WTO Doha Development Agenda - a stronger multilateral trading system

Summary: July 31, 2004: WTO Doha Development Agenda: WTO mid-point agreement paves the way for future conclusion of trade round - a stronger multilateral trading system (Geneva)

Meeting in Geneva this week, the World Trade Organisation has taken a decision which effectively completes half of the trade negotiations launched in Doha in November 2001- the Doha Development Agenda (DDA). The text adopted today sets the parameters of the future package in five key areas: agriculture, industrial products, development issues, trade facilitation, and services. To complete the Round, the framework needs to be filled out, notably with figures. The DDA is crucial to bolstering international economic growth and helping developing countries integrate into the global economy. The decision adopted today gives a clear signal that the multilateral trading system can deliver on the real needs of all its members, especially developing countries, and maintaining an ambitious round that is broad in scope.

Speaking from Geneva EU Trade Commissioner Pascal Lamy said: "The DDA is about making trade work for all, and delivering growth and development. After the setback in Cancun, today's decision shows that the multilateral trading system is alive and kicking. But we have only walked half of the way: we need now to rapidly conclude this round, thus bringing good news to a world economy in need of stimulus ". He added: "The EU letter circulated in May appears to have triggered a much needed impetus in the talks which have now succeeded. It is another demonstration that when Europe stands united we can punch our weight and moreover, to the benefit of the entire trading community, especially developing countries."

Commenting on the agreement, EU Agriculture Commissioner Franz Fischler said: "Today we got a deal which will boost the world economy, farm trade and the opportunities for poorer countries. This agreement also ensures that other rich countries will follow the EU on its reform path. The EU's reformed farm policy will not be called into question. Now, EU farmers have a clear perspective, developing countries will see better market access and less unfair competition."

The text adopted today - known as the "Oshima text" by reference to the current Chairman of the WTO General Council, Ambassador Oshima, sets clear and precise parameters on each of the key issues under negotiation. In the months ahead WTO members will develop the agreed framework into concrete, detailed and specific commitments with a view to completing the Round as soon as possible.

The DDA's final result remains an indivisible package in the form of a Single Undertaking for all WTO members: "nothing is agreed until everything is agreed". In addition to the five issues addressed in today's decision the final result should also cover the remaining items on the agenda satisfactorily such as trade and environment, dispute settlement, geographical indications (GIs) or anti-dumping rules.

It has been agreed that the next WTO Ministerial will take place in Hong Kong in December 2005.

Key elements of the Geneva agreement

Agriculture

The framework agreement will deliver a considerably bigger farm trade liberalisation compared to the Uruguay Round. It will bring a substantial cut in trade-distorting agriculture support, the elimination of trade distorting export competition practices and a significant opening of agriculture markets. All developing countries will benefit from special treatment, allowing them to liberalise less over a longer period. The world's 50 poorest countries do not have to undertake any commitments. Today's decision fully recognises the EU's fundamental farm policy reforms and ensures that also other rich countries make their farm support systems more trade-friendly.

A solution for cotton

The framework recognises the vital importance of cotton for a certain number of developing countries, and addresses the issue ambitiously, expeditiously and specifically within the agriculture negotiations. The work will encompass all trade-distorting policies affecting the sector, from import tariffs, trade-distorting cottons subsidies to export subsidisation. The EU for its part has already abolished all exports subsidies and tariffs for cotton and has undertaken a fundamental reform of its cotton subsidies eliminating the most trade-distorting support.

Industrial products

Trade in non-agricultural products represents around 90% of world trade and 70% of developing countries trade in goods. Lowering tariffs means trade growth. A decrease in tariffs of around 50% has been estimated to increase trade by around € 200 bio.

The agreement provides for a reduction of tariffs according to the following principles:

Ambitious formula to cut tariffs: a non-linear formula, with deeper cuts for higher tariffs for all products, without a priori exclusions. The text also foresees possibilities for more ambitious tariff cuts/elimination for certain sectors, in particular those of interest for developing countries (so-called sectoral initiatives)
Special rules for developing countries: developing countries would have longer transition periods and flexibilities in tariff cuts.
The particular situation of Least Developed Countries (LDCs): the world's 50 poorest developing countries will be exempted from having to reduce their industrial tariffs. They will only be required to bind their tariffs in order to enhance transparency and predictability of their trading systems. Developed and emerging developing countries are invited to provide LDCs with duty-free and quota-free access to their markets - as the EU has done in Everything But Arms initiative (EBAs) - to support diversification and increase their integration in the multilateral trading system.
The text also provides guidelines for addressing non-tariff barriers to trade

Services

Services represent between half and two thirds of the economies of both developed and developing countries. 15 of the world's 40 leading service exporters are from developing countries.

