The news that EU reached a deal with the Latin American Countries (largely Costa Rica, Ecuador, Guatemala, Nicaragua Bolivia and Panama) on bananas has sparked anger from the African Caribbean and Pacific Countries (ACP). These countries (ACP) have long enjoyed preferences in the EU as one of their most important markets.
Today, 28/07/2008 as the DDA mini-ministerial negotiations in Geneva entered their second week, the ACP countries in solidarity and banana exporters particularly led by a West African Country of Cameroon expressed outrage and frustration on how the EU handled the issue on Bananas.
They are blaming the EU for shutting them out of the negotiations and reaching a deal with the Latinos that is going to severely affect their banana exports and affect millions of livelihoods in their countries. They warned this was not acceptable.
The ACP countries among other tropical products have long enjoyed preferences on their banana exports into the EU as their major banana market, largely linked to their historical trade relations with the EU characterised by the Lome Conventions and the Cotonou Partnership Agreement.
The EU currently applies a specific tariff of 176 Euros per tonne on bananas to non ACP suppliers. This tariff has always conferred the ACP country banana producers a comparative advantage over Latino producers.
It seems that the Latin American countries took advantage of the current intensified negotiations in the DDA and pressured the EU to cut its banana tariffs from 176 Euros to 109 Euros per tonne by 2014. This sharply contrasts a compromise deal that was proposed by Pascal Lamy the Director General of WTO. Mr. Lamy had proposed a final tariff of Euros 116 by 2015 as a middle ground which was rejected by the Latinos.
Mr. Lamy compromise proposal and the Latino deal means that the initial tariff cuts would be effectively implemented beginning January 2009. The Latinos have offered to concede on the legal part of the preferences on bananas with respect to peace clause as well as the 42 list of products( so called preference products) for which the ACP countries are seeking preservation of long standing preferences.
However, by this morning (28th July 2008) in an impromptu meeting convened by the Coordinator of the ACP Group, the Ambassador of Mauritius, the minister of Cameroon who is also the spokesperson of the ACP banana producing and exporting countries stated it categorically that its members were dissatisfied and were “not going to sign up to the Agriculture revised modalities” if the banana issue agreement does not address the minimum of their concerns.Thus blocking any possible Doha deal
The Ambassador of Mauritius indicated that the group had offered a counter proposal to the deal reached between EU and Latin American countries. In their package proposal the ACP countries are seeking among others (i) readjustment of proposed tariff cuts numbers (ii) measures to address revenue loss due to loss of export earnings from the deal i.e.the ACP wanted to be Compensated by the EU and (iii) EU to fund ACP structural adjustment programmes in ACP banana producing economies will be diversifying away from a single product of bananas which is being hurt by competition from the Latin American countries.
By the close of business today (Monday, 28 July), the ACP delegates were still in discussions but continued their threat that they will not be part of the consensus that wont address satisfactorily their concerns on bananas.
Monday, July 28, 2008
Thursday, July 24, 2008
The Multilateral Trading System Sails through Rough Waters in Geneva!!
Prof. Richard Baldwin at the Graduate Institute of International Studies in Geneva recently warned that the World Trade Organisation (WTO) is facing a threat of being irrelevant to the world trading nations if it "does not adopt to its challenges"! Like other international institutions namely the U.N.(and its largely ineffective Security Council) the IMF and the World Bank, it seems the bug of ineffectiveness is catching up with the newest of these international institutions-the World Trade Organisation (which was only born on January 1995)!
While Prof. Richard Baldwin, had in mind the threat of regionalism in which trading states have resorted in bypassing the WTO most favoured nation (MFN) liberalisation approach to regional or bilateral or unilateral liberalisation of global trade. He contends this would end up making WTO irrelevant as an institution charged with ensuring the rule based trading system! which is its strategic challenge, the immediate problem however (probably hard to adopt), is power, politics and the geopolitical positioning in its membership!
