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THIRD WORLD ECONOMICS

South rallies around proposals to advance developmental agenda

A proposal to highlight development concerns in the ongoing discussions on WTO reform has received backing from a large number of developing countries.

by D. Ravi Kanth

GENEVA: After four years of fractious divisions, amid sustained attempts to hijack the Doha Development Agenda (DDA) negotiations, the developing and least-developed countries have finally rallied around two proposals at the World Trade Organization seeking to advance their developmental agenda as part of WTO reforms.

A “ray of hope” was provided at the WTO General Council meeting on 24 July when the two proposals, “Strengthening the WTO to promote development and inclusivity” and “An inclusive approach to transparency and notification requirements in the WTO”, came up for discussion, trade envoys told the South-North Development Monitor (SUNS).

Ever since the WTO’s tenth Ministerial Conference in Nairobi in December 2015, the developing countries and least-developed countries (LDCs) had remained divided on one issue or another, said a trade envoy who asked not to be quoted.

If, as evident at the General Council meeting, they can now remain united, they can counter the one-sided narrative on WTO reforms that is being advanced by the United States and other developed countries, the envoy said.

At the meeting, the two proposals tabled by developing countries dominated the proceedings. In contrast, a proposal by the US to introduce differentiation/graduation among developing countries for availing of special and differential treatment (S&DT) was largely rejected by developing countries and LDCs.

Bringing balance

The proposal on “Strengthening the WTO to promote development and inclusivity”, which was put forward by Bolivia, Cuba, Ecuador, India, Malawi, South Africa, Tunisia, Uganda and Zimbabwe, was introduced by India. (On the content of the proposal, see the following article in this issue. On the proposal on transparency and notification requirements, see the article “Developing countries propose an inclusive approach to transparency” in this issue.)

India’s Ambassador to the WTO J.S. Deepak said the proponents wanted to “bring balance to the ongoing discussions on WTO reform by reaffirming the importance of development to the work of this organization.”

“As the original proponents of reforms to correct the asymmetries in the covered [WTO] Agreements, developing Members are more than willing to engage constructively in these discussions,” said Deepak.

He expressed sharp concern over “a one-sided narrative” being advanced by major developed countries, especially the US, that disregarded “issues of importance and concern to developing countries” and “erodes the core principles of consensus-based decision making, non- discrimination and S&DT”.

Deepak maintained that the recent proposals “to differentiate between developing Members, impose punitive strictures for non-compliance with notification obligations, and do away with S&DT in negotiations on fisheries subsidies are illustrative of the lack of balance in the reform proposals that have been tabled.”

“This [one-sided narrative] needs to be remedied and soon,” the Indian envoy said, emphasizing that “we need to have on the table reform proposals that reflect the views of developing countries including LDCs.”

The proposal circulated by the nine developing and least-developed countries, said Deepak, aimed to “ensure that issues of their interest are not sidelined in ongoing discussions on WTO reform.”

The concept paper, said Deepak, stated emphatically that “the Marrakesh Agreement Establishing the WTO recognizes that international trade is not an end in itself, but a means of contributing to certain objectives including ensuring that developing countries and LDCs secure a share in international trade commensurate with the needs of their economic development.” Therefore, discussions on WTO reform “should be premised on the principles of inclusivity and equity, and not serve to widen existing asymmetries in the covered agreements”.

Deepak said that preserving the core values of the multilateral trading system with a view to building trust among members must remain the central goal of the WTO members. Consequently, preserving and strengthening the WTO must include:

*  Disciplining laws and regulations of WTO members which mandate unilateral action on trade issues that are inconsistent with WTO rules.

*  Strengthening the multilateral character of the WTO, especially through the preservation of the practice of decision-making by consensus and respecting Article X of the Marrakesh Agreement on amendments.

*  Ensuring that plurilateral joint statement initiatives do not change the fundamental architecture of the WTO.

*  Correcting the existing imbalances in the covered agreements as mandated in the Doha Round by building on the work done so far, in accordance with existing mandates.

Deepak went on to elaborate on other aspects such as:

*  Resolving the impasse in the WTO dispute settlement system, particularly resolution of the Appellate Body impasse as a central priority in the reform agenda.

*  Safeguarding development concerns based on S&DT, which is a non-negotiable, treaty-embedded right for developing and least-developed members.

*  Rebalancing the asymmetric rules of the Uruguay Round by strengthening S&DT provisions in accordance with paragraph 34 of the Doha Ministerial Declaration.

*  Transparency and notification requirements without any punitive measures and taking into consideration capacity constraints faced by developing countries and LDCs.

*  The developed members should lead by example in submitting comprehensive, timely and accurate notifications especially regarding their final bound AMS commitments, Mode 4 market access commitments, Article 66.2 of the TRIPS Agreement, and disclosure of origin of biological resources and associated traditional knowledge in patent applications.

*  Transparency should permeate the full spectrum of the operation of the WTO, from its day-to-day meetings to Ministerial Conferences.

*  The need to take into account the resource constraints of small country delegations by rationalizing the number of meetings at the WTO to ensure there are no overlaps. In areas where there are active negotiations, these meetings should as far as possible take place in formal mode, including having a minuted record of discussions.

Deepak concluded his statement by emphasizing that “our immediate priority in WTO reforms should be to resolve the ongoing impasse in the Appellate Body and to address the unilateral measures as these pose serious existential challenges for the organization.”

Further, “any reforms must be development-centric, preserve the core values of the system, strengthen the provisions of special and differential treatment in existing and future agreements and preserve the multilateral character of WTO,” Deepak said.

In response to the joint proposal by the nine developing and least-developed countries, the US said that it would completely reject the proposal seeking “development and inclusivity” by reopening the Uruguay Round agreements, said a trade envoy who asked not to be quoted.

