Transcript Slide 1

Doha Current Status
• The July 2006 talks in Geneva failed to reach an agreement
about reducing farming subsidies and lowering import taxes,
and continuation of the negotiations will take months to
resume.
• Hong Kong offered to mediate the collapsed trade
liberalisation talks. Director-General of Trade and Industry,
Raymond Young, says the territory, which hosted the last
round of Doha negotiations, has a "moral high-ground" on
free trade that allows it to play the role of "honest broker".[1]
•
Brazil emerged at the WTO’s Doha Round as a key player at
the center of the three important issues:
antidumping, agriculture subsidies, and patent protection.
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[1] http://en.wikipedia.org/wiki/Doha_Round
BRAZIL’S
ECONOMIC PROFILE
• Brazil has Latin America's largest economy; there has been
steady growth under Lula but millions live in poverty
• Population 186.8 million
• The % share of Agriculture in total GDP has increased slightly
over the years
Origins of gross domestic product :
agriculture 10% (30% when including agribusiness)
industry 36%
services 54%
Agriculture accounts for 40% of Brazilian exports
Brazil’ stand position
Brazil agrees that the introduction of a disclosure requirement in
the TRIPS Agreement is an essential element of the
development outcome that is expected from the Doha
Development round.
Brazil and the US have led opposite sides of the talks, which have
stalled over U.S. and European reluctance to reduce
agricultural subsidies and developing nations' insistence on
maintaining protective industrial tariffs.
Both countries also have opposing views over drug patents
"there is an unequivocal political will" by political leaders to
conclude the Doha Round, but "rich countries are responsible
for the current stalling“ — Brazil's chief negotiator
Patent Protection
One of the most visible issue on the table at the Doha Meeting was drug
patents, raised to the top of the international agenda due to the lack of
affordable medicine for millions of AIDS victims in the poorest countries.
Brazil, which for a long time has had a program for universal distribution of
AIDS drugs to those who are HIV positive, pushed hard aided by India and
South Africa for a declaration expanding their rights to produce and obtain
generic drugs.
At the Doha negotiations, it was declared that safeguarding patents and
copyrights "does not and should not prevent countries from taking
measures to protect public health.“ This was considered a victory for Brazil
AGRICULTURE:
Brazil is one of the leaders of the G-20, a group of agricultural producers.
• Brazil
Brazil
wants is
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US, EU and Japan to reduce their agricultural subsidies, so
that developing countries which have a competitive advantage over
developed nations can export their products.
The US has indicated it will cut subsidies only on the condition
that other developed nations do the same. It is suggested that the US
offer was made with the expectation that Europe would reject it.
The Bush administration, already on shaky political ground, cannot
afford to lose the support of the agricultural lobby.
This agricultural subsidy assistance is estimated by the Organization for
Economic Cooperation and Development to be around $300 billion annually
which increases the supply of basic agricultural goods on the world market,
thus lowering their prices.
Why are agricultural subsidies such a big issue?
• Many of the world's poorest nations have few exports to offer
besides basic agricultural products. These countries are hardpressed to compete against richer nations, such as the US, the
EU, and Japan that support farmers with subsidies.
• Wealthier nations stand by their subsidies because without
them, many of their farmers would be out of business (plus
political power/lobby).
• Critics of subsidies illustrate this reasoning by explaining that
the average EU cow is said to receive a $2.20 daily subsidy,
more than the daily wage of 20 percent of the world's
population.
Poorer nations cannot afford to subsidize, but they try to
protect their farmers in other ways. For example, tariffs on
agricultural goods are often even higher in poor countries than
in rich ones.
How subsidies affect Brazil
(real example)
The EU allocates close to $1.6 billion to subsidize annually
the continent’s export of refined sugar.
The sugar industries in the EU buy raw sugar from their excolonies in the Caribbean, Africa and the Pacific, then
process it in their own refineries and then sell it, within the
EU itself, at prices normally two times higher than the
international rate.
With this aggressive protectionist policy, the Europeans
manage to be the world’s greatest exporters of sugar, despite
their production costs that are double those in countries like
Brazil, Thailand and Mozambique.