These challenges are not new though, many have not forgotten the Seattle debacle, when small and poor nations stood up to the rich nation`s bullying and arm twisting at the 3rd WTO ministerial conference that ended up collapsing without a trade treaty signed! similarly at the 5th ministerial meeting in Cancun Mexico that also collapsed without an agreement because of poor nations and developing countries standing up against the expanded agenda that brought on board the so called "Singapore or New Issues".
The poor nations had learned the lessons of using their numerical strength to rebalance the power of their rich counterparts through the coalitions (like the famous G90, G21, G33, G110 and many more Gs that evolved right on the run to the Cancun Ministerial meeting). More than 3/4 of the WTO membership are either Developing or Least Developed Countries!
The core of the problem is that its hard to imagine how its possible to reach an agreement based on consensus under "Single Undertaking" (nothing is agreed until everything is agreed) between very diverse 153 members of this organisation. You have categories ranging from the super Rich countries and blocks like the U.S.(together with NAFTA countries account for 8 percent of world trade), EU [31 percent of world trade (intra-trade) take place here], then Japan and China and other major East Asian Countries control regional trade of about 14 percent of global trade)and poor members for instance African intra-regional trade is hardly 0.5 percent of global trade (actually its only USD 33 billion making it only 0.3 percent of global traded merchandise- even though its the region with the largest membership in the WTO)
With this immense trade power imbalance, its difficult to have states agree amongst themselves on a deal that satisfies every body especially when some members come with mercantilist intentions to the negotiating table, even if one appealed to the moral conscience of the negotiators, definitions of what would be a moral trade deal would differ!
By yesterday, the Chairman of the Trade Negotiating Committee (TNC) who is also the WTO Director General Mr. Pascal Lamy had come face to face with this reality of power, politics and diversity of interests and suspended negotiations in the green room! the logic of calling few a key ministers in Geneva during this summer was to try to minimize friction between the key protagonists, bring the powerful players together to agree amongst themselves before they sell the deal to the wide membership expecting high chances of acceptability then!
This mode of negotiation was adopted in that it would allow afew ministers from key regional coalitions as Coordinators (For instance , currently the Deputy Prime Minister of Mauritius is coordinating the ACP group in the negotiations)to join the big powers in the green room and they would emerge out occassionally to brief their constituencies on the progress.
The model gathered almost 30 ministers and senior officials, together in the so called "Green Room" but the points of divergences were so divergent that Mr. Lamy informed yesterday`s informal Heads of Delegations (HOD) TNC that he was changing the mode of negotiations to even smaller groups of ministers over an issue and then he will reconvene everyone in a general membership as a formal TNC to ascend to the deal reached amongst these small groups of ministers! By the yesterday, G7 (your guess is right-U.S., EU, Brazil, India, China, Japan and the unusual suspect, Australia!) had emerged as the core negotiating group thats likely to salvage the Round!
But the problem is that other politically insignificant delegations and their ministers had started feeling frustrated and locked out of the process, many of which have left Geneva already! This threatens the consensus amongst the membership and even if the deal was to be reached by the G7 consensus is likely to be difficult to reach in these circumstances (Mauritius minister warned this morning in the ACP/ and G90 coordination meeting).
Poor countries` ministers are heard complaining in the corridors of the WTO about the lack of transparency and inclusiveness of the whole process and that they will be no way they will ascend to a deal they have not negotiated and does not meet their minimum demands from the Round! Things are bad and they seem only to get worse for the MTS!
I will follow the events from inside from now-keep your eye on this space!
While Prof. Richard Baldwin, had in mind the threat of regionalism in which trading states have resorted in bypassing the WTO most favoured nation (MFN) liberalisation approach to regional or bilateral or unilateral liberalisation of global trade. He contends this would end up making WTO irrelevant as an institution charged with ensuring the rule based trading system! which is its strategic challenge, the immediate problem however (probably hard to adopt), is power, politics and the geopolitical positioning in its membership!
