WTO July 2004 Package of Framework Agreements

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  • by Anup Shah
  • This Page Last Updated Monday, August 02, 2004

The World Trade Organization (WTO) member countries (most of the world) met again at the end of July 2004 to discuss more development and trade issues.

On this page:

  1. Why Another WTO Meeting?
    1. Attempt to Continue from Previously Collapsed Talks
    2. Attempt to Create a Package of Framework Agreements
  2. Drafts of Agreement Draws Predictable Criticism from Third World
  3. Final Agreement Reported In West As Success For Everyone. Who Is Everyone?
    1. What was agreed?
    2. Were the deals worth celebrating?
  4. Blame Game Again?
    1. Recipe for Continued Poverty
  5. Is another, fairer world possible?
  6. More Information

Why Another WTO Meeting?

Attempt to Continue from Previously Collapsed Talks

The previous major WTO meeting was in Cancun, Mexico, in September 2003. However, those trade talks collapsed because:

  • Richer countries wanted to talk about newer issues that mostly they themselves would have benefited from;
  • Poorer countries wanted to finish older issues mostly on agriculture that affected them the most, especially the impact of European and U.S. subsidies on their own agriculture and lack of access to those markets.
  • The continued non-transparent and non-democratic processes in decision-making and draft text writing, combined with procedure-abusing and arm-twisting tactics by the powerful blocs such as the US and European Union (EU) has constantly meant that poorer countries are dealt with an unfair deal. This was no different for Cancun.
  • For example, the powerful countries and blocks isolated groups of poorer countries to discuss aspects of the agreements (weakening poorer countries' ability to negotiate and discuss). In addition threats of things like withdrawal of much-needed aid would once again be used.
  • However, for the first time developing countries made a somewhat successful and united stand against the powerful richer countries to represent their concerns.

For more details on what happened at Cancun, see for example, the following:

  • This web site’s section on the Cancun WTO Meeting.
  • Divide and Rule: The EU and US response to developing country alliances at the WTO 1, ActionAid, July 2004. This report looks at what happened at Cancun and how since the collapse of the meeting, the EU and US have tried to split developing country alliances and force their own interests at the expense of poor countries using intimidation at the WTO.

Attempt to Create a Package of Framework Agreements

After the deadlock, WTO members in Geneva tried to restart the talks. An agreement was reached to have a package of framework agreements by the end of July, 2004. The first draft of the July package was circulated on 16 July. Negotiations started in the fortnight beginning 19 July.

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Drafts of Agreement Draws Predictable Criticism from Third World

As with the previous trade meetings, the draft texts drew criticism from most of the third world. For example there was concern on many angles, including the following:

  • The drafts fell short of some of the Doha mandates back in 2001;
  • There was lack of progress on development issues yet again (despite being continually highlighted);
  • Key issues for development were ignored and not even part of the first draft text, such as
    • Commodities;
    • Trade, debt and finance;
    • Trade and technology transfer
    • and Trade Related Aspects of Intellectual Property Rights (TRIPs) in relation to public health
  • Issues of interest to developing countries were not detailed out but other issues of interest to developed countries were detailed;
  • There were concerns about the new blue box domestic subsidies presented by the US, seen as a way to protect some of its own industries while also allowing more economic dumping, counter to global free trade principles;
  • There was a low priority on issues of implementation (e.g. anti-dumping, investment (TRIMS), sanitary measures (SPS) and technical barriers to trade) because of the reluctance of developed countries to deal with them.

Some non-trade issues which richer countries had previously wanted to increase their market share were removed such as investment, competition, transparency in government procurement. Side NoteThese are important issues in their own right, but beyond scope of these trade meetings, requiring separate efforts. With richer countries adding these in, without everyone agreeing on all the outstanding existing issues raised criticism from the third world as as example of continued disregard to the third world, while only promoting their own agendas.

For more details at these concerns and criticisms, see the following as an example:

  • Developing Countries' Initial Responses to Draft July Package2, by Martin Khor, Third World Network, July 2004. This article summarizes reactions from many member countries and regions.
  • Widening divergences over July package3 by Chakravarthi Raghavan, Third World Network, July 26, 2004
  • North tactics to split developing-country alliances exposed4, by Kanaga Raja, Third World Network, July 26, 2004
  • D-Day for the WTO 5, by Walden Bello, Focus on the Global South, July 28, 2004
  • US blocking trade deal at WTO6, Oxfam, July 28, 2004
  • Oxfam condemns proposed trade deal for failing poor countries7, Oxfam, July 30, 2004
  • WTO’s Empty Framework Allows Agricultural Dumping to Continue 8, Trade Observatory, July 30, 2004
  • Doha Round: last-ditch effort to find agreement on package deal underway9, Bridges Weekly, International Centre on Trade and Sustainable Development, Volume 8, Number 26, 21 July 2004

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Final Agreement Reported In West As Success For Everyone. Who Is Everyone?

In the final hours of the long and drawn out meeting, western media outlets reported how US and EU compromises allowed a historic deal to be made.

