, be successful in meeting the challenges posed by WTO. Even then, the rich countries must cooperate in making the WTO an organization for all countries and not just a rich man's club.
Q: What role has your organization played in creating awareness about the WTO amongst developing countries?
A: We have established a network with other civil society organizations in different countries and work together by publishing literature, holding seminars and workshops, meeting with government officials, briefing media through press conferences, arranging lectures in educational and training institutions, and by helping developing countries in formulating positions on various issues. We hope that governments and other civil society organizations alike appreciate our efforts and we intend to continue our activities in these areas.
Q: How can developing countries make their voices heard in the WTO?
A: By building their capacity to understand the issues, be wary of the proposals and sweet talk put up by the major countries, prepare counter-proposals, and also come up with a longer-term vision of the system they want. They should also cooperate closely with one another and always have in mind the interests of their countries and people.
<http://worldtradereview.com/webpage.asp?wID=104>
Q&A: Why Did Trade Talks Collapse?
The World Trade Organization (WTO) meeting in Cancun, Mexico - aimed at liberalising trade between rich and poor countries - has ended without agreement. BBC News Online explains why no deal was reached, and how it will affect people North and South.
Why did the talks fail?
The talks failed because rich and poor countries could not reach agreement on two key issues.
The first and most contentious of these was agriculture.
Rich countries were accused of hypocrisy for urging poor countries to open their markets but not being prepared to open their own - or reduce the huge subsidies to their farmers.
In the end, the rich countries would not agree to the abolition of all export subsidies, which make their agricultural products cheaper on world markets.
There was also a great deal of opposition to European Union proposals for rules to govern investment by multinational companies in the developing world.
Many countries felt that they could not agree to this without losing control of their industries, and argued that the WTO was not the appropriate forum for such discussions.
Who is to blame?
Both sides have blamed each other for the failure of the talks.
The US trade representative in Cancun said poor countries would have to be prepared to compromise more if future trade talks were to make progress.
But developing countries blamed the EU, for trying to introduce a far too ambitious agenda on issues such as investment and competition.
In reality, it was the developing countries' ability to maintain a common bargaining position despite pressure from the rich, and despite differing interests on some issues, that proved decisive.
It showed that the developing nations now have real power in the WTO.
What happens next?
This was only an interim meeting in the Doha round of trade talks.
Now the negotiations return to the back rooms of Geneva, hopefully out of the headlines, where trade officials will make suggestions on the way forward.
But there are real doubts whether the ambitious deadline of concluding the Doha round by the end of next year can be met.
The Cancun setback makes it unlikely that a deal can be completed by 2005.
However, earlier trade rounds also suffered from delay - including the previous Uruguay round which lasted eight years.
It all depends on whether the shock of failure at Cancun will make both sides more willing to compromise at the next ministerial meeting, which will take place in Hong Kong in 2004.
Who will be affected by the failure?
Trade has been the engine of world economic growth over the past 50 years.
But in the past few years there has been a sharp slowdown.
A new trade deal would have boosted economic growth and confidence.
Developing countries will be the biggest loser if trade liberalisation fails, however.
The World Bank estimates that 144 million people would be lifted out of poverty if a deal had gone through in Cancun.
Citizens in rich countries would have gained from a deal involving agriculture through cheaper food prices.
However, developing countries are still on track to make gains in two areas.
Under an earlier agreement, rich countries have agreed to full opening up of textile and clothing markets by the end of 2004.
And in August, there was a deal that should make cheap medicines available to poor countries in the near future.
The WTO has agreed to finalise the deal on importing generic drugs to meet medical emergencies like HIV/Aids within the next six months.
BBC News, 15 September 2003
<http://news.bbc.co.uk/1/hi/business/3103782.stm>
Speeches: Director-General Supachai Panitchpakdi
|
Date |
Title |
|
9.12.04 |
Dr. Supachai pays tribute to textiles body at its final meeting |
|
2.12.04 |
Dr. Supachai urges China to ensure further Doha momentum |
|
4.10.04 |
Dr. Supachai: “we are back on track and moving forward” |
|
4.08.04 |
Supachai consults on possible emergency meeting for textiles and clothing
adjustment challenges |
|
15.06.04 |
Dr. Supachai calls on UNCTAD XI to deliver clear message in
support of the Doha Round |
|
11.06.04 |
Ten Years After Marrakesh: the WTO and Developing Countries |
|
28.05.04 |
Africa stands to gain from successful trade negotiations —
Dr. Supachai |
|
25.05.04 |
Dr. Supachai opens WTO public symposium |
|
4.05.04 |
Dr. Supachai underlines importance of Doha progress for LDCs |
|
27.04.04 |
Dr. Supachai lauds IMF's new policy |
|
25.03.04 |
Dr. Supachai opens WTO African workshop on cotton |
|
15.03.04 |
Dr. Supachai says small countries too have a responsibility
to strengthen the trading system |
|
26.02.04 |
Dr. Supachai says US must lead in Doha talks |
|
20.01.04 |
Dr. Supachai says Saudi accession an “imminent reality” |
|
10.11.03 |
Supachai urges China to help rebuild confidence in trade talks |
|
6.11.03 |
Supachai says DDA failure would be lost opportunity for developing
countries |
|
10.09.03 |
‘Show leadership at Cancún,’ Supachai tells African Union |
|
9.09.03 |
Poor countries need trade to escape poverty, Supachai tells Cancún forums |
|
15.07.03 |
Supachai: Doha talks can unlock Africa's huge economic
potential |
|
16.05.03 |
Dr. Supachai underlines need to conclude Doha talks successfully and on
time |
|
6.05.03 |
End of textile quotas to strengthen WTO, says Dr. Supachai |
|
1.05.03 |
Lead the way towards compromise, Supachai urges OECD ministers |
|
22.01.03 |
Dr. Supachai pledges WTO help in Arab trade reform efforts |
|
8.01.03 |
Dr. Supachai urges members to give a major push to the negotiations |
|
27.11.02 |
Supachai: Cancún success is vital not only for trade |
|
26.11.02 |
Supachai cites importance of agriculture liberalization to developing
countries |
|
4.11.02 |
Trade policies cannot work on their own, Supachai tells development
seminar |
|
9.10.02 |
DG Supachai: WTO on track to meeting Doha technical cooperation
commitments |
|
23.09.02 |
Supachai announces “four pillars” to help conclude the negotiations |
|
11.09.02 |
DDA offers unique opportunity for Arab countries to
diversify exports — DG Supachai |
|
4.09.02 |
DG Supachai underlines WTO's contribution to sustainable
development |
<http://www.wto.org/english/news_e/spsp_e/spsp_e.htm>
Text of the ‘July package’ — the General Council’s
Post-Cancún
Decision
The text of the General Council’s decision on the Doha Agenda work programme (the “July package”), agreed on 31 July 2004, containing frameworks and other agreements designed to focus the negotiations and raise them to a new level:
Draft General Council Decision of 31 July 2004
1. The General Council reaffirms the Ministerial Declarations and Decisions adopted at Doha and the full commitment of all Members to give effect to them. The Council emphasizes Members' resolve to complete the Doha Work Programme fully and to conclude successfully the negotiations launched at Doha. Taking into account the Ministerial Statement adopted at Cancún on 14 September 2003, and the statements by the Council Chairman and the Director-General at the Council meeting of 15-16 December 2003, the Council takes note of the report by the Chairman of the Trade Negotiations Committee (TNC) and agrees to take action as follows:
(a) Agriculture: the General Council adopts the framework set out in Annex A to this document.
(b) Cotton: the General Council reaffirms the importance of the Sectoral Initiative on Cotton and takes note of the parameters set out in Annex A within which the trade-related aspects of this issue will be pursued in the agriculture negotiations. The General Council also attaches importance to the development aspects of the Cotton Initiative and wishes to stress the complementarity between the trade and development aspects. The Council takes note of the recent Workshop on Cotton in Cotonou on 23-24 March 2004 organized by the WTO Secretariat, and other bilateral and multilateral efforts to make progress on the development assistance aspects and instructs the Secretariat to continue to work with the development community and to provide the Council with periodic reports on relevant developments.
Members should work on related issues of development multilaterally with the international financial institutions, continue their bilateral programmes, and all developed countries are urged to participate. In this regard, the General Council instructs the Director General to consult with the relevant international organizations, including the Bretton Woods Institutions, the Food and Agriculture Organization and the International Trade Centre to direct effectively existing programmes and any additional resources towards development of the economies where cotton has vital importance.
(c) Non-agricultural Market Access: the General Council adopts the framework set out in Annex B to this document.
(d) Development:
Principles: development concerns form an integral part of the Doha Ministerial Declaration. The General Council rededicates and recommits Members to fulfilling the development dimension of the Doha Development Agenda, which places the needs and interests of developing and least-developed countries at the heart of the Doha Work Programme. The Council reiterates the important role that enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity building programmes can play in the economic development of these countries.
Special and Differential Treatment: The General Council reaffirms that provisions for special and differential (S&D) treatment are an integral part of the WTO Agreements. The Council recalls Ministers' decision in Doha to review all S&D treatment provisions with a view to strengthening them and making them more precise, effective and operational. The Council recognizes the progress that has been made so far. The Council instructs the Committee on Trade and Development in Special Session to expeditiously complete the review of all the outstanding Agreement-specific proposals and report to the General Council, with clear recommendations for a decision, by July 2005. The Council further instructs the Committee, within the parameters of the Doha mandate, to address all other outstanding work, including on the cross-cutting issues, the monitoring mechanism and the incorporation of S&D treatment into the architecture of WTO rules, as referred to in TN/CTD/7 and report, as appropriate, to the General Council.
The Council also instructs all WTO bodies to which proposals in Category II have been referred to expeditiously complete the consideration of these proposals and report to the General Council, with clear recommendations for a decision, as soon as possible and no later than July 2005. In doing so these bodies will ensure that, as far as possible, their meetings do not overlap so as to enable full and effective participation of developing countries in these discussions.
Technical Assistance: the General Council recognizes the progress that has been made since the Doha Ministerial Conference in expanding Trade-Related Technical Assistance (TRTA) to developing countries and low-income countries in transition. In furthering this effort the Council affirms that such countries, and in particular least-developed countries, should be provided with enhanced TRTA and capacity building, to increase their effective participation in the negotiations, to facilitate their implementation of WTO rules, and to enable them to adjust and diversify their economies. In this context the Council welcomes and further encourages the improved coordination with other agencies, including under the Integrated Framework for TRTA for the LDCs (IF) and the Joint Integrated Technical Assistance Programme (JITAP).
Implementation: concerning implementation-related issues, the General Council reaffirms the mandates Ministers gave in paragraph 12 of the Doha Ministerial Declaration and the Doha Decision on Implementation-Related Issues and Concerns, and renews Members' determination to find appropriate solutions to outstanding issues. The Council instructs the Trade Negotiations Committee, negotiating bodies and other WTO bodies concerned to redouble their efforts to find appropriate solutions as a priority. Without prejudice to the positions of Members, the Council requests the Director-General to continue with his consultative process on all outstanding implementation issues under paragraph 12(b) of the Doha Ministerial Declaration, including on issues related to the extension of the protection of geographical indications provided for in Article 23 of the TRIPS Agreement to products other than wines and spirits, if need be by appointing Chairpersons of concerned WTO bodies as his Friends and/or by holding dedicated consultations. The Director-General shall report to the TNC and the General Council no later than May 2005. The Council shall review progress and take any appropriate action no later than July 2005.
