IUST: India, ALBA Bloc, Egypt Criticize Nairobi Deal But Stop Short Of Blocking It

India, the ALBA bloc of socialist Latin American countries and Egypt publicly registered their objections to certain parts of the Nairobi package during the closing session of the World Trade Organization ministerial conference on Saturday (Dec. 19), but ultimately stopped short of blocking the deal.

Indian Commerce Minister Nirmala Sitharaman outlined three main objections to the package. The first is that the ministerial declaration did not explicitly reaffirm the continuation of the Doha Round, which she said had been demanded by a majority of WTO members, including India, the G-33 and African Group. The other two objections relate to the rules on export subsidies.

India's informal objections on export subsidy rules are notable in light of the fact that the Nairobi export competition decision that contains them is not legally binding or enforceable under dispute settlement.

The decision contains a paragraph explicitly stating that it does not “imply any change to the obligations and rights” under Article 10.1 of the WTO Agriculture Agreement, or diminish in any way existing obligations under the Agriculture Agreement or WTO Agreements.

With regard to the Doha round, Sitharaman acknowledged that the ministerial declaration instead only outlines the differing views of members on whether the Doha round should continue.

“And therefore mentioning about the division here became inevitable, and all of us are sitting and going along, but on behalf of that large group, I would still say that reaffirmation is the mandate which all of us came here with,” she said. Her comments were briefly interrupted by a power outage at the conference venue.

The second aspect of the package to which Sitharaman objected on behalf of India was the requirement that developing countries eliminate all export subsidies for cotton by Jan. 1, 2017. That is roughly two years ahead of the deadline by which developing countries must eliminate agricultural export subsidies for other goods; however, developing countries may delay that second deadline until 2022 under certain conditions.

Under the Nairobi decision, developed countries are required to eliminate export subsidies for cotton, and generally all other agricultural export subsidies, immediately effective Dec. 19.

 “I had very clearly had mentioned under cotton that for the developing countries we shall not accept the date [of 2017]. That date of 2017 has gone through which is completely unacceptable to me,” she said. Sitharaman said she was under the impression that there would be another chance to seek changes to the text, which was not the case.

Finally, Sitharaman objected to the fact that, in the final text of the export competition decision, the obligations on export subsidies in paragraph nine, 10 and 11 apply to developing as well as developed countries. “The word developed has been dropped and has now become inclusive of developing countries, which is not acceptable to us,” she said.

Paragraph 9 states that members “shall not apply export subsidies in a manner that circumvents the requirement to reduce and eliminate export subsidies,” while paragraph 10 states that members “shall seek not to raise their export subsidies beyond the average level of the past five years on a product basis.”

Paragraph 10 states that WTO members “shall ensure that any export subsidies have most minimal trade distorting effects and do not displace or impede the export of another Member.” The paragraph also includes an obligation for a subsidizing member to consult with any another interested member upon request, and to provide information about its export subsidies to that member upon request.

Prior to the closing session, sources had identified ALBA countries and Egypt as among those WTO members who might object to the package, as they were not part of the negotiations to hammer out a deal among the so-called G-5 group of major WTO members.

The members of that group -- United States, European Union, Brazil, China and India -- worked out during closed-door negotiations the elements of the Nairobi package, including the agriculture deal. The text was then given to the whole membership to review for roughly an hour before reconvening for a final decision.

Prior to the circulation of text, however, certain parts of it were vetted with countries and negotiating groups that had an interest in particular issues, sources said. It is unclear if changes were made as part of that consultation process.

After the text was circulated, one ambassador from a developed country WTO member said he would be extremely surprised if the text was rejected by other members, for two reasons. The first was that the chairs of the negotiating groups had done a good job of understanding the issues that were important for various WTO members and making sure they were addressed in the text.

Second, he said the G-5 countries cover a wide spectrum in terms of their prosperity and their views of world trade, which provided a “bit of a guarantee” that the final product negotiating by this group would be acceptable to all members.

But all of that did not stop the ALBA bloc -- which consists of Bolivia, Cuba, Ecuador, Nicaragua and Venezuela -- from criticizing the negotiating process as driven by major WTO members. This was one of two criticisms the ALBA group raised during the ministerial's closing session, along with the failure of the ministerial declaration to reaffirm the Doha round.

The ALBA statement, delivered by Cuban Vice Minister for Foreign Trade and Investment Ileana Nunez, said its member countries are “profoundly concerned that the negotiations on fundamental issues of this organization are being led by a reduced number of countries to then be submitted to the majority.”

Speaking through a translator, Nunez said the ALBA countries fear that the failure to reaffirm the Doha round in Nairobi will have “serious consequences in the defense of the interests of developing countries” in the future work of the WTO. She said the aim of some members is to introduce new issues to the WTO agenda without concluding the majority of the mandates contained in the Doha round.

“We are not going to give up defending the Doha round, we cannot abandon it whilst all mandates have not been concluded, within the architecture built multilaterally over more than 20 years. On the contrary, indeed if we were to do that we would not be respecting the mandate given to us by the ministers and we would be acting against the interests of this organization,” she said.

While the U.S. has taken the position that the lack of consensus means the Doha round is dead, other countries say it is still alive because there is no consensus to bury it and the WTO takes decisions by consensus.

But Cuba and the ALBA countries did not block the deal in Nairobi, as they did briefly at the 2013 WTO ministerial in Bali, Indonesia, when they objected to the deletion of language in the Trade Facilitation Agreement aimed at undermining aspects of the U.S. embargo on Cuba.

Asked after the closing session of the Nairobi ministerial why the ALBA bloc did not do the same this time around, Nunez said the group was satisfied that the ministerial declaration did include some language stating that development shall remain at the core of the WTO's work, and also did not wish to block a deal in Africa.

While lamenting that the Doha round was not not explicitly reaffirmed, Nunez said the ALBA countries will continue working so that the WTO's future agenda includes the development as one of its fundamental pillars. “We did not really want this text, but this text in general includes these ideas so the ALBA delegations in a constructive manner did not want to block [the package], much less being in Africa,” she told Inside U.S. Trade after the closing session.

Egypt gave a similar rationale as to why it did not block the package despite its objections to the requirement that it eliminate by 2030 export subsidies used for marketing and internal transportation costs. These are known as “Article 9.4” subsidies, taking their name from a provision in the WTO Agriculture Agreement.

Under the Nairobi decision, developing countries are required to eliminate Article 9.4 subsidies by 2023, but that deadline is extended to 2030 for least-developed countries (LDCs) and net food-importing developing countries (NFIDCs). Egypt is a member of the latter group.

“We have emphasized and continue to underscore the importance of providing NFIDCs and LDCs the flexibility to continue benefiting from Article 9.4, where we would have favored to benefit from it indefinitely,” the Egyptian representative said at the closing session.

He said Egypt has shown “extreme flexibility” in participating in the negotiating process and has respected members' sensitivities and red lines in many areas. In light of that, Egypt expects to receive the same consideration of its sensitivities from other members, he added.

“Madam chair, in the spirit of compromise and out of respect to our host country Kenya, given the circumstances, we would go along with the text as presented to us,” he said.

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