WTO Nairobi ministerial: What awaits for LDCs?

With less than two weeks in hand, Least Developed Countries (LDCs) have nothing to do but wait for the 'final drama' of the World Trade Organisation (WTO), to be staged in Kenyan capital, Nairobi. It is the 10th ministerial conference (MC10) of the multilateral trade body, scheduled to be held on December 15-18 this year, to finalise some rules for global trade where share of the LDCs is very thin -- around 2.0 per cent. Nevertheless, the LDCs are not shielded from the fluctuations in global trade as well as its rules. Being poor with limited capacities to contain any turmoil, these countries have to rely on the multilateral platform named WTO.
PROLONGED DOHA ROUND: Member countries of the WTO have been negotiating for 14 years to set the rules on trade in agriculture, industrial products, services as well intellectual property rights, trade facilitation and dispute settlement in broader terms. The negotiation phase, initiated in 2001 at the 5th WTO Ministerial conference in Qatar's capital Doha, is known as Doha Development Agenda or Doha Round.  Once members have completed their negotiations, they will formally endorse a set of agreements as a binding commitment through which global trade will be guided.  
But the negotiation process is very cumbersome as different members have different interests in trade. The major rifts among the developed and developing countries originate from farm subsidy and tariff cuts on industrial products.  Developing countries led by India, Brazil and South Africa are demanding significant reduction of subsidies provided by the developed countries. Developed countries led by the United States and European Union, on the other hand, are not inclined to do so, and are demanding reduction of tariffs on merchandise products by the developing nations. In this game, the LDCs are not in the picture as the Doha Round has exempted these countries from any commitment.  Moreover, one of the Doha agenda is about commitment from the developed countries to provide duty-free, quota-free (DFQF) market access to LDC exports as well as technical cooperation to improve their capacities.
The so-called 'single undertaking' arrangement, which is considered as the basis of the Doha Round, makes the situation more difficult.  This arrangement compels the WTO to implement all the agreements at a time after completion of the negotiation. The saying 'nothing is agreed until everything agreed' is so all pervading that LDCs find it very difficult to put their issues separately for consideration.
HOPE IN BALI: In the last ministerial conference in Bali two years back, WTO members agreed on a smaller package dubbed Bali Package which accommodated only a few Doha agendas including Agreement on Trade Facilitation (ATF). ATF becomes the first agreement endorsed by the WTO members since its inception. Other components of the Bali Package included food stockpiling, tariff rate quotas (TRQs), cotton and a number of LDC-specific development issues.  Except ATF, no part of the Bali package is binding in nature. That's why, the ministerial decision on DFQF for LDCs is yet to bring any development.
The ministerial decision actually urged developed countries to improve their existing DFQF coverage prior to the next ministerial conference in Nairobi. But it doesn't obligate them to increase coverage to 97 per cent. That's why, the USA is yet to pay attention to the DFQF demand of Bangladesh. In fact, US is the only developed country that doesn't provide tariff-free market access to Bangladesh. And Bangladesh and Cambodia are only two LDCs whose products face higher customs duties while entering into the US market. The Bali decision also asks members to report on the implementation of DFQF decision at the forthcoming Ministerial Conference. So, LDCs will get an update in this regard at the Nairobi conference, although it is well-known that the situation has changed very little since the Bali conference in this regard.
Looking through a twisted lens, 100 per cent DFQF is no more a demand of the LDCs. Bangladesh, the coordinator of the LDC group at the WTO, has rightly pointed out that 'demanding a meaningful and effective' market access is more important. The draft proposal for inclusion in the declaration of 10th ministerial conference submitted by Bangladesh on behalf of LDCs mentioned that "we put emphasis on legally binding, and commercially meaningful outcomes: On transparent, objective and simplified Rules of Origin, Duty Free and Quota Free Market Access, Services, and Cotton." That means LDCs are pushing for substantive, binding, LDC-specific decisions.
A well-coordinated negotiation is required, as always, to achieve these 'legally binding and commercially meaningful' outcomes in Nairobi.  In reality, LDCs' scope for negotiation in Nairobi is already over as representatives and officials in Geneva are now busy in trying to minimise divergences between developed and developing countries.  
CLEAR DIVERGENCE: In a greenroom meeting in Geneva last week, big developing countries headed by India, South Africa, Brazil and China strongly opposed the proposed draft text of the declaration and submitted a counter proposal. These three countries, with support from Indonesia, Venezuela and Ecuador, demanded that the Nairobi conference can not be the conclusion of the incomplete Doha round. But, the developed world, headed by the United States, European Union and Japan, is pursuing for conclusion of prolonged Doha round which produces little outcome so far.
There is also divergence among the LDCs on, among others, market access issues. Many African LDCs are in discomfort over tariff-free market access for Bangladesh especially in the United States. Shamim Ahsan, Bangladesh Ambassador to WTO and Coordinator of the LDC Consultative group at the WTO, in an interview with ICTSD Bridge News hinted at this. When asked whether the LDC group managed to find common ground on the DFQF issue, he said: "The DFQF issue is, again, a work in progress. It is being discussed in a particular mode. A dedicated session was held at WTO Committee on Trade and Development (CTD) and we are now developing the parameters of a study on DFQF which will tell us the way to follow on this issue."
A recent study by ICTSD finds that LDCs' combined exports would expand by 2.9 per cent globally if developed and selected developing countries (China, India and South Korea) allowed 100 per cent DFQF to the poor countries. Among 48 LDCs, countries like Haiti, Uganda, Malawi, Cambodia, Bangladesh and Nepal will be the biggest gainers. And the only LDC that appears to lose is Lesotho. But, the loss is only 1 per cent of imports or about US$5 million. The loss derives from the erosion of Lesotho's preference margins mainly on apparel exports to the US, to the benefit of competing LDCs, like Bangladesh and Cambodia. While Lesotho's opposition to 100 per cent DFQF for LDCs is understandable, joining of Haiti with Lesotho is confusing.
GLIMMER OF HOPE: Divergence among the LDCs in their trade interests is not a new phenomenon. This divergence is there since the inception of the WTO. However, the LDCs did try in the past to take some common position in the multilateral trade talks as they are exempted from any kind of obligations in the Doha Round. Thus, there is still an opportunity for the LDCs to reach a convergence in their positions. Here Bangladesh, as the leader of the group, has a role to play.
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