WTO in Nairobi – Did realism win over ambition?

For the first time since its creation, WTO ministers convened in Africa for the 10th Ministerial Conference in Nairobi, Kenya. The ministers had a daunting task: salvage the Doha Development Agenda (DDA) that has suffered from a negotiating stasis for over a decade and most importantly, prevent the systemic collapse of the multilateral trade governance architecture, endangered by the proliferation of mega-regional trade deals.

When the DDA was inked in Doha in 2001, the economic and political context was significant: two months after the horrific events of September 11, the world needed to give a strong signal that countries with various interests and realities were able to agree on a shared purpose: ‘development’. Fourteen years later, economic realities, shaped by the financial crisis and the rise of emerging economies, as well as the changing nature of global trade, are spurs to action.

The “development” endeavor, in itself, is not at stake. The real question is how to address the increasingly complex group of developing countries, which are not a homogeneous group and can no longer be treated as such. While by certain economic standards, India, China and other large developing countries can legitimately claim development needs, on some specific issues, it is increasingly hard for them to argue for special and differential treatment (SDT), given their capacity to significantly influence the global trading system.

What did Nairobi achieve?

The outcome of the Nairobi conference can be celebrated for at least three reasons:

First, on the content, there are three areas in which Ministers managed to engineer a deal:

• Commitments to guarantee export competition in agriculture. This deal is seen as WTO’s most important negotiated outcome on agriculture in the last 20 years. It will see the end of export subsidies immediately for most products from developed countries and by 2018 for developing countries.

• A meaningful package on least-developed country (LDC) and development issues. This includes an agreement on cotton for LDCs, duty-free and quota-free regimes for LDCs from more WTO members, multilateral guidelines on rules of origin and the services waiver for LDCs.

• A landmark deal on information technology. 53 WTO members will eliminate tariffs on 201 IT products, covering 90 per cent of world trade on these products, for an approximate value of US$1.3 trillion a year.

Second, the world has witnessed a proliferation of parallel mega-regional negotiations, triggered by the fact that multilateral trade rules were not able to catch up with the needs of 21st century trade. A failure to address some issues of importance to developing countries (such as export competition in agriculture, rules of origin for LDCs or granting preferential access to services), would have continued to deepen the gulf between developed and developing countries. While the multilateral system may not be perfect in its current state, it at least provides for a predictable system that prevents bilateral trade deals from creating their own sets or rules and setting those rules for others.

Third, Nairobi has made a step towards an alternative way of making decisions at the WTO. One of the strengths of the WTO is the principle of “single undertaking”, which means that countries cannot pick and choose low hanging fruits and leave the difficult decisions for later. However, as the WTO membership increased (164 members to date), this strength became a major weakness. Two years ago, the Ministerial Conference in Bali made a step away from this principle with the standalone Trade Facilitation Agreement. Nairobi confirmed this trend with more deals in specific sectors and by making difficult decisions on agriculture.

What more needs to be done?

Significant efforts need to be made to complete the Doha Development Agenda. Some key questions for developing countries did not make their way to Nairobi. The SDT provision is still under contention. Not all WTO member countries, particularly the developed ones, have been able to agree on how this should be implemented, and the full range of issues, including market access negotiations on agriculture and industrial products, are far from finished.

At the beginning of the meeting, some delegations were claiming that Doha was at the “end of the line”, and that the WTO was in need of fundamental reform. There were major disagreements over the content and the timing of new issues, with developing countries favouring a conclusion of DDA prior to tackling other issues.

Finally, the parallel mega-regional negotiations remaine a spectre to the WTO. At the end of the meeting, it was unclear to what extent the WTO and the mega-regionals would be complementary.

Isabelle Ramdoo is the Deputy Head of Programme for 
Economic Transformation and Trade at the European Centre for Development Policy Management.