Info Service on WTO and Trade Issues (Mar18/01)
5 March 2018
Third World Network
WTO chief, China, EU and US advocate plurilaterals
Published in SUNS #8633 dated 2 March 2018
Geneva, 1 Mar (D. Ravi Kanth) - The World Trade Organization director-general
Roberto Azevedo along with the European Union, the United States,
and China on Wednesday mounted a concerted campaign for launching
plurilateral negotiations on the new issues albeit with differing
The new issues include rules for electronic commerce, investment facilitation,
disciplines for micro, small, and medium enterprises (MSMEs), and
even trade and gender.
There were recurring undertones and commonality of views in the separate
statements made at the Graduate Institute in Geneva which conducted
the meeting on "Plurilaterals, the New Way Forward in Global
Trade?," on Wednesday.
The overall impression was that the views voiced appeared to be a
well-coordinated effort of the DG with the three countries.
The Director-General and the European Union's trade envoy Ambassador
Marc Vanheukelen echoed almost identical views on the need to emulate
the Tokyo Round of codes - on subsidies and countervailing measures,
technical barriers to trade (sometimes called the Standards Code),
anti-dumping, import licensing, safeguards, and others - for advancing
the plurilateral outcomes on new issues that can be subsequently multilateralised.
[The Tokyo Round of Multilateral Trade Negotiations and the Codes
negotiated under it was under the auspices of the old GATT, a provisional
treaty. It was the resulting view of a fragmented multilateral arrangement
that ultimately resulted in the "Single Undertaking" concept
of the Uruguay Round, whose final outcome of a definitive international
treaty organisation and the requirement that every participant sign
on to every one of the agreements. All the references and precedents
of the Tokyo Round codes cited by the three major trading entities
and the WTO head appeared to slur over this "history" of
the old GATT and the WTO. SUNS]
In sharp contrast to the position papers on these three issues that
were unveiled at Buenos Aires on 13 December 2017, the three dominant
members of the global trading system echoed their openness to discuss
electronic commerce, investment facilitation, and disciplines for
At Buenos Aires, for example, the US did not join the group of countries
that issued the statement on investment facilitation. China and Pakistan
did not join the sponsors of the call for plurilateral negotiations
on electronic commerce. It is not clear whether the US joined the
proponents who sought disciplines for MSMEs.
The three-hour discussion was moderated by the former WTO official
Patrick Low at the Graduate Institute. The WTO DG Azevedo gave the
Prof Bernard Hoekman, who had served at the WTO and the World Bank,
delivered a keynote address as to why WTO members must embrace plurilaterals
for regulatory practices.
Prof Hoekman argued that the multilateral trading system is not in
a good shape with its negotiating function in a state of comatose
because of the Doha Development Agenda trade negotiations. He said
the bicycle principle of uninterrupted trade liberalization was undermined
because of the "misuse of consensus and the misuse of special
and differential treatment (S&DT)."
With "consensus" being used to block negotiations, and S&DT
flexibilities constraining the system, people are not engaging in
the negotiations, Prof Hoekman argued. There is a growing shift to
preferential trade agreements which, he said, are discriminatory as
they would address issues such as subsidies or state capitalism.
Therefore, trade cooperation on the lines of the Trade Facilitation
Agreement (TFA) which is aimed to bring down trade costs must be considered
in plurilateral initiatives, Hoekman said.
[The TFA was negotiated multilaterally, and was not the outcome of
a plurilateral negotiation. SUNS]
"Moving on Plurilaterals can do more to advance the trade costs
agenda and thereby, provide some oxygen to the system," said
Hoekman. Plurilaterals on regulatory policies on non-tariff issues
must be considered, he said.
He said that what groups of countries attempted to do in Buenos Aires
on plurilaterals would be a good practice.
He spelt out the necessary conditions - leadership, open and transparent
process monitored by the WTO and dissemination of information - essential
for the success of the plurilaterals.
In a short statement, Benin's trade envoy Ambassador Eloi Laourou
said the developing and least-developed countries want multilateralism
with synergies for addressing the outstanding problems.
Ambassador Laourou said outstanding agricultural issues, as well as
fisheries subsidies, must be addressed as per the Sustainable Development
He said the developing countries and LDCs want to ensure the "development
dimension" of the multilateral trade negotiations as set out
in the Doha trade agenda.
He said plurilaterals cannot address the development dimension as
was the case with the plurilateral agreements on civil aircraft, bovine
meat, and government procurement.
