The Multilateral Trading System Wither Doha Development Agenda:

The Multilateral Trading System Wither Doha Development Agenda:

What level of ambition in the DDA does Africa need to come out a winner?

Annet Blank, WTO

Trade Policy Training Centre in Africa (TRAPCA) Conference

Swaziland, 5 7 November 2007

Introduction

1. Since the launch of the DDA in 2001, Members of the WTO have been working hard and are at great pains to reach a deal that can deliver significant benefits to all member countries. It was named a "Development" Round, to capture the ambition to pay more attention to the needs of developing countries. This paper looks at the possible gains for developing countries which could accrue to them from the conclusions of the negotiations. It furthermore provides a brief update on the state of play in the negotiations and ends with some observations on what level of ambition is needed in the DDA to make Africa come out as a winner.

Developmental aspects of the DDA: possible gains for developing countries[footnoteRef:1] [1: This section (II) draws entirely from WTO document WT/COMTD/W/143/Rev.3.]

agriculture

2. A successful conclusion of the negotiations would lead to considerable gains for developing countries. Further reform of the world agriculture trading system would lead Members closer towards the long-term objective they agreed to during the Uruguay Round and which is encapsulated in the Doha Declaration, the 1August2004 Decision and the HongKong Declaration, namely to establish a fair and market-oriented agricultural trading system.

3. Substantial reductions of tariffs, along with a reduction of tariff peaks and tariff escalation, would result in increased market access opportunities. Exports to developed countries would increase and South-South trade would be stimulated. This would not only allow developing countries to export products where they have a comparative advantage, but would also allow for the diversification of production, including value-added processing, and export orientation. Enhanced tariff quotas with an improved tariff quota administration regime would also result in improving market access opportunities. Substantial reductions in trade-distorting domestic support and the elimination of all forms of export subsidies would make world prices more realistic, reduce artificial competition and benefit exporters, especially in developing countries.

4. At the same time, appropriate special and differential treatment, including the flexibility to designate a number of products as 'special' and the establishment of a Special Safeguard Mechanism, may alleviate some concerns that some developing countries have about the possible effect of tariff reductions on rural development, rural livelihood and food security. Similarly, flexibility in the right to provide some agriculture support, as well as the flexibility to provide certain types of input and investment subsidies could help developing countries improve productivity, and consequently the earning capacity, of their agriculture sector. At the same time, improved market access conditions on a more certain footing can help to increase infrastructure and investment, including foreign direct investment, and therefore increase and improve production and processing standards, employment and standards of living.

B. non-agricultural market access

5. In recognition of benefits that accrue from appropriately designed trade liberalization measures, many developing country Members have been reducing their import tariffs autonomously over the years. Several of them have also liberalized in the context of customs unions and regional trade agreements. The importance of developing countries in international trade has been growing. Trade in manufactures which is a subset of the non-agricultural products accounting for more than 70percent of world merchandise exports provides a good example: the share of developing countries in world exports of manufactures rose from 16.6percent in 1990 to 28.1percent in 2004.[footnoteRef:2] [2: Source: WTO Secretariat. The term manufactures refers to SITC sections 5, 6, 7, 8 minus division68 and group 891. It excludes fish & fish products, as well as fuel and mining products.]

6. Overall, the gains from NAMA liberalization have been estimated by several institutions to range from US$54.2billion to US$276.8billion.[footnoteRef:3] Most of these estimates are long-term, in the sense that they assess the impact following full adjustment. Evidence regarding short-term effects is scarce. These estimates need to be considered in light of the following: first, the estimates are based on scenarios which may diverge substantially from any final agreement reached. Second, the models typically do not take proper account of factors such as growth effects, preferences, or supply-side constraints. For example, in order to feel the full benefits of results in the NAMA negotiations, alleviation of supply-side constraints is a necessary condition. Moreover, it is important to note that the estimates of gains from opening up to trade do not take into account any consideration of adjustment costs associated with increased trade competition. [3: Piermartini, R. and Teh R. (2005). "Demystifying Modelling Methods for Trade Policy", WTO Discussion Paper No. 10.]

7. The gains that could accrue to individual developing countries would also differ depending on each country's comparative advantage as well as on the extent to which it will liberalize itself. However, in general terms, both North-South and South-South trade are expected to expand as a result of the NAMA negotiations, with the corresponding effect on economic efficiency and growth. Additionally, removing or reducing tariff escalation will give developing countries the opportunity to diversify their export base and to produce and export products with a higher domestic value-added component.

8. Another outcome of the NAMA negotiations is expected to be an improvement in the binding coverage levels which, along with a possible reduction in binding overhang, could enhance the predictability and transparency of the trading environment. This could be further reinforced by the requirement that bindings should only take the form of ad valorem duties. Problems in the area of non-tariff barriers are also expected to be addressed in the context of the NAMA negotiations and in other negotiating groups. Since the results of the different NTB negotiations will be applied on an MFN basis, the benefits will accrue to the entire Membership. Granting duty-free and quota-free market access (DFQF) to LDCs, whether by developed country Members or other developing Members, would offer this group of countries additional market access.

