Appendix
A "Development Round"?
Paragraph 34 'We urge the Government in consultation
with developing countries, NGOs and others, to establish clear
benchmarks by which it will assess the success or failure of Cancún
and the Round as a whole.'
The Government is committed to making sure that the
Doha round produces real benefits for the poor. Critical to delivering
that commitment will be an assessment of whether the agreements
made in Cancún and beyond are development friendly. Therefore,
DFID will commission an independent assessment of the Doha round
agreements, and their likely impact on development, once the round,
scheduled to end on 1 January 2005, is completed.
In addition and more immediately, the Government
will be taking regular stock of progress against the targets set
out in DFID, DTI and FCO's joint Public Service Agreement on trade.
Paragraph 36 'The deadlines for resolving issues
which were supposed to be resolved at an early stage—TRIPS
and public health, SDT, implementation—have been missed.
Early resolution of these issues was part of the mandate delivered
at Doha, and was supposed to be a key component of a development
round. […] The resolution of Implementation issues should
not, as paragraph 47 of the Doha Ministerial Declaration insisted,
be a bargaining chip in this so-called "Development Round."
Regrettably, it is.'
We welcome the recent agreement on TRIPS and public
health which shows that the WTO can responds to developing countries'
needs. Nevertheless, the slow pace of progress on other issues
of importance to developing countries is regrettable.
On implementation in particular, the Government recognises
that some WTO members' positions have been used as a negotiating
tactic. We believe, however, that there are legitimate issues
to be addressed and we are working hard to meet developing countries'
concerns. This will mean, that as far as possible, the tactics
of the negotiations should be kept separate from the substance
of discussions.
Agriculture
Paragraph 50 '… the USA and the EU must
set binding deadlines to reduce and in time eliminate the trade-distorting
support they provide to their farmers, and to eliminate all forms
of export subsidies.'
At Doha, all WTO members committed themselves to
"comprehensive negotiations aimed at: substantial improvements
in market access; reductions of, with a view to phasing out, all
forms of export subsidies; and substantial reductions in trade-distorting
domestic support." We fully agree that this commitment now
needs to be translated into reality through the Doha round of
negotiations.
Paragraph 52 '… the Commission has paid
insufficient attention to the developmental impacts of CAP and
CAP reform proposals, and [we] trust that the Government has been
doing its utmost to encourage its European partners to take seriously
the external impacts of domestic policies.'
The Government is indeed doing its utmost to encourage
others to take seriously the external impacts of domestic policies.
These issues were raised repeatedly by Ministers in the debate
on the reforms set out in the Long-Term Perspective on Sustainable
Agriculture. Throughout the CAP reform discussions, DEFRA worked
in careful and close co-ordination with DFID, DTI, HMT and FCO
to ensure maximum impact.
Paragraph 57 '… the technicalities of whether
support to agriculture might be provided in a manner which is
defined as "minimally trade-distorting" is a distraction
from the requirement to reduce the overall level of support which
the EU and other developed countries provide to their agricultural
sectors.' Paragraph 58 '… Green Box subsidies, although
classified as "minimally trade-distorting", will continue
to distort production and trade.' Paragraph 59 'The UK and the
EU should …be pressing for discussions on capping the Green
Box …'
The Government agrees on the need for reductions
in the overall level of trade distorting subsidies over time,
not just in the EU but in all countries and particularly those
in the developed world. This needs to be done in a managed way
so as to avoid unnecessary disruption and hardship.
The form that a subsidy takes does genuinely matter.
The decoupling of most EU subsidies from production is expected
to have real impacts on the volume of EU production, over time
on export subsidies and dumping, as well as on EU exports to markets
of importance to developing countries. For example, DEFRA estimated
that full decoupling would have reduced EU beef production by
5-10%.
Decoupled subsidies based on a historic and unchanging
reference year will have very little impact on current production
decisions. They do provide farmers with a safety-net that could
enable them to produce at a loss if they chose to do so, but unlike
existing direct payments, they will encourage farmers to adjust
their production to market prices and not to the level of subsidies.
