	Background

The World Trade Organization (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). The outcome of ministerial conferences is a  ministerial declaration that guides future work. In negotiating the Doha Round on behalf of the United States, the Office of  the United States Trade Representative (USTR) is also guided by certain  goals, notably the goals outlined by the Trade Promotion Authority (TPA)  granted by Congress in 2002. The  December 2003 General Council meeting did not result in any agreements,  except to resume talks in early 2004. Doha Round Behind Schedule but July Framework Injected New Momentum into Trade Talks after Failed Cancun Ministerial

Despite the Doha Round starting 2004 on an uncertain note, political  leadership, intensified dialogue, and a series of conciliatory gestures  resulted in adoption by WTO members of a framework agreement on key  negotiating issues called “the July framework” or “package.” The  framework is credited with putting global trade talks back on track, and  participants report that they have finally begun to make progress. The WTO negotiating process also became more effective, contributing to  progress. Moreover, agriculture is recognized as  having achieved greater progress than other issues, such as industrial  market access and services, which are essential for attaining an acceptable  balance of issue interests among the WTO’s 148 members. Negotiators Have Made Uneven Progress in Key Issue Areas

Negotiating progress has varied markedly in the six issues designated as  key work areas at the upcoming Hong Kong ministerial—(1) agriculture,  (2) trade facilitation, (3) industrial (nonagricultural) market access, (4)  services, (5) development issues, and (6) rules. Progress has also been limited on two other issues  being advocated by other WTO members—development-related issues and  rules. Negotiators still need to agree on numerous outstanding details if WTO  members are to achieve modalities at the December 2005 Hong Kong  ministerial. Nevertheless, achieving a meaningful agreement in  industrial market access will be essential for the United States. Several Factors Pose Challenges to Successful Negotiations in Hong Kong

Seven interrelated factors may influence the Doha Round’s progress in  resolving substantive differences in the lead-up to the Hong Kong  ministerial. Sixth, there are timing considerations, with the  mid-2007 expiration of any renewed U.S. Trade Promotion Authority acting  as an implicit deadline. The last (Uruguay) round  succeeded in the complex challenge of adding agriculture, services, and  intellectual property rights to the trading system for the first time. A special relationship between U.S.  and EU leaders contributed to the Doha ministerial’s success and to the  July 2004 package. Agriculture remains central to the round. We met with officials from key U.S. government agencies, including the  Department of Agriculture, the Department of Commerce, the Office of the  U.S. Trade Representative, the State Department, and the Department of  the Treasury, to obtain perspectives on progress in the negotiations overall  and individual issue areas and factors affecting negotiations. Agriculture

Given the importance of agriculture in the Doha Round negotiations,  coalitions of countries regrouped in 2004 and focused on making progress  on the three pillars in agricultural reform of export subsidies, domestic  supports, and market access.
Why GAO Did This Study

The outcome of ongoing World Trade Organization (WTO) negotiations is vital to the U.S. economy, because trade with WTO members accounts for about one-fifth of the U.S. gross domestic product. The current round of trade negotiations--called the Doha Round--was supposed to end by January 2005 with agreement on the key issues of agriculture, industrial market access, services, and to strengthen the trading system's contribution to economic development. Failure to reach any agreement at the last WTO ministerial meeting in Cancun, Mexico, in September 2003, put the talks behind schedule and threatened the outcome; however, talks resumed in 2004, and a new ministerial conference will convene in Hong Kong in December 2005. In light of these events, and with the impending renewal decision on U.S. Trade Promotion Authority, which streamlines the process by which Congress approves trade agreements, GAO was asked to assess (1) the overall status of the Doha Round negotiations, (2) progress on key negotiating issues, and (3) factors affecting progress toward concluding the negotiations.

What GAO Found

During 2004, Doha Round negotiations got back on track as trade ministers signed a framework agreement known as the "July package." By committing to eliminate agricultural export subsidies, the agreement's main achievement was to recognize the importance of agriculture in the round and thus reopen talks on other issues. Since this breakthrough, negotiations are picking up momentum, as WTO members are working toward deadlines for more detailed agreements at the December 2005 Hong Kong ministerial conference. Yet despite the improved negotiating atmosphere, the talks are behind schedule, and considerable work remains on the numerous issues that must constitute a final agreement. Progress has been uneven on the six negotiating issues identified as central to the Hong Kong meeting--agriculture, trade facilitation (customs reforms), industrial market access, services, WTO rules, and development issues. The United States has particular reform interests in the first four of these issues. Progress has occurred on two of them: in agriculture, based on agreements in the July framework, and trade facilitation, for which talks have finally been started. However, little progress has been made on industrial market access and services, two other issues of interest to the United States. Several factors could affect progress in the critical period leading up to the December 2005 Hong Kong ministerial. Achieving consensus among the WTO's 148 members is a challenging task, and diverse economic incentives and competing visions add complexity to the negotiations. Cooperation by the United States, the European Union, and some of the developing countries is also seen as key to a successful conclusion before U.S. Trade Promotion Authority expires in mid-2007, an implicit deadline for the talks.