10th WTO Ministerial Focuses on LDCs

The 10th WTO Ministerial Conference, held in Nairobi, Kenya from December 15-19, concluded with six ministerial decisions of significance for developing countries, particularly LDCs. Four decisions revolve around agricultural trade and require clear commitments for both developed and developing countries; an additional two decisions focus solely on benefits for LDCs. Despite what some are calling a “historic” trade package, however, the future of the WTO’s Doha Development Agenda remains uncertain.

In terms of agriculture, the centerpiece of the Nairobi Package is the elimination of agricultural export subsidies. Developed country members made a direct commitment to eliminate export subsidies immediately, with the exception of a few agricultural products; subsidies on some of the most sensitive products, such as processed foods, dairy products, and meat, must be phased out by 2020. Developing countries were granted more time; they have until 2023 to remove their subsidies, with Least Developed Countries (LDCs) and net food-importing countries having until 2030 to meet their commitments.

An elimination of agricultural export subsidies is good news for poorer nations, since increased subsidy use can displace agricultural production in low- and middle-income countries. WTO Director General Roberto Azevêdo described the decision as historic, saying, “WTO members — especially developing countries — have consistently demanded action on this issue due to the enormous distorting potential of these subsidies for domestic production and trade.” The decision also takes steps to ensure that other export policies, such as export credits and non-emergency food aid, are not used as a substitute for subsidies.

The Nairobi Package also reaffirms the Bali Agreement’s “peace clause” concerning public food stockholding programs; this clause allows developing countries to continue such programs for food security purposes until a permanent solution is found at the 11th Ministerial Conference in 2017.

The final agricultural agreements in the Nairobi Package concern a controversial special safeguard mechanism that, if approved, would give developing countries the right to temporarily increase duties when import prices fall or when they experience a surge in imports, and a decision to grant LDCs duty-free, quota-free access to developed countries’ cotton markets. (For further analysis regarding all of these agricultural decisions, see “10th WTO Ministerial Conference Aims to End Agricultural Export Subsidies”.)

Regarding decisions that deal specifically with LDCs, the Nairobi Package addresses preferential rules of origin to make it easier for LDC exports to qualify for preferential market access in both developed and developing countries. This decision expands upon the rules set forth in the Bali Agreement by providing guidance as to who to determine when a product qualifies as being made in an LDC and when inputs from other sources can be taken into consideration in terms of a product’s origin. The Nairobi decision calls for preference-granting countries to allow the use of non-originating materials (i.e., materials from sources other than LDCs) up to 75 percent of the final value of the exported product. If these allowances are made, Africa south of the Sahara could be a major beneficiary, as this region comprises a majority of the world’s LDCs (with several important countries in the region not falling into the LDC category).

Finally, the decision was made to extend the existing waiver period in which non-LDC countries can grant preferential treatment to LDC services and service suppliers; the new extension will take the waiver period until December 2030. This decision also encourages members to engage in discussions regarding technical assistance to LDCs’ service sectors.

Despite the focus placed on LDCs in all of these decisions, however, one agreement was noticeably lacking – an agreement regarding the Doha Development Agenda. DG Azevêdo acknowledged this failure to conclude the long-delayed Doha Round, highlighting members’ fundamentally differing views on how to proceed with future Doha negotiations. This inability to reach a compromise on the Doha Agenda could negatively impact both Africa, in terms of the region’s sustained economic growth, and the WTO itself, in terms of its success as a true multilateral organization, as pointed out in pre-conference op-ed by Amina Mohamed, Cabinet Secretary for Foreign Affairs and International Trade and chairman of the Nairobi Conference.

Of particular importance was the meeting’s failure to address domestic agricultural support policies. Many developing countries view the domestic support policies of developed countries as unfair competition for poor producers in developing countries, who must contend with those subsidized products in their own domestic markets.

By: Sara Gustafson, IFPRI

Photo credit:Flickr: WTO