Bridges Daily Update #1 - Divides Run Deep as Ministers Arrive at Nairobi WTO Meet

14 December 2015

Trade ministers are arriving in Nairobi, Kenya to begin their latest biennial conference, set to be held from 15-18 December. Whether the WTO meet will indeed be able to yield substantive outcomes is, at this stage, anybody’s guess, given the deep divides that remained across the membership at the end of preparations in Geneva.

Members have spent the past several months negotiating the terms of a possible package of deliverables to present at the meeting, which marks the WTO’s Tenth Ministerial Conference, as well as language that will set the direction of the organisation’s future work.

However, talks in Geneva ultimately left much to be decided by ministers on all fronts once the conference officially gets underway on Tuesday afternoon, with WTO Director-General Roberto Azevêdo reporting to members on 7 December that at this stage, they “have no deliverables for Nairobi – either on the potential outcomes that we identified, or on the Ministerial Declaration.”

At the time, he urged members to use the remaining time in Geneva to advance their work as much as possible before Nairobi.

“We should aim to present ministers with documents for a yes/no decision – or if necessary with only a couple of outstanding issues to resolve,” Azevêdo urged. The days that followed, however, did not yield such a result, with members forwarding bracketed documents in some areas, while remaining divided in others on whether to continue pursuing negotiations at all.

More negotiating paralysis?

The ministerial – referred to in trade circles as MC10 – has been heralded by some trade watchers as a potential landmark event, marking both the first such conference to be held in sub-Saharan Africa, as well as the 20th anniversary of the WTO.

The gathering comes shortly after other major international events such as the UN climate talks in Paris and the Sustainable Development Summit in New York, where trade has been slated as a potential means for advancing sustainability goals.

However, the repeated setbacks in the Doha Round trade negotiations have loomed over this year’s ministerial preparations, as they have over many other meets before it. This time, however, the stakes have changed, particularly given the various evolutions in the global trade landscape, including among others the proliferation of regional and “mega-regional” trade deals – many of which are now addressing areas that do not feature in WTO negotiations.

How to ensure that the WTO remains relevant as a negotiating forum has therefore been a key focus for members, with some such as China, India, and the African Group, among others, advocating for language reaffirming the Doha Round and subsequent ministerial declarations and decisions. Others, such as the US, EU, and Japan have opposed such language and are pushing for discussing the same issues outside that context, alongside “new” ones.

Calling upon members to demonstrate flexibility and political will to resolve their disagreements, Amina Mohamed, Kenya’s Cabinet Secretary for Foreign Affairs and International Trade and the chair of the ministerial, noted in a piece for the Huffington Post that “the Tenth Ministerial in Nairobi is the last chance for some time to come for the WTO to dig itself out of its negotiating stasis.”

The updated draft of the ministerial declaration – dated 9 December and released by Bloomberg BNA – shows various bracketed areas that will need to be tackled by ministers over the coming days. Brackets are included in the preamble and all three parts of the ministerial declaration – which address the achievements and challenges over the WTO’s 20-year history, any decisions from the ministerial, and the future work of the organisation, respectively. The area with the most brackets, however, is the third and final part.

Various alternative paragraphs are put forward in that section, ranging from reaffirmations of the Doha Development Agenda and subsequent ministerial declarations and decisions; a recognition of different perspectives without any final agreement; or instead providing instructions to WTO members that they “continue deliberations” on how to address their disagreements with a view to agreeing a way forward by the end of next year.

Among these brackets is a paragraph on undertaking, “at least on an exploratory basis,” trade-related issues that would require discussion for the WTO to keep pace with the changing global trading system.

Agriculture

Over the past week, Azevêdo reportedly held Green Room meetings with ambassadors of key trading countries on the three areas that have lately commanded the attention of farm trade negotiators – specifically, agricultural export competition, the special safeguard mechanism (SSM), and public food stockholding – to see whether some of the existing gaps could be resolved.

However, farm talks chair Vangelis Vitalis of New Zealand reported at an informal meeting on Friday, 11 December that “this group did not succeed in bridging the significant gaps that still separate members,” noting that his 7 December report on the state-of-play in the agriculture negotiations “remains eerily and depressingly valid.”

Vitalis reportedly noted, however, that of the areas on the table, things were looking slightly more positive on export competition, expressing hope that ministers could provide useful guidance.

At the same meeting, members discussed a revised proposal from the G-33 coalition of developing countries regarding a special agricultural safeguard. The proposal co-exists with the earlier SSM proposal.

Currently, the special agricultural safeguard in the Agreement on Agriculture is only available to countries that converted non-tariff border measures into tariffs during the Uruguay Round of trade talks, and as a result is not available to most developing countries. The G-33 proposal would expand this to allow all developing countries access to this safeguard in the case of an import surge for products that have an SSM symbol in their schedules, among other provisions.

