By Roberto Azevêdo
GENEVA, Jan 22 2016 (IPS)

In 2015 the international community took some huge strides forward on a number of vital issues.

There was the agreement on the United Nations new Sustainable Development Goals.

There was the remarkable breakthrough in Paris in the fight against climate change.

Roberto Azevêdo

And, late in December, at the World Trade Organization (WTO) ministerial conference in Nairobi, members agreed a set of very significant results. In fact, they delivered some of the biggest reforms in global trade policy for 20 years.

We must seek to capitalise on this progress in 2016.

Let me explain in a bit more detail what was delivered in Nairobi.

The Nairobi Package contained a number of important decisions ­ including a decision on export competition. This is truly historic. It is the most important reform in international trade rules on agriculture since the creation of the WTO.

The elimination of agricultural export subsidies is particularly significant in improving the global trading environment.

WTO members ­ especially developing countries ­ have consistently demanded action on this issue due to the enormous trade-distorting potential of these subsidies. In fact, this task has been outstanding since export subsidies were banned for industrial goods more than 50 years ago. So this decision corrected an historic imbalance.

Countries have often resorted to export subsidies during economic crises ­ and recent history shows that once one country did so, others quickly followed suit. Because of the Nairobi Package, no-one will be tempted to resort to such action in the future.

This decision will help to level the playing field in agriculture markets, to the benefit of farmers and exporters in developing and least-developed countries.

This decision will also help to limit similar distorting effects associated with export credits and state trading enterprises.

And it will provide a better framework for international food aid ­ maintaining this essential lifeline, while ensuring that it doesn’t displace domestic producers.

Members also took action on other developing-country issues, committing to find a permanent solution on public stockholding for food security purposes, and to develop a Special Safeguard Mechanism.

And members agreed a package of specific decisions for least developed countries, to support their integration into the global economy. This contained measures to enhance preferential rules of origin for these countries and preferential treatment for their services providers.

And it contained a number of steps on cotton ­ helping low-income cotton producers to access new markets.

Finally, a large group of members agreed on the expansion of the Information Technology Agreement. Again, this was an historic breakthrough. It will eliminate tariffs on 10 per cent of global trade ­ that’s 1.3 trillion dollars worth of trade, making it the WTO’s first major tariff cutting deal since 1996.

Altogether, these decisions will provide a real boost to growth and development around the world.

This success is all the more significant because it comes so soon after our successful conference in Bali that delivered a number of important outcomes, including the Trade Facilitation Agreement. (TFA)

The TFA will bring a higher level of predictability and transparency to customs processes around the world, making it easier for businesses ­ especially smaller enterprises ­ to join global value chains.

It could reduce trade costs by an average of 14.5 per cent – with the greatest savings being felt in developing countries.

The Agreement has the potential to increase global merchandise exports by up to 1 trillion dollars per annum, and to create 20 million jobs around the world.

That’s potentially a bigger impact than the elimination of all remaining tariffs.

So the challenge before us is very significant.

For instance, during or the last two years, we have been trying to reinvigorate the Doha agenda on development, exploring various ways of overcoming the existing difficulties. We tested different alternatives over several months of good engagement, but the conversations revealed significant differences, which are unlikely to be solved in the short term.

But the challenge is not limited only to the question of what happens to the Doha issues, it is about the negotiating function of the WTO. It is about what members want for the future of the WTO as a standard and rule-setting body. And the challenge is urgent.

The world won’t wait for the WTO. Other trade deals will keep advancing.

The wider the gap between regional and multilateral disciplines, the worse the trade environment becomes for everyone, particularly businesses, small countries and all those not involved in major regional negotiations.

But the outlook is not bleak. I said at the outset that 2016 was full of promise. I truly believe that ­ because, while we face real challenges, there are also real opportunities before us.

