TWN Info Service on WTO and Trade Issues (Jun17/15)
28 June 2017
Third World Network

Formulaic approach to MC11 outcomes to ensure comfort for US?
Published in SUNS #8487 dated 22 June 2017

Geneva, 21 Jun (D. Ravi Kanth) -- Attempts to finalize a formulaic approach of outcomes for the World Trade Organization's eleventh ministerial meeting in Buenos Aires this December are being intensified with the sole aim of ensuring that the United States remains comfortable without having to undertake any fresh commitments, according to people familiar with the development.

That formulaic approach advanced by major developed countries along with their allies in the developing world, including the ACP (African, Caribbean, and Pacific) group, will involve outcomes for prohibiting certain categories of fisheries subsidies, improvements in domestic regulation in services based on what was negotiated in the failed Trade in Services Agreement (TiSA), and launching fresh negotiations on e-commerce as well as reduction commitments in domestic support for agriculture.

In return for the payment made for these issues by the large majority of developing and poorest countries, the developed, and developing countries allied to them, could agree to an extremely burdensome and difficult-to- implement permanent solution for public stockholding programs for food security, while deferring any outcome on the special safeguard mechanism for developing countries to the long term.

More important, the proponents of the formulaic approach will finalize the outcomes on a standalone basis without any linkages to the Doha Work Program (DWP), thereby, terminating the WTO's Doha Development Agenda forever.

An early glimpse of the outcomes for Buenos Aires has become available from two sets of proposals that are being circulated on domestic regulation and fisheries subsidies, and also the informal breakfast group meetings of select trade envoys which are not open to the large majority of countries.

To start with, the proposals on domestic regulation are the handiwork of the erstwhile members of the failed TiSA group.

These proponents include the European Union, Japan, Australia, Chile, Norway, Mexico, Colombia, Peru, and Chinese Taipei among others.

The proposals which stem from the failed TiSA negotiations are constructed in such a way that the US is comfortable with them.

Incidentally, the US is not a sponsor of any of the proposals on the table.

Although the underlying rationale is purported to be to enhance transparency and licensing commitments, in reality the proposals curtail the "policy space" for the developing countries, according to an African trade envoy, who asked not to be quoted.

In four restricted Job documents - Job/Serv/239/Rev. 2, Job/Serv/250/Rev. 1, Job/Serv/251/Rev. 2/ and Job/Serv/257/Rev. 2 - circulated on 14 June, the proponents have spelled out the broad parameters of the BA (Buenos Aires) outcomes on domestic regulation.

The first proposal on "domestic regulation - administration of measures" - circulated by Australia, Chile, Colombia, the European Union, Japan, Kazakhstan, Mexico, Norway, Peru, Korea and Chinese Taipei - covers "elements of domestic regulation related to the administration of licensing requirements and procedures, qualification requirements and procedures, and technical standards."

The second proposal dealing with "domestic regulation - development of measures" tabled by Australia, Canada, Colombia, the European Union, Israel, Japan, Kazakhstan, Mexico, Norway and Chinese Taipei covers "the elements of domestic regulation related to the development of measures within the scope of GATS Article VI. 4."

The third proposal on "domestic regulation and transparency" circulated by Australia, Colombia, the European Union, Hong Kong, China, Japan, Kazakhstan, Korea, Mexico, and New Zealand calls for an article on transparency.

The fourth proposal by the proponents calls for additional elements on domestic regulation and technical standards.

And finally, the fifth proposal on "domestic regulation measures, gender equality" calls on members to ensure that licensing requirements, licensing procedures, qualification requirements or qualification procedures "do not discriminate against individuals on the basis of gender."

In short, the five proposals shift the ground on domestic regulation away from what was sought in the previous draft text issued by Peter Govindasamy of Singapore in 2009.

That the proposals have nothing to do with what was set out in the Govindasamy text is an indication that the outcomes are being stitched according to the needs of the US, said a person familiar with the negotiations.

On fisheries subsidies, several proponents of the DR (domestic regulation) along with members of the ACP group are seeking almost the same outcomes for prohibiting certain categories of fisheries subsidies.

The ACP group has queered the pitch for a "multilateral and meaningful development outcome on fisheries subsidies rules" without any linkage to the Doha rules work program.

The four-page proposal issued on 20 June says emphatically that there must be no "linkages to other rules areas in WTO negotiations" on grounds that countries have an obligation to stop unsustainable overfishing and depletion of global fisheries stocks.

It has justified the proposal on grounds of food security while turning its back to issues concerning access agreements or accords involving sovereign nations, and outside the remit of the WTO.

"Therefore, these agreements should not be subject to scrutiny in the WTO," it had suggested.

The ACP wants two categories of subsidies to be prohibited to address overcapacity and overfishing by eliminating subsidies to illegal, unreported and unregulated (IUU) fishing.

At minimum, the outcome on fisheries subsidies at Buenos Aires must prohibit two categories of subsidies with due regard given to specificities of jurisdictions with multi-species catch, according to the ACP.

The two categories of prohibited subsidies include:

i. Subsidies to fishing vessels or fishing activity negatively affecting fish stocks that are in an overfished condition.

ii. Subsidies provided to vessels or operators engaged in illegal, unreported and unregulated (IUU) fishing.

In addition to these two categories of prohibited subsidies, the ACP also wants "further prohibitions on certain subsidies which contribute to overfishing and overcapacity."

Such prohibitions, the ACP says, must target as a priority subsidies provided to large commercial or industrial fishing and subsidies to fishing activities outside of the Member's maritime jurisdiction - i. e. the high seas or in the EEZ (exclusive economic zone) of another member.

However, the proposed prohibitions shall not apply to a developing country or least-developed country from maintaining or granting subsidies for the following fishing activities:

* "coastal fishing activities related exclusively to the artisanal, small scale subsistence and livelihood of the fishermen and their families within the Member's territorial waters";

* "fishing activities, which exclusively exploit fish stocks whose ranges are domestic and confined to the Members' EEZ"; and

* "fishing activities, which exclusively exploit quotas or any other rights, established by a regional fisheries management organization (RFMO) or a regional fisheries management arrangement."

In what appears to be a move to placate China's concerns, the ACP also made it clear that the proposed "disciplines shall not apply to disputed waters issues," according to people familiar with the development.

As regards transparency requirements, the ACP said the developing countries as well as LDCs must be provided with appropriate "transition periods, technical assistance, and capacity building" for conducting stock assessments, monitoring, and other implementation requirements.

In short, the outcomes on domestic regulation and fisheries subsidies will result in terminating the linkages to the work done in the Doha Development Agenda negotiations for the past 16 years.

On a separate track, the proponents of DR proposals are also intensifying their efforts for launching negotiations on e-commerce with the European Union having already circulated a proposal to the WTO Council for Trade in Services on "an enabling environment to facilitate online transactions."

That proposal was severely criticized by a large number of developing countries on 6 June.

While the work on these areas is taking place at a furious pace, work on the permanent solution for public stockholding programs for food security and the special safeguard mechanism for developing countries remains stuck because of the stonewalling tactics adopted by several leading proponents of the DR proposals.

In conclusion, the lack of unity and growing divisions among developing and least-developed countries might set the stage for Buenos Aires in which the DDA is decimated forever while the proponents walk away with outcomes that are helpful to the US, which did not have to work for them, according to people familiar with the negotiations. +