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Africa: Trade Disconnect
AfricaFocus Bulletin
Jun 29, 2007 (070629)
(Reposted from sources cited below)
Editor's Note
International trade talks are again on the edge of collapse
after failure of the G4 (United States, EU, Brazil, and India)
to reach agreement at a side meeting in Potsdam, Germany.
Developing countries are increasingly vocal in their refusal
to make new commitments for opening their markets without
meaningful concessions from industrialized countries on such issues
as agricultural subsidies.
As the G4 meeting collapsed, there was a clear split between the
U.S. and the EU on the one side and Brazil and India on the other.
At the same time, a very wide coalition of developing countries,
calling itself the "G90 Plus," issued a critique of both the
substance and process of the negotiations.
Given that developed countries seem unwilling to make serious
compromises, critics welcomed the unity of developing countries,
and noted that a bad result would be worse than no conclusion at
all. Speaking to Inter Press Service, Eileen Kwa of the Thailand-based
Focus on the Global South, said "I don't think the WTO is
going to really affect world trade. I mean world trade has been
increasing exponentially in the last few years without any round.
So that will continue. So I don't think that this collapse is
going to affect world trade." The round was not going to be a
gain for the majority of developing countries, particularly in
Africa, she added.
This AfricaFocus Bulletin contains excerpts from two recent
background articles on the trade talks impasse from Martin Khor,
of the Third World Network. For the complete articles and much
additional background, visit http://www.twnside.org.sg
For earlier AfricaFocus Bulletins on trade issues, go to
http://www.africafocus.org/tradexp.php
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"G90 Plus" developing countries issue Declaration on Doha talks
TWN Info Service on WTO and Trade Issues (June 07/22)
By Martin Khor (TWN), Geneva 21 June
Third World Network
http://www.twnside.org.sg
Major groupings representing a majority of developing countries
in the WTO on Thursday issued a Development Declaration warning
that development concerns have been left behind in the rush to
agree to a deal in the Doha Round.
The alliance of groups and countries, calling themselves the
G90-Plus, said that the multilateral system in the WTO cannot be
a rubber stamp to legitimise decisions made by a few, referring
to the G4 (US, EU, Brazil and India), whose Ministers have been
meeting in Potsdam, Germany. ...
The "G90 Plus" comprises the ACP (Africa, Caribbean and Pacific)
Group, the Africa Group and the Least Developed Countries (LDC)
Group, and Bolivia and Venezuela.
A press conference announcing the Declaration was held this
afternoon, and was addressed by Ambassador Gail Mathurin of
Jamaica (who chairs the ACP Group), Ambassador Love Mtesa of
Zambia (who chairs the LDC Group), and a representative of Uganda
(which chairs the Africa Group).
Amb. Mathurin said that the G90 was a combination of important
developing country groupings that had come together previously
and now to take common positions on the Doha negotiations. As a
few other countries had also joined in the new Declaration, the
alliance could be termed G90-Plus.
She stressed the importance that the views of the majority of
developing countries be reflected in the draft modalities that
are now being prepared by the Chairs, and in the intense
negotiating process in the coming weeks.
The G90 Plus document is entitled "Declaration on Development
Concerns and Issues in the Current WTO Negotiations".
According to the Declaration, "it is imperative if the Round is
to be completed that the concerns and issues that matter to a
majority of developing countries are dealt with satisfactorily
and that our development interests are truly addressed and
promoted."
It added that critical issues for developing countries have been
marginalised or left behind as the negotiations proceeded. They
warned that WTO members should not be rushed into agreements
because "content cannot be sacrificed for timelines" and "it is
more important to get the agreements right than meet deadlines."
The Declaration dealt with both the negotiating process and the
substance of the negotiations.
On the process, the Declaration stressed four principles:
participation and transparency, the need for full and not partial
modalities, balance between obligations and benefits and less
than full reciprocity.
On participation, the G90 Plus said that a major positive feature
of the multilateral trading system is the principle that it
allows all trading partners the opportunity to participate in
making the rules. The legitimacy of the WTO rests on whether this
principle is adhered to.
"We have been concerned that the recent negotiating process has
been less than transparent and participatory. Although it is
widely known that important negotiations are taking place in the
G4 process, the vast majority of members have little or no
knowledge of the progress and content of different stages of the
negotiations.
"Although two developing countries are part of the G4, we cannot
expect them to carry the responsibility of representing the views
and positions of all developing countries.
"We have been told that the Geneva multilateral process is
central, but without knowledge of the political or technical
aspects of the G4 negotiations, it is not possible for the
majority of members to prepare themselves or provide inputs.
"We are concerned that members may be faced with texts arising
from small plurilateral processes and requested to consider them
at very short notice and to adopt them for the sake of the
system. As we are the majority of members of the system, we have
the right to know what is going on and to be given the
opportunity to participate."
The G90 Plus thus called for a much more transparent and
participatory overall process. "The multilateral process with
full participation of all members in discussion and in preparing
the drafts and final texts must be central. The multilateral
system cannot be used to rubber stamp and legitimise the
decisions made by a few members."
On the need for full modalities, the G90 Plus said that the Doha
Work Programme outcome is a "Single Undertaking." All issues that
are important to members must be considered in a balanced and
equitable manner.
"The modalities and solutions for all issues therefore have to be
considered and settled simultaneously," said the Declaration. "It
is unfair to seek a deal first on so-called "core issues" and to
promise that "other issues" be settled later.
"Firstly, it is a matter of subjective interpretation what the
"core issues" are because different members have different
priorities. Secondly, there is a concern that "other issues" will
be left aside after the so-called "core issues" are settled."
The Declaration said that S&D and Implementation Issues were once
considered priority issues, but after Cancun they were not
included in the so-called four key issues to resolve, and they
have fallen aside, despite promises that they are equally
important.
