Doha Round Negotiation under WTO

The below mentioned article provides an essay on Doha round negotiation under WTO.

Introduction:

In Hong Kong India made some modest gains in the field of agriculture, industrial products and TRIPS. A good number of issues concerning liberalisation of global trade are yet to be resolved.

However, much depends on future negotiations during which several issues particularly regarding market access for manufactured goods (NAMA) and services are to be resolved.

Whether in these future negotiations, developed countries will adopt an attitude which ensure fair and free trade from the viewpoint of LDCs and developing countries. The developed countries proposed to link lower farm subsidies by them to gain greater market access for non-agricultural goods in the developing countries. This is against the letter and spirit of Hong Kong Declaration. And it is these kinds of tactics of the developed countries that Juseph Stiglitz predicted and thought that due to this Doha Round Negotiations for Development will collapse.

In our view it must be made clear to the developed countries that the artificiality of prices arising out of the substantial domestic agricultural subsidies provided by them must be dealt with firmly if we are to make any headway towards fair trade in agriculture. Developing countries have a right to use the flexibilities provided in Hong Kong declaration to protect their small and medium enterprises and their infant industries like automobiles.

Therefore, in future trade negotiations no compromise be made on flexibilities in connection with agriculture and industrial products granted to the developing countries in Hong Kong declaration. We agree with Muchkund Dubey who have been associated with earlier Uruguay Round negotiations when he writes “The initiatives of India, Brazil and other major developing countries have indeed brightened up the prospects of concluding the Doha Round by the end of 2006 or thereafter”.

However, the magnitude of the problems still remaining unresolved should not be underestimated. There are still seemingly irreconcilable differences on some of major elements of modalities. The time available is too short. Therefore, one cannot rule out the possibility of the agreement reached in Hong Kong falling apart and the Doha Round being delayed indefinitely posing new threats to the multilateral trading system.

The Doha Round of trade negotiations are under way for the last ten years (since 2001). Negotiations paused in December 2008 but again resumed but so far talks have not been concluded and also there has not been much progress in this regard too. It may recalled that main purpose of setting up WTO was to usher in era of trade liberalisation.

Thus, if Doha Round which focuses on the developmental dimension fails, it would affect free trade and the countries would enter into bilateral trade agreements providing for trade preference to the parties to the agreements. To promote multilateral trade mechanism India is working with coalition groups in the WTO towards an early conclusion of the Doha Round. Its stands has been made quite clear that it favours the protection of poor, substance farmers of developing countries and gives priority to vulnerable industries of the developing countries.

Doha Round Talks in the Area of Agriculture:

In the area of agriculture discussions are still taking place on the basis of revised Draft of agriculture modalities of December 2008. According to this draft, developed countries would have to reduce their bound tariffs in equal annual installments over 5 years with an overall minimum average cut of 54 per cent. And developing countries have to reduce their bound tariff with a maximum overall average cut of 36% per cent over a larger implementation period of 10 years.

Developing countries would have a special products (SP) entitlement of 12 per cent of agricultural tariff lines. An average tariff cut of 11 per cent is proposed on SPs including 5 per cent of total tariff lines at zero cuts. There are also reductions proposed for various categories of domestic and export subsidies.

Non-Agricultural Market Access (NAHA) Negotiations:

In the case of Non-Agricultural Market Access (NAMA) negotiations, the tariff reductions are proposed through a non-linear swift formula with three coefficients of 20, 22 and 25 for formula reductions linked to specific flexibilities for protecting sensitive NAMA tariff lines of developing countries.

India has said any attempt to dilute the development agenda of the Doha round of the WTO talks will not be acceptable and demands for more market access from developing countries by developed countries cannot be entertained. The US has asked large developing countries including India, Brazil and China to remove duties on some industrial goods but has been refused as these countries claim that it goes beyond the commitments that they have to undertake in the on-going round.