Thus, we do not expect decoupled payments to result in significant
distortions compared to a purely market-based outcome. We therefore
support the focus of the Doha mandate on reducing trade-distorting
domestic support and export subsidies and believe that discussions
on capping the Green Box would be counter-productive.
Paragraph 59 '… the UK must insist, when
the EU finally does reduce the amount of trade-distorting support
it provides to agriculture, that the reductions include products
of export interest to developing countries.'
The Commission has already proposed that all WTO
Members should eliminate all forms of export subsidies for certain
key products of interest to developing countries. The EU regimes
for sugar, cotton, olive oil, tobacco and fruit and vegetables,
all of which are of export interest to developing countries, are
due to be reviewed over the next six months. The Government will
in all cases be pressing for reductions in trade-distorting support.
Paragraph 64 'As a result of intensive lobbying
… and powerful alliances … the EU's sugar regime is
not included in current CAP reform proposals, despite its disastrous
developmental consequences.'
Sugar was not part of the recent CAP reform process
because it was the subject of a separate Council decision in 2001
which modified the existing sugar regime and extended it to June
2006. That decision did include a commitment to a further review
(of the sugar regime itself, not of the EU-ACP Sugar Protocol)
in 2003. It is clear that change is essential to anticipate future
duty-free access already decided under the Everything But Arms
agreement and we look forward to the proposals for reforming the
sugar regime from the Commission later this year. DFID has also,
for example, written a paper on the development aspects of sugar
reform which has been shared with the Commission and all EU Member
States.
Paragraph 67 '… rapid liberalisation poses
its own problems.' Paragraph 47 '… attention must also be
paid to the spin-off effects of rapid agricultural liberalisation.'
We agree that developing countries need to build
the capacity to take advantage of more liberal world agricultural
markets. This is a long-term process, which means that rapid agricultural
liberalisation could disadvantage poorer and less-prepared developing
countries. Because of this, DFID is pressing, for example, for
a managed liberalisation of the sugar sector.
Agricultural liberalisation agreed through the Doha
Round will not begin until the Round is concluded and will take
place over a number of years. For example, Harbinson proposes
that tariff reductions in developing countries should take place
over a period of ten years. This means that, so long as developing
countries start preparing themselves now, there is time for countries
to adapt so as to take advantage of the opportunities that the
Doha Round is expected to create. DFID is committed to supporting
developing countries to do this where they themselves identify
help on trade related issues as a priority for poverty reduction.
Through the Integrated Framework, DFID also supports Least Developed
Countries in integrating trade-related issues into their poverty
reduction strategies.
Paragraph 68 '… the WTO should require that
the EU consults adequately and compensates appropriately those
countries whose preferences are eroded. In the case of sugar,
preference losers should also be provided with assistance …'
Paragraph 47 '… attention must also be paid to the fate
of those developing countries which benefit from the existing
system …'
WTO agreements are reciprocal and binding. Preferences,
on the other hand, are non-reciprocal and non-binding. We therefore
do not support the principle of mandatory compensation for preference
erosion. Evidence also suggests that instead of helping beneficiary
countries to diversify their economies, preferences often encourage
them to maintain production of a few specific products in often
uncompetitive sectors thus further hampering their efforts to
promote economic growth and development.
We do, however, believe that it is important that
countries who may suffer from preference erosion should be given
assistance to help them through the transition. To this end, DFID
is pressing the World Bank and the IMF to establish a multilateral
impact assessment facility to identify the cases where preference
erosion is likely to cause real problems, and to help developing
countries to design appropriate mitigation strategies. These strategies
would be supported through the normal country assistance planning
process. DFID is also pressing the Commission to address the issue
of special assistance in the forthcoming sugar regime reforms.