These challenges are not new though, many have not forgotten the Seattle debacle, when small and poor nations stood up to the rich nation`s bullying and arm twisting at the 3rd WTO ministerial conference that ended up collapsing without a trade treaty signed! similarly at the 5th ministerial meeting in Cancun Mexico that also collapsed without an agreement because of poor nations and developing countries standing up against the expanded agenda that brought on board the so called "Singapore or New Issues".
The poor nations had learned the lessons of using their numerical strength to rebalance the power of their rich counterparts through the coalitions (like the famous G90, G21, G33, G110 and many more Gs that evolved right on the run to the Cancun Ministerial meeting). More than 3/4 of the WTO membership are either Developing or Least Developed Countries!
The core of the problem is that its hard to imagine how its possible to reach an agreement based on consensus under "Single Undertaking" (nothing is agreed until everything is agreed) between very diverse 153 members of this organisation. You have categories ranging from the super Rich countries and blocks like the U.S.(together with NAFTA countries account for 8 percent of world trade), EU [31 percent of world trade (intra-trade) take place here], then Japan and China and other major East Asian Countries control regional trade of about 14 percent of global trade)and poor members for instance African intra-regional trade is hardly 0.5 percent of global trade (actually its only USD 33 billion making it only 0.3 percent of global traded merchandise- even though its the region with the largest membership in the WTO)
With this immense trade power imbalance, its difficult to have states agree amongst themselves on a deal that satisfies every body especially when some members come with mercantilist intentions to the negotiating table, even if one appealed to the moral conscience of the negotiators, definitions of what would be a moral trade deal would differ!
By yesterday, the Chairman of the Trade Negotiating Committee (TNC) who is also the WTO Director General Mr. Pascal Lamy had come face to face with this reality of power, politics and diversity of interests and suspended negotiations in the green room! the logic of calling few a key ministers in Geneva during this summer was to try to minimize friction between the key protagonists, bring the powerful players together to agree amongst themselves before they sell the deal to the wide membership expecting high chances of acceptability then!
This mode of negotiation was adopted in that it would allow afew ministers from key regional coalitions as Coordinators (For instance , currently the Deputy Prime Minister of Mauritius is coordinating the ACP group in the negotiations)to join the big powers in the green room and they would emerge out occassionally to brief their constituencies on the progress.
The model gathered almost 30 ministers and senior officials, together in the so called "Green Room" but the points of divergences were so divergent that Mr. Lamy informed yesterday`s informal Heads of Delegations (HOD) TNC that he was changing the mode of negotiations to even smaller groups of ministers over an issue and then he will reconvene everyone in a general membership as a formal TNC to ascend to the deal reached amongst these small groups of ministers! By the yesterday, G7 (your guess is right-U.S., EU, Brazil, India, China, Japan and the unusual suspect, Australia!) had emerged as the core negotiating group thats likely to salvage the Round!
But the problem is that other politically insignificant delegations and their ministers had started feeling frustrated and locked out of the process, many of which have left Geneva already! This threatens the consensus amongst the membership and even if the deal was to be reached by the G7 consensus is likely to be difficult to reach in these circumstances (Mauritius minister warned this morning in the ACP/ and G90 coordination meeting).
Poor countries` ministers are heard complaining in the corridors of the WTO about the lack of transparency and inclusiveness of the whole process and that they will be no way they will ascend to a deal they have not negotiated and does not meet their minimum demands from the Round! Things are bad and they seem only to get worse for the MTS!
I will follow the events from inside from now-keep your eye on this space!
Wednesday, July 23, 2008
India`s Government Survives, DDA holding on a Thread!
The Indian Minister of Commerce and Industry Mr. Kamal Nath, jetted in this morning from the Indian Parliament with a confidence vote in his government and assured the Developed Countries`members of the WTO that "I am obviously not here to hand around freebies without getting something in return"! India is seen as crucial for the ministers to get a deal in this ministerial meeting and everybody held his breath (including the big powers ) when Mr. Kamal Nath flew back to Delhi to attend the congress at home which secured the vote of confidence yesterday!
