a

GAO

United States Government Accountability Office

Report to the Chairman, Committee on 

Ways and Means, House of 

Representatives

April 2006 WORLD TRADE 

ORGANIZATION

Limited Progress at 

Hong Kong Ministerial 

Clouds Prospects for 

Doha Agreement

GAO-06-596
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 2006

WORLD TRADE ORGANIZATION

Limited Progress at Hong Kong 

Ministerial Clouds Prospects for Doha 

Agreement 

Highlights of GAO-06-596, a report to the 

Chairman, House Committee on Ways 

and Means 

U.S. officials often call the World

Trade Organization’s (WTO) Doha

Development Agenda or “Round” of

global trade talks, launched in

Doha, Qatar, in November 2001, a 

“once in a generation opportunity”

to expand trade. President Bush 

has identified their success as his 

administration’s top trade priority. 

Due to various U.S. notification and 

consultation requirements,

concluding the negotiations in 2006

is essential for a Doha agreement 

to qualify for congressional

consideration under U.S. Trade 

Promotion Authority (TPA), which

expires July 1, 2007. A ministerial 

meeting among the WTO’s 149 

members was held on December

13-18, 2005, in Hong Kong, China,

to make decisions needed to 

advance the talks. 

Given the importance of the WTO 

Doha Round to the United States, 

GAO was asked to provide an 

update on the status of the 

negotiations. In this report, the 

latest in a series on the

negotiations, we (1) provide the 

status of the Doha negotiations on

the eve of the Hong Kong

ministerial, (2) review the outcome 

of the Hong Kong ministerial, and

(3) discuss the prospects for 

concluding the Doha Round before 

TPA expires in July 2007.

WTO members made little progress in 2005 toward their goal of completing

the steps needed to set the stage for finalizing the Doha Round of global 

trade talks. The key milestones for progress through July were missed. 

Despite new proposals on agricultural subsidy and tariff cuts submitted in 

October 2005, it was clear by November that key players were too far apart 

to achieve the major decisions planned for the December ministerial. To 

avoid a failure, members agreed to lower expectations for the meeting. 

The Hong Kong ministerial resulted in modest agreements on a narrow range 

of agricultural and development issues. Ministers made little progress on the 

broader Doha negotiating agenda, including two other U.S. priorities—

services and nonagricultural market access. Nevertheless, WTO members

renewed their resolve to successfully conclude the Doha Round by the end 

of 2006 and set new interim deadlines under a compressed schedule to meet 

that goal. Critical decisions that will determine each member’s cuts in tariffs 

and other barriers were due April 30 and July 31, 2006, but the April 30

deadline will be missed.

WTO members continue to profess commitment to accomplish the ambitious

agenda set at Doha. However, with nearly all tough decisions put off, the 

tension between members’ original high ambitions and the U.S. TPA 

timeframe has become acute. Since the Hong Kong ministerial, members 

have taken concrete steps to help build consensus. Yet, the ongoing impasse

on core areas such as agriculture, and the difficult political decisions needed 

to resolve it, cause many experts to be skeptical. As illustrated below, 

numerous time-consuming steps still must be completed in the little more 

than a year left before TPA expires. While holding out hope for an 

agreement that lives up to Doha’s promise, experts say outright collapse, 

substantial delay, or modest results are all possible outcomes. 

Key Selected Deadlines in 2006 for Doha Negotiations 

Source: GAO, based on WTO documents.

Jan.

2006

Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.

Feb. 28: 

Submit 

plurilateral 

requests for 

services

Apr. 30: 

Establish 

modalities for 

agriculture and 

NAMA

Provide 

Integrated 

Framework 

recommendations

July 31:

Submit schedules for 

agriculture and NAMA

Submit second round of 

revised offers for services

Chair submits

consolidated rules text

Provide “Aid for Trade” 

recommendations

Submit first full draft of 

trade facilitation report

Oct. 31:

Submit final 

commitment 

schedules for 

services

Dec. 31:

Conclude 

Doha

negotiations

NAMA: Nonagricultural market access

www.gao.gov/cgi-bin/getrpt?GAO-06-596.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

(202) 512-4347 or yagerl@gao.gov. 
Page i GAO-06-596 World Trade Organization

Contents

Letter 1

Results in Brief 2

Background 4

Limited Progress Since Mid-2004 Causes WTO Members to 

Recalibrate Goals for Hong Kong 8

Hong Kong Resulted in Several Limited New Commitments, but 

Postponed Key Decisions on Cutting Tariffs and Other 

Barriers 18

Several Factors Make Meeting 2006 Deadlines Challenging, and 

Have Raised Doubts about the Likelihood of an Ambitious 

Outcome within the TPA Time Frame 24

Concluding Observations 37

Agency Comments and Our Evaluation 38

Appendixes

Appendix I: Objectives, Scope, and Methodology 40

Appendix II: GAO Contacts and Staff Acknowledgments 42

Tables Table 1: Major Negotiating Groups in the World Trade 

Organization 5

Table 2: Agriculture Market Access Proposals Revealed Wide 

Differences among Key Players in Expectations for 

Developed Countries 14

Table 3: Principal U.S. Government Activities to Conclude Doha 

Round Agreements 33

Figures Figure 1: Agenda for Hong Kong Focused on Only 2 of the 16 Doha 

Negotiating Areas 9

Figure 2: Key Milestones and Deadlines Missed in the WTO 

Negotiations in 2005 12

Figure 3: Key Selected Deadlines in 2006 for the Doha 

Negotiations 32
Contents

Page ii GAO-06-596 World Trade Organization

Abbreviations

ACP African, Caribbean, and Pacific Group of States

C-4 Cotton Four countries

EU European Union

GATT General Agreement on Tariffs and Trade

G-4 Group of 4

G-5 Group of 5

G-6 Group of 6

G-10 Group of 10

G-20 Group of 20

G-90 Group of 90

ITC International Trade Commission

LDC Least developed countries

NAMA Nonagricultural market access

TPA Trade Promotion Authority

USTR Office of the United States Trade Representative

WTO World Trade Organization

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-06-596 World Trade Organization

United States Government Accountability Office

Washington, D.C. 20548

A

April 26, 2006 Letr

The Honorable William M. Thomas

Chairman

Committee on Ways and Means

House of Representatives

Trade ministers from members of the World Trade Organization (WTO) 

gathered in Hong Kong, China, in December 2005, for a meeting that was 

originally expected to yield agreements considered critical for concluding 

the Doha Round negotiations by the end of 2006.1

 Launched in November 

2001 in Doha, Qatar, these negotiations involve 149 nations and encompass 

a far-reaching, ambitious agenda for liberalizing trade ranging from 

reducing tariffs and eliminating subsidies, to bolstering economic 

development in poor countries. Because the Doha Round is considered a 

“package deal”—or single undertaking in WTO parlance—simultaneous 

agreement by all members on all issues is required to finalize an agreement. 

U.S. and WTO officials acknowledge that concluding the negotiations in 

2006 is essential for a Doha agreement to qualify for the streamlined 

congressional approval procedures of the U.S. Trade Promotion Authority 

(TPA), which expires July 1, 2007.2

 President Bush has identified the 

success of the Doha Round negotiations as his administration’s top trade 

priority.

Given the importance of the WTO Doha Round to the United States, you 

asked us to provide an update on the status of these negotiations. In this

1

The negotiations are formally called the Doha Development Agenda but are commonly 

referred to as the “Doha Round.”

2

Title XXI of the Trade Promotion Authority (TPA) Act of 2002 (P.L. 107-210) gives the 

president the authority to conclude trade deals around the world and to submit legislation 

approving and implementing the agreement subject to an up or down vote by Congress 

using expedited procedures within a set time period. To qualify, any agreement resulting 

from the Doha negotiations must be entered into by the president before July 1, 2007. 

Expedited consideration is also contingent on the president’s compliance with requirements 

for consultations with and notices and reports to Congress before, during, and after 

negotiation of the agreement. In negotiating the Doha Round on behalf of the United States, 

the Office of the United States Trade Representative is guided by the goals outlined by TPA, 

including overall and principal objectives and promotion of certain priorities. 
Page 2 GAO-06-596 World Trade Organization

report, the latest in a series,3 we (1) provide the status of the Doha 

negotiations on the eve of the Hong Kong ministerial, (2) review the 

outcome of the Hong Kong ministerial, and (3) discuss the prospects for 

concluding the Doha Round before TPA expires in July 2007.

To address these objectives, we met with, and reviewed documents from a 

range of WTO, U.S., and foreign government officials, as well as academic 

experts and private sector groups (including business associations, law 

firms, and civil society groups) in Washington, D.C.; Geneva, Switzerland; 

and Brussels, Belgium. We also attended the sixth WTO ministerial 

conference in Hong Kong, China. To assess the prospects for success, we 

relied on the views of selected participants and experts representing a 

range of institutional perspectives (government, academia, “think tanks,” 

nongovernmental organizations, business groups, and other trade policy 

observers), as well as our own analysis. We conducted our work from May 

2005 through March 2006 in accordance with generally accepted 

government auditing standards.

Results in Brief Between mid-2004 and the eve of the WTO’s Hong Kong ministerial 

conference in December 2005, WTO members made little progress toward 

their goal of making the major decisions in six core areas that would be 

needed to set the stage for final negotiations in 2006: (1) agriculture, (2) 

nonagricultural (or industrial) market access, (3) services, (4) trade 

facilitation (simplification of customs procedures), (5) development issues, 

and (6) WTO rules (including antidumping and subsidies). During this 

period, trade facilitation negotiations got off to a good start and some 

progress on technical issues was achieved in most other areas of the 

negotiations, although this generally took longer and proved more 

contentious than expected. Key milestones were missed, including the May 

2005 deadline for submitting new and revised offers in the services 

negotiations, which was not met by most members. Despite significant 

proposals on cutting agricultural subsidies and tariffs submitted in October 

2005, it was clear to members by November that the negotiating positions 

3

GAO, World Trade Organization: Global Trade Talks Back on Track, but Considerable 

Work Needed to Fulfill Ambitious Objectives, GAO-05-538 (Washington, D.C.: May 31, 2005); 

GAO, World Trade Organization: Cancún Ministerial Fails to Move Global Trade 

Negotiations Forward; Next Steps Uncertain, GAO-04-250 (Washington, D.C.: Jan. 15, 

2004); GAO, World Trade Organization: Early Decisions Are Vital to Progress in Ongoing 

Negotiations, GAO-02-879 (Washington, D.C.: Sept. 4, 2002).
Page 3 GAO-06-596 World Trade Organization

of key players were too far apart to achieve major agreements at the 

December ministerial. To avoid a potentially disastrous collapse at Hong 

Kong, the new WTO Director-General steered members toward lowered 

expectations for the meeting. As a result, they shifted the focus to narrower 

initiatives primarily intended to lock in progress to date and benefit leastdeveloped country members.

The Hong Kong ministerial resulted in modest agreements on a narrow 

range of agricultural and development issues, but postponed decisions on 

how much to cut tariffs and other barriers. Notably, WTO members 

conditionally agreed to eliminate agricultural export subsidies by 2013 and 

to provide least-developed countries duty-free and quota-free access to 

developed-country markets for at least 97 percent of their products. 

However, little progress was made on other core areas of the broader Doha 

negotiating agenda, including two of the United States’ priorities—services 

and nonagricultural market access. Despite its modest achievements, the 

Hong Kong ministerial declaration formally committed members to 

conclude an overall agreement on the Doha Round by the end of 2006 and 

set a series of interim deadlines to meet that goal. For example, April 30, 

2006, was the new date for establishing “modalities”—broad guidance on 

the extent of each country’s reductions in tariffs, subsidies, and other trade 

barriers—for agricultural and nonagricultural goods. Members’ schedules, 

reflecting how they propose to apply these modalities in their national 

commitments, are due July 31, 2006, and will be the basis for the final phase 

of negotiations.

