WTO ministerial meeting

Mid-December 2011 saw the eighth WTO ministerial conference coming to an end with no end in sight for the conclusion of the Doha Development Agenda.

However, it was also a historic meeting in that Russia, Samoa and Monte Negro were formally accepted to the WTO and for the clinching of a 42-country deal that would liberalise billions of dollars in public contracts.

It is widely accepted that the disagreements between developed countries such as the US and EU and major emerging economies such as Brazil, China and India on non-agricultural and agricultural market access put the 10-year-old Doha negotiations on hold. Due to the Doha Round’s current difficulties, much of the trade dialogue has turned toward ensuring the WTO’s continued relevance in the multilateral trading system.

The option of introducing new issues into the global trade body to address emerging challenges – such as climate change, food security, trade and exchange rates, and energy – has been suggested by some members as one such way of keeping the global trade body current and credible.

However, there was no agreement on this issue as some members had reservations about starting on new issues as they felt that the old issues would be dropped, although the Director General of the WTO said that the new issues would not be not negotiated, unless the members consensually agree on the mandate of negotiations.

The frustrations of a seemingly never-ending round of negotiations has created yet another problem in that there is now a fear that the multilateral trading system could be seriously weakened if some members give up on the Doha Round, which includes everyone, and try to negotiate a series of deals among a few likeminded members. Although the big deal could not be concluded and no one attended the meeting with optimism that the round would be concluded, there were some important issues which had been discussed in depth as to be included in the final statement of the Chair. The Chair’s statement noted that many ministers had urged their counterparts to commit to a ‘standstill’ on all forms of protectionism. Many ministers had also urged their counterparts to agree not to impose export restrictions on food aid purchased by the World Food Programme – echoing the language of an accord amongst heads of state from the G-20 group of major economies at their Cannes summit in November.

Also on food security, the Chair’s statement reflected support amongst some ministers for a work programme on trade and food price volatility and its impact on LDCs and net food-importing developing countries  An important decision taken at this meeting was that the ministers agreed to a waiver that makes it possible for members wishing to grant least developed countries greater access to their services markets, even if it means deviating from the most-favoured-nation principle.

For a decade, LDCs have maintained that WTO members should be allowed to treat services and service suppliers from the poorest countries more favourably than those of other nations. To achieve that aim, they needed to convince the membership to waive one of the core principles of the multilateral trading system: The obligation to treat all members equally. While countries may discriminate between least developed countries and the rest of the membership, all preferences must be extended to the entire LDC group. The waiver also provides the possibility for preferences to be conferred beyond just market access measures, although such preferences would need to be approved ex-ante by the Council for Trade in Services. Touching on the potential value for LDCs, International Lawyers and Economists Against Poverty (ILEAP) Executive Director David Primack had suggested that the waiver itself was merely a mechanism that had little substantive value in its own right.

Its potential value, he had argued, will depend on how well LDCs can assess how and where the preferential treatment could confer enough of a commercial advantage for their service providers to expand into new markets, as well as the political will of preference-granting countries to offer meaningful concessions in areas of interest to the recipients.

Should these conditions converge, he added, the potential for the waiver to catalyse essential investments in LDC services sectors could be significant.

It is important to note that among the LDCs, there are many countries even in the SAARC region which could with this waiver penetrate markets which have not been accessed by them so far but have been penetrated by developing countries such as Sri Lanka.

The ministerial decision on LDC accession commits WTO members to develop market opening benchmarks by July 2012. With regard to goods, the benchmarks are likely to be based on the average post-accession tariff level of existing LDC members.

For services liberalisation, benchmarks will be considerably harder to determine. However, factors such as the existing level of openness in the candidate country, the number of services sectors covered, and the regulatory effort required are under consideration.

Ministers also adopted decisions on electronic commerce, TRIPS non-violation complaints, and a work programme on small and vulnerable economies. Although the above mentioned important decisions were taken at the Ministerial meeting, it appears that the negotiations on the Doha Round will keep on chugging along indefinitely till all lose interest in it.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)