WTO’s 31 July “deadline” on TF protocol passes quietly

Differences among member states have resulted in the inability of the WTO to adopt, by 31 July as initially envisaged, a legal instrument that would give effect to a contentious trade facilitation accord.

by Kanaga Raja

GENEVA: The World Trade Organization missed the “31 July midnight deadline” for the adoption of the Protocol of Amendment that would have been put to the membership for a vote and made effective when a two-thirds majority is obtained, and the Trade Facilitation Agreement (TFA) made effective among them.

Several legal experts have questioned this interpretation of the TFA becoming part of Annex 1A of the Marrakesh Agreement.

In line with the earlier statement of the WTO General Council Chair on 25 July (when consensus was denied at the Council), WTO Director-General (D-G) Roberto Azevedo indicated that the missing of this deadline would result in this agenda item – report by the Chairman of the Preparatory Committee on Trade Facilitation – being closed without further action and the General Council meeting, suspended on 25 July, would be formally closed without a protocol being adopted.

Just a couple of hours or so before the midnight deadline, an informal heads-of-delegation meeting convened by Azevedo assembled, and he announced that it was immediately reverting to an informal meeting of the Trade Negotiations Committee (TNC).

Briefing members on the state of play since the suspension of the General Council meeting, the D-G reported that at present “there is no workable solution on the table” and that he did not have any indication that one would be forthcoming.

He further said that he did not have the necessary elements that would lead him to conclude that a breakthrough was possible. “We got closer – significantly closer – but not quite there.”

“On the one side we have the firm conviction, shared by many [which in GATT/WTO euphemism or in plain English only meant more than one], that the decisions that ministers reached in Bali cannot be changed or amended in any way – and that those decisions have to be fully respected. And on the other side of the debate we have some who believe that those decisions leave unresolved concerns that need to be addressed in ways that, in the view of others, change the balance of what was agreed in Bali. These are the two sides,” he said.

“We have not been able to find a solution that would allow us to bridge that gap. We tried everything we could. But it has not proved possible,” Azevedo said. The fact that members did not have a conclusion meant that “we are entering a new phase in our work – a phase which strikes me as being full of uncertainties.”

He maintained that this was not just another delay which could simply be ignored or accommodated into a new timetable, but would have consequences that were likely to be significant.

The D-G invited members to use the coming summer break “to think carefully about what the next steps might be”, further urging them to “reflect long and hard on the ramifications of this setback”.

The D-G, as TNC Chair, did not open the floor for statements.

Speaking to journalists after the meeting, Ambassador Michael Punke of the United States said: “We are obviously sad and disappointed that a very small handful of countries were unwilling to keep their commitments from the December conference in Bali and we agree with the Director-General that that action has put this institution on very uncertain ground.”

Some trade observers have pointed out that fears over the WTO losing its credibility over this development are somewhat misplaced in that this was not the first time that the WTO had missed a deadline but just one in a long line of missed deadlines since the WTO came into being on 1 January 1995.

Trade observers further noted that many of these missed deadlines and unfulfilled obligations were over issues that were of importance to the developing countries and the fulfilment of the development mandate of the Doha Round negotiations, and that the vast majority of such missed deadlines were on account of the US and other developed countries withholding their consensus. (See the following article for some examples of the missed deadlines.)

India’s stand

A Press Trust of India report in the Economic Times on 31 July said that India was sticking to its position on the issue of food security. It said that a series of meetings had been held by US Secretary of State John Kerry and Commerce Secretary Penny Pritzker with senior Indian officials, including Finance Minister Arun Jaitley and Commerce Minister Nirmala Sitharaman, to persuade the Indian government to dilute its tough stand on the Bali package.

(At a joint press conference on 31 July with Indian External Affairs Minister Sushma Swaraj, Kerry said: “Our feeling is obviously that the agreement that was reached in Bali is an agreement that importantly can provide for food security for India. We do not dismiss the concerns India has about large numbers of poor people who require some sort of food assurance and subsistence level. But we believe there is a way to provide for that that keeps faith with the WTO Bali agreement. And so, we are obviously encouraging our friends in India to try to find a path here where there is a compromise that meets both needs. And we think that is achievable, and we hope it is achievable.”)

The PTI report quoted India’s Commerce Minister Sitharaman (she is Ms. Sitharaman and not a Mr., as Washington-based media persist in reporting) as earlier telling reporters after her meeting with the US officials that India’s stand “remains the same.”

It further cited an Indian official as saying that India had suggested a way of action to break the deadlock and that it was for the developed countries to respond. The official was also reported to have said that the new formula was “on the broad contours” of India’s stand, and that the Bali deal need not collapse even if the 31 July deadline was not met.

According to some reports that could get no official or citable confirmation, on 31 July night at the WTO, in some talks involving the US and India, the US and its supporters (despite Kerry’s remarks in New Delhi) were even not agreeable to a time-bound dedicated work programme on other Bali decisions, nor a legal commitment in the General Council that pending a permanent solution to the food security issue, India’s programmes for procuring food from resource-poor farmers for supply to poor consumers would be legal and not challenged.

Other media reports noted the threat (reported in some Indian papers citing dubious unnamed sources) that some of the TFA protagonists were considering ignoring India and concluding the agreement among themselves.

An Indian official was reported as ridiculing such reports, noting that the TFA protagonists were aiming at opening up markets of developing countries to exports of transnational corporations (to an extent equivalent to a 10% tariff cut, according to former WTO D-G Pascal Lamy), and efforts to create panic did not make any sense.

Veteran trade analyst and Editor Emeritus of the South-North Development Monitor (SUNS), Chakravarthi Raghavan, noted that in 1985-86, in the era of a more powerful US and more popular president, Ronald Reagan, the US had held out similar threats – in this case, to launch GATT negotiations on services – only to quickly realize that such threats did not work with India, leading to the Punta del Este compromises.

Lack of forward movement

D-G Azevedo had met with the coordinators of some 17 groupings at the WTO on 31 July afternoon. On 29 July, he had met with the coordinators of some 15 groupings. Reportedly on both occasions, there had been no change in positions since the 25 July General Council meeting. Azevedo had also reportedly met with India on 29 July and again on 31 July.

The General Council had met on 25 July to discuss the TFA but later on the same day suspended its meeting due to a lack of consensus on the Protocol of Amendment.

In their interventions at that General Council meeting, many developing countries voiced concerns about the lack, in their view, of forward movement on issues of importance to them in the context