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World Trade Organization (WTO)

Current Negotiations

Update on WTO Negotiations Number 5 - September 2006

The Framework Agreement, July 2004

A breakthrough in the deadlock that had resulted during the Fifth Ministerial Meeting in Cancun, Mexico occurred with the Framework Agreement of July 2004. This agreement provided a roadmap in the way forward for the Doha Development Agenda negotiations. Basic concepts for addressing key issues of the Doha Round were outlined and negotiations in trade facilitation were launched. The agreement also reaffirmed the centrality of development to the negotiations, with developing-country concerns integrated into the frameworks for agriculture, non-agricultural market access (NAMA), and trade facilitation. There are strong provisions relating to trade-related technical assistance, capacity building, special and differential treatment, and other specific concerns of developing countries. The July package provided momentum to the Round and provided concepts and approaches that would act as a guide to trade negotiators for the development of methodologies for reducing trade distortions.

Intensive Negotiations 2005

Throughout 2005, WTO members were engaged in an intense phase of the Doha Development Agenda negotiations to prepare for the Sixth WTO Ministerial Conference in Hong Kong, China (December 13-18, 2005). This phase of the negotiations focussed on making progress in all areas on the basis of the Doha Development Agenda of 2001 and the July 2004 Framework Agreement, in particular on agriculture and non-agricultural market access.

A series of informal ministerial meetings took place throughout 2005: Davos, Switzerland (January 29, 2005), Mombasa, Kenya (March 3-4, 2005), Paris, France (May 4, 2005), Dalian, China (July 12-13, 2005), and Zurich, Switzerland (October 10, 2005).

These informal meetings brought together ministers responsible for the WTO from a broad and representative group of developed and developing countries to build on the July 2004 Framework Agreement by outlining the structure of key negotiating areas and suggesting the work that remained to be done before the Sixth WTO Ministerial Conference in Hong Kong, China. WTO informal ministerial meetings are not decision-making forums but do provide opportunities to lend political guidance and momentum to the negotiations.

These meetings were complimented by meetings of the senior officials (a group of senior, capitals-based officials responsible for trade from major WTO members), as well as the on going work of the negotiating groups in Geneva. To help advance the Doha Round negotiating agenda, Canada hosted one such senior officials meeting in Geneva, April 2005.

Canada’s priorities at these meetings were to continue to push for progress in the Doha Development Agenda, reach a common understanding on key issues for the road ahead, and ensure focussed discussions on issues of concern to developing countries.

As meetings progressed, the critical issues were becoming more clearly defined and progress was made in moving towards convergence in some key areas. In particular, the Paris meeting resulted in a breakthrough in finding a solution for the highly technical issue of converting agricultural tariffs into percentage terms in order to apply a tariff reduction formula for agricultural market access. In regards to non-agricultural market access (NAMA), the Dalian meeting revealed the beginnings of convergence around an ambitious tariff-cutting procedure, the “Swiss Formula” – a progressive formula that cuts higher tariffs by more than lower ones – should be the basis for the WTO NAMA negotiations. At the October 10 meeting, the United States put forward a much-anticipated proposal in the agriculture negotiations, which included specific ideas on reducing trade-distorting domestic support. The ideas put forward by the U.S. were discussed informally at the Zurich meeting, and the proposal was welcomed as a real effort to renew momentum in the agriculture negotiations.

Although ministers had decided to work to advance the July Framework text to create a more comprehensive overall negotiating text (called a “first approximation”) by July 2005, it was judged that this would not be possible. Instead, Chairs of the negotiating groups were charged with producing a series of status reports rather than the more substantive text that was hoped for before the Hong Kong Ministerial.

Hong Kong

Ministers responsible for the WTO gathered in Hong Kong, China, December 13-18, 2005 for the Sixth WTO Ministerial meeting. The outcome of that meeting was the Hong Kong Ministerial Declaration. Although not as ambitious or comprehensive as Canada would have liked, the declaration provided the basis for Canada and other WTO members to continue to pursue their objectives in the Doha Development Agenda negotiations. At Hong Kong, WTO members reached several important decisions that permitted the negotiations to proceed on track. Most importantly:

• agreement on an end date for the elimination of agricultural export subsidies (by the end of 2013), a structure for the reduction of agricultural domestic support and for the reduction of tariffs for improved market access;

• elements of an agreement on cotton, including elimination of all export subsidies for cotton by developed countries in 2006;

• the outline of a tariff-cutting formula in NAMA and reaffirmation of the importance of sectoral agreements in this area, alongside flexibilities for developing countries;

• approval for a framework for intensifying the services negotiations;

• agreement to intensify negotiations on trade rules and trade facilitation; and

• an agreement on “aid for trade” for developing countries and a commitment to offer duty-free and quota-free market access to least-developed country (LDC) products.

In Hong Kong, WTO members also set April 30, 2006 as the date by which full modalities (methodologies for developing detailed commitments) in the agriculture and NAMA negotiations should be completed. Individual country schedules to reduce trade barriers based on modalities were to be completed by July 31, with an overall deadline for the Round set for the end of 2006. An end of 2006 conclusion was imposed upon the negotiations in order that a completed agreement could be presented to the U.S. Congress, well in advance of the July 1, 2007 expiry date of Trade Promotion Authority (TPA) in the U.S.

2006

The months since the Hong Kong Ministerial have been spent trying to meet the deadlines set out in the Hong Kong Declaration. However, the inability of key WTO members to bridge gaps in negotiating positions concerning agriculture and non-agricultural market access (NAMA) have continued to prevent members from reaching consensus. As a result, ministers were unable to meet the April 30, 2006 deadline to establish modalities in agriculture and NAMA. Members have been trying to find agreement on these two issues in particular, as they have become the fulcrum around which the negotiations have become centred. The Doha Development Agenda operates on the basis of a “single undertaking”; that is, consensus must be found in all negotiating areas in order for the Round to be completed.

Ministers continued their efforts and at the end of June 2006, ministers met in Geneva (June 28- July 1) to try and move the negotiations forward, but reached an impasse on the issues of market access for agriculture, agricultural domestic support, and market access for non-agricultural products. The G6 Ministers (U.S., EU, India, Brazil, Australia, and Japan) then returned to Geneva July 23-24 to try to circumvent the impasse and inject momentum into the talks. However, they were unable to bridge their differences in negotiating positions. As a result, WTO Director-General Pascal Lamy recommended that negotiations in all areas be suspended, with no indication of a resumption date.

Challenges Ahead

Canada is extremely disappointed at the impasse reached in the WTO negotiations. These negotiations provided a valuable opportunity to level the playing field for the agri-food sector, increase market access for goods and services providers, strengthen trade rules, and facilitate trade at borders. It also represents a missed opportunity for developing countries, which stood to gain from further integration into the world trading system and from the reduction in agricultural subsidies.

The road ahead will require much work by all WTO members to put the Doha Development Agenda negotiations back on track. Canada especially urges key members to show the necessary flexibility to reach a breakthrough in the current impasse so as not to jeopardize the substantial gains already achieved.

Canada remains committed to the rules-based multilateral trading system, as well as the objectives of the Doha Development Agenda. We stand ready to work with other WTO members and the Director-General of the WTO to find a way forward. The government will also continue to consult with provinces, territories, and stakeholders on how best to achieve our trade policy objectives.

ANNEX

Main Bodies for the Doha Negotiations and their Chairs (2006):

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