Talking African Stakes in WTO Negotiations with Rwanda’s Ambassador Francois Xavier Ngarambe

8 November 2017

Bridges Africa met with Francois Xavier Ngarambe, Ambassador and Permanent Representative of the Republic of Rwanda to the United Nations Office in Geneva, to discuss the upcoming Eleventh Ministerial Conference of the WTO. Ambassador Ngarambe is currently the Coordinator of the African Group at the WTO.

Almost two years ago, the WTO held its first ministerial conference in Africa, which saw the adoption of a series of decisions on agriculture, cotton, and LDC issues. What, in your view, is the economic significance of this Nairobi package? And what is your assessment of the work conducted at the WTO since then?

[Ambassador Francois Xavier Ngarambe] It is too early to determine the economic significance of the Nairobi package. Some of its elements can be considered as going in the right direction, while others indicate a major setback.

One of the positive elements of the Nairobi package is the decision to eliminate export subsidies in agriculture. As you know, for many decades, rich countries provided export subsidies to a range of agriculture products, ending up by dumping those products into the world market, thus depressing world market prices. Cheap subsidised imports have negatively affected many commodities in Africa, where a significant number of farmers have gone out of business, rural jobs have been lost and domestic production has suffered. The Nairobi decision to eliminate export subsidies was therefore a good decision in principle. But, in reality, very few countries are still providing export subsidies. Certainly, the decision will be useful in future as a disincentive to any resurgence of such policies. That is why it is important to make the ministerial decision a legally binding obligation subject to dispute settlement.

Other elements of the Nairobi package such as the decision on the implementation of the services waiver or the decision on preferential rules of origin don’t provide any immediate economic benefits to least developed countries (LDCs) because of LDCs’ structural challenges and supply capacity constraints. On cotton, the decision on market access for some cotton products was considered a step forward. However, there is a need to conduct a market access analysis based on accurate trade data in order to make an informed assessment.

The negative aspect of the Nairobi package is the denial of the Doha mandates, as reflected in the Nairobi Declaration, paragraph 30: “We recognize that many Members reaffirm the Doha Development Agenda […] Other Members do not reaffirm the Doha mandates...”

This was a major setback in the pursuit of development-driven outcomes initiated with the launch of the Doha Development Round in 2001. The round raised many expectations and promises to generate more economic benefits to developing countries and LDCs, but developed countries failed to deliver until that abrupt decision denying the Doha mandates. Furthermore, paragraph 34 of the same declaration introduced new issues which are still controversial: “While we concur that officials should prioritize work where results have not yet been achieved, some wish to identify and discuss other issues for negotiation; others do not. Any decision to launch negotiations multilaterally on such issues would need to be agreed by all Members.”

The entire post-Nairobi process was characterised by this huge divergence. Developed countries focused on pushing new issues for which there is no mandate (e-commerce, investment facilitation, micro, small and medium-sized enterprises (MSMEs)), while being reluctant to engage on longstanding mandated issues.

The Eleventh Ministerial Conference of the WTO (MC11) in Buenos Aires this December is fast approaching. What are the African Group’s priorities for the conference? What would a successful outcome look like for the continent?

[FXN] The African Group’s priorities are duly expressed in the African Union Trade Ministers’ Declaration and articulated in all meetings of the WTO General Council and other relevant WTO bodies. The list of our priorities is as follows: (i) the elimination of harmful subsidies in agriculture; (ii) an ambitious outcome on cotton; (iii) a permanent solution for public stockholding for food security purposes; (iv) a special safeguard measure (SSM) as a policy instrument to protect African farmers from cheap imports and import surges; (v) an ambitious outcome on fisheries subsidies; and finally, (vi) an outcome on special and differential treatment provisions that will create a conducive international environment for the industrialisation of Africa. Delivering on these issues would create a favourable international environment for boosting productivity, sector linkages and sustainable development in Africa.

The African Group – with the African, Caribbean and Pacific Group (ACP) and the LDC Group – has submitted a proposal for negotiation in the area of special and differential treatment (S&DT) which focuses on the need for policy space for industrialisation. How can the proposed provisions support development in Africa? And what would be the main challenge to obtaining a meaningful outcome on S&DT?

