The decision provides the scope, framework, structure and direction of negotiations, in agriculture, non-agriculture market access (NAMA), cotton, services, development issues and trade facilitation. Apart from extending the deadline for negotiations, the decision further sets new time schedules for review of special and differential treatment (July 2005), implementation issues (July 2005) and services for submission of revised offers (May 2005).

The Mauritius Declaration and its annex, the African Common position adopted by AU Ministers of Trade in GrandBaie which was endorsed by the AU Summit in Maputo and the Kigali Declaration and consensus of African Ministers - provided the guidelines for Africa in the negotiations pre-Cancún and post-Cancún respectively. These offer a benchmark on assessing how African interests have been taken on board by the July package or the compromises we have had to make in various groups of negotiations.

Agriculture

Agriculture has always been seen as the key to the progress or the success of the Doha Round, and there was a clear linkage with what concessions could be made in other areas. Therefore, post-Cancún, enormous efforts were made to secure compromises in this area. The guiding principles for AU Members on the three pillars of the Agreement on agriculture were spelt out in Para 2 of the Kigali Declaration on, inter alia, the following:
• That further reform for agriculture should aim to attain the objectives as set out in the Doha mandate. Each Round of agriculture negotiations should take into account the need for appropriate policy space that would allow African countries to pursue agricultural policies that are supportive of their development goals, poverty reduction strategies, food security and livelihood concerns.
• That the “framework”, and the associated modalities to be agreed upon, should address themselves fully on all the three pillars, in a balanced and equitable manner,
• That, in accordance with the Doha mandate, binding, precise and effective S and D is an integral part of all elements of negotiations on agriculture

It seems that some of these principles are reflected in paragraphs 1, 2 and 3 of Annex, A which provide the chapeau of the framework on agriculture. It is stated that in order to achieve a final balance in the context of a single undertaking, the modalities need to incorporate operationally effective and meaningful provisions for Special and Differential Treatment. It was agreed that the three pillars form an inter-connected whole and must be approached in a balanced and equitable manner. The framework provides only a road map. It is only when the reduction targets in each pillar of the negotiations have been decided that it will be possible to assess the actual balance of concessions; and of the value of flexibilities provided.

Domestic Support

Africa wanted all forms of trade distorting domestic support measures, used by developed countries, to be substantially reduced. They pressed for substantial reduction of both Amber and Blue box measures as well as for a thorough review of trade distorting elements of green box support measures, and the elimination of the 5% de minimis support for developed countries. We also wanted the scope of article 6.2 maintained and expanded and the enhancement of domestic support measures consistent with Annex 2 of the agreements.

In the July framework package, members have agreed to undertake substantial reduction of all trade distorting domestic support measures. Specific reduction commitments in respect of AMS, Amber Box and de minimis have to be negotiated. It has also been agreed to have a tiered approach to AMS reduction commitments whereby those with high levels of support will be subject to deeper cuts. Product specific commitments will be capped at their respective levels. The methodology is to be negotiated. Developed country members are required to make a 20% reduction in overall levels of its permitted trade distorting trade in the first year of the implementation period to be determined. The importance of this may be symbolic, establishing a new ceiling that may not later be exceeded. In Para 15 it is agreed that the blue box support will not exceed 5% of a member’s average total value of agricultural production during an historical period, which will be established in the negotiations. However, this broadens the category of the Box in such a way that it could cover the cyclical payments in the USA Bill of 2002. The Green Box is to be reviewed and clarified to ensure that the measures have not or at most have minimal, effects on production. As part of S and D, developing countries will have lower reduction and longer implementation periods and continue to benefit from article 6.2 provisions.

African countries have a well founded fear that the negotiations may not result into substantial reduction of domestic support as demanded. In paragraph 9.4, the reference to reduction of ‘some product (not all) specific support’ could lead to the exclusion of sensitive products of export interest to Africa by the major subsidisers. While Africa had called for the elimination of de minimis, the goal now seems to be to reduce rather than to eliminate it. Negotiations should aim at substantial reduction. Flexibility should be given to the developing countries. The Blue Box support distorts trade and should be recognized as such. Unfortunately the package expands this category. Africa should press for deeper reduction and eventual elimination of the Blue Box. The challenge in this pillar is to find the right reduction formula, prevent box shifting, and seek deep reduction in de minimis while guarantying S & D for developing countries.

