1 The WTO Doha Round This guide provides essential background on the Doha Development Round of the World

Trade Organization (WTO). It is intended as an introduction to the issues for a general development audience, but also provides a selection of further links and reading that might be of interest for a more specialized audience. What is the Doha Round? . The World Trade Organization (WTO) was launched in 1995, and since then, five Ministerial conferences have been held. The Doha Ministerial in 2001 was declared the Development Round, and was marked by a core concern: that the multilateral trading system should benefit the developing countries that constitute over three quarters of WTO members. The Doha declaration pledged to enable developing countries to secure a share in the growth of world trade commensurate with the needs of their economic development through two key routes: Improving market access to Northern markets for developing countries by reducing import tariffs that prevent increase prices and distort competitiveness Phasing out domestic and export subsidies, that enable the overproduction of goods at very low prices, often leading to the dumping of these goods at prices that are cheaper than those of locally produced goods The most strategic area identified for reform at Doha was agriculture, followed by non-agricultural market access (NAMA), trade in services (GATS), developing country issues (Special and Differential Treatment);aid for trade. Yet, in the intervening period, Northern countries have proved unwilling to open up their agricultural markets, without a commitment from developing countries to lower their own barriers in services and non-agricultural goods. Rich countries also want to limit the scope of Special and Differential Treatment Measures (SDT) measures that would soften the impact of tariff reductions for 1

2 developing countries. Thus, the promise of Doha as a catalyst for development has largely not been met. The Doha Round and agriculture Even though agricultural trade is marginal in Europe and the USA, the sector is heavily subsidized and protected in both of these industrialized trade giants. At the same time, most developing countries depend on agriculture as a provider of livelihoods. As a result, the poorest group of developing countries in the Doha Development Round, the G90, is pushing hard to make sure their interests are recognized. Many countries have large and economically significant agricultural sectors, and these are often fiercely protected internationally. However, in the EU, agriculture contributes only 1.7% to the total value of European income. In the US, this figure is even lower, at around 1%. Despite the marginal economic value of agriculture, the sector is heavily subsidised and protected in both of these industrialised trade giants. The United States has vowed that it wants to remove all trade barriers, but is subject to political pressure from such groups as cotton farmers, who are influential in states that are key to the republican vote. Developing countries and agriculture In contrast to the Northern developed countries, the majority of developing countries depend on agriculture as a provider of livelihoods. As a result, the poorest group of developing countries in the Doha Development Round, the G90, is pushing hard to make sure their interests are recognised, and that they are entitled to special and differential treatment to strengthen their handicapped trading positions. However, there is also a group of so-called advanced developing countries, such as Brazil, that have large and efficient agricultural systems. This group is thus pushing for more liberalisation in order to exploit their competitive advantages. In Agricultural negotiations in the Doha Development Round can generally be divided into four core themes: market access, domestic supports, export competition, and development issues: 2

3 Market access: this includes import tariff reductions, rules for special and sensitive products, and a safeguard mechanism protecting developing countries from big dips in world prices or surges in imports which could threaten food security Domestic supports: The subsidy payments to farmers, which the WTO has classified into 3 different coloured boxes, representing different levels of tradedistorting financial supports Export competition: which include export subsidies, and food aid issues (such as the dumping of Northern agricultural surpluses in developing countries) Development issues: recognising the reduced agricultural capacity of many developing countries and thus the need for flexibility and special and differential treatment (SDT) Doha and developing countries WTO definitions of developing countries Of 132 countries in the WTO, 103 are classified as developing or least developed. This number is increasing year by year. There are no WTO definitions of developed and developing countries so members make their own decisions on their status. However, other members can challenge the decision of a member to make use of provisions available to developing countries. Special and differential treatment Special and Differential Treatment allows for developed countries to treat developing countries more favourably than other WTO members, and for flexibility in the rate at which developing countries are expected to liberalise. Preferential trade agreements 3

4 The most significant expression of SDT is non-reciprocal Preferential Trade Agreements, which allow least developed countries to benefit from lowered tariffs on certain products, to boost their access to international markets without the requirement of lowering their own tariffs in return. One of the aims of Doha has been to erode these PTAs, since they are seen as distorting paths to multilateral trade liberalisation. The rationale is that the introduction of duty and quota free access for products from LDCs will erase the necessity for PTAs. The erosion of the PTAs has prompted much discussion. One key area of debate is the EU's plan to replace its non-reciprocal PTAs with ACP countries with Economic Partnership Agreements that would require the elimination of ACP tariffs. Aid for trade To cushion the transition period, alternative forms of support, such as aid for trade, have been proposed. Aid for trade is intended primarily to develop supply capacity in developing countries, enabling them to have a greater chance of holding their own in the global GATT and GATS The two acronyms, 'GATT' and 'GATS' are often confused. The General Agreement on Tariffs and Trade (GATT) is the trade agreement agreed in 1947 after the failure of the U.S. congress to ratify the International Trade Organisation that had been proposed at Bretton Woods, along with the International Monetary Fund (IMF) and the World Bank. GATS, the General Agreement on Trade in Services, is the agreement within the WTO on trade in services. It became part of the WTO in 1995. Export subsidies and domestic subsidies It is important to distinguish between domestic subsidies and export subsidies. The former are paid to farmers for producing agricultural 4

