Bridges Daily Update # 2 - WTO Negotiating Function Under Scrutiny as Ministerial Begins

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.

Though the formal action has only just begun at the Kenyatta International Conference Centre, the past two days have already seen a flurry of activity, with ministers gathering in various bilateral and group configurations to prepare for all-night negotiating sessions.

While the mood in the corridors ranged from gloom to ambition to see a possible resolution on both the WTO’s future work, as well as what substantive outcomes might emerge as Nairobi deliverables, key officials publicly pledged to do their utmost to achieve a successful result.

“I don’t think any of us is ready to give up today, we’re not ready to give up tomorrow, we’re not ready to give up on the 17th, nor are we ready to give up on the 18th,” said Amina Mohamed, Kenya’s Cabinet Secretary on Foreign Affairs and Trade and chair of the conference.

Azevêdo, Kenyatta: Paris, Bali as inspiration

The Nairobi trade talks follow hot on the heels of a historic multilateral emissions-cutting agreement, clinched last week in Paris, France, with various officials and stakeholders on the first day citing the climate negotiations’ success at bridging strong divergences.

“2015 is a year in which we have displayed unparalleled cooperation in agreeing on a number of collective approaches to some of the most pressing problems facing humanity,” said Kenyan President Uhuru Kenyatta during Tuesday’s opening plenary, referring both to the Paris talks and the UN’s new Sustainable Development Goals (SDGs).

“The spirit that has followed us to come together and achieve measures that many thought impossible should also be present at this year’s Tenth WTO Ministerial Conference,” he continued, noting the body’s contribution to global growth, increased international trade, orderly dispute settlement, and integrating poorer countries into the global marketplace.

The memory of the 2013 Bali ministerial conference was recalled by other speakers during the opening plenary, given its success in inking the WTO’s first global trade deal in its history. WTO Director-General Roberto Azevêdo on Tuesday echoed a quote from Nelson Mandela that he had used on that occasion – “it always seems impossible until it is done” – as a potential source of inspiration in the days ahead.

Froman: Doha is “at the end of the line”

The cautiously optimistic statements in plenary stood in contrast, though, with the mood and dynamics among trade negotiators.

US Trade Representative Michael Froman called on WTO members to acknowledge that the Doha talks were “at the end of the line,” in an op-ed in the Financial Times on 13 December. “It is time for the world to free itself from the strictures of Doha,” he said.

The US stance seemed directly at odds with the position taken by India and numerous other developing countries, many of which have argued that the long-running talks need to be concluded before moving on to new issues.

A joint ministerial statement from the African Group, China, Ecuador, India, and Venezuela issued on Tuesday called for a redoubling of efforts to “proceed towards the full, successful, and multilateral conclusion of the negotiations,” referring to the Doha mandate.

Although not referring specifically to the position taken by Froman, the group highlighted the various benefits they say would come from a successful, “comprehensive” conclusion of the Round with “economically meaningful and balanced outcomes.”

EU Commissioners Cecilia Malmström and Phil Hogan – responsible for trade and agriculture, respectively – joined the fray in a joint public statement, saying that they were “concerned by the deep persisting differences” between governments on the post-Nairobi WTO agenda. While the organisation should “keep working on” the outstanding Doha issues, it should also start to address other issues that are important for today’s global trade, the Commissioners argued.

Separate statements from both the least developed country (LDC) and small, vulnerable economies (SVE) trade ministers issued going into the conference also called for a successful conclusion to the Doha Round trade talks. Sources indicate that African ministers of trade are expected to adopt a similar declaration on Wednesday.

Meanwhile, experts and ministers attending side events on Tuesday at a Trade and Development Symposium reflected over the WTO’s potential future if faced with negotiating stasis in Nairobi, with many noting the shifting realities of trade flows and policymaking. Questions teemed on how to make sure new regional or plurilateral trade agreements remain compatible with the multilateral system and how to tackle emerging issues such as the digital economy.

Agriculture: negotiating groups set out their stands

The Cairns Group of agricultural exporting countries issued a statement calling for the abolition of agricultural subsidies at the ministerial, as well as new disciplines on other agricultural trade policies that have export subsidy-like effects. The conference should also address developing countries’ concerns on cotton, they said.

