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Professor Mustafizur Rahman

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1 Professor Mustafizur Rahman
World Trade Organization (WTO) Negotiations: Interests and Challenges for Bangladesh Lecture by Professor Mustafizur Rahman Executive Director, CPD Faculty of Business Studies Bangladesh University of Professionals (BUP) 9 April 2010 CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

2 The Evolution of the Multilateral Trading System: From GATT to WTO
Contents Introduction The Evolution of the Multilateral Trading System: From GATT to WTO Overview of WTO Principles and Rule-based Regime Doha Development Agenda of the WTO Ongoing Negotiations: Issues and Concerns for the LDCs Lessons from Seventh WTO Ministerial Conference (on 30 November – 2 December, 2009) CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

3 I. Introduction Trade issues are becoming increasingly important for low income countries, particularly LDCs such as Bangladesh This is because LDCs are getting integrated into the global economy at an unprecedented pace In Bangladesh’s case the policy of trade liberalisation was initiated in early 1980s, gained momentum in early 1990s and has continued thereafter Three distinct periods can be identified: phasing, pacing, sequencing Main features of Bangladesh’s Trade Policy: Reduction of tariffs; Removal of NTBs; Reduction of anti-export bias As a result, the degree of openness of Bangladesh and LDCs (export plus import as a share of GDP) is on the rise. This would mean that Bangladesh and other LDCs are becoming increasingly integrated into the global economy through export and import of goods, services, capital and labour (through both factor movement and product movement) CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

4 I. Introduction Growing Importance of Trade Related Issues for Low Income Countries such as Bangladesh Since the 1990s Bangladesh economy has become increasingly integrated with the global economy. In 1991, less than a quarter of Bangladesh economy was connected directly with the global economy; in contrast in 2007 the comparable figure was more than half, about 56%. Items FY 1981 FY1991 FY 2001 FY2008 FY2009 1. Export (X) (mln USD) 725 1718 6467 14088 15565 2. Import (M) (mln USD) 1954 3472 9335 20217 22507 3. Remittance (R) (mln USD) 379 764 1882 7915 9689 4. ODA Disbursed (mln USD) 1146 1733 1369 1873 1627 5. FDI (net) (mln USD) 24 550 650 941 Total (1-5) (mln USD) 4204.0 7710.5 50329 GDP (Current Price) (mln USD) 89548 Degree of Openness (Export + Import as % of GDP) 13.5 16.8 33.4 43.4 42.5 Extent of Globalisation (%) 21.2 24.9 41.4 56.6 56.2 X as % of M 37.1 49.5 69.3 69.7 69.2 (X+R) as % of M 56.5 71.5 89.4 108.8 112.2 ODA as % of GDP 5.8 5.6 2.9 2.4 1.8 ODA As % of Export 158.1 100.9 13.3 10.5 Source: CPD-IRBD Database This would mean that developments in the global economy will have important implications for the Bangladesh economy; both in terms of opportunities that originate from it and the challenges that Bangladesh will need to address. CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda 4 4

5 I. Introduction The importance of WTO is that it seeks to bring discipline to movements of goods and services by dismantling barriers to movements of goods and services and also promote investment and capital flows that relate to trade Global movements of goods and services are constrained by: tariff barriers non-tariff barriers The primary objective of WTO and its predecessor, the GATT, is to Do away with NTBs Convert NTBs into tariffs Reduce Tariffs (Nominal tariff, tariff peaks, tariff dispersion) Bring discipline to trade-related investment measures Bring discipline to trade-related intellectual property rights CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

6 I. Introduction A rule-based trading system is helpful for developing countries and LDCs However, there are many concerns of LDCs in the context of the current negotiations LDC share in the global trade is less than 1 per cent of global trade. These countries face many difficulties in integrating with the global economy At the same time there are many opportunities for LDCs originating in the global economy. These need to be realised. LDCs require support for this LDCs look forward to strengthened global integration. WTO as an institution will need to play an important role in this CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

