Lagos — Progress on the Doha Development Round (DDA) of multilateral trade negotiations was halted by the failure of Trade Ministers to agree on the four Singapore issues (the WTO Ministerial Meeting in Singapore (1996) agreed to launch programmes on investment, competition, transparency in government procurement and trade facilitation which became known as the Singapore issues), agriculture and cotton in Cancun on September, 14, 2003.

As the Ministerial moves to Hong Kong, prospects on progress of the DDA are now beginning to emerge with the WTO General Council decision of July 31 on the future of the round - being referred to as the WTO July Framework Agreement. However, this is simply a framework agreement as actual modalities for negotiations are still to be negotiated.

It is encouraging that developing countries that have always been on the periphery of international trade landscape are gradually turning their participation in the WTO system into influence. This has been evidenced by events that led to the failure of the Seattle Ministerial in 1999, the formulation of the Doha Declaration in 2001 resulting in the 'development round', and the collapse of Cancun trade talks in 2003.

Despite these developments, negotiations on issues that are core to the development dimension of international trade are still locked into general statements of intent. Key issues emanating from this decision include agriculture, trade in industrial goods or Non- Agricultural Market Access (NAMA), trade in services, trade facilitation, and the principles of special and differential treatment (S&D) which accords special privileges to developing countries, by either exempting them from some of the WTO rules or being treated less demandingly than developed countries as a cross-cutting issue. There still remains the challenge of translating these generalities into precise, effective and operational modalities for implementation. Adequate preparations, especially at national and regional fronts, are a pre-condition for designing appropriate positions in forthcoming Hong Kong WTO negotiations. At the core of such preparations is to ensure sufficient and sound technical skills and institutional capacity.

On Agriculture for instance, it must be recalled that a resolve to deal with higher levels of protection in agriculture was at the core of the collapse of the Cancun Ministerial. Prior to Cancun, developing countries, including Brazil, Argentina, China, India and South Africa, forged a united front known as the G20 around the reduction of trade-distorting agricultural policies in developed countries. Whether the 31 July decision on agriculture is to be regarded as a promising opportunity towards a developmental outcome will largely depend on the actual modalities that will be adopted in forthcoming negotiations. Nevertheless, a framework for addressing distortions in global trade in agriculture now exists. Developing countries must now take advantage of this framework in pursuit of their development objectives. The decision contains three pillars: domestic support; export subsidies; and market access. Special and differential treatment for developing country Members remains an integral part of these pillars.

Cotton has been singled out as an integral part of the agricultural negotiations and all trade-distorting policies affecting cotton as stated in the in Doha Declaration are to be dealt with in this context. It appears that developing countries were not in agreement as to whether cotton is to be addressed outside or inside the agricultural framework.

On domestic support, the DDA calls for "substantial reductions in trade-distorting domestic support" in agriculture. Subsidizing Members are expected to make a 20% reduction in the overall total of their trade-distorting subsidies (including Amber box, Blue Box and de minimis support) during the first year of the implementation period through a 'tiered' formula. Cuts will be made progressively such that higher levels of subsidy will experience deeper cuts than lower levels. Amber box subsidy reductions will be effected from final bound levels also progressively through the 'tiered' formula. It is important to note that current levels of agricultural subsidies negotiated during the Uruguay Round., are already well below the bound levels. Therefore, the impact of such cuts is likely not to be felt at the beginning of the implementation period. During the negotiations, concerns have been raised about the possibility of transfers between different categories of support. It has been agreed that product-specific support payments will be capped but how to do that is still remains an unanswered question. Nevertheless, 'box shifting 'still remains a concern to be taken into account For example, the US counter cyclical payments in terms of the 2002 US Farm Act can be now notified as Blue Box measures, opening up the possibility of avoiding reducing trade-distorting domestic support. Least-Developed Countries (LDCs) will not be required to undertake reduction commitments. The Blue Box has been recognized as important in promoting agricultural reforms and its support will not exceed 5% of a Member's average total value of agricultural production during an historical period, yet to be determined.

On export competition, the DDA calls for "reduction of, with a view to phasing out, all forms of export subsidies". Developed countries have agreed to eliminate export subsidies. The modalities for the elimination of export subsidies are still to be negotiated but this has to be done in parallel with the elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect, such as export credits, export credit guarantees, trade distorting practices of state trading enterprises or insurance programs with repayment periods beyond 180 days. The provision of food aid that is "not in conformity with operationally effective disciplines" will also be agreed so as to "prevent commercial displacement". The issue of "parallelism" with measures such as export credits, export guarantees and insurance support measures and those affecting provision of food aid is likely to prolong the process of eliminating of export subsidies. In a nutshell, this 'parallelism' presents itself as a potential for delaying the elimination of export subsidies. Therefore, the question of a credible time table for the elimination of export subsidies should be a key issue in forthcoming negotiations.

With respect to market access, the DDA calls for "substantial improvements in market access". A single approach (tiered formula) on tariff reductions has been agreed that takes into account of tariff structures. Tariff reductions will be made from bound rates and that, except the LDCs, all WTO Members will have to make a contribution, while also taking into account S&D provisions for developing countries. Deeper tariff cuts are expected in higher tariffs to ensure progressivism in tariff reductions while allowing for flexibility for 'sensitive' products.

The Agreement allows Members to designate an approximate number of products to be negotiated as 'sensitive products', including developed countries. In essence, this extends special differentiated treatment to developed countries as well and creates an incentive for maintaining existing protectionist measures, at least in the short- and medium terms. Developing countries will also be able to designate Special Products (SPs) for more flexible treatment on the basis of food security, livelihood security and rural development needs. However, it is not clear as to what constitutes concepts such as 'livelihood security' and how such criteria can be linked to special products category. A Special Safeguard Mechanism (SSM) to guard against import surges will be established for use by developing countries.

