Capitol Comments

WTO Ministerial Meeting Yields Meager Results

By Peter Mayberry and Jessica Franken | February 10, 2006

dispute dominates negotiations

Governmental officials from 149 countries throughout the world came together in Hong Kong December 13-18, 2005 for a ministerial conference convened as part of the World Trade Organization's "Doha Round" of international trade negotiations. And for those who have an interest in agricultural issues, Hong Kong was certainly the place to be in early December. Unfortunately, however, for those of us who have only a passing interest in trade issues involving agriculture, the Hong Kong ministerial conference was somewhat frustrating.

And despite the heavy emphasis on crop issues, when compared to the WTO ministerial conferences held in Seattle during 1999 and the ministerial held in Cancun during 2003, the Hong Kong conference could be characterized as a tremendous success. Indeed, even though there were significant efforts by various protest groups to thwart negations in Hong Kong, the WTO meeting went off fairly smoothly - albeit with one night of serious melees outside the conventional center—and, in the end, a modest agreement was reached, which ensures the survival of the Doha Round for at least a few more months.

That said, however, no one is claiming any real victories from the Hong Kong conference since some major roadblocks still remain, and the clock is ticking (negotiations are slated for completion by the end of 2006). At this point, therefore, it is uncertain whether the Doha Round will ultimately achieve its goal of significantly reducing tariffs charged by member countries all over the world.

For the nonwovens industry, WTO negotiations offer the opportunity to reduce and/or eliminate duties on primary materials, roll goods and converted items traded between developed and developing countries. This is especially important for nonwovens producers in the U.S. because the U.S. unilaterally eliminated the duties on imported roll goods during the "Uruguay Round" negotiations in the early 1990s. This action was taken by the U.S. government despite the fact that virtually all of our trading partners charge some sort of duty on exported roll goods coming from the U.S., and many countries charge tariffs that are in the double digits. Duties on converted items made from nonwoven roll goods entering the U.S. are also amongst the lowest in the world.

It is for these reasons that INDA's International Trade Advisory Board requested that an INDA representative attend the Hong Kong ministerial and seek opportunities to: 1) explain the industry's positions on various international trade issues to as many officials as possible; and 2) cajole anyone and everyone associated with the WTO to keep these negotiations alive. During the entire WTO meeting, a number of opportunities to achieve the first goal (even though almost everyone seemed to be fixated on disputes related to agricultural issues) arose, but several times it appeared that the second goal was in real trouble.

Achievements

The primary objective for the meeting was to agree on a binding declaration that would serve as road map for completing the Doha Round. In essence, the declaration that WTO officials hoped to achieve prior to the conference was a comprehensive set of tariff cuts, reductions in non-tariff barriers to trade, assurances of intellectual property protections, and more. The end result, however, was far less of an achievement.

The biggest success achieved during the Hong Kong conference was an agreement within the declaration whereby all WTO member countries committed to eliminating their domestic agricultural subsidies by the year 2013. But getting to this agreement was the most time consuming and contentious matter of the entire week, and it ultimately represented something of a disappointment to the Office of the U.S. Trade Representative (USTR) which had argued in favor of a 2010 deadline right up until the very end of the negotiations.  

According to U.S. trade officials, the declaration-drafting process was conducted such that, early in the week, WTO staff put out a call early asking 30 different countries to submit papers spelling out areas of agreement they could accept with previous versions of the text. These papers were collected and amalgamated by WTO staff behind closed doors and then presented as a unified document to the negotiators who walked through the document on an item-by-item basis during sessions that ran into the wee hours of the morning.

Reportedly it was a slow, tedious process in which every single word included in the draft was debated, sometimes for hours on end. Pressure was put on the negotiators to adopt as much as possible as often as possible, and sleep deprivation was intentionally adopted as a motivating factor. After this smaller body of WTO members approved a final draft declaration, it was presented to the entire congregation for another review. This document was ultimately adopted at the end of the conference, and has been posted on the internet at www.wto.org.

Even a cursory review of the draft declaration shows how much work remains to be done with this declaration. Sections of the document dealing with agricultural subsides, for instance, do not include any details on how these eliminations will be implemented or reference to any specific percentage reductions. And, with regard to non-agricultural market issues (NAMA), there is no definitive language in the declaration whatsoever.

At issue with regard to NAMA, according to numerous officials involved in the negotiations, is agreement on the rate by which duties will be reduced by WTO countries big and small. According to these sources, it has already been agreed that countries currently charging higher duties will be expected to adopt more aggressive tariff reductions than those who presently charge lower duties. The exact rates of reduction, however, are in dispute. In WTO speak, the members have agreed to adopt two coefficients—one for high tariff countries and another for low tariff charging countries—but they have yet to decide exactly what those coefficients will be.

Furthermore, it has also been agreed that lesser developed countries will be allowed to specify certain non-agricultural products that are exempt from tariff reductions under the Doha Round but, again, specifics related to the number and type of goods that will could be exempted, and the specific countries that will allowed to exempt items, have yet to be released.

What Next?

Even before the ministerial meeting was convened, USTR Robert Portman floated the idea that another meeting would be needed in early 2006 if there were any realistic hope of completing the Doha Round by the end of this year. Sensing that little real progress would be made in a forum as open as a full-blown ministerial meeting, Ambassador Portman called on WTO members to come together again in a more private setting this spring to hash out their differences with fewer distractions.

Due to its frustration over the lack of real progress within the WTO, published reports also note that the Bush Administration is focusing on bilateral trade deals that are far easier to negotiate. The USTR is reportedly seeking free trade agreements with Thailand and South Korea, for instance, and is also working to "intensify" similar negotiations with Peru and Panama.  

No matter what happens, however, time is starting to become a real factor for any trade deal that involves the U.S.. Whether it is a multinational negotiation developed under the WTO or a bilateral deal cut between the U.S. and one of more of our trading partners, no agreement can be put into effect until it is ratified by Congress, and the only way to get an agreement through Congress is through the use of Presidential "trade promotion authority." TPA allows the White House to cut trade deals with other countries and present the results to Congress for an up or down vote, without any amendments, under expedited consideration. Current TPA that was granted to the Bush Administration by Congress will expire in mid 2007.  

U.S. trade officials are already using the looming specter of TPA expiration in their efforts to get trade deals finished quickly. But, with regard to the Doha Round, it is impossible to predict what will happen. This is especially true considering the opportunity that was missed in Hong Kong, only to be replaced with the smaller chance that a break through can be made in Geneva this spring.

Summing up the current situation, therefore, a good description was offered by John Engler, president of the National Association of Manufacturers, in a quote published by the Bureau of National Affairs, "The WTO ministers have kicked the can down the road�leaving [U.S. manufacturers] with four more months wandering around the desert without a compass."

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