7 II. The Evolution of the Multilateral Trading System:
From GATT to WTO WTO's predecessor, the GATT, was established on a provisional basis towards the end of the Second World War along with other new multilateral institutions dedicated to international economic cooperation - notably the two "Bretton Woods" institutions: the World Bank (WB) and the International Monetary Fund (IMF) The original 23 GATT countries were amongst over 50 countries which agreed to a draft Charter for an International Trade Organization (ITO) - a new specialized agency of the United Nations to deal with trade related issues. However, when the United States government announced, in 1950, that it would not seek Congressional ratification of the Havana Charter, the ITO was effectively dead CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

8 II. The Evolution of the Multilateral Trading System: From GATT to WTO
GATT evolved following the demise of ITO Despite its provisional nature, the GATT remained the only multilateral instrument governing international trade from 1948 until the establishment of the WTO in 1995 In all, eight GATT Rounds were held. The last GATT round was the Uruguay Round which was the most Comprehensive Round. The GATT UR for the first time discussed, issues related to trade in Agriculture and the Services sector The WTO was established, after about fifty years of ITO, at the end of the GATT-UR which was the eighth Round; WTO started to function in January 1995 The first Round of the WTO could only be initiated in 2001, at the Fourth Ministerial Meeting in Doha. This came to be known as the Doha Development Round (DDR). The Doha Round was expected to be concluded by December, Since many issues remain unresolved, the negotiations in the context of DDR is still continuing CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

9 II. The Evolution of the Multilateral Trading System: From GATT to WTO
GATT Trade Rounds Name Dates Objectives No of Participating Countries Geneva 1947 Adoption of GATT 23 Annecy, France 1949 Tariff reduction 13 Torquay, England 1951 38 1956 26 Geneva ("Dillon ") Geneva ("Kennedy ") GATT negotiation rules 62 Tokyo Overall reduction of tariffs to an average level of 35% and 5-8% among developed nations Non-tariff barrier codes - Government procurement - Customs valuation - Subsidies and countervailing measures - Antidumping - Standards - Import licensing 102 Uruguay Round Broadening of GATT Limit agricultural subsidies Include services trade Include intellectual property Establishment of the WTO (World Trade Organization) CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

10 III. Overview of WTO Principles and Rule-based Regime
Ministerial Conferences: Geneva 1998 Creation of WTO 1995 Seattle 1999 Singapore 1996 Doha 2001 Cancun 2003 Hong Kong 2005 2009 CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

11 The four main elements are:
III. Overview of WTO Principles and Rule-based Regime The rule-based regime in WTO is premised on two basic principles, often expressed as four main elements. These two basic principles are non-discrimination and market efficiency (or open, secure access) The four main elements are: Most favoured nation, commonly referred to as MFN, means simply that members of the GATT extend the same treatment to imports from all the other members, i.e., all members are treated equally as well as the "most favoured" among them. This is non-discrimination at the border- favour one, favour all National treatment means that imported goods, once they have met all the requirements of whatever border regime is in place and have entered into the internal (domestic) market in a member's economy, will be treated no less favourably than domestic goods are treated in the domestic market. This is non-discrimination in the internal (domestic) market CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

12 Taken together, these two elements ensure non-discrimination
III. Overview of WTO Principles and Rule-based Regime Taken together, these two elements ensure non-discrimination Elimination of QRs and NTBs and reliance on tariffs as the sole instrument of border protection: Tariffication The general goal of transparency which is achieved through publication of trade laws and regulations. Transparency is expected to improve market efficiency as it is necessary for participants in the market to know the rules if they are to compete effectively. These four elements: (a) MFN, (b) National Treatment, (c) Reliance on Tariffs and (d) Transparency, are the four most powerful Swords of the GATT CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