Paragraph 69 'The case of sugar illustrates a
point which we believe should be adopted as a general principle
of trade liberalisation; the poor should not pay for the poorest
… Poor and vulnerable countries should not bear the burden
of agricultural reform in the North.'
In the Everything But Arms negotiations the UK tried,
unsuccessfully, to prevent all the burden of the initial LDC sugar
imports from reducing market access to the EU for ACP suppliers
of Special Preferential Sugar. In general, the Government has
consistently insisted that all developing country interests are
taken into account in any reform scenario.
Paragraph 70 '… WTO members must honour
the commitments made in the Marrakesh Decision, and restated at
Doha, to help the NFIDCs as well as the LDCs to maintain their
food security whilst world agricultural markets adjust.'
The UK is firmly committed to implementing the Marrakesh
Decision. DFID commissioned an independent report on this which
was shared with the Commission and presented in the WTO in April
2003. The report offered some new ideas on how the Decision might
be implemented, such as improved IMF financing facilities to help
deal with price shocks and World Bank examination of commodity
price risk management. These ideas were taken up by the WTO's
Committee on Agriculture and have been included in the Committee's
work programme. But the UK will continue to encourage WTO members,
particularly donors, to implement other areas of the Marrakesh
Decision, such as giving food aid in fully-grant form and ensuring
that aid programmes include technical and financial assistance
to improve developing countries' agricultural productivity and
infrastructure.
Paragraph 71 '… urge the Government to continue
in its efforts both to promote rules and instruments such as strategic
or Special Products and the Special Safeguard Mechanism, and to
provide aid and other assistance, to enable developing countries
to safeguard their food security needs, and … to protect
themselves from dumping.'
The UK has been active in promoting Special and Differential
Treatment provisions for developing countries such as "strategic"
or Special Products and the Special Safeguard Mechanism. DFID
most recently commissioned an independent report on Special Products
which was shared with the Commission and presented in the WTO
in July 2003. However, the Government is concerned that developing
countries should not be able to use Special and Differential Treatment
provisions to insulate themselves completely from liberalisation.
This would be extremely damaging to trade between developing countries,
which accounts for an average of 40% of developing country exports.
Paragraph 75 'There should be a complete ban
on the use of export subsidies, and the abusive use of export
credits and food aid, from day one of an Agreement on Agriculture.'
Export subsidies are used to export surpluses that
have been produced at above world market prices with the help
of coupled domestic support and border protection. It is not possible
to eliminate export subsidies without reforms to domestic support
and tariff barriers. Reforms to all three areas therefore need
to take place on similar timescales. The reforms that have been
made to the CAP mean that the EU is now able to reduce its export
subsidies to about 25% of the level that was paid 10 years ago.
This demonstrates real progress and provides a good platform for
the negotiations at Cancún.
Paragraph 76 '… urge the UK Government …
to ensure that developing countries are not forced to open up
their markets until developed countries eliminate the practices
which lead to dumping. There may be value in considering a "balancing
mechanism" which would allow developing countries to protect
their domestic markets in the event that distortions caused by
domestic and export subsidies are not eliminated.'
Developing countries will only open their markets
to the extent that they agree to do so as part of a new Agreement
on Agriculture which they accept in their capacity as full members
of the WTO. The Government recognises that some poorer developing
countries have a weaker voice in WTO negotiations, however, we
believe that they are within their right to not agree to measures
they see as prejudicial to domestic producers or food security.
Moreover, Harbinson proposes that Least Developed Countries should
be exempt from market access commitments, while other developing
countries should have less stringent reduction commitments than
those applied to developed countries.
The Committee's proposed 'balancing mechanism' is
similar to a proposal for a 'Special and Differential Countervailing
Measure' (SDCM) made in 2001 by Argentina, Bolivia, Paraguay,
Philippines and Thailand. The UK believes that Special and Differential
Treatment provisions for developing countries should be aimed
at protecting the poor. The impact of uncharacteristically cheap
imports for poor farmers will be the same whether or not they
come from a country that subsidises production and exports. Rather
than supporting the SDCM, the UK has therefore favoured a Special
Safeguard Mechanism that would protect poor farmers from damage
to their livelihoods resulting from temporary surges in the quantity,
or falls in the price, of imports.
