The Nairobi WTO Ministerial Conference 
and post-Nairobi developments Bipul Chatterjee is Executive Director and Smriti Bahety is a Policy Analyst at CUTS International The World Trade Organization (WTO) organises Ministerial Conferences, generally once every two years, which provides a platform for trade ministers from all member countries to discuss the pressing issues affecting international trade and take decisions under the multilateral trading agreements or adopt new agreements. The WTO concluded its Tenth Ministerial Conference in Nairobi, Kenya, in December 2015. This article aims to understand the outcome of the Nairobi Ministerial Conference and the post-Nairobi developments. At the outset, it is important to briefly understand the background of the WTO negotiations leading up to Nairobi. We will then discuss the implications of the decisions taken at Nairobi and the road ahead for the multilateral trading system. The WTO Ministerial Conferences At the WTO’s Fourth Ministerial Conference in Doha, Qatar, in November 2001, the Doha Development Agenda (DDA) was launched which encompassed a wide-ranging work program with the aim to achieve lower trade barriers around the world and facilitate increased global trade. With development at the heart of the negotiations, the main areas included Agriculture, Non-Agricultural Market Access (NAMA), Services, Intellectual Property, Development Issues and Trade Facilitation amongst others. Since then, progress has been slow for a variety of reasons (as discussed later). However, the WTO’s Ninth Ministerial Conference, held in December 2013 in Bali, Indonesia, gave a new impetus to the multilateral trade regime with the successful conclusion of negotiations on the Trade Facilitation Agreement (TFA). Furthermore, along with the TFA, the Bali Declaration included Decisions on other items including Understanding on Tariff Rate Quota Administration Provisions of Agricultural Products, Public Stockholding for Food Security Purposes, Export Competition, Cotton, and four issues of interest to Least Developed Countries (LDCs), namely: Preferential Rules of Origin, Preferential Treatment to Services and Service Suppliers, Duty-Free and Quota-Free Market Access, and Monitoring Mechanism on Special and Differential Treatment. The days and months leading up to the WTO’s Tenth Ministerial Conference in Nairobi were tense and over the last several years there has been an increasingly sharp divide amongst member countries, both over the content of various specific deliverables, as well as on the future course of multilateral negotiations at the WTO. There has been a sharp divide in opinions about the future of the DDA and whether or not it remains relevant. Going into Nairobi, Michael Froman, the United States Trade Representative, made it abundantly clear that the Doha Round was designed for a different era and in the present context it is important to reframe the agenda. Furthermore, he indicated that the United States is interested in bringing new emerging issues for discussion the WTO forum (such as electronic commerce and environment). A similar stand was advocated by Cecilia Malmström, the EU Commissioner for Trade, highlighting the need to have a flexible approach to negotiations. On the other hand, developing countries like India have remained firm that the negotiations must be carried out within the DDA and no new issues be brought unless the Doha Round issues are closed. With this backdrop we proceed to analyse the outcomes of the Nairobi Ministerial Conference. Outcome of the Nairobi Ministerial Conference The Tenth WTO Ministerial Conference was held in Nairobi from 15th to 19th December 2015. After five days of intense negotiations, 162 members of the WTO came to a deal to push the agenda, and crucially reassert their relevance. There were a number of significant decisions made by the member countries. The ‘Nairobi Package’ contains six ministerial decisions, including three decisions pertaining to agriculture. Additionally, three decisions were adopted under the Regular Work of the General Council on electronic commerce, implementation of the WTO Agreement on Trade-Related Intellectual Property Rights (TRIPS), and a work programme for the advancement of small economies. Furthermore, members also endorsed the Declaration on the Expansion of Trade in Information Technology (ITA-II). The first was a decision on a special safeguard mechanism (SSM) for developing country members. It recognises the right of developing country members to have recourse to a SSM. The issue of SSM would be further discussed amongst the members, and delinked from the issue of market access. The second decision was on public stock holding for food security purposes. These negotiations will be held in the Committee on Agriculture in dedicated sessions and in an accelerated time-frame, distinct from the agriculture negotiations under the DDA. SSM and public stockholding are important issues for developing and net food importing countries and it is significant that going forward these issues will be taken up for an early resolution. While there may not have been any binding commitment at Nairobi, but the recognition of the importance of these issues is significant. The third decision was on export competition. Disciplines have been imposed on measures affecting export competition, including export subsidies. All member countries have to eliminate export subsidies within a given time frame, with some relaxation for developing countries to comply. While on paper the decision to eliminate export subsidies sounds remarkable, over the years most developed countries have eliminated or significantly reduced such subsidies. Member countries also affirmed the importance of cotton to the least developed countries (LDCs). Developed country members, and developing country members declaring themselves in a position to do so, shall under their respective preferential trade agreements grant duty-free and quota-free market access for cotton produced and exported by LDCs from 1 January 2016. Further, developed countries shall eliminate cotton export subsidies immediately and developing countries do so by 1st January 2017. Decisions were adopted in favour of the LDCs on preferential rules of origin for LDCs and on preferential treatment in favour of services and service suppliers of LDCs to increase LDC participation in services. The endeavour is to facilitate trade by the LDCs and help them increase their share in world trade. The decisions in favour of LDCs are in line with the WTO’s constant effort to make the global trading order more inclusive and to help LDCs reap the benefits of trade. Member countries also reaffirmed their commitment to the Work Programme on Small Economies. The objective of the programme, which is carried out in dedicated sessions of the Committee on Trade and Development, is to address the trade-related issues facing small economies and to help them integrate into the multilateral trading system. An important commitment was undertaken regarding e-commerce. WTO members would continue the practice of not imposing customs duties on electronic transmissions until the next session of the Ministerial Conference in 2017. Further, the TRIPS Council would be asked to continue its discussions on whether non-violation disputes should