[FXN] The rationale for the S&DT provisions submitted by the Group of 90 countries is to make the current stringent rules of the WTO more flexible in order to create a favourable international environment for industrialisation. After many decades of negation, particularly following the Washington Consensus, industrial policy is back on the agenda of development economists and national policymakers; it is prominently reflected in our regional and national development frameworks. Notably, the Sustainable Development Goal (SDG) 9 is a commitment to “build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.” At continental level, the overarching objectives of “Agenda 2063: The Africa We Want,” the continent’s own development vision, puts emphasis on industrialisation, structural transformation, and economic diversification. Regrettably, WTO agreements are not conducive to the industrialisation of African economies.

For example, Article 18 of the General Agreement on Tariffs and Trade on infant industry protection (with non-operational provisions), the Agreement on Trade-Related Investment Measures (which prohibits local content requirements) or the Agreement on Subsidies – to name a few – hinder the use of those industrial policies. History shows that in their early stage of industrialisation, countries which are currently rich employed a variety of industrial policies, including (i) industry subsidies, (ii) infant industry protection, (iii) local content requirements, and (iv) technology transfer, among others. Some of these measures were even reintroduced by a number of developed countries following the 2008 financial crisis. What we are asking, therefore, is for rules to be relaxed so as to create a fair and equitable multilateral trading system, with rules commensurate with the needs of our economies, instead of rules being kept that prohibit policy tools that have helped others to develop. For information, we have only submitted 10 proposals out of 148 special and differential treatment provisions identified. There is no reason to believe they would not be acceptable. Our participation and partnership in the multilateral trading system are guided by development dividends we can harvest from it. It’s the raison d’être of our membership.

Since the launch of the Doha Round in 2001, agriculture has been widely considered as one of the centrepieces of the so-called “development dimension” in WTO talks, but it remains unfinished business. What is your take on the state of play in agricultural negotiations?

[FXN] Indeed, agriculture has been and remains for us the centrepiece of the development dimension in WTO negotiations. Agriculture plays a key role in Africa’s economy for employment, generation of gross domestic product, rural development, food security, and livelihoods. The Agreement on Agriculture adopted during the Uruguay Round (1986–1994) represents one of the most unbalanced and unfair agreements in international trade. With a huge aggregate measure of support (AMS) and no provision for limiting product-specific subsidies, the WTO agreement has created an environment in which subsidies can depress world market prices in agriculture and easily allow major subsidisers to dump their cheap, subsidised products into others’ markets. Article 20 of the Agreement on Agriculture provides for negotiations towards achieving a fair and market-oriented agriculture trading system but this longstanding objective is yet to be achieved.

The state of play in negotiations is not sending any positive signal that we might achieve any significant outcome. Africa’s position on agriculture negotiations aims at eliminating all trade-distorting subsidies, particularly targeting the AMS; ensuring clear disciplines on product-specific support to avoid subsidy concentration on some products; and also addressing Green Box support to avoid box shifting. Many developing countries such as ACP countries, China, and India also support this spirit. Other submissions, such as from the European Union, Brazil et al. and from some members of the Cairns Group, do not address the historical imbalances inherited in the Uruguay Round agreement and cannot lead to a market-oriented agricultural trading system. In short, it is not yet clear whether we will have any outcome in this important pillar but we will continue to engage constructively and consistently given its importance to our present and future development objectives.

Fisheries subsidies are perceived as the area where WTO members have the highest chance of agreeing on a concrete outcome in Buenos Aires. What are the stakes for Africa in these negotiations?

[FXN] We fully support a ministerial decision aimed at prohibiting certain forms of fisheries subsidies that contribute to overcapacity and overfishing, as well as the elimination of subsidies that contribute to illegal, unreported, and unregulated (IUU) fishing in line with SDG target 14.6. It is well known that the fisheries sector contributes significantly to economic growth and to food and nutrition security in many African countries. It is therefore important to address all policies causing the depletion of marine resources, as well as policies distorting market rules, depressing market prices, and forcing African fishers out of business. Indeed, available reports are alarming. Today, it is estimated that 58 percent of marine stocks are fished at maximum levels with no room to grow, while the share of overfished stocks increased from 10 percent in 1970s to over 31 percent in recent years. Huge subsidies are a major factor contributing to overfishing and overcapacity and the most harmful subsidies are granted to large-scale industrial fishing. An ambitious outcome addressing these issues – while preserving the policy space for Africa to develop this sector – would be important. Unfortunately, the current state of play doesn’t promise any meaningful outcome; it indicates that some WTO members may only agree to address subsidies to IUU but with a work programme to continue negotiations on remaining issues.

