TWN Info Service on WTO and Trade Issues (Mar18/18)
23 March 2018
Third World Network

Many fiercely oppose changes to DSU, says South Africa's Rob Davies
Published in SUNS #8646 dated 21 March 2018

New Delhi, 20 Mar (D. Ravi Kanth) - South Africa's trade minister Rob Davies said Tuesday (20 March) that many countries fiercely opposed any departure from the current system of judicial rulings issued by the Appellate Body to "negotiated outcomes" as suggested by some members at the World Trade Organization.

At the informal trade ministerial summit hosted by India, many countries such as South Africa, Indonesia, Brazil, China, the European Union, and Guatemala among others warned that they will not accept any change from the current dispute settlement system based on binding rulings in which the Appellate Body's rulings remain final.

The WTO director-general Roberto Azevedo has been toying with the idea of embracing alternative systems in which rulings have to be negotiated as proposed by the US Trade Representative Ambassador Robert Lighthizer.

Azevedo did not speak about or refer to the alternative system at the informal ministerial meeting even as many countries warned that they will not accept any change in the existing dispute settlement system, several trade ministers told SUNS.

The Delhi summit witnessed intense "clash of paradigms" on the way forward at the WTO and in the multilateral trading system, South Africa's trade minister Rob Davies told SUNS in a one-on-one interview. "The sort of paradigm that is emerging from a number of developed countries together with some of the advanced developing countries is one which says let us deal with the Doha issues which also includes agriculture but not according to Doha mandates or Doha principles," he said.

The second issue in the clash of paradigms, said Minister Davies, is the one concerning "differentiation and the special and differential flexibilities."

"Here the narrative that is emerging," according to the South African trade minister, is that special and differential flexibilities will be decided on a case-by-case basis for major developing countries.

Norway, New Zealand, and Kenya among others welcomed differentiation, he noted. "For a number of countries, including India and South Africa, this is a no go and a red line," because there is no easy self-reclassification process for many countries, he said.

Moreover, such a controversial system would "involve all of us going into an application of onerous process of certification subject to approval from other members," he said.

"That does not mean in the negotiations there would not be any flexibility but the pathway doesn't seem to happen," he said.

The third issue, he said, "is an enthusiasm for these self-designated groups that emerged in Buenos Aires" to press for plurilateral initiatives in rule-making areas. Several countries, including China, made a strong case for plurilaterals in investment facilitation and electronic commerce, he said.

On the issue of plurilaterals, apparently Roberto Azevedo said that those groups which develop rules among them cannot take it for granted that those rules will be accepted on the basis of "as is" in the WTO, Minister Davies said.

"I added that those of us in the G90 who have developed our views on S&DT in Buenos Aires, could not get the approval because of opposition from some members," he said.

As regards the crisis at the Appellate Body (AB), he said the issue got much traction at the informal ministerial summit.

"The proposed alternatives for the DSB did not get much traction during the meeting as many ministers wanted to adhere to the rulings of the judicial body than negotiated outcomes as under GATT 1947," he said.

"There is a sharp concern over the non-appointment of AB members," he said, suggesting that there has to be an urgent resolution.

The new US deputy trade representative and trade envoy to the WTO, Ambassador Dennis Shea, spoke on the need for a "paradigm" change at the WTO, according to Minister Davies.

"My view is that what we have is a paradigm that trade liberalization is good for everybody and it is at the core of the WTO, which is now found wanting from different sides of membership," he said.

"Many of the developing countries felt that after Buenos Aires that policy space is important for us [developing countries] and we must have the policy space, as the current multilateral trade rules undermine our policy space," Minister Davies said.

And now from the other side, we have big countries that feel that the trade deficit is a disadvantage, and accordingly, they would need enhanced market access to address the trade deficit, he said.

"The paradigm of what the world needs at this juncture," he said, "is how trade can contribute to inclusive development, in the face of a fundamentally disruptive digital technology."

"Our proposal is that we have to remain realistic and what we can achieve are only an outcome on fisheries subsides and food security at this juncture while preserving the current multilateral trading system," he argued.

"Every issue is caught up in the clash of paradigms", he said, cautioning that e-commerce and Digital 2000 with light touch of tweaking the rules are akin to what happened with the financial products such as derivative financial liberalization in 2008.

South Africa, he said, is seeking an exception from the US safeguard measures because of the damage it would have on its small companies that are engaged in global value chains.

Commenting on the crisis in the Appellate Body and attempts to undermine the judicial body, Minister Davies said "many countries are reluctant to depart from a judicial body that makes decisions and many countries said they will not accept a negotiated outcome."