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Post-MC11: Charting a way forward for LDCs, SVEs and SSA countries

Post-MC11: Charting a way forward for LDCs, SVEs and SSA countries
Photo credit: EIF

07 Mar 2018

The 11th World Trade Organization (WTO) Ministerial Conference (MC11) was held from 10-13 December 2017 in Buenos Aires, Argentina, against a backdrop of considerable changes to the global, political, economic and trading landscape, particularly since the time the Doha Round of multilateral trade negotiations was initiated in 2001, almost 17 years ago.

These changes to the landscape and new geopolitical dynamics obviously lead to evolutions in Members’ interests and positions on traditional negotiating issues, making it extremely difficult to make meaningful progress on them. To add to the complexities, a host of trade and trade-related issues with impacts on global trade have emerged, such as the rapid growth in e-commerce, the rise of global value chains and climate change, which all pose new challenges to the world economy.

In general, countries do not dispute the importance of these issues, but rather the ‘how’, the ‘where’ and the ‘when’ in terms of addressing them. Some Members insisted on finding solutions to longstanding issues, whereas some felt the Doha architecture no longer served their evolved interests and was no longer relevant to emerging issues related to modern business practice and trade. Consequently, MC11 saw modest outcomes.


More remains to be done to ensure the WTO and countries continue to engage to sustain the momentum created by the Trade Facilitation Agreement (TFA) and to build confidence in the multilateral trading system to bring global prosperity. The multilateral trading system is particularly important for the poorest, smallest and least developed countries of the world.

This issue of the Commonwealth Trade Hot Topics examines the outcome of MC11 and assesses the technical and strategic way forward for least developed countries (LDCs), small, vulnerable economies (SVEs) and sub-Saharan African (SSA) countries, especially from the perspective of a changing global, political, economic and trading landscape and the evolution of interests and negotiating terrain at the WTO.


The changing global economic and trading landscape

Several notable changes have taken place on the global economic and trading scene since the inception of the Doha Round in 2001. The growing importance of technology has given rise to changes in the way trade is conducted, requiring new rules, institutional frameworks and physical infrastructure. There is growing fragmentation of production, which has increased countries’ interdependence. Climate change is acting as a‘sword of Damocles’, forcing countries to rethink production processes and the way they organise economic and social life. Recent scientific research has confirmed that Pacific tropical cyclones and Atlantic hurricanes are likely to intensify and become more destructive as a result of ocean warming. The same study shows that the number of severe hurricanes has increased by 25-30 per cent for each degree of global warming.

Further, the advancement of several developing countries into stronger competitive economies has triggered a rebalancing exercise in a global economy that has hitherto been dominated by a few developed countries. The rising economies can now project themselves outward and play an increased role in the global economy.

Another significant development has been growing anti-globalisation and anti-trade sentiment, which contributed to a dip in global trade in 2016 and 2017. In its Trade and Development Report 2016, the United Nations Conference on Trade and Development noted that the global economy was in a fragile state and that growth in 2016 had dipped to below 2.5 per cent, the rate experienced in 2014 and 2015. The WTO forecasted trade expansion in 2017 to be between 1.8 and 3.6 per cent, primarily because of the uncertainty of the global economy, which was partly a result of growing anti-globalisation sentiment and some countries pursuing protectionist and inward-looking policies that undermined high trade growth.

These changes have meant that the global economic and trading landscape is different to the one that existed in 2001 when the Doha Round was agreed, and to that in 1995, when the WTO was launched and entrusted with the responsibility of providing a forum for trade negotiations among its Members, who now number 164.

Changing positions and negotiating dynamics

The changes that have taken place have had a bearing on the evolution of countries’ interests and their positions at the WTO, including in terms of the manner in which they conduct trade negotiations. This is especially seen in the new alliances countries have created to help advance their evolved interests. The clearest example of this is that of the interests of some developing countries coming to blend with those of developed countries, as in the case of e-commerce and investment facilitation.

There are two main reasons for this evolution. First, prior to the Doha Ministerial Conference some developing countries did not have much interest in discussing e-commerce and investment, as at that time they lacked much understanding of the implications of multilateral agreements in these areas for their economies, but managed to gain in-depth knowledge which made them comfortable to discuss the issues. Second, some developing countries have developed capacity in these areas and become aware of the vital role of e-commerce and investment facilitation in trade and development. This coalescence of interests between developed and developing countries has led to the development of new alliances aimed at advancing these.

