South Africa's Approach to the WTO 9th Ministerial Conference

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Trade, Industry and Competition

31 October 2013
Chairperson: Ms J Fubbs
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Meeting Summary

The International Trade and Economic Development Division of the Department of Trade and Industry explained that the WTO 9th Ministerial Conference aimed to address the imbalances that were left unaddressed during the Doha Round. South Africa’s negotiating objectives for the Doha Round aimed to enhance market access for products of export interests to developing countries; renegotiate rules that perpetuate imbalances in the international trade regime; and ensure appropriate policy space for developing countries to pursue development objectives through the meaningful implementation of the principle of Special and Differential Treatment (S&DT). Although, during the Doha Round there were repeated attempts by major economies to erode the Round’s developmental mandate and oppose meaningful reform in agriculture for developing countries. The WTO 9th Ministerial Conference would offer Low Developed Countries (LDCs) an opportunity to present a modest package of provisions which would include Duty Free Quota Free (DFQF) agreements, services waiver, Rules of Origin (RoO) agreements; Agricultural Tariff Rate Quotas (TRQs), export subsidies; food security; some S&DT provisions and trade facilitation.

Members said South Africa’s approach in hoping for the resurrection of the Doha Round was wishful thinking. They asked what lessons had been learned from the global crisis, because it seemed people were just digging in their heels without considering taking global trade forward.  Members asked to what extent were African nations a united force in ensuring that they had a united voice in pushing forth the African agenda during the conference. They did not think the developing world would win the battle of asking developed countries to relax their agricultural subsidies and asked how strong the alliances built between South Africa and its Southern partners were.
 

Meeting report

Introductory Remarks
The Chairperson welcomed all members as well as visiting pupils. She stated to Committee members that each member had an obligation to ensure that they represented factual information. If any member was unsure of what was stated during a meeting they needed to consult the Committee Secretary or refer to the PMG website as a source of reference. She welcomed Deputy Director General (DDG) Mr Xavier Carim to present South Africa’s approach to the WTO’s 9th Ministerial Conference.

South Africa’s Approach to the WTO’s 9th Ministerial Conference
Mr Xavier Carim, DDG: International Trade and Economic Development Division (dti), presented South Africa’s Approach to the WTO 9th Ministerial Conference. Globally, the imbalances in the rules appointed by the World Trade Organization (WTO) were prejudiced to developing countries interests. As a nation that was a proponent of multiculturalism, South Africa’s support for the Doha Round was premised on overcoming identified imbalances and securing a developmental outcome for developing countries. South Africa’s negotiating objectives for the Doha Round aimed at enhancing market access for products of export interests to developing countries; renegotiate rules that perpetuated imbalances in the international trade regime; and ensure appropriate policy space for developing countries to pursue development objectives through the meaningful implementation of the principle of Special and Differential Treatment (S&DT). The Doha mandate required placing the concerns of developing countries at the centre of the work programme. In pursuit of fulfilling such a mandate, South Africa had built alliances with Southern partners such as in the Africa Group,  NAMA-11 (Non-Agricultural Market Acess-11), G20 and G90.

During the negotiations of the Doha Round, there were repeated attempts by major economies to erode the Round’s developmental mandate and oppose meaningful reform in agriculture for developing countries but pressure was put on emerging economies to open their industrial and services sectors by major economies. This further perpetuated the imbalances in the international trade regime and pushed for an outcome that was not developmental, fair or balanced. Such divergences and intransigence had brought the Doha Round to an impasse since July 2008. The impasse prompted new approaches for international liberalisation and rule making negotiations, so as in 2011 major economies proposed plurilateral negotiations on selected issues and new priority issues for negotiations which undermined the multilateral principle of the single undertaking which required balanced progress on the agenda. The plurilateral methodology favoured the behaviour of cherry picking and trade facilitation instead of agriculture.