(End)

Excerpt:

The failure of the two major players in global trade negotiations to bridge their differences has put paid to the adoption of the protocol of amendment for implementation of the contested Trade Facilitation Agreement (TFA) for the time being. 

India and the United States failed Thursday at the World Trade Organization (WTO) to reach agreement on construction of a legally binding decision on a “permanent peace clause” that would further strengthen what was decided for public distribution programmes for food security in developing countries at the ninth ministerial meeting in Bali, Indonesia, last year.New Delhi made its choice clear to Azevedo: either members [of the WTO] agree to a permanent solution for food security or postpone adoption of the TFA protocol until there are credible outcomes on all issues, by the end of the year.

The Bali decision on food security was one of the nine non-binding best endeavour outcomes agreed by trade ministers on agriculture and development.

For industrialised and leading economic tigers in the developing world, the TFA – which would harmonise customs procedures in the developing world on a par with the industrialised countries – is a major mechanism for market access into the developing and poorest countries.

WTO Director-General Roberto Azevedo, who had put all his energies over the last seven months into ensuring the timely adoption of the TFA protocol by July 31 as set out in the Bali ministerial declaration, was clearly upset with the failure to adopt the protocol.

“The fact we do not have a conclusion means that we are entering a new phase in our work – a phase which strikes me as being full of uncertainties,” Azevedo told the delegates at the concluding session of the General Council, which is the highest WTO decision-taking body between ministerial meetings.

The Bail ministerial declaration was adopted at the WTO’s ninth ministerial meeting in December last year. It resulted in a binding multilateral agreement on trade facilitation along with non-binding outcomes on nine other decisions raised by developing and poorest countries, including an interim solution on public distribution programmes for food security.

The developing and poorest countries remained unhappy with the Bali package even though their trade ministers endorsed the deal. The countries of the South resented what they saw as the “foster parent treatment” accorded to their concerns in agriculture and development.

While work on clearing the way for the speedy implementation of the TFA has preceded at brisk pace at the WTO over the last seven months, other issues were somewhat neglected. Several African and South American countries, as well as India, remained unhappy with the lack of progress in issues concerning agriculture and development, particularly in public distribution programmes for food security.

Last week, India fired the first salvo at the WTO by declaring that unless there are “credible” outcomes in the development dossier of the Bali package, including a permanent solution for food security, it would not join the consensus to adopt the TFA. Bolivia, Venezuela and Cuba shared India’s concerns.

Despite concerted political lobbying by leading U.S. administration officials and envoys from Western countries in New Delhi to change its stand, the Indian government informed the WTO director-general Wednesday that it wanted a substantive outcome on food security, without which it would oppose the TFA protocol.

Without bringing India and the United States into a face-to-face dialogue at the WTO, Azevedo held talks with the representatives from the world’s two largest democracies in a one-on-one format.

According to sources familiar with the WTO’s closed-door consultations, Azevedo informed India that its demand for a substantive outcome on food security would not be acceptable to members because they would not approve “re-writing” the Bali ministerial declaration.

New Delhi made its choice clear to Azevedo: either members agree to a permanent solution for food security or postpone adoption of the TFA protocol until there are credible outcomes on all issues, by the end of the year.

“India’s position remains the same,” New Delhi trade minister Nirmala Sitharaman told reporters after a meeting with the U.S. Commerce Secretary Penny Pritzker Thursday.

Given the importance of TFA for U.S. business interests, Washington yielded some ground by agreeing to a compromise, but the two sides were stuck on legal aspects, particularly on how this should be adopted at the General Council.

The result Thursday was that the differences between the two led to an adjournment of the General Council without the TFA protocol.

“We have not been able to find a solution that would allow us to bridge that gap,” the WTO director-general told members.  “We tried everything we could … but it has not proved possible,” Azevedo said.

“We are absolutely sad and disappointed that a very small handful of countries were unwilling to keep their commitments from the December conference in Bali and we agree with the director-general that the failure has put this institution on very uncertain ground,” U.S. deputy trade representative Ambassador Michael Punke told reporters.

