Presentation on theme: "WTO Hong Kong ministerial conference (13-18 December)"— Presentation transcript:
1 WTO Hong Kong ministerial conference (13-18 December) Levente Császi, DG ExPo Policy Department
2 Topics for discussion What is trade and why is trade important? What is the WTO?TimelineWhat is new in this round?The stakes of the DDA and Hong KongThe structure of the negotiationsThe main actorsThe EU agendaAgricultureNAMAServicesIs it a “Development” round?The EP and Hong Kong
3 What is trade and why is it important 8000 billion $ in goods and servicesTrade policy: incentive to produce certain goodsTheory:link between freer trade and economic growthComparative advantagePositive sum gameBUT:Trade is NOT enoughnot magic panacea!
4 Myriad of instruments, policies and tools Tariffs (tariffication, binding tariffs, tariff peaks, tariff escalation, tariff reducing formula), quotas, tariff rate quotas (TRQs), standards, non-tariff barriers, subsidies, investment rules, intellectual property rights (IPRs), geographical indications (GIs), environment, labour standards, services regulation, movement of people, export credits, enforcement of the rules, technical assistance, trade facilitation, aid for trade, customs valuation, rules of origin, implementation issues, dispute settlement, anti-dumping, sanitary and phytosanitary measures, investment…
5 Trade policy and overall economic impact Trade liberalisation: uni-, bi-, pluri-, multilateralTrade PolicyDirect effects on trade flows and growthIndirect effects through Economic growthGeographyDomestic policiesTrade policy is foreign policy!
6 What is the WTO? Creation in Uruguay round (1995) 148+ Members Member-driven intergovernmental organisation?Champion of free trade?Negotiating mechanism to create economic opportunities?"Unidentified object of global governance"? – no common understandingDevelopment organisation?Obscure organisation with 23 agreements where fisheries are discussed under the “Rules” chapter
7 Basic principles Non-discrimination (MFN principle) Transparency of rules (e.g.“tarrification”, notification system)Progressive liberalisation through multilateral trade roundsConsensusEnforcement of rules (Dispute Settlement)
8 WTO rounds Year Place/name Subjects covered Countries 1947 Geneva Tariffs231949Annecy131951Torquay38195626Dillon RoundKennedy RoundTariffs and anti-dumping measures62Tokyo RoundTariffs, non-tariff measures,“framework”agreements102Uruguay RoundTariffs, non-tariff measures, rules,services, intellectual property,dispute settlement, textiles, agriculture,creation of WTO, etc123
9 Globalisation and the WTO “Asymmetrical economic order”WTO: part of the problem - part of the solution?The world without the WTO…“rules based system” vs “rule of the jungle”asymmetrical trade regime would exist without the WTO (bilateral and biregional agreements)DSU – protects the weak?consensus?
10 Timeline of negotiations Launch of Doha Development AgendaEU-US renewal too late, Cancun failureJuly framework agreement2005 – August: “approximations”2005 – November – draft ministerial textDecember - Hong Kong Ministerial – “recalibration” & new road mapCountries table offers based on Hong Kong guidanceDecember – negotiations concludeSubmit implementing legislation to US CongressJuly – US Trade Promotion Authority expiresNew domestic reforms? (Farm Bill Renewal, CAP?)Most reforms start to kick in
11 What is new in this round? Growing membership (China, DCs)Growing agenda affecting policy spaceIncreasingly inflexible negotiating positionsGrand bargain: agri vs NAMA and servicesDeveloping countries split (G20, G33, G90)
12 What is at stake in the DDA and at Hong Kong? Economic terms – expectations on gains from DDA scaled down (World Bank projections)Credibility of multilateralism - key concern for Europe (alternative: bilaterals…)Reducing global trade asymmetry – what about the DDA?Policy space?Paradigm shift in agriculture?
