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Empowering the poor? The successesand limitations of the Bali Package forthe ldcsAmrita Narlikara & Shishir Priyadarshiba Centre for Rising Powers, University of Cambridge, UKb Development Division, World Trade Organization, Geneva,SwitzerlandPublished online: 10 Sep 2014.
To cite this article: Amrita Narlikar & Shishir Priyadarshi (2014) Empowering the poor? Thesuccesses and limitations of the Bali Package for the ldcs, Third World Quarterly, 35:6, 1051-1065,DOI: 10.1080/01436597.2014.907727
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Empowering the poor? The successesand limitations of the Bali Packagefor the LDCsAmrita Narlikara* and Shishir Priyadarshib
aCentre for Rising Powers, University of Cambridge, UK; bDevelopment Division, World Trade Organization,Geneva, Switzerland
After over a decade of languishing in stalemate, the Doha Develop-ment Agenda – the first round of trade negotiations launched underthe auspices of the World Trade Organization – finally achieved abreakthrough at the Bali ministerial in 2013. Given that the Dohamandate places development – and particularly the concerns of theLeast Developed Countries (LDCs) – at the heart of its agenda, ourpaper focuses on what the Bali outcome means for the world’s poor-est countries. As a first step we provide a brief background againstwhich the Bali negotiations took place. In the second section weassess the achievements and limitations of the Bali outcome, focusingon the LDC-specific package and also commenting on other issues thataffect the LDCs. In the third section we explain the reasons for someof the achievements at Bali, which include negotiating strategies usedby the LDCs themselves. In the fourth and final section we identify aplan of action for the future.
Keywords: World Trade Organization; Doha Development Agenda;Least Developed Countries; Bali ministerial conference; negotiations;bargaining
In 2001 trade negotiators launched the World Trade Organization’s (WTO) veryfirst round of trade negotiations. The round was unprecedented in its ambition,especially in comparison with the trade rounds that had taken place under theumbrella of the General Agreement on Tariffs and Trade (GATT). Further, itplaced development concerns at the heart of the organisation’s negotiatingagenda. Not only was the new round thus called the Doha Development Agenda(DDA, our emphasis) but it promised special attention to the concerns of theLeast Developed Countries (LDCs).1 We see this commitment in the numerousreferences that the Doha Declaration makes to the LDCs, and also in thefar-reaching promises of the sections that are specifically devoted to them.Paragraph 42, for instance, declares:
*Corresponding author. Email: [email protected]
© 2014 Southseries Inc., www.thirdworldquarterly.com
Third World Quarterly, 2014Vol. 35, No. 6, 1051–1065, http://dx.doi.org/10.1080/01436597.2014.907727
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We recognize that the integration of the LDCs into the multilateral trading systemrequires meaningful market access, support for the diversification of their produc-tion and export base, and trade-related technical assistance and capacity building.We agree that the meaningful integration of LDCs into the trading system and theglobal economy will involve efforts by all WTO members. We commit ourselves tothe objective of duty-free, quota-free market access for products originating fromLDCs.2
Laden with a heady combination of ambition and good intentions, the DDA didstart with the promise of expeditiously addressing some of the key concerns ofdeveloping countries. But, despite making some progress in terms of the bench-marks that were agreed on various issues, the negotiations continued to be lar-gely beleaguered by recurrent deadlocks. As a result, the negotiationslanguished in stalemate for over a decade.
Finally, a deal was reached at the WTO’s ninth ministerial conference at Bali,on 7 December 2013. Admittedly the scope of this deal is considerably smallerthan the original mandate of the DDA. But, insofar as it represents the first break-through after a long series of deadlocks, the agreement reached at Bali is signifi-cant. Importantly, even the smaller agenda that was harvested at Bali includesan ‘LDC Package’ as one of the three major sets of issues on which a deal wasreached. This package provides us with a useful case to assess the extent towhich trade negotiators have kept the priorities of the poorest and most vulnera-ble at the heart of the DDA through the thick and thin of 12 years of negotiation.
In this paper, therefore, we focus centrally on the LDC Package of the Baliagreement, and analyse the gains that it may generate for the world’s poorestcountries. Before doing so, however, we briefly provide the background againstwhich the Bali negotiations took place. In the following section we assess theachievements and limitations of the Bali outcome. We provide this analysis onits own terms, but also against some of the pre- and post-Bali critiques that theLDC-specific provisions have encountered. We make brief reference to the otherDDA issues that formed the content of the Bali agreement, particularly trade facil-itation, but restrict our comments to the impact that agreement in these areaswould generate for the LDCs. In the third section we explain the reasons behindthe LDC-specific Bali outcome. In doing so, we include a comparative assessmentof the strategies used by the LDCs today and in the recent past, as well as of thefacilitating and/or debilitating external conditions. In the fourth and concludingsection we identify an agenda for the future, particularly from the perspective ofthe LDCs.
The Bali agreement in perspectiveWhen the DDA was launched in 2001, its target date for completion was set for2005. Far-reaching in ambition, the DDA aimed to bring about greater marketopening in agricultural and industrial goods, as well as services. Depending onhow one interpreted its mandate, it offered scope for the WTO’s expansion intothe so-called ‘Singapore issues’ of competition policy, trade and investment,government procurement and trade facilitation. Most importantly it recognisedthe concerns of developing countries and promised to ‘place their needs andinterests at the heart of the Work Programme adopted in this Declaration’.
