South suffers humiliating setback at Nairobi

The 10th ministerial meeting of the World Trade Organisation held in Nairobi last December proved to be a major setback for the developing countries. D Ravi Kanth reports.

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INDIA, China, Indonesia, South Africa and other developing countries suffered a humiliating setback at the WTO's 10th ministerial meeting in Nairobi.

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 South-North Development Monitor (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 in their efforts 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 the trans-Atlantic trade elephants to pursue their new issues. To be sure, the final paragraph (paragraph 34) of the declaration appears to leave a small chink for developing countries to mount a resistance to 'negotiations' on the new issues. The paragraph says: 'While we concur that officials should prioritise 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)

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

India and China failed to stop the aggressive push by the US and the EU, who were silently supported by Brazil, at a closed-door marathon meeting that ended on early 19 December.

The two major developing countries yielded ground on one issue after another in the so-called Nairobi 'deliverables' on agriculture that included the outcomes on export competition, SSM and public stockholding programmes 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.

The Nairobi Ministerial Declaration (NMD) 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 to commence work on the outstanding issues with new approaches and new issues.

‘Absolutely disappointed’

The Indian trade minister 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 programme in which the WTO Director-General and his secretariat played a crucial role, said another 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 the SSM and public stockholding programmes 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 DDA negotiating architecture based on special and differential treatment (SDT) and 'less than full reciprocity' (LTFR)-based tariff and subsidy reduction commitments in agriculture and tariff reduction commitments in industrial goods, 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 SDT flexibilities and LTFR-based trade commitments.

At the concluding press conference in Nairobi, 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.

While the Indian minister seemed disturbed with the outcome she negotiated, the US Trade Representative (USTR) Michael Froman celebrated the final Nairobi outcome. Froman pointedly captured the shift that he along with the EU, WTO Director-General Azevedo and the conference chairperson Mohamed had brought about at Nairobi.

'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 organisation to consider,' he said in a statement issued by the USTR's office.

Froman's message reflects a victory for the US which has, since 2008, pushed for a 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.

Key paragraphs

The crucial paragraphs in the NMD that gave the US and the EU a decisive victory are paragraphs 30, 31 and 34.

Paragraph 30, for example, reads: 'We recognise that many Members reaffirm the Doha Development Agenda, and the Declarations and Decisions adopted at 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 this Organisation.'

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 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 Nairobi meeting had been extended by one more day beyond the originally scheduled closing date of 18 December to enable the US, the EU, 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 meeting among the five also witnessed several stalemates on the night of 18 December, a source said.

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

The agriculture package mentions the special safeguard mechanism for developing countries with a reference to the Hong Kong Ministerial Declaration but not the DDA negotiations. Both the SSM and the permanent solution for public stockholding programmes 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 of issues for the least developed countries (LDCs) 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 USTR Froman. The future for the developing countries at the WTO remains utterly bleak as they failed to assert their priorities when push came to shove in Nairobi.                               

D Ravi Kanth writes for the South-North Development Monitor (SUNS), from which this article is reproduced (SUNS, No. 8161, 22 December 2015). SUNS is published by the Third World Network.

*Third World Resurgence No. 305/306, January/February 2016, pp 9-10