C. services

Several studies have estimated, with a wide variety of research techniques, the income effects attributable to a reduction in services protection. In general, these gains have been found to dwarf the benefits expected to flow from further trade liberalization in goods. This is due to several factors. First, barriers in many services markets are higher than existing barriers in goods trade, barring particular exceptions such as in the case of agriculture. Second, these barriers normally consist of less transparent and efficient measures quotas and other non-revenue generating interventions than tariffs in merchandise trade. Third, as explained above, the costs of services protection, in particular of infrastructure-related services, are spread across, and impose deadweight losses on, a wide array of downstream user industries.

9. Developing countries stand to gain considerably from liberalization of trade in services, both on the part of their trading partners and in terms of their own policy regimes. Bearing in mind the nature of potential economy-wide gains from low-cost, high quality services, benefits to countries from their own liberalization can be considerable. While there are obvious long-term gains associated with services liberalization, there are also adjustment costs involved which may need to be addressed with assistance and capacity-building programmes. Obviously much depends on domestic regulatory or institutional reforms to underpin the viability and credibility of the new environment. For example, the absence of clear and predictable market conditions may prompt potential investors to demand risk premiums that are not politically or socially acceptable. If increased entry into financial sectors is not accompanied by adequate prudential supervision, instability may ensue. And the absence of welldesigned universal service requirements may result in new, unsustainable burdens being imposed on vulnerable groups or regions. The pace, content and sequencing of liberalization programmes are thus key to avoiding unnecessary frictions and ensuring the efficiency and viability of the new regimes.

10. Even though governments can and indeed do initiate reforms of services sectors unilaterally, multilateral commitments under the GATS can be an important catalyst for such liberalization and reform efforts. On the one hand, services negotiations can help to improve export access in areas of developing country interest, such as the movement of natural persons, cross-border supply of services, or in specific sectors. The GATS can also be used to secure access to markets that are already open, and where developing countries are acquiring a comparative advantage, such as the cross-border trade of electronically delivered services. On the other hand, specific commitments can spur and promote investment in the unilaterally liberalized sectors, by making access to the market predictable, secure, and discrimination-free. Moreover, specific commitments can be shaped to take into account eventual adjustment processes and to allow for the development of necessary regulatory frameworks.

D. trade facilitation

11. Lowering trade-related transaction costs can result in a significant improvement in a country's ability to compete effectively in the global economy. This has been widely recognized by developing countries and LDCs, which also acknowledge the importance of trade facilitation for the attainment of their development objectives. While pointing at the need for TA&CB to respond to possible costs of implementing certain measures, developing and least-developed Members have drawn particular attention to the benefits they foresee in terms of increasing the competitiveness of their small and medium-scale enterprises. This applies in particular to the case of landlocked developing countries and LDCs, for which steps to facilitate transit traffic along with facilitating their own cross-border trade can produce a marked reduction in their import costs and an improvement in their export competitiveness on world markets. National experience papers presented by delegations in the Negotiating Group, as well as numerous studies that have been conducted by relevant international organizations that are collaborating with WTO Members in this area, point to a range of benefits that can be realized by taking measures to facilitate trade, including improving revenue collection, improving border controls and security, lowering administrative costs, encouraging more trade and foreign investment, and enhancing the competitiveness of domestic business in its home market as well as on export markets. Developing countries also stand to benefit greatly from the aspired increase in transparency and predictability of the trading environment.

E. special and differential treatment

(i)Parameters of the Development Dimension

12. Special and differential treatment is an integral part of the WTO Agreements and reflects a recognition of the diverse nature of WTO's vast membership, asymmetry in their economic strengths and the need to ensure that economic gains from the trading system are well distributed among all Members. While acknowledging that the multilateral trading system has attempted to address some of their concerns through appropriate S&D provisions, most developing countries still feel that more needs to be done to enhance the effectiveness and operationalization of these provisions. One of the main concerns expressed has been that S&D provisions are couched in best endeavour language and merely exhort Members to take certain steps, rather than making this action mandatory and binding.

(ii)Possible Gains for Developing Countries

13. While it is difficult to quantify the gains from the S&D work programme, mainly because of the lag between adopting and operationalizing any recommendation, it can be said that gains would accrue by making the S&D provisions more precise, effective and binding. Clearly, in order to assist developing countries, especially the LDCs, the S&D provisions must respond to, and be reflective of, their concerns. A number of developing country Members have said that commitments and obligations undertaken by them in the WTO have reduced their flexibility to adopt, what in their view, are pro-development policies and measures. In this context, they have put forward a number of proposals which seek to enhance the existing flexibility in the rules for them, and consequently provide them a certain degree of policy space. They have also sought simplification of cumbersome procedures and/or notification obligations, so that they can divert their resources to other developmental issues and areas.

14. Developing country Members also consider transitional time periods as an important element of S&D treatment; one that provides them with more time to conform with, or fulfil particular obligations. However, many, if not all, of these transition periods have expired and developing countries, especially the LDCs, are seeking a positive consideration of their requests for extension of these transition periods. There are several proposals on the need for technical assistance to be more predictable and targeted to the development needs of developing and leastdeveloped countries. There are also a number of proposals that seek to improve coherence arrangements with other organizations in the delivery of such assistance.

