An ‘imbalanced’ revival

The ninth MC was held in Bali, Indonesia, in the first week of December 2013. After the unsatisfactory end of the eighth MC at Geneva, there was an urgency at the WTO to ‘deliver’ something more definitive at Bali. The period from 2011 to 2013 was marked by a flurry of activity in the various negotiating groups of agriculture, non-agricultural market access (NAMA), services, trade facilitation, Special and Differential Treatment to LDCs, Dispute Settlement and so on. Many of the Chairs of the negotiating groups also submitted their progress reports to the General Council. DG, WTO, Pascal Lamy took the initiative in organising a few Trade Negotiating Committee (TNC) meetings during the interim period. In the TNC meeting in December 2012, there were proposals in agriculture from G20 on a transparent administration of tariff rate quotas (TRQ). The G33 proposal was tabled by Indonesia, which underlined the importance of public stockholding of food grains for the poor of developing countries and therefore the need to exclude them from any future disciplines. The DG, WTO was however cautious and stated that the Bali MC was too near and a conclusion to the Doha Round was unlikely, given the deep divisions that remain among Members.

Issues at Bali

The one important change in the ninth MC was that Robert Azevedo took over as the new DG, WTO. Azevedo was the Brazilian Ambassador in earlier MCs and brought back a lot of optimism. He managed to energize the negotiations in agriculture, trade facilitation and many other areas shortly after taking over.

The new DG, in the customary letter to the journalists, identified four issues that would be taken up at the MC: a) an agreement on trade facilitation; b) agreements to support LDCs such as Duty-Free Quota Free (DFQF) access, simplified rules of origin for LDC exports, improved market access for services exports and revisiting the cotton issue; c) special & differential provisions in all agreements and d) agriculture issues such as export subsidies and public stockholding. These are discussed in more detail below.

Trade facilitation (TF): This was an area on which consensus was created in the run-up to the MC. The basic issue was simple enough: a simplification of customs procedures and their transparent administration would benefit all countries and lead to efficiency gains. Some of the requirements were: publishing of import procedures, duty rates and classification/valuation rules; issuing of advance customs rulings, where requested; infrastructure and procedures for expedited shipments for Air Cargo (mainly American Air Cargo carriers); and pre-arrival processing. The new DG, Azevedo, was also pushing this with great enthusiasm to show that there was something on the table for everyone. However, as it turned out, it was only the developed countries and some large developing countries including China and Brazil, which were backing this agreement. India, while supporting the overall agreement, was opposed to the provisions on expedited shipments. This was because they already had all the customs procedures and systems in place and the onus was on the rest of the membership to put these in place. While there was no doubt that the provisions were logically sound, they were criticised because the developed countries were being gifted the TF agreement while ‘paying’ nothing for it.

LDC-related issues and special & differential treatment provisions: These included preferential rules of origin for LDCs; operationalisation of the waiver already granted to LDC service providers; the long outstanding ‘cotton’ issue, which was a demand of four African countries to reduce cotton subsidies in the US and other developed countries; duty free quota free (DFQF) access for LDC goods and services; and a monitoring mechanism for special and differential treatment to LDCs. While Azevedo had made the right noises about these issues, they weren’t addressed in the Bali Declaration.

Agriculture: The issue of maintaining public food stocks for purposes of food security came up for long debates. India and the US became the main protagonists in the debate. India understandably wanted an exemption for these stockholding operations from the rules that barred agricultural subsidies. The US was against any such exemption. The DG, Roberto Azevedo (who was earlier Brazil’s Ambassador and one of the supporters of the proposal), proposed a half-way solution that would introduce a ‘peace clause’ that would allow countries to continue with such operations until a permanent solution was found. Again, the US was against a permanent ‘peace clause’ and initially suggested a period of two years for the provision, which was later agreed as four years. Ultimately it was decided that WTO would find a solution to the issue in four years, until which time countries could carry on with their public stockholding operations of food grains. The US, however, added on difficult notification and safeguard requirements, which required members to notify to the WTO the details of the measures taken and also ensure that these were not trade-distorting. Moreover, the US also emphasised that the peace clause would not apply to subsidies under the Agreement on Subsidies and Countervailing Measures, which was the more general agreement on subsidies.

The other issues in agriculture, which were mostly agreed upon, were ‘General Services’ that allowed members to pursue policies on land reforms and livelihood security, which, in turn, promoted rural development and poverty alleviation. There was agreement on more transparency in applying tariff rate quotas. However, the earlier commitment to phase out export subsidies by 2013 could not be met, even though members agreed not to impose further export subsidies, on a best endeavor basis.

Conclusion

The Bali Declaration was mostly about the Trade Facilitation text, which was adopted by the membership. While it revived the WTO as an organisation, it also highlighted the unequal distribution of power at the WTO. The Trade Facilitation agreement was generally agreed to be a win for the developed countries because they got an agreement that would help their exporters for ‘free’. Developed countries conceded nothing in agriculture, which has been the biggest point of contention in the Doha agenda. The Bali Ministerial will also be remembered for the protracted negotiations between the US and India on the issue of public stockholding of food grains. Though India did manage to get a ‘peace clause’ into the agreement for a period of four years, it was accompanied by onerous notification and safeguards requirements. Finally, the Bali Ministerial also opened the door of the WTO for bringing issues outside the ‘single undertaking’ to the negotiating table. This would only bias the discussions in favor of developed countries, because these were issues such as investment and environmental goods and services, which were of interest to developed countries.

The writer is Additional Chief Secretary, Department of Mass Education Extension and Library Services and Department of Cooperation, Government of West Bengal.