Prof. Simon J. Evenett

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The Changing Landscape of NAMA and the Doha Round
Prof. Simon J. Evenett www.evenett.com
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Contents of this presentation

• Chronology of the Doha Round.
• Five important factors that condition progress in
  the Doha Round.
• Spread of regional and bilateral agreements.
• Preference erosion.
• Concluding remarks.

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Chronology of the Doha Round

• Launched at Doha Ministerial in 2001.
• Antecedents Singapore Ministerial.
• Doha Development Agenda.
• Apparent change in priorities of the WTO.
• What is new? What remains the same?
• Multiple interpretations of what the development
  mandate means.
• Special and differential treatment.
• Differentiation across developing countries.
• Or is it just rhetoric?

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Chronology of the Doha Round

• Cancun Ministerial Meeting in 2003.
• Streamline agenda of the round.
• Emphasis on agriculture.
• Roles of G20 and G90.
• July 2004 package.
• Roles of G20 and G90.
• Recent WTO mini-ministerial in Paris.
• Towards the Hong Kong Ministerial in December
  2005.
• Time?
• Inclination?
• Expectations game.

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5 important conditioning factors

• Discontent with the Washington Consensus.
• Which ideas should drive trade reform?
• Rising profile of certain large developing
  countries.
• Leadership of G20.
• G20, G90.
• Legacy of Uruguay Round.
• The Implementation costs non-debate.
• Limits of legal rules in the WTO?
• Spread of regionalism since 1990.
• Changing preference regimes.

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Spread of regionalism What?

• Number of bilateral and regional agreements have
  quadrupled since 1990to approximately 230.
• Provisions not limited to market access, even in
  South-South agreements.
• All 48 SSA nations below to at least on regional
  agreement.
• On average each SSA nation is a member of 4
  agreements.
• Same as South Asia, more than East Asia, less
  than Eastern Europe (non-EU), Middle East, and
  Latin America and Caribbean nations.
• Most no. of agreements signed by a SSA nation is
  9.

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Spread of regionalism Why?

• Shift in EU policies (bilateral FTAs and EPAs).
• Shift in US position towards preferential trade
  agreements.
• Competitive liberalisation.
• Initiatives of some developing countries.
• Important underlying factors
• Dissatisfaction with pace of multilateral
  liberalisation.
• Chase for preferential market access.
• Scale as a pre-requisite for competitiveness.
• Trade policy as foreign policy.

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PTAs deliver less than expected.

• Why?
• Increase in percentage of duty-free tariff lines
  into OECD nations.
• RTAs cover a third of world trade.
• But strip out zero duty tariff lines and the
  share falls to one fifth.
• And, strip out tariff lines where duty is less
  than 3 percent and the share falls to one
  seventh.
• Rules of origin and administrative barriers.
• Tariff revenue losses and trade diversion.
• Major commitment problem with free trade areas.

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Which trade institution have delivered the most
tariff cuts in developing countries?
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Preference schemes What?

• Non-reciprocal regimes.
• Discretionary.
• Applies to all types of goods.
• Form
• Lower tariffs (limit of zero tariff.)
• Larger quotas.
• Laxer rules of origin.
• Motivations.
• Historical tiesor obligations.
• Desire to promote development.
• As a substitute for aid.

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Foreign GSP treatment of Mauritius exports.

• Source WTO Trade Policy Review of Mauritius in
  2001.
• Mauritius benefits from the following 14 GSP
  regimes Canada, Finland, Japan, New Zealand,
  Norway, Sweden, Switzerland, USA, the EU,
  Bulgaria, Czech Republic, Hungary, Poland, and
  Russia.

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US preference schemes for Africa.

• GSP
• Offered since mid-1970s.
• Expanded coverage of LDCs in 1997.
• Expires in 2006.
• Competitive needs limitations.
• AGOA
• Introduced in 2000, expires in 2015.
• 38 of 48 nations are now eligible for AGOA
  preferences.
• 37 eligible for textiles and clothing preferences.

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EU preference schemes for Africa.

• GSP
• Duties suspended for non-sensitive goods.
• Duties reduced 3.5 below MFN rate for sensitive
  goods.
• Differential effect between agricultural and
  industrial goods.
• Cases where goods have specific as well as ad
  valorem dutiesno reduction in former offered.
• EBA
• introduced in 2001 for LDCs.
• Unlimited duration. No periodic reviews.
• Doubts about effectiveness.

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Who benefits from preferences?
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Implications for Doha Round.

• Preference erosion from MFN tariff cuts.
• IMF the problem is concentrated on a small
  number of countries dependent on a smaller number
  of products. The policy response should thus
  focus on these countries and sectors
• Options for reform
• Preference maintenance de jure and temporal.
• Financing adjustment, including BOP problems.
• Investment in infrastructure etc.
• Promotion of SMEs.
• Development of national safety nets.
• Laxer trade-related standards.
• More liberal rules of origin.
• Exemptions from rules on export subsidies.

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Evaluation of these options.

• Fundamental nature of the problem lack of
  commitment not to engage in non-MFN
  liberalisation.
• Contingency.
• Needs assessment, including potential phase-outs.
• Moral hazard problems.
• Financing.
• Source.
• Common pot?
• Financing mechanism---Prowse proposal.
• Enforceability.
• Can aid commitments be written into multilateral
  agreements?
• Dependency.

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Concluding remarks.

• Important non-trade and non-WTO-related factors
  are influencing progress on the Doha Round.
• What fundamentally underlies preference erosion
  is the inability of preference granting nations
  to commit not to offer more preferences to other
  suppliers or to sign more free trade agreements.
• Preference erosion is, therefore, not just about
  lowering MFN tariff rates.
• Mismatch between this reality and negotiating
  strategies.