Two months back in Geneva, the trade ministers of different countries of the world sealed a deal on advancing global trade with less restrictions and more transparent rules. It was the 12th ministerial conference (MC12) of The World Trade Organisation (WTO) where they gathered after a long lapse of four and a half years. Desperation was there to reach a minimum deal as the MC11 in Argentina was inconclusive and almost directionless. After having been deferred twice due to the Covid-19 pandemic, the 12th version of MC finally took place on June 12-17 in Geneva, Switzerland. Co-hosted by Kazakhstan, the conference ended with a set of outcomes that requires a critical examination from the perspectives of different parties, including the world's poor-country club-Least Developed Countries (LDCs_.
Interestingly, for those LDCs who are set to graduate from the United Nations-defined category in recognition of their economic advances, the MC12 was a new kind of challenge. Up to MC10, there had been no additional move by these countries to press some different kinds of agenda. In MC11, there was an effort to push a recipe for the graduating LDCs. Now, at the 12th MC, these countries, including Bangladesh, strongly pressed the agenda of continuation of their trade benefits for a certain period of time even after the graduation takes place.
In fact, Bangladesh led the move as the country is set to shed LDC label in 2026. After graduation, the country is likely to lose preferential market access to the major export destinations. High tariffs at regular rates would be imposed immediately on export goods to enter other countries, excepting the European Union (EU). The European bloc has already agreed to offer three years' extension of preferential trade benefits even after the graduation. From Bangladesh perspective, this is a logical demand. The country's annual merchandise export of US$ 52 billion in the last fiscal year is one of the main sources of the country's foreign-exchange earnings.
Nevertheless, with the relentless effort of LDC group, coordinated by Chad, WTO member-countries came to the consensus that 'graduating LDCs would need some sort of support to overcome the challenges they would confront after graduating to the middle- income-country status.
This acknowledgement by 164 members is an achievement for the LDCs. It is expected to ease the path of seeking extension of privileged market access for few more years after graduation. It has been learnt that the mighty WTO member USA opposed the trade-benefit extension, in a blanket manner, for graduating LDCs. It preferred country-specific duty-benefit on the basis of needs assessment. In that case, Bangladesh may place its demand for product-specific trade needs at MC13.
In the MC12 forum, Bangladesh initially planned to seek six-to nine years' extension of market access after graduation. Later, it decided to keep it flexible. Now, Bangladesh will have to push for a revised proposal when the nations sit for the MC13.
Also, Bangladesh enjoys patent waiver on its pharmaceuticals manufacturing sector as an LDC. The waiver under Trade Related Aspects of Intellectual Property Rights (TRIPS) would not be applicable after graduation. Despite a repeated try, the issue could not be included in the main agenda of MC12. So, no positive outcome on extension of TRIPS waiver for LDCs is there. The ministerial, however, decided to extend the TRIPS waiver for the production and supply of Covid-19 diagnostics and therapeutics.
TRIPS waiver for LDCs under the WTO-TRIPS agreement helped Bangladesh's pharmaceutical sector to achieve exponential growth. Country's pharmaceutical sector is now concerned about the end of the era of waiver after LDC graduation.
The MC12 came up with fisheries-subsidy agreement (FSA), the first WTO deal to place environmental sustainability at its core. It is also a significant one for Bangladesh along with other LDCs although it has no immediate impact. Implementation of the FSA would need ratification by two-thirds of the WTO members. It is a time-consuming process and likely take several years.
Once it is implemented, developing countries and LDCs will be benefitted from the set of global rules of fisheries subsidies' agreement as it would help curb harmful subsidies and protect global fish stocks.
"The agreement prohibits support for illegal, unreported and unregulated (IUU) fishing. It bans support for fishing in overfished stocks. And it takes a first but significant step forward towards curbing subsidies for overcapacity and overfishing by ending subsidies for fishing on the unregulated high seas," WTO Director-General Ngozi Okonjo-Iweala told members at the closing session of MC12. She said the agreement would leave a positive impact for 260 million people who depend on marine fisheries for their livelihood.
According to WTO estimate, fisheries subsidies - estimated to range from US$ 14 billion to $ 54 billion per year globally - enable many fishing fleets to operate longer and farther at sea, to the detriment of marine life.
But, in the case of Bangladesh, this is not relevant as most of the fishing takes place inland. The reduction in fisheries subsidy is mainly related to marine subsidy.
At the MC-12 meet, the WTO members agreed to maintain their current practice of not imposing customs duties on electronic transmissions. But, for the first time, the members have decided to set a phasing- out time of e-commerce moratorium. The e-commerce moratorium has been renewed at every Ministerial Conference since its adoption in 1998. The moratorium will remain in force until MC13. In case of delay in MC13, the embargo would be lifted automatically after March 2024.
The decision on lifting the e-commerce moratorium would be helpful to Bangladesh as it is losing a considerable amount of customs revenue from this sector. Bangladesh collects value-added tax (VAT) from domestic sources and income tax from e-commerce sector. However, the WTO moratorium prohibits the customs department from imposing customs duty on digital trade despite having immense potential.
The global cross-border e-commerce market size is around $1,000 billion, which will rise to around $4,820 billion by 2026. Study findings say Bangladesh loses more than US$6.0 billion worth of business a year because of waiver in duty on e-commerce. The country will be benefited because of the adoption of the e-commerce issue.
Ensuring food security, exemption of the World Food Programme from food purchase during emergency were also agreed by WTO members amid tensions stemming from global supply-chain disruption. None of the decisions would yield immediate benefit or result for the WTO member-countries.
In the WTO negotiations, it is always difficult for LDCs to get some space to make their issues of interests. This time also, they could not bring their top-priority agenda to the green-room discussions where a few powerful member-countries ultimately set the rules of the game. Thus, many again raised the same old question: whether the WTO decision-making process properly follows 'one- member, one-vote' rule. Do all members of the WTO can raise their voices equally?
The LDCs did not return from the MC12 empty-handed, though. They, however, also did not return cheerfully as many gray areas are there in the outcome documents and declarations. The ministerial conference ended with a number of outcome documents and issue-based ministerial declarations branded as Geneva Package. How worthy the package for Bangladesh as well as other LDCs is the most important question.
Also, question can be raised on the necessity of the big gathering after spending hectic time, money and effort to get a shady and modest deal after four years of preparation.
Doulot Akter Mala, special correspondent of the FE, was in Geneva to cover the MC12 by joint invitation of WTO-FES.
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