Half Full or Half Empty?: The Hong Kong WTO Ministerial Conference Has Delivered an Interim Deal for the Doha Round Negotiation
December 29, 2005
On December 18, 2005, after an intense six-day talk, WTO Members have produced an interim package for the Doha Round negotiation. The Hong Kong Ministerial Declaration includes, inter alia, deadlines for the elimination of agricultural export subsidies (2013) and cotton export subsidies (2006), and also mandates that duty and quota-free access for at least 97% of products originating from the least developed countries (LDCs) be provided by 2008. Other detailed structures (modalities) of further negotiations in the areas of agricultural and non-agricultural market access are to be established by April 30, 2006. WTO Director-General Pascal Lamy observed that the Doha Round was "back on track," and especially that there has been a "rebalancing in the favor of developing countries." Nonetheless, disappointment and criticism also emerged from certain Members as well as outsiders, including NGOs.
Amid a grim atmosphere after the September 11 terrorist attacks, the Doha Development Agenda (DDA) was established at the fourth WTO Ministerial Conference held in Doha, Qatar in November 2001. Prioritizing development concerns in trade negotiations, one of the main topics under the DDA has been the liberalization of agricultural trade, such as the reduction (or elimination) of farm tariffs and subsidies maintained by developed countries. However, an irreconcilable fissure between developed and developing countries over these issues eventually collapsed the fifth WTO Ministerial Conference in CancÃºn, Mexico in September 2003. Ever since the CancÃºn debacle, the Doha trade talk has largely been stalled, with the only exception being the establishment of "Doha Work Program" (July Framework) in August 2004, which was nothing more than a basic roadmap for future negotiations.
In an attempt to break the stalemate, United States Trade Representative Robert Portman made an ambitious offer of agricultural trade liberalization on October 10, 2005. This reform proposal addressed three pillars (tariffs, export subsidies, and domestic support) of agricultural protection over the next five years. While the European Commission responded to the U.S. proposal by offering some concessions in agriculture, some European Union (EU) Member States, in particular France, fiercely opposed such move. French President Jacques Chirac threatened to "block a world trade deal" if the EU's concession went beyond the status quo of the Common Agricultural Policy (CAP). Nonetheless, the Commission's offer, although painfully made out of acrimonious exchanges with some EU Member States, failed to meet the expectation of its trading partners.
On November 9, 2005, major negotiators, such as the U.S., EU and Brazil, admitted for the first time that WTO Members would not be able to fulfill their original ambition at the upcoming Hong Kong Ministerial Conference. Pascal Lamy also warned that WTO Members must "recalibrate" their original expectation. On November 26, 2005, Lamy, with the General Council Chairman, presented the first Draft Ministerial Text on the Doha Work Program which would be used in the Hong Kong meeting. In a testimony to little progress in the negotiations under the Doha Round, the Draft Text provided a weak base for negotiations. It was mostly a progress report, which simply identified "working hypotheses" as well as some areas of "convergence," subject to a strong disclaimer stating that "it does not purport to represent agreement overall, and it is without prejudice to any delegation's position on any issue."
The Hong Kong Ministerial Conference (December 13-18, 2005)
Considering the recalibrated expectation among negotiators, observers had predicted that the Hong Kong meeting would deliver a rather modest, face-saving pact with an accent on development. This prediction turned out to be true. After reconfirming sizable gaps in their positions, negotiators procrastinated cracking the hardest nuts (such as concrete modalities for market access negotiations), and instead agreed on those issues which enjoyed relatively higher levels of convergence among themselves even prior to the meeting. Major contents of the deal are as follows.
First, with respect to agriculture, all forms of export subsidies (including export credits, guarantees, and insurances) will be eliminated by the end of 2013. Developing countries relinquished their initial position (elimination of export subsidies by the end of 2010), accommodating the EU's position. In domestic support, greater cuts will be made in higher bands (higher levels of subsidies). Accordingly, the EU will embrace the highest cuts (top band), followed by the U.S. and Japan (middle band), and the rest of the Members (bottom band). The modalities of market access (tariff reduction) negotiations will be established by April 30, 2006. With respect to cotton, all forms of export subsidies will be eliminated in 2006 with duty and quota-free access for LDCs? cotton.
Regarding non-agricultural market access (NAMA), Members adopted the "Swiss formula" mandating greater cuts in higher tariffs, and decided that modalities for tariff reduction be established by April 30, 2006. In services, a set of detailed items for future liberalization stipulated in Annex C has been linked to the main text of the declaration and thus will guide future service negotiations. Developing countries had originally been opposed to such "prescriptive and mandatory" languages in Annex C, but eventually gave in to a firm position held by the EU and the U.S.
Regarding the LDCs, Members agreed to provide duty and quota-free access to exports from the LDCs by 2008. However, three percent of such exports can be exempted from this obligation, thereby paving the way for developed countries to protect certain politically sensitive products, such as textiles (U.S.) and leather (Japan).
