TWN Info Service on WTO and Trade Issues (Jul17/09)
13 July 2017
Third World Network

Developing and LDCs to pay heavy price for Hamburg declaration
Published in SUNS #8499 dated 11 July 2017

Hamburg, 10 Jul (D. Ravi Kanth) -- The leaders of the Group of 20 developed and developing countries along with invited nations on Saturday unveiled a controversial declaration of compromises for "shaping the interconnected world" for which the developing and poorest countries will continue to pay a heavy price.

That "interconnected world" has shelved multilateral trade liberalization based on bringing out "developmental" integration of developing and poorest countries into the global trading system as set out in the Doha Development Agenda.

The G20 leaders, who met on 7-8 July in Hamburg amid the most unprecedented protests, opted for "reciprocal and mutually advantageous trade and investment frameworks" as opposed to the "developmental" priorities of the Doha Development Agenda (DDA), several sherpas told the SUNS.

For the first time, the Doha Development Agenda or the unresolved Doha issues were not even mentioned in the G20 leaders' communique because of opposition from the United States as well as other major industrialized countries.

China, India, Brazil, South Africa, and Indonesia who negotiated the Hamburg declaration along with their developed country counterparts seemed to have allowed the erasing of the DDA.

Effectively, the Trump administration's "America First" and "Buy America and Hire America" were echoed in the Hamburg declaration when the G20 leaders acknowledged the "importance of reciprocal and mutually advantageous trade" framework.

Given the opposition of the US to the likely "deliverables" being discussed for the World Trade Organization's eleventh ministerial meeting in Buenos Aires in December, the Hamburg declaration merely said: "we [G20 leaders] commit to work together with all WTO members to make the eleventh WTO ministerial conference a success."

Consequently, there is no clarity in the Hamburg declaration on what is going to be achieved in Buenos Aires in less than six months.

It is not clear whether the mandated issues such as the permanent solution for public stockholding programs for food security, the special safeguard mechanism for developing countries, and other unresolved Doha issues will be vigorously pursued.

[It remains to be seen whether, when Germany as the host (or the EU) tables the Hamburg Declaration at the WTO, the large majority of developing and LDCs, not part of the self-appointed G-20 summit group, are going to meekly accept the outcome of the G-20 Hamburg summit and declarations or decide to refuse consensus or take note and, as at some past Ministerials (Seattle 1999, Cancun 2003), say "enough is enough" and rather ensure the failure of MC11 at Buenos Aires than acquiesce in these G20 compromises. SUNS.]

Even though the e-commerce figured in the section on trade of the Hamburg declaration, there is no consensus on intensifying negotiations on this issue for an outcome at Buenos Aires.

"We will constructively engage in WTO discussions relating to E-commerce and in other international fora with responsibilities related to various aspects of digital trade to foster digital economy and transparent frameworks on digital trade," it maintained.

"Intensified concerted action is needed to enhance the ability of developing and least-developed countries to more fully engage in digital trade," the Hamburg declaration emphasized.

Further, the Trade and Investment Working Group (TIWG), which was created in Hangzhou last year, failed to figure in the Hamburg declaration.

"We will seek to identify strategies to facilitate and retain foreign direct investment," it merely said.

However, the US demand for improving the functioning of the WTO, particularly the Dispute Settlement Body and the notification requirements, figured prominently in the Hamburg declaration.

"To further improve the functioning of the WTO, we will cooperate to ensure the effective and timely enforcement of trade rules and commitments as well as improve its negotiating, monitoring and dispute settlement functions," it said.

[Former trade negotiators and those following the mandated DSU review under the Doha Work Programme, however, note that firstly, in the final stages of the Uruguay Round negotiations at official level in October-December 1993, culminating in the draft Marrakesh Treaty and its annexes, the WTO dispute settlement understanding (DSU) with its negative consensus and the detailed time-frames from raising of a dispute to implementation of rulings were largely shaped by the United States.

[Morever, it is the US and the EU among leading industrial nations that have stymied the original intention of the Marrakesh Treaty, and incorporated in the Doha Declaration and Work Programme on the DSU, to undertake a full review of the DSU and its procedures, and decide at the 1999 Ministerial Conference whether to continue, modify or terminate the DSU and its procedures (Legal texts, p 465). It was the two majors who have more or less reduced the comprehensive DSU review and changes to a few formalistic ones, and are yet to complete those talks (that are separate from the Doha Single Undertaking). SUNS]

Surprisingly, the WTO director-general Roberto Azevedo remained satisfied with the Hamburg Declaration, according to the German Chancellor Angela Merkel.

On the sections on trade in "sharing the benefits of globalization", said Merkel, "I can say we have achieved results on trade and the WTO's Director-General [Roberto Azevedo] is satisfied."