Paragraph 76 '… the implementation schedule
for reducing tariffs should be based not on politically negotiated
and somewhat arbitrary time-frames but on clear developmental
indicators.'
It is important that WTO agreements are clear and
transparent so that their implementation can be monitored. It
is difficult to see how this could be squared with a system that
tailored time-frames to countries' individual circumstances. However,
it is clearly important that developing countries should have
adequate time to prepare for tariff reductions. Harbinson therefore
proposes that developing countries should implement tariff reductions
over a period of ten years, while developed countries should do
so over a period of five years. The European Commission's proposal
for modalities in the WTO agriculture negotiations also argues
that a longer implementation period (as well as lower reduction
rates) should be agreed for developing countries. The UK Government
fully supports this approach.
Paragraph 77 'Any agreement on agriculture must
… pass two developmental tests; will it stop dumping, and
will it allow developing countries to protect themselves from
any continuation of dumping? … [and] must not make the poor
pay for the poorest, and must:
a) Reduce tariffs and tackle tariff peaks
and escalation.
b) Extend duty-free and quota-free access
to all LDC exports into all developed countries.
c) Ensure that tariff barriers are not replaced
by other protectionist barriers.
d) Include binding timetables to reduce and
in time eliminate domestic support and export subsidies of all
types.
e) Compensate and assist current preference
holders and ensure the food security of the NFIDCs and LDCs.'
The Government agrees that it is important to reduce
dumping, but does not believe that it will be possible to stop
it immediately. As stated above, to prevent dumping, reforms are
needed to all three areas of support (market access, domestic
support and export subsidies) and on similar timescales. Sudden
adjustment, for instance the elimination of export subsidies for
sugar, would require rapid and radical reform, which in the case
of the EU sugar regime, some developing countries, especially
ACP exporters, would oppose.
The Government fully supports the Special Safeguard
Mechanism, but not the idea of a Special and Differential Countervailing
Mechanism. This is discussed in the response to 76 of the Committee's
report. Many developing countries already have considerable flexibility
to raise tariffs to protect against dumping because their applied
tariffs are well below their WTO bound tariffs.
The Government fully agrees that a new Agreement
on Agriculture must reduce tariffs, including tariff peaks, and
tackle tariff escalation. It also agrees that tariff barriers
must not be replaced by other protectionist barriers. It consistently
highlights the development impact of any new EU proposals on standards
and other non-tariff barriers, and works to ensure this is minimised
as far as possible. The Government also strongly agrees that all
developed countries should extend duty-free and quota-free access
to all LDC exports.
The Government agrees that a new Agreement on Agriculture
must include binding timetables to reduce domestic support and
export subsidies of all types.
The Government's responses to the other points raised
above are covered in the responses to paragraphs 68-71 of the
Committee's report.
Paragraph 78 '… the Government should make
a commitment to transfer a proportion of any savings from CAP
reform to its development budget so that the losers from agricultural
liberalisation can be helped to move into other activities.'
The Government fully agrees with the objective of
reducing the CAP budget and has consistently argued in the EU
for reforms that reduce trade-distorting support and offer savings
to both EU consumers and taxpayers.
However, the Government is not in favour of explicitly
linking any revenues raised from CAP reform to the United Kingdom's
development budget. The Government has made a strong financial
commitment to development which will see the UK's aid budget almost
double in real terms in 2005/06 compared to 1997. This includes
a commitment to spend 90 per cent of aid in the poorest countries
and a significant programme of trade related capacity building.
Beyond agriculture: other issues for Cancún
Paragraph 84 '… a development-friendly outcome
would make substantial progress on reducing tariffs, tackle tariff
peaks and escalation, address the issue of preference erosion,
and acknowledge the developmental value of less than full reciprocity.'
