What could the WTO Ministerial Deliver?

The WTO’s 9th Ministerial Conference in Bali, 3-6 December 2013, aims to deliver on three key strands: Trade Facilitation, a few agricultural elements including export subsidies and specific issues relating to cotton, and items of interest to least developed countries.

Trade Facilitation: UNCTAD estimates that the average customs transaction involves 20-30 different parties, 40 documents and 200 data elements. This deal aims to streamline bureaucracy and cut red tape to get products moving more efficiently around the globe. The developing countries, inefficiencies in customs and transport act as roadblocks to their integrations into the global economy and markedly reduce their competitiveness and inflow of FDI. The deal also includes provision for enhancing technical assistance and capacity building for developing economies to implement trade facilitation provisions.

Agriculture: These negotiations comprise four areas taken from the much larger Doha agriculture package that are considered to be ‘low hanging fruit’: export subsidies, tariff quotas, developing countries’ food stockholding for food security, and a proposed list of general services of particular interest to developing countries that could be given domestic support without distorting trade.

  1. Export Subsidies: The draft text for Bali stops short of legal commitments, but contains some of the strongest statements of intent that have ever been made on the subject. If it is agreed, members would “exercise utmost restraint” in using any form of export subsidy. They would “ensure to the maximum extent possible” that progress will be made in eliminating all forms of export subsidies. WTO members had already agreed to eliminate all of these by 2013 at the 2005 Hong Kong Ministerial, but the deadline was missed because of the impasse in the Doha Round.
  2. Stockholding for food security: currently the amount of trade-distorting domestic support is limited to 10% of the value of production for developing countries, which they argue is not enough. The compromise text would mean that members would temporarily refrain from lodging a legal complaint (a “peace clause”) if a developing country exceeded its limits as a result of stockholding for food security.

Cotton: Ministers are expected to reaffirm their commitment to reform world cotton trade and to increase their work towards the reform. In 2005 members had already agreed that export subsidies on cotton would be eliminated, and that developed countries would allow cotton from least developed countries into their markets duty and quota free. They also agreed to cut domestic support for cotton, by more than for other agricultural products and more quickly. The 2013 draft deal reiterates members’ commitment to “on-going dialogue and engagement” to make progress towards achieving the 2005 objectives. The text is a compromise following the proposal by the “Cotton Four” (Benin, Burkina Faso, Chad and Mali) that asked for cotton from LDCs be given duty-free and quota-free access to developed markets from 1st January 2015 and that all export subsidies on cotton in developing countries be eliminated immediately. The proposal described the damage that the Four believe has been caused to them by cotton subsidies in richer countries, called for the subsidies to be eliminated, and for compensation to be paid to the four while the subsidies remain, to cover economic losses caused by the subsidies.

Least Developed Countries: 34 of the 49 LDCs designated by the UN are WTO members and another 9 are negotiating their accession. The WTO recognises that LDCs need special treatment and assistance to achieve their development objectives. The proposal concerning LDCs contains decisions on 3 major elements: implementation of duty-free and quota-free market access for LDCs, preferential rules of origin for LDCs, and operationalisation of the LDC services waiver.

  1. DFQF access for LDCs: Members agreed to implement DFQF market access for LDC products at the 2005 Hong Kong Ministerial. Although significant progress has been made, the Bali Conference will see members consider a draft decision that would further encourage developed members to improve their existing DFQF coverage to provide greater market access to LDCs. The draft decision represents a political commitment of WTO members to assist LDCs to integrate into the multilateral trading system. It also calls on WTO members to enhance the transparency of their DFQF schemes.
  2. Preferential Rules of Origin for LDCs: if this decision is agreed then for the first time, governments will have a set of multilaterally agreed guidelines that they apply to their non-reciprocal preference schemes for LDCs, which should make it easier for LDC exports to qualify for preferential market access.
  3. Operationalisation of the LDC services waiver: this decision aims to increase the participation of LDCs in world services trade, resulting in benefits that can help achieve development objectives. Trade in services accounts for over 70% of global GDP, but currently makes up just 0.6% of LDC exports and 1.7% of LDC imports. A “services waiver” for LDCs was adopted in 2011, but no WTO member has yet made use of this policy.

Read the full WTO Briefings on Trade Facilitation, Agriculture, Cotton and LDCs

For all the information on the WTO’s 9th Ministerial in Bali including background papers and latest drafts, see the Ministerial website

Summary

The WTO’s 9th Ministerial Conference in Bali, 3-6 December 2013, aims to deliver on three key strands: Trade Facilitation, a few agricultural elements including export subsidies and specific issues relating to cotton, and items of interest to least developed countries. Although much of the draft text is statements of intent rather than legally binding commitments, the Trade Facilitation deal has real potential to cut the costs of trade on a global scale through a range of simple but high impact measures to cut red tape at borders – it is estimated that 10% of the gains would go directly to Sub-Saharan Africa (a 0.5% boost to GDP).

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By | 2017-10-08T11:56:22+00:00 November 26th, 2013|Uncategorized|Comments Off on What could the WTO Ministerial Deliver?

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