PLACING DOHA ROUND FOR THE POOR

Doha Round under WTO umbrella is expected to be signed at 1 January 2005. Although the progress of the round is very slow because of deadlocked in some important agricultural issues, mainly on market access, domestic supports, and export subsidy. Moreover, a big gap between developed and developing countries' position on special and differential treatment (SDT), trade-related aspects of intellectual poverty rights (TRIPS), and public health, is considered a major obstacle to reach the agreement (Abbott 2003, Finger 2002).

Under this gloomy situation and an increasing bargaining position of developing countries, the poor who mostly live in developing countries (DCs) is expected to have a better chance to make use of the round for the following two reasons. Firstly, poverty issues have been the main agenda of most international meeting and discussions of the international organizations, such as United Nations, in the last decade. The number of poor people has been surprising; FAO (2003) estimated that the number of people live with less than US$ 1 per day is around 1.5 billions, while that of less than US$ 2 account for a half of total population or nearly three billion people (Shah, 2004). This has caused an increase in the number of infected people by various endemic illnesses such as HIV and TBC. Moreover, this situation has enriched regional conflicts and terrorism (Abbott 2003). The UN with its Millennium Development Goal placed reducing poverty and halving the proportion of people earning less than $1 per day, as one of the most important goals . Thus, reducing poverty is now gaining its most important momentum in the international perspective.

Secondly, most deadlocked in agricultural issues steams from the high and intensive government policies related to agricultural sector in industrialized countries (ICs). The global trading system is still very much biased against the poor. An average poor person faces twice the level of trade tariff than an average rich person. Agricultural subsidies in the rich world total US$300 billion more than Africa 's GDP and six times the amount of development aid to poor countries (World Bank 2003). In 2002, direct support to farmers by countries belonging to the Organization for Economic Co-operation and Development (OECD) totaled around US$235 billion, three quarters of the total OECD support estimate of US$318 billion. Subsidies by this group of countries account for over 90 per cent of trade-distorting domestic support and export subsidies reported to the WTO.

Poor farmers cannot escape the poverty trap if they are forced to compete with products subsidized by the treasuries of the richest countries. The elements of a solution include effectively pursuing the process of reform in the three areas of market access, domestic support and export competition, while providing greater flexibility for developing countries to pursue rural development and food security. Most importantly, there is need for the EU, Japan and the United States to reduce subsidies, cut tariff and non-tariff protection, address tariff peaks and escalation. The recent decision to reform the EU's Common Agricultural Policy is a positive step, although this needs to be translated into ambitious negotiating proposals (FAO 2003).

Under these facts, the ICs have been under a strong pressure to reduce their agricultural supports in the Doha Round. If this can be realized, developing countries will have better market accesses of their agricultural products in developed countries. This is a great potential to improve the agricultural sector in developing countries leading to a better welfare to poor people. This is way the Doha Round is labeled as Doha Development Round.

Following Abbott (2003), an alternative approach to realize this objective is to implement so called Critical View (CV) in the Doha Round. Under this approach, the ultimate goal of trade liberalization is development and a fair trade is a way to achieve the goal. Under this approach, the basic question of trade policy would become, not whether a national measure is trade distorting but whether it is development distorting.

Following this view, there are some agenda that can be obstacles to make the Doha Round as a development round. These agenda are limited market access of agricultural products of developing countries (DC), limited market access of manufacturing products of DC, limited market access of services DC, subsidy and supports of developed countries to their agricultural sector, TRIPS issues, and reciprocity issues. Therefore, under the Doha Round, this approach should emphasize the following efforts:

Rectifying imbalances . Various policies that cause imbalances between DCs and ICs and inhibit development should be eliminated or reduced. These policies include TRIPS, general agreement on trade in services, and subsidy policy in ICs.

Rethinking reciprocity . It is unfair to expect “full reciprocity” between DCs and ICs because of differences in economic capacity, political situation, and vulnerability of DCs. An alternative offered by this approach to place reciprocity based on the relative state of development.

Special and differential treatment (SDT) and flexibility . SDT is intended to improve the market of DCs in ICs and to give a flexibility to DCs to intervene their markets for the shake of development.

Trade issues of special interest of DCs . Under the Doha Round, issues that are the main concern of DCs should be prioritized. These issues including vulnerability of DCs export due to technical and price risk and dependency of DCs on few-exported commodity.

Food security and rural development . More than 800 millions of population in DCs is very vulnerable of food insecurity. Therefore, various supports to DCs to overcome this problem and to promote rural development should be one of the focus in the round.

Considering most people cultivating CGPRT crops are poor, the success of DCs in implementing CV approach in the Doha Round could have a significant benefit for them. It will be daunting tasks and the Doha Round that is labeled as development round, is one of the best opportunity for decision makers to fight for the poor, including CGPRT farmers.

Written by Wayan R. Susila, UNCAPSA Staff

References

Abbott, K. W. 2003. Development Policy in the New Millennium and the Doha Development Round, Asian Development Bank, Publication Stock No. 061503.

Finger, J. M. 2002. The Doha Agenda and Development: A View from the Uruguay Round, American Enterprise Institute for Public Policy Research, Washington DC .

Shah, A. 2004. Poverty Facts and Stats, http://www.globalissues.org/TradeRelated/Facts.asp , Wednesday, April 28, 2004.

The World Bank, 2003, Cancun Trade Talks an Opportunity to Lift Millions out of Poverty, September 5, 200.