Revised WTO texts do not offer much to the developing world

The revised texts for multilateral trade negotiations in agriculture and industrial goods released on July 10 do not offer much to benefit the developing world. There is practically not much difference in spirit of the drafts issued in July and those released in May.

The negotiations on designation of Special Products and use of Special Safeguard Mechanism (SSM) are vital for the developing world in protecting their agriculture and livelihood from a possible surge in cheap imports. The revised draft released by Crawford Falconer has largely disappointed the developing countries.

The May draft had proposed a 30% threshold before the price trigger could be used for SSM. It also said the SSM-supported duty cannot exceed the pre-Doha or Uruguay Round bound rates and that the additional duty shall not exceed 50% of the difference between the import price and the trigger price. These provisions would render application of SSM almost difficult and ineffective.

The revised draft has suggested a single option for volume-based trigger for application of SSM as compared to two options suggested in the May draft.

There is, however, a relaxation for least developing countries (LDCs), small vulnerable economies and ?other developing countries??this may possible divide the unity amongst the developing countries, if not tackled effectively.

According to the revised draft, SSM can be used when the import price falls to a trigger price equal to 85% of the average monthly MFN sourced price for that product for the most recent three-year period preceding the year of import. The developing countries represented by G-33 had suggested that the trigger price should be determined on the basis of the average monthly price for the recent three-year period before the year of import.

The revised draft also proposed that an additional duty should not exceed 85% of the difference between the import price and the trigger price. G-33 had suggested that an additional duty can be imposed up to the difference between the import price and the trigger price, so that the new price after the SSM duty can be the trigger price.

While the May draft offers a weak safeguard mechanism for the developing countries? agriculture, it has not done much in calling for a reduction in overall trade-distorting subsidies in developed countries and also for reduction in their high-tariff barriers. The revised draft has not called for a reduction in Blue Box subsidies. There is no change in the revised draft relating to the sensitive products of developed countries.

The revised text has said that developing countries shall be entitled to self-designate Special Products guided by indicators based on the criteria of food security, livelihood security and rural development to the extent of 10% to 18% of tariff lines. However, a footnote said that below this level developing countries need not resort to guidance by these indicators. This implies that above this number, developing countries can designate more SPs provided these are guided by indicators.

The revised draft further said ?up to 6% of the number of tariff lines may have no cut. The overall average cut shall, in any case, be 10-14%?. The July draft has removed option for developing countries to ?transfer? unused entitlement on sensitive products to obtain additional special products?which was available in the May draft.

The revised NAMA draft released by Don Stephenson has sought to take away the flexibilities to industries in the developing countries with the introduction of ?anti-concentration? clause. While the July 2004 Framework agreed that the flexibility cannot be used by developing members to exclude entire HS Chapters, the latest draft suggested restrictions beyond this mandate. Such unduly restrictive clause disregards the realities and sensitivities of the industries in the developing countries. Flexibilities are more needed for the protection of small and medium-sized industries.

The revised NAMA draft still continues to link tariff reduction coefficients with flexibilities. The flexibilities have to be treated on stand-alone basis and there should be no trade-off between flexibilities and tariff reduction coefficients. The latest NAMA draft has also attempted to create a division in the unity of the developing countries by proposing additional flexibilities to some.

The proposal for negotiations in remanufactured goods finds place in the revised draft indicating convergence on this issue, which is far from reality. In the earlier draft, the issue was under the square brackets reflecting lack of consensus on the subject.

The controversial coefficient ranges for developed and developing countries for cutting tariffs through a ?Swiss formula? still remains in the May text as also the percentages of tariff lines that can have flexibilities from the full tariff cuts, according to a ?sliding scale?.