Other Development Issues: in the ongoing market access negotiations, recognising the fundamental principles of the WTO and relevant provisions of GATT 1994, special attention shall be given to the specific trade and development related needs and concerns of developing countries, including capacity constraints. These particular concerns of developing countries, including relating to food security, rural development, livelihood, preferences, commodities and net food imports, as well as prior unilateral liberalisation, should be taken into consideration, as appropriate, in the course of the Agriculture and NAMA negotiations. The trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system, should also be addressed, without creating a sub-category of Members, as part of a work programme, as mandated in paragraph 35 of the Doha Ministerial Declaration.
Least-Developed Countries:
the General Council reaffirms the commitments made at Doha concerning
least-developed countries and renews its determination to fulfil these
commitments. Members will continue to take due account of the concerns of
least-developed countries in the negotiations. The Council confirms that
nothing in this Decision shall detract in any way from the special provisions
agreed by Members in respect of these countries.
(e) Services: the General Council takes note of the report to
the TNC by the Special Session of the Council for Trade in Services and
reaffirms Members' commitment to progress in this area of the negotiations in
line with the Doha mandate. The Council adopts the recommendations agreed by
the Special Session, set out in Annex C to this document, on the basis of
which further progress in the services negotiations will be pursued. Revised
offers should be tabled by May 2005.
(f) Other Negotiating Bodies:
Rules, Trade & Environment and TRIPS: the General Council takes note of the reports to the TNC by the Negotiating Group on Rules and by the Special Sessions of the Committee on Trade and Environment and the TRIPS Council. The Council reaffirms Members' commitment to progress in all of these areas of the negotiations in line with the Doha mandates.
Dispute Settlement: the General Council takes note of the report to the TNC by the Special Session of the Dispute Settlement Body and reaffirms Members' commitment to progress in this area of the negotiations in line with the Doha mandate. The Council adopts the TNC's recommendation that work in the Special Session should continue on the basis set out by the Chairman of that body in his report to the TNC.
(g) Trade Facilitation: taking note of the work done on trade facilitation by the Council for Trade in Goods under the mandate in paragraph 27 of the Doha Ministerial Declaration and the work carried out under the auspices of the General Council both prior to the Fifth Ministerial Conference and after its conclusion, the General Council decides by explicit consensus to commence negotiations on the basis of the modalities set out in Annex D to this document.
Relationship between Trade and Investment, Interaction between Trade and Competition Policy and Transparency in Government Procurement: the Council agrees that these issues, mentioned in the Doha Ministerial Declaration in paragraphs 20-22, 23-25 and 26 respectively, will not form part of the Work Programme set out in that Declaration and therefore no work towards negotiations on any of these issues will take place within the WTO during the Doha Round.
(h) Other Elements of the Work Programme: the General Council reaffirms the high priority Ministers at Doha gave to those elements of the Work Programme which do not involve negotiations. Noting that a number of these issues are of particular interest to developing-country Members, the Council emphasizes its commitment to fulfil the mandates given by Ministers in all these areas. To this end, the General Council and other relevant bodies shall report in line with their Doha mandates to the Sixth Session of the Ministerial Conference. The moratoria covered by paragraph 11.1 of the Doha Ministerial Decision on Implementation-related Issues and Concerns and paragraph 34 of the Doha Ministerial Declaration are extended up to the Sixth Ministerial Conference.
2. The General Council agrees that this Decision and its Annexes shall not be used in any dispute settlement proceeding under the DSU and shall not be used for interpreting the existing WTO Agreements.
3. The General Council calls on all Members to redouble their efforts towards the conclusion of a balanced overall outcome of the Doha Development Agenda in fulfilment of the commitments Ministers took at Doha. The Council agrees to continue the negotiations launched at Doha beyond the timeframe set out in paragraph 45 of the Doha Declaration, leading to the Sixth Session of the Ministerial Conference. Recalling its decision of 21 October 2003 to accept the generous offer of the Government of Hong Kong, China to host the Sixth Session, the Council further agrees that this Session will be held in December 2005.
Annex A
Framework for Establishing Modalities in Agriculture
1. The starting point for the current phase of
the agriculture negotiations has been the mandate set out in Paragraph 13 of
the Doha Ministerial Declaration. This in turn built on the long-term
objective of the Agreement on Agriculture to establish a fair and
market-oriented trading system through a programme of fundamental reform. The
elements below offer the additional precision required at this stage of the
negotiations and thus the basis for the negotiations of full modalities in the
next phase. The level of ambition set by the Doha mandate will continue to be
the basis for the negotiations on agriculture.
2. The final balance will be found only at the conclusion of
these subsequent negotiations and within the Single Undertaking. To achieve
this balance, the modalities to be developed will need to incorporate
operationally effective and meaningful provisions for special and differential
treatment for developing country Members. Agriculture is of critical
importance to the economic development of developing country Members and they
must be able to pursue agricultural policies that are supportive of their
development goals, poverty reduction strategies, food security and livelihood
concerns. Non-trade concerns, as referred to in Paragraph 13 of the Doha
Declaration, will be taken into account.
3. The reforms in all three pillars form an interconnected whole and must be approached in a balanced and equitable manner.
4. The General Council recognizes the importance of cotton for a certain number of countries and its vital importance for developing countries, especially LDCs. It will be addressed ambitiously, expeditiously, and specifically, within the agriculture negotiations. The provisions of this framework provide a basis for this approach, as does the sectoral initiative on cotton. The Special Session of the Committee on Agriculture shall ensure appropriate prioritization of the cotton issue independently from other sectoral initiatives. A subcommittee on cotton will meet periodically and report to the Special Session of the Committee on Agriculture to review progress. Work shall encompass all trade-distorting policies affecting the sector in all three pillars of market access, domestic support, and export competition, as specified in the Doha text and this Framework text.
5. Coherence between trade and development aspects of the cotton issue will be pursued as set out in paragraph 1.b of the text to which this Framework is annexed.
DOMESTIC SUPPORT
6. The Doha Ministerial Declaration calls for “substantial reductions in trade-distorting domestic support”. With a view to achieving these substantial reductions, the negotiations in this pillar will ensure the following:
· Special and differential treatment remains an integral component of domestic support. Modalities to be developed will include longer implementation periods and lower reduction coefficients for all types of trade-distorting domestic support and continued access to the provisions under Article 6.2.
· There will be a strong element of harmonisation in the reductions made by developed Members. Specifically, higher levels of permitted trade-distorting domestic support will be subject to deeper cuts.
· Each such Member will make a substantial reduction in the overall level of its trade-distorting support from bound levels.
· As well as this overall commitment, Final Bound Total AMS and permitted de minimis levels will be subject to substantial reductions and, in the case of the Blue Box, will be capped as specified in paragraph 15 in order to ensure results that are coherent with the long-term reform objective. Any clarification or development of rules and conditions to govern trade distorting support will take this into account.
Overall Reduction: A Tiered Formula
7. The overall base level of all trade-distorting domestic support, as measured by the Final Bound Total AMS plus permitted de minimis level and the level agreed in paragraph 8 below for Blue Box payments, will be reduced according to a tiered formula. Under this formula, Members having higher levels of trade-distorting domestic support will make greater overall reductions in order to achieve a harmonizing result. As the first instalment of the overall cut, in the first year and throughout the implementation period, the sum of all trade-distorting support will not exceed 80 per cent of the sum of Final Bound Total AMS plus permitted de minimis plus the Blue Box at the level determined in paragraph 15.
8. The following parameters will guide the further negotiation of this tiered formula:
· This commitment will apply as a minimum overall commitment. It will not be applied as a ceiling on reductions of overall trade-distorting domestic support, should the separate and complementary formulae to be developed for Total AMS, de minimis and Blue Box payments imply, when taken together, a deeper cut in overall trade-distorting domestic support for an individual Member.
· The base for measuring the Blue Box component will be the higher of existing Blue Box payments during a recent representative period to be agreed and the cap established in paragraph 15 below.
Final Bound Total AMS: A Tiered Formula
9. To achieve reductions with a harmonizing effect:
· Final Bound Total AMS will be reduced substantially, using a tiered approach.
· Members having higher Total AMS will make greater reductions.
· To prevent circumvention of the objective of the Agreement through transfers of unchanged domestic support between different support categories, product-specific AMSs will be capped at their respective average levels according to a methodology to be agreed.
· Substantial reductions in Final Bound Total AMS will result in reductions of some product-specific support.
10. Members may make greater than formula reductions in order to achieve the required level of cut in overall trade-distorting domestic support.
De Minimis
11. Reductions in de minimis will be negotiated taking into account the principle of special and differential treatment. Developing countries that allocate almost all de minimis support for subsistence and resource-poor farmers will be exempt.
12. Members may make greater than formula reductions in order to achieve the required level of cut in overall trade-distorting domestic support.
Blue Box
13. Members recognize the role of the Blue Box in promoting agricultural reforms. In this light, Article 6.5 will be reviewed so that Members may have recourse to the following measures:
· Direct payments under production-limiting programmes if:
Or
· Direct payments that do not require production if:
14.
The above criteria, along with
additional criteria will be negotiated. Any such criteria will ensure that
Blue Box payments are less trade-distorting than AMS measures, it being
understood that:
· Any new criteria would need to take account of the balance of WTO rights and obligations.
· Any new criteria to be agreed will not have the perverse effect of undoing ongoing reforms.
15. Blue Box support will not exceed 5% of a Member’s average total value of agricultural production during an historical period. The historical period will be established in the negotiations. This ceiling will apply to any actual or potential Blue Box user from the beginning of the implementation period. In cases where a Member has placed an exceptionally large percentage of its trade-distorting support in the Blue Box, some flexibility will be provided on a basis to be agreed to ensure that such a Member is not called upon to make a wholly disproportionate cut.
Green Box
16. Green Box criteria will be reviewed and clarified with a view to ensuring that Green Box measures have no, or at most minimal, trade-distorting effects or effects on production. Such a review and clarification will need to ensure that the basic concepts, principles and effectiveness of the Green Box remain and take due account of non-trade concerns. The improved obligations for monitoring and surveillance of all new disciplines foreshadowed in paragraph 48 below will be particularly important with respect to the Green Box.
EXPORT COMPETITION
17. The Doha Ministerial Declaration calls for “reduction of, with a view to phasing out, all forms of export subsidies”. As an outcome of the negotiations, Members agree to establish detailed modalities ensuring the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect by a credible end date.
End Point
18. The following will be eliminated by the end date to be agreed:
· Export subsidies as scheduled.
· Export credits; export credit guarantees or insurance programmes with repayment periods beyond 180 days.
· Terms and conditions relating to export credits, export credit guarantees or insurance programmes with repayment periods of 180 days and below which are not in accordance with disciplines to be agreed. These disciplines will cover, inter alia, payment of interest, minimum interest rates, minimum premium requirements, and other elements, which can constitute subsidies or otherwise distort trade.
· Trade distorting practices with respect to exporting STEs including eliminating export subsidies provided to or by them, government financing, and the underwriting of losses. The issue of the future use of monopoly powers will be subject to further negotiation.