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For a variety of reasons agreement on the DDA proved difficult to reach. Thefirst major deadlock occurred at the Cancun ministerial conference in 2003, anda series of deadlocks followed. In part these problems were a product of theintrinsically difficult nature of the agenda. Previous GATT rounds had providedrelatively low-hanging fruit by way of tariff reductions, in comparison with themore contested and politically sensitive goals of the DDA. Changing power bal-ances also affected the efficiency of decision making: it was easier in the GATT
to arrive at decisions amid a small and like-minded group of developed coun-tries (often the so-called Quad – the USA, EU, Canada and Japan) in compari-son with decision making in an organisation that comprises 160 members atdifferent levels of development, few of which are willing to stand on themargins of the negotiations. Relative decline and the financial crisis furtherreduced the willingness of the major powers, particularly the USA, to show theleadership that it had traditionally done in previous multilateral negotiations.The more the developed countries turned to easier regional and bilateral alterna-tives, the greater was the decline in political will towards reaching a multilateralagreement.
The long and serious difficulties encountered in the main business of theDDA, however, produced two results: one in the form of a vital LDC-specificdevelopment at the sixth ministerial conference at Hong Kong (MC6) in 2005,and the other in the form of ‘political guidance’ to members at the eighth minis-terial conference (MC8) at Geneva in 2011 on process and mandate of the DDA.
In 2005, amid ferocious disagreement among members and little sign of abreakthrough at Hong Kong, a chink of light had shone through via Annex F ofthe Ministerial Declaration. In this Annex six important decisions were adopted infavour of the LDCs. While each of these decisions provided some important sup-port, flexibility or directive in favour of the LDCs, perhaps the most far-reaching, interms of its political and substantive significance, was the decision to provideduty-free and quota-free (DFQF) market access to products from LDCs.
Paragraph 36 of Annex F states that ‘developed-country Members shall, anddeveloping-country Members declaring themselves in a position to do so should’provide DFQF market access ‘on a lasting basis’ for all products originating fromLDCs ‘by 2008 or no later than the start of the implementation period’. Membersunable to provide such market access ‘shall’ (as opposed to ‘should’) provideDFQF market access ‘for at least 97 per cent of products originating from LDCs’;further, these members ‘shall take steps to progressively achieve compliance’ togive full DFQF.
This has turned out to be a very important decision taken in favour of theLDCs and has led to significant changes in member-country tariff regimes sinceits adoption. All developed countries, except the USA, have met the 97% DFQF
target and gone beyond it, and several of the large developing countries havealso been improving the DFQF market access that they offer to LDCs.
In a similar yet different way the developments at the 2011 ministerialhelped change the context, which in turn paved the steps towards an agreementat Bali. The ‘Elements for Political Guidance’ document, which was issuedalong with the other decisions reached at the MC8, recognised that, since intensi-fied efforts over the past many years had failed to conclude the DDA singleundertaking, members should now commit to ‘advance negotiations, where
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progress can be achieved, including focusing on the elements of the Doha Dec-laration that allow Members to reach provisional or definitive agreements basedon consensus earlier than the full conclusion of the single undertaking’.3 Thiseffectively allowed negotiators to focus on issues where results could feasiblybe harvested. By adopting a pragmatic and realistic approach, and matchingambition with what seemed feasible, members zeroed in on three possibledeliverables at Bali. These included an agreement on trade facilitation, certainaspects of agriculture and certain development issues, and the nucleus of whatwas an LDC package. And, very importantly, even as members agreed to limitthe Bali agenda to these aspects of the DDA, a clear understanding emergedamong developed and developing countries that, even within this limitedagenda, priority would have to be given to the issues of concern to the LDCs.
These developments, that is, the adoption of the LDC-specific decision at MC6and the understanding to give priority to LDC concerns resulting from the deci-sion at MC8, throw up an interesting and surprising paradox: even as the largereconomies (developed and developing) have remained embroiled in disagree-ments, the LDCs have emerged as winners. Their successes have included AnnexF, as well as a further commitment to prioritise their concerns (which would finda place even in the revised and narrowed agenda of Bali). In fact, the onlygroup of countries for which the DDA has delivered any gains before Bali, andpretty much consistently so since the Doha Round was launched, is the groupof the poorest and weakest countries in the system. In the third section weexplain why this was the case. But, before doing so, we provide an assessmentof the gains and limitations of the Bali Package for the LDCs.
Assessing the Bali Package for the LDCsThe agreement reached at Bali, after years of deadlock, injects new life andvitality not only into the Doha negotiations, but also into the multilateral tradingsystem. As the Director General of the WTO, Roberto Azevedo, wrote in the WallStreet Journal (December 1, 2013): ‘If we fail to deliver a package this week,there would be no winners – just a long list of losers: businesses, around theworld, the unemployed, the underemployed, the poor, the beneficiaries of food-security schemes, and the WTO itself … if we fail here, the consequences wouldbe grave.’
