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THIRD WORLD ECONOMICS

WTO GC chair ignores core development issues, pushes e-commerce

The chair of the WTO General Council is seeking to press forward the contentious agenda on electronic commerce at the trade body in the face of developing-country opposition.

by D. Ravi Kanth

GENEVA: While remaining silent on the core developmental outcomes demanded by least-developed and developing countries in the Doha work programme, the WTO General Council (GC) chair, Ambassador Harald Neple of Norway, has mounted an extraordinary effort on e-commerce.

 He has been holding sustained consultations with African and other countries in an attempt to find a way forward before the final GC meeting of the year in December, several trade envoys told the South-North Development Monitor (SUNS).

 In the first 10 days of November, the GC chair, along with Ambassador Alfredo Suescum of Panama – who was appointed by Neple as Friend of the Chair to oversee the dedicated sessions on e-commerce – held one-on-one meetings with key trade envoys from Africa and Asia ostensibly to elicit their opinions on how to move forward on e-commerce despite their opposition, said a trade envoy who asked not to be quoted.

 The GC chair is expected to prepare a report based on his consultations for the consideration of members before they adjourn for the winter holiday. Consequently, the scheduled meetings on e-commerce have been cancelled.

 Significantly, the GC chair has not made a similar effort, as he is currently making on e-commerce, to resolve/convince major industrialized countries to give up their opposition on core developmental issues such as the permanent solution for public food stockholding programmes, the Special Safeguard Mechanism for developing countries to curb unforeseen surges in imports of agricultural products, elimination of trade-distorting cotton subsidies, harmonization of non-preferential rules of origin and also harmonization of preferential rules of origin for the least-developed countries, said an African trade envoy.

 “Clearly, the double standards, when it comes to issues concerning the developing and poorest countries, are on full display – as demands raised by major developed countries in e-commerce and other areas are accorded priority,” said a South American trade envoy who asked not to quoted.

Opposition on e-commerce

During the dedicated session on e-commerce on 18 October, it became clear that there is no consensus for moving forward on e-commerce. That session was eventually suspended after a volley of protests from members from the African Group, India, Venezuela, Bolivia and Cuba, among others.

 At the session, Morocco, which is the coordinator for the African Group, had said categorically that its members want to “prioritize work on the outstanding Doha issues, such as Agriculture Trade Distorting Domestic Support, SSM [Special Safeguard Mechanism], Public Stockholding for Food Security, Cotton, LDC [least-developed country] priorities, TRIPS, and, last but not least, Development and S&DT [special and differential treatment]”, before addressing issues on e-commerce.

 Subsequently, at an informal ministerial meeting in Oslo, Norway, on 21-22 October, several trade ministers from developing countries, including South Africa and India, expressed strong protests on engaging on multilateral rule-making on e-commerce.

 South Africa’s trade minister Rob Davies said his country is not prepared to negotiate multilateral rules for e-commerce, while India said new issues, including e-commerce, cannot run ahead of the Doha issues, according to participants familiar with the Oslo meeting.

 In the report submitted to WTO members on the Oslo ministerial meeting, Norway said that “among so-called new issues, many ministers mentioned e-commerce as a potential candidate for harvesting results in one form or another in Buenos Aires [where the WTO’s eleventh Ministerial Conference, or MC11, will be held next year], while others seemed more skeptical.”

 In fact, except for one or two developing countries, most of the ministers from developing countries had opposed e-commerce at the Oslo meeting, said a participant who took part in the proceedings.

 Nonetheless, Norway maintained in its informal report that “further focused, but open-minded, discussions and scoping on e-commerce are needed before any conclusions can be drawn.”

Pressure

Several trade envoys said that major industrialized countries are exerting pressure on African Group coordinator Morocco; Rwanda, which is the coordinator for the African, Caribbean and Pacific (ACP) Group; and Benin, which is the coordinator for the LDCs, to change their position, said an African trade envoy who asked not to be quoted.

 A former US trade official who is now advising the LDC Group, Alicia Greenidge, wants the poorest countries to accept the e-commerce work programme, or else major players will proceed to address e-commerce in a plurilateral agreement in the WTO by the eleventh Ministerial Conference, an LDC source told SUNS.