5 products. The latter help farmers export their products. This may seem obvious, but the EU in particular often refers ambiguously to reductions it has made in subsidies, without specifying that this is not a reference to the market distorting domestic subsidies but to the less significant export subsidies. Therefore the claims it makes are often not as dramatic as they appear to be. Percentages It is important to put percentages and figures into context, as reports can be misleading. For example, although the Doha Ministerial Declaration obliges Developed Countries to provide duty and quota-free access for 97% of Least Developed Country exports as of 2008, the remaining 3% reservation will account for 330 tariff lines. This could mean depriving some countries of market access for all their key products. The Doha Development Round, as it has been known, was nicknamed that way to show that this round of trade negotiations were to favor poor countries ability to develop and prosper from global trade, while acknowledging the unequal nature of global trade, dominated by industrialized countries, at the direct expense of the developing world. Media attention lacking There was hardly a mention in many western mainstream media, certainly not on prime time television news broadcasts, that such an important meeting was taking place. Only as the meetings ended with dramatic collapse did the media appear to turn attention to this. Yet the headlines were more about the sensational bickering between the EU and US as to who was to blame for the collapse.

WTO Meeting in Hong Kong, 2005 5

6 December 2005 saw Hong Kong host the 4th World Trade Organization (WTO) Ministerial meeting. This meeting, one of the most important in the world, was to discuss a number of trade-related issues, key for developing and developed nations, alike. This meeting continues from the earlier Doha round where it was recognized that the global trading system was unequal and unfair for most of the world and so the meetings should place development at the fore. Thus this meeting is being billed as a Development Round. However, the concerns as per previous years continued to include the lack of transparency and democracy in the decision-making processes, and the power that the rich nations have over the poor distorting trade in their favor. The previous Ministerial meeting two years earlier collapsed as the developing world took a strong stance and stood up to the rich nations. Yet, since then, the same kinds of issues have resurfaced as rich nations appear to have hardly moved on their countless promises, pledges and obligations. As a result, and perhaps predictably, poorer countries were pressured to agree to a deal that did not really work in their favor. Last updated Monday, December 26, 2005.

WTO Meeting in Cancun, Mexico, 2003 The 5th WTO Ministerial Conference in Cancun, Mexico was held in midSeptember, 2003. Issues similar to those raised in Doha were raised again, with the accompanying controversies. The talks collapsed because rich countries refused to finish discussion on issues raised in previous meetings. Instead, they wanted to talk about new issues. Poorer countries wanted to finish discussion on the previous issues because it impacts them the most. While the talks failed, it was the first time the developing world took a united stance against the rich countries. Last updated Thursday, September 18, 2003. WTO Meeting in Doha, Qatar, 2001 6

7 The 4th WTO Ministerial Conference in Doha, Qatar was held in November 2001. It was to launch a new round of trade talks prioritizing the development of poor countries and was dubbed the development round. But it was marred with controversy. Qatar was selected as the venue due to its repressive laws about the right to protest. Furthermore, both in the lead up to the meetings, and in the outcomes, developing countries on the whole had actually been marginalized and ignored, once again. Last updated Sunday, December 22, 2002. World trade negotiations appear to be stalemated. Meeting in Hong Kong in December 2005, trade ministers from World Trade Organization (WTO) member countries were unable to bridge major disagreements in the Doha Round negotiations, so called because they were launched in Doha, Qatar, in2001. Why are these negotiations so difficult? The answers lie mainly in the developing world. A Changing World of Trade. The global trade regime expanded during the past two decades to encompass most developing countries, including China, which was outside the capitalist trading system in earlier rounds of trade talks. Countries like India were less engaged in earlier rounds, reflecting economies that were largely closed at the time. Now, however, these fast-growing countries have become major players in the global economy and global trade regime. As they join global trade negotiations, they bring their own offensive and defensive concerns. Some want to liberalize sectors in which they are competitive, such as agriculture, textiles, and apparelthe same sectors that are the most protected in wealthy countries, reflecting strong domestic constituencies resistant to change. Developing countries also have defensive concerns. Many of them have agricultural sectors that employ large shares of their population but are not competitive in global markets. And many want to maintain trade barriers to nurture fledgling domestic manufacturing and service sectors. The different priorities of developed and developing countries make it inevitable that current and future bargaining rounds will be more complex and difficult than past negotiations What would it take to produce a global trade 7

8 agreement that addresses the interests of both developed and developing countries? To analyze the underlying economic interests of the WTOs diverse members and the potential effects of the Doha Round negotiations, the Trade, Equity, and Development Project of the Carnegie Endowment for International Peace commissioned a model of global trade as a tool to estimate the impact of different trade policy scenarios. It is one of the newest in a series of models built to analyze the Doha Round, using the latest global trade data. In comparison with other models, the Carnegie model makes several improvements. Most notable are more accurate representations of the way labor markets function in developing countries. Most models assume that all labor, including unskilled labor, is fully employed. Yet this assumption is far from the reality of developing countries. The Carnegie model incorporates actual unemployment rates. Most model streat agricultural labor as identical to urban