The Bali package promises gains for the system as a whole, but especiallyso for LDCs that enjoy a stronger footing in multilateral trade bargaining than inregional and bilateral trade agreements. Further, the Bali agreement breaks newground in the prolonged DDA negotiations via its decisions on three areas thatcomprise the Doha work programme: trade facilitation, agriculture and cotton,and development issues. While the first two affect, and take into account, theneeds of the LDCs, the third is the most relevant for our paper as it focuses spe-cifically on LDC concerns.
The LDC-specific package comprises three decisions that cover DFQF marketaccess, simplified preferential Rules of Origin, and the operationalisation of theservices waiver. Two other decisions, namely that on cotton and on the elementsof a monitoring mechanism, also have important implications for the LDCs.Finally, of the decisions taken on the WTO’s regular work at Bali, at least twohave vital relevance for the LDCs, namely the reaffirmation of the Aid for Trade
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initiative and an exploration and recommendation of steps to increase the flowsof technology transfer to developing countries.
In many ways the LDC package was the least controversial of the Dohaissues under negotiation at Bali. Stable texts on all three documents were arrivedat in Geneva. The draft decision on Rules of Origin was circulated to membersin October and the text has remained stable since then. The draft decision onoperationalising the LDC services waiver was also circulated in October and thistext too remained stable through the last stages of the process in Geneva andthen in Bali. The third draft decision in favour of LDCs, which relates to DFQF
market access for them, was supported by a very large majority of the memberswhen it was last taken up towards the end of the negotiating process in Geneva.A few members did express some concern, however, some formally and someinformally. The LDC facilitator, who had guided this text, felt that it representeda very fine balance between the aspirations and concerns of both sides, andtherefore forwarded it to ministers through the General Council.
The situation differed in both agriculture and trade facilitation. On tradefacilitation, negotiators were unable to reach consensus in Geneva. A number ofkey areas remained bracketed in spite of the desire not to take open texts toBali. The situation was, in some ways, even more interesting with respect to thefour decisions in agriculture, and especially so with regard to the decision on‘food security’. All Members agreed to the draft decision on the table in theevening of 19 October. However, differences re-emerged in Bali and, in fact,even until the final day of the conference it was not clear whether the major dif-ferences between some developing and developed countries (particularly Indiaand the USA, and to some extent Pakistan) would be overcome. Eventually anagreement was gavelled only around noon on 7 December.
On 2 December, on the eve of the Bali ministerial, LDC ministers had issueda call urging the membership of the WTO to adopt their collective proposals. Atvarious times during the conference, when a failure appeared to be the mostlikely outcome, LDC delegations were seen huddled together discussing the possi-bility of suggesting the adoption of only their package. Whether or not such aproposal would have elicited the support of the entire membership will remain amatter of conjecture.
However, finally, when the three LDC-specific decisions were adopted at Bali,in keeping with the call issued by the LDC ministers, their text remained largelyunchanged from their Geneva versions (whereas, as mentioned earlier, both agri-culture and trade facilitation were subject to some robust debate and bargaining).To this extent it can be said that, from their departure in Geneva to the comple-tion of the conference in Bali, the LDCs did not have to make further concessionsto have their package accepted.
Nonetheless, the final deal that the LDCs got out of Bali is not one that hasbeen met with universal approbation. A vital point of criticism has been thenon-binding ‘best endeavour’ language used in all three decisions on the devel-opment issues, whereas trade facilitation (or at least Part I of the agreement)puts the burden on binding commitments.4 At the start of the conference India’sCommerce Minister, Anand Sharma, had made a scathing critique of the deal onthe table:
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We have a half-baked agricultural package, statements of pious intent for LeastDeveloped Countries (LDCs) and several unresolved issues in the trade facilitationagenda … None of these texts require the developed countries to make bindingcommitments for the benefit of developing countries. In contrast, developing coun-tries would be required to undertake significant commitments in trade facilitation.If this imbalance in the Bali package is not redressed, the world at large wouldaccuse all of us of collectively making hollow promises and keeping the tankempty on development content.5
This point of criticism vis-à-vis the LDC Package has persisted since the Baliconference among some stakeholders. South Africa’s Trade Minister, RobDavies, is quoted as stating, ‘While the agreements reached at Bali are impor-tant, it is important to ensure balance in the agreements. We are of the view thatthere is a structural imbalance in which the least-developed countries securedonly best endeavour solutions while there is a binding agreement on trade facili-tation.’6
We offer a different view and argue that it would be wrong to dismiss theBali Package as an aggregate loss to the world’s poor. Trade facilitation isindeed a binding agreement, whereas most of the LDC-specific provisions arebest-endeavour ones. But at least two questions need answering before one candismiss the Bali Package as an aggregate loss for the world’s poor. First, willthe binding nature of the trade facilitation agreement place more onerous bur-dens on poor countries, and divert scarce resources away from more urgent tasks(such as health and education) and towards the simplification of customs proce-dures? Second, what is the real value of best-endeavour commitments?
