18th December 2011
Bridges Daily Update #4 | WTO Ministerial Conference: Chair Gavels Decisions, Maps Out Future
The WTO’s eighth ministerial conference came to a close on Saturday evening, after three days of high-level meetings that saw the accession of Russia, Samoa, and Montenegro, along with the clinching of a 42-country deal that would liberalise billions of dollars in public contracts.
At the close of the three-day talks, ministerial conference chair Olusegun Olutoyin Aganga of Nigeria described the high-level discussion and mapped out how members saw the future.
‘New’ issues or Doha?
There was a “shared sense” among ministers, Aganga noted, that the “key question” to unlocking the impasse in the ten-year old Doha talks regards the balance between emerging and advanced economies over their respective contributions and responsibilities.
Long-standing disagreements between developed economies - such as the US and EU - and major emerging economies - such as Brazil, China, and India - on non-agricultural and agricultural market access have widely been faulted for putting the negotiations on hold.
The WTO is “like a train without a locomotive,” one trade official commented to Bridges. “The locomotive is China and the US - but it’s not pulling the train.”
In light of the Doha Round’s current difficulties, much of the trade dialogue has turned toward ensuring the WTO’s continued relevance in the multilateral trading system.
The option of introducing new issues into the global trade body to address emerging challenges - such as climate change, food security, trade and exchange rates, and energy - has been suggested by some members as one such way of keeping the global trade body current and credible. This view was reiterated by some ministers this past week.
However, Aganga told the closing session, other ministers “expressed reservations” about beginning negotiations on new topics, due to concern either about “the possibility of addressing issues selectively or shifting the focus away from unresolved issues in the DDA negotiations.”
Many ministers would rather that any new issues be instead brought to WTO committees, “in accordance with their normal rules and procedures and within their respective mandates,” the conference chair added.
WTO Director-General Pascal Lamy, speaking to reporters on Saturday evening, downplayed these concerns, adding that talking about an issue and negotiating about an issue are not the same thing. Talking about new issues, he added, does not mean that new issues are set to replace the old ones.
In the WTO, he stressed, “you do not negotiate an issue unless you have a consensually agreed mandate of negotiation.”
Doha: low-hanging fruit?
The same tensions between WTO members found expression in the part of the chair’s statement on the Doha Round. Aganga noted that many members expressed “deep regret” at the impasse in the negotiations - but at the same time reaffirmed their commitment to delivering on the mandate for the decade-long talks.
Trade ministers had emphasised their openness to different negotiating approaches, Aganga’s statement said - something which the US in particular has urged. However, some had also “expressed strong reservations” about plurilateral approaches, the chair observed.
Many negotiators are fearful that the multilateral trading system could be seriously weakened if some countries give up on trying to reach accords that include everyone, and instead embark on a series of deals amongst subsets of the membership.
Echoing one of the central themes of the conference, Aganga said that many ministers had stressed the need to identify areas where agreements could be reached in the short term. Others had called for a step-by-step approach, respecting the Doha negotiating mandate and the ‘single undertaking’ - under which all issues are treated as parts of one larger deal.
“Everything is part of this big bargain, so we need to ask how can we take the low-hanging fruit without abandoning the other issues,” one delegate told Bridges.
“People are saying, ‘let’s reap the benefit of whatever’s there’,” the source added.
According to the chair’s statement, ministers had stressed the centrality of development and underlined the need to prioritise issues of interest to least developed countries (LDCs), including cotton, a question that has dogged trade talks for over eight years and which was raised again by West African ministers during this year’s gathering.
Lamy told reporters on Saturday evening that African cotton exporters had received new commitments on market access and development assistance during the three-day meeting. “These were not previously part of the landscape,” he said.
On a related note, the chair’s statement noted that many ministers had urged their counterparts to commit to a ‘standstill’ on all forms of protectionism - a move that the Cairns Group of net agricultural exporters had championed in particular. Others had instead emphasised their right to use WTO-consistent policy space to achieve economic and development objectives - something that a number of developing countries had stressed.
Aganga observed that, during the conference, many ministers had also urged their counterparts to agree not to impose export restrictions on food aid purchased by the World Food Programme - echoing the language of an accord amongst heads of state from the G-20 group of major economies at their Cannes summit in November.
Also on food security, the chair’s statement reflected support amongst some ministers for a work programme on trade and food price volatility, and its impact on LDCs and net food-importing developing countries (see Bridges Weekly, 7 December 2011).
