A glimpse at the setting, major challenges, and major players in reaching consensus on new trade regulations in 2011
The Doha Development Round began in November 2001. International Setting: September 11, 2001 Bombing of the World Trade Center in NY Change in government administration in the US Developing country dissatisfaction with Uruguay Round Creation of the EU “Domestication” of trade issues in developed nations First Actions of Ministerial Meeting: Addition of China to the WTO Declaration of the Round as a “Development” Round (First time that international regulation would combine trade and development.)
Agriculture Cotton Non-Agricultural Market Access (NAMA) Development • Special and Differential Treatment • Technical Assistance • Implementation • Development Issues
Services Negotiating Bodies • Rules, Trade, Environment, and TRIPS • Dispute Settlement
Trade Facilitation
The Work Program (WT/L/579)
+9 Years Without Consensus 2001 Doha, Qatar: Development put on agenda & set deadline as Jan. ‘05 2001
2002
2004 Geneva, Switzerland: developed nations agree to lower subsidies for developing nations agreement to lower tariffs on manufactured products. Cotton separated from agr 2003
2004
2003 Cancun, Mexico: Agree to extend TRIPS and Public Health agreements until 2013. The G20 Developing Nations group formed with leadership of Brazil and India. Main purpose is to challenge the US/EU agricultural proposal. Talks collapse over discussion of subsidies.
2005
2006 Geneva: Almost no progress made in negotiations because of agriculture. 2006
2007
2005 Hong Kong: Ministerial Meeting to deal w/ ‘sensitive issues’. Consensus reached opening developed nations borders to LDC goods. Agree to eliminate agricultural export subsidies. Accord reached on cotton.
2008 Geneva: Ministers met regarding modalities. Wrote basic agr. Framework. Failed because of Special Safeguard Mechanisms (SSM). China steps up as leading voice. 2008
2007 Potsdam, Germany: Negotiators from US, EU, Brazil, and India discuss agriculture. Collapsed and raised tensions.
2009
2010
2011
2009-2010 Worldwide: Various meetings of different groups discussing the DDR as a side note and attempting to make progress.
Challenges of the DDR #1 Agriculture Issues: -Redefine green box, blue box, and amber box spending
Amber Box Most tradedistorting payments and subsidies; “coupled” payments IE: Price supports, production payments
Blue Box Less tradedistorting subsidies because direct payments are given on limited production. IE: Compensatory payments.
Green Box Minimallydistorting subsidies and “decoupled” payments. IE: Research and Development
Challenges of the DDR #1 Agriculture Issues: -Redefine green box, blue box, and amber box spending -Reduce all spending to be within green and blue box
82% 49% 23%
GDP of Cameroon 2010; $21.8 Billion (IMF)
=$51.2 billion
Elliot, Kimberly. Delivering on the Doha Agenda: Are the Proposed Cuts in EU and US Agricultural Subsidies Real? Center for Global Development, November 2005.
GDP of Paraguay 2010; $12 Billion (IMF)
Challenges of the DDR #1 Agriculture Issues: -Redefine green box, blue box, and amber box spending -Reduce all spending to be within green and blue box -Special Safeguard Mechanisms (SSM) “A tool that allows developing countries to raise tariffs above the bound rates if there is a drastic fall in the price of an imported product or increase in the volume of an imported product beyond certain levels.� -Khor
~Written in to Uruguay Round as a Special Safeguard (SSG) in the AoA ~Only but countries that dropped tariffs to exist under a minimum percent. ~Therefore, only usable by developed nations. ~SSM for developing nations
Challenges of the DDR #1 Agriculture Issues: -Redefine green box, blue box, and amber box spending -Reduce all spending to be within green and blue box -Special Safeguard Mechanisms (SSM) ~Arguing over Trigger Prices
Challenges of the DDR #1 Agriculture -North/North Relations European Union Japan Norway Republic of Korea Switzerland Support for rural communities, sustainable agriculture, and a non-liberalizing agricultural trade agenda.
United States Cairns Group (Australia, Canada, Colombia, Costa Rica, Malaysia, New Zealand, Peru, South Africa)
Abolition of agricultural export subsidies, decrease domestic subsidies, allow greater market access, and allow for “zeroing�.
