January 5, 2010

Latest Article: Doha Round : Issues , Implications & Challenges



What this article is about ?
Trade ministers from about 35 countries met in Delhi recently to give impetus to the Doha round of trade talks. This article covers in a condensed form the background of the stalled Doha round of Trade negotiations, understanding the issues of the developing countries and challenges ahead. Before You read this article Here are a few helpful links. This article is the extension of the fourth link 'Genesis of WTO & Doha Round" . 
  1. What is Tariff?
     A tariff is synonym to tax. It is a duty imposed on goods when they are moved across a political boundary. Normally tariffs apply to imports.
    1. Ad valorem Duty: pre decided percentage of the value of the good that is being imported. vulnerable to prices of the goods.

    2. A specific Tariff: It is a tariff of a specific amount of money that does not vary with the price of the good. These tariffs are vulnerable to changes in the market or inflation unless updated periodically.

    3. A revenue Tariff : A set of rates designed primarily to raise money for the government. A tariff on coffee imports imposed by countries where coffee cannot be grown, for example raises a steady flow of revenue.

    4. Prohibitive tariff: It means that the tariff is so high that nearly no one imports any of that item.

    5. Protective Tariff : It is intended to artificially inflate prices of imports and protect domestic industries from foreign competition (see also effective rate of protection,) especially from competitors whose host nations allow them to operate under conditions that are illegal in the protected nation, or who subsidize their exports.

    6. Environmental tariff or Green Tariff or 'eco-tariff': It is placed on products being imported from, and also being sent to countries with substandard environmental pollution controls.




  2. What is Protectionism?
    Protectionism is the economic policy of restraining trade between nations through qualitative and quantitative methods such as tariffs on imported goods, restrictive quotas, and a variety of other restrictive government regulations.
    They are designed to discourage imports, and prevent foreign take-over of local markets and companies.This is a policy of antiglobalization and almost opposite to free trade. The term protectionism is used because this doctrine protects the business and labour within a country by restraining trade with foreign countries.
    Thus, Protectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods,restrictive quotas, and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over orcompetition.
    A variety of policies can be used to achieve protectionist goals. These include:Tariffs, Import Quotas, Administrative Barriers, Export subsidies, Government subsidies & exchange rate manipulation.



  3. What is GATT?
    Background:
    World War–II lasted from 1939 to 1945. The was left many countries in Europe and Asia totally battered. Their economies were shattered; there was tremendous stain on political and social systems resulting in wide spread annihilation and migration of people. Intentional peace was ruffled. Something had to be done to put these war-ravaged economies back in shape. Simultaneously, the various colonies in Asia and Africa were acquiring political freedom. And there was urgent pressure on them for rapid economic development and political stabilization. In this background the United Nations Organisation (UNO) was born on the collective wisdom of the world.

    UNO came to encompass the concerns for development in economic, commercial, scientific, social and cultural sphere of the member nations. It formed various forums and agencies. One such forum under the UNO was the General Agreement on Tariffs and Trade (GATT) which was
    established in 1947.

    GATT which emerged from the “ashes of the Havana Charter” was formed in 1947 and lasted until 1994, when it was replaced by the World Trade Organization in 1995. In International Conference on Trade and Employment in Havana in the winter of 1947-48, fifty-three nations drew up and signed a charter for establishing an International Trade Organisation (ITO). But the US Congress did not ratify the Havana Charter with the result that the ITO never came into existence (1950).

    At the same time 23 nations agreed to continue extensive tariff negotiations for trade concessions at Geneva, which were incorporated in a General Agreement of Tariffs and Trade. This was signed on 30th October 1947 and came into force form 1st January 1948 when other nations had also signed it.

    The critical juncture was reached during the Uruguay Round of multilateral trade negotiations, which may be called the final act. It was signed by 12 countries in which India was signatory. Popularly known as Dunkel agreement, It finally emerged as the World Trade Organisation (WTO) on 1st January, 1995.

    4. What was the main objective of GATT?
    The GATT's main objective was the reduction of barriers to international trade. This was achieved through the reduction of tariff barriers, quantitative restrictions and subsidies on trade through a series of agreements. The GATT was a treaty, not an organization although a small secretariat occupied what is today the Centre William Rappard in Geneva, Switzerland. The functions of the GATT were taken over by theWorld Trade Organization which was established during the final round of negotiations in early 1990s.


    Rounds of Global Trade Talks under GATT:
    First Round:Geneva April 1947
    In the first round of talks held in Geneva in 1947, 23 countries, which had formed GATT, exchanged tariff concessions on 45,000 products worth 10 billion US dollars of trade per annum.This affected 10% of total Global Trade.


