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Following the 11th Ministerial Conference (MC11) of the World Trade Organisation (WTO) held in Buenos Aires in December last year, there is no progress at all in advancing multilateral trade negotiations. Again, very little effort is visible to move ahead with plurilateral talks on issues already agreed by some members of WTO in the Argentine capital in 2017.
As the MC11 concluded without any ministerial declaration and decision, there were three ministerial statements on: electronic commerce, investment facilitation and micro, small and medium enterprise (MSMEs). A good number of member countries, in three groups, issued these statements separately expressing their intention to launch plurilateral trade talks on these areas.
Many argued that plurilateral deal would be the future to overcome prolonged stagnation of Doha Round of multilateral trade talks. Some, however, differed by saying that rise of plurilateral initiatives would undermine the multilateral trade regime and put the developing nations at bay.
A plurilateral trade agreement is a sector-based deal among a sub-set of WTO members. Under the framework, the member countries agree to negotiate a trade agreement on a sector within the greater context of the WTO. Two kinds of plurilateral agreements are possible. One is restrictive under which market access benefits and other obligations are applicable to the members of the deal only. It is also known as non-MFN based deal. Another is open to all, once negotiated and agreed by a group of members. This type of plurilateral deal is MFN-based. Those who do not participate in the negotiation may join the agreement later but have to accept the already negotiated obligations.
Four plurilateral agreements were parts of the WTO at the time pof its inception. Of these, International Dairy Agreement and International Bovine Meat Agreement were terminated in 1997. Agreement on Trade in Civil Aircraft and Agreement on Government Procurement (revised in 2014) are still in effect.
Currently, a few plurilateral agreements are under negotiation mostly by developed and advanced developing countries. These include: Environmental Goods Agreement (EGA) and Trade in Services Agreement (TISA). Again, Information Technology Agreement II (ITA-II) is a plurilateral deal first agreed in 1996 by 29 members. In 2015, an extended version the deal was adopted at the 10th Ministerial Conference of the WTO in Nairobi. It allows tariff elimination of more than 200 IT products and services. Ninety seven WTO members have joined the deal so far.
Generally, plurilateral trade deals are subject to negotiation under the auspices of WTO but these can also be negotiated outside the WTO. The negotiation within the WTO means a sub-set of WTO members has to initiate the negotiation and finalise it accommodating the WTO dispute settlement mechanism. The sub-set has to qualify as 'critical mass' which basically means the involvement of all major players of the sector under negotiation to make the deal an MFN one. Thus, around 70 to 80 per cent of the global market needs to be covered by an MFN-based plurilateral deal.
BANGLADESH POSITION: Last year in Buenos Aires, Bangladesh skipped any involvement with a number of plurilateral moves. A number of arguments were there to back the decision. One year later, these remain unchanged.
The main argument is that being a firm believer of multilateral trade regime and supporter of WTO's rule-making and dispute settling framework, Bangladesh should not get into plurilateralism. It may also undermine the ongoing Doha negotiation where every member of the WTO has equal say.
Another argument is that being a Least Developed Country (LDC), it can gain very little from plurilateral deals already negotiated, or under negotiation, or proposed. Moreover, the proposed deals on e-commerce and investment facilitation are parts of new issues forwarded by developed countries to bypass Doha Round talks. So, as argued, by accepting new issues, Bangladesh will only strengthen the hands of the developed countries.
Capacity constraint is also argued as another major barrier to join any plurilateral deal. There is an apprehension that negotiating in a plurilateral forum is more difficult due to strong presence of developed and powerful nations. It is also complex in nature and requires more skilled and experienced negotiators.
Moreover, opening its market to further foreign competition, particularly from the big and resourceful countries, would create huge pressure on employment and wear away growth prospects of many local industries.
While these arguments have some merits, strong counter-arguments are also there and the country's policymakers need to review those.
First, plurilateralism is not necessarily a deviation from multilateralism. Instead, it may be an effective tool to break the ice of stagnant multilateral trade talks. The 'single undertaking' mechanism of Doha Round turns into its fundamental weakness. Member countries have to agree on all the issues to make it effective. But full consensus on all the issues now seems impossible due to divergent trade interests and differences of opinions. As a result, 17 years after the launching of Doha trade talks, the avenue of multilateralism shrinks significantly. Plurilateral talks may gradually widen the avenue as limited number of countries will be there to negotiate an issue.
Second, only a few plurilateral deals have, so far, been negotiated and a few are now under negotiations. Proposed deal like e-commerce is quite relevant for LDCs like Bangladesh. Furthermore, new issue in the WTO is a reality as global economy gradually becomes diverse and complex with the emergence of new ideas and innovations. Sticking to Doha issues only is a wrong approach. Some developing countries like India and South Africa are insisting on LDCs to make their hands stronger to continuously block the new issues. At the same time, they have opened separate windows to negotiate new issues. Bangladesh needs to take note of it.
Third, capacity building is a continuous process and comprehensive exercise. Over the years, Bangladesh has improved its trade negotiation capacity both in the government and the private sector. Also there is no scope to avoid developed and powerful nations in global trade, and Bangladesh has to face these countries in any multilateral negotiation. Without facing them, it is not possible to achieve any gainful deal.
Fourth, Bangladesh has significantly opened its market and there are little defensive interests for the country in global trade arena. The country thus needs to push its offensive interests like market access. But, without getting involved in any negotiation including that of plurilateral, it is not possible to pursue offensive interests.
WAY FORWARD: Bangladesh is now at the final phase of graduation from LDC group by 2024 while the country will continue to enjoy LDC-benefits till 2027. With less than 10 years in hand, policymakers need to think seriously about the current practice of trade policy formulation which is still dominated by LDC-centric perspectives.
Finally, negotiations on plurilateral deals are likely to gain momentum in the near future. Even a number of LDCs are preparing to get involved with the deals. In the long run, Bangladesh can't stay away.