Binding outcomes for LDCs unlikely in Nairobi package

The Nairobi Ministerial Conference is unlikely to yield binding concessions for the least developed countries.

by D. Ravi Kanth

GENEVA: The package of “deliverables” at the forthcoming Nairobi WTO Ministerial will be unlikely to have any binding outcomes and the concessions for the least developed countries (LDCs) will remain a promise of “best-endeavour efforts”, according to several trade envoys.

The much-touted package of concessions for the LDCs to be agreed at Nairobi is unlikely to contain any binding outcomes after the major developed countries made it clear on 4 November that they will not be in a position to provide binding deliverables for duty-free and quota-free market access, simplification of preferential rules of origin, services waiver and on the vital issues of the cotton dossier, several trade envoys told the South-North Development Monitor (SUNS).

At a “green room” meeting specifically convened on the LDC package on 4 November, WTO Director-General Roberto Azevedo asked the developed countries to indicate what they are going to do on the four issues – duty-free and quota-free market access, simplification of preferential rules of origin, services waiver including enhanced market access for LDC services providers, and cotton.

At the meeting, the chairs of the different negotiating bodies overseeing the LDC issues gave their respective assessments on where the issues stood in regard to the four LDC concerns.

The chair of the agriculture negotiations, Ambassador Vangelis Vitalis of New Zealand, stated that while there are some positive indications in market access for cotton, the prospects in the domestic support pillar seem less encouraging. Even in the export competition pillar, the LDC cotton producers might only get results on the elimination of export subsidies but not on export credits, according to LDC participants familiar with the meeting.

The European Union, the United States, Japan and other major developed countries said they will strive hard to provide improvements in the four areas – duty-free and quota-free market access, simplification of preferential rules of origin, services waiver and cotton – for the LDCs but not on a binding basis, said an LDC trade envoy who asked not to be quoted.

The developed countries maintained that they are not required to provide binding outcomes under the Bali ministerial declaration, the trade envoy added.

According to the developed countries, the Bali ministerial declaration, which was agreed at the WTO’s ninth Ministerial Conference in December 2013, merely suggested that “issues in the Bali Package where legally binding outcomes could not be achieved will be prioritized.” That did not imply that binding outcomes will be delivered at the 10th Ministerial Conference in Nairobi, the developed countries argued, according to the LDC envoy.

The major developed countries merely suggested that they are still working hard on finding some solutions to the LDC issues but not on a binding basis.

The EU said that it is looking at the extent to which it can provide binding outcomes but suggested several internal difficulties, according to an LDC envoy.

The EU, for example, will provide duty-free and quota-free market access subject to political and labour safeguards. The EU said it is one of the main members that can address the preferential rules of origin but it is still examining the issues.

On cotton, the EU said, Brussels is ready to provide a commitment to eliminate export subsidies. But, on domestic support for cotton, the EU ruled out any outcome because it provides Blue Box support for cotton producers in two member countries, said another LDC envoy.

At the green room meeting, the US issued a one-line statement saying the issues in the LDC package are difficult and that they face domestic challenges.

The US said that on one issue – the waiver for exempting the LDCs from implementing the commitments in the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement for pharmaceutical products – they have already agreed, according to the LDC envoy.

The developed countries said they are ready to address some issues in the 25 special and differential treatment proposals but did not suggest whether they would be on a binding basis, according to the LDC trade envoy.

LDC priorities

A day before the green room meeting, the LDCs circulated a comprehensive proposal listing all their priorities for which they sought binding outcomes at the Nairobi meeting. The LDCs’ priorities include:

(i)    binding improvements in 25 special and differential treatment provisions along with the G-90 countries;

(ii)   simplification and streamlining of the preferential rules of origin to eliminate barriers to LDC exports;

(iii) the LDC modalities for special treatment to their services providers, including the operationalization of the services waiver for preferential market access;

(iv)  binding duty-free and quota-free market access for LDC exports in industrialized countries and in developing countries in a position to do so;

(v)   substantial outcomes in the three pillars – market access, domestic support and export competition – of agriculture, including the exemption of market price support schemes for public stockholding programmes for food security, de minimis calculation and special safeguard mechanism;

(vi)  on cotton, provision of duty-free and quota-free market access in the US and other industrialized countries for the LDC cotton products from 2016 in different stages, reduction of domestic support by 50% from next year, and elimination of export subsidies coupled with new disciplines on export credits and state trading enterprises;

(vii)  changes in the tariff reduction obligations for industrial products for LDCs which are currently participating in a customs union and disciplines to address erosion of preferential tariffs of industrial products and commitments to refrain from non-tariff barriers;

(viii)               exemption of LDCs from implementing the transparency provisions across the rules negotiation pillars of anti-dumping, countervailing duties, regional trade agreements and fishery subsidies;

(ix)   continuation of fishery subsidies by the LDCs without contributing to overfishing or the depletion of fish stocks; and

(x)    full operationalization of the 2002 and 2012 WTO General Council decisions for enabling LDCs to accede to the WTO expeditiously.

For all practical purposes, however, the LDCs will now have to live with best-endeavour outcomes instead of the much-promised binding outcomes at the Nairobi ministerial meeting, trade envoys told SUNS. (SUNS8129)             

Third World Economics, Issue No. 603, 16-31 October 2015, pp8-9