Export Support

In the Kigali consensus, Africa had called for a commitment to eliminate export subsidies by a certain date. Indeed this was one of the main reasons that led to the collapse of the Cancún meeting. In the framework, member states have committed themselves to eliminating export subsidies and measures that have equivalent effect by a credible end date. Measures which have equivalent effect include export credit, credit guarantee and insurance programs, certain practices of state trading corporations and certain food aid transactions. This introduces what has been referred to as parallelism. The schedule and modalities are subject to negotiations.

Developing countries will be given longer phase out periods as part of S & D and will also continue to benefit from Article 9.4 for a reasonable period to be negotiated. The parallel elimination approach was a demand by the European Union and was part of the bargain for the eventual elimination of export subsidies. In paragraph 20, it is agreed that the reductions will be implemented in annual instalments, which will take into account internal reform steps of member states. Together with parallelism, this provision could extend the period of implementation phase beyond the time frame developing countries have in mind. For example, the reform of the EU Common Agriculture policy does not envisage a review on several sectors until 2013.

State enterprises in many African countries play an important role in ensuring food security, and stabilising the income of rural farmers. Disciplines which will be developed need to take into account this unique role.

Food security and stabilisation of earnings for rural farmers in developing countries need to be taken into account. Many African countries still depend on food aid in emergency situations. To an extent, this concern is taken care of in Para 24 and 25. In this paragraph, it is agreed to give them special consideration. But it is necessary to work out concrete implementable provisions.

While developing countries are given longer implementation period for a phasing out of subsidies under S& D, this may be academic for African countries, as most do not have export subsidies.

The major achievement of the package under this pillar is the commitment to eliminate export subsidies at a certain date - to be agreed. The key issues that remain include proposing an appropriate date, clarifying the role of state trading enterprises, and working out appropriate provisions for food aid, which should be distinguished from surplus food disposal.

Market Access

The objective of Africa in this regard is to improve market access for their agricultural products, both in their primary and processed forms. This requires inter alia addressing the issues of high tariff, tariff peaks and tariff escalation, Non Tariff barriers including SPS and TBT, and developing a more simplified and transparent tariff quota regime. Africa called for duty and quota free market access for products originally from LDCs with a simplified rules of origin, and the LDC being exempted from making any reduction commitments. Together with the group of 33, Africa wanted to be allowed the use of special products with flexibility to select tariff lines, and the establishment of a safeguard mechanism for use by developing countries. The erosion of preferences was particularly of concern to G-90.

The framework provides for a single-tiered approach formula for the reduction of Tariffs for both developed and developing countries. The highest tariffs will undergo deeper cuts. There is no specific special and differential treatment in tariff reductions apart from the LDC who will not be required to make any reductions. Mainly in response to the G-10 and the EU, a new concept of ‘sensitive products (SP),’ to be subject to special treatment, has been introduced. This could lead to developed countries designating products of interest to Africa as ‘sensitive’- thus making it difficult for them to have effective market access. Improvement of market access in these products is to be achieved through a combination of means such as improved tariff rate, quotas and tariff reductions. The selection and treatment of sensitive products is yet to be negotiated.

The concept of ‘special products’ for developing countries, demanded by G-33, has been agreed with flexibility to designate such products based on the criteria of food security, livelihood security and developmental needs. But the criteria and treatment are yet to be specified. A safeguard mechanism for developing countries is to be established and the conditions for its use are yet to be determined. Contrary to the wish of Africa, the SSG for developed countries will be continued.

Sectoral Initiative on Cotton

The African countries supported the proposal submitted by our African countries on cotton, which, inter alia calls for the elimination of export subsidies within three years and domestic support within four years with effect from January 2005; and the establishment of a support fund. They were insisting on the negotiation in the cotton sector being a fast track process, independently from agriculture. Cotton provides a glaring example of how domestic subsidies in rich countries depress world prices and their negative impact to the economies of a number of African countries.