To answer the first question first, concerns about the costs of implementingthe trade facilitation agreement were high on the developing countries’ agenda.Section II of the agreement attempts to alleviate these concerns, and outlines theSpecial and Differential Treatment (SDT) provisions for developing countries andLDCs. It states that ‘assistance and support for capacity-building should be pro-vided to help developing and least-developed country Members’ (our emphasis).Most importantly the agreement also recognises that ‘where a developing orleast developed country Member continues to lack the necessary capacity,implementation of the provision(s) concerned will not be required untilimplementation capacity has been acquired’.7 It further provides for numerousflexibilities whereby developing countries and LDCs can self-designate variousobligations into different categories, and thereby work within different (andmore amenable) time-frames. In other words, although the trade facilitationagreement is a binding agreement, and one that the LDCs too will eventuallyhave to comply with, it offers extremely important flexibilities never beforeincorporated in a multilaterally agreed deal in the WTO.
The second question on the value of best-endeavour provisions is importanton its own terms, but is also relevant for the broader issue of the real-life impactthat norms can potentially generate. In all three of the LDC-specific agreements,we find that, although some of the language adopted is indeed exhortatory, thesections do represent significant departures from convention in the WTO and maytilt the balance more in favour of the poor than the critics recognise.
The agreement on preferential Rules of Origin provides a set of guidelineson improving the transparency and simplicity of these rules, and on keeping the
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value-added thresholds as low as possible to allow LDCs (which have limitedproductive capacities) to secure greater advantage from preferential tradearrangements.8 But it is worth bearing in mind that, until this agreement wasarrived at, the developed countries had treated the testy and complex issue ofrules of origin as a unilateral prerogative that preference-giving countries couldexercise, a favour of sorts that they bestowed upon preference-recipients. TheBali agreement on preferential Rules of Origin is unprecedented in bringing thisissue area within the multilateral domain. For the first time an attempt has beenmade to universalise and multilateralise good practice in this area, and therebyto offer some protection to LDCs against the stringent conditionalities of particu-lar preference schemes. This is not a development to be scoffed at.
The second agreement deals with the services waiver, which allows countriesto give preferential market access to trade in services from the LDCs.9 Thewaiver itself is not new and dates back to 2011. But LDCs have thus far not ben-efited from this waiver, since no country has as yet translated it into specificpreferential schemes. The Bali decision is important because it puts in place aprocess that would lead to the operationalisation of the waiver and thereby togreater market access for service providers from LDCs. It instructs the Councilfor Trade in Services to ‘initiate a process aimed at promoting the expeditiousand effective operationalization of the LDC services waiver’. While improvingthe international policy environment, it also places some responsibility on theLDCs by asking them to identify the services sectors of export interest to them.Sequentially it then requires follow-up and time-bound action from the membersof the WTO in the following manner:
With a view to accelerating the process of securing meaningful preferences forLDCs’ services and service suppliers, the Council for Trade in Services shall con-vene a High-level meeting six months after the submission of an LDC collectiverequest identifying the sectors and modes of supply of particular export interest tothem. At that meeting, developed and developing Members, in a position to doso, shall indicate sectors and modes of supply where they intend to provide prefer-ential treatment to LDC services and service suppliers.
Again, the decision has value in as much as it requires the developed and devel-oping countries to clearly signal their intent as regards the waiver, and that tooin response to the agenda set by the LDCs. In effect, therefore, it should lead toconcrete market access benefits accruing to the LDCs in global trade in services.
The third agreement focuses on DFQF.10 It reinforces the provisions of AnnexF of the Hong Kong Declaration by requiring developed countries that do notprovide DFQF for at least 97% of products originating from LDCs to ‘seek toimprove their existing duty-free and quota-free coverage for such products, soas to provide increasingly greater market access to LDCs, prior to the next Minis-terial Conference’ (our emphasis). While reinforcing the recommendations ofAnnex F is not a milestone in itself, the recent decision moves the goalpostscloser. Rather than wait for the completion of the DDA, it does to some extentdisentangle the full implementation of the DFQF decision from the Single Under-taking commitment. This is a significant step beyond what was promised to theLDCs at Hong Kong.
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A fourth decision taken under the development package puts in place thekey elements of a ‘Monitoring Mechanism on Special and Differential Treat-ment’.11 It is not restricted to LDCs and is therefore not part of the LDC Package,but it still has significant benefits for the LDCs. The General Council had pro-posed the establishment of such a mechanism in 2002; over a decade later Balihas finally operationalised this idea. It represents a first – and vital – stepwhereby members can raise concerns regarding the implementation of any SDT
provision contained in any agreement or decision of the WTO. Reviews via thismechanism would be conducted ‘with a view to facilitating integration of devel-oping and least-developed Members into the multilateral trading system’. Forprovisions found to be inadequate or wanting the mechanism would be able torecommend ‘the consideration of actions’ to improve implementation and even‘the initiation of negotiations aiming at improving the Special and Differentialprovision(s) that have been reviewed under the Mechanism’. There is no auto-maticity in securing acceptance of the review, although the agreement urges therelevant WTO body to consider the recommendation at the earliest opportunity.Above all, in providing an opportunity for such a review, and one that can beinitiated by the members themselves, the agreement is unprecedented.
