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WTO Negotiations – Where things stand
On July 30 Pascal Lamy announced a new halt to Doha Round negotiations, after ten days of ministerial discussions. Why this new collapse of talks ? Where do negotiations stand ? On what basis were discussions being held ? What elements will be retained for further pursuit of negotiations ?
The trade ministers of the member States of the World Trade Organization (WTO) met in Geneva from July 21-29 with the intent of concluding an agreement on the Doha Round, begun in 2001. In the area of agriculture, discussions were based on the July 10 text proposed by Crawford Falconer, chairperson of the agricultural negotiations group of the WTO. On July 29 the negotiations were halted because members could not reach an agreement. The sticking point concerned details of the special safeguard mechanism (SSM). What is the SSM ? What was the point of contention ?
Currently the Special Safeguard Clause allows WTO member countries to impose additional customs duties, for a limited time, on goods subject to sudden import surges or price drops. The Doha Round calls for the elimination of this clause to be replaced by a special safeguard mechanism (SSM) . The SSM would be based on the same principle as the special safeguard clause but would be considered an element of special and differential treatment and therefore would only apply to developing countries.
During the July talks, all member States agreed to the introduction of the SSM, but they did not agree on all of the details of its functioning. This blocked a successful outcome to the talks.
The July 10 text calls for safeguards based either on volume or price. In both cases, the triggering threshold rates are determined on a country-by-country basis. When imported volumes exceed these thresholds the importing country may impose additional customs duties, for a limited period of time. The greater the amount by which imported quantities exceed the threshold, the higher the duties that may be applied. As for the price-based SSM, the supplementary duties are proportional to the gap between the import price and the triggering price or threshold. Additional tariffs are subject to ceilings, which are determined as a function of bound tariffs in effect at the time in the case of volume-based SSM and on the gap between the triggering price and the import price in the case of price-based SSM.
Where disagreement occurs is when the ceilings are higher than the bound rates (rates that can’t be raised without compensation being made to affected parties) before the beginning of the Doha Round. The United States, Latin America, the countries of Southeast Asia, and other countries of the Cairns Group that are not part of the G-33 are not willing to authorise any excedent over pre-Doha bound rates. They are also opposed to the G-33’s demand for significant tariff increases in the framework of the SSM.
The beginning of an agreement was reached but could not be finalised. It was agreed that the SSM authorised a breach of pre-Doha rate commitments, but no agreement could be reached on the following points :
the quantification of triggering thresholds, the level of ceilings on additional tariffs (15% above bound rates ?) the number of products for which there could be a breach of pre-Doha bound rates.
The impact of this discussion varies from country to country and even within the same country from product to product. For a given product in a given country much depends on the level of the trade tariff actually levied compared to the the bound rate, as these two can differ. Problems occur in the case of countries whose applied rates are close or equal to bound rates. This is the case for certain developing countries.
What’s the next step for talks ?
As of the 30th of July, Pascal Lamy, the Director-General of the WTO, and member States reiterated their desire to "record progress made and continue to work". Talks were pushed off to a date that remains to be specified but the chairpersons of the negotiations were asked to produce reports on progress made in July. The report on the agricultural talks was presented on August 12 but contained no new figures on the "modalities" or blueprint of an agreement, compared to the text of July 10. In fact, Mr. Falconer clearly stated his intention not to propose any precise wording since, in his view, this would be "counter-productive". In these conditions, it is difficult to know what advances were made and ought to be preserved.
It is nonetheless interesting to note that the report underlined that no new basis for an agreement on cotton was reached, an issue of importance to certain developing countries, especially in Africa. The cotton question was not able to be raised before talks were halted. Another point worth noting is that the blockage arose from political disagreement and not a technical one, concerning the functioning of the SSM, including among countries of the South and and not just between North and South as has often been the case in the past.
Useful links
A blog on the unfolding of negotiations from July 21 to July 30 by the IATP, the Institute for Agriculture and Trade Policies Daily reports on the talks from July 21 to July 30, commented and analysed by the ICTSD (International Centre for Trade and Sustainable Development)
World Trade Organization 10 July 2008 revised draft modalities (pdf) Unofficial guide to the 10 July 2008 ‘revised draft modalities’ An unofficial guide to agricultural safeguards 11 August 2008 report on agricultural negociations (pdf) Official texts on agricultural negociations 2008
