doha development agenda (dda)

8/4/2019 Doha Development Agenda (Dda)

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DOHA DEVELOPMENT AGENDA

(DDA)


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What is the DOHA DEVELOPMENT AGENDA?

The Doha Development Round or Doha Development Agenda (DDA) is the currenttrade-negotiation round of the World Trade Organization (WTO) which commenced inNovember 2001. Its objective is to lower trade barriers around the world, which will helpfacilitate the increase of global trade. As of 2008, talks have stalled over a divide onmajor issues, such as agriculture, industrial tariffs and non-tariff barriers, services, andtrade remedies. The most significant differences are between developed nations led bythe European Union (EU), the United States (USA), and Japan and the major developingcountries led and represented mainly by Brazil, China, India, South Korea, and SouthAfrica. There is also considerable contention against and between the EU and the USAover their maintenance of agricultural subsidiesseen to operate effectively as trade

barriers. The Doha round was to be an ambitious effort to make globalization moreinclusive and help the world's poor, particularly by slashing barriers and subsidies infarming.

The Doha Round began with a ministerial-level meeting in Doha, Qatar in 2001.Subsequent ministerial meetings took place in Cancn, Mexico (2003), and Hong Kong(2005). Related negotiations took place in Geneva, Switzerland (2004, 2006, 2008);Paris, France (2005); and Potsdam, Germany (2007).

The most recent round of negotiations, 2329 July 2008, broke down after failing toreach a compromise on agricultural import rules. After the breakdown, majornegotiations were not expected to resume until 2009. Nevertheless, intense negotiations,mostly between the USA, China, and India, were held in the end of 2008 in order to agreeon negotiation modalities. However, these negotiations did not result in any progress.


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WHAT ARE ITS OBJECTIVES?

Making Globalisation Work for the Poor

reducing trade barriers will be an important objective for negotiations

and building developing countries negotiating capacity.

The programme encompasses strengthened rules, and specific

commitments on government support and protection for agriculture.The purpose is to correct and prevent restrictions and distortions in

world agricultural markets

Without prejudging the outcome, member governments commit

themselves to comprehensive negotiations aimed at:

market access: substantial reductions in tariffs and restrictions

exports subsidies: reductions of, with a view to phasing out, all forms of

these

domestic support: substantial reductions for supports that distort trade


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Who are participants of the DDA?

144 countries which make up the WTO

Included are the trade blocs of developing

and industrialized nations: the G20.

spearheaded by the G4 (the People's

Republic of China, India, Brazil, and South

Africa).

The European Union

The USA


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While the General Agreement on Tariffs and Trade(GATT) rounds were successful in considerably reducingtariffs on non-sensitive manufactured goods, leaving themost difficult items to be tackled in the Doha Round.These items include agricultural export subsidies,domestic support for agriculture, agricultural tariffreductions, trade in services, anti-dumping duties, and

the rules governing RTAs. Also, the non-uniformity ofcuts in tariffs and non-tariff barriers to trade (NTBs)resulting from compromises in earlier rounds has beenproblematic because it can create its own distortions.Hence, the Doha Round has been particularly difficult.


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PROBLEMS/ISSUES

AGRICULTURE

Agriculture has become the most important and controversial issue. Agriculture isparticularly important for developing countries, because around 75% of the populationin developing countries live in rural areas, and the vast majority are dependent onagriculture for their livelihoods.

In the decades-old debate over the global role of the World Trade Organization,agriculture is a constant point of reference -- particularly for those who question theorganization's ability to make progress in leveling the playing field. Developing countries,many of them reliant on agriculture, have long wanted rich countries to stop subsidizingtheir farmers' production and lower tariffs. In exchange, wealthy countries are arguingagainst a proposal for a safety-net tariff mechanisms for developing countries; whenprices fall or when imports rise too high, poor countries could charge substantially moreat the ports to make sure local producers are protected. For more than three decades,during seven rounds of multilateral talks that finished with the Tokyo round in 1979,attempts to reach a deal on agricultural trade liberalization failed.

In the ongoing Doha Development Agenda round of talks, agriculture has again takencenter stage. Initiated in 2001, the negotiations had stalled by December 2008 asmembers became deadlocked, once again, over farming sector subsidies, tariffs, andother protections. WTO member countries have vowed to rev up talks in an effort toconclude the round in 2011, but so far this year there seems to have been little concrete

progress. After 10 years of Doha negotiations, there is increasing concern that if the talksare not completed this year, then the round may be abandoned.


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An agricultural subsidy is a governmental subsidy paidto farmers and agribusinesses to supplement their income, manage thesupply of agricultural commodities, and influence the cost and supplyof such commodities

Although some critics and proponents of the World Trade Organizationhave noted that export subsidies, by driving down the price ofcommodities, can provide cheap food for consumers in developingcountries, low prices are harmful to farmers not receiving the subsidy.Because it is usually wealthy countries that can afford domesticsubsidies, critics argue that they promote poverty in developingcountries by artificially driving down world crop prices. Agriculture isone of the few areas where developing countries have a comparativeadvantage, but low crop prices encourage developing countries to bedependent buyers of food from wealthy countries. So local farmers,instead of improving the agricultural and economic self-sufficiency oftheir home country, are instead forced out of the market and perhapseven off their land. This occurs as a result of a process known as

"international dumping" in which subsidized farmers are able to"dump" low-cost agricultural goods on foreign markets at costs thatun-subsidized farmers cannot compete with. Agricultural subsidiesoften are a common stumbling block in trade negotiations. In 2006,talks at the Doha round of WTO trade negotiations stalled because theUS refused to cut subsidies to a level where other countries' non-subsidized exports would have been competitive.


