WTO members concluded their Tenth Ministerial Conference in Nairobi on 19 December by securing an historic agreement on a series of trade initiatives.
The “Nairobi Package” pays fitting tribute to the Conference host, Kenya, by delivering commitments that will benefit in particular the organization’s poorest members.
The Nairobi Package contains a series of six Ministerial Decisions on agriculture, cotton and issues related to least-developed countries. These include a commitment to abolish export subsidies for farm exports.
Decisions were also made regarding preferential treatment for least developed countries (LDCs) in the area of services and the criteria for determining whether exports from LDCs may benefit from trade preferences.
The WTO’s Tenth Ministerial Conference was held in Nairobi, Kenya, from 15 to 19 December 2015, the first such meeting hosted by an African nation. The Conference was chaired by Kenya’s Cabinet Secretary for Foreign Affairs and International Trade, Amina Mohamed.
The Conference was opened on 15 December by Kenya’s President, Uhuru Kenyatta.
During the opening session, the Conference was also addressed by the Chair of the WTO’s General Council, Fernando de Mateo.
Agreements on Agriculture
A centrepiece of the Nairobi Package is a Ministerial Decision on Export Competition, including a commitment to eliminate subsidies for farm exports.
A number of countries are currently using export subsidies to support agriculture exports. The legally-binding decision would eliminate these subsidies and prevent governments from reverting to trade-distorting export support in the future.
Under the decision, developed members have committed to remove export subsidies immediately, except for a handful of agriculture products, and developing countries will do so by 2018. Developing members will keep the flexibility to cover marketing and transport costs for agriculture exports until the end of 2023, and the poorest and food-importing countries would enjoy 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. These disciplines include 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.
Ministers also adopted a Ministerial Decision on Public Stockholding for Food Security Purposes. The decision commits members to engage constructively in finding a permanent solution to this issue. Under the Bali Ministerial Decision of 2013, developing countries are allowed to continue food stockpile programmes, which are otherwise in risk of breaching the WTO’s domestic subsidy cap, until a permanent solution is found by the 11th Ministerial Conference in 2017.
A Ministerial Decision on a Special Safeguard Mechanism (SSM) for Developing Countries recognizes that developing members will have the right to temporarily increase tariffs in face of import surges by using an SSM. Members will continue to negotiate the mechanism in dedicated sessions of the Agriculture Committee.
In addition, a Ministerial Decision on Cotton stresses the vital importance of the cotton sector to LDCs. The decision includes three agriculture elements: market access, domestic support and export competition.
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 to those of developing countries declaring that they are able to do so — from 1 January 2016. The domestic support part of the cotton decision acknowledges members’ reforms in their domestic cotton policies and stresses that more efforts remain to be made. On export competition for cotton, the decision mandates that developed countries prohibit cotton export subsidies immediately and developing countries do so at a later date.
Decisions of benefit to LDCs
The Nairobi Package also contains decisions of specific benefit to LDCs, including enhanced preferential rules of origin for LDCs and preferential treatment for LDC services providers.
Preferential rules of origin for LDCs
The Ministerial Conference adopted a decision that will facilitate opportunities for least-developed countries’ export of goods to both developed and developing countries under unilateral preferential trade arrangements in favour of LDCs.
The decision in Nairobi builds on the 2013 Bali Ministerial Decision on preferential rules of origin for LDCs. The Bali Decision 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 upon 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. It calls on preference-granting members to consider allowing the use of non-originating materials up to 75% of the final value of the product.
The decision also calls on preference-granting members to consider simplifying documentary and procedural requirements related to origin.
Key beneficiaries will be sub-Saharan African countries, which make up the majority of the LDC Group, the proponent for the Nairobi Decision on Preferential Rules of Origin for LDCs.
LDC trade in services
The Ministerial Decision on Implementation of Preferential Treatment in Favour of Services and Service Suppliers of Least Developed Countries and Increasing LDC Participation in Services Trade: It extends the current waiver period under which non-LDC WTO members may grant preferential treatment to LDC services and service suppliers. The waiver, adopted in December 2011, runs 15 years. The Ministerial Decision extends this an additional four years, or until 31 December 2030.
The waiver allows WTO members to deviate from their most-favoured nation obligation under the General Agreement on Trade in Services (GATS). To date, 21 members have submitted notifications granting preferences to LDC services and service suppliers. The decision also instructs the WTO’s Trade in Services Council to encourage discussions among members on technical assistance aimed at increasing the capacity of LDCs to participate in services trade. It also sets up a review to monitor the operation of the notified preferences.
WTO members secure landmark $1.3 trillion IT trade deal
In another significant outcome from the Nairobi Ministerial, WTO members representing major exporters of IT products agreed on 16 December on the timetable for implementing a landmark deal to eliminate tariffs on 201 information technology products valued at over $1.3 trillion per year.
Negotiations on the expanded Information Technology Agreement (ITA) were conducted by 53 WTO members, including both developed and developing countries, which account for approximately 90% of world trade in these products. However, all WTO members will benefit from the agreement, as they will all enjoy duty-free market access to the markets of the members eliminating tariffs on these products.
The list of 201 products was originally agreed by the ITA participants in July 2015.
For every product on the list, ITA participants have negotiated the level of reductions and over how many years it will fully eliminate the tariffs. As a result of these negotiations, approximately 65% of tariff lines will be fully eliminated by 1 July 2016. Most of the remaining tariff lines will be completely phased out in four stages over three years. This means that by 2019 almost all imports of the relevant products will be duty free.
Trade ministers welcomed the conclusion of negotiations on the accessions of Liberia and Afghanistan at the Tenth Ministerial Conference.
Liberia will formally become a member of the WTO 30 days after notifying the organization that it has ratified its accession terms.
Afghanistan applied for WTO membership in 2004 and will formally take its seat at the WTO 30 days after its ratification instrument is received.