    Second Round : Annecy Round - 1950
    The second round took place in 1949 in Annecy, France. 13 countries took part in the round. The main focus of the talks was more tariff reductions, around 5000 total..


    Third Round Torquay Round - 1951
    The third round occurred in Torquay, England in 1951. 38 countries took part in the round. 8,700 tariff concessions were made totaling the remaining amount of tariffs to three-fourths of the tariffs which were in effect in 1948. The contemporaneous rejection bythe United States of the Havana Charter signified the establishment of the GATT as a governing world body.[4]


    Fourth Round Geneva Round - 1955-1956
    The fourth round returned to Geneva in 1955 and lasted until May 1956. 26 countries took part in the round. $2.5 billion in tariffs were eliminated or reduced.


    Fifth Round Geneva (Dillion) Round - 1960-1962
    The fifth round occurred once more in Geneva and lasted from 1960 to 1962. The talks were named after U.S. Treasury Secretary and former Under Secretary of State, Douglas Dillon, who first proposed the talks. 26countries took part in the round. Along with reducing over $4.9 billion on 4400 items in tariffs, it also yielded discussion relating to the creation of the European Economic Community (EEC).

    Sixth Round Kennedy Round - 1964-1967
    With the formation EEC, the US had been put at a disadvantage. As a reaction to this, the US Congress passed the Trade Expansion Act in October 1962 which authorised the Kennedy administration to make 50 per cent tariff reduction in all commodities. This paved the way for the opening of the Kennedy round of trade negotiations at Geneva in May 1964, which were to be completed by 30 June 1967.This round had the participation of 62countries and negotiated tariff reductions of approximately $ 40 billion, covering about four-fifths of the world trade. The major industrialcountries in this group applied substantial cuts on their dutiable imports, e.g. as much as 64 per cent cuts in the case of the United States, 3 per cent in case of Britain, 30 per cent in case of Japan, 24 per cent in case of Canada. They left the US and European tariff on the manufactured goods in the range of 5 to 15 per cent. However, with regard to agricultural products, the negotiations had lesser success. They agreed on an average duty reduction of 25 per cent on agricultural items. Non-tariff obstacles, too remained untouched and scant attention was paid to the problems of developingcountries .In IMF study revealed that weighted average tariff for all industrial products had been reduced to 7.7 per cent, 9.8 per cent on finished manufactured products, 8 per cent on semi-finished products and 2 per cent on raw materials. Thus trade in industrial products after the completion of Kennedy Round was substantially free of restrictions.

    Seventh Round Tokyo Round - 1973-1979
    Reduced tariffs and established new regulations aimed at controlling the proliferation of non-tariff barriers and voluntary export restrictions. 102countries countries took part in the round. Concessions were made on $190 billion worth. The Seventh Round of Multilateral Trade Negotiations (MTN) was launched in September 1973 under the auspices of GATT. Its objectives were laid down in the Tokyo Declaration. The Declaration set out a far-reaching programme for the negotiations in six areas. These are


  4. tariff reduction

  5. reduction of elimination of non-tariff barriers

  6. coordinated reduction of all trade barriers in selected sectors

  7. discussion on the multilateral safeguard system

  8. trade liberalisation in the agricultural sector taking into account the special characteristics

  9. special treatment of tropical products.

  10. It also emphasized that MTN must take into account the special, interests and problems of developing countries.




Eighth Round Uruguay Round - 1986-1993
The Eighth Round of GATT negotiations which began at Punta Del Esta in Uruguay in September 1986 ought to have been concluded by the end of 1990. But at the ministerial meeting in Brussels in December 1990, an impasse was reached over the area of agriculture and the talks broke down. The talks were restarted in February 1991 and continued till August 1991. On 20 December 1991. AurthurDunkel, the then Director-General of GATT tabled a Draft Final Act of the Uruguay Round, known as the Dunkel Draft Text. This was a take-it-or-leave-it” document which was hotly discussed at various fora in the member countries through 1992 till July 1993 when the then Director General, Sutherland relaunched the negotiations in Geneva. On 31 August 1993, the Trade Negotiations Committee (TNC) passed a resolution to conclude the Uruguay Round by 15 December. On 15 December 1993 at the final session, Chairman Sutherland declared that seven years of Uruguay Round negotiations had come to an end. Finally, on 15 April 1994, 123 Ministers of membercountries ratified the results of the Uruguay Round at Marrakesh (Morocco) and the GATT disappeared and passed into history and it was absorbed by theWorld Trade Organization (WTO) on 1 January 1995. The Uruguay Round of trade negotiations undertaken by the GATT since its establishment in 1947 had a wide agenda. The GATT originally coveredinternational trade rules in the goods sector only. Domestic policies were outside the GATT purview and it operated only at international border. In the Uruguay Round, the GATT extended to three new areas, viz. Intellectual property rights services and investment. It also covered agriculture and textiles, which were outside the GATT jurisdiction.




