WTO Trade Negotiations: Doha Development Agenda, Bali Package and Nairobi Package

There are more or less 60 agreements which are administered by the WTO. However, there are six agreements which made the foundation of this multilateral organization as follows:

• The Agreement on Agriculture (AoA)
• Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
• Agreement on the Application of Sanitary and Phytosanitary Measures (SPS)
• Agreement on Technical Barriers to Trade (TBT)
• Agreement on Trade Related Investment Measures (TRIMS)
• General Agreement on Trade in Services (GATS)

The above agreements more or less make various provisions for removing the trade and non-trade barriers, protection of domestic industries, protraction of farmers, protection of intellectual property etc. These agreements were finalized in the Uruguay round of trade negotiations that led to conclusion of the GATT agreements and establishment of WTO. To take the trade negotiations to further level, the negotiations had started in 2001 at the Doha round.

Doha Round

To take the trade negotiations to further level, Doha Development Round or Doha Development Agenda (DDA) commenced in November 2001. The overall objective is to lower trade barriers around the world, which would help facilitate the increase of global trade. The Uruguay round had already included many agreements on vital issues such as trade in agriculture and trade in services. The agenda in Doha Round was to expand the agriculture and services talks to allow trade-offs and thus achieve greater trade liberalization.  The main negotiating issues and the key elements from India’s perspective in the Doha Round are as follows:

Agriculture

Substantial and effective reductions in Overall Trade-Distorting Domestic Support (OTDS) by developed countries;

Self designation of an appropriate number of Special Products (SPs);

An operational and effective Special Safeguard Mechanism (SSM); and

Tariff simplification and tariff capping of developed country tariffs.

Non-agricultural Market Access (NAMA)

• NAMA covers manufacturing products, fuels and mining products, fish and fish products, and forestry products. These products are not covered by the Agreement on Agriculture or the negotiations on services. The Doha Talks require adequate and appropriate flexibilities for protecting economically vulnerable industries; participation in sectoral initiatives on a non-mandatory and good faith basis without prejudgement of the final outcome. The special and differential treatment for developing countries must be substantial.
• Non tariff barrier (NTB) textual proposals with wide support such as the Horizontal Mechanism must be taken up on a more serious note.

Services

• The qualitative improvement in the revised offers especially on crosses border supply and movement of natural persons.

TRIPS

• Establishing a clear linkage between the TRIPS Agreement and the Convention on Bio-diversity (CBD) by incorporating specific disclosure norms for patent applications; and Enhanced protection for geographical indications (Gls) other than wines and spirits.

Why Doha Talks failed?

The Doha round of talks failed because of the divide between the developed and developing countries on WTO, IMF and World Bank.

• The key argument of the developing countries was that the current rules and regulations are more in favour of the developed or industrialised countries; and the developed countries don’t come forward for trade concessions for the developing countries. The developing countries set the market conditions as per their own needs.
• On the other hand, the developed countries and blocks such as EU argue that the developing economies don’t comply with their demands for near zero-tariffs in agriculture and services.

During most of the Doha talk rounds, the developed countries pressurized the developing countries to open their markets further via a so called Trade Facilitation Agreement (TFA). On the other hand, the developing countries pressurized the developed countries to bring more transparency to rules and regulations in the global financial bodies; and for removing or raising the cap on food and agricultural subsidies (this also known as “aggregate measure of support”, or AMS). The issue got politicised in both the blocks.

Further, the developing countries also could not make some credible union {G-33 had not strong coherence} to put their cause and lacked a coherent strategy.  Summarily, the Doha Round talks failed because of the following:

• Inability of the participating countries to achieve an agreement in the key areas of agricultural subsidies and tariffs.
• Developing countries have sought an agreement from developed countries on cutting back farm subsidies as well as tariffs.
• Developing countries seeking bigger cuts on industrial tariffs to have more market access.

Analysing India’s Stand during Doha Round

India along with G-33 group of developing countries wanted right for food stockholding for food security purposes. India took very extreme position from the beginning and wanted substantial and effective reductions in overall trade-distorting domestic support (OTDS) of the US and EU. Later, India softened its stand on both the key issues viz. Trade Facilitation Agreement (TFA) and subsidy on procurement, stocking and distribution of food grain during the Bali conference.