13 Provisions of the GATT/WTO
III. Overview of WTO Principles and Rule-based Regime Provisions of the GATT/WTO SWORDS SHIELDS Most favoured nation Grandfather pre-existing preferences National treatment Regional trade agreements Reliance on tariffs Waivers "in exceptional circumstances" Transparency Government procurement Domestic production subsidies Customs valuation rules Security exception No unreasonable customs fees or formalities Critical shortages of food and essentials Freedom of transit Balance of payments Restrictions on subsidies, no export subsidies Safeguards, antidumping and subsidy/countervail Rules for state trading and monopolies S&D for Developing and Least Developed Countries CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

14 Marginalisation of weaker economies in the context of globalisation
III. Overview of WTO Principles and Rule-based Regime Rationale for S&D Treatment for LDCs and Developing Countries Marginalisation of weaker economies in the context of globalisation Infant industry argument Lack of technical capacity Lack of financial resources Weak capacity to participate in WTO-system Weak capacity to take advantage of the opportunities emanating from WTO system Modalities of S&D Treatment in the WTO Special and Differential (S & D) Status Waivers from undertaking obligations and Aid for Trade Package Staggered Implementation Schedule Technical Support: Trade and Aid Nexus Special Market Access Provisions (in the WTO and under GSPs) CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

15 Single Undertaking: Nothing is Agreed unless Everything is Agreed
III. Overview of WTO Principles and Rule-based Regime Decision Making in the WTO Single Undertaking: Nothing is Agreed unless Everything is Agreed Decision Making Process - Ministerial Conference - General Council - Agreement-Specific Committees In WTO, Countries Get Not What They Deserve, But What They Negotiate Decision Making The WTO continues the GATT practice of taking decisions by consensus but if a decision cannot be reached by consensus, it is to be arrived at through majority vote (unless otherwise provided in the particular agreement under reference). In the Ministerial Conference and the General Council, each member has one vote CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

16 III. Overview of WTO Principles and Rule-based Regime
How the WTO Works? CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

17 Non-agricultural Market Access (NAMA) Services (GATS)
IV. Doha Development Agenda of the WTO Launched at the 4th WTO Ministerial Conference in Doha in November 2001(also known as Doha Development Round) Currently Doha Round of negotiations are continuing in Geneva Five Clusters of Negotiating Issues Agriculture Non-agricultural Market Access (NAMA) Services (GATS) Rules and Trade Facilitation “Development” Provisions Built-in Agenda; Continuing Agenda; New Agenda CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

18 Market Access Negotiations
IV. Doha Development Agenda of the WTO Market Access Negotiations Major objectives: Tariffication of NTBs Elimination of Non-Tariff Barriers Gradual Reduction of Tariffs CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

19 IV. Doha Development Agenda of the WTO
Pillars of the Agreement on Agriculture (AoA) A.Market Access B.Domestic Support C.Export Competition Tariffs Reductions Market Access Tariff Quotas Special Safeguards Amber Box Reduction Commitments Blue Box Production Limiting Green Box Non Trade Distorting S & D Box Exceptions for Dev’g Quantitative Reductions Value Reductions Other Rules Special and Differential Treatment, Peace Clause, Commitment to Reforms CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

20 UR Commitments IV. Doha Development Agenda of the WTO : Agriculture
Market Access Developed Developing Least Developed Reduction Commitments 36% average % average None 15% minimum % minimum None Time-period years: years: Domestic Support Developed Developing Least Developed Reduction Commitments 20% % No reduction Time-period years: years: De Minimis % % % Specific Exemption Article 6.2 exemption for certain investment, input and diversification subsidies Export Competition Developed Developing Least Developed Reduction % value % volume No reduction 24% value % volume No reduction Time-period years: years: Specific Exemption Article 9.4 Transport and Marketing subsidies CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

