Development through trade back in focus

Updated: Dec 25 2013, 10:57am hrs
The 9th Ministerial Conference of the World Trade Organisation (WTO) in Bali concluded recently with the ministerial declaration focusing on development in trade negotiations, especially under the Doha Development Agenda (DDA). It has taken time as expected in any multilateral negotiations but the content is back in a substantive manner. Both the ministerial declaration and the negotiating processes to arrive at it present important insights.

One of the most contentious issues pertaining to the public stockholding for food security purposes stands resolved with the declaration taking cognisance of the developmental imperatives of the poor and the farmers in the developing world. This has been achieved by deciding that in the interim, until a permanent solution is found, Members shall refrain from challenging through the WTO Dispute Settlement Mechanism, compliance of a developing Member with its obligations under the Agreement on Agriculture (AoA) in relation to support provided for traditional staple food crops in pursuance of public stockholding programmes for food security purposes. This was the stand taken by the developing countries and finally it was recognised that India was not just concerned over its own pro-poor food security programme but the poor residing in the developing world at large.

There is a visible shift from what can be done to what ought to be done. This is trade negotiations with a human face and for this the negotiators from both the developed and the developing worlds must be complimented as much as the WTO Secretariat through its new DG. In particular, Indias international relations with other developing countries, Indias steadfast leadership and positive disposition of Indias negotiating dynamics with both developed and developing countries stand out clearly. This has important beginnings for the entire gamut of issues relating to global economic governance and not just at the WTO.

There were several other dimensions of the DDA on which consensus was achieved. Some of the well-known ones include the Agreement on Trade Facilitation (AFT), and decisions pertaining to development and LDCs, along with some other decisions on tariff rate quota, export competition, cotton, etc. Of these, one of the rather overlooked subject of decision, which did not get adequate attention even in the media, is on the Preferential Rules of Origin for LDCs. Inherent in the ministerial decision on this aspect is a covert recognition of the developmental role that preferential rules of origin could play. This is embedded in the provision, according to which it is recognised that other than wholly obtained products, origin may be conferred by substantial or sufficient transformation, which can be defined in a number of ways, including through: (a) ad valorem percentage criterion; (b) change of tariff classification; and (c) specific manufacturing or processing operation. It is also recognised that these methods in certain cases may be used in combination. This leaves open the possibilities of preferential rules of origin for LDCs to be evolved also as product-specific rules with more than one rule determining the originating status of products for preferential exports. This has a developmental implication through origin-rules emphasising on domestic manufacturing and local value addition that have employment-generating and well as export-augmenting effects. For an efficacious trade facilitation mechanism, manufacturing becomes the basis for trade, and trade remains a pre-requisite that needs to be facilitated. These together bring back development to the fore, especially where it is needed the most, i.e. the LDCs.

Indeed, both the developmental focus and the negotiating process at Bali are historic in the life of the WTO. However, the post-Bali work programme of the WTO has a long and winding road to travel. This is because there are several issues of trade and trade-related liberalisation as imbibed in the DDA that still remain unresolved. Some of these include areas of non-agricultural market access through tariff liberalisation, sanitary and phytosanitary (SPS) measures, technical barriers to trade, trade in Services under GATS, TRIPs etc.

While there is a large canvas to be covered, the WTO Declaration 2013 at the picturesque Bali locale paints for a fresh WTO-hope, brushing aside inter-country differences for the cause of development through trade.

Ram Upendra Das

The author is senior fellow, Research and Information System for Developing Countries, New Delhi.

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