World Trade Organization (WTO)

WTO Doha Round Bulletin - Update

Week ending 24 January 2006

Key Issues

Overview

There was modest but useful progress at the 6th WTO Ministerial Meeting in Hong Kong, with members reaching consensus on a set of decisions contained in the ministerial declaration.

The main substantive outcomes were: 1) agreement to a 2013 end date for the elimination of agricultural export subsidies and 2) agreement to use a Swiss formula for industrial-product tariff cuts. Members also adopted a development package for Least Developed Countries including broad-based duty free, quota free access by 2008 (details outlined below). Members agreed to a work program for 2006 setting 30 April as the target for finalising modalities for agriculture and NAMA and 31 July for draft schedules and revised services offers.

Australia remains determined to secure an ambitious result in the Doha Round, and is committed to meeting the set deadlines. Australia’s Deputy Prime Minister and Minister for Trade, the Hon. Mark Vaile MP will be attending a meeting of WTO Ministers this week in Davos, Switzerland in the margins of the World Economic Forum, to plan the road ahead.

Agriculture

The key outcome on agriculture from the Hong Kong Ministerial was agreement to eliminate export subsidies by 2013. Although our preference was for elimination by 2010, this was a positive breakthrough and finally set down a marker on an issue that Australia has been pursuing for 50 years. Important progress was also made on some key development issues including special treatment for cotton to assist struggling producers in West Africa.

Disappointingly, relatively little time was spent on market access, despite this being the key issue that needs to be resolved. The Europeans did not give any indication that they would improve their market access offer while the G10 (group of countries that provide high levels of agricultural support) tabled a revised offer that left many questions unanswered, including whether it would offer substantial new trade opportunities. Some of the work that has been done on domestic support over the past year was captured in the Ministerial declaration but there was no further progress on the size of the subsidy cuts or disciplines for the Blue Box (production limiting category of domestic support). The language in the final Ministerial declaration on STEs is open to interpretation and we will continue to maintain that STEs are not in and of themselves trade distorting, and pressure the EC to substantiate their claims of trade distortion.

Non-Agricultural Market Access (industrial products)

The Hong Kong Ministerial Declaration saw Members agree to use a Swiss formula to cut tariffs. However, the details of such a formula, including the numbers to be used as coefficient(s), are yet to be agreed. Brazil and India, both of whom have relatively high industrial tariffs, made clear that they would not make significant concessions on NAMA unless there were substantial concessions in agricultural market access by the major players. The NAMA negotiations, therefore, are likely to remain at an impasse until agriculture moves. As with agriculture, Members agreed that modalities should be established by 30 April 2006 with draft Schedules based on those modalities to be submitted no later than 31 July 2006. Further highlighting the link between NAMA and agriculture, a new paragraph was inserted into the Ministerial declaration, stating that the negotiations should reflect a “comparably high level of ambition” in each area. Members differ in their opinions as to how that provision should be interpreted, or what, if any, status the new paragraph has in the negotiations.

Services

Services negotiations made reasonable progress during the Sixth WTO Ministerial Meeting. While Australia would have preferred a stronger outcome on services, the resulting Ministerial Declaration and Annex C on services provides a solid basis to continue work in 2006. It offers clear and practical guidance on how Members can improve the coverage and quality of offers, and sets a number of deadlines for the negotiations.

Prior to the Ministerial Meeting many Members, including Australia, believed the request-offer process on its own would not deliver meaningful improvements in market access and needed to be supported by additional processes. Thus, ‘complementary approaches’ were a focus of the discussions at Hong Kong. The outcome of these negotiations was that the request-offer process will remain the main modality for the negotiations but will be supported by plurilateral approaches to improve market access commitments. The idea is that groups of Members with similar interests make collective requests to other Members, identifying their objectives for the negotiations in a particular sector or mode of supply. Ministerial endorsement of plurilateral sectoral approaches will enhance the prospect of securing progressive liberalisation in areas of commercial interest. Australia is already working to ensure that our key services export interests are taken up by plurilateral groups. Groups of Members presenting plurilateral requests to others should submit their requests by 28 February 2006.

