Friday, October 23, 2015

Costa Rican observations about Nairobi Conference draft ministerial declaration

Historically Costa Rica has been a demandeur in the Doha negotiations and seeks an ambitious result in all three core issues. We have remained flexible and are willing to accept an outcome that helps to strengthen the multilateral trade system. Having said that, it seems clear that we will not be able to provide for an ambitious result in Nairobi, but it is even clearer that we must provide for a credible one for the sake of the multilateral system.

As agriculture remains the main issue, we hope that discussions advance on the export competition front, and we should also be prepared for the worst-case scenario. Certainly market access discussions have been put on hold, but we would suggest looking at the only aspect of the whole negotiation that has an agreement between large groups of members. Even though Costa Rica has already deepened its market access in agriculture through comprehensive FTAs with its mayor partners, we believe there is added value in the work that has been done with the Tropical Products Agreement that may be a good asset –if played well - in Nairobi.

On the other hand, it is also time to move forward. A Ministerial declaration resulting from the Nairobi Conference must acknowledge a willingness to understand and address the linkages between trade and environmental performance, the transformative nature of global value chains and digitalization; the increasing importance of trade in services and investment; the need to address competition policies; among other topics that are already being discussed outside of the WTO, in organizations like the OECD and through initiatives like the E15 from the ICTSD. The world has changed in a fundamental way during the past 20 years and we must find new ways to tackle old and current problems. The lack of agreements during the past 14 years in the Doha negotiations leaves us with a legacy on unresolved issues that we still need to address, and to that we must add now the disruptive role of climate change.

This is a critical year for the climate debate with the international community gathering in Paris for a climate change summit only one week before the Nairobi conference. Paris will mark a historical tipping point for the mainstreaming of climate change in economic and development pathways around the world.

As long as the WTO is unable to complete the DDA, it will remain being part of the problem. Even if the DDA negotiation continues post-Nairobi, there is a global sense of urgency that the multilateral trade system engages as a provider of solutions at a global scale. This unique opportunity is imminent for this organization and must not be squandered.

In order to deliver swiftly and effectively in this course of action, the DDA requires additional time, say, another 12 months, and the key pillars and topics of discussion should remain the same. It just cannot be “business as usual”. The difference would be a clearer understanding of why this complex effort of the Doha negotiation Round is being undertaken. The WTO requires a broader, more holistic vision about the imperative to advance both the trade and climate change agendas. This century a clearer long-term view is needed where climate science informs our thinking and elucidates our choices this century. With impacts from climate change looming large, the time has come to stop treating the trade regime and the climate regime in silos. The solution is not to merge them – they seek different objectives – but recognize how and why they affect each other. 

For example, this will show, unquestionably, that the greatest threats to agriculture are not policy-based. It is not protectionism or liberalization what will hamper agriculture’s ability to prosper, but climate change. Therefore, we must start a conversation about how trade can help agriculture to become more resilient in the face of climate change.

Also, it will provide a greater sense of opportunity regarding the completion of a modern and robust multilateral agreement in services, a growing industry that has a far lower carbon footprint than the production and trade of other goods. This means that growth in the services sector belongs into a low carbon economy, which is what planet Earth urgently demands.

In addition to agriculture and services, NAMA should be approached from the point of view of a progressive reduction in carbon emissions in the manufacturing process of all goods, and a progressive increase in the renewable energy component in that manufacturing. By 2050, all traded goods that enjoy free tariffs should be manufactured with a source of energy that is renewable, and its embedded carbon emissions neutralized. This requires an ambitious plan with goals to be targeted for completion by 2030, which is only 15 years away (almost as long as the DDA has been discussed). [The OECD offers a magnificent tool to visualize embedded carbon emissions in international trade:]

This holistic vision would be like a new pair of prescription lenses that could provide a mindset for a negotiation framework that would result in a successful DDA, not with minimal ambition, but, quite on the contrary, with maximal one, as it would be clear that the outcome of the negotiation would be a means to a very concrete and tangible end, a vehicle to advance development and prosperity while fighting climate change.

Costa Rica is willing to engage and actively contribute to further this view, in an attempt to obtain from Ministers a mandate in line with all previous ones for the Doha Round, but focused on an outcome that will be a bold statement towards advancing trade while contributing with solutions to climate change.