World Trade Organization ground-breaking deal for development

The 10th WTO Ministerial Conference, gathered in Nairobi since Tuesday, agreed on Sunday on a global trade deal that benefits developing countries in Africa and around the world by getting rid of trade distorting export subsidies in agriculture. As regards EU producers, they will for the first time see a level playing field in export competition, a key priority for EU negotiators.

After a tough week of negotiations important decisions have been taken to improve rules on agricultural trade. Furthermore, the deal opens up opportunities for the poorest and most vulnerable developing countries to integrate better into the global trading system. The EU team, led by Cecilia Malmström, Commissioner for Trade, and Phil Hogan, Commissioner for Agriculture, was at the forefront of efforts to broker a deal. Ministers also mapped out the future direction for WTO trade negotiations and started a debate on new issues that the WTO should address.

Cecilia Malmström, welcoming the deal, said “We’ve had some long days and nights of intense negotiations here in Nairobi, and our work has paid off. The EU has successfully concluded what we set out to achieve. The WTO, meeting for the first time in Africa, has been able to deliver a good deal for developing countries. Today’s decision opens real opportunities for more trade and investment and reinforces the global trading system. For those who had doubts, it proves the relevance of the WTO and its capacity to deliver results. That’s good news for our work in the years ahead”.

Phil Hogan added that “this is a square deal for EU agriculture, for farmers in the developing world, in particular for the least developed countries. We have delivered on our objectives outlined ahead of the negotiations. In recent years, the EU has led the way in agreeing to renounce the use of export subsidies. Now, for the first time, there are binding disciplines on subsidies such as export credits, where our competitors are subsidising trade worth billions every year. These new binding controls will level the playing field for EU exporters. Also, our competitors will not be able to circumvent these rules through use of state trading enterprises – a key demand for the EU. We have also achieved our objectives on food aid and the special safeguard mechanism. The food aid deal will mean less displacement of local African production, which means it’s good for African farmers and good for the Migration agenda.”

Today’s decisions, building on the agreement reached in Bali two years ago, improves the global environment for trade. In practical terms, today’s deal:

• Will stop the use of subsidies and other schemes unfairly supporting agricultural exports. The elimination of export subsidies will protect vulnerable farmers in developing countries from the damaging effects of export subsidies. And it will fast-track the removal of these subsidies in the case of cotton.
• Ensures that food aid for developing countries is given in a way which does not distort local markets
• Seeks to simplify the conditions that exporters from the poorest countries have to meet, so that their products benefit from trade agreements (so-called rules of origin). It also gives more opportunities for businesses from the poorest countries to provide services in the WTO’s 164 member countries.

These changes will be phased in gradually. More time is allowed to developing and least developed countries to adapt themselves to different aspects of the rules.

For European producers and exporters, the deal brings new opportunities by creating a more level playing field towards both developed and emerging economies. Specifically, it will benefit EU farmers by ensuring an end to export subsidies in key sectors such as wheat flour, sugar and dairy.

The Ministerial also saw the finalisation of the update of the 1996 Information Technology Agreement, which when implemented will remove duties covering €1.2 trillion in trade. Consumers will benefit from the elimination of tariffs and thus more affordable prices on products such as media players, game consoles and GPS.

These two agreements are a shot in the arm for the global trading system. They come on the back of other important multilateral successes with the UN’s 2030 Sustainable Development Goals and last week’s climate change agreement. It provides a firm basis for work in 2016 to further opening multilateral trade opportunities and to broaden and modernise the WTO’s current agenda.