DOHA ROUND: DOHA ROUND: THE OUTLOOKTHE OUTLOOK

Mr. José Luis MachineaMr. José Luis MachineaExecutive SecretaryExecutive Secretary

ECLACECLAC

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CONTENTSCONTENTS

Importance and urgency of DohaImportance and urgency of Doha

Complex nature of the negotiationsComplex nature of the negotiations

After Hong KongAfter Hong Kong

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IMPORTANCE AND URGENCY OF IMPORTANCE AND URGENCY OF DOHA DOHA

The multilateral system is the best option The multilateral system is the best option for developing countriesfor developing countries

Developing countries are the main Developing countries are the main beneficiaries of a successful Doha roundbeneficiaries of a successful Doha round

Risks of protectionism and “managed Risks of protectionism and “managed trade”trade”

Full incorporation of China raises concernsFull incorporation of China raises concerns• Main challenge for the multilateral trading Main challenge for the multilateral trading

system is adapting to the surge in competition system is adapting to the surge in competition from China and Asia in global marketsfrom China and Asia in global markets

44

IMPORTANCE AND URGENCY OF IMPORTANCE AND URGENCY OF DOHADOHA

Mounting tensions between the Mounting tensions between the multilateral, regional and bilateral multilateral, regional and bilateral levels of global integration: threat of levels of global integration: threat of exclusionexclusion• Overlapping standards, inconsistent Overlapping standards, inconsistent

tariff reduction timetables, restrictive tariff reduction timetables, restrictive rules of originrules of origin

• WTO losing ground WTO losing ground • Most favoured nation treatment tending Most favoured nation treatment tending

to be the exception rather than the ruleto be the exception rather than the rule

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MAIN NEGOTIATING ISSUES AT MAIN NEGOTIATING ISSUES AT DOHADOHA

AgricultureAgriculture Non-agricultural market access (NAMA)Non-agricultural market access (NAMA) Trade in servicesTrade in services Relationship between environmental accords and Relationship between environmental accords and

WTOWTO Rules (anti-dumping, fishery subsidies and Rules (anti-dumping, fishery subsidies and

regional trade agreements) regional trade agreements) Dispute settlement (outside the single Dispute settlement (outside the single

undertaking)undertaking) Trade facilitation Trade facilitation The development dimension and multilateral The development dimension and multilateral

trading system.trading system.

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AGRICULTUREAGRICULTURE

Core issue for DOHACore issue for DOHA Three pillarsThree pillars

• Market access: significant reduction of Market access: significant reduction of tariff barriers and expansion of tariff tariff barriers and expansion of tariff quotasquotas

• Export competition: reduction of all Export competition: reduction of all export subsidies with a view to phasing export subsidies with a view to phasing them out altogetherthem out altogether

• Domestic supports: clarifications, Domestic supports: clarifications, disciplines and substantial reductions.disciplines and substantial reductions.

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CENTRALITY OF AGRICULTURECENTRALITY OF AGRICULTURE

Market access is the main and most complex issue, as Market access is the main and most complex issue, as well as the one that holds out the potential for the well as the one that holds out the potential for the greatest gains.greatest gains.

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Industrialized countries:Industrialized countries: tariff peaks tariff peaks

32.0

43.340.0 38.5

68.3

58.757.6

74.9 308.0

0

10

20

30

40

50

60

70

80

Tobacco Cigarettes Grape must Fructose andsyrups

Cheese Meat (withbone)

Tobacco Nuts Seeds

European Union Japan United States

Source: ECLAC International Trade and Integration Division

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Exports Imports Exports ImportsTARIFFREDUCTIONS

REDUCTION IN DOMESTIC SUPPORTS

Developing countries

6.7 6.0 0.8 -0.1 0.6 0.1

Argentina 4.6 4.5 1.5 -0.5 4.9 2.4Brazil 4.7 4.4 -0.5 0.6 0.1 0.1Bolivia 2.4 4.2 2.2 -0.4 -0.2 0.2Colombia 5.7 6.9 -0.9 0.7 1.8 0.3Costa Rica 14.6 3.8 1.7 -0.5 28.4 2.2Chile 4.7 4.9 1.3 -0.3 2.6 0.5India 5.0 5.7 1.5 0.1 0.1 0.0Jamaica 14.4 5.9 1.5 -0.3 4.7 0.0Mexico 5.1 8.4 0.9 0.5 0.6 -0.5South Africa 6.5 -0.2 1.3 0.5 0.5 0.1Thailand 12.4 6.4 0.6 0.0 4.8 0.3Trinidad and Tobago 11.2 5.4 1.2 -0.3 -2.3 -1.4Venezuela (Bol. Rep. of) 8.5 6.8 0.2 0.3 -0.8 -0.4

Least developedcountries

3.7 5.3 2.0 -0.2 0.1 0.1

REGION

Source: B. Hoekman, F. Ng and M. Olarreaga (2003): “Reducing Agricultural Tariffs versus Domestic Support: What's More Important for Developing Countries?”, PRWP 2918, World Bank.