Although delegations generally expressed satisfaction with the outcome of the conference, certain Members (developed countries) expressed disappointment about a "lack of ambition" in NAMA and services. In contrast, NGOs were critical of a "betrayal of development promises." Oxfam pointed out that under the Hong Kong deal rich countries can still block the key exports from the LDCs, such as textiles.
Finally, most delegations ascribed the relative success of the conference to the so-called "bottom-up" approach under which inputs come directly from Members, rather than from above (the Chair). They also praised Hong Kong for providing "excellent facilities, good organization and a secure environment" for the negotiation.
With a new blueprint in hand, WTO Members are likely to intensify their efforts to bridge the still wide negotiational gaps in every unsettled area. The problem is that the Doha Round's mileage up to Hong Kong still runs short of the original ambition (two-thirds of the way to a final agreement). Considering a minimum period required to convert any agreed formula (modalities) into individual commitments as well as the negotiation deadline of the Doha Round (the end of 2006) derived from the expiration date of the Bush
Administration's fast track authority in mid-2007, WTO Members would need to diligently hold a series of negotiations, including possible "mini-ministerials," in order to achieve tangible results.
About the author
Sungjoon Cho, an ASIL member, is an Assistant Professor of Law at Chicago-Kent College of Law, Illinois Institute of Technology. During the period of 1994-96, he represented the government of South Korea in negotiations under the World Trade Organization and the Organization for Economic Cooperation and Development. He is the author of Free Markets and Social Regulation: A Reform Agenda of the Global Trading System (Kluwer Law International, 2003), and The Law of the World Trade Organization (2005) (with Joseph H. H. Weiler), http://www.jeanmonnetprogram.org/wto/Units/index.html.
 WTO, Summary of December 18, 2005, Day 6: Ministers Agree on Declaration that "Puts Round Back on Track," available at http://www.wto.org/english/thewto_e/minist_e/min05_e/min05_18dec_e.htm [hereinafter WTO Brief 6].
 See Rob Portman, America's Proposal to Kick-Start the Doha Trade Talks, Fin. Times, Oct. 10, 2005, at 15.
 See George Parker & Edward Alden, Brussels in Push to Unblock World Trade Talks, Fin. Times, Oct. 15, 2005, at 2.
 See George Parker et al, Chirac Fires Warning Shot on Trade Deal in Defense of Farm Subsidies, Fin. Times, Oct. 28, 2005, at 4.
 See EU Offer of Deeper Farm Tariff Cuts Fail to Restart Talks, Bridges Weekly Trade News Digest, vol. 9, No. 37, Nov. 2, 2005.
 See Members Scale Back Expectations for Hong Kong, Bridges Weekly Trade News Digest, vol. 9, No. 38, Nov. 9, 2005; Dark Clouds over Doha, The Economist, Nov. 10, 2005.
 See Members "Recalibrating" Expectations for Hong Kong and Beyond, Bridges Weekly Trade News Digest, vol. 9, No. 39, Nov. 16, 2005.
 Doha Work Program, Preparations for the Sixth Session of the Ministerial Conference, Draft Ministerial Text, Job(05)/298, Nov. 26, 2005, available at http://www.wto.org/english/news_e/news_e.htm.
 See e.g., Richard Waddington, WTO Seeks Face-Saving Pact to Keep Talks Moving, Reuters, Dec. 13, 2005.
 WTO Ministerial Conference (Sixth Session, Hong Kong, Dec. 13-18, 2005), Doha Work Program: Draft Ministerial Declaration (Revision), WT/MIN(05)/W/3/Rev., Dec. 18, 2005, available at
 Bridges Daily Update on the Sixth Ministerial Conference, Issue 4, Dec.16, 2004, available at http://www.ictsd.org/ministerial/hongkong/wto_daily/16_December/en051216.htm.
 Bridges Daily Update on the Sixth Ministerial Conference, Issue 3, Dec.15, 2004, available at http://www.ictsd.org/ministerial/hongkong/wto_daily/15_December/en051215.htm.
 See WTO Brief 6, supra note 1.
 Oxfam Press Release, WTO Agreement A Betrayal of Development Promises, available at http://www.oxfam.org/en/news/pressreleases/2005/pr051218_wto_betrayal.
 See WTO Brief 6, supra note 1.
20] WTO, Director-General's Letter to Journalists, available at http://www.wto.org/english/thewto_e/minist_e/min05_e/brief_e/brief01_e.htm.
 WTO, Lamy Says the Engine of Negotiations Are "Buzzing" Again, Oct. 13, 2005, available at http://www.wto.org/english/news_e/news05_e/tnc_13oct05_e.htm.
 See Alan Beattie, Waning Expectations: Agreement on Trade Remains Remote as Time Trickles Away, Fin. Times, Jul. 18, 2005, at 11.