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WTO DOHA Development Round

Following the recent new EU offer on agriculture and other areas of the WTO Doha Development round (28 October), trade ministers from the US, the EU, Australia, Brazil, and India are set to meet in London and Geneva from 7-9 November 2005 in order to reconcile their differences ahead of the December Ministerial Conference in Hong Kong.

However, progress looks bleak as long as the major players reach an understanding on what is (or should be) the real aim of the current trade round. The recent EU offer, as well as the reactions that followed it, show how individual Members appear to pursue different, if not conflicting, objectives.

On the one hand, the EU offer seems to take seriously the pro-development goal set out in the 2001 Doha Declaration ('We seek to place their [developing countries] needs and interests at the heart of the Work Programme adopted in this Declaration') by suggesting a differentiation in the levels of commitments depending on each Member's level of development: (a) all developed countries should grant full duty/quota free access for all products from least developed countries, together with an undertaking by more competitive developing countries to take steps in this direction; (b) least developed countries should not be asked to open their markets in the current negotiations and that market opening commitments of other developing countries will reflect their level of development.

On the other, the EU seems adamant in reaffirming the traditional pro-liberalization underpinning of the multilateral trade system. Accordingly, any reduction of import tariffs on agricultural products is strictly conditional upon progress on trade in services ('ambitious individual, mandatory numerical targets for services sectors to be liberalized') and industrial products ('This is where our comparative advantage lies... our average industrial tariff is just 4% ... this is our last 'trade off' and we expect an ambitious result for Europe's businesses and exporters'). Such progress should including both developed and developing countries.

Reactions from developing countries to these proposals are equally puzzling: while the EU demands on services and industrial products are 'unrealistic' and 'completely unacceptable', differentiated treatment among different classes of developing countries is also seen as anathema to many of the (at least major) developing countries.

True, development and liberalization are not conflicting goals in themselves. However, what needs to be clarified is whether liberalization is merely an instrument to further developmental policies or whether development is simply a likely spillover of liberalization policies. Until this is settled, offers and demands to reduce barriers to trade in agricultural products, industrial products or services will always be too high or too low.

Dr Federico Ortino is the Director of the Institute's Investment Treaty Forum and is a Fellow in International Economic Law at the Institute.

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