WTO Doha Round Framework Package - July 2004

Agreement on Doha "Framework Package" in Geneva

The General Council of the World Trade Organization agreed on 31 July to adopt a Framework Package that will guide the next phase of the WTO Doha Round negotiations. 

This "Framework Package" put the Round back on track and was a significant step forward towards concluding the Doha Round negotiations. The package includes an overarching General Council Decision and Annexes providing negotiating frameworks for agriculture, non-agricultural market access, services and trade facilitation. The General Council Decision also addresses a range of development issues and includes agreement that three so-called "Singapore Issues" (competition policy, investment and transparency in government procurement) will not be included in the Doha Round.

The "Framework Package" provides a solid basis for Australia to pursue our objective of maximising market access in agriculture, services and industrial products and to remove distortions in international trade that hinder the competitiveness of our exporters.

Outcome:

Lead-up to the July Package

The "Doha Round" of WTO multilateral trade negotiations was launched in Doha, Qatar, in November 2001. This was the first Round to be launched under the new World Trade Organisation, the successor to the GATT. The Doha Ministerial Declaration mandated negotiations among WTO members to further progress global trade liberalisation in agriculture, non-agricultural market access (industrial products) and services. The Declaration also contained a commitment by WTO members to address the needs and interests of developing countries in the negotiations and to resolve a number of concerns raised by developing countries about difficulties they were experiencing in implementing the WTO Agreement. At Doha, it was also decided that work should commence within the WTO on elaborating new disciplines on what are called the "Singapore Issues" - after the Second WTO Ministerial Conference in Singapore in December 1996 at which they were proposed. These issues are trade facilitation (improvements in customs, transit and border procedures), competition policy, investment and transparency in government procurement.

Discussions and negotiations then commenced to develop a framework agreement which would establish the commitments that members would have to make to meet the goals agreed at Doha. This agreement would then guide the next phase of more detailed negotiations on the specific modalities of these commitments. This process suffered a setback in September 2003 when the Cancún Ministerial Conference was unable to reach agreement on a text for this framework.

Following a period of reflection, momentum returned to the Doha Round in 2004 with re-engagement by major players such as the EU and US and key developing countries. The Cairns Group, under Australian leadership, was particularly active in efforts to re-engage the G20 group of developing countries in seeking common ground on agricultural reform. The key agriculture players in the negotiations - Australia, the US, the EU, India and Brazil - also met a number of times at Ministerial level as the "Five Interested Parties" to attempt to clarify and resolve as many differences as possible before the July meeting.

In the margins of the Annual OECD Ministerial Council meeting in Paris in May 2004, key WTO Ministers decided to make a high-level commitment to push again for conclusion of a framework package by the end of July"s General Council meeting in Geneva. APEC Ministers Responsible for Trade lent their strong support to this goal in their Declaration from Pucon, Chile in June. Ministers from the G20, the Africa Union and the G90 group of developing countries also met in the first half of 2004 and committed themselves to working towards a July outcome.

Agriculture

The 2001 Doha mandate on agriculture calls for reforms across three "pillars" substantial improvements in market access, substantial reductions in domestic support and the phasing out with a view to total elimination of all export subsidies. The Cairns Group coalition of 17 agricultural fair traders, chaired by Australia, played a key role in framing this mandate and has continued to work since to set the ongoing negotiating agenda and to press the WTO membership to step up and meet the ambition of the Doha mandate.

The agriculture negotiating framework (Annex A) secures an historic commitment to eliminate export subsidies, the worst form of agricultural subsidy. Important new disciplines have also been agreed to remove unfair, subsidized competition through government-supported export credit programs and to set up new arrangements to manage food aid in ways which does not damage commercial trade.

Big cuts in the other domestic support provided to farmers by many wealthy countries have also been foreshadowed. The text provides for both an overall cut and for reductions in Amber box, de minimis and blue box support. The EU and the US have agreed, in the framework, to a down payment reduction of 20% in trade distorting farm support in the first year after the negotiations are completed.