WTO members and observers recognize that achieving an agreement within 

the time remaining in 2006 will be challenging, given the limited progress to 

date and the scope and difficulty of the work outstanding. Members 

continue to profess high ambitions, however, and most view expiration of 

TPA on July 1, 2007, as a hard deadline that drives the need to conclude 

negotiations in 2006. Since Hong Kong, some steps toward achieving their 

agreed-upon goals have been taken, such as gaining agreement among key 

members to use simulations of the impact of proposed cuts in subsidies 

and tariffs as a basis for discussions. Nevertheless, factors such as the 

failure to meet most prior deadlines, the ongoing impasse on core areas 

such as agriculture, and the difficult political decisions needed to resolve 

them, cause experts to be skeptical. In particular, the trade-offs required to 

finalize the agreement will need to be made when political events such as 

elections are taking place, which will constrain key countries. Moreover, 

even if a breakthrough is achieved, many difficult and time-consuming 

steps must be completed before entering an agreement. Thus, the ability to 
Page 4 GAO-06-596 World Trade Organization

meet the 2006 deadlines with an ambitious outcome—one that would result 

in a strengthened and measurably freer global trade environment—is in 

doubt. While holding out some hope for a satisfactory outcome, several 

experts in fact warn that outright collapse, substantial delay, or a minimal 

outcome are possible. 

We solicited comments on a draft of this report from the Office of the U.S. 

Trade Representative (USTR), and the Departments of Agriculture, 

Commerce, and State; these agencies generally agreed with our substantive 

findings and offered a few minor technical corrections, which we 

incorporated.

Background The WTO was established as a result of the Uruguay “Round” on January 1, 

1995, as the successor to the General Agreement on Tariffs and Trade 

(GATT). Based in Geneva, Switzerland, the WTO administers agreed-upon 

rules for international trade, provides a mechanism for settling disputes, 

and serves as a forum for conducting trade negotiations. WTO membership 

has increased since 1995, and there are currently 149 WTO member nations 

and customs territories that are diverse in terms of economic development; 

these members negotiate individually or as a member of a group of 

countries (see table 1 for some of the major country groupings). While the 

WTO has no formal definition of a “developing country,” the World Bank 

classifies 105 current WTO members—or approximately 72 percent—as 

developing countries; 32 of these members are officially designated as 

“least-developed countries” (LDCs).4

 USTR negotiates on behalf of the 

United States in WTO negotiations.

4

The WTO recognizes as least-developed countries those countries that have been 

designated as such by the United Nations. Since 1971, the United Nations has denominated 

LDCs “a category of States that are deemed highly disadvantaged in their development 

process... facing more than other countries the risk of failing to come out of poverty.” In its 

2003 review of LDCs, the United Nations identified LDCs as countries with a 3-year average 

estimate of gross national income per capita under $900, among other criteria.
Page 5 GAO-06-596 World Trade Organization

Table 1: Major Negotiating Groups in the World Trade Organization

Source: GAO analysis of WTO documents.

a

The African, Caribbean, and Pacific Group of States (ACP) is an organization created in 

1975. It is composed of African, Caribbean, and Pacific states that are signatories to the 

partnership agreement between the ACP and the EU, now officially called the “Cotonou 

Agreement.”

The WTO ministerial conference held in Hong Kong, China, from December 

13–18, 2005, was the sixth since the establishment of the WTO in 1995. 

These ministerial conferences, convened at least every 2 years, bring 

together trade ministers from all WTO members. The outcome of a 

ministerial conference is reflected in a fully agreed-upon ministerial 

declaration. The substance of these declarations guides future work by 

outlining an agenda and deadlines for the WTO until the next ministerial 

conference. Decisions in the WTO are made by consensus—or absence of 

dissent—among all members, rather than by a simple majority. Periodic 

“mini-ministerials,” or informal meetings among small groups of selected 

WTO members, are often used to advance dialogue on issues.

Country group Countries Interest

Groups of 4, 5, and 6 

(G-4, G-5, G-6)

United States, EU, Brazil, and India (plus 

Australia in G-5; Japan in

G-6)

The G-5 helped negotiate the July 2004 

framework agreement on agriculture and 

variants of this group are now a key 

negotiating group for the Doha Round

European Union (EU)

(currently has 25 members)

Austria, Belgium, Cyprus, Czech Republic, 

Denmark, Estonia, Finland, France, 

Germany, Greece, Hungary, Ireland, Italy, 

Latvia, Lithuania, Luxembourg, Malta, 

Netherlands, Portugal, Poland, Slovak 

Republic, Slovenia, Spain, Sweden, and

United Kingdom

Political union that negotiates as a group in 

the Doha Round

Group of 20 (G-20) 

(currently has 21 members)

Argentina, Bolivia, Brazil, Chile, China, 

Cuba, Egypt, Guatemala, India, Indonesia, 

Mexico, Nigeria, Pakistan, Paraguay, 

Philippines, South Africa, Tanzania, 

Thailand, Uruguay, Venezuela, Zimbabwe

Developing countries united on agriculture 

negotiations

Group of 10 (G-10) Bulgaria, Iceland, Israel, Japan, 

Liechtenstein, Mauritius, Norway, South 

Korea, Switzerland, and Chinese Taipei

Net food importers and subsidizers

Group of 90 (G-90) Members of the African Union; the LDCs; 

and the African, Caribbean, and Pacific 

(ACP) Groupa

Coalition of the poorest and least-developed 

countries in the WTO

Cotton Four (C-4) Benin, Burkina Faso, Chad, and Mali West African cotton-producing countries 

advocating a WTO initiative to assist their 

cotton farmers
Page 6 GAO-06-596 World Trade Organization

At the Hong Kong conference, ministers sought to make progress in the 

ongoing multilateral trade negotiations, officially known as the Doha 

Development Agenda. Formally launched at the fourth WTO ministerial 

conference in Doha, Qatar, in November 2001, the negotiations are the 

latest in a series of global trade talks (negotiating rounds) dating back 

nearly six decades.5

 They are intended to reduce trade barriers and 

facilitate the free flow of commerce throughout the world. A major 

objective of the Doha negotiations is development—that is, to help 

developing countries realize the economic benefits of trade and enable 

them to take advantage of trading opportunities.

The Doha ministerial declaration established a work program with a 

number of negotiating areas and set the goal for concluding the 

negotiations by January 1, 2005.6

 Of the 16 current negotiating areas, 

market access in agriculture, services, and nonagricultural (industrial) 

products (NAMA) are the three U.S. priorities. WTO members set specific 

goals for each area and set up various negotiating groups to achieve them. 

In agriculture, the Doha work program commits countries to lower barriers

in world agricultural markets and sets forth three pillars for agricultural 

trade reform: export competition (subsidies), domestic support (subsidies 

and other assistance to farmers), and market access (tariffs). Agriculture 

remains the top issue for many participants and has been described as the 

lynchpin of the Doha negotiations. Lack of progress in liberalizing 

agriculture is partly due to the fact that it was first added to the trading 

system in the last (Uruguay) round, which left high subsidies and tariff 

barriers in place. Doha negotiations in services aim to ensure increased 

transparency and predictability of rules and regulations governing services 

and to promote liberalization of service markets. The goal of the NAMA 

negotiations is to reduce or eliminate tariffs and non-tariff barriers. The 

5

The Doha Round is the ninth round of trade liberalizing negotiations under the auspices of 

the GATT/WTO since 1947. For additional information on the fourth ministerial conference 

and the Doha Development Agenda, see GAO-02-879.

6

There are currently 16 negotiating areas in the Doha work program. These 16 areas are 

implementation-related issues and concerns; agriculture; services; market access for 

nonagricultural products; trade-related aspects of intellectual property rights; trade 

facilitation; WTO rules; dispute settlement understanding; trade and environment; 

electronic commerce; small economies; trade, debt, and finance; trade and transfer of 

technology; technical cooperation and capacity building; least-developed countries; and 

special and differential treatment. Originally, the Doha declaration set forth three other 

negotiating areas: transparency of government procurement, interaction between trade and 

competition policy, and relationship between trade and investment. Members agreed to 

drop these three areas in the July 2004 framework agreement.
Page 7 GAO-06-596 World Trade Organization

agriculture and NAMA negotiations involve first reaching agreement on 

“modalities”—the formulas, thresholds, dates, and other numerical 

benchmarks that members will commit to meet when they revise their 

WTO schedules of subsidy and tariff commitments. This guidance then is

translated into national tariff schedules specifying what tariff will be 

charged on each product. Members are then “bound” not to exceed these. 

Concluding the round will require simultaneous agreement on all issues, 

because WTO members have agreed it will be a package deal (or “single 

undertaking” in WTO parlance). As a result, trade-offs are expected to 

occur among issues to accomplish an overall balance satisfactory to all 

members. When it is final, the trade agreement will impose legally binding 

international obligations on WTO members governing the trade barriers 

they are allowed to maintain (such as tariffs) and the trade rules by which 

they must abide. Failure to comply is subject to binding dispute settlement 

and possible trade retaliation.

To date, the negotiations have progressed fitfully. Our January 2004 report 

explained the factors that caused the September 2003 Cancún ministerial to 

collapse in acrimony and confusion, including sharp North-South 

(developed-developing country) divisions on key issues. For example, 

developing countries rejected the proposed U.S. and EU reductions in 

agricultural subsidies as inadequate, but the United States and the EU felt 

developing countries were not contributing to reform by agreeing to open 

their markets. Moreover, many developing countries remained dissatisfied 

with proposed responses to their demands for special treatment and for 

relief from difficulties they were still experiencing in implementing existing 

WTO obligations. In 2004, the Doha Round negotiations started again on an 

uncertain note; however, political leadership, intensified dialogue, and a 

series of conciliatory gestures resulted in WTO members adopting an 

agreement on key issues in the negotiations known as the “July framework 

agreement,” which is credited with achieving sufficient progress on 

agriculture to put the global trade talks back on track and reopen 

discussion of other issues. The main features of the framework agreement 

were to establish key principles for each aspect of global agricultural trade 

reform; identify the key elements of negotiations to improve 

nonagricultural market access; stress the importance of liberalizing access 

to services markets and addressing outstanding development concerns; 

and launch negotiations to clarify and improve WTO rules on customs
Page 8 GAO-06-596 World Trade Organization

procedures (trade facilitation).7 WTO members also agreed to hold their 

next ministerial in Hong Kong in December 2005. However, our last report8

noted that, despite the improved negotiating atmosphere, the negotiations

were effectively 2 years behind schedule and considerable work remained 

on the numerous issues that would constitute a final agreement. Pursuant 

to the Trade Act of 2002, in March 2005, the president requested a 2-year 

extension of TPA, and the extension went into effect.

Limited Progress Since 

Mid-2004 Causes WTO 

Members to 

Recalibrate Goals for 

Hong Kong 

Despite the impetus provided by the framework agreement, the Doha 

negotiations moved slowly throughout 2005. As we reported last year, WTO 

negotiators began 2005 with a resolve to complete the round in 2006 and set 

the stage by agreeing to make progress in 6 of the 16 Doha negotiating 

areas by the end of 2005—agriculture, NAMA, services, trade facilitation, 

development issues, and WTO rules. However, limited progress was made 

before the Hong Kong ministerial, as the talks stalled in fall 2005 amid 

stalemate over fundamental issues on agriculture and NAMA. To avoid 

another failed meeting, such as at the last ministerial in Cancún, Mexico, 

expectations for the Hong Kong ministerial were lowered. The agenda for 

the meeting shifted from making key decisions on the six core areas to 

focusing on narrower initiatives, particularly in agriculture and 

development, that could help the talks move forward, if only marginally 

(see fig. 1).

