What’s at stake for WTO members in Nairobi?

With the signing of the General Agreement on Tariffs and Trade (GATT) in 1947, trade began to be viewed in a multilateral context, with rules and regulations requiring the agreement of multiple parties.

GATT drew in 23 countries, but then globalisation came about and was described as a train that had rolled out of the station at high speed, leaving those on the platform clambering after it. So in 1995, when GATT paved way for the World Trade Organisation (WTO), 123 countries came on board.

It was expected to facilitate the shipment of goods across world borders, but 20 years later, trade barriers continue to be at the heart of WTO discussions.

Cycle of negotiations

With the 10th Ministerial Conference (MC10) getting underway in Nairobi today, and 162 members on board WTO now, what are they really pushing for?

This is the first time the WTO has held a Ministerial Conference in Africa, and expectations are high that it will deliver favourable policies for developing countries, particularly the least developed.

Some members argue that WTO must keep working on the 2001 Doha declarations, as these are vital for development, and until they are concluded, the focus must not be diverted to anything else.

But others argue that after years of limited success, it is unlikely that the Doha framework could yield any further progress.

There have been nine rounds of multilateral talks under the Geneva-based WTO. The Doha round, or officially, the Doha Development Agenda, is the latest cycle of negotiations.

It was the first to focus on getting developing countries into the global market and grow their economies.

The Doha round has been expected to lead to a reduction in import taxes, restricted use of subsidies, lower regulatory barriers in the trade of services, and revise intellectual property rules to improve poor countries’ access to products like drugs.

Fourteen years later, little progress has been made, and a lot remains contentious.

Take the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement to begin with. A 2003 waiver allows countries that are unable to domestically produce pharmaceuticals to import them instead.

Though there is space under TRIPS for developing countries to benefit from compulsory licensing, they have effectively been prevented from doing so by complicated rules and procedural requirements from developed countries.

Exemptions to pharmaceutical patent protection to least-developed countries (LDCs) were extended to January 1, 2016, enabling them import cheaper, generic drugs from countries with licences. LDCs hope to use MC10 to extend this beyond next year.

Trade barriers

On agriculture, members agreed to negotiate to reduce barriers to market access, which include taxes and protectionist quotas; and reduce and eventually phase out export subsidies and domestic support that distort the pricing of produce internationally.

Domestic taxes that restrict trade on exports from developing countries include ‘tariff escalation’, which is when developed nations introduce higher levies on finished products than on raw materials. This has the effect of protecting domestic processing, and discouraging value addition in countries where raw materials come from.

And while developing countries and LDCs make up about two-thirds of WTO membership, their push for policies that would help them join the developed world are often undermined by the dominance of economic powerhouses like the US and European Union.

Further, all decisions have to made by consensus, which is complicated by having 162 diverse countries from all types of economic zones.

President Uhuru Kenyatta acknowledged this imbalance in trade negotiations ahead of the Nairobi talks.

“While recognising that members have different national priorities, nonetheless, I continue to urge all members to demonstrate the necessary willingness, flexibility and pragmatism to find agreement,” he said in a letter addressed to WTO Director-General Roberto Azevê last week.

Since the Uruguay round that began in1986, reduction in tariffs in sectors such as textiles, clothing, and agricultural products have remained of primary interest to developing countries. This was part of Bali package in 2013.

Developing nations also want a reduction in supply-side barriers, such as weak infrastructure and inadequate access to health care, education and social policy. They view liberalisation in these sectors as building blocks for modern economies.

However, the US and EU are reluctant to remove trade barriers unless rapidly industrialised countries like China, India and Brazil are delisted from developing nations. India has opposed this, terming it a violation of commitments made in Uruguay.

On cotton, the US and EU have put the writing on the wall — the US says it cannot commit to providing full market access and eliminating export subsidies, while the EU has confirmed it will not comply with the request to eliminate export subsidies.

LDCs also continue to push for technical assistance in accessing the trading system to help them integrate into global economy. They want help in implementing existing commitments, as well as developing trade policy expertise. WTO has tried to deliver on this through an integrated framework for trade-related technical assistance.

In light of the few victories, many countries have been vocal about their dissatisfaction with the progress of WTO talks.

Walk out

In India, over 80 civil society groups have said the WTO agenda has nothing good for their country. They claim the organisation has served as a powerful tool in the hands of developed countries to undermine economic trajectories in developing nations.

“In the eventuality of India being unable to extract concrete concessions from the developed countries on issues that concern them, and the developed countries’ insertion of new agenda at Nairobi, we call upon the Government of India to walk out of the Ministerial Conference,” reads their statement.

In Kenya, 17 NGOs have teamed up with 344 other organisations from 100 countries and asked the Government to reorient its stand in international trade and investment negotiations.

In a July 8 letter addressed to WTO members, the NGOs argue that the organisation is a corporate-led model of globalisation that has failed workers, farmers, the poor and the environment, while facilitating the enrichment of a privileged few.

“In the negotiations, sectors are being targeted that are of particular interest to developed country corporations, rather than with a focus on export opportunities for developing countries,” the letter reads in part.

But most analysts and WTO officials agree that the Nairobi talks will largely extend negotiations on the Doha round, rather than achieve consensus on any contentious issues that would knock down trade barriers.

Still, some agreements are expected, such as an end to tariffs on IT exports.

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