TWN Info Service on WTO and Trade Issues (Jan19/11)
30 January 2019
Third World Network

India, South Africa reject attempts to launch talks on e-com, IF

Published in SUNS #8834 dated 29 January 2019

Geneva, 28 Jan (D. Ravi Kanth) – India and South Africa on Friday last week (25 January) rejected attempts to launch plurilateral negotiations on e-commerce and investment facilitation (IF).

They made their opposition clear during an informal ministerial meeting in Davos, cautioning participants at the ministerial against pursuing divisive priorities that would strike at the very roots of “multilateralism,” trade ministers told SUNS.

Trade ministers who took part in the meeting flagged that the continuation of the World Trade Organization’s Appellate Body (AB), the highest adjudicating arm of the Dispute Settlement Body, must remain as the central goal in the face of escalating “unilateral” and “protectionist” measures imposed by the United States.

Meeting on the margins of the annual World Economic Forum meeting in Davos on Friday, more than 30 countries spoke about the “systemic” crises that has engulfed the WTO’s dispute settlement system following the repeated attempts by the US to block the filling of four vacancies at the AB.

Instead of restoring confidence in the multilateral trading system by addressing the life-and-death issues of the Dispute Settlement Body and other developmental issues, it is deplorable that some countries are pursuing plurilateral initiatives to further undermine the multilateral framework of the 164-member WTO, India said.

South Africa’s trade minister Rob Davies rebuked attempts to launch plurilateral negotiations in electronic commerce without addressing the “digital” divide.

The plurilateral initiative to launch negotiations in e-commerce is an attempt to bring some two-dozen rules crafted in the failed Trans-Pacific Partnership agreement under the WTO purview, the South African minister told SUNS.

India and South Africa called for addressing the asymmetrical agricultural rules based on the mandates set out in the Doha Development Agenda.

Malaysia which expressed alarm over “rising trade tensions” warned against “unequal trade relations” stemming from “new forms of colonialism.”

China, which had raised serious concerns on issues such as the data flows and data storage within the country on local servers, chose to sign off on the plurilateral initiative launched by 48 countries, including the EU which is counted as one for its 28 members.

China, however, insisted that the negotiations on the e-commerce plurilateral initiative must be “pro-multilateral” and mutually complementary to the multilateral discussions under the 1998 Work Programme on E-commerce.

The US, however, did not participate in the meeting because of the temporary federal government shutdown that continued till Sunday.

Without attending the meeting, the US managed to secure its priorities in the e-commerce plurilateral initiative, said a participant who asked not to be quoted.

Participants who took part in the meeting include Argentina, Australia, Brazil, Canada, the Central African Republic on behalf of the least-developed countries, Chile, China, Colombia, Costa Rica, Egypt, the European Union, Hong Kong-China, India, Indonesia, Japan, Kazakhstan, Korea, Malaysia, Malawi on behalf the Africa, Caribbean, and Pacific (ACP) group, Mexico, Morocco, New Zealand, Nigeria, Norway, the Philippines, Russia, Saudi Arabia, Singapore, South Africa which represented the African Group, Switzerland, Thailand, and Turkey among others.

The WTO General Council chair Ambassador Junichi Ihara of Japan and the WTO director-general Roberto Azevedo assisted the ministers during the deliberations. Every participant was given three minutes to spell out their priorities for the trade body for this year.

Switzerland’s economy and education minister Guy Parmelin, who chaired the half-day meeting, spoke about the unprecedented challenges facing the multilateral trading system. He said discussions on WTO reforms have gained momentum, suggesting that members must accelerate the dialogue on reforms.

In his intervention, the WTO director-general, Roberto Azevedo, said that members must determine priorities, including in areas of agriculture and development.

He said there has to be an outcome on fisheries subsidies by the end of this year. He touched on what he called the growing momentum in the joint initiatives, particularly e-commerce.

The director-general said the multilateral trading system (MTS) is under threat but did not throw any light on why the MTS is facing the worst systemic crisis, said a participant who asked not to be quoted.