F. rules

15. An eventual clarification and improvement of any of the rules under negotiation will increase the predictability of the trading system to the benefit of all Members. Moreover, an appropriate balance of rights and obligations will permit developing countries to pursue their development objectives and at the same time guard against practices that have a negative impact on their trade. Another area where balance is crucial concerns trade-offs between the costs and administrative burdens of the contingency protection system and its capacity to ensure fairness and transparency.

G. regional trading arrangements

16. With respect to RTA transparency, the new Transparency Mechanism may have certain implications for developing countries and in particular for those availing themselves of the Enabling Clause. The latter agreements will be subject to transparency obligations on a par with RTAs notified under Article XXIV of the GATT 1994 and Article V of the GATS, thus adding new elements to what is current practice, i.e. a "Factual Presentation" of the RTA prepared by the Secretariat.[footnoteRef:4] However, while strengthening the transparency obligations, the Transparency Mechanism acknowledges the constraints that some developing countries may face in gathering the required reporting information and it provides for flexibilities with respect to the reporting timeframes and for technical assistance. Of great significance to developing countries is the improved access to RTAs-related information that will result from the operation of the mechanism. Since practically all Members are engaged, or are engaging, in multiple RTAs, the need for adequate transparency has become systemic in a fundamental sense. [4: Parties to RTAs notified under GATT Article XXIV and GATS Article V were previously required to submit a "Standard Format" which was essentially a summary of the agreement. The Factual Presentations relieve Members of such responsibility thus benefiting all Members irrespectively of whether they are developed or developing country Members.]

17. As for RTA systemic issues, it is generally accepted that a developmental rationale exists for allowing developing countries to engage in progressive asymmetric liberalization with selected partners. However, if transition periods are too long or too many products are excluded from coverage, potential gains from RTAs in terms of growth and development will be foregone. At the same time, it is important to ensure coherence both within the regional arrangement, as well as with the broader goals of the multilateral trading system. Negotiations in this area can deliver important gains for developing countries by shaping the rules in such a way as to reflect RTAs parameters that can better accommodate their development needs and constraints.

H. trade and environment

18. There has been little substantive debate among participants in the negotiations on the specific gains that may accrue to developing countries from the negotiations under paragraphs 31(i) and (ii) on the relationship between MEAs and the WTO. Many developing countries have ratified many of the multilateral environmental agreements considered relevant in the present negotiations. The mandate under paragraphs 31(i) and (ii) affords an opportunity to create positive synergies between the trade and environment regimes, including through more efficient institutional cooperation. As regards paragraph 31(iii), some hold the view that liberalization of environmental goods and services can be beneficial to trade, environment and development. According to them, the negotiations could result in increased trade due to a reduction or elimination of tariffs and non-tariff barriers. They also feel that the negotiations could potentially assist developing countries in obtaining the resources and tools needed to address key environmental priorities. Others, however, question the possible environmental benefits of some of the goods proposed for liberalization. These Members feel that the development gains would be enhanced only if goods which have an unambiguous environmental use are liberalized.

19. Some developing country Members have also argued for the retention of a certain level of policy space in determining which goods may help them meet their nationally prioritized environmental objectives. In this context, they have also stressed that their national interests in these negotiations are mainly directed towards the building-up and development of domestic production capacity in the provision of environmental goods and services. This, in their view, would further contribute to their objective of achieving sustainable development.

I. dispute settlement(i)Parameters of the Development Dimension

20. According to paragraph30 of the Doha Ministerial Declaration, the negotiations on dispute settlement aim to "agree on improvements and clarifications of the Dispute Settlement Understanding (DSU). Under paragraph47 of the Doha Declaration, these negotiations are not to be treated as part of a single undertaking. A number of developing country Members highlighted in the early stages of the negotiations the need to have effective access to the dispute settlement procedures. In this context, it was stressed that clarifications or improvements to the DSU should not lead to any reduction in the access of developing country Members to dispute settlement procedures. Although a number of developing country Members have been active users of the dispute settlement procedures, others, in particular African and LDC Members, have had much more limited participation to date. These Members highlighted in their proposals the significant constraints, including resource constraints, they face in having recourse to the complex and expensive (if outside counsel is used) procedures of the DSU.

21. The interests of developing country Members in the DSU negotiations are, however, not limited to S&D, or indeed to developmental aspects only. The improvement and clarification of the dispute settlement mechanism has an institutional dimension that goes beyond the particular interests of developed or developing countries. A stable, predictable and effective multilateral system to resolve trade disputes benefits the whole WTO membership. Many proposals put forward by developing country Members therefore address systemic concerns and are not intended to secure any particular form of S&D. Some of these proposals may reflect concerns which are of special significance to developing country Members as users of the dispute settlement mechanism (for example, the enhancement of third party rights). Others, however, reflect more general systemic concerns not intrinsically tied to a developmental dimension.