The final year embodying the results of the Uruguay Round of Multilateral Trade Negotiations comprises 28 Agreements. It had two components: the WTO Agreement and the Ministerial decisions and declarations. The WTO Agreement covers the formation of the organisation and the rules governing its working. Its Annexures contain the Agreements covering trade in goods, services, intellectual property rights, plurilateral trade, GATT Rules 1994, dispute settlement rules and trade policy review. The Uruguay Round was concerned with two aspects of trade in goods and services. The first related to increasing market access by reducing or eliminating trade barriers. Reductions in tariffs, reductions in non-tariff support in agriculture, the elimination of bilateral quantitative restrictions, and reductions in barriers to trade in services met this. The second related to increasing the legal security of the new levels of market access by strengthening and expanding rules and procedures and institutions.


What is the difference between GATT & WTO?
The WTO is not an extension of the GATT but succession to the GATT. It completely replaces GATT and has a very different character. The major
differences between the two are:
1. The GATT had no status whereas the WTO has a legal status. It has been created a by international treaty ratified by governments and legislatures
of member states.
2. The GATT was a set of rules and procedures relating to multilateral agreements of selective nature. There were separate agreements on separate issues, which were not binding on members. Any member could stay out of the agreement. The agreements, which form part of the WTO, are permanent and binding on all members.
3. The GATT dispute settlement system was dilatory and not binding on the parties to the dispute. The WTO dispute settlement mechanism is
faster and binding on all parties.
4. GATT was a forum where the member countries met once in a decade to discuss and solve world trade problems. The WTO, on the other hand, is
a properly established rule based World Trade Organization where decisions on agreement are time bound.
5. The GATT rules applied to trade in goods. Trade in services was included in the Uruguay Round but no agreement was arrived at. The
WTO covers both trade in goods and trade in services.
6. The GATT had a small secretariat managed by a Director General. But the WTO has a large secretariat and a huge organizational setup.


Issues & Priorities of Developing Countries




  1. The agenda of Developing countries includes agriculture, services (financial, telecommunications, information technology, etc.), intellectual property rights, electronic commerce, investment, government procurement, and competition policy.

  2. The developing countries assert that the agenda of the WTO, the implementation of its agreements, and the much-praised dispute settlement system all serve to advance the interests of developed countries and sidelining those of the developing countries.

  3. The least developed countries (LDCs) are marginalized in the world trade system, and their products continue to face tariff escalations.

  4. Rules uniformly applied to WTO members have brought about inequalities because each member has different economic circumstances.

  5. Until the Uruguay Round, which ended in 1994, the trade negotiations focused on nonagricultural goods, mainly because the U.S. always wanted to protect its farm sector.

  6. Most developing country economies are in one way or another dependent on the U.S., the EU, or Japan in terms of imports, exports, aid, security, etc. Any obstruction of a consensus at the WTO might threaten the overall well-being and security of dissenting developing nations.

  7. Trade negotiations are based on the principle of reciprocity or "trade-offs." This means that if one country gives a concession in an area, such as the lowering of tariffs for a certain product, in return for another country acceding to a certain agreement. However this bartering benefits the large and diversified economies, because they can get more by giving more. (The focus of Develped countries has always been Yeh Dil Maange More !!!)


  8. Developing countries have fewer human and technical resources. Hence they often enter negotiations less prepared than their developed country counterparts.

  9. Developing countries have discovered that seeking recourse in the dispute settlement system is costly and requires a level of legal expertise that they may not have. Besides, the basis on which the system is run—whether a country is violating free trade rules—is not the most appropriate for their development needs.

  10. America has promoted free trade principles only in sectors that benefit the U.S. economy; in other sectors, like textiles, protectionism reigns.

  11. Further liberalization in some areas will give Developed countries more access to the resources of the Developing countries thereby further debilitating the domestic economies of developing countries.

  12. U.S. influence in the WTO has more often meant U.S. domination than responsible leadership.

  13. Instead of promoting beneficial goals for all, America is too often concerned with aggressively expanding its own markets.

