Developing Countries return Empty Handed from WTO’s Nairobi Ministerial
First published by Focus on the Global South
The tenth Ministerial Conference (MC10) of the World Trade Organisation (WTO) concluded today, a day after its scheduled duration. Those of us who were in Nairobi, however are still contemplating how it is possible to have a successful outcome despite the fundamental differences among members on crucial issues. How come the MC10 which was at one point on the verge of collapse sailed through? Why a country like India with a 1.2 billion population was silenced and forced to accept a BAD deal compromising its policy space and above all its sovereignty?
After a 24 hour-long non-stop marathon meeting on 19th December, the draft Nairobi Ministerial Declaration (NMD), also called the Nairobi Package, was finalised and endorsed by Members despite clear disappointment expressed by India and other developing and least developed countries (LDCs), and their ‘explicit disagreement’ on the issue of reaffirmation of Doha Development Round (DDR), one of the key issues in Nairobi. The split of opinion on the DDR is clearly reflected in the NMD text. Paragraph 30 says, “We recognize that many Members reaffirm the Doha Development Agenda (DDA), and the declarations and decisions adopted at Doha and at the Ministerial Conferences held since then, and reaffirm their full commitment to conclude the DDA on that basis. 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. We acknowledge the strong legal structure of this Organization”.
The NMD contains six decisions on agriculture, cotton and issues related to LDCs. The agricultural decisions cover commitment to abolish export subsidies for farm exports, public stockholding for food security purposes, a special safeguard mechanism for developing countries, and measures related to cotton. Decisions were also made regarding preferential treatment for least developed countries (LDCs) in the area of services and the criteria for determining whether exports from LDCs may benefit from trade preferences.
Given the vast differences among WTO members on different aspects of the agricultural negotiation during the MC10 negotiations, some of us from the civil society groups and representatives of La Via Campesina from different parts of the world were hopeful that the Ministerial would remain inconclusive and there would be a repeat of Seattle or Cancun. Given the 20 years history of WTO, we were concerned that the final outcome will be pro-US at the cost of third world interests. Our apprehensions were proved correct when the NMD was finally adopted on 19th December. The United States (US) got what it wanted at this first ever Ministerial Conference in Africa, giving nothing to Least Developed Countries (LDCs), Africans and other developing countries. After five days of hectic discussion at the MC10, more than 150 member countries of the WTO from the South had nothing to take away from here. They return empty handed from Nairobi while the US and big corporations will celebrate because they got what they wanted from the MC10. There is no permanent solution on food stockholding and no decision on special safeguard mechanisms (SSM) for developing countries. They got an extension of deadline for elimination of Exporting Subsidies, longer repayment term for export financing support (export credit). There was no-affirmation of Doha Development Round (DDR) and most importantly, language in the NMD to open discussion on the new issues (Singapore issues). Once again, the Ministerial declaration, offers a full cake to developed countries and not even a slice to developing countries. It once again vindicates our position that the WTO cannot deliver for the poor and only serves the interests of the rich.
When the Nairobi Ministerial began, no other issue except agriculture was on the agenda. GATS, NAMA and TRIPS were kept aside at Nairobi so that it concertedly delivers positive outcomes on agriculture to benefit the developing countries. But as NMD indicates there are absolutely no positive outcomes for Africa and countries of the South in the WTO.
Before Nairobi Ministerial Declaration however, only one agreement was signed, a plurilateral agreement on Information Technology Agreement 2 (ITA-2) among 53 countries–compared to 82 countries that signed ITA I. They agreed to remove tariffs on 201 information and communications technology (ICT) products by 2024 (tariffs on major products among the 201 items will be removed within three years covering 89 percent of the 201 items by trade value). The covered goods represent about 96 percent of global trade in the enumerated ICT products. India is not party to the ITA-2 since it had suffered a devastating impact of ITA-1 on its domestic electronic hardware sector. The ITA-2 will have a devastating impact on the emerging IT hardware industry in Asia, Africa and Lain America, which is offering all kinds of incentives to investors in order to promote manufacturing of IT and electronics products in their countries.
Some developing countries are also exulting that there is an agreement in the NMD on elimination of export subsidies in agriculture, but the fact of the matter is that under the Hong Kong Ministerial Declaration of 2005, developed countries were supposed to eliminate all their export subsidies by December 2013. And in Nairobi they succeeded in extending this commitment to 2020, a seven-year extension. But this exemption will not apply to “processed products and dairy products for the Members who have notified export subsidies for such products or categories of products in their latest notification on export subsidies to the Committee on Agriculture”. It is the processed products and dairy products from the US and EU that are increasingly penetrating into the markets of developing countries and devastating local food industries. Hae-Yeon Chung of the Korean Peasants League said “poor farmers have nowhere to sell their farm produce while their industries continue to close shop, sending their workers home because processed foodstuffs are flooding supermarket shelves across the world. Our products cannot compete with the processed foodstuffs from Europe and America since they have been priced so low”. Peasants from Korean Peasants League (KPL) and La Via Campesina (LVC) from different parts of the world marched on the streets of Nairobi every day protesting against the WTO. Their key slogans were “Agriculture is not your trade, it is our life. Our life is not for trade. #ENDWTO. Remove WTO out of Agriculture.”
