General Council meet shows WTO members sharply divided

Ahead of the WTO’s 10th Ministerial Conference, to be held in Nairobi in December, member states remain far apart on what is to be decided at the meeting as well as what will happen to the Doha Round negotiations after Nairobi.

by D. Ravi Kanth

GENEVA: Trade envoys remained sharply divided at the WTO’s General Council meeting on 8 October after the developed countries led by the United States and the European Union fiercely opposed demands of developing and least developed countries for “credible”, “balanced” and “developmental” outcomes at the Nairobi ministerial meeting, several trade envoys told the South-North Development Monitor (SUNS).

The divisions between the two sides came into the open on the package of deliverables for the WTO’s 10th Ministerial Conference, which will be held in Nairobi on 15-18 December, as well as on the post-Nairobi roadmap for unresolved issues in the Doha Development Agenda.

The battle lines on the substantive as well as process-related issues seemed more like a North-South divide as the US and the EU appeared in no mood to continue with the Doha Development Agenda (DDA) negotiations regardless of their failure to address the agreed mandates, particularly in agriculture, since 2001, several trade envoys maintained.

The EU, the US, Japan and Norway, among others, emphasized leaving behind the Doha architecture in the post-Nairobi process because of the repeated failures to provide the anticipated outcomes.

The EU and the US had been prime movers behind the launch of the Doha Round immediately after the September 2001 attacks in New York, promising the developing and least developed countries that they would be integrated into the global trading system through a developmental reform of agriculture and other areas.

Despite their decision to now walk away from the Doha architecture, the trans-Atlantic trade elephants maintained somewhat disingenuously at the 8 October General Council meeting that they are still ready to address the outstanding issues in agriculture and other areas while pursuing new issues.

In sharp contrast, coordinators for different developing-country coalitions such as Saudi Arabia (on behalf of the Arab Group), Lesotho (coordinating the African Group), Barbados [for the Africa, Caribbean and Pacific (ACP) Group], Indonesia (leading the G33 coalition) and Guatemala (for the small and vulnerable economies) pressed for a credible package of developmental deliverables based on the mandates of the Doha Development Agenda.

Several major developing and least developed countries such as China, India, Kenya, Egypt, Brazil, South Africa, Morocco, Ghana, Venezuela, Cuba, Bolivia, Korea and Ecuador issued nuanced messages for preparing “developmental” outcomes for the Nairobi meeting and also for ensuring a clear roadmap for addressing the remaining Doha issues.

Divergent views

In his intervention at the beginning of the General Council meeting, WTO Director-General (DG) Roberto Azevedo said that at the G20 trade ministers’ meeting in Istanbul on 6 October, there had been “a willingness to proceed on the basis of a package of specific issues which is DDA-minus” and to commence work on a final Nairobi document. He claimed a small package of deliverables – export competition, “development issues with a particular focus on LDCs [least developed countries]”, and a set of possible outcomes to improve transparency in a number of areas – may gather convergence at Nairobi. But Azevedo has not indicated till now the proponents of the small package of deliverables.

Azevedo said that “ministers also gave their backing to a parallel discussion on the path of future work on unresolved Doha issues after Nairobi.”

Nonetheless, “whatever we deliver in Nairobi, it will not be viable or credible to announce it as an agreed conclusion of the DDA single undertaking,” Azevedo said.

The DG admitted candidly that “at this point, there are divergent views on what happens after Nairobi.” “Many say that if there is no consensus to end the Doha Round then it will simply continue … and that we should state this clearly. Others say that if we do not deliver Doha by Nairobi then that will be it – even without a formal statement affirming its demise,” he argued. “Clearly these views will be extremely difficult to reconcile.”

Azevedo said the divide continues to persist on how to address the core issues of the DDA and their development dimension after Nairobi – whether under the DDA framework or whether under a reformulated architecture.

Against this backdrop, members must start working on the basis that there will be a Ministerial Declaration that would reflect the stock of decisions at Nairobi, as well as provide clear guidance on future work.

“My proposal therefore is to start a process that will lead us to text-based negotiations on [a Nairobi] Ministerial Declaration,” the DG said, adding that he would hold consultations on how to go about the process.

Kenya’s trade envoy Ambassador Stephen Karau issued a strong message that “something has to be delivered in Nairobi” to ensure the credibility of the WTO.

“In this regard we support having a drafting group to start work on the issues that the Director-General has identified as promising for outcomes in Nairobi,” Karau maintained. Given the paucity of time, “we therefore support the Director-General’s proposal of having a drafting group to start work immediately,” Kenya, which will host the Nairobi ministerial meeting, emphasized.

But in an abrupt response to the Kenyan ambassador’s call, the DG said that he is not embarking on any drafting group at this juncture, according to people familiar with the meeting. Azevedo reiterated that his proposal is to start a process of consultations with members.