13 The structure of the negotiations July framework – basic guidelines“Single undertaking”General Council, TNC, Committeesdefensive and offensive interestsissue-based coalitionsshifting power constellations, G-20 emergingCore group, “green room deals”?consensus – developing countries have “negative power”
14 Main actorsFive interested parties (FIPs - EU, US, Australia, India, Brazil)Quad (EU, US, Japan, Canada)New Quad (EU, US, India, Brazil)Cairns groupG10G20 (Brazil, India, China – marriage of convenience)G33 – one issue: special products and SSMG77/90 – Africa + LDCs - defensiveWho else is driving negotiations? (NGOs, multinationals…)Parliamentarians???
15 Cairns GroupArgentina*AustraliaBolivia*Brazil*CanadaChileColombia*Costa Rica*Guatemala*Indonesia*MalaysiaNew ZealandParaguay*Philippines*South Africa*Thailand*Uruguay*These countries have overlapping memberships with the G-20G-20 (G-21)ArgentinaBoliviaBrazilChinaCubaEcuador*EgyptEl Salvador*IndiaIndonesiaMexicoNigeriaPakistanParaguayPeru*PhilippinesSouth AfricaThailandTanzaniaVenezuelaZimbabwe*These members have left the G-20 since its formation, due to the CAFTA negotiations with the US.EU MembersAustriaCyprusCzech RepublicBelgiumDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyLatviaLithuaniaLuxemburgMaltaNetherlandsPolandPortugalSlovakiaSloveniaSpainSwedenUnited KingdomG-33Antigua and BarbudaBarbadosBelizeBotswanaDominican RepublicGrenadaGuyanaHaitiHondurasJamaicaKenyaMauritiusMongoliaNicaraguaPanamaPeruthe PhilippinesSaint Kitts and NevisSaint LuciaSaint Vincent and the GrenadinesSurinameTrinidad and TobagoTurkeyUgandaZambia(China*)(India*)*These countries (formal G-20 members) are actively participating in G-33 meetings and support the Group in the negotiations.Recently Acceded MembersAlbaniaCroatiaGeorgiaJordanMoldovaNepalOmanG-10(Bulgaria)Chinese TaipeiIcelandIsraelJapanKoreaLichtensteinNorwaySwitzerlandG-90 (AU/ACP/LDC)This is a combination of the 54 African Union countries, 77 African, Caribbean and Pacific (ACP) countries and 49 least-developed countries (LDCs), which are Members of the WTO
16 Ag resistant countries Doha Interest GroupsGroupCountriesAgricultureIndustrial GoodsServicesSubsidiesAccessUnited StatesEuropean UnionFree traders (Cairns)Australia, New Zealand, ChileAg resistant countriesG10: Japan, Korea, Taiwan, Switz, NorwG-20 main playersBrazil, Argentina, ThailandChinaIndiaDeveloping: SP, preference erosionG-90 and G-33Developing: net food importersLDCs and others= Offensive position= Defensive position
17 The EU Agenda I Starting off with a broad “post-modern” agenda (Seattle to Doha, “Singapore issues”)Defensive interests:Agriculture: CAPGoods: footwear, textiles and clothingServices: transport, audiovisual, education, healthcareOffensive: services & goods(professional services, e-commerce, etc)
18 The EU Agenda II Trade facilitation (other 3 Singapore issues dropped) Trade and the environment + core labour standards controversialDevelopment: global EBA, openness to S&D, phasing out export subsidiesChallenge: “preference erosion” (ACP)Agriculture is the sticking point – locking in 2003 CAP reformPolicy linkages: CAP, budget, developmentThree-level game
19 Agriculture I July framework: market access: substantial tariff reductionsexports subsidies: reductions of, with a view to phasing out, all forms of these (in the 1 August 2004 “framework” members agreed to eliminate export subsidies by a date to be negotiated)domestic support: substantial reductions for supports that distort trade (in the 1 August 2004 “framework”, developed countries pledged to slash trade-distorting domestic subsidies by 20% from the first day any Doha Agenda agreement is implemented.
