Eyes On WTO Ministerial, Nairobi

A lot is at stake in the World Trade Organisation (WTO) Ministerial meeting getting underway in Nairobi – for New Zealand, for developing countries and for the multilateral trading system – says NZ International Business Forum Executive Director Stephen Jacobi.

The tenth WTO Ministerial meeting is being held in Nairobi 15-18 December and will be attended by newly appointed New Zealand Trade Minister Hon Todd McClay.

“As the pre-eminent body of multilateral trade rules and the arbiter of global trade disputes, the WTO is critically important to New Zealand”, says Stephen Jacobi.

“Today the WTO’s role in liberalising trade and eliminating trade barriers is being relegated to second or even third place as economies look to bilateral and regional agreements to boost trade growth.  While regional agreements provide benefits for the participants, this approach risks leaving behind the world’s poorest countries, which need the WTO to provide the means for them to compete on a more level playing field in global trade”.

The WTO’s Doha Development Agenda launched in Doha, Qatar in 2001 was dubbed a “development round” precisely to foster a more inclusive approach to trade and investment, but Doha has languished since Ministers came close but ultimately failed to conclude the round in July 2008.

“With Doha seemingly on a very slow burn, the WTO agenda risks becoming out of date as business models continue to evolve rapidly. In a world of global value chains the time and cost of doing business is paramount.  It is important, therefore, that the WTO members move to ratify the Trade Facilitation Agreement (TFA), concluded at last year’s Ministerial in Bali two years ago.  So far only 57 members (including New Zealand) have ratified and 108 ratifications are required to enable TFA to enter into force.  If something as obviously beneficial as customs co-operation cannot be quickly implemented, it is hard to see how other more complex issues can be addressed”.

Mr Jacobi says regional agreements like the Trans Pacific Partnership (TPP) are not substitutes for effective action in the WTO.

“While regional agreements like TPP can help move forward the trade liberalisation agenda, they do not deal effectively with issues like agricultural and export subsidies which need solutions involving all trading partners.  Some might prefer it if these issues were never dealt with, but that is not likely to lead to concessions being made in other areas of importance such as market access for goods and services.  Only a comprehensive outcome which delivers benefits for all participants is likely to achieve the consensus necessary to enable the WTO to move on to next generation trade issues”.

Mr Jacobi said that Ministers were faced with a stark choice in Nairobi – having to wind up Doha at this point or re-committing to its conclusion in a specified time frame.  At the very least Ministers need to come take significant decisions on other key issues on the Nairobi agenda such as the elimination of export subsidies, a package of measures to assist development and liberalisation of environmental goods and services.  A future expansion of the WTO Information Technology Agreement (ITA) covering trade in electronic products is also under consideration.

“Many in business have already given up on Doha, but they have not yet given up on the WTO.  Hopefully something of the ‘spirit of Paris’ can flow over to Nairobi to show that multilateralism can work as much for trade as it can for climate change”.

“We wish Minister McClay and the New Zealand team well in Nairobi” concluded Mr Jacobi.