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.

• [1] http://en.wikipedia.org/wiki/Doha_Round

BRAZIL’SECONOMIC 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

• Brazil is upset

AGRICULTURE:

Brazil is one of the leaders of the G-20, a group of agricultural producers.

Brazil wants the US, EU and Japan to reduce their agricultural subsidies, sothat 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 forEconomic 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 hard-pressed 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.

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 ex-colonies 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.

How subsidies affect Brazil(real example)

• 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.

• 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 NEWSBUSH 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”

• 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

CONCLUSION