Brazil’s trade envoy Marcos Galvao suggested that it would be possible to reinvigorate the talks despite the failure Thursday. “When we come back in September, we can come forward with the Bali package and the whole work programme,” Galvao told IPS.

In New Delhi, U.S. Secretary of State John Kerry said “our feeling is obviously that the agreement that was reached in Bali is an agreement that importantly can provide for food security for India.”

“We do not dismiss the concerns India has about large numbers of poor people who require some sort of food assurance and subsistence level, but we believe there’s a way to provide for that that keeps faith with the WTO Bali agreement,” Kerry maintained.

Credible and permanent rules for food security are vital for developing countries to continue with their public distribution programmes to address livelihood security.

“The programme enables governments in the developing countries to put more money in the hands of the poor farmers by buying their crops at stable and higher price, and use those government purchases to feed the hungry – many of those same farm families – with free or subsidised food distributions,” said Timothy A. Wise, an academic with the Global Development and Environment Institute at the U.S. Tufts University.

Several developing and poorest countries – Zambia, Ghana, Malawi, Senegal, Kenya, Nigeria, Egypt, Morocco, Tunisia, Botswana, Sri Lanka, Bangladesh, Nepal, Jordan, India, and Saudi Arabia – are currently implementing food security programmes for different food articles.

The Bali package involves nine issues in addition to the TFA and they need to be addressed “on an equal footing,” Nelson Ndirangu, Kenya’s senior trade official told IPS. “I’m sympathetic to India’s stand and I agree that all issues, including a permanent solution for food security, must be addressed along with the TFA,” said Ndirangu.

(Edited by Phil Harris)

By Roberto Azevêdo
GENEVA, Jul 29 2014 (IPS)

In the 1960s, there were high hopes for the development of the newly-independent sub-Saharan African countries but these hopes were quickly dashed following a series of shocks which began in the mid-70s, with the first oil price spikes, followed by a severe decline in growth and increase in poverty in the 80s and early 90s. However, by the mid-1990s, economic growth had resumed in certain African countries. Economic reform, better macroeconomic management, donor resources and a sharp rise in commodity prices were having a positive effect.

WTO Director General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

In the 2000s, many African countries witnessed high economic growth performance and during that period some of the world’s fastest growing economies were in sub-Saharan Africa. Angola, Nigeria, Chad, Mozambique and Rwanda all recorded annual growth of over 7 percent.

In 2012 Africa’s exports and imports totalled 630 billion dollars and 610 billion dollars respectively, ­ a fourfold increase since the turn of the millennium. And the long term prospects for growth are good. The Economist Intelligence Unit has forecast average growth for the regional economy of around 5 percent yearly from 2013-16.

Despite all this, the continent still plays a marginal role in the global market, accounting for barely 3 percent of world trade. One significant reason – although, of course there are others – is that African economies are still narrowly based on the production and export of unprocessed agricultural products, minerals and crude oil.“There is little doubt that the regional [African] market offers good scope for African firms to diversify their production and achieve greater value addition”

Now, due to relatively low productivity and technology, these economies have low competitiveness in global markets – apart from crude extractive products. The low productivity of traditional agriculture and the informal activities continue to absorb more than 80 percent of the labour force. And growth remains highly vulnerable to external shocks.

This story of half a century of struggle, set-backs and progress shows two things:

One, the road to meaningful and inclusive development still seems long.

Two, we are in a better position than ever to make real, sustainable progress.

Many countries are striving to do more in turning their strength in commodities into strengths in other areas,­ using commodities as a means of spurring growth across various sectors. The United Nations Economic Commission for Africa’s 2013 Economic Report echoes this ­ calling for the continent’s commodities to be used to support industrialisation, jobs, growth and economic transformation.