· Provision of food aid that is not in conformity with operationally effective disciplines to be agreed. The objective of such disciplines will be to prevent commercial displacement. The role of international organizations as regards the provision of food aid by Members, including related humanitarian and developmental issues, will be addressed in the negotiations. The question of providing food aid exclusively in fully grant form will also be addressed in the negotiations.
19. Effective transparency provisions for paragraph 18 will be established. Such provisions, in accordance with standard WTO practice, will be consistent with commercial confidentiality considerations.
Implementation
20. Commitments and disciplines in paragraph 18 will be
implemented according to a schedule and modalities to be agreed. Commitments
will be implemented by annual instalments. Their phasing will take into
account the need for some coherence with internal reform steps of Members.
21. The negotiation of the elements in paragraph 18 and their
implementation will ensure equivalent and parallel commitments by Members.
Special and Differential Treatment
22. Developing country Members will benefit from
longer implementation periods for the phasing out of all forms of export
subsidies.
23. Developing countries will continue to benefit from special
and differential treatment under the provisions of Article 9.4 of the
Agreement on Agriculture for a reasonable period, to be negotiated, after the
phasing out of all forms of export subsidies and implementation of all
disciplines identified above are completed.
24. Members will ensure that the disciplines on
export credits, export credit guarantees or insurance programs to be agreed
will make appropriate provision for differential treatment in favour of
least-developed and net food-importing developing countries as provided for in
paragraph 4 of the Decision on Measures Concerning the Possible Negative
Effects of the Reform Programme on Least-Developed and Net Food-Importing
Developing Countries. Improved obligations for monitoring and surveillance of
all new disciplines as foreshadowed in paragraph 48 will be critically
important in this regard. Provisions to be agreed in this respect must not
undermine the commitments undertaken by Members under the obligations in
paragraph 18 above.
25. STEs in developing country Members which enjoy special
privileges to preserve domestic consumer price stability and to ensure food
security will receive special consideration for maintaining monopoly status.
Special Circumstances
26. In exceptional circumstances, which cannot be adequately covered by food aid, commercial export credits or preferential international financing facilities, ad hoc temporary financing arrangements relating to exports to developing countries may be agreed by Members. Such agreements must not have the effect of undermining commitments undertaken by Members in paragraph 18 above, and will be based on criteria and consultation procedures to be established.
MARKET ACCESS
27. The Doha Ministerial Declaration calls for “substantial improvements in market access”. Members also agreed that special and differential treatment for developing Members would be an integral part of all elements in the negotiations.
The Single Approach: A Tiered Formula
28. To ensure that a single approach for developed and
developing country Members meets all the objectives of the Doha mandate,
tariff reductions will be made through a tiered formula that takes into
account their different tariff structures.
29. To ensure that such a formula will lead to substantial trade
expansion, the following principles will guide its further negotiation:
· Tariff reductions will be made from bound rates. Substantial overall tariff reductions will be achieved as a final result from negotiations.
· Each Member (other than LDCs) will make a contribution. Operationally effective special and differential provisions for developing country Members will be an integral part of all elements.
· Progressivity in tariff reductions will be achieved through deeper cuts in higher tariffs with flexibilities for sensitive products. Substantial improvements in market access will be achieved for all products.
30. The number of bands, the thresholds for defining the bands and the type of tariff reduction in each band remain under negotiation. The role of a tariff cap in a tiered formula with distinct treatment for sensitive products will be further evaluated.
Sensitive Products
Selection
31. Without undermining the overall objective of the tiered
approach, Members may designate an appropriate number, to be negotiated, of
tariff lines to be treated as sensitive, taking account of existing
commitments for these products.
Treatment
32. The principle of ‘substantial improvement’ will apply to
each product.
33. ‘Substantial improvement’ will be achieved through
combinations of tariff quota commitments and tariff reductions applying to
each product. However, balance in this negotiation will be found only if the
final negotiated result also reflects the sensitivity of the product
concerned.
34. Some MFN-based tariff quota expansion will be required for all such products. A base for such an expansion will be established, taking account of coherent and equitable criteria to be developed in the negotiations. In order not to undermine the objective of the tiered approach, for all such products, MFN based tariff quota expansion will be provided under specific rules to be negotiated taking into account deviations from the tariff formula.
Other Elements
35. Other elements that will give the flexibility required to reach a final balanced result include reduction or elimination of in-quota tariff rates, and operationally effective improvements in tariff quota administration for existing tariff quotas so as to enable Members, and particularly developing country Members, to fully benefit from the market access opportunities under tariff rate quotas.
36. Tariff escalation will be addressed through a formula to be agreed.
37. The issue of tariff simplification remains under negotiation.
38. The question of the special agricultural safeguard (SSG) remains under negotiation.
Special and Differential Treatment
39. Having regard to their rural development, food security and/or livelihood security needs, special and differential treatment for developing countries will be an integral part of all elements of the negotiation, including the tariff reduction formula, the number and treatment of sensitive products, expansion of tariff rate quotas, and implementation period.
40. Proportionality will be achieved by requiring lesser tariff reduction commitments or tariff quota expansion commitments from developing country Members.
41. Developing country Members will have the
flexibility to designate an appropriate number of products as Special
Products, based on criteria of food security, livelihood security and rural
development needs. These products will be eligible for more flexible
treatment. The criteria and treatment of these products will be further
specified during the negotiation phase and will recognize the fundamental
importance of Special Products to developing countries.
42. A Special Safeguard Mechanism (SSM) will be established for
use by developing country Members.
43. Full implementation of the long-standing commitment to achieve the fullest liberalisation of trade in tropical agricultural products and for products of particular importance to the diversification of production from the growing of illicit narcotic crops is overdue and will be addressed effectively in the market access negotiations.
44. The importance of long-standing preferences is fully recognised. The issue of preference erosion will be addressed. For the further consideration in this regard, paragraph 16 and other relevant provisions of TN/AG/W/1/Rev.1 will be used as a reference.
LEAST- DEVELOPED COUNTRIES
45. Least-Developed Countries, which will have
full access to all special and differential treatment provisions above, are
not required to undertake reduction commitments. Developed Members, and
developing country Members in a position to do so, should provide duty-free
and quota-free market access for products originating from least-developed
countries.
46. Work on cotton under all the pillars will reflect the vital
importance of this sector to certain LDC Members and we will work to achieve
ambitious results expeditiously.
RECENTLY ACCEDED MEMBERS
47. The particular concerns of recently acceded Members will be effectively addressed through specific flexibility provisions.
MONITORING AND SURVEILLANCE
48. Article 18 of the Agreement on Agriculture will be amended with a view to enhancing monitoring so as to effectively ensure full transparency, including through timely and complete notifications with respect to the commitments in market access, domestic support and export competition. The particular concerns of developing countries in this regard will be addressed.
OTHER ISSUES
49. Issues of interest but not agreed: sectoral
initiatives, differential export taxes, GIs.
50. Disciplines on export prohibitions and restrictions in
Article 12.1 of the Agreement on Agriculture will be strengthened.
Annex B
Framework for Establishing Modalities in Market Access for
Non-Agricultural Products
1. This Framework contains the initial elements for future work on modalities by the Negotiating Group on Market Access. Additional negotiations are required to reach agreement on the specifics of some of these elements. These relate to the formula, the issues concerning the treatment of unbound tariffs in indent two of paragraph 5, the flexibilities for developing-country participants, the issue of participation in the sectorial tariff component and the preferences. In order to finalize the modalities, the Negotiating Group is instructed to address these issues expeditiously in a manner consistent with the mandate of paragraph 16 of the Doha Ministerial Declaration and the overall balance therein.
2. We reaffirm that negotiations on market access for non-agricultural products shall aim to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on products of export interest to developing countries. We also reaffirm the importance of special and differential treatment and less than full reciprocity in reduction commitments as integral parts of the modalities.
3. We acknowledge the substantial work undertaken by the Negotiating Group on Market Access and the progress towards achieving an agreement on negotiating modalities. We take note of the constructive dialogue on the Chair's Draft Elements of Modalities (TN/MA/W/35/Rev.1) and confirm our intention to use this document as a reference for the future work of the Negotiating Group. We instruct the Negotiating Group to continue its work, as mandated by paragraph 16 of the Doha Ministerial Declaration with its corresponding references to the relevant provisions of Article XXVIII bis of GATT 1994 and to the provisions cited in paragraph 50 of the Doha Ministerial Declaration, on the basis set out below.
4. We recognize that a formula approach is key
to reducing tariffs, and reducing or eliminating tariff peaks, high tariffs,
and tariff escalation. We agree that the Negotiating Group should continue its
work on a non-linear formula applied on a line-by-line basis which shall take
fully into account the special needs and interests of developing and
least-developed country participants, including through less than full
reciprocity in reduction commitments.
5. We further agree on the following elements regarding the
formula:
· product coverage shall be comprehensive without a priori exclusions;
· tariff reductions or elimination shall commence from the bound rates after full implementation of current concessions; however, for unbound tariff lines, the basis for commencing the tariff reductions shall be [two] times the MFN applied rate in the base year;
· the base year for MFN applied tariff rates shall be 2001 (applicable rates on 14 November);
· credit shall be given for autonomous liberalization by developing countries provided that the tariff lines were bound on an MFN basis in the WTO since the conclusion of the Uruguay Round;
· all non-ad valorem duties shall be converted to ad valorem equivalents on the basis of a methodology to be determined and bound in ad valorem terms;
· negotiations shall commence on the basis of the HS96 or HS2002 nomenclature, with the results of the negotiations to be finalized in HS2002 nomenclature;
· the reference period for import data shall be 1999-2001.
6. We furthermore agree that, as an exception, participants with a binding coverage of non-agricultural tariff lines of less than [35] percent would be exempt from making tariff reductions through the formula. Instead, we expect them to bind [100] percent of non-agricultural tariff lines at an average level that does not exceed the overall average of bound tariffs for all developing countries after full implementation of current concessions.
7. We recognize that a sectorial tariff
component, aiming at elimination or harmonization is another key element to
achieving the objectives of paragraph 16 of the Doha Ministerial Declaration
with regard to the reduction or elimination of tariffs, in particular on
products of export interest to developing countries. We recognize that
participation by all participants will be important to that effect. We
therefore instruct the Negotiating Group to pursue its discussions on such a
component, with a view to defining product coverage, participation, and
adequate provisions of flexibility for developing-country participants.
8. We agree that developing-country participants shall have
longer implementation periods for tariff reductions. In addition, they shall
be given the following flexibility:
a) applying less than formula cuts to up to [10] percent of the tariff lines provided that the cuts are no less than half the formula cuts and that these tariff lines do not exceed [10] percent of the total value of a Member's imports; or
b) keeping, as an exception, tariff lines unbound, or not applying formula cuts for up to [5] percent of tariff lines provided they do not exceed [5] percent of the total value of a Member's imports.
We furthermore agree that this flexibility could not be used to exclude entire HS Chapters.
9. We agree that least-developed country participants shall not be required to apply the formula nor participate in the sectorial approach, however, as part of their contribution to this round of negotiations, they are expected to substantially increase their level of binding commitments.
10. Furthermore, in recognition of the need to
enhance the integration of least-developed countries into the multilateral
trading system and support the diversification of their production and export
base, we call upon developed-country participants and other participants who
so decide, to grant on an autonomous basis duty-free and quota-free market
access for non-agricultural products originating from least-developed
countries by the year […].
