Multilateral fillip
in the wee hours of August 1, 2004, members of the World Trade Organization (wto) reached an agreement in Geneva. It is only a framework agreement, but sets out principles to guide further negotiations. Positive in places, much hard work remains if the developing world is to secure meaningful gains.
For various actors involved in the process, the agreement varies in significance. wto director-general Supachai Panitchpakdi called it a "truly historic' achievement and a "minor triumph for multilateralism'. Brazilian foreign minister Celso Amorim found it good for trade and social justice. Even European Union (eu) trade commissioner Pascal Lamy, extremely cynical since Cancun, admitted "the multilateral trading system is alive and kicking.' us trade representative Robert Zoellick was more diplomatic: he characterised the deal as a crucial step for world trade.
India, however, was extremely self-laudatory (see table: India goes hyperbolic). In an official press release, Indian commerce and industry minister Kamal Nath called the agreement a major victory for India for it fully protects her interests. China's assessment, on the other hand, was more realistic; while the deal was "not bad,' China's ambassador said, developing countries were "not fully satisfied.' Civil society organisations echoed this sentiment. Oxfam, for instance, acknowledged that developing countries had registered small wins but warned there were no cast-iron commitments and no clear timeline for reform.
Agriculture On agriculture, developed countries have clearly committed to phase out all forms of export subsidies (direct or indirect), by a date yet to be negotiated. Given the eu had vehemently opposed phasing out its export subsidies in Cancun, this is a positive development. Of course, gains derived from eliminating export subsidies could be nullified by providing domestic subsidies. On this front, the agreement does not do enough. There is a commitment to cut all trade-distorting domestic support by 20 per cent in the first year. This is good, but the language is ambiguous. The base year on which the 20 per cent reduction is to be applied is to be decided; thus, how real or notional such reduction will be hangs in negotiatory balance. Further, the agreement requires that the sum of all trade-distorting support not exceed 80 per cent "in the first year and throughout the implementation period.' The language here implies developed countries would effectively have to make only a one-time cut of 20 per cent for the entire implementation period. It remains to be seen how this issue is interpreted.
| India goes hyperbolic | | Claim | Comment | | Products of special sensitivity exempt from tariff reduction commitments | The draft agreement clearly states these products eligible for “flexible treatment” implying reductions would not be exempted but treated with flexibility. The “criteria (for selection) and treatment of these products” to be specified during ensuing negotiations | | By ensuring that additional criteria for selecting measures under Blue Box subsidies is negotiated before it is made operational, India prevented a US move to create a new blue box and transfer some of its trade distorting support to this box | The US provides no Blue box subsidies currently. The provision to cap Blue Box subsidies at 5 per cent actually allows it to increase subsidies under this category | | Sensitive products re-defined to limit the number of developed country products in this category | Number of products to be treated as “sensitive” not limited. Members may choose an “appropriate number”, still to be negotiated | | Special and differential treatment provisions for developing country agriculture export subsidies extended beyond the Doha Round | The text, however, states that extension would be “for a reasonable period, to be negotiated”. | |
Another achievement is capping Blue Box subsidies
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