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Antidumping

A product is considered to have been dumped if the export price is less than the pricecharged in the producing country for the same product.

If a company exports a product at a price lower than the price it normally charges on itsown home market, it is said to be dumping the product. Is this unfair competition?Opinions differ, but many governments take action against dumping in order to defendtheir domestic industries. The WTO agreement does not pass judgement. Its focus is onhow governments can or cannot react to dumping it disciplines anti-dumping actions,

and it is often called the Anti-Dumping Agreement. the WTO agreement allowsgovernments to act against dumping where there is genuine (material) injury to thecompeting domestic industry. In order to do that the government has to be able to showthat dumping is taking place, calculate the extent of dumping (how much lower theexport price is compared to the exporters home market price), and show that thedumping is causing injury or threatening to do so.

GATT allows countries to take action against dumping. The Anti-Dumping Agreementclarifies and expands Article 6, and the two operate together. They allow countries to actin a way that would normally break the GATT principles of binding a tariff and notdiscriminating between trading partners typically anti-dumping action meanscharging extra import duty on the particular product from the particular exportingcountry in order to bring its price closer to the normal value or to remove the injury todomestic industry in the importing country.


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Subsidies

WTO disciplines the use of subsidies, and it regulates the actions countries can take to counter

the effects of subsidies. It says a country can use the WTOs dispute settlement procedure toseek the withdrawal of the subsidy or the removal of its adverse effects. Or the country canlaunch its own investigation and ultimately charge extra duty (known as countervailing duty)on subsidized imports that are found to be hurting domestic producers.

Prohibited subsidies: subsidies that require recipients to meet certain export targets, or touse domestic goods instead of imported goods. They are prohibited because they arespecifically designed to distort international trade, and are therefore likely to hurt othercountries trade. They can be challenged in the WTO dispute settlement procedure where theyare handled under an accelerated timetable. If the dispute settlement procedure confirms thatthe subsidy is prohibited, it must be withdrawn immediately. Otherwise, the complainingcountry can take counter measures. If domestic producers are hurt by imports of subsidizedproducts, countervailing duty can be imposed.

Actionable subsidies: in this category the complaining country has to show that the subsidyhas an adverse effect on its interests. Otherwise the subsidy is permitted. The agreementdefines three types of damage they can cause. One countrys subsidies can hurt a domesticindustry in an importing country. They can hurt rival exporters from another country when the

two compete in third markets. And domestic subsidies in one country can hurt exporterstrying to compete in the subsidizing countrys domestic market. If the Dispute Settlement Bodyrules that the subsidy does have an adverse effect, the subsidy must be withdrawn or itsadverse effect must be removed. Again, if domestic producers are hurt by imports ofsubsidized products, countervailing duty can be imposed.


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Safeguards Safeguards: emergency protection from imports

A WTO member may restrict imports of a product temporarily (take

safeguard actions) if its domestic industry is injured or threatened withinjury caused by a surge in imports.

safeguard measures were always available under GATT (Article 19). However,they were infrequently used, some governments preferring to protect theirdomestic industries through grey area measures using bilateralnegotiations outside GATT, they persuaded exporting countries to restrainexports voluntarily or to agree to other means of sharing markets

The WTO agreement broke new ground. It prohibits grey-area measures, andit sets time limits (a sunset clause) on all safeguard actions.

there is disagreement over the special safeguard mechanism used to protectdomestic farmers in developing countries from agricultural import surges.WTO members have agreed that developing countries will have a specialsafeguard mechanism, and more or less agreed on how big the import increasewould be to trigger a temporary tariff rise. The WTO members also agreed on

how high the rise should be in general. The blockage is about the situationwhere the special safeguard mechanism raises tariffs above commitmentscountries made in their MFN bound rates. India has demanded that developingcountries be allowed to apply high, temporary tariffs in excess of existingbound rates to stem imports above a threshold level that could harm localproducers.


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SPECIAL AND DIFFERENTIAL

TREATMENT S&D Special and Differential Treatment (SDT) consists of measures to compensate developing

countries for the structural asymmetries existing between them and developed countries.These are expressed mainly in reduced access to technology and finance and deficiencies inhuman resources and infrastructure and result in the low systemic competitiveness of thesecountries. SDT compensates for such asymmetries so as to ensure more equitableparticipation in international trade.

Several arguments have been advanced against SDT. First, it is argued that the heterogeneity ofdeveloping countries makes the concept meaningless in practical terms. Many developing

countries have reached the stage of take-off while others have achieved a sufficiently highlevel of economic sophistication for the internal generation of investment and technologicalinnovation necessary to achieve self-sustained growth. A second argument is that SDT is partof the baggage that was dismantled with the liberalization and globalisation processes. Thirdly,SDT is said to be an unnecessary crutch which protects inefficiency and hinders adjustmentto the requirements of global competitiveness. A fourth argument is that SDT is trade-distorting and has encouraged the use of unsustainable subsidies.

The heterogeneity argument is partly valid in the sense that there is a wide variety of

developing countries and the category is barely functional from the trade negotiationsperspective. Nevertheless, several countries, for example those of South East Asia, havereached the take-off stage under conditions different from those sanctioned by the WTO, byusing policies of protection and strong state support for industry.

doha development agenda (dda)

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