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

2. Key Messages A successful Doha Round is very important from a development perspective 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 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 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” 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 26Draft Declaration issued November 26 Sights must not be lowered if Doha is to be a true development round 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 There is a lot of work to do before end 2006

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

4. Outstanding issues Key issues remain to be resolved Key issues remain to be resolved Agriculture, in particular market accessAgriculture, in particular market access Cotton Cotton Developing countries, especially MICs, on NAMADeveloping countries, especially MICs, on NAMA ServicesServices Including benchmarks Including benchmarks Development dimensionDevelopment dimension Complementary agenda on aid for trade Complementary agenda on aid for trade

5. Agricultural Market Access Proposal Cut on highest tariffs % Sensitive products % Tariff Cap Dev’ed/Dev’ing US10/1090175/x EU10/28608100/150 G2010/1275 < or = 1 100/150 G1010/1045/50*10/15*NO * Numbers indicative only

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

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

8. Services 69 offers, plus 30 revised (EU25 counted as 1), but low quality and lack of momentum 69 offers, plus 30 revised (EU25 counted as 1), but low quality and lack of momentum Mandatory quantitative benchmarks for coverage of commitments in service sectors? Mandatory quantitative benchmarks for coverage of commitments in service sectors? Opposed by many developing countriesOpposed by many developing countries Plurilateral negotiations Plurilateral negotiations Mandatory participation benchmarks?Mandatory participation benchmarks? Overall objectives for modes Overall objectives for modes GATS rules GATS rules Broad agreement to continue negotiations and intensify effortsBroad agreement to continue negotiations and intensify efforts

9. Trade Facilitation Solid progress to date Solid progress to date Large number of proposals, broad participationLarge number of proposals, broad participation Special and differential treatment (SDT), capacity building (CB) and technical assistance (TA) integral parts of any agreement 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 2006Link 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 implementationExpectations 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 BankRole of international organizations, including Bank Where next? Where next? Text based negotiations on Articles V, VIII and X of GATT 1994?Text based negotiations on Articles V, VIII and X of GATT 1994?

10. Development Issues Proposals to strengthen SDT Proposals to strengthen SDT Focus on 28 (of the 88 proposals) agreed in principle for Cancùn, PLUS 5 agreement-specific proposals from LDCsFocus on 28 (of the 88 proposals) agreed in principle for Cancùn, PLUS 5 agreement-specific proposals from LDCs Duty and quota free access for all LDC exports Duty and quota free access for all LDC exports Resistance from countries concerned with preference erosionResistance from countries concerned with preference erosion Benefits require flexible rules of originBenefits require flexible rules of origin Concerns re preference erosion and net food importers 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 foodLosses 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 costsSerious 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 countriesAdjustment costs should not be a reason to deny the benefits of liberalization to the vast majority of developing countries Extended transition periods for affected products raise risk reducing gains from the round Extended transition periods for affected products raise risk reducing gains from the round

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

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

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

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