The tone of the Tenth World Trade Organization (WTO) Ministerial Conference, held in Nairobi, Kenya from 15 to 18 December 2015, was set by developed countries on various occasions in the last two years.
Two days before the Ministerial, US Trade Representative Michael Froman published an opinion piece in the Financial Times.
In it, he said that the realities of trading have changed radically the last decade. He argued that a new category of global players –the so-called ‘emerging economies’ – have risen and that the multilateral trading system had to be updated to take stock of this reality, rather than treating these countries as ‘developing nations’ that should benefit from exceptions and enjoy flexibility in liberalisation.
But emerging economies such as China and India argue that they remain developing countries as significant sections of their populations live in poverty. They also argue that they are not considered ‘developed countries’ according to the United Nations Development Programme’s Human Development Index.
The US and several other developed countries blamed developing countries for the stalemate of the Doha Round where very little was delivered. In turn, India and other developing countries accused the developed world of failing to deliver the Doha Development Agenda before they declined to reaffirm the developmental mandate of the round.
The US argued that the expansion of global value chains made issues like investment, e-commerce, competition and government procurement more relevant to the WTO agenda. Some of these issues had appeared before as ‘Singapore issues’ but were rejected in the 2003 Ministerial.
The only Singapore issue that was picked up was trade facilitation which was concluded in 2013 in a multilateral agreement. The Singapore issues have been rebranded as ‘new issues’ and developed countries are putting effort in opening negotiations in these areas on a multilateral level.
One of the novelties in Nairobi was that for the first time the membership’s division was reflected in the Ministerial Statement, which noted that some members reaffirm the Doha Development Agenda while others do not. The rule of consensus has not been disregarded in this way before.
Another outcome that will influence the course of any future negotiations is the affirmation of the ‘single undertaking’ which was instrumentalised by developing countries to achieve beneficial results in certain areas after making trade-offs in other areas. Although this will not remain unchallenged, the developed countries will be negotiating on an ‘agree on what can be agreed’ basis.
In agriculture, practical outcomes such as the abolition of export subsidies by all members, was welcomed. However, analysis suggests that this is not a real victory for developing countries as other measures which distort agricultural markets remain in place.
In agriculture, there was no progress on market access, domestic support or the other items under export competition. Apart from export subsidies where progress was made, export competition also comprises export credit, food aid and state enterprise trading.
The Ministerial also failed to take any decisions on the special safeguards mechanism (no expansion to all members) and public stockholding programmes (no permanent solution). In addition, the Ministerial observed the conclusion of the negotiations that expand the Information Technology Agreement (ITA) with a list of new products and welcomed the negotiations that started in 2015 on an Environmental Goods Agreement (EGA).
The way forward
In the future, developed countries will try to make use of the Ministerial outcomes to introduce new issues on the WTO agenda. Not many developing countries will accept this. However, as the developed world seems determined to make progress on these areas, we shall expect the beginning of the age of plurilateral agreements, where coalitions of the willing will conclude plurilateral agreements that are put in place for others to join whenever they feel ready. In this way, developed countries outsource the WTO negotiation process to closed negotiating rounds that they initiate and where they are majority.
For example, the Trade in Services Agreement (TISA) that is being negotiated by (mostly) developed countries is taking place in the WTO premises, it is anchored on the General Agreement on Trade in Services (GATS) and has all legal requirements to become a WTO plurilateral agreement to which others would accede later.
In a second stage, and if a sufficient number of members join in, the agreement can be declared a multilateral agreement. In this way, non-participants will have not really negotiate a text but will be presented with a fait-accompli – and the freedom to take it or leave it. The coalitions of willing that are to be formed are not open to all members. For instance, the US has blocked China from joining the negotiations of the TISA.