This is now the primary issue holding up the Doha negotiations which is into its tenth year. According to WTO Director General Pascal Lamy, while the Doha round is stuck in a deadlock, the relevance of the multilateral institute has not yet waned. WTO is a member driven organization and its negotiations are a collective enterprise, India is a good example of how trade can be leveraged to achieve growth and reduce poverty, he added. As per WTO estimates, the Doha round that seeks to open up trade further in goods and services, is expected to result in gains worth $282 billion.

Another important aspect of NAMA negotiations pertain to Non-Tariff Barriers (NTBs). With regard to this, India is one of the initial proponents of the Horizontal Mechanism (HM) proposal. It aims to bring in a ministerial decision on “Procedures for the facilitation of NTBs.” This proposal has received the support of more than 100 WTO Member countries. Though the Doha mandate refers to NTBs in the context of ‘products of export interest to developing countries’, there have been some moves to utilize this increasing market access of remanufactured goods by some countries, led by United States of America.

The Services Negotiations at the WTO:

In services India has been a demandeur. It has also offered substantial sectoral and modal coverage in its initial and revised offers which are subject to the conditions of receiving satisfaction in respect of its Mode 1 and Mode 4 requests. India is the coordinator of the plurilateral requests in Model (cross-border supply) and Mode 4 (Movement of Natural Persons) – the crore areas of its interest in the services negotiations. India is also co-sponsor of plurilateral requests in computer and related services (CRS) and architectural, engineering and integrated engineering services.

India has shown considerable movement from Uruguay Round commitments to revised offers; however its primary requests in Modes 1 and 4 have not been addressed by key developed countries. Some of the major developed country members have shown little or no movement in their Mode 4 offers which is a major cause of concern to India.

The US and other developed countries such as Australia are trying to introduce a new approach to services negotiations by way of the clustering initiative. India has opposed this cluster approach on procedural as well as substantive grounds. The lack of progress in services under the Doha Round is not due to problems with the approach of negotiations but because of lack of political will, inadequate response from developed countries in sectors and areas of export interest to developing countries, and little movement in agriculture and NAMA.

Rules Negotiations at Doha Round Talks:

Negotiations are taking place in the Negotiating Group of Rules (NGR) aimed at clarifying and improving disciplines under the Anti-Dumping Agreement and the Agreement on Subsidies and Countervailing Measures (ASCM), while preserving the basic concepts, principles, and effectiveness of these agreements and their instruments and objectives. Members are also discussing new disciplines for fisheries subsidies.

Consensus eludes on the bigger issues in anti-dumping such as zeroing, sunset reviews, lesser duty rule, public interest, causation, and anti-circumvention. In Subsidies Agreement, considerable divergence remains in the proposals on specific subsidies in the case of inputs provided at regulated prices, and benchmarks for export finance. India has been seeking strengthened anti-dumping rules so as to prohibit the use of zeroing in dumping margin calculation, strengthening of the rules for conduct of sunset reviews, and mandatory application of lesser duty.

In the Subsidies Agreement, India is opposed to the enlargement of the scope of prohibited subsidies in the ASCM and/or limiting of the existing flexibilities for the developing countries. In the negotiations on the new disciplines on fisheries subsidies, India is seeking effective special and differential (S&D) treatment for the developing countries, particularly in the light of employment and livelihood concerns for small, artisanal fishing communities and for retaining sufficient ‘policy space’ so as to enable it to develop its infrastructure.

Trade Facilitation at Doha Round Negotiations:

Another important area of the Doha round is the negotiations on trade facilitation. Simplification of trade procedures by reducing trading costs is in the interest of all WTO members. A Draft Consolidated Negotiation Text on Trade Facilitation was worked out by the WTO members on 14 December 2009.

The draft text has since been revised six times in 2010 through discussions in the meetings of the Negotiating Group on Trade Facilitation. India has been actively participating in these meetings and has also tabled a few proposals on ‘Customs Cooperation’, Rapid Alerts System of Customs Union’, and ‘Appeal Mechanism’, Developed countries do not want to change their trade procedures but expect others to do so.

