Hong Kong conference will fail in key areas

Hira Jhamtani, Denpasar, Bali

The Sixth Ministerial Conference of the World Trade Organization (WTO) will begin on Dec. 13 amid an uncertain atmosphere. This conference is supposed to launch the Doha Work Program -- agreed on during the Fourth Ministerial Conference in 2001 at Doha -- dubbed the "Development Round" by some governments. Its goal is to create coherence between trade and development, particularly for developing countries.

But many official delegates and NGOs attending the conference are not very sure about the process, nor the outcome. Many fear a repetition of the Cancun (fifth ministerial conference) collapse in 2003.

Ministers will deliberate various aspects of the Doha work program, among others, the agriculture subsidy and market access, non-agricultural market access (NAMA), trade in services, intellectual property rights (TRIPS) particularly related to public health, special and differential treatment for developing countries and implementation issues. Delegates will base the negotiation process on a complicated ministerial draft issued on Dec. 7. This is the second draft; the first draft issued on Nov. 26 generated disappointment and anger among developing countries as it contains very little on development aspects. The Dec. 7 draft contains a mixture of texts (53 paragraphs) and six annexes with differing levels of agreement and disagreement among the WTO delegations in Geneva.

The secretariat did not attach a cover letter to the draft declaration, which makes it difficult for ministers and officials to know which issues are still hotly contested and which ones have reached full consensus or a certain degree of agreement. Many of the annexes, for instance, were written on the responsibility of the chair of the negotiation groups and do not reflect the agreement among WTO members. This is especially true of Annex C on the liberalization of services, which has been contested by almost all developing countries.

The three most contentious issues are agriculture, NAMA and services. On agriculture, developing countries want developed countries to be serious about slashing their export and domestic subsidies within a fixed timeframe to be decided. These subsidies push cheap exports to developing countries, thus jeopardizing the livelihoods of farmers.

The Group of 33 (G-33), a grouping of developing countries led by Indonesia, proposed the special safeguard mechanism and special products to protect their small farmers from such cheap imports, but also to ensure food security and rural development. But developed countries have declined to make firm commitments.

Instead, they are pressuring developing countries to slash tariffs on non-agricultural products (NAMA) even more drastically than what developing countries are suggesting for developed countries in the agricultural sector. In NAMA, developed countries, led by the EU want developing countries to cut their bounded tariff steeply and to bound the tariff of all products.

Indeed developing countries have higher industrial tariffs and some tariffs are not bound in order to create flexibility and the protection of their domestic industry, a practice that developed countries adopted themselves when they were at the development stage. Although many developing countries have liberalized imports in recent years (Indonesia for one), some sensitive products are still protected by moderate to high tariffs.

On services, the present WTO rules allow developing countries the flexibility to liberalize sub-sectors as appropriate, based on their national policies and interests. The services market is indeed imbalanced, as developing countries still do not have a competitive advantage. Liberalizing this sector too fast may mean that developing countries will have to reduce or even lose their capability in providing services in the future. Also, there is concern about liberalizing public services such as health, education, water and energy.

The EU demands that developing countries increase liberalization in 93 out of 163 services sub-sectors (or 57 percent) classified in the WTO. And developing countries have to participate in sectoral negotiations in eight out of 16 selected sub-sectors. Developing countries have rejected such demands.

Although talks on modalities for agriculture trade were supposed to take center stage during the fifth ministerial meeting, the EU diverted the focus to four so-called Singapore Issues -- investment, government procurement, competition and trade facilitation.

Had those issues been agreed upon, policy options in developing countries would have been so much reduced it could have endangered their domestic development. Today, the EU and other developed countries are shifting attention from agriculture and NAMA to services, to the extent of asking developing countries to go beyond the General Agreement on Trade in Services (GATS) requirements.

Developed countries insist that if developing countries want agriculture subsidy reduction, then they have to agree on the services issues proposed by developed countries. But too often, developing countries have been "duped" into this kind of trade off and get nothing in the end.

Many are predicting intense debate on services, which may lead to no agreement. And many developing countries are worried that "development issues" -- special and differential treatment, review of imbalanced rules, problems in implementation, problems in a non-transparent mode of negotiations -- will again be sidelined.

Four years after the Doha Work Program was agreed, developed countries have not changed their negotiation positions and stance. As Martin Khor, the director of the Third World Network wrote, "they have dropped the pretense of having any development goals in the main negotiations on agriculture, NAMA and services. They also will not address the imbalance in WTO rules and the problems developing countries are facing in implementing WTO requirements and rules."

The writer is a researcher on global and environmental issues in Denpasar.