G20 affirm DDA on post-Nairobi work but open door to RTA issues

At their recent summit in Hangzhou, the G20 major economies agreed to address the unresolved Doha Development Agenda issues in the WTO, but also left an opening for issues from regional trade arrangements to enter the scope of discussion in the trade body.

by D. Ravi Kanth

GENEVA: Major developing countries led by China have ensured, in the Hangzhou communique issued by G20 leaders, strong language on the WTO’s post-Nairobi work programme, “with development at its centre”, for addressing the remaining “DDA [Doha Development Agenda] issues” on a priority basis, trade envoys told the South-North Development Monitor (SUNS).

After their 4-5 September meeting in Hangzhou, China, the G20 leaders reiterated their commitment to address the unresolved DDA issues in “agriculture, including all three pillars of agriculture (i.e. market access, domestic support and export competition), non-agricultural market access, services, development, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and rules.”

Despite their sustained efforts to finalize the post-Nairobi work programme based on the remaining DDA issues, developing countries have over the past eight months faced numerous hurdles and roadblocks because of opposition from the US and other industrialized countries.

The US, for example, has vociferously maintained that it will not negotiate the DDA issues because of lack of agreement among member states at the WTO’s tenth Ministerial Conference in Nairobi, Kenya, last December to continue with the Doha Round of negotiations, according to trade envoys familiar with the negotiations.

The US has also blocked efforts to negotiate on the remaining DDA issues on the grounds that members will have to agree to “new approaches” before commencing negotiations. The US indicated its plurilateral approaches for issues in the Doha rules dossier, particularly on fisheries subsidies, while setting aside other issues concerning improvements in anti-dumping provisions, trade envoys said.

Other major industrialized countries such as the European Union, Australia, Canada, Switzerland and Norway have signalled their intention to continue work on the Doha issues without insisting on any new approaches, trade envoys maintained.

Effectively, work at the WTO on the post-Nairobi work programme with DDA issues at its centre remains nearly paralyzed in the last eight months since the Nairobi Ministerial Conference.

Against this backdrop, the leading developing countries in the G20, such as China, India, Turkey and South Africa, succeeded in bringing back development-centred issues in the DDA in the Hangzhou communique.

The fact that the US had to agree to include the “DDA” issues in the leaders’ communique is significant. Whether the US will actually participate in shaping the post-Nairobi work programme based on these issues, however, remains to be seen, said a trade envoy who asked not to be quoted.

Language on DDA ... and RTAs

In paragraph 26 of the Hangzhou communique, the G20 leaders reiterated their commitment “to shape the post-Nairobi work with development at its centre and commit[ted] to advancing negotiations on the remaining DDA issues as a matter of priority, including all three pillars of agriculture (i.e. market access, domestic support and export competition), non-agricultural market access, services, development, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and rules.”

For agreeing to insert language on the DDA issues, according to trade envoys familiar with the negotiations, the US and other industrialized countries forced the developing countries at the Hangzhou summit to agree to include language such as: “We also note that a range of issues may be of common interest and importance to today’s economy, and thus may be legitimate issues for discussions in the WTO, including those addressed in regional trade arrangements (RTAs) and by the B20 [the coalition of business associations from the G20 countries].”

Effectively, such language opens the door slightly for bringing the RTA issues into the WTO even though a large majority of WTO members are not part of agreements such as the Trans-Pacific Partnership (TPP) or other major regional agreements, said an envoy of a G20 member country.

More importantly, the Hangzhou communique paves the way for discussing issues such as the electronic commerce work programme when it says, “We will work together with all WTO members with a sense of urgency and solidarity and with a view to achieving positive outcomes of the MC11 [the WTO’s eleventh Ministerial Conference, which will take place next year] and beyond and we will work together to further strengthen the WTO.”

In short, major industrialized countries led by the US and the EU, along with their developing-country partners such as Singapore, Hong Kong, Costa Rica, Mexico and Korea, will make a sustained effort to either launch or conclude negotiations on e-commerce at the eleventh Ministerial Conference, the envoy maintained.

Overall, the language on global trade issues in the Hangzhou communique is a grand “compromise” between developing countries led by China and the industrialized countries, particularly the US, the envoy argued.

The industrialized countries also succeeded in introducing language on the important role “that bilateral and regional trade agreements can play in liberalizing trade and in the development of trade rules, while recognizing the need to ensure they are consistent with WTO rules.”

Effectively, this would be tantamount to bringing disciplines agreed in bilateral and regional agreements, such as the rules on e-commerce in the TPP agreement, into the WTO work programme, a developing-country trade envoy said.

The US, for example, had suggested 15 concepts in the e-commerce work programme at the WTO which were largely based on what was agreed on e-commerce in the TPP agreement, the envoy suggested.

The US proposal called for “prohibiting digital customs duties”, “enabling cross-border data flows”, “promoting a free and open Internet”, “preventing localization barriers”, “barring forced technology transfers”, “protecting critical source code” and so on.

The concept of “preventing localization barriers”, for example, demands that “companies and digital entrepreneurs relying on cloud computing and delivering Internet-based products and services should not need to build physical infrastructure and expensive data centres in every country they seek to serve. Such localization requirements can add unnecessary costs and burdens on providers and consumers alike. Trade rules can help to promote access to networks and efficient data processing.”

Leading developing countries such as China, India and South Africa want foreign companies to build physical infrastructure as well as data centres for availing their services instead of depending on cloud computing, in which the US maintains a near-monopoly, the envoy argued.

EGA negotiations

Further, the continued differences between China on one side and the US and its allies on the other in the ongoing negotiations on a plurilateral Environmental Goods Agreement spilled over into the G20 leaders’ communique.

The two sides struck a compromise to include language that “seeks to eliminate tariffs on a broad range of environmental goods by the end of 2016”.

The Hangzhou communique says: “G20 Environmental Goods Agreement (EGA) participants welcome the landing zone achieved in the WTO EGA negotiations, and reaffirm their aim to redouble efforts to bridge remaining gaps and conclude an ambitious, future-oriented EGA that seeks to eliminate tariffs on a broad range of environmental goods by the end of 2016, after finding effective ways to address the core concerns of participants.”

China also agreed to language on excess capacity in steel and other industries as well as on subsidies and other types of government support.

The communique says: “We recognize that the structural problems, including excess capacity in some industries, exacerbated by a weak global economic recovery and depressed market demand, have caused a negative impact on trade and workers. We recognize that excess capacity in steel and other industries is a global issue which requires collective responses. We also recognize that subsidies and other types of support from government or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention.”

In short, while the developing countries held their ground on the DDA issues as reflected in the Hangzhou communique, they conceded ground on bringing RTA-related issues into the WTO through the backdoor.

“The developing countries must now ensure that negotiations on DDA issues are conducted on the existing Doha work programme before they agree to discuss the new issues,” said a trade envoy from a G20 country. (SUNS8310)                                         

Third World Economics, Issue No. 624, 1-15 September 2016, pp6-7