In line with this, I think there are a number of essential steps to take:

– diversification of economic structure, namely of production and exports;

– enhancement of export competitiveness;

– technological upgrading;

– improvement of the productivity of all resources, including labour; and

– reduction of infrastructure gaps.

Only by delivering in these and other areas can policymakers ensure that growth enhances human well-being and contributes to inclusive development. But how can we take these steps?

Of course I should say that although African countries share some common features, no unique set of policies, including those on trade and industrial policy, could ever fit for all in a uniform way. Even among the least-developed countries (LDCs), some are already exporters of manufactured products, although often they rely on a single product  while others are more dependent on commodities. Nevertheless, I think it is clear that some preconditions of success are universal.

African regional integration is of course very high on the policy agenda. There is little doubt that the regional market offers good scope for African firms to diversify their production and achieve greater value addition. Already now, manufactures constitute as much as 40 percent of intra-African exports, compared with 13 percent of Africa’s exports to the rest of the world.

The Bali Package, which World Trade Organisation members agreed in December last year, will help to resolve some problems. Inclusive, sustainable development was at the heart of the whole Bali project ­ and our African members played a crucial role in making it a success. It brought some progress on agriculture. It delivered a package to support LDCs. It provided for a Monitoring Mechanism on special and differential treatment.

And, in addition, Bali delivered the Trade Facilitation Agreement and this is a direct answer to some of the problems of fragmentation. Costly and cumbersome border procedures, inadequate infrastructure and administrative burdens often raise trade-related transaction costs within Africa to unsustainable levels, creating a further barrier to intra-African trade.

This Agreement will help to address some of these bottlenecks. It will support regional integration, and therefore complement the African Union’s efforts to create a continental free trade area. And it will begin to remove some of the barriers which prevent full integration into global value chains. As such it will create an added impetus for industrialisation and inclusive sustainable development.

And it is worth noting here that the Trade Facilitation Agreement broke new ground for developing and least-developed countries in the way it will be implemented.

Another vital issue here is the importance of agricultural development in industrialisation, and the role of industrial collaboration through regional cooperation. The contribution of the agriculture sector is of utmost importance for the establishment of a sound industrial base. It can provide a surplus to invest in industrial capacity building, and supply agricultural raw materials as inputs to the production process, especially for today’s highly specialised food processing industry.

Moreover, it can also significantly contribute to industrialisation by providing an ample supply of food products. This is because food constitutes a large share of what wage earners in African countries spend their money on. Its availability at low prices contributes to increase the purchasing power of wages, and therefore raise the competitiveness of a country in international markets. (END/IPS COLUMNIST SERVICE)

Excerpt:

A group of developing countries brought a tectonic shift at the World Trade Organization on Friday by turning the tables against the industrialised countries, when they offered a positive trade agenda to expeditiously arrive at a permanent solution for food security and other development issues, before adopting the protocol of amendment of the contested Trade Facilitation Agreement.

Bolivia, Venezuela, Cuba and India inflicted a huge blow on the dominant actors in global trade by refusing to join consensus on the protocol required for full implementation of the TFA that is being pushed through the WTO with carrots and sticks.

“This is unimaginable, that New Delhi would decide the fate of decisions at the WTO, which has been a preserve of the United States and the European Union for the last 50 years,” said a trade envoy from a Western country.The mismatch, in terms of progress, between the TFA on one side, and lack of credible movement in agriculture and development on the other, especially in arriving at a permanent solution for public stockholding programmes, has come into the open at various meeting in Africa and elsewhere

Only seven months ago, the industrialised countries were triumphant at the WTO’s ninth ministerial meeting in Bali, Indonesia, after having succeeded in clinching the TFA. At one go, that agreement would harmonise customs procedures in the developing world on a par with the industrialised countries. It would offer enhanced market access for companies in the rich and leading developing countries such as China, Korea, Hong Kong and Singapore.