• TFA, as mentioned above is prime interest to developed countries, which want hassle-free access to markets in countries like India. The concerns of India as well as G-33 countries are to address the food security problem. The Doha talks had collapsed mainly due to food production- and stocking-related disputes. India is willing to bargain on this front to secure developed countries’ consent for removing or raising the cap on food and agricultural subsidies.
• India cannot go ahead with caps on food and agricultural subsidies particularly when the Food security act is in implementation. This implies that India can face retributive tariffs from developed countries.

This is why India softened its stand and ready to accept middle path which can exempt the developing countries to carry on with the food subsidies. On Trade Facilitation Agreement (TFA) front, the trade talks involve the removal of red tape (Custom Raj) from cross border transactions i.e. harmonize the custom clearance norms and introduce the sweeping changes in domestic procedures. The talks also involve expansion of infrastructure at entry points. For the developing countries, these are hard to meet demands without external assistance.

Ninth Ministerial Conference 2013 and Bali Package

The Ninth Ministerial Conference of WTO was held in Bali, Indonesia on 3–7 December 2013. The key issues discussed in this meet included Trade facilitation, Agriculture negotiations, Cotton, Least-developed countries, Monitoring mechanism, Small and vulnerable economies, Yemen’s accession, E-commerce, Non-violation in intellectual property etc. The outcome of this package was the first agreement reached through the WTO called Bali Package. But there were unresolved issues in this Bali Package also, which are discussed below:

• Under Bali package, the WTO agreed to allow developing countries to provide subsidy on food crops without any punitive action via a so called Peace Clause, which offered four years of immunity against penalties imposed for breaching the farm subsidy cap of 10 per cent under the WTO Agreement on Agriculture (AoA). However, India rejected this clause in want of a permanent solution to its food security act.
• Developing countries sought an end to the export subsidies given to farmers by the developed countries which give them edge in exports. United States came up with a new US Farm Bill 2014 to ensure that there would be no cut in export subsidies.
• Developing countries and LDCs wanted special safeguards and changing of rules related to public stockholding for food security.

Overall, the developing countries said that the developed ones just are rallying behind the Trade Facilitation Agreement to get the markets opened up in developing countries to their goods and services; without providing permanent solutions to their problems. They wanted an agreement on special safeguard measures (SSM) to protect farmers against import surges.

SSM is a tool that allows developing countries to raise tariffs temporarily to deal with surges in agricultural imports or price falls. Developing and developed nations are at loggerheads over the ‘trigger factor’ that allows a developing country to raise tariff on imports and the level of tariff that can be imposed.

10th Ministerial Conference and Nairobi Package

The Tenth Ministerial Conference of the WTO was held in Nairobi, Kenya during 15-19 December 2015. This was the first such meeting to be hosted by an African nation. The agenda of this meeting was to take forward issues that were unresolved during last ministerial conference in Bali in 2013.

The Nairobi Package

After five days negotiations, a “Nairobi Package” was defined which contained a series of six ministerial decisions on agriculture, cotton and issues related to LDCs. These include a commitment to abolish export subsidies for farm exports”. As per this package:

• Developed countries such as United States will need to eliminate the farm export subsidies immediately, except on a handful of agriculture products. The developing countries were allowed to end these export subsidies by 2018.
• The Developing countries were given flexibility to cover marketing and transport costs for agriculture exports until the end of 2023. Additional time was given to the poorest and food importing countries. This simply implied that India will not be able to offer export subsidies for sugar and other farm products after eight years.
• No final decision was taken on public stock-holding as well as Special Safeguard Mechanisms (SSM).
• The countries struck a deal on IT trade whereby, they would eliminate the tariffs on 201 IT products per year. The idea is to make all IT products duty-free by 2019.

India’s Concerns with Nairobi Package and Current Status

India wanted public food procurement to be exempted from subsidy reduction deals under WTO norms, which say public stockholding must not exceed 10 per cent of the value of food grains produced. India’s argument was that it should have permanent freedom instead of a temporary peace clause to use its food reserves to feed its poor without the threat of violating any international obligations. This issue remains unresolved so far. Further, India wanted to get the Doha Development Agenda reaffirmed. Towards this, India also had given a written submission to Director General WTP and chair of 10th ministerial conference. But WTO seemed to leave it where it was and move on. This was a setback for India.