Kenyan Writer Says Attention Now on Trade Talks in China

Text of commentary by Oduor Ong’wen entitled “All eyes are now on the new trade talks in China” published by Kenyan newspaper The Standard website on 13 July

One country, two cities and different motivations. This is how to describe parallel meetings taking place in China.

Hong Kong, the venue of the next ministerial meeting of the World Trade Organization (WTO) to be held in December, is hosting civil society organizations from Asia, Latin America and Africa that are here to plan strategy for the December parley.

Not far away in the coastal city of Dalian, some 30 trade ministers are also meeting to try to break the logjam on cutting tariffs on agricultural and industrial products.

Both meetings started on Monday [11 July] and end today, but with different expectations.

While at the Dalian meeting industrialized countries are putting pressure on developing countries to pander to their wishes as pushed by transnational corporations, the civil society meeting is about rolling back corporate influence on global trade negotiations.

Yesterday’s (Tuesday) edition of The Standard of Hong Kong quoted the outgoing WTO director-general, Supachai Panitchpadki, of saying that the talks, launched under controversial circumstances in November 2001 and due to be concluded at the end of 2006, are in trouble due to “a crisis of immobility”. Common ground continues to elude WTO members in talks on non agricultural market access (Nama).

At the end of informal-mode meetings from 31 January – 4 February and 14-18 March, countries seemed little closer than before to agreement on any of the major issues being discussed.

Tariff reduction, elimination

Developing and developed countries still broadly differ on the approach to be taken towards tariff reduction and elimination. The former continue to push for the development of a broad tariff- reduction formula; the latter, led by the US, want this process to take place in parallel with a ‘sectoral’ initiative that would sharply reduce or eliminate import tariffs on certain products.

A number of developing countries insist that these ‘sectorals’ should only be considered after a formula for reducing tariffs is agreed.

Developed countries also argued that eliminating low tariffs – below, for example, 3 per cent – would be beneficial, while many developing countries said that these tariffs were important.

Countries have also differed on whether all products not covered by the WTO agreement on agriculture were to be covered by any rules that come out of the Nama negotiations, with some confusion over how to classify fish and fish products.

They have also clashed on the binding of tariffs, with some countries pointing out that while the Nama negotiating mandate specified that all products were eligible for consideration, it did not say that tariffs must be bound for all products.

The issue is significant because the July Package – agreed on 1 August last year – specifies that tariff reduction is to start from bound rates, i.e., the tariff rates that members have pledged not to exceed, rather than from the rates that they actually apply, which are often much lower.

Members also differ on how to incorporate flexibilities for developing countries into tariff-reduction rules.

A number of developing countries continue to argue that they should not have to reduce tariffs as much as developed countries, with some calling for differentiated coefficients for rich and poor countries in the final tariff reduction formula to allow for this.

Other countries argued for an implementation period twice as long for developing countries as for developed ones.

Liberalization

Former US trade representative Robert Zoellick had said before the recent meetings that the US would be willing to consider the differentiated coefficient approach and longer transition periods – so long as members accepted immediate liberalization in some sectors as well as a so-called ‘Swiss formula’ for tariff cuts.

Developing countries are generally opposed to the Swiss formula, which requires higher tariffs to be cut more heavily, since they tend to have higher tariffs on industrial goods than their richer counterparts.

Several Latin American countries, which have generally bound most, if not all of their tariffs, asked other developing countries to do so as well.

A number of Asian and African developing country members want tariffs on some sensitive products to remain unbound and thus outside the tariff reduction formula; this would allow them to impose high protective tariffs if deemed necessary.

Countries debated the fairness of the long-standing suggestion to set the base rate for reducing unbound tariffs at twice the applied rate, albeit without any conclusion on the matter.

Although letting certain tariffs remain unbound was specifically mentioned in the July package, several developed countries argued that agreeing to do so would constitute a concession that would need to be paid for elsewhere in the negotiations.

In particular, the US, Norway, Switzerland, and New Zealand said that they would agree to either differentiated coefficients under a Swiss formula approach or to allowing countries to retain unbound tariffs, but not both.

Agriculture

With regard to agriculture, the issue of calculating ad valorem equivalent tariffs is potentially contentious.

This is besides the end date for ending farm export subsidies.

The issue ad valorem calculation is in relation to how tariffs that are expressed as dollars per ton or euros per litter, or some other complex variations, can be converted into percentages of the price.

Agriculture chairman has identified three groups of closely related topics in the discussions on converting “specific” duties and more complex tariffs into percentages of the price – the timing, technical issues, and overarching political questions.

Originally scheduled for completion by end of 2004, the so- called Doha Development Round has been dogged by squabbles over subsidies and corporate-driven northern agenda of ripping open the economies of less industrialized nations.

As the two groups meet in China to prepare for the ultimate face- off in December, one wonders whether this calm city of slender skyscrapers will turn into a battleground that Seattle and Cancun were.

Maybe there will be a miracle in Dalian.