WTO failure: Doha Agenda minus 'development'

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.