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Q&A: ''Rich Countries Should Bear Burden of Doha Round Adjustments''

Interview with Faizel Ismail*

GENEVA, Mar 25 2008 (IPS) - The World Trade Organisation’s negotiations on the lowering of industrial tariffs – known as non-agricultural market access (NAMA) – have now reached a critical stage. Faizel Ismail, South Africa’s Geneva-based lead negotiator who also coordinates the NAMA 11 coalition of emerging developing economies, talks to IPS's Aileen Kwa about his concerns.

IPS: Why is South Africa so concerned about the NAMA negotiations? FAIZEL ISMAIL: We got involved in the NAMA negotiations in a more active way around the time of the Hong Kong ministerial conference (in 2005).

At the time, the U.S. and EU put on the table the Swiss formula (a tariff cutting formula) with coefficients of 10 for developed countries and 15 for developing countries. (Coefficients are the numbers to be put into the formula that will determine the depth of tariff cut. The smaller the coefficient, the deeper the tariff cut. The different tariff structures between developed and developing countries however mean that although developing countries might have a higher coefficient, they nevertheless end up making larger percentage tariff cuts).

We felt that this demand on the table of the EU and the US was far too onerous in comparison to the offers these countries were willing to make in agriculture. It was also not in accordance with the mandate of ‘‘less than full reciprocity’’. (‘‘Less then full reciprocity’’ in the WTO’s Doha Declaration of 2001 is interpreted by many to mean that developed countries in the NAMA negotiations have to take a larger proportion of tariff cuts or adjustments, compared to developing countries).

In fact, we found that "less than full reciprocity" went the other way. It was developing countries who were going to make a more onerous commitment, even within the NAMA negotiations.

So we started working together (as) a group of countries (at) whom the (liberalisation) demands were directed. These are also the major emerging developing countries, including Brazil and India. China, whilst not in the group, has always been a close ally.

(South Africa) started playing the role of coordinator. We thought the best way to defend ourselves against what we thought was a very unfair proposal by developed countries was to get organised.

We participated actively in the negotiations to defend ourselves but also to build an alliance that could play an effective role in the negotiations. Up to that point, the developing countries did not have a very clear voice.

For us in South Africa, the issue of industrial production and development is very potent. We have been undertaking a process of reform since the new government came into power. It is a very robust democracy with good institutions to negotiate different interests. We have always engaged with other social forces – business, trade unions and governments.

As South Africa, we are willing to make a contribution to the Doha Round, provided that it is also proportionate to our circumstances. There is always the threat of job losses, production output being affected; and the social costs can be significant given our very high level of unemployment.

So we have to weigh very carefully any commitment that we make which could have a negative impact on both our social sectors and on our industrial development. There are also issues related to the industrial development process and our need for policy space for furthering our industrial development.

Any contribution we make will have to be balanced and considered against those various policy issues. We have some labour intensive industries, particularly clothing and textiles and footwear, that are relatively uncompetitive and these would be vulnerable to any severe adjustment.

IPS: What are the challenges you have faced in the NAMA negotiations so far? FI: From the beginning we have consistently urged members to adhere to, one, the Doha mandate of less than full reciprocity and, two, the mandate of paragraph 24 of the Hong Kong declaration, which says that there must be compatibility in the level of ambition (depth of liberalisation) between the agriculture and NAMA (negotiations).

We negotiated paragraph 24 in Hong Kong and it compels the membership to compare the level of ambition between those two issues. However, up until now, the developed countries have simply refused to abide by the letter and spirit of that mandate.

Our problem with the chairperson of the NAMA negotiations (Canadian ambassador Donald Stephenson) is that he has not even attempted to be bound by that mandate. He said that in his first text (in July 2007) that this is a matter of interpretation and everybody has their own view and he does not think he needs to be consistent with that mandate. He just dismissed it.

And his second text (February 2008) has also dismissed it. The only way we can ensure that our interpretation of paragraph 24 in the final negotiations is adhered to, is through this NAMA 11 alliance. We have been able to maintain this group.

IPS: What do you hope to see unfold in the negotiations in the coming months? FI: The number one issue is to see the EU and U.S. make reforms to level the playing field in agriculture, remove the distortions in agriculture and create opportunities for developing countries to export the products where they have a natural comparative advantage. This is in keeping with paragraph 24.

Secondly, we need to look at the NAMA mandate itself. If you read the Doha mandate, there is a very strong orientation towards developing countries. The mandate makes it absolutely clear that developed countries must make the greater adjustment. If there are to be job losses as a result of liberalisation, the developed countries must bear the greater proportion of that burden.

So we in the NAMA 11 are holding them to that mandate and, in that context, we are ready to make a contribution.

IPS: Do you see the Doha Round being concluded soon? FI: Right now, I cannot see how the pieces are going to fall together. I cannot see a picture of the round concluding but the round is indeed possible. It is an objective that we are committed to.

We have an interest because the promise of the round is to address the deficit in the multilateral trading system which we have inherited from over 50 years of GATT (the General Agreement on Tariffs and Trade, whose rules have been widely recognised as biased against developing countries).

The opportunity now is to strengthen the trading system and address this deficit in a meaningful way. Developing countries are keen to ensure that this indeed takes place. So we are working towards concluding the round.

However, given the delays in the process thus far, and given the politics in a number of major developed countries, we are now getting close to a point where the possibility of concluding the round would become increasingly difficult to foresee.

We are still hopeful that developed countries will still make the necessary contribution – (the lack of which) continues to remain the major obstacle to the further progress of the round, particularly with regard to the high level of ambition in agriculture.

*The first in a series of two interviews on the NAMA talks

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