MC10, the Stubbornness of Developed Economies

Introduction

 

The 10th Ministerial Conference (MC10) of the World Trade Organization (WTO) was held in Nairobi (Kenya) in December 2015. The Ministerial Conference is the highest decision-making body of the WTO and has competence on all matters under any of the multilateral trade agreements. For the first time, the Ministerial Conference has met in an African country. This fact had raised many expectations among developing economies and especially the least developed countries (LDC). However, the expectation has fallen into disillusion because of the lack of scope of the final resolution, the so-called "Nairobi Package".

 

The MC10 has shown once again the big divergences between developed and developing economies. The difficulties of the WTO's multilateral trading system have been evident; moreover, developed economies are concerned about the regional trade agreements in Africa and other regions around the world which could reduce the role of the WTO in the commercial trading system.

 

Doha Development Agenda

 

During the MC10, the developing countries and especially the LDC have insisted on compliance with the Doha Development Agenda (DDA), the outcome of the 2001 WTO meeting. This agreement was very positive for the developing countries in that it tried to liberalize world trade on the one hand and on the other hand to improve the trade conditions of developing countries regarding the agricultural goods trade. In this sense, African countries would enjoy better access to the developed countries’ markets without any tariffs or duty customs.

 

Meanwhile, developed countries accepted in the DDA the commitment to eliminate, directly or indirectly, export subsidies on agricultural products. However, this has not happened yet - in spite of many announcements. The developed countries, including the European Union, insist on having greater access to developing countries’ markets, with lower tariffs for their products, and this has a negative impact on developing economies.

 

The lack of commitment in these matters has provoked disenchantment for the developing countries’ negotiators and has moved developed countries to negotiate other aspects which are easier to understand. Both sides are called to dialogue, though it seems that they have completely different interests: developed economies trying to penetrate developing markets and developing economies trying to protect their economies from interference and disruptive measures that distort the market. 

 

Despite few agreements being reached during the MC10, there was discussion of major issues such as the search for consensus on the continuation of the DDA as well as new guidelines for determining the Rules of Origin and LDC issues, the ratification of the Trade Facilitation Agreement and the adoption of the Information Technology Agreement.

 

The “Nairobi Package” and Africa

 

In general terms it could be said that the issues of the “Nairobi Package” with relevance for African countries are very limited. The Package underlines the commitment of developed economies to eliminate subsidies on the export of agricultural products. These subsidies distort the competitiveness of agricultural goods in African countries. The EU announced two years ago it would eliminate such subsidies, but there still remain many other economic subsidies to European agriculture that distort the agricultural market in Africa.

 

African countries, in particular the LDCs, have not found political support for their food storage policy which is very important to the population of these countries. This storage policy allows developing countries to address potential food crises and ensure the poorest have access to basic food at a reasonable price. The Nairobi Package has postponed the debate on this matter to next Ministerial conference in 2017.

 

The MC10 made progress with the guidelines used to determine when a product can be considered as "made in an LDC". These ‘Preferential Rules of Origin’ established concrete measures that make it easier to export products that have been produced wholly or partly in LDCs that have preferential access to developed markets. They allow a product to be considered “made in an LDC” even if 75% of its value is made in other countries. This is called ‘cumulation’. The Nairobi Package outlines requirements for preference-granting countries in areas such as the determination of substantial processing, ‘cumulation’, the simplification of documentary requirements, flexibilities and transparency.

 

There has been little progress regarding the ‘LDC Services Waiver’ in the Nairobi Package. Many outstanding issues remain without specific arrangements despite the reduction of administrative processes, fees for visas, work and residence permits, licenses for LDC services supplies, and the request for additional clarification of the term “preferential treatment”.

 

Conclusion

 

Although other agreements have been reached at the MC10, such as trade facilitation agreements, the adoption of the Information Technology agreements and new commitments to the Enhanced Integrated Framework (EIF), most of the relevant issues for African countries have been neglected. For many, though, the Ministerial Conferences of the WTO are still a valid instrument through which global trade agreements can be achieved.

 

These agreements provide legal certainty and are a vehicle for the progress of developing countries through trade. However, the ambition of developed countries to obtain short-term benefits, the insensitivity of the negotiators obeying unwritten orders from their governments, and the lack of strategy on the part of developing countries stifle new opportunities for these nations. And what is more important, they forget that behind the LDCs there are millions of people living below the poverty line fighting for survival. 

 

José Luis Gutiérrez Aranda

AEFJN Advocacy Office Trade