Bridges Daily Update #2 | WTO Ministerial: Strong Statements Start Bali Bargaining

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The WTO’s Ninth Ministerial Conference kicked off in Indonesia on Tuesday afternoon, with trade ministers generally appearing ready to make one final push to advance the Bali package.

Just a week ago in Geneva, Director-General Roberto Azevêdo had reported to members that – while their efforts had brought them closer to a deal than they had been in years – they were still not in a position to announce a final package. Turning Bali into a negotiating ministerial, he warned at the time, “would not be feasible.”

In his comments today, the tone appeared markedly different.

“The overwhelming message that I am hearing from members is that they want a deal, and they are realising what is at stake,” he told reporters on Tuesday, noting that calls are coming from both developed and developing countries.

A starting point

“No member is being asked to do the impossible,” Azevêdo added. “Any misgivings a member may have would be about not getting everything that they hope for.”

The package “does not satisfy all expectations, but in multilateral negotiations we cannot get everything we want,” Moroccan Ambassador Omar Hilale told reporters on Tuesday, speaking on the African Group’s behalf.

Other members have similarly affirmed that, while the proposed Bali package is not perfect, it would at least constitute progress.

“Many delegations have come with a sense of the need to do something in Bali,” one negotiator told Bridges.

Political push forward

An agreement in Bali would be the WTO’s first multilateral trade pact since it was formed eighteen years ago – even though the global trade body has struck a number of other deals, including on thorny topics such as bananas or government procurement.

The 12-year standstill in the Doha talks have had many proclaiming doomsday for the WTO’s negotiating function, with some openly questioning the organisation’s ability to respond to new challenges, given its impasse on resolving older issues.

“Success here in Bali will demonstrate to the world-and to ourselves – that we are still capable of coming to agreement on matters critical to the global economy,” said Indonesian President Susilo Bambang Yudhoyono, whose country is hosting the conference.

Groups jostle for political space

The need to show a result in Bali has become a recurring theme in various political statements issued since last week’s General Council meeting in Geneva, in a sign that the Director-General could indeed be receiving some of the support he needs to bring the package “across the finish line.”

Statements of support have come from various groupings within the WTO, including from several developed and developing country members.

Two developing groups – the G-33 coalition with sizeable populations of smallholder farmers, and the G-20 group that favours developed country farm reforms – have issued statements over the past two days expressing regret over the impasse in the talks.

The Least Developed Country (LDC) Group members stressed Tuesday their interest in seeing a successful outcome at the ministerial, in particular on the LDC package, which focuses on duty-free, quota-free market access; more favourable rules of origin for their goods; the operationalization of the 2011 services waiver; and a request by the C4-producers to advance the difficult issue of cotton.

Ministers of various Francophone delegations stressed in informal consultations this week that, until now, most of the Bali efforts have focused on resolving technical issues. Countries now need to take difficult political decisions in order to strike a deal, they said, according to sources familiar with the meeting.

Food stocks: temporary or permanent solution?

Especially critical will be how hard India is willing to push on ensuring that the country will be able to buy subsidised food for public stocks at administered prices, as outlined in the G-33 proposal. New Delhi had previously appeared to be in favour of a proposed new “peace clause,” which as currently designed would last for four years, but has lately been seen as wavering on that position due to the political climate at home.

However, in a statement on Monday, Indian commerce minister Anand Sharma warned it would be “difficult for us to accept an interim solution as it has been currently designed.” He nonetheless stopped short of rejecting the negotiated draft outright as a basis for further discussion, and added that “as a responsible nation, we are committed to a constructive engagement for finding a lasting solution.”

Sharma also reiterated that, until a permanent solution has been reached, “an interim solution which protects us from all forms of challenge must remain intact.” A number of developed countries and some developing ones have to date only been willing to accept a time-limited temporary agreement.

The Economic Community of West African States (ECOWAS) considers itself mostly in line with the positions of the G-33 and LDCs on this issue, sources say. For ECOWAS countries, the G-33 position should not be seen as a defensive option, arguing that  preserving the rights of small farmers and the poor vulnerable populations in developing countries must be the primary objective of the development round.

Another statement by the Cairns Group of farm exporters, which includes both developed and developing countries, urged WTO members to “engage constructively in Bali in order to find a path forward for the multilateral trading system.” The group said that trade policy reform has a role to play in addressing food security, and called for an immediate post-Bali work programme to address agriculture issues as a priority.

Trade facilitation, agriculture linkage “key”

One of the main questions being heard in the corridors is how much the agriculture and trade facilitation pillars of the Bali package will be linked in the coming days of negotiations. Sources familiar with the trade facilitation talks – which deal with cutting “red tape” at the border in order to expedite trade flows – have acknowledged that the two are very much tied together, with one noting that India’s position on the peace clause is “key.”

However, even if the standoff over the G-33 proposal is resolved, there are still various outstanding issues within the trade facilitation draft text itself, mainly in Section I on general disciplines.

Some sources have said that the technical issues could probably be resolved quite quickly, with one noting that with those areas negotiators just “ran out of time.” However, other topics – such as expedited shipments, transit, and consularisation – will surely require tough political calls.

Still, some have said that “landing zones” on even these topics are in sight, while cautioning against predicting too much too soon.

Wednesday, Thursday to yield “clarity”

Today’s opening was, in negotiating terms, a quiet day, with the main action in Bali expected to kick into gear on Wednesday.

“Tomorrow is the opening dance,” one source said. The morning plenaries include in their line-up the US, EU, China, and India, which are among those members whose endorsement is seen as key for a final deal.

Meetings among members outside the plenaries are also slated to begin tomorrow, sources say, where the actual negotiations will begin to get underway. However, many have noted that how much depends on negotiations, and how much on political advances, remains to be seen.

All or nothing?

Sources commenting to Bridges have stressed that members are indeed aiming to advance all three pillars of the Bali package together in one go. Some had previously speculated that specific items where there is already convergence, such as the four LDC issues, could move forward as stand-alone decisions if a full deal is not possible.

“We have been negotiating this as a package – a package within the single undertaking,” Azevêdo concurred on Tuesday in his comments to reporters. “If one of these elements fails, the result will most likely be that everything else fails as well.”

Protests

The first day of the ministerial also saw some protests by civil society groups, which sources say are likely to continue throughout the week. Some organisations have especially taken issue with how the lack of a permanent solution on food security could, in their view, pose difficulties for developing country farmers. Others have warned against the financial burdens that a trade facilitation deal might impose.

The Director-General commented to reporters that the protests were in their own way “welcome news.”

“It shows that we’re relevant, that we’re working, that the work we’re doing matters,” he said, while noting that sometimes the WTO’s work is not always “well perceived.”

Time to show compromise

Ultimately, officials and observers say, what comes out of the Bali conference depends on how much ministers are willing to push for common ground on the remaining issues.

“The landing zones are discernible. It’s not rocket science,” Azevêdo said. “By WTO standards, they are very, very, very easy.”

“For the spirit of multilateralism to work, we need to show flexibility, show compromise,” added Indonesian trade minister Gita Wirjawan.

ICTSD reporting.