After spending considerable time speaking on improving the functioning of the WTO’s regular bodies and pursuing both plurilateral and multilateral initiatives simultaneously along with “policy space,” the director- general said urgent resolution of the AB crisis is critical, according to another participant, who asked not to be quoted.

In a hard-hitting statement, India said members must safeguard the multilateral framework embodying the WTO. India said the much-talked about WTO reforms must “adopt a sequential approach”. In the first stage problems, members must confront “appointment of new members to the AB” so as to restore trust among members.

The AB’s continuation is essential for “preserving the rights and obligations of members”, India said, arguing that “after the WTO membership has successfully addressed this issue, other reform issues, including improvements in the Dispute Settlement Mechanism, could be taken up for detailed discussion by Members.”

In short, the two-tier structure of the DSM [dispute settlement mechanism], comprising the panels and the Appellate Body, independence of the AB, automaticity in the dispute settlement process and the decision-making by t he DSB [Dispute Settlement Body] by consensus, must be safeguarded, India maintained.

India expressed concern over “innovative” ways adopted by some countries for undermining their market access commitments. Members must address the “asymmetrical and unbalanced” rules that are tilted against the interests of developing countries, India said.

South Africa’s trade minister Rob Davies warned against pursuing reforms selectively, saying the top priorities at the WTO must include the resolution of the AB crisis, the permanent solution for public stockholding programs for food security, domestic farm subsidies, and effective rules for special and differential flexibilities.

Davies said that appropriate lessons must be drawn from the uneven playing field created by globalization, adding that the digital divide is a major challenge for countries in Africa. He said South Africa will not support rules that would entrench the existing disparities among countries.

Malawi, on behalf of the ACP group, said that members must address the uneven playing field in which many developing and poorest countries are not properly integrated into the global trading system. Malawi said the DDA (Doha Development Agenda) is the biggest reform agenda agreed by all members, emphasizing that it must guide members in addressing the unresolved issues.

Canada, which had hosted an informal ministerial conference of 13 countries in Ottawa last year, said it is deeply concerned about the rise in protectionism and the AB crisis. Canada said the clock is ticking with no action on several fronts.

Australia, which hosted the breakfast-meeting on e-commerce along with Japan and Singapore, spoke of the e-commerce plurilateral initiative, emphasizing that it would be inclusive.

The European Union said though the priority is addressing the AB crisis, members must pursue negotiations, including in areas such as e-commerce.

Malaysia cautioned that it is a testing time for the multilateral trading system, emphasizing that the new government is rebuilding the nation.

Malaysia said it does not want a retreat into protectionism, arguing that ” unequal trade relations should not be the new form of colonialism,” said a participant who asked not to be quoted.

Korea said 2019 is a crucial year for the Appellate Body while Morocco said the solution to the AB crisis is an imperative.

Brazil said it is fully committed to the WTO reform, suggesting that no one should be blamed for the systemic challenges facing the WTO.

Brazil pressed for improvements/reforms in the Dispute Settlement Body, monitoring and transparency initiatives, and in reinvigorating the negotiating function.

Significantly, Brazil said it is open to new special and differential flexibilities in future agreement. Norway said the AB crisis is the most serious issue that needs to be addressed.

In his concluding remarks, the WTO director-general said the participants had highlighted the importance of finding a solution to the Appellate Body crisis. Azevedo said participants acknowledged the importance of pursuing reforms. He said a lot of work remains on the table to strengthen the multilateral trading system.

In a statement issued after the meeting, the Swiss minister Parmelin said ministers recognized that 2019 would be a crucial year for the MTS.

“Ministers welcomed the process recently initiated to address concerns related to WTO’s dispute settlement system”, the Swiss minister said, emphasizing the urgency of restoring a full-functioning Appellate Body.

Ironically, even as many ministers called for resolving the AB crisis, attempts were made to turn the focus on plurilateral initiatives and controversial WTO reforms that are inimical to the interests of developing countries, said a trade minister, who asked not to be quoted.