11. We recognize that newly acceded Members shall have recourse
to special provisions for tariff reductions in order to take into account
their extensive market access commitments undertaken as part of their
accession and that staged tariff reductions are still being implemented in
many cases. We instruct the Negotiating Group to further elaborate on such
provisions.
12. We agree that pending agreement on core modalities for
tariffs, the possibilities of supplementary modalities such as zero-for-zero
sector elimination, sectorial harmonization, and request & offer, should be
kept open.
13. In addition, we ask developed-country participants and other
participants who so decide to consider the elimination of low duties.
14. We recognize that NTBs are an integral and equally important
part of these negotiations and instruct participants to intensify their work
on NTBs. In particular, we encourage all participants to make notifications on
NTBs by 31 October 2004 and to proceed with identification, examination,
categorization, and ultimately negotiations on NTBs. We take note that the
modalities for addressing NTBs in these negotiations could include
request/offer, horizontal, or vertical approaches; and should fully take into
account the principle of special and differential treatment for developing and
least-developed country participants.
15. We recognize that appropriate studies and
capacity building measures shall be an integral part of the modalities to be
agreed. We also recognize the work that has already been undertaken in these
areas and ask participants to continue to identify such issues to improve
participation in the negotiations.
16. We recognize the challenges that may be faced by
non-reciprocal preference beneficiary Members and those Members that are at
present highly dependent on tariff revenue as a result of these negotiations
on non-agricultural products. We instruct the Negotiating Group to take into
consideration, in the course of its work, the particular needs that may arise
for the Members concerned.
17. We furthermore encourage the Negotiating Group to work closely with the Committee on Trade and Environment in Special Session with a view to addressing the issue of non-agricultural environmental goods covered in paragraph 31 (iii) of the Doha Ministerial Declaration.
Annex C
Recommendations of the Special Session of the Council for Trade in Services
(a) Members who have not yet submitted their initial offers must do so as soon as possible.
(b) A date for the submission of a round of revised offers should be established as soon as feasible.
(c) With a view to providing effective market access to all Members and in order to ensure a substantive outcome, Members shall strive to ensure a high quality of offers, particularly in sectors and modes of supply of export interest to developing countries, with special attention to be given to least-developed countries.
(d) Members shall aim to achieve progressively higher levels of liberalization with no a priori exclusion of any service sector or mode of supply and shall give special attention to sectors and modes of supply of export interest to developing countries. Members note the interest of developing countries, as well as other Members, in Mode 4.
(e) Members must intensify their efforts to conclude the negotiations on rule-making under GATS Articles VI:4, X, XIII and XV in accordance with their respective mandates and deadlines.
(f) Targeted technical assistance should be provided with a view to enabling developing countries to participate effectively in the negotiations.
(g) For the purpose of the Sixth Ministerial meeting, the Special Session of the Council for Trade in Services shall review progress in these negotiations and provide a full report to the Trade Negotiations Committee, including possible recommendations.
Annex D
Modalities for Negotiations on Trade Facilitation
1. Negotiations shall aim to clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 with a view to further expediting the movement, release and clearance of goods, including goods in transit. Negotiations shall also aim at enhancing technical assistance and support for capacity building in this area. The negotiations shall further aim at provisions for effective cooperation between customs or any other appropriate authorities on trade facilitation and customs compliance issues.
2. The results of the negotiations shall take
fully into account the principle of special and differential treatment for
developing and least-developed countries. Members recognize that this
principle should extend beyond the granting of traditional transition periods
for implementing commitments. In particular, the extent and the timing of
entering into commitments shall be related to the implementation capacities of
developing and least-developed Members. It is further agreed that those
Members would not be obliged to undertake investments in infrastructure
projects beyond their means.
3. Least-developed country Members will only be required to
undertake commitments to the extent consistent with their individual
development, financial and trade needs or their administrative and
institutional capabilities.
4. As an integral part of the negotiations, Members shall seek
to identify their trade facilitation needs and priorities, particularly those
of developing and least-developed countries, and shall also address the
concerns of developing and least-developed countries related to cost
implications of proposed measures.
5. It is recognized that the provision of technical assistance
and support for capacity building is vital for developing and least-developed
countries to enable them to fully participate in and benefit from the
negotiations. Members, in particular developed countries, therefore commit
themselves to adequately ensure such support and assistance during the
negotiations.
6. Support and assistance should also be provided to help
developing and least-developed countries implement the commitments resulting
from the negotiations, in accordance with their nature and scope. In this
context, it is recognized that negotiations could lead to certain commitments
whose implementation would require support for infrastructure development on
the part of some Members. In these limited cases, developed-country Members
will make every effort to ensure support and assistance directly related to
the nature and scope of the commitments in order to allow implementation. It
is understood, however, that in cases where required support and assistance
for such infrastructure is not forthcoming, and where a developing or
least-developed Member continues to lack the necessary capacity,
implementation will not be required. While every effort will be made to ensure
the necessary support and assistance, it is understood that the commitments by
developed countries to provide such support are not open-ended.
7. Members agree to review the effectiveness of the support and assistance provided and its ability to support the implementation of the results of the negotiations.
8. In order to make technical assistance and
capacity building more effective and operational and to ensure better
coherence, Members shall invite relevant international organizations,
including the IMF, OECD, UNCTAD, WCO and the World Bank to undertake a
collaborative effort in this regard.
9. Due account shall be taken of the relevant work of the WCO
and other relevant international organizations in this area.
10. Paragraphs 45-51 of the Doha Ministerial Declaration shall apply to these negotiations. At its first meeting after the July session of the General Council, the Trade Negotiations Committee shall establish a Negotiating Group on Trade Facilitation and appoint its Chair. The first meeting of the Negotiating Group shall agree on a work plan and schedule of meetings.
World Trade Organization, rue de Lausanne 154, CH-1211 Geneva 21, Switzerland
31 July 2004
<http://www.wto.org/english/tratop_e/dda_e/draft_text_gc_dg_31july04_e.htm>
Q&A: WTO Trade Breakthrough
The World Trade Organization has salvaged global trade talks, with a compromise agreement to overcome a damaging rift between rich and poor countries. BBC News Online looks at why it took so long, and how the deal was reached.
What exactly were these talks about?
This is the latest stage in a process that began nearly three years ago.
In November 2001, WTO members met in Doha, Qatar, to agree on the Doha Development Agenda, intended to start negotiations on opening world markets to agricultural and manufactured goods.
This meeting was dubbed the "Doha round" of trade talks, and was meant to work towards a system of trade rules that were fairer to developing countries.
In September 2003, in Cancun, Mexico, a summit was held to hammer out agreement on the Doha round, and concentrated on four main areas - agriculture, industrial goods, trade in services, and a new customs code.
However those talks failed because rich and poor countries could not reach agreement, particularly on agriculture.
A new alliance of developing nations emerged that refused to sign a proposed agreement which they felt favoured the richer WTO members.
Why was agriculture such a big issue?
The poor countries accused the rich nations of protecting their farmers through subsidies, and then dumping their goods on poor countries at knock-down prices, undermining local farmers.
The subsidies, usually funded through the taxpayer via governments or trade associations, have made production costs for Western farmers cheaper.
This made them more competitive and as a result their production has increased.
As well as having subsidised goods pouring into their countries, the poorer nations have also claimed that when they tried to export their goods to the West, they were vying against subsidised agro-businesses.
Europe's Common Agricultural Policy, which swallows up nearly half the EU's annual expenditure, was in the firing line, as were multi-billion dollar subsidies given by the US government to its farmers, and especially to its cotton producers.
With cheap US cotton flooding the world, prices are down around the world, making West African cotton very hard to sell.
So what has been the breakthrough?
After talks in Geneva lasting well into Saturday night, key WTO members accepted proposals to cut the subsidies wealthy countries give their farmers for exports.
The key nations, including the US, the EU, Brazil and Japan, agreed to eliminate export subsidies at a date to be set, to limit other subsidies and to lower tariff barriers.
The plan includes a "down payment" that would see an immediate 20% cut in the maximum permitted payments by rich nations.
Developing countries also won the right to protect "special" products crucial to the well being of their economies.
And in Return?
Wealthier nations, among them the EU's members, won better access to markets in developing nations, particularly for industrial goods.
The draft deal also allows for moves to liberalise global trade in manufactured goods and services, although the WTO's poorest nations would not have to contribute.
Customs procedures should be simplified, and stricter rules on state aid for rural development introduced.
The WTO believed progress in the talks was crucial now, as there are US presidential elections in November, and a change in the European Commission in the autumn.
That could have led to talks being stalled for at least the next couple of years.
What happens next?
The deal opens the way for full negotiations to start in September. It is hoped progress can be made before the December 2005 WTO ministerial meeting in Hong Kong.
Analysts say it is vital that any new deal be agreed before 2007, when what is known as "fast-track legislation" expires in the US.
Without fast-track, which limits the power of the US Congress to alter trade deals negotiated by Washington, there is little prospect that the US would adopt a new pact.
EU Commissioner Lamy said that he now believed the Doha round could be completed by the end of 2005.
What are the potential long-term economic benefits?
According to the World Bank, a successful final deal could add $520bn (£280bn; 420bn euros) to the world economy by 2015, if rich and developing countries cut their tariffs.
Most of the benefit would, the World Bank believes, go to poorer countries.
"This is really a good day for the world economy, for Europe and especially developing countries," said European Union Agriculture Commissioner Franz Fischler.
BBC News, 1 August 2004
<http://news.bbc.co.uk/1/hi/business/3943439.stm>
Trade Agreement at a Glance
The draft framework agreed by members of the World Trade Organization on Sunday [1 August 2004] sets out principles for a legally binding treaty to liberalize international trade.
These are the key commitments of the framework.
Agriculture
· Subsidy caps to be reduced by 20% in first year of agreement
· 5% cap on subsidies which limit production
· Export subsidies to be eliminated
· Export credit guarantees - with repayment periods longer than 180 days - to be eliminated
· Work towards eliminating trade-distorting practices in food aid and state-run export boards
· Highest tariffs to be reduced the furthest, using an unspecified formula
· Cotton industry issues to be tackled separately within negotiations
· Developing countries to be given longer to implement tariff reduction
· Least-developed countries to be exempt from tariff reduction, but must substantially increase level of binding commitments regarding future cuts
Industrial Products [issues not yet agreed upon]
· Tariffs to be reduced below a maximum ceiling, based on a future formula
· Some tariffs to be eliminated or brought to fixed levels
Services
· Countries must submit offers to liberalize their service industries as soon as possible
· No service sector should be excluded from liberalization
· It should be made easier for people to work abroad
· Special attention to be given to sectors of export interest to developing countries
Trade Facilitation
· Members must agree to improve co-operation between customs authorities and to start negotiations on "further expediting the movement, release and clearance of goods, including goods in transit"
BBC News, 2 August 2004
<http://news.bbc.co.uk/1/hi/business/3527874.stm>
SAARC to Seek Timeframe for End of Agriculture
Subsidies
ISLAMABAD: Members of the South Asia Association for Regional Cooperation (SAARC), are to seek a timeframe from developed countries of the WTO for the reduction of subsidies of $360 billion per annum being extended to the agriculture sector, a senior government official said.
“The SARRC countries would place this demand in a joint statement during the 4th meeting of SAARC commerce ministers to be held in Islamabad from November 22-23,” the official said.