  14. America's agenda is always it own benefits. It goes with Liberalization if it benefits or goes with protectionism if it. So it is ultimately US interest for US that counts.

  15. Exports from developing countries face significant market access impediments in Developed countries.

  16. The developed nations have imposed new agreements in telecommunications, information technology, and financial services for the benefits of MNC's and TNC's , so that they get new market access in Developing countries.

  17. America has always interpreted WTO agreements to protect its key industries. In textiles and clothing, the U.S. has selectively opened its markets, but this liberalization has proved of little benefit to developing nations.

  18. Using creative calculations and interpretations of the Agreement on Agriculture (intended to reduce domestic support and open up markets), the U.S. made a few relatively insignificant changes in its policies to comply with its commitments under the agreement. This makes difficult for thedeveloping countries to enter the US market.

  19. The 1996 Farm Bill reduced direct payments to U.S. farmers, but it increased expenditure for export subsidies, thereby providing a net benefit to U.S. agroexporters.

  20. Implications of TRIPS: Trade Related Intellectual Property Rights Agreement (TRIPS) fiercely protects the rights of corporations but easily allows the shared knowledge of indigenous communities to be patented by others. When fully implemented,developing countries will lose billions in rent transfers to rich countries, as TNCs will continue to control virtually all the patents of developing countries.


  21. Genetically modified seeds and plants (GMOs) raise costs for farmers and promote monocropping, which increases the incidence of diseases and pests, encourages the use of chemicals, and threatens the biodiversity and genetic purity of plant species.TheDeveloping countries will be unable to halt their imports unless those countries can present scientific proof of harmful effects. In sum, TRIPS will be catastrophic for both health and sustainable agricultural systems indeveloping countries.

  22. Investment Issues: Agreement on investment seeks to gain national treatment and rights for corporations operating in all countries. Small- and medium-sized enterprises indeveloping countries are unlikely to be able to withstand such competition, leading to the destruction of domestic economies in the LDCs.

  23. Issues with Transparency in Government Procurement: Such an agreement will eventually bring about the full-scale opening of government procurement--a trillion dollar business--to foreign companies. Like theinvestment agreement, this will be detrimental for developing countries, whose enterprises will not be ready for such intense competition.

  24. The WTO should consider its top priority to be the development needs of its members.

  25. Sections of agreements that work to the disadvantage of developing countries must be changed, including agriculture, TRIPS, textiles, and the dispute settlement system.

  26. U.S. domination should end, decisionmaking should be democratic, and each government should consult regularly with its broader society on trade deliberations.

  27. A change from a "trade creates wealth" perspective to one that stresses broad-based development is necessary if trade is to improve the living standards of the world's poor and ensure the long-term sustainability of resources.

  28. The WTO should emphasize greater self-sufficiency of economies nationally and regionally.

  29. Domestic markets, rather than foreign markets, should be the main stimulus of growth.

  30. Resources should be used sustainably to support local and national communities.

  31. People and the preservation of the environment, rather than capital, should be the primary objectives of any expansion of global trade.

  32. Countries must be free to choose if they want overseas investments and, if so, what kind of investments.

  33. They must also be able to decide on their tariff rates and other trade barriers in order to protect their industries, as the developed countries have been doing.

  34. The U.S. and other developed economies should use its influence to encourage the WTO to become a democratic institution that provides space for a diversity of economic interests.

  35. Certain practices and rules in the WTO must be changed to incorporate the realities and broader development agenda of the Developed Countries.

  36. All members should be equipped with the technical expertise and human resources to participate fully in the multilateral negotiations.

  37. Decisionmaking in the WTO must involve all members. This has not been the case to date; instead the "quad" (U.S., EU, Japan, and Canada) has made many decisions on behalf of all.

  38. The dispute settlement system must consider the development needs of countries (especially the most vulnerable & LDCs), not just whether free trade rules have been violated.

  39. If developed and developing country farmers are to compete in the same markets, then annual subsidies that developed countries provide to their farmers should be reduced to the negligible amounts near to thosedeveloping countries provide. Or developing countries should be allowed to increase both their subsidies and their tariffs to protect their markets from the highly subsidized exports of the developed countries.

  40. Small farms in both developed and developing countries should be encouraged, not squeezed out--especially in developing countries, where farming is the source of livelihood for millions.