"He [Azevedo] is an independent observer," she emphasized.

The German Chancellor, who presided over the two-day meeting at Hamburg's famous international exhibition venue while parts of the city were almost under siege, admitted that "discussions on trade were tough."

"I said markets need to be kept open and it is all about fighting protectionism." But she admitted that "unfair trade practices" also have to be fought.

The sections covering trade, steel, and climate change for "shaping an interconnected world" were "difficult" and divisive at times, she said.

Despite fierce and violent protests on the streets of Hamburg last week against globalization and the presence of the US President Donald Trump, the G20 attempted to salvage the crumbling edifice of "globalization" by agreeing to "keep markets open" while continuing to "fight protectionism".

As demanded by the United States for pursuing its current bilateral trade priorities instead of multilateral trade liberalization, the G20 countries agreed to the "importance of reciprocal and mutually advantageous trade and investment frameworks."

Effectively, the US administration will press ahead with its bilateral trade priorities based on "reciprocal and mutually advantageous trade and investment frameworks."

Although the US has agreed to the principle of "non-discrimination", it is highly unlikely that the Trump administration will adhere to the principle of non-discrimination, said several participants, who asked not to be quoted.

As regards the pre-eminent status attached to the World Trade Organization in the international trading system, the Hamburg declaration remained silent on the "central role" of the WTO in the global trading system unlike the previous Hangzhou declaration of September 2016.

In an attempt to stave off the slapping of retaliatory measures on imports of steel and other products by the United States, the G20 leaders set a deadline for "the Global Forum on Steel Excess Capacity, facilitated by the OECD" to issue a report by end August.

"We look forward to a substantive report with concrete policy solutions by November 2017, as a basis for tangible and swift policy action, and follow-up progress reporting in 2018," the leaders said.

Merkel said she is not sure whether the OECD report will stop the proposed bilateral retaliatory measures. "We have to wait till August and still lot of work needs to be done and August is not far off," Merkel emphasized.

She suggested that many issues during the discussions were difficult on trade and excess capacities.

The declaration contained several other controversial and intrusive provisions such as the linkage brought between "sustainable global supply chains" and "the implementation of labour, social, and environmental standards."

"In order to achieve sustainable and inclusive supply chains, we commit to fostering the implementation of labour, social and environmental standards and human rights in line with internationally recognized frameworks, such as the UN Guiding Principles on Business and Human Rights and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy," the Hamburg declaration maintained.

The process this time for negotiating the declaration "was long drawn and is by far the longest negotiation," India's sherpa Arvind Panagariya told reporters on 8 June.

"This was predictable," he said, because of the changes in the governments in the US and also the UK where the views of the government have shifted from traditionally-held positions. Also, the negotiators involved this time were different, he said.

Although the Hamburg declaration is wide-ranging, it is much shorter than what was negotiated in Hangzhou last year, he said.

He said that the Hamburg declaration covers four areas such as "sharing the benefits of globalization," "building resilience," "improving sustainable livelihoods," and "assuming responsibility."

And within the section on sharing the benefits of globalization, there are different sub-items such as "prospering global economy", "trade and investment," "excess capacity", "global supply chains," "digitization" and "employment."

He said that four particular areas took a lot of time in the negotiations. They are climate change, trade and investment, migration, and excess capacity in steel. "Those four took lot of time," he said.

"This time you would see the terms like reciprocity, non-discrimination, and here the US had a strong view that for liberalizing trade it has to be reciprocal, it should be balanced in terms of liberalization and in terms of reciprocity," he said.

"The term reciprocity and non-discrimination is not particularly new to me. I'm a trade economist and nobody liberalizes unilaterally, while some developing countries have done that," he said. " But when it comes to bigger players, all liberalization is reciprocal," he said.

"What is important is non-discrimination is there and that continues to be part of the declaration, i. e. reciprocity with non-discrimination, implying that all sides should liberalize but the liberalization must remain on the basis of non-discrimination," he said.

[It was not clear whether Mr. Panagariya, a free trade economist of the Jagdish Bhagwati school, encompassed within this "non-discrimination", the basic most-favoured-nation principle part of global trade from long before the GATT 1947, and incorporated as Article 1 of GATT 1947 and GATT 1994, annexed to the WTO. SUNS]

But what he did not indicate is why India allowed the language on developmental priorities based on the Doha work program to disappear from the Hamburg declaration and whether it made any attempts at coalition-building to ensure that the developing countries stuck to their positions on multilateral trade liberalization based on a developmental framework.

In short, the developing countries continued to yield ground to the US and other dominant countries by sacrificing their core priorities in global trade for the fear of isolation and antagonizing the US and the EU among others. +