Select Committee on European Scrutiny Fifth Report


2 Doha Development Agenda

(25127)

15529/03

COM(03) 734

Commission Communication: "Reviving the DDA Negotiations — the EU Perspective"

Legal base
Document originated26 November 2003
Deposited in Parliament9 December 2003
DepartmentTrade and Industry
Basis of considerationEM of 31 December 2003
Previous Committee ReportNone
Discussed in Council8-9 December 2003
Committee's assessmentPolitically important
Committee's decisionFor debate in European Standing Committee C

Background

2.1 The World Trade Organisation (WTO) Doha Development Agenda (DDA) was launched in 2001, and is due to be completed by 1 January 2005. As its title suggests, its main aim is to bring benefits to developing countries, but the most recent round of negotiations, which took place in Cancun on 10-14 September 2003, broke up without agreement. According to the Commission, this was due in part to systemic problems in the operation of the WTO itself, but it also believes that there were a number of serious underlying problems, which need to be addressed. These include the emergence of new groups, driven by concerns that their priorities have not been given sufficient attention; the reluctance of a number of WTO members either to engage in further trade liberalisation or to extend the WTO rulebook; the importance (and fear) of China and her "huge" exporting potential; and differences of substance which remained too wide to be bridged in the time available. The Commission has therefore been considering how, and under what conditions, the negotiations could be re-launched, and it has set out its views in this Communication.

The current document

2.2 The Communication seeks to address two series of issues, one concerned with essentially strategic questions, and the other with more detailed negotiating aims in specific areas.

2.3 On the former, it suggests:

  • that multilateral negotiations, rather than bilateral/regional trade arrangements, should remain the European priority;
  • that there remains solid support for rules on issues such as anti-dumping, subsidies and regional agreements as the necessary complement to market opening, and as an essential pre-requisite to the better integration of developing countries into the world economy;
  • that, although some developing countries have expressed concern that multilateral access could affect the preferences they enjoy in a number of developed markets, previous WTO rounds have not worked against the interests of developing countries, and that greater openness (not least on the part of the developing countries themselves), accompanied by stronger trading rules, remains the best way to secure developmental gains; and
  • that there should be a modest but feasible package of reforms, focusing on the preparation and management of WTO Ministerial meetings, better participation of smaller Members and other means to improve the efficiency and inclusiveness of WTO negotiations.

2.4 Against this background, the Commission concludes that the WTO must remain the principal forum for trade opening, and that the best way forward lies in the Community supporting the early re-launch of the DDA, and, along with other WTO members, participating constructively in efforts to secure agreement. It also says that, although the Community's fundamental objectives remain valid, appropriate lessons should be drawn from the Cancun meeting, and the rest of its Communication examines how this can be achieved in the following key areas.

AGRICULTURE

2.5 The Commission says that negotiations were launched in Doha on a broad and balanced platform covering substantial reductions in trade-distorting support and export subsidies, improvements in market access, special treatment for developing countries, and non-trade concerns. It suggests that the Community has from the outset taken a pro-active role in this area, both in supporting implementation of the Doha Declaration, and in the reforms which it has since made to the common agricultural policy, and it stresses that it is now essential that others should follow this example.

2.6 More specifically, it says that the focus should be on measures which distort trade, particularly where support is linked to production or prices, but that support which addresses key policy goals, with little or no effect on trade, "cannot be subject to any capping or reduction". The Commission also says that, although developing countries should have more flexibility as regards domestic support, in order to address their developmental needs, such an approach should be targeted on the poorer among them; and it suggests that, although developed countries should make the largest contribution to trade liberalisation, it is also essential to increase trade among developing countries.

2.7 The Commission then suggests a number of particular steps, including:

  • others (including the largest and most advanced developed countries) following the example set by the Community's Everything But Arms (EBA) initiative,[6] and matching the Community's offer to eliminate export subsidies on a list of products of interest to developing countries;
  • addressing non-trade concerns in such areas as environmental protection, animal welfare and rural development;
  • effective measures on cotton to address the plight of the African countries, to match those taken by the Community under the EBA initiative, and in its recent proposals to reform the domestic support regime; and
  • following the expiry of the "peace clause",[7] for WTO members to proceed by multilateral negotiations, rather than by litigation.

MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS

2.8 The Commission says that this is an area which offers the Community significant potential trade gains, but that progress has been disappointing, with very little balance between the commitment of different WTO members, and with large numbers of exclusions and exemptions having been put forward, especially by some influential developing countries. It comments that this would have denied meaningful market access not only to Community exporters, but to those of other developing countries as well, and that important trade and developmental benefits will be achieved only if there is serious market opening within the developing world. It therefore concludes that the concept of "less than full reciprocity" should not imply the non-participation of developing countries, but instead reflect their genuine capacity to contribute, according to their level of economic development. It suggests that this implies adherence to a simple, single non-linear tariff reduction formula applied to all tariff lines, whilst also catering for sectoral negotiations on products of particular interest, such as textiles, where more far-reaching measures are needed. The Commission also notes the importance of meaningful disciplines on non-tariff barriers.