"We therefore cannot accept the concept that there will be
"partial modalities" to be settled first (for instance, by end of
July 2007), with only some issues included, while excluding
others," said the G90 Plus. ...
The Declaration also stated that for developing country members,
the level of obligations must be commensurate with the level of
benefits to be obtained in the Round. There should not be a
situation in which developing countries are asked to undertake
obligations which are not matched by the same level of benefits,
causing a net loss.
"For developing countries, there are serious concerns that the
Round must not result in de-industrialisation or in more import
surges in agriculture that adversely affect food security,
farmers' livelihoods and rural development. This would defeat the
purpose of the development objectives of the Round."
The G90 Plus said that many developing countries are unable to
take advantage of opportunities arising from increased market
access due to limited supply capacity.
"Many studies have concluded that most developing countries will
gain little or nothing and many will be losers from existing
proposals put forward by developed countries. These countries
should therefore not be asked to undertake obligations that
result in costs and losses which are not made up for by
benefits."
The G90 Plus statement also called for the principle of less than
full reciprocity (as affirmed in the Doha Declaration) to be
respected. Developing countries should undertake less obligations
than developed countries (for example, as measured by percentage
reduction in tariffs).
Moreover, the principle gives developing countries the right "not
be expected, in the course of trade negotiations, to make
contributions which are inconsistent with their individual
development, financial and trade needs."
...
Clash of positions and paradigms that led to G4 collapse
By Martin Khor, Geneva, 22 June 2007
Info Service on WTO and Trade Issues, Third World Network
http://www.twnside.org.sg
In the immediate aftermath of the collapse of the G4 talks in
Potsdam, some interesting conclusions can be drawn about what
happened and why.
Firstly, the configuration in relations between the four (the US,
EU, Brazil and India) changed. The US and EU got together, had a
rapprochement between themselves in agriculture, and united to
press the two developing countries very hard on NAMA [NonAgricultural
Market Access].
Before, the EU had been pushing the US to reduce overall trade
distorting support (OTDS) while the US pushed the EU to cut its
agricultural tariffs by more.
At Potsdam, the US offered $17 billion as its cap for OTDS (which
is above the $15 billion the EU had asked for and the $12 billion
demanded by the G20). The EU offered an average tariff cut of 50%
in farm tariffs (below the 54% demanded by the G20 and far below
the 60% demanded by the US).
The EU and US were amenable to each other's "lowering of
ambition", or to "forgive each other's sins." And then they
combined to be tough on India and Brazil on NAMA and on India on
special products.
In their statements, the EU and US have claimed how "flexible"
both of them had been, and how inflexible Brazil and India had
been. In the blame game now going on, the two developed countries
have thus attempted to throw the burden of the collapse of talks
onto the two developing countries ...
A different view came from Brazilian Foreign Minister Celso
Amorim at his Potsdam press conference after the talks collapsed:
"In a way, we are having a Cancun II in which two developed
countries have found a common level of comfort for themselves by
lowering ambition in developed countries' agricultural market
access and by lowering ambitions in OTDS - yet keeping high
ambitions in NAMA and special products and other areas. We came
to a conclusion we are pursuing a decline - not a Development
Round."
Amorim was referring to the deal on agriculture made by the US
and EU just before the WTO's Cancun Ministerial Conference of
September 2003. That deal shocked Brazil (which had before that
been working with the US and the Cairns Group to press the EU on
its tariffs) and India (which thought it could work with the EU
to get the WTO to accept a more lenient approach to tariff cuts).
...
The second conclusion is that with the US-EU rapprochement, the
developing countries are going to benefit very little or nothing
from the "lowered ambition" of the giants in agriculture.
...
But the $17 billion it mentioned at Potsdam was still grossly
inadequate in the view of Brazil and India, and quite rightly so.
Mr. Kamal Nath, the Indian Commerce Minister, told the media that
the applied OTDS of the US was only $10.8 billion in 2006. He
remarked: "And the offer is $17 billion, which is more than 50%
of the current applied level. There is no equity, there is no
logic in this. We can't correct the flaws."
...
This is the third conclusion, that the US and EU are now wrongly
portraying the G4 collapse as the fault of two inflexible
developing countries that are not willing to give anything in
return for their own generous offers.
Firstly, the EU and US offers are anything but generous. ...
"In effect, the EU and US are offering nothing, and for their
offer of zero they are trying to extract blood from the
developing countries in NAMA and services as well as in
agriculture market access," said Chakravarthi Raghavan, a
long-time analyst of WTO developments. ...
All these lead to the conclusion that the developed countries
were never interested in development or the interests of the
developing countries when they launched the Doha Work Programme
in 2001.
They had to call it the Doha Development Agenda and later the
Development Round to entice the developing countries to join in
the launch of a new round. Now, the developing countries are
calling the bluff of the developed countries and asking that the
outcome of the Round really have a development content.
And in answer, the US and EU are saying that they want "new trade
flows" from developing countries in order for their offers in
agriculture to stand. And their agriculture offers are nothing to
shout about, and in some important elements, even really nothing.
The USTR has had to resort to saying that "new trade flows" (read
significant cuts to applied rates of developing countries) is
what lifts poor countries out of poverty.
But the poor countries think otherwise, which is why the great
majority of them have defensive interests in the negotiations,
and are fighting to limit the degree of liberalisation they have
to undertake.
The clash of perceptions of what is development and what is
anti-development in the proposals of this "Development Round" is
what led to this new crisis and impasse in the Doha talks.
AfricaFocus Bulletin is an independent electronic publication
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with a particular focus on U.S. and international policies.
AfricaFocus Bulletin is edited by William Minter.
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