The Hindu Business Line : A tale of evolving WTO drafts

A comparison between the two drafts prior to the upcoming WTO ministerial meeting at Hong Kong helps to throw light on the pressures being exerted on the ministerial conference, thus yielding an important clue to the state of play of the conflicting forces grappling with each other to settle vital parameters of international trade for the next three or four years.

ONE has no idea of what awaits the WTO ministerial meeting at Hong Kong in mid-December except for the fact that whatever finally transpires will be widely divergent from what was expected a year ago. Interestingly, however, the world is not totally clueless about the accomplishment, or the lack of it, of the ministerial conference. This is because the outcome of the meeting (and the ongoing negotiations process) will be encapsulated in the declaration to be adopted at its conclusion and, already, there are two drafts which can provide a fair enough idea of what the denouement is likely to be.

The first draft was released by the Director-General of the WTO, Mr Pascal Lamy, on November 26 and the second on December 1.

A careful reading of the two indicates differences in the text, which must have been the result of detailed feedback from the WTO member countries.

The comparison is of interest to the world, at large, because it helps to throw light on the pressures being exerted on the ministerial conference, thus yielding an important clue to the state of play of the conflicting forces which are currently grappling with each other to settle vital parameters of international trade for the next three or four years.

But, first, before we go to the drafts themselves, it would be useful to see what views New Delhi has on the issues that figure in the evolving documents. Commenting on the first draft on the last day of November, the Union Commerce Secretary said in Geneva that India was "disappointed" with the document because of the "serious and growing development deficit in the Doha Round". On agriculture, he said it would be difficult for New Delhi to agree to a position "without convergence on issues such as specification in proportionality of cuts or thresholds of tariff reduction formula for developing countries". Among the other subjects high on the Indian agenda were:

"(i) agreement on designation and treatment of Special Products;

(ii) product coverage, price and volume triggers and remedies in the Special Safeguard Mechanism; and

(iii) exemption from any form of cuts to the de minimis in the domestic support pillar".

On non-agriculture market access, he said India was concerned at the attempts being made "to dilute less-than-full reciprocity (LTFR) in reduction commitments which requires that developed countries must undertake greater percentage reductions as compared to developing countries". He reiterated that this was the Doha mandate and "we cannot accept interpretations which measure LTFR against S&D provisions". On special and differential treatment, he said that paragraphs 17 to 20 of the draft clearly showed that there was no progress on the Doha mandate. He lamented: "Even the five prioritised S&D proposals of the LDCs have not been agreed to".

A day after the Commerce Secretary revealed his mind on the first draft, the second was released in Geneva. What is the shape of this second document vis-à-vis the first? More precisely, does it indicate any signs of an inclination on the part of the protagonists (that is, the rich and the poor economies) to come closer to each other's positions on a wide range of subjects?

To take the S&D aspect (since New Delhi has taken pains to point to the inadequacy of the first draft on the subject), it should be nothing short of a great disappointment that there has been no change at all in the two versions of the evolving declaration. It can be argued that there could possibly be no change because nothing has been accomplished by the negotiators in the run-up to the Hong Kong ministerial, which is a fair enough stand to adopt.

But, then, the story is not the same with a couple of other aspects of the two drafts although the first document was certainly the distilled outcome of all the work that had already been done (or not done) on the ground before Hong Kong.

In fact, the other relatively important subject (among others) which has escaped any major alteration in the second draft is "services negotiation" which, clearly, holds a critical place in future trade exchanges for economies like India. Specifically, there have been two changes. While the first is the addition of a reaffirmation of the "objectives and principles" indicated by "the Modalities for the Special Treatment for Least-Developed Country members in the Negotiations on Trade in Services adopted on 3 September 2003", the second is the exclusion of the following two sentences (included in the first draft): "We recognise the special situation of recently-acceded Members who have undertaken extensive market access commitments at the time of accession. This situation will be taken into account in the negotiations."

A new section added in the second draft relates to TRIPS and paragraph 19 of the Doha Declaration, the section reading in part: "We take note of the work undertaken by the Council for TRIPS pursuant to paragraph 19 of the Doha Ministerial Declaration and agree that this work shall continue on the basis of paragraph 19 of the Doha Ministerial Declaration and the progress made in the Council for TRIPS to date". Among other things, paragraph 19 asks the TRIPS Council to "examine, inter alia, the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, and other relevant new developments raised by members..."

Importantly, the Doha Declaration asks the TRIPS Council "to take fully into account the development dimension", an idea that is being continually, and rightly, being harped on by the poor countries these days.

Substantial changes have been made in the second draft on the subjects of agriculture and NAMA, perhaps reflecting the fact that these two areas have been the real problematic spheres for the ongoing Doha Round negotiations. Quite inexplicably, the first draft had just one paragraph on the subject of "agriculture negotiations" which said precious little about anything except that the progress made in Geneva in the special session of the Committee on Agriculture since 2004 was welcomed and that "much remain(ed) to be done in order to establish modalities and to conclude the negotiations".

The second draft has six paragraphs dealing with sub-issues like domestic support, export subsidies and market access, not to miss out on special and differential treatment where the draft takes note of the "consensus that exists in the Framework on several issues in all three pillars of domestic support, export competition and market access" and also the fact that "some progress has been made on other special and differential treatment issues". On market access, the draft refers to "some recent movements on the designation and treatment of Special Products and elements of the Special Safeguard Mechanism".

In place of just one routine paragraph on the NAMA talks in the first draft, the second has seven focussed paragraphs dealing with, among other issues, tariff formulae, non-tariff barriers and, of course, S&D treatment the point being also made that the WTO members reaffirm their "less than full reciprocity commitment as (an) integral part of the modalities".

Paragraph 18 of the second draft (relating to NAMA) reads: "However, we recognise that much remains to be done in order to establish modalities and to conclude the negotiations.

Therefore, we agree to intensify work on all outstanding issues to fulfil the Doha objectives..." In fact, this may safely be described as the one common refrain which will run through all the drafts of the Hong Kong declaration that will be issued between now and December 13 when the conference begins. It is no doubt a resolution which needs to be acted on in the interests of a healthy, equitable world economy. At the same time, it reflects the wide gap that exists between the haves and have-nots on the planet, at a time when comparative advantage is inexorably moving towards the latter.

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