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Saturday, March 26, 2016

WTO Nairobi Ministerial: In search of positives

Wasi Ahmed

  As the countdown is closing in, the WTO (World Trade Organisation) Ministerial Conference to be held in Nairobi, Kenya (15--18 December, 2015) seems to hold some positives towards reducing, if not eliminating, the asymmetries governing global trade. The consensus on extending the about-to-expire waiver regarding pharmaceutical patents for the least developed countries (LDCs) up to 2033 is indeed one that strikes a strong note in favour of creating a level-playing field for the poorer countries in the production and export of pharmaceutical products.

WTO Director General Roberto Azevêdo had earlier warned all member countries about divergences that may pose to weaken the outcome of the forthcoming conference, adding that the key task ahead lay in attaining convergence on as many issues as possible. The consensus on the aforementioned waiver for the LDCs is, no doubt, a remarkable accomplishment for the WTO in terms of the much sought after convergence. There are few others, though the picture, so far, is not clear enough. A decision has reportedly been agreed on 'non-violation' cases in intellectual property, and it is likely to be adopted in Nairobi.

As for the core DDA (Doha Development Agenda) issues, there has not been any progress to deliver a work programme within the deadline of July 31 this year as agreed in the Bali Ministerial last year. Reviving the issues towards a meaningful course of action in near future remains a major challenge. The DG, while terming the scenario 'very disappointing', said that it should not become an obstacle to achieving outcomes at the forthcoming Ministerial Conference. "This missed deadline does not represent a barrier to delivering in Nairobi - but it should be a wake-up call about our prospects for success," he said.

Meanwhile, the G-20 leaders in a joint communiqué gave a strong call for the WTO to deliver in Nairobi and to implement all the elements of the Bali Package, including those on agriculture, development, public stockholding as well as the prompt ratification and implementation of the Trade Facilitation Agreement. It remains to be seen how this spirit gets reflected in the deliberations in Nairobi. In this context, it may be noted that the WTO's fourteenth trade monitoring report on G20 trade measures shows that the application of new trade-restrictive measures by G20 economies remained stable compared to the previous reporting period. Although the report shows relative restraint by G20 economies in introducing new trade restrictions, the stockpile of measures continues to grow. Since the uncertain global economic outlook continues to have its negative impact on international trade, the report calls on G20 leaders to deliver on their pledge to refrain from implementing new protectionist measures and to roll back existing trade-restrictive measures. The role of the G20 members is believed to be crucial in determining the course of the negotiations in Nairobi.

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. Export competition refers to a) export subsidies, and b) the parallel issues on the Doha development agenda -- the latter relating to opportunities for governments to subsidise exports through export credits and by other permissible means. Under the WTO agreement on agriculture, only export subsidies are subject to control and reduction. The parallel issues are not currently subject to control and reduction.

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". As specified in more detail in Article 9.1 of the Agreement, this list covers most of the export subsidy practices which are prevalent in the agricultural sector, notably:

-direct export subsidies contingent on export performance;

-sales of non-commercial stocks of agricultural products for export at prices lower than comparable prices for such goods in the domestic market;

-producer-financed subsidies such as government programmes which require a levy on all production which is then used to subsidise export of a certain portion of that production;

-cost reduction measures such as subsidies to reduce the cost of marketing goods for export: this can include upgrading and handling costs and the costs of international freight, for example;

-internal transport subsidies applying to exports only, such as those designed to bring exportable produce to one central point for shipping; and

    -subsidies on incorporated products, i.e. subsidies on agricultural produces such as wheat contingent on their incorporation in export products such as biscuits, breads etc.

      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 6 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.

If the Nairobi conference succeeds in drawing a conclusive deal on export competition in agriculture, it should be considered a landmark achievement. The indication given by the Director General himself suggests that despite gaps and divergences, there are scopes and opportunities for reconciling differences.

Source: Bangladesh Newspaper- The Financial Express, 09 December 2015