(ii)Possible Gains for Developing Countries

22. A strengthened multilateral rules-based dispute settlement mechanism has been heralded as one of the major achievements of the Uruguay Round. The DSU is generally acknowledged to have served WTO Members well so far. Indeed, more than 80 WTO Members (including 65 developing countries) have participated, either as party or as third-party, in at least one dispute to date. Since the dispute settlement procedures are in essence an instrument for the protection of Members' substantive rights and obligations under the WTO Agreements, it might be said that the immediate objective of improving and clarifying procedures under the DSU ultimately serves the long-term goal of enhancing the ability of WTO Members, in particular developing country Members, to fully benefit from the trade opportunities they have negotiated in the WTO.

23. The main benefits of improvements and clarifications to the DSU could be expected to come in the form of institutional strengthening of the multilateral trading system and enhanced capacity for all Members to protect their interests in the WTO. To the extent that developing country Members, especially smaller economies with limited political power to influence the behaviour of larger trading partners, may generally have more difficulty in defending their interests effectively, such enhancements would especially benefit them. A number of procedural improvements are under consideration, that may not have any particular developmental dimension, but that would also, if successfully negotiated, benefit developing country Members as users of the system (for example, the establishment of remand authority, the clarification of "sequencing" between compliance and retaliation procedures or the elaboration of procedures to address "post-retaliation" situations).

24. Other proposals under consideration address the resource constraints highlighted by a number of developing country Members, in the form of enhanced technical assistance or financial support. While they do not directly affect procedural steps in the dispute, they focus on ensuring that developing country Members have effective access to the procedures in the first place and the means to successfully go through a procedure. Improvements designed to address these resource constraints could facilitate recourse to the procedures by developing country Members and enhance their ability to effectively defend their rights under the WTO agreements, as complainants or defendants.

State of play in the negotiations

25. What is the current state of play in the negotiations? In the words of the Director-General of the WTO, what remains to be done is small compared to all the proposals already on the table, which represents two to three times what was achieved in the last Round of negotiations. The DirectorGeneral also considers that it is small compared to the potential benefits of rebalancing the multilateral trading system in favour of developing countries or the weakening of this insurance policy against protectionism if we fail in this last lap. Negotiations have started again to move ahead in earnest. Starting with the work on Agriculture, participants are demonstrating the kind of engagement needed to move ahead. According to the Director-General, completing the Round is now technically possible. Intensive text-based negotiations are taking place in the decisive areas of Agriculture and NAMA (Non-Agricultural Market Access) at this moment in Geneva aimed at developing enough common ground to allow the Chairs to prepare revisions of the texts they issued in July. We hope to see revised NAMA and Agriculture draft texts on modalities in the coming weeks. Those revised texts would capture the state if the negotiations and reflect what WTO Members have decided to accept in terms of reduction commitments regarding the triangle of issues of agriculture support, agriculture market access and in non-agricultural market access[footnoteRef:5]. Advances in these key negotiations would allow WTO Members to tackle the other areas of the negotiations such as services, rules, trade facilitation, special and differential treatment etc. [5: It is recalled that LDCs are exempted from any reduction commitments both in the negotiations on Agriculture and those on Non-Agricultural Market Access (NAMA). In NAMA LDCs are encouraged to increase their binding commitments. ]

26. The Chair of the Services negotiations is in the process of conducting consultations on the content of a text in this area. AnnexC of the Hong Kong Ministerial Declaration must govern the content of any such document as well as future work in this area. The Chair of the Negotiating Group on Rules expects to circulate texts on Anti-dumping and Subsidies and Countervailing Measures, including fisheries subsidies, at around the same time that the revised papers on Agriculture and NAMA are circulated. In the other areas of negotiations, such as on Special and Differential Treatment, the Chairs of the Negotiating Groups are also sparing no efforts to move the work ahead and they will also be developing texts as they judge the issues ripe.

The DDA: what level of ambition is needed for Africa?

27. The literature available covering the wide range of positions on the DDA from the staunch advocates to the opponents confirm that looking at all various numbers show that the way forward is clear. A bad round will hurt Africa; no round would be a loss as well. Africa needs a development round, with full duty-free quota-free access (DFQF) as a part of multilateral liberalization[footnoteRef:6]. The outcome of a number of studies show that in basic Doha scenarios, without any development component, lowincome African countries might stand to loose. But with a development package, including dutyfree quota-free access for LDCs, many of the countries will turn their losses to gains. [6: "What could the Doha Round Mean for Africa?", Katherine Vyborny, Carnegie Endowment.]

28. Full DFQF market access for least-developed countries is actually within the realm of the possible. WTO Ministers at the Hong Kong Ministerial Conference in December 2005 took a number of Decisions in favour of the LDCs, the most important being the one on DFQF:

"We agree that developed-country Members shall, and developing-country Members declaring themselves in a position to do so should:

(a)(i)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.

(ii)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. In addition, these Members shall take steps to progressively achieve compliance with the obligations set out above, taking into account the impact on other developing countries at similar levels of development, and, as appropriate, by incrementally building on the initial list of covered products.

(iii)Developing-country Members shall be permitted to phase in their commitments and shall enjoy appropriate flexibility in coverage.