  41. Developed countries should eliminate the tariff escalation on product chains of interest to developing countries. And if the WTO continues to force all countries down the liberalization path, the protected sectors in the U.S. must also be liberalized to open up new export markets for developing nations
    Genesis of WTO and Doha Round
    Uruguay Round of Multilateral Trade Negotiations comprised 28 Agreements. It had two components: the WTO Agreement and the Ministerial decisions and declarations.

    The WTO Agreement covers the formation of the organisation and the rules governing its working. Its Annexures contain the Agreements covering trade in goods, services, intellectual property rights, plurilateral trade, GATT Rules 1994, dispute settlement rules and trade policy review.
    The Uruguay Round was concerned with two aspects of trade in goods and services. The first related to increasing market access by reducing or eliminating trade barriers. Reductions in tariffs, reductions in non-tariff support in agriculture, the elimination of bilateral quantitative restrictions, and reductions in barriers to trade in services met this.

    The second related to increasing the legal security of the new levels of market access by strengthening and expanding rules and procedures and institutions.

    So, the World Trade Organization (WTO) was foundeed to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakesh Agreement, replacing the General Agreements on Tariffs and Trade (GATT). The WTO has 153 members which represent more than 95% of total world trade and 30 observers, most seeking membership. The WTO is governed by a ministerial conference, meeting every two years; a general council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the ministerial conference. The WTO's headquarters is at the Centre William Rappard, Geneva, Switzerland.


    WTO deals with
    1. Regulation of trade between participating countries

    2. Providing a framework for negotiating and formalising trade agreements

    3. Dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments.

    What is Doha Development Agenda?
    WTO is currently endeavouring to persist with a trade negotiation called the Doha Development Agenda (or Doha Round), which was launched in 2001 to enhance equitable participation of poorer countries which represent a majority of the world's population.

    However, the negotiation has been dogged by "disagreement between exporters of agricultural bulk commodities and countries with large numbers of subsistence farmers on the precise terms of a 'special safeguard measure' to protect farmers from surges in imports. At this time, the future of the Doha Round is uncertain."

    Ministerial conferences & bulwark of disagreements
    First ministerial conference - Singapore 1996
    After birth of The inaugural ministerial conference was held in Singapore in 1996. Disagreements between largely developed and developing economies emerged during this conference over four issues initiated by this conference, which led to them being collectively referred to as the "Singapore issues".
    The sigapore issues were:
    1. Transparency in government procurement


    2. Trade facilitation (customs issues),

    3. Trade and investment

    4. Trade and competition.

    The developing countries opposed these issues as they were not in their favours. The European Union, Japan and Korea favoured these issues and pushed them in successive conferences. US said that it could accept some or all of them at various times, but preferring to focus on market access.

    Second ministerial conference : Geneva 1998
    Third ministerial conference : Seattle 1999
    The two conferences nothing notable could happen except that at Seattle, with massive demonstrations and police and National Guard crowd control efforts drawing worldwide attention failed the conference.

    Fourth ministerial conference Doha 2001
    The Doha Development Round was launched at the conference. The talks are stalled even today and impetus is on reaching a final agreement. The major impediment is different interests of developed and developing nations.

    Fifth ministerial conference, Cancun Mexico 2003
    This minieterial conference was called for to reach an agreement on the Doha round. However, an alliance of 22 southern states, the G20 developing nations (led by India, China and Brazil), demanded agreements on Singapore issues and called for an end to agricultural subsidies within the EU and the US. There was no progress made in this round too.

    Sixth ministerial conference: Hong Kong 2005:
    The sixth WTO ministerial conference was held in Hong Kong from 13 December – 18 December 2005 with an aim to reach an agreement on Doha Round by 2006. In this meeting, countries agreed to phase out all their agricultural export subsidies by the end of 2013, and terminate any cotton export subsidies by the end of 2006. Further concessions to developing countries included an agreement to introduce duty free, tariff free access for goods from the Least Developed Countries, following the Everything But Arms initiative of the European Union — but with up to 3% of tariff lines exempted. Other major issues were left for further negotiation to be completed by the end of 2010

    Seventh ministerial conference : Geneva 2009
    This will held in Geneva from 30 November–December 2009.


What was the Objective of Delhi Meeting?
The objective of the Delhi meeting was neither to focus on negotiations on specific topics nor to reach an agreement .The objective was to concentrate on working on a timetable for the talks. India's Foreign trade minister, Anand Sharma had invited the leaders to get some momentum into the negotiations.


