October 11, 2005
IN THIS ALERT:

• US, EU Submit WTO Agricultural Reform Proposals
• WTO Director-General Lamy Says Services Essential to Doha Round
• Recent Services Documents Available
• UNCTAD Predicts Increase In FDI Flows

US, EU Submit WTO Agricultural Reform Proposals
 
At an October 10 trade ministers meeting in Zurich, the US submitted a formal proposal for multilateral agricultural reforms meant to move World Trade Organization (WTO) agricultural negotiations forward.  The plan proposes reducing domestic farm subsidies that are believed to distort world trade the most by 60 percent over 5 years (Amber Box), halving the previously agreed ceiling on those farm subsidies regarded as less distorting of trade over 5 years (Blue Box), and eliminating farm export subsidies by 2010.  Click here for a USTR Fact Sheet that outlines the proposal.

At the meeting, the EU proposed its own cuts in agriculture, and put forward negotiating guidelines for services. EU Trade Commissioner Peter Mandelson said that both goods and services are critical to the round.  "When the crunch comes, the EU’s final negotiating flexibility in agriculture will be heavily influenced by how ambitious all WTO members are on NAMA and services. And there will certainly be no deal on agriculture unless and until there is a balanced outcome across the board,” he said.  The EU proposes reducing domestic farm subsidies by 70 percent, committing to negotiate on product specific caps, and eliminating farm export subsidies (though no date was set).

On Services, Mandelson called for a multilateral formula for commitments by WTO Members, agreement on the principle of a plurilateral approach with sectoral model schedules, a date for revised offers and final offers, and targets for negotiations on rules.  Click here for a copy of Mandelson's statement. 

WTO Director-General Lamy Says Services Essential to Doha Round
 
In an October 5 address to an International Trade Centre conference, WTO Director-General Pascal Lamy said that services are a core element of the Doha Development Agenda — and a satisfactory result is a sine qua non for the Doha Round.  He noted that there is a clear link between development and the benefits brought about by the opening of services markets. "Proof of these benefits is that developing countries which have embraced and invested in the establishment of a services industry are clearly in the forefront of the battle against poverty and illiteracy. Countries with open services markets have seen greater product and process innovation, based largely on their access to foreign capital and world-class technology...modern services can help to overcome the constraints of economic poverty, geographic periphery, and social exclusion." Click here for a copy of the speech.

Recent Services Documents Available

The annual reports of several WTO services bodies have been made available on the WTO website:

• Council for Trade in Services - Annual Report of the Council for Trade in Services to the General Council (2005), (S/C/24). 
  
• Annual Report of the Committee on Specific Commitments to the Council for Trade in Services (2005), (S/CSC/11). 
  
• Working Party on Domestic Regulation - Annual Report of the Working Party on Domestic Regulation to the Council for Trade in Services (2005), (S/WPDR/8).
  
• Working Party on GATS Rules - Annual Report of the Working Party on GATS Rules to the Council for Trade in Services (2005), (S/WPGR/15).

UNCTAD Predicts Increase In FDI Flows

Global foreign direct investment (FDI) registered a 2 percent increase in 2004, the first annual increase after three years of declining growth, the United Nations Conference on Trade and Development (UNCTAD) said in its annual World Investment Report. UNCTAD expects a 10% increase in worldwide FDI this year.  According to the report, foreign investment in services, particularly financial services, continued to grow steadily, accounting for the bulk of world FDI inflows.  The service sector accounted for 63% of the total value of cross-border mergers and acquisitions in 2004, with financial services representing one-third. Click here for an overview of the report.  Click here for the complete report.