WTO Ministerial Conference in Hong Kong December 2005: Deputy Minister briefing

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ECONOMIC AFFAIRS SELECT COMMITTEE

ECONOMIC AFFAIRS SELECT COMMITTEE
9 May 2006
WTO MINISTERIAL CONFERENCE IN HONG KONG DECEMBER 2005: DEPUTY MINISTER BRIEFING


Chairperson: Ms N Ntwanambi (ANC)

Documents handed out:
G-20 Statement to the Trade Negotiating Committee
NAMA 11 Statement

SUMMARY
The Deputy-Minister of Trade and Industry briefed the Committee on latest developments in the World Trade Organisation negotiation process. The deadline of the 30 April 2006 for full modalities for agriculture had been missed. Key issues and challenges were outlined. The process sought to reduce imbalances and inequities within the trade system. Trade distorting domestic support mechanisms were targeted for reduction. The developed countries sought greater access to developing world markets.

Members asked certain questions including the introduction of new forms of trade blockage, hidden agendas within the process, the role of the G20 countries, the position of the World Bank, the need for a common African position, how deadlocks were resolved and the role of civil society groups in advocacy.

MINUTES
Mr R Davies (Deputy-Minister of Trade and Industry) provided information on the latest developments in the trade negotiation process within the World Trade Organisation (WTO). The WTO Chairperson’s introductory statement and the G20 statement were provided. Full modalities in agriculture should have been in place by the 30 April 2006. The Doha round of trade talks could collapse if a breakthrough was not achieved by July 2006. Issues and challenges were outlined in the negotiating process. The focus was on reducing imbalances and inequities within the developing world sector. Export subsidies were an important component of the negotiations. An end-date should be determined for export subsidies. Different categories of domestic support had been identified that were trade distorting. Such support mechanisms would be reduced. The developed world tended to set tariff barriers for competitive products. A two-way process of demands would be maintained. The US wanted high tariffs in general for non-agricultural products to be reduced. Subsidies should have been removed at Hong Kong in December 2006. Tariffs would have to be reduced. The United States and the European Union request a more attractive offer from the advanced industrial countries. Agriculture was an important issue for the developing world. The EU might offer a new negotiating mandate pertaining to agricultural tariffs. Nedlac partners would be involved in discussions to determine acceptable tariff reductions.

Discussion
Mr J Sibiya (ANC-Limpopo) noted the emergence of new blockages to free trade and asked whether a referee existed within the World Trade Organisation to monitor developments. Trade agreements should be based on mutually-beneficial agreements. Hidden rivalries and national interests appeared to plague the process.

Ms S Mabe (ANC-Free State) sought clarity on the role of the G20 countries in influencing policy developments within the WTO. Clarity was sought on the deadline for agricultural markets. She asked for a progress report on the intellectual property market negotiations.

Mr Hendricks asked whether the World Bank and the International Monetary Fund had hidden agendas in relation to developing countries.

Mr D Mkono (ANC-Eastern Cape) declared that Africa had to formulate a sound strategy to achieve optimal concessions at the WTO.

Mr Davies responded that the international trade negotiation process was uneven and unequal. The developing world had gained more influence but remained marginalized to some extent. The demands of developing countries could not be ignored. The rebalancing of the trade environment would involve a concession from all parties. The WTO is a multi-lateral organisation as opposed to the World Bank where economic strength was paramount. The WTO operated on the basis of a consensus between various positions. The G20 could not be perceived as the majority within the WTO but was influential within the organisation. Least developed countries had no tariff reductions to make in the current round. 27 developing countries could make tariff cuts. The agricultural group could be effective if agreements could be reached on agricultural adjustments. The farming community in the developed world was small but highly influential and resisted further reforms. Ambitious demands had been directed at the developing world. The value of a country’s preference would be reduced by tariff reductions. For example, the value of duty free would be curtailed if tariffs were reduced. Certain compensations would be awarded for loss of preference. Attempts would be made to divide the developing world. Many deadlines for agricultural markets had been missed. The July deadline was perceived as the last chance. The US was attempting to slow up a new Farm Bill to hinder the agricultural negotiations. Intellectual property was not a major issue in the current round of negotiations. The EU wanted to extend recognition of geographical indications. The WB and the IMF were not directly involved in the negotiation process.

The Chairperson asked whether the Francophone states in Africa tended to divide African consensus.

Mr Davies declared that the Francophone states were not a dividing issue. The African group tended to function effectively. The US and the EU wanted advanced developing countries to open up their markets further. The developing world would have to guard against ulterior motives.

Mr Kolweni (ANC) asked for clarity on the beneficiation issue in trade negotiations.

Mr D Gamede (ANC-Kwazulu-Natal) asked how a deadlock situation could be resolved.

Ms M Temba (ANC-Mpumalanga) asked whether local industrial sectors contributed to the overall African proposal.

Mr Davies stated that beneficiation was relevant for tariff escalations. Developing countries had to add value to agricultural products. Beneficiated products attracted higher export duties. The outcome of a deadlock depended on the size of countries involved and the nature of the dispute. The agricultural sector experienced the biggest distortion in trade. The developing world had to ensure that decisions were made collectively in terms of the agriculture sector.

Mr J Sibiya (ANC-Limpopo) asked whether Africa possessed sufficient amounts of think-tanks and civil society groups to consider all pertinent issues and formulate a common response to trade-related challenges.

Mr Davies stated that a number of think-tanks existed within civil society that provided advocacy on trade negotiations. The developing world had to promote interaction with the least-developed world to avoid divisive tactics by the developed world. The amalgamation of the various positions of the G90 countries had to be actively pursued.

The meeting was adjourned.

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