The bilateral and plurilateral request-offer processes will lead into a further round of revised offers. The Ministerial Declaration set a date of 31 July for revised offers to be made, with final draft schedules of commitments to be submitted by 31 October 2006. Reflecting these timeframes, we propose to consult further with stakeholders in the next few months on possible elements of a revised offer for Australia.

Development Package

The Hong Kong Ministerial meeting delivered a development package that was acceptable to all WTO members. In particular members agreed to provide duty free and quota free access to almost all products from Least Developed Countries by 2008 or no later than the start of the implementation period. Members also supported Aid for Trade Initiatives including the launch of a task force to operationalize the concept and supporting a joint World Bank/IMF proposal to upgrade the Integrated Framework. Several members also pledged substantial funds for the purpose of trade-related technical assistance. At the Hong Kong meeting Australia contributed $4 million for Aid for Trade activities (this is in addition to the $32 million in such assistance provided last year).

Intellectual Property Issues

Although Geographical Indications (GIs) did not feature prominently in the discussions at Hong Kong, the EC has indicated that it will pursue its agenda, under which it seeks to reserve certain terms for the exclusive use of EC producers.

The Director-General’s consultative process concerning the relationship between the TRIPS Agreement and the Convention on Biological Diversity (the TRIPS/CBD relationship) was formalised in the Declaration. India and Brazil have led developing country demands for formal negotiations in the WTO on the relationship. Developing country demands include: disclosure in patent applications of source and country of origin of genetic resources, and of traditional knowledge used in the invention; prior informed consent; and benefit sharing arrangements.

The 6 December 2005 decision by the WTO General Council to adopt amendments to the TRIPS Agreement to implement the 2003 Decision on TRIPS and Public Health removed this issue from contention at Hong Kong. The Decision enables all WTO members to respond to public health emergencies, even if they themselves lack the capacity to produce the required medicines.

Trade Facilitation

The Hong Kong Ministerial Declaration lays down clear markers for the path ahead in the trade facilitation negotiations. Members endorsed moving to text-based negotiations early after Hong Kong, with a view to concluding binding commitments on trade facilitation as part of the Doha Round outcome. Special and differential treatment and provision of technical assistance and capacity building for developing/least developed countries were highlighted as key elements of the negotiations. The Negotiating Group on Trade Facilitation will next meet on 15-16 February in Geneva.

WTO Rules:

Subsidies and Trade Remedies

Under paragraph 28 of the Hong Kong Ministerial Declaration, Ministers reaffirmed their commitment to the rules negotiations. They recognised that the negotiations on anti-dumping have intensified and deepened, and that discussion of the issues based on specific textual proposals for amendment to the Anti-Dumping Agreement has been productive.

On subsidies and countervailing measures, Ministers noted that while proposals for amendments to the Subsidies and Countervailing Measures Agreement have been submitted on a number of issues, there was a need to deepen analysis on the basis of specific textual proposals in order to ensure a balanced outcome in all areas of the Negotiating Group on Rule’s mandate.

On fisheries subsidies, Ministers noted that there was broad agreement that certain forms of fisheries subsidies that contribute to over capacity and over fishing should be prohibited. Ministers called on WTO Members promptly to undertake further detailed work to, inter alia, establish the nature and extent of disciplines on subsidies in the fisheries sector, including transparency and enforceability. Ministers noted that special and differential treatment for developing and least-developed Members should be an integral part of these negotiations.

Ministers directed the Rules Group to intensify and accelerate the negotiating process in all areas of its mandate and gave the Chairman of the Group the mandate to prepare consolidated texts of the Anti-Dumping and Subsidies and Countervailing Measures Agreements that shall be the basis for the final stage of the negotiations. The Chairman has been asked to prepare these ‘early enough to assure a timely outcome within the context of the 2006 end date for the Doha Development Agenda and taking into account progress in other areas of the negotiations.’