Through subsidies and protectionist import tariffs, the
European producers are able to trade their sugar on the
world market at below their cost of production and thereby
reap major profits.
• Of all the major world sugar producers, Brazil has the lowest
production costs. Its cost of production is around $165 a ton.
• In the EU countries, the cost is approximately $700 a ton.
The EU’s $1.6 billion in subsidies are used to bridge the huge
gap between these costs and the price of sugar on the world
market.
• If European sugar was not subsidized, it would not be traded
on the world market, because in other countries, the costs of
production are so much lower.
• Because it has a highly competitive price on the world
market, since it has a cost of production far below
international costs, the importation of Brazilian sugar and
alcohol from sugar is subject to severe taxation in the US and
the EU countries.
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http://www.wsws.org/articles/2007/jan2007/braz-j24.shtml
• Brazil's sugar cane-based industry is far more
efficient than the US industry, but Brazilian
producers are denied access to the US market by
tariffs of 54 cents per gallon and subsidies of 51
cents per gallon paid to US producers.
• If rich countries suddenly demolished trade barriers
and zeroed out subsidies, Brazilian farming would
really shift into overdrive.
• Full liberalization would boost the real value of
agricultural and food output by 34% and real net
farm income by 46%, according to the World Bank.
• Under a more realistic scenario, Brazil's income
would rise by $3.6 billion a year. That is why the
Doha round of multilateral trade talks, which Brazil
hopes will dramatically lower barriers to agricultural
trade, are so important.
CONCESSIONS:
Brazil offer responds to two strategic lines of action.
The first indicates that even if agricultural negotiations
have not progressed as Brazil had hoped, the country is
doing its best to continue moving the services
negotiations and taking a constructive stance.
Secondly, the actual offer does not include new
commitments in services sectors of strong interest to
certain developed countries, such as the financial sector,
telecoms, energy and transport.
Brazil also excluded sensitive areas from a public policy
point of view such as health education and social welfare
services.
In presenting the offer, Brazil made a link between
progress on market access for services and negotiations
on GATS rules-related issues, including domestic
regulation, safeguards and subsidies.
• The new initial offer includes commitments in 14
services sub-sectors in areas not covered by the
current Brazilian list of commitments.
• The new sub-sectors covered include veterinary,
technical testing, fishing, personnel placement and
supply, investigation and security, equipment
maintenance, packaging, convention services, travel
agencies, tour operators and building services,
among others.
• While most WTO members welcomed the Brazilian
offer, some expressed caution by indicating that a
closer look at the Brazilian offer was in order before
making any assessment on the quality and trade
value of the offered commitments.
Recommendations for successful future Doha negotiations
• The WTO should establish a formal structure for its
negotiations that will assure that the interests of every
developing-country member are represented in a way that
is equal with the importance of all other members.
• Developed countries must commit to reducing their
production and export subsidies on agricultural products
that are of export interest to developing countries.
• Reduce other policies including import tariffs and other
barriers that reduce world prices of these products, there
must be a clear and explicit schedule for eliminating the
effects of these policies completely and in a timely fashion.
Recommendations (continuation)
• About intellectual property, the Doha Round negotiations
and developed countries should deliver on the promise to
provide needed flexibility for developing countries to gain
access to essential pharmaceutical products and other
products, such as those of biotechnology and information
technology, that are needed to improve the health and
facilitate the progress of developing countries.
RECENT ON THE NEWS
BUSH VISITS BRAZIL (March 9th 2007)
• U.S. is interested in obtaining Brazil’s unique
expertise and supply of sugar-cane ethanol as
means to produce fuel (biofuels)
• U.S. wants to reduce its dependence on oil
imported from countries that are not their allies
(Venezuela, Iran, Iraq)
• Could this give Brazil power to negotiate?
“we give you the technology for biofuels, you reduce
your subsidies of us to import agricultural products”
CONCLUSION
• All countries need to commit to some level of
liberalization if Doha is to progress. WTO
members have to learn to compromise in order
to get somewhere.
• It is a fact that by removing trade barriers,
developed countries would convey economic
benefits to developing countries that are worth
about twice the amount of their annual aid
transfers.
www.wto.org