The journey from Bali to Nairobi and death of the Doha Development Round

The recently concluded Nairobi Ministerial Conference of the World Trade Organisation has effectively killed the 'Doha Development Round' and any chance of another 'Development Round' being initiated in the near future looks bleak as the developed countries have silently committed to non-reaffirmation of the Doha Round. India along with the other developing countries expressed thorough 'disappointment' over non-reaffirmation to conclude the 14 year old Doha Round pacts. The objective of the Doha Round was to improve the trading prospects of the developing and poor world (a Development Agenda).

The BALI package (9th Ministerial Conference)

The issue of public stockholding of food has always been a contentious issue. The developed countries demanded that the developing countries reduce agricultural subsidies under the Amber Box type (subsidies to fertilizer, electricity, fuel and assistance through minimum support price). As per the Agreement on Agriculture (under GATT), a maximum of 5% of the 'de-minimis level' can be spent on subsidies under Amber box, while for the developing countries it is capped at 10%. The 'de-minimis' level is the reference which is nothing but the production (of agriculture) of the year 1986-87. The developing countries, especially India feel that this is a discriminatory rule as the production capabilities of developing countries were poor in 1986-87 when compared to the developed countries as well as the fact that inflation was not taken into account. If statistics are to be compared although US is capped at 5% of the de-minimis level, it is much more than India's 10% as production in 86-87 was low. Developing countries like India strongly opposed this rule citing the need to spend more on subsidies for food security and income support for farmers. The Bali ministerial Conference took up the issue and tried to come up with a solution. The three outcomes of the Bali package are:

• LDC(Low Developing Countries) should get duty free, quota free market access to sell goods in all countries.
• Peace Clause
• Trade Facilitation Agreement(TFA)

Peace Clause - The WTO decided that it will not hear any case regarding violation of norms in its dispute-settlement body if any developing country exceeds its cap of 10% on Amber Box subsidies for four years(till 2017). A permanent solution was to be reached by the 11th Conference(2017). Subsidies only for food security/public stockholding were exempted.

The TFA was a major step towards reduction of Non-Tariff Barriers, especially red tape in customs clearance and licensing difficulties. Some of its features are:

1. Online applications and payment of taxes/fees.
2. Single window for document check
3. Faster clearance to perishable goods
4. No middlemen/agent needed
5. Coordination bodies at national and international level to be created to implement TFA.

Experts predicted that implementation of TFA would increase world GDP by $ 1 trillion and 21 million jobs will be created as export/import will rise. Although the deadline for the members to sign the TFA was 31st July 2014, Prime Minister Modi refused to sign it stating that a permanent solution needed to be reached on the food subsidy issue. The government feared that implementing the TFA would allow developed countries to have better market access and if WTO ruled in favour of the developed countries regarding the subsidy issue, the domestic farmers would be adversely affected by the import surges. Consequently, in November 2014, during President Obama's visit to India, a deal was made in which it was decided that the 'Peace Clause' would be extended to infinite time till a solution is reached. Thus, India's food security programs would not be challenged in the WTO and US promised to back India at the WTO.

The NAIROBI Package(10th Ministerial Conference)

India, along with other developing countries especially members of the G33, LDCs, the Africa Group and the ACP, wanted a reaffirmation of the mandate of the Doha round. They wanted the Doha round to continue till all outstanding issues, including on protection of poor farmers and food sovereignty are resolved. But rich countries wanted round to end and sought introduction of new issues that are of their interests including e-commerce, global value chains, competition laws, labour, environment and investments.
The Nairobi package contains series of six ministerial decisions on agriculture, cotton and issues related to LDCs. They are:

• Commitment to eliminate subsidies for farm exports. Developed members have committed to remove exports immediately while developing countries are to do so by 2018. LDCs have been given additional time to cut down export subsidies completely.
• Decision on Public Stockholding for Food Security commits members to engage constructively in finding a permanent solution to this issue.
• Decision on Special Safeguard Mechanisms for Developing countries provides them the right to temporarily increase tariff in face of import surges by using an SSM.
• Decision on duty free and quota free access of cotton from LDCs to markets of developed countries, calling for reforms in domestic cotton policies of LDC and asking developed countries to prohibit cotton export subsidies immediately and the developing countries at a later date.
• Decision adopted that will facilitate opportunities for LDC's export of goods to both developed and developing countries.
• Decision on giving preferential  treatment to LDC services and service suppliers.

The meeting was concluded without any commitment by developed countries to check their domestic subsidies. The developed countries refused to budge from their long standing position and instead blamed the developing countries for not taking any action regarding import duties.