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Anti-Dumping Duties Calculated by Finding the General Dumping Margin:
Dumping Margin = Export Price – Domestic Price Average Dumping Margin for a Group of Similar Products Example: (DM of Bananas from EU + DM of Apples from EU + DM of Oranges from EU) ÷ 3 = Average DM of Fruit from EU
“Zeroing” is when the DM is negative then it is automatically put to ZERO Implications: -Average Dumping Margin is too high -Duties are set too high -Inhibits market access
Challenges of the DDR #1 Agriculture -North/South Relations “Essentially, developed countries are bargaining for more market access in developing countries in exchange for a reduction of their own domestic subsidization of agriculture.” (Cohn, p. 10-11) Sensitive Issues: ~Agricultural Subsidies ~Special Safeguard Mechanisms ~Market Access CHINA • Concerned with Recently Acceded Member (RAM) status • Feels pressure of opening too quickly • Wants to maintain preferential treatment
INDIA • Wants to make sure SSM trigger levels are low enough to ensure sufficient protection.
BRAZIL • Market Access • Looking to use it’s comparative advantage to export to new markets • Hesitant of opening own borders because of historical factors
Challenges of the DDR #1 Agriculture -Ambassador/Constituency Relations
Political situation at home ~Changes in gvt leadership ~Ability to pass legislation Public Interest Private Interests
Challenges of the DDR #2 Cotton -So controversial was separated from agriculture -History of US abuse of cotton subsidies -Particularly challenging because of development aspect UNITED STATES V. BRAZIL Brazil charged the US in the WTO’s Dispute Settlement Body for failing to comply with the UR AoA and Agreement on Subsidies and Countervailing Measures. After 8 years, the WTO ruled in 2009 that the US was in violation of the agreements and gave Brazil authority to erect retaliatory barriers.
Challenges of the DDR #2 Cotton -So controversial was separated from agriculture -History of US abuse of cotton subsidies -Particularly challenging because of development aspect
Challenges of the DDR #2 Cotton -So controversial was separated from agriculture -History of US abuse of cotton subsidies -Particularly challenging because of development aspect Cotton 4 Proposal Benin, Burkina Faso, Chad, Mali ~Domestic spending on cotton be cut more deeply and at a faster rate than spending on other goods. ~Is the current draft of the DDR (TN/AG/W/4/Rev.4) “If enacted, US and Oman would have to lower applied tariffs, US cotton production would have an estimated decrease of about 15% and EU production decrease around 30%... …while estimated to raise between 2.5%-12% in all other cotton producing countries.” (ICTSD
Global Economy Crisis 2009- World trade dropped 20%
Current Situation
Global Economy Crisis 2009- World trade dropped 20% G-20 Countries have passed Âą28 trade measures with restrictions
Current Situation
Global Economy Crisis 2009- World trade dropped 20% G-20 Countries have passed Âą28 trade measures with restrictions EU major internal debt crisis China exports dropped 17.5% India exports hit heavily in: gems, jewelry, handicrafts, textiles, etc. Brazil worried about national sectors Political Situations US administration change: Republican to Democrat Congress failed to continue the Generalized System of Preferences China has new $586 billion domestic spending plan India was the leading supplier under GSP to US Brazil administration change within Working Party End of 2010 Summits Dealing with current trade disparities China and Germany resisting limiting trade surpluses
Current Situation
January 2011 Ministerial Meeting Director General Pascal Lamy’s Outline 1. Update the 2008 drafts to serve as foundation for final accord 2. Continue negotiations through a ‘cocktail approach’ 3. Make sure all texts originate through a chair-driven bottom-up process.
January NegoHaHons Schedule January 10th, 2011-‐ January 17th, 2011: Trade facilitaHon, trade and environment, intellectual property rights, and development January 17th, 2011 – January 24th, 2011: Agriculture, NAMA, services, and dispute seUlement.
Last round of talks? -All have vested economic interested in finishing the DDR -Domestic political situations cause difficulty -EU says thy are committed but this is the last time they come to the table -Almost all agree that 2011 is “make it or break it”
“Agriculture accounts for a small share of developed countries’ economics, but is highly sensitive in political terms. It’s time for the developed countries to show leadership and start putting into practice the recommendations that emerge from their own discussions at the OECD…Political sensitivity shouldn’t translate into irrational economic policies.” -(OECD, ‘The Low Hanging Fruit’)
Outlook for DDR 2011