Africa, Development & Aid, Economy & Trade, Food and Agriculture, Global, Global Geopolitics, Headlines, Trade & Investment, Trade and poverty: Facts beyond theory

TRADE: “Development More Important than Quick Conclusion of Doha”

Isolda Agazzi

GENEVA, Dec 3 2009 (IPS) - Governments expressed the will at the seventh ministerial meeting of the World Trade Organisation (WTO) to finish the Doha Round of trade negotiations as soon as possible. But the Africa Group still deems development to be a more important priority than a speedy conclusion.

Despite the decision of the seventh ministerial meeting to aim for a close to the Doha Round by the end of 2010, Hicham Badr, the ambassador of Egypt and coordinator of the Africa group, stressed that the Africa Group will continue to push for a Doha Round based on a developmental mandate.

“If we had to choose between a (quickly concluded) round and a successful round, we would prefer a successful round where the developmental aspect remains at the core of the package.”

Most of the outstanding points of contention, such as cotton, still depend on the cooperation of Northern countries. African cotton producers are ready to use the WTO dispute settlement mechanism if the talks don’t deliver.

The ministerial meeting, which ended yesterday, marks the growing power of developing countries. “We should not underestimate the power of developing countries,” said Badr. “Today’s WTO is different from five or 10 years ago. Countries in the WTO may not make up 85 percent of the world’s GDP (gross domestic product), but they represent 85 percent of the world’s population.”

Ronald Kirk, U.S. trade representative, told the plenary that, “while developed countries will continue to have a significant role in the global economy, advanced developing countries are playing an ever-increasing role.”

According to the International Monetary Fund, 58 percent of global economic growth between now and 2014 will be provided by China, India, Brazil, Argentina, South Africa and the Association of Southeast Asian Nations (ASEAN) countries.

Northern countries bear a lot of responsibility for the breaking down of the Doha Round talks, particularly on the issue of cotton.

“Concluding the round as soon as possible is urgent,” exclaimed Mamadou Sanou, trade minister of Burkina Faso and coordinator of the Cotton Four (C4) group of countries. “While developed countries may not lose much in waiting, poor countries lose a lot with the round being dragged out. Thousands of cotton growers are struggling against poverty.”

Cotton has become the rather dismal symbol of the failure of the Doha Round. The C4 countries are still waiting for clear proposals from their interlocutors to start the negotiations. The C4 are Benin, Burkina Faso, Chad and Mali.

Other groupings of developing countries also continue to exert pressure on the Americans and the Europeans for an acceptable solution.

Sanou stressed that the C4 prefers a negotiated solution but this position does not preclude the possibility of legal solutions within the WTO, which means using the dispute settlement mechanism.

“The basis of the negotiations must correspond with the ministerial statement in Hong Kong and the December 2008 (negotiating) texts,” he said and emphasised the importance of balancing trade with developmental goals. The C4 also insists on the need of a systemic approach to the subsidies policies of countries concerned and the price of cotton on the world market.

The current texts were “achieved through consensus and there must be no change” to them, he added.

Speaking on behalf of least developed countries (LDCs), Tanzania’s ambassador to the WTO Ali Mchumo asked for an “early harvest” in the Doha Round of the duty-free and quota-free market access for LDCs, including the cotton issue.

“Since the Hong Kong ministerial meeting in 2005, it has been decided that cotton would be treated expeditiously and specifically, but it is still dragging primarily because of the huge subsidies provided by richer governments supporting farmers and cotton exporters. These subsidies, which are trade-distorting, are having a bad effect on African cotton farmers.”

Accession to the WTO is another significant hurdle for developing countries, according to Mchumo. “Rather than being a smooth and fast process, some of the countries have to spend a lot of time on it. One country has spent eight years and the reasons advanced were of a political nature.

“In the WTO, we should transcend political reasons and rather assess a country’s ability on the basis of its capacity. Currently the process is taking too long and countries have to spend too many resources,” added Mchumo.

The LDCs are also explicitly asking for the creation of a waiver regarding the liberalisation of services. “Services are a new area where LDCs and poor countries will have to spend a lot of resources,” he commented.

Some non-governmental organisations (NGOs) argue that the much vaunted developmental mandate is simply not present in the Doha Round. Activists belonging to the Our World is Not for Sale (OWINFS) network demanded that the round be halted with a view to a complete revision of the global trading system.

Research has confirmed the criticism levelled by OWINFS. The latest is a book published yesterday by the International Centre for Trade and Sustainable Development (ICTSD) in Geneva with the title: “Agricultural Subsidies in the WTO Green Box: Ensuring Coherence with Sustainable Development Goals”. The ICTSD seeks to bridge the differences between proponents of trade and sustainable development.

The study found that “green box” subsidies do in fact distort trade, affect developing country farmers and can also harm the environment. These subsidies, considered currently as non-trade distorting, are allowed under WTO rules and the current Doha negotiating framework.

The book notes that as efficient agricultural exporters press WTO members to reduce their trade-distorting “amber box” and “blue box” support, developed countries’ “green box” spending has increased – a trend widely expected to continue. “While some types of green box payments probably have only a minor effect on production and trade, others have a significant impact,” according to the study.

The “amber box” contains all domestic support measures considered to distort production and trade and for which only minimal (“de minimis”) supports are allowed. The “blue box” is like the amber box but with conditions attached that are designed to reduce distortion. At present it has no limits on spending. The “green box” contains subsidies that are regarded as non-distorting or, at most, causing minimal distortion.

Countries’ latest official reports to the WTO show that the U.S. provided 76 billion dollars in “green box” payments in 2007 – over nine-tenths of its total spending – while the EU notified the WTO of 91 billion dollars in 2005. In the case of the EU, a large and growing share of “green box” spending was on decoupled income support, which the book shows can have a particularly significant impact on production and trade.

Decoupled income support refers to a plan like the EU’s Common Agricultural Policy in which the aid that farmers receive is delinked from production volumes.

Kenneth Quartey, a representative of the Ghana National Association of Poultry Farmers and of OWINFS, cited as an example that “the amount of poultry in Ghana’s market has increased from 30,000 tons in 2003 to 230,000 tons by 2009. Not only is it a question of import surges, but also of our ability to get access to capital.

“If the Doha Round concludes and our domestic policy space is further closed, we see little space for agriculture in Ghana and the rest of Africa where 60 percent of the population relies on agriculture for income. If the Doha Round concludes, we simply do not know what to do.”

Republish | | Print |

Related Tags

principles of finance with excel