Deliverables needed to restore confidence in WTO negotiations

–  Dr. Faisal Ahmed  –

Buenos Aires is now ready to host the 11th Ministerial Conference (MC) of the World Trade Organisation (WTO). This conference, held every two years, is the highest decision-making body in the WTO, and responsible for rule-making on international trade issues. Perhaps because of this, the successive MCs since the 1996 Singapore Round had a lot on platter ranging from the historical North-South divide to the dispute between conventional versus new trade-related issues.

The most comprehensive MC has been the one held at Doha in 2001, whose voluminous agenda is still waiting to materialise as it included a plethora of work programs on agriculture, non-agricultural market access, subsidies, anti-dumping, rules of origin,least developed countries (LDCs), and what not. Since then the pace of negotiation had been slow, and the Doha Round impasse was creating deterrence for trade negotiations. It was not surprising to hear the former WTO director general Pascal Lamy way back in 2011 chose not to speak on ‘the future of the multilateral trading system’, but to deliver a talk on ‘the multilateral trading system of the future’. In 2013, when the credibility of WTO itself was at stake, the MC at Bali came as a relief with some key outcomes pertaining to Trade Facilitation Agreement and Peace Clause relevant to food security. Also, the Nairobi Package of 2015 had a bouquet of offerings. Besides, outcomes on LDC issues, it decided to eliminate agricultural export subsidies, which were trade-distorting.

Unfortunately, the current discourse on the forthcoming meeting seems to hover around the same conventional arguments of Doha agenda versus the new issues. Nonetheless, there should be at least three critical issueswhich need utmost policy space in Buenos Aires through multilateral rule-making. But whether they can be converted into deliverables remain a cause of concern.

First and foremost is the issue of food security, specifically the one related to public stockholding. Some governments in developing countries have public stockholding (PSH) programs to procure food at a price fixed or administered by them. Though the purpose of providing such a support is to help sustain livelihoods, yet this can be trade-distorting. The Bali Round agreed on the Peace Clause by waiving off the 10 per cent limit and the Nairobi package re-affirmed to negotiate a permanent solution.

India and the G-33 have also been insisting on a permanent solution to this issue of procurement subsidies, but the recent anti-circumvention proposal by Russia with support from some developed and developing countries makes it difficult.These conditions are seven in number, are stringent and requires those G-33 countries to agree that they will not directly export the PSH stocks including those by state trading companies, and that the stocks procured for such programs do not hamper food security of other WTO members. Moreover, other conditions in this proposal are even more contentious in nature as one of them states that these countries cannot use the highly solicited ‘permanent solution’ if their exports of a produce did not exceed 5 per cent of global export share of that product. On the contrary, there are talks that a large number of countries have already come in support of a joint proposal by India and Chinathat calls for eliminating US$160 billion of high trade-distorting farm subsidies in the United States and some other industrialised economies. This is a potential litmus test for the negotiators in Buenos Aires as to whether they keep the WTO’s health blue or red!

Secondly, among the new issues on agenda being pushed by the developed countries, e-commerce occupies a foremost position. E-commerce is well within the scope of WTO through its work program launched in 1998, but whether a new set of commitments should be created by subjecting it to multilateral negotiations remains the issue of discord. Whereas, the EU, Australia, China and some other countries support launching new negotiations, others like India and the African group wants the existing framework to persist. Many countries in the global South would not support new negotiations owing to their supply-side constraints pertinent to digital processes, and weaker domestic regulations for e-commerce.Moreover, even least developed countries (LDCs) fear that with such binding and regulated cross-border commitments in e-commerce, their small and medium enterprises (SMEs) and more so their consumers would be subjected to unfair business practices.Since the new negotiation proposal also calls for no localisation requirements, a large number of countries are showing reluctance as they believe that the market would be dominated by only a few multinational companies.

Nevertheless, the new negotiationswould have benefits too in terms of trade facilitation as well as enhanced national participation in the global value chains, but that can be leveraged well only through a robust domestic digital infrastructure. Therefore, the voice of the LDCstoo should be accorded a priority, and WTO ought to provide them enough policy space to enhance domestic preparedness before committing to new negotiations. Also, with the new negotiations, the modalities related to moratorium on import duties in e-commerce transactions need to be assessed comprehensively.

Finally, the issue of fisheries subsidy seems to be relatively less contentious, but is nonetheless complex. The issue has traversed through the Doha Round and the Hong Kong Ministerial Conference and continues to be on table for the forthcoming Argentina meeting. The mandate is significant to protect the Life below Water – a key sustainable development goal (SDG) – without hampering the livelihood of those associated with fishing in developing countries and LDCs. In fact, among other things, the SDG Target 14.6 calls for eliminating subsidies that contribute to illegal, unreported and unregulated fishing; and also to prohibit overfishing. Thus, multilateral rule-making need to focus on this issue which has garnered considerable support from various countries given its inter-linkage with the SDG mandate. It is hoped that some deliverables in terms of restricting illegal fishing will find a place in the outcome document.

Thus, given the contentions prevalent thereof, we can only be optimistic that some pragmatic outcomes and deliverables comes out. That will be enough to restore confidence of the global South in multilateral rule-making.

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About the Author

Dr.Faisal Ahmed

Academic & Geopolitical Expert

Dr. Faisal Ahmed is Associate Professor & Chairman of International Business Area at FORE School of Management, New Delhi. His research and consulting areas include free trade agreements, WTO issues, south-south cooperation, and trade & geopolitics. He held the position of consultant to the United Nations Economic and Social Commission for Western Asia (UNESCWA) and other organisations, and has led project supported by the Ministry of Commerce & Industry, Govt. of India. He has also taught at Indian Institute of Foreign Trade, New Delhi as a visiting faculty and has worked as Associate Director with CUTS International, a leading global think tank on competition and WTO issues. He holds Post-graduation qualification and Doctorate degree from India in the area of international trade, and an Executive Certification in Geopolitical Analysis from Geneva.