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Lamy Pushes APEC Towards Doha Re-Start

by Mary Swire, for, Hong Kong

17 November 2006

WTO Director-General Pascal Lamy, in an address to the APEC Business Advisory Council in Hanoi this week, said that all APEC trade ministers have “expressed a sense of urgency and joined in calling for a rapid restart of the negotiating engines in Geneva”. He urged the APEC business community to lobby governments for a successful conclusion to the Doha Round.

Mr Lamy, who has lately seemed pessimistic about the chances for a renewal of the Doha process, which collapsed in acrimony in July after major member nations refused to offer further cuts in agricultural support and tariffs.

' Why can agriculture,' asked Mr Lamy, 'which represents less than 8% of world trade, keep the entire Doha Round agenda off track? The answer is simple: because food production remains a very sensitive sector for both rich and poor countries. And since the current Round is a development one and since more than 70% of the world’s poor live in rural areas, there is no way the negotiations can succeed if the existing agriculture bias against developing countries is not properly addressed. This means an effective reduction in farm subsidies by rich WTO members as well as a reduction of agriculture tariffs providing for substantial improvements in market access. Obviously the reduction in tariffs should be modulated with the necessary flexibilities for developing countries. In July we could not reach agreement on these points because, on the one hand, what was offered in reduction in subsidies was not perceived as enough by developing countries, and because, on the other hand, the insistence on flexibilities which could negate the principle of market access, was unacceptable to some developed and developing countries.'

The Director-General said that recently he had seen some signals of new flexibilities from key players. 'I do hope these will soon turn into concrete and specific numbers,' he said.

Mr Lamy recalled that the Uruguay Round had seen a reduction of trade-distorting agriculture subsidies of rich countries by 20%, and said that proposed Doha Round cuts are more than three times bigger. 'In the Uruguay Round, developed countries agreed to reduce their export subsidy spending by 21% whereas today we have already agreed to the complete elimination of this category of subsidies by 2013. The Doha Round would also strengthen and develop new disciplines for other forms of export support such as export credits, food aid and state trading enterprises.'

'The Uruguay Round delivered average cuts, meaning Members were free to select those products where tariffs would be cut and where not. This led to tariff peaks and tariff escalation, in particular on products of interest for developing countries such as textiles and clothing or footwear. In this Round, Members agree to cut tariffs according to one methodology, where high tariffs would be cut more than low tariffs. It remains a remarkable feat that close to two-thirds of the WTO Members will be applying the same formula, collectively accounting for approximately 97% of world imports of industrial products. Using this formula, developed countries will apply the tariff cuts on a line-by-line basis, with no exceptions, while limited flexibilities would be available for developing Members.

'This Round will also bring greater transparency and predictability by increasing the number of tariffs which will be subject to a maximum ceiling, i.e. binding. In the Uruguay Round, the average binding coverage reached 73% for only 21 participating developing countries and 99% for developed countries. In the Doha Round, developed countries would achieve a 100% binding coverage. This 1% increase should not be underestimated, as the trade involved is significant in terms of value for at least three of these countries: Canada, Japan and the United States. For developing countries, the percentage will increase to approximately 99.7%.

'The Doha Round will also bring deeper cuts and squeeze water out of high bound rates. While the Uruguay Round set as an overall target a reduction of 33%, the actual reductions were well below this average, in particular for many developing countries. This Round holds the potential of significantly reducing the peaks that rich countries still apply to developing exports and cutting tariffs in developing countries, in particular with regard to South-South trade.'

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