Hong Kong conference will fail in key areas

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.