Select Committee on European Union Seventeenth Report


THE WORLD TRADE ORGANIZATION: THE HONG KONG MINISTERIAL

CHAPTER 1: INTRODUCTION

What is the Doha Development Agenda

1.  The Doha Development Agenda, widely known as the Doha Round, was launched at the fourth WTO Ministerial Meeting in Doha, Qatar in November 2001. The Doha Round was the result of widespread agreement among delegates at the Ministerial that it was time to address the imbalances of previous Rounds and to offer developing countries the prospect of trade talks which they could clearly see were to their benefit. The Doha Declaration promised to place the needs and interests of developing countries at the heart of the WTO's work programme.


2.  The Doha Declaration (see Box 1, above) and work programme promised a great deal, and negotiations were expected to be complex. It was hoped to achieve the objectives by the end of 2004. To do so within this timescale, a Ministerial was arranged in Cancún in September 2003 firstly to take stock of progress made in negotiations, and secondly to agree the "modalities", or parameter and scope, of further negotiations. Though it was never intended that final agreement should be reached at Cancún, the failure of the meeting to reach consensus on the scope of the Doha negotiations was a significant setback.

The Committee's previous report

3.  In June 2004 the Committee completed an inquiry into the role of the EU in the World Trade Organization following the collapse of the Ministerial meeting in Cancún. The report from that inquiry was published on 16 June 2004 (16th Report of Session 2003-04, HL Paper 104).

4.  We have decided to return to this topic in the run up to the next Ministerial meeting, to be held in Hong Kong between 13 and 18 December. Our intention is to reflect on and update the conclusions of our 2004 report. In the course of this second inquiry, we have taken oral evidence from Ian Pearson MP, Minister of State for Trade; and from Roger Liddle, adviser to Commissioner Mandelson, the EU's Trade Commissioner. We have also received, at short notice, written submissions from the Food and Drink Association, Christian Aid and Oxfam.

5.  We make this report to the House for debate.

6.  In our earlier report, whilst we noted that there were many reasons behind the failure of the Cancún Ministerial, we highlighted the following:

7.  Our report sought to analyse these issues and made a number of recommendations which we hoped would contribute to the reinvigoration of the Doha Round. A full summary of these conclusions is reprinted at Appendix 3. Our key recommendations were:

  • The EU should commit to phasing out export subsidies by a specified date, as long as other countries follow suit;
  • The EU must be flexible in negotiations on reductions in agricultural tariffs and other forms of agricultural protection in order to increase access to protected EU markets;
  • Doha Round should aim for the elimination or significant reduction of industrial tariffs;
  • The main barriers to trade in services should be tackled; and
  • Despite the failure at Cancún, members should work for a successful outcome to the Doha Round by early 2006.

The current status of the Doha Development Agenda, and the forthcoming Hong Kong Ministerial

8.  As will become clear, for the most part these recommendations from our earlier report still accurately describe the improvement which we believe needs to be made to complete the Doha Round. Indeed, we note that in some areas, specifically agriculture, very little actual progress has been agreed since the publication of our report. We therefore consider that, following on from the failure of the Cancún Ministerial, the forthcoming Ministerial in Hong Kong should be an ideal opportunity for WTO members to seek to reinvigorate the Doha Round.

9.  We expect that the negotiations at Hong Kong will build on the agreements reached during a 24 hour session at a WTO meeting on 1 August 2004. However, in the light of the time lost in the aftermath of the failure at Cancún and the slow progress ever since, we consider that, even given a successful meeting in Hong Kong, it would be unrealistic to continue to aim for a successful completion of the Doha Round by early 2006 as previously envisaged. This is very much in tune with the feeling of WTO members who have, according to Ian Pearson, MP, "adopted an unofficial end date of the end of 2006 for the Round" (p 1). We note that a number of political factors including the US mid-term elections, the end of the US Trade Promotion Authority (also known as the Fast-Track Authority) in June 2007 and the French elections may mean that there is only a short period of time when agreement will be possible. We accordingly urge WTO members to work for the completion of the Doha Round by the end of 2006.

The changed landscape of negotiations

10.  As we noted in our previous report, the collapse of the Cancún Ministerial also signalled the changes taking place in the landscape of world trade. The Doha Round represents the first time that China, following her accession to the WTO, has been involved in multilateral trade negotiations. China's ability to produce huge quantities of very cheap exports has had a major impact on policy thinking within the WTO. Many member countries, especially the smaller developing countries, are nervous of the threat they perceive from China. India's productive capacity has had a similar effect.

11.  In addition and for the first time, the developing countries, who represent the majority of the WTO's membership, have had a powerful say in the Doha negotiations. At the Ministerial, the newly formed G20 and G90 groups provided the mechanism for developing countries more effectively to present a united front, and to negotiate with richer countries from a stronger base. As a result, the EU and US found that they could no longer achieve results without the active co-operation of these developing countries. As we noted in our earlier report, it remains important that the developing countries recognise that they have a responsibility to work for the successful completion of the Doha Round, as well as power to influence the outcome.


Expectations for Hong Kong and the key sticking points

12.  In his evidence to us, Roger Liddle, adviser to Commissioner Mandelson, the EU's Commissioner for Trade, told us that trade ministers had reached a "consensus that it is not possible to get decisive progress without lowering expectations for Hong Kong" (Q 26). However, he remained convinced that the Doha Round would be completed by the revised date of the end of 2006.

13.  Conversely, the upside, he felt, was that negotiations had progressed beyond abstract arguments about the trade systems, and choice of tariff reduction formula, to discussion of the concrete details, or actual level of tariff reductions. We note that as a result of the Cancún failure, expectations for what can be achieved by the Doha Round have already been reduced as evidenced by the removal of a number of areas, notably the Singapore Issues (see Box 3, below), from the negotiations. This is a pity. However, removing these issues allows WTO members to concentrate on the main discussions on agriculture, non-agricultural market access and trade in services. Willing countries should seek to pursue agreements in these excluded areas through bilateral and plurilateral (see Box 4, overleaf) methods. We hope that the WTO will return to these areas in the future as there are clear benefits for both developed and developing countries from security of investment.


14.  Of the areas which remain within the scope of the Doha negotiations, from the evidence we have received, it is clear that the main obstacles to progress at Hong Kong are:

  • Agricultural market access;
  • Agricultural export subsidies;
  • Non-agricultural market access (NAMA); and
  • Trade in services.

15.  We turn to each of these issues in more detail in the next chapter.





 
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