WTO Nairobi Ministerial leaves Caribbean Small Vulnerable Economies Empty Handed

Alicia Nicholls

The ‘Nairobi Package’ has been hailed as having secured “an historic agreement on a series of trade initiatives”. Without doubt, the delegates of the WTO’s Tenth Ministerial held in December last year in Nairobi, Kenya sought to draw inspiration from the historic conclusion of the Paris Agreement on climate change at COP21 and to capitalise on the euphoria of the first WTO Ministerial on African soil to achieve consensus in the few areas where it was deemed to be possible. However, while there were a few mostly modest achievements, particularly for Least Developed Countries (LDCs), most Caribbean countries would be justified in opining that they came away from Nairobi with very little to show for their efforts.

Issues for Caribbean SVEs

Caribbean countries have been strong supporters of the multilateral trading system and of the Doha Development Round. As stated  by Senator Arnold J. Nicholson of Jamaica on behalf of the Caribbean Community (CARICOM) at the Ministerial’s Opening Plenary session, some of the key issues of importance to CARICOM going into Nairobi were:

  • Adoption of decisions relating to the G-90 proposals on Special and Differential treatment provisions including those related to small, vulnerable economies and least developed countries
  • Agricultural issues, including the Special Safeguard Mechanism, which was proposed by the G-33 in November, 2015
  • Fisheries Subsidies
  • Work Programme on Small Economies
  • Special measures for least developed countries

So what did the Nairobi Ministerial achieve?

Export Competition in Agriculture: Developed countries have committed to immediately eliminating their remaining scheduled farm export subsidies with some exceptions. It is the first major agricultural agreement to be concluded since the WTO came into being at the conclusion of the Uruguay Round two decades ago. Developing countries have been given until 2018 to eliminate their farm export subsidies and up to 2022 for certain products and groups of products. Least developed countries (LDCs) and the net food importing developing countries have a longer period. Additionally, the decision also includes disciplines on export policies to prevent their use as subsidies in disguise.

LDC Package: Of benefit to Haiti as the only LDC within the Caribbean, the ‘LDC Package’ includes enhanced preferential rules of origin which build on those in the Bali package and a fifteen year extension of the waiver for preferential treatment of LDC service providers. Developed and developing country Members which have declared themselves in a position to do so have agreed to grant duty-free and quota-free market access for LDC cotton from January 1, 2016, to the extent provided for in their respective preferential trade arrangements. Developing country Members which have declared themselves not in a position to grant duty-free and quota-free market access for cotton produced and exported by LDCs are to consider the possibilities for increased import opportunities for LDC cotton from January 1, 2016. Developed countries are to immediately eliminate export subsidies on cotton, while developing countries have until January 1, 2017 to do so.

Information Technology Agreement (ITA-II): In the biggest IT trade deal since the Information Technology Agreement was agreed to in 1996, 53 WTO members representing a mix of developed and developing countries (including Mauritius) agreed to eliminate tariffs on 201 information technology goods which account for a reported $1.3 trillion in trade.Tariffs on an estimated 65% of tariff lines will be fully eliminated by July 1 of this year, with the majority of the remaining tariff lines to be gradually phased out in four stages within three years. As the ITA-II was agreed on a Most Favoured Nation (MFN) basis, all WTO members will enjoy duty-free access for those covered goods to the markets of countries which have signed the Agreement.

WTO Members also adopted the reaffirmed Work Programme on Small Economies. Additionally, two LDC countries, Liberia and Afghanistan, completed their accession negotiations. This shows that despite the stalemate in the multilateral negotiations states still view the WTO as having value.

Unresolved Issues

Despite these modest results, the Nairobi Declaration does leave many  issues unresolved and it would not be unfair to say that the Caribbean SVEs left the Ministerial largely empty handed. To date the services negotiations, a key area for the services-dependent economies of the Caribbean, remain deadlocked. No decision was made at Nairobi on the G-90 proposals on special and differential treatment.

