China alone abides by commitments to world’s poorest

The WTO member countries are moving towards the Eighth Ministerial Conference in Doha next December, again with no concrete results, even on issues relating to least-developed Countries (LDCs), recognized by the member countries’ ambassadors in the informal meeting of last July 26.

The WTO (World Trade Organization) comprises 153 members, including the largest in the world (only one of the largest economies, Russia, is not a member of the Organization) and many of the smaller and poorer countries, the so-called ‘least developed countries’ or LDC.

The latter include, for example, Haiti, devastated by the earthquake and cholera, and several African countries affected by famine and drought.

The WTO agreed, back in 2001, to grant to the LDC a special and differential treatment, which includes a more flexible and faster mechanism to open the markets of developed countries and/or developing to products from LDCs and technical assistance to help them increase their production and trade.

To date, unfortunately, after ten years of negotiations, such commitments have yet to be translated into practice.

Reporting on July 26 informal meeting of its Trade Negotiations Committee, which oversees the negotiations in all topics WTO reported[1]: “. . . ambassadors from WTO member countries said they regret that the membership will not be able to agree on a package that would have had at its core a number of issues concerning least developed countries – the so-called LDC-plus package, agreed as an ‘early harvest’ ahead of the rest of the Doha Round.”

“Some now argued that the meeting should still strive to agree on the core least developed country issues (‘LDC only’), without the additional subjects that were previously seen as possible candidates for agreement in December. Others preferred to focus on what to do afterwards, which would include least developed country issues as well.”

PARALYSIS

The statement quoted WTO Director-General Pascal Lamy, who chairs the Trade Negotiations Committee: “What we are seeing today is the paralysis in the negotiating function of the WTO, whether it is on market access or on the rule-making.”

He added: “What we are facing is the inability of the WTO to adapt and adjust to emerging global trade priorities, those you cannot solve through bilateral deals.”

The July 26 meeting reflected two positions among the membership:

– To concentrate on the non-Doha Round part of the Ministerial Conference’s agenda and on how to proceed with the Doha Round after the conference, believing that striving for a small Doha package at the conference will “suck the oxygen” from the other two issues.

– To add some decisions for least developed countries to the other two issues.

The core least developed country issues are duty-free, quota-free (DFQF) access for their exports to richer markets, simpler rules for determining when products come from LDCs, a waiver exempting LDCs from making commitments in services trade, and extra cuts in subsidies and trade barriers in cotton.

The WTO recognizes as LDCs those countries which have been designated as such by the United Nations.[2] There are currently 48 least-developed countries on the UN list, 31 of which to date have become WTO members.

The 31 LDCs members of the WTO are: Angola. Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Congo, Democratic Republic of the Djibouti, Gambia, Guinea, Guinea Bissau, Haiti, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Senegal, Sierra Leone, Solomon Islands, Tanzania, Togo, Uganda and Zambia.

Twelve more least-developed countries are negotiating to join the WTO: Afghanistan, Bhutan, Comoros, Equatorial Guinea, Ethiopia, Laos, Liberia, Sao Tomé & Principe, Samoa, Sudan, Vanuatu and Yemen.

Some speakers warned the trade negotiating committee that the WTO’s credibility is being undermined by the inability to reach agreement on Doha Round issues and on decisions that would benefit the world’s poorest countries, and by the “soap opera” of the Doha Round.

But they acknowledged that the objections some countries have raised against each of the proposals for an “LDC-plus” package make agreement on the package impossible, and those members’ opinions also diverge on how to deal with the least developed countries’ issues.

“The so-called red lines came from both developed and developing countries,” one ambassador observed, referring to negotiators’ inability to move beyond particular points.

“It became clear to use and to others that an early harvest package was not happening and was not going to happen,” another said.

WITH OR WITHOUT A DECEMBER PACKAGE

WTO reported:

“One country, China, said that with or without a package in December (2011), it will honour its commitment to the least developed countries made at the 2005 Hong Kong Ministerial Conference by expanding duty-free, quota-free access for their exports from 60% of products to 95%.”

Considering the little impact it would have on the developed world and emerging economies, or even on large developing countries, with or without crisis, opening their markets to LDCs, and the benefit that would accrue to the latter, it was expected that the members of the WTO would finally fulfill this year what they decided from long ago. However, as WTO affirmed, only one country, China, which joined the WTO in December 2001, will fulfill its commitments to the LDCs.

That China buys U.S. Treasury bonds, or debt of European countries is part of the economic and trade policies being implemented by the Asian giant for several reasons and several concerns. These include the desire to preserve its reserves in dollars and Euros, and contribute to global financial stability that the world is seeking to return to, and pave the path of growth for all, including China’s economy.

But that China declares that it will fulfill its commitments to the world’s poorest regardless of what other WTO members do, relates neither to its monetary possessions nor to its concerns or economic interests. It is, in fact, a clear sign of China’s new leadership role in the world.

China is lending a hand to the world’s poorest, and setting an example for the global rich.

BACKGROUND

It would be worthwhile recalling what the 2001 ministerial meeting of WTO in Doha[3] stated in paragraph 42 of the declaration adopted on November 14:

“We recognize that the integration of the LDCs into the multilateral trading system requires meaningful market access, support for the diversification of their production and export base, and trade-related technical assistance and capacity building. We agree that the meaningful integration of LDCs into the trading system and the global economy will involve efforts by all WTO members. We commit ourselves to the objective of duty-free, quota-free market access for products originating from LDCs.

“In this regard, we welcome the significant market access improvements by WTO members in advance of the Third UN Conference on LDCs (LDC-III), in Brussels, May 2001. We further commit ourselves to consider additional measures for progressive improvements in market access for LDCs. Accession of LDCs remains a priority for the Membership.”

The WTO Ministerial Declaration adopted on December 2005 in Hong Kong[4] stated in paragraph 47:

“We reaffirm our commitment to effectively and meaningfully integrate LDCs into the multilateral trading system and shall continue to implement the WTO Work Programme for LDCs adopted in February 2002. We acknowledge the seriousness of the concerns and interests of the LDCs in the negotiations as expressed in the Livingstone Declaration, adopted by their Ministers in June 2005. We take note that issues of interest to LDCs are being addressed in all areas of negotiations and we welcome the progress made since the Doha Ministerial Declaration as reflected in the Decision adopted by the General Council on 1 August 2004.”

“Building upon the commitment in the Doha Ministerial Declaration, developed-country Members, and developing-country Members declaring themselves in a position to do so, agree to implement duty-free and quota-free market access for products originating from LDCs as provided for in Annex F to this document.”

In Annex F, the developed-country members asked developing countries members in a position to do so to join them and committed themselves to the following:

Provide duty-free and quota-free market access on a lasting basis, for all products originating from all LDCs by 2008 or no later than the start of the implementation period in a manner that ensures stability, security and predictability.

Members facing difficulties at this time to provide market access as set out above shall provide duty-free and quota-free market access for at least 97 per cent of products originating from LDCs, defined at the tariff line level, by 2008 or no later than the start of the implementation period.

By Raúl de Sagastizabal