Brussels, 21/12/2015 (Agence Europe) - The 162 countries of the World Trade Organization (WTO), meeting last week at the 10th ministerial conference in Nairobi, thrashed out a last minute agreement on Saturday 19 December on the agricultural section of the Doha Round, deciding that developed countries will get rid of subsidies for farm exports immediately, that developing countries will phase them out by the end of 2018 (though maintaining some flexibility until the end of 2023) and the least developed countries (LDCs) will have until the end of 2030 to remove them.
Ministers were unable, however, to reach any agreement on the future of the multilateral work of the WTO post-Nairobi. Discussions on this issue will begin in Geneva from the start of 2016.
Significant outcome. “I am pleased with the package we have concluded. It will contribute to the growth of all developing countries, including the LDCs, the small vulnerable economies and Cotton 4 (Benin, Mali, Chad and Togo). We have also been successful in renewing the multilateral system. We are ready to work hard over the next two years so that we can do more at the next ministerial conference than we have done today”, Kenyan Minister for Foreign Affairs and Trade Amina Mohamed, who chaired the conference, told the press after the closing ceremony.
“This is the WTO's most significant outcome on export competition in agriculture. It includes the ending of export subsidies that many member countries have long been calling for”, commented WTO Director General Roberto Azevedo.
Phased programme. The Nairobi package comprises three ministerial decisions on the agricultural section of the Doha Round: a decision on export competition, one on public stockholding for food security purposes and one on the special agricultural safeguard mechanism for developing countries.
By virtue of the ministerial decision on expert competition, developed countries will remove export subsidies “immediately” and developing countries will have to end theirs by the end of 2018, or the end of 2023 for some, including India, under the flexibility allowed by Article 9(4) of the WTO agreement on agriculture. The LDCs and developing countries which are net importers of foodstuffs will have until the end of 2030 under the provisions of Article 9(4).
A few developed countries - Switzerland, Canada and Norway - will have until 2020 to get rid of export subsidies for processed products, and dairy and pigmeat products but the export subsidies will have to be removed immediately if these products are exported to LDCs.
United States spared. However, this decision is less far-reaching on removing measures with equivalent effect to export subsidies (export credits, the activities of state-owned trading companies and international food aid). The decision on export credits is most accommodating for the United States, setting, as it does, a maximum repayment term of 18 months.
The decision states that those countries which have state trading enterprises (STE) that export agricultural products must ensure that the STEs “do not operate in a manner that circumvents any other disciplines contained in this Decision”. These countries must “make their best efforts to ensure that the use of export monopoly powers by agricultural exporting state trading enterprises is exercised in a manner that minimises trade distorting effects and does not result in displacing or impeding the exports of another Member”.
With regard to food aid, the decision does not provide for any monetisation ceiling.
Examination of Indian demands. The decision on the special safeguard mechanism (SSM) called for by the developing countries of the G33, led by India, China and Indonesia, that would allow the countries of this group temporarily to increase their customs duties in the event of a sudden surge in agricultural imports, states that the developing member countries “will have the right to have recourse to (this mechanism) as envisaged under paragraph 7 of the Hong Kong Ministerial Declaration”. Negotiations on this mechanism will continue in Geneva within the WTO agricultural negotiations committee.
With the decision on exemptions for public stockholding for food security purposes, a mechanism also called for the by G33 group of developing countries, and in particular India, the member countries pledge to “engage constructively to negotiate and make all concerted efforts to agree and adopt a permanent solution” on this interim mechanism put in place at the Bali conference.
New package for LDCs. In addition to the decisions on agriculture, the Nairobi package includes two decisions of specific benefit to LDCs: one enhancing preferential rules of origin for LDCs, allowing the use of non-originating materials up to 75% of the final value of the product, and the other granting preferential treatment for LDC services providers and increasing LDC participation in the global trade in services.
This package also includes a decision on cotton, including the removal of export subsidies - with immediate effect for developed countries and by 1 January 2017 for developing countries - and duty-free and quota-free market access for LDC exports from 1 January 2016.
“This is an extremely significant result, which will strengthen the position of the LDCs in the multilateral trade system” said Azevedo
Uncertain future. “Success was achieved here despite members' persistent and fundamental divisions on our negotiating agenda - not because those divisions have been solved. We have to face up to this problem. Members must decide - the world must decide - about the future of this organisation”, he added.
The 162 member countries of the WTO - soon to be 164 with the official accession this week in Nairobi of Liberia and Afghanistan - did not manage to come to agreement on the future of the Doha Round or on the post-Nairobi multilateral work programme.
The developing countries, led by India, restated their firm desire to continue Doha Round negotiations within the framework of the negotiating mandate set in 2001, even if it were to bring only modest progress. The developed countries, with the United States and the EU at the forefront, did not reaffirm the Doha mandate, calling for new approaches (such as plurilateral talks) to discuss (in addition to the Doha Round issues of agriculture, industry, services and rules) new issues, such as investment, non-tariff barriers, public procurement, e-commerce, energy and more.
New issues. Part three of the Nairobi statement acknowledges that many member countries are fully committed to concluding the Doha Round but that “other Members do not reaffirm the Doha mandates, as they believe new approaches are necessary to achieve meaningful outcomes in multilateral negotiations”. “Members have different views on how to address the negotiations”, the text says.
“Nevertheless, there remains a strong commitment of all Members to advance negotiations on the remaining Doha issues. This includes advancing work in all three pillars of agriculture, namely domestic support, market access and export competition, as well as non-agriculture (Ed: industrial goods) market access, services, development, TRIPS and rules”, the text continues. “Some wish to identify and discuss other issues for negotiation; others do not. Any decision to launch negotiations multilaterally on such issues would need to be agreed by all Members”, it states.
Deep differences within the G-5. The agricultural agreement reached on Saturday was the result of intense negotiations within the group of the world's five main economies - Brazil, China, India, the United States and the EU - which have such differing interests but which managed to overcome their differences so as not to derail the first WTO ministerial conference to be held on African soil. In addition to the divergent views of India and the United States on export competition, several sources reveal that discussions laid bare deep disagreement between India and Brazil, which, as the main Latin American agricultural exporter, was unhappy over the special safeguard mechanism.
US representative Mike Froman, who had led the charge against the Doha Round in the run-up to the conference, said that, while there remained differing views within the WTO, a path had been cleared in Nairobi for a new era for the WTO.
Indian Trade Minister Nirmala Sitharaman expressed her “deep disappointment” and said she had “strongly protested” over the failure of the member countries to re-affirm the desire to conclude the Doha Round - a desire expressed by a large section of the developing countries, including most of the G-33, the LDCs, the African Group and the ACP countries, she pointed out. She was pleased, however, to have won a commitment seeking to allow developing countries to use the SSM and also the restatement of previous decisions on public stockholding.
Good agreement for the EU. Speaking on behalf of the EU, Trade Commissioner Cecilia Malmström expressed her pleasure that “the WTO, meeting for the first time in Africa, has been able to deliver a good deal for developing countries”. “Today's decision opens real opportunities for more trade and investment and reinforces the global trading system”, she added.
“This is a square deal for EU agriculture, for farmers in the developing world, in particular for the least developed countries. We have delivered on our objectives outlined ahead of the negotiations. In recent years, the EU has led the way in agreeing to renounce the use of export subsidies. Now, for the first time, there are binding disciplines on subsidies such as export credits, where our competitors are subsidising trade worth billions every year. These new binding controls will level the playing field for EU exporters. Also, our competitors will not be able to circumvent these rules through use of state trading enterprises”, said Agriculture Commissioner Phil Hogan. (Original version in French by Emmanuel Hagry)