The official said developed countries of the WTO, which include the US, EU and Japan, are providing subsidies to their respective agriculture sectors due to which prices of the least developed countries (LDCs) of the WTO are not competitive in the international markets.
The official said in the July framework, developed countries of the WTO had agreed to reduce the agriculture sector subsides but did not provide a timeframe.
Now Pakistan and India have decided that they would seek a timeframe from the developed countries under the platform of SAARC, the official added.
“The 6th ministerial conference of the WTO is scheduled to be held in December 2005 and member countries would take up the demand of LDCs with regard to timeframe for reduction in agriculture sector subsidies.”
Progress on GSP plus: The official said SAARC countries would also discuss the progress under the SAARC-EU GSP scheme and would forward a request to European Commission to grant benefits of super regional cumulation covering both SAARC and ASEAN under its GSP scheme.
About SAARC trade issues, the official said commerce ministers of the region would also discuss the formation of SAARC High Economic Council (SHEC), and SAARC Infrastructure Fund (SIF), which would ensure smooth trade between SAARC members after SAFTA gets finalized.
The official said Pakistan, India, Sri Lanka would finance the proposed SAARC Infrastructure Fund, which would be utilised for the development of infrastructure of Bangladesh, Nepal, Bhutan and Maldives. The official said ministers would also discuss the issue of visa facilitation among SAARC countries besides other issues of investment, arbitration and avoidance of double taxation.
The official said commerce secretaries of SAARC would finalise the agenda on during two-day meeting from November 20 prior to the meeting of the commerce ministers.
About the SAFTA treaty that had been signed by the SAARC countries at Islamabad in January, he said ministers would review the progress on it.
Under SAFTA, all the seven countries would have to liberalize and reduce their tariff regime to ensure the free trade among the SAARC countries.
Demand for compensation: The official said least developed countries of the region have sought 10 percent share of the exports of developed as compensation after they would lower their tariffs under SAFTA regime. This issue would also be discussed at the meeting, the official said.
The LDCs had placed this demand in the meeting of committee of experts (CoE) held in Dhaka in October. The committee has been assigned to develop a consensus by December on various issues with regard to SAFTA. But developed countries of the regional had asked Nepal, Bangladesh, Maldives and Bhutan to rationalize their demand as it is quite irrational and is almost impossible for India, Pakistan and Sri Lanka to accept it.
The developed countries have asked LDCs to put forth their revised during the forthcoming meeting in Islamabad, the official said.
Khalid Mustafa, Daily Times, 13 November 2004 <http://www.dailytimes.com.pk/default.asp?page=story_13-11-2004_pg5_2>
SAARC Commerce Ministers Review Steps to Implement
SAFTA
[Extract]
…[Pakistan Commerce Minister Humayun Akhtar] Khan said the SAARC Ministers looked at other issues including, trade facilities, tariff, taxation and custom issues to accelerate the pace of cooperation.
Khan said the Ministers also agreed to ask the permanent representatives of their countries at World Trade Organization (WTO) to cooperate with each other at the World forum.
He said SAARC Commerce Ministers decided to form a special committee for enhancing trade and economic cooperation among the member countries, adding they also agreed to evolve a common strategy to confront challenges of poverty, backwardness, illiteracy and hunger being faced by the people in the region.
Nath said the people of the region face problems of unemployment and poverty and these can be confronted by enhancing mutual cooperation in all fields.
He hoped that SAFTA will be finalised within next 15 months and would provide a strong platform to accelerate economic activities in the South Asian region.
He said India and Pakistan had trade volume of $200 billion which comprised $175 billion of India while Pakistan had only $25 billion.
He said improvement in relations among South Asia countries would help increase India's trade in the region.
K J M Varma, Outlook India, 23 November 2004 <http://www.outlookindia.com/pti_news.asp?id=263293>
How is Pakistan likely to fare in a world free of quotas on textiles and
clothing exports? To answer this question we should first ask four other
questions. What has been happening to global trade in these products in the
last couple of decades? How has Pakistan performed in these areas during the
same period? What opportunities are available to the country as the world
moves towards a quota free regime? And, what policies should the government
adopt in order to maximize benefits for Pakistan?
Global trade in the textile and clothing sector has undergone major structural changes in the last decade or two. There was an uneven increase in exports of the two main items produced by the industry. While the value of textile exports increased at the annual rate of 5.3 per cent in the 1980-2000 period, that of apparel grew by an incredible 8.1 per cent.
Most of the restructuring took place in the five-year period between 1985 and 1990 when the export of textiles increased by 15 per cent a year and that of apparel by 17 per cent.
That was the time when the apparel industry began to globalize with several large buyers shopping around the world for the cheapest source of supply they could find within the quotas available to them.
It was during this period that the clothing industry established itself in such non-traditional places as Bangladesh, Mauritius and the Caribbean. In 2000, world trade in textile and apparel amounted to an estimated $356 billion.
Textile and clothing exports accounted for 2.5 per cent of the total world trade and 3.4 per cent of the world trade in merchandise. In keeping with past trends, it is safe to assume that the trade in these products would grow at rates higher than the increase in overall trade.
And, while the rich countries will continue to be the major consumers of these products, several parts of the developing world will also become significant consumers. This will be the case particularly in the rapidly growing countries of East Asia.
There are some distinct trends within this trade. The products coming out of this industry can be divided into three broad categories: textile fibres, textile yarn and fabrics, and clothing and apparel.
Textile fibres barely accounted for six per cent of world imports of the products of this sector; textile yarn and fabrics accounted for another 39 per cent. The remaining 55 per cent was made-up apparel and garments.
The developing world holds a natural advantage in the production of these products since it produces the bulk of the world's output of cotton - the most important raw material for this industry - and has an abundant supply of cheap labour to work in an activity many components of which are labour-intensive.
And yet, developing countries account for only 30 per cent of the total trade of this sector. With the end of the MFA regime the share of the developing world is bound to increase.
Within the developing world, the sources of supply have changed quite significantly as wages have increased in several countries. Using $1 billion worth of exports as a threshold for defining major suppliers in 1980 only China, Honk Kong, South Korea and Taiwan made it to the list.
In other words, textile and clothing industry was concentrated in the countries in East Asia. This pattern of supply changed in the 1980s as deep structural transformation occurred in several East Asian economies.
By 1990, Indonesia, Malaysia, Thailand, India and Pakistan had entered the league of major exporters. By 2000, there was further expansion in the major league as the Philippines, Vietnam, Bangladesh and Sri Lanka also emerged as major suppliers.
According to some estimates, over one-half of production capacity in the apparel industry moved from rich countries to those in the developing world. This shift was the consequence of two factors one of which was the distortions introduced by the adoption of restrictive trade practices under a regime known as the Multi-Fibre Agreement, or MFA. The other was "globalization" which in the context of the textile and apparel industry meant the slicing up of the production chain.
This provided an opportunity for developing countries to specialize in the labour-intensive stages of the manufacturing process. Since the apparel-manufacturing component of the industry is considerably labour intensive, it is in this part of the industry that the developing world has performed well.
The remarkable success of Bangladesh, Cambodia, Mauritius, Sri Lanka and Vietnam as garment producers and exporters is one indication of the way the industry has restructured on the basis of shifting comparative advantage.
Textile is Pakistan's oldest industry. Investment in it began after the first trade war with India that began in 1948 and resulted in the total cessation of all textile imports from the neighbouring country.
Pakistan had depended on Indian supplies; with the trade war raging with India, the country quickened the pace of industrial development particularly in textiles. Initially, Pakistan concentrated on cotton spinning with the yarn manufactured by the new industry used mostly by small looms that produced low quality fabrics.
Weaving came afterwards as did refining and finishing. Garment and apparel manufacture came even later. Textile policy during the period of Ayub Khan determined the structure of the industry for decades to come.
In order to spread the ownership of the industry as broadly as possible, the government issued licenses for establishing spinning units with only 12,500 spindles. This was well below the economies of scale even at that time.
With the spinning industry segmented in such small units it took time before scale economies could be developed and the industry could get vertically integrated. This began to change as the government eased its licensing policy for the establishment of new units and expansion of the existing ones.
At this time the sector comprises most activities associated with the industry. These include spinning, weaving, processing and finishing, knitted fabrics and clothing, woven garments, and woollen spinning and weaving and garments.
Textile enterprises include both vertically integrated units, large concerns dealing in exclusively knitting and woven garments, and small factories involved in finishing dyeing and knit wear exports.
Textile is the largest component of the manufacturing sector of Pakistan. In 2000, it accounted for 40 per cent of direct employment, 30 per cent value-added by the manufacturing sector and 60 per cent of the total merchandise exports.
The country's textile and apparel exports in 2001 comprised cotton yarn, fabrics, ready-made garments, and textile made-ups. Fabrics exported by Pakistan include, in order of importance, cotton fabrics, knitwear (hosiery), art silk and synthetics and tents and canvas.
Made-up textiles include bed ware, linen, and towels. Pakistan is not a major exporter of garments and apparel. Its relatively high-value exports are mostly made-up textiles although the share of garments has been increasing steadily. Made-ups and apparel accounted for slightly more than half of the country's total exports.
Pakistan's textile and clothing exports are highly concentrated in terms of market destination. The United States and the European Union account for more than 70 per cent of the total.
Some changes are occurring as exporters have begun to penetrate such markets as South Africa, Turkey and Mexico. The last market is particularly attractive since Mexico's membership in the North America Free Trade Area (Nafta) allows exporters indirect access to the US on preferable tariff terms.
In anticipation of the end of the MFA regime, Pakistan's textile industry has made a significant amount of investment in modernizing its plants. In fact much of the private investment in the last five years was accounted for by textiles. Once the dust settles down following the end of the MFA, the textile producers will discover whether they have invested in the right sub-sectors.
At this time it appears that a major shift will not occur in the sources of apparel since some of the countries that currently dominate this part of global trade will continue to benefit from lower tariffs in the importing countries even after the end of the quota regime.
The end of MFA does not mean that all textile and clothing exporters will be playing on a level field; some of the exporters will continue to enjoy tariff preferences. These include Bangladesh and a number of poor countries in Africa and the Caribbean.
In the light of this, it would be prudent for producers in Pakistan to concentrate their attention on industrial fabrics. The short staple cotton grown in most parts of Pakistan is suitable for these products; the demand for these products is also increasing rapidly as new technology and manufacturing practices increases the popularity of cotton fabrics for automobile and aircraft seats, drapery and household furniture. Also, these lines of product don't face tariff discrimination that will continue to affect the trade in garments.
There has been a reasonable amount of activity in Islamabad in recent years as policymakers have begun to address some of the problems faced by the textile industry. Four areas are receiving the attention of policymakers. One, the government is working on establishing a regulatory system that would require standardization of cotton for both domestic and foreign markets.
This should help to improve the reputation of Pakistan's cotton exports for both quality and consistency. Two, the government has allowed the import of superior grade cotton that would help add value to the finished products produced by the domestic industry.
Third, the government no longer requires permission for setting up new enterprises, shifting the burden of investment decisions on to the shoulders of the private sector.
This reverses the policy bias developed during the period of Ayub Khan and preserved for a long time even after his departure. Four, there is now greater recognition that exporters need financial support from the banking sector. The setting up of the Pakistan Export Finance Guarantee Agency covers a gap that has existed for a long time.