7

The full framework (WTO, “Doha Work Program: Decision Adopted by the General Council 

on 1 August 2004,” WT/L/579, Aug. 2, 2004) is available at

http://www.wto.org/english/tratop_e/dda_e/draft_text_gc_dg_31july04_e.htm (downloaded 

April 19, 2006).

8

GAO-05-538.
Page 9 GAO-06-596 World Trade Organization

Figure 1: Agenda for Hong Kong Focused on Only 2 of the 16 Doha Negotiating Areas

Some Technical Progress 

Achieved but Key 

Milestones Missed

In early 2005, at a mini-ministerial meeting in Davos, Switzerland, and 

subsequently at a February meeting among all WTO members, WTO 

members agreed that the goal of the Hong Kong ministerial was to set the 

stage for the final phase of the Doha negotiations, which would enable the 

round to conclude in 2006. To that end, they agreed to seek to finalize 

Sixteen negotiating areas set in 

framework agreement

(August 2004)

• Agriculture 

• Services

• Nonagricultural market access

• Intellectual property rights

• Trade facilitation

• Rules

• Dispute settlement

• Trade and environment

• Electronic commerce

• Small economies

• Trade, debt, and finance

• Technology transfer

• Capacity building

• Development

• Special and differential treatment

• Implementation-related issues

• Agriculture 

• Services

• Nonagricultural market access

• Intellectual property rights

• Trade facilitation

• Rules

• Dispute settlement

• Trade and environment

• Electronic commerce

• Small economies

• Trade, debt, and finance

• Technology transfer

• Capacity building

• Development

• Special and differential treatment

• Implementation-related issues

• Agriculture:

 export competition pillar 

• Services

• Nonagricultural market access

• Intellectual property rights

• Trade facilitation

• Rules

• Dispute settlement

• Trade and environment

• Electronic commerce

• Small economies

• Trade, debt, and finance

• Technology transfer

• Capacity building

• Development: selected issues

• Special and differential treatment

• Implementation-related issues

Six focus areas agreed to at Davos, 

Switzerland mini-ministerial

(January 2005)

Principal areas addressed at 

Hong Kong ministerial

(December 2005)

Source: GAO, based on WTO information.
Page 10 GAO-06-596 World Trade Organization

modalities for both the agriculture and NAMA negotiations at Hong Kong, 

and to make significant progress in four other core areas—services, trade 

facilitation, development issues, and WTO rules (which covers subjects 

such as subsidies, antidumping measures, and regional trade agreements). 

Deliverables in these six areas are critical in determining how ambitious 

the Doha Round will be in terms of cuts in tariffs, subsidies, and other 

barriers to trade, as well as the ultimate balance across member interests 

and issues.

Despite these ambitious goals, the overall pace of the negotiations was 

slow throughout most of 2005, and even progress on technical issues was 

difficult to achieve. For example, in the agriculture and NAMA talks, 

negotiators were able to agree on a preliminary basis to methodologies for 

converting specific tariffs into ad valorem equivalents (tariffs based on a 

percentage of value), a necessary step before potential tariff reductions 

could be calculated and considered.9

 However, reaching this agreement for 

agriculture proved to be contentious and occupied the negotiators’ time 

through early May, delaying the discussion of more central issues such as 

how to make tariff and subsidy cuts. On many issues, negotiators made 

incremental progress by narrowing the number of options under 

consideration or fleshing out principles or methods without coming to full 

agreement. On NAMA, for example, a list of products to be covered by the 

negotiations was compiled, but there was disagreement about including 

some items, and no agreement on whether the list should be considered 

definitive or just a guideline.

In 2005, WTO members missed the key milestones they had set to keep the 

talks on schedule for completion at the end of 2006 (see fig. 2). In the 

services negotiations, many WTO members failed to submit offers for 

opening their markets to foreign services-providers by a May 2005 deadline. 

Just before the ministerial, the services negotiating group chair reported 

having 69 initial and 30 revised offers, but 23 members had not yet 

submitted any offer.10 In addition, the chair described many of the offers as 

disappointing, because they did not provide new market access or bind 

9

The Department of Agriculture reports that agreement on ad valorem equivalents has not 

yet been fully completed. Isolated products remain to be confirmed, some WTO members 

have only recently responded to questions in discussions on this point, and members are not 

fully agreed on the process for verification.

10This number excludes least-developed countries, which were not required to prepare 

services offers.
Page 11 GAO-06-596 World Trade Organization

access at existing levels. In development, the negotiating group made little 

progress toward a July 2005 deadline to prepare recommendations to 

improve special and differential treatment.11 WTO members also missed an 

informal but important milestone to reach agreement in July 2005 on a 

“first approximation” of the modalities for agriculture, NAMA, and other 

issues, which negotiators had hoped to finalize at the Hong Kong 

ministerial. As deadlines were missed during the spring and summer of 

2005, WTO’s then-Director-General warned negotiators that the talks were 

not moving fast enough to reach this goal. In early July, the DirectorGeneral stated flatly that “these negotiations are in trouble,” adding that 

WTO members faced “a crisis of immobility” that threatened their ability to 

deliver decisions at the Hong Kong ministerial.

11“Special and differential treatment” refers to specific provisions that provide more time or 

leniency, greater market access, or other more favorable terms to developing and leastdeveloped countries in implementing WTO agreements.
Page 12 GAO-06-596 World Trade Organization

Figure 2: Key Milestones and Deadlines Missed in the WTO Negotiations in 2005

We noted in our last report that U.S. and EU leadership has been essential 

to making progress in the WTO trade negotiations and that relations 

between their newly appointed trade principals could influence success at 

Hong Kong. However, a number of events made the leadership transition 

and U.S.–EU relations more difficult in 2005. A gap of several months 

occurred between the time when then-current U.S. Trade Representative 

Robert Zoellick was nominated Deputy Secretary of State in early January 

2005 and when his replacement, Rob Portman, was confirmed in late April 

by the Senate as the new Trade Representative. At that time, a U.S.–EU 

aircraft dispute was flaring, and influential U.S. congressmen took umbrage 

at comments by the new EU Trade Commissioner, Peter Mandelson, 

directed at U.S. policies on cotton subsidies. In addition, some U.S. 

Source: GAO, based on WTO, USTR, and other information.

Jan.

2005

Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.

Jan. 1:

Originally 

scheduled 

conclusion of 

Doha Round 

(postponed)

Mar. 30: 

President 

requests

2-year TPA 

extension

May 31: 

Services

offers

deadline 

missed by 

many 

members

July 1: 

TPA 

renewed

June 30: 

Deadline for 

General 

Council

action on 

implementation 

issues missed

Jan. 29:

Mini-ministerial in 

Davos, Switzerland 

(decision to focus on 

six core negotiating 

areas)

July 25-29: 

“First 

approximation”

of modalities

for agriculture, 

NAMA, and 

other issues

abandoned

July 31: Deadline for 

recommendations on 

outstanding development 

proposals missed

Nov. 10: 

Decision to forego 

agriculture and 

NAMA modalities

Oct. 10: 

U.S.

agriculture proposal

Oct. 28: EU agriculture 

proposal

Sept. 1: 

New 

Director-General 

assumes position

Dec. 13-18:

Hong Kong 

ministerial

EU: European Union

NAMA: Nonagricultural market access

TPA: Trade Promotion Authority
Page 13 GAO-06-596 World Trade Organization

negotiators were also occupied with finalizing the Dominican Republic–

Central America–United States Free Trade Agreement and ensuring its 

approval by Congress, which was finally secured on July 28, 2005.

Countries Still Divided over 

Toughest Issues in Fall 2005

Fundamental divisions among WTO members became very clear in the fall 

of 2005 when members found themselves deadlocked over conflicting 

market access goals. In October, key members and country coalitions put 

forth detailed agriculture proposals that were intended to re-energize the 

negotiations and resolve key issues before the Hong Kong ministerial. The 

United States; the EU; the Group of 20 (G-20) coalition of developing 

countries; and the Group of 10 (G-10)—a coalition of primarily developed 

countries that import most of their food—laid out their positions on cutting 

agricultural subsidies and tariffs and what they expected in return from 

trading partners.12 The differences among these parties’ positions were 

particularly evident in their approaches to market access (see table 2). The 

U.S. proposal centered on an offer to cut U.S. domestic farm subsidies 

substantially, along with aggressive tariff cuts ranging from 55 to 90 percent 

for all developed countries. However, the offer was contingent on higher 

subsidy cuts and “ambitious” market access improvements by other 

countries, particularly the EU and the G-20. Many WTO members received 

the proposal as a significant effort to unblock the negotiation, but some 

countries were doubtful that the proposed subsidy cuts were as substantial 

as billed. The EU proposed smaller agricultural tariff cuts, with more 

exemptions for protecting “sensitive” products from competition from 

imports. This offer was contingent on certain concessions from other 

members, notably substantial market opening in NAMA and services from 

the more advanced developing countries of the G-20, especially Brazil and 

India. The G-20 proposal on agricultural market access, submitted earlier in 

the year, was presented as a middle ground, as the suggested tariff cuts for 

developed countries fell between the U.S. and EU proposals.13

12For a detailed comparison of the agriculture proposals by the United States, the Group of 

20, the EU, and the Group of 10, see Charles Hanrahan and Randy Schnepf, WTO Doha 

Round: The Agricultural Negotiations, Congressional Research Service, RL33144 

(Washington, D.C.: Jan. 12, 2006).

13Although this debate centered on the extent of market access in the EU and other 

developed countries, the proposals also offered schemes for reducing developing countries’ 

agriculture tariffs, though to a lesser extent than in developed countries.
Page 14 GAO-06-596 World Trade Organization

Table 2: Agriculture Market Access Proposals Revealed Wide Differences among 

Key Players in Expectations for Developed Countries

Sources: U.S., G-20, EU, and G-10 proposals.

a

These terms are from the EU’s second proposal of Oct. 28, 2005; the 20% tariff reduction minimum 

takes into account the “pivot” concept.

b

The G-10 proposal included two approaches to tariff reductions—“linear” and “flexible.” This table 

presents the G-10’s linear approach to facilitate comparison with the other members’ proposals that 

are also based on the linear approach.

The EU’s market access offer became the focus of criticism before the 

ministerial, as neither the United States nor the G-20 considered it 

acceptable. They demanded that the EU cut its tariffs further and reduce 

the number of sensitive products that would be exempted from the 

standard tariff cuts. USTR noted that the EU’s proposal would allow for 

tariff cuts of as little as 20 percent on about four-fifths of EU tariff lines.14

Also, according to USTR, the EU could effectively limit competition from 

imports, due to the large number of sensitive products it had proposed to 

shield from liberalization (about 142 tariff lines). Although the EU revised 

its offer at the end of October 2005, it was again quickly rejected as 

insufficient.

The EU held the stance in the Doha Round that its chief gains were to be 

found in the industrial and services sectors underpinning its economy. 

Specifically, the EU wanted countries such as India and Brazil to offer real

U.S. G-20 EUa G-10b

Tariff rate reduction 

goals

55–90% 45–75% 20–60% 27–45%

Maximum tariff rate (cap) 75% 100% 100% (no cap on 

sensitive products)

None

Sensitive products, as a 

percentage of all 

agricultural products

1% 1% Up to 8% 15%

14A tariff line is a single item or product in a country’s schedule or list of tariffs, associated 

with a particular tariff rate.
Page 15 GAO-06-596 World Trade Organization

improvements in access to their industrial and services markets.15 EU 

members had already agreed to reform the EU’s domestic support 

programs and to eliminate export subsidies as part of the framework 

agreement and believed they had gotten little in return. In internal 

consultations in late October, France warned the EU negotiating team that 

it should not overstep its mandate, which in its view was strictly tied to 

existing agricultural subsidy spending and the 2003 reform of the EU’s 

Common Agricultural Policy, by making concessions in the negotiations 

that would not be acceptable to EU member states. 

