WTO failure: Doha Agenda minus 'development'

Mari Pangestu, Centre for Strategic and International Studies (CSIS), Jakarta

The recent failure of the WTO Ministerial Meeting in Cancun to agree to move forward, reflects on the continual lack of regard of the major members of the WTO, to the interests and concerns of developing countries. By the eleventh hour, there was just not enough on the table regarding developing countries -- the majority of WTO's 146 members. There is now great skepticism of the Jan. 1 2005 deadline for the end of negotiations.

Since the Doha Development Agenda (DDA) was launched in November 2001, developing countries have been asking, where is the "development" in the agenda? The WTO was supposedly set up with a one country and one vote system, but development has not become the corner stone of the agreement as promised.

Governments and ministers have not delivered on their promises -- despite that a more equitable trading system is already part of the Millennium Development Goals (MDG) agreed upon at the UN Millennium Summit in September 2000.

The MDG -- agreed upon by leaders from 189 countries -- placed development at the heart of the global agenda by adopting time- bound and measurable goals and targets for reducing poverty, hunger, illiteracy, disease, discrimination against women and environmental degradation by 2015.

The outcome of the Doha agenda needs to be consistent with the MDG, to be achieved through a global partnership for development or a compact of shared responsibilities.

This means that developing countries need to strengthen and reform policies (including the role of the trade policy), institutions and governance, to achieve growth, development and poverty eradication.

For Indonesians, this should be the number one election issue next year. Voters should be asking whether poverty is being addressed, basic needs delivered and jobs created.

Has the leadership and government at the national and local level taken the necessary steps and ensured that budgetary resources are being used for this purpose? What is the national vision and strategy to meet the targets by 2015, in terms of reforms, better governance and resources?

On the other hand, developed country's leaders have pledged increased aid, more effective debt relief and more access to trade and technology. Part of this promise is that the international system ensures that poor countries can achieve rapid progress, through an equitable trading (and financial) system and additional donor assistance where required.

Unfortunately these promises are without specific targets and deadlines -- just like in Cancun.

Trade policy and openness is a means to sustained growth and development. Empirical evidence and lessons from other countries basically indicate that what matters is not openness itself, but the way in which the process of opening up is implemented.

This relates to complementary policies such as investing in crucial infrastructure and ensuring policies are aimed at broad based development. Addressing inequities is better done through specific policies, such as social safety nets, rather than through trade policy. Being competitive is about increasing productivity, it thus requires investment in human capital and technology transfers, aside from the trade policy.

Thus it is not enough to provide temporary protection through the trade policy to increase industry competitiveness and higher productivity -- if all other policies such as those related to investment in infrastructure, labor and wage, and fiscal policies, do not support the target of the increase in productivity.

We need a national vision of economic development to reach the millennium goals by 2015, and we need to understand clearly what the role of trade policy and other policies are to achieve this. Only in this way can we have a coherent trade policy and decide what needs to be done at the national level, and how to position ourselves in negotiations at the regional level and at the WTO in a coherent way.

So what needs to be on the table for developing countries and how does the trading system need to change?

A number of main issues led to the stalemate in Cancun: Agriculture, non agriculture market access and the "new issues."

Developed countries need to eliminate all export subsidies and phase out domestic support that affects developing country's exports and reduces their agriculture tariffs. The decision has to be made by the two major players, the European Union and the U.S.

Developing countries also need some flexibility to address food security and rural development. They should be able to justify what "special products" are, and what their national plans are to support the development of such products and eventually integrate them into the international trading system. For us, these products are sugar, rice, soybeans and corn.

In non agriculture market access the issue, among others, is how to reduce tariffs for manufactured products using a formula and over a specific period of time. For developing countries the issue is the speed and depth of tariff reduction, the removal of tariff peaks and escalation in developed country markets, and the specter of non-tariff barriers rising as tariffs fall, which can negate improved market access.

An example is the duty free access given to the least developed countries, which as the African experience in entering EU markets shows, can be derailed by complex rules of origin.

Our homework is to come up with a national vision for industrialization and design the appropriate trade policy.

As for the "Singapore issues" -- negotiations on investment, competition policy, government procurement and trade facilitation -- most developing countries have not agreed to start negotiations because of capacity, and a lack of understanding of these complex issues. The main issue here is overloading the agenda for developing countries, which are still struggling with the implementation of what they agreed upon in the Uruguay Round.

Other issues which did not get much of an airing in Cancun include, a credible framework for special and differential treatment, past commitments, and how to best integrate least developed countries into the trading system. Also questioned is how the WTO process can deliver on "development".

At Cancun, we saw the more assertive stance of developing countries, who were not ready to be railroaded into accepting a draft that they deemed not to be in their interests.

The key of all successful outcomes of past multilateral rounds has been the political will of the developed countries to deliver on broken promises and play a leadership role in addressing the inequities of the international trading system.

There is no breakthrough without the U.S. and EU coming forth especially on agriculture. Yet developing countries must also argue their case better. The "development" part of the Doha agenda should recognize that the different capacities and conditions of developing countries requires greater "flexibility" in terms of commitments, time lines and even disciplines.

However, developing countries must also come up with a responsible framework for this "flexibility". This is so that "flexibility" is not abused by irresponsible governments and vested interests to delay reforms indefinitely, and so that the longer time frame and "extra" policy space are indeed used to deliver development and eradicate poverty.

The writer is also co-coordinator of the Task Force on Poverty and Development for the United Nations Millennium Project.