Select Committee on International Development Fifth Report


3  WTO Doha Development Round

Prospects for an agreement

18. In July 2006 the World Trade Organisation (WTO) Doha Development Round negotiations were suspended when it became clear that too little progress was being made, particularly on agriculture. Peter Mandelson, the European Union Trade Commissioner, told the Committee that negotiators had come to an impasse:

"[Negotiations] were suspended then because we were unable to make any progress on the subject of trade distorting farm subsidies because, as the US trade representative said at the time, 'There is not enough agricultural market access on the table from Europe and from the developing countries to make it worth our while to indicate any further flexibility on farm subsidies'. The Director-General [of the WTO] said, […] 'If you want to make progress on the market access side you are going to have to indicate where you are going on the subsidy side.'"[19]

Informal contacts between key negotiators, especially the European Union and the United States, have continued since the suspension. In November, the Director-General of the WTO indicated that working-level negotiations would resume although "fully-fledged" ministerial-level talks would not be possible unless there was movement in member states' positions.[20] Reports of meetings in early January 2007 between US and EU negotiators, followed by high-level contacts at the World Economic Forum in Davos, suggest that a deal may now be possible. The Prime Minister has said that there is momentum behind negotiations.[21] On 7 February, WTO Director-General Pascal Lamy announced "we have resumed our negotiations fully across the board."[22]

19. Eight months since the suspension, the central issues dividing negotiators have not changed: significant progress on market access and agricultural subsidies remain the building blocks necessary to secure a deal which would enable a successful outcome to the Round. In its response to our 2006 Report on the Doha Round, the Government said that it believed that "an ambitious, pro-development outcome is still deliverable".[23] The window for securing that outcome is, however, smaller than it was last summer. The US President's 'fast-track' authority to agree a deal expires at the end of June.[24] It is not a given that this authority will be extended. Reports from the International Centre for Trade and Sustainable Development suggest that a breakthrough in the negotiations now could help convince Congress to extend the President's authority, and that this in turn would simplify the process of finalising the Round.[25] If neither a deal nor an extension to the 'fast-track' authority is agreed before June, however, there is the possibility that negotiations may be put on hold until after the US Presidential elections in 2008, with unforeseeable consequences.

20. We welcome the renewed effort the WTO membership, including the UK, is putting into securing a deal in the Doha Development Round. Time is, however, short: the likely window for a deal is now just a few months. The key difference between July 2006, when the suspension was announced, and now is greater political will to reach an agreement rather than a significant change in the 'building blocks' involved in any deal. Moreover, we believe that it is continued political will that will be decisive in securing a deal. We encourage the UK, EU and all negotiators to approach this deal with a determination to succeed.

A development package

21. As we said in our 2006 Report, WTO members have committed themselves to a round which places developing countries' "interests and needs at [… its] heart".[26] This commitment was reaffirmed at the Hong Kong Ministerial in December 2005. The Trade Commissioner told us that "the principal beneficiaries [of a deal], those who will disproportionately benefit, as it were, will be the developing world".[27]

22. The WTO operates on the basis that nothing is agreed until everything is agreed. It is, therefore, a concern that the development gains of the talks could be lost if no agreement is reached this year. Some, including Commissioner Mandelson, have called for a separate 'development package' to be agreed and implemented. This package would safeguard some of the development outcomes of the negotiations, regardless of the overall outcome of the talks:

"I am not looking to a development package as an alternative to an overall outcome of this Round which by definition is a development outcome. But there are particular measures we can target at the least developed in addition to the overall outcome of the Round which are important and which we in Europe have been sustaining and keeping in place during the period of suspension to some good effect."[28]

Elements of such a package would include improvements to trade rules for least developed countries and enhanced trade capacity-building initiatives. The Government has told us that "the UK's priority is to make trade rules work in the interests of the world's poor […] We continue to press for any agreed measures to be implemented in a progressive manner for developing countries."[29] As we said in our 2006 Report, some developing countries were wary of such a package.[30] They were concerned that it would fail to address the areas in which their greatest potential gains lie, especially EU agricultural tariffs and tariff escalation on processed goods.[31]

23. We understand that agreement of a development package, separate from or in addition to an overall deal, is viewed as controversial by the WTO and some of its members. We agree with the EU Trade Commissioner that the development package is not an alternative to an overall deal. We are concerned, however, that hard-fought-for gains for the world's poorest countries should not be lost because of others' intransigence. We recommend that the Government give priority to all options available which safeguard the development outcomes of the negotiations, even if the Round itself is not concluded successfully.

Involving the business sector

24. The World Bank says a deal would increase world income by $287 billion by 2015.[32] This could translate to significant development benefits, which is our main focus as a Committee. However, the promise of development benefits alone is unlikely to break the deadlock. There is also the promise of gains for developed countries, not least for those involved in services and in trade in manufactured goods.[33] It is therefore surprising to us that UK and other European business communities are not more vocal in advocating a successful outcome. The Trade Commissioner told us that business was already more active since the beginning of the year:

"I believe that when they do realise finally that we are in the end game[…], when the penny really drops[…], you will see them more active."[34]

25. We believe that the involvement of business leaders in shaping the EU offer, such as encouraging concessions on agriculture and on other sticking points in order to secure broader trade benefits, is crucial. We recommend that the Government intensify its dialogue with business leaders about the Round and make every effort to facilitate their involvement in these negotiations.

