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The WTO 5th Ministerial Conference in Cancun: A Briefing on the Major Issues

In preparation for the ministerial held 10-14 September, 2003, we prepared a brief to update you on the essential information and issues pertaining to the conference:

What will be discussed in Cancun?

The WTO so far has released a draft of the declaration for the upcoming ministerial, which tentatively lists the topics that will headline the conference. Topics listed include: TRIPS & Public Health; Agriculture; Non-Agricultural Market Access; Services; Rules; TRIPS; Environment; Dispute Settlement Understanding; Special & Differential Treatment; Implementation; Investment; Competition; Government Procurement; Trade Facilitation; Small Economies; Trade, Debt & Finance; Trade & Transfer of Technology; TRIPS non-violation; E-Commerce; Technical Cooperation; LDCs; and new accessions.

A Brief on the Major Issues:

The Cancun conference is largely for assessing progress that has been made in negotiations mandated by the Doha Declaration.  Of the issues listed in the Cancun draft declaration, some are not explicitly slated for negotiation at the conference, but rather progress in their ongoing negotiations will be noted and commented upon.  For other issues, however, the Doha Declaration mandates that an explicit consensus on modalities for negotiations be reached at the ministerial.  Below are summaries on some of these latter issues, specifically Agriculture, TRIPS & Public Health, the Singapore Issues, and Non-Agricultural Market Access:

Agriculture

Perhaps the most contentious issue of the Doha Round, much of the success of the round hinges upon whether or not satisfactory agreement on modalities for agriculture negotiations can be reached. For poorer countries that do not have industrial sectors, agricultural exports are sometimes the only goods they are capable of exporting, and they are unwilling to make concessions in other areas unless their agricultural products are granted better market access to other parts of the world. For wealthier countries, agriculture carries with it complicated issues of food security, cultural preservation, and biodiversity. During the Uruguay Round, all countries agreed on broad guidelines for decreasing supports for domestic agriculture, and increasing market access for agricultural imports, however they are currently grappling over the details of the modalities for negotiations on specific commitments toward achieving those goals. (The deadline, which was originally set for March 2003, was not met, and hopes are that an agreement on modalities may be reached by Cancun). The original deadlock over negotiation modalities was primarily caused by EU failure to agree on a Common Agricultural Policy (CAP) reform to reduce supports for agriculture, and complicated by the US’s post-Doha implementation of the Farm Bill, which dramatically increased federal support for agriculture. (This step shocked developing countries, as the US had previously been pushing for agriculture liberalization along with the developing world). Since then, the EU has agreed on a CAP reform policy which reduces subsidies to farmers earlier and by larger percentages than previously agreed, and which attempts to sever the tie between subsidies and production.

For more information, see...

GTN Agricultural Issue Page
GTN Agricultural Background for the WTO 2003 Public Symposium
WTO Agriculture Negotiation Backgrounder
CAP Reform Agreement Summary

TRIPS & Public Health

Paragraph 6 of the Doha Declaration on TRIPS and Public Health mandates that all member countries reach an agreement by the end of 2002 to resolve the issue of how countries with little or no manufacturing capabilities may procure drugs at below cost in times of national health emergencies. Negotiations reached a standstill, however, when the US rejected the proposal for an agreement in late December 2002, due to a dispute about which diseases would be covered by the agreement. The US favors a relatively limited definition of which diseases would apply under the agreement (HIV/AIDS, Malaria, Tuberculosis, and other similar infectious diseases), because they are afraid a broader definition may give rise to disincentives to create new pharmaceutical products. Developing countries prefer not to specify diseases. Because of the US blockage of the agreement, negotiations have yet to produce a result. In the meantime, the US has promised not to challenge countries that provide generic drugs for the poorest of the WTO Member who need them, but this promise is limited to only those diseases specifically in the Declaration, and to the poorest of the WTO Members. The current goal, therefore, is to reach an agreement prior to Cancun regarding Paragraph 6.

For more information, see...

GTN Intellectual Property Issue Page
WTO Declaration on the TRIPS Agreement and Public Health
TRIPS Material on the WTO Website
ICTSD's List of Papers and Articles on TRIPS
South Centre: "Implications of the TRIPS Agreement for Developing Countries"

Singapore Issues

During the 1996 Singapore Ministerial, members agreed that the relationships between trade and competition and between trade and investment required further examination. Trade facilitation and transparency in government procurement were also set apart for further study. Three working groups were organized within the WTO to address these areas, but a decision on whether or not to formally integrate these four issues, now known as the Singapore Issues, into the WTO framework was delayed until Doha in 2001. It was there that that the WTO recognized a “case for multilateral rules” in these areas, and mandated that decisions at the 5th Ministerial be reached as to whether negotiations on these issues could begin.

