TWN Info Service on WTO and Trade Issues (Dec15/19)
23 December 2015
Third World Network

South suffers humiliating setback at Nairobi
Published in SUNS #8161 dated 22 December 2015

Nairobi/New Delhi, 21 Dec (D. Ravi Kanth) - India, China, Indonesia, South Africa, and other developing countries have suffered a humiliating setback on Saturday (December 19) at the World Trade Organization's tenth ministerial meeting in Nairobi, Kenya.

The setback came after they nearly surrendered their negotiating space to the United States, the European Union, and other developed countries to start the process of bringing new approaches that could eventually lead to "graduation", several ministers and trade officials told the SUNS.

The US, the EU, and Brazil were ably assisted by the WTO Director-General Roberto Azevedo and Kenya's Cabinet Secretary for foreign affairs Amina Mohamed to bring about this result and effectively close the Doha Development Agenda (DDA) negotiations on African soil.

The Nairobi Ministerial Declaration provided unambiguous language for trans-Atlantic trade elephants to pursue their new issues.

[The final paragraph of the Declaration, though seemed to leave a small chink for developing countries to impede "negotiations" on the new issues. The declaration, on the WTO website in WT/MIN(15)/W/33/Rev.3 document, says: "34. While we concur that officials should prioritize work where results have not yet been achieved, some wish to identify and discuss other issues for negotiation; others do not. ANY DECISION TO LAUNCH NEGOTIATIONS MULTILATERALLY ON SUCH ISSUES WOULD NEED TO BE AGREED BY ALL MEMBERS. (Emphasis added)." SUNS].

The US, the EU, and Brazil managed to secure a substantive agreement on export competition without having to pay for the balancing issues covering a permanent solution for public stockholding programs for food security, the special safeguard mechanism (SSM) for facing unforeseen surges in imports of agricultural products supplied by heavily subsidizing countries, and more crucially, the reaffirmation to continue the Doha Development Agenda (DDA) negotiations.

India and China failed to stop the aggressive push by the US and the EU, who were silently supported by Brazil, at the closed-door marathon meeting that ended on early Saturday.

The two major developing countries yielded ground on one issue after the other in the so-called Nairobi "deliverables" on agriculture that included the outcomes on export competition, SSM, and public stockholding programs for food security.

Finally, the two representatives of the developing world at the high table conceded their negotiating ground by agreeing to vague and ambiguous language that merely said work on the outstanding "Doha" issues will continue, instead of saying clearly the remaining DDA issues, in Geneva.

The NMD (Nairobi Ministerial Declaration) has created an ugly situation where there will be protracted battles on whether there is a mandate to pursue the DDA negotiations at all or commence work on the outstanding issues with new approaches and new issues.

The Indian trade minister Ms. Nirmala Sitharaman cut a sorry figure at the final concluding plenary meeting when she said, "I'm absolutely disappointed that the ministerial declaration doesn't mention the Doha Round."

She went on to say that some of the amendments mentioned by her were not contained in the final results. "I was surprised that a few amendments that we have given have not gone through. I very clearly had mentioned that under cotton we shall not accept that date. 2017 is completely unacceptable to me."

"What is the use in making such a statement when India is not able to firmly stand up to pressure from the US and seek changes in the final Nairobi Ministerial Declaration," asked an African delegate present at the meeting.

India and China, though resisting the belligerent moves by the dominant powers, finally agreed to language on agriculture and the post-Nairobi work program in which the director-general and his secretariat played a crucial role, said another South African minister.

Despite holding marathon meetings with the US, the EU, and Brazil, the two major developing countries were unable to secure credible language, if not concrete outcomes, on SSM and public stockholding programs while agreeing to a substantive agreement on export competition.

More disturbingly, they let the trans-Atlantic trading partners have their say on the future negotiating function of the WTO by ensuring the entry of new approaches that could eventually terminate the existing negotiating architecture based on special and differential treatment and less-than-full-reciprocity based tariff and subsidy reduction commitments in agriculture and tariff reduction commitments in industrial goods of the DDA negotiations, an African trade minister lamented.

From now on, the two major developing countries will have to wage a grim battle for stopping "graduation" - which could result in losing their S&DT flexibilities and LTFR-based trade commitments.