Fisheries Subsidies and IUU: Disappointingly, no agreement was reached on the pressing issue of fisheries subsidies which have led to over-fishing, or on the issue of illegal, unreported and unregulated fishing (IUU). These practices, which serve to shrink already rapidly depleting fish stocks, pose serious threats to coastal states’ food security, employment, income generation and the stability of their rural communities. By extension, they will have consequences for SVEs achievement of the Sustainable Development Goals (SDGs) and their targets.

SSM & Public Stockholding: Even where decisions were taken, they remain subject to further negotiation. It was agreed that developing countries have the right to an SSM by which they will temporarily be able to increase tariffs in response to import surges. However, the actual details of this mechanism remain to be determined in subsequent negotiations. On the issue of public stockholding, WTO members are no closer to a permanent solution.

SVEs have also expressed their disillusion with the lack of consideration given to many of their proposals, including the proposal for a development package for Nairobi which had been tabled by the ACP countries.

Uncertain Future for Doha 

Critically and most telling, WTO members have been unable to reach any consensus on the future of the Doha Round. This lack of agreement was unprecedentedly mentioned in the Nairobi Ministerial Declaration.

After fourteen years of negotiations and limited progress to show outside of the Trade Facilitation Agreement concluded at Bali, developed countries have called for Doha to be euthanised.  In a letter penned in the Financial Times , the United States Trade Representative, Michael Froman, strongly stated that “Doha was designed in a different era, for a different era, and much has changed since’. He further asserted that “[f]reeing ourselves from the strictures of Doha would also allow us to explore emerging trade issues”.

On the contrary, most developing countries, including Caribbean countries, have been vocal in their opposition to any attempt to jettison the Doha Round. Barbados’ representative, the Hon Senator Maxine McClean, in her statement on behalf of the ACP at the Opening Plenary summed up the importance of the Doha Round to Barbados as follows:

“Barbados places great store in the Doha Development Agenda, as it recognises that need to narrow inequalities in the share of trade between developed countries and in particular the small and the vulnerable economies.”

While WTO members have committed in the Nairobi Declaration to continuing negotiations on the remaining issues under the Doha Round, the future for the Doha mandate does not look bright, especially since the USTR has already pronounced the Round dead.

The Question of Emerging Issues

Another unresolved issue relates to expanding the sphere of negotiations to include emerging trade issues in light of the changing contours of global trade. There is some merit to this view put forward by developed countries. Trade disciplines which were negotiated twenty years ago cannot adequately regulate all of the newer complexities of twenty-first century global trade. Some of the new areas proposed include the long mooted “Singapore issues” of investment, competition policy and transparency in government procurement, as well as newer areas like e-commerce, global value chains, environment and labour.

This suggestion has been forcefully resisted by developing countries which argue that their limited capacity to engage in negotiations on these new areas puts them at an inherent disadvantage, and instead favour the conclusion of the Doha Round before any new issues are added. Paragraph 34 of the Nairobi Declaration takes this disagreement into account by mandating that any agreement to launch negotiations on new issues must be agreed to by all.

What next?

As negotiators resume their work in Geneva on the remaining Doha issues, WTO members will have to decide on the future of the Doha Round. Progress will likely continue on the plurilateral agreements, such as the Environmental Goods Agreement and Trade in Services Agreement. In regards to the issue of regional trade agreements, WTO members have committed to making the provisional Transparency Mechanism a permanent one as was decided by the General Council in 2006. Progress on more contentious issues such as non-agricultural market access (NAMA), anti-dumping, domestic support measures and services will likely to be slower.

Two points must be noted. Firstly, whether members decide to jettison the Doha Round or adopt a new mandate, the development element must be central to all negotiations. Secondly, the polarisation between developed countries and the majority of developing countries, coupled with the increased heterogeneity of the WTO’s membership, continue to be impediments to any substantive progress. The only way for the stalemate to be broken will be by serious compromise but without jeopardising the development prospects and interests of developing countries.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

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