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THIRD WORLD ECONOMICS

WTO General Council holds final meeting for 2016

Accession requests, the Doha negotiations and the e-commerce work programme were among the areas looked into by the WTO’s last General Council meeting of the year, which also set the dates for the next Ministerial Conference. Kanaga Raja reports.

GENEVA: The WTO General Council on 7 December formally agreed that the eleventh session of the WTO Ministerial Conference (MC11), to be held in Buenos Aires, Argentina, will take place on 11-14 December 2017.

The final General Council meeting of 2016 also took up a number of other agenda items, some of which are highlighted below.

Under two separate agenda items, the General Council agreed to establish two working parties to examine the requests for accession to the WTO by the Federal Republic of Somalia and the Democratic Republic of Timor-Leste, both least-developed countries (LDCs). It also welcomed them as observers to the organization.

Negotiations

Under the agenda item on the report by the Chair of the Trade Negotiations Committee, according to trade officials, the statement made by WTO Director-General Roberto Azevedo and the statements of delegations at the informal heads-of-delegation (HOD) meeting on 1 December were put on the record of the General Council meeting. (Azevedo also serves as the Trade Negotiations Committee Chair.)

At that HOD meeting, a number of developing countries stressed the need for outcomes at the next Ministerial Conference on the issues of public stockholding for food security purposes as well as on a Special Safeguard Mechanism (SSM) for developing countries, with the LDCs in particular calling for the issues of special and differential treatment (SDT) and the LDC issues to be addressed (see TWE No. 629).

Only three delegations spoke under this agenda item at the 7 December General Council meeting.

According to trade officials, Morocco (on behalf of the African Group of countries) said that a meeting of African trade ministers in Addis Ababa had stressed the importance of regional integration across the African continent.

With respect to the WTO issues, they had highlighted the SSM, public stockholding, fisheries subsidies, trade-distorting domestic support and cotton, with the development dimension being at the heart.

Morocco said that the priority should be to conclude as soon as possible all the Doha issues. It is important to highlight the principles of the Doha Development Agenda (DDA) including a transparent and inclusive process, full participation and decision-making by consensus.

For MC11, Morocco would like to see the issues of domestic support, cotton, SSM, public stockholding and fisheries subsidies in line with Target 14.6 of the Sustainable Development Goals (SDGs).

Progress should be made in an incremental manner, it said, adding that it would like to see a mini-ministerial meeting at some point in the second half of 2017.

Uganda said exports of the LDCs have gone down by 23% in the last 10 years. It highlighted difficulties with respect to capacity. Africa is looking to make a structural transformation with industrialization at the heart of this.

Uganda said it would like to discourage all members from having a narrow interpretation of special and differential treatment, which should be much broader than just about longer time periods.

It noted that 80% of African exports are raw commodities. There is thus a need to add value to Africa’s primary products, Uganda said.

Fiji (on behalf of the Pacific Group) said that the development dimension is key. It would like to see taken up the issues of domestic support in agriculture and fisheries subsidies in line with SDG Target 14.6.

E-commerce review

According to trade officials, under the agenda item on the review of progress on the e-commerce work programme, the General Council Chair, Ambassador Harald Neple of Norway, reported that Ambassador Alfredo Suescum of Panama (Friend of the GC Chair overseeing the dedicated sessions on e-commerce) held a consultation in June and a meeting in July and, based on these discussions, decided to call a meeting on 18 October. He had met with 40 delegations bilaterally including all the regional coordinators.

According to the General Council Chair, substantive discussions did not take place at the meeting on 18 October because of procedural concerns.

[At that meeting, members of the African Group underlined that they will not accept attempts to force discussions on thematic or negotiating issues that are inconsistent with the 1998 work programme on e-commerce. Following the statement by Morocco on behalf of the African Group, Suescum was forced to suspend the thematic session on “Facilitating e-commerce and e-commerce for development.” (See TWE No. 627.)]

The General Council Chair said some think that e-commerce is being given a higher priority as compared to the Doha issues of interest to them. It was clear that there is a misunderstanding of the role of the dedicated session on e-commerce. One delegation specifically said that it would oppose any discussion on e-commerce in the dedicated session, according to the Chair. In the view of this delegation, the Nairobi decision directed members to submit and discuss papers in the subsidiary bodies.

