How successful was the Hong Kong Ministerial?

Decisions in Hong Kong indicate tariff reductions in developing countries and duty-free and quota-free access to Nepalese exports in the developed countries.

By Navin Dahal

10. January 2006

The sixth Ministerial of the World Trade Organisation (WTO) recently concluded in Hong Kong in December 2005, drawing mixed reactions. Some admit that it was a success and some argue that it was a failure. The fifth WTO Ministerial held in Cancun in 2003 was dubbed a failure as WTO Members could not reach a consensus and the Ministerial ended without a declaration. Many were apprehensive that Members would not be able to reach a consensus in Hong Kong and that the Ministerial would meet the fate of the Cancun Ministerial. On this account, the Hong Kong Ministerial can be dubbed a success as it adopted a declaration.

However, the success of a Ministerial cannot be and should not be judged solely on the basis of whether or not it was able to agree on a declaration. For a least developed country (LDC) like Nepal, a Ministerial can be termed successful only if the decisions help it to enhance trade opportunities. In the light of this fact, let?s examine whether or not the decisions of the Hong Kong Ministerial in different areas will help countries like Nepal to expand and enhance trade opportunities in the international market.

Agriculture

Agriculture has been the "make or break" issue in WTO negotiations. Huge domestic and export subsidies in the developed countries have distorted international trade in agriculture. At the time of the establishment of the WTO, Members agreed to discipline the agriculture sector by reducing domestic and export subsidies. In the present round of trade negotiations, Members are negotiating on the new reduction commitments and time period. Of all the different areas requiring Members to make reduction commitments, they were able to agree only on the end date for the elimination of export subsidies in the HK Ministerial. Members have agreed to the parallel elimination of all forms of export subsidies and disciplines on all export measures by the end of 2013. Some major decisions were also made in other areas. The modalities will be finalised in the next few months in Geneva.

The end of export subsidies is likely to increase the world prices of agriculture commodities. This could result in a higher food bill for a net food importing country like Nepal. However, increased prices may act as an incentive for farmers to grow more.

Least Developed Countries like Nepal are not required to make commitments to reduce domestic support and export subsidies in the present round. However, Nepal will have to be cautious that the modalities for tariff reduction ensure enhanced market access in the developing countries and elimination of tariff peaks and tariff escalation in the developed countries (in case these are not addressed by duty-free quota-free access).

Non Agricultural Market Access (NAMA)

As Nepal has already bound 99.3 percent of its tariff lines and LDCs are not required to make further reduction commitments in this round, the outcome of this round is not going to alter Nepal?s import tariffs. Nepal?s interest in this area is thus market access for its manufactured goods including garments in developing and developed country markets. Decisions in HK indicate that the present negotiations in this area are likely to result in tariff reductions in developing countries and duty-free and quota-free access to Nepalese exports in the developed countries.

Services

The liberalisation of the services sector and particularly in ?mode 4?, cross border movement of natural persons, can have a huge positive impact in the livelihood options for Nepal. Liberalisation in this mode in developed countries and particularly for ?low skilled and unskilled? categories is important for Nepal. This needs to be accompanied by the elimination of employment conditions, economic needs tests, quota restrictions in visa and recognition of qualifications.

Navin Dahal is the executive director of MS Nepal partner SAWTEE, South Asia watch on Trade, Economics and Environment - a Kathmandu based regional network of NGOs