Agriculture and involving developing countries

26. The Director-General of the WTO has identified three key areas in which progress is required for there to be a breakthrough. Two of these are agriculture-related: reductions both in US agricultural subsidies and in EU agricultural tariffs. Agriculture has in fact been at the heart of the Doha Round since its launch. In his evidence to us, the Trade Commissioner said that there was a range of positions on agriculture among developing countries. He made a distinction between "more competitive" developing countries, such as Brazil, who would be arguing for radical agricultural liberalisation and others who would feel more threatened by the loss of preferential tariffs.[35] He told us,

"Hilary [Benn] and other members of the British Government need to realise this. Sometimes when I hear them clamouring for the dismantling of agricultural protection, the break-up of the CAP [Common Agricultural Policy], I wonder whether they realise that with the dispatch of the CAP would go the agricultural preferential access to the poorest developing countries in the world."[36]

In our 2006 Report, we discussed the fact that different groups of developing countries would benefit differentially from agricultural liberalisation.[37] We do not accept that the end of the CAP would mean the end of special and preferential access for developing countries.

27. Since the suspension of negotiations in July 2006, there has been significant contact between EU and US negotiators. There has been much less contact involving the developing countries of the G110.[38] Where there has been contact, this has largely been with the industrialised G5 bloc.[39] The WTO Director-General has stressed the need for transparency in the negotiations and that the negotiations should be a multilateral process in which all delegations participate.[40]

28. We recognise that a deal involves compromise. No-one can expect that all aspects of a successful outcome to the Doha Round will please all WTO members. We do believe, however, that it is the WTO membership's duty to ensure that a deal on agriculture does not favour only those who shout loudest. We understand the rationale behind getting the early agreement of 'key players' to any deal but we are concerned that there is a danger that the EU and US could overcome their difficulties only to find some developing countries, perhaps outside the G5, rejecting a deal in which they have played little part. We recommend that the Government encourage the EU to consult broadly during the closing stages of the negotiations to ensure it draws in the views of the full range of G110 countries.


19   Q 32 Back

20   WTO Director-General's remarks at the informal Trade Negotiations Committee meeting, 16 November 2006, and his speech in Uruguay, 22 November 2006 (www.wto.org/english/tratop_e/dda_e/dda_e.htm) Back

21   Reuters, 26 January 2007 Back

22   WTO Director-General's statement to the General Council, 7 February 2007, (www.wto.org/english/tratop_e/dda_e/dda_e.htm) Back

23   International Development Committee, Third Special Report of Session 2005-06, The WTO Hong Kong Ministerial and the Doha Development Agenda: Government Response to the Committee's Third Report of Session 2005-06, HC 1425, p 13 Back

24   'Fast-track' is the trade negotiating authority granted by US Congress that allows the President to negotiate international trade agreements. Under fast-track procedures, the President submits the legislation to Congress for approval or rejection. No amendments are allowed. Back

25   International Centre for Trade and Sustainable Development, BRIDGES Weekly Trade News Digest, Vol. 11, Number 4 (www.ictsd.org) Back

26   International Development Committee, Third Report of Session 2005-06, The WTO Hong Kong Ministerial and the Doha Development Agenda, HC 730, paragraph 8; and the Doha WTO Ministerial Declaration, 14 November 2001 (www.wto.org/english/tratop_e/dda_e/dda_e.htm) Back

27   Q 33 Back

28   Q 40 Back

29   International Development Committee, Third Special Report of Session 2005-06, The WTO Hong Kong Ministerial and the Doha Development Agenda: Government Response to the Committee's Third Report of Session 2005-06, HC 1425, pp 6 and 7 Back

30   International Development Committee, Third Report of Session 2005-06, The WTO Hong Kong Ministerial and the Doha Development Agenda, HC 730, paragraphs 43-45 Back

31   Tariff escalation is an increase in tariffs as a good becomes more processed, such as low tariffs on fresh tomatoes but higher tariffs on ketchup. Back

32   World Bank. WTO's Doha Development Agenda (www.worldbank.org/trade/wto) Back

33   World Bank. WTO's Doha Development Agenda (www.worldbank.org/trade/wto) Back

34   Q35 Back

35   Q 33 Back

36   Q 36 Back

37   International Development Committee, Third Report of Session 2005-06, The WTO Hong Kong Ministerial and the Doha Development Agenda, HC 730, paragraphs 30-33 Back

38   The largest ever bloc of developing countries, representing nearly 80% of the world's population, which came together at the WTO Hong Kong Ministerial in December 2005. Back

39   Brazil, Russia, India, China and South Africa. Back

40   WTO News Item (www.wto.org/english/news_e/news07_e/gc_dg_stat_7feb07_e.htm), 7 February 2007 Back


 
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