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About the Project

CUTS Centre for International Trade Economics & Environment (CUTS CITEE) Jaipur, India is implementing the phase-II of the project entitled, "WTO Doha Round & South Asia: Linking Civil Society with Trade Negotiations". The project has been named as ‘South Asia Forum for International Trade’ (SAFIT-II). It aims to establish linkage between the civil society organisations (CSOs) and research institutions while conducting advocacy with the governments. The project will be implemented in five South Asian countries, viz.

Bangladesh, India, Nepal, Pakistan, Sri Lanka in partnership with various organisations. It would focus on the following issues, identified from the Hong Kong WTO Ministerial Declaration:

  • Duty & Quota Free Market Access

  • Services

  • Preference Erosion and Aid for Trade

  • Agriculture: Special Products and Special Safeguard Measures

  • Non-Tariff Barriers 

One of the objectives of this project is to generate negotiating inputs and assist the negotiators and policy makers while taking into account the position of civil society (including NGOs, business bodies, trade unions, women groups, particularly those working on gender and trade linkages) for the successful completion of the Doha Round in December 2006. The duration of the project is 15 months i.e. from April 2006 to June 2007 and is divided into two Components.

Component I of the project will be covered during the first 9 months (April – December 2006) of the project and will principally be research work focusing on issues related to trade negotiations. The next 6 months (January – June 2007) will come under Component II, which will focus on the domestic preparedness to face the challenges of trade liberalisation and globalisation. The activities under the Component II are dependent on the successful conclusion of the Doha Round (as per the current schedule of December 2006).

I. Background & Context

CUTS CITEE initiated the phase-I of collaborative project entitled, “WTO Doha Round & South Asia: Linking Civil Society with Trade Negotiations”  (SAFIT- I) in January 2005. The project was launched on the premises that the outcome of the Doha Round will have significant implications on international trade and national development, and this is more so for developing countries. International trade is being increasingly linked with livelihoods and associated national development (poverty reduction) strategies. Under SAFIT-I, research analysis on five key issues of ‘July Framework Agreement’ was undertaken. As an outcome of the project, a book entitled, ‘South Asian Position in the WTO Doha Round: In Search of a True Development Agenda’ was published and released at Hong Kong. 

As per the Framework Agreement, the Doha Round of negotiations was to come to an end by December 2005, when the sixth Ministerial Conference of the WTO took place at Hong Kong, China. And as one of the premises, the phase-I of this project work was undertaken in the South Asia. However, given the realpolitik of negotiations, predictably the Doha Development Agenda (DDA) could not be concluded in Hong Kong but it did invite some more pertinent issues for future research and advocacy.

It was apprehended that Hong Kong Ministerial could have been the final step of the Doha Round that was launched in 2001, however, members managed to achieve a modest outcome. Perhaps the members followed the hypothesis of the so-called ‘Plan B’, in which expectations were lowered all around and breaking the logjam in the contentious issues were strategically postponed for later date. Hence, post-Hong Kong becomes more challenging. 

Though the Hong Kong WTO Ministerial made some progress in advancing the DDA, however, much remains to be done, particularly in settling the negotiating modalities in agriculture and non-agriculture market access (NAMA) and in putting some flesh onto the bones of GATS. And wherever progress was made it was qualified whether in dealing with the concerns of African cotton producers or in improving market access for the products of the least developed countries (LDCs). Given the work still to do, it is not guaranteed that new deadlines will be met or that the DDA will be concluded on time.

Notwithstanding the progress the overall result leaves an enormous amount of unfinished work. In some respects, the outcome is weaker than what it might appear at first sight. In agriculture, the so-called core modalities, the formulas for cutting tariffs and subsidies are left unresolved. This task, which was originally set for Hong Kong Ministerial, is now deferred until April 30, 2006, with the submission of draft schedules no later than July 31, 2006. This unfinished business includes: intractable issues of the relevant liberalisation thresholds for developed and developing countries; the treatment of sensitive products; developing countries’ self-designated Special Products; the Special Safeguard Mechanism (SSM); and disciplines on food aid. The EU regards all this as tantamount to an export subsidy, export credits and the practices of state trading enterprises.

In cotton, it would seem that the overall reductions and the implementation schedules for domestic farm subsidies must be agreed before the depth and speed of cotton subsidy cuts can be negotiated. There will be no early harvest. And it is worth recalling that domestic subsidies make up about 80-90 percent of the total US support for cotton. 

In NAMA, as in agriculture, the core modalities remain to be negotiated within the same time period, including the vexed questions of the number of coefficients in the ‘Swiss Formula’, the meaning of ‘less than full reciprocity’ for developing countries, the development of sectoral initiatives and the treatment of preference erosion. 

In services, there seems to have been even a step backwards. The new text, instead of obliging members to enter into plurilateral market access negotiations, simply requires that they “shall consider such requests”. Genuine progress in the GATS will call for an intensified request-offer process augmented by action within plurilateral groups with shared sectoral interests, leading through to multilateral commitments. Opportunities might be taken to draw on approaches embodied in the Basic Telecommunications and Financial Services Agreements. Besides, there might be a role for some form of quantitative targets. None of these ideas was advanced in Hong Kong Ministerial. 

Even in trade facilitation, there remains considerable unfinished business. While negotiating modalities had been broadly agreed prior to Hong Kong, developing countries are not ready to move to legal drafting on the substantive provisions of the agreement before more progress can be made on the issue of technical assistance and capacity building. In addition, further clarity is needed on how commitments from developing country would relate to issues such as their development needs and implementation capacities.

