The WTO Bali Package for LDCs

1. The WTO Bali Package for LDCs Samer Seif El-Yazal WTO

2. Introduction • At Bali (MC9), WTO Ministers adopted ten decisions relating to Doha Development Agenda; three of these decisions are LDC-specific. The decision on cotton also largely relates to LDCs. • Ministers also welcomed two of the earlier decisions taken by Members pursuant to MC8; the one relating to TRIPS extended the transition period for LDCs to comply with TRIPS obligations until 1 July 2021 (IP/C/64) • The other decision concerns the guidelines on LDC accessions which introduces some precise benchmarks for market access negotiations and sets out some other parameters to further ease and simplify the accession of LDCs to the WTO (WT/L/508/Add.1)

3. Preferential Rules of Origin for LDCs (WT/L/917) • The LDC Group has been seeking flexible rules of origin criteria since the launch of the DDA negotiations, to better utilize the preferences accorded to them. • Soon after the Hong Kong Decision on DFQF market access which asks Members to adopt simple and transparent rules of origin for LDC products, the Group made a submission which was revised several times. A detailed proposal formed part of the LDC Bali package (TNC/C/W/63). • As negotiations on LDC Bali Package began in the middle of 2013, Members requested LDCs to be realistic on their demand and focus on some elements which they believed were feasible to work out given the complex nature of the subject matter. • Subsequently, the LDCs made an abridged submission in September 2013 seeking agreement on some core elements that could facilitate their market access (TN/C/W/63/Add.1).

4. Preferential Rules of Origin – contd. • At Bali, Ministers adopted the first set of multilateral guidelines on preferential rules of origin which Members may wish to draw upon as they develop or improve their preferential rules of origin arrangements for LDCs. • The guidelines do not envisage common/harmonized rules of origin across all unilateral preference schemes for LDCs; it preserves the prerogative of governments to follow the method they deem appropriate, but provides some normative elements in each of the major method in which origin is conferred on goods. • The guidelines contain some illustrations in which rules of origin can be made easier for the LDCs to comply with. For instance, in case of value addition method, the guidelines recognizes the maximum threshold of foreign inputs (75%) that the LDC Group desire to qualify for preferences. • The guidelines take into account some best practices that Members apply in their rules of origin frameworks. For instance, it provides examples of different possibilities of cumulation of inputs which can help LDCs source materials in an efficient and competitive manner.

5. Preferential Rules of Origin – contd. • The guidelines also invite Members to keep documentary requirements simple and transparent, which could help minimize cost of compliance for the LDCs. • The Committee on Rules of Origin is to annually review the developments in the context of these guidelines, and keep the Sub-Committee on LDCs informed of the review. Some Limitations: • These guidelines are best endeavour provisions, but mark the beginning of such guidelines in the area of preferential rules of origin which hitherto has been the sole prerogative of the governments. • Only broad parameters have been set, with less specificity. The LDCs may reflect on the utility of a detailed decision which they originally envisaged prior to Bali. • Active engagement from LDCs required at the Committee on Rules of Origin as well as in the Sub-Committee on LDCs .

6. Operationalization of the Waiver concerning Preferential treatment to Services and Service Suppliers of LDCs (WT/L/918) • Since the launch of the DDA negotiations, LDCs have been seeking special priority in sectors and modes of supply of export interest to them. •  In 2003, modalities for special treatment for LDCs were adopted which paved the way for the adoption of the first ever waiver in 2011 (MC8), for Members to grant preferential market access to LDC services and service suppliers. • The LDC Services Decision (2011) represents a significant step forward in the multilateral trading system, since preferences under the GATS framework were non-existent before. • However, no WTO Member has yet made use of the waiver since its adoption. This led the LDCs to submit a proposal as part of their Bali package, asking Members to undertake meaningful preferences for LDCs in services (TN/C/W/Add.2). • At Bali, Ministers adopted a decision which puts in place a process that would lead to the operationalization of the waiver and thereby facilitate preferential market access for LDCs.

