Important Decisions Reached in Nairobi at the WTO’s 10th Ministerial Conference

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[author: Marcus Sohlberg]

On December 19, the World Trade Organization (WTO) concluded its 10th Ministerial Conference in Nairobi, Kenya. The Ministerial Conference, which typically is held every two years, is a meeting of the decision-making body of the WTO that ministers from all Members attend and where decisions can be taken on any matters under the multilateral trade agreements.

For years, the WTO decision-making arm has struggled to obtain the required consensus among all Members in order to reach new multilateral agreements. In particular, the negotiations launched in 2001 in the context of the Doha Development Round, which named improved trading prospects for developing countries as a fundamental objective, have been deadlocked. This has led many to question the effectiveness and relevance of the WTO decision-making function. A glimmer of hope, however, came in 2013 when the Members concluded the Trade Facilitation Agreement at the 9th Ministerial Conference in Bali, the first multilateral trade agreement under the WTO in two decades (see earlier coverage in King & Spalding’s Trade & Manufacturing Alert).

Building upon the momentum from 2013, the Members again showed in Nairobi that they are able to move the trading agenda forward by concluding the “Nairobi Package” containing several important decisions.

First, several decisions were made that affect international trade in agricultural products. In particular, Members agreed to a staged elimination of all export subsidies for agricultural products. Developed-country Members agreed to remove such subsidies immediately, with the exception of a handful of products, and developing-country Members agreed to do so by 2018 with an exception for marketing and transport support (which may be extended through the end of 2023). In addition, WTO Members agreed to new rules to discipline the activities of state trading enterprises in agricultural trade and to limit the benefits of export financing support. Lastly, WTO Members called for duty-free and quota-free access for cotton from least-developed countries (LDCs).

Second, a number of decisions were reached for the specific benefit of LDCs, including enhanced preferential rules of origin and preferential treatment for services providers. The rules of origin agreement establishes a set of guidelines to make it easier for exports from LDCs to qualify for preferential market access. In terms of services, a waiver was agreed whereby non-LDC Members can grant preferential treatment to LDCs without breaching their WTO obligations.

Third, certain WTO Members agreed to expand the Information Technology Agreement to eliminate import duties on 201 information technology (IT) products, which account for over $1.3 trillion of trade per year (see earlier coverage in King & Spalding’s Trade & Manufacturing Alert). The negotiations commenced in 2010 and have involved Members representing the major exporters of IT products. Although participation in the negotiations was optional, all Members will benefit from the agreement and enjoy duty-free market access on the list of 201 products covered by the agreement. The elimination of duties will be staged with 65 percent of the list of products becoming duty free on July 1, 2016 and the duties affecting almost all of the remaining products phased out by 2019.

Finally, at Nairobi the accession negotiations of Liberia and Afghanistan concluded and these countries are now set to become fully-fledged members of the WTO, which would expand the membership to 164 covering more than 95 percent of world trade.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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