Islands Business - Economic Commentary: WHY THE ISLANDS NEED TO PUSH FOR DOHA

After six years of negotiations they are weary and eager to see some light at the end of what has been a long, dark and bumpy tunnel.

Robert Sisilo
2006 was a long year for the Doha Development Round (DDR); but it failed to excite. It was the year the cracks burst open, deep differences surfaced, and Geneva trade negotiators finally accepted that time has again run out to conclude the DDR.

Robert Sisilo... for developing countries there is a lot at stake in the Doha Development Round.

After six years of negotiations they are weary and eager to see some light at the end of what has been a long, dark and bumpy tunnel.

Trade negotiators therefore hope the year 2007 will provide that defining moment. A hope against hope since the dominant issue on the negotiating table is deep cuts on import duties and farm subsidies, an agenda of significantly greater interest and benefit to developed countries.

One should rightly wonder whether there is enough on the table to persuade members that it is worth concluding an agreement.

For Pacific Islands Countries (PICs) one of the issues which they have a defensive interest in the DDR negotiations is fisheries subsidies.

Since the WTO Doha Ministerial Conference held in November 2001, the so-called “Friends of Fish” have focused on banning fisheries subsidies such as fishing access fees and financial support to the fisheries sector.

These subsidies, they argued, are partly responsible for the alarming depletion of many fish stocks and should therefore be banned.

But banning access fees and government financial support to the fisheries sector would be a disaster for PICs, particularly those where fish is about the only tradable resource they have and have in abundance.

The revenue which access fee payments generate for these countries and the need to develop their own domestic fishing industries so that they can fish their own seas are huge. For some it would therefore be better that the DDR stay buried.

BETTER OPTION: But the catch here is the likelihood of members resorting to the WTO dispute settlement mechanism for redress. And this can be a very costly exercise and the outcome unpredictable. A better option is to negotiate the rules.

Besides, the negotiations are not just about fisheries subsidies.

There are a host of other issues that are also of interest to Pacific Islands Countries (PICs).

One of these is the “development package” that was put together for least-developed countries at the WTO’s Ministerial Conference in Hong Kong in December 2005.

That package includes more technical assistance, capacity building and a commitment by rich countries to provide duty-free, quota-free access for goods from the world’s poorest countries. And this includes the 5 LDCs (Least Developed Countries) from the Pacific. Bury the DDR and you bury this commitment.

And of particular interest to Fiji and Papua New Guinea is a request both made, along with other small vulnerable economies, for the WTO to extend their export subsidy programmes to 2018.

These programmes, which under the current rules should be phased out completely by the end of 2009, would enable their manufacturing industries to diversify, produce more goods for export, create more jobs and assist them in integrating into the multilateral trading system.

Phase these programmes out and industries at the infant stage will simply close for lack of competitiveness.

There is of course the work programme on Small Economies that was launched in 2001 and which requires WTO members to look at the trade-related problems of small, vulnerable economies and how best to address them.

In trying to ensure the interests of all PICs are taken on board, the proponents of the work programme—which includes Fiji, Papua New Guinea and Solomon Islands (as WTO members)—have tabled proposals on agriculture, industrial products, fisheries subsidies, services, trade facilitation, and rules.

These proposals seek equal and equitable treatment for small and vulnerable countries.

Being small and vulnerable, their plea here is for WTO rules to basically treat equal members equally and unequal members unequally. It’s called Special and Differential Treatment (SDT) in WTO jargon, but this is a terrible misnomer.

And closer to home is the ongoing Economic Partnership Agreement (EPA) negotiations with the EU.

The WTO and EPA negotiations are closely related. Both are about trade distortions and the crafting of rules to address them. And both claim to advance development.

Besides, the WTO defines the rules of the game for EPAs and it therefore influences their principles and dynamics.

With the rules of the game still being negotiated in Geneva, it is uncertain if an EPA will be WTO-compatible if it is signed off ahead of the DDR.

When WTO boss Pascal Lamy suspended the DDA negotiations on 24 July 2006, he had hoped it would create a crisis situation that would put pressure on the major trading powers to quickly soften their stances on import duties and farm subsidies.

But after three and a half months, there was no evidence that this has happened. No government was embarrassed, let alone intimidated, by the suspension.

On the contrary, the suspension took the pressure off governments to pursue bilateral and regional trading arrangements.

Fearing the prospect of the DDR being buried and following pleas by developing countries, Lamy decided to start informal technical discussions on all issues of the Round in mid-November.

But “full-fledged” negotiations would however remain on hold until members come up with new numbers on import duty cuts and domestic support in agriculture.

The ‘window of opportunity’ for the full resumption of the DDR negotiations is still limited although a meeting of trade ministers from 30 countries at the World Economic Forum held in the Swiss skiing resort of Davos in late January has given a new breath of life to the DDR many said were effectively dead.

For developing countries, there is a lot at stake in the DDR and much remains to be achieved.

It is their round and this presents a golden opportunity to redress the shortfalls and shortcomings of the Uruguay Round, which most of them were not party to.

But for this to happen, the issue of development must be at the DDR’s centre of gravity.The rich countries will just have to deliver on development issues. And developing countries have to be convinced that the major trade powers are offering more than before.

Here the proof of the pudding will be in the eating; when the negotiations resume and conclude, that is.

Hopefully this will be sooner rather than later.

Robert Sisilo is the Permanent Representative of the Pacific Islands Forum to the WTO, based in Geneva, Switzerland. The views expressed here are his own.