Published in The Financial Express on Friday, 18 December 2015

Move to bring LDC package for WTO’s ‘face-saving’

ROO relaxation for poor states likely
Asjadul Kibria


NAIROBI, Dec 17: As there is no sign of reducing the differences among the members of the World Trade Organisation (WTO) to reach a deal, a move to prepare a small package for the Least Developed Countries (LDCs) is the only advancement so far.

This was appeared on the third day of the 10th ministerial conference (MC10) of the WTO in Kenya. The conference formally started in Nairobi, the capital of Kenya, on Tuesday, and is scheduled to end today (Friday).

The developed countries, headed by the United States, the European Union and Japan, want to conclude the 14-year-long Doha negotiation. But the developing countries, headed by China, India and Indonesia, oppose the move. The LDCs, coordinated by Bangladesh, also oppose discontinuation of Doha negotiation without implementing the decisions already taken.

There are also differences among the countries on introducing new issues, like – labour and environment, in the multilateral trade regime.

“Amid rigidity among both the developed and the developing countries to reduce the gaps, the LDCs’ only option is to continue pressurising for consolidation of Bali Package,” said Professor Mustafizur Rahman, executive director of Centre for Policy Dialogue (CPD).

He, however, observed that there is still little improvement in the area of commercially meaningful duty-free and quota-free (DFQF) market access, as demanded by the LDCs.

“So far, only development that has appeared is in relaxation of rules of origin (ROO),” he added while talking with the FE.

A draft text has already been prepared on the basis of guidelines contained in the Bali ministerial decision, taken in 2013, to set criteria for preferential ROO for LDCs.

The developed countries may agree on maintaining 25 per cent local value addition for goods to be manufactured in the LDCs for granting preferential treatment.

According to the draft text, members ‘shall consider’ allowing 75 per cent of foreign inputs to make up the final value of a product to qualify for preferential treatment, said sources.

Though in WTO language, ‘shall’ represents binding commitment, putting the term ‘consider’ weaken the scope of implementation. Some of the developing countries actually pushed for putting ‘consider’ instead of ‘aim’ as proposed.

To recognise concern of the developing countries, the draft text proposes to allow them to undertake commitments on ROO for the LDCs on ‘best endeavour basis’, meaning no obligation within a stipulated timeframe.

Finally, if adopted, decisions on relaxed ROO have to be implemented by the end of 2016.

Commerce Minister Tofail Ahmed expressed optimism on relaxation of rules of origin.

“There will be a beneficial outcome for Bangladesh as well as other LDCs,” he told journalists.

On service trade wavier, work is still going on, as the preference-giving countries want more flexibility. Following Bali decision, the LDCs jointly submit a collective request, where they mentioned the sectors they want to be opened-up by preferential treatment.

The draft text for Nairobi contains binding language on reducing administrative procedures and fees for visas, work permits, residence permits, and licenses in favour of the LDC service suppliers and independent professionals as well as on the issue of mutual recognition of qualification. But the developing and some developed countries still have reservation.

On overall progress of the conference, Mr Ahmed, who is also the coordinator of the LDC-group in WTO, said: “We want a positive ministerial declaration.”

Regarding the ongoing differences whether to continue or not the Doha negotiation, Dr Debapriya Bhattacharya, distinguished fellow of CPD, observed that the ‘Doha round is in twilight zone’, and ‘within next 48 hours it will be decided whether the sun will rise or set.’

“It is not the Doha round per say, but the objectives and concerns we have to consider,” he told the FE during a sideline event of the conference, organised by the International Centre for Trade and Sustainable Development (ICTSD).

“If the concerns and priorities contained in the Doha agenda can be carry over through a new agenda, we should not oppose. But face-saving efforts by bringing the LDC package or mini-package will not be the solution,” he added.

United States Trade Representative (USTR) Michel Forman, in a briefing with selected journalists on Thursday categorically said as Doha negotiation is yet to bring the expected outcome during the last 14 years, it is time to move forward with new realities of the world economy.

Nicolas Imboden, executive director of Geneva-based International Trade, Development, Economic Governance Advisory Services (iDEAS) centre, opined that both the developed and the developing countries have come into a compromise to find the way forward.

“Everything is on the table now, and they need to compromise. It is wrong to think that the developed countries could impose discontinuation of Doha round, and it is also wrong to think that the developing countries could resist the huge pressure of the powerful nations,” he told the FE.

Imboden was of the view that ultimately ‘it is the political will’ that would determine the future direction of the multilateral trade regime.




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