The framework adopted in this area, while making positive progress on the Derbez’s text, however, fell short of African demands. Cotton will now be addressed in the Agriculture negotiation “ambitiously”, “expeditiously” and “specifically”. The special session of the committee on Agriculture is to ensure appropriate prioritisation independently from the sectoral initiatives. A subcommittee on cotton is to be established to report periodically on progress to the committee on Agriculture. No compensatory fund, as demanded by Africa, has been established. Instead, the development and finance support will be considered in the context of the existing programme of Bretton woods institutions. It is not clear whether there will be additional resources for this purpose. Besides, there is no common understanding of the words ‘expeditiously’ and ‘ambitiously’. It would have been preferable to have a target date of resolving the problem. There is no commitment to eliminating all cotton subsidies.

However, it is important to press that all trade distorting policies be addressed and the level of ambition is higher than in other Agriculture reductions. It is most probable that the dispute on cotton brought up within the DSB and its implications helped to create an environment for a compromise. Uganda, Kenya and Tanzania raised the issue of commodity price fluctuation. This remains on table and needs to be followed up.

Non-Agriculture Market Access

It will be recalled that even before Doha, African countries were apprehensive of the proposals for negotiations in Non-agriculture products. They had wanted initially to have a study on the post- liberalisation impact on their economies. In post-Cancún discussions, the Derbez text was a basis for discussion on the modalities. Africa had a problem with the text as they felt it did not adequately take into account the principle of less than full reciprocity as per Doha mandate. In Kigali, the Ministers stressed that it was imperative that the agreed framework provides policy space and flexibility to allow African countries undertake industrial policy and national development objectives by ensuring the following objectives:

• The formula to be agreed upon needs to be such as to allow the operationalisation of meaningful and binding special and differential treatment for developing countries, including the principle of less than full reciprocity. In this respect, it should be emphasised that the non-linear approach does not provide the basis for equitable results. African countries need flexibility for their development and industrial objectives.

• Bound duty-free and quota free market access by developed countries for products of LDCs with realistic, flexible and simplified rules of origin. LDCs shall be exempted from making reduction commitments.

• Due to the critical importance of preferences for African countries, solutions to the question of preference erosion should be obtained within the WTO negotiations. In this respect, a sectoral approach would be detrimental to African preferences in major export markets. A suitable curve-out should be made in favour of African economies/exports. It should be stressed that work on preference erosion should not be outsourced to other multilateral institutions.

• The issue of tariff bindings should be approached in a way that creates incentives to those countries that have not bound their tariffs to do so. In this regard, the binding tariffs should be acknowledged as the main contribution to this round by those countries that decide to do so.

• The framework should ensure that non-tariff barriers are addressed in parallel with tariff reductions as NTBs have, in many instances, nullified existing market access opportunities for African exports.

• On the issue of appropriate studies and capacity building, direct linkage should be drawn between progress in the negotiations and the results and findings of specific studies.

Despite the objections of African and other developing countries, the Derbez text, with minor modification, was adopted as the framework for NAMA Negotiations. The annex is short and given the first sentence, it is not clear as to what has been agreed. It directs that negotiations continue on a non-linear formula, on line-by-line basis applied from bound rates. This would result into steeper cuts for many developing countries. Unbound tariffs are to be subjected to a non-linear approach. In Paragraph 2 of annex B, a sectoral component is incorporated which aims at harmonisation on elimination of tariffs. The framework says participation by all in sectoral initiative will be important. It is not clear whether it would be mandatory. It is also proposed to increase the scope of binding to at least 95%.

Developing countries are to have longer implementation periods. LDCs, though exempted from reduction commitments, are encouraged to increase their tariffs bindings’ coverage. The framework recognises the challenges faced by beneficiaries of preferences, which should be taken into account in respect of tariff barriers as part of the negotiations. All participants were encouraged to make notifications by 31st October of their NTBS so that they can be examined as part of negotiations. But there are no concrete commitments.

On the insistence of African countries, a new paragraph, (Para 1) was introduced in annex B whereby it is considered as having initial elements. Additional negotiations will be required on some specified aspects of these elements in order to finalise the modalities. This could provide a window of opportunity for African countries to improve the modalities on the treatment of unbound tariffs, the flexibilities for developing country participants, and the issue of participation in sectoral tariff component and the question of preferences. But this will not be easy as there has been different interpretation of the import of this addition to Derbez text. The developed partners seem to believe the elements are agreed and only a few specifics need to be refined.