Another communiqué from the G-33 group of developing countries reiterated the importance of a safeguard to raise tariffs temporarily in the event of sudden import surges or price depressions, as well as a “permanent solution” to difficulties the group’s members say they face in buying food at administered prices for public stocks, under the WTO’s existing farm subsidy rules.

However, the declaration also indicated that the group would be “open to explore future cooperation on other areas in WTO agriculture negotiations where group members see common interests and shared objectives.” The G-33 includes China, India, and Indonesia, as well as numerous smaller developing countries.

Like the Cairns Group countries, the EU commissioners’ statement also argued in favour of an outcome on all forms of export subsidies.

Rules, LDC issues

Outcomes on fisheries have been slated as another potential deliverable from the Doha mandate for MC10, which sources say has started to gain more traction among some groups in recent days, particularly with an eye on demonstrating the WTO can also deliver positive outcomes for a wider sustainability agenda. Mohamed, the conference chair, published an op-ed last Saturday on the importance of tackling the issue at the global trade body.

On LDC issues – also under negotiation in Nairobi – sources say informal consultations on preferential Rules of Origin (RoO) took place on Tuesday. A draft decision seen by Bridges was circulated to delegations by Chair Steffen Smidt of Denmark beforehand in an attempt to suggest compromise language on certain outstanding issues. If adopted, the decision would be an addendum to the 2013 Bali decision.

Sources say that the Danish ambassador has been consulting with several delegations in recent days and preferred to submit a clean text without brackets in an attempt toward reaching convergence.

The draft decision outlines a set of multilaterally agreed guidelines to help make it easier for LDC exports to qualify for preferential market access, detailing specific obligations for preference-granting countries in areas such as the determination of substantial transformation, cumulation, simplification of documentary requirements and implementation, flexibilities, and transparency.

At press time, it appeared that discussion on language regarding the use of terms such as "aim to" versus "consider to" in one section of the draft decision involving how to define the threshold level of value addition to qualify for preferential treatment is proving divisive.

“Rules of origin could very well be a deliverable during this ministerial conference. Discussions on this issue has been so far very constructive,” said a developed country delegate, whose words were echoed by an African official.

EIF: US$90 million pledged

On the eve of the ministerial conference, 15 countries pledged almost US$90 million for the second phase of the Enhanced Integrated Framework (EIF) – the only global aid for trade programme with an exclusive focus on least developed countries.

The EIF is a multi-donor programme which supports LDCs to be more active players in the global trading system by helping them tackle supply-side constraints to trade. The new phase of the Enhanced Integrated Framework was launched over the summer and is expected to run from 2016 to 2022.

“We are marking a new and exciting chapter for the EIF partnership today,” said Azevêdo, who explained that the will to deliver outcomes for the world’s poorest nation is “real” and that a successful pledging conference would be an important part of that effort.

During the conference, trade officials from Australia, Denmark, Estonia, the EU, Finland, France, Germany, Korea, Luxembourg, Norway, Saudi Arabia, Sweden, Switzerland and the United Kingdom reaffirmed their strong support for this Aid-for-Trade programme, while the Netherlands joined as a new donor.

The amount of funding needed to run the programme in the next seven years has been estimated at between US$274-320 million.

Most donors have indicated that owing to budgeting cycles they were not in a position to commit for more than two years, while noting that further contributions would be made available in this second EIF phase. Some stressed that progress was needed towards more effectiveness and ownership of the funds allocated.

Some developed country delegates suggested that the amount pledged constituted a “very strong basis,” given the pressures many core donors face due to humanitarian emergencies and a difficult economic context. One LDC delegate said, however, that more was expected as US$90 million was not even half of the funding required.

ITA waiting game

At press time, it remained unclear whether the group of WTO members involved in the negotiations to expand the Information Technology Agreement (ITA) will have a completed deal to announce this week, though sources indicated potential signs of progress. Azevêdo told reporters on Tuesday morning that he was confident of there being an ITA result.

ICTSD reporting.

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