Finally a few words on the decision on cotton. The package of texts result-ing from the negotiations that took place in Geneva before this Bali ministerialconference included a text on cotton, which covers both the trade and develop-ment components of this major issue.12 The C4 countries (Benin, Burkina Faso,Chad and Mali) can feel some frustration that the cotton initiative, which waslaunched more than 10 years ago, is yet to be fully addressed. But it also needsto be recognised that it is the absence of progress so far in the DDA as a whole,and more specifically in agriculture, that has prevented members from deliveringon cotton ‘ambitiously, expeditiously and specifically’, as indicated in theAugust 2004 General Council Decision and further reaffirmed in the 2005 HongKong Ministerial Declaration. Even though the text on cotton adopted at Balidoes not imply any major breakthrough on this issue, it is nonetheless interest-ing and significant. It constitutes a renewed push for negotiations on cotton andstrongly reaffirms its principles and objectives; it enhances transparency andmonitoring; and it reaffirms the importance of development assistance.
All three agreements reached as part of the LDC Package, as well as the deci-sions taken on the monitoring mechanism and on cotton, thus represent majorsteps forward in favour of the LDCs. To different degrees, despite the best-endeavour language in some areas, they break new ground in the norms thatunderpin the WTO. For instance, the relevant paragraph in the Doha Declarationon DFQF merely stated that ministers agree to work towards the objective of pro-viding DFQF access to LDCs; this language was roundly criticised at the time asbeing completely meaningless. Yet, a few years later, it was this very languagethat led to a specific commitment being taken to provide DFQF market accessunder Annex F of the Hong Kong Ministerial Declaration. And again, if onelooks at the language of the Hong Kong Decision, while to some extent it didprovide the cover of the completion of the Doha negotiations for developedcountries to provide 97% access, by 2012 all developed countries, with the soleexception of the USA, had provided the recommended minimum of DFQF market
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access of 97% to products from LDC countries, with a few offering close to100%. This reinforces the point that Bali breaks new ground for the LDCs.
On balance the Bali outcome appears to be a good deal for the LDCs. Thecritics are right to point to the trade facilitation agreement, and also the energythat was spent in negotiating it (along with the last-minute furore over foodsecurity), to then argue that the Bali agreement did not treat the issue of devel-opment as its sole and paramount concern. But, in view of the relatively mini-mal concessions that the LDCs had to make on trade facilitation, and theimportant implications of the decisions taken as part of the LDC Package, as wellas the developmental benefits of some of the other decisions, it would be correctto conclude that the LDCs have probably harvested more at Bali than any othergroup of countries. Given the limited share of the LDCs in world trade and therepeated pledges made globally to improve the lot of the poorest and most vul-nerable countries, this is an outcome that few can reasonably take issue with.
Explaining the outcomeAs the previous section argues, the final Bali package has a strong tilt in favourof the LDCs, both through the LDC-specific decisions as well as through the devel-opmental aspects of other decisions, such as the provisions in the trade facilita-tion agreement that provide for assistance and support to developing countries,especially LDCs, and pre-conditionally for undertaking commitments. In effect,therefore, one-third of the Bali Package deals directly with LDC concerns, whileother aspects of the package also take the needs of the LDCs into account. Thisis an impressive outcome for the world’s poorest countries to achieve in a multi-lateral negotiation.
The achievements of the LDCs at Bali need to be seen in light of theiralready considerable success at Hong Kong. We argued in the first section thatthe LDCs constitute the one group for which the multilateral system has deliveredvia Annex F, even when the system was deadlocked on all other fronts. At leastone reason for this was that the cost of the promised DFQF market access forLDCs was significantly lower than the short-term political costs associated withthe lowering of agricultural subsidies in developed country markets, or similarcosts for the larger developing countries to allow greater market access to indus-trial products from the developed countries. In fact, one could even go a stepfurther to argue that the persistence of deadlock in other issue areas worked tothe advantage of the LDCs. Both the developed countries and the larger develop-ing countries knew that they would be judged very harshly by the internationalcommunity if they failed to deliver any results on a round that was explicitlycommitted to development. In such a scenario a package of decisions for theLDCs, including one to provide their products DFQF market access was a relativelyeasy and politically pleasing deliverable. Lack of progress on almost all otheraspects of the DDA in the period leading up to Hong Kong, in a way pushednegotiators to focus on LDC-specific decisions as deliverables for Hong Kong.
The Bali ministerial’s narrowed mandate, along with the continued commit-ment of members to the cause of development, created a somewhat similar setof conditions to those in Hong Kong: negotiators were working not with a largemandate with significant cross-cutting issue linkages, but on a less-ambitious
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agenda that required at least some results on development. Additionally, Balibrought an added variable via trade facilitation.
Initially some countries did feel that the primacy being given to trade facili-tation in the Bali Package would dilute the focus on development and LDC issues(as did other countries, which were concerned about the lack of central focus onagriculture). South Africa, for instance, expressed this concern at the start of theconference: ‘the “LDC-plus” approach that was the original basis for launchingwork on the early harvest has been inverted and replaced by a “Trade Facilita-tion-plus” approach.’13 The reason why development remained a key priority forBali, and why the system still managed to deliver on LDC and developmentissues, was twofold.
