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WTO Agrees on Measures to Aid LDCs but Fails to End Doha Round

Tuesday, December 22, 2015
Sandler, Travis & Rosenberg Trade Report

World Trade Organization members reached agreement on a series of trade initiatives largely benefiting least-developed countries but failed to find consensus on the fate of the long-running Doha Round negotiations at a ministerial meeting in Kenya that wrapped up Dec. 19.

According to the WTO, the so-called Nairobi Package contains six ministerial decisions on the following issues.

Export competition – Developed member countries committed to remove export subsidies for farm exports immediately, with a handful of exceptions. Developing countries will follow suit by 2018 but will keep the flexibility to cover marketing and transport costs for agriculture exports until the end of 2023. The poorest and food-importing countries will have 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; e.g., 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 are given longer time to implement these rules.

Public stockholding for food security purposes – Thedecision commits members to engage constructively in finding a permanent solution to this issue. Under a 2013 ministerial decision developing countries are allowed to continue food stockpile programs that are otherwise at risk of breaching the WTO's domestic subsidy cap until a permanent solution is found by the 11th ministerial meeting in 2017.

Special safeguard mechanism for developing countries – This mechanism recognizes that developing members will have the right to temporarily increase tariffs in the face of import surges by using an SSM. Members will continue to negotiate this mechanism in dedicated sessions of the Agriculture Committee.

Cotton – On market access, the decision calls for cotton from LDCs to be given duty-free and quota-free access to the markets of developed countries and those developing countries declaring that they are able to do so from Jan. 1, 2016. The domestic support part of the decision acknowledges members’ reforms in their domestic cotton policies and stresses that more efforts remain to be made. On export competition, the decision mandates that developed countries prohibit cotton export subsidies immediately and that developing countries do so at a later date.  

LDCs – A 2013 ministerial decision on preferential rules of origin for LDCs set out, for the first time, a set of multilaterally agreed guidelines to help make it easier for LDC exports to qualify for preferential market access. The Nairobi Decision expands on this by providing 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. The decision calls on preference-granting members to consider (a) allowing the use of non-originating materials up to 75 percent of the final value of the product and (b) simplifying documentary and procedural requirements related to origin. In addition, the Nairobi Decision extends the current waiver period under which non-LDC WTO members may grant preferential treatment to LDC services and service suppliers for 15 years, until Dec. 31, 2030. To date, 21 members have submitted notifications granting preferences to LDC services and service suppliers.

The WTO states that member countries reaffirmed the organization’s pre-eminence as “the global forum for trade rules setting and governance” and recognized the contribution that the rules-based multilateral trading system has made to the strength and stability of the global economy. In the face of a growing trend toward regional trade agreements like the recently concluded Trans-Pacific Partnership, members emphasized the need to ensure that such agreements “remain complementary to, not a substitute for, the multilateral trading system” and said the WTO’s Committee on Regional Trade Agreements will be discussing the systemic implications of RTAs for the multilateral trading system and their relationship with WTO rules.

At the same time, no clear determination was made on the Doha Round, which was launched in 2001 but stalled due to intractable differences on key issues and has been overtaken by developments in the global economy. The U.S., the EU and others had pushed for a definitive end to the negotiations but many developing countries disagreed. The WTO said following the ministerial meeting that member countries acknowledged these different views but affirmed their “strong commitment … to advance negotiations on the remaining Doha issues.” It remains to be seen what form that may take, though the U.S. appears to have taken the position that the Doha Round is over.

Also at the ministerial members (a) welcomed the conclusion of negotiations on the accessions of Liberia and Afghanistan, which will take effect 30 days after each country notifies the WTO that it has ratified its accession terms, and (b) noted six new ratifications of the Trade Facilitation Agreement, bringing the total to 63.

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