(b)Ensure that preferential rules of origin applicable to imports from LDCs are transparent and simple, and contribute to facilitating market access.

Members shall notify the implementation of the schemes adopted under this decision every year to the Committee on Trade and Development. The Committee on Trade and Development shall annually review the steps taken to provide duty-free and quota-free market access to the LDCs and report to the General Council for appropriate action.

We urge all donors and relevant international institutions to increase financial and technical support aimed at the diversification of LDC economies, while providing additional financial and technical assistance through appropriate delivery mechanisms to meet their implementation obligations, including fulfilling SPS and TBT requirements, and to assist them in managing their adjustment processes, including those necessary to face the results of MFN multilateral trade liberalisation"[footnoteRef:7]. [7: WTO Ministerial Declaration, Ministerial Conference, Hong Kong, December 2007, document WT/MIN(05)/DEC, Annex F. ]

29. The Decision aims at providing totally free market access to LDCs, but allows 97percent (with the ultimate goal of increasing to 100percent). For some countries, increasing the 97percent free access to the full 100percent makes much difference. According to the study by KatherineVyborny referred to in this paper, the commitment to provide substantial duty-free, quotafree access to developed country markets for all least developed countries (97percent free access), creates a significant improvement in the outcome for Sub-Saharan African countries. However when the market access is totally free (100percent), at least one of the models in her study (International Food Policy Research Institute, IFPRI )shows that African countries' losses turn to gains. Why this difference? She points out that the Decision covers 97percent of all tariff lines, rather than 97percent of the products these countries actually produce. For a number of LDCs the remaining 3percent can be significant in that the 3percent would cover the vast majority of what they export, and would thus likely be excluded from the Decision. Improving market access to 100percent (what is the ultimate objective of the Ministerial Decision), would ensure that the few products that the LDCs mostly export, are covered.

30. The annexed table gives on overview of tariff treatment of LDC exports in selected developed and developing markets (2005).[footnoteRef:8] It presents a disaggregation of market access conditions facing LDC exports both in terms of tariff lines and trade value, by groups of products, in selected developed and developing country markets for the year 2005. [8: WTO document WT/COMTD/LDC/W/41.]

31. In 2005, Australia, Canada, EC, New Zealand and Norway, provided total or nearly total duty-free status to imports from LDCs. When imports are not totally allowed duty free, dutiable tariff lines are usually concentrated in agriculture and in manufactured products (i.e.,nonagriculture, excluding ores, petroleum and other raw materials). Indeed, the basic pattern of MFN tariffs reveals that many importing countries do not tax minerals and petroleum products under the MFN regime, therefore LDCs do not enjoy additional preference under those lines.

32. The Table in the Annex also shows that in 2005, Japan, Switzerland and the US were the three countries that were yet to provide total or nearly total duty-free status to LDC exports. The percentage of dutyfree tariff lines for the US was 84percent, while that of duty-free imports was 70percent. For Switzerland, the respective figures were 86percent and 97percent. The incidence of dutiable tariff lines is concentrated in the non-agricultural sector for the US, while in the case of Switzerland the dutiable tariff lines are concentrated in the agriculture sector. In the case of Japan, the percentage of duty-free tariff lines was 86percent, while the percentage of duty-free imports was 27percent. For Japan, it is the tariff they levy on petroleum products that explains the overall small percentage of their duty-free imports from LDCs. It may also be noted that both Japan and Switzerland have recently improved their market access schemes for LDCs.

33. It can also be seen from the Table in the Annex that a high number of duty-free tariff lines does not necessarily ensure a high percentage of duty-free imports, a point also made by KatherineVyborny (supra). Moreover, even if the overall percentage of duty-free imports is high, there may be substantial variation between imports of agriculture and nonagricultural products from LDCs.

34. The recent trends in world trade revealed the increasing importance of developing countries' demand as a source of growth for international trade. Growth in South-South trade has generally exceeded that of world trade over the past 15years. With this strong trend, share of South-South trade in total world trade climbed from 8percent in 1990 to more than 16percent in 2005. As a result, the issue of market access to developing countries is of growing importance to the LDCs.

35. Since 1989, some developing countries have been providing duty-free access to a limited number of products from LDCs under the Global System of Trade Preference (GSTP).[footnoteRef:9] These preferences, which are still of limited importance, are complemented by a series of bilateral or regional preferential market access schemes, as well as a few non-reciprocal preferential schemes. Since much of South-South trade, especially for processed goods, occurs at intra-regional level, trade preferences given under these regional trade agreements have gained relevance in some cases. [9: In the first round of GSTP, eleven developing countries made specific concessions to their LDC partners. A new round was launched at UNCTADXI in Brazil in 2004, with the objective of extending the commitments in favour of LDCs. ]

36. Although a number of developing countries have some measures in favour of LDCs, preferential access granted by developing countries to the LDCs as a group is still limited (see the Table in the Annex). The general pattern emerging from the table is that duty-free access is usually granted on an MFN basis. It focuses on raw commodities and petroleum rather than on manufactured or agricultural goods. It may also be noted that duty-free treatment, including preferential and MFN, across these goods is asymmetric. While Thailand is accepting 64percent of agricultural imports on a duty-free basis, in Korea the duty-free access is principally granted to nonagricultural products (75percent in terms of import value).

