WTO failure to adapt to trade shifts could hamper Nairobi talks

The World Trade Organization could miss an opportunity to advance fairer international trade at its 10th ministerial conference in Kenya this week as it struggles to respond to a growing shift toward alliances between countries that bypass the 20-year-old body.

More than two dozen ministers from the body’s 162 members are skipping the biennial meeting starting Tuesday in the capital, Nairobi. Those present will be handed a messy document because trade negotiators in Geneva couldn’t agree on the content of the draft declaration to be issued at the end of the four-day gathering.

“The WTO has to adjust to a changing world environment,” Wilma Viviers, director of the TRADE research unit at South Africa’s North-West University, said by phone on Dec. 9. “There are big forces at play, with countries like the U.S., the E.U., Australia, New Zealand and others who are negotiating free-trade agreements, that may start functioning alongside the WTO soon.”

The Nairobi meeting looks unlikely to complete the WTO’s so-called Doha round of talks that began in the Qatari capital about 15 years ago. The objectives set out then were meant to add billions of dollars to the global economy by spurring cross- border commerce. Negotiations have been stuck since 2009 because of differences between wealthy and poor nations, chiefly over subsidized farming in the developed world.

Pacific Rim

As progress has stalled, nations have thrashed out deals that aren’t fully governed by the WTO. The U.S. and some of its trading partners have proposed the Trans-Pacific Partnership with 12 Pacific Rim nations and the Transatlantic Trade and Investment Partnership with the European Union.

Developing nations will arrive in Nairobi seeking commitments to conclude initiatives from the Doha Development Agenda and assurances talks will continue beyond this week’s meeting. Developed nations such as Australia, Japan and the U.S., along with the European Union, oppose guarantees on the course of future talks.

“There are a few other members who are of the view that the Doha round is effectively dead and that the work program can address some of the issues, but not within the framework and mandate” of Doha, South African Trade and Industry Minister Rob Davies said at a press conference in Cape Town. “That is the issue — what is going to be said about the future work program of the WTO?”

His government wants to see the Doha objectives completed before talks move on, Davies said. That includes issues such as rich nations’ agricultural subsidies, especially for cotton.

Still Relevant?

The “Doha Round is not addressing the current needs of its members,” Darlington Mwape, senior fellow at the Geneva-based International Centre for Trade and Sustainable Development, said in an interview in Nairobi. “Unless we adjust the mandate of the Doha round to include other relevant issues, it may turn out to be irrelevant.”

Debate in Nairobi may revolve around the Trade Facilitation Agreement, a compromise deal to improve customs procedures for goods from least-developed countries, or LDCs, that the WTO says could increase merchandise exports by as much as $1 trillion a year. At least two-thirds of members need to assent to the accord, with Kenya being the latest and 57th to do so.

A fully implemented TFA could cut global trade costs by as much as 17.5 percent, according to the Organization for Economic Cooperation and Development, helping to counter slowing cross- frontier commerce. The WTO has reduced its forecast for 2015 world trade growth to 2.8 percent from 3.3 percent, the fourth consecutive year of expansion at slower than 3 percent.

Despite the low expectations, some progress is possible in Kenya this week. Geneva-based negotiators have been working on a package that could include export subsidies for LDCs, according to South Africa’s Davies. Another positive outcome could be the passage of a deal ending tariffs on $1.3 trillion in information-technology products.

“You wouldn’t really expect that the contentious issues will be resolved next week,” William Mwanza, a researcher at the Stellenbosch-based Tralac Trade Law Centre, said Dec. 11. “It’s taken 15 years, and in the past week there hasn’t really been so much progress, so you wouldn’t really expect much next week.”

 – Bloomberg [With assistance from Paul Vecchiatto]