South Centre Analyses, December 2013

Overview:

 

WTO’s MC9: Summary of Issues

10 documents were distributed to WTO Members on 26 November 2013 at the last General Council meeting before the Bali Ministerial Conference (MC9).  These documents are being transmitted to Bali. They include:

Trade Facilitation (Rm W text – JOB/TNC/35)

Agriculture

  • General Services (JOB/TNC/28)
  • Public Stockholding for Food Security Purposes (JOB/TNC/29)
  • Understanding on Tariff Rate Quota Administration Provisions of Agricultural Products, as Defined in Article 2 of the Agreement on Agriculture (JOB/TNC/30)
  • Export Competition (JOB/TNC/31)

Cotton (JOB/TNC/32)

Development and LDC Issues

  • Preferential Rules of Origin for LDCs (JOB/TNC/24/Rev.1)
  • Operationalization of the Waiver Concerning Preferential Treatment to Services and Service Suppliers of LDCs (JOB/TNC/25/Rev.1)
  • Duty-Free and Quota-Free Market Access for LDCs (JOB/TNC/33)
  • Monitoring Mechanism on Special and Differential Treatment (JOB/TNC/34)

As the negotiations are not completed, these texts are still bracketed. This paper provides in bullet points, what the proponents of these issues had wanted, what they attained in these still-to-be-finalised documents, and provides a short commentary of the outcomes obtained.

On balance, the package for developing countries remains highly imbalanced: a legally binding Trade Facilitation Agreement demanded primarily by developed countries, versus outcomes on issues of importance to developing countries that are not legally binding (LDC issues; export competition); very weak (Monitoring Mechanism); or time-limited and partial in application (food security; tariff-rate quota administration).

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WTO’s Negotiating Agenda After Bali

This is a 2-pager providing points on what should and should not be part of the WTO’s post-Bali agenda.

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Agriculture:

WTO’s MC9:  Analysis of the Food Security ‘Peace Clause’ Text

The Peace Clause is time-limited (4 years) and partial in coverage (no inclusion of the WTO’s Agreement on Subsidies and Countervailing Measures- ASCM). Countries can still be taken to dispute. It also has onerous and intrusive transparency and information requirements and conditions. Furthermore, in order to use it, countries have to effectively make an admission of ‘guilt’ – they have to notify that they have exceeded or are at risk of exceeding their very limited ceiling levels for trade-distorting domestic supports. Such an admission would not stand them in good stead after the 4-year ‘Peace Clause’ has lapsed!

If agreed to, this would have been a lost opportunity for the global community to right some of the problems in the current WTO rules in such a way that food security, the plight of small farmers across the developing world and the precariousness of their livelihoods could have potentially been supported by governments through public stockholding programmes. Most developing countries that had not provided trade-distorting domestic supports at the time of the Uruguay Round bound themselves at zero levels of such supports and today, remain constrained by these commitments. They only have a 10% de minimis allowance of the value of production of a crop.

This is a major imbalance in the context of the continued huge sums of domestic supports provided by the US (USD 130 billion in 2010) and the EU (79 billion Euros in 2009) to their producers.

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Trade Facilitation:

Discussing the Legal Basis for Entry Into Force of a Trade Facilitation Agreement

A Trade Facilitation Agreement (TFA) has been proposed as an outcome from the Bali WTO Ministerial Conference. The TFA’s provisions create new rights and obligations for WTO Members; they alter the rights and obligations that WTO Members currently have under the WTO Agreement and its annexes. Accordingly, the TFA should be incorporated into WTO law by listing it as one of the covered agreements under Annex 1A of the WTO Agreement.

Consequently, the following note argues that:

  • The TFA will only enter into force upon the fulfillment of requirements under Article X of the WTO Agreement (i.e. the article addressing amendments).
  • The Ministerial Conference cannot take a decision that overrides the requirements of Article X of the WTO Agreement.
  • Members can also argue for pegging the entry into force of the WTO to the conclusion of the Doha Mandate Single Undertaking, basing that on the current content of paragraph 47 of the Doha Declaration.

Anything outside this framework carries a significant threat to the rules-based nature of the WTO, undermines the Marrakesh agreement, sets a problematic precedent, and calls into question the legitimacy of the outcome.

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Key Issues Still Under Brackets in the Trade Facilitation Text Presented to the Ministerial Conference in Bali

(based on Room W-JOB/TNC/35)

The following document comments on the remaining bracketed articles in the trade facilitation (TF) draft text (Room W- JOB/TNC/35) presented to the ministerial conference in Bali. It includes five main sections, including:

  • 1)     One page summary note and recommendations on the TF draft text
  • 2)     General comments on the balance within the latest TF draft text;
  • 3)     Comments of Section I
  • 4)     Comments on the provisions under ‘institutional arrangements’ of the TF text;
  • 5)     Comments on the ‘general provisions’ of the TF text;
  • 6)     Comments on Section II

The document includes the following annexes:

  • Annex (1): Recalling main parts of the Negotiating Mandate `
  • Annex (2):  Note on the scope of the ‘Expedited Shipments’ provision under Section I of the trade facilitation draft text; services liberalization from the backdoor.
  • Annex (3): Note on the Reference to ‘Making Category B and C provisions an integral part of the Agreement’
  • Annex (4): Comments on Bracketed Articles under TF text Section I
  • Annex (5): What did LDCs get under Section II of the Trade Facilitation draft text raised to the Ministerial Conference in Bali?

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Development:

WTO’s MC9: Analysis of the Text on the Monitoring Mechanism

The text on the Monitoring Mechanism (JOB/TNC/34) which has been transmitted from Geneva to the Bali Ministerial is extremely disappointing. It

  • Does not allow for the strengthening of S&D provisions
  • Will be about reviewing the implementation of existing S&D provisions, not strengthening S&D provisions themselves
  • Is not a place where negotiations will be able to take place since ‘in carrying out its functions, the Mechanism will not alter or in any manner affect, Members’ rights and obligations under WTO Agreements… or interpret their legal nature’. i.e. the Mechanism is toothless.
  • Can only ask other negotiating bodies to review the implementation of S&D provisions.
  • Even so, in asking the other bodies, it cannot give them specific instructions of the outcome since it cannot ‘define or limit’ the ‘final determination’ of these bodies. I.e. it cannot be specific and mandate these bodies to improve a provision.

In short, the Mechanism is ineffective and will not serve the purpose the demandeurs had wanted – to strengthen S&D provisions.

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