Decisions adopted on TFA, food security and post-Bali work

After a protracted impasse, the WTO has agreed to put in place a trade facilitation pact, confirm an interim arrangement concerning public food stocks, and advance moves to implement other decisions adopted by its last Ministerial Conference in Bali.

by Kanaga Raja

GENEVA: A special meeting of the General Council of the World Trade Organization on 27 November adopted three decisions on the Protocol of Amendment relating to the Trade Facilitation Agreement (TFA), on public stockholding for food security purposes and on the post-Bali work programme.

The adoption of the Protocol of Amendment will result in the insertion of the TFA into Annex 1A of the WTO Agreement where it will be placed after the Agreement on Safeguards. The Protocol will enter into force in accordance with paragraph 3 of Article X of the WTO Agreement. It will need to be ratified by two-thirds of the WTO’s membership for it to come into force, i.e., 107 ratifications out of a membership of 160. There is however no deadline set for when this will be achieved.

This decision also means that the Trade Facilitation Agreement Facility, which was launched back in July to assist developing and least-developed countries in implementing the TFA, will now become operational.

With respect to the decision on public stockholding for food security purposes, the Bali decision on this issue will remain in place until a permanent solution is agreed and adopted.

Until such a permanent solution (whose detailed outcome or legal instrument is not prejudged) is adopted, and provided the conditions set out in Bali are met, WTO member states shall not challenge through the WTO dispute settlement mechanism, compliance of a developing member with its obligations under Articles 6.3 and 7.2(b) of the Agreement on Agriculture (AoA) in relation to support provided for traditional staple food crops in pursuance of public stockholding programmes for food security purposes existing as of the date of the Bali decision.

The decision does not cover challenges under the Agreement on Subsidies and Countervailing Measures.

According to the decision, members are to engage constructively to negotiate and make all concerted efforts to agree and adopt a permanent solution on the issue of public stockholding for food security purposes by 31 December 2015.

It also says that if a permanent solution is not agreed and adopted by the 11th WTO Ministerial Conference (to be held in 2017), the mechanism (referred to in paragraph 1 of the Bali decision, and as set out in paragraph 1 of this decision) shall continue to be in place until a permanent solution is agreed and adopted.

The decision further states that negotiations on a permanent solution shall be held in the WTO Committee on Agriculture in Special Session, in dedicated sessions and in an accelerated time-frame.

The decision on a post-Bali work programme on a priority basis for legally binding outcomes on other Bali Ministerial decisions is for transforming nine Bali best-endeavour decisions into legally binding instruments. These are four decisions in agriculture and five in the development dossier. The agriculture decisions cover tariff-rate quota administration, export competition and phasing out of cotton subsidies. Issues in the development dossier comprise preferential access for services suppliers in least-developed countries (LDCs), and duty-free and quota-free market access for LDCs. The work on other parts of the Doha Development Agenda (DDA) is included in a preamble to the actual decision.

According to the decision on post-Bali work, work shall resume immediately and all members shall engage constructively on the implementation of all the Bali Ministerial decisions in the relevant WTO bodies, including on the preparation of a clearly defined work programme on the remaining DDA issues as mandated in paragraph 1.11 of the Bali Declaration.

As per paragraph 1.11, members agree that the issues of the Bali package where legally binding outcomes could not be achieved, including LDC issues, shall be pursued on priority.

The deadline for agreeing on the work programme mandated in the Bali Declaration shall be July 2015.

“Back in the game”

In his statement at the General Council meeting, WTO Director-General Roberto Azevedo said that by agreeing these three decisions, “we have put ourselves back in the game. We have put our negotiating work back on track – that means all the Bali decisions: trade facilitation, public stockholding, the LDC issues, the decisions on agriculture, development, and all of the other elements. And we have given ourselves the chance to prepare the post-Bali work programme.”

But, crucially, he added, during this process “we have seen a renewed commitment to the multilateral system.”

Nevertheless, “we need to find an easier way of doing things. While we have seen renewed commitment to the WTO, the truth is that we must avoid repeatedly putting ourselves in this position. We have lost precious time since July, and it goes without saying that we can’t wait another two decades to deliver further multilateral outcomes. We have to think about how we can operate in a more efficient way.”

