17th REPORT: THE WORLD TRADE ORGANISATION:
THE HONG KONG MINISTERIAL 13TH-18TH DECEMBER
Letter from Ian Pearson MP, Minister for
Trade, Investment and Foreign Affairs, Department of Trade and
Industry, Foreign and Commonwealth Office to the Chairman
Further to my letter of 23 January
updating you on the outcomes of the Hong Kong Ministerial, I am
now in a position to provide you with responses to the conclusions
of the Committee's very helpful report.
29 January 2006
The current status of the Doha Development Agenda,
and the forthcoming Hong Kong Ministerial
33. We urge WTO members to work for the completion
of the Doha Round by the end of 2006.
The changed landscape of negotiations
34. 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.
We agree that developing countries will have
a major influence on the outcome of the Doha Development Agenda,
to a much higher degree than in previous trade rounds. This is
an important step forward both in terms of the accountability
of the World Trade Organisation and in the ability of multilateral
trade negotiations to create a world trading system that brings
benefits to developed and developing countries alike. With seats
in the Five Interested Parties and the G4 and G6 groupings, Brazil
and India will have a major role in shaping a final deal. However,
we need to be alive to concerns among the G90 that their membership
is not represented in these small groupings. We will aim to ensure
that representatives of the LDCs and other poorer and more vulnerable
countries are properly consulted and content with the negotiating
Agricultural market access
35. We support the Commission's offer to reduce
agricultural tariffs by an average of 38.9% and consider that
the developing countries should now respond constructively.
We continue to want to see ambitious reductions
in agricultural tariffs in order to ensure substantial improvements
in market access and the benefits this can bring to developing
countries. We support the Commission in its work towards resolving
this very difficult issue. Its offer of 28 October 2005 has yet
to provoke any meaningful engagement from other WTO members. We
fully support the Commission's position that the Round has to
be balanced across the main issues, and that the EU cannot make
any further unilateral moves without movement from others in return.
We continue to seek to persuade other WTO members of the need
for constructive engagement.
36. We consider that it is important to ensure
that LDC and ACP countries do not suffer disproportionately as
a result of the erosion of their preferential access to the EU's
agricultural markets. We accordingly urge WTO members to agree
appropriate temporary transition measures to compensate these
countries. These measures should be designed to distort trade
as little as possible.
We strongly support multilateral trade liberalisation
but appreciate that reductions in the EU's MFN tariffs will have
an impact on preferences received by developing countries under
the EU's preferential trade agreements. Similarly we support reduction
of the EU's domestic and export subsidies but appreciate this
will have an impact on developing countries that benefit from
high price guarantees on particular commodities (eg sugar).
We and our European partners are committed to
helping developing countries to combat the effects of preference
erosion through trade adjustment assistance, and by providing
additional aid for trade to tackle other barriers to their ability
to benefit from greater trade liberalisation, such as poor infrastructure.
The EU has adopted a "development package" that encompasses
these aims and that includes commitments to substantially increased
The July 2004 Framework Agreement states, "The
importance of long-standing preferences is fully recognised. The
issue of preference erosion will be addressed." The EU's
development package was discussed at the Hong Kong Ministerial.
Not all developed countries were able to follow the EU's lead
and mirror all of the commitments entered into by the EU. However,
both the US and Japan announcedaround the Hong Kong Ministerialvery
substantial increases in aid for trade. In addition, at Hong Kong
the developed countries committed to introducing an equivalent
arrangement to the EU's "Everything but Arms" measureie
duty and quota free access for all 50 LDCs.
Disappointingly, this commitment is only for
97% product-coverage, which limits its potential value. We will
seek to persuade developed countries to go beyond 97% coverage
when the time comes to put this commitment into effect.
Increased developed country duty and quota free
access for LDCs will create new preferences that will partly offset
the effects of preference erosion. With this exception, none of
these proposals involves trade-distorting actions or measures.
Trade adjustment assistance and aid for trade represent development
aid funding this will improve opportunities to trade for developing
country recipients, but does not involve any trade-distorting
intervention in markets.
Agricultural export subsidies
37. We support the Government's decision to
push for the removal of all agricultural export subsidies as well
as the EU's May 2004 offer to eliminate these subsidies if all
other WTO members agree to follow suit. We urge WTO members to
agree to do so by 2010
At the Ministerial in Hong Kong WTO members
agreed to eliminate all export subsidies by 2013. While this was
a later date than we would have liked, the agreement is welcome.