The Echo of the Issues:
The core issues were echoed in G20 summits in Washington in November and London in April as well as the G8+ summit in L'Aquila in July apart from a meeting of farm exporters in June at Bali and again at the Organisation for Economic Cooperation and Development (OPEC) in Paris and in July at a meeting of the Asia-Pacific APEC grouping.


Is America taking Much Interest ?
United States which is key to any deal , is expected by many other countries to start engaging in the negotiations , however the key focus of Obama Administration seems to be upon economic crisis and health care besides to be able to point to new opportunities for U.S. business.


What is Emphasis of Developed Countries?
Developed countries emphasize the big emerging countries like China, India and Brazil to open their markets and not make excessive use of special arrangements fordeveloping countries in a Doha deal to shield their industries from competition.


Who came for the Meeting?
About 35 trade ministers, representing major developed economies, such as the United States and European Union; the big emerging countries, such as China, India, Brazil, Indonesia and South Africa; and developing countries who coordinate regional alliances, such as Mauritius for the African, Caribbean and Pacific countries, and Burkina Faso for the cotton producer apart from WTO Director-General Pascal Lamy. (TOI)


What are the core Issues & Challenges?
  1. There are gaps and unresolved issues on agriculture and non-agriculture market access (Nama). The center point of talks involves efforts to open up trade in agriculture and industrial goods.

  2. The involves rich countries to open their protected markets for agriculture produce and cutting their heavy subsidies they provide to their farmers & agro exporters , as they are able to wipe out the farmers in poor /developing countries out of the market.

  3. The richer developing countries will also cut industrial tariffs in return so that it opens up their markets for industrial goods to do business with both rich and poor countries.

What is center point of issues?
  1. There are some exceptions to these cuts which are called flexibilities. The flexibilities are the major difficulty.

  2. The developing countries are being led by Brazil. Developing countries say that rich nations are using these flexibilities to protect farmers and prevent any competition at their domestic market in such commodities like farm produces which are politically sensitive everywhere.

  3. The developed countries also see that developing nations may use some flexibilities to shield some sectors. The United States says it would not move further until it has a better idea how the developing nations like India, China , Brazil will use the flexibilities.

  4. Special safeguard mechanism : This is an agreement that would allow developing countries to raise agricultural tariffs temporarily to help their farmers cope with a sudden flood of imports.

  5. US and some developing countries such as Costa Rica which exports food said that the safeguard must not be used to choke off the normal growth in trade, and that tariffs must not rise above "pre-Doha" levels.

  6. India and other big countries such as Indonesia said they needed a quick and powerful safeguard to protect their millions of subsistence farmers from the unforeseen impact of market opening, even if that meant big rises in tariffs.

  7. The United States wants to push for agreements that would go beyond any general cut in industrial tariffs to eliminate duties altogether in some sectors, such as chemicals or electronic goods.

  8. China and India say they are resisting efforts to strong arm them into sector deals, which they insist must be purely voluntary.

  9. African countries want the United States to make bigger cuts in its cotton subsidies than in other agricultural products. They say that U.S. cotton subsidies make it uneconomic for their farmers to produce, and they cannot afford similar state aid.

What did WTO Director General Pascal lamy Said?
  1. WTO Director General Pascal Lamy pointed out that in the Hong Kong ministerial in 2005, it was decided that the modalities (formulae for calculating tariff and subsidy cuts and levels of flexibilities) for agriculture and NAMA (NonAgriculture Market Access) would be concluded first and then the final offers in services negotiations would be exchanged.

  2. However, in July 2008, a number of developing countries, including India, wanted to make sure while the NAMA (Non Agriculture market Access) and agri talks moved towards conclusion, services were also made part of the package so that offensive interests are met.

What is the Current Situation?

  1. The 36 invitees (excluding India) included the Brazil-led members of the G-20 alliance of developing countries, the G-33 Group, the coordinators of the Least Developed Countries group, African group, Caribbean and Pacific countries, Nama-11, Small and Vulnerable Economies, Cotton-4, and the G-10. The US, European Union, Japan, Australia and New Zealand.

  2. A deadline has been already fixed to conclude the Doha round by the 2010, however it seems difficult as WTO's decision-making process works on the basis of consensus even if one member decides not to join a proposed agreementtalks get stalled.

  3. Trade ministers are now working on the a ‘single undertaking’, which means decisions have to be made on all important issues like agriculture, services and NAMA.

  4. This means that nothing gets inked till everything is decided.

  5. There seems to be a more of a split between the developing and the developed nations.

  6. G20 summit will held in Pittsburgh in September 25-25 for further continuing the talks. 
  7. Source:wikipedia,IMF.

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