Speaking at a media briefing following the General Council meeting, Azevedo explained that since July there had been an impasse in the implementation of the Bali issues, “which had a paralyzing effect on the negotiations in all areas.”

The impasse, he said, related to the political link that was established between two Bali decisions, one on the public stockholding programmes for food security purposes and the other being on the Trade Facilitation Agreement.

He said that the General Council decision clarified the Bali decision on public stockholding for food security purposes, and  made  clear that the “peace clause” agreed  in Bali will remain in force until a permanent solution to that issue is found.

It also stated that members shall make all efforts to negotiate a permanent solution by 31 December 2015. This is an advance of the original target date – the 11th Ministerial Conference in 2017.

Another of the General Council decisions adopts the Protocol of Amendment which formally inserts the Trade Facilitation Agreement into the WTO rulebook, and this clears the path for the TFA to be implemented and to come into force.

The third General Council decision concerns the WTO’s post-Bali work. With this decision, said Azevedo, members committed themselves to resuming this work immediately and engaging constructively on the implementation of all Bali Ministerial decisions including the work programme on the remaining DDA issues. Members also agreed that the deadline for agreeing the work programme will now be July 2015.

At the media briefing, Azevedo was asked to comment on the fact that the issue of trade facilitation was dropped from the Doha agenda back in 2003 at the Cancun Ministerial Conference but has now made a comeback, while nothing has been done on the core issues in the DDA such as agriculture. He said that trade facilitation was dropped “because people thought it was too difficult” and also “because at the time the approach that was taken did not get consensus.”

[Trade observers have noted that all the four so-called “Singapore issues” (viz., investment, competition policy, government procurement and trade facilitation) figured on the agenda at Cancun with a view to launching negotiations on all four by express consensus. However, all four issues met with resistance. At that stage, the then EU Trade Commissioner Pascal Lamy, in a “Green Room” meeting among a select few countries, offered to take off the agenda other Singapore issues, but wanted at least the trade facilitation issue. However, a large number of countries not in the Green Room and kept out of the negotiations refused to agree, and the Cancun meeting collapsed.

[After some talks in Geneva, a compromise for resuming work on the Doha Development Agenda was agreed at the General Council in July 2004. Under item 1(g) of the July 2004 package decision, the General Council launched negotiations on trade facilitation. – SUNS]

Azevedo said a very large number of developing countries were now hailing the Trade Facilitation Agreement, saying that it was important for them and that they wanted it done and implemented. According to Azevedo, this “tells you something about the developmental elements that are present in this agreement.”

“To say today that this agreement is not part of a development agenda I think would be misleading, to say the least,” he claimed.

“We adopted today a General Council decision on the post-Bali work. And that puts all of the Bali decisions, and that puts the work programme for the conclusion of the Doha Development Round, back on a priority basis on the table,” he further said.

“Important milestone”

In its statement at the General Council meeting, India (represented by Ambassador Anjali Prasad) said that the adoption of the three important decisions by the Council was a clear testimony to the fact that if members show understanding towards each other’s concerns and demonstrate political will, “it is possible to find a solution that meets with our common needs and interests.”

“It is indeed an important milestone in the history of the WTO as we agree to annex the Agreement on Trade Facilitation, the first multilateral agreement since the WTO was established,” said India.

Looking ahead, India urged members to engage constructively in advancing discussion on all the Bali Ministerial decisions.

“We would need to redouble our efforts to prepare a clearly defined post-Bali work programme on the remaining DDA issues as mandated in Paragraph 1.11 of the Bali Ministerial Declaration. The adoption of a permanent solution on the issue of public stockholding for food security purposes is an important objective for us. We urge the membership to engage on the subject in the spirit of the decision adopted by us today.”

India said that as work is resumed towards achieving a balanced and successful conclusion of the DDA in accordance with the mandate given by Ministers, “we cannot afford to lose sight of the ‘development dimension’.”

On its part, India said it would engage constructively with members in the coming days to seek balanced outcomes that yield the “development dividend” of the Doha Round.