Elaborating the right formula, whether linear or non-linear, presents a challenge for African countries. There is need to elaborate a formula that ensures effective market access for African products, address tariff peaks and escalation, while respecting the principle of less than full reciprocity. It also remains to be seen how the loss of preferences arising from MFN reductions will be compensated. There is need to assess the impact of sectoral negotiations approach and identifying sectors of interest to African countries. There should be an assessment both at the national and regional level of the implication of tariffs cuts on revenue, domestic enterprise competitiveness, and employment.

The negotiations will also address the problem of erosion of preferences and the liberalisation of tropical products. The framework calls on all developed, and developing country members in a position to do so, to provide duty free and quota free market access to products from LDCs. This is exhortatory rather than being prescriptive.

New Issues (Trade Facilitation)

African countries had objected to the inclusion of new issues in the negotiations of the Doha Round. Their position was that the study process should continue in the working Groups before a decision to commence negotiations could be taken by explicit consensus. At Cancun, the EU had agreed to drop two issues from the Doha work Programme and post Cancun. They indicated willingness to drop a third one. But, they floated the possibility of Plurilateral Agreements in these areas with an opt-in opt- out discretion for developing countries which was rejected by the Group of 90.

In the July package, a compromise was reached whereby no new work towards negotiations will be undertaken during the Doha Round on trade and investment, trade and competition, and transparency in government procurement.

It was agreed, to commence negotiations aimed at clarifying GATT articles v, vii, and x with the objective of expediting the movement, release and clearance of goods including goods in transit. The negotiations would take into account the principle of S and D; developing countries would not be required to undertake commitment which they cannot implement including, inter alia “for financial reasons”. Further, developing countries would not be required to undertake investments in the infrastructure beyond their means. Thus, implementation would be tied to capacity of developing countries. Modalities call for increased capacity building support. It is not clear whether the ensuing agreement will be subject to DSU. This could be implied from the footnote where it is stated that, it is without prejudice to the final financial results of the negotiations. There is need for clarity regarding exemption of African and LDC countries from the DSB provisions.

To the extent that the EU agreed to drop the three Singapore issues from the Doha work programme, in return for agreeing to negotiations on trade facilitation, this was a significant achievement for Africa and other members of G-90.The modalities adopted on trade facilitation take into account some of the concerns regarding S and D. But there will be need for vigilance in the detailed negotiations to ensure that those are concretised and are implementable.

Services

The July package reiterates the commitments and objectives set out in the Doha work programme and the GATS guidelines. It underscores the need for meaningful offers in areas of interest to developing countries. It also stipulates that revised offers should be submitted by May 2005, while initial offers should be submitted as soon as possible. The importance to developing countries of Mode 4 - movement of natural persons - is noted since it calls for intensification and conclusion on negotiations for rules such as on emergency safeguards not later than the date of entry into force of the outcome of the Round.

The services negotiations provide considerable challenges to Africa. African countries at the national level need to identify their national interests and priorities. This should involve carrying out an assessment at the national level - what offer should be made and what conditions should be attached. They also need to assess the quality of offers made as well as what requests to make. The following challenges have been recently identified by a seminar in Geneva of African Negotiators:

• A need for improvement of the participation of African countries in the actual negotiating process and in this regard, assistance to African countries especially in the request/offer process is considered very important;
• The need to negotiate commercially meaningful market access in sectors and modes of supply of interest for African countries, such as low skilled service suppliers under mode 4, outsourcing under mode 1,or specific services sectors such as tourism;
• The enhancement of the participation of African countries in the rule-making area; and
• The urgent need for African countries to undertake assessment of their services sectors so as to identify those services of interest to them.

I believe that institutions such as ILEAP have an important role to play in this regard.

Developmental Issues

Ministers in Doha decided to review all S & D provisions with a view of strengthening them and making them more precise, effective and operational. The African group played a lead role in presenting agreement specific proposals. In both pre- and post-Cancún there has been no tangible progress in realising the Doha Agenda as regards the 88 proposals on the table. Only procedural issues have been dealt with and decided.

In the July package it was decided that work should continue on all outstanding issues, including the monitoring mechanism and incorporating S & D treatment in the architecture of WTO. The committee on Trade and Development and other subsidiary bodies handling S & D were given a new deadline of July 2005 for reporting. Equally on implementation, the Director General has been mandated to carry out the consultation process and report to the Trade Negotiating Committee and the General Council by July 2005.It is clear that hardly any progress has been registered in these areas.