The EU's trade envoy Ambassador Vanheukelen said it is a political
imperative that no one can impose anything on anybody, suggesting
that there would not be any pressure exerted on those who are not
members of the plurilaterals.
He said the EU is comfortable with a sub-set of issues being pursued
at this juncture. The EU, he said, wants "flexible multilateralism",
a point that was also echoed by the WTO Director-General at the end
of the meeting.
Ambassador Vanheukelen said plurilaterals by no means are going to
be easy, maintaining that the voluntary codes of the Tokyo Round,
which were later multilateralised in the Uruguay Round, could become
the best route for achieving plurilateral outcomes that would be later
He said the critical mass of membership in the plurilaterals is essential.
Besides, the plurilateral outcomes must be enforceable in the dispute
settlement system, he said. Further, they must not lead to any deviation,
the EU trade envoy argued.
China's trade envoy Ambassador Xiangchen Zhang said he is a "fundamentalist
on multilateralism but I'm open to new issues."
When the multilateral system is strong and robust, supplementary approaches
could be followed for e-commerce and investment facilitation, he said.
"Otherwise, WTO will lose relevance," he argued. The Chinese
envoy said it is fine if some members don't want to join in the plurilaterals,
emphasizing that pressure must not be exerted on those members who
remain outside the plurilaterals.
The US deputy trade envoy Mr Chris Wilson said the WTO's negotiating
function is working well as it had produced an agreement on trade
facilitation and even on an enhanced Information Technology Agreement-II.
The US perspective is one of "optimism," as the Buenos Aires
meeting allowed members to experiment with new processes. He said
the utility and appropriateness have to be considered on a situational
process, arguing that the US is open to plurilaterals on fisheries
subsidies and agriculture.
He said the US is participating in e-commerce and remains interested
in MSMEs. The US is open to discussing investment facilitation, though,
it remains skeptical on some aspects concerning investment facilitation.
Mr Wilson said that certain structural aspects such as transparency
and differentiation must be sorted out before starting plurilaterals.
While it is important for having the broadest participation, it is
equally important to grapple with the contributions of members that
must be commensurate with their trading status, the US trade official
China said plurilaterals are only a process for conducting negotiations
for establishing rules among like-minded members.
China said the developing countries remain reluctant about plurilaterals
because they don't have the capacity. They need special and differential
treatment flexibilities in the plurilateral agreements, China maintained.
The Chinese envoy argued that members need to make a distinction between
the Tokyo Round and the current new plurilaterals.
The Director-General, who did not participate in the deliberations
and arrived at the end of the meeting, was asked to give a concluding
He said there were many reasons why there were no substantive outcomes
at Buenos Aires but "one important reason was that there were
few potential trade-offs that would force flexibility."
Azevedo said "flexibility is essential in the process of consensus-based
decision making that we follow at the WTO", suggesting that members
"who want a particular outcome often calculate: "if I block
progress in other areas, the others will agree with what I'm asking"."
Being a former negotiator, he said, "I know that this is how
many approach negotiations in the WTO."
Such a "rationale does not always work as there may be no strong
push to get outcomes somewhere else, so others would have no reason
to agree with one's demands" and "one's demands may be too
costly for the others."
"If the costs of agreeing to demands exceed the benefits sought
in other areas of the negotiations, you are unlikely to find a way
forward," he said.
Without naming the countries, he said "a careful analysis of
these forces and trade-offs before Buenos Aires would likely have
shown that such "hostage-taking tactics" would not work."
It was not clear whether the director-general was pointing a finger
towards India which had blocked new issues, particularly institutional
issues such as trade and gender, after the permanent solution for
public stockholding programs for food security was blocked by the
Did the director-general mean that for countries like the US, there
is no interest in issues like food security or reduction commitments
in domestic subsidies?
His remarks did not address these questions.
Azevedo said "under any circumstances, the major problem with
this approach is that it does not encourage flexibility or a search
"Instead, it encourages an all-or-nothing game of "mutually
assured destruction"," he said.
In what seemed a subtle critique of the "consensus-based system"
that invariably leads to "zero risk" approach, he said,
"a member can look at any initiative they don't particularly
like and simply stop it from even being discussed."
"Of course, the outcome of such an approach is paralysis, because
virtually all issues will meet some opposition from someone,"
"For a consensus-based system to work, participants must realize
that the indiscriminate usage of the power to block will paralyze
and ultimately destroy it," he argued.