Lesotho, on behalf of the African Group, said: “Our Bali and post-Bali journey has not been an easy one, yet it is in such excruciating journeys that great lessons are learnt. It is therefore a fervent hope of the African Group that as members gear themselves up to engaging in other post-Bali decisions, such lessons will not be cast out into oblivion. Rather they should guide our path in the next phase of our journey.”

Some of these lessons included the importance of ensuring that outcomes are fully negotiated by all members with sufficient time for consultations and an accompanying conducive environment, said Lesotho.

“Moreover, we have learnt that through cooperation and spirit of partnership the WTO can thrive and deliver balanced outcomes, with all members across [the developed-developing country] divide making essential contributions thereby striking win-win beneficial outcomes.”

The African Group further said: “We certainly cannot discount the fact that there are also areas where the organization can do better and every effort should be made to ensure that the WTO negotiations are truly inclusive and transparent in every way possible.”

The Group welcomed the momentous adoption of the three General Council decisions, calling it the first step towards the realization of the objectives set out therein.

While recognizing that nothing is absolute and that there is always room for improvement, the Group said that “today’s milestone” once and for all sealed the unencumbered operation of the Trade Facilitation Agreement Facility. In this setting, the Group took the opportunity to lodge an appeal to the donor community to furnish the Facility with requisite funding.

The African Group looked forward to constructively engaging with members in the context of further steps on the adopted decisions including on public stockholding for food security purposes and on the post-Bali work programme.

LDCs’ views

Uganda, on behalf of the LDC Group, said that the LDCs supported the deal that had been constructed and presented at the General Council.

The LDC Group recalled that during deliberations in the Preparatory Committee on Trade Facilitation it had highlighted the fears that its members had due to the lack of clarity on the source of funding to facilitate the implementation of the Trade Facilitation Agreement.

“We are happy to associate ourselves with the Trade Facilitation Agreement Facility that was established to provide that sense of clarity that we were looking for. It may be true that this is not the best outcome but it will be used as a stepping stone to address the requisite needs and challenges posed by the need for assistance and support for capacity building.”

Uganda also noted that the decision of the General Council captured some of the elements that the LDCs wanted to see, such as a reference to paragraph 47 of the Doha Ministerial Declaration.

“We can also live with the language on assistance and support for capacity building. In our view, it gives us a degree of assurance we were looking for.”

The LDC Group said: “This is not the best deal but it is one nonetheless that puts us back on the highway to negotiate legally binding and meaningful LDC-specific outcomes. After today, we shall know whether indeed members were genuine when they said that we could get back to business as usual and conclude the Doha Round.”

“We shall know whether in fact the Trade Facilitation Agreement was not the only thing that this set of members wanted to see concluded out of the Doha Development Agenda,” it said.

Uganda recalled that the LDCs submitted their collective request on the operationalization of the LDC services waiver on 21 July. “We are looking to hold a high-level meeting in mid-January 2015 consistent with Paragraph 1.2 of the waiver decision, where non-LDCs in a position to do so would indicate areas where they would grant preferences. To that end therefore, we are looking to the participation of all non-LDC members in the high-level meeting to be held in mid-January and also for those members to grant meaningful preferences to LDCs consistent with the waiver decision.”

The LDCs also welcomed the decision on the post-Bali work programme. “We take note of the fact that all issues in the Bali package where legally binding outcomes could not be achieved, including LDC issues, will be prioritized. It is our hope that this will now lead us to a track where we shall be able to craft a work programme  with the view to concluding the remaining elements of the Doha Round without introducing new issues, with development at the centre.”

Uganda said that the current situation of LDCs should not please anyone; “in fact, on the contrary, all of us should be working towards the graduation of all LDCs.”

“This is probably what informed Ministers in Doha to seek to put our issues at the heart of the work programme and also to continue to make positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development.

“We should not let the July events go to waste. We have to, and we owe it to posterity to take lessons from these events. Otherwise, we shall be accused of having learnt nothing and forgotten nothing.”