PERCENTAGESIMPACT OF IMPROVEMENTS IN MARKET ACCESS AND DOMESTIC SUPPORT

50% reduction in tariff barriers:Agricultural products

50% reduction in domestic supports for

agricultural products

Changes in welfare:( $ per capita income)

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CENTRALITY OF AGRICULTURECENTRALITY OF AGRICULTURE

Market access is the main and most complex issue, as Market access is the main and most complex issue, as well as the one that holds out the potential for the well as the one that holds out the potential for the greatest gains.greatest gains.

Defining targets and tools for eliminating export Defining targets and tools for eliminating export subsidies and substantially reducing all trade-distorting subsidies and substantially reducing all trade-distorting domestic supports are highly complex and highly domestic supports are highly complex and highly technical tasks. technical tasks.

This contributes to the failure to address the politically This contributes to the failure to address the politically complex matter of reducing agricultural protectionism complex matter of reducing agricultural protectionism in Europe, Japan and the United States.in Europe, Japan and the United States.

Developing countries do not necessarily present a Developing countries do not necessarily present a united front on all three pillars of the agricultural united front on all three pillars of the agricultural negotiations.negotiations.• The relatively less developed countries prefer to maintain unilateral The relatively less developed countries prefer to maintain unilateral

preferences and keep the existing restrictions on access to the preferences and keep the existing restrictions on access to the European Union market, for example.European Union market, for example.

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COMPLEXITY OF THE NEGOTIATIONSCOMPLEXITY OF THE NEGOTIATIONS

The negotiating agenda includes highly complex The negotiating agenda includes highly complex technical matters that are being deferred while technical matters that are being deferred while the countries await results in agriculture.the countries await results in agriculture.

Developing countries must be prepared for Developing countries must be prepared for different scenarios.different scenarios.

In order to reach an agreement, an overall In order to reach an agreement, an overall balance of interests between developing and balance of interests between developing and developed countries will have to be achieved:developed countries will have to be achieved:• Inevitable trade-offs among different issuesInevitable trade-offs among different issues• Giving ground on some topics in order to gain in othersGiving ground on some topics in order to gain in others• Rigidity may be useful in the negotiations but, in the Rigidity may be useful in the negotiations but, in the

end, pragmatism and a broad view are needed.end, pragmatism and a broad view are needed.

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SOME CONCLUSIONSSOME CONCLUSIONS

Agriculture is of central importance, but it Agriculture is of central importance, but it is not the only issueis not the only issue

Weak leadership thus far by the United Weak leadership thus far by the United States and the European Union (however States and the European Union (however things are changing after the US proposal) things are changing after the US proposal)

Developing countries are more prepared Developing countries are more prepared and better organized than beforeand better organized than before

Apart from agriculture, shifting alliances Apart from agriculture, shifting alliances among the developing countries and among the developing countries and between developing and developed between developing and developed nations.nations.

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AFTER HONG KONGAFTER HONG KONG An inconclusive meeting would undermine An inconclusive meeting would undermine

the credibility of WTO and weaken its the credibility of WTO and weaken its mandate. mandate. • Good credibility in dispute settlement, but Good credibility in dispute settlement, but

none in promoting negotiations.none in promoting negotiations.• Indirect stimulus for discriminatory preferential Indirect stimulus for discriminatory preferential

agreements outside WTO.agreements outside WTO.• WTO would lose influence and relevance.WTO would lose influence and relevance.

Features of the Hong Kong Declaration:Features of the Hong Kong Declaration:• Reasonable and realistic parameters that will Reasonable and realistic parameters that will

allow negotiations to continue in 2006.allow negotiations to continue in 2006.

DOHA ROUND: DOHA ROUND: THE OUTLOOKTHE OUTLOOK

www.eclac.orgwww.eclac.org

Mr. José Luis MachineaMr. José Luis MachineaExecutive SecretaryExecutive Secretary

ECLACECLAC