• WTO agrees to scrap farm export subsidies

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    No progress on Doha Round
    The World Trade Organization (WTO) concluded a five-day ministerial conference in Nairobi on Saturday with an agreement to abolish agricultural export subsidies.

    Member-countries, however, failed to make progress on the long-stalled Doha Round of negotiations aimed at lowering global trade barriers.

    The commitment to abolish export subsidies for farm exports was hailed by WTO Director General Roberto Azevedo in a statement as the “most significant outcome on agriculture” in the organization’s 20-year history.

    US trade representative Michael Froman said the deal would “help level the playing field for American farmers and ranchers.”

    “The WTO’s actions in this area will put an end to some of the most trade distorting subsidies in existence and demonstrates what is possible when the multilateral trading system comes together to solve a problem,” he said.

    The European Commission also praised the “landmark deal” as “good for fairer global trade.”

    “For those who had doubts, it proves the relevance of the WTO and its capacity to deliver results,” EU Trade Commissioner Cecilia Malmstroem said in a statement.

    Other decisions under the so-called “Nairobi Package” cover food security, special safeguard mechanisms, and measures related to cotton. Decisions were also made regarding preferential treatment for least developed countries (LDCs).

    “Two years ago in Bali we did something that the WTO had never done before—we delivered major, multilaterally negotiated outcomes,” Azevedo said. “[H]ere in Nairobi, we saw those same qualities at work … once again, we delivered.”

    The WTO’s Tenth Ministerial Conference was held from December 15 to 19 and was the first such meeting hosted by an African nation. It was chaired by Kenya’s Cabinet Secretary for Foreign Affairs and International Trade, Amina Mohamed.

    Mohamed said ministers “faced challenging moments,” in concluding the Nairobi Package, which required an extra day of intensive negotiations to conclude.

    “Tough calls had to be made but we did bite the bullet,” she said, adding: “We have reaffirmed the central role of the WTO in international trade governance.”

    Centerpiece decision
    The centerpiece of the Nairobi Package was the Ministerial Decision on Export Competition, which involves a commitment to eliminate subsidies for farm exports.

    “WTO members—especially developing countries—have consistently demanded action on this issue due to the enormous distorting potential of these subsidies for domestic production and trade,” Azevêdo noted.

    Export subsidies are used by several countries to support agriculture exports. The WTO decision would eliminate these and prevent governments from reverting to trade-distorting export support in the future.

    Developed members committed to remove export subsidies immediately, except for a handful of agriculture products. Developing countries will do so by 2018 and will keep the flexibility to cover marketing and transport costs for agriculture exports until the end of 2023. The poorest and food-importing countries were given additional time to cut export subsidies.

    The decision contains “disciplines” to ensure that other export policies are not used as a disguised form of subsidies. These include terms to limit the benefits of financing support to agriculture exporters, rules on state enterprises engaging in agriculture trade, and disciplines to ensure that food aid does not negatively affect domestic production. Developing countries were also given longer time to implement these rules.

    Ministers also adopted the Ministerial Decision on Public Stockholding for Food Security Purposes, which commits members to engage in finding a permanent solution to the issue. Under a Bali decision of 2013, developing countries were allowed to continue food stockpile programs, which are otherwise in risk of breaching the WTO’s domestic subsidy cap, until a permanent solution is found by the 11th Ministerial Conference in 2017.

    The Ministerial Decision on a Special Safeguard Mechanism (SSM) for Developing Countries, meanwhile, recognizes that developing members will have the right to temporarily increase tariffs in face of import surges. The mechanism for this will continue to be negotiated by members in sessions of the Agriculture Committee.

    Focus on LDCs
    The Ministerial Decision on Cotton, meanwhile, stresses the vital importance of the cotton sector to LDCs, focusing on market access, domestic support and export competition.

    On market access, cotton from LDCs will be given duty-free and quota-free access to developed countries’ markets, and those of developing countries that declare they are able to do so, from January next year. The domestic support part acknowledges members’ reforms in their cotton policies and stresses that more efforts remain to be made. On export competition, developed countries have to ban cotton export subsidies immediately and developing countries will do so at a later date.

    Other decisions that will specifically benefit LDCs include enhanced preferential rules of origin and preferential treatment for services providers.

    Opportunities for LDC exports to both developed and developing countries will be facilitated under unilateral preferential trade arrangements. This built on a Bali decision that set out multilaterally agreed guidelines to help make it easier for LDC exports to qualify for preferential market access.

    The Nairobi decision provides more detailed directions on specific issues, such as methods for determining when a product qualifies as “made in an LDC,” and when inputs from other sources can be “cumulated”—or combined together—into the consideration of origin. It calls on members to consider allowing the use of non-originating materials up to 75 percent of the final value of the product.

    The Ministerial Decision on Implementation of Preferential Treatment in Favor of Services and Service Suppliers of Least Developed Countries and Increasing LDC Participation in Services Trade, meanwhile, extends the current waiver period under which non-LDC members may grant preferential treatment. The period has been extended by 15 years to December 31, 2030.

    The waiver allows WTO members to deviate from most-favored nation obligations under the General Agreement on Trade in Services. To date, 21 members have submitted notifications granting preferences to LDC services and service suppliers.

    WTO role affirmed, divide acknowledged
    In Nairobi, ministers cited the “pre-eminence of the WTO as the global forum for trade rules setting and governance” and reaffirmed the “need to ensure that regional trade agreements remain complementary to, not a substitute for, the multilateral trading system.”

    They acknowledged that members “have different views” on how to address the future of Doha Round negotiations but also claimed a “strong commitment…to advance negotiations on the remaining Doha issues.”

    “This work shall maintain development at its center and we reaffirm that provisions for special and differential treatment shall remain integral,” the ministers said.

    Azevêdo said there were “persistent and fundamental divisions on our negotiating agenda” and that WTO members “have to face up to this problem.”

    “Members must decide—the world must decide—about the future of the Doha Round,” he said. “This impasse is already harming the prospects of all those who rely on trade today—and it will disadvantage all those who would benefit from a reformed, modernized global trading system in future.”

    The Doha Round of trade negotiations was launched to great fanfare in the Qatari capital in 2001 with the aim of helping developing countries grow through improved trade access.

    Two new countries, Liberia and Afghanistan, joined the WTO club last week, bringing the total number of members to 164.

    WITH A REPORT FROM AFP

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