The Singapore issues are an extremely important part of what will be discussed at the Cancun Ministerial, complicating an already multifarious Doha Agenda and adding weight to an already heavy WTO burden. They also serve to crystallize the debate between developed and developing countries. Developed countries see these issues as the necessary next step for the WTO. Developing countries are cynical, however, that any agreement on these issues may interfere with their development opportunities in the long run.

Although the Doha Declaration mandates that consensus must be reached on modalities for negotiations on each of these four areas, the crux of the debate is likely to focus on whether negotiations on these topics within the WTO should begin at all:

Competition: The EU and US vigorously support a multilateral competition framework, claiming that unfair business practices distort trade just as much as tariffs. Developing countries, and most vocally India, urge caution on this issue proposing that competition regimes should be the decision of each individual country and should implemented at the country’s appropriate pace. At the Cancun conference, members are expected to come to a decision on modalities for negotiation on the issue of competition policy. However, the Doha conference chairman noted in his remarks that the interpretation of the mandate also “would…give each member the right to take a position on modalities that would prevent negotiations from proceeding after the Fifth Session of the Ministerial Conference until that member is prepared to join in an explicit consensus.”

Investment: Members who welcome a multilateral agreement on investment stress the benefits of greater transparency and well-defined investor rights, while opponents voice concerns that an agreement would curtail a country’s ability to implement national development and environment policies. Those against implementation of a multilateral investment policy also simply say that the WTO isn’t the correct forum. As with competition policy, members are expected to come to agreement on modalities for negotiation at the Cancun Ministerial, and this does include the possibility of agreeing upon no further negotiation on the topic.

Trade Facilitation: Multilateral guidelines through the WTO and other international organizations already exist in this area. This sets trade facilitation apart from the other Singapore issues because it has already been accepted by the Member countries as a legitimate issue within the WTO framework. The central question in Cancun will be what regulation, specifically simplification and transparency of cross-border transportation of goods, will offer over and above existing requirements. At the conference, members are expected to reach an agreement on modalities for negotiations.

Transparency in Government procurement: Government procurement of goods and services typically accounts for a large portion of GDP for developing countries. An existing plurilateral agreement through the WTO, the Agreement on Government Procurement has attempted to establish non-discrimination in government procurement decisions. Proponents of extending this agreement to all members say that increased transparency will help reduce corruption. The opposition fears that developing countries would suffer if foreign companies were put into direct competition with domestic firms. At Cancun, a decision should be taken as to modalities for negotiations specifically on the transparency aspect of government procurement.

For more information on the Singapore Issues, see...

ICTSD and IISD Doha Briefing: "The Singapore Issues"
Investment Watch: "The Singapore Issues: Overloading the Agenda?"

Non-Agricultural Market Access

The original purpose of the GATT was to create a multilateral trading system in which tariffs on industrial goods would be minimized as much as possible.  At the Doha Ministerial, members raised concerns about the implementation of this goal, and agreed that a consensus must soon be reached on how to make this a reality.  The Doha Declaration mandates that members reach a consensus by Jan. 1, 2005 (the "single undertaking" deadline) as to how exactly tariffs on non-agricultural goods will be reduced, and to implement that plan thereafter.  Cancun was originally slated in that declaration to be a "stocktaking" of progress made in negotiations.  NAMA has proven to be a particularly difficult issue to resolve because of an abundance of different proposals as to how to increase market access for these goods: some countries propose mathematical formulas to reduce all tariffs on non-agricultural goods (for example, reduce tariffs by a certain percentage); some countries propose tariff harmonization, which would make tariffs for the same good equal everywhere; developing countries prefer to see the elimination of tariff peaks and tariff escalation first. Although the Doha Declaration states that Cancun will only be a stocktaking, the draft program for the Cancun Ministerial indicates that modalities for negotiation on NAMA will in fact be adopted at the conference.  In view of the difficulties Member countries have already had in negotiating their proposals, it is hard to envision a consensus on NAMA coming out of the ministerial conference.  Because of the importance of the issue to the WTO's mission and the implications any agreement will have on developing countries' courses of development, adoption of any  modalities for negotiation on NAMA will likely be a hot topic at Cancun.

For more information, see...

WTO: Non-Agricultural Market Access Negotiations
International Trade Center's Report on WTO NAMA Negotiations (updated Jan 2004)
ICTSD and IISD Doha Briefing: "Market Access for Non-Agricultural Products"

Where Can I Go for Further Information?

The WTO Cancun Ministerial Page - contains logistical information and background on the conference.
ICTSD's Cancun Ministerial Info Page - lists current events news articles on topics relating to Cancun and events before, at, and after the conference.
SEATINI's Bulletin - Volume 6 of this bulletin offers news on development of negotiations in preparation for Cancun.