The Doha Development Agenda An Update World Bank

The Doha Development Agenda An Update World Bank December 1, 2005

Key Messages n n A successful Doha Round is very important from a development perspective Hong Kong Ministerial December 13 -18, 2005 originally expected to agree negotiating modalities for agriculture and non-agricultural market access (NAMA), plus progress in services, rules, trade facilitation and development dimension WTO Members now recalibrating expectations for Hong Kong, but maintaining the initial ambition for the Round Hong Kong “an intermediary stage on the way to full modalities”; aim to agree on “a range of numbers – the outer parameters – in the July 2004 frameworks, and corresponding texts in the rule-making part of the negotiations” • Draft Declaration issued November 26 n n Sights must not be lowered if Doha is to be a true development round There is a lot of work to do before end 2006

Important progress has already been made n n n Conditional agreement on elimination of export subsidies Narrowing of Singapore Issues to trade facilitation only TRIPS waiver on access to medicines July 2004 Framework Agreement elements on agriculture Development at the center of a trade round

Outstanding issues n Key issues remain to be resolved • Agriculture, in particular market access n Cotton • Developing countries, especially MICs, on NAMA • Services n Including benchmarks • Development dimension n Complementary agenda on aid for trade

Agricultural Market Access Proposal US Cut on highest tariffs % Sensitive products % Tariff Cap Dev’ed/ Dev’ing 90 1 75/x 60 8 100/150 75 < or = 1 100/150 45/50* 10/15* NO 10/10 EU 10/28 G 20 10/12 G 10 10/10 * Numbers indicative only

Large cuts are needed to reduce actual trade distorting domestic support $US billion 79%* Overhang 93%* Actual 47%* *percentages refer to degree of overhang

NAMA n Definition of the formula • Agreement on Swiss formula, but not on coefficients n Flexibility for developing countries • Some groups seek special treatment n Newly acceded, small and vulnerable • Differentiation among developing countries n EU proposes the same coefficient for developed and advanced developing countries (with some additional flexibilities) - but this is very controversial • Participation in sectoral negotiations? n E. g. , jewels, sports equipment, pharmaceuticals • Treatment of unbound tariffs n How to calculate the base rate for reductions?

Services n n 69 offers, plus 30 revised (EU 25 counted as 1), but low quality and lack of momentum Mandatory quantitative benchmarks for coverage of commitments in service sectors? • Opposed by many developing countries n Plurilateral negotiations • Mandatory participation benchmarks? n n Overall objectives for modes GATS rules • Broad agreement to continue negotiations and intensify efforts

Trade Facilitation n Solid progress to date • Large number of proposals, broad participation n Special and differential treatment (SDT), capacity building (CB) and technical assistance (TA) integral parts of any agreement • Link between TA and CB and implementation of commitments will be a critical part of the negotiations in 2006 • Expectations that negotiations in this area will move from Uruguay Round-style “best endeavor” approach to commitments of secure financing for implementation • Role of international organizations, including Bank n Where next? • Text based negotiations on Articles V, VIII and X of GATT 1994?

Development Issues n Proposals to strengthen SDT • Focus on 28 (of the 88 proposals) agreed in principle for Cancùn, PLUS 5 agreement-specific proposals from LDCs n Duty and quota free access for all LDC exports • Resistance from countries concerned with preference erosion • Benefits require flexible rules of origin n Concerns re preference erosion and net food importers • Losses may be less than expected: offsetting gains; time period for implementation; utilization of existing preferences; likely price rises for food • Serious problem for a few countries, who will require increased international assistance – aid for trade- to cope with transitional adjustment costs • Adjustment costs should not be a reason to deny the benefits of liberalization to the vast majority of developing countries n Extended transition periods for affected products raise risk reducing gains from the round

Aid for Trade n n Important complement to – but not substitute for – an ambitious Doha Round Integrated Framework (IF) • Increased funding, plus enhanced ability to leverage much larger bilateral and multilateral resources n Including to address infrastructure constraints • Geneva-based task force of donors and LDCs working on a new governance structure, for agreement in April 2006 n n Contributions likely pending agreement on governance Adjustment • Diagnostics and assistance n Regional/cross-country needs • Exploring need for additional mechanisms

Aid for Trade cont’d n LDC proposal • Enhanced IF; adjustment facility managed by the WTO; infrastructure fund; debt relief, swaps and buy-back n n Increased focus in bilateral programs Scope to make progress in Hong Kong • Proposals in Nov 26 draft Declaration

Rules n Some highlights • Debate on clarification of disciplines on anti-dumping and subsidies (including fisheries subsidies) expected to become more intense in 2006 • Progress on transparency procedures concerning RTAs, but limited progress on strengthening systemic disciplines

Conclusion n November 2005, WTO Members recalibrate expectations for Hong Kong, but maintain the initial ambition for the Round • The hardest decisions of the Doha Round will now need to be made in early 2006 • End of 2006 target for completion (US TPA expiry, June 2007) n n There is too much at stake to lower sights on Doha Bank will continue to contribute through • Advocacy for an ambitious, pro-development Round • Research on trade policy and reform • Aid for trade, including cooperation on enhanced IF • TA and CB at global and country levels, including greater integration of trade into country programs