SA faces Doha Round 'challenge'
July 13, 2009
By Ethel Hazelhurst
South Africa faces major challenges when the stalled Doha round of trade talks finally get back on track, according to Xavier Carim, the deputy director-general for international trade.
Meeting in Italy last week, leaders of the world's major economies, the Group of Eight (G8), called for Doha talks to resume. The call was supported by the Group of Five major emerging market economies, which include South Africa.
Carim said at the weekend that South Africa stood to make "the deepest and widest cuts to its industrial tariffs of all member countries" under current demands on the Doha table.
He said: "South Africa is in an unusual position because it was treated as a developed country in the Uruguay round (of trade talks). This has given us less flexibility in these negotiations."
The Uruguay round, which ended in 1994 with the creation of the World Trade Organisation (WTO), addressed the concerns of the advanced economies and ignored the interests of the developing world.
The Doha development round was intended to provide better access to global markets for these economies but it has stalled repeatedly since its launch in 2001 because developed and developing countries' positions were too far apart. The attempts to revive it come as global trade volumes fall an estimated 10 percent this year.
Carim said South Africa would be required to cut 23 percent of its industrial tariff lines by more than 30 percent, while another 7 percent of its lines would take smaller cuts under the current requirements.
"South Africa is arguing that we have a specific case to make."
He referred also to the hefty subsidies that the US, EU and other advanced economies provide to their farmers. "Only a few years ago they were worth about $1 billion (R8.2bn) a day," he said. "Though the payments have since been reduced they remain substantial."
And the situation is complicated by the fact that, when agricultural prices are high, subsidies are not required, but when prices fall, as they have done over the past year, larger subsidies are provided by governments in rich countries.
Carim said: "Though the US is offering to reduce its subsidy ceiling from $40bn a year to $14bn, this ceiling still gives them scope to double the level of subsidies currently being paid out from the $7bn to $14bn."
He said the subsidies to domestic farmers in Europe and the US "do enormous damage to production in other parts of the world" by driving prices down further.
Developing countries depend heavily on exports for their growth. According to the WTO, developing nations' trade represents 40 percent to 50 percent of their gross domestic product compared with an average of 15 percent for more advanced countries.
The key issues that have stalled the Doha talks for nearly eight years will not be on the agenda when the WTO holds its next ministerial meeting in November. Members will simply review the operations of the WTO.
Taku Fundira, a researcher at the Trade Law Chamber of Southern Africa, said the meeting would be a chance for members to come up with a new model for future talks.
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