[In the ministerial decision on the work programme on e-commerce, ministers at the Nairobi Ministerial Conference in 2015 decided: “(1) To continue the work under the Work Programme on Electronic Commerce since our last session, based on the existing mandate and guidelines and on the basis of proposals submitted by Members in the relevant WTO bodies as set out in paragraphs 2 to 5 of the Work Programme, (2) To instruct the General Council to hold periodic reviews in its sessions of July and December 2016 and July 2017 based on the reports that may be submitted by the WTO bodies entrusted with the implementation of the Work Programme and report to the next session of the Ministerial Conference, (3) That Members will maintain the current practice of not imposing customs duties on electronic transmissions until our next session which we have decided to hold in 2017.”]

The Chair said that the General Council does have a central role in the work programme and it considers issues of a cross-cutting nature. In any event, paragraph 34 of the Nairobi Ministerial Declaration says that any negotiations can only begin on the basis of consensus.

Neple said that some delegations stressed the need to avoid using procedural issues to block discussion. In their view, if some members did not want any discussion at all, they should make that clear.

Many delegations recognized the potential benefits of e-commerce but noted the existing infrastructure challenges that need to be addressed first and foremost. They need to fill the knowledge gap to help identify the development-related issues that could be discussed, the Chair said further.

Some people have said that the issue should be discussed first in the relevant subsidiary bodies and should only be brought to the dedicated session once it has matured. Others were of the view that the dedicated session had a mandate to discuss cross-cutting issues.

Some delegations wanted to see some progress by MC11. Others do not share this view and want to continue the exploratory nature of the work programme.

The Chair said that “as we move forward, it is my hope delegations will continue to discuss electronic commerce.” It is important to address the knowledge gap as well as the connectivity issues, in close cooperation with other organizations that can complement the WTO’s work, he added. Members should identify issues which can be discussed in the WTO and proceed incrementally in a transparent and inclusive manner.

E-commerce and development

According to trade officials, China mentioned its proposal on e-commerce (co-sponsored by Pakistan), which it said has been introduced in the Goods Council, the Council for Trade in Services and the Committee on Trade and Development, in accordance with the 1998 work programme and the Ministerial Declaration.

It said the development dimension is at the heart of this work and that e-commerce is an important component in development. But it is important to address the lack of information, the lack of capacity and the lack of skills that many delegations worry that they suffer from. It is also very important that efforts are made to facilitate and promote the cross-border flow of goods with e-commerce, and this can be done through helping countries with legislation.

China said that there is a very good chance for developing-country micro, small and medium-sized enterprises (MSMEs) to benefit from global value chains. Small farmers in China have been helped by e-commerce.

It underlined that it is not a mandate to negotiate but to examine all of the trade-related issues to do with e-commerce. Before any rule-making, there must be a better understanding of what is going on. There should be no new market access agreements. Members should avoid crossing any red lines but should be clarifying and improving the understanding of existing multilateral rules through a bottom-up approach, China said.

The European Union said that e-commerce is of use in many different ways and is something that fits into the WTO across a number of different formats. The Oslo mini-ministerial meeting in October was a good example of ministers’ endorsement of this. It noted that a number of cross-cutting issues were discussed in the seven papers that were submitted in July.

It expressed regret over the meeting of the dedicated session on 18 October, saying that this could have allowed the advancement of the work. But instead now work is slowed down by procedural issues.

According to the EU, there is too much emphasis on the process. Noting that a number of members would want to address this issue in the regular committees, it said that it is flexible on this. But there is also a need to move ahead.

MC11 should deliver something on e-commerce, the EU said; 18 years after the launch of the work programme, it is not too soon to deliver something.

Members can also identify a number of legal areas that could be ripe for discussion. They should be looking at things that can be done to help the regulatory side of e-commerce, helping small and medium-sized enterprises (SMEs) to participate, the development dimension and other issues, it said.

All of these issues could be advanced by MC11, it said. In parallel, a number of larger issues could be the subject of discussion over a longer timeframe.

The EU welcomed China’s initiative, saying that there are a number of things in China’s paper which could be of interest, including e-contracts and e-signatures. It also called for making the moratorium on e-commerce duties permanent.

The United States said it is encouraged by the way in which the work has been revitalized. The China/Pakistan paper contains proposals that are ripe for discussion. The US also supports making the moratorium on e-commerce duties permanent, which it said is something that would mark progress.

There is not much low-hanging fruit in Geneva, but this is, said the US. If this cannot be done, it is difficult to see what can be done multilaterally on e-commerce.

Benin, on behalf of the LDCs, thanked China and Pakistan for their paper. It was of the view that the work programme of 1998 is important and that the General Council should take into account any cross-cutting issues. However, there are major difficulties in terms of capacity in the LDCs; only five LDCs have broadband connections.

It pointed out that there is no negotiating mandate on this issue. Only one million households in LDCs have Internet access, so while e-commerce is important, priority should be given to the Doha Round issues.