The stand-off continued, as Brazil and India refused to make improved 

NAMA or services offers until the EU made a better agricultural market 

access offer. As leaders of the G-20, Brazil and India complained that the 

EU wanted developing countries to accept much lower tariffs in NAMA 

than it was willing to offer in agriculture—an export area where many 

developing countries have a competitive advantage. They insisted that 

developed countries’ market access offers in agriculture be proportional to 

the market access demanded of developing countries in NAMA and 

services. However, the EU said its offer was not only final, but conditional, 

and would be withdrawn if demanders persisted in seeking “something for 

nothing”—or in the EU Trade Commissioner’s words, “real cuts by Europe, 

paper cuts by others.”

Despite the intense focus on agriculture, negotiations continued on 

industrial goods and services trade, but the knotty conflicts we reported 

last year continued to impede their progress. On NAMA, negotiators circled 

around the problem of what tariff reduction formula to use, with signs of 

potential agreement on a “Swiss” formula that would even out tariff levels

15The EU has stated that real improvements on market access would require reductions in 

their applied, as opposed to bound, tariff rates. An applied tariff is the actual tariff rate 

levied for a product, while a bound tariff is the maximum allowed tariff rate for a product, 

which a country has agreed at the WTO not to go above. Many developing countries’ bound 

tariff rates are considerably higher than the tariffs they currently apply. For example, Brazil 

had an average bound tariff of 31 percent and a 12 percent average applied rate in 2004, 

according to WTO country statistics.
Page 16 GAO-06-596 World Trade Organization

by cutting higher tariffs more than lower ones.16 However, negotiators 

could not agree on the type of Swiss formula to use and the selection of 

coefficients that would determine the reductions for developed and 

developing countries. In addition, the treatment of unbound tariffs17 was 

not settled, and the degree to which developing countries would have the 

flexibility to deviate or exempt products from the formula was 

controversial. On services, negotiators were stalled over proposals to alter 

the bilateral negotiating format, speed the pace of the negotiations, and 

encourage greater participation and better market access offers by more 

countries. Suggestions included the use of numerical targets, with 

members covering a certain percentage of service sectors in their offers, 

and a plurilateral negotiating approach whereby groups of countries 

collectively present “requests” to other groups of countries for market 

access improvements and then the recipient countries reply with market 

access “offers” to the demanding countries. However, developing countries 

criticized these suggestions as overly prescriptive, and a constraint on their 

freedom to opt out of services liberalization or selectively liberalize 

sectors. 

The trade facilitation negotiations made good progress throughout the 

year, as did the negotiations on rules, but remained at the stage of exploring 

proposals versus bridging gaps in positions.18 Trade facilitation negotiators 

put forward a large number of proposals for expediting the movement of 

traded goods, and developing countries participated actively. Negotiations 

on various trade “rules” intensified, with the debate focusing on the divide 

between the traditional and new users of trade remedy laws (measures 

used to counter unfairly priced and subsidized imports)—including the 

United States—and non-users that have called for significant change in 

users’ antidumping and countervailing duty regimes. Rules negotiators 

conducted in-depth discussions of such proposed changes and narrowed 

16The Swiss formula is a nonlinear mathematical formula that (1) produces a narrow range 

of final tariff rates from a wider set of initial tariffs and (2) specifies a maximum final rate, 

no matter how high the original tariff. A key feature is a number (the coefficient) that is 

negotiated and plugged into the formula to determine the maximum final tariff rate. This 

formula was first proposed by Switzerland in the 1970s in the Tokyo Round of trade 

negotiations.

17An unbound tariff is one that a country can raise to any level because it has made no 

commitment to keep the tariff rate below a maximum allowed (bound) level.

18The WTO rules negotiations address provisions concerning antidumping measures, 

subsidies and countervailing measures (including fishery subsidies), and regional trade 

agreements.
Page 17 GAO-06-596 World Trade Organization

the list of issues somewhat, according to U.S. officials. While proposals 

aimed at U.S. practice remain a concern, U.S. officials report that 

proponents had difficulty justifying or gaining consensus for their more 

radical proposals. Rules negotiators also considered U.S. proposals to 

improve transparency and due process in trade remedy proceedings and 

made progress on developing new disciplines on subsidies (including fish 

subsidies) and transparency for regional trade agreements.19

Goals Lowered for 

December 2005 Hong Kong 

Ministerial 

The flurry of activity in October gave way to the realization in November 

that the gaps between key negotiating positions were still too wide for 

negotiators to reach any major decisions by December, and the agenda for 

Hong Kong was scaled back. New WTO Director-General Pascal Lamy, 

whom members had installed that fall with hopes that his energetic style 

might bring negotiators to decisions more quickly, had begun his term by 

declaring that his goal for Hong Kong was to take the Doha negotiations 

“two thirds of the way” to conclusion. By early November 2005, Lamy 

concluded that members had not bridged their differences enough to draft 

texts with specifics on modalities in the core negotiating areas and urged 

members to “recalibrate” their expectations for the ministerial. He 

suggested that members focus on what could reasonably be achieved, 

rather than risk a failure reminiscent of previous ministerials in Cancún 

and Seattle. The text for a Hong Kong ministerial declaration should thus 

try to capture progress or any decisions made since the framework 

agreement and provide a range of numbers (or “outer parameters”) to 

indicate how other decisions had been clarified, if not narrowed down. 

Members recognized that no one would be served by presenting the 

ministers with an overly full and unresolved agenda. They agreed to focus 

on what was achievable, while stressing they remained committed to an 

ambitious outcome for the round.

The agenda for Hong Kong quickly changed to reflect these scaled-back 

expectations and focus on several development issues. Lamy called for the 

19On antidumping, the negotiating group’s chair reported in November 2005 that in-depth 

debate over proposals had progressed to the point that work was being carried out almost 

exclusively on the basis of specific legal texts. The chair also indicated he sensed a broad 

agreement on three principles: (1) avoiding unwarranted use of antidumping measures, 

while preserving the basic concepts, principles, and effectiveness of the instrument and its 

objectives where such measures are warranted; (2) limiting the costs and complexity of 

proceedings for interested parties and the investigating authorities; and (3) strengthening 

the transparency and predictability of proceedings.
Page 18 GAO-06-596 World Trade Organization

ministerial to deliver on several narrow measures to benefit the 32 LDCs 

that are WTO members. In addition, the EU and certain developing 

countries voiced the view that an “early harvest” on development issues 

was important symbolically. Immediately before the ministerial, the Group 

of 90 (G-90)—a coalition of the African Union; the LDCs; and the African, 

Caribbean, and Pacific Group—issued a statement reminding WTO 

members that the Doha ministerial declaration had placed the needs and 

interests of developing countries at the heart of the Doha Round and that 

they expected concrete benefits from Hong Kong. India and other 

developing-country coalitions made similar statements. The EU Trade 

Commissioner emphasized the importance of making a “down payment” on 

the trade agreement to the poorest countries at Hong Kong. He stated that 

the Doha negotiations were a development round and “not an agricultural 

exporters’ round,” leading the U.S. Trade Representative and key members 

of Congress to question whether the EU’s efforts to shift the focus to 

development were somewhat self-serving. 

The draft declaration text, as transmitted in early December for 

consideration at the ministerial, contained few provisions for new 

agreements to be made at Hong Kong. The provisions included calling on 

ministers to adopt decisions on five LDC proposals and to set new 

deadlines for completing modalities and other aspects of the negotiations. 

Annexes to the draft text on the six core negotiating areas represented full 

agreement by WTO members in only one area—trade facilitation. The 

annexes on the five other core areas simply summarized the members’ 

positions at that point in time, and postponed key decisions that would be 

necessary before member-to-member bargaining over each nation’s 

schedules of commitments could begin. 

Hong Kong Resulted in 

Several Limited New 

Commitments, but 

Postponed Key 

Decisions on Cutting 

Tariffs and Other 

Barriers

WTO members arrived in Hong Kong intent on avoiding a stalemate and 

ensuring continued progress in the negotiations. The ministerial 

declaration that was adopted reflects commitment to complete the Doha 

negotiations in 2006 and agreement on a narrow set of issues. Agriculture, 

of critical concern for many members, continued to occupy much of the 

negotiators’ attention at the ministerial. Economic development issues also 

were featured prominently at Hong Kong, with nearly round-the-clock 

negotiations finally yielding several concrete steps to alleviate some 

concerns of the WTO’s poorest members. Other U.S. priorities, however— 

notably services and NAMA—made little progress at the ministerial.
Page 19 GAO-06-596 World Trade Organization

Members Formally Commit 

to Conclude Negotiations by 

2006 

Negotiators at Hong Kong succeeded in avoiding deadlock and meeting—

or even exceeding—the lowered expectations for the ministerial. Having 

failed to meet many of the important milestones they had set for 

themselves in 2005, and aware of the difficult ground still to be bridged, in 

Hong Kong members reaffirmed their commitment to a successful and 

timely completion of the round. In doing so, they agreed to a new deadline 

for completing the round by the end of 2006 and interim deadlines under a 

compressed schedule by which to reach agreement on the difficult issues 

that had eluded them thus far. For example, they set April 30, 2006, as the 

deadline for WTO members to agree on modalities for cutting tariffs and 

subsidies for agricultural and nonagricultural goods. The next key deadline 

is July 31, 2006, when countries will be expected to submit national 

schedules of commitments embodying the modalities for agriculture and 

NAMA, and to present revised offers for liberalizing trade in services.

Ministers Focused on 

Export Competition Issues 

and Cotton, but Made Little 

Progress on Other Aspects 

of Agricultural Negotiations

In Hong Kong, negotiators focused primarily on three agricultural issues: 

elimination of export subsidies, in-kind food aid, and the demands of a 

group of African countries on cotton. However, they did not address the 

underlying differences on agricultural market access and made little 

progress on other areas in the agriculture negotiations.

First and most significantly, members agreed to eliminate all forms of 

agricultural export subsidies on a parallel basis by 2013. Reaching 

consensus on this deadline proved to be difficult, however. The EU, the 

largest user of agricultural export subsidies, insisted on progress in 

developing parallel disciplines on export credit programs, state trading 

enterprises, and other aspects of export competition before agreeing on a 

deadline to end export subsidies. On the other hand, the G-20 and other 

major agricultural exporters, including the United States, wanted a 2010 

deadline for abolishing agricultural export subsidies before turning to other 

export competition issues. Heated debate on an export subsidies deadline 

continued throughout the ministerial, with Brazil reportedly threatening to 

pull out of the talks at one point. The compromise adopted involved a 

commitment to eliminate a substantial part of the export subsidies in 

phases by the end of 2010 if an agreement enters into force in January 2008.

Second, negotiators devoted considerable time to discussing whether inkind food aid distorts international commodities markets, but they failed to 

reach consensus on this issue. The EU maintains that in-kind food aid is 

trade-distorting and represents a form of export subsidy. At Hong Kong, EU 
Page 20 GAO-06-596 World Trade Organization

negotiators sought a commitment from other members to phase out in-kind 

food aid and to move toward an international system of cash-only 

assistance that would allow countries in need to purchase food from the 

most convenient and commercially viable sources. The United States, 

however, as the main provider of in-kind food aid, resisted this move, 

arguing that in-kind food is often critical in emergencies such as famines 

and natural disasters. The ministerial declaration deferred setting 

disciplines on food aid until April 30, 2006, in conjunction with the adoption 

of overall modalities for agriculture. The ministers did agree to certain 

principles, including a guarantee that such disciplines would include a 

mechanism, called a “safe box,” to ensure the availability of food for needy 

populations in emergency situations.