Mr. Kamal Nath and therefore the Indian delegation at the WTO are seeking key compromises in the current rhetorically intensified negotiations - India is seeking serious progress in agricultural reforms in developed countries specifically a substantial reduction in trade distorting domestic support in the major powers (especially U.S.)that will be key in helping reversing the characteristic investment deficit in developing country agriculture. He said this was the major benchmark otherwise members would rather pack they bags and cut their losses now! He belittled the U.S. offer of sealing their Overall Trade Distorting Domestic Support (OTDS) at USD 15 billion as a minimalist offer getting the round nowhere!
Mr. Kamal warned that the world powers cannot make mistakes here in Geneva, they are meeting in a rather grim context of a number of crises in various parts of the world especially the three "FCs" i.e. the Food, the financial and the fuel crises! that an ambitious outcome on domestic support, will get India to start listening! He warned for the case of India and other developing countries Agriculture is a case of life and death, it involves the livelihoods of the poorest farmers who number in the hundreds of millions and that "we cannot have a development Round" without an outcome which provides full comfort to livelihood and food security concerns in the developing countries"
He wondered the logic of the developed countries failure to agree on the Special Safeguard Measures proposal(technically known as SSM in the negotiations jargon) " do developed countries expect us to standby, see a surge in imports and do nothing? Do we give developed countries the unfettered right to continue subsidizing and then dumping those subsidies on us jeopardising lives of billions?" He said this is self-righteousness of Developed Countries and that, this self-righteousness will not do-"If it means no deal, so be it"!
Mr. Kamal Nath and therefore the Indian delegation at the WTO are seeking key compromises in the current rhetorically intensified negotiations - India is seeking serious progress in agricultural reforms in developed countries specifically a substantial reduction in trade distorting domestic support in the major powers (especially U.S.)that will be key in helping reversing the characteristic investment deficit in developing country agriculture. He said this was the major benchmark otherwise members would rather pack they bags and cut their losses now! He belittled the U.S. offer of sealing their Overall Trade Distorting Domestic Support (OTDS) at USD 15 billion as a minimalist offer getting the round nowhere!
Mr. Kamal warned that the world powers cannot make mistakes here in Geneva, they are meeting in a rather grim context of a number of crises in various parts of the world especially the three "FCs" i.e. the Food, the financial and the fuel crises! that an ambitious outcome on domestic support, will get India to start listening! He warned for the case of India and other developing countries Agriculture is a case of life and death, it involves the livelihoods of the poorest farmers who number in the hundreds of millions and that "we cannot have a development Round" without an outcome which provides full comfort to livelihood and food security concerns in the developing countries"
He wondered the logic of the developed countries failure to agree on the Special Safeguard Measures proposal(technically known as SSM in the negotiations jargon) " do developed countries expect us to standby, see a surge in imports and do nothing? Do we give developed countries the unfettered right to continue subsidizing and then dumping those subsidies on us jeopardising lives of billions?" He said this is self-righteousness of Developed Countries and that, this self-righteousness will not do-"If it means no deal, so be it"!
Tuesday, July 22, 2008
Trade Briefing: WTO`s DDA Mini-Ministerial Negotiations 21-26 July 2008 in Geneva, Switzerland
Starting Monday 21st July 2008 over 40 world trade ministers from major protoganist countries in the DDA gathered in Geneva Switzerland to salvage the Doha Development Agenda launched 7years ago in the Qatar capital Doha.
Throughout this week, ministers will struggle to find consensus on the modalities (formulas and othe mechanisms) on how to liberalise trade in the two basic "pillars" of the Round- trade in agricultural and industrial goods. Later in the week, ministers will move into other essential areas of the Round like trade in services, rules and intellectual property rights to ensure that the outcome keeps within the realms of the basic principle of the WTO of "Single Undertaking" which spells that "nothing is agreed until everything is agreed".
Stakes are high, to some this is the last opportunity to avert the threat facing the multilateral trading system, which has seen its recent increasing irrelevance due increasing prominence of bilateral and regional trade agreements among major trading powers and major trading powers with small developing and poor countries.
