Less than a week before the 10th WTO Ministerial Conference, beginning today at the Kenyan capital Nairobi, Director General Roberto Azevêdo urged upon all WTO members to "seize the last opportunity to show the flexibility and political will that we need" for a successful Ministerial Conference that is "essential to support growth and development for all members."
Anyone who has been following the proceedings in the run up to the Nairobi Ministerial knows there is an element of unease in the words of the WTO boss. He is worried about the divergences among the members arising from their conflicting interests. And he knows well enough that convergence on some of the major issues does not seem plausible. These divergences in the expectations and opinions among the developed, developing and least developed country (LDC) blocs may trigger a major shift in pursuing their respective interests at the ministerial conference. There are also fears that such shifts leading to divisions among the developing countries may be instigated by the powerful developed country blocs.
Referring to some of the core issues where conflicting interests stand in the way of a comprehensive Nairobi Package, the director general mentioned the issue of agriculture as a potential source of divergence. In his own words, consultations on agriculture-related issues "show entrenched and widely divergent positions." One of the main elements of discord is that a large number of the members maintain that an acceptable outcome on agriculture talks has to take into account a broader outcome on agricultural market access.
There were intensive consultations on a range of other issues besides agriculture in the past months at the WTO. These included consultations on market access, trade in services, export competition in agriculture, WTO rules, trade and development, TRIPS (Trade-Related Aspects of Intellectual Property Rights), trade and environment, dispute settlement. There were also consultations and reports prepared on the key LDC issues: rules of origin, services waiver, duty-free quota-free (DFQF) market access.
Outcomes of some of these have become known, and if nothing untoward happens, there is a strong likelihood that these would get formal endorsement at Nairobi. The issue of export competition in agriculture is one. A positive outcome on export competition in agriculture is likely to emerge in Nairobi despite persisting gaps on some critical areas. Export competition is one of the three pillars of the WTO agreement on agriculture and the Doha Development Agenda on agricultural negotiations. Under the Agreement on Agriculture, export subsidies are defined as referring to "subsidies contingent on export performance, including the export subsidies listed in detail in Article 9 of the Agreement". All such export subsidies are subject to reduction commitments, expressed in terms of both the volume of subsidised exports and the budgetary outlays for these subsidies. Developed country members are required to reduce, in equal annual steps over a period of six years, the base-period volume of subsidised exports by 21 per cent and the corresponding budgetary outlays for export subsidies by 36 per cent. In the case of developing country members, the required cuts are 14 per cent over 10 years with respect to volumes, and 24 per cent over the same period with respect to budgetary outlays. The deal expected in export competition will, no doubt, be a significant one.
Extension of pharmaceutical patents for the LDCs beyond the current time frame to 2033 is one of the most desired of the deliverables for the LDCs at Nairobi. This, too, will hopefully receive formal endorsement to the cheers of the poor countries. For Bangladesh, it implies a huge opportunity to develop its pharma industry.
With regard to LDCs' services waiver, Bangladesh on behalf of the LDC Group circulated a draft Ministerial Decision on which open-ended consultations were held. However, it remains to be seen how far the draft is accommodated in the ministerial declaration. There were also consultations on special and differential (S&D) measures applicable to the LDCs on various Agreement-specific issues.
As for the most talked-about LDC issue -- DFQF market access, the director general in his report only three days prior to the Ministerial mentioned that consultations saw some progress on the issue, although he remained reticent on the nature and direction of the consultations. That there has not been any conclusive consultation on the issue is evident from what he referred to as the need for 'common ground'. There is not much hype on the issue even from the LDC Group, as no specific textual proposal has been tabled either by the LDC group, or by any of its members.
The rules of origin issue, critically important for LDCs' market access, is also not set to go in the way the LDCs have been looking at it - in terms of a substantial reduction of local value addition in exports.
From what has emerged so far, consensus reached on export competition in agriculture is no mean achievement. Getting it through without twisting the basic tenets of the Agreement on Agriculture would be a remarkable achievement. The facility agreed on the waiver of the LDCs' pharmaceutical patents by way of allowing them to continue producing generic medicines far beyond the current waiver is another significant milestone. But these, despite their importance, are tiny blips in the context of the myriad issues -- a number of which are long lingering - that the world body has to tackle to justify its relevance in the context of the fast changing global trade scenario.
In this context, it may not be out of place to mention that with the unprecedented growth of regional trading agreements (RTAs) and the vast expanse of trade and commerce governed by their own rules and disciplines, the WTO today is, in essence, short of ideas in sticking to its prime objective of setting out an all-embracing and effective rule-based system in international trade. True, failure of the WTO, especially in pursuing the Doha Round in right earnest, has, in large part, prompted the surge of the RTAs, including the recent mega
RTAs dividing the world into major trade, albeit power blocs. Given that RTAs are in compliance with the basics of the WTO rules in their key dispensations, the crux of the problem lies in segregating countries into groups after their own likings. The fallout may be varied, including a sharp, escalating rise in inequality and economic asymmetries across the globe.
Now, how does the WTO deal with the situation? Proposals have been made for the Nairobi ministerial to reaffirm the need to ensure that RTAs complement but do not substitute the multilateral trading system. To this effect, consultations were held to create a transparency mechanism to make RTA disciplines and rules permanent, and to enhance the role of the Committee on Regional Trade Agreements at the WTO. These initiatives, to say the least, are just reactive in nature, and hence leave no scope to convince one that multilateralism can prevail on regionalism, even in curbing the adverse effects on countries which are not party to effective RTAs, and are thus rendered loners.
How far can flexibility and political will count when interests of the regional groupings are so decisively divisive?