Hopes fade for WTO development

Martin Khor, The Star, Asia News Network/Selangor, Malaysia

At the WTO's Ministerial conference in Hong Kong on Dec. 13- 18, there will be many expressions of disappointment that the Doha round of negotiations has not lived up to its "development" name.

This widespread feeling is shared by officials of developing countries and many non-governmental organizations, thousands of which will be in Hong Kong.

Last Friday, the WTO agreed on a draft Ministerial declaration that will be brought for negotiations in Hong Kong. It will mainly contain only progress reports on how the talks are going in various areas.

The only report finalized by the WTO members themselves is on trade facilitation. Malaysia's ambassador to the WTO, Muhamad Noor Yakub, chairs this group and has been congratulated for managing this feat.

The WTO members could not agree on the content of the other main reports. On agriculture and non-agriculture market access (NAMA), the reports will only carry the name of the chairmen of the groups.

And on the contentious area of services, there is disagreement on many items in the text drawn up by the chairman. So the draft for Hong Kong will denote (through a bracket) that there is no agreement and the section on services will be opened for re- negotiation.

It is clear that the WTO talks are stuck. Developing countries and NGOs alike are worried how the rich countries have derailed the development goals.

The Round is no longer about development but about opening up the markets of the developing world. The fear is that the outcome will be counter to development goals, with millions of small farmers dislocated and local industries losing their business or disappearing.

When the Doha talks were launched in 2001, it was proclaimed that the needs and interests of developing countries would be at the center of the work program.

At the top of the agenda were two items directly involving development concerns -- strengthening special and differential treatment for developing countries, and resolving the problems from implementing the WTO agreements.

Over a hundred proposals were forwarded in each item, asking for reforms in the major WTO treaties, which were found to contain imbalances. Four years later, hardly any proposal of significance from these two items have been resolved.

Then there was supposed to be a strong development dimension in the talks on agriculture, NAMA and services. This means two things: increasing export opportunities for developing countries, and enabling them to have "special treatment" so that their firms and farms are not required to compete with imports and foreign firms, before they are ready.

Unfortunately, as the Indian Commerce Kamal Nath has put it, the WTO talks are in danger of becoming not a Development Round but a Market Access Round. Developing countries are being pressed to open up all sectors of their economy.

And at the same time, the rich economies are still very reluctant to liberalize in areas that can benefit developing countries, especially agriculture and the movement of labor services.

This is at the heart of the deadlock. Developing countries want the rich countries to give up their subsidies and open up in agriculture, as they promised to do in the last Round, but in practice did not.

But developed countries, on the defensive, are pushing the developing countries to quickly open up their agriculture, industrial products and services.

Due to the impasse, expectations that the Hong Kong Ministerial will produce full "modalities" (the formulae and numbers for reduction of subsidies and tariffs) have been lowered.

But the NGOs -- and quite a few governments -- are worried that in the pressure cooker atmosphere of WTO Ministerials, the developed countries extract commitments from developing countries while giving very little away themselves.

Agriculture should be at the center of this Round, with rich countries cutting their subsidies and tariffs. So far, their proposals have been inadequate.

Experts find there would be little if any real cuts in domestic subsidies and little gain in market access, unless the United States and European Union offers are much improved.

At the same time, most of the proposals would oblige developing countries to cut their own agricultural tariffs by more than during the last Round.

Thus, rich countries can continue to "dump" their farm products below cost in developing countries, which are even less able to defend themselves from the artificially cheapened farm imports because they have to cut their tariffs even more sharply.