Third, negotiators in Hong Kong also addressed the demands raised by a 

group of four African countries,20 known collectively as the Cotton Four 

(C-4). Since the Cancún ministerial, the C-4 countries have sought to bring 

attention to the plight of African farmers, who face falling international 

prices for cotton and diminishing opportunities in overseas markets. At 

Hong Kong, the C-4 countries, supported by others, obtained a commitment 

by developed countries to eliminate all forms of export subsidies for cotton 

in 2006. This provision, aimed primarily at the United States, coincides with 

existing U.S. plans to eliminate cotton export subsidies by that time.21 The 

C-4 also obtained a commitment from developed countries to provide dutyfree, quota-free access for cotton exports from least-developed countries 

when the agreements resulting from the Doha negotiations are 

implemented. Moreover, the C-4 secured a new commitment that the 

overall Doha agreement on agriculture would entail deeper and faster cuts 

in domestic cotton subsidies relative to cuts in domestic support for 

agricultural commodities in general.

The Hong Kong ministerial declaration reflects more limited progress on 

several other agricultural issues. On the domestic support pillar, the 

declaration contained a new commitment to ensure that the total of all 

trade-distorting domestic support to farmers must be reduced, possibly 

involving cuts beyond those agreed to for specific categories of farm 

payments—known as “boxes” in WTO parlance. The declaration also 

20The four countries are Benin, Burkina Faso, Chad, and Mali.

21The United States planned to eliminate its export subsidies for cotton producers during 

2006 to come into conformity with an adverse ruling from the WTO on a cotton case filed by 

Brazil.
Page 21 GAO-06-596 World Trade Organization

adopted a framework with three levels or “bands” for reducing domestic 

farm subsidies, which were based on the amount of financial support 

provided by members. The United States would fall in the middle of these 

bands, along with Japan, while the EU would be in the top band, and other 

countries that provided domestic support to farmers would be in the lowest 

band. Members in the higher bands would be expected to make deeper 

cuts. Similarly, in the market access pillar, the declaration reflects 

convergence on an arrangement calling for four bands for tariff reductions, 

with higher cuts for higher tariffs. Finally, the Hong Kong declaration noted 

that developing countries will be granted additional flexibility to protect 

their domestic agricultural production by self-designating special products 

and having access to a volume- and price-based special safeguard 

mechanism to protect against import surges.

Several Proposals on 

Development Issues Were 

also Adopted at Hong Kong

The Hong Kong ministerial conference also devoted substantial attention to 

certain development issues. The prominence of these issues may have 

contributed to a public show of unity among some 110 developing 

countries at Hong Kong. Nevertheless, a number of developing-country 

officials expressed concerns about their different needs and priorities at 

the ministerial, and in private meetings in the weeks just before the 

conference.22

Formal adoption of five proposals made by LDCs was among the most 

significant agreements related to development at the ministerial. Among 

these proposals was a controversial initiative to secure duty-free, quotafree access to developed countries’ markets. LDCs, supported by the EU, 

had sought complete duty-free, quota-free access for all of their products.

However, the United States opposed this initiative for various reasons, 

including the fact that, as proposed, the initiative exceeded the current U.S. 

statutory authority, which sets conditions on preferential market access to 

protect U.S. commercial interests and to advance certain U.S. policy goals. 

U.S. Trade Representative Portman also indicated that numerous 

developing countries that do not qualify for LDC status had raised concerns 

about being disadvantaged in the U.S. market. In the end, the compromise 

22For example, representatives of several African, Caribbean, and Pacific nations have 

raised questions about whether large developing countries such as Brazil and India could 

effectively represent the interests of small, less developed countries. At the ministerial, 

differences among developing countries were also evident in the opposing positions taken 

by Latin American and Caribbean negotiators on the EU banana import regime.
Page 22 GAO-06-596 World Trade Organization

called for duty-free and quota-free access for at least 97 percent of tariff 

lines of developed countries’ imports from LDCs, and for steps to be taken 

to achieve complete coverage thereafter.23 The declaration also urged 

developing countries to take on the same commitment to LDCs if they were 

able. 

Moreover, following up on 2005 work,24 the declaration invited the creation 

of a WTO task force to recommend how “aid for trade” can contribute to 

Doha development goals by helping developing countries take advantage of 

new trade opportunities. The declaration also called for members to 

increase their financial commitments for technical assistance and capacity 

building to help developing countries participate in trade negotiations and 

implement the WTO agreements. At Hong Kong, the United States and 

others made new commitments outside the WTO declaration. Notably, the 

United States pledged it would double its “aid for trade” to developing 

countries to $2.7 billion a year by 2010; the EU announced it would raise its 

commitment to 2 billion euros per year by 2010; Japan offered to provide 

$10 billion from 2006 through 2008.

Little Progress Made in 

Other Important Areas

Little progress was made in two other areas of the Doha negotiations 

critical to U.S. interests—NAMA and services. 

In NAMA, negotiators decided to:

• postpone reaching agreement on modalities until April 30, 2006;

23The exemption of up to 3 percent of tariff lines, insisted upon by developed countries, 

would allow these countries to shield certain sensitive products such as sugar and textiles. 

This provision is to take effect by 2008, or by the start of implementation of Doha 

agreements.

24Recently, the World Bank, the International Monetary Fund, WTO, and other researchers 

have issued papers exploring the benefits and costs of trade liberalization for developing 

countries and how international institutions could help them adjust. See, for example, Joint 

Note by the Staffs of the IMF and the World Bank, “Aid for Trade: Competitiveness and 

Adjustment” (Washington, D.C.: Apr. 11, 2005); WTO Committee on Trade and Development, 

“Developmental Aspects of the Doha Round of Negotiations” (Geneva, Switzerland: revised 

Nov. 22, 2005).
Page 23 GAO-06-596 World Trade Organization

• call for comparable levels of ambition25 in market access for agriculture 

and NAMA; and 

• reaffirm the goal of reducing or eliminating tariffs in various ways, 

notably by adopting a Swiss formula approach that cuts high tariffs 

more than lower tariffs to achieve these reductions. 

However, negotiators did not agree on specific numbers (coefficients) for 

the Swiss formula, which would determine the depth of cuts and final tariff 

ceilings for members. The range of cuts proposed by members prior to 

Hong Kong is wide. Moreover, they left unresolved the controversy over 

how much flexibility developing countries will retain to deviate or exempt 

products completely from the formula.

In services, members agreed to:

• accelerate negotiations by adopting a plurilateral approach, whereby 

groups of countries jointly present offers to other groups; and

• clarify that participation in plurilateral negotiations would be voluntary, 

as members would be able to decide whether or not to respond to the 

requests presented to them.

The Hong Kong declaration addressed numerous other issues, ranging from 

trade facilitation to rules, but they received minimal attention at the 

conference. On trade facilitation, for example, the declaration categorized 

previous proposals and endorsed drafting a text of new commitments. On 

rules, WTO members reaffirmed their commitment to substantial results, 

set several new goals, and authorized the chair of the Committee on Rules 

to produce a draft text embodying proposed changes to existing WTO 

agreements on antidumping and subsidies to serve as the basis for final 

negotiations. 

25“Comparable ambition” was not defined in the ministerial declaration. Members are 

debating how it should be defined. 
Page 24 GAO-06-596 World Trade Organization

Several Factors Make 

Meeting 2006 

Deadlines Challenging, 

and Have Raised 

Doubts about the 

Likelihood of an 

Ambitious Outcome 

within the TPA Time 

Frame

WTO members and observers recognize that achieving a balanced and 

ambitious outcome for global trade talks within the TPA time frame will be 

challenging, and the window of opportunity is quickly closing. Efforts to 

make progress are under way. However, a mix of motivating and 

constraining factors creates tension between the feasibility of meeting the 

2006 deadlines and members’ ambition for a far-reaching agreement. 

Motivating factors include a desire to reap the economic benefits that some 

experts forecast would result from further trade liberalization and the fact 

that the outlines of a “grand bargain”—or key trade-offs involved in any 

deal—are becoming clearer. On the other hand, factors constraining 

progress include the difficulty of breaking the ongoing impasse over 

agriculture, political constraints in key WTO member states, and the 

significant amount of work to be done in the time remaining. Some officials 

maintain that success remains possible, but emphasize that members need 

a greater sense of urgency and the political will to cut trade barriers from 

current levels. Other officials and many experts are skeptical that success 

is possible within the TPA timeframe. In the event that an ambitious 

agreement cannot be reached within the TPA timeframe, members may be 

forced to consider extending the talks or concluding them with more 

modest results. 

Expiration of TPA Is Seen as 

a Hard Deadline

Generally seen by the United States and other WTO members as a hard 

deadline, the expiration of TPA on July 1, 2007, is a motivating factor to 

concluding the negotiations. Failure to meet that deadline would risk 

expiration of TPA and make U.S. approval of an agreement more difficult. 

The Doha Round agreement would be eligible for approval under TPA, 

provided it was signed by the president before July 1, 2007, when the 

authority lapses.26 Continuing negotiations without TPA is possible but 

would jeopardize the president’s ability to present a final Doha agreement 

to Congress for an “up or down” vote within a fixed period of time. 

Congress would then be in a position to avoid acting on the legislation or to 

demand that certain parts of the agreement be renegotiated. According to 

USTR, the WTO agreement would need to reach Congress by the spring of 

2007 to meet the TPA deadline. As discussed later, renewing TPA is not 

presently contemplated. (When TPA was renewed in 2002, after an 8-year 

26The president, however, must fulfill a number of procedural requirements and meet certain 

time frames established by TPA. As a result, we concluded in our last report that the Doha 

negotiations need to conclude by the end of 2006 to meet TPA’s statutory requirements. 
Page 25 GAO-06-596 World Trade Organization

lapse, the legislation passed the House of Representatives by only three 

votes.)

Most Members Continue to 

Profess High Ambition and 

Work Has Resumed in 

Earnest

Most WTO members maintain that they are committed to the goal of 

achieving an ambitious Doha agreement. The concept of ambition refers to 

the scope and level of trade liberalization to which WTO members are 

willing to commit. A high level of ambition, for example, would result in a 

comprehensive agreement in which members commit to significant 

reductions in tariffs, subsidies, and other trade barriers across most, if not 

all, core issues under negotiation. Such a robust agreement should result in 

a strengthened and measurably freer global trade environment and added 

impetus for economic growth and development. An outcome with a low 

level of ambition, on the other hand, would result in little actual trade 

liberalization and create few new opportunities for growth. 

WTO members and the Director-General continue to work on ways to 

facilitate the successful conclusion of the negotiations. Since the talks 

resumed in late January 2006, negotiators have been engaged in a flurry of 

activities designed to speed up the process and find practical ways to 

narrow their differences. These include holding a series of miniministerials among small groups of WTO members and intensified bilateral 

consultations, setting more interim deadlines, developing questionnaires 

and reference papers to advance dialogue, and conducting simulations on 

the effects of tariff cuts under various scenarios. In February, DirectorGeneral Lamy indicated that these activities represented a needed shift 

from general principles to discussion of concrete numbers and text, and 

were resulting in a heightened awareness of the need for movement by all 

players, in concert, toward a middle ground. At that time, he stated that he 

had no indication that agreeing on modalities would not be possible by 

April 30, 2006. Shortly thereafter, U.S. Trade Representative Portman 

reported that the United States and the EU were making progress in 

narrowing some differences on agriculture. In addition, the first deadline 

since the Hong Kong ministerial was successfully met, as members 

submitted plurilateral requests in the services negotiations by the agreed-to 

deadline of February 28, 2006. Over 14 requests for market access in 

sectors such as financial and express delivery services were submitted, 

with the United States participating in 10; more are expected. 
Page 26 GAO-06-596 World Trade Organization

Members Further Motivated 

by Risks of Forfeiting 

Potential Economic 

Benefits

Also motivating the negotiations is the risk of foregoing the expected 

benefits from a successful Doha agreement. The economic benefits from 

trade liberalization occurring as a result of the Doha Round could be 

significant. The Organization for Economic Cooperation and Development 

and trade experts in general agree that only a comprehensive multilateral 

process of negotiation, in which political and economic trade-offs are 

maximized, can realize all the benefits of market opening and rules 

strengthening. Agricultural reform in particular has largely been kept out of 

regional agreements and would need to involve the present WTO 

protagonists to be meaningful. Some estimates, as reported in a 

Congressional Research Service report,27 indicate that economic gains 

could be as high as $574 billion globally and $144 billion in the United 

States.28 Other estimates are more modest. For example, a 2005 World 

Bank study projects global gains ranging from $84 billion to $287 billion 

annually by the year 2015,29 while a Carnegie Endowment study predicts 

income gains of $40 to $60 billion from what it deems plausible outcomes 

of the Doha Round.30 Although this represents a small share of global and 

U.S. income, some economists and development advocates argue that 

global trade liberalization—particularly of agricultural products and other 

products of interest to developing countries—could still play a role in 

promoting economic opportunity and alleviating poverty. For example, the 

additional income would equal or surpass aid flows to developing 

countries, and leading developing country exporters such as Brazil, India, 

China, Thailand, and Argentina would stand to capture sizeable gains. 