Decisions in favour of LDCs
On 17 December, ministers agreed to a waiver that makes it possible for members wishing to grant least developed countries greater access to their services markets, even if it means deviating from the most-favoured-nation principle.
For a decade, LDCs have maintained that WTO members should be allowed to treat services and service suppliers from the poorest countries more favourably than those of other nations. To achieve that aim, they needed to convince the membership to waive one of the core principles of the multilateral trading system: the obligation to treat all members equally.
While countries may discriminate between least developed countries and the rest of the membership, all preferences must be extended to the entire LDC group. The waiver also provides the possibility for preferences to be conferred beyond just market access measures, although such preferences would need to be approved ex-ante by the Council for Trade in Services.
Touching on the potential value for LDCs, International Lawyers and Economists Against Poverty (ILEAP) Executive Director David Primack suggested that the waiver itself was merely a mechanism that had little substantive value in its own right.
Its potential value, he argued, will depend on how well LDCs can assess how and where the preferential treatment could confer enough of a commercial advantage for their service providers to expand into new markets, as well as the political will of preference-granting countries to offer meaningful concessions in areas of interest to the recipients.
Should these conditions converge, he added, the potential for the waiver to catalyse essential investments in LDC services sectors could be significant.
Countries that grant preferential access to LDC service suppliers must make a detailed notification to the Council for Trade in Services, which will review annually whether the exceptional circumstances justifying the waiver still exist.
Least developed countries acceding to the WTO have long complained that trading partners routinely ask them to take on commitments beyond their capacity, as well as beyond those that were required from LDCs that joined the WTO earlier.
These countries have often criticised the opaque negotiation process, alleging that bilateral meetings are held behind closed doors without multilateral oversight.
The ministerial decision on LDC accession commits WTO members to develop market opening benchmarks by July 2012. With regard to goods, the benchmarks are likely to be based on the average post-accession tariff level of existing LDC members.
For services liberalisation, benchmarks will be considerably harder to determine. However, factors such as the existing level of openness in the candidate country, the number of services sectors covered, and the regulatory effort required are under consideration.
In addition, bilateral negotiations will be complemented by multilateral oversight in order to improve the transparency of the accession process.
TRIPS transition period
The third LDC-related decision concerns the application of WTO rules on intellectual property rights. Least developed countries’ exemption from implementing the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) expires in July 2013; however, they will be able to submit ‘duly motivated’ further extension requests, which the TRIPS Council has been instructed to ‘consider fully’.
Ministers also adopted decisions on electronic commerce, TRIPS non-violation complaints, a work programme on small and vulnerable economies, and the fourth appraisal of the trade policy review mechanism.
All of these documents can be found here.
Samoa, Montenegro welcomed into the fold
The WTO also welcomed Samoa and Montenegro into their ranks on Saturday, just a day after the ministerial conference had approved the accession protocol of Russia.
Montenegro, which started its accession process seven years ago, will gain visibility in global affairs and trade as a result of joining the WTO, the country’s prime minister, Igor Lukšić, said.
Meanwhile, Samoa is the fifth least developed country to join the global trade body since 1995 - in its case after a 13-year wait. During the accession ceremony, Lamy underscored the difficulties LDCs face in accession, noting that technical assistance and capacity building are essential to “empower countries like Samoa to be in a position to negotiate trade rules.”
“We have learnt that the rules governing accessions of least developed countries can and must be further simplified to help you join the WTO family,” he added, commenting that the Pacific island’s accession will provide the WTO membership with an “active partner to lead on all these areas.”
Members question process
Five Latin American countries - Bolivia, Cuba, Ecuador, Nicaragua, and Venezuela - had, on Thursday, submitted a document to the conference citing “exclusionary and undemocratic practices” in the consultation process leading up to the high-level gathering.
They argued that the political guidance document that had been agreed before the ministerial “represents only the opinion of some members,” and were therefore dissociating themselves from the consensus.
However, the ministerial conference chair told reporters that the issues with those five members had been resolved, explaining that the countries “made absolutely clear that they were not breaking consensus.”
Ecuadorian trade minister Francisco Rivadeneira, in his statement to the plenary, asked that, in any future processes of decision-making or negotiation, “any member that wishes to participate directly in all of the stages of the decision-making process should be able to do so.”
“We believe this has not always been the case in the past,” he added, referring particularly to this year’s ministerial preparation process.
This year’s conference marked the last regular ministerial held under Lamy’s leadership. The next regular ministerial conference is set to be held in 2013; the precise date and venue has yet to be announced.
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