Incremental Advances in WTO Negotiations - Essay Example

Full Examiner Incremental Advances in WTO Negotiations Trade ministers meeting in Hong Kong have accepted an agreement that incrementally advances long-stalled World Trade Organization (WTO) negotiations but still leaves most political and economic decisions pending for 2006. Ministers approved December 18 a final declaration aimed at giving direction for concluding the conference, formally called the Doha Development Agenda, by the end of 2006. U.S. Trade Representative Rob Portman said at a closing press conference that it was important for them to continue focus upon the task and lead the way forward. He was especially glad over the fact that this conference had given them the verdict that all countries had a consensus. Despite the economic disparities among the states, still he believed it was extremely reassuring that all of them had come together on one platform with one agenda. Seemingly, the December 13-18 Hong Kong meeting did not achieve the kind of breakthrough the United States had desired some time back. However, it did produce some results, most of who were conditioned on successful conclusion of the Doha negotiations with an all-encompassing trade agreement. Agricultural Export Subsidies and Cotton The final declaration requires elimination of agricultural export subsidies by 2013, a date agreed to the European Union (EU). The EU is important to be considered here as it accounts for about 90 percent of such spending. The US along with the developing countries were thinking on lines of 2010 as a deadline as they believed it could suffice better progress. The declaration requires elimination of export subsidies on cotton maximum by 2006. this issue is particularly important for West Africa. The U.S. Congress is likely to repeal U.S. cotton export subsidies already, in order to come in line with an adverse WTO dispute-settlement panel ruling. It would accord them duty-free, quota-free access to cotton from the lesser developed countries. However, this can practically only take effect once implementation starts on any final agreement reached in the Doha negotiations. It states as an objective that any negotiated cuts in domestic support spending for cotton farmers in countries that have such programs would have to go deeper and be put into practice faster than any other domestic agricultural subsidy cuts. The U.S. delegation worked intensively with mediators from Burkina Faso, Benin, Mali, Chad and Senegal; countries that had threatened to block any Doha agreement without acceptable resolution of the cotton issue. Everyone wants to reduce subsidies and eventually eliminate subsides in agricultural goods, was the general impression at the conference.But here was the argument whether this should be true for all agriculture except cotton, or otherwise. Ultimately, cotton has finally been placed with the rest of its agriculture fraternity. Duty-Free, Quota-Free Market Access The declaration requires the provision of duty-free and quota-free market access for most products from the 32 least-developed countries by 2008 or no later than the start of the implementation period of any agreement. It requires such access for at least 97 percent of products as that fall in line with the tariff schedule. The United States had pressed for exceptions to duty-free, quota-free for specific products that already trade competitively on the global market. The United States has not decided on what products it might exclude from duty-free, quota-free treatment.Sugar may or may not be one possibility.Earlier in the week it was suggested that other possible exclusions, including certain competitive textile products from Bangladesh and Cambodia may be considered. The Doha negotiations have languished almost since they were launched in 2001, with an impasse over politically difficult agriculture issues blocking most other progress. By the end of 2006, they are scheduled to conclude a deadline of sorts for the United States, which has trade negotiating authority from Congress only until July 2007. WTO members had agreed in a July 2004 framework for negotiating on agriculture on eliminating export subsidies but left the deadline to further negotiation. In parallel with export subsidy elimination, the declaration also requires negotiated agreement by April 2006 on disciplines for agricultural export credits and credit guarantees; on monopoly state trading enterprises such as food aid, as well as grain marketing boards in Canada, Australia and New Zealand. Food Aid The declaration's ruling on food aid says any WTO-negotiated rules would not prevent food from going to hungry people in emergencies but would prevent displacement of commercial sales by assistance of excess supplies. The EU had been pressing to restrict food aid to cash only, a position vigorously resisted by the United States. At a late December 18 meeting with other delegations, Portman said the WTO should not limit delivery of food aid only to emergencies. He believed that they should be doing everything possible to promote the most flexible flow of food to where it is needed.What is allowed as legitimate donations of food must be expanded to cover both emergencies and the needs of the most susceptible. Food aid can be the distinction between life and death for starving people. Domestic Support Payments and Tariffs Even with agreement on export subsidies elimination, much more difficult negotiations remain on the other major groups of agricultural issues concerning domestic support payments to farmers and tariffs. In October the United States had submitted a suggestion for drastically reducing agricultural tariffs and the most trade-distorting domestic support. This attempt to rally support for robust results at the Hong Kong meeting achieved little, as the EU subsequently made a counter-proposal that analyses showed would produce little or no real additional market access. The declaration indicates modest development on the other major agricultural issues, tariffs and domestic support. On tariffs, it formally adopts existing working language setting four bands, from highest to lowest, but sets no level of ambition - or target - for cuts. The United States had pressed for deep cuts, deepest at the highest level. The declaration has no specific language on limiting the number of sensitive products excluded from tariff cuts. The United States had pressed for a limit of 1 percent of products, as defined by the tariff schedule; the EU had sought 8 percent, about 160 products. On trade-distorting domestic support, the declaration adopts some new language setting three bands for cuts but no specific level of ambition. The sharpest cuts would have to be made in the highest band, concerning the EU, the WTO member currently allowed to spend the most money on domestic support, about 3-1/2 times the allowed U.S. level. The United States and Japan, in the second band, would have to make somewhat smaller cuts. Other countries, in the third band, would have to make even smaller cuts. Other Issues In language worked out on EU demand, the declaration requires that tariff cuts in industrial goods achieve "a comparably high level of ambition" as agricultural tariff cuts. The declaration indicates little progress on industrial tariffs. It does set an April 30 deadline for establishing modalities -- how far and how fast to open markets -- and a July 31 deadline for countries to submit offers. It adopts what is called a Swiss formula for the industrial tariff cuts, requiring the sharpest cuts for the highest tariffs. The United States had pressed more specifically for a Swiss formula that had two coefficients, a higher one requiring deeper cuts for the developed countries and a lower one for developing countries. The declaration specifies no number of coefficients. The declaration sets deadlines for the services negotiations, requiring countries to make offers to open their markets for financial services, telecommunications, express delivery and other services by July 31, 2006. It requires countries to submit their final complete list of proposed commitments on services by October 31. In all, it has to taken as a small step forward. Right now, every thing is in the speculation phase, however, it is likely that of a positivist attitude is maintained, a productive outcome can be maintained. Work Cited Odessey, B. Agreement Reached on Incremental Advances in WTO Negotiations. 19 Dec 2005. . Read More