Info Service on WTO and Trade Issues (Jun18/11)
18 June 2018
Third World Network
China, India, South Africa holding "system to hostage",
Published in SUNS #8695 dated 6 June 2018
Geneva, 5 Jun (D. Ravi Kanth) - The European Union suggested on Monday
(4 June) that China, India, and South Africa among others are holding
the "system to hostage" by pursuing at the World Trade Organization
ideologically-driven toxic positions on "development". The
EU insisted that the special and differential treatment (S&DT)
must be "need-driven and evidence-driven."
At a meeting of the 65th session of the Trade and Development Board
(TDB) of UNCTAD, the EU trade commissioner Cecilia Malmstrom claimed
the debate on "development" is being blocked and the "system"
is held "hostage" by some developing countries.
Without naming the countries such as China, India, and South Africa,
which have repeatedly made it clear that S&DT is an integral part
of the Uruguay Round commitments and that they will not accept any
"differentiation" among developing countries for availing
S&DT flexibilities, Commissioner Malmstrom said that developing
countries need "flexibilities."
But two-thirds of members cannot be excluded from the purview of the
WTO commitments, she said.
The S&DT must be based on "need-driven and evidence-driven"
Effectively, she argued, some big developing countries - China, India,
and South Africa among others - cannot avail of the S&DT under
the "differentiation" framework.
Malmstrom also expressed her frustration that the negotiations on
fisheries subsidies are not moving well as some countries are blocking
While acknowledging the Doha agenda, she argued that a lot of developments
(since the launch of the Doha negotiations) have overtaken the issues
in the Doha agenda.
She urged members to continue with the plurilateral initiatives that
have been launched through joint initiatives at Buenos Aires, despite
the rejection of the initiatives by a large majority of developing
countries at the open-ended heads of delegations meeting on 12 December
2017 at the WTO's eleventh ministerial meeting in Buenos Aires.
The EU trade commissioner came down heavily on the United States for
slapping illegal duties on imports of steel and aluminum from the
EU, Canada, and Mexico, but refused to say that the US duties amounted
to a "trade war", ad ding though "we could be"
approaching the trade war.
Malmstrom refused to characterize the retaliatory measures the EU
would impose as part of the dispute at the WTO, along with measures
by Canada and Mexico, would constitute "tit-for-tat" actions.
She justified the EU's actions as part of a trade dispute launched
on 1 June at the WTO as a "rebalancing" move.
In short, the EU commissioner remained daggers crossed against the
US on Washington's additional duties on steel and aluminum.
But the EU was in complete agreement with the US on the issue of "differentiation"
and denying S&DT treatment to China, India, and South Africa,
said a trade envoy familiar with the ongoing debate on "development"
among select trade envoys.
The EU's positions are also echoed by Japan which reckons that the
position s adopted by China, India, and South Africa among others
are "ideological" and not evidence-based, said a trade envoy
from a major industrialized country who asked not to be quoted.
Indeed, there is complete consensus among the developed countries
to bring about "differentiation" among developing countries
for deciding who should avail S&DT and who should not.
The common position held by the developed countries on differentiation,
which they claim is not an "ideological" stand, is being
aggressively echoed ate very informal trade ministerial summit, including
at the recent meeting convened by Australia in Paris.
At that informal ministerial meeting in Paris on 31 May, India's commerce
minister Suresh Prabhu said "trade must contribute to development."
He said India continues to make advances in some sectors while facing
"compelling" challenges in many other sectors. Many developing
countries are also facing daunting challenges in several sectors like
Consequently, many developing countries have not been able to integrate
into the "global trading system."
"Any endeavour at the WTO for reciprocal trade rules, which ignores
this reality, will further deepen the divide and aggravate the disenchantment
with globalization," Prabhu warned.
"Special and differential treatment provisions for all developing
countries without exception, and LDCs are an integral part of the
WTO Agreement and this principle must be protected," India emphasized
at the Paris meeting.
"Approaches based on selection, such as the "case-by-case"
approach to gran ting special and differential treatment to developing
countries must be avoided," India said.
South Africa said "the principle of special and differential
treatment is also under challenge."
Speaking on behalf of his trade minister Rob Davies at the informal
ministerial meet in Paris, the South African trade envoy Ambassador
Xavier Carim said "recent proposals to narrow its scope, irrespective
of objective difference s in levels of economic development between
developed and developing countries will only compound our negotiating
South Africa, which is the coordinator for the African Group at the
WTO, said the group's "core positions" are built on the
developmental objectives embedded in the Doha mandate.
"The African Group will continue to seek meaningful outcomes
in agriculture, on domestic support, cotton, public stockholding,
SSM, as well as on fisheries subsidies, and on the G90 S&DT proposals,"
South Africa said.
In a draft ministerial statement issued on 10 December 2017, the G90
group had said "the provisions for special and differential treatment
(S&DT) remain a n integral part of existing and future WTO Agreements."
The G90 urged trade ministers to "instruct the Committee on Trade
and Development in Special Session to expeditiously complete the review
of all the outstanding Agreement-specific proposals and report to
the General Council, with clear recommendations for a decision, at
the next Ministerial Conference."
"Notwithstanding Articles 4 and 5 of the TRIMs Agreement and
Articles III and XI of GATT, Members agree that developing countries
shall be free to deviate temporarily from the provisions of Article
2 of the TRIMs Agreement, and introduce new investment measures related
to trade in goods," the G90 countries maintained.
They outlined the following provisions, saying "measures notified
by developing countries under this provision shall be effective for
an initial period that does not extend beyond 15 years or up to the
time these objectives have been met (whichever is shorter), provided
the selected measures fulfil one of the objectives stipulated below:
i. Accelerate industrialization and achieve socio-economic transformation;
ii. Upgrade and modernize the domestic manufacturing capabilities
of small and medium enterprises and their contribution to employment
iii. Promote domestic manufacturing capabilities in high value-added
sectors or technology intensive sectors;
iv. Stimulate and facilitate the transfer or indigenous development
v. Promote domestic competition and/or correct restrictive business
vi. Promote purchases from disadvantaged regions in order to reduce
regional disparities within their territories and support the development
of geographically disadvantaged regions;
vii. Stimulate environment-friendly methods or products and contribute
to sustainable development;
viii. Increase export capacity in cases where structural current account
deficits would cause or threaten to cause a major reduction in imports;
ix. Close the digital divide in industrial production."
In short, the developing countries now clearly face a Herculean task
on "development", particularly in stopping the "differentiation",
which is part of the warlike agenda being advanced by the US, the
EU, Japan, and other developed countries, trade envoys said.