One troubling aspect of the textile industry in Pakistan is the lack of interest by foreign companies in the country. With the exception of China, no major cotton exporter has developed a presence in the world market without the active involvement of transnational corporations.
Lack of interest in Pakistan persists in spite of the fact that Pakistan has a more open investment regime in South Asia than most other countries in the region. According to the Asian Development Bank's index of openness to foreign direct investment (FDI), Pakistan scores 2.0 compared to 3.0 for the rest of South Asia.
A lower score indicates more openness. It is obvious that the perception that Islamic extremism has taken hold of Pakistan has taken a toll in terms of scaring away foreign investors from a sector in which the country has a clear comparative advantage. Getting rid of that perception therefore has to be high government priority.
Shahid Javed Burki, Dawn, 7 December 2004 <http://www.dawn.com/2004/12/07/op.htm>
EU Backs Lamy to Head World Trade Organization
Pascal Lamy, the former EU trade commissioner, could become the World Trade
Organization's new director general, replacing Supachai Panitchpakdi when his
three-year term runs out in August.
Mr Lamy, a French socialist credited with helping to rescue the Doha round of trade liberalisation talks in July by driving through reforms of the EU's common agricultural policy, yesterday won the enthusiastic support of the European commission.
The 25-member EU is expected to formally endorse his candidature tomorrow. Friends say he has the backing of Robert Zoellick, the US trade representative, who has had a series of bruising battles with the EU including the unresolved spat over subsidies between Boeing and Airbus.
Mr Lamy is seen as having a good chance of success because he commands unanimous EU support - unlike years when Europe was divided as in the case of both Mr Supachai, a former deputy prime minister of Thailand, and his New Zealander predecessor, Michael Moore.
The former trade commissioner, who has won a strong reputation in the developing world for spearheading moves to open up EU markets, faces competition from a Brazilian, a Uruguayan and a Mauritian.
Perez del Castillo, Uruguay's foreign minister and chairman of the WTO general council at the time of the Cancún summit, is likely to split the Latin American vote with Felipe Seixas Correia, Brazil's ambassador to the trade body. Jaya Krishna Cuttaree, the trade minister of Mauritius, has been drumming up support among the 79-strong African, Caribbean and Pacific bloc.
Nominations close this month, with the 148-member WTO making a final decision in May. It is said to be determined to avoid any suggestion of the usual geographical "Buggins' turn" by fixing firm criteria.
Mr Lamy won public endorsement yesterday from José Manuel Barroso, president of the commission, and Peter Mandelson, his successor at the EU's trade portfolio, who held more than three hours of talks with Mr Zoellick in Paris on Monday. …
David Gow, The Guardian, 8 December 2004 <http://www.guardian.co.uk/business/story/0,,1368536,00.html>
WTO: Challenge and Opportunity
The World Trade Organization (WTO) regime that goes into effect from January 1, 2005 will present a formidable challenge, but it will also be a rare opportunity for Pakistan to create a niche for its products in the global markets. As the harbinger of a major change in the global trading system, the WTO will essentially aim at lowering trade barriers, providing greater access to global markets and removing subsidies. For Pakistan, it is critical that the quotas on textiles and clothing exports will stand abolished from the beginning of the new year. As world trade moves towards greater liberalisation, the country's business community needs to prepare itself to more effectively meet the newly emerging challenges in this field.
The share of textile exports in Pakistan's total export volume is around 65 percent and as such the implications for the new WTO regime could have far-reaching ramifications. It is encouraging to find that the country's textile and clothing sector have been upgrading their products. All the textile sectors will be required to work together to increase their international competitiveness. The domestic textile industry enjoys a big advantage in that its products have an established name in the world markets. For the country's premier textile sector, there is now an opportunity to increase its share in the world export markets, which it could achieve with a combination of competitive prices and high quality standard of goods. Recently, an agreement was also reached according to which the developed countries will gradually reduce farm subsidies. This should also help countries like Pakistan in boosting exports of their agricultural products.
While at the question of tariff, this has been gradually reduced over the years in the country. It is noticeable that despite reductions in import tariff, the domestic industry has stood the challenge and even improved its output substantially - indicating that this sector has been trying to get fully oriented to market mechanism which is essential to operate in a globalised economic system. Meanwhile, the cost of doing business in Pakistan should be reduced. This will make the goods produced here more competitive and also help attract investment. While the business community is expected to be aware of the challenges brought by the introduction of WTO regime, the government also needs to enlighten and educate them on the wider and deeper implications of this new order. The challenge can thus be converted into an opportunity to boost the country's trade and economy on a sustained basis.
Editorial, The News, 29 December 2004
<http://www.jang.com.pk/thenews/index.html>
The Liberalization Expected under ATC and What
Pakistan Stands
to Gain from it
Conclusions and Recommendations
As quotas are eliminated from global trade, competition amongst Asian countries will become more intense. Pakistan's main competitors are India and China.
Although India and China have larger cotton production and industrial infrastructure, Pakistan has moved towards market economy faster than both countries and domestic industry operates in a less sheltered environment. Pakistan has higher cotton yield per acre than India and the fiber strength of Pakistani cottons is considerably higher than that of Chinese varieties. These basic strengths of Pakistan's textile sector enable it to compete successfully in categories where it is strong. In other categories where Pakistan lags, considerable effort will be required to retain and gain share of the markets after integration with WTO rules.
China's full Accession to WTO has been delayed until 2015, and that may provide relief to Pakistan in catching up, especially in the garments category. Pakistan is competitive with Asian competitors in overall costs. High costs of power and steam are offset by raw cotton, yarn and wages. Many other factors will determine competitive performance; however, fundamental costs of production do not seem to be a limiting factor for Pakistan. The following recommendations are made for Pakistan to take full advantage of trade liberalization after 2005.
Government Support
The T&C industry in Pakistan will need support from the government in reducing their costs. Key areas are (i) Electricity tariff rationalization (Power costs are uncompetitive at present); (ii) Availability of Natural Gas for self generation of power; (iii) Provide assistance to the textile industry by developing infrastructure; (iv) Build textile institutes to train skilled labor force and give incentives (including scholarships to deserving students) to attract maximum students; (v) Negotiate further market access through Regional Tariff Agreements; (vi) Make efforts to convert prospects of Trade & Investment Framework Agreement (TIFA) with US into Free Trade Agreements and as a consequence converting US cotton in Pakistan for export of textiles under duty free access; (vii) Make available reliable national statistics - currently inadequate information on size of cotton crop creates speculative price fluctuations in the price of cotton lint; and (viii) Make a national strategy for image building.
Cotton
A high growth strategy is crucially dependent on increased domestic cotton of good quality at competitive prices. Since domestic consumption has already reached 10.42 million bales and is likely to increase progressively, the supply of domestic cotton lint is an essential element of growth for two reasons: One is staple length and fiber character and the second is price factor. Pakistan's downstream industry is aligned with particular fiber characteristics of domestic cotton and niche markets developed for its products. A switch to imported cotton will throw this alignment out. Moreover, the import parity price is always higher than the export parity price for domestic cotton, even under a free trade regime. Pakistan's textile industry exploits this differential for a competitive edge which will be lost if a sizeable part of domestic consumption has to be imported.
Cotton is a high input crop subject to vagaries of weather. Developed countries protect farmers through massive subsidies - a sore point in WTO negotiations. Under a free trade system it is becoming harder for domestic production to thrive, let alone grow. The increasing costs of inputs, primarily diesel, electricity and imposition of General Sales Tax on fertilizer and pesticides has squeezed profit margins of the farmers despite fetching global prices of cotton. Increase in cotton production is a function of acreage and higher inputs into technology. Neither of this is possible under current costs of production for cotton. Hence cotton production is stagnant at 10 to 11 million bales mark.
Farmers get high prices (even higher than international prices) only when the crop is short, like year 2003. In this case domestic industry is robbed off its competitive edge and the following year the demand-pull is reduced, dropping cotton prices to levels that are not conducive to growth. In the absence of forward trading, hedge markets and lack of accurate crop estimation mechanism, it becomes a zero-sum game where farmers and industry only gain at the cost of each other.
There is a glimmer of hope that if under WTO, developed countries reduce their subsidies to farmers, or at least agree to provide direct subsidies, without distorting international prices, Pakistan may find a solution to the see-saw effect on domestic cotton and industrial production. If that possibility does not materialize, Pakistan will have to provide direct subsidies to its cotton growers in order to keep the high growth strategy on track. The worst scenario will occur if subsidies are removed under WTO, international prices rise and Pakistan's cotton production does not respond. In that case the price differential advantage of domestic industry will evaporate. Therefore, along with managing pricing issues without creating market distortions, the government needs to look into agriculture production factors and arrange for filling weak links in the research-seed-cultivation chain.
Another potential source of fiber for the textile industry is MMF. Pakistan needs to urgently address the domestic price distortions of MMF and bring them into line with world market prices to allow domestic industry to make the appropriate fiber choice according to market conditions. New investments in MMF production in the absence of protection should also be encouraged.
Ginning
Ginning industry forms the major link between production and consumption. It is the first step of processing raw cotton from the fields. It happens to be the weakest link in the value chain of cotton in Pakistan. Market distortions of the seventies and a subsequent drift of the downstream industry towards cheap, low value products have kept this industry technologically retarded. There are about 1200 ginning factories in the country with a total ginning capacity of 20 million bales per season, out of which 65% are operational. The unregulated spawning of the industry began in the mid-eighties as cotton production was increasing at a fast rate. All of the ginning mills use 1940's technology - the sentinel sawgin - which is locally manufactured in rural areas by semi-literate mechanics with no standards.
There is no trained manpower since there are no institutes for the purpose. It is a seasonal business (100 days) operated by rural entrepreneurs at low capital and operational costs. The main source of income is trading of commodities rather than service charges for ginning operations. Raw cotton is bought from growers and intermediaries and after separation of seed from lint, speculative trading in cotton seed (and oil) and pressed lint bales forms the bulk of economic activity.
As long as the spinning and weaving industry was concentrated on short staple, low-count yarns, poor ginning was tolerated as profitability was a function of cheap cotton and volumes. Since the late nineties, as the industry is beginning to move towards value addition, ginning quality has become a major issue.
In comparison with the international standards local ginning industry is inefficient and uncompetitive. The local ginning industry is inefficient in power consumption (an expensive utility to begin with) hence its cost of ginning is higher than international standards. Moreover, the process itself has serious deficiencies of quality. Major defects are: i) Cotton fibers are broken and add to floating fiber content which devalues lint; ii) Trash is not removed adequately; iii) Bales are not pressed according to international standards. Pakistani bale is 174 Kgs. as against international standard of 198 Kgs.; and iv) Moisture content is not adequately controlled; invariably bales contain high moisture content causing yellowing of lint.
For these reasons Pakistani cotton lint is valued at a discount of 5 to 10% in the international market for the same fiber characteristics. Contamination is becoming another serious issue. Although contamination is not purely a ginning problem, it is a product of the process flow from the fields through transport and through the mill.
Contamination is a serious disqualifier for high end fabrics and garments where pure white appearance cannot be attained in the presence of non-cotton lint materials in the yarn used for spinning. White polyethylene and polyester fiber is virtually impossible to glean from lint in bales of cotton. All these quality issues are related to grading standards of cotton. Until 2001, there were no grading standards in the country. Recently, the Ordinance for Pakistan Cotton Standards Institute was promulgated by which market quotations for cotton lint are now made according to international standards based on fiber length, uniformity, fiber strength, micronaire, neps and color. Previously cotton was quoted on the basis of variety (unverifiable) and geographical location.