37. This paper argues in favour of a scenario for a successful conclusion of the DDA including a development package. This development package needs to encompass both full free market access for the poorest countries, as well as allow for the increased disbursement of aid to assist those countries in benefiting from open markets. A word on aid. Trade opening is WTO's core business. Providing financial aid for trade is not within WTO's mandate. However, in recognition of the fact that African countries also require assistance to enhance their capacity to benefit from open trade, the WTO, in collaboration with other IGOs, is working to implement the Aid for Trade initiative. WTO Ministers at HongKong have given WTO a mandate to work as a catalyst in this area [footnoteRef:10]. WTO 's main role and contribution to the Aid for Trade initiative, as mandated in HongKong, is to provide a platform for periodic monitoring and review of whether Aid for Trade is being adequately funded by donors and delivering the expected results. There is no specific Aid for Trade Fund. Simply put, the Aid for Trade initiative aims to increase the totality of assistance provided by donors around the world, which is dedicated to trade capacity building. The Aid for Trade initiative is about assisting developing countries to increase export of goods and services, to integrate into the multilateral trading system, and to benefit from liberalized trade and increased market access. To fulfil the Aid for Trade initiative, predictable, sustainable and effective financing from donors (through their bilateral and regional aid cycles) and agencies is fundamental. Aid for Trade can thus address supply-side constraints facing African countries including those related to infrastructure, productive capacity and adjustment support. In this regard, WTO is in the process of finalizing preparations for the first global aid for trade review meeting to be held in November2007 in Geneva. This meeting has been preceded by three regional Aid for trade reviews, in Lima, in Manila and recently in Dar-es-Salaam, for the African countries. Aid for Trade is not a substitute for a successful DDA. It is also not a substitute for the right domestic policies. But Aid for Trade is an increasingly important and necessary complement. [10: WT/MIN(05)/DEC, paragraph 57.]

38. For LDCs, the key pillar in the much larger Aid for Trade edifice is the Integrated Framework (IF). The IF is an international initiative through which the IMF, ITC, UNCTAD, UNDP, the World Bank and WTO combine their efforts with those of the LDCs and donors to respond to the trade development needs of LDCs. Its two main objectives are a coordinated delivery of trade related assistance and assisting LDCs in the mainstreaming of their trade policy into their overall national development strategies. The IF provides the concrete mechanism through which LDCs can access Aid for Trade[footnoteRef:11]. It is in the process of being enhanced. At the WTO Hong Kong Ministerial Conference, Ministers reaffirmed their commitment to better integrate LDCs into the multilateral trading system and endorsed the three elements that would constitute the enhanced IF (EIF): (i)provide increased, predictable and additional funding on a multi-year basis; (ii)strengthen the IF incountry, including through mainstreaming trade into national development plans and poverty reduction strategies; more effective follow-up to diagnostic trade integration studies (DTIS) and implementation of action matrices; and achieving greater and more effective coordination amongst donors and IF stakeholders, including beneficiaries; and (iii)improve the IF decision-making and management structure to ensure an effective and timely delivery of the increased financial resources and programmes. The IF Secretariat is housed at the WTO. A High Level Pledging Conference for the IF has taken place in Stockholm last September where donors pledged around $US170million for all IF LDCs for a period of five years. [11: see the IF website: www.integratedframework.org]

Conclusion

39. It has been demonstrated that a targeted "development package" coming out of the DDA, including total free market access (100percent duty-free, quota-free market access) plus aid to help the poorest countries to build their competitive advantage and increase their exports is indispensable for the African countries to emerge as winners from the DDA. This is in the realm of the possible as WTO Ministers took a Decision to accord duty-free and quota-free market access to the LDCs. Moreover, while it is not within the mandate of the WTO to provide funding for trade-capacity building development projects, outside of its own TA activities, it acts as a catalyst to generate additional aid for trade funds from donors. Recent developments in the Integrated Framework for LDCs, important pillar in the Aid for Trade construction, demonstrate that there is a global commitment in the donor community to make trade work for development. However, aid is not a substitute for a successful outcome of the DDA. It is now up to the DDA negotiators to make good on the middle word of the DDA: development. African negotiators must continue to play their part in this.

2

Table: Tariff treatment of LDC exports in selected developed markets, 2005

Market

Sector

NUMBER OF TARIFF LINES

IMPORTS (Million US$ and percentage)

MFN

LDC Beneficiaries

Total

LDCs

With imports

Dutiable MFN imports

LDC Scheme

Total

Dutiable

Duty-free status (%)

