Can the Doha Round Be Revived?
Jan 06, 2016
In mid-December 2015, trade ministers from the 162 member countries of the World Trade Organization (WTO) held their 10th Ministerial Conference in Nairobi, Kenya, the first held on the African continent. The negotiations took an extra day to complete, and by the end of the process, WTO members had agreed to implement a package of reforms in the area of agricultural export competition, including export credits and food aid, with a separate agreement for countries to phase out such mechanisms for cotton exports, as well as provide tariff-free access for cotton exports from least developed countries. No agreements were reached in the other two agricultural ‘pillars’ of market access and domestic support, with the controversial issues of what a special safeguard mechanism to protect against import surges in developing countries should look like, and parameters for food security stockholding mechanisms under WTO rules still unresolved.
The agreement on export competition had been more or less reached about 10 years ago, at the 6th Ministerial conference held in Hong Kong in December 2005, although there were some negotiated modifications to the food aid language over the last few years. Finalizing that agreement had been delayed awaiting similar resolutions on negotiations for agricultural market access and domestic support, as most WTO members were still hoping to craft a broad-based trade liberalization package encompassing the three pillars within agriculture, as well as non-agricultural market access, and trade in services, as was envisioned in the original Doha Round declaration in 1999. With the agricultural export competition portion now being put into effect, it appears that the long-running debate over whether to approach the negotiations on a piecemeal basis, a process known as ‘early harvest’, or to bundle everything into a comprehensive package, known as the ‘single undertaking’ approach, has finally been put to rest.
Many of the agreed changes contained in the export competition agreement have already been put into effect by developed country members such as the EU and the United States, so this deal is likely to have only a modest impact on global agricultural trade flows. The United States repealed its main export subsidy program, the Export Enhancement Program (EEP), as part of the 2008 farm bill, after it had not been utilized at all since 1995. The Dairy Export Incentive Program (DEIP) is still on the books, and was last used in 2010. That law may have to be repealed to come into compliance with this new WTO agreement.
In practice, the GSM-102 export credit guarantee program is already in compliance with this new agreement, as USDA’s Foreign Agricultural Service currently offers guarantees for loan periods (tenure) up to 18 months. However, the statutory maximum tenure is currently 24 months, as modified in the 2014 farm bill, so that will likely need to be taken care of by the end of 2017. The European Union largely eliminated its use of export subsidies (called export restitutions) in the latest reform of its Common Agricultural Policy (CAP) in 2014.
With respect to the food aid language in the export competition agreement, it appears that the food aid implementing organizations which partner with USAID and USDA will be constrained, as it includes limitations on situations in which food aid commodities can be monetized and requires engaging third party entities (either commercial or non-profits) to conduct monetization transactions. Due to provisions in the 2014 farm bill, monetization has largely been eliminated for Title II ‘Food for Peace’ projects but its use is still quite common under the Food for Progress program. The U.S. is the main donor country still utilizing in-kind (commodity) assistance for the bulk of its international food aid programs.
The Ministerial Declaration explicitly concedes that member countries remain deeply divided as to whether to continue to pursue only the objectives laid out for the Doha Round in 1999 or to terminate the Round and start over. Such a step would allow the WTO to continue to pursue unresolved items on the Doha Round agenda but also create space to add new items to the agenda. The divide over this question appears to fall largely along developed versus developing country lines, as has often been the case in global trade negotiations. It is clear that the Nairobi Ministerial did not resolve this key underlying question--it remains to be seen whether it will be tackled in a meaningful way before the 11th Ministerial Conference is convened, which is due to be held late in 2017.