Developing countries have, by and large, adopt an extra defensive approach to negotiations. Least developed countries, in general, do not want to undertake any binding commitment. Capacity constraints and lack of resources are two major factors that prevent developing countries (and least developed countries) from taking on binding commitments in trade facilitation.

The current scenario indicates that developed countries and other donors may not invest in building physical infrastructure in these countries, although the July 2004 Framework Agreement clearly links commitments to support and assistance for infrastructure development. It is important that this linkage is respected by the entire WTO membership particularly the developed countries and that of adequate assistance is provided for implementation of commitments so that a high standard agreement on trade facilitation can be reached.

The Doha Round of trade negotiations in the WTO which began in 2001 remains unfinished due to differences among members on various issues. The Eighth Ministerial Meeting of the WTO which was held in December 2011 in Geneva provided political guidance to the members to resolve the issues involved. However, there was no significant progress in 2012.

Efforts are being made for an early progress on some issues in time for the Ninth Ministerial Conference of the WTO (MC9) to be held in December 2013. India is of the view that any yearly outcome of the negotiations should in invariably address issues of interest to the developing countries, especially the least developed countries (LDCs) and the small vulnerable economies.

A Draft Consolidated Negotiating Text on Trade Facilitation was worked out by the WTO members on 14 December 2009. The Draft Text has since been revised fourteen times (till December 2012) through discussions in the meetings of the Negotiating Group on Trade Facilitation (NGTF).

India is actively engaged in these negotiations and has also tabled a few proposals on ‘Customs Cooperation’, ‘Rapid Alerts System of Customs Union’, and ‘Appeal Mechanism’. The Draft Text, however, lacks internal balance. The developed countries are holding up the laws and procedures of their own countries as benchmarks and want the developing countries to replicate them. Developing countries have by and large adopted a defensive approach in the negotiations.

The developed countries and a few developing countries are making efforts to achieve’ Trade facilitation’ for an early outcome, in time for the Nineteenth Ministerial Conference. India along with most of the developing countries wants issues of market access and trade facilitation to be balanced with developmental issues such as duty free quota, free market access for LDCs, and acceptance of the modalities for reducing cotton subsidies.

The G33 group of countries, which is a coalition of 46 developing countries, including India, has tabled a proposal on food security in the WTO on 16 November 2012. The proposal is for an amendment to certain provisions of the WTO Agreement on Agriculture to allow developing countries great flexibility in their public stockholding operations for food security purposes. The issue of food security is very important for India and any concession on the trade facilitation front needs to be balanced by acceptance of the G33 proposal in any package deal for the Nineteenth Ministerial Conference.

During the 2012-13 some of the developed countries members of the Information Technology Agreement (ITA) of WTO viz, the USA, European Union, and Japan, have proposed expansion of the agreement (called ITA-2) to increase the coverage of IT products on which customs duty would be bound at zero, addressing non-tariff measures, and expanding the number of signatory countries to include new signatories such as Argentina, Brazil and South Africa.

The proponents of ITA expansion have prepared a consolidated list containing around 350 IT products (combining products of interest to all proponents of ITA-2) on which tariff reductions are being sought. This is under active discussion in the WTO and India is carefully examining the proposal.

Negotiations in services have continued primarily in the plurilateral format. Intensive negotiations were held in 2009, 2010, and also till the first half of 2011. These efforts culminated in a report by the Chair of the Committee on Trade in Services (CTS) and all subsidiary bodies under the CTS in April 2011. The Chair’s report puts forth two views.

The developed countries’ view is that further progress on market access could include the binding of autonomous liberalization where possible, improved levels of access under commercial presence mode, that is, Mode 3 (including restrictions on foreign equity participation and forms of commercial presence). The developing countries view is that there is imbalance in market access negotiations as sectors of export interest to them are not being fully reflected in developed countries’ offer.