Programs and Opportunities
Developing Countries Find Voice
in Hong Kong
February 2006
Printable version
By Mary Rekas
Last December, 150 member nations of the WTO (World
Trade Organization) met in Hong Kong to gain consensus
on new rules for world trade. This third ministerial of
the DDA (Doha Development Agenda) resurrected the hope
for trade liberalization, culminating in a ministerial
declaration that clarified agreements and set a schedule
for continuing negotiations.
At the
Hong Kong meeting, the least-developed WTO nations found
their voice and ended a stalemate that began at the
second Doha ministerial in Cancún, Mexico, in 2003.
Leaders from developing nations articulated the needs of
their constituencies in very specific terms and became
an integral part of the negotiation process.
This
welcome change was not happenstance. It came through
support by developed nations for measures to help
least-developed nations become participants in the world
trading community. Trade capacity building, through
bilateral assistance and international institutions, has
helped these developing economies to define and
articulate their needs, and has helped them acquire the
technical expertise they need to be globally
competitive.
Doha Follows in Footsteps of Uruguay Round |
The
GATT (General Agreement on Tariffs and Trade) was
established by 23 countries in 1947 to bring
ground rules to international trade. The last of
eight trade negotiations under the GATT, the
Uruguay Round, established the WTO and set maximum
tariffs for members, but did little to liberalize
agricultural trade or get poor countries
trade-ready. However, the Uruguay Round set the
core pillars of negotiations that are still used
by negotiators today. It also encouraged
transparency in nontariff barriers and introduced
new rules for sanitary and phytosanitary measures
and other technical regulations.
The primary goal of Doha, the first trade round of
the WTO, has been liberalization that will enable
developing countries to compete effectively in the
global market. While ministers and governments
fret that the Doha Round is not meeting the time
frames set in Qatar and is not achieving the level
of ambition that had been hoped for, this state of
affairs is not unusual in global trade
negotiations. The Uruguay Round lasted from 1986
until 1995. While it was significant in
introducing new international trade rules, this
initial round achieved far less ambitious trade
reform than that set forth in Doha. |
Developing Nations To Benefit Most
After an optimistic
beginning in Qatar in 2001, the WTO’s DDA went off track
in Cancún. Developing countries felt their interests
were not being represented and joined together to
disrupt the negotiation process. The DDA’s three
pillars—export competition, market access, and domestic
support—seemed imperiled when the Cancún Ministerial
ended in disarray.
This was
unfortunate, since from its inception, DDA has been
considered the round that would more fully bring
developing nations into the global trade arena.
Agriculture is its major focus and, rightly so, since
the economies of developing nations are usually founded
on agriculture. Without fundamental reform in
agricultural trade, the DDA will not live up to its
name.
Two-thirds of the WTO membership is comprised of
developing countries; 32 are considered least-developed
countries. In these countries, over 70 percent of the
poor live in rural areas where agriculture is the
largest employer. Agriculture accounts for about 60
percent of the labor force in developing countries and
about 25 percent of their GDP (gross domestic product).
Trade
liberalization achieved through DDA will have enormous
reach throughout the global economy, with developing
countries standing to gain the most. The outcome of this
round will determine not only whether WTO members will
have greater access to international markets, but
whether developing countries will have the opportunity
to share in the prosperity that free trade brings.
United
States Leads in Trade Capacity Building
The U.S. government intensified its trade capacity
building efforts for developing countries following
Cancún, tackling many of the issues that had led to the
alienation of these WTO members—ratcheting up training
in technical and sanitary and phytosanitary measures,
helping set up legal and administrative processes for
international trade, and finding investment partners for
infrastructure. These initiatives were designed to help
producers in developing countries participate in the
global marketplace.
During
the Hong Kong Ministerial, to demonstrate support for
what has become known as aid for trade initiatives, many
nations came forward with significant pledges for
developing countries. The United States announced new
trade capacity building initiatives and pledged another
$2.7 billion to be provided by 2010, in addition to the
$1.3 billion already invested. Among other U.S.
proposals: further duty-free, quota-free access for more
products from developing nations, including cotton.
Development Initiatives Strike Positive Accord
Consensus on the importance of development initiatives
brought least-developed countries to the table at Hong
Kong. The three provisions in the declaration that oiled
the negotiation mechanism included the right of
least-developed nations to self-designate special
products that will receive protective status and to
institute a special safeguard mechanism based on price
and, possibly, quantity triggers. The declaration also
included duty-free, quota-free status for most imports
from the world’s poorest countries.
There
was also ministerial agreement regarding the three
pillars of the DDA:
The year 2013 was inked in as the final year for
elimination of all agricultural export subsidies.
Disciplines for export credits, state trading
enterprises, and food aid were also established. The
best way to provide food aid remains a contentious
issue between the United States and the EU (European
Union). While the United States consistently provides
more food as aid than other nations, the EU promotes a
cash-only policy in lieu of commodities. The United
States agreed to disciplines to address the commercial
displacement effects of its food aid programs, but
will continue to provide food for emergency situations
and in areas of chronic hunger.
Market access.
Minimal progress was made, with market access in key
markets such as the EU left unresolved. However, there
was some agreement on improving trade facilitation by
cutting costly and confusing customs procedures. With
an open marketplace already in place, the United
States continues to stress what it must bring home
from the Doha negotiations—a level playing field for
its producers.
Domestic support.
A three-band system was established for cutting
domestic support, with deeper cuts for countries with
higher domestic support. The EU is in the top band
with the highest percentage for support reductions,
Japan and the United States in the second tier, and
all other countries in a third band of lowest
reductions. There were also discussions of how to
limit use of WTO classifications of support
(categorized under amber, blue and green boxes), along
with reducing the de minimus levels of support, a
catchall category based on a percentage of a country’s
agricultural production.
Alliances
Based on Goals
Alliances were formed at Hong Kong based on common
goals, rather than developed vs. developing nations or
north vs. south. For example, the United States, Japan,
and several developing nations worked on development
initiatives. The United States also worked with the G-20
developing countries to set the 2013 date for ending
export subsidies and working on market access issues,
and with the Africans on the duty-free, quota-free
initiative and on cotton.
Next
Steps
The Hong Kong negotiations were based on the July 2004
Framework that built on earlier progress in trade
issues. The October proposal of the United States, which
set time frames for the elimination of trade distorting
measures, subsidies, and tariffs, boosted the
credibility of the U.S. position on the Doha talks and
formalized the U.S. demand for market access. The tepid
EU response to the proposal has been largely discounted
by other WTO members.
Members
set April 30, 2006, as the deadline for establishing
modalities (rules), the first in a series of dates for
setting the terms of the new agreement. Other interim
meetings are expected to help move the negotiations
toward completion, but a lot of work remains to be done.
Mary Rekas is a public affairs specialist in the FAS
Public Affairs Division. E-mail:
Mary.Rekas@usda.gov
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