27Congressional Research Service, The World Trade Organization: The Hong Kong 

Ministerial, RL32060, (Washington, D.C.: Jan. 20, 2006).

28Drusilla Brown, Alan Deardorff, and Robert Stern, “Computational Analysis of Multilateral 

Trade Liberalization in the Uruguay Round and Doha Development Round,” University of 

Michigan Discussion Paper 490, Dec. 12, 2002. Available at 

http:/www.spp.umich.edu/rsie/workingpapers/wp.html (downloaded April 19, 2006).

29Thomas W. Hertel and Roman Keeney, “What is at Stake: The Relative Importance of 

Import Barriers, Export Subsidies and Domestic Support,” in Anderson and Martin, eds., 

Agricultural Trade Reform and the Doha Development Agenda (Washington, D.C.: World 

Bank, 2005); and Kym Anderson, Will Martin, and Dominique van der Mensbrugghe, “Doha 

Merchandise Trade Reform: What’s at Stake for Developing Countries,” July 2005, available 

at http://www.worldbank.org/trade/wto (downloaded April 19, 2006). Results vary 

depending on the type of model (static vs. dynamic), key assumptions in the model, and the 

ambition of the liberalization scenario. The World Bank studies, for example, do not attempt 

to quantify services liberalization. 

30Sandra Polanski, Winners and Losers: Impact of the Doha Round on Developing 

Countries (Washington, D.C.: Carnegie Endowment for International Peace, 2006). 
Page 27 GAO-06-596 World Trade Organization

Nevertheless, such projected overall gains can mask important differences, 

and several authoritative studies suggest that some groups and nations face 

potential losses and near-term adjustment costs that merit particular 

consideration in the negotiations.

Clearer Outlines of a Grand 

Bargain Enable Concerted 

Effort

Another factor that could facilitate reaching agreement in the negotiations 

relates to the outlines of a “grand bargain” (the necessary trade-offs, or 

benefits and concessions, among the players) that, according to some 

observers, are becoming more apparent. According to WTO DirectorGeneral Lamy, each country or group now knows what it needs to do. The 

United States, for example, is expected to make further reductions to its 

domestic agricultural subsidies and clarify how it will handle 

countercyclical payments to compensate farmers for low commodity 

prices,31 and the EU is expected to reduce its domestic agricultural

subsidies and cut agricultural tariffs. In return, large developing countries 

such as Brazil, India, and China are expected to lower barriers to 

agriculture, industrial goods, and services sufficiently to create new market 

opportunities. In general, other developing countries would be asked to 

liberalize as their capacity allows and would benefit from special treatment 

and trade capacity building assistance. The clarity of the trade-offs 

necessary for a deal—although requiring difficult reforms—could result in 

a concerted effort among key nations to bridge their differences and 

address areas of importance to their trading partners. 

Impasse on Agriculture 

Continues to Constrain 

Progress 

Despite indications of an outline for a “grand bargain,” the negotiations to 

date have centered on agriculture and remain deadlocked on this issue. In 

mid-February, and again in late March, U.S. Trade Representative Portman 

remarked that the negotiations have largely lost the momentum generated 

by the United States’ October 2005 proposal on agriculture. According to 

WTO Director-General Lamy, the United States, the G-20, and the Cairns 

Group regard the EU’s market access offer as inadequate. Since Hong 

Kong, the EU has held firmly to its position that its October 2005 offer is 

serious and that others must first make concrete and commercially 

meaningful proposals in areas of interest to the EU before it would even 

31U.S. countercyclical payments compensate farmers for low commodity prices. Specifically, 

U.S. producers of wheat, feed grains, rice, upland cotton, oilseeds, and peanuts are eligible 

to receive countercyclical payments whenever the effective (market) price for these 

commodities falls below the target price set by federal legislation.
Page 28 GAO-06-596 World Trade Organization

contemplate improvements in its offer. According to the EU, these would 

restore needed “balance” among the key players’ market access interests. 

However, it remains unclear whether the European Commission has the 

flexibility to improve its October offer.32 In fact, a March 2006 memo to the 

European Commission signed by 13 of its 25 member nations stated that 

the EU’s October 2005 offer “exhausted and may have exceeded” all the 

room for maneuver they had on domestic support and market access, and 

that even improved offers on NAMA and services would not justify an 

improvement. The United States also faces pressure from many WTO 

members to improve and clarify its agricultural offer, particularly on 

domestic support. Brazil and India, negotiating on behalf of the G-20, 

maintain that until there is more movement on agriculture, they will not 

negotiate reciprocal concessions on the other core issues—namely NAMA 

and services. They also insist that any cuts in NAMA and services must be 

proportional to those by developed countries on agriculture and that, in 

general, developed countries should cut their tariffs more than developing 

countries. As a result, they argue, developed-country demands for acrossthe-board cuts that harmonize tariff levels across countries and bring 

developing-country tariffs below presently applied rates are excessive. A 

group of 11 developing countries that includes Brazil and India recently 

stressed that they need flexibility to shield products from liberalization so 

that they can pursue industrial policies and manage structural adjustment.

A March mini-ministerial among six key players—the EU, the United 

States, Japan, Australia, Brazil, and India—failed to yield breakthroughs. 

Rather than moving in concert, as they had pledged in January, players 

signaled little or no flexibility, according to reports. Since the meeting, U.S. 

Trade Representative Portman and Secretary of Agriculture Mike Johanns 

have said publicly they are increasingly doubtful that sufficient “political 

will” exists to conclude a deal in 2006. 

32For example, on March 21, 2006, EU Trade Commissioner Mandelson stated that “certain 

WTO members continue to expect more from us on agricultural market access...we are 

ready to play a constructive role, including on agriculture... but we need to see real cuts in 

industrial tariffs.” On March 22, Mandelson said “the members of the WTO realize that a new 

offer on agriculture is not on the agenda,” and Commissioner for Agriculture Mariann 

Fischer Boel “confirmed that the EU had no intention of making new proposals.”
Page 29 GAO-06-596 World Trade Organization

“Political Will” to Break 

Deadlock Still Absent and 

Timing for Making Hard 

Political Choices Is Not 

Propitious 

Breaking the impasse over agriculture remains key to reaching agreement 

on the whole of the Doha agenda. However, the political will to liberalize 

and make the quality of offers and concessions necessary to break the 

impasse is not yet evident. In addition, the political timing of elections 

scheduled for 2006 in several countries, including the United States, the 

EU, and Brazil, could make concessions at this time even more difficult.

In the United States, 2006 is a congressional election year, and Congress 

already seems to be divided on support for further trade liberalization. 

Faced with increasing trade deficits, heightened competition from China, 

and workers’ displacement as jobs move overseas, the approval of free 

trade agreements has become a difficult proposition. Congressional 

deliberations on the Dominican Republic–Central America Free Trade 

Agreement in 2005 were extremely contentious, and it passed Congress by 

only two votes. U.S. Trade Representative Portman has attempted to 

rebuild bipartisan consensus on U.S. trade policy. However, some leaders 

in Congress have publicly stated that unless the United States gains 

significant market access on agriculture, NAMA, and services—particularly 

in the large developed and developing nations that U.S. business groups 

have identified as liberalization priorities—they will not agree to a deal.

Timing is sensitive for other reasons as well. For example, most provisions 

of the present U.S. farm bill expire in September 2007, and Congress will 

begin work on the legislation to reauthorize U.S. farm programs in 2006. 

Congressional leaders want to take into account the framework likely to 

emerge from the WTO negotiations when drafting a bill, in part to avoid 

exposing farmers to the uncertainty associated with WTO challenges to 

U.S. programs. However, some are skeptical that a WTO agreement will be 

completed in time and urge the drafting of legislation independent of WTO 

negotiations. Other congressional members and some farm organizations 

advocate the extension of the current farm bill until the outcome of the 

Doha negotiations is clear. In the meantime, certain members of Congress 

have urged the administration not to “tie their hands” in drafting a new 

farm bill and have asked executive branch agencies to coordinate closely 

with congressional committees to ensure that they can work with any 

result being negotiated at the WTO. 

Other key players also face political constraints. The EU’s current political 

problems range from member states’ rejection of the EU constitution to 

violent protests by disaffected immigrants and youths. One expert recently 

noted that EU budget negotiations in December did not deliver an 

agreement to cut back on the EU’s agricultural support spending, as some 
Page 30 GAO-06-596 World Trade Organization

EU members such as the United Kingdom had hoped.33 Instead, only 

agreement to review spending in 2008-2009 was achieved. France, in 

particular, has been adamant in its opposition to any further EU 

concessions on agriculture in the WTO negotiations, but it is not alone. EU 

Commissioner Mandelson has recently affirmed that the EU member states 

are united in insisting that all main parties to the talks should be prepared 

to offer more to get more in the talks, while stressing that others need to 

offer more in areas of interest to the EU. Brazil will hold presidential 

elections in the fall of 2006; however, its negotiating strategy is not 

expected to change. In its powerful role as leader of the G-20 and as one of 

the nations with the most to gain from the negotiations, Brazil is likely to 

hold fast to its position that any movement on NAMA and services will be 

proportional to (and dependent on) what it achieves in agriculture. India’s 

new government has kept its markets open to certain imports, but remains 

reticent about commitments to liberalize its agriculture and industrial 

markets further; the government’s stance is attributed to the perceived 

benefits of retaining “policy space” for development, and concerns that its 

many small domestic producers would be unable to withstand heightened 

competition from China and other foreign nations. Several officials stated 

that they believe China’s rise as a manufacturing and export power has 

made many nations wary of committing to cut tariffs at the WTO. China, in 

turn, has not played a visible role in pressing for liberalization in the Doha 

negotiations.

These political constraints have led some observers and stakeholders to 

propose high-level political intervention to break the impasse. Notably, 

some trade experts and at least two heads of state have suggested a “trade 

summit” at which national leaders from key countries such as the EU, the 

United States, Brazil, and India could meet to make the commitments 

necessary in the core negotiating areas and break the impasse. In early 

March, British Prime Minister Tony Blair and Brazilian President Luiz 

Inacio Lula da Silva issued a public call for such a WTO summit. On the one 

hand, they recognize that this action would require commitment to 

strengthening the world’s economy and global trading system at a time 

when protectionist tendencies may be on the rise. Yet, they argue that the 

risks of letting the Doha talks fail or languish in uncertainty would be 

contrary to members’ and the institution’s best interests. U.S. officials offer 

mixed reactions to the idea of a “trade summit”: some think a leaders’ 

33Simon Evenett, “The WTO Ministerial Conference in Hong Kong: What Next?” (University 

of St. Gallen and the Centre for Economic Policy Research, Jan. 18, 2006).
Page 31 GAO-06-596 World Trade Organization

meeting may be desirable if the ministers’ efforts fail, and others question 

its usefulness. U.S. Trade Representative Portman, for example, recently 

stated that summits between the leaders of Britain and France within the 

EU, rather than broader international summits, may be more productive.

