What’s cooking for MC12?

Two processes that could reshape the WTO in the interest of the most powerful

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When it finally convenes, the postponed 12th Ministerial Conference of the World Trade Organization may be made to greenlight an agenda of liberalisation measures and institutional reforms inimical to the needs of developing-country members.

The unfolding big picture of MC12

THE World Trade Organization (WTO)’s upcoming 12th Ministerial Conference (MC12) may become a stage for reshaping the multilateral trading system in the interest of the most powerful, including corporate lobbies. While the proposed WTO intellectual property waiver for COVID-19 vaccines and treatments has been continuously blocked through various strategies and tactics for more than a year, it is increasingly clear that the interests of developed countries are focused on establishing two post-MC12 processes.

One, entitled ‘WTO response to the COVID-19 pandemic’, is focused on promoting more liberalisation and regulatory constraints instead of delivering the intellectual property waiver (TRIPS waiver). The other process is focused on the notion of ‘WTO reform’, which several developed countries including the United States, the European Union, Japan and others have been using to push their ideas for redesigning the WTO and its rules of decision-making.

At the same time, issues of concern to developing countries and least developed countries (LDCs) and civil society are being further marginalised. These include the TRIPS waiver proposal and proposals to correct the rules of the WTO Agreement on Agriculture, which have led to the effective demise of the agricultural sector in many poor countries and exacerbated food insecurity around the world. Other important issues include strengthening and operationalising special and differential treatment for developing countries and LDCs, which is integral and crucial to the proper functioning of the multilateral trading system.

The process claiming to find a WTO response to the COVID-19 pandemic

In June 2021, the chairperson of the WTO General Council unilaterally selected David Walker, New Zealand’s Ambassador to the WTO, to facilitate a series of negotiations supposedly focused on ensuring a WTO response to the COVID-19 pandemic. Consequently, this process came to be known as the ‘Walker process’. Walker’s work, reflected in his reports to the WTO General Council, revolved around a premise that what is needed is more liberalisation, interventions that will further constrain regulatory space and policy tools available to WTO member states, and more reliance on the private sector.

From among the voices and proposals that Walker had heard, he chose to focus on the following issues:

•     pushing trade facilitation and regulatory coherence in a way that undermines developing countries’ flexibilities under the existing rules and further limits regulatory space;

•     promoting services liberalisation as one of the answers to the pandemic;

•     limiting the ability to use export restrictions that are currently allowed under WTO rules. The pandemic has shown that when demand exceeds supply, developing countries/LDCs will be outbid by developed countries which can afford to pay much higher prices. In such contexts, developing and least developed countries have a special need to utilise export restrictions, given the limited policy tools available to them.

•     pushing an expansive notification and monitoring regime that will further put pressure on developing countries in implementing their trade policies; and

•     opening the door wider for the private sector to exert influence on WTO processes, on the grounds of expanding collaboration with other international organisations and other stakeholders, with a specific mention of the private sector.

Issues raised by developing countries such as food security and intellectual property issues have been sidelined in the reports by Walker, who also repeatedly refused to cover the issues pertaining to the TRIPS waiver.

A skewed process leaving most WTO members in the dark

Without proper consultations, Walker produced a draft text of a Ministerial Declaration to be adopted by MC12 on the WTO response to the pandemic. He proposed it as a basis for deliberations among a very small group of selected countries. Such processes are designed to put pressure on the rest of the WTO membership, which are not in the room to negotiate, to accept the outcome when they are shown the result of the deliberations at the last moment. They are given no proper chance or time to meaningfully engage in the negotiations. The appealing name of ‘WTO response to the COVID-19 pandemic’ is invoked to further pressure delegations to feel compelled not to refuse the outcome despite the fact that they were not given the chance to meaningfully participate in deliberating it and that the content does not reflect their views and potentially becomes very damaging for their interests.

A group of developing countries stress TRIPS waiver, structural transformation, economic resilience and food security

In October 2021, a group of developing countries including Pakistan, Egypt, Tunisia, South Africa, Sri Lanka and Uganda presented a submission at the WTO that sought to capture a lot of the concerns of developing countries.

Developed countries have had the capacity to employ exceptional fiscal and monetary policies to manage the shock from the COVID-19 crisis and to cushion the economic and social impact. In comparison, developing countries and LDCs do not possess the tools that would allow them to respond and recover and maintain resilience to withstand a global crisis of this scale.

The above submission emphasises that the focus of the work on the WTO response to the pandemic ought to shift from liberalisation and regulatory constraints to policy space and enablers of structural transformation and resilience building, including economic resilience and food security issues. It also stresses that any proposals considered under the WTO pandemic response should in no way constrain the policy tools and space that developing countries and LDCs need in order to respond to pandemics and similar crises, nor restrict tools and flexibilities available to developing countries and LDCs under the WTO agreements.

The submission also emphasises that the TRIPS waiver is central to the WTO’s response to the pandemic. It also adds that WTO members should not, directly or indirectly, prevent or discourage another member(s) from fully utilising the flexibilities of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) or in any way limit such flexibilities.

