Highlights of the 10th Ministerial Conference for the World Trade Organisation
Brian Mureverwi, tralac intern, provides an overview of key issues being discussed at the WTO’s 10th Ministerial Conference in Nairobi
The tenth ministerial conference (MC10) is being held in Nairobi, Kenya from 15-18 December. The MC10 is being held for the first time in Africa, since the establishment of the World Trade Organisation in 1995. The MC9 was held in Bali, Indonesia in December 2013. The Ministerial Conference is the topmost body of the WTO under the governance structure set up by the “Marrakesh Agreement Establishing the WTO”, and has the authority to take decisions on all matters under any of the Multilateral Trade Agreements.
Ironically, the MC10 is being held in Africa at a time when there is growing political divide over the continuation of stalled Doha Development Agenda (DDA) negotiations, as well as the uncertainty over the negotiating function of the WTO. The slow progress of the Doha round has given impetus to the multiplicity of mega regional trade agreements. The gathering also 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. Major highlights of the recently concluded MC10 include discussions on
Lack of consensus on the continuation of Doha negotiations;
Rules of Origin and LDCs’ issues;
Accession of Liberia and Afghanistan;
Ratifications of the Trade Facilitation Agreement,
Adoption of the Information Technology Agreement, and
Launch of phase 2 of the Enhanced Integrated Framework (EIF)
Lack of Consensus on the Continuation of the Stalled DDA Negotiations and Agriculture
The conference took note of the progress made under the DDA negotiations, but lacked consensus on the continuation of thereof. The WTO members failed to reach agreement on all areas of the negotiations, including Agriculture, NAMA, Services, Rules, including fisheries subsidies, and TRIPS. The 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”. 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 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.” 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.
EU Commissioners Cecilia Malmström and Phil Hogan – responsible for trade and agriculture, respectively – contributed 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.
Regarding agriculture, there has been no agreement among member states on export competition, special safeguard mechanism, and public stockholding. There has been no evolution in the substantive positions of members regarding domestic support and market access. No new ideas, suggestions or other thoughts on these two pillars have been put forward. Hence, post Nairobi work programme on agriculture for the WTO hangs in balance. On cotton, there was progress with respect to market access and export competition. However, negotiations stalled on the contentious issue of domestic support for cotton.
Rules of Origin and LDC issues
A decision on preferential rules of origin for LDCs finally emerged after various consultations. The text outlines requirements for preference-granting countries in areas such as the determination of substantial transformation, cumulation, simplification of documentary requirements and implementation, flexibilities, and transparency.
Information Technology Agreement
On 16 December, WTO members finally signed the Information Technology Agreement covering 54 countries. The pact – an update to the WTO’s 1996 Information Technology Agreement (ITA) – would see tariffs removed on 201 products, such as new-generation semi-conductors, magnetic resonance imaging (MRI machines), video game consoles, computed tomography (CT) scanners, and various advanced medical products. Twenty years ago, most of these products simply did not exist. Today, they are commonplace. This expanded agreement aims to respond to this new reality. Some estimates place the gains from this expanded deal – known as ITA-II – at an additional US$1.3 trillion in annual trade. The list of products, which together cover 10 percent of global trade, had already been confirmed in July, leaving the participants in this initiative still needing to agree on the “staging” for phasing out tariffs.
The deal almost fell through after China, one of the largest exporters and markets for these products delayed to make final submission for the expanded list. In 2013 ITA talks fell out after China insisted on dropping some items from the broader list. However US President Barack Obama and Chinese President Xi Jinping in 2014 reached a bilateral agreement in Beijing on expanding the scope of the pact.
LDCs Services Waiver
Regarding the LDC services waiver, discussions also proved difficult, with many outstanding issues as members work to agree language on the preferential conditions provided under the waiver approved earlier. Some of the issues discussed involve reducing administrative procedures and fees for visas, work and residence permits, and licenses for LDC services suppliers and independent professionals, the issue of mutual recognition, and the LDC request for additional definition of the term “preferential treatment” in the sense of the waiver.
The LDC Services Waiver, adopted at the WTO Eighth Ministerial Conference (MC8) in 2011, allows non-LDC members to grant preferences to provide all LDCs greater access to their markets. For the first time, this decision allows WTO members to deviate from their Most-Favoured Nation obligation under the General Agreement on Trade in Services (GATS).
Enhanced Integrated Framework
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.
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.
Accessions and Ratifications of Trade Facilitation Agreement
Another key development was the formal invitation of Liberia into the WTO, with the ceremony attended by the nation’s president, Ellen Johnson Sirleaf and Kenyan President Uhuru Kenyatta. The Liberian leader called the news “another turning point” in her nation’s history. Once Liberia ratifies the protocol of accession it will become the 35th least developed country (LDC) within the WTO. Currently, 19 governments are negotiating to join the global trade body, with six of these being LDCs: Bhutan, Comoros, Equatorial Guinea, Ethiopia, Sao Tomé & Principe, and Sudan. Liberia had submitted its formal accession request in June 2007. Given its recent challenges including the Ebola crisis, experts say that WTO accession will bring the country into a rules-based system that will encourage economic reforms, in turn generating inclusive growth. Liberia will have until 15 June 2016 to ratify the membership deal, and would become a full-fledged WTO member 30 days after it notifies the acceptance of its Protocol of Accession to the WTO Director-General.
Afghanistan, another LDC, signed the instrument of accession on 18 December. Since the last MC9 held in Bali in 2013, other members that joined the WTO are Yemen, Seychelles, and Kazakhstan raising the membership to 164.
Prior to the convening of the MC10, Kenya ratified the Trade Facilitation Agreement joining other African countries such as Côte d’Ivoire Mauritius, Botswana, Niger, and Togo. Grenada and Saint Lucia are the second and third Caribbean island nations to ratify the TFA, after Trinidad and Tobago. Towards the close of the conference, additional ratifications had been received from Myanmar, Norway, Zambia, Viet Nam, Brunei, and Ukraine. The number of ratifications now stands at 63, far short of the two thirds required for the TFA to come into effect.
Concluded at the WTO’s 2013 Bali Ministerial Conference, the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. It further contains provisions for technical assistance and capacity building in this area.
Watered Down Expectations from the Nairobi MC10
The Nairobi MC10 marked the growing divergence of thoughts among developed and a developing countries, on the future functionality of the WTO’s multilateral trading system. The post-Nairobi work programme remains weak, with very few items of developmental concerns to Africa, and other LDCs. There is need to find conclusive ways and strategies of fusing the outstanding DDA issues, with new issues of the 21st century trade agenda currently shaping the global trade arena. The sudden conclusion of the DDA has far reaching implications on agriculture, TRIPS, and other developmental concerns of WTO members. This possibility challenges the WTO’s credibility of delivering on future agenda items. However, the increasing accessions for membership indicate that the WTO is still a credible institution, capable of handling rules based trade, while addressing developmental concerns of its members.
The Ministerial Conference concludes on 18 December; tralac will report on the final outcome, in the first newsletter of 2016.