In the aftermath of the December WTO Ministerial Conference in Buenos Aires, pessimism about the future of the institution has been reaching record levels and no clear plan has emerged yet on where to take the WTO next. In this rather bleak environment, what are the possible options for African countries to advance their trade and development priorities?
The outcome of the WTO’s Eleventh ministerial conference (MC11) has been disappointing to most observers. Other than a political commitment to conclude negotiations on fisheries subsidies by the next ministerial and a rollover of old moratoriums on non-violation complains in the area of intellectual property and on the taxation of electronic transactions, MC11 did not yield any substantive results. No progress has been achieved either on any of the core areas of concern to African countries like food security or development, despite the large number of proposals tabled ahead of the conference. Ministers even failed to agree on a joint declaration, leaving members and observers wondering where to go next and how to address unresolved issues under existing mandates. In light of this impasse, the last day of the conference saw several proponent groups issuing ministerial statements announcing more structured work towards future plurilateral negotiations, notably on e-commerce and investment facilitation.
For African countries who have decided not to join such new initiatives, the lack of multilateral outcomes may raise significant concerns. It hardly comes as a surprise, however. Expectations were already low before Buenos Aires, notwithstanding repeated statements highlighting the importance of a vibrant rule-based system. Intransigent attitudes combined with hostage-taking practices by several large WTO members did the rest. The ensuing move towards plurilateral initiatives is not surprising either. With members largely divided on so-called “new issues” such as digital trade, the push emulates earlier attempts at exploring new approaches through initiatives like the trade in services agreement (TISA), the environmental goods agreement (EGA) or the information technology agreement (ITA II). In a similar vein, the tensions that prevented a consensus on a future roadmap for negotiations can be traced back to long-standing attempts by several large players at obtaining higher levels of commitments from emerging economies. In fact, members already failed to reaffirm the Doha mandate at the previous ministerial conference, with the final declaration explicitly acknowledging opposing viewpoints without reconciling them. In a way, Buenos Aires is only the latest and arguably clearest manifestation of a trend which has developed for nearly ten years.
What is new?
What has changed this time, though, is the method adopted by some countries to pursue their interests, as exemplified by the new US administration’s stance on trade. To be clear, the underlying concerns remain largely the same: faced with a growing trade deficit, the US continues to blame unfair practices by emerging economies, including industrial subsidies and forced transfer of technology. For the White House, the WTO has been unable to deal with state capitalism – as shown by the controversy over China’s market economy status – and has treated the US unfairly by repeatedly condemning Washington for its approach to antidumping. On rule making, the US keeps insisting on the need for further differentiation among developing countries and for moving away from the Doha Round approach altogether, possibly towards more plurilateral approaches.
While pursuing this same line of argumentation, the US has however started to use more radical methods to assert its concerns. Most visibly, Washington has blocked the nomination of new appellate body members at the WTO – a move which will paralyse the whole dispute settlement mechanism if not solved in the coming months. After pulling out of the Trans-Pacific Partnership (TPP) and pushing for a renegotiation of NAFTA and the US Korea FTA, the White House has resorted to new safeguard measures at the risk of opening the floodgates of protectionism against. More generally, after playing a leading role in shaping the multilateral trading system since the end of World War II, the US is now increasingly disengaging from multilateral talks.
What are the option for Africa?
Confronted with this unprecedented reality, African countries need to reassess their strategy at the WTO. Three main options come to mind. Each has its pros and cons.