The 9th WTO Ministerial Conference in December 2013 would offer Low Developed Countries (LDCs) an opportunity to present a modest package of provisions which would include Duty Free Quota Free (DFQF) agreements, services waiver, Rules of Origin (RoO) agreements; Agricultural Tariff Rate Quotas (TRQs), export subsidies; food security; some S&DT provisions and trade facilitation. Although the provisions within the LCD package were modest, prospects of it being recognised were not encouraging because major economies were not willing to discuss DFQFs and their agricultural subsidies, outside of what was negotiated during the Doha Round. There was a lack of willingness to commit to legal binding capacity building undertakings for weakest economies and there was little time left to bridge gaps. In preparation for the 9th Ministerial Conference in Bali, South Africa was in consultation with the National Economic Development and Labour Council (NEDLAC), India-Brazil-South Africa (IBSA) and BRICS as well as engagement with its Parliamentary Portfolio Committee.

Discussion
The Chairperson thanked Mr Carim for his presentation which helped fill in some of the gaps the Committee had in regards to its Trade Workshop report.

Mr G McIntosch (COPE) asked for clarification on the acronym DFQF and wanted to know which party members and members from the Portfolio Committee would be going to Bali for the 9th Ministerial Conference.

Mr G Hill-Lewis (DA) said in preparation for the Ministerial Conference, it was important for members to get documents on what was negotiated and agreed to during the Doha Round. As for South Africa’s approach in hoping for the resurrection of the Doha Round, he thought that was wishful thinking, plurilateralism had shown some gains for trade around the world but the question was whether South Africa was missing that boat. He asked why LDC services and RoO would be non-binding undertakings.

Mr W James (DA) stated that South Africa’s political management of integration in the region and its inability to successfully integrate a free trade zone regionally could be an issue raised at the WTO. What was the thinking within the dti in terms of it moving from the old regime of bilaterals and fostering a new regime.

Mr N Gcwabaza (ANC) asked what lessons had been learned from the global crisis, because it seemed people were just digging in their heels without considering taking global trade forward.

Mr Z Wayile (ANC) stated that since there had been a dispute during the Doha Round in 2008, what had been the impact of that particular impasse on developing nations. He asked to what extent the global crisis as well as the recent economic crisis in the EU would influence the rigidity of positions taken by those particular countries. Due to Africa’s historical background, to what extent were African nations a united force in ensuring that they had a united voice in pushing forth the African agenda? He asked for clarity on what agricultural products were facing major threats, and the mechanisms being undertaken to address that particular front.

Mr D Swanepoel asked if African nation states were a united front in preparing for negotiations in Bali. Although he was aware of the major differences between countries such as China, India and the United States, he wanted to know how far those differences fared economically.

Mr Carim apologised for all the acronyms in the document. He said DFQF meant Duty Free Quota Free market access which meant the opening of markets entirely to products for Low Developed Countries. RoO meant Rules of Origin which stipulated goods given preference actually originated from the country awarded this preference. TRQs meant Tariff Rate Quotas which stipulated that imports entering a country would be subject to lower or even zero tariff rates. S&DT meant Special and Differential Treatment and under this framework the WTO gave special treatment in favour of a developing country; the country would have fewer obligatory commitments to take on or given a longer time frame to implement those commitments.

Since South Africa was a proponent of multilateralism. It was important to understand the dangers of plurilateralism, which further excluded and marginalised Africa from the globalised process. Rather it was where a group of member states propelled a culture of exclusivity where they defined a set of standards which suited their level of economic development. South Africa had to take a firm position and speak against such a process that allowed for fragmentation.

The cost of not completing the Doha Round in 2008, meant the continuation of all the imbalances identified during the Uruguay Round. LDC services and RoOs were said to be non-binding because it meant that there were no legal commitments arising from such provisions, and therefore members did not have to adhere to them. In regards to TRQs, what was being proposed was that there needed to be greater transparency. If a quota was given, it needed to be adhered to in a transparent manner. However, many major economies were not willing to participate in that. Since the original formulation of TRQs was directed at developing countries, they therefore had the right to determine rules of transparency and under fill.

On the question of Free Trade Agreements (FTAs) there was no doubt that FTAs would have an effect on revenue especially since tariffs were a significant source of revenue for many African countries. South Africa would not be affected by FTAs because a small portion of government revenue was derived from tariffs and tariff liberalisation at the South African Customs Union (SACU) level had not led to revenue decreases in some countries within Southern Africa. The absence of Bilateral Investment Treaties (BITs) also had little to do with actual Foreign Direct Investment (FDI) flows, despite all the concerns raised about the South African economy. The first half of 2013 had still seen significant FDI flows which had little to with BITs.