The dynamics are that advanced developing countries led by India, Brazil, South Africa, largely agricultural producers are asking Developed Countries (Especially U.S. and the EU) to take bold steps and liberalise their agricultural goods markets, cut their overall trade distorting domestic support (OTDS) and eliminate export subsidies on agricultural exports. While Developed Countries are calling for an ambitious market opening for industrial goods on part of these developing countries.
Overall, the developing countries have insisted that an ambitious outcome of the Round should be seen in the context of the Round being a Development Round and interpreted in the context of the Hong Kong Ministerial decision of " less than full reciprocity" in favour of the developing and least developed countries.
By close of business on Monday 21 July, the EU had come foward and offered to cut its farm tariffs by 60 percent from the previous 54 percent they had stuck on, Peter Mendelson EU Trade Commissioner said that the EU was "kick starting a week of crunch-talks on a new global commerce pact"!
While the U.S. has largely indicated that they are waiting to see the contribution of others especially when it comes to advanced developing countries of India, Brazil, South Africa and China! U.S. insists that these countries must open their industrial goods market in return for its cutting its domestic support programmes (farm subsidies).
The big powers of U.S., Japan,and the EU are largely pushing the developing countries to open more of their markets for industrial goods by substantially cutting tariffs while the developing countries are targetting agricultural markets for the highly protected agricultural commodities like rice, beef and wheat in Japan, EU and U.S. markets.
This blog will be following the progress of the negotiations closely and will constantly be updated with respect to the progress, please check regularly for the updates and leave a comment!
Throughout this week, ministers will struggle to find consensus on the modalities (formulas and othe mechanisms) on how to liberalise trade in the two basic "pillars" of the Round- trade in agricultural and industrial goods. Later in the week, ministers will move into other essential areas of the Round like trade in services, rules and intellectual property rights to ensure that the outcome keeps within the realms of the basic principle of the WTO of "Single Undertaking" which spells that "nothing is agreed until everything is agreed".
Stakes are high, to some this is the last opportunity to avert the threat facing the multilateral trading system, which has seen its recent increasing irrelevance due increasing prominence of bilateral and regional trade agreements among major trading powers and major trading powers with small developing and poor countries.
The dynamics are that advanced developing countries led by India, Brazil, South Africa, largely agricultural producers are asking Developed Countries (Especially U.S. and the EU) to take bold steps and liberalise their agricultural goods markets, cut their overall trade distorting domestic support (OTDS) and eliminate export subsidies on agricultural exports. While Developed Countries are calling for an ambitious market opening for industrial goods on part of these developing countries.
Overall, the developing countries have insisted that an ambitious outcome of the Round should be seen in the context of the Round being a Development Round and interpreted in the context of the Hong Kong Ministerial decision of " less than full reciprocity" in favour of the developing and least developed countries.
By close of business on Monday 21 July, the EU had come foward and offered to cut its farm tariffs by 60 percent from the previous 54 percent they had stuck on, Peter Mendelson EU Trade Commissioner said that the EU was "kick starting a week of crunch-talks on a new global commerce pact"!
While the U.S. has largely indicated that they are waiting to see the contribution of others especially when it comes to advanced developing countries of India, Brazil, South Africa and China! U.S. insists that these countries must open their industrial goods market in return for its cutting its domestic support programmes (farm subsidies).
The big powers of U.S., Japan,and the EU are largely pushing the developing countries to open more of their markets for industrial goods by substantially cutting tariffs while the developing countries are targetting agricultural markets for the highly protected agricultural commodities like rice, beef and wheat in Japan, EU and U.S. markets.
This blog will be following the progress of the negotiations closely and will constantly be updated with respect to the progress, please check regularly for the updates and leave a comment!
African Countries Draw thier Red Lines in the DDA Mini-Ministerial Meeting in Geneva today!