20 Protection is Still High and Mostly at the Border Source: OECD
21 Tariff Peaks Are Very High Source: WTO IDB (MFN Applied Duties)
22 Tariffs Escalate in Final Products Source: WTO IDB (MFN Applied Duties)
23 Agriculture: Three Pillars Market AccessAverage WTO Allowed Ag Tariff3. Domestic Support – amber box: WTO allowed (gold) and Projected (yellow) 2005 Aggregate Measurement of Support (AMS) Levels. Billion $ at current x rates2. Direct Export SubsidiesEU(over $2 billiona year)OtherUnited StatesSwitzerlandNorway
24 Agriculture: Proposals for market access Market Access: Average WTO Allowed Ag Tariff(1% sensitive products)(1% sensitive products)(8% sensitive products)(Based on WTO AVEs)
25 Domestic subsidiesEU offer: 70 percent reduction in trade-distorting subsidies (conditional, US wants 83 percent)
26 Non-agricultural market access (NAMA) Z= AX/(A+X)The magic harmonising Swiss formula – different from Uruguay!X= old tariff A= coefficient Z=new tariffDebate is about the coefficient + smaller coefficient for developing countries (2/3 of developed country commitments)
27 Services I GATS flexible “offer-request” process The 4 modes of supply:cross-border (trade that takes place from the territory of one country into another, e.g. e-commerce or telecoms)consumption abroad (consumption of services in another country e.g. tourism)commercial presence (establishment of a firm from one country in the territory of another – particularly important for financial services and professional services)movement of natural persons (the ability for nationals to work overseas for a temporary period to provide services, which is not a synonym for cross-border labour movement in general
28 Services II Significant gains possible from services liberalisation No progress so farEU proposed benchmarks:Voluntary commitments according to certain criteriaSmaller commitment from DCsNot forced liberalisation or privatisationResentment from DCs and NGOs
29 The EU position before HK Agri tariff cuts between 35% to 60%Sensitive products (6-8% off tariff lines), cap of 100% for developed and 150% for developing countriesReduction of trade-distorting subsidies (up to 70 percent)Export subsidies: phasing out + full parallelism: US to get rid of export credits, commercial food aid, etcAmbitious tariff reduction in NAMAServices: “benchmarks“ – less flexible?Development packageGlobal EBASpecial and differential treatment (flexibilities)TRIPs – better access to drugsCottonAid for trade
30 Key Elements of U.S. Proposal Stage 1 (5-year implementation):Substantial reductions in trade-distorting domestic support (“Amber Box”: 60 percent cut for U.S., 83% cut for EU and Japan)Substantial reductions in tariffs, with deeper cuts for higher tariffsDeveloped countries: tariff cap and cuts ranging from 55% to 90%Developing countries: slightly lesser cuts, focus on emerging marketsLimits the number of “sensitive products” eligible for smaller tariff cut to only 1% of total tariff lines, and ensures meaningful access through large quotas.Total Elimination of export subsidies by 2010Stage 2 (5 years after Stage 1 implemented):Phase out remaining tariffs and trade-distorting support measures over 5 years
31 Development???Market access and rebalancing rules on domestic and export support;The recognition, "operalisation" and implementation of special and differential treatment (S&D) and flexibilities for developing countries (e.g. separate treatment of cotton, a development box in agriculture);Mainstreaming the development dimension into a wider range of policies that are not "classical trade instruments" but are covered by one of the 23 WTO agreements or could be added to the WTO agenda (TRIPs, TRIMs, Singapore issues, standards, social and environmental requirements).EU: Round for free + global Everything But Arms?
32 Development II – demands from DCs lesser and lower obligations for developing countries (asymmetric tariff cuts, exemptions for special and sensitive products and unbound tariffs);longer implementation periods;subsidies allowed on non-trade concerns (vulnerability, food security and environmental issues);a definition of "small and vulnerable economies";special treatment for single commodity producers;trade facilitation and technical help;support measures for implementation;a ban on certain trade defence measures applied by developed countries with regards to specific countries and/or product categories;special safeguard possibilities for developing countries under certain conditions
33 The EP and Hong Kong4th Parliamentary Conference on the WTO – IPU + EP30 MEPsMeetings with senior representativesTwo main topics:Concluding the roundInternational coherence