Some WTO members have expressed interest in discussing so-called “new issues” at the WTO, including e-commerce and investment facilitation, either on an exploratory basis or with a view to negotiating new disciplines. What is the African Group’s approach on these topics and why?

[FXN] New issues such as e-commerce, investment facilitation, and MSMEs do not – as indicated – have a mandate for negotiating new rules. More importantly, we have realised that the proposed rules are more or less similar to those rules negotiated under the Trans-Pacific Partnership with a hindrance effect on countries with low technological capabilities to catch up. For example, on e-commerce, some members proposed rules such as the free flow of data, the limitation or elimination of data-localisation requirements, as well as non-disclosure of source code, to name a few. These would have a negative impact on the traditional investment benefits (investor establishment, skills development, wages, taxes, and technology transfer). For this reason, the African Group has requested continuance of discussions on an exploratory basis to share experiences, including on the digital industrial policies used by others to develop their digital economies, instead of rushing in and adopting premature rules that will prevent countries from catching up. On investment facilitation, our assessment is that the current proposals for binding rules in this area would undermine the right of members to regulate for legitimate national objectives. We believe that only host states are in a position to decide how investment facilitation norms should apply within their territories, taking into account their unique and differentiated development goals. Rwanda provides a good example in business and investment facilitation reforms. Rwanda didn’t wait for multilateral binding rules to reform. Thus, experience sharing at regional and multilateral levels such as through processes of the United Nations Conference on Trade and Development can suffice.

In services, some delegations have also tabled proposals on domestic regulation. Can you briefly explain your group’s position in this area?

[FXN] Proposals tabled on domestic regulation of services contain problematic issues that would significantly constrain the ability of African countries to regulate by restricting the policymaking processes of governments. To give one example, regarding the rule-making process, it is suggested that when a member wishes to develop a “measure” – which is defined as “any law, regulation, rule, procedure, decision, administrative action or any other form” – the said member has to ensure that the measure is based on objective and transparent criteria, is not more burdensome than necessary, is conducted with reasonable and impartial procedures, and that the member has granted all interested foreign states and companies unrestricted access to the policymaking processes and taken their views into account. I believe we all follow that process in one way or another. But such a mandatory rule would definitely invite more pressure from multinational companies on our domestic regulatory processes and would undermine the right to regulate of our governments.

Compared to this year, it seems that WTO negotiations ahead of the last two ministerial conferences in Bali and Nairobi had a more pronounced focus on development, including on specific LDC issues. Why is this the case?

[FXN] Since the Nairobi Tenth Ministerial Conference, we have noticed a consistent tendency to sideline development-driven outcomes while dragging in new issues such as investment facilitation and MSMEs in a manner that makes them look like issues of critical interest to developing countries. We anticipate that the real effect of new issues would be to fast-track proponents’ agenda in the WTO for intrusive rules that would undermine the right to regulate of our governments and defeat our development agenda. Those who continue to frustrate development-driven outcomes play against the very definition of the inclusive multilateral trading system we all agreed to build.

Looking at things from a longer-term perspective, beyond Buenos Aires, how do you think WTO rules and the multilateral trading system can best support sustainable development and structural transformation in Africa?

[FXN] There is a need for a paradigm shift both at national and multinational levels to support structural transformation through inclusive and sustainable industrial development. Multilateral rules should be supportive. In agriculture, including cotton, there is an urgent need for rich countries to eliminate all trade-distorting support measures and to provide special and differential treatment provisions – including SSM – to developing countries. Other existing WTO agreements and rules should be adjusted to respond to the needs for industrialisation of less technologically advanced countries. National efforts to develop supply-side capacities in Africa will always be frustrated and even annihilated if the corrections to the multilateral trading system that have been mentioned are not effectively addressed.

This interview was conducted on 3 November 2017.

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