WTO Ministerial Section • Volume 9 • Number 42 • 7th December 2005

Ministerial Chair John Tsang: Development Package Must Not Be “Bargaining Chip”

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With a comprehensive Doha Round pact increasingly unlikely at the WTO’s 13-18 December Ministerial Conference in Hong Kong, more and more governments are looking to reach an agreement there on a number of development-related issues such as aid for trade and duty- and quota-free market access for exports from least-developed countries (LDCs). However, several developing countries are nervous that they could end up ‘paying for’ these concessions elsewhere in the negotiations. Hong Kong Commerce, Industry and Technology Secretary John Tsang, who will chair the upcoming meeting, has warned that any such deal must not become a "bargaining chip" in the overall talks.

Package already taking shape on TRIPS — but is it useful?

WTO Members have already agreed on two issues that had been mentioned as potential elements of a Hong Kong development package — giving LDCs a seven-and-a-half year extension to comply with most WTO intellectual property rules, and amending the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) to allow countries with insufficient pharmaceutical manufacturing capacity to import cheaper generic versions of medicines that are still under patent. However, critics argue that both of these decisions will be of little practical use to poor countries. The former, they say, is so circumscribed that it is of limited value (see BRIDGES Weekly, 30 November 2005), while the latter is based on a 2003 agreement that not a single country has yet been able to use to import drugs (see related story, this issue).

Other measures that countries have suggested include unrestricted market access for LDC exports, an accord on some proposals for enhancing the special and differential treatment (S&D) provisions in specific WTO agreements (Members are currently focusing on five such proposals from LDCs), and an aid for trade programme.

G-7, FIPs+Japan focus on concessions for LDCs

The potential development package featured high on the agenda at a London summit of finance ministers from the Group of Seven (G-7) industrialised countries as well as a meeting of senior officials from the US, the EU, Australia, Brazil, India (the so-called Five Interested Parties, or FIPs) and Japan in Geneva, both on 2-3 December.

The G-7 endorsed the concept of a "comprehensive development package that addresses the concerns of developing countries, in particular least developed countries," and promised to increase spending on aid for trade to USD 4 billion. The trade and agriculture ministers who met in Geneva indicated afterwards that they had spent a significant amount of time discussing concessions for LDCs in Hong Kong. However, in a recent interview with Agence France Presse, Tsang cautioned that a development package, though a worthy objective, "cannot be a substitute" for gains in trade, and should not be linked to other areas of the negotiations.

EU repeats commitment to development package to G-90, G-7

The EU has been one of the most vocal proponents of a development deal in Hong Kong, as Trade Commissioner Peter Mandelson recently reminded his counterparts from the G-90 group of African, Caribbean, Pacific, and LDCs, as well as the G-7 summit. In addition to the measures outlined above, Brussels has suggested that a package include measures such as accelerated subsidy and tariff cuts on cotton, and, more controversially, mitigating preference erosion by "reducing tariffs in a way that allows for adjustment" by G-90 countries that currently receive preferential access to the EU market — or in other words, by making smaller tariff cuts.

Sceptics claim that the EU’s enthusiasm is largely an attempt to deflect criticism for its refusal to make deeper cuts to its farm tariffs. On 1 December, US Trade Representative Rob Portman accused the EU of "hiding behind the least-developed countries" to avoid opening its agricultural markets.

The US, for its part, is reluctant to fully open its own markets to textiles exports from LDCs. It also insists that any deal on cotton be part of a broader Doha Round agreement on agriculture. The EU already offers duty- and quota-free market access to most LDC products, and pays out far less in cotton subsidies than the US.

A group of nine developing countries including Brazil, India and South Africa, recently criticised rich countries for having "hijacked" the development debate. Though agreeing on the need for a deal that addresses the development-specific issues currently in the spotlight, they argued that that the most important development outcome that the Doha Round could produce was for developed countries to substantially reduce farm tariffs and subsidies as well as high tariffs on certain heavily-protected manufactured products without extracting onerous concessions in return (see BRIDGES Weekly, 30 November 2005).

The G-7 ministerial statement is available at http://www.g8.utoronto.ca/finance/fm051203.htm.

ICTSD reporting; "John Tsang urges high Doha ambitions," NEWS.GOV.HK, 15 November 2005; "WTO host says Hong Kong trade talks must salvage development deal," AGENCE FRANCE PRESSE, 30 November 2005; "US seeks larger EU farm tariff cuts," BUSINESS STANDARD, 3 December 2005.