According to former WTO Director-General Pascal Lamy, the TFA would cut tariffs in developing countries by 10 percent

The developing and poor countries, in return, were offered half-baked outcomes in the Bali package on agriculture and development, including an interim mechanism for public stockholding for food security with a promise of a permanent solution in four years, an agreement on general services in agriculture, transparency-related improvements in what are called tariff rate quota administration provisions, and most trade-distorting farm export subsidies and export credits.

The poorest countries, as part of the “development” dossier, secured a set of best endeavour promises concerning preferential rules of origin for exporting to industrialised countries, preferential treatment to services and services suppliers of least developed countries, duty-free and quota-free market access for least-developed countries, and a final monitoring mechanism for special and differential treatment flexibilities.

The TFA has witnessed perceptible progress since the Bali meeting, while other issues raised by developing and poor countries have taken a back seat at the WTO.  The mismatch, in terms of progress, between the TFA on one side, and lack of credible movement in agriculture and development on the other, especially in arriving at a permanent solution for public stockholding programmes, has come into the open at various meeting in Africa and elsewhere.

“Even seven months after Bali, we do not have the required confidence and trust that there will be constructive engagement on issues that impact the livelihood of a very significant part of the global population,” Indian Ambassador Anjali Prasadtold WTO’s General Council, which is the organisation’s highest decision-making body, during the ministerial meetings, on Friday.

Prasad said “the Trade Facilitation Agreement must be implemented on as part of a single undertaking including the permanent solution on food security.” Bolivia, Cuba and Venezuela took the same stand as India that all issues in the Bali package have to be implemented on the same and equal footing.

“Nothing is agreed until everything is agreed in the Bali package,” India’s trade minister Nirmala Sitaraman told the Financial Times last Friday.

Against this backdrop, India finally pulled the plug at the General Council meeting by saying that “the adoption of the trade facilitation protocol be postponed until a permanent solution on public stockholding for food security is found.”

Without the protocol, it is difficult to undertake rapid liberalisation of customs procedures as set out in the TFA.  Effectively, the Indian stand has put paid to an early adoption of the trade facilitation protocol.

“Today, we are extremely discouraged that a small handful of Members in this organization [WTO] are ready to walk away from their commitments at Bali, to kill the Bali agreement, to kill the power of that good faith and goodwill we all shared, to flip the lights in this building back to dark,” Deputy U.S. Trade Representative Ambassador Michael Punke lamented at the General Council meeting.

Trade envoys from Japan, the European Union and a group of 25 industrialised and developing countries slammed India for its move to oppose the TFA until all other issues, particularly, the permanent solution on food security, are resolved.

“But the TFA cannot be divorced from the other issues, including food security, which need to be converted into a binding agreements on a priority basis,” India’s former trade envoy Ambassador Jayant Dasgupta told IPS Saturday.

Dasgupta, who played a major role in providing the rationale for exempting public distribution programmes for food security from WTO disciplines, offered several reasons why food security must trump over the hard core mercantile trade agenda embodying the TFA.

First, he said, ” the debate on food security exposed the insensitivity of trade negotiators of some major industrialised countries (pushed by seven or eight transnational corporations that dominate global food trade) to address food security issues, arising out of static interpretations of trade rules framed many decades ago, when such problems were not conceived.”

Second, the objections raised by the United States, Canada and Australia in addressing food security  are unacceptable because they do not want to concede that there has been more than 650 percent inflation in India since 1986-88.

The WTO agreement on agriculture uses the references prices of 1986-88 for determining domestic support commitments. “Any economist worth his salt would be aghast at the idea that the calculation of subsidies should take place without reference to the current market prices but to market prices which existed twenty six to twenty eight years,” the former Indian trade official argued.

Third, the problem of public procurement and stockholding for food security purposes is resorted to by not only India, but China, Indonesia, Philippines, Pakistan, Egypt, Jordan, Nigeria, Kenya and many other developing countries.

