Interview | Shanker D. Bairagi, Ambassador of Nepal and Coordinator of LDCs consultative group in WTO.

15 November 2013

Shankar D. Bairagi is currently the Ambassador and Permanent Representative of Nepal to the World Trade Organization.  He is also the Coordinator of LDCs consultative group in WTO.

The LDC package to be harvested at the World Trade Organization (WTO) Ninth Ministerial Conference (MC9) to be held in Bali, Indonesia in December 2013 includes four elements of interest to least developed countries (LDCs): duty-free, quota-free (DFQF) access for LDC exports; more favorable rules of origin (RoO) for their goods; the operationalization of the services waiver; and the cotton issue. So far, three proposals were tabled by the LDC group: one related to the preferential RoO, another to operationalizing the LDC services waiver, and the last to the cotton issue. This interview was conducted on the 11 November 2013.

At this stage, what are LDCs main challenges for Bali? Which strategies should they follow to give traction to their proposals?

Let me start with a general answer. Success in Bali is critical to pave the way for the conclusion of the Doha Round and also for the future of the multilateral trading system. Everyone has a vital stake in this process. So, bearing that in mind and in order to facilitate a successful outcome in Bali, LDCs have shown maximum flexibility in the negotiations on all issues of the package. This does not mean that we do not want a more meaningful and binding outcome on all LDC issues!

We have been guided by the sense of optimism and realism. For us, all LDC issues are doable because they are not new and do not require much technical work. Basically, most of our issues are waiting for implementation. What we need more is political will than anything else to address them in a meaningful way.

While we discuss a three-pillar package for the 9th Ministerial, it is our principled position that delivery on LDC issues should not be linked to the progress or the lack of progress in other areas of negotiations. LDC issues have been termed as the best candidates for an early harvest, and there is general understanding among members on this. Now the time has come to translate this understanding into action. The international trade community will have nothing to celebrate as success if vital development issues of LDCs are not addressed in Bali. We want to send this message and hope it will be understood by all in its true sense.

We have very little time left for Bali.  Negotiations are progressing well in recent weeks but not at the pace that is required to accomplish them within the time that is available.

The small package for Bali contains three parts: Trade Facilitation, agriculture and development issues of particular concern for LDCs. The first two pillars seem to have advanced more than the development pillar. Would the results for LDCs be like a non-binding declaration of goodwill?

We are concerned over the fact that a proper balance is lacking across all pillars in Bali package. This is a development round and naturally development issues must remain at the centre of negotiations.  LDCs issues are vital for the livelihoods of nearly a billion people who are still grappling with the dehumanizing conditions of poverty, hunger and overall backwardness.  Meaningful outcome on all LDC issues is therefore not a desire but a compulsion, if the international community is genuinely concerned about their wellbeing and progress.

So, how could the LDC group press for greater substance?

As you know, we have three pillars in Bali package: agriculture, trade facilitation and development. Having binding decisions TF pillar and neglecting two others would not be acceptable. There should be proper balance in terms of outcome for all three pillars. We should be mindful that LDCs need proper attention in the multilateral trading system, since their development imperatives are greater than those of any other group of countries. Therefore, we should think of balance more in terms of addressing the genuine development needs of LDCs. This should be the overarching objective.  So, we will not be in a position to accept the imbalance created by only non-binding sort of guidelines or the declarative language for LDCs and something concrete in other pillars. How the global trade community would justify the outcome of Bali if it lacks concrete deliverables for the LDCs, the poorest and most vulnerable countries? We will have to wait how the Bali package takes its final shape.

We do not yet have proposals on all LDCs issues. What can be done to improve getting common proposals on issues emphasized by LDCs?

It is not true that LDCs have not submitted proposals.

But, there is not one proposal on all the LDCs issues, right?

We have submitted proposals. In fact we submitted proposals on 31 May. The LDC package for Bali consists of four core areas: DFQF market access, operationalization of the services waiver, RoO and cotton. The cotton group (C-4) has resubmitted a proposal, and consultations are currently taking place on this issue. Negotiations on two LDC proposals namely the operationalization of services waiver and the preferential rules of origin have resulted in draft decisions to be endorsed by the Ministers.  The only remaining issue is DFQF market access, and this is not a new issue!  We submitted a proposal on DFQF, and based on that - and taking into account the members concerns and aspirations as well as the sensitivities attached to it - we have been working on possible elements that could be agreed on. We are very much engaged in the process, and I am hopeful of reaching reach a meaningful conclusions in Bali.

What progress has been made on the WTO proposals made by LDCs in the area of services and RoO?

The draft decisions on services and preferential RoO have been stabilized and they now will go to the Ministers for endorsement. The outcome on these two proposals is not optimum but we have accepted them in a spirit of compromise to advance the process of overall negotiations with a view to having an outcome in Bali.