Against Looming Deadlines, 

Many Difficult and TimeConsuming Steps Remain

Shortly after the Hong Kong ministerial, the Director-General estimated 

that 40 percent of the work necessary for completing the negotiations 

remained; he noted that the most recent 5 percent of the work had taken 

nearly 17 months to complete. However, just over a year remains before the 

president would have to enter into a final WTO agreement to qualify for 

TPA consideration by Congress. Keeping to the deadlines is critical if the 

major issues are to be dealt with and necessary steps completed, according 

to U.S. and WTO officials. However, the track record for meeting deadlines 

in these negotiations is not promising. We noted in our last report that the 

talks were unlikely to conclude before December 2006, which would be 2 

years after the originally established deadline of January 2005. Indeed, 

most interim deadlines in the negotiations have been repeatedly deferred.

Even if a political breakthrough on agriculture were to be achieved, U.S. 

and WTO officials agree that finalizing each country’s schedule of WTO 

commitments on agriculture, NAMA, and services would be timeconsuming, with little margin for missed deadlines (see fig. 3 for a timeline 

of negotiation deadlines in 2006). First, members must make up for lost 

time after missing the critical deadline of April 30, 2006, for agreeing to 

modalities in agriculture and NAMA. This means they must agree on the 

formulas, thresholds, dates, and other numerical benchmarks that 

members will be committed to meet when they revise their current WTO 

commitments. However, to finalize these commitments, a host of technical 

issues fraught with political and practical implications must be addressed. 

In February 2006, for example, the chairman of the negotiating group on 

agriculture presented a list of 70 questions that he believed would need to 

be addressed to complete modalities.34 In mid-March, a U.S. official told us 

that WTO members had been focusing on about 15 modalities issues but 

had not come close to compromise on any. In NAMA, meanwhile, the 

34These questions from the agriculture chair include, among others, (1) the range of cuts for 

domestic support expected in each of the three bands set in the Hong Kong ministerial 

declaration, (2) the number of tariff lines that developing countries will be able to designate 

as special products, and (3) the definition of an “emergency situation” that would qualify for 

in-kind food aid.
Page 32 GAO-06-596 World Trade Organization

negotiating chair identified 14 issues in his March 27 report that still need 

work to finalize modalities—particularly the tariff reduction formula, 

treatment of unbound tariffs, and flexibilities for developing countries. The 

list did not include how to interpret the linkage between ambition in 

agriculture and NAMA established at Hong Kong, which has since been the 

topic of heated debate.

Figure 3: Key Selected Deadlines in 2006 for the Doha Negotiations

Second, once modalities are agreed to, the United States and other 

members must take a series of important and time-consuming steps to 

reach a final agreement. For example, members must draft revisions of 

their national tariff schedules to indicate how they intend to meet their 

modalities commitments for each product or tariff line. The draft 

commitment schedules in agriculture and NAMA are to be completed by 

July 31, 2006. A U.S. official told us that only when the draft schedules are 

submitted will other members see which products will be liberalized. Then, 

a process of verifying schedules, finalizing sectoral agreements, and 

bargaining among individual members (known as “request–offer”) begins. 

According to U.S. officials, verification is critical because the modalities 

text will allow different interpretations of commitments, and only 

countries’ national schedules are legally binding. They said that most 

Source: GAO, based on WTO documents.

Jan.

2006

Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.

Feb. 28: 

Submit 

plurilateral 

requests for 

services

Apr. 30: 

Establish 

modalities for 

agriculture and 

NAMA

Provide Integrated 

Framework 

recommendations

July 31:

Submit schedules for 

agriculture and NAMA

Submit second round of 

revised offers for services

Chair submits

consolidated rules text

Provide “Aid for Trade” 

recommendations

Submit first full draft of 

trade facilitation report

Oct. 31:

Submit final 

commitment 

schedules for 

services

Dec. 31:

Conclude 

Doha

negotiations

NAMA: Nonagricultural market access
Page 33 GAO-06-596 World Trade Organization

experienced observers agree that this process is vital to achieving intended 

results and may require 6 to 8 months to complete. Even if the current 

schedule for submitting schedules is met, little time would remain in 2006 

to do this work.

Third, as indicated in table 3, before and after an agreement is finally 

entered into, the United States must take certain steps to comply with TPA. 

The president must notify and solicit input from Congress and ask the 

International Trade Commission (ITC) for an assessment of the 

agreement’s likely impact on the U.S. economy and specific industries 

before signing an agreement. The agreement itself must be entered into 

before July 1, 2007. Once an agreement is entered into, the U.S. 

administration would have to draw up an implementing package that would 

include implementing legislation and a plan, known as a statement of 

administrative action, to carry out the agreement under existing law; this is 

likely to be a laborious effort, according to U.S. officials. The 

implementation package for the Uruguay Round, for example, filled 

hundreds of pages. U.S. officials said the plan must specify how existing 

U.S. programs, regulations, and legislation will be adjusted to comply with 

WTO commitments. The implementing package, one official noted, must 

also contain a series of reports (e.g., an analysis of how the agreement 

serves U.S. commercial interests) and a description of how the agreement 

meets TPA-mandated negotiating objectives.

Table 3: Principal U.S. Government Activities to Conclude Doha Round Agreements

U.S. Government activities Time frames

TPA requires USTR to consult closely with congressional revenue committees (i.e., 

the House Ways and Means and Senate Finance Committees), the Congressional 

Oversight Group, and other congressional committees with jurisdiction over areas 

affected by the WTO Doha agreement.

Throughout negotiations

Negotiate agriculture and NAMA modalities. January–April 2006

Develop national tariff schedules and other binding commitments based on 

modalities for agriculture and NAMA. Prepare and submit revised services offers. 

May–July 2006

Verify schedules, finalize sectoral and non-tariff barrier agreements, and engage in 

“request–offer” negotiations with individual WTO members or groups.

August–December 2006

TPA requires that at least 180 days before entering into a trade agreement, the 

president must report to congressional revenue committees on the range of 

proposals being negotiated that could require amendments to U.S. trade remedy 

laws, and how the proposals relate to the principal U.S. negotiating objectives 

concerning those laws.

December 31, 2006
Page 34 GAO-06-596 World Trade Organization

Source: GAO analysis of WTO milestones and TPA requirements.

Fourth, a series of other complex and difficult issues that are crucial to 

some members may need to be resolved before a final WTO agreement is 

possible; however, WTO members have largely postponed dealing with 

them until after the core issues are resolved. This sequential approach—

putting off some issues until other issues are decided—puts further stress 

on the time available to conclude an agreement. For example, a variety of 

developing-country concerns and calls for changes to WTO rules in areas 

such as antidumping, trade facilitation (customs reform), and services are 

on the agenda; several of these issues may prove intractable. The crosscutting issue of erosion of preferences illustrates the complexities. A 

number of WTO members are small developing countries with economies 

dependent on one or two commodity exports. Currently, some of them rely 

heavily on the preferential tariff treatment they receive for their exports in 

the EU, the United States, and other developed countries. As a result, they 

regard reducing worldwide tariffs as a clear threat to their economic wellbeing. Yet foregoing or delaying the benefits of multilateral liberalization so 

these countries can retain their preferred access is not acceptable to many 

other WTO nations. A seminar to explore options for dealing with this issue 

was held in April 2006.

TPA requires that at least 90 days before entering into an agreement, the president 

must notify Congress of his intent to enter into the agreement.

April 1, 2007

TPA requires that at least 90 days before entering into agreement, the president must 

provide the ITC with details of the agreement “as it exists at that time” and request 

ITC to prepare and present to the president and Congress an assessment of the 

agreement’s likely impact on the U.S. economy and specific industry sectors. 

Between the time of the president’s request and the ITC’s submission of the 

assessment, the president must “keep ITC current with respect to details of the 

agreement.”

April 1, 2007

TPA requires that no later than 30 days after the president notifies Congress of intent 

to enter into an agreement, private sector advisory committees must submit reports 

on the agreement to Congress, the president, and USTR.

May 1, 2007

The president must enter into an agreement before this date for the agreement to 

qualify for approval under TPA’s expedited procedures.

July 1, 2007

TPA requires that within 60 days after entering into an agreement, the president must 

submit to Congress a description of the changes to existing law he believes would be 

required to bring the United States into compliance with the agreement.

August 31, 2007

TPA requires that no later than 90 days after the president enters into the agreement, 

the ITC must submit its impact report to the president and Congress.

September 30, 2007

The president is required by TPA to submit to Congress the final text of the 

agreement, together with a draft of the implementing bill, a statement of 

administrative action, and supporting information.

No date specified, but both houses of 

Congress must be in session

(Continued From Previous Page)

U.S. Government activities Time frames
Page 35 GAO-06-596 World Trade Organization

Difficulty Foreseen in 

Meeting Deadline with an 

Ambitious Outcome Leads 

Experts to Float Other 

Options

WTO member states still say that they remain committed to the goal of 

concluding the Doha Round with robust results by the end of 2006. The fact 

that all members continue to be engaged in efforts to accomplish this task 

is a positive sign; if the political will can be found to accommodate each 

others’ ambitions and produce an acceptable “grand bargain,” then it would 

be difficult but not impossible to conclude the Doha Round successfully 

within the TPA timeframe. However, the limited progress to date and the 

significant amount of work remaining has raised questions about the 

feasibility of an ambitious outcome by the 2006 deadline, particularly 

without more active leadership from the highest levels. A January poll of 

negotiators, policy makers, and experts located in Geneva and key country 

capitals revealed that none of the Geneva respondents believe WTO 

members will meet their goal for completing the negotiations in 2006 and 

only 2 percent of all respondents believed they would meet the April 30 

modalities deadline.35 Moreover, the officials and experts we consulted 

believe that by July 2006, it will be clear whether the goal of completing an 

agreement within the TPA timeframe can be met. Backloading modalities 

on agriculture and NAMA to July would, however, “guarantee failure,” 

according to WTO Director-General Lamy. These concerns have led 

numerous experts and observers to suggest that there may be different 

outcomes, including (1) no results in the round, (2) negotiations continuing 

beyond mid-2007 with uncertain results, or (3) conclusion of the round 

with modest results within the TPA timeframe.36 Each involves trade-offs.

1. No results in the round. At Davos in late January, the EU Trade 

Commissioner was quoted as stating that so little was being offered by 

other countries that the EU would stand to lose next to nothing if the Doha 

negotiations failed. (His official remarks since then, however, emphasize 

the EU’s commitment to Doha’s success, while stressing the need for 

reciprocity.) In February, WTO Director-General Lamy indicated that 

without sufficiently ambitious results, there will be no Doha outcome. U.S. 

Trade Representative Portman has said the United States is committed to 

doing everything it can to bring an agreement together. Yet he added that if 

the Doha negotiations are not concluded by the end of 2006, “there is a real 

35Institute for International Business, Economics and Law, Global Trade Opinion Poll, 

Survey No. 12, Jan. 2006 (Adelaide, Australia: The University of Adelaide).