First, after years of stalemate, having trade facilitation as a deliverable andpart of the Bali Package finally rekindled the interest of developed countries,and their corporations, in the Round. Positive issue-linkage resulted. For the firsttime in a long while governments in developed countries were willing to makegreater concessions on development and agriculture (particularly food security),as they were also able to offer the possibility of improved market access indeveloping countries to their own businesses via the trade facilitation agreement.By including trade facilitation, the Bali Package became politically palatable tothe North, which also meant that developed countries could offer more conces-sions to the developing world. The fact that a large proportion of the gains fromtrade facilitation would accrue to the developing countries, by increasing theefficiencies of trade and also creating new jobs, allowed the developed countriesto further hone a discourse that emphasised the development-conducive natureof their demands (despite the objections that some developing countries raisedwith regard to its prioritisation and timing). The agenda was narrow enough tomaintain a good deal of the focus on the development issues, but also wideenough to re-engage influential stakeholders in the developed countries.
Second, a great deal of the credit for achieving a significant and substantiallymeaningful outcome on development issues needs to go to the LDCs themselves,and to the way they negotiated with other parties. As a coalition the LDCs madea concerted effort to keep up the pressure on all members to retain the focus ontheir concerns as per the promises of the original DDA, Annex F of Hong Kong,and the decisions and political guidelines of MC8. They invested serious effort intaking on an agenda-setting role in the process, producing detailed drafts andcollective proposals. The LDC group held numerous consultations, at technicaland expert level as well as the ambassadorial level, in negotiating and draftingtheir positions. They further used the outcomes that they had arrived at, after agreat deal of deliberation, in a retreat held in October 2012. This retreat pro-duced the detailed outcome documents on all issues that the LDCs wished to seeincluded as part of the LDC package at Bali.
Their agenda-setting role, moreover, often involved the use of integrativenegotiating strategies rather than distributive blocking ones. The LDCs negotiatedrealistically and with a great deal of political maturity. The manner in whichthey modified their initial proposal on the Rules of Origin, and agreed to scaledown their ambition to a level that was more acceptable to the developed coun-tries, but which nevertheless gave the LDCs a basis for improving the existingRules of Origin regimes, is an illustration of this pragmatic enlightenment and
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desire to achieve an agreed outcome. Similarly, the way they negotiated thedecision on the operationalisation of the services waiver, and accepted a linkageof the signalling conference with their own responsibility to come up with theirneeds assessment, displayed their keen desire to work constructively towards anintegrative negotiated outcome at Bali.
In contrast, the detailed and lengthy discussions, at times stretching throughthe night and into the wee hours of the morning, which the Director Generalhad to undertake on food security, were a response to the distributive blockingstrategies that some other developing countries had used. So was the case in thelast minute concerns expressed by some Latin American countries, which alsothreatened to derail the process, but for the patience and persistence shown bythe Director General and the Indonesian Trade Minister.
The LDCs also worked in close coordination with other developing countries.When announcing the emergence of agreement on stable texts in Section II ofTrade Facilitation, the LDCs worked in cooperation with several other groups ofdeveloping countries, including the African Caribbean and Pacific (ACP) groupand the Africa Group.14 They also enjoyed the support of the larger developingcountries: witness the statements by India, South Africa and others at theplenary session in Bali in support of the LDC cause.
Very importantly the LDCs also stood the test of dealing with rifts withintheir coalition.15 The way in which their coordinator was able to overcome thesedifferences and keep the group together was exemplary. Perhaps the most diffi-cult issue the group had to contend with was the concern that some of its mem-bers had with the proposed DFQF decision. A key point of difference was overthe issue of possible preference erosion, particularly if full DFQF was grantedthose LDCs that were not enjoying it at the time. This divide translated mostobviously between some of the African and Asian LDCs, with the former con-cerned with how the provision of DFQF would affect their existing preferentialshares in major markets, in particular through the African Growth and Opportu-nity Act. A few other developing countries also echoed this concern.
The opposition attempted to exploit these differences to its advantage. Forinstance, the USA expressed its reservation on certain aspects of the draft DFQF
decision, and justified its reluctance to implement the Hong Kong decision interms of the possible negative impact on LDCs already benefiting from the exist-ing preference programmes that the USA offered them.16 It was only a combina-tion of perseverance and constant intra-group dialogue by the LDC coordinator, aswell as some clever drafting alternatives, that finally ensured an outcome accept-able to all. Credit must also be given to the LDC Facilitator, the former Ambassa-dor of Denmark, who made it clear that he would not accept a ‘no-result’ on LDC.
While the LDCs were aided in their cause by the fact that the DDA is, afterall, a development round, as well as by institutional developments at Hong Kongand MC8 that reinforced the commitment to their concerns, their informed activ-ism, coalitional bargaining and integrative strategies were crucial in securing afavourable deal at Bali.
An LDC plan of action: agenda for the futureThe adoption of a Bali Package is a critical step in several ways: the agreementhas breathed new life into the Round, retained and reinforced the promise of
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development as envisioned by the DDA, and has bolstered the credibility of themultilateral trading system. Moreover, it has also shown that the membershipcan deliver results for the LDCs, who now have a number of concrete sections intheir favour. There are of course a number of issues that the LDCs will have toaddress and take appropriate action on, if they are to translate these decisionsinto concrete trade-related gains. Accordingly, in this section, we suggest a pro-gramme for action whereby the LDCs can build further on the gains made. Wealso point to areas of concern and likely sticking points in the future, and offersuggestions on steps that might be taken to overcome them.