[Similar points made in 88]
The Government fully agrees with the importance of
reducing tariffs and tackling tariff peaks and escalation. We
also believe that it is important that countries which may suffer
from preference erosion should be given assistance to help them
through the transition, as explained in the response to 68. The
Government fully agrees with the importance of less than full
reciprocity. This is particularly important in the context of
the concerns of some developing countries over the potential impact
of tariff reductions, for example on revenue collection.
Paragraph 86 '… the "appropriate studies
and capacity-building measures to assist least-developed countries
to participate effectively in the negotiations" which were
mandated in Doha, seem to have slipped off the agenda.'
The WTO's commitment to help the least developed
countries to participate in negotiations has not slipped off the
agenda. The UK, and many other developed countries, see increased
developing country participation as critical to achieving democratic
decision making in the WTO. A programme of work is ongoing (see
92 for more details).
Paragraph 86 '… tariff reduction calculations
must also take account and give credit for liberalisation which
developing countries have undertaken of their own accord …'
The Government recognises that this is a factor which
must be taken into careful consideration in the framing of the
modalities for conducting market access negotiations for non-agricultural
products.
The Negotiating Group on Market Access is currently
discussing cuts to bound rather than applied tariff rates. Cuts
to bound rates will, in most cases, have less impact on developing
countries that have undertaken market liberalisation above and
beyond their Uruguay commitments (for instance as a result of
an IMF structural adjustment programme) as there will be a wide
gap between bound and applied tariffs rates.
Paragraph 86 '… tariff barriers must not
simply be replaced by strict rules of origin, Sanitary and Phyto-sanitary
Standards … and other non-tariff and technical barriers to
trade.'
The Government strongly agrees. Non-tariff barriers
are an integral part of the Doha mandate on non-agricultural market
access. The EU Council Conclusions in preparation for Cancún
reiterate that the European Community "seeks an ambitious
outcome both on tariffs and non-tariff barriers, whose potential
to impede trade remains very high". The UK Government fully
supports this aim. We will continue to work to ensure that rules
of origin, Sanitary and Phyto-sanitary and other standards are
properly focused and do not constitute unfair barriers to trade,
particularly for developing countries. In addition, all G8 members,
including the EU, are committed to ensuring that rules (particularly
rules of origin provisions and documentation requirements) do
not inadvertently preclude eligible developing countries from
taking advantage of preference programmes.
Paragraph 87 '… we urge developed countries
… to respond positively to the calls from LDCs for "binding
commitments on duty-free and quota-free market access for all
products from LDCs on a secure, long-term and predictable basis
with realistic, flexible and simplified rules of origin
…'
The UK Government will continue to press for all
developed and advanced developing countries to provide duty-free
and quota-free access to their markets for all imports from the
Least-Developed Countries, as the EU has already done under its
Everything But Arms initiative. The UK is also working actively,
both within the EU and in the G8 context, to improve and simplify
rules of origin.
Paragraph 92 'We ask the Government to provide
aid for increased technical assistance [for the WTO competition
discussions] to enable their [developing countries] effective
participation.'
Substantial technical assistance has and will continue
to be provided to developing countries to build up their exposure
to, and experience with, competition law as well as transparency
in government procurement, trade facilitation and investment policies.
The UK Government's technical assistance programme
for competition law stems from the specific commitments on competition
policy contained in the 2000 White Paper on International Development
as well as the WTO Doha Ministerial Declaration. The latter called
for more analysis so that developing countries can assess the
potential development impact of a WTO agreement on competition.
The UK's support has included backing an UNCTAD multi-year programme
of technical assistance (including a series of regional workshops),
work by Consumers International to develop a practical handbook
and toolkit to build consumer awareness. In the future we will
provide additional support to build more human and institutional
capacity in developing countries' fledgling competition authorities.
