It’s make or break for global trade as Nairobi talks begin

The World Trade Organisation (WTO) faces an acid test as trade ministers attending the Nairobi conference make a last-ditch effort to rescue talks, which have dragged on for 14 years without conclusive agreements. 

The agency, which sets global rules of trade, is under pressure to produce a positive outcome to prove its relevance in a world economic order where countries are increasingly safeguarding their economic interests through regional groupings and bilateral deals.

Most observers have taken a position that whether positive or negative, the outcome of the 10th Ministerial Conference (MC10) under way in Nairobi will mark a radical shift in the global multilateral trading system.

“The WTO is already at cross-roads,” Foreign Affairs and International Trade secretary Amina Mohamed, who is chairing the MC10, said yesterday. “It is important that members use the MC10 to show faith in the multilateral system.”

By end of Thursday, Ms Mohamed will either read a “Nairobi Declaration” indicating that the ministers have agreed on the global trade rules or issue “the chairperson’s statement” if no deal is sealed. “If we fail to agree, members will have to admit that WTO’s negotiation mechanism is flawed and decide whether to modernise it or get rid of the function altogether.”

She, however, ruled out collapse of the talks, saying the momentum gained after world leaders struck a climate change deal in Paris had given new impetus to the multilateral negotiation framework.

Positive outcome

A growing number of the WTO members have been signing the Trade Facilitation Agreement (TFA), one of the agenda for the MC10, indicating that the mood is set for a positive outcome.

The list of issues on the table for the Nairobi talks include agricultural production and marketing subsidies, fishery support, development support to Least Developed Countrires (LDCs), push to cut taxes on a list of technology and environmental goods and market access by LDCs.

Rich states took time off on Monday to pledge financial support to LDCs, raising hope that a deal is in the offing for development support that poor nations have been demanding.

A number of the proposals put before the MC10 – such as subsidies in agriculture and fisheries - have been on the cards since the WTO was formed 20 years ago. Others have been rolled over from the 2001 when global trade ministers first met in Doha, Qatar.

Director-General Roberto Azevedo said the MC10 needed to change the outlook of the multilateral system, adding that negotiations that drag for long without conclusion have the effect of eroding faith in WTO’s ability to police global trade.

“We have come with a meaningful agenda to Nairobi, hoping to seal a deal,” Mr Azevedo told journalists in Nairobi. 

“I’m quite confident that political will is there to give us an agreement, but the WTO after MC10 must be an agency that negotiates to deliver within a short time.”

The WTO is generally an intergovernmental agency where government representatives from across the world haggle over rules of trade.

Since governments hardly produce goods and services for sale, country negotiators simply gather to trumpet positions held by their corporations.

Due to low volumes of trade (one per cent of global merchandise exchange), Africa has had low interest in the multilateral system despite accounting for 25 per cent of WTO membership.

Of late, the WTO has been holding public forums ahead of its ministerial conferences, allowing parliamentarians, civil society groups and development agencies to submit views on proposals at hand.

When he officially opened the forum Tuesdday, President Uhuru Kenyatta hailed the WTO for its role in boosting international trade, resolving disputes and supporting integration of poor states into the global economic order.

He, however, repeated his call to developing states to reject “market-distorting” subsidies that rich states offer their farmers. “We need a global trading system that enables us to resolve our pressing challenges such as insecurity, environmental degradation and unemployment,” Mr Kenyatta said.

But even developing states seek ways of reforming the negotiation role of the WTO to become responsive to their diverse needs, the agency’s dispute resolution mechanism has also been put on the spot for isolating poor states.