Clearly, the DG seemed to be worried that like India, which had blocked
the discussion on investment facilitation at the General Council last
year, any one member could block further discussions on new plurilateral
initiatives that he and his office had assiduously worked to promote
in the run-up to the Buenos Aires meeting.
His remarks also seemed to gloss over the fact that the WTO is structured
on specific rules and mandates as set out in the Marrakesh Agreement
and that clearly lay out what issues can be discussed and what issues
cannot be brought to the WTO.
Thus, he seemed to be asking members not to insist on consensus but
work for the system and its common good and "be ready to compromise
and seek common ground from day one."
Without mentioning a word about the Doha Development Agenda negotiations
and why they were not being pursued, Azevedo said the "new normal"
is "we have to be more flexible."
"No one should be forced to accept anything or to negotiate anything
they don't want to," he said. "But, at the same time, everyone
should be free to discuss issues that are of importance to them,"
the director-general said.
He did not address how any issue can be discussed without a formal
ministerial/General Council approval. But his remarks suggested that
in his thinking there is no sanctity of a Round of negotiations launched
by trade ministers with specific issues as anybody can raise any issue?
He went on to espouse the GATT rules that had "inbuilt flexibilities,
in different forms", which is what the current US Trade Representative
Ambassador Robert Lighthizer is pressing for resolving trade disputes
unlike the current binding dispute settlement mechanism.
Azevedo said "people often see WTO disciplines as a monolith,
or as a rigid, one-size-fits-all set of rules," arguing that
it "is far from true."
"While our core rules do apply to everyone, specific obligations
vary considerably across the membership," he said.
Effectively, he brought in differentiation under the garb of flexibilities.
"Look at the Tokyo Round in the 1970s, for example," he
said, arguing that "a series of agreements on non-tariff measures
emerged" after the Tokyo Round.
"However, only a relatively small number of GATT members - mainly
industrialized - subscribed to these agreements. Because they were
not accepted by the full GATT membership, they were often informally
The codes included such areas as subsidies and countervailing measures,
technical barriers to trade (sometimes called the Standards Code),
anti-dumping, import licensing, and safeguards, and others.
"These codes were not multilateral, but they were a beginning,
and helped to plant the seeds for our existing WTO multilateral agreements,"
In short, he made a case for the plurilateral initiatives which were
launched "in Buenos Aires, which may be testing yet other forms
"The open-ended groups created at MC11 are a somewhat new approach,"
he said, suggesting that "they respond to the risk of paralysis
brought about by objections to any conversation on issues not already
covered by the Doha Work Programme, regardless of how important they
are to others or to the trade environment today."
[In advancing this view, Azevedo seemed to overlook the fact that
the decision that no other issue should be addressed before the conclusion
of the Doha Work Programme negotiations, was a fundamental part of
the July 2004 General Council decision that enabled re-launch of the
negotiations after the collapse of the 2003 Cancun Ministerial meeting
of the WTO. Brazil and its then foreign Minister, Celso Amorim, along
with India's Kamal Nath had enabled the successful re-launch of the
negotiations at the General Council in July 2004. SUNS]
The director-general also remained silent on the role played by his
office in propping up these open-ended groups starting from last August,
according to an authoritative source, who closely monitored the developments
in his office.
These groups, according to Azevedo, "do not represent a north-south
divide, unlike some previous initiatives of the times of the GATT."
"Instead, they encompass developed, developing and least-developed
countries, big and small," he said.
Credit goes to him for stitching these groups behind the scenes to
demonstrate that there is no North-South divide in these groups, the
He said that these groups must "afford any and all WTO members
the opportunity to participate actively and constructively from day
one" and "any discussions in those groups should already
be taking into account the perspectives of others - including of those
who are not at the table."
Azevedo said discussing issues inside the WTO "with everybody
or with those who are willing to do so" would remain "open
and transparent, where anyone and everyone has a chance to shape the
conversations if they so desire."
As regards whether plurilaterals are the new way forward, he said,
"in my view, the future is not plurilaterals - the future is
He went on to say "plurilateral initiatives may be part of that
- but as I have set out, there are ways of delivering flexibility
within multilateral approaches as well."
He said "flexibility will not lead to fragmentation. In fact,
in a system with 164 members of different sizes, different priorities
and different stages of development, flexibility is precisely the
way to avoid fragmentation."
The Machiavellian views advanced by the director-general seemed to
pose the greatest threat to the developing and poorest countries,
turning every rule to advance the interests of the US and other industrialized
countries, according to a trade envoy at the meeting who asked not
to be quoted.