TWN Info Service on WTO and Trade Issues (May19/07)
15 May 2019
Third World Network

South must put forward its own WTO reform agenda, says Davies

Published in SUNS #8906 dated 14 May 2019

New Delhi, 13 May (D. Ravi Kanth) – Developing countries must put their ow n reform agenda on the table to ensure that “development and inclusivity” remain at the centre-stage of the World Trade Organization (WTO) and its multilateral trading system (MTS), South Africa’s trade minister Rob Davies told the SUNS.

Under the title of “WTO reforms,” the “rich countries” have placed a divisive trade agenda on the table, Davies told the SUNS in an interview.

Davies is in New Delhi for the informal ministerial meeting of developing countries being hosted here by India on 13 May.

As part of their agenda, said Davies, the rich countries are seeking to bring about a change in the classification of countries and the commitments they must undertake.

The proposed “differentiation” of commitments is primarily targeted at developing countries, he said.

The classification system is based on a “divide-and-rule” framework so as to ensure that certain developing countries are denied special and differential treatment (S&DT) while safeguarding the interests of the least-developed countries, he argued.

“The tool they have used is to force the discussion through the disablement of the Appellate Body of the dispute settlement system, and by saying the organization needs a change,” Davies said.

“The reaction has been not to say that somebody has gone rogue and needs to address this issue [accordingly]. The developing countries are being asked to pay for stringent commitments in the name of transparency and further tightening of the rules,” the South African trade minister argued.

The proposed transparency and notification commitments of the reform proposals, said Davies, are nothing but an “intrusion” into the domestic law and the rights of importers.

The other set of reforms proposed by the rich countries include an elevated and special status for the “plurilateral” negotiations, he said.

“Whatever they come up in the plurilateral negotiations, other members must agree to the outcome even if they are not party to the negotiations.”

Essentially, the rich countries are trying to set the rules “for the e-commerce of the 21st century” through these plurilateral negotiations, which are aimed at undermining the “policy space” in the developing countries, Davies pointed out.

Against this backdrop, the informal ministerial meeting hosted by India is a “positive step”, as there is an urgent need to “develop a developing country agenda” for countering the inequitable reforms proposed by the rich countries, the South African minister said.

He said the “voice of the developing countries has weakened” over time.

Therefore, the time has come for developing countries to put forward with ” more coherence,” their own agenda for development and inclusivity in the multilateral trading system, Davies argued.

“Instead of reacting to the reform agenda of others, the developing countries need to be putting a reform agenda of their own and look at all of the detailed issues by examining whether their proposals support development and inclusivity and advance the interests of the majority of the developing countries,” he said.

Crucially, the reform proposals of the developing countries must aim at “reducing the manifest inequalities that continue to exist in the world economy, and ensure that there is space for developing countries to develop a niche in new technologies and the unfolding fourth industrial revolution,” Davies maintained.

Therefore, the developing countries have to ensure that policy space is safeguarded for developing the new technologies in an “equitable way,” he argued.

Commenting on the trade wars, particularly between the US and China, Davies said that they will continue for a considerable period of time.

“It remains an area of concern for several of us and under the US Section 232 [national security provisions] we were already affected and we could see all that again,” he said.

The ongoing trade war between the US and China is all about “who is going to be the hegemon, and who is going to lead the fourth industrial revolution,” Davies said, suggesting that “issues concerning technology are going to be national security issues.”

“Our view is we don’t want to back one master against the other, we want to see balanced, inclusive and developmental outcomes,” Davies said.

Clearly, even big countries in the EU are seeing the abusive role of data mining for commercial reasons, monopoly conduct, and non-payment of taxes [by the technological behemoths], he maintained.

“When proposals on any of these issues [in the e-commerce] come out, the developing countries need to look at them with a long term perspective and they must remain careful,” he said.

Otherwise, the developing countries will pay a huge price, Davies said, adding that India has addressed some of these issues in the concept paper.

The US-China trade war, said Davies, started with the narrative of “trade imbalance and the loss of manufacturing capacity [in the US].”

Then the discourse has shifted to the emergence of China as the leader of the technology and the fourth industrial revolution in which the US companies ” will find themselves as the second-fiddle players,” Davies maintained.

“Ultimately and fundamentally, it is a struggle for the leadership and dominance of the fourth industrial revolution,” he said.

“This is not going to go away, and it is not going to be resolved by one meeting between President Trump and Xi at the G20 leaders’ meeting in Osaka,” Davie s pointed out.

“There might be a short-term ceasefire on tariffs [between the US and China] but ultimately this issue is going to persist in one form or the other,” Davies said.

Consequently, developing countries must follow the “developmental path like China and other countries in the history [of economic development] and safeguard their policy tools,” he said.

“The policy tools are crucial so that the ladder is not decisively kicked a way through the proposed new trade rules [by the rich countries],” he said.

“Ultimately, it is about multilateralism. Is multilateralism going to be a basis on which we are going to find collective solutions to collective problems of humanity or is it going to be a game of power relations in which the powerful countries extract concessions from the powerless,” Davies asked.

In short, these existential issues are all on the table right now, he concluded.