Opening up possibilities for foreign firms to provide services - such as telecoms, banking, distribution or tourism, as well as the temporary entry of foreign professionals - are vital to modern and efficient economies.

The text gives a political impetus to the on-going negotiations which are based on requests and offers. Improved offers should be tabled by May 2005. Members who have not yet presented offers should do so as soon as possible.

Cutting down red-tape at the border: launch of negotiations on trade facilitation

Excessive customs procedures and red tape can represent up to 5% of the value of the imports, thus creating an important obstacle to trade. Recent studies calculate that halving the costs of customs procedure could lead to savings up to € 300 bio.

Today's decision adopts guidelines for the negotiation aimed at expediting the movement, release and clearance of goods. Developing countries will adopt commitments according to their capacity to implement them.

The other so-called Singapore issues (competition, investment and transparency in public procurement) are dropped from the Doha Agenda but work on them will continue in the WTO.

Development issues

The agreement calls for the strengthening of provisions on Special and Differential Treatment (SDT) in favour of developing countries and implementation issues. On trade related assistance (TRA), the agreement welcomes progress made and underlines the continued commitment of WTO members to improve the quality, quantity and co-ordination of TRA as key to underpin the negotiations and their implementation.

The EU is committed to providing TRA. From 2001-2003 we have committed 2 billion Euro and have set aside for the next 4-5 years again an amount of 2 billion Euro.

The EU will continue to build alliances and work together with a very broad range of both developed and developing countries to ensure a rapid outcome of the Doha Development Agenda, if possible during 2005.

Internally within the EU, the Commission will continue to consult EU Member States and the European Parliament on the basis of our mandate and maintain a structured dialogue with civil society on DDA issues.

For more information:

http://europa.eu.int/comm/trade/issues/newround/doha_da/cancun/index_en.htm

http://europa.eu.int/comm/agriculture/external/wto/cancun/index_en.htm

For the full text of the WTO Decision

http://europa.eu.int/comm/trade

http://www.wto.org

The agriculture text in detail

Cutting trade distorting agricultural support

The framework locks in the recent reforms of the EU's Common Agricultural Policy (CAP). They will not be called into question. The agreement also ensures that other developed countries, in particular the US, will have to undertake reforms. This will be achieved by a combination of disciplines of the different forms of support.

Overall levels of the most trade distorting domestic support will have to be substantially reduced
A down payment of 20% of this reduction will be made in year 1 of the implementation period. This is a bigger cut than the reductions made following the Uruguay Round over six years
Big subsidisers will make the deepest cuts
Blue box support cannot exceed 5% of agricultural production, no further reduction is foreseen
The non-trade distorting green box remains untouched
The de minimis-loophole will be reduced.

Ending trade distorting export practices

On export competition, the EU's objective was to ensure equal treatment for all forms of trade-distorting export practices in the world. This has been secured.

EU export subsidies, export credits, credit guarantees and insurance programmes with repayment periods beyond 180 days will be eliminated by an end date to be agreed
Export credits, credit guarantees and insurance programmes with repayment periods below 180 days will be subject to strict disciplines regarding subsidies and any other trade-distorting elements
Trade distorting practices with respect to export State Trading Enterprises will also be eliminated
Genuine food aid for people in need will obviously continue. However, for food aid which is being abused for commercial displacement concrete disciplines will be imposed. The question of providing food aid only in grant form will be addressed in the negotiations.

Opening agriculture markets

The deal will substantially improve market access. Farm tariffs will be cut according to a single, tiered approach: the higher the tariff, the higher the tariff cut will be. However, the agreement caters for the EU's concern to address sensitive products. Countries can self select an appropriate number of sensitive products which will can be treated in a more lenient way. As compensation, tariff rate quotas have to be opened in order to ensure better market access.

A special, better deal for developing countries

All developing countries will benefit from a special and differential treatment across the board via:

Longer implementation periods for all commitments
Lower tariff and subsidy cuts
Special treatment on market opening for so-called special products to address food security, livelihood and rural development concerns
Fullest liberalisation of trade with tropical products
Addressing the erosion of trade preferences

Least developed countries do not have to undertake any commitments to reduce tariffs or farm support. In addition, developed countries and those developing countries in a position do so should provide duty-free and quota-free market access for products from LDCs. The EU has already unilaterally implemented such a measure with its "Everything But Arms" initiative.

Ref: EC04-198EN
EU source: European Commission
UN forum:
Date: 31/7/2004

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