As we have argued in this paper, even best-endeavour language can generatefar-reaching norm-setting and norm-reinforcing consequences. In the case of thethree LDC-specific decisions, plus the ones on the monitoring mechanism andcotton, we already have language that equips the LDCs with considerable agenda-setting power. For example, in terms of the operationalisation of the serviceswaiver, the decision made underlines action that has to be taken by both theLDCs and their trading partners. To this extent the responsibility for setting theagenda for taking forward this decision is as much in the hands of the LDCs as itis in those of the developed countries. Once the LDCs have come up with theircollective requests, it requires action from the developed and developing countrymembers. The LDCs would be well-served in using this opportunity to set theagenda, and to further hold the members of the WTO to account on the follow-upaction required.
The decisions on DFQF and Rules of Origin are, at face value, ones thatplace the onus on the developed (and large developing) countries, rather thanallocate greater control to the LDCs. But having a multilateral set of guidelineson the Rules of Origin is, in fact, not only unprecedented, but also gives theLDCs a concrete document that they can go back to. They can further use it tohelp simplify various existing preferential Rules of Origin, and thereby improvethe utility and meaningfulness of various preferential schemes of market access(including DFQF).
To avail themselves of these opportunities, the LDCs will need research capac-ity and also negotiating capability. Collective action will be especially importantin terms of the requests they might advance on the services waiver, but will alsoprove useful in taking the initiative in other areas (via enhanced research capa-bility, as well as the enhanced legitimacy of demands that are backed by largenumbers). Preservation of the unity of the LDC coalition will be a key part of thisprocess, as will cooperation between the group and coalitions of other develop-ing countries.
Besides drawing on their own resources, and those of their coalition allies,the LDCs can potentially also rely on institutional support. In this work they willbe aided by the specifically designated ‘LDC Unit’ within the WTO, which hasworked with them in the past and will continue to help address their needs withinthe overall mandate of the organisation. Other organisations too (such as UNCTAD
and the Commonwealth Secretariat), as well as research institutions (includinguniversities and institutes) can be enlisted to help the LDCs in this work, as wasdone in the pre-Bali phase. These entities can help the LDCs identify their priori-ties, frame their demands effectively and engage in some blue-skies thinking onhow their needs and concerns can be addressed with greater efficacy.
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While the LDCs have made major inroads into centre-staging their concernson the negotiating agenda, and to some extent possibly even altering the rulesof the WTO in their favour through the three main decisions (plus additional rele-vant ones), there are other areas on which further action is still necessary. Theseinclude both the Monitoring Mechanism and Aid for Trade. In the context ofthe former the LDCs will have to carefully assess the existing SDT provisions intheir favour to identify those they feel have proved to be ineffective in the past.They will then have to make a collective proposal to improve their utilisationand effectiveness. These deliberations, as we know from various such instancesin the past (including the work done under Paragraph 44 of the Doha Declara-tion), can be long-drawn-out and progress may be frustratingly slow. The LDCswill have to persevere. As many a negotiator can tell through his or her experi-ence, putting forward a proposal is, relatively speaking, much easier than takingit through the entire gamut of negotiating processes. Similarly, on Aid for Trade,the LDCs will have to clearly spell out their requirements; use every forum tohighlight these needs; work closely with donors; be aware that donors are facingbudgetary pressures; ensure the full and efficient utilisation of allocatedresources; and be able to show the effectiveness of aid that has been providedso as to attract further assistance.
Another aspect of the Bali Accord that the LDCs will have to keep track ofand monitor, in terms of its implications for them, is food security. On the lastday of the conference members agreed to an ‘interim solution’ that would allowdeveloping countries to have public stockpiling programmes for food securitypurposes.17 While there is a divergence of view on whether this interim solutionwill continue until a permanent solution is found, or only up to MC11, what isclear is that this will be an important area of work in the coming years, as coun-tries endeavour to arrive at a so-called ‘permanent solution’. The interests ofboth sides will need to be matched: those who have food security concerns andhad strongly backed the proposal and those who have expressed some reserva-tions, perhaps because they felt that an unbridled use of subsidies, even for foodsecurity purposes, could significantly affect their export markets. The LDCs willneed to follow developments in this area very closely, be ready with variousimpact scenarios, and develop their negotiating position accordingly.
While we rate what was achieved at Bali as a major success, both for the sys-tem as a whole and for the poorest countries within the system, the LDCs cannotafford to rest on their laurels. To capitalise on the LDC-specific decisions, they willneed to show further initiative and be proactively involved in agenda setting in thecoming period. Much will depend, for instance, on how they use the opportunityto identify and articulate their collective requests with respect to the serviceswaiver; on how they use the pointers to best practices in the Rules of Origin deci-sion to simplify the exiting preferential rules of origin regimes; on how they takeforward the DFQF decision, especially the inbuilt monitoring process to get at least97% DFQF access from all developed countries, and also from developing countriesin a position to provide it; on the trade and development aspects of cotton both inthe context of the negotiations on agriculture and through the Director General’sConsultative Mechanism on Cotton; and on the initiative, involvement and proac-tivity that they show, including in agenda setting and in taking the deliberationsforward, in other areas such as the Monitoring Mechanism and Aid for Trade.