Losses for Developing countries and Agriculture at the MC10
No decision on a Permanent Solution to the Food Stockholding programme: The General Council Decision of 27th November 2014 reaffirmed that WTO members will make all concerted efforts to agree and adopt a permanent solution on the issue of public stockholding for food security purposes by 31 December 2015. But the NMD Decision on Public Stockholding (WT/MIN(15)/W/46) offers only pious intent to find a solution, thus ignoring the issue of right to food for poor consumers and price support to the subsistence farmers which is the backbone of food security programme in countries like India. At MC10, the issue of a permanent solution was the most neglected issue and no serious efforts were made to secure this at any cost despite the fact that not only India, but several African countries like Tunisia, Zambia, Zimbabwe, Morocco, Egypt and Kenya, all have public food stockholding programmes in maize.
No final decision on Special Safeguard Mechanisms (SSM): This was a key demand under special and differential treatment (S&DT) from the G33 in order to protect their food producers from import surges. But this has again been ignored in Nairobi. Though the Decision on SSM (WT/MIN(15)/W/45) in the NMD says the developing country members will “have the right to have recourse” to a special safeguard mechanism “as envisaged under paragraph 7 of the Hong Kong Ministerial Declaration” that means it will be based on import quantity and price triggers.
But paragraph 2 of the Decision on SSM indicates that the decision on SSM is not final. It says “pursue negotiations on an SSM for developing country Members in dedicated sessions of the Committee on Agriculture in Special Session (“CoA SS”)”.
The developed countries are blocking this basic safeguard for developing countries even though they themselves have access to similar mechanisms such as special agriculture safeguard measures (SSG), which allows them to increase tariffs on imported products in order to protect their domestic food producers and stablize prices in their own countries. They also have access to several other mechanisms, which act as effective safeguards against imports, such as Tariff Peaks, Tariff Rate Quotas (TRQs) and Non Tariff Barriers (NTBs). But the US, EU, Canada and Australia are not ready to allow access to SSM to developing countries, despite several reported cases of import surges in the past. According to the Food and Agriculture Organisation (FAO), Kenya had experienced import surges of maize, sugar, and dairy. Similar surges were experienced in rice, tomato paste, and poultry in Ghana; poultry, rice, and vegetable oils in Cameroon; rice and dairy products in Tanzania; poultry and vegetables oils in Mozambique; and rice, poultry, and sugar in Côte d’Ivoire. Haiti is a classic example where US imports of rice led to complete devastation of rice cultivation in Haiti prompting Former US President Bill Clinton to apologize to Haitians in 2011, when he became the UN Special Envoy to Haiti, “I have to live every day with the consequences of the lost capacity to produce a rice crop in Haiti to feed those people, because of what I did. Nobody else”.
Between 1980 and 2003, FAO found that there were between 7,132 to 12,167 import surges of 23 ‘food groups’ in 102 developing countries. This shows that more countries are moving from being net food exporting countries to becoming food deficit or net food importing countries. The increase in import bills without any apparent respite has led to deepening current account deficits in these countries. The cost of the food imports basket for the LDCs in 2007 was roughly 90 percent more than what it was in 2000. This is in contrast to a 22 percent increase in the cost of food imports in developed countries during the same period. The world’s food import bill stood at $745 billion in 2007, up by 21 percent from 2006, and out of which developing countries footed $233 billion.
No Relief to Cotton four (C4) countries on Cotton: The NMD Decision on cotton (WT/MIN(15)/W/48) provides some relief to the C4 countries but much below their expectation based on their proposal submitted before Nairobi Ministerial on 12 October 2015. The cotton sector is the second largest formal employer in Benin, Burkinsa Faso, Chad, and Mali and almost one million farm unions provide employment to seven to eight million actively farming adults and livelihoods to some 10 to 13 million people. But these countries face major challenge in marketing their produce because of restricted access and the heavy subsidies by the US to their cotton growers.
The NMD Decision on cotton does not provide binding commitments but only best endeavour outcomes, e.g. on Market access, the Decision calls for cotton from LDCs to be given duty-free and quota-free access to the markets of developed countries – and to those of developing countries declaring that they are able to do so – from 1 January 2016. The domestic support part of the cotton decision acknowledges members’ reforms in their domestic cotton policies and stresses that more efforts remain to be made. On export competition for cotton, the decision mandates that developed countries prohibit cotton export subsidies immediately and developing countries do so at a later date.
Agricultural Subsidies (Domestic Support): It is quite surprising that post Doha, this is the first Ministerial where there was no discussion about cutting down massive trade-distorting farm subsidies offered by developed countries which affect the market internationally.
Despite the completely biased deal in favour of developed countries, none from African countries, the LDCs and other developing countries came out openly against the dictates of the US to turn the whole deal in their favour. There was some discomfort among few developing countries members on the draft Ministerial Declaration, because it did not commit reaffirmation of the Doha Development Agenda (DDA). They were also upset that the NMD did mention the possibility of new issues being introduced.
The MC 10 will be remembered as the graveyard of the Development agenda under the Doha Round. And it will also be remembered as the conference where members agreed to bring on board new issues that they themselves buried in Cancun in 2003. The Nairobi Ministerial Conference outcomes warrant that developing countries should join hands to leave the WTO and bury the WTO forever
Afsar Jafri