Given the level of development and developmental needs of African countries, Africa should continue to press on operationalisation of Special and Differential treatment as part of the grand bargain in the overall negotiations. S & D should be recognised as a right and not treated as a favour. Given the asymmetries among member states, it is patently unrealistic to have one set of rules, standards or institutions. Our countries need space to develop institutions and capacities necessary to take advantage of market access available in the global market space as well as their own domestic and regional markets.

In the consultations, the question of ‘graduation’ has been raised by our developed partners as one of the impediments in responding favourably to our proposals. It seems we need to examine whether this is genuine concern that has to be addressed or rather a red herring being used as a pretext to avoid facing up to the problem.
Conclusion

As stated in the beginning, the July package marked the end of talks about talks, especially with regard to Agriculture, Cotton, NAMA, and trade facilitation. It provided modalities to be used in further Liberalisation. The recognition of the need for S & D treatment in all negotiating groups is positive. It is also significant that both in Agriculture and NAMA, LDCs most of which are in Africa will not be required to make any reduction commitments.

There is need to coordinate the position being taken in the DDA on the one hand and the positions being taken in negotiations for the EPA between the EU and ACP African countries on the other. It is interesting to note that we have rejected to negotiate in DDA, but agreed to negotiate in EPA on the Singapore issues. These issues include, for example, subjects like trade and competition policy, trade and investment, and government procurement, which have been dropped from the Doha work programme - yet they are part and parcel of the EPA negotiations.

The objective of negotiations with EU is to achieve WTO compatible trade agreements. This raises the question of how the principle of less than full reciprocity can be safeguarded considering that such agreements are covered by Article 24. Hence, there is need to clarify the pertinent rules and re-adjust them to allow for S & D.

Clearly, the tariff reductions that will emerge in agriculture and NAMA within the context of WTO talks will impact on the margin of preferences that can be secured within the EPAs. There is need for assessment of the implications. African countries should be assisted to understand these implications.

It is worth recalling that the negotiations are under a single undertaking. Paragraph 49 of the Doha Declaration provides that negotiations shall be conducted in a transparent manner between participants in order to facilitate effective participation by all. They shall be conducted with a view to ensuring benefits to all participants and to achieving an overall balance in the outcome of the negotiations. This balance is required within the various sectors of negotiating groups and between these sectors. Since Doha, events show that with well-articulated and researched positions, Africa can, with determination, go a long way in getting its interests taken on board. This has been the case with regard to TRIPS and public Health and sectoral initiative on cotton.

The emergence of the Group of 20(G-20) and the Group of 90 (Africa, ACP and LDCs) have changed the dynamics of negotiations. Africa should identify its critical interests and form the necessary alliances to achieve a reasonable bargain. There should a periodical assessment of whether the balance envisaged in paragraph 49 of Doha Declaration is on track and whether in the end it has been achieved before we accept final outcome. However, there is no substitute for effective well-informed and credible participation in the negotiating process.

Works Consulted

1) ACP-EU Partnership Agreement signed in Cotonou, 23 June, 2000.
2) Bridges, year 8 No.7 July-August 2004,”How Significant Is the Latest WTO Deal?”
3) Decision Adopted by the General Council on the Doha Work Programme, August 2004,WT/L/59,2 August 2004.
4) Diana Montero Melis and Purnima Purohit,”We’ve been here before, Perspectives on the Cancún Ministerial.
5) The Doha Work Programme set out in the Doha Declaration (DMD, WT/MIN (01/DEC/1) of 2001.
6) Report of the retreat for African missions in Geneva, 28th October 2004.
7) South Centre Analytical Note, “A Detailed Analysis of Annex D To The General Council Decision July 2004,”Modalities For Negotiations on Trade Facilitation”, August 2004,SC/ADP/AN/CC/2.4
8) T Ademola Oyejide,”Interests and Options of Developing Least-Developed Countries in New Round of Multilateral Trade Negotiations”, No. 2, May 2000.
9) The Trade and Development Board,” Reveview of Developments and Issues in the Post Doha Work Programme of Particular Concern to Developing Countries: A Post Cancún Perspective”, fifty-first session, Geneva, 4-15 October 2004.
10) UNCTAD,”Multilaterlism and Regionalism: The New Interface, Rio de Janeiro, 8 June 2004.