1. DOHA ROUND: THE OUTLOOK Mr. José Luis Machinea Executive Secretary ECLAC

2. 2 CONTENTS Importance and urgency of Doha Importance and urgency of Doha Complex nature of the negotiations Complex nature of the negotiations After Hong Kong After Hong Kong

3. 3 IMPORTANCE AND URGENCY OF DOHA The multilateral system is the best option for developing countries The multilateral system is the best option for developing countries Developing countries are the main beneficiaries of a successful Doha round Developing countries are the main beneficiaries of a successful Doha round Risks of protectionism and “managed trade” Risks of protectionism and “managed trade” Full incorporation of China raises concerns Full incorporation of China raises concerns Main challenge for the multilateral trading system is adapting to the surge in competition from China and Asia in global marketsMain challenge for the multilateral trading system is adapting to the surge in competition from China and Asia in global markets

4. 4 IMPORTANCE AND URGENCY OF DOHA Mounting tensions between the multilateral, regional and bilateral levels of global integration: threat of exclusion Mounting tensions between the multilateral, regional and bilateral levels of global integration: threat of exclusion Overlapping standards, inconsistent tariff reduction timetables, restrictive rules of originOverlapping standards, inconsistent tariff reduction timetables, restrictive rules of origin WTO losing groundWTO losing ground Most favoured nation treatment tending to be the exception rather than the ruleMost favoured nation treatment tending to be the exception rather than the rule

5. 5 MAIN NEGOTIATING ISSUES AT DOHA Agriculture Agriculture Non-agricultural market access (NAMA) Non-agricultural market access (NAMA) Trade in services Trade in services Relationship between environmental accords and WTO Relationship between environmental accords and WTO Rules (anti-dumping, fishery subsidies and regional trade agreements) Rules (anti-dumping, fishery subsidies and regional trade agreements) Dispute settlement (outside the single undertaking) Dispute settlement (outside the single undertaking) Trade facilitation Trade facilitation The development dimension and multilateral trading system. The development dimension and multilateral trading system.

6. 6 AGRICULTURE Core issue for DOHA Core issue for DOHA Three pillars Three pillars Market access: significant reduction of tariff barriers and expansion of tariff quotasMarket access: significant reduction of tariff barriers and expansion of tariff quotas Export competition: reduction of all export subsidies with a view to phasing them out altogetherExport competition: reduction of all export subsidies with a view to phasing them out altogether Domestic supports: clarifications, disciplines and substantial reductions.Domestic supports: clarifications, disciplines and substantial reductions.

7. 7 CENTRALITY OF AGRICULTURE Market access is the main and most complex issue, as well as the one that holds out the potential for the greatest gains. Market access is the main and most complex issue, as well as the one that holds out the potential for the greatest gains.

8. 8 Industrialized countries: tariff peaks 32.0 43.3 40.0 38.5 68.3 58.7 57.6 74.9 308.0 0 10 20 30 40 50 60 70 80 TobaccoCigarettesGrape mustFructose and syrups CheeseMeat (with bone) TobaccoNutsSeeds European Union JapanUnited States Source: ECLAC International Trade and Integration Division

9. 9 ExportsImportsExportsImports TARIFF REDUCTIONS REDUCTION IN DOMESTIC SUPPORTS Developing countries 6.76.00.8-0.10.60.1 Argentina 4.64.51.5-0.54.92.4 Brazil 4.74.4-0.50.60.1 Bolivia 2.44.22.2-0.4-0.20.2 Colombia 5.76.9-0.90.71.80.3 Costa Rica 14.63.81.7-0.528.42.2 Chile 4.74.91.3-0.32.60.5 India 5.05.71.50.1 0.0 Jamaica 14.45.91.5-0.34.70.0 Mexico 5.18.40.90.50.6-0.5 South Africa 6.5-0.21.30.5 0.1 Thailand 12.46.40.60.04.80.3 Trinidad and Tobago 11.25.41.2-0.3-2.3-1.4 Venezuela (Bol. Rep. of) 8.56.80.20.3-0.8-0.4 Least developed countries 3.75.32.0-0.20.1 REGION Source: B. Hoekman, F. Ng and M. Olarreaga (2003): “Reducing Agricultural Tariffs versus Domestic Support: What's More Important for Developing Countries?”, PRWP 2918, World Bank. PERCENTAGES IMPACT OF IMPROVEMENTS IN MARKET ACCESS AND DOMESTIC SUPPORT 50% reduction in tariff barriers: Agricultural products 50% reduction in domestic supports for agricultural products Changes in welfare: ( $ per capita income)

10. 10 CENTRALITY OF AGRICULTURE Market access is the main and most complex issue, as well as the one that holds out the potential for the greatest gains. Market access is the main and most complex issue, as well as the one that holds out the potential for the greatest gains. Defining targets and tools for eliminating export subsidies and substantially reducing all trade-distorting domestic supports are highly complex and highly technical tasks. Defining targets and tools for eliminating export subsidies and substantially reducing all trade-distorting domestic supports are highly complex and highly technical tasks. This contributes to the failure to address the politically complex matter of reducing agricultural protectionism in Europe, Japan and the United States. This contributes to the failure to address the politically complex matter of reducing agricultural protectionism in Europe, Japan and the United States. Developing countries do not necessarily present a united front on all three pillars of the agricultural negotiations. Developing countries do not necessarily present a united front on all three pillars of the agricultural negotiations. The relatively less developed countries prefer to maintain unilateral preferences and keep the existing restrictions on access to the European Union market, for example.The relatively less developed countries prefer to maintain unilateral preferences and keep the existing restrictions on access to the European Union market, for example.