“Because of the way the agreement on agriculture provisions is worded, most of these developing countries could be held to be in violation of the WTO rules,” said Dasgupta, pointing out that “India is articulating not only its own problems but also those of other developing countries.”

And fourth, “by seeking to push India into a corner on this extremely sensitive issue for many developing countries, the United States and its handful of supporters are seriously jeopardising the credibility of the WTO in terms of latter’s ability to correct its mistakes and to be sensitive to the needs of a majority of its developing members.”

By Chakravarthi Raghavan
GENEVA, Jul 22 2014 (IPS)

The world of today is considerably different from the one at the end of the Second World War; there are no more any colonies, though there are still some ‘dependent’ territories.

In the 1950s and 1960s, as the decolonisation process unfolded, in most of the newly independent countries leaders emerged who had simply fought against foreign rule, without much thought on their post-independence economic and social objectives and policies.

Some naively thought that with political independence and power, economic well-being would be automatic.

Chakravarthi Raghavan

By the late 1950s, the former colonies, and those early leaders within them who yearned for better conditions for their peoples, realised that something more than political independence was needed, and began looking at the international economic environment, organisations and institutions.

In the immediate post-war years, the focus of efforts to fashion new international economic institutions (arising out of U.S.-U.K. wartime commercial policy agreements) was on international moves for reconstruction and development in war-ravaged Europe.

As a result, in the sectors of money and finance, the Bretton Woods institutions [the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) or World Bank], were established – even ahead of agreeing on the United Nations Charter and its principle of sovereign equality of states (one nation, one vote in U.N. bodies) – on the basis of the ‘one-dollar one-vote’ principle.“Within the Bretton Woods institutions, there was no direct focus on promoting ‘development’ of the former colonies; what little happened was at best a side-effect of the lending policies of these institutions and the few crumbs that fell off the table here and there, often to further Cold War interests”

In pursuing their wartime commercial policy agreements, the United Kingdom and the United States submitted proposals in 1946 to the U.N. Economic and Social Council (ECOSOC) for the establishment of an international trade body, an International Trade Organization (ITO).

ECOSOC convened the U.N. Conference on Trade and Employment to consider the proposals; the Preparatory Committee for the Conference drafted a Charter for the trade body, and it was discussed and approved in 1948 at a U.N. conference in Havana.

Pending ratification of the Havana Charter, the commercial policy chapter of the planned international trade body was fashioned into the General Agreement on Tariffs and Trade (GATT) and brought into being through the protocol of provisional application, as a multilateral executive agreement to govern trade relations, i.e., governments agreeing to implement their commitments to reduce trade barriers and resume pre-war trading relations through executive actions subject to their domestic laws.

At Havana, during the negotiations on the Charter, Brazil and India had expressed their dissatisfaction, but had reluctantly agreed to the outcome and the provisional GATT.

The U.S. Senate, as a result of corporate lobbying, was however unwilling to allow the United States to be subject to the disciplines of the Havana Charter and did not consent to an ITO Charter; the result was that the provisional GATT remained provisional for 47 years, until the Marrakesh Treaty which brought the World Trade Organization (WTO) into being in 1995.

Within the Bretton Woods institutions, there was no direct focus on promoting “development” of the former colonies; what little happened was at best a side-effect of the lending policies of these institutions and the few crumbs that fell off the table here and there, often to further Cold War interests.

From about the early 1950s, to the extent that it provided any reconstruction and development loans to the developing world, the IBRD acted in the interests of the United States, its largest single shareholder, and favoured the private sector.

For example, early Indian efforts to obtain IBRD loans for the public sector to set up core industries like steel, which needed large infusions of equity capital that the Indian private sector was in no position to provide, were turned down, based purely on the ideological dogma of private-vs-public-enterprise.

It was only much later that a separate window, the International Development Association (IDA), was created at the World Bank to provide soft loans (with low interest and long repayment periods) to low-income countries.