Although regulatory standards are in place, provision of equipment and trained manpower is required to implement grading standards in the country so that every bale produced is graded according to certification of a reliable authority. To eliminate contamination, other strategies need to be devised and executed. This will require backward integration with growers and intermediaries by the spinners, supported by regulations and certification facilities.
Ginning remains the Achilles heel of Pakistan's cotton economy. Unless practical steps are taken to upgrade ginning technology and improve the quality of lint in cotton bales coming out of the ginning mills, moving into value-addition on domestic cotton will not materialize and Pakistan would have to be content with subsisting on low value products with diminishing terms of trade.
Muhammad Anum Saleem, The World Trade Review, 16-31 January 2005
<http://www.worldtradereview.com/news.asp?pType=N&iType=C&iID=99&siD=14&nID=19026>
Import Tariffs on Textile Products to Remain Intact, says Humayun
Lahore: Federal Minister of Commerce, Humayun Akhtar Khan admitted that some of the textile categories would come under pressure in quota free regime following the aggressive Chinese marketing but other categories would definitely surge as the tariffs would remain intact on the import of textile products.
Talking to The Nation here on quota-free textile trade after WTO's Multifibre Arrangement (MFA) implementation, the Minister said that the stakeholders should not get worried in going for further investment in the textile sector.
He was of the view that Asian countries should consider WTO for strengthening their economy. The implementation of WTO will bring positive results for developing countries, however for gaining good results these countries must upgrade their products at par with international standards, as there is plenty of competition in the open market.
Humayun said the country's textile sector that achieved excellent progress has nothing to fear much from free competition from the year 2005.
Minister said the year 2005 is going to be a landmark as from January 1 that year phasing out of all quota system would be complete to open the trade in textiles and garments to globalise free trading regime. The government would continue to support the textile sector.
He also asked them at the same time to maintain the high quality of their fabrics and yarns, saying they must remain also cost-effective to sustain the global open market competition.
The country has earned $12.313 billion exports in the last year, which expected to swell up to $13.7 billion this year showing 12.3 per cent increase.
The minister's attention was drawn towards the sloppy policy of the Export Promotion Bureau, which had auctioned the growth quota for Rs200 million, as the country had to spend an amount of Rs500 million to clear them.
The Minister said that the quota affairs were not efficiently managed in the past due to which the exporters continue to suffer.
He, however, said that he still was in touch with the US authorities to sort out the matter and to clear those shipments, which have remained stuck at the US ports.
To a question about the forthcoming Expo Pakistan 2005, he said that the response from abroad and home was equally encouraging.
He did not agree to the claim that the exporters are not taking interest in the event at all due to their commitments abroad and that not more than 20 per cent stalls have been booked so far.
The minister refuted claims that the response from the foreign buyers is very poor. Many foreigners have confirmed their visit to Pakistan during the fair.
The minister said that government had been spending Rs500 million to compensate the textile exporters whose shipments were detained by the US Customs or obstructed due to embargoes imposed by the US authorities.
Federal minister said that the ordinary tax on Pakistani products at the time being is 1.5 per cent and on the other hand tariffs and duties at these products are very high. These tariffs and duties will eventually ease out after WTO implementation and the developing countries would definitely benefit from the situation.
With regard to tariff reduction, the minister pointed out that developed countries were required to bring down their industrial tariffs first but the developing countries would be given some time. Therefore, he stressed there should be no fear whatsoever for the industry.
He further said that WTO did not lay any condition on tariffs, therefore, once the country comes out of the IMF conditionalities the present low tariffs could be fixed higher.
Humayun Akhtar said that against the bounded tariffs of up to 95 per cent the applied tariffs are very low at 25 per cent, which was only to meet the IMF restrictions.
He said that compliance issue such as environment, social and labour, which were not WTO issues but were likely to be widely used by the developed countries to stop flow of goods from developing countries would be taken up bilaterally.
Presently, he said, seven negotiating areas connected with WTO were being handled by various committees established in the Ministry of Commerce and in order to create awareness a separate body would be set up in the EPB. Printed material and other information were available at this forum.
Responding to a question, he said that these committees were also interacting with stakeholders in order to fully protect the interest of the industry and trade. He assured that all care would be taken to protect the interest of the country.
"Incumbent government has adopted rationalised policies and reduced tariff barriers and at present if one compares the ratio of tariff barriers, Pakistan has the lowest possible tariff barriers as compared to other countries," he said.
He opined that after implementation of WTO, Pakistan's Gross Domestic Production (GDP) would rise straight away.
For export subsidies, the Minister said, "We have enough cushion to support our farmers, which allows us to subsidize any crop up to 10 per cent of its total value of production, as such programmes for subsistence and resource-poor farmers have been exempted as a Special and Differential Treatment for developing countries.
"The Minister said it has been agreed that all trade distorting domestic support will be reduced through a tiered formula, adding, WTO members such as the EU having higher level of support will make greater over all reductions."
We can have access to Special Safeguard Mechanism, which we can use if there is any dumping of agricultural products. Since cotton suffers the most from agricultural subsides and livelihood of many African countries depends on export of cotton, it has been agreed that cotton subsidies will be handled separately but within the overall agriculture negotiations. These negotiations would be on a fast track basis, he added.
To achieve sustained export performance he said the government was making efforts in areas of facilitation, WTO related issues, export promotion and diversification, extension of export promotion zones and industrial clusters and measures to prepare for the elimination of MFA quotas by 2005.
The government, he maintained, was committed to liberalizing trade and widening export base through revival of industrial activity and strong institutional supply side measures.
Our export strategy, he said, was focused on reducing cost of doing business, increasing market access, technology and skills upgradation, social, environmental and security compliance and value addition.
He said the President and he himself were taking the agenda of expanding market access during their visits abroad.
Fortunately, he said, the quota system would be behind us from 2005 when the textile and clothing sector will be reintegrated into the normal rules of the multilateral trading system embodied in the WTO.
We hope that it will be a true integration, in every sense of the term.
We also hope that every effort will be made by all the members of the WTO particularly the major importers of Textiles and Clothing to resist the temptation of continuing the protection through other imaginative measures. We hope that the developed countries will ensure that such an eventuality does not arise and that the WTO rules based system reins supreme ensuring free, fair and level playing field.
We are aware of the argument by some that developing country markets are closed to imports. Let me say candidly that this might have been the case in the past but the situation has changed significantly in recent years. Developing countries continue to implement far-reaching reforms to liberalise their trading regime.
Pakistan has already significantly lowered its tariffs on textiles and clothing and also bound them under the WTO. A country where exports of textiles and clothing constitute almost 67 per cent of our total exports, high tariffs and tariff peaks on textiles were prevalent in the earlier decades. For some time textile and clothing items were not even allowed to be imported. But our commitment to the WTO and our faith in liberalisation can be gauged from the fact that we have brought down our tariffs to around 1/3rd of their earlier rates and all textiles and apparel are now freely importable, Humayun added.
The World Trade Review, 16-31 January 2005 <http://www.worldtradereview.com/news.asp?pType=N&iType=C&iID=99&siD=20&nID=18961>
Islamabad: The government has constituted study groups to identify hidden tariff and non-tariff barriers in the Indian import regime that restricted the flow of Pakistani exportable products into that country, a senior official told.
The commerce ministry has also sought information from all chambers of commerce and industry, trade associations and business groups in this regard before starting the second round of negotiation on bilateral trade with India.
Secretary Commerce Tasleem Noorani said that the study group would soon visit India to interact with the relevant people to identify the barriers, which have restricted the entry of Pakistani products.
After the compilation and research work, he said these barriers, both tariff and non-tariff, would be discussed with the Indian authorities. He said that despite the MFN status, India has granted to Pakistan, exports to that country could not register any tangible growth.
Regarding the new European Union GSP scheme, the secretary said that Pakistan would hopefully get a favourable market access under the new scheme. He said Pakistan would also continue talks with EU member countries for increasing the trade.
When asked about his China visit, Mr Noorani said that the free trade agreement (FTA) would be finalized with China within the next six months. Under the preferential trading arrangement (PTA), China would give deeper concession to Pakistan, which would increase the trade volume, he added.
According to a report, the peak rate of customs in India was around 70 per cent. Some agriculture items were subject to much higher customs duty like 80 per cent to 150 per cent on sugar.
Furthermore, certain items are included in the ban list. The other duties included additional customs duties, which is levied on all articles imported in India equivalent to the excise duty; special duty on specific articles; special additional duty is levied on all articles and the rates varies for various items; additional surcharges levied from time to time and its rates varies for different items.
Similarly, a 2 per cent education cess has been imposed on all imports in the 2004 budget. After landing, imports are also subject to taxes by the Indian states - octroi, local sales tax, local government sales tax and toll tax.
The non-tariff barriers include requirement of political, security clearance; sampling, customs inspection; requirement of technical, standard certification, labelling and marking rules; packaging rules, specification; import license; opening of LC; sanitary and phyto-sanitary measures; implementation of IPR convention and issue of subsidy.
The World Trade Review, 16-31 January 2005
<http://www.worldtradereview.com/news.asp?pType=N&iType=C&iID=99&siD=20
&nID=18963>
Karachi: Quality cotton exporters and manufacturers seem confident to have a leading position in the post WTO regime but consider competition a challenge.
Commenting on WTO regime, Anwer Yasin, Former Vice Chairman of Karachi Cotton Association (KCA) and a leading exporter of lint told that there was confusion among the stakeholders in Pakistan that WTO would be harmful for them. Whereas, "it is going to help quality exporters and the manufacturers," he added.
He suggested that the low-quality manufacturers should improve not only the quality of their products but also the working environment these products were made in to fulfill environmental and social clauses of WTO compliance issues.
Another lint exporter said, "by and large country is going to benefit from the WTO where competition will be tough but opportunities would be numerous."
He added that Pakistan being fourth largest cotton producing country, had an edge over non-producing countries where the main threat lied with China.
However, one manufacturer confidently said, "Our quality is much better than Chinese products, which apparently should eliminate this threat."
"In view of the super bumper cotton crop, manufacturers of cotton products must concentrate on quality while procuring cheaper raw material," he said.
It is pertinent to mention that despite being fourth largest cotton producer in the world, Pakistan faces cotton contamination.
State Bank of Pakistan in its 1st Quarterly Report of FY05, has quoted reports of other institutions saying that Pakistan was facing a huge net loss of US$1.4 billion to $3.0 billion annually on grounds of contaminated cotton.
SBP has chalked out a programme to get rid from cotton contamination. However, the central bank said it was impossible to have zero contamination while achieving significantly lower levels would be practicable.
On the other hand, one stakeholder commenting over the competition in the WTO regime, said that role of Pakistan Cotton Standards Institute (PCSI) was very important as far as quality was concerned. But, he said that the PCSI was not playing its due role important role.
The World Trade Review, 16-31 January 2005 <http://www.worldtradereview.com/news.asp?pType=N&iType=C&iID=99&siD=20&nID=19003>
Dr Supachai Panitchpakdi is director-general of the World Trade Organization, a position he took up on 1 September 2002 for three years.
