The Doha Development Agenda: A Brief Update

1. The Doha Development Agenda:A Brief Update Carlos A. Primo Braga Senior Adviser, International Trade Department The World Bank The WTO and the DDA Washington, D.C. April 25, 2005

2. Doha Development Agenda • The 4th WTO Ministerial was held in Doha, Qatar in November 2001; • At that opportunity, Ministers adopted a wide-ranging work program known as the Doha Development Agenda (DDA); • DDA elements outside negotiations include issues related to small economies; trade, debt and finance; trade and transfer of technology; technical cooperation and capacity building.

3. DDA: Topics for Negotiations • Agriculture • Non-agricultural market access (NAMA) • Services • System of notification and registration of GIs for wines and spirits under TRIPS • WTO Rules • Dispute Settlement Understanding • Trade and environment • S&DT • Outstanding implementation issues

4. The Road to Cancun • Many deadlines missed… • Re-alignment of agricultural negotiating positions: US + EU • Rules, MA, Singapore Issues vs. implementation concerns • The return of S&DT… • The cotton “problem” • TRIPS and medicines • The proliferation of RTAs

5. TRIPS • Doha Ministerial Declaration on TRIPS and Public Health provides extension of transition periods for patents on pharmaceutical products in the case of LDCs. • It also recognizes the need for flexibility in determining the grounds for compulsory licensing to promote access to medicines. • Compulsory licensing mechanism in the case of countries with insufficient or no manufacturing capacities agreed upon on August 30, 2003, in parallel with a commitment to avoid abuses of this flexibility for industrial policy objectives and safeguards to avoid diversion of drugs.

6. The DDA: “Detour” at Cancun • Singapore Issues: North vs. South – the role of the G90 plus NGOs. • The cotton initiative – the role of LDCs (e.g., the cotton-4) plus NGOs. • Agriculture: EU + US vs G20 (other important coalitions: G10 and G33). • NAMA and Services: lack of enthusiasm from developing countries. • S&DT: tactics (preference erosion) and ideology (policy space vs. disciplines)

7. Singapore Issues (investment and competition policy, trade facilitation and transparency in government procurement) in the DDA Terms of the debate: • Recognition of the relevance of these issues for promoting growth and increasing competitiveness of developing countries. • Doubts about global rule-making as the most effective mechanism to promote change in these areas (plus implementation concerns). • Implications of multilateral dispute settlement. • Concerns that adding these issues to the agenda may crowd-out other themes of greater priority for developing countries.

8. Back-on-track: The WTO General Council Decisions (August 1, 2004) • Agriculture: • Parallelelimination of all forms ofexport subsidies, including all export measures with equivalent effect which are not in accordance with strengthened disciplines to be established (e.g., export credits, export credit guarantees or insurance programs, trade-distorting practicesof exporting state-trading enterprises, and food aid); • Substantial reductions of trade-distorting support, encompassing amber and blue boxes, as well as de minimis subsidies. In the first year of implementation of the agreement, countries are expected to cut at least 20 per cent of the overall level of trade-distorting support based on the sum of the Final Bound Total AMS, permitted deminimis and theBlue Box capped at 5 per cent of a Member’s average total value of agricultural production during a historical period to be agreed.

9. Back-on-track: The WTO General Council Decisions (cont.) • Agriculture (cont.) • Tariff reductions are expected to be made from bound rates using a tiered (“banded”) formula that will foster greater harmonization of tariff regimes with deeper cuts in higher tariffs. In the case of sensitive products, “substantial improvement” is tobe achieved through combination of tariff quota expansion and tariff cuts. • Cotton will be dealt with in the agricultural negotiations. To facilitate the prioritization of the cotton issue in the three pillars of the negotiations, a subcommittee on cotton will report periodically on progress achieved to the Special Session of theCommittee on Agriculture. • NAMA: “back” to a qualified Derbez text. Consensus still missing… • Services: new timetable for revised offers (May 2005). • Begin negotiations in trade facilitation and agreement that other SI are outside the single undertaking. • New timetable to agree on S&DT issues (July 2005). • Extension of the DDA deadline with the next Ministerial scheduled for Hong Kong in December 2005.

10. Problems ahead… • Agriculture: • calculation of AVEs; • the criteria for selection of sensitive products (and special products) – the greater the flexibility on this front, the smaller the potential for substantive improvement in market access through tariff cuts; • the definition/implementation of the tiered formula – not only in terms of the type of tariff reduction mandated by band, but also with respect to the question whether tariff line caps will be established that could control for “strategic” behavior at the level of product classification; • the profile of implementation of new disciplines in each one of the three pillars – the more back-ended is the reform, the less substantial will be its impact in present-value terms; • the choice of the historical period for capping the Blue Box and the size of the cuts required on trade-distorting domestic support. • Cotton: expectations of quick solutions vs. reality. • NAMA: back to square one. Differentiation among developing countries, definition of the formula, the scope of sectoral negotiations, policy space …

11. Problems ahead… • Services: excessive focus on Mode 4 by developing countries; lack of interest in using the negotiations to leverage domestic reform. • Rules: the 2006 agenda? • The S&DT debate, including its implications for trade facilitation • The engagement of developing Members (including least-developed countries) in the process vs. the misleading appeal of the “round for free” concept. • Impact of implementation “externalities” on the negotiations: the ATC phase-out. • The impact of DS decisions on the negotiations.

12. Concluding remarks: • For the development promise of the Doha agenda to be realized, all countries have to take responsibility: • Rich countries have to lead in terms of concessions in agriculture, labor intensive manufactures, and development assistance as well as in services (modes 1 and 4, in particular). • Middle income countries have to be willing to provide new access in services, increase the coverage/binding of their services’ policies under GATS (mode 3 in particular) and increase market access both in NAMA and agriculture -- benefiting themselves and their neighbors. • Low-income countries, while seeking donor assistance and flexibility on resource-intensive rules, have to be willing to reform their own border protection and to gradually assume greater commitments vis-à-vis the multilateral trade system.

13. More information www.worldbank.org/trade cbraga@worldbank.org References: Anderson, K. and W. Martin, 2005, “Scenarios for Global Trade Reform,” mimeo. Primo Braga, C.A., 2005, “The DDA: A Brief Update,” mimeo. World Bank, 2003 and 2004, Global Economic Prospects. (Washington, DC: The World Bank).