Some Members felt that the Doha architecture was no longer relevant to confront emerging issues related to modern business practice and trade. Should Member States conduct a reality check and look at the reforms necessary to enable the organisation to deliver on contemporary issues? The systemic reform agenda has unfortunately become embedded within a political agenda that is proving extremely difficult to pursue, at least for the time being, given lack of progress on the core Doha Round issues.

The way forward for LDCs, SVEs and SSA countries

The evolution of country interests and positions has left the WTO facing the challenge of balancing discussions to 1) find solutions to longstanding issues and 2) try to satisfy a strong urge to expand the negotiating agenda to include emerging issues that are relevant to new economic sectors. Given their limited capacity, LDCs, SVEs and SSA countries have always been opposed to an expanded agenda, particularly in view of the implications for them of such an agenda while longstanding issues of interest to them remain unresolved. They also face strategic challenges to their effective participation in multilateral trade negotiations, especially given their limited negotiating capacities. They also face the challenge of trying to catch-up with developed countries and at the same time avoid being left behind in new economic sectors.

Given the transformative nature of interests and the negotiating terrain, it is imperative for LDCs, SVEs consider ways that enable them to continuously and vigorously enlighten or demonstrate the need for all the elements of the development dimension at the centre of the multilateral trade negotiations and at the same time to prepare to participate in engagements on issues of modern business that are relevant to them. Consideration should be given to LDCs, SVEs and SSA countries cooperating with both developed and bigger developing countries, not only through existing coalitions but also on present common interests – that is, creating new coalitions. Such an approach would help LDCs, SVEs and SSA countries influence the negotiations, as they cooperate with different and more significant powers on different negotiating issues of interest to them.

Critical to this approach is the evidence-based representation of interests that is grounded in robust analysis that takes into account the transformative nature of these interests, to enable the construction of persuasive proposals. The multilateral trading system has demonstrated dynamism concerning interests, strategies, agenda-setting and the negotiating terrain: countries advance their changing interests by attempting to reshape the negotiating agenda, with implications for other countries’ interests and negotiating strategies. In this regard, LDCs, SVEs and SSA countries can conduct case study-based analysis to strengthen their positions. For example, showing benefits from long periods of derogation from WTO rules can strengthen their position on S&DT. Evidence-based proposals would also help deepen understanding of these issues by their negotiating counterparts and influence a change in their perceptions. Analytical work is also critical in areas relevant to modern business practice and trade, to generate an understanding of the challenges facing LDCs, SVEs and SSA countries and of how they can harness the opportunities these issues bring regarding revolutionising productive capacities, business and trade.

LDCs, SVEs and SSA countries must also demand continuation of the open-ended inclusive approach, particularly in view of the desire among some developed countries to pursue discussion on some critical areas with like-minded partners. A strong rules-based, transparent and predictable multilateral trading system is a prerequisite for growth, employment and sustainable development. Small and weak countries need a robust, rulesbased and transparent and predictable trading environment the most. The TFA negotiations were a success partly because they allowed for the assessment of S&DT based on individual country implementation capacity rather than the traditional approach of granting flexibilities based on the group to which the country belongs. Such an open-ended inclusive approach will allow LDCs, SVEs and SSA countries to cooperate with both developed and major developing country players on shared interests. Besides, this approach represents a workable and tested model that will ensure the participation of these countries in both the Ministerial and the Geneva processes.

As such, it is essential that the LDCs, SVEs and SSA countries stress the importance of the multilateral trading system and preserve and strengthen it in order to ‘promote the rules-based, open, transparent, inclusive, non-discriminatory and equitable trade embodied in the WTO’ and ‘provide it with the tools it needs to face the challenges of the 21st century’ (Presidential Declaration) as well as to provide space to promote LDCs, SVEs and SSA countries’ interests.

The authors are, respectively, Trade Adviser in the Commonwealth Small States Office in Geneva and a.i. Head and Economic Adviser of the International Trade Policy Section, Commonwealth Secretariat. Any views expressed in this article are those of the authors and do not necessarily represent those of the Secretariat.

Author Collin Zhuawu and Teddy Y. Soobramanien
Source The Commonwealth
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Date 07 Mar 2018
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