While the Indian minister seemed disturbed with the outcome she negotiated, the US Trade Representative Ambassador Michael Froman celebrated the final Nairobi outcome. Froman captured poignantly the shift that he along with the EU, the WTO director-general Azevedo and the chairperson Mohamed had brought about at the tenth ministerial conference.

"As WTO members start work next year, they will be freed to consider new approaches to pressing unresolved issues and begin evaluating new issues for the organization to consider," said Froman in a statement issued by the USTR's office.

Ambassador Froman's message marks a victory for the US which started in 2008 for change in the negotiating approaches. His deputy Ambassador Michael Punke gets the credit for decisively changing the entire negotiating framework by resorting to constant diversionary tactics to shift the focus from the central farm subsidy issues in the DDA negotiations, according to several trade envoys.

At the final concluding press conference, the EU trade commissioner Cecilia Malmstrom suggested that Brussels strongly believes in "differentiation" - suggesting that China and India cannot be treated like other developing countries despite some problems of underdevelopment in certain areas.

The crucial paragraphs in the NMD (Nairobi Ministerial Declaration) that gave the US and the EU a decisive victory are contained in 30, 31, and the last paragraph 34.

Paragraph 30, for example, reads: "We recognize that many Members reaffirm the Doha Development Agenda, and the Declarations and Decisions at the Doha and at the Ministerial Conferences held since then, and reaffirm their full commitment to conclude the DDA on that basis [language proposed by China, India, South Africa, Ecuador, Venezuela, and the African Group of countries]. Other members [the US, the EU, Japan, and a handful of other countries] do not reaffirm the Doha mandates, as they believe new approaches are necessary to achieve meaningful outcomes in multilateral negotiations. Members have different views on how to address the negotiations. We acknowledge the strong legal structure of the Organization."

In the face of the divide between the two sides, paragraph 31 says ambiguously and vaguely: "Nevertheless there remains a strong commitment of all Members to advance negotiations on the remaining Doha issues. This includes advancing work in all three pillars of agriculture, namely domestic support, market access and export competition, as well as non-agriculture market access, services, development, TRIPS and rules. Work on all the Ministerial Decisions adopted in Part II of this Declaration will remain an important element of our future agenda."

Effectively, by saying Doha issues and not the DDA issues, the NMD (Nairobi Ministerial Declaration) has created an ugly situation for the WTO members who will now spend their time interpreting the Nairobi mandate.

They will know the debilitating/destructive effects of the NMD when they resume work in Geneva to pursue the remaining "Doha" issues, according to a capital-based trade official who asked not to be quoted.

The European Union trade commissioner Cecilia Malmstrom said the Nairobi ministerial declaration vindicated the significance of multilateral outcomes to address global trade issues. She said the EU is satisfied with the outcome on export subsidies, export credits, and state-trading enterprises.

The only two areas where there was no progress was on the improvements in the special and differential treatment flexibilities as proposed by around 90 developing and least-developed countries, and the transparency-related improvements in fisheries subsidies proposed by Peru and the ACP group, and anti-dumping (by Brazil) and subsidies and countervailing measures (by the EU and Australia).

The meeting was extended by one more day beyond December 18 to enable the United States, the European Union, China, India, and Brazil to reach an agreement on export competition that includes the elimination of farm export subsidies and diluted disciplines on export credits. It also includes best endeavour outcomes on food aid, and new disciplines on state-trading enterprises. The G-5 meeting also witnessed several stalemates on Friday night, a source said.

The deal was ultimately reached only after India and China conceded ground on the language pushed by the United States, the European Union, and Brazil, said several participants familiar with the meeting.

The agriculture package mentions special safeguard mechanism for developing countries with a reference to the Hong Kong Ministerial Declaration but not the DDA negotiations. Both SSM and the permanent stockholding programs for food security do not have a definite timeframe. The cotton outcome for the four West African countries contains immediate elimination of export subsidies, enhanced market access, and modest commitments to reduce trade-distorting domestic subsidies.

The package on LDC issues for the least-developed countries includes non-binding rules for preferential rules of origin and implementation of preferential treatment in favour of LDC services and services suppliers in services trade.

In short, the Nairobi ministerial meeting opened "the road to a new era for the WTO," as claimed by Ambassador Froman. The future for the developing countries at the WTO remains utterly bleak as they failed to assert their priorities when the push came to shove at Nairobi.