Advancing LDC concerns in the post-Nairobi context

10 March 2016

As the dust from the Tenth WTO Ministerial Conference held in Nairobi, Kenya settles and delegates resume their discussions in Geneva, this piece reviews some of the key MC10 outcomes and assesses possible ways forward to advance the concerns of least developed countries (LDCs). 

The Nairobi Ministerial produced a set of specific decisions, including most significantly new rules on export competition providing for the gradual phase out of export subsidies and establishing initial disciplines on export credit and food aid. It also reiterated the Bali decision on public stockholding and achieved incremental progress on specific least developed country (LDC) issues such as market access for cotton, an updated timeframe for the services waiver, rules of origin and the right to use—under modalities to be determined—a special safeguard in agriculture (for further analysis of the Nairobi decisions see article "Evaluating agriculture in the Nairobi package" in this issue).

Beyond these decisions, however, the real challenge in Nairobi consisted in overcoming persistent divergences on the future of the Doha Development Agenda (DDA) and in defining possible parameters for future negotiations. On this critical point, the declaration sheds little light on what exactly lies ahead, but makes it clear that the “post-Nairobi” landscape will look markedly different from the one preceding the ministerial. Four elements deserve specific attention here.

First, paragraph 31 reaffirms the strong commitment by all WTO members to advance negotiations on the remaining Doha issues including agriculture, non-agricultural market access (NAMA), services, TRIPS, rules, and the broader notion of "development." At the same time, members remained at odds over the reaffirmation of the DDA mandate, with paragraph 30 explicitly acknowledging opposing viewpoints without reconciling them. This controversy around the mandate essentially reflects a desire by some members to review the terms of engagement in the DDA, not least to ensure higher levels of commitments from large emerging economies than what is currently envisaged. By extension it raises the broader question of differentiation among WTO members beyond the current "recognised categories" of developed, developing, and least developed countries.

Third, the declaration reflects a view held by some that new approaches need to be explored as a way to “achieve meaningful outcomes.” Such approaches would probably include plurilateral negotiations whether they take the form of critical mass agreements applied on a most favoured nation (MFN) basis or more excluding initiatives following the Government Procurement Agreement (GPA) model. At the Eighth Ministerial Conference, the final consensus statement already made reference to different negotiating options. At that time, members privileged a step by step strategy, focusing on small packages of low hanging fruits. In parallel, however, several plurilateral initiatives where launched as illustrated by the Trade in Services Agreement (TISA), the Environmental Goods Agreement (EGA), or the Information Technology Agreement (ITA II) concluded in Nairobi. Finally, paragraph 34 states that some members “wish to identify and discuss other issues for negotiation,” while others do not. The declaration doesn’t specify what those issues are, but several topics have already been floated by proponents including investment, digital trade, global value chains, or regulatory coherence, to list just a few.

Overall, these tensions over differentiation or the single undertaking are not new. Nor is the push for new issues, several of which are partially covered in existing agreements (e.g. investment or regulatory convergence) or already on the agenda (e.g. work programme on e-commerce). The main difference this time—besides the fact that members’ divisions have been explicitly reflected in the declaration—is that ministers fell short from agreeing on a possible way forward. In Bali, the declaration mandated the preparation of a clearly defined work programme on the "remaining DDA issues." This time, members came back to Geneva with no deadline, no clear parameters for future engagement, and persistent uncertainty about the overall negotiating framework. Even more worrying—and perhaps at the root of the current situation—is the fact that large developed players seem to have lost interest in the DDA negotiations.

Traditionally, trade issues among advanced economies, namely the EU, the US, and Japan were addressed through multilateral talks. In the course of the DDA, they reluctantly accepted to engage on issues such as agriculture domestic support pushed by the developing country G20 and others, assuming that they could sell such reforms domestically in exchange for enhanced export opportunities—largely in their respective markets (e.g. the US would look at the EU beef market or the Japanese pork market). Since 2008 however, large players have found alternative pathways to deal with their trade issues as illustrated by the EU-Japan FTA; the conclusion of the Trans-Pacific Partnership (TPP); or the EU-US Transatlantic Trade and Investment Partnership (TTIP). Such negotiations not only tend to result in more ambitious liberalisation outcomes compared to Doha, they also conveniently exclude politically sensitive issues such as domestic support, while embracing a wider set of issues including investment or regulatory convergence. In short, with the mega-regionals, large players don’t really need a DDA anymore, at least not under its current form. They have achieved most of their liberalisation objectives outside of the WTO, without losing any multilateral bargaining chip. Granted, this doesn’t cover emerging economies but under the draft negotiating texts, the real market access gains they could have expected from China or India for example would have been very small anyway. For LDCs who essentially remain "deal takers" in these negotiations, the fact that large trading powers lose interest in the DDA and that negotiating elements are removed from the Doha equation, will obviously result in fewer trade-offs and less leverage opportunities to advance their concerns.  

What prospects in the post-Nairobi context?

Based on the above, three combinable scenarios can be envisaged. First, members may spend time arguing about whether the DDA is dead or alive, re-interpret what was agreed in Nairobi, or simply engage in a blame game. Others may want to condition any further talks on prior reaffirmation of the DDA. For the reasons highlighted above, such an approach is unlikely to generate meaningful results. Second, large players may continue to disengage, and simply pursue their “competitive liberalisation strategy” through preferential agreements. They may even bet on the fact that several developing and emerging economies will ultimately express interest in joining such regional negotiations as already indicated after the conclusion of the TPP. Finally, members may decide to take some time off, engage in a period of reflection and identify which issues should be pursued either multilaterally or plurilaterally, taking advantage of the openings offered by the post-Nairobi landscape.

While all of the three scenarios highlighted above are possible, the third is probably the only one which would offer some prospects for LDCs. Under this scenario, the group would need to proactively articulate its priority interests as opposed to being only reactive. These interests have arguably been articulated before but they were framed under the overall DDA approach. Post-Nairobi, there might be a need to revisit longstanding LDC proposals, focusing on the underlying concerns behind them and devising specific strategies to advance them. Food security, special and differential treatment, fisheries subsidies, or non-tariff barriers will obviously be on the agenda, but such a reassessment should not be limited to the current DDA structure. From a development perspective, the main consideration should be whether an issue – “new” or “old”  helps address the structural handicaps affecting LDCs or not. In a similar vein, LDCs should consider ideas floated by others, looking at them either as leverage points or in their own merit, taking into account the fact that disciplines in those areas will be increasingly crafted outside of the WTO where LDCs are not represented. Based on this analysis, LDCs could engage with other WTO members, test the waters, and find possible supporters. Only then should concerns of format and configuration come into play.   

Author: Christophe Bellmann, Senior Resident Research Associate at the ICTSD.

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