Bali Update: What has happened since the WTO Ministerial?, Part II

WTO LogoSo, the July 31, 2014 deadline for adopting the WTO Trade Facilitation Agreement (TFA), as reported in Bali Update, Part I, has come and gone, and the Agreement has not been adopted. On July 31, 2014, the WTO General Council met to adopt the protocol that will insert the TFA into the WTO regulatory framework. However, as Director-General Azevêdo reported just before the midnight deadline:

At this late hour, with the deadline just a matter of moments away, I don’t have anything in my hands that makes me believe that we can successfully reach consensus. . .. On the one side we have the firm conviction, shared by many, that the decisions that ministers reached in Bali cannot be changed or amended in any way — and that those decisions have to be fully respected. And on the other side of the debate we have some who believe that those decisions leave unresolved concerns that need to be addressed in ways that, in the view of others, change the balance of what was agreed in Bali. These are the two sides. We have not been able to find a solution that would allow us to bridge that gap.

The “other side of the debate” refers to India’s insistence that the Bali Package agreed to in December be adjusted to address its food security concerns before the Trade Facilitation Agreement is adopted.

At Bali, the members agreed to continue discussions to arrive at a permanent solution on how to treat food subsidies. Meanwhile, they instituted a “peace clause” of four years during which such programs by developing countries that meet certain criteria are to be shielded from trade challenges, even if they negatively impact other countries’ trade. India wants this agreement to be interpreted to mean that the “peace clause” remains in place permanently until a comprehensive agricultural package is reached. India believes its interpretation will put more pressure on both sides to adhere to the December 31, 2014 deadline to arrive at an agreement on this issue.

Its refusal to budge on this position means that the Trade Facilitation Agreement remains draft text. This impasse will be revisited in September.

Launch of TFA Technical Assistance Programs

Nevertheless, some steps have already been taken on a key component of the Trade Facilitation Agreement (TFA). The TFA introduces requirements for members to improve the efficiency, effectiveness, and transparency of their customs procedures. The text further provides for technical assistance to developing countries to build the capacity needed to implement its requirements.

The WTO Trade Facilitation Agreement Facility (TFAF) has been launched to provide this assistance.

In a meeting on July 22, 2014, a group of major international organizations declared their intention to work together to assist developing and least-developed Members through a range of technical assistance and capacity-building initiatives. The joint statement is signed by the following international organizations, some of which have already also launched their programs:Imports

The US Agency for International Development (USAID) is establishing an Alliance for the Trade Facilitation Agreement as a public-private partnership. Other multilateral and bilateral donors are expected to launch their assistance programs shortly.

The WTO TFAF will act as a focal point for these efforts by supporting needs assessment, facilitating information flow among development partners and requests for technical assistance, disseminating best practices, and providing grants to support project development and implementation.

Fruition on these commitments is being made contingent on the still-pending adoption of the TFA. Will this reality pressure India to fall in line? (To be continued)

Bali Update: What has happened since the WTO Ministerial?

WTO LogoAfter having pulled the members together to achieve consensus to make some decisions at the WTO Bali Ministerial in December, 2013, months later WTO Director-General Azevêdo issued a warning against revisiting those decisions.

The “Bali Package” adopted at the Ministerial consists of a number of small deals pulled from the broader Doha Agenda for negotiating a new set of rules to govern international trade:

  1. Decision on duty-free, quota-free (DFQF) access for products of least-developed countries.
  2. Decision to simplify preferential rules of origin for least-developed countries to make it easier for them to qualify for DFQF entry into the importing countries.
  3. Decision operationalizing the “services waiver” that will grant least-developed countries preferential access to other countries’ services markets.
  4. Decision on a “monitoring mechanism” to analyze and review implementation of special and differential treatment rules for developing countries.

The Agreement on Trade Facilitation, in particular, is seen as the most important component of the Bali Package. It Importsintroduces requirements for members to improve the efficiency, effectiveness, and transparency of their customs procedures. The anticipated benefits are a 10%-15% reduction in the costs of international trade. For developed countries, these changes hold the promise of increasing trade flows and revenue collections. Furthermore, the Agreement contains promises of technical assistance and capacity building for developed countries to help them to make the required investments associated with implementing the Agreement.

At this point, the text adopted in Bali remains a draft. Though its substance is not expected to change substantially, its text will become final only when it is adopted by the WTO General Council. This adoption is currently scheduled to occur at the meeting of July 31, 2014.

Meanwhile, however, India has raised the concerns of food security and indicated that it wants to see more progress on this issue. At Bali, the members agreed to continue discussions to arrive at a permanent solution on how to treat agricultural subsidies. Meanwhile, they instituted a “peace clause” of four years during which such programs by developing countries that meet certain criteria are to be shielded from trade challenges, even if they negatively impact other countries’ trade. This issue is of prime importance to India who wants to see progress on this issue. India wants this “peace clause” to be made permanent and believes that, like the Trade Facilitation Agreement, this should become part of the Bali Package.

Such a proposal is likely dead-on-arrival, however. Developed countries such as the United States, have agricultural subsidies programs that they would dearly love to be able to protect from complaints by other WTO members. They consider India’s economy to be too big to be eligible for this type of protection.

We can expect the long-running “negotiations” over the difficult issue of agricultural subsidies to continue for some time. (To be continued -)

Bali Present: WTO 9th Ministerial Delivers

Bali Opens (www.wto.org)

Bali Opens
(www.wto.org)

In our last post, Hopeful Watching: The WTO 9th Ministerial in Bali, we discussed the high hopes with which the Doha Development Round had been launched, its shrinking agenda, and the hope that some consensus would emerge that could lead to a deal focused around the hopes and aspirations of developing countries.

Just in time for the holidays, after round-the-clock discussions that extended into an additional all-nighter of negotiations, the “Bali Package” was delivered. It consists of the following small deals pulled from the broader Doha Agenda:

On Agriculture, the thorny issue of Food Security led to a “peace clause” for four years during which food stockpiling programs by developing countries which meet certain criteria will be shielded from trade challenges, even if they negatively impact other countries’ trade, while they negotiate a permanent solution. This outcome, where it’s now advanced developing countries, notably India, that are seeking protection for their agriculture subsidies represents a complete turn-around from the original focus of the Doha Round – elimination by developed countries of their programs of subsidies. This issue, perhaps more than any other, indicates the extent to which the Doha agenda has evolved since 2001.

The consensus around Development Issues emerged in the form of Members’ commitments to implement four previous decisions:

New WTO Member

Bali Closes (www.wto.org)

Bali Closes
(www.wto.org)

In other business, thirteen years after submitting its application to join the WTO, Yemen was formally welcomed into its ranks. Once Yemen ratifies the terms of its accession, it will become the WTO’s 160th member. It is also the seventh (7th) LDC to join the WTO. Implementation of the Development Decisions (above) will improve the terms on which LDC products access world markets whether or not they join the WTO.

Post-Bali Package?

The Bali Package also includes hopeful language about returning to the other issues on the Doha Agenda. These include market access for manufactured goods, more substantive agreements on agriculture and an agreement on services. However, on services, for example, separate negotiations have already begun to conclude the Trade in Services Agreement (TISA). These talks are being pursued on a plurilateral basis, i.e. a sub-set of WTO members, allowing them to bypass the pesky requirement to achieve consensus among all (now 160) WTO members. It is therefore more realistic to conclude that the Bali Package has already delivered all that can be reaped from the Doha Agenda.