Published: The Pioneer, August 21, 2004,

By Bipul Chatterjee

WTO’s July Package glosses over many of the vexed issues of Singapore, but nevertheless, says Bipul Chatterjee, it’s not bad as a road map for the future

Both the Right and the Left of the Indian polity have criticized WTO’s July Package, expressing there is little that India gained. Why is it that people from diametrically opposite political spectra have such a common position? What is the truth? Is the glass half-full or half-empty? If one carefully analyses the July Package, it is not difficult to see that it has too many gaps and it is unlikely that the Doha Round will be concluded even before the extended December 2005 deadline.

Except in “modalities for negotiations on trade facilitation” the negotiated text is full of optional words like “may” and “will”. The only places where the mandatory word “shall” has been used are for those for which no explicit commitments are required. In the text on agriculture, some of these gaps are glaring. It is true that the members have agreed to a major demand of the European Commission and the G-10 group of agricultural importing countries on “sensitive” products. But an appropriate number of tariff lines to be treated as sensitive is left open for negotiations.

On the other hand, the G-33 group of developing countries (mostly net food importers, such as Egypt and Mauritius, demands the designation of an appropriate number of “special” products be placed under the “special and differential treatment” (S&DT) category. The text also speaks about “operationally effective” S&DT. “These products will be eligible for more flexible treatment. A Special Safeguard Mechanism will be established for use by developing country members.”

It appears that a small number of rich countries like Japan, Norway and Switzerland will succeed in receiving “special and differential” treatment of a different nature as far as their “sensitive” products are concerned, while a significant concern of developing countries on “special” products will be considered as “best endeavour”.

A quick analysis of the July 31 decision and India’s existing tariff structure on agricultural products reveals that the country could list rice, dairy products (fresh milk and cream), tea, coffee, oilseeds and horticultural products (mushroom, peas, etc.) as special and sensitive products. However, the listing of such products has to be based on the basis of in-depth studies and that should be the Commerce Ministry’s agenda in the future. Of these, dairy products and oilseeds are of greater concern to a large number of small farmers in India, in whose name the government was so assertive.

The framework agreement on Non-Agricultural Market Access (NAMA) is more vague than that of agriculture. It has only outlined the initial elements for future work on modalities, thus starting virtually from scratch. However, many industry bodies have welcomed the NAMA text. Both the Federation of Indian Chambers of Commerce and Industry and the Confederation of Indian Industry have commented that their concerns have been “addressed and reflected in the text”. The US Council for International Business welcomed the deal as a “good road map”, while UNICE (the main European business lobby) urged all WTO members to “contribute in the coming months leading to the 2005 WTO Ministerial, in the negotiating process underway in all areas of negotiations”.

Cotton, a livelihood issue for small West African farmers, was another roadblock. In spite of strident demands for stand-alone negotiations, it will be an integral part of agriculture negotiations. However, the US cotton lobby criticised the deal and described it as “unfair and will threaten the round”. There was criticism from other quarters as well. According to Oxfam International, the deal was a “serious betrayal of developing countries”. While the WTO General Council’s decision of July 31 emphasised that the “trade-related” aspects of this issue will be pursued in the agriculture negotiations, it is not clear how the “wishful” thinking to “stress the complementarity between the trade and development aspects” will be put into practice.

On Singapore issues, there was quite a surprise. Of the four contentious issues, “Trade Facilitation”, was accepted with some difficulty, while Investment, Competition and Transparency in Government Procurement were dropped from the Doha agenda. On Trade Facilitation, WTO has decided to agree to negotiate by “explicit consensus” to commence negotiations. Thus, in future, any “new” issues which may come before the WTO members for negotiations will have to be decided by explicit consensus. Secondly, Investment, Competition Policy and Transparency in Government Procurement have been dropped out of the Doha Work Programme, but not immersed into Lake Genevè. In all likelihood the study process will continue, thus the three will remain hovering in the corridors.

There is a possibility that protagonists will demand for negotiations on these issues after the Doha Round is over and, in another scenario, these issues may be brought back to the WTO more formally through the Hong Kong Ministerial Declaration (December 2005). Thus, the issues remain as a challenge to future antagonists.

The situation on Singapore Issues can best be described as though they were seemingly unbundled, there will be a “stand alone” negotiations on trade facilitation and the other three issues will remain in the WTO in a “standstill” mode. The EU has been advocating for plurilateral agreements on these issues. These are also being wrought into several other side-deals, and thus the demandeurs will use those agreements as “templates” for multilateral negotiations.

On Trade Facilitation, the scope of negotiations will be of “limited nature”. As per the July 31 Decision, negotiations shall be confined to “clarify and improve” relevant aspects of Articles V, VIII and X of GATT 1994 with a view to further expediting the movement, release and clearance of goods, including goods in transit. The negotiated text made several references to Customs and this can be interpreted as that negotiations will be confined to “border” measures only.

The text on services should be a major disappointment for developing countries. It called for further liberalisation of the services sector with a possible change in the basic structure of GATS, i.e., the positive list approach (“with no a priori exclusion of any service sector or mode of supply”). Therefore, developing countries should be extra cautious while negotiating services. The only manner in which they can counter this offensive is by demanding a standalone agreement on movement of natural persons. However, the July 31 Decision only notes the “interest” of developing countries on this mode of service supply. Is it due to over-emphasis on agriculture by the G-20 and the group of “five interested parties” (Australia, Brazil, EU, India and USA)?

In the midst of all this, “development concerns” did not receive much attention. Though the text has several paragraphs on “development”, the word “poverty” does not appear even once and the language is too vague. Further, there was an attempt to introduce a de facto new class of developing country WTO members with advanced Latin American and East Asian nations on one side and ACP (Africa, Caribbean and the Pacific) nations on the other. This move could have institutionalised preferential market access as a norm in the multilateral trading system.

On balance, the July Package is a mixed bag for developing countries, like India. A good feature on trade facilitation is the recognition of “cost implications” of proposed measures. During the Uruguay Round there was no such recognition and many poor countries are still to find out the cost implications of WTO obligations, such as the TRIPs Agreement.

Another serious issue is the deadline by which the Doha Round is to be concluded- December 2005. Not only is time running out , it is not clear how the US will approach these negotiations given its Presidential elections and the fact that the US President’s trade negotiating mandate will come up for renewal sometime in the middle of next year. It is likely that the negotiations will continue for a few more years taking into consideration the phrase “deadlines are not to be met, but to remind us of the importance of issues”.