36See, for example, Gary Clyde Hufbauer and Jeffrey J. Schott, “The Doha Round After Hong 

Kong,” Policy Briefs in International Economics (Washington, D.C.; Institute for 

International Economics, Feb. 2006).
Page 36 GAO-06-596 World Trade Organization

danger the Doha Round could drift into a long, unpredictable period of 

stagnation.” Some analysts and business groups also warn the round has 

gone off course for lack of political will, and accepting various premises for 

avoiding liberalization; they say that a pause or collapse would be better 

than reaching a “bad deal.” Yet a complete collapse of the Doha Round is 

generally seen as the least desirable outcome by observers, who believe 

that members will try to avoid total failure because so much is at stake. In 

addition to forfeiting the economic and welfare gains expected from Doha’s 

successful conclusion, WTO Director-General Lamy and numerous 

observers warn that failure to achieve agreement may pose risks to the 

credibility of the WTO as an effective or even relevant institution. Although 

the WTO itself—with its extensive set of binding commitments and vast 

coverage in terms of country membership and world trade volume—would 

no doubt continue, experts caution that Doha’s failure could strain the 

global trading system. For example, Director-General Lamy has expressed 

the view that developing countries, particularly the smallest and weakest, 

would be among the biggest losers. Others say one potential outcome of a 

failed round could be the proliferation of regional and bilateral trade 

agreements, further weakening the “most favored nation” principle—the 

concept of equal treatment for all members that is a pillar of the 

multilateral trading system. The United States has already announced its 

intention to move vigorously in 2006 to negotiate new bilateral and regional 

agreements. In fact, some in Congress have encouraged the United States 

to pursue bilateral free trade agreements with countries such as Korea, in 

part to encourage countries that are resisting liberalization at the WTO to 

take notice. Other WTO functions, such as the legitimacy of the dispute 

settlement system, also could be weakened.

2. Negotiations continue beyond mid-2007 with uncertain results. 

Another possible outcome would be to continue the talks in the hope of a 

more robust outcome at a later date. Experts note that past rounds have 

taken longer than originally planned, and the last round—which involved 

fewer countries—took 7.5 years to complete. However, because of the 

importance of TPA for U.S. ratification, it is unclear whether countries 

would choose to continue negotiations without TPA or let the negotiations 

pause until TPA is extended or renewed. One scenario would be to 

continue the negotiations without TPA, with the hope that TPA is 

eventually renewed, although congressional observers believe that 

extension or renewal of TPA is an uncertain and difficult proposition in the 

near term. A second scenario would be to put the negotiations on hold for 

an indefinite time until TPA is extended or renewed. Some experts think 

that renewal or extension of TPA would probably have a better chance if it 
Page 37 GAO-06-596 World Trade Organization

were linked to an extension of the U.S. farm bill or if the Doha negotiations 

showed potential of concluding with an ambitious result. Because of these 

uncertainties, the difference between outright failure of the round and 

continuing or suspending the negotiations may only be clear after some 

years have passed. 

3. Concluding the round with modest results within TPA’s timeframe. 

This scenario would avoid the risks of outright failure and the uncertainty 

inherent in continuing the talks beyond mid-2007. However, a modest 

outcome may not be acceptable to many WTO members as it may not 

include sufficient gains to offset the costs; or—in trade negotiators’ 

language—the agreement would not result in a “balanced package.” EU 

Trade Commissioner Mandelson stated publicly early in 2006 that the EU 

would “reluctantly settle” for a minimalist outcome, but WTO DirectorGeneral Lamy said a “cheap round is not an option,” and U.S. Trade 

Representative Portman quickly rejected “Doha-lite” as falling short of 

success and being difficult to promote domestically. In addition, a more 

modest package would leave countries with more ambitious goals little 

alternative but to pursue other avenues for liberalization, such as bilateral 

agreements.

Concluding 

Observations

WTO members undertook an ambitious set of goals when they launched 

the Doha Development Agenda more than 4 years ago. Our May 2005 report 

ended by noting that some of the experts we had consulted were confident 

that an ambitious, balanced outcome of the round could be attained—if 

2005 resulted in sufficient progress. Other experts warned that hard 

decisions were necessary and time was short if an outcome living up to 

Doha’s promises were to be achieved. Progress in 2005 through the Hong 

Kong ministerial, however, was considerably less than WTO members 

hoped. With nearly all tough decisions put off until 2006, the tension 

between members’ original high ambitions and the TPA time frame has 

become acute. This is evident in the increasing divide between the official 

statements of WTO members and the expectations of experts on whether 

the round can be completed before TPA’s expiration on July 1, 2007. U.S. 

officials often call the Doha Round a “once in a generation opportunity” 

because the last global trade round took a decade to launch and complete 

and another decade to implement. WTO Director-General Lamy recently 

stressed that WTO members will soon face the “moment of truth” for the 

Doha Round. In part for this reason, some observers expressed dismay at 

the timing of the president's announcement that he was nominating U.S. 

Trade Representative Portman to be Director of the Office of Management 
Page 38 GAO-06-596 World Trade Organization

and Budget. At press time, WTO Director-General Lamy had just announced 

the April 30 modalities deadline would be missed, necessitating a shift to 

continuous text-based negotiations in the coming weeks. He urged 

members to deal coolly and constructively with the situation, avoiding 

recrimination and showing fresh determination to accelerate progress. 

With just over a year left to produce an agreement that qualifies for TPA, it 

remains unclear whether the WTO can create an environment where 

members perceive it is in their interest to make the significant changes in 

their current positions, and other decisions, that cumulatively would fulfill 

the vision of the Doha Development Agenda.

Agency Comments and 

Our Evaluation

We requested comments on a draft of this report from the U.S. Trade 

Representative, the Secretary of Agriculture, the Secretary of Commerce, 

and the Secretary of State, or their designees. The Assistant U.S. Trade 

Representative for WTO and Multilateral Affairs indicated general 

agreement with the report’s conclusion that the WTO Doha negotiations are 

not where they should be and provided us with several technical 

comments, which we incorporated as appropriate. The Department of 

Commerce’s Deputy Assistant Secretary for Agreements Compliance 

indicated that, overall, the report fairly portrays the state of the 

negotiations and the key problems U.S. negotiators are facing; they 

provided several technical comments on rules negotiations, which we 

incorporated. The Department of Agriculture’s Director, Multilateral Trade 

Negotiations Division, International Trade Policy, Foreign Agricultural 

Service, raised a minor point about the state of discussions on ad valorem

equivalents, which we incorporated. The Department of State’s Director of 

Multilateral Trade, Bureau of Economic and Business Affairs, did not raise 

any substantive concerns with the report.

We are sending copies of this report to interested congressional 

committees, the U.S. Trade Representative, the Secretary of Agriculture, 

the Secretary of Commerce, and the Secretary of State. We will also make 

copies available to others upon request. In addition, this report will be 

available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me 

at (202) 512-4347 or yagerl@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 
Page 39 GAO-06-596 World Trade Organization

of this report. GAO staff who made major contributions to this reported are 

listed in appendix II.

Loren Yager

Director, International Affairs and Trade
Page 40 GAO-06-596 World Trade Organization

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

In this report, we (1) provide the status of the Doha negotiations on the eve 

of the Hong Kong ministerial, (2) review the outcome of the Hong Kong 

ministerial, and (3) discuss the prospects for concluding the Doha Round 

before U.S. Trade Promotion Authority (TPA) expires in July 2007.

We followed the same overall methodology to complete all three of our 

objectives. We obtained, reviewed, and analyzed documents from a variety 

of sources. From the World Trade Organization (WTO), we analyzed the 

2001 Doha ministerial declaration; the Doha work program decision 

adopted by the General Council on August 1, 2004, known as the “July 

framework agreement”; the final and earlier versions of the December 

Hong Kong ministerial conference declaration; reports by the DirectorGeneral and negotiating chairs; and negotiating proposals and other 

documents from WTO member countries. From U.S. government agencies 

and foreign country officials, we obtained background information 

regarding negotiating proposals and positions. We also obtained 

information on day-to-day developments from trade publications.

To assess the status of the Doha negotiations before Hong Kong, we met 

with a variety of U.S. government agencies, including the Office of the U.S. 

Trade Representative (USTR) and the Departments of Agriculture, 

Commerce, and State, to obtain information on progress on the 

negotiations and on the issue areas and factors affecting the negotiations. 

We also met with representatives from Brazil in Washington, D.C. Further, 

we met with officials from the Mauritius Sugar Syndicate, the Food Trade 

Alliance, the National Farmers Union, and the National Cotton Council. In 

addition, we attended conferences and seminars, such as those sponsored 

by the American Bar Association in partnership with the Washington 

International Trade Association, and the Global Business Dialogue. 

With the assistance of USTR and the State Department, in October 2005 we 

traveled to WTO headquarters in Geneva and European Union (EU) 

headquarters in Brussels. We met with WTO member country officials at 

each location, including those from the EU, Japan, Mauritius, Australia, 

Benin, Burkina Faso, Chad, Mali, and members of the African, Caribbean, 

and Pacific group. We also met with WTO officials, including the industrial 

(nonagricultural) market access, services, and trade facilitation negotiating 

group chairs. Upon returning from our trip, in November 2005, we briefed 

your staff on the status of the Doha negotiations prior to the Hong Kong 

ministerial conference.
Appendix I

Objectives, Scope, and Methodology

Page 41 GAO-06-596 World Trade Organization

To assess the outcome of the Hong Kong ministerial conference, we 

attended the Hong Kong conference in December 2005. In Hong Kong, we 

attended USTR congressional briefings and went to press conferences and 

meetings open to country delegates. We also collected the views of experts, 

relying primarily on (1) published articles in reputable sources such as 

Foreign Affairs and Foreign Policy; (2) publications put out by a range of 

organizations following the ministerial and Doha talks, such as the Institute 

for International Economics, the International Food and Agricultural Trade 

Policy Council, the Center for Economic Policy Research, the International 

Centre for Trade and Sustainable Development, the Center for Global 

Development, Bryan Cave, the American Society of International Law, 

Oxfam, and the South Centre, as well as officials at the World Bank, the 

Organization for Economic Cooperation and Development, the EU, and the 

Congressional Research Service; and (3) seminars and conferences 

sponsored by the Department of Agriculture and groups such as the 

Georgetown Law School and the American Bar Association, the Cordell 

Hull Institute, the American Enterprise Institute, Women in International 

Trade, the Washington International Trade Association, the Woodrow 

Wilson Center for International Scholars, the Center for Strategic and 

International Studies, and the Carnegie Endowment for International 

Peace. Though many of these seminars and conferences we attended 

occurred in Washington, D.C., collectively they represent a range of 

perspectives from “think tanks,” government, academia, business, 

nongovernmental organizations, and former trade officials in the United 

States and elsewhere. Also, we reviewed news media reports, news 

releases on the developments at the ministerial conference, and statements 

about the outcome of the ministerial conference from the WTO, U.S. and 

foreign governments, and other international organizations.

To assess prospects for success, we relied on the perspectives of 

participants and experts, as well as our own analysis. We defined success 

with an “ambitious outcome” as meeting WTO members’ originally agreed 

goals and U.S. objectives as set forth in TPA legislation and associated 

requirements.

We performed our work from May 2005 through March 2006 in accordance 

with generally accepted government auditing standards.
Page 42 GAO-06-596 World Trade Organization

Appendix II

GAO Contact and Staff Acknowledgments ApendxiI

GAO Contact Loren Yager, Director (202) 512-4347 or YagerL@gao.gov

Staff 

Acknowledgments

In addition to the individual named above, Kim Frankena, Assistant 

Director, Ann Baker, Lynn Cothern, Juan Gobel, Ernie Jackson, Venecia 

Rojas Kenah, and Marisela Perez made key contributions to this report.

(320353)
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

Obtaining Copies of 

GAO Reports and 

Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost 

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To 

have GAO e-mail you a list of newly posted products every afternoon, go to 

www.gao.gov and select “Subscribe to Updates.”

Order by Mail or Phone The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to:

U.S. Government Accountability Office

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Congressional 

Relations

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548

Public Affairs Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548