7. Operationalization of the waiver – contd. • A high level meeting is foreseen six months after the LDCs will have tabled their collective request identifying their sectors and modes of supply of export interest to them. At that meeting Members are to come prepared and indicate what preferences they would like to provide to the LDCs. • Meanwhile, Members are encouraged to unilaterally provide preferences to LDC service suppliers. • The decision also recognizes the need to strengthen LDCs' domestic service capacity in order to make use of existing opportunities and any preferences in future. Some Limitations: • The waiver decision alone does not guarantee that Members actually grant preferences to LDCs. Hence, proactive engagement from LDCs with their trading partners on a regular basis is key to secure commercially meaningful market access. • The LDCs need to complete their background work and prepare their collective request as soon as possible which can only trigger responses from Members.

8. Duty-free and Quota-free (DFQF)market access for LDCs (WT/L/919) • Securing DFQF market access has been a long standing aspiration of LDCs in the multilateral trading system. • Members adopted a concrete and comprehensive decision at the Hong Kong Ministerial Conference in 2005, which has largely been implemented by most developed Members. • However, full realization of Hong Kong Decision has not been achieved which led the LDCs to submit a proposal as part of their Bali package (TN/C/W/63). • Though the proposal lacked full consensus among the Group, it's defining feature was that it sought enhanced and commercially-meaningful market access for all LDCs, without diminishing the existing market access enjoyed by any LDC.

9. DFQF – contd. • At Bali, Ministers adopted a decision on DFQF market access for LDCs, asking particularly developed country Members that do not yet grant 97% DFQF access to LDC products, to seek to improve their existing DFQF coverage prior to MC10. • Most importantly, granting of DFQF market access has been made independent of the single undertaking of the DDA. • The Decision brings enhanced transparency and oversight in the implementation of DFQF access for LDCs. For instance, the Secretariat shall annually prepare a report on Members' DFQF access at the tariff line level which is expected to facilitate the mandated annual review in the CTD. •  The General Council is to report to MC10 on the implementation of this Decision Some Limitations: • The Decision is not of a legally binding nature, but represents a political commitment and gives some directions to Members to adhere to. It also keeps the issue alive on the DDA agenda for an eventual better outcome in future. • Given the sensitivities involved with this topic among LDCs as well as among the preference dependent developing countries, the Decision perhaps reflects the best achievable outcome. • The usefulness of the Decision can only be judged at MC10. In the meantime, the LDCs need to make full use of the opportunity provided through the forum provided by the CTD.

10. Cotton (WT/L/916) • Cotton has been an important dossier for the LDCs in the DDA, in particular with the tabling of sectoral initiative of cotton by the C-4 countries in 2003. • In 2004, Members agreed to address the concerns of LDCs in the cotton sector and established a two track approach: the development assistance aspects and the trade policy aspects. • In 2005, further impetus was provided in the Hong Kong Ministerial Declaration, in particular for an explicit decision on cotton in all three pillars of market access, domestic support and export competition. • Barely two months before the Bali Conference, the LDCs tabled a proposal on cotton (TN/AG/GEN/33) seeking specific outcomes on both trade and development components. For instance, the proposal called for immediate elimination of all forms of export subsidies on cotton.

11. Cotton (WT/L/916) – contd. • At Bali, Ministers adopted a decision on cotton which reaffirms the importance of cotton as well as the importance on delivering on trade-related components. • It also aims at enhanced transparency and monitoring of trade-related aspects of cotton. • Biannual dedicated discussion is to take place examining the three pillars of trade component: Market Access, Domestic Support and Export competition, on the basis of factual information and data from the Secretariat. • The decision, for the first time, envisages to consider non-tariff measures applied to cotton exports from LDCs in markets of interest to them. • As regards development assistance aspect, DG's consultative framework mechanism on cotton will continue to review and track cotton-specific assistance or other assistance related to this sector. • The DG to provide periodic reports on the development assistance aspect as well as progress made in implementing the trade-related components at each WTO Ministerial Conference. Some Limitations: • The decision lacks ambition with no new commitments, but maintains the spotlight on an issue that is critical for many LDCs. • The decision puts more emphasis on transparency and monitoring rather than directly addressing the trade distorting policies affecting the cotton sector; progress will very much depend on how LDCs approach this issue in 2014.