Hong Kong 13-18 Dec. 2005

The Sixth WTO Ministerial Conference  
Hong Kong, China, 13 to 18 December 2005.

Hong Kong Ministerial Conference: The task before Bangladesh
C. K. Hyder
The Daily Star
19-09-2005

The World Trade Organisation (WTO) is due to hold its sixth Ministerial Conference in Hong Kong from December 12 -18. Its main objective is to sort out the differences which still hold up implementation of the "Doha Development Round," which began in 2001. As the issues stand now, the chances of success of the Hong Kong meeting look increasingly slim. On July 31, the officials' meeting in Geneva missed the deadline for reaching an agreement in this regard. The developments since then do not seem to indicate a resolution of the issues.

There are differences of opinion as to what would happen if the Doha round fails. Some countries point out that the original purpose of the WTO was to break down the tariff walls created during the 1930s. The excellent work done by the WTO and its predecessor, the General Agreement on Tariffs and Trade (GATT), no longer constitutes a big impediment to world trade. The new additions -- a dispute settlement code, and the review mechanism available in the WTO -- should ensure resolution of any dispute on tariff related issues. On the other hand, the other group feels that breakdown of the Hong Kong meeting will be a threat to Doha Round and will be disastrous for the world economy, particularly for the export-reliant developing countries. The Hong Kong conference is thus of significant concern for the developing countries and the LDCs, which value trade more than aid or debt relief.

So far, the Doha Round has been kept alive by the WTO General Council's decision of August 1, widely known as "July Package." Major decisions, which came out from the July Package, were basically the agreement to eliminate export subsidy and launch negotiations on trade, facilitation keeping the three other Singapore issues (Transparency in Government Procurement; Trade and Investment; and Trade and Competition Policy) outside the Doha Round. Moreover, July Package puts priority on the need to push ahead with talks in five negotiating areas -- agriculture, non-agricultural market access (NAMA), development issues, trade facilitation, and services, while just reaffirming the commitment to continue negotiations in other negotiating agenda such as Rules, Trade and Environment, Dispute Settlement Procedures and Intellectual Property Rights.

The July Package provided broad guidelines to move forward in the five key negotiating areas. Specific approaches to be applied in each of the key areas were left for negotiations in Geneva. There was an expectation that Geneva could reach an agreement on specific areas by the Hong Kong Ministerial Conference following the guideline provided in the July Package. However, there was practically no progress in any of the specific issues across the five key areas by the end of July 2005, which implies that the talks have fallen significantly behind the timetable for reaching important decisions by the Hong Kong Ministerial meeting in December and ending the negotiations by the end of 2006.

In agriculture, discussions in Geneva in last one year have resulted only in an agreement on a methodology for converting the non-ad valorem tariff to ad valorem. Consensus on this purely technical issue required intervention by the ministers and was pushed by the WTO Mini-Ministerial held in Paris in May 2005. It is observed that progress in discussions on the substantive issues has been inadequate for reaching consensus. All three pillars of Agriculture market access, domestic support and export competition, remain unresolved and there is unlikely to be any consensus before the Hong Kong Ministerial Conference to be held on December 13-18 unless there is an extra effort to intensively discuss the issues with a view to reaching consensus.

With regards to NAMA, intensive discussion on a formula approach could not result in any outcome, although there seems to be an agreement to adopt a Swiss-type formula with different coefficient for developed and developing countries (Swiss formula envisages higher tariff reduction for the products with high duty and lower tariff reduction for the products with low duty and, thus it eliminates the tariff peaks and tariff escalation). It appears that if the developed countries reduce their ambitions in NAMA, an agreement could be reached on a formula before Hong Kong. Nevertheless, there is unlikely to be any consensus on other two key issues- sectoral approach and non-tariff measures. The key issue for Bangladesh as well as for the Least developed Countries, which is duty free access for the products of the LDCs to developed and advanced developing countries has remained unresolved. In this context, it is worth mentioning that most of the developed countries including European Union, Canada, Australia, Norway etc. have already granted duty free to all products of export interest to the LDCs. However, the United States and some advanced developing countries are yet to provide such access to all products of the LDCs.

In services, despite the fixing of a date for submission of revised offer by May 31, only 24 (counting EU as one) countries submitted their revised offer, while 44 countries submitted their initial offers. Remaining 55 WTO members, including 31 least developed country members, are yet to submit their initial offer. According to an assessment given by the chair of the special Committee on Trade in Services, the quality of offers so far made remains unsatisfactory and is unlikely to make any improvement in current level of commitment. Even there was no substantial improvement in the level of commitment in mode 4, which is critically important for developing and least developed countries.

Despite the fact that the Doha Ministerial Declaration and the July Package call for enhanced market access, balanced rules, and well targeted, sustainably financed technical assistance and capacity-building programs to address the concerns of the developing and least developed country members, the discussions on development dimension are revolving over the review of special and differential treatment and the implementation-related issues without any concrete progress. It seems that key players in the WTO are reluctant to provide open-ended flexibility for the LDCs in implementing the commitment and view that any flexibility should be transitional and should be provided on the basis of a need that is assessed collectively by the members. On the other hand, the LDCs require that there must be a degree of automaticity in granting flexibilities. It is to be mentioned that discussions on the development dimension are merely focused on flexibility in undertaking commitment by the LDCs, which fail to capture the development dimension of the WTO in totality.