21 The current negotiations on NAMA aim at:
IV. Doha Development Agenda of the WTO NAMA The current negotiations on NAMA aim at: reducing tariffs, including reduction or elimination of tariff peaks, high tariffs and tariff escalation eliminating (or accelerated reduction of) tariffs in particular sectors (the so-called sectoral) reducing non-tariff barriers and provision of special and differential treatment and less than full reciprocity in reduction commitments by the developing countries and LDCs CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

22 It was agreed that: NAMA
IV. Doha Development Agenda of the WTO NAMA It was agreed that: the product coverage would be comprehensive, and without a priori exclusions, tariff reduction was to commence from bound rates, that all non ad-valorem duties will be converted to ad-valorem equivalents and credit shall be given for autonomous liberalisation by developing countries provided that the tariff lines are bound on an MFN basis Special market access for LDCs CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

23 Expansion of services trade
IV. Doha Development Agenda of the WTO Objectives of GATS Expansion of services trade Progressive liberalization through successive rounds of negotiations Transparency of rules and regulations Increasing participation of developing countries Negotiations to take place on offer and request list CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

24 GATS: Four Modes of Supply
IV. Doha Development Agenda of the WTO GATS: Four Modes of Supply Mode 1: Cross-border supply (e.g. international telephony) Mode 2: Consumption abroad (e.g. international tourism) Mode 3: Commercial presence (e.g. establishment of foreign bank) Mode 4: Movement of natural persons (e.g. doctor working abroad) CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

25 GATS: Sectoral Coverage
IV. Doha Development Agenda of the WTO GATS: Sectoral Coverage Business Services Communication Construction Distribution Education Environmental Services Health-Related Services Financial Services Tourism Recreation, Culture & Sport Transport Other Services CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

26 S&D Treatment of Developing Countries and LDCs
IV. Doha Development Agenda of the WTO S&D Treatment of Developing Countries and LDCs LDCs and developing countries have been given some flexibilities in fulfilling the obligations under the WTO longer time frame for implementation of obligations preferential market access waiver from various WTO obligations and technical and financial assistance But, most of the S&D provisions are: non-binding and in the form of ‘best endeavour clauses’ apparently mandatory, yet de-facto non-binding only a few provisions are mandatory and binding provisions The Doha declaration obligates the WTO to make S&D provisions ‘precise, effective and operational’ CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

27 IV. Doha Development Agenda of the WTO
S& D Treatment The following kinds of S&D provisions can be found in the UR Agreements provisions aimed at increasing trade opportunities (12) provisions which call upon WTO Members to safeguard the interest of LDCs (49) provisions offering flexibility of commitments (30) transitional time periods (18) provisions related to technical assistance (14) provisions in favour of least developed countries (22) CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

28 Run up to the Hong Kong Ministerial
IV. Doha Development Agenda of the WTO Run up to the Hong Kong Ministerial The Doha “Development” Round (DDR), was launched at the end of the Fourth WTO Ministerial Conference held in Doha on 9-13 November The Doha Ministerial agreed on time schedules for negotiations and for reaching modalities for framework, and then translating those modalities into a single undertaking by 1 January 2005 The Doha work programme suffered a major setback when the Fifth Cancun Ministerial Conference of the WTO, held during September 2003, failed to hammer out a Ministerial Declaration CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

29 Agriculture Outcome of the Hong Kong Ministerial
IV. Doha Development Agenda of the WTO Outcome of the Hong Kong Ministerial Agriculture Agriculture negotiations are related to three pillars: domestic support, market access and export subsidies Major task was to identify modalities to reduce the $240 billion subsidy agriculture given to OECD countries (amber, blue and green box subsidies; domestic support; export subsidy; export credit subsidy) As agreed under paragraph 45 of the July Framework agreement, LDCs, including Bangladesh, are exempted from any tariff reduction commitment A general formula for reduction of tariffs could not be reached On the issue of domestic support: it was agreed that export credit subsidy will be phased out; it was agreed that there would be three bands for subsidy reduction; in the overall cut in trade-distorting domestic support, there would be higher linear cuts in higher bands. However, the level of cuts would be decided later CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

