Delhi meet calls for strengthening WTO-MTS, promoting development

Trade ministers from several developing countries met in New Delhi in May to discuss ways to work towards a more inclusive and development-oriented WTO.

by D. Ravi Kanth

GENEVA: Trade ministers from 17 developing and least-developed countries have called for strengthening the World Trade Organization and promoting “development and inclusi-vity” in the multilateral trading system (MTS).

In the face of multiple challenges confronting the WTO and its multilateral trading system, the trade ministers and senior officials from the 17 countries – Egypt, Barbados, Central African Republic, Nigeria, Jamaica, Saudi Arabia, Malaysia, Bangladesh, China, Benin, Chad, India, Indonesia, Malawi, Uganda, South Africa and Oman – agreed to “work together” as a like-minded group at the WTO to make the global trade body more effective.

This came in an outcome document issued at an informal ministerial meeting hosted by India in New Delhi on 13-14 May.

But five countries – Brazil, Argentina, Guatemala, Kazakhstan and Turkey – chose not to join the outcome document because of their opposition to building a like-minded group for emphasizing the “development dimension” in the global trading system.

Brazil, which had created the G20 coalition of developing countries for bringing about equitable and balanced trade rules in agriculture, has now become the chief opponent to building a developing-country coalition to address unilateral and protectionist measures, said an African trade minister who asked not to be quoted.

The five countries also raised several concerns about forming a like-minded group for pursuing multilateral negotiations based on the consensus principle.

Joining hands

India’s commerce and industry minister Suresh Prabhu, who chaired the meeting, emphasized that developing countries must join hands and work as a strong coalition to avert the “existential crisis” facing the WTO. Without a strong WTO based on a development dimension, the developing and poorest countries will not be able to integrate into the global trading system, he said.

Prabhu also said the Appellate Body (AB) is vital for the smooth functioning of the WTO’s dispute settlement system. Without the AB, it would be difficult for developing countries to secure independent and impartial rulings in trade disputes, the Indian minister told his counterparts at the concluding session, according to trade envoys present at the meeting.

Commenting on the “ongoing impasse” at the AB following the decision by the United States to block the selection process for filling four vacancies in the AB, the trade ministers urged “all WTO members to engage constructively to address this challenge without any delay.”

The WTO Director-General Roberto Azevedo, who attended the dinner meeting on 13 May, asked the trade ministers to join the plurilateral initiatives, arguing that they provide flexibility, said a trade minister from Africa who asked not to be quoted. Azevedo also said that he did not know what would happen to the AB after 11 December 2019, the minister said.

(If the impasse in the AB persists, the body will be left with just one member from 11 December, short of the three members required to hear any appeal.)

Several trade ministers and senior officials from China, Barbados, Jamaica, Indonesia, Benin (on behalf of the African Group), Egypt and Nigeria, among others, endorsed Prabhu’s assessment for ensuring the development dimension in the global trading system.

A senior Chinese trade official said that China wants a developmental outcome based on multilateral principles. The official also said that China will host an informal ministerial meeting in November to focus on the need to preserve the multilateral trading system.

The Chinese official said it is important to stay in the joint initiatives on electronic commerce and investment facilitation, as otherwise there is a danger that rules will be crafted without the participation of the developing countries.

Upholding multilateralism

Without naming the US, which has resorted to unilateral protectionist measures by imposing additional duties on steel and aluminum imports, the trade ministers said “an inclusive multilateral trading system based on equality and mutual respect should ensure that all WTO Members abide by WTO rules and abjure any form of protectionism.”

The ministers emphasized that “the core value and basic principles of the multilateral trading system must be preserved and strengthened, particularly with a view to building trust among members.” They urged WTO members “to adopt measures that are compatible with WTO rules to avoid putting the multilateral trading system at risk.”

Against the backdrop of sustained attempts by developed countries to undermine the consensus-based decision-making at the WTO, the developing-country trade ministers stressed that “multilateral avenues, based on consensus, remain the most effective means to achieve inclusive development-oriented outcomes.”

In this context, the ministers said “Members may need to explore different options to address the challenges of contemporary trade realities in a balanced manner.”

As regards the joint plurilateral initiatives that have been launched on e-commerce, investment facilitation, domestic regulation for trade in services, and disciplines for micro, small, and medium-sized enterprises, the trade ministers merely said that “the outcomes of these initiatives should be conducive to strengthening the multilateral trading system and be consistent with WTO rules.”

Commenting on attempts to bring about “differentiation” to deny special and differential treatment to several developing countries in the WTO, the ministers said “special and differential treatment is one of the main defining features of the multilateral trading system and is essential to integrating developing members into global trade.”

More important, “special and differential treatment provisions are rights of developing members that must be preserved and strengthened in both current and future WTO agreements, with priority attention to outstanding LDC [least-developed country] issues.”

In effect, the trade ministers rejected the concept of “differentiation” that the US has sought to introduce in the current and future WTO negotiations.

On the so-called WTO reforms being proposed by the US and other developed countries, the trade ministers emphasized that “the process of WTO reform must keep development at its core, promote inclusive growth, and fully take into account the interests and concerns of developing members, including the specific challenges of graduating LDCs.”

“The way forward” on reforms, according to the trade ministers, “must be decided through a process that is open, transparent, and inclusive.”

“We agree to work collectively with the aim to develop proposals to ensure that our common interests are reflected in the WTO reform process,” the ministers maintained.

“In order to instill confidence among the Members” in the WTO rules, the trade ministers said, “it is imperative that the Ministerial Conferences of the WTO are organized in a more open, transparent and inclusive manner.”

Without naming the US and other developed countries which are insisting on stringent transparency and notification requirements, including naming and shaming provisions, the trade ministers said “WTO notification obligations must consider the capacity constraints and implementation-related challenges faced by many developing countries, particularly LDCs”.

“In the WTO, a more cooperative and gradual approach is the best way in dealing with the issue of transparency, where many developing Members struggle to comply with their notification obligations.”

The trade ministers also called for removing the “imbalances and inequities” in the WTO agriculture and other agreements. There is a need “to provide adequate policy space to the developing Members to support their farmers through correcting the asymmetries and imbalances” in the Agreement on Agriculture. The ministers underlined the need for flexibilities for LDCs and net food-importing developing countries, and called for expeditious resolution of trade-distorting domestic subsidies in cotton.

The 17 countries also agreed “to consult on various issues of common interest to developing Members, including comprehensive and effective disciplines on fisheries subsidies with appropriate and effective Special & Differential Treatment provisions for developing Members.” (SUNS8907)

Third World Economics, Issue No. 680/681, 1-31 January 2019, pp6-7