This Monday (July 15^th) two decisive weeks might be starting for the multilateral trading system. Not because consensus has emerged around any issue of the Doha Round, but rather from the fact that these two weeks are the last ones that the WTO will be led by the outgoing Director General of the WTO, Mr. Pascal Lamy. It is his last opportunity to secure some result of the Round, so that it could be adopted at the Trade Negotiations Committee (TNC) meeting to be held during the second one of these two weeks, i.e. the week of July 22nd. Moreover, in that second week a meeting of the General Council will be held (July 24^th - 25^th), that could endorse a draft decision to the 9th. Ministerial Conference to be held next December in Bali.

 

Of course, nothing about this is in the formal or informal agendas of the WTO, but such absence has never been an obstacle to push for agreements, as the preparatory process of the 8th Ministerial Conference reminds us. At that time, during the last week-end of November 2011, a political guidance paper emerged from Mr. Lamy´s Green Room and landed at the meeting of the General Council that approved the draft proposal to be adopted at the 8th. Ministerial Conference, in December 2011.

 

Procedurally any proposal has to be specifically included in the draft agenda of the General Council ten days before the meeting. This means July 12 ^th - at the latest. According to diplomatic sources last Friday the “airgram” had not been circulated yet.

 

Why such a hurry ? The week after July 15 is dedicated to issues of interest to developed countries: Trade Facilitation. It is unlikely that a consensus will emerge, due to abundance of brackets in the text. It will be so, unless consensus is somehow « created » by the Chairmen of either the Trade Facilitations Negotiating Group- or the Trade Negotiations Council, or both. Such practice is not uncommon and has been applied in the negotiations of draft text of the Doha Round in 2008, such as in Non Agricultural Market Access or Rules.

 

Why is Trade Facilitations so important now? After all, this issue has been but a sideshow of the Doha Round. The reasons are both kinds: substance and procedure.

 

(i) Trade Facilitation is intended to reduce the control capacity of border customs. The removal or reduction of the scope of customs procedures can be a means of reducing a non-tariff barrier. The old handbook of trade negotiations says that a tariff negotiation is meaningless unless any circumvention with non-tariff barriers is previously removed, or at least conditioned. Without such prohibition in Article XI of GATT94, no tariff reduction rounds could have been possible. The same also applied to agricultural negotiations in the Uruguay Round (1986-94): No tariff negotiation makes sense until the removal or the conditioning of import restrictions that are not « ordinary custom duties », as well as import bans. The first ones were eliminated (but for some exceptions) by Article 4:2 of the Agreement on Agriculture and the latter ones by the Agreement on Sanitary and Phyto-Sanitary Measures. These two elements were the most important ones in the agricultural negotiations of the Uruguay Round.

 

Trade facilitation does the same job, for industrial products. It means reducing the capacity of a country to apply a tariff at the border entry point. With customs controls, tariffs might become irrelevant as a trade policy measure. As a matter of fact, the general impact of trade facilitation in terms of trade liberalization is equivalent to no less than a tariff reduction of 10%, mainly in developing countries.

 

(ii) The procedural aspect of negotiations is also very important. After pocketing trade facilitation in Bali, NAMA’s market opening attempts could be back as a “Post Bali” initiative, renamed as Global Value Chains. Instead of a parallel negotiation on Trade Facilitation and on NAMA, as was the case until 2008, there could be a sequential negotiation of industrial market access, including customs procedures that would avoid tradeoffs between these two negotiations. Using the example of the Uruguay Round negotiation in agriculture, tough rules (although poorly implemented today) on sanitary measures and the prohibition of any import restriction that were not ordinary tariffs, exhausted the negotiating push for liberalization. Hence agricultural tariffs and subsidies in developed countries remained high and this was the price that had to be paid at that time. With a sequential negotiation in trade facilitation and NAMA such price would be spared.

 

Obviously, as long as trade facilitation is not secured, no other issue can be dealt with in the Doha Round that might disturb the critical issue of trade facilitation. That is why any outcome in agricultural negotiations would be minimized to a microscopic size. Also the Hong-Kong mandate for the Doha Round to eliminate all forms of export subsidies by 2013, which has been disregarded by all developed countries, or the G-20 proposal to make at least a reduction in 2013. Even the G-33 proposal on food security stockholding faces stiff opposition from developed countries. Of course, there will be something on development, but only the usual lip-service in Ministerial Declarations.

 

So, these two weeks trade diplomats should have their eyes, ears and noses wide open on Trade Facilitation.

 

July14th, 2013

 

- Mónica James, IREI, Geneva.