Australia underscored the need for defining the package in detail without prejudice to other aspects of the Doha Round as well as initiating a process for a narrative of a post-Nairobi work programme.

“New approaches”

The EU said it is prepared to engage through a negotiating group for a Nairobi package centred around export competition based on 2008 revised draft modalities, and some deliverables for the LDCs. The EU, however, expressed concern on improvements in special and differential treatment flexibilities as demanded by a group of 90 countries.

The EU’s new trade envoy Ambassador Marc Vanheukelen said categorically that “if we could not reach agreement on the core DDA issues in the last 14 years and in particular over the last two years when we considered significantly recalibrated approaches, this doesn’t inspire confidence in our ability to advance on the same basis in the future.”

Therefore, “new approaches” as well as “parallel exploration of possible negotiations in other areas” are critical for bringing the WTO back into the centre of “trade rule-making.”

The US trade envoy Ambassador Michael Punke said that he would agree with the DG’s assessment on a finite number of issues that could bring consensus at Nairobi. The US envoy ruled out any chance of an outcome on a special safeguard mechanism (SSM), which failed due to lack of convergence over the last 14 years.

The US said it offered a proposal on domestic agricultural support but was shot down before sunset on the same day, according to a negotiator present at the meeting. Punke said there will not be any consensus to declare the DDA dead, nor consensus to continue the DDA after the Nairobi meeting. Washington was open to a post-Nairobi work plan dealing with any issue but would not reaffirm the DDA architecture which had failed for 14 years.

Continuing with the Doha Round

In sharp contrast to the EU and US positions, China called for the Doha Round based on the existing mandates to continue after the Nairobi meeting. China’s trade envoy Ambassador Yu Jianhua said while he would agree with the need for a ministerial declaration, it must not be drawn from a subjective orientation. “Drafting should not deny or change [the] Doha mandate,” said Yu. He said China is willing to consider new issues such as e-commerce and investment on an exploratory basis.

Brazil issued the strongest statement yet on how members are frustrated because of continued failure to address the trade-distorting domestic support in agriculture. Brazil’s trade envoy Ambassador Marcos Galvao said all promises to reform agriculture subsidies and market access barriers are “broken”, and agriculture always remains as “the main victim of recurrent hit-and-run ... THAT is what really compromises the credibility of our work in this organization and undermines trust among ourselves.”

Galvao said candidly that “for Brazil this is a sine qua non condition: In order to consider joining a consensus for an eventual extremely limited outcome in Nairobi, we will definitely need a collective commitment to carry on with our work, beginning, as of January, in the areas where real negotiation and agreement could once again not be postponed.”

“This commitment and the substantive agreements we may reach in Nairobi are two inseparable parts of one same package,” the Brazilian envoy emphasized. Brazil is not going to pay for new issues in return for addressing the unresolved areas of agriculture, he said.

South Africa’s trade envoy Ambassador Xavier Carim said the package of deliverables for the LDCs must be acceptable to them. He said members recognize the need for the DDA to continue because of unresolved issues. Carim said South Africa will not accept any transparency provisions that add administrative burdens or interfere with domestic processes.

Ghana said the Doha Round must not be buried in Nairobi.

India said it has consistently demanded that “a comprehensive and balanced outcome in all the three core negotiating areas viz. Ag[riculture], NAMA [non-agricultural market access] and Services as well as internally on all three pillars of Agriculture, even if with a downward recalibration of ambition, is a necessary condition for fulfilling the development mandate of this Round.”

“We believe that we should continue our efforts to reach as close as possible to that result at Nairobi,” India’s Ambassador Anjali Prasad told her counterparts. She said “credibility and balance of the package will be essential for the success of Nairobi.”

“Another critical success factor for Nairobi,” said Prasad, “would be the terms on which we decide to advance the remaining DDA, should it be difficult to achieve consensus on a comprehensive set of outcomes.”

“Nairobi, in such a situation, cannot be either the conclusion or the end of the DDA,” according to the Indian envoy. She said “multilateral negotiations such as those envisaged under the DDA are an ongoing process, especially when they are aimed at addressing existing inequities in the trading system.” “The framework provided by the DDA is a valuable component for attaining this goal, and should continue to anchor the deliberations on remaining DDA issues,” India argued.

Prasad also emphasized that “special and differential treatment is an integral component of all pillars of the negotiations. Any calls for changing the existing WTO legal paradigm and seeking further stratification among developing countries will not be conducive for advancing our work, and could complicate the negotiating process immensely.”

In short, the General Council meeting exposed the widening divide between the North and South in what is billed as a developmental round. It has to be seen whether countries of the South can stop the sudden push to guillotine the Developmental Round on African soil in December. (SUNS8110)

Third World Economics, Issue No. 601/602, 16 September -15 October 2015, pp2-4