WTO Rules on Regional Trade Agreements (RTAs)

With slow progress in the Doha Round, the development of WTO disciplines on RTAs is of growing importance. Already, RTAs cover more than 30 percent of world trade, a figure that will certainly continue to rise. Without a definition of “substantially all trade”, there is no effective test for RTA compliance with WTO disciplines. As such, RTAs which cover an extremely low percentage of trade are being ‘permitted’ by the WTO, to the detriment of other WTO members, including Australia. Recent World Bank studies confirm that poor quality agreements are more likely to have negative effects such as trade diversion, as well as discouraging momentum in negotiations at the multilateral level.

The Negotiating Group on RTA Rules managed to reach a consensus text in the lead-up to Hong Kong. Although the text was much less ambitious than Australia had hoped, some last-minute amendments were proposed in relation to the transparency mechanism, which aims to improve reporting and notification requirements in relation to RTAs. Agreement has been reached on many elements of the transparency mechanism, and this remains the most advanced of the RTA rules issues under negotiation, with an end April deadline set in Hong Kong.

Significant attention was also devoted to the systemic elements of the negotiation in 2005; however Members views remain far apart. The Hong Kong text encourages text-based negotiations “as soon as possible”, with the aim of appropriate outcomes by end 2006. The key issue for Australia is ensuring that RTAs are subject to effective WTO disciplines, which requires the development of a definition for “substantially all trade” (SAT) under Article XXIV of GATT. We have been leading the call for the establishment of an ambitious threshold for SAT based on tariff lines as well as various specific trade volume tests, so as to ensure that RTAs are comprehensive. Our proposals have gained some momentum and we are hopeful that there will be real movement in the negotiations in early 2006. These disciplines are of particular interest to Australia because RTAs are undermining our international competitiveness and diverting attention away from our most effective market access tool – namely, the WTO negotiations.

Meetings in Geneva (as at 20 January 2006)

JANUARY

20 Dispute Settlement Body

23- 27 Jan Agriculture Week

23 – 24 Committee on Regional Trade Agreements

26 Working Party on State Trading Enterprises

27 Committee on Agriculture

30 Negotiating Group on Rules - Regional Trade Agreements

31 Sub-Committee on Cotton

FEBRUARY

1 Trade Policy Review Body - Israel

1 – 2 Committee on Sanitary and Phytosanitary Measures

1 – 3 Negotiating Group on Rules

2 - 3 NAMA Days

3 Trade Policy Review Body - Israel

6 - 17 Feb Services Weeks

6 Committee on Budget, Finance and Administration

6 – 10 Committee on Government Procurement

6 Working Party on Domestic Regulation

7 Committee on Trade in Financial Services

8 Committee on Specific Commitments

8 – 9 General Council

9 Council for Trade in Services

10 Working Party on GATS Rules

13 - 17 Feb Agriculture Week

13 Council for Trade in Services - Special Session

14 Trade Policy Review Body - Angola

14 Committee on Trade and Development - Dedicated Session

15 – 16 Negotiating Group on Trade Facilitation

16 Trade Policy Review Body - Angola

17 Council for Trade in Services - Special Session

17 Dispute Settlement Body

20 Committee on Trade and Environment

20 Working Group on Trade, Debt and Finance

21 – 22 Committee on Trade and Environment - Special Session

27 Feb - 3 Mar NAMA Week

27 Trade Policy Review Body - Djibouti

28 Sub-Committee on Cotton

28 Trade Policy Review Body - Overview of Developments in the International Trading Environment

Contact Us:

Trade Policy Section
Office of Trade Negotiations
Department of Foreign Affairs and Trade
BARTON ACT 0221
Fax: (02) 6261 3514

or email trade.consult@dfat.gov.au

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