10th WTO Ministerial Conference in Nairobi

December 11, 2015

Starting December 14, 2015, there are expectations of a sense of euphoria likely to sweep through Kenyatta International Convention Centre(KICC) in Kenya’s Capital with rooms expected to be filled with ministers from around the world. The director general of the WTO, ambassador Roberto Azevedo has been working toward a successful World Trade Organisation Ministerial Conference in Nairobi.There will be days of intense negotiations, often expected to run through the night, members of the World Trade Organisation are anticipated to agree to a range of new measures to improve global trade in Nairobi. As a someone with business interests and extensive knowledge on Global trade, success is never guaranteed. It has been well documented that negotiators at the World Trade Organisation in Geneva, have been trying to shape the Nairobi conference for close to a year, worked long hours to broker compromises.Some of the issues raised by Africa and fellow developing countries have come tantalisingly close to a deal, but fell just short in the days leading up to the Nairobi meeting. So it falls to participating ministers to make the tough decisions to salvage the expected outcome but there are expectations that if Africa was to play a critical role in Nairobi, talks there must be a consensus on all sticky issues among the member countries. Africa ministers responsible for trade recently completed a meeting to harmonise their negotiation pact but little is expected of their efforts. In keeping with a long tradition, the trade ministers discussed better ways for African countries to strengthen its support for the multilateral trading system and the World Trade Organisation.It seems all critical issues under the Doha Development Agenda have seen their respective comfortable landing zones, and ministers are now looking into ways to nicely pack them all for a final conclusion of the Doha negotiations in Nairobi. Unfortunately, this is not going to be the case.Developing countries’ trade envoys at WTO have been raising more concerns these days that discussions on such important issues have been kept behind closed doors in critical meetings.To make things even worse, the rest of the WTO members only get information on what has been discussed only from some respected publications.

Aerial view of Nairobi, Kenya where the 10th WTO ministerial meeting is starting on Monday
Aerial view of Nairobi, Kenya where the 10th WTO ministerial meeting is starting on Monday

There are even more concerns among developing countries as it has become much clearer in the events leading to Nairobi conference that African countries have done practically nothing to rectify the existing imbalances in global trade.Rich countries are allowed to provide a huge amount of subsidies in agriculture while developing countries needing to expand their support to poor farmers and addressing rural poverty are prevented from doing so by the existing agreements.A pending treaty that will be part of the Nairobi talks is worth hundreds of billions of dollars annually to global trade, known as the WTO Trade Facilitation Agreement(TFA). Research undertaken by the OECD conducted that in some African countries, estimated revenue losses from inefficient border procedures exceed 5% of GDP. Full implementation of the TFA would stem such losses, eliminating trade costs by 16.5% in low income countries, by 14.6% in upper-middle income countries, and by 11.8% in OECD countries.Trade Facilitation Agreement is a rescued component of the original Doha Round, concluded at the last WTO Ministerial in Bali Indonesia in 2013. Once in force, it will benefit global trade through harmonisation of customs procedures, improved cooperation between customs and trade authorities, linkages on facilitation between the private sector and Customs, and a raft of capacity development programs for Least Developed Countries.The economic benefit to global trade arising from full implementation of the TFA is mind boggling. A World Bank study earlier this year estimated that the global trade cost savings from full implementation of the TFA will conservatively amount to US$210 billion per year.To put this in common man’s language, that’s a gain of slightly over US$33 per year for each and every person residing in a WTO member state.Sadly, the TFA has earned barely a mention in the internationally on trade circles, compared with the attention afforded to the mega-regional trade agreements such as the TPP and TTIP have received.TFA has been undersold in the lead-up to Nairobi, thanks to influence of the mega-regionals.Resulting speculation as to the relevance, scope and future of the WTO’s Doha trade agenda has gripped the Nairobi dialogue.Trade Facilitation Agreement onto the global stage should be a core focus of public discussion in the lead-up to the Nairobi Ministerial three days away.

African countries and other less developed countries need to realise that with a much lowered ambition on market access combined with no commitment to reducing domestic subsidies, the rich countries will continue enjoying their unfettered access markets in developing countries with heavily subsidised agriculture products. Is this the terms on which rich countries will be willing to conclude the Doha negotiations and allow developed countries to introduce a new round of multilateral trade negotiations focusing purely on commercial issues in Nairobi talks?When WTO trade ministers agreed to launch the Doha Development Agenda in 2001, it was understood that the agenda would be balanced and expectations was that it will further improve global trade by lowering barriers and rectify the imbalances that have been in favor of rich countries, and at the same time provide additional flexibility for developing countries to address their development challenges. This mandate has been reiterated by the 2005 Hong Kong ministerial declaration and the 2008 revised draft modalities in agricultural and industrial goods. While it is widely understood that they are not cast in stone, African countries believe that the 2008 draft modalities provide the best basis to define a roadmap to conclude the round, and they are willing to consider recalibrating these draft modalities to make them more relevant to the current dynamics of the negotiations.Ambassador Azevedo himself, as the Brazilian ambassador to the WTO, wrote in 2012 that “the December 2008 draft modalities are the basis for negotiations and represent the end-game in terms of the landing zones of ambition. Any marginal adjustments in the level of ambition of those texts may be assessed only in the context of the overall balance of trade-off, bearing in mind that agriculture is the engine of the round.” He went on to argue that “the draft modalities embody a delicate balance achieved after 10 years of negotiations. This equilibrium cannot be ignored, or we will need adjustments of the entire package with horizontal repercussions. Such readjustments cannot entail additional unilateral concessions from African countries.”

The questions the developing-country trade envoys have now are how could a few developed countries working with the director-general think that they could just focus on lowering the ambition on tariff liberalisation and getting rid of all other issues which could be critical to developing countries including Africa? And do ministers in Nairobi abandon all the mandates agreed by among themselves to just to conclude the round in December and praise Nairobi conference starting this Monday as the land of the Doha conclusion?It is obvious, however, that ministers from the Africa need to insist strongly that the conversations in Geneva should be inclusive and transparent, that flexibility for developing countries is a must and that there is no need to rush to conclude the Doha Development Agenda so long as there is no proper balance between improving the global trade for all and leveling the playing field for developing countries. To countries in Africa, this would mean that the proposals on agricultural special products and a special safeguard mechanism should be accommodated as part of the Doha outcomes.In short, there will be little or no success in Nairobi. Among the key highlights in Nairobi are that India is expected to strongly pitch for a permanent solution for food security and a tool for developing nations to protect their poor farmers from sudden surge in imports and wants WTO’s ministerial declaration to mention the special safeguard mechanism to protect poor and marginal farmers from any surge in imports or steep decline in prices.In Nairobi, 161 WTO members will sit at the table with very different views on agricultural market access and with highly different degrees of willingness to compromise.My prediction is that give the slow pace of the WTO talks since the Doha Round in 2001,country members will continue forging ahead with so-called “regional” trade agreements amongst themselves like East African Community, proposed Continental Free Trade Area for African countries, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership all started as draft propositions between government negotiators.

Contador Harrison