More generally, the UK has allocated £110 million
to trade related capacity building activities since 1998. This
is more than double the £45 million we pledged in the 2000
White Paper. A more detailed briefing sheet explaining our commitments
is available on DFID's website (http://www.dfid.gov.uk). A detailed
description of technical assistance programmes and projects provided
by the EC and its member states has recently been updated and
can be found in the following WTO document available on their
website: (WT/WGTCP/W/223/Rev.1 and G/C/W/442/Rev.1, 5 August 2003).
Paragraph 96 'We are not persuaded that an agreement
on investment would be driver for development, or that the WTO
is the right place [for it]…we were pleased to hear Baroness
Amos acknowledge that the Singapore Issues are not a priority.
We trust this means that the government no longer supports the
launch of WTO negotiations on investment in this round.'
The UK Government accepts that a basic transparent,
legal and regulatory framework for investment will not, in itself,
substantially increase foreign direct investment flows to developing
countries. Contrary to paragraph 95 of the Committee's report
we do, however, believe in principle that, depending on the detail,
a framework WTO agreement on investment could have potential benefits
to developing countries. That is why we continue to support the
launch of WTO negotiations on investment in this round. All Government
Departments share a common position on the new issues. Both the
Secretary of State for Trade and Industry as well the International
Development Secretary have stated that the Singapore Issues are
not a development priority for the UK compared to agriculture,
TRIPS and public health, and special and differential treatment.
As the Committee knows, there are at present a variety
of options under discussion and no decision has yet been taken
on the scope of negotiations. Both the Trade and Industry Secretary
and the International Development Secretary have made an explicit
commitment not to sign up to anything which we believe would not
be in the interests of developing countries as a whole. On investment
in particular, our support for commencing negotiations does not
extend to specific proposals that prevent developing countries
from pursuing their national development priorities.
Any WTO investment agreement should recognise the
right for developing countries to follow national development
priorities. The UK Government supports the application of joint
ventures, technology transfers, and employment generation requirements
to foreign investors. Members would need to list these requirements
in its schedules as exceptions to the non-discrimination principle.
The EC has commented both in its submission to the
WTO (WT/WGTI/W/140) and during consultations in the WTO that it
believes the development provisions in a multilateral investment
agreement would not only be compatible with development objectives
and policies but also support them. In that paper, the EC acknowledges
that the right of WTO members to regulate in order to meet national
policy objectives should be explicitly recognised. The EC also
stressed that the development dimension should be incorporated
in the overall structure of such an agreement. The UK government
continues to subscribe fully to these stated aims. It will be
for developing countries themselves to decide whether or not the
development case is strong enough to persuade them to support
the launch of negotiations in Cancún.
Paragraph 100/101 '…inclusion of the Singapore
Issues on the post-Cancún agenda is excessively hard bargaining.
We trust that the Government's move to disassociate itself from
supporting the Singapore Issues signals that the views of developing
countries have been heard and acted upon.'
The Government, together with the EC, has been engaged
with a range of developing countries in a variety of fora to discuss
the Singapore Issues. The evolution of the proposals clearly
demonstrates that the voices of developing countries are being
heard in WTO discussions. For example on competition, the proposals
recognised that significant flexibilities must be built in to
any agreement to allow developing countries to "progressively"
adopt competition policies which suit their level of development.
There is also clear recognition that extensive technical assistance
programmes are needed to help them develop competition laws and
appropriate institutions. This is crucial if countries are to
maintain their social, economic and development objectives. Equally,
on trade facilitation the Commission is committed to integrating
capacity building, technical assistance and SDT into any framework
agreement. The EC realises that additional negotiations increase
demands on developing country delegations and hence have agreed
to move forwards "each at his own pace and according to his
own abilities".