30 Outcome of the Hong Kong Ministerial Cotton
IV. Doha Development Agenda of the WTO Outcome of the Hong Kong Ministerial Cotton The HK Declaration provided a consensus on cotton issue. It was agreed that all forms of export subsidies for cotton would be eliminated by developed countries by At the closing session members agreed that trade distorting domestic subsidies for cotton production be reduced more ambitiously than under whatever general formula is agreed, and that it should be implemented over a shorter period of time than is generally applicable. The members committed to give priority in the negotiations to reach such an outcome CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

31 Outcome of the Hong Kong Ministerial Food Aid
IV. Doha Development Agenda of the WTO Outcome of the Hong Kong Ministerial Food Aid On the issue of Food Aid, it was agreed that disciplines on in-kind food aid, monetization and re-exports would be made in a manner that leaves no loophole for continuing export subsidisation. The disciplines on export credits, export credit guarantees or insurance programmes, exporting state trading enterprises and food aid was to be completed by 30 April 2006 as part of the modalities The issue of discipline in food aid remains essentially unsettled although the text mentions that the level of food aid and interests of the net food importing countries will be safeguarded. This is expected to take care of food aid receiving countries. Bangladesh and other net food importing countries will need to carefully follow the negotiations on this issue since desubsidisation and withdrawal of support in developed country agricultural sector is likely to push up the global food price CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

32 Outcome of the Hong Kong Ministerial
IV. Doha Development Agenda of the WTO Outcome of the Hong Kong Ministerial NAMA As regards negotiations on NAMA (non-agricultural market access), the ambition level has been lowered significantly in Hong Kong. It was agreed that a non-linear Swiss-type formula (higher the tariff, higher will be the cut), with multiple coefficients, would be used for the purpose of tariff cuts. Developing countries appear to have withstood their position in terms of undertaking lower commitments in NAMA Although LDCs are not expected to take any reduction commitments under NAMA, any reduction in the MFN tariffs on industrial goods by the developed and developing countries is expected to lead to significant preference erosion for Bangladesh and other LDCs. Besides, LDCs are also expected to bind a substantial number of industrial tariffs In some of the developed countries, under S&D provisions, LDCs will get duty-free access for all their industrial goods. However, in some others the share of goods getting DF-QF market access would be only 97 percent, and it is apprehended that many industrial goods of export interest to LDCs would be included in the ‘exclusion list’. Accordingly, items such as Bangladesh’s apparels will have to enter markets of some developed countries, most notably that of the USA, (and to some extent Japan) with MFN duties CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

33 Outcome of the Hong Kong Ministerial
IV. Doha Development Agenda of the WTO Outcome of the Hong Kong Ministerial Services Not much progress could be achieved in services. However, Article 3 of Annex C is an important decision which states that “members shall pursue full and effective implementation of the Modalities for the Special Treatment for Least Developed Country Members in the Negotiations on trade in Services (LDC Modalities) adopted by the Special Session of the Council for Trade in Services, with a view to have beneficial and meaningful integration of LDCs into multilateral trading system” Further, Article 9 (a) of Annex C is important for Bangladesh. It states that members shall develop appropriate mechanisms for the full and effective implementation of the LDC Modalities, including, expeditiously developing appropriate mechanisms for according special priority including to sectors and modes of supply of interests to LDCs in accordance with Article IV:3 of the GATS and paragraph 7 of the LDC Modalities However, no specific decision on Mode 4 was taken CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