On the LDCs’ part, Uganda said, “we have learnt  that  when a system consistently fails to deliver for many of its members, when a section of its members perpetually dwell in abject poverty and hunger with dreams far from reach, a time  comes  when  the  status  quo is challenged. We have also learnt that negotiated outcomes that are heavily tilted in favour of one party are not sustainable.”

Support for package

Kenya, on behalf of the African, Caribbean and Pacific (ACP) Group, commended the US and India for their constructive role in resolving the impasse, adding that the ACP Group supported the package as put forward at the General Council.

On the public food stockholding decision, the ACP Group welcomed the improvement on clarification of the peace clause, which shall remain in force until a permanent solution is put in place. It also welcomed the target date of 31 December 2015 for adoption of an agreement on a permanent solution.

On the decision on the Protocol of Amendment, the Group said it was very pleased that some of its textual proposals had been taken on board in the trade facilitation decision. The adoption of the trade facilitation package should now allow the Trade Facilitation Agreement Facility to be operationalized. It urged its donor partners to generously contribute resources to the Facility which would complement the efforts of the developing and least-developed countries in the implementation of their commitments under the TFA. It also urged the WTO Director-General to reach out to donor institutions with a view to soliciting their contribution towards realizing the objectives of the Facility.

On the post-Bali work programme, the ACP Group endorsed the extension of the work programme deadline to 31 July 2015. The Group said it placed high importance on resuming work on the mandate from Ministers to define a post-Bali work programme. It looked forward to expedited work in this regard, notwithstanding the agreement to move the deadline forward to next July.

“We have done a lot of work and also useful ideas have been floated in our informal discussions since February and which we can build on to finalize [the] post-Bali work programme,” said the ACP Group.

The Group said it was ready to engage constructively and had already tabled a document in October before the Trade Negotiations Committee which highlighted the principles that the Group considered as paramount in defining the post-Bali work programme.

Landmark agreements

In its statement at the General Council, the European Union said it certainly was a very important day in the history of the WTO and of the multilateral trading system.

According to the EU, the message from Geneva was twofold: (1) the WTO had taken three decisions, each one important on its own merits; (2) even if things were not easy at this place and setbacks may happen, members were ready and able to sit down and work through their differences. Over the last weeks, the WTO was very much in the spotlight and some again believed that failure was inevitable, but they were proved wrong, the EU said.

The General Council decisions not only implemented the landmark Bali agreements, they also confirmed the WTO’s role as the centre of international trade policy, said the EU.

According to the EU, the TFA was a key achievement in this respect. It would smoothen trade, bring more transparency to traders and help developing countries become more involved in global trade flows. The EU said it would support developing countries to implement the agreement and would contribute to the necessary funding to ensure that “we all move in the right direction. We all now need to expedite the ratification process in order to allow the agreement to enter into force as soon as possible.”

The EU was also pleased with the result achieved on public stockholding. It said it had always considered food security an international priority and had actively supported efforts to find suitable solutions at the WTO.

“We now need to turn our attention to post-Bali and the DDA negotiations,” the EU said, adding that it remained a strong believer in the benefits of multilateral trade agreements and considered the conclusion of the DDA a strategic priority.

“It is high time that we agree on a work programme that puts us on a clear, realistic and credible path towards the conclusion of the round.”

Meanwhile, in a statement from Washington, US Trade Representative Michael Froman said: “The WTO has taken a critical step forward by breaking the impasse that has prevailed since July. I am pleased that the United States was able to work with India and other WTO members to find an approach that preserved the letter and spirit of the package of decisions reached at last year’s Bali Ministerial Conference.”

“The Trade Facilitation Agreement has the potential to fundamentally reform global customs practices and substantially reduce the costs and time associated with goods crossing borders. It’s a perfect example of how breaking down barriers to trade can unlock new opportunities for developed and developing countries alike, and it’s a particularly important win for small and medium-sized businesses in all countries.”

Froman further said: “With this win under the WTO’s belt, we can once again focus our efforts on revitalizing the organization’s core negotiating functions.” (SUNS7927)                              

Third World Economics, Issue No. 582, 1-15 Dec 2014, pp2-5