South Centre Report, 15 November 2013

WTO Negotiations on Trade Facilitation: Development Perspectives

A possible new trade facilitation agreement has occupied the most time in the preparations for the WTO’s Ministerial Conference in Bali in December.  A new experts report is being issued by the South Centre on “WTO’s Trade Facilitation Negotiations:  Development Perspectives”. This report has drawn from meetings of trade expert group meetings organised recently by the South Centre to examine the issues being discussed for the Bali Ministerial as well as longer-term issues relating to the multilateral trading system.

The experts report points out that while it may be beneficial for a country to improve its trade facilitation, this should be done in a manner that suits each country, rather than through international rules which require binding obligations subject to the dispute settlement mechanism and possible sanctions when the financial and technical assistance as well as capacity building requirements for implementing new obligations are not adequately addressed.

Thus one possibility is that the agreement provides that substantive provisions in the present Section 1 of the draft text are not legally binding on developing countries, just as the provision of financial resources and technical assistance is non-binding on developed countries.  Instead, developing countries can endeavour to meet the obligations on an aspirational basis, and can apply for financial resources for programmes to upgrade their trade facilitation capacities.

In the case commitments under a multilateral trade facilitation agreement are undertaken, these should be approached in a way that would provide developing Members and LDCs with policy space and flexibility to adopt and implement commitments commensurate with their capacity to do so, and subject to the provision of technical and financial assistance and capacity building.  Developing Members and LDCs could then, at their discretion, progressively move into higher levels or standards of implementation, when capacity exists to do so, taking into account their development context.

Achieving the above necessitates a balanced agreement with effective and binding rules on SDT.  Moreover, least developed countries should be exempted from undertaking binding commitments as long as they remain LDCs.  This would be consistent with the understanding in other components of the Doha work programme.

On the basis of the current content of the negotiating text and given the current internal imbalance in the proposed agreement, developing countries are advised to be very cautious about rushing into a trade facilitation agreement by the ministerial conference in Bali, given the serious implementation challenges it carries.

The report reflects the views of several eminent experts of developing counties who are knowledgeable about the WTO rules and negotiations.   Among the experts are Rubens Ricupero (former Secretary General of UNCTAD), S. Narayanan (former Ambassador of India to the WTO), Ali Mchumo (former Managing Director of the Common Fund for Commodities and former Ambassador of Tanzania to the WTO), Li Enheng (Vice Chairman, China Society for WTO Studies), Carlos Correa (Professor, University of Buenos Aires), Deepak Nayyar (Vice Chair, Board of South Centre, former Vice Chancellor of Delhi University and former Chief Economic Advisor to Government of India), Yilmaz Akyuz (Chief Economist, South Centre, former Director of UNCTAD’s Globalisation and Development Strategies Division) and Chakravarthi Raghavan (Editor Emeritus of South-North Development Monitor).

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