The market access part of the framework agreement provides for substantial tariff reductions leading to substantial access improvements for all products. This will be negotiated through a tiered formula which ensures that higher tariffs are subject to deeper cuts. There is provision for designating some sensitive products which will not be subject to the full effect of the tariff reductions. These will be designated using tariff lines and will still be subject to the requirement of substantial improvement in market access, through a combination of tariff rate quota expansion and tariff reductions. The agreement is not as ambitious as Australia had argued for on market access, but it sets out an approach to tariff cuts and market opening which is much stronger than the proposal we were faced with last year in Cancún .

Non-Agricultural Market Access (Industrial Products)

The Doha mandate on industrial products provides for negotiations on non-agricultural market access (NAMA) on reduction or elimination of tariffs, including by addressing tariff peaks, high tariffs and tariff escalation, as well as non-tariff barriers. All products are to be covered with no exclusions. Australia is a major exporter of industrial products with our ability to increase such exports dependent upon our ability to penetrate new and existing markets. This is why we have worked hard in Geneva to preserve the possibility of an outcome to the Round that meets the Doha level of ambition.

The non-agricultural products negotiating framework (Annex B) essentially replicates the text that was presented at the Cancún Ministerial Meeting last year (known as the Derbez text). It includes a non-linear (or harmonising) formula approach to reducing tariffs across-the-board to a similar level, thereby reducing tariff peaks and tariff escalation as required under the Doha mandate. There is also the option of supplementing the formula with sectoral initiatives. However, other provisions lessen the impact of the formula on tariff reductions, particularly through extensive flexibility provided to developing countries.

As a number of WTO members had difficulties with the adoption of the Derbez text unchanged it was agreed that Annex B would be presented as containing the "elements" for future work on modalities by the Negotiating Group on Market Access, while acknowledging that additional negotiations would be required to reach agreement on the specifics of these elements.

Services

Under the timetable agreed by WTO Trade Ministers at Doha, members were expected to lodge initial requests for specific commitments by 30 June 2002, while initial offers were due by 31 March 2003.

Negotiations have been progressing steadily. By April 2004, 42 offers had been made, covering 57 WTO members (the EC offer also covers the 15 EU members). However the pace of the services negotiations slowed after Cancún. Annex C of the framework package reiterates calls on members who have not done so to submit offers as soon as possible and the General Council Decision calls for all members to submit improved offers by May 2005.

Australia has a wide breadth of services interests - which range from professional, financial and education services through to mining, environmental and private hospital services - reflecting our status as a vibrant and rapidly growing services exporter, with geographically diverse trading interests. For this reason, and because of the growing importance of global services trade, Australia joined others in successfully pressing for the services negotiations to be highlighted in the General Council Decision by giving it a stand-alone paragraph, placing services on the same footing as the negotiations on agriculture and non-agricultural market access.

Development Issues

At Doha WTO Ministers agreed to place the needs and interests of developing country members at the heart of the WTO work programme. This is addressed in the framework by its extensive recognition and integration of special and differential treatment, technical assistance and capacity building. Appropriate S&D provisions allow developing countries to engage in commitments and further integrate themselves into the multilateral trading system, while also providing the flexibility to adjust to the transition this involves. The General Council Decision reaffirms WTO members" commitment to the provision of such flexibility and to taking developing country concerns into consideration in the future negotiations on modalities for agricultural and non-agricultural market access. The framework package also recognises the particular difficulties of least developed countries (LDCs) - they have effectively been exempted from making any new commitments under the Doha Round for agriculture or industrials.

However Australia considers that the framework agreement most directly addresses the needs of developing countries by encouraging economic reform, by creating the conditions for global improvements in market access - particularly in agriculture, industrial products and services - and through removing agricultural subsidies in developed countries which negatively impact on the competitiveness of developing country products.

Trade Facilitation

The General Council Decision, by explicit consensus, launches negotiations on trade facilitation. Annex D provides the modalities for negotiations that will be aimed at improving the efficiency of the global movement of goods, for example through improved and streamlined customs and border control procedures.

Annex D also recognises the particular difficulties faced by developing countries in having the financial and technical capacity to undertake such improvements and includes commitment by developed country members to provide technical assistance and support for capacity building.