The Singapore Issues offer potential benefits to
developing countries, depending on the details of the proposed
framework agreements. These are yet to be fleshed out. For example,
trade facilitation helps development, and important for access
to markets in the modern commercial world. Trade facilitation
measures have demonstrably improved the flow of goods, and might
increase customs revenue, and result in higher levels of confiscation
of smuggled goods. On transparency in government procurement,
developing countries could potentially benefit with possible savings
of 10-15%. Similarly, a competition agreement would help foster
co-operation and dialogue among a diverse range of countries providing
them with a more coherent approach to competition problems, especially
tackling international hard-core cartels. The evidence shows that
such cartels are becoming more global in nature and are having
particularly damaging effects on developing countries, who may
not have competition laws, and hence are more open to such abuses.
For example, a research paper for the World Bank, which looked
at 16 'cartelised' products during the 1990's, estimated that
the total value of cartel-affected imports to developing countries
in 1997 was $81.1 billion. This made up 6.7% of all imports and
was equal to 1.2% of their combined GDP. Estimates of price increases
resulting from these cartels were as high as 50%. Overcharges
from these were estimated as being in the region of $18-32 billion.
As the Committee knows there are differing degrees
of support amongst developing countries for each of the four Singapore
Issues. Developing countries are not all unanimous that the issues
should be dropped from the Doha agenda. A substantial number
see the potential benefits of framework agreements but remain
concerned that the detailed design should reflect their development
priorities.
Paragraph 106 '…US opposition to agreement
on TRIPS and public health put Cancún and the whole "development
agenda" at risk. Now the US has moved on agriculture, the
USA should move on TRIPS and public health' Paragraph 151
'…Given the UK's support of the USA in Iraq, the Prime Minister
must have accumulated plenty of political capital with the USA.
Now is the time to spend it, persuading the USA on TRIPS and
public health…'
The Government welcomes the recently agreed solution
to the negotiations on TRIPS and public health. We are particularly
pleased that WTO Members managed to agree to the 16 December 2002
compromise text. This is an important step in helping developing
countries tackle public health crises such as HIV/AIDS. It should
also build momentum in other areas of the Doha talks and help
to restore developing countries' trust in the WTO's commitment
to a true 'development' round.
Paragraph 107 '…A satisfactory resolution
on TRIPS and public health prior to Cancún, not as part
of a new exchange of concessions, is hugely important…agreement
would go some way to restoring their [developing countries] faith
in the WTO process and the ability of developed countries to keep
their promises.'
The UK Government does not regard resolution of the
TRIPS and public health issue as part of a new exchange of concessions.
All WTO members, including the US, agreed that this needed to
be resolved quickly because of its importance in helping developing
countries access essential medicines. We do not view the solution
as a "down payment" for developing countries' concessions
in other areas of the negotiations.
Paragraph 108 'Oxfam's proposals to establish
a mechanism for determining and extending transition periods for
individual developing countries on the basis of achievement of
agreed development milestones makes good sense.'
The UK Government believes that the WTO needs a more
sophisticated and effective system of special and differential
treatment that prioritises poorer countries most in the need for
longer transition periods. Trade reforms need to be suited to
the needs of individual countries if they are to be effective
in reducing poverty. This will require WTO members to reach a
consensus on a new framework for SDT. In the meantime, we continue
to support the principle of considering individual requests to
extend implementation periods where there is a genuine commitment
to reform and poverty reduction.
Specifically regarding Oxfam's proposals, the Government's
view is that trade reforms are part of a country's strategy to
reduce poverty. Sequencing of reforms and longer transition periods
against achievement of agreed development milestones could mean
that many countries would be unable to take advantage of new trading
opportunities, leaving them excluded and marginalized in the world
trading system. Thus Oxfam's proposal may not be the most effective
approach to assisting countries to achieve the Millennium Development
Goals.
Paragraph 110 'Restrictions which apply to foreign
but not domestic firms must be first listed, and then progressively
removed as liberalisation proceeds'
The Government disagrees with the Committee's analysis
which gives the false impression that countries are being locked
into a "conveyor belt" of ever more liberalisation.
