Shifting gear

Egypt has refined its negotiating position for next month's Hong Kong WTO ministerial conference, reports Niveen Wahish

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As the date of the W5orld Trade Organisation's ministerial conference draws near the wrangling continues, with negotiators now talking of recalibrating objectives for Hong Kong, says Craig Thorn of the DTB Associates, a consulting firm specialising in international trade and agricultural policy.

Speaking at a conference held in Cairo on "The WTO ministerial conference in Hong Kong and Egypt's trade liberalisation commitments: benefits and costs", Thorn told the audience that the original objective had been to agree full modalities, ie the reduction formulas for tariffs and subsidies, by Hong Kong.

"A do or die session in Hong Kong is no longer possible," he said, before adding that "this does not mean that the overall objective has been lost."

Thorn believes member countries will try to consolidate progress already made rather than push negotiations further. He expects another meeting to be held during the first quarter of 2006 at which negotiators will try to achieve what they had originally wanted for Hong Kong.

Despite the fact that most countries now sense that nothing major will be concluded in Hong Kong efforts to fine-tune positions continue. Tomorrow trade ministers of the African Group meet in Tanzania to finalise a common position while later this month Arab trade ministers are scheduled to meet in Beirut for the same purpose.

In addition to seeking to formulate common positions Egypt is looking out for its own interests, says Sherine El-Sabagh, head of the general department for goods at the Ministry of Foreign Trade and Industry (MFTI).

Speaking at the Cairo conference, El-Sabagh said that the aim of negotiators is to make the most of trade liberalisation while ducking negative repercussions. On agriculture she said Egypt is calling for measures that will increase access for its agricultural exports, including tariff reductions and an end to trade distorting subsidies in the developed world. In the meantime Egypt is stressing that any preferential treatment developing countries currently receive should continue. Cairo is also calling for safeguards for developing countries seeking to protect their relatively weak markets. Developing countries, she argued, must be allowed to make lower tariff cuts than developed countries.

Where the proposed tariffs are lower than those currently collected local industries may well face threats. In order to alert the private sector to the potential dangers El-Sabagh produced a list of goods where this is currently the case, and stressed that Egypt will retain the right to classify a certain number of products -- yet to be decided -- as special or sensitive, exempting them from tariff cuts or else allowing a longer grace period for local producers to adjust.

The situation with Non-Agricultural Market Access (NAMA) is less complicated: Egypt's applied tariff rate is already lower than the bound rate to which it is committed within the WTO. Iman Refaat, head of NAMA and customs issues at MFTI, demonstrated to the conference that, with the exception of only a handful of products, even when applying the maximum tariff cut demanded by developed countries Egypt's applied rate would continue to be lower than the new bound rate. The tariff reductions of September 2004 far exceeded Egypt's commitments to the WTO. A list of exceptions is, however, currently being prepared of products on which Egypt may ask for lower tariff cuts, or else exemption.

Egypt's negotiating position is that developing countries should not be required to reciprocate the cuts made by developed countries. But as far as NAMA negotiations go Egypt is less worried about tariffs than about non-tariff barriers, including technical obstacles to trade, customs valuations, sanitary and phytosanitary requirements and labeling. Developing countries, argued Refaat, do not have the infrastructure to meet these requirements.

Egypt's position over services is also clear-cut. Together with several developing countries Egypt is against setting any benchmark for concessions made in the area of service liberalisation. The General Agreement of Trade in Services does not impose commitments on members but allows them to choose the areas they are willing to liberalise and to accept or refuse requests to open up specific areas. The idea of benchmarking offers was suggested by developed countries that feel insufficient progress has been in made in the area of liberalising trade in services.

Iman El-Sabaa, head of tourism and financial services at MFTI's general department for trade in services, says Egypt remains committed to making headway on this issue. She points out that Egypt has been committed for some time to liberalising construction, tourism, financial and maritime services. In June 2005 it expanded the list to include the computer services sector, express mail, additional construction services, additional insurance services as well as air transport services, sectors that had been effectively liberalised before June but were not registered with the WTO. The service sector is increasingly seen as crucial to Egypt's economic growth, an engine of job creation and a major source of hard currency. According to El-Sabaa the World Bank estimates that services accounted for 52.4 per cent of Egypt's GDP in 2004.

Non-Agricultural Market Access and trade in services are two areas in which the developed world is seeking concessions before it reciprocates in the agricultural sector.