SERVICES

2.9 The Commission says that this is another key priority for the Community, in that a further opening in services trade would offer major potential benefits to all countries, whilst being entirely consistent with the full maintenance and protection of public services. Despite this, it says that progress so far has been very disappointing, with only the Community having made a meaningful offer. It therefore suggests that a major step change is needed, involving a much greater level of engagement from all WTO members, and efforts to negotiate the reduction or elimination of barriers to environmental services.

SINGAPORE ISSUES

2.10 On the four Singapore issues (creating rules on competition, transparency in public procurement, investment and trade facilitation), the Commission says it is of crucial importance to create optimal conditions for cross-border trade, to encourage a climate attractive to productive foreign direct investment, to promote fair competition, and the procurement of the best goods and services. However, whilst noting the deep disagreement among WTO members on whether rules should be made at a multilateral level, it suggests that there is no reason for the Community to abandon its long-term objective of creating such rules, and of exploring ways of achieving this for all four areas within the WTO. At the same time, it recognises that it may be necessary to consider each of these issues strictly on its own merits, and for the Community no longer to insist on their being treated identically if there is no consensus in favour of this. It therefore suggests that the possibility of conclusions being adopted by interested members only, and on a voluntary basis, should be explored, following which it would be necessary to assess whether this would provide real added value.

TRADE AND ENVIRONMENT

2.11 The Commission notes fears, on the one hand, that the WTO can become an obstacle to environmental policy making, and, on the other hand, that over-regulation in pursuit of environmental protection is becoming an "unnecessary, disproportionate, and perhaps protectionist burden" for traders. It adds that, whilst the need for non-protectionist regulation in pursuit of environmental protection is generally accepted, the Community is among the very few parties to have concluded that these issues should be clarified in the WTO, so as to achieve a more stable equilibrium between trade and environmental policy, and thus enable the commitments made in Johannesburg on sustainable development to be pursued. It suggests that, in order to do this, it would be helpful at this stage to focus more on political principles, not least in the relationship between the WTO and Multilateral Environment Agreements, and it also proposes that there should be an initiative on market opening for environmental goods and services, aimed primarily at benefiting developing countries.

GEOGRAPHICAL INDICATIONS

2.12 The Commission notes that many products, particularly in the food and drink sector, meet the specific needs of local markets, and that there is general acceptance — as, for example, with wines — of the use of geographical indications as a means of branding on the basis of origin. However, it also notes that there is some controversy over how far this practice should be encouraged, and that three key issues arise within the WTO context — whether the present arrangements for wines and spirits can now be developed through the establishment of a register for all wines and spirits world-wide; whether the regime should be extended to other products; and whether the use of geographical indications in countries where a product has not originated can be rolled back. The Commission points out the differences which exist in this area between the Community and other participants, some of whom wish to abandon this part of the Doha negotiating agenda, and says that efforts are needed to persuade them to show the necessary flexibility (as the Community itself has done on the creation of a multilateral register). In this respect, it highlights the importance of pointing out that the protection of geographical indications is not exclusively geared to the protection of Community interests, but offers opportunities to developing countries as well.

The Government's view

2.13 In his Explanatory Memorandum of 31 December 2003, the Minister for Trade and Investment at the Department of Trade and Industry (Mr Mike O'Brien) says that the Communication was endorsed by the General Affairs Council on 8-9 December, and reflects the Government's stated commitment to work for a successful outcome to the current negotiating round, which benefits industrialised and developing countries alike. He says that the Communication will form the basis of the Community's position in the negotiations, which have now recommenced following the Cancun meeting, and that the UK has urged all WTO members to enter these negotiations positively and flexibly. He comments that the Communication is fully consistent with such an approach.

Conclusion

2.14 Given the target of completing the Doha Development Agenda by 1 January 2005, this Communication is clearly timely, bearing in mind also recent indications that the US Government is seeking to restart the round of negotiations. The Communication also touches upon an issue of considerable significance, given the Community's pivotal role in any future negotiations, and, for that reason, we are recommending that it should be debated in European Standing Committee C. We also believe that such a debate could usefully take account of the comments on the WTO and Cancun set out in the Report produced last month by the International Development Committee. [8]


6   This provides preferential access to produce from the least developed countries. See (21715) 12335/00; HC 23-xxxi (1999-2000), para 9 (29 November 2000), HC 28-ii (2000-01), para 3 (10 January 2001) and HC 28-vii (2000-01), para 2 (28 February 2001). Back

7   This stipulates that, until the end of 2003, agricultural subsidies permitted under the WTO's Agreement on Agriculture cannot be challenged under other WTO agreements. Back

8   First Report from the International Development Committee, 2003-04, Trade and Development at the WTO: Learning the lessons of Cancun to revive a genuine development round, HC 92-I. Back


 
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