34 Outcome of the Hong Kong Ministerial
IV. Doha Development Agenda of the WTO Outcome of the Hong Kong Ministerial Aid for Trade It is an emerging concept. A governance structure is yet to be put in place to mobilise and disburse the committed resources. The Director General of the WTO is to constitute a Task Force to design the governance structure which will provide its recommendations by July 2006 (Article 7 of main text). Once again, Bangladesh needs to take adequate preparations to take advantage of these aid flows Major concerns in this regard are the followings: It is not clear whether these resources are additional or being diverted from other commitments More importantly, whether there is a double or triple counting on account of resource commitments to MDGs and PRSP What is also not clear is whether disbursement of these funds will fall under the IMF and the World Bank conditionalities These resources are for all developing countries, and it is not clear how this will be targeted to LDCs CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

35 Outcome of the Hong Kong Ministerial TRIMS
IV. Doha Development Agenda of the WTO Outcome of the Hong Kong Ministerial TRIMS One of the areas where S&DT was accorded to LDCs in Hong Kong relates to Trade-Related Investment Measures (TRIMS). The transition period has been extended by seven years from 2006, i.e. till The LDC proposal was to extend it up to More importantly, LDCs will be able to not only continue with old TRIMS (subject to notification) but also introduce new ones. One needs to explore to what extent Bangladesh can use this provision to support its strategic trade policy funding by withstanding the pressures from the World Bank and the IMF CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

36 Outcome of the Hong Kong Ministerial
IV. Doha Development Agenda of the WTO Outcome of the Hong Kong Ministerial LDCs as a group received a limited market access deal. Some progress has been achieved in the areas of export subsidy in cotton, and in a few cases of special and differential treatment. Some promises have been made on “Aid for Trade” Bangladesh’s ambitions from the Ministerial remain largely frustrated as it did not get meaningful market access, and with no significant progress in other areas including Mode - 4 Bangladesh did not anticipate adequately that certain textile importing developing countries would play such an open and active role against Bangladesh. The role of Pakistan, and partly, Sri Lanka was to the detriment of Bangladesh’s interests. Our South Asian solidarity was of no help to Bangladesh CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

37 Agriculture V. Ongoing Negotiations: Issues and Concerns for the LDCs
Negotiations are taking place as regards tariff reduction for agri-products: Two ranges of coefficients for developed and developing countries SSM for sensitive products LDCs are considering only the defensive interests such as “no reduction commitments” LDCs are reticent on offensive interests such as market access, issue of preference erosion, and implications of food price increase. Bangladesh and other LDCs must identify their offensive interests for the negotiations Duty-free and quota-free access to the developed and developing country markets is not yet given in a binding manner, i.e. a definitive “shall” is still missing in the agriculture related text Bangladesh and other LDCs need to pursue this CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

38 Bangladesh has both “offensive” and “defensive” interests
V. Ongoing Negotiations: Issues and Concerns for the LDCs NAMA Bangladesh has both “offensive” and “defensive” interests Bindings of Tariffs: As an LDC Bangladesh will not be required to undertake any tariff reduction commitment on NAMA. But it may be required to take commitments to bound the non-bound industrial products. Bangladesh’s offensive interest lies in ensuring that items of her export interest does not get into the Sectoral. Preference Erosion: By all counts preference erosion is becoming an increasingly important issue of concern for Bangladesh and other LDCs The Swiss formula will be the modality for tariff reduction. The coefficients are [7-9] for developed countries and [19-23] for developing countries Some studies show that Bangladesh will lose about US$ 300 million due to preference erosion CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

39 NAMA V. Ongoing Negotiations: Issues and Concerns for the LDCs
To offset this, the LDCs are renewing the demand for global zero-tariff access for all products from the developed countries. Essentially, for Bangladesh, this would mean getting zero-tariff access in the US market as other major markets are covered by GSP schemes. This could provide a short-term trade-off for tariff preference erosion. For example, tariff on Bangladesh’s products in US market at present amounted to about US$ 300 million. CPD Modelling exercise (Bhattacharya et al. 2004) indicates that a zero-tariff access in the USA would have increased Bangladesh’s export of apparels to the US market by about $1.0 billion (or by 50%) Zero tariff access to the Canadian market, provided since 2001, has helped Bangladesh to increase her apparel export from $97.91 mln in FY2002 to FY2007, a growth of about over 5 years! Negotiations are continuing as to the HK decision on DF-QF - design of 97% list; phase-in of 3% list; commercially meaningful market access CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