Progress in other area of negotiations is also insignificant. By the end of December, possibility of reaching any consensus in Rules, Trade and Environment, Dispute Settlement Procedures, Trade Facilitation and Intellectual Property Rights seems to be minimal. For this reason, former Director General of WTO in his report to the General Council on 28 July 2005 maintained: "Hong Kong must therefore set the stage for the final phase of negotiations. For this to happen, Ministers will have to take a number of decisions, notably establishing modalities for Agriculture and Non-Agricultural Market Access (NAMA), and provide the political guidance and impetus necessary for the work to move into the final phase in all areas, respecting the principle of the Single Undertaking."

For Bangladesh as well as for other LDCs it is important that the outcome of Doha Round properly captures development needs of the least developed countries. Development needs of the LDCs are spelled out in the Dhaka and Livingstone Declarations of LDC trade ministers. The WTO members require addressing these concerns in the negotiations on various elements of Doha Work Programme. Development priority of Bangladesh and other LDCs in the WTO should be viewed from the following perspectives and reflected in all areas of Doha Round.

• a. Market access in goods: Least developed countries should be provided a secure, predictable, and meaningful market access at least by the development countries through:
  - Duty-free and quota-free access to all products of LDCs and reflecting them in the schedule of commitments;
  - Making the rules of origin applicable for the duty-free and quota-free access realistic, simple and flexible to match the industrial capacity of LDCs;
  - Exempting LDCs' exports from antidumping, countervailing, and safeguard measures.
• b. Market access in services: Improving the level of commitment in mode 4 by granting free access to service providers, especially semi-skilled service providers and removing all sorts of barriers on temporary movement of natural persons;
• c. Flexibility in undertaking commitment: Allowing flexibility to the LDCs in undertaking commitments and obligations in order to permit them to adopt policy to meet the development needs;
• d. Technical assistance targeted at:
  - Development and diversification of production and export base of LDCs to enable them to reap the benefit from the opportunities provided by the WTO in market access openning;
  - Addressing the supply side constraints of LDCs;
  - Compliance by LDCs to the SPS and TBT requirements of the exporting countries; and
  - Trade policy capacity building.
• e. Measures for offsetting the negative effect: Adopting effective measures in order to offset negative impact of trade liberalisation to be undertaken by the WTO members i.e. measures for addressing the negative impact of agriculture trade liberalisation and measures for addressing the erosion of preferences.

It is expected that the LDCs including Bangladesh focus on these key issues in order to achieve meaningful outcome at the Hong Kong Ministerial Conference.

The Hong Kong Ministerial Conference will have to provide political guidance to make forward movement. In the run up to Hong Kong, Geneva will try its best to present a draft to the Ministerial Conference, which will be the basis for negotiation in the Ministerial Conference. During this period the LDCs and Bangladesh must flag their issues forcefully so that their issues find a place in the draft. It is to be remembered that in many instances the issues raised by the LDCs are lost in the course of discussion on the issues of importance to key players in the WTO. In order to have a meaningful outcome from the Hong Kong Ministerial Conference for the LDCs, Bangladesh and other LDCs should concentrate on the following issues:

• a. In NAMA, Bangladesh and other LDCs should pursue duty free and quota free access from at least all developed countries and a date should be agreed upon in the modalities on NAMA. In this context, it would be appropriate for Bangladesh and other LDCs to agree on increasing the binding coverage in order to give a feeling to the other Members that LDCs are also participating in the process. Such a commitment from the LDCs will not affect their tariff policy because they can easily bind their tariffs well above their average tariffs.
• b. Apparently no LDCs have submitted any offer in trade in service. In order to achieve something meaningful the LDCs must make specific offer to enter into negotiations. Since the Chairman of the Special Council on Trade in Services indicated that he would like to discuss implementation of modalities for special and differential treatment in trade in services before Hong Kong Ministerial Conference, the LDCs should identify their areas of export interest in order to give effect to the modalities, otherwise no countries will be in a position to make meaningful offer to the LDCs in services.
• c. Apparently, there will be a move to establish the modalities in Agriculture and NAMA. For this reason, the LDCs should propose effective measures to address the erosion of preferences.
• d. Regarding special and differential treatment, while focusing on the review of the existing provisions, the LDCs should demand mandatory S&D treatment in all future agreement of the WTO.
• e. It appears that the demand of the LDCs for technical assistance to address the supply side constraints is not attracting due attention. The LDCs should make their efforts to have political commitment from the WTO Ministerial Conference on these specific issues, which is essential for reaping the benefits from the market access resulting from the negotiations of the WTO.

C K Hyder is the Secretary-General of Metropolitan C hamber of Commerce and Industry, Dhaka. The views expressed are not necessarily those of the MCCI.