Mini Nairobi Package on LDCs for Nairobi WTO MC10

· Bangladesh Leads the LDC Pack

Bangladesh has presented, on behalf of the Least Developed Country (LDC) Group at the WTO, two submissions for consideration as possible deliverables for the organisation’s upcoming ministerial conference later this year. While one submission involves preferential rules of origin, the other one requests a dedicated session of the Council for Trade in Services on the LDC services waiver to be held this month. These submissions were circulated to WTO members two weeks ago on 24 and 25 September.

Over the past months broad consensus has emerged among Geneva-based trade delegates that the ministerial – as a minimum – must meaningfully address development issues of concern to LDCs in Nairobi.

According to the WTO, issues that have received more convergence and might be potential deliverables for MC10 include development issues with a particular focus on LDCs, export competition in agriculture, and a set of possible outcomes to improve transparency in a number of areas.

More specifically, recent consultations held on LDC issues indicate that potential issues to be forwarded to Nairobi for decision-making include, for example, elements of Special and Differential Treatment, issues of interest for LDCs in agriculture including domestic support, issues related to non-tariff barriers (NTBs), binding duty-free quota-free (DFQF) market access through scheduling, the operationalisation of the decisions on the services waiver and rules of origin, and the preservations of flexibilities contained in various decisions as well as strengthened technical assistance.

According to experts in the field, this submission seeks to transform the guidelines on preferential rules of origin contained in the Bali ministerial decision into compulsory criteria.  

Currently, these rules are designed on a unilateral basis without any harmonised standard, which critics say creates additional problems for the WTO’s poorest members, forcing them to adapt to a range of rules depending on the intended export market.

During the last WTO ministerial conference in Bali, a decision was adopted on rules of origin to provide some guidelines to WTO members to develop or build on their individual rules of origin arrangements applicable to imports from LDCs.

In April this year, the LDC group submitted a paper entitled “Elements for a discussion on preferential rules of origin for LDCs” intended to trigger a discussion among WTO members with regard to the implementation of the Bali ministerial decision on rules of origin in order to ultimately enhance market access for their products.

The submission by Bangladesh dated from 24 September presents in detail the rationale behind LDCs’ request on preferential rules of origin under unilateral preference schemes and reiterates elements for a decision on preferential rules of origin for LDCs for adoption at MC10.

The submission also calls preference granting countries to take into account “the level of development, industrial capacity, scarcity of resources, human resources constraints, manufacturing capabilities, and administrative challenges of LDCs” while designing their rules of origin.  

Additionally the document encourages WTO members to take into account the current global value chains reality “wherein production is fragmented and companies are inclined to source goods from efficient sources.”

In terms of setting out the technical aspects of preferential rules of origin and ways to determine when substantial or sufficient transformation has taken place, the submission details a series of methodologies and provisions related to cumulation – the latter of which allows two or more parties to a preferential scheme to jointly fulfil the relevant local processing requirements

Regarding the value addition threshold, the Group suggests for example allowing foreign inputs to a maximum of  d” 75 percent of value in order for a good to qualify for benefits under LDC preferential trade arrangements.

Services waiver

Bangladesh submitted on 25 September a communication requesting a dedicated session of the WTO Council for Trade in Services (CTS) to examine the results emerging from the Bali decision on the operationalisation of the services waiver for LDCs.

Following the Bali decisions, the LDC group submitted a collective request back in July 2014 articulating the preferences in terms of sectors and modes of supply that they would like to receive from preference granting countries. It was agreed in the decision adopted in Bali that six months after such a collective request, a high-level meeting would take place for WTO members to signal their preferential treatment to services and services suppliers of LDCs based on the collective request.

To date, Australia, Canada, Norway, Hong Kong China, Republic of Korea, Chinese Taipei, Japan, New Zealand, Singapore, Switzerland, Mexico and India have notified their preferences to the CTS. The European Union and Chile also recently announced their intentions of notification and the United States and Turkey submitted their notifications last month.

The LDC communication underlines the appreciation by the Group for some of the extensive notifications made by certain WTO members especially when those included more preferences than what had been earlier announced.

The services waiver decision provides a two-track approach. On the one hand, market access preferences of the type referred to in GATS Article XVI can be automatically covered by the waiver. On the other hand, non-market access measures are not automatically covered, but can be authorised by the WTO CTS. These can include, for example, regulatory preferences, preferential national treatment, and exemptions for quotas or taxes.