The repeated attempts by major economies opposing agricultural reforms but pressuring emerging economies to open up their industrial and services would require South Africa to take deeper and wider industrial tariff cuts than any other WTO member. This was because during the Uruguay Round a tariff rate formula was adopted which became the basis for tariff liberalisation. The formula targeted one’s tariff rates commitment made during the Uruguay round which saw that South Africa’s bound tariff rates negotiated during the Uruguay Round was very close to its actual applied tariff rate. Since the gap between South Africa’s bound rate and applied rates was very minimal when the trade liberalisation formula was applied, it had a greater effect on a wider range of South Africa products in comparison to any other WTO member.

The lessons of the global crisis had resulted in many countries taking more protectionist policies, which had been a major factor leading to the impasse of the Doha Round. For the next Ministerial Conference, on the main principle points, African countries were coherent with one another on where they stood, but differences still remained depending on some of the specifics.

On agricultural products facing threats, the potential ban on South African citrus with black spot disease was an issue dealt by the Department of Agriculture but dti had tried to assist them in addressing that.

Overall South Africa champions the multilateral approach and it needed to further its position in regards to this. There were a number of areas that were subject to negotiations and they were very technical. He suggested it would be better to prepare a briefing on those issues.

The Chairperson said this matter required a lot of deliberation.

Mr Swanepoel said he was worried that South Africa was excluded from plurilateral negotiations, and the dangers associated with its lack of involvement in these discussions – whilst South Africa’s commitment to the single undertaking agenda was not progressing at the speed they would like. He asked whether larger developing markets were involved in these negotiations.

Mr Lewis said he would like the follow up documents detailing the food security proposal. He asked if the phenomenon of Round Tripping was allowed under the RoO system.

Mr Wayile asked that given the challenges around agricultural products and the consistent approach of rigidity what else could be done to tackle this issue. Farmers producing food were not subsidised, and he did not think the developing world would win the battle of asking developed countries to relax their subsidies. He asked if this meant South Africa needed to adopt a liberal stance and if so what would be the unintended consequences of following that route. In respect to the alliances South Africa had built with Southern partners, how strong were those blocs economically? And was there also any alignment in regards to the reform South Africa had taken to address its issues within the WTO and other global forums?

The Chairperson asked what steps could be taken to work through the issues faced by South Africa within the global forum. She noted the importance of working through such issues and how such would impact South Africa and other developing nations.

Mr Carim responded that in respect to plurilateral negotiations it only involved a few select countries who were mainly OECD countries which South Africa was not a part of – but China had been negotiating to become part of the negotiations. In regards to food security, India had made a food security proposal to help lessen the burden of hunger on it 600-700 million poor people facing food insecurity, but their proposal would be going against the subsidy limits they had agreed to during the Uruguay Round and therefore their proposal was not accepted. Round Tripping would not be allowed in the case of RoO but ultimately there was unfairness within the agricultural trade regime internationally. Most of the provisions resulting in developing countries experiencing unfair treatment, were legally binding and if developing countries were to respond to such unfair systems, they needed to find legal possibilities to do that such as finding new trading partners.

In general the alliances formed within the African continent had been effective in avoiding unfair deals but they still lacked sufficient strength to reverse the negotiations of the Uruguay round. On the alignment of reforms in the context of other global forums, although the mechanisms had been different in the approach utilised, the objectives were still similar. Also it was important to continually negotiate towards breaking down the walls of global imbalances, and although the negotiations do take time and were complex, it was important not to give up.

The Chairperson thanked Mr Carim for his responses. She said although the negotiations did take time it was important for them to be carried out, it was not surprising that the developed world would be opposed to the Doha Round. Over the years one had seen the priority issues changing dramatically, there had been more focus on environmental issues and agriculture had taken less precedence. Developed countries could afford reducing their hand in their agricultural industry, yet it denied developing countries from being able to reach that level. With India’s food security proposal denied, it begged one to ask the question of whether the WTO was becoming an obsolete organisation. Also, the undermining of the multilateral process only created more problems. One needed to support the institution of multilateralism and say no to coalitions. She thanked all member for attending the meeting.

Committee Minutes: adoption
The minutes from 17 September and 8, 15, 18 October 2013 were adopted. The minutes from 16 and 26 October 2013 were not adopted due to technical issues.

 The meeting was adjourned.
 

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