Sources say that the proposal has been welcomed cautiously in some quarters, such as the EU and Norway, as having more promise, while noting there was no time to discuss it ahead of Nairobi. Others, such as Brazil and Argentina, continue to question the viability of achieving a safeguard-related outcome without a result on market access.

LDC package, rules

Another lingering question is whether the event will be able to deliver substantive outcomes for the WTO’s poorest members, those classified as least developed countries (LDCs). In that context, four main areas have been discussed as items for a possible LDC “package” – duty-free, quota-free market access (DFQF), cotton, the LDC services waiver, and preferential rules of origin – with varying success.

Regarding the LDC package, while advances have been very limited in areas such as DFQF, some progress has been seen in rules of origin. Ambassador Steffen Smidt of Denmark – the talks’ chair – reportedly circulated a revised chairman’s text late last week which, he said, could serve as a potential opportunity for reaching consensus. MC10 negotiations will be based off of the bracketed draft text.

Another area where WTO members have been considering possible deliverables for Nairobi is under the “rules” negotiations, which address anti-dumping, subsidies and countervailing duties, fisheries subsidies, and provisions on regional trade agreements (RTAs).

Members have been debating possible transparency-related outcomes in these areas, as well as prohibitions on fisheries subsidies. Whether to take on more rules-related negotiations in Nairobi has nevertheless proven divisive, sources say, with no convergence on any proposals to date and no clear path forward for MC10.

While some members suggest that a lower-ambition outcome on rules may still be possible for Nairobi, others are less certain that a deal is still feasible and whether that would be the best use of ministers’ time, while still a third group opposes a rules outcome at the ministerial and is instead pushing for talks later on.

EIF pledging conference, LDC accessions

Some notable events related to LDCs are on the docket for Nairobi. For example, Monday 14 December, the day prior to the launch of the ministerial, will see the hosting of the pledging conference for the Enhanced Integrated Framework (EIF), a multi-donor Aid for Trade programme designed exclusively for least developed countries. The pledging conference marks the launch of the second phase of the EIF, which will run from 2016 to 2022.

Later in the week, two least developed countries – Liberia and Afghanistan – are set to be invited into the organisation, with the accession ceremonies scheduled for Wednesday and Thursday, respectively. The two countries would, once they ratify their accession terms, become the WTO’s 163rd and 164th members.

Possible ITA-II deal?

Another open question going into the ministerial would be whether a group of countries negotiating to expand the product coverage of the WTO’s Information Technology Agreement (ITA) – a tariff-cutting plurilateral pact for information and communication technology (ICT) products – will be able to wrap up a final deal.

A final product list was announced by the ITA-II expansion members – who are a subset of the original ITA’s membership – in July. In the months since, negotiators have been working to agree the “staging periods” for phasing out tariffs on those 201 products, with these product additions meant to reflect some of the new commercial realities of technology trade. Tariffs would be removed either upon the ITA-II’s entry into force, or within three, five, or seven years.

While advances have been reported in the latest talks, with some key participants reducing the number of goods they aim to put in the longer phase-out periods, the final hold-up is said to be the continued need for a revised national tariff schedule from China as well as for Beijing’s lifting of reservations on some members’ schedules.

“If things drag deeper into the week, this precious initiative risks being thrown into the less-than-savoury stew of the Doha Development Round discussions or misused as a negotiating chip against unrelated issues,” said John Neuffer, President and CEO of the Semiconductor Industry Association and a long-time watcher of the talks.

At the time of this writing, a press conference on the ITA, hosted by Japan, was scheduled for Wednesday 16 December, trade sources confirm. Whether an outcome will be ready by then remains uncertain at this stage.

E-commerce, TRIPS non-violation, TFA

Despite the uncertainty, there are some draft decisions already prepared for ministers to approve in Nairobi. These involve renewing the WTO’s long-standing e-commerce work programme and moratorium on e-commerce duties, as well as renewing a moratorium on non-violation and situation complaints under the Trade-Related Aspects of Intellectual Property Agreement (TRIPS), both regular items on ministerial conference agendas.

A draft decision on the WTO’s work programme on small economies has also been forwarded to ministers for approval. Separately, while WTO members are still far short of the number of ratifications needed to bring the Trade Facilitation Agreement (TFA) inked two years ago in Bali into force – with ratifications now numbering at 57 with Kenya’s submission – various events relating to the multilateral pact are scheduled to be held in Nairobi on the conference sidelines.

ICTSD reporting.

10 December 2015
Within a matter of days, trade ministers will gather together in the Kenyan capital city of Nairobi for the WTO’s Tenth Ministerial Conference, marking the first time that the global trade body’s...
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15 December 2015
Trade ministers continued to disagree over the future of the WTO’s negotiating function, as talks for the organisation’s Tenth Ministerial Conference (MC10) kicked off in Nairobi, Kenya, on Tuesday...
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