40 GATS: Mode 4 (Temporary Movement of Natural Persons)
V. Ongoing Negotiations: Issues and Concerns for the LDCs GATS: Mode 4 (Temporary Movement of Natural Persons) Raihan and Mahmood (2004) estimated that an increase of 2 lakhs of Unskilled workers would bring additional US$ 3.5 billion Skilled workers would bring US$ 381 million Professionals would be US$ billion Bangladesh must negotiate for Mode 4 Bangladesh has not submitted “request” and “offer proposal” for negotiation LDC Modalities: An Amendment or a waiver (signalling conference) CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

41 GATS: Mode 4 (Temporary Movement of Natural Persons)
V. Ongoing Negotiations: Issues and Concerns for the LDCs GATS: Mode 4 (Temporary Movement of Natural Persons) Bangladesh and other LDCs should submit requests on mode 4 as early as possible Bangladesh could consider offering market opening in some areas, which are already open under autonomous liberalisation. The offers can be tailored to protect national interest It is not only developed countries, which are indifferent to the legitimate demand of the LDCs; it is also LDCs, which are not serious about their mandate and role in the WTO negotiations process. CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

42 S&D Treatment of Developing Countries and LDCs
V. Ongoing Negotiations: Issues and Concerns for the LDCs S&D Treatment of Developing Countries and LDCs LDCs have not been active in coming up with appropriate S&D proposals to be considered in the negotiation committee Most of the proposals suffer from lack of clarity of language Countries should consider redrafting the proposals to reflect their needs, with the help of experts, as well as WTO Secretariat CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

43 V. Ongoing Negotiations: Issues and Concerns for the LDCs
Negotiations on Rules Bangladesh has both defensive and offensive interests in this area in view of anti-dumping cases against her by India (which has been favourably resolved) and Brazil (on jute, now under consideration) LDCs should articulate proposals to the effect that anti-dumping duties (ADD) are not imposed on items of their export interest, particularly on apparels in view of the difficulties emanating from MFA phase-out Problems of LDCs as regards their underdeveloped domestic industries should be forcefully articulated. The implications of various anti-dumping measures need to be understood by LDCs through appropriate homework LDCs should argue for greater assistance in establishing sustainable fisheries and be allowed capacity enhancing subsidies CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

44 The proposals of Trade Facilitation are tied with Technical Assistance
V. Ongoing Negotiations: Issues and Concerns for the LDCs Trade Facilitation The proposals of Trade Facilitation are tied with Technical Assistance It is unlikely to move forward. Even if they do, TF will not give rise to new trade opportunities, though perhaps these will improve the competitiveness of Bangladesh export in the global market. CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

45 VI. Lessons from Seventh WTO Ministerial Conference (on 30 November – 2 December, 2009)
Not much movement at the Conference; however, political commitment to complete the Doha Round in 2010 and have the eighth Ministerial by 2011 LDCs must strive for commercially meaningful (meaningfully enhanced) implementation of DF-QF initiative Work should continue to address Bangladesh’s interests in the context of Disproportionately Affected Countries (DACs) GATS Mode-4 and a Waiver for LDCs Compete globally, act locally – build trade-related supply-side capacities Aid for Trade (AfT): A major thrust is required in support of LDCs such as Bangladesh LDCs should maintain their solidarity and should not lose sight of their common interests Important – building negotiating skills to advance Bangladesh’s trade interests CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda

46 Thank You for Your Attention
CPD-PMR: WTO Negotiations : Interests and Challenges for Bangladesh CPD-PMR: WTO-Doha AgendaCPD-PMR: WTO-Doha Agenda


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