Some EU Member States came to Hong Kong reluctant
to put forward an end date. The compromise reached was for an
end date of 2013. The date is both specific and fixed and, furthermore,
the elimination is progressive. There is a commitment to phase
out a substantial proportion by the mid-point between the beginning
of the implementation period and the 2013 end-date, ie by around
On export subsidies WTO members agreed to the
parallel elimination of all forms of export subsidies and disciplines
of export measures with equivalent effect to be completed by 2013.
This includes an agreement to ensure elimination of all commercial
displacement in the form of food aid. This will have a big impact
on the US. It also includes ensuring that all trade-distorting
practices of State Trading Enterprises are eliminated (which potentially
affects Canada, Australia and New Zealand in particular).
Non-agricultural market access
38. We firmly believe that it is now time
for developing countries such as Brazil to respond before Hong
Kong to agricultural offers from the likes of the EU with serious
proposals of their own in access to non-agricultural markets.
It is clear that larger developing countries
such as Brazil and India have much to gain from liberalisation
of trade in both the agricultural and industrial sectors. They
are not confronted by the same problems that face the weak and
vulnerable or smaller developing countries. We believe that it
is important for larger developing countries to participate actively
in all aspects of the DDA negotiations. Therefore we are disappointed
that at Hong Kong, Brazil and others were unwilling to negotiate
meaningfully with the result that NAMA became a hostage to agriculture.
However, Paragraph 24 of the Hong Kong Ministerial Declaration
established parallelism between the NAMA and agricultural negotiations.
We are of the view that this means real increases in market access
by all developed and larger and more advanced developing countriesin
both sets of negotiations.
Trade in services
39. We urge countries to secure a commitment
at Hong Kong to a date by which revised best and final offers
on trade in services will be tabled.
The Ministerial Declaration agreed at Hong Kong,
together with the annex on services"Annex C",
builds on the package agreed by WTO Members in July 2004 by providing
a clear framework to define a way forward for services liberalisation
in the Doha Round. The Ministerial Declaration reaffirms that
negotiations shall proceed with a view to promoting the economic
growth of all trading partners, particularly developing and least-developed
countries. The Declaration urges all Members to participate actively
towards achieving a progressively higher level of liberalisation
in trade in services, with due respect for the right of WTO Members
to regulate to meet national policy objectives and with appropriate
flexibility for individual developing countries.
Annex C reaffirms that the request-offer process
remains the main method of negotiation and clarifies the non-prescriptive
nature of the proposed plurilateral approach. Despite a number
of proposals from WTO Members calling for their inclusion, Annex
C omits any reference to multilateral numerical targets and indications.
This outcome is in line with the UK preference for a settlement
that avoids mandatory requirements on developing countries to
liberalise services and maintains the flexibility for developing
countries to choose whether or not to make any GATS commitments
at all. The Annex calls on WTO Members to submit outstanding initial
offers as soon as possible and sets target dates for the submission
of plurilateral requests by 28 February 2006, a second round of
revised offers by 31 July 2006, and final draft schedules of commitments
by 31 October 2006.
Commitment to Doha: Multilateral versus bilateral
and plurilateral agreements
40. We believe that governments should strongly
pursue multilateral arrangements. Were the Doha Round to break
down, this would bring serious pressure to bear on governments
to pursue bilateral and regional agreements as a way forward.
It would be a paradox if a breakdown of the Doha Round were to
lead to bilateral agreements between the major trading blocks
from which the developing countries would be excluded to their
detriment. We therefore urge all WTO members to work for a successful
outcome to the Hong Kong Ministerial as a very high priority.
We are strongly committed to pursuing a more
liberal trading environment through multilateral negotiations.
Developing countries have real negotiating power in the WTO, with
each country having an equal vote. Well- designed bilateral agreements
can be a positive force both economically and politically, and
can provide an important compliment to the multilateral system.
They cannot and should not, however, be viewed as an alternative
to the multilateral trading system, which must continue to take
15 Correspondence with Ministers, 45th Report of Session
2005-06, HL Paper 243, pp 87-88. Back