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The LDC group, working as one, has delivered. The LDCs must realise thisand therefore will also need to guard against disunity in their coalition, while atthe same time strengthening their cooperative endeavours with other developingcountries, which has also enhanced their bargaining power. Particularly impor-tant in the preservation of the unity of the LDC coalition will be how they man-age the issue of preference erosion in the future, while they will also need tokeep a close eye on how their own interests interact with those of the largerdeveloping countries on issues such as food security and commodity prices.
The LDCs achieved an outcome strongly in their favour at Bali. They nowneed to build upon the momentum generated through the adoption of the Balipackage, by further strengthening their integrative negotiating strategy and bybeing proactively involved in all stages of the ensuing work and deliberations inthe WTO. Only this will ensure that the decisions that have been adopted at Baliare translated into concrete market access gains.
AcknowledgementsAmrita Narlikar is grateful to the Leverhulme Foundation for funding this research. The views expressed inthis paper do not necessarily reflect the views of the WTO.
Notes on contributorsAmritar Narlikar is Reader in International Political Economy, and Director ofthe Centre for Rising Powers, POLIS, University of Cambridge. She is also aSenior Research Associate at the Centre for International Studies, University ofOxford and an Official Fellow, Darwin College. She is the co-author ofBargaining with a Rising India: Lessons from the Mahabharata (2014).
Shishir Priyadarshi is Director, Development Division, World Trade Organization.
Notes1. The UN defines LDCs as ‘low-income countries suffering from severe structural impediments to sustain-
able development’. It applies three criteria for identifying countries in this group: gross national incomeper capita, the human asset index, and the economic vulnerability index. Of the 49 countries that are cat-egorised as LDCs, 34 are members of the WTO and another nine are in the process of negotiating acces-sion.
2. Doha WTO Ministerial Declaration, Adopted on 14 November 2001, WT/MIN(01)/DEC/1.3. “Elements for Political Guidance, 1 December 2011,” WT/MIN(11)/W/2, issued at MC8, Geneva, Decem-
ber 15–17, 2011.4. While there is recognition among the LDCs and larger developing countries that they have significant
gains to make from reforming their customs procedures and reducing bureaucracy and corruption, tradefacilitation has been seen by a good many developing countries as being driven largely by the USA andmultinational corporations seeking greater market access in the South via Global Value Chains.
5. Sharma, “Address.”6. Quoted in “Glaring Asymmetries in Bali Accord,” Independent European Daily Express, December 16,
2013. http://www.iede.co.uk/news/2013_3682/glaring-asymmetries-bali-accord.7. Agreement on Trade Facilitation, Ministerial Decision, WT/MIN(13)/36 – WT/L/911, December 7, 2013.
http://wto.org/english/thewto_e/minist_e/mc9_e/tempdocs_e.htm.8. Preferential Rules of Origin for Least-Developed Countries – Ministerial Decision – WT/MIN(13)/42 –
WT/L/917, December 7, 2013.9. Operationalization of the Waiver Concerning Preferential Treatment to Services and Service Suppliers of
Least-Developed Countries – Ministerial Decision –WT/MIN(13)/43 – WT/L/918.10. Duty-Free and Quota-Free Market Access for Least-Developed Countries – Ministerial Decision – WT/
MIN(13)/44 – WT/L/919, December 7, 2013.
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11. Monitoring Mechanism on Special and Differential Treatment – Ministerial Decision –WT/MIN(13)/45— WT/L/920, December 7, 2013.
12. Cotton – Ministerial Decision – WT/MIN(13)/41 – WT/L/916, December 7, 2013.13. Davies, “South African Statement.”14. http://www.wto.org/english/news_e/news13_e/dgra_28nov13_e.htm, accessed December 20, 2013.15. On coalition strategies, see Narlikar, “Collective Agency, Systemic Consequences.”16. Priyadarshi and Rahman, “Building up to the Ninth WTO Ministerial Conference.”17. Public Stockholding for Food Security Purposes – Ministerial Decision – WT/MIN(13)/38 – WT/L/913,
December 7, 2013. Note that the decision also establishes a work programme for finding this permanentsolution and states: ‘In the context of the broader post-Bali agenda, Members commit to the work pro-gramme mentioned in the previous paragraph with the aim of concluding it no later than the 11th Minis-terial Conference’.
BibliographyDavies, Rob. “South African Statement to the 9th WTO Ministerial Conference – Bali, Indonesia.” December 4,
2013. http://www.wto.org/english/thewto_e/minist_e/mc9_e/stat_e/zaf.pdf.Narlikar, Amrita. “Collective Agency, Systemic Consequences: Bargaining Coalitions in the WTO.” In The
Oxford Handbook on the World Trade Organization, edited by Amrita Narlikar, Martin Daunton, andRobert Stern (Oxford: Oxford University Press, 2012), 184–209.
Priyadarshi, Shishir, and Taufiqur Rahman. Building up to the Ninth WTO Ministerial Conference: Issues ofInterest to LDCS. Commonwealth Trade Hot Topics 98. London: ODI, 2013.
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