The FIP, or the Five Interested Parties were a group of countries that were chosen to overcome the initial deadlocks. These parties were made up of key political and economic players in the world of trade: the United States, European Union, Australia, Brazil and India. The majority of the world’s poor were only represented by two nations.

Politicians such as UK’s Patricia Hewitt and the European Union’s Trade Commissioner, Pascal Lamy, who last year blamed the poor for not accepting their deals and offers, described this round as successful.

What was agreed?

Things agreed included:

  • The agreement of cutting agricultural subsidies and other aid to farmers from rich countries. This is in return for developing countries opening markets for manufactured goods.
  • Updating old customs procedures;
  • EU and US to offer a down payment that would see an immediate 20% cut in the maximum permitted payments they make;
  • Marking the beginning of the end of rich countries' farm subsidies that undercut farmers from developing countries;

Were the deals worth celebrating?

A major positive step, despite any concrete details or indications when it would happen, was the agreement for rich countries to reduce their heavy farm subsidies that distort trade and impact the poor countries so much. However, as well as the lack of specifics, there was much to be criticized, and it appeared that the poorer countries once again lost out. For example:

  • Much of the agreement was deliberately vague. Even if the spirit of some text might appear positive, the vagueness will mean powerful countries can (and most likely will) spin it to their own interests nearer the time the issues are raised again. Side NoteWe saw during the Iraq war build up for example, that the U.S. and American U.N. Ambassadors themselves saying that their pursuit of a U.N. Resolution against Iraq did not mean automatic war, yet, nearer the time the war did start, they said that everyone knew this would be the reality. See this site’s section on Iraq10 for more on these aspects.
  • Crucial information such as a timetable for subsidy elimination was not provided.
  • Actual figures for tarrif cuts were not discussed.
  • While issues crucially critical of richer country policies were vague, poorer countries agreed to open up their markets in return. This means future negotiations may be on condition that the poor countries open up their markets in return for subsidy reductions.
  • Richer countries, it could be argued, should have agreed to cut their subsidies without any compromise. Instead, without needing to agree a reciprocation on manufactured good, this will allow richer countries to retain their unfair competitive edge.

The final agreement was harder for the poorer countries to accept because it was presented so late, without sufficient time to analyze. The Third World Network summarized key and common criticisms from developing countries, which included criticisms of:

  • The process, especially the fact that there was little time for the delegations to read and react to the text and to send it to their capitals and get instructions;
  • Uncertainty and vagueness over the Non-Agricultural Market Access (NAMA) part of the agreement which calls for the liberalization of all natural resources, particularly in fisheries, gems, and mining.
  • In the new agriculture text, there were complaints about:
    • The new blue box being retained (although the meeting of the Five Interested Parties was supposed to have agreed to it was supposed to postpone a decision on this for a later stage);
    • The non exemption of developing countries from reduction of minimal domestic support (crucial for many developing countries, as their minimal support is dwarfed by the enourmous first world farm subsidies);
    • The proposal to discuss differential export taxes;
    • The inadequate treatment of special products;
    • The double standards in the text pandering to the demands of developed countries (including new demands) whilst the developing countries' demands were not met and they are told to show flexibility.
  • Inadequate treatment of implementation issues. That is, details on how to carry out the agreements were missing.

Oxfam noted criticism worth citing here:

Small wins were achieved by developing countries in the form of stronger language on agricultural export subsidies and export credits and the dropping of three out of the four so-called Singapore Issues but overall the final text remained disappointing and did little to advance the round of talks, said Oxfam. Apparent concessions by the US on cotton were not legally binding and would not guarantee an end to the harmful regime.

[Celine Charveriat, Head of Oxfam International’s Geneva office]: Negotiators may trumpet breakthroughs on export subsidies and cotton but there are no cast-iron commitments here and no clear timeline for reform. We need a far more ambitious and radical approach. If rich countries do not immediately put their promises into action, this declaration will become just one more stage in a long journey of disappointment and deception.

Arrested Development. Trade talks move inches but miles remain11, Oxfam, July 31, 2004

It is understandable that many non-governmental organizations (NGOs) and developing countries are skeptical of richer countries' commitments, because on many issues, vague promises have turned out to be hollow. Yet, if the rich countries did live up to their stated commitments,

Economists have estimated that a final deal could add more than $500bn a year to the size of the global economy, but some trade negotiators and most development groups warned last night the draft was biased in favour of the West and there was much to do to secure a deal that would benefit poor countries.

Larry Elliot, Deal on global trade holds out hope for poor nations12, The Guardian, August 2, 2004

As discussed on this sites foreign aid section13, rich country farm subsidies alone are far larger than the amount of aid they give to the poorer countries. For the poor countries then, these issues are crucial. We like to blame the poor for their predicament. Yet, we hardly see how the rich countries contribute, and sometimes are major reasons for their problems.

For more on these reactions, see the following:

  • International Groups Denounce World Trade Pact14, by Jim Lobe, OneWorld US, August 2, 2004
  • Deal on global trade holds out hope for poor nations15, by Larry Elliott, The Guardian, August 2, 2004
  • Critical comments on revised text by developing countries16, by Goh Chien Yen, Tetteh Hormeku and Martin Khor, Third World Network, July 30, 2004