But the IDA did not function as professed and did not provide loans to set up industries or promote development in poorer countries; in actual practice it acted to advance the interests of the developed countries in the Third World.

IDA loans came with conditionalities to promote structural adjustment programmes, such as unilateral trade liberalisation, resulting in deindustrialisation of the poorer African countries. Even worse, IDA loans came with additional conditionalities to cater to the fads and fashions of the day and the concerns of Northern, in particular Washington-based, civil society.

The IDA “donor countries” dominated its governance and used their clout there to sway IDA lending – initially, the IDA obtained funds from the United States and other developed countries, and there were two or three substantial replenishments thereafter.

Subsequently, the funds from loan repayments and the profits of the World Bank (earned by lending at market rates to developing countries) were used to fund IDA, with small new contributions from the “donors” at every replenishment.

Though developing countries borrowing from the IBRD at market rates thus turned out to be the funders of the IDA, they had no voice in IDA governance, and the developed countries, with very little new money, have maintained control over the IDA and IBRD policies, to promote their own policies and the interests of their corporations in developing countries.

On the trade front, in successive rounds of negotiations at the GATT, the group of major developed countries (the United States, Canada, Europe, and later Japan) negotiated among themselves the exchange of tariff concessions, but paid little attention to the developing countries and their requests for tariff reduction in areas of export interest to them.

The only crumbs that fell their way were the result of the multilateralisation of the bilateral concessions exchanged in the rounds, through the application of the “Most Favoured Nation” (MFN) principle. From the Dillon Round on (through the Kennedy and Tokyo Rounds), each saw new discriminatory arrangements against the Third World and its exports.

In the Uruguay Round (1986-94), culminating in the Marrakesh Treaty, the developing countries undertook onerous advance commitments in goods trade, and in new areas such as ‘services’ trade and in intellectual property protection, on the promise of commitment of developed countries to undertake a major reform of their subsidised trade in agriculture and other areas of export interest to developing countries.

These remain in the area of promises while, after the 2013 December  Bali Ministerial Conference, the United States, Europe and the WTO leadership are attempting to put aside as ‘out of date’, all past commitments, while pursuing the ‘trade facilitation’ agreement, involving no concessions from them, but resulting in the equivalent of a 10 percent tariff cut by developing countries.

In much of Africa, this will complete the “deindustrialisation process” and ensure that the Third World will remain “hewers of wood and drawers of water”.  (END/IPS COLUMNIST SERVICE)

* This text is based on Chakravarthi Raghavan’s recently published book, ‘The THIRD WORLD in the Third Millennium CE’.

Excerpt:

The “fragility” of the World Trade Organization’s ‘Bali package’ was brought into the open at the weekend meeting in Sydney, Australia, of trade ministers from the world’s 20 major economies (G20).

The Bali package is a trade agreement resulting from the 9th Ministerial Conference of the WTO in Bali, Indonesia, in December last year, and forms part of the Doha Development Round, which started in 2001.

The G20 group of countries includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, the United States, and the European Union.“… the Bali package is not just about trade facilitation and it also includes other issues ... That was the premise on which the developing countries agreed to trade facilitation and it has to be self-balancing” – South African trade minister Rob Davies

During the Sydney meeting, India and South Africa challenged the industrialised countries present to come clean on implementation of the issues concerning the poor countries in agriculture and development, according to participants present at the two-day meeting.

Ahead of the G20 leaders meeting in Brisbane, Australia, in mid-November, Sydney hosted the trade ministerial meeting to discuss implementation of the Bali package, particularly the trade facilitation agreement (TFA). The TFA has been at the heart of the industrialised countries’ trade agenda since 1996.

More importantly, Australia, as host of the November meeting, has decided to prepare the ground for pursuing the new trade agenda based on global value chains in which trade facilitation and services related to finance, information, telecommunications, and logistics play a main role.