Pascal Lamy called the cotton issue the ‘litmus test' for the Doha Round. A proposal was tabled by the C-4 at end of October, asking for the implementation of DFQF market access for cotton originating from LDCs as of 1 January 2015. What should C-4 countries do to give traction to that proposal?

This is another long-standing issue for some of fellow LDCs.  The LDC group supports this proposal, which, we believe, is a reasonable one.  This is an important development issue and a meaningful outcome is essential in Bali to address this. The C-4 countries are trying their best to seek an outcome in a constructive way. The point is that, without addressing the core issue of cotton, I do not think anybody would claim that the Round has given a true development result! We should bear in mind that this is also an issue related to LDCs, and will have negative impact on the livelihoods of poor people living in these countries, if not addressed in a meaningful way.

Some studies have shown major benefits of trade facilitation. How do you see the negotiations on trade facilitation evolving, including the modalities of implementation of such agreement for LDCs?

The trade facilitation agreement has two components: Section I relates to the commitments and Section II contains special and differential (S&D) treatment provisions. We are still not sure in what form the overall outcome will be delivered. We believe that the trade facilitation agreement in itself is not properly balanced between section one and section two. There are more binding commitments in section one, while under section two it is not clear as to what extent our partners will provide the required technical and financial assistance for LDCs to help them acquire sustainable capacity. Our position has been that notification and the implementation of the category C provisions will very much depend on the acquisition of implementation capacity through technical and/or financial assistance.  If you don't acquire capacity, you should not be asked to notify the dates and implement it. We want S and D provisions built on the parameters contained in Annex D of July package as well as Annex E of the Hong Kong Ministerial Declaration.  The provisions of these two documents clearly state that LDCs are required to undertake only those commitments that they can and that are in line with their development needs and priorities as well as their institutional, administrative and financial capacities.

Which of the proposals on the table have the potential to contribute to LDCs' trade growth in the most significant way?

Well, I believe all four proposals are important. For LDCs, all three components- commercially meaningful market access; simplified and facilitative rules of origin; and supply-side capacity- are crucial for them to grow and expand international trade. LDCs remain grossly marginalized in the world economy with around 1 per cent share in global trade.  Our proposals on DFQF, on the services waiver, and on cotton seek to enhance market access opportunities that will eventually help LDCs to benefit from the multilateral trading system.  The proposal on the rules of origin seeks to help LDCs to utilize existing and future preferences through simplified, transparent and easy process.

Considering that the productive capacities among LDCs have played an important role in enhancing opportunities through trade, what can be done at the Bali ministerial meeting to address LDC supply side constraints?

LDCs' productive capacity is very low. They confront structural challenges that impede their growth and development. Addressing their supply-side constraints and overcoming infrastructure bottlenecks should remain a priority agenda for all of us.  In this context, we need to continue to emphasise the importance of aid for trade and its increased share going to LDCs as well as the continuity of the Enhanced Integrated Framework (EIF) with adequate resources and longer term perspective. Therefore, the Bali ministerial declaration should contain important commitments in these areas.

Do the LDCs have any proposals in mind on how to invigorate the overall negotiating process?

The LDC group is one of the recognized groups in the WTO. Like other groups, we also have vital interests and a stake in the process. As I said in the beginning, the core issue here is how to devise a credible and balanced package. Failure to do so will jeopardise both the process and an outcome. In any case, LDCs issues should receive priority; our issues should remain beyond the balancing exercise. LDCs, which have a negligible share in world trade, have nothing to trade off and our partners also should not expect that. We believe there is a general understanding that LDCs should be treated with priority. We should really move forward and deliver something in Bali that will help us maintain the credibility of the system and the WTO as a negotiating forum.

What is the potential outcome of the ministerial meeting that could unleash the power of trade to promote sustainable and inclusive development?

Clearly for LDCs, development issues are at the centre of our discussion. We have engaged in trade facilitation negotiations with the understanding that our core issues are also taken on board and addressed in a meaningful way. In a nutshell, development issues, including agriculture, have the potential to unleash the power of trade to promote sustainable and inclusive development. Without eradicating poverty and hunger and addressing other core development issues we cannot think of erecting an edifice for sustainable and inclusive development for all. The Bali Ministerial must not miss the opportunity to be a milestone in our development endeavours.

Shankar D. Bairagi is currently the Ambassador and Permanent Representative of Nepal to the World Trade Organization.  He is also the Coordinator of LDCs consultative group in WTO. He led the group of 77 and China at the expert level as a coordinator during the intergovernmental negotiations on the Istanbul Program of Action for the LDCs, adopted by the Fourth United Nations Conference on the LDCs in 2011.  He also negotiated on behalf of the LDCs in the g-77 and China the final outcome of the 2010 high level plenary meeting on the Millennium Development Goals.

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