Developing countries have not seen the kind of flexibility from key players that would indicate that a deal in terms of the Doha trade negotiations could be reached in the next year or so, Department of Trade and Industry (DTI) International Trade and Economic Development deputy DG Xavier Carim said on Wednesday.

For the Doha trade negotiations to be concluded by the middle of next year, the wide apart positions of the major players had to be narrowed substantially before the end of this year, he noted during a media briefing in Johannesburg.

The Doha negotiations have been continuing for nearly eight years, while the World Trade Organisation (WTO) was trying to have the negotiations concluded before the US midterm elections and the presidential elections in Brazil in mid-2010.

If the negotiations were not concluded before that time, the process could see a pause until 2011.

This would mean that the majority of the negotiating process would have to be concluded by the end of this year for the agreements to be signed by the middle of next year, said Carim.

While the mandate of the Doha negotiations had set developmental objectives to remove the trade imbalances and inoquities against developing countries, these objectives have in the course of the negotiations been eroded, noted Carim.

He said that developing countries were not seeing substantial and meaningful reform of the trade system and that while there have been some changes, this has not been to the extent that constitutes substantial transformation.

One of the biggest concerns for South Africa was a reduction in the ambition to reform agricultural trade.

As a result of the Doha negotiations, there have been no new market openings for South African agricultural products.

Further, developing countries have also faced pressure to significantly reduce their industrial tariffs and open their markets to industrial country exports.

South Africa would have to take the deepest and widest cut in tariffs of any WTO member as a result of the formula agreed to by the WTO, said Carim, noting that this could hardly be considered fair or developmental.

The country would take tariff cuts on about 30% of its industrial tariff lines at applied rates, with more than two-thirds of the tariff lines to be cut by more than 30%.

This would reduce the scope to employ tariffs to support industrial policy objectives and would expose labour intensive industries to intensified competition, the DTI noted.

Carim emphasised that South Africa was willing to participate in the Doha negotiations, but said that any trade policy had to be supportive of the country's industrial diversification and could not undermine the employment objectives of the country.

He highlighted that while there has also been an acknowledgement that South Africa would need specific accommodations with regard to the tariff line cuts, the specific degree of flexibility around this had not yet been negotiated.

South Africa would, however, ensure that it got a proportional deal, said Carim.

REGIONAL MULTILATERAL TRADE

Meanwhile, Carim noted that there was an understanding among the Southern African Customs Union (Sacu) members that it would have to improve or it would become irrelevant.

An Economic Partnership Agreement (EPA) with the European Union (EU), which had led to a division among the five Sacu member States, had forced the customs union to think about its future, said Carim.

Botswana, Lesotho and Swaziland had all signed an EPA with the EU, while South Africa and Namibia had not, leading to tension not only between the member countries, but also among the Southern African Development Community.

He noted that the customs union, which was established in 1910, was the oldest in the world. It could, however, not continue to operate in the same way it always had in the current global environment that was becoming more competitive and more challenging.

Carim said that Sacu members had to move into a deeper form of integration, had to develop a common trade and industrial policy and had to coordinate agricultural policy and competition.

Further, the members also had to approach any future negotiations as a single entity and had to agree on a negotiating agenda.

Carim said that the custom union's revenue sharing method was not sustainable into the future. He explained that the union members put all the customs and excise collected in the common customs area into a pool that is then shared among the members.

South Africa contributed about 98% of the revenues, but only received a share of about 50% or less. This was, however, a very small part of the country's total revenues, while these revenues formed a large portion of the total revenues of the other member States.

The revenue sharing system was very volatile, said Carim.

The member States would discuss the review of this method.

Sacu had to determine what policy would allow it to use the revenues in a way that is more sustainable, would deepen infrastructural development and improve the region's productive capacity, added Carim, noting that this was part of an ongoing dialogue between the members.