By David Jessop
In a matter of days Caribbean ministers and officials will meet in London to prepare for a World Trade Organisation (WTO) mini-ministerial meeting that will take place in Geneva from July 21 onwards.
These mini-ministerial meetings are the way in which the consensus-based WTO process tries to move forward decisions on draft texts produced in the WTO’s various negotiating arenas of agriculture, goods, services and trade facilitation by committees of ambassadors.
If such mini-ministerial meetings, attended by around thirty to forty nations at the invitation of the WTO Director General, are able to make progress and reach outline political agreement on contentious textual issues, the process moves on to trying to achieve eventual formal agreement at a meeting of the WTO Council involving all of its member governments.
While this process is particularly difficult for smaller developing nations as they frequently have no access to the key decisions being taken between developed nations and key emerging economies such as India, Brazil, China, and South Africa, the mini-ministerial concept does allow ministers from nations such as the Caribbean to be involved in consensus building and to defend the region’s interests. Thus it appears at the time of writing that the Foreign Trade Ministers of Guyana and Barbados will participate in this next mini-ministerial on behalf of the region.
Anyone who has followed the slow progress of the present trade round may be surprised that such a meeting is taking place at this time. Washington’s policy makers are about to go into hibernation for the duration of the US presidential race and the transition to a new administration; objections have until very recently come from India and to a lesser extent Brazil about the value of such a meeting because of unresolved differences with the EU and the US on issues ranging from subsidies to industrial tariffs; and a whole range of concerns have been expressed about the treatment of smaller developing economies – all suggesting that the Doha Develop-ment Round was going nowhere fast.
However, having spent much of the past week in Geneva, what is striking and seemingly against all odds, is that there is now a cautious sense amongst a wide range of senior officials from nations as diverse as the Philippines, the United States and Mexico that progress may be possible.
Calling the mini-ministerial is to some extent a gamble on the part of the WTO Director-General, Pascal Lamy as he is hoping by doing so to move the round from being fifty to seventy five per cent complete. Success, if that is the right word, depends on the extent to which differences on agriculture and goods, known as non-agricultural market access (NAMA), and services can be achieved over the next few weeks.
However, one significant sign indication of a narrowing of positions occurred on July 11. Then a new draft agriculture text simplifying options in key areas was published. This aims to help ministers take decisions.
Its contains few changes in cuts to subsidies and tariffs, but does set out a range of options, for instance for special products that developing countries will be able to shield from tariff cuts on the basis of agreed criteria.
This appears to have emerged from wide-ranging informal consultations involving all parties that will lead to special products from developing countries being placed in tiers for which different tariffs will apply. Under this approach some products would be exempt from tariff cuts altogether or face low cuts, with a second tier of products receiving moderate cuts that are less stringent than those for non-special products. Another option for ministers will be a one-tier approach in which all products would have to undertake an average and possibly a minimum cut.
Of particular concern to Caribbean sugar, banana, rum and rice producers in this new text are proposals for the faster liberalisation of so-called tropical products. This approach is being pursued aggressively in Geneva by a number of Latin American nations who want such products to cease to be subject to the slower liberalisation required by the African, Caribbean and Pacific group. In the case of bananas, sugar and rum, the two groups have opposing interests. While intensive informal consultations at a detailed tariff line level have been continuing between the parties and the EU since March, no final agreement has been reached. As a consequence these products now appear on both the long-term preference annex and on the tropical products annex and are likely to be the subject of difficult discussions that will also involve the European Commission.
So potentially contentious has the issue become that there is some interest in removing some of these products entirely or treating them differently in a notional ‘annex x.’
While the duration of the mini-ministerial remains unclear, it is unlikely to last more than five days unless significant progress is possible. If this occurs and the texts covering the so-called modalities move forward, the process will then go on to the development of schedules for tariff reductions.
There are clearly many factors militating against agreement in each of the negotiating arenas. However, what is now happening requires the Caribbean to take very seriously the threat posed on existing preferences.
That this should be happening so soon after the many concerns expressed about the implications of the Economic Partnership Agreement with Europe has been initialled is indicative of the fact that pressure, especially from Latin nations on the Caribbean’s key preference-based exports and from others globally for further tariff reductions, will not go away.
Such pressure for trade liberalisation has become in recent months of much greater appeal to both developed nations and the world’s fast-growing emerging economies as they seek ways to stimulate their economies in the face of a global economic slowdown.
For this reason the region will be hard pressed to resist moves that will eventually result in further losses to its foreign exchange earnings and revenues from import tariffs if the WTO process does move forward. Without either the economic weight of a viable integration process or a business community able to deliver in new markets, multilateral trade liberalisation presents a far from attractive prospect.
Previous columns can be found at www.caribbean-council.org