The negotiations on market access for non-agricultural products (NAMA), according to the Doha Declaration, is centered around the need to reduce or eliminate tariffs, including the reduction or elimination of tariff peaks and tariff escalation and non-tariff barriers (NTBs), in particular on products of export interest to developing countries. This will also have to take into account the need for special and differential treatment for developing countries. These statements were reaffirmed in the July Decision on NAMA. Despite intense discussions, the new framework agreement does not contain significant progress from the so-called Derbez Draft which was produced but not agreed upon at Cancun. Developing countries in the discussions emphasized the need for 'policy space and flexibility' in order to allow room for industrial policy.

The agreement gives recognition to the non-linear formula approach as the basis for reducing tariffs, lowering or eliminating tariff peaks and tariff escalation, while taking account of the special needs and interests of developing and least-developed countries, including through less than full reciprocity in reduction commitments. Tariff reductions or elimination shall commence from the bound rates after full implementation of current concessions. Developing countries shall have longer implementation periods for tariff reductions. LDCs will not be required to apply the formula but are expected to substantially increase their level of binding commitments. NTBs are regarded to be an integral part of the DDA, and Members are encouraged to make notifications on NTBs by 31 October 2004. The challenges faced by non-reciprocal preference beneficiary countries and those that are heavily dependent on tariff revenue should be recognized.

On Trade in Services, members who have not submitted their initial offers were expected to do so because a round of revised offers was expected by May 2005. Members were expected to aim at achieving progressively higher levels of liberalization with no a priori exclusion of any service sector or mode of supply and should give special attention to sectors and modes of supply of export interest to developing countries. The interest of developing countries in Mode 4 is essential to be noted.

On Trade Facilitation, which is the only Singapore issue that is now part of the new framework agreement, and is aimed at reducing all the transactions costs associated with the enforcement, regulation and administration of trade policies. Broadly speaking, trade facilitation includes domestic policies, institutions and infrastructure dealing with the movement of goods across borders. The clarification and improvement of relevant aspects of Articles V, VIII and X of the GATT 1994, with a view to further expediting the movement, release and clearance of goods, including goods in transit, will be part of the next negotiations. The timing for entering into commitments in the case of developing and least developed countries should be related to their implementation capacity. Enhancing technical assistance and support for capacity building in trade facilitation should also be part of negotiations.

In summary, the July 2004 WTO Agreement provides for a framework for concluding the Doha Development Agenda, which was deadlocked in Cancun. This agreement is a mere framework and modalities for negotiations are yet to be determined. However, inside feelers maintain that it is certainly better than what was on the table in Cancun, noting that there is now an ample opportunity to integrate development needs of developing and least-developed economies into negotiations provided there is adequate preparation.

In the agricultural sector, attention should be paid on ensuring substantial progress in the reduction of trade-distorting measures such as production and export subsidies in developed markets. Despite higher tariffs on agricultural products in some countries in Sub-Saharan Africa, the region's agricultural markets are relatively efficient and non-distorted. If accompanied by effective measures to address NTBs such as sanitary and phyto-sanitary (SPS) and support infrastructure such as transport, significant gains can be reaped in increasing exports to OECD and other developing countries' markets. Net food importing countries are also likely to derive benefits from agricultural trade liberalization. The negotiation modalities on Special Safeguard Mechanism (SSM) for use by developing countries to guard against import surges are still to be negotiated and some capacity building efforts in this area may be important. The introduction of 'sensitive' and 'special' products categories will require countries to conduct independent analysis of their agricultural sectors so as to identify their defensive and offensive concerns.

Finally, the development dimension of the Doha Round of negotiations, through special and differential treatment still needs to be clearly spelled out and made operationally effective. This simply means in all key issues for negotiations discussed above, developing countries will need to make sure that the final outcome are supportive of their development objectives. This sounds so simple but working out specific modalities and instruments remains a challenge. Again more work - such as participation of stakeholders around specific issues at national levels; analytical studies by independent researchers and effective modalities to deal with supply capacity constraints- are urgently needed.

The implications for tariff liberalization in non-agricultural products for developing countries, especially in Sub-Saharan Africa, are generally known. Key concerns are the revenue losses and possible de-industrialization that may result from further tariff reductions. Some countries are also concerned about the erosion of 'industrial policy space' and existing 'preferences' under non-reciprocal trade preferences such as the General System of Preferences (GSP), Everything-but-Arms (EBA) initiative, Africa Growth Opportunity Act (AGOA) and the Cotonou preferences.

In the area of trade facilitation, it is important to conduct a capacity needs assessment in order to effectively benefit from available technical assistance and capacity building provisions. This may also be important in informing negotiating positions on special and differential treatment for developing and least developed countries in trade facilitation. Developing countries should seek to benefit effectively from trade facilitation provisions while avoiding making commitments that may become unsustainably costly and administratively burdensome.

In conclusion, going by recent comments of Paschal Lamy, the new WTO Director-General, there are signals of hope that developing countries can still use the Doha Round of multilateral trade negotiations in furtherance of their development objectives. This hope rests on their ability, individually and collectively, to turn their participation into formidable influence. Such influence will only be possible if they have clearly identified their trade interests within the context of their overall development strategies; if such interests are supported by appropriate domestic policy and regulatory frameworks and are translated into negotiation positions; and have the required capacity to advance such negotiation positions. The participation of various stakeholders at national levels and enhanced assistance from the donor communities is evidently important to deal with these challenges.

Ukaoha is the President of the National Association of Nigerian Traders (NANTS), Chairman of the Nigerian Trade Network (NTN) and the Secretary-General of the African NGOs Association on Trade and Agriculture.