African ministers participating in the furore to salvage the Doha Round in Geneva, have drawn their red lines! Led by two deputy prime ministers (Honourable Uhuru Kenyatta Deputy Prime Minister and Minister of Trade of Kenya and Mr. Ramkrishna Sithanen, Deputy Prime Minister, Minister of Finance and Economic Development of Mauritius) has declared in a joint statement that there will not support any deal that falls short of their expectations on one of these key issues of interest to their economies:
Cotton. African ministers are demanding an ambitious, expeditious and specific treatment on cotton in the Round as cotton is key for wide range of livelihoods in their economies. On this issue they have been able to gun support from the Caribbean and the Pacific Countries together with the G20 a group of major developing countries coordinated by Brazil.Essentially they are calling upon members like U.S. to reduce huge subsidies given to cotton farmers in the U.S., market opening for cotton bi-products from African cotton growing countries like Mali, Burkina Faso, Benin (members of the famous C4)
Bananas. The ministers are also calling for a separate treatment of the banana issue from the general agriculture modalities. They are insisting on reviewing the current deal that was reached under the auspices of the WTO Director General Pascal Lamy and they vowed that, they will seek his attention with intent to revise substantially and improve the results on the banana issue taking into account the specific interests and development concerns of the banana producers on the continent. The team on banana is lead by Mr. Mbarga Atangana Luc Magloire, Minister of Trade of Cameroun who is the spokesperson of the group on the banana issue.
Preferential Erosion! The long standing preference erosion will be a make or break issue for Africa and for almost all the developing countries in the current negotiations. The African and the Caribbean countries have long enjoyed preferences with in the developed countries markets like the EU and U.S., these preferences are being threatened by the proposed tariffs cuts and the African countries will fight tooth and nail to save some preferences on some key products (technically being called the preferential products in the negotiations) but these products overlap with tropical products proposed by the developing countries from Latin American Countries causing friction between the two groups. The African Ministers have emphasised the need for a "trade solution" on this issue of preference erosion in which they are seeking an implementation period of atleast 10 years minimum before tariffs are cut (implementing the cuts) on their selected preferential products. They are also seeking developed countries to commit themselves on the non-trade solution to the preference erosion problem by providing technical assistance to the affected countries during the transition period to help them adjust and diversify into other lines of products.
Watch this space for further developments the negotiations!
Cotton. African ministers are demanding an ambitious, expeditious and specific treatment on cotton in the Round as cotton is key for wide range of livelihoods in their economies. On this issue they have been able to gun support from the Caribbean and the Pacific Countries together with the G20 a group of major developing countries coordinated by Brazil.Essentially they are calling upon members like U.S. to reduce huge subsidies given to cotton farmers in the U.S., market opening for cotton bi-products from African cotton growing countries like Mali, Burkina Faso, Benin (members of the famous C4)
Bananas. The ministers are also calling for a separate treatment of the banana issue from the general agriculture modalities. They are insisting on reviewing the current deal that was reached under the auspices of the WTO Director General Pascal Lamy and they vowed that, they will seek his attention with intent to revise substantially and improve the results on the banana issue taking into account the specific interests and development concerns of the banana producers on the continent. The team on banana is lead by Mr. Mbarga Atangana Luc Magloire, Minister of Trade of Cameroun who is the spokesperson of the group on the banana issue.
Preferential Erosion! The long standing preference erosion will be a make or break issue for Africa and for almost all the developing countries in the current negotiations. The African and the Caribbean countries have long enjoyed preferences with in the developed countries markets like the EU and U.S., these preferences are being threatened by the proposed tariffs cuts and the African countries will fight tooth and nail to save some preferences on some key products (technically being called the preferential products in the negotiations) but these products overlap with tropical products proposed by the developing countries from Latin American Countries causing friction between the two groups. The African Ministers have emphasised the need for a "trade solution" on this issue of preference erosion in which they are seeking an implementation period of atleast 10 years minimum before tariffs are cut (implementing the cuts) on their selected preferential products. They are also seeking developed countries to commit themselves on the non-trade solution to the preference erosion problem by providing technical assistance to the affected countries during the transition period to help them adjust and diversify into other lines of products.
Watch this space for further developments the negotiations!
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