No binding commitments at Nairobi on LDC package, say developed countries

The WTO’s Nairobi meeting may deliver little in the way of credible and binding outcomes, with the developed countries appearing reluctant to make significant commitments on this front, as the following two reports on recent discussions among trade envoys indicate.

by D. Ravi Kanth

GENEVA: The developed countries led by the United States have made it abundantly clear that they are not going to provide at the WTO’s Nairobi ministerial meeting binding commitments in the LDC package or developmental outcomes in special and differential treatment provisions as demanded by 90 developing and least developed countries, people familiar with the development told the South-North Development Monitor (SUNS).

During a day-long closed-door retreat on 15 October at a hotel in Geneva, the US and its allies signalled that the outcomes at the Nairobi meeting beginning on 15 December are not going to deliver on the “development” dimension of the Doha Round.

The US, the European Union, Australia and Japan have already declared that they will close the Doha Development Agenda (DDA) negotiations at Nairobi and move on to new issues while continuing with the unresolved issues on agriculture and industrial goods outside the DDA.

The retreat was attended by select trade envoys from over a dozen developed and developing countries to discuss the deliverables in the LDC package, the export competition pillar in agriculture, and improvements in transparency provisions.

Trade envoys from the US, the EU, China, India, Brazil, Australia, Japan, Canada, Norway, Switzerland, New Zealand, Mexico, Colombia, South Africa and Kenya, among others, took part in the meeting.

Little for LDCs

The discussion on the LDC package, which dominated the pre-lunch proceedings, was largely focused on the level of commitments that the US, the EU, Japan, Canada, Norway and Australia are willing to undertake on duty-free and quota-free market access, cotton, the simplification of preferential rules of origin, and enhanced access for services providers in the poorest countries.

On duty-free and quota-free market access for LDC exports (DFQF), which was agreed at the WTO’s Hong Kong Ministerial Conference in 2005, the US has categorically ruled out binding outcomes for all the LDCs, particularly Bangladesh, Nepal and Cambodia, according to people familiar with the retreat. The US said it would not be able to provide DFQF access for up to 97% of exports of LDCs.

In the Hong Kong Ministerial Declaration, the developed countries had agreed that they shall “provide duty-free and quota-free market access on a lasting basis, for all products originating from all LDCs by 2008 or no later than the start of the implementation period in a manner that ensures stability, security and predictability.”

The declaration gave a leeway to the US by saying that “members facing difficulties at this time to provide market access as set out above shall provide duty-free and quota-free market access for at least 97 per cent of products originating from LDCs, defined at the tariff line level, by 2008 or no later than the start of the implementation period.” The developing countries were required to provide DFQF access in a manner they can offer depending on their ability to do so.

While developed countries such as the EU, Japan, Canada and Australia maintained at the 15 October retreat that they could fully comply with a binding commitment for DFQF access, the US ruled out any prospect for a binding outcome at the Nairobi meeting, according to people familiar with the retreat.

On cotton, the US maintained its inability to undertake substantial commitments to reduce trade-distorting subsidies, to provide full market access and to eliminate export subsidies. The EU also indicated that it would not be able to comply with the elimination of export subsidies.

Effectively, the deliverables on cotton are anything but substantial and binding, said an LDC trade envoy familiar with the meeting.

The developed countries, particularly the US and the EU, have ruled out binding provisions on the simplification of preferential rules of origin. The LDCs have provided different options for binding provisions on the simplification of rules of origin but in all likelihood the developed countries are unwilling to offer credible commitments, said the LDC envoy.

The LDCs are also left high and dry in regard to enhanced market access for services providers from the LDCs under Mode 4. The US indicated that it would not be in a position to offer access in Mode 4 as proposed by the LDCs, according to the LDC trade envoy.

In short, the Nairobi deliverables for the LDCs will be another round of best-endeavour outcomes but not “lasting”, “credible” and “binding” outcomes, several people familiar with the retreat told SUNS.

Sharp exchanges

The discussion on the export competition pillar for farm products was marked by sharp exchanges between the representatives of developing countries such as India, China, Brazil and South Africa on the one side, and the major developed countries on the other.

The new chair of the Doha Round’s agriculture negotiations, Ambassador Vangelis Vitalis, raised three major questions at the meeting. The chair asked the participants to spell out: (i) the problem that they would face on the 2008 revised draft modalities (Rev.4) in export competition, (ii) the problem they have in complying with the Rev.4 disciplines, and (iii) how they intend to fix the problem.

The export competition pillar includes elimination of export subsidies, and disciplines on export credits, food aid and state trading enterprises.

The EU said it wants Rev.4 as the basis in all four areas while the US said it will not accept the disciplines in export credits and food aid, according to people familiar with the meeting.

The US also said it can accept neither a 180-day duration for export credits as stipulated in the revised draft modalities of 2008, nor any discipline on food aid at the WTO, according to a person familiar with the discussion.

Sharp differences also came to the fore as the US and the EU demanded an end to the special and differential treatment flexibilities for the developing countries in export subsidies as indicated in Article 9.4 of the WTO Agreement on Agriculture.

India rejected the call from the US and the EU, saying there is no basis for eliminating the special and differential treatment flexibilities based on the Uruguay Round commitments in Article 9.4 of the Agreement on Agriculture and the Rev.4 text of 2008.

India said if the developed countries eliminate their export subsidies on 1 January 2016, the developing countries will phase out their export subsidies in 2021 based on the language in the Rev.4 text, according to people familiar with the meeting.

The developed countries at the retreat also adopted an extreme form of stonewalling tactics regarding the improvements in the special and differential treatment (S&DT) provisions as demanded by the G90 countries.

Instead of engaging in an honest give-and-take dialogue on the G90 proposals, the developed countries were only conveying their views through numerous faxes and raising questions, according to the people familiar with the retreat.

In a nutshell, the writing on the wall for the Nairobi meeting is clear. The developed countries have almost prepared the ground to walk away from Nairobi without delivering “credible”, “lasting” and “binding” outcomes on either the LDC package, export competition pillar or improvements in the S&DT provisions.

Furthermore, the developed countries want to bury the 14-year-old DDA negotiations once and for all without delivering on any of the promises they made in 2001, several trade envoys told SUNS. (SUNS8115)                          

Third World Economics, Issue No. 601/602, 16 September -15 October 2015, pp4-5