Total

With imports

Dutiable tariff lines

Dutiable tariff lines

Dutiable imports

Tariff lines

Imports

Australia

Total

6,124

5,669

3,209

853

536

0

0

118,200.9

153.0

0.0

100.0

100.0

Agriculture

775

637

215

100

29

0

0

5,086.3

16.9

0.0

100.0

100.0

Non-agriculture

5,193

4,894

2,984

735

507

0

0

104,320.5

94.6

0.0

100.0

100.0

Ores

33

26

0

2

0

0

0

209.9

0.1

0.0

100.0

100.0

Petroleum

4

3

0

2

0

0

0

8,037.1

39.3

0.0

100.0

100.0

Raw materials

119

109

10

14

0

0

0

547.1

2.1

0.0

100.0

100.0

Canada

Total

8,607

8,371

4,133

1,758

981

96

1

306,331.7

1,566.7

5.3

98.9

99.7

Agriculture

1,389

1,281

837

271

124

96

1

17,211.7

22.8

0.0

93.1

100.0

Non-agriculture

7,063

6,939

3,279

1,449

857

0

0

263,655.8

798.6

5.3

100.0

99.3

Ores

33

30

0

6

0

0

0

1,817.7

17.9

0.0

100.0

100.0

Petroleum

1

1

0

1

0

0

0

18,096.2

726.0

0.0

100.0

100.0

Raw materials

121

120

17

31

0

0

0

5,550.3

1.4

0.0

100.0

100.0

European Communities

Total

10,096

9,817

7,365

3,595

2,703

30

5

1,316,478.0

19,621.1

399.6

99.7

98.0

Agriculture

2,073

1,858

1,682

544

389

7

3

76,374.0

1,962.6

147.7

99.7

92.5

Non-agriculture

7,829

7,770

5,655

2,982

2,307

23

2

946,330.9

10,578.8

251.9

99.7

97.6

Ores

41

39

0

13

0

0

0

16,764.9

861.6

0.0

100.0

100.0

Petroleum

2

2

0

2

0

0

0

209,383.5

4,734.1

0.0

100.0

100.0

Raw materials

151

148

28

54

7

0

0

67,624.6

1,484.0

0.0

100.0

100.0

Japan

Total

9,255

8,205

5,539

791

496

1,284

81

507,975.7

3,476.2

2,532.6

86.1

27.1

Agriculture

1,852

1,442

1,407

121

61

940

32

42,791.5

214.1

5.6

49.2

97.4

Non-agriculture

7,235

6,610

4,119

648

433

341

47

328,178.9

786.3

77.4

95.3

90.2

Ores

37

31

0

4

0

0

0

14,275.6

23.6

0.0

100.0

100.0

Petroleum

2

2

2

1

1

2

1

79,772.9

2,449.6

2,449.6

0.0

0.0

Raw materials

129

120

11

17

1

1

1

42,956.8

2.6

0.0

99.2

99.9

New Zealand

Total

7,432

6,560

3,197

541

370

47

1

26,032.3

139.9

0.1

99.4

99.9

Agriculture

1,026

806

365

65

21

43

1

1,992.6

4.1

0.1

95.8

97.0

Non-agriculture

6,258

5,642

2,828

465

349

4

0

22,147.7

7.8

0.0

99.9

100.0

Ores

33

11

0

0

0

0

0

1.0

0.0

0.0

100.0

n.a.

Petroleum

1

1

0

1

0

0

0

1,624.0

118.6

0.0

100.0

100.0

Raw materials

114

100

4

10

0

0

0

267.1

9.3

0.0

100.0

100.0

Norway

Total

7,198

6,593

1,161

609

232

0

0

55,306.4

138.7

1.3

100.0

99.1

Agriculture

1,362

1,104

833

73

26

0

0

3,410.0

16.6

0.0

100.0

100.0

Non-agriculture

5,678

5,370

328

533

206

0

0

50,611.8

83.1

1.3

100.0

98.4

Ores

33

13

0

1

0

0

0

323.5

9.3

0.0

100.0

100.0

Petroleum

2

2

0

1

0

0

0

441.1

29.8

0.0

100.0

100.0

Raw materials

123

104

0

1

0

0

0

520.0

0.0

0.0

100.0

100.0

Switzerland

Total

8,482

7,879

7,037

754

641

1,172

31

126,115.2

146.1

5.0

86.2

96.6

Agriculture

2,232

1,822

1,925

134

107

1,161

31

7,317.3

44.0

4.9

48.0

88.9

Non-agriculture

6,084

5,913

5,051

610

527

11

0

113,168.8

98.0

0.1

99.8

99.9

Ores

33

24

0

0

0

0

0

2.6

0.0

0.0

100.0

n.a.

Petroleum

2

1

0

0

0

0

0

1,931.4

0.0

0.0

100.0

n.a.

Raw materials

131

119

61

10

7

0

0

3,695.0

4.1

0.0

100.0

100.0

United States

Total

11,202

10,666

6,623

1,653

1,078

1,812

585

1,597,342.7

18,184.9

5,379.2

83.8

70.4

Agriculture

1,810

1,547

1,424

208

125

274

4

61,303.5

260.9

0.8

84.9

99.7

Non-agriculture

9,212

8,948

5,171

1,411

947

1,538

581

1,329,428.5

6,741.6

5,378.4

83.3

20.2

Ores

43

38

10

4

1

0

0

2,541.4

62.3

0.0

100.0

100.0

Petroleum

2

2

2

2

2

0

0

129,081.6

10,804.4

0.0

100.0

100.0

Raw materials

135

131

16

28

3

0

0

74,987.6

315.8

0.0

100.0

100.0

n.a.:not applicable.