A first approach may consist in adopting a “business as usual” attitude by tabling proposals and ideas on how to move forward on issues of particular concern to the African Group. After all, Buenos Aires gave a clear mandate to continue negotiations on fisheries subsidies with a view to concluding them by MC12. This remains a priority area for the Group and should be pursed energetically. In other areas, in the absence of any contrary instructions, previous mandates arguably still apply. This was confirmed by Susana Malcorra’s chair summary at the end of the last ministerial conference, which reiterated that “Members agreed to advance negotiations on all remaining issues, including on the three pillars of agriculture, […] as well as non-agriculture market access, services, development, TRIPS, rules, and trade and environment.” While Buenos Aires did not deliver on several of these issues, negotiations prior to the ministerial saw constructive engagement, particularly on agricultural domestic support with a flurry of new ideas being tabled. Members can take this process where they left it and work towards a consensus by 2019. The main arguments in favour of such an approach is the recognition that as long as certain issues – such as public stockholding for food security purposes – are not resolved, it will be politically difficult to move forward on other issues. In some areas, there may be scope for exploring new creative solutions, for example on issues such as special and differential treatment. This approach, however, implies that other members are willing to engage constructively. It is also difficult to see how applying the same recipe that has failed to deliver results over the last 10 years could suddenly lead to a different result. For these reasons, a pure “business as usual” approach is probably bound to fail. This does not mean, though, that new ideas to address longstanding problem cannot help achieve some incremental steps on a few issues.
A second approach may consist in recognising that under current political circumstances, nothing can be realistically achieved at the WTO. In this context, African countries should disengage, at least in the short run, and wait for the stars to re-align. In practice, this approach could simply consist in restating maximalist positions in areas where African countries have specific interests (e.g. agriculture, cotton, S&DT) and blocking progress where they are not proponents. This would guarantee a total paralysis of the system, but at least would allow African countries to keep all their bargaining chips intact in anticipation of future negotiations if and when some of the large players decide to come back to the table. The downside of this approach is obviously the high risk of further undermining the multilateral trading system upon which many African countries rely, with no guarantee that talks would pick up again in the near future. New rule-making may shift to plurilateral initiatives and tomorrow’s trade disciplines may end up being designed without inputs from most African countries. More importantly, this approach does not help to address the urgent development concerns behind the proposals articulated by the African Group. Finally, it fails to recognise that the underlying concerns behind the US current positions are likely to remain even if the US administration changes.
A third approach may consist in helping bridge the gap among large players such as the US and China and foster engagement on the concerns raised by them. Such an approach would of course only make sense if it creates leverage for the African Group to advance its own priority issues. One of the main challenges facing the system post-Buenos Aires will consist in finding what would prompt the US to “release the hostage” in the appellate body nomination process and to re-engage in multilateral talks. This may require addressing some of Washington’s concerns. Put more simply, the US grievances against multilateralism arguably call for an in-depth reform of the WTO. This can be seen as an opportunity for engagement and even form the basis of a new negotiating agenda, assuming that African concerns can be introduced in the mix. For example, if the US is unhappy with existing subsidy rules as they apply to some members, this may represent an opportunity for revisiting the Agreement on Subsidies and Countervailing Measures (ASCM) and address some of the African Group’s longstanding proposals in this area. Obviously this assumes that members are willing to engage in good faith in such multilateral discussions, as opposed to solving their problems bilaterally. At present, this is far from certain. Nor is it clear that those key players would be more inclined to make concessions in this configuration than they were under the Doha Round.
To sum up, all the approaches suggested above entail significant risks and high uncertainties. As such, none of them is an obvious choice for African countries.
The launch of plurilateral initiatives on e-commerce and investment facilitation will further remove leverage and trade-off opportunities for African countries to advance their priorities. This is, nonetheless, where discussions are likely to move in the short run, even if so far none of these initiatives has really secured a critical mass of WTO members. African countries concerned about such initiatives have no real means to stop them. At most they can try to revive multilateral deliberations on some of these topics (e.g. through the work programme on e-commerce). Others in the African Group have already decided to join such initiatives, with some even playing a leading role. This is obviously a strategic choice for each country to make, but clearly participating in such initiatives will provide more opportunities to engage and influence outcomes than remaining outside.
Beyond the WTO, negotiations under regional and bilateral free trade agreements will continue to be the main locus for trade integration. Under such circumstances, African countries should make sure that they do not put all their eggs in the same basket. Regional integration at the continental level offers significant opportunities to foster economic transformation (see the article by Judith Fessehaie in this issue). Brexit will provide a good occasion for African countries to rethink their trade relation with the EU. Finally, emerging economies like China and India will continue to grow as strategic partners and offer new export opportunities. More than ever, taking advantage of these alternative avenues will be essential in advancing Africa’s sustainable development aspirations.
Author: Christophe Bellmann, Senior Resident Research Associate at the ICTSD