Africa’s ‘Contentious issues’ left out of agenda for WTO meeting

African countries hoped to use the Nairobi conference to lobby for their interests. PHOTO | TEA GRAPHIC 

By CHRISTABEL LIGAMI

Posted  Saturday, December 5   2015 at  13:04

In Summary

• Developed countries are reluctant to make a commitment that will allow African nations’ exports easy access, unless rapidly industrialised countries like China, India and Brazil are removed from the cluster of developing nations.

African countries stand to lose their quest for larger market access due to conflicts between developed and Asian countries, ahead of the World Trade Organisation (WTO) Ministerial Summit in Nairobi.

Developed countries — the US and the EU — are reluctant to make a commitment that will allow African nations’ exports easy access, unless rapidly industrialised countries like China, India and Brazil are removed from the cluster of developing nations. This classification means they will have to be given the same preferential treatment African countries want.

The 10th Ministerial Conference, scheduled for December 15 to 18, is the first to be held in Africa. African countries had hoped to use the platform to lobby for their interests.

Confidential sources at the WTO offices in Geneva say Africa’s agenda for the ministerial meeting has been classified under “key contentious issues,” and has not been included in the draft declaration to be adopted by WTO ministers in Nairobi, and will, therefore, not be discussed.

These key contentious issues omitted from the draft Nairobi Ministerial Declaration are agricultural subsidies, market access, trade in industrial goods and trade in services.

Instead members will discuss issues on food security, energy, micro-small-medium sized enterprises, investment, competition, e-commerce and currencies.

“If members stick to these rigid positions, it will be difficult to negotiate a consensus document, known as a Ministerial Declaration, in Nairobi. Ministers will be together for only a few days, and we cannot expect them to resolve everything in such a short time,” said the official.

“If they cannot agree on the way forward, or how we will discuss this in 2016, then there will be a great deal of uncertainty hanging over future negotiations.”

Key issues

Top on the African countries’ priorities is reduction of agricultural subsidies, and implementation of domestic support measures to reduce competition from exports from developing countries.

READ: No deal yet in Africa’s quest for removal of export subsidies

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Other issues are investment, competition policy, transparency in government procurement, and trade facilitation, all of which could further expose domestic markets to competition from foreign companies.

The EAC Director-General of Customs and Trade Peter Kiguta said unless the issue of classifying countries is discussed and resolved, every nation will push for its own interests.

“Developed countries are against the idea of classifying China, India and Brazil as developing countries when they are their key competitors, especially in the manufacturing sector,” said Mr Kiguta.

He added that since China’s exports to Africa have surpassed those of the US and the EU, the country should not be classified as a developing nation.

“WTO should consider changing the classification based on a country’s contribution to the global economy rather than its GDP per capita,” Mr Kiguta said.

He added that emerging powers like China, India, Brazil, Mexico, Indonesia, Malaysia and South Africa are increasingly becoming a threat to developed countries since they are no longer policy takers. This means that these countries now increasingly influence the pattern and scope of international trade, creating new supply and demand pulls and influence in international trade.

“WTO members can no longer ignore the new geopolitics of the world economy and need to address it amicably. This is what countries should be pushing to be included in the Nairobi agenda,” Mr Kiguta said.

Kenya Private Sector Alliance chairman Vimal Shah said although the WTO has helped African countries gain access to bigger markets for their agricultural goods, there is a need to have a level playing field for trade to become competitive.

“Many developed and some developing countries, like China, are offering subsidies to their farmers, which African countries cannot afford. We should therefore not be classified with a country like China under the same cluster of developing countries because we are already losing in terms of market competition,” said Mr Shah, adding that agricultural subsidies to farmers in the US, Europe, and Japan at $1 billion a day are six times the amount these countries provide in development assistance.

“Together with other measures, such as tariffs and quotas, these subsidies make it difficult for developing countries to compete. They allow agricultural exports from rich countries to drive small farmers out of business in developing countries,” said Mr Shah.

Despite a commitment under the WTO to reduce certain agricultural subsidies by 20 per cent, industrialised countries of the Organisation for Economic Co-operation and Development still have rising overall subsidy levels.

African countries have been lobbying to address issues of agricultural subsidies; anti-dumping barriers by rich countries like the US, Japan and Korea that restrict export of agricultural products, steel and other goods from developing countries; the impact of lower industrial tariffs on domestic industries; and the failure of rich countries to provide adequate technical assistance to enable developing countries to comply with trade regulations and thus compete effectively.

Under the WTO, African countries have opened their markets to cheap imports that undermine domestic agriculture and industry; rich countries have not lowered their trade barriers, which cost developing countries $100 billion in lost opportunities.

Doha language

Some members say they cannot agree to a ministerial declaration that does not contain affirmative language on continuing with the Doha Round. Others say they would reject any mention of Doha.

“Some members, including India and China, want to continue on the Doha path, adhering to existing negotiating texts, the Doha Declaration and declarations of subsequent ministerial conferences. These countries fear that without this direction, they may lose the gains made over the past 14 years.

But others believe that progress during those 14 years, and particularly since 2008, has been minimal thanks to the format of the negotiations.

Moreover, these members believe that for the WTO to remain relevant, members must be able to discuss, or possibly negotiate, new issues that are pertinent to businesses today,” said the WTO official.

According to Erick Musau, a business research analyst at Standard Investment Bank, if there is no consensus it could be because members consider issues plurilaterally.

A plurilateral agreement implies that WTO member countries are given the choice to agree to new rules on a voluntary basis. This is in contrast with the multilateral WTO agreements, where all members are party to the agreement.

“Agreements emerging from such negotiations need to be flexible enough to permit developing countries to take on commitments that are implemented over longer time frames. Such agreements could provide technical assistance,” said Mr Musau