The US further claimed that the Doha Development Agenda negotiations had been closed at the Nairobi Ministerial Conference.

The US trade envoy said the US’ own proposal for differentiation/graduation among developing countries in availing of S&DT must be concluded.

The EU did not reject the joint developing-country proposal but said there were several aspects that it could not support.

Several other developed countries such as Canada and Japan adopted a nuanced approach in response to the joint proposal. Among the developed countries, only Norway showed a degree of amenability towards the proposal.

A few middle group developing countries such as Peru said they would support the joint proposal.

Several developing-country coalitions – the African Group, the Africa, Caribbean and Pacific (ACP) Group, and the LDC Group – strongly supported the proposal.

“Similar views”

China’s Ambassador to the WTO Zhang Xiangchen commended “India and other co-sponsors for their efforts in putting forward” the joint proposal. He said “China shares similar views on various issues raised in the paper, on which we have clearly expressed our positions in China’s proposal on WTO reform.”

“In particular, we agree that WTO reform does not mean accepting either inherited inequities or new proposals that would worsen imbalances,” the Chinese envoy said, emphasizing that  “reforms must be premised on the principles of inclusivity and development.”

He said “the priorities for WTO reform must be addressing immediate existential crises including Appellate Body selection impasse and the resort to unilateral measures.”

“Also, any reform must reaffirm the principle of Special and Differential Treatment, which is a treaty-embedded and non-negotiable right for all developing members,” the Chinese envoy said.

Zhang said he would agree that “the multilateral process remains the most effective means to achieve inclusive development-oriented outcomes, while we may also need to explore different options to address the challenges of contemporary trade realities in a balanced manner.”

He said “developing members, including LDCs, are catching up and getting more and more involved in the WTO reform process. This document is a very good example. This kind of effort is extremely important because the WTO reform should never be one-sided but inclusive and balanced.”

“China will continue working with other members to ensure developing members’ voices are not ignored in this process,” the Chinese envoy maintained.

Core values

In the closing statement on the joint proposal, South Africa’s Ambassador Xolelwa Mlumbi-Peter emphasized that “developing countries have been proponents for the reform of the WTO virtually from the first moment the ink on the Uruguay [Round] Agreements dried as many countries have alluded to.”

“The Doha Round was commonly seen as an opportunity to address unfinished business,” she said. “However, virtually 20 years to date, we have not been able to cement the Doha issues and there is no agreement regarding the direction of the reform.”

She said the WTO members had committed in the Marrakesh Agreement to continuing to make positive efforts to ensure that developing countries, and especially LDCs, secure a share in the growth of world trade commensurate with the needs of their economic development.

Sharply disagreeing with the US position that “the Doha Development Round is dead”, the South African trade envoy reminded the US that “decisions in the WTO are reached by consensus and there is no decision by the WTO that declares the Round concluded.”

“The trade and development nexus is a recognized principle and development has to be core to the work of the WTO,” said Mlumbi-Peter.

“S&DT is a right which is embedded in WTO agreements and has to be preserved and is not subject to the whims of members and abstract prognostications,” she emphasized.

Without naming the likes of Brazil and Kenya, the South African envoy said, “We note that there might be WTO members who wish to opt out of S&DT; it is their prerogative to self-declare that they do not require flexibility in implementation of WTO agreements.”

However, she said “any attempts to put pressure on members to give up their rights are not acceptable and will continue to be rejected with the contempt it deserves.”

The developing countries, she said, have reiterated the view that “WTO reform must preserve the core values and basic principles of this organization, including S&DT and consensus decision making which are critical to preserve the functioning of the multilateral trading system and are important to build trust.”

“In this context,” she asserted, “as developing countries we continue to be guided by the Doha mandate, [and] in our paper we express the importance of balance, inclusivity and priorities outlined under this mandate.”

“The WTO reform agenda cannot be in only one direction as some members seem to suggest,” she said, arguing that “there remains a substantial body of unfinished business under the Doha Development Agenda including addressing asymmetries in agriculture, strengthening special and differential treatment, and addressing implementation issues amongst other things.”

Further, “the credibility and continued relevance of the multilateral trading system is premised on two essential features – mutual benefit from the system and mutual trust. Also important is the need to ensure that multilateral rules are supportive to the country`s development objectives,” she said.

She expressed sharp concern that “the reform is happening without a discussion and consensus about its objectives and expected outcomes.”

“In our view, ‘WTO reform’ does not mean accepting inherited inequities or new proposals that would worsen imbalances,” she said, demanding that “reforms must be premised on the principles of inclusivity and development and respond to the underlying causes of the current backlash against trade and the difficulties that developing members continue to face vis-a-vis their industrialization challenges.”

Therefore, she said, the two most serious and immediate risks to the relevance of the multilateral trading system are:

*  the unprecedented challenges of unilateral trade measures that violate WTO rules and principles and the manner in which national security measures are implemented, which have “taken us into uncharted territory”; and

*  the continuing impasse in the Appellate Body selection process threatens the dispute settlement mechanism that is the foundation of a functioning multilateral trading system. Without a resolution by 10 December, the dispute settlement mechanism will be rendered obsolete. In the absence of a functional, effective and independent mechanism for enforcing the rules, negotiating new rules becomes futile.

While the joint developing-country proposal garnered support from many members, the US proposal for introducing differentiation/graduation among developing countries was denounced by many developing countries and LDCs.

The US, said a trade envoy who asked not to be quoted, “remained isolated as there was little support, with the EU offering some conditional support.” (SUNS8955)                                            

Third World Economics, Issue No. 684/685, 1-31 March 2019, p2-4


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