“I said the Bali package is not just about trade facilitation and it also includes other issues,” South Africa’s trade minister Rob Davies told IPS Monday. “That was the premise on which the developing countries agreed to trade facilitation and it has to be self-balancing.”

Davies said that “the issue is that while South Africa doesn’t need any assistance, many developing and poor countries have to make investments and implement new procedures [because of the TFA]. What was there in the [TF] agreement is a series of best endeavour provisions in terms of technical and financial support together with best endeavour undertakings in terms of issues pertaining to least developed countries in agriculture and so on.”

Over the last few months, several industrialised countries, including the United States, have said that they can address issues in the Bali package concerning the poor countries as part of the Doha Single Undertaking, which implies that nothing is agreed until everything is agreed.

The specific issues that concern the interests of the least-developed countries include elimination of cotton subsidies and unimpeded market access for cotton exported by the African countries, preferential rules of origin for the poorest countries to export industrial products to the rich countries, and preferential treatment to services and services suppliers of least developed countries, among others.

“Even if there is an early harvest there has to be an outcome on other issues in the Bali package,” the South African minister argued.

There is lot of concern at the G20 meeting that if the trade facilitation protocol is not implemented by the end of this month, the WTO would be undermined.

“What we said from South Africa is to commit on the delivery of the outcomes in the Bali package,” Davies told IPS. “And a number of developing countries present at the meeting agreed with our formulation that there has to be substantial delivery of the outcomes in the Bali package.”

At the Sydney meeting, the industrialised countries pushed hard for a common stand on the protocol for implementing the Trade Facilitation Agreement by July 31. The TF protocol is a prerequisite for implementing the trade facilitation agreement by the end of July 2015.

The United States also cautioned that if there is no outcome by the end of this month, the post-Bali package would face problems. “Talking about post-Bali agenda while failing to implement the TFA isn’t just putting the cart before the horse, it’s slaughtering the horse,” U.S. Trade Representative Ambassador Michael Froman tweeted from Sydney.

The industrialised countries offered assurances that they would address the other issues in the Bali package, including public distribution programmes for food security, raised by developing countries. But they were not prepared to wait for any delay in the implementation of the TF agreement.

Over the last four months, the developing and poorest countries have realised that their issues in the Bali package are being given short shrift while all the energies are singularly focused on implementing the trade facilitation agreement.

The African countries are the first to point out the glaring mismatch between implementation of the TFA on the one hand and lack of any concerted effort to address other issues in the Bali package on the other. The African Union has suggested implementing the TFA on a provisional basis until all other issues in the Doha Development Agenda are implemented.

The industrialised countries mounted unprecedented pressure and issued dire threats to the African countries to back off from their stand on the provisional agreement. At the AU leaders meeting in Malibu, Equatorial Guinea, last month, African countries were forces to retract from their position on the provisional agreement.

However, South Africa, Tanzania, Zimbabwe and Uganda insisted on a clear linkage between the TFA and the Doha agenda.

India is fighting hard, along with other developing countries in the G33 coalition of developing countries on trade and economic issues, for a permanent solution to exempt public distribution programmes for food security from WTO rules in agriculture.

New Delhi has found out over the last six months that the industrialised countries are not only creating hurdles for finding a simple and effective solution for public distribution programmes but continue to raise extraneous issues that are well outside the purview of the mandate to arrive at an agreement on food security.

India announced on July 2 that it will not join consensus unless all issues concerning agriculture and development are addressed along with the TF protocol.

India’s new trade minister Nirmala Sitaraman, along with South Africa, made it clear in Sydney that they could only join consensus on the protocol once they have complete confidence that the remaining issues in the Bali package are fully addressed.

Against this backdrop, the G20 trade ministers on Saturday failed to bridge their differences arising from their colliding trade agendas.

The developing countries, particularly India, want firm commitment that there is a permanent solution on public distribution programmes for food security along with all other issues concerning development, an Indian official told IPS.