The dangerous push for a post-MC12 work plan and implementing body

Developed countries, including the US and the EU, are pushing towards setting up a work plan and related implementing body that will carry out the post-MC12 work on the WTO response to the COVID-19 pandemic and potentially other future pandemics and crises. One proposition is for this body to be chaired by a head of delegation appointed by the General Council chair. Proponents of this idea are pushing for agreement over a Ministerial Decision at MC12 on this matter even before the WTO membership gets the chance to negotiate and agree to common grounds on what should entail a WTO response to the pandemic.

In effect, agreeing to such a post-MC12 work plan and body while the content of the work plan is not agreed could serve as a blank cheque that could be manipulated to push the liberalisation and deregulatory interests that were revealed in the first version of the text that Walker released. Its relation to the existing mandates of negotiations – including the Doha mandate of 2001 which has multiple issues of interest to developing countries that were never delivered – is not clear. This means its operationalisation could end up further marginalising work on existing mandates.

The proposition to delegate to the General Council chair the selection of a chair for this work could lead to a process similar to the ‘Walker process’, whereby most of the developing countries and LDCs remain outside the negotiating room or uninformed about the deliberations, except for what they get to know from periodic reports at the General Council.

‘WTO reform’ and attempts to replace state-led multilateralism with corporate-fuelled plurilateralism

The narrative about ‘WTO reform’ has been populating the WTO deliberations for a while. In the run-up towards MC12, the WTO Director-General has facilitated a push to have WTO reform at the forefront of issues to be addressed in the conference. But there is a major difference between what developing countries mean by reform and the ideas being pushed by some developed countries under the guise of ‘reform’, which has become a bone of contention among the WTO membership.

Developing countries have long called for reform of the multilateral trading system in favour of developing countries and large vulnerable constituencies such as small farmers, producers, workers, patient groups and indigenous peoples. In December 2020, a collective submission by the group of African states at the WTO, India and Cuba stressed that central to this reform agenda was the call to review and rebalance existing WTO rules, in order to address the implementation challenges that developing countries and LDCs have been facing and to strengthen and improve operational special and differential treatment.

In contrast, the narrative and proposals pertaining to WTO reform as promoted by developed countries, led by the US and the EU, continue to push for:

•     agreements on new issues (such as rules on industrial subsidies);

•     new approaches on special and differential treatment that will eventually limit the availability of these flexibilities to developing and least developed countries;

•     injecting into the WTO agenda issues that will further constrain the policy tools available to developing countries and undermine inclusivity and participation in WTO negotiations, through attempting to alter decision-making procedures;

•     normalising plurilateral approaches to setting the WTO negotiating agenda and adopting new rules which will undermine the multilateral nature of the organisation and its ability to deliver anything useful for developing countries and LDCs;

•     extending the WTO monitoring mechanisms in a way that would put further pressure on developing countries in implementing their trade policies;

•     opening up more space for big business in the WTO under the umbrella of ‘multi-stakeholderism’.

In the context of negotiating the outcome document of MC12 (i.e., the Ministerial Declaration), a number of mainly developed countries are pushing for the establishment of a new working group on what they call ‘improvements of the functioning of the WTO’. The EU and Brazil informally floated a proposal seeking the establishment of such a working group to consider ‘institutional improvements to the functioning of the WTO’ and address the WTO monitoring and deliberating function, negotiating function and dispute settlement function.

Setting up such a body while there remains major disagreement on what ‘WTO reform’ means and the direction sought from such work will allow the US, the EU and other developed countries to utilise this platform to push for operationalising the ideas they have in mind for ‘WTO reform’. Such approaches significantly undermine and limit the ability of developing countries and LDCs to influence agenda setting and pursue issues of interest to them in the negotiations. They will also legitimise a bigger role for the private sector, mainly big business, in influencing agenda setting and negotiations in the WTO, thereby creating a more imbalanced institution that is responsive mainly to the commercial interests of big business.

The truth of what is being prepared for MC12

While some developed countries continue to block any progress towards the TRIPS waiver, and the WTO Director-General and secretariat facilitate such obstructionist positions, the push on the two fronts detailed above could result in fundamental changes to the WTO’s institutional architecture and function. It is another step in the attempt to circumscribe the fundamental rules of decision-making that the WTO was built around in order to remedy the major deficiencies that characterised the GATT (General Agreement on Tariffs and Trade) system that preceded it.

These latest attempts should be seen in the light of the developments since the last two WTO Ministerial Conferences, held in Nairobi in 2015 and in Buenos Aires in 2017. Back then, the developed countries succeeded in pushing back on the existing negotiation mandates of interest to developing countries, although they did not succeed in fully killing the Doha Round. They also commenced an intensive push towards illegally expanding plurilateral approaches to defining issues of negotiations and to changing WTO agreement rules. What could unfold in MC12 could further serve these attempts.

In effect, these processes would open the door to reinventing the WTO as a power-based rather than rules-based organisation. The result will be to deny space for developing countries and their development issues in order to facilitate corporate power grab of the WTO. This will also significantly undermine, if not put an end to, many of the common goals of civil society campaigns that have been calling for correcting trade rules to make them less harmful and constraining on development processes and the transformations needed to address the global climate crisis and more recently the global pandemic. – TWN                    

The above was first published as a TWN briefing paper (14 November 2021).

*Third World Resurgence No. 349, 2021, pp 57-59