Finally, the commitment in respect to the market access for products of LDCs is weakened by the fact that the obligation relates only to the 97 percent of products originating from LDCs (defined at the tariff line level), and there is no deadline set for the call to progressively achieve compliance with the Hong Kong obligation. The three percent reservation would account for some 330 tariff lines and for some countries this could effectively deprive them of market access for all their products – it would be highly restrictive on products such as textiles from Bangladesh.

At the centre of the challenge ahead is the fact that the blockages that we saw before Hong Kong still remain. Most critically, some parties (EU) say they will not move further on agriculture until others move on services and NAMA, while others (some developing countries) say just the opposite. Also, there are stand-offs within sectors, for example, in services, where developing countries’ demands on mode 4 (the movement of natural persons) are pitted against developed countries’ expectations on mode 3 (commercial presence). However, stand-offs are not an exclusively North-South affair. In agriculture, the demands of some Organisation for Economic Cooperation and Development (OECD) countries (notably the US) that others (notably the EU) do more on market access are matched by demands from some (notably the EU) that others (notably the US) do more to discipline food aid.

Maintaining the positive outlook, the Ministerial text is seemingly a move forward over the “July Package”, adopted at Geneva in 2004 and it gives rise to a lot of core issues for further study.  There is much at stake should the momentum of multilateral liberalisation stalls: analysis points out the risk of both major opportunities forgone and multilateral trading framework strained systematically. Hence, charting the way ahead will require that trade policy needs to be seen in a broader domestic context. This recognises that market opening works best when it is backed by sound macroeconomic policies, flexible labour markets, a culture of competition and strong institutions. Through this lens, trade reform can be promoted as a necessary tool of growth and development rather than as a concession paid to others.

II. Objectives

The project has the following inter-related objectives:

  • to facilitate cross-fertilisation of experiences and lessons learnt on international trade and national development among South Asian Countries and to establish linkage between the CSOs and research institutions to enhance the consultation process while developing appropriate policy responses;

  • to strengthen the capacity of the South Asian countries on new emerging issues;

  • to establish a platform to facilitate in preparing a common position for South Asian countries during the Doha Round for the benefit of the poor, with a special focus on women and inputs from the grassroots;

  • to engage different stakeholders (NGOs, trade bodies, industry bodies, trade unions, WTO experts, women group, etc.) and present their concerns on each of the issues covered in ‘July Framework Agreement’; and

  • to address livelihood concerns while developing negotiating positions, thus influencing the process of making the Doha Round of trade negotiations a truly development round.

  • to rectify democratic deficits in economic governance in South Asian countries, so that the process of policy-making becomes more people-oriented as opposed to current top-down approach.

III. Methodology

Like SAFIT-I, five organisations have been engaged as research partners from five South Asian countries. The designated organisations will conduct research on five issues. The detailed terms of reference have been prepared on each of the five identified topics. The terms of reference for the Component-I of the research will be limited to those aspects covered under the WTO Hong Kong Ministerial Declaration.

The second part (Component-II) of the research will focus on domestic preparedness to face the challenges of trade liberalisation. This part will commence after the completion of first phase of research focusing on issues related to trade negotiations.

In the first nine months of the project (Component-I), the focus of research will be on five key issues of WTO Hong Kong Ministerial Declaration. Terms of reference broadly includes the following (non-exhaustive list of) issues:

Agriculture

  • Criteria for designation of Special Products

  • Identification of Special Products

  • Treatment of Special Products

  • Special Safeguard Mechanisms

  • Link between Special Products and Special Safeguard Mechanisms

Non-agricultural market access

  • Identification and Categorisation of Non-tariff Barriers

  • Examination of Notified Non-tariff  Barriers

  • Different Approaches to Non-tariff  Barriers Negotiations

Services

  • Operationalisation of Article IV (Special & Differential Treatment) of GATS

  • Operationalisation of LDCs Modalities

  • Disciplines on Domestic Regulation and Building Regulatory Capacity

  • Targeted Technical Assistance to LDCs

Duty and Quota Free Market Access (DQFMA) for LDCs

  • DQFMA from Developed Countries

  • DQFMA from Large Developing Countries Like India

  • Exclusion of Certain Products from DQFMA

  • Rules of Origin

  • Financial and Technical Support Aimed at Diversification of LDC Economies

Preference Erosion and Aid for Trade

  • Challenges Faced by Preference Erosion

  • Assessment of the Problem

  • Using Aid for Trade for Minimising Loss as a Result of Preference Erosion

In addition to carrying out research through in-depth literature review and broad interaction with trade policy officials, business bodies, civil society groups etc., in national capitals of each of the five countries, the project partners are required to share/provide their respective country’s positions and perceptions of different stakeholders vis-à-vis a particular topics. Besides, crosscutting issues such as technical assistance and capacity building and gender implications of particular measures will also be explored. 

Once this research paper is ready, it will be circulated to the project partners in other countries and advisers for comments. Finally, the project partners will finalise the research paper by incorporating the comments and suggestions suitably.

IV. National Consultations

During Component-II, National Consultations will be organised in each of the five countries. Linking Component I & II, there would be five country specific declarations/recommendations and one common declaration on South Asian perspective, which would be based on the above five declarations.  All six declarations would be released for doing advocacy with trade negotiators, trade policy officials, business bodies, NGOs and civil society actors for wider dissemination and greater help to countries in South Asia to better understand their concerns. This will be used as a lobby tool.


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