11. 11 COMPLEXITY OF THE NEGOTIATIONS The negotiating agenda includes highly complex technical matters that are being deferred while the countries await results in agriculture. The negotiating agenda includes highly complex technical matters that are being deferred while the countries await results in agriculture. Developing countries must be prepared for different scenarios. Developing countries must be prepared for different scenarios. In order to reach an agreement, an overall balance of interests between developing and developed countries will have to be achieved: In order to reach an agreement, an overall balance of interests between developing and developed countries will have to be achieved: Inevitable trade-offs among different issuesInevitable trade-offs among different issues Giving ground on some topics in order to gain in othersGiving ground on some topics in order to gain in others Rigidity may be useful in the negotiations but, in the end, pragmatism and a broad view are needed.Rigidity may be useful in the negotiations but, in the end, pragmatism and a broad view are needed.

12. 12 DIFFERENCES AMONG DEVELOPING COUNTRIES Different stances on level and importance of liberalization Different stances on level and importance of liberalization Without progress on NAMA, it will be very difficult to move forward on agriculture, especially with the G-10 Without progress on NAMA, it will be very difficult to move forward on agriculture, especially with the G-10 Lack of progress on NAMA also acts as a disincentive for South-South trade. Lack of progress on NAMA also acts as a disincentive for South-South trade.

13. 13 SOME CONCLUSIONS Agriculture is of central importance, but it is not the only issue Agriculture is of central importance, but it is not the only issue Weak leadership thus far by the United States and the European Union (however things are changing after the US proposal) Weak leadership thus far by the United States and the European Union (however things are changing after the US proposal) Developing countries are more prepared and better organized than before Developing countries are more prepared and better organized than before Apart from agriculture, shifting alliances among the developing countries and between developing and developed nations. Apart from agriculture, shifting alliances among the developing countries and between developing and developed nations.

14. 14 AFTER HONG KONG An inconclusive meeting would undermine the credibility of WTO and weaken its mandate. An inconclusive meeting would undermine the credibility of WTO and weaken its mandate. Good credibility in dispute settlement, but none in promoting negotiations.Good credibility in dispute settlement, but none in promoting negotiations. Indirect stimulus for discriminatory preferential agreements outside WTO.Indirect stimulus for discriminatory preferential agreements outside WTO. WTO would lose influence and relevance.WTO would lose influence and relevance. Features of the Hong Kong Declaration: Features of the Hong Kong Declaration: Reasonable and realistic parameters that will allow negotiations to continue in 2006.Reasonable and realistic parameters that will allow negotiations to continue in 2006.

15. DOHA ROUND: THE OUTLOOK www.eclac.org Mr. José Luis Machinea Executive Secretary ECLAC

16. 16 OECD agricultural producer supports (Billions of US$) Source: OECD, 2005, “Agricultural Policies in OECD countries: Monitoring and evaluation. 2005 Highlights”.

17. 17 LATIN AMERICA AND ITS PARTNERSHIPS G-20: Argentina, Bolivia, Brazil, Chile, Costa Rica, Paraguay, Uruguay. G-20: Argentina, Bolivia, Brazil, Chile, Costa Rica, Paraguay, Uruguay. Cairns: Argentina, Bolivarian Republic of Venezuela, Bolivia, Brazil, Chile, Costa Rica, Guatemala, Mexico, Paraguay. Cairns: Argentina, Bolivarian Republic of Venezuela, Bolivia, Brazil, Chile, Costa Rica, Guatemala, Mexico, Paraguay. G-33: Bolivarian Republic of Venezuela, Cuba, Dominican Republic, Haiti, Honduras, Nicaragua, Panama, Peru, Caribbean (11 countries)… unwilling to open their agricultural markets. G-33: Bolivarian Republic of Venezuela, Cuba, Dominican Republic, Haiti, Honduras, Nicaragua, Panama, Peru, Caribbean (11 countries)… unwilling to open their agricultural markets. African Union; African, Caribbean and Pacific Group of States (ACP); least developed countries: Dominican Republic, Haiti, Caribbean (13 countries)… seeking to avoid erosion of unilateral preferences in European Union or United States. African Union; African, Caribbean and Pacific Group of States (ACP); least developed countries: Dominican Republic, Haiti, Caribbean (13 countries)… seeking to avoid erosion of unilateral preferences in European Union or United States. Friends of Anti-Dumping Negotiations (FANs): Brazil, Chile, Colombia, Costa Rica, Mexico. Friends of Anti-Dumping Negotiations (FANs): Brazil, Chile, Colombia, Costa Rica, Mexico. “Friends of Fishing” (FoFs): Argentina, Chile, Ecuador, Peru (fishing subsidies) “Friends of Fishing” (FoFs): Argentina, Chile, Ecuador, Peru (fishing subsidies) Colorado Group: Chile, Colombia, Costa Rica, Paraguay (trade facilitation). Colorado Group: Chile, Colombia, Costa Rica, Paraguay (trade facilitation).

18. 18 BACKDROP TO HONG KONG (SAR) MINISTERIAL CONFERENCE Lower growth, and higher inflation, interest rates and oil prices than in 2004 Lower growth, and higher inflation, interest rates and oil prices than in 2004 Major agricultural disputes Major agricultural disputes Sugar (European Union); cotton (United States)Sugar (European Union); cotton (United States) Significant disputes between the United States and the European Union Significant disputes between the United States and the European Union Foreign Sales Corporations (FSC), Airbus-BoeingForeign Sales Corporations (FSC), Airbus-Boeing Debates on trade issues in United States Debates on trade issues in United States High current account deficit and trade deficit with ChinaHigh current account deficit and trade deficit with China Impacts of the end of the Multifibre ArrangementImpacts of the end of the Multifibre Arrangement Outsourcing of services (India)Outsourcing of services (India) Debates on CAFTA (sugar)Debates on CAFTA (sugar)