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There actually seems to be hope that next week’s G20 summit will move beyond the tired mantra to finish the Doha Round and give a push to the Millennium Declaration commitment to provide duty-free, quota-free market access for the world’s poorest countries. This is an opportunity to contribute to job creation and growth when the global economy is still fragile. Furthermore, it would have minimal impact on importing countries since the least-developed countries account for around 1 percent of global trade.

Thus, it is heartening that an early October draft of the action plan on trade produced by the G20 development working group includes the following language:

G20 members agree to make concerted progress towards providing Least Developed Countries (LDCs) with [full] duty-free and quota-free (DFQF) access to their markets.

While the brackets mean that a commitment to providing full product coverage is not agreed, the paragraph goes on to say that the group will work on:

…building consensus towards an appropriate timetable leading to the implementation of 100% DFQF by advanced economies and of the Hong Kong commitments on DFQF for emerging economies.

Bravo to the drafters for reiterating the need for comprehensive product coverage. At the WTO ministerial in Hong Kong in 2005, U.S. negotiators insisted on limiting DFQF market access to 97 percent to protect politically sensitive agricultural and clothing items. Since those products are what LDCs typically export, the carve-out robs the proposal of all meaning.

As for timing, the CGD Working Group on Global Trade Preference Reform recommends that rich countries should provide 100 percent DFQF market access immediately, while emerging powers with programs—Brazil, China, India, and Turkey—should phase in full coverage by 2015, the target for meeting the Millennium Development Goals. Other middle-income G20 members that do not have preference programs for LDCs should create them.

So what should we look for in next week’s declaration and associated annexes? First, does the language on DFQF market access appear at all? Our working group recommended and the European Union (EU) formally proposed this action last year, but addressing this issue at the Pittsburgh summit was blocked, presumably by the United States. This time around, U.S. negotiators might agree to go along with some fuzzy language about making progress on the initiative. If that is the case, the thing to look for is whether the words “full” and “100 percent” in reference to the coverage of the scheme are included. Specifics on timing would be welcome, but seem unlikely.

Finally, with the United States ambivalent at best, who will be the cheerleaders in Seoul for this initiative? The EU, pushed by the United Kingdom, should again be strongly supportive since their Everything But Arms program already has full product coverage and they recently rectified the major weakness in the program when they announced changes to the restrictive rules of origin. Canada has a very good program and was interested in putting this on the agenda in Toronto, but they may balk at the 100 percent language since they also have sensitivities in agriculture. It is interesting that Korea is taking the lead in putting trade for development on the agenda, with the emphasis on full product coverage, because their preference program for LDCs is slated to top out at 95 percent product coverage. That could mean that Korea would be willing to go further if this is part of a joint G20 initiative. Similarly, Brazil is facing opposition from domestic producers to their proposal to phase in full product coverage over four years and officials have reportedly said that it would be easier to do if they had a mandate from the G20.

The fulcrum of the development agenda that the G20 leaders are set to consider is resilient growth—trade is clearly one of the key tools for achieving this goal. South-South trade is also of increasing importance and that makes the G20 an appropriate forum to discuss DFQF market access. So I’m looking forward to seeing what comes out of the summit next week. Stay tuned…

 

CGD blog posts reflect the views of the authors drawing on prior research and experience in their areas of expertise. CGD does not take institutional positions.

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