Dr Supachai began his professional career in 1947 at the Bank of Thailand, where he stayed until 1986 when he decided to run for parliament. With his notable track record, he was appointed deputy minister of finance. Following the dissolution of parliament in 1988, he was appointed director and adviser, and subsequently president, of the Thai Military Bank.
Returning to politics in 1992, Dr Supachai became deputy prime minister, entrusted with the country’s economic and trade policymaking. In this position, which he held until 1995, he was actively involved in international trade policy. A staunch supporter of free and fair trade, Dr Supachai played a pivotal role in the international arena, principally in the Asia Pacific Economic Cooperation (Apec) and the Association of Southeast Asian Nations (Asean). He also promoted efforts to liberalise trade in the region through what has become the Asean Free Trade Area (Afta).
As chairman of Thailand’s International Economic Policy Committee, Dr Supachai was highly influential in charting the country’s international trade and economic policies. On the wider regional and international stage, he has played instrumental roles as initiator and active supporter of numerous trade and investment facilitating forums, groupings and development projects. He was the first to push for the formation of the Asia-Europe Meeting (Asem), which draws together heads of government from Asia and Europe to foster closer ties between the nations of the two continents.
Following the change in government in November 1997 in the wake of Thailand’s financial crisis, Dr Supachai was appointed deputy prime minister of in charge of economic policies, and minister of commerce. In his capacity as minister of commerce, he relaxed Thailand’s restrictions on foreign participation and ownership, and brought the country’s accounting standards into line with international practices to enhance and ensure transparency in the economic system.
Dr Supachai was born in 1946 in Bangkok, Thailand. He has a Master’s degree in econometrics, development planning, and a PhD in economic planning and development from the Netherlands School of Economics (now known as Erasmus University) in Rotterdam. He has published a number of books, including Globalisation and Trade in the New Millennium (2001) and China and the WTO: Changing China Changing WTO (2002, co-authored with Mark Clifford).
You played a crucial role in bringing Thailand out of an economic crisis that had lasted almost 50 years. Can you tell us about this experience?
Well, in fact the crisis didn’t last nearly as long as that, but certainly it was a very difficult time. We had embarked on a long period of reform that had been quite successful, but we were vulnerable to external shocks because of rigidities in our macroeconomic policies.
Some of those external shocks were market-generated and some were brought about by policy decisions in other countries. Some of our problems could also be attributed to the fact that we didn’t have a sufficient regulatory infrastructure at that time to deal with the rapid shifts in market sentiment.
How can other developing countries learn from Thailand’s economic recovery?
The first point to be made is that reforms are essential, particularly in strengthening the market mechanism and the financial system. Absent the economic reforms we undertook, Thailand would not be posting the strong growth that she is today. But reform must be a smooth and staged process. If a country is to liberalise its economy it needs to have the necessary institutional infrastructure in place.
As the first WTO director-general from the developing world, many in the Third World expect you to be a champion of their causes. Do you feel you have succeeded in satisfying these expectations?
It’s true that I am the first director-general of the WTO coming from a developing country, but I am not the developing countries’ DG. I am the director-general for all 147 members of the WTO. As the leader of a neutral secretariat I do not take sides and I do not champion causes. It’s true that I have wide experience in issues of importance to developing countries, but that doesn’t make me unique. In fact, all of our member governments showed an inclination in favour of development issues in November 2001 by agreeing to launch the Doha Development Agenda global trade negotiations. These negotiations have a major development component and have been strongly supported by developing country governments. Of course, there is some frustration because we haven’t been able to advance these negotiations as far as we would have liked. But in recent months, there have been very positive indications that we can achieve something of real benefit to developing countries.
What was the reaction of the developed world, and specifically the US, to your election as director-general?
It was wrong to characterise the DG selection campaign as a developing country vs. developed country process, although it’s true that many journalists did exactly that. In fact, I had quite a number of developed countries supporting my candidacy, including Japan, Britain, Australia and the Netherlands. My predecessor, Mike Moore, had support from many developing countries, as well. The compromise that was struck allowed for Mike and I each to serve a three-year term. The US and all other members of the WTO were in strong support of this approach and I have continued to enjoy support from the US since I assumed office.
Can you explain why the WTO is considered the world’s most powerful organization, despite being one of the youngest?
This is something of a mystery to me, I must confess. We are an organization with only 600 staff and a budget of about $120 million - a very small organization. We have no military power, we cannot offer loans or grants and we as a secretariat do not make any major decisions. Rather we provide a forum in which WTO member governments hold their negotiations, resolve their disputes and discuss each other’s trade policies. Perhaps, when we are characterised as being so powerful it is because our dispute settlement mechanism is somewhat unique. When governments are deemed by a dispute settlement panel not to be in compliance with their WTO obligations, those governments are required to make the necessary adjustments. Should they not implement the panel decisions, the country which has brought the dispute to the WTO has the right to retaliate. This doesn’t happen very often though. We’ve had more than 300 cases and only a handful have resulted in sanctions. But when it happens it seems to create big headlines.
Does the WTO cooperate with UNCTAD?
Of Course. We are the joint parents of the International Trade Centre, a very important organization that advises private sector enterprises in developing countries on how to participate more fully in the global trading system. We work with UNCTAD on the Integrated Framework of Trade Related Technical Assistance for Developing Countries.
Together with the ITC we also cooperate closely with UNCTAD on
the Joint Integrated Technical Assistance Programme. They have come to all our
ministerial conferences and are observers in our major Geneva meetings. We
attend all their major meetings; in fact I led a WTO delegation to Sao Paulo
for UNCTAD XI earlier this month. And before that I was the chairman of UNCTAD
X in 2000, which was instrumental in restoring and confirming faith in the
multilateral trading system after the setback in Seattle.
What progress has been made
in bringing
Saudi Arabia and other Arab countries into the WTO fold?
We have 11 Arab members of the WTO and five Arab countries are currently engaged in accession negotiations. Some of these negotiations are more advanced than others. The Lebanese negotiations are going quite well in fact. The Saudi negotiations have really picked up as well. There are some issues that remain to be resolved, but considerable progress has been made in the last year and my expectation is that we will enter the final phase of the talks in the relatively near future.
How was the WTO affected by the events of 11 September 2001?
Well, I had not taken office as yet, but I have been told that the impact was significant. Of course, it was a great shock to everyone and there was a great deal of sadness. With respect to our work, I think in the immediate aftermath of the events of 11 September there was a strong inclination for everyone to work together to find solutions to common problems. In our case, there were two examples of this. The week of 11 September was the last week of the Chinese accession negotiations. These were difficult negotiations, but following the attacks there seemed a real sense of solidarity among the negotiators and a renewed sense that bringing China into the WTO was the right thing to do for a large number of reasons.
Secondly, our fourth ministerial conference, in Doha, was held in November, just two months after the attacks. Here, too, one could not help but have the feeling that nations were committed to working together. I wouldn’t say that the successful outcomes to those two negotiations were entirely attributable to a collective response to the attacks, but the genuine sense of solidarity that was engendered did contribute.
Since then, it’s difficult to say that the organization has
changed as a result of the attacks. Unlike some other organizations, this is
not an ideologically driven place. This is a pragmatic place where governments
come to negotiate trade agreements. There are politics here, to be sure, but
the tone is based more on finding practical solutions to commercial problems.
How do you respond to the
accusations that the WTO functions as a club for the rich nations, serving the
needs of multinationals at the expense of democracy and the environment?
No one who understands the WTO would make this charge. You have to understand that this is an organization in which all decisions of the 147 governments are taken on the basis of consensus. Some would say that it’s not the most efficient way to make decisions, but you can’t call it undemocratic. The smallest members can bring disputes against the biggest here and emerge victorious. It happens regularly.
The negotiations on which we have embarked are called the Doha
Development Agenda negotiations and the focus is on development. If developing
countries don’t like the way the negotiations are progressing, they not only
say so, they actively campaign to change the course of the negotiations. We
saw that happen quite vividly in Cancun last September.
Why did the
US reject the WTO initiative to provide low-priced
pharmaceutical products to the developing world?
Actually, what happened was that we reached two agreements on access to affordable medicines, one in Doha in 2001, which dealt with most issues, and one here in Geneva last August, which dealt specifically with the question of providing such medicines to those countries that lack the capacity to produce pharmaceuticals generically. The US signed off on both agreements. It’s true that they initially had some concerns during the negotiations that led up to the August agreement. Essentially, they worried that without effective patent protection, research and development into the development of new drugs would stall. In the course of the negotiations, those worries were addressed in a way that all governments could accept.
Why are there frequent differences of opinion between the US and the WTO, and what steps has the WTO taken in this regard?
It is not a question of differences of opinion between the US and the WTO. The WTO as an institution does not have an opinion, rather opinions are held by our 147 member governments. There are often differences of opinion between members, whether it concerns negotiations, trade policy discussions or dispute settlement. Perhaps what you are referring to is the number of disputes involving the US. Again, when there is a dispute settlement case, it is not brought by the WTO, but by one member, or group of members, against another.
And in fact, there have been a large number of disputes involving the US. The US has brought the most cases and has been taken to dispute settlement the most times of any member. This is no doubt partly a function of trade volume. The more trade you have, the more sectors in which you trade, the greater the likelihood of a dispute arising. This is why the US, the EU, Japan, Canada, Korea and India have been involved in more cases than smaller trading nations.
What progress has the WTO made in its efforts to free the world trade system, particularly in the agricultural sector?
We have made substantial progress in this regard. We are now poised (as of the end of July 2004) to reach an interim agreement that would pave the way for the elimination of agricultural export subsidies, the most trade-distorting form of support. Members have accepted the need to sharply reduce trade-distorting domestic support as well as substantially opening markets to imports. Much needs to be done to secure a deal in these important areas. For one thing, progress needs to be made in other areas of our negotiating agenda, including trade in services and trade in manufactured goods. It goes without saying too, that special consideration will have to be given for developing countries, net food-importing countries and least-developed countries. All of this will require great effort, but trade ministers have given their clearest indications since these negotiations were launched that they are prepared to do what is necessary to obtain an agreement and keep the Doha Development Agenda on track.
Has the participation of developing countries in international trade increased since you took your current position?
Without question. The strong and determined performance in Cancun by the Group of 20 developing countries, to which Egypt belongs, was a clear indication of this. The developing countries have skilfully staked out strong positions on agriculture, cotton, services, non-agricultural market access and development issues such as special and differential treatment for developing countries and addressing the concerns of these countries in implementing existing agreements.
More developing countries are participating, across a wider spectrum of issues, than ever before. Let me give you one example: Last year, four West African states - Chad, Mali, Benin and Burkina Faso - brought to the WTO’s Trade Negotiations Committee the specific request for intensive negotiations on the elimination of trade-distorting subsidies for cotton producers. This issue has become a central one in our agenda and it seems clear that these countries have the chance to obtain an agreement in this area that would be of substantial benefit to them. The notion of four poor countries bringing their case to the WTO membership in this way would have been extremely unlikely even five years ago.
Does the WTO give preferential treatment of any kind to developing countries?
Certainly. Every country has its own tariff schedule. Every country makes the decision on the level of tariffs it should apply. Generally speaking, those tariffs are significantly higher in developing countries. Moreover, developing countries are granted longer time periods to implement certain agreements. There are different thresholds that apply to developing and developed countries in a range of areas.