 In what seems to be a misguided interpretation of paragraph 34 of the Nairobi Ministerial Decision, the LDC Group has been advised to submit a formal proposal whereby they effectively acquiesce to proceeding outside the mandate of the existing WTO work programme on e-commerce on the assurance that they will not take on commitments or binding obligations in this area.

 The Group is being advised in a confidential technical note that the proponents want to know what the “substantive elements on development and capacity building to include in their pitches for an outcome at MC11” will be, and the LDCs are urged to jump on board early before the proponents concede to a plurilateral initiative.

 This comes at a time when the proponents of e-commerce, the GC chair and the Friend of the Chair, together with the WTO secretariat, are desperately trying to find a way to move forward the e-commerce “discussions” in the WTO.

 The African Group, India, Bolivia and Cuba have maintained that any discussion on e-commerce must follow the prescripts of the existing e-commerce work programme adopted by the General Council in 1998 and reaffirmed in subsequent Ministerial Decisions and Declarations. The work programme is specific and sets out the broad framework for discussions in the relevant WTO bodies.

 However, with eight submissions now on the table, all proponents, with the exception of China, refuse to address their submissions in the relevant bodies mandated to deal with them, thereby delaying any chance of meaningful engagement this year.

 The pressure now being placed on the poorest and most vulnerable economies of the LDC Group to agree to an outcome on e-commerce is at a tipping point, even as their attempts to seek outcomes in areas that are most pressing to their needs to help them integrate into the global economy are being ignored.

 In all likelihood, the GC chair and Ambassador Suescum could present a report on their consultations on e-commerce at the GC meeting in December based on what the LDCs have suggested, said an industrialized-country trade envoy.

Chinese position

Meanwhile, China has cautioned against pushing members to opposing ends in the e-commerce-related work at the WTO, saying efforts to force countries to adopt a work programme despite their opposition can bring harm to the multilateral trading system.

 In what appears to be counter to an ambitious e-commerce work programme that would include eliminating localization requirements and permitting cloud computing without restrictions, China has maintained that work on e-commerce must be based on the existing mandate of 1998, “focusing on areas of common interest to members with the aim of realizing pragmatic progress at the 11th ministerial conference” in Buenos Aires next year.

 China said the e-commerce work programme must focus on “promotion and facilitation of cross-border trade in goods enabled by internet, together with services directly supporting such trade in goods, such as payment and logistics services.”

 “The discussions are to clarify and improve the application of existing multilateral trading rules, with a view to enabling developing members, SVEs [small, vulnerable economies] and LDCs in particular, and their SMEs [small and medium-sized enterprises] and disadvantaged groups to better participate in and benefit from international trade and global value chains and to achieve leap-forward development,” China has argued.

 Significantly, it wants to extend the existing moratorium on the imposition of customs duties on e-commerce, but “the discussions at this stage should not lead to new market access commitments including tariff reductions.”

 Several industrialized and some developing countries, including the US, have called for a permanent prohibition on imposing customs duties instead of the current practice of extending the moratorium after every two years.

 China has underscored the need for creating “a sound trade policy environment facilitating cross-border e-commerce” involving business-to-consumer (B2C) and business-to-business (B2B) transactions and applying “simplified measures for import, export and transit of goods traded under B2C mode.”

 Beijing also wants members to focus on “paperless trade, and facilitate access to, use of, and data exchange with the single window of a Member’s authorities for international trade by cross-border e-commerce transaction platforms and traders, and also services providers of trade facilitation, payment, logistics, and courier services.”

 It has also emphasized addressing other issues such as “transparency on policy framework of cross-border e-commerce”, improving “infrastructure and technical conditions for cross-border e-commerce”, and exchanging information on issues relevant to e-commerce such as consumer protection, privacy protection and intellectual property rights.

 China has suggested that the WTO General Council must provide political guidance by involving all the relevant bodies.

 In short, the powerful members, including the GC chair from Norway, along with the WTO Director-General Roberto Azevedo are moving heaven and earth to force the African and other developing countries to give up their opposition on e-commerce, said a South American trade envoy. (SUNS8354)    

Third World Economics, Issue No. 628, 1-15 November 2016, pp2-3


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