In fact, many countries are signatories of the GATS and have
in practice committed themselves to relatively minimal levels
of liberalisation. There is nothing which will force them to
revise this status quo as negotiations proceed. It is up to individual
WTO members to decide which sectors they wish to liberalise.
Paragraph 119 'The Government is also supporting
an assessment of GATS by UNCTAD.'
This is inaccurate. The Government is working with
both the World Bank and UNCTAD to oversee work by a group of independent
experts, which aims to inform developing countries' assessments
of various GATS proposals. This should help them negotiate more
effectively through being better informed.
This approach is different from undertaking an overall
assessment of GATS. As each developing country has different
needs and economies, its position in the GATS negotiations will
be unique. Thus assessments are only useful if they look at the
specifics of the country concerned. An overall assessment would
be broad brush and less meaningful. Furthermore, developing countries
clearly require support in the area of impact assessment, but
the assessments must be undertaken by individual countries themselves
and not on their behalf by the WTO, donor countries or other international
organisations.
Paragraph 120 'We urge the Government and the
EU to consider seriously developing country requests on Mode 4.'
The UK Government fully recognises the potential
benefits of a liberalising agreement on Mode 4 for both developed
and developing country economies. The current EU offer does go
some way towards meeting the requests of some of the major developing
country suppliers of Mode 4 related services, such as India.
Significantly more work needs to be done before we
can confidently claim to have adequate mechanisms for managing
freer trade in other areas of Mode-4 requested by developing countries,
such as free movement of lower-skilled workers. While the net
potential benefit for developed and developing country economies
of freer labour movement is widely accepted to be large and positive,
there are still likely to be a few unwelcome effects on a number
of developed country domestic interest groups. These must be
understood if they are to be properly mitigated.
Paragraph 121 '…the UK and the EU must
ensure that the right to regulate includes the right to regulate
for development as well as to provide a welcoming business environment.
They must ensure that this right is supported by the IFIs. They
must not put undue pressure on developing countries to make liberalisation
commitments.'
The Government's view is that it is critical for
all developing country offers to open sectors be made together
with the introduction or strengthening of appropriate regulatory
measures covering development as well as the business environment.
The two should be considered as opposite sides of the same coin,
and not as separate issues.
Regarding the Committee's views on "undue pressure"
and the proposal that developing countries should receive credit
for so called "autonomous liberalisation" undertaking
at the behest of the IFIs (para 114), the Government agrees.
It is important to make an explicit distinction between a country
undertaking trade liberalisation policies as part of a Poverty
Reduction Strategy, whether in services or goods, as opposed to
choosing to bind those liberalising measures within the WTO rules-system.
The only way that an autonomous or IFI-linked liberalisation
measure can be "locked in" via GATS is if the member
concerned chooses to offer it up as a GATS commitment. There
is no way that GATS can automatically lock in any liberalisation
measure, whether IFI-linked or not.
Paragraph 127 'Donors should commit themselves
to assisting commodity-dependent countries and farmers to increase
their productivity, to add more value and to diversity their activities.
And, to increase coherence further, serious consideration should
be given to linking the debt service schedules of commodity-dependent
LDCs to changes in commodity prices which are beyond their control'
We agree that commodity dependent countries need
to increase productivity and diversify their economies. This
requires countries themselves to create a more favourable domestic
environment for pro poor investment and economic growth.
The Government also agrees that commodity prices
have an important impact on debt sustainability. This is why
we successfully pushed for a revision to the Heavily Indebted
Poor Countries (HIPC) Initiative so that a country's debt position
is reviewed again as countries exit the Initiative. This means
that additional relief is provided where external factors, such
as falls in commodity prices, have pushed a countries debts back
over the HIPC thresholds. The Government believes that, as countries
complete the HIPC process, debt relief should be provided on an
irrevocable basis, rather than being agreed annually. Reviewing
annual debt service levels would mean that the relief would no
longer be irrevocable.
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