Source:WTO, UNCTAD, ITC.

Table: Tariff treatment of LDC exports in selected developing markets, 2005

Market

Sector

NUMBER OF TARIFF LINES

IMPORTS (000'000s US $)

MFN

LDC Beneficiaries

Total

LDCs

With imports

Dutiable MFN imports

LDC Scheme

Total

Dutiable

Duty-free status (%)

Total

With imports

Dutiable tariff lines

Dutiable tariff lines

Dutiable imports

Tariff lines

Imports

China

Total

7,550

6,945

6,912

684

581

-

-

602,731.7

15,267.1

1,138.8

8.5

92.5

Agriculture

1,085

826

1,004

79

77

-

-

24,909.2

672.7

672.5

7.5

0.0

Non-agriculture

6,277

5,950

5,761

555

475

-

-

494,917.1

903.1

450.3

8.2

50.1

Ores

37

27

11

19

0

-

-

25,937.4

363.8

0.0

70.3

100.0

Petroleum

1

1

0

1

0

-

-

47,722.8

13,311.5

0.0

100.0

100.0

Raw materials

150

141

136

30

29

-

-

9,245.2

15.9

15.9

9.3

0.2

India

Total

11,693

9,854

11,406

1,585

1,511

11,406

1,511

148,339.5

2,278.5

2,264.1

2.5

0.6

Agriculture

1,490

998

1,452

299

278

1,452

278

5,472.2

793.9

781.9

2.6

1.5

Non-agriculture

9,907

8,631

9,658

1,243

1,190

9,658

1,190

85,922.3

1,384.5

1,382.1

2.5

0.2

Ores

60

41

60

7

7

60

7

1,550.0

13.5

13.5

0.0

0.0

Petroleum1

1

1

1

0

n.a

1

n.a

39,099.5

n.a

n.a

0.0

n.a.

Raw materials

235

183

235

36

36

235

36

16,295.4

86.6

86.6

0.0

0.0

Korea, Republic of

Total

11,261

10,136

9,763

791

703

9,547

654

261,236.5

1,122.3

810.4

15.2

27.8

Agriculture

1,537

1,238

1,507

78

77

1,460

70

10,982.2

26.4

19.4

5.0

26.4

Non-agriculture

9,443

8,655

7,975

696

609

7,822

568

184,372.0

408.5

103.6

17.2

74.6

Ores

48

33

48

2

2

41

2

5,157.0

103.6

103.6

14.6

0.0

Petroleum

10

9

10

4

4

10

4

42,605.8

583.7

583.7

0.0

0.0

Raw materials

223

201

223

11

11

214

10

18,119.4

0.2

0.2

4.0

7.4

Singapore

Total

10,688

10,284

6

2,393

2

-

-

198,299.1

459.3

1.1

99.9

99.8

Agriculture

1,216

1,106

6

285

2

-

-

5,256.2

71.6

1.1

99.5

98.4

Non-agriculture

9,294

9,025

0

2,093

0

-

-

172,058.4

274.3

0.0

100.0

100.0

Ores

36

22

0

0

0

-

-

44.3

0.0

0.0

100.0

n.a.

Petroleum

2

2

0

2

0

-

-

18,504.4

112.2

0.0

100.0

100.0

Raw materials

140

129

0

13

0

-

-

2,435.9

1.2

0.0

100.0

100.0

Taipei, Chinese

Total

8,839

8,015

6,108

601

463

-

-

177,585.0

1,768.0

51.0

30.9

97.1

Agriculture

1,421

1,144

1,085

77

51

-

-

7,307.0

95.9

15.6

23.6

83.7

Non-agriculture

7,210

6,695

4,979

515

411

-

-

143,191.4

122.5

35.4

30.9

71.1

Ores

40

27

0

2

0

-

-

947.3

0.0

0.0

100.0

100.0

Petroleum

2

1

1

1

0

-

-

18,235.7

1,549.3

0.0

50.0

100.0

Raw materials

166

148

43

6

1

-

-

7,903.5

0.3

0.0

74.1

99.7

Thailand

Total

5,505

5,214

5,256

1,065

1,012

-

-

115,672.9

3,595.0

2,369.2

4.5

34.1

Agriculture

768

666

727

156

148

-

-

4,370.8

179.8

64.6

5.3

64.1

Non-agriculture

4,592

4,417

4,401

884

847

-

-

90,367.0

855.5

789.0

4.2

7.8

Ores

33

25

33

4

4

-

-

292.8

9.1

9.1

0.0

0.0

Petroleum

1

1

0

1

0

-

-

16,903.6

1,038.1

0.0

100.0

100.0

Raw materials

111

105

95

20

13

-

-

3,738.7

1,512.5

1,506.4

14.4

0.4

Notes:1Imports of crude petroleum are not broken down by partner country.

n.a.: not applicable.

''-': data on preferential treatment of LDC exports is not available.

Source:WTO, on the basis of WTO, UNCTAD and ITC data.