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The WTO’s Road from Bali: A South African Perspective

DrBrendanvickersThe 9th World Trade Organisation (WTO) Ministerial Conference was held in Bali, Indonesia from 3-7 December 2013. Under the stewardship of the new WTO Director-General, Roberto de Azevêdo, the Ministerial Conference delivered the first outcome of the Doha Round after a prolonged impasse that dates back to 2008.

 

The Bali Outcome was welcomed by most WTO Members for rekindling some faith in the organisation and the multilateral rules-based trading system. Trade Ministers adopted ten decisions in Bali, addressing both the regular work of the WTO's General Council and the Doha Development Agenda (DDA) negotiations.

The former decisions were largely uncontentious matters, including standard undertakings to extend waivers for e-commerce and TRIPS non-violation complaints, while prioritising work on Aid for Trade and small, vulnerable economies. By contrast, the DDA remains highly contested between rich and poor countries (and even among some developing countries), with negotiations in Bali overrunning by one day.

Given these dynamics, it was significant that India, supported by the Africa Group, managed to deliver a positive outcome on food security through public stockholding food programmes for the poor. Aside from food security, the only fully binding agreement was on Trade Facilitation (TF), an issue that advanced industrialised economies have exerted great pressure to conclude ever since the first WTO Ministerial Conference in Singapore in 1996. While TF is no doubt an issue of importance to all developing countries (and plans are indeed underway at national and regional levels to modernise customs procedures), African countries have other more pressing priorities in the Doha Round.

The Bali Outcome, however, did not concretely address many of Africa's concerns about the imbalanced nature and rules of the multilateral trading system. These include the need to eliminate agricultural export subsidies, expeditiously address cotton subsidies (especially important for the West African cotton producers), provide duty/quota-free market access for least-developed countries (LDCs), and strengthen special and differential treatment (SDT) provisions. Indeed, many of these issues may only be addressed in future as part of a post-Bali work programme.

Formally, the Bali Outcome may lay the basis for re-starting the Doha Round negotiations in its totality under the single undertaking principle. However, there are concerns that the Ministerial Conference delivered yet another imbalanced trade deal, perpetuating the historical asymmetry of economic opportunity in favour of rich countries. It is indeed disconcerting that the WTO, with developing countries constituting two-thirds of its membership, continues to deliver such imbalanced outcomes.

In particular, it appears that the Bali Outcome lays the basis for an approach where specific issues of interest to the more powerful members of the WTO are advanced, while the issues of importance to the weaker members are marginalised. TF is a case in point. Whereas the TF Agreement (TFA) imposes binding commitments on WTO Members that must be implemented now, developing country issues were couched in best endeavour language (effectively: "we will try our best") and may only be addressed in future as part of the post-Bali process.

Moreover, since the binding rules under the TFA cover measures and procedures already in place in advanced economies, the latter will be required to make minimal, if any, changes to their existing regime. By contrast, developing countries and LDCs, particularly in Africa, will be required to undertake major legislative, policy and infrastructural changes and reforms to meet these standards without any binding commitments of finance, technical assistance or capacity-building from the developed countries.

To derive benefit from the TFA, African countries need to implement their commitments in a way that ensures the benefits of trade facilitation accrue to African producers, thereby supporting the continent's structural transformation and industrial development objectives. This means that the TFA should facilitate intra-African trade of products made in Africa (especially diversified manufactured products), rather than seeing the benefits of the easing of imports accruing to products produced in regions outside Africa.

What is the way forward and what are the prospects for the WTO and Doha Round?

The decisions taken at Bali may be an important stepping stone towards completion of the Doha Round. By the end of this year, WTO Members must develop a clearly defined work programme to ensure delivery of the remaining DDA issues. At South Africa's behest, priority is to be given to issues in the Bali Package where legally binding outcomes could not be achieved. These are essentially the issues of interest to developing countries and African countries in particular. South Africa should continue building and strengthening alliances with like-minded Southern partners (such as the Africa Group, NAMA 11, G20, G90) to champion a development outcome to the Doha Round.

Trade diplomats in Geneva also confront a rapidly changing global trading landscape. In recent years, the major economies have been turning away from multilateralism and the Doha Round, reinforced by strong push in "mega" regional trade agreements – including the Transpacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) negotiations between the United States and European Union. The TTIP in particular appears more focused on setting new global standards in areas of interest to the major economies, including services, intellectual property and investment.

The major economies have also been at the forefront of proposals for "new" approaches for trade negotiations (such as plurilateral negotiations in services, government procurement, information technology goods, and environmental-friendly goods) and the introduction of "new" issues onto the WTO's agenda (such as energy, investment and competition).

South Africa and fellow African countries should carefully consider the implications of this changing landscape for their trade policy and strategies. In the current climate, the focus for South Africa should be to support Africa's development, industrialisation and integration.

It is now widely recognised that Africa needs to shift its current consumption and commodity-driven growth path onto a more sustainable industrial development path. In this regard, Africa has embarked on ambitious "development integration" strategy for integration that combines market integration, cross-border infrastructure development and policy coordination to diversify production and boost intra-African trade.

South Africa should continue to prioritise this approach in its engagements in the Southern African Customs Union (SACU), the Southern African Development Community (SADC) and the Tripartite Free Trade Area. Indeed, critics often miss the point that African countries are also engaged in a "mega-regional", with plans to link up Eastern and Southern Africa through this Tripartite Initiative, to be followed by the mooted Continental Free Trade Area.

While trade with the North has grown consistently and remains strong, the share of the North in South Africa's total trade has declined relative to the growth of Africa and the emerging economies as the country diversifies its trading partners. The policy implications of this shifting pattern are clear.

On the one hand, South Africa should consolidate and maintain its existing trade and investment relations with the industrial economies; this includes advocating for the African Growth and Opportunity Act's extension and South Africa's inclusion after 2015, when the scheme is set to expire.

On the other hand, South Africa should strengthen and deepen its new economic relations with the dynamic economies of the South, including the BRICS, especially to build industrial complementarities and shift the structure of trade onto a more sustainable basis.

 


Dr Brendan Vickers is a research associate on dynamics that underpin global economic multilateralism including trade and development, international finance and economic government. He is the Head of Research and Policy in the International Trade and Economic Development (ITED) division of the Department of Trade and Industry. Prior to joining the department, he was the Programme Director for Global Economy and Development at the Institute for Global Dialogue (IGD), one of South Africa's leading international relations think-tanks. He previously also served as the Deputy Director responsible for International Relations and Trade in the Office of the President in South Africa.

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