apply to intellectual property, and to make recommendations to the next Ministerial Conference to be held in 2017. In the meantime, WTO members would refrain from bringing such cases to the dispute settlement system. The Nairobi Ministerial also witnessed the endorsement of the second phase of the Information Technology Agreement (ITA-II) by 53 WTO members that calls for tariff eliminations on a large number of information technology (IT) products. As a result of these negotiations, approximately 65 per cent of tariff lines will be fully eliminated by 1st July 2016. Most of the remaining tariff lines will be completely phased out in four stages over three years and by 2019 almost all imports of the relevant products will be duty free. The elimination of high tariffs on IT products will boost global trade and expand annual global GDP by $190 billion. This indeed is one of the most significant outcomes of the Nairobi Ministerial Conference. However, Nairobi fell short on a number of fronts. As discussed above, the no permanent solution was arrived at on the issues of SSM and public stockholding for food security. The impact of elimination of export subsidies is not likely to be significant either. More profoundly, member countries agreed to disagree on whether the DDA can remain the basis for ongoing negotiations. The general consensus based approach to decision making in the WTO made way for an express division in views. The Nairobi Ministerial Declaration highlighted that some countries prefer ‘new approaches’ to achieve results at the multilateral level. Other members reiterated that the WTO negotiations must address outstanding issues within the confines of the DDA agenda. Changing global realities In all fairness, the results at Nairobi were perhaps the best that could be achieved given the circumstances. One of the reasons for the modest outcome is that the global realities have been changing very rapidly since the launch of the Doha Round, and even more so in the last decade. There has been economic and political turbulence across the globe. Global realities have significantly altered in the WTO’s 20-year history. Developing countries, particularly emerging economies such as Brazil, Russia, India, China, and South Africa, exercise significant influence over global trade. China, which joined the WTO in 2001, has now become the world’s largest exporter. Average applied tariffs, meanwhile, have significantly dropped and trade volumes have doubled. Meanwhile, electronic commerce has changed the nature of cross-border engagement. Regional and bilateral trade deals are also on the rise, with over 600 such agreements notified to the WTO by the end of 2015, up from 267 in 1995. Mega-regional pacts, such as the Trans-Pacific Partnership (TPP), have drawn particular notice for their potential commercial impacts (both for TPP members and the countries excluded from the TPP) and their forays into areas not traditionally dealt in trade agreements. As a result of all of these developments, the WTO is said to be at a crossroad, and there is a growing voice for it to evolve. This is despite the fact that it’s other key pillars, trade monitoring, the work of the WTO’s regular bodies, and the dispute settlement system, have been widely appreciated for their success. The road ahead There is a need to re-assess and re-think in a realistic manner of what is achievable within the Doha framework. Clinging on to the rhetoric of DDA will not facilitate a beneficial dialogue. There is a need for all countries to adopt a more pragmatic approach. The rise of mega trade agreements and plurilateral agreements has created an avenue for countries to agree on issues with like-minded countries alone. Going forward there are many issues, both old and new, that call for deliberation and some of them are discussed below. Services. There is a growing appreciation of services and its importance to all countries. It is worth considering if the negotiations on services is worthy of discussion in isolation. There is, thus, a need for streamlining the rules for services trade and investment and having single-window clearance to reduce transaction costs. Processes and procedures pertaining to visas and work permits should be streamlined within the scope of the General Agreement on Trade in Services (GATS). Farm subsidies. They still remain on the WTO’s agenda but because the Nairobi Ministerial outcome was ambiguous on this, we do not know if it will come up for discussion in Geneva any time soon. However, there is a need to look into the Agreement on Agriculture and the classification of subsidies into the permissible ‘green box’ and the restricted ‘amber box’ subsidies. As noted earlier, the developed countries have been drastically reducing the amber box subsidies, but greatly increasing direct farm subsidies (which fall in the green box). Developing countries will continue to resist reduction in agricultural tariffs in the face of high farm subsidies and to achieve any meaningful trade liberalisation the issue of subsidies must be addressed first. New issues. WTO members decided at the 1996 Singapore Ministerial Conference to set up three new working groups: on trade and investment, on competition policy, and on transparency in government procurement. They also instructed the WTO Goods Council to look at possible ways of simplifying trade procedures (that is trade facilitation). Of the four Singapore issues, trade facilitation was retained and wrapped up at the Bali Ministerial in 2013 and there has been some movement on the other issues. Moreover, these issues are already covered in agreements such as the TPP. Given the trend, it is likely that interested countries will push for these issues plurilaterally. Developing countries need to assess their internal capabilities and take another look at these issues to see how they can benefit from potential multilateral agreements on them. Many developing countries like India are now not only capital importers, but also capital exporters, and it may be in their interest to be open to discussing trade and investment. Similarly, as compared to 2001, a number of developing countries have adopted domestic competition law, which includes provisions to deal with competition-related trade issues. Further, an increasing number of member countries are joining the WTO GPA and if countries do not wish to be left behind in participating in public procurement contracts abroad, they must consider joining the GPA. At the international level, it is clear that new issues will be discussed and agreements will be finalised, if not multilaterally, then bilaterally/regionally or plurilaterally. Instead of shying away from discussions, developing countries may engage in them and see how they can influence their trade competitiveness. This will allow them to influence the discussions since inception. Further, developing countries must raise the level of ambitions while negotiating trade and investment deals. Numerous studies have shown that trade liberalisation helps the economy to grow and in order to reap benefits from international trade countries must be proactive, rather than defensive in negotiations. ... developing countries must raise the level of ambitions while negotiating trade and investment deals

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