Japan said that e-commerce is very important for trade in the 21st century. It is encouraged that there has been some energy in the discussions but was disappointed with the discussion on cross-cutting issues in the dedicated session on 18 October.

Japan said that China’s proposal is a good first step, but there is a need to look at a wide range of issues and see which belong to the relevant portfolio of WTO issues. Other elements should also be discussed, including data flows and e-signatures.

Pakistan pointed to a digital and knowledge gap, saying that this is complicated by the multi-dimensional and multi-agency nature of e-commerce. It highlighted the $15 trillion in business-to-business e-commerce transactions every year but said these opportunities are not being seized by businesses and consumers in developing countries.

Paraguay said some members are not going to be able to benefit from a lot of these gains through e-commerce because they don’t have the infrastructure or the institutional capacity. This needs to be taken up so that all members can support this, it added.

Laos expressed support for the China/Pakistan paper.

Peru said that it would like to see a more substantive discussion and expressed support for the China/Pakistan paper.

Korea said that before the summer break it had been very enthusiastic about what was going on in relation to e-commerce but this did not last long; it was unhappy about the  meeting in October. It maintained that the work on e-commerce is going to continue whether or not the WTO keeps up with it, as it is important for the global economy. It said it was fine with discussing the issue in the four regular bodies as well as in dedicated sessions in the General Council.

Uganda expressed support for the statement made by Benin. It said there is no problem with discussing the issue but there is a big difference between discussing and negotiating. There is no mandate for negotiations. The issue should go to the dedicated session but also be taken up in the regular bodies. It also pointed to the problem of the digital divide.

Norway welcomed the number of suggestions that have come forward. It called for a step-by-step approach. It appreciates the infrastructure and regulatory requirements in developing countries.

Canada said there is a need to identify which aspects are related in the WTO context. Whether the issue is taken up in the dedicated session in the General Council is not the key point. On those who fear a negotiation behind every discussion, those fears should be put to rest because clearly members are not at a point where anyone can really identify anything for negotiations, it said.

Canada said the General Council can and should be a forum for discussing cross-cutting issues. It is the only place where such issues can be taken up. For example, the moratorium on e-commerce duties can only be taken up in the General Council, it said.

Nigeria said the General Council has a critical role to play on this issue. There are regulatory challenges for governments and SMEs. Most of the developing countries are not really ready to discuss certain elements because there is a knowledge gap and there is also a challenge to get the SMEs involved, it said.

Chile expressed support for the work programme as well as continued work in the General Council and in the regular committees. There is a need to help improve the capacity of developing countries to participate more effectively, it said, and the best way to do this is by having both the General Council and the subsidiary bodies involved. E-commerce has a very important role to play in development, it said.

Hong Kong-China said that WTO members should intensify the engagement on e-commerce. It expressed support for the China/Pakistan paper.

Switzerland said that it has been a longstanding supporter of the work programme. It is open to whatever format or forum for discussion; what is important is that progress is made on substance.

Non-negotiating framework

According to trade officials, India said there is an existing framework and that it is a non-negotiating one. There is no scope for negotiations. It is, however, open to any discussion in the relevant bodies.

India noted that the Nairobi ministerial decision calls on the General Council to have a periodic review and that there should be a bottom-up approach coming out of these committees. It would not support an effort to undermine the regular bodies.

There is also a need to address the knowledge gap, the development dimension and the LDC issues, it stressed.

Australia said that e-commerce is a gateway for greater participation by MSMEs.

Brazil, on the question of the process, said that some delegations are suggesting that there be a joint session of the General Council and the relevant bodies. It could go along with that, it said. It is open to any format for a non-negotiating discussion of the issues.

Mexico was of the view that the moratorium on e-commerce duties should be made permanent.

Ecuador underscored the need to deepen the discussion but not to turn away from the DDA issues.

El Salvador, on behalf of itself, the Dominican Republic and Guatemala, said that the China/Pakistan paper is a good starting point, and that e-commerce can help MSMEs to cut costs and access new markets.

Colombia said that e-commerce can be an important tool for SMEs. The proposal by China can yield fruit. Apart from the General Council, these issues could also be addressed in the other bodies.

Uruguay said that e-commerce is unavoidable. It would like to see a decision on the moratorium on e-commerce duties and a roadmap for MC11.

Bolivia said that the problem is not just a question of physical infrastructure, but that 50% of the developing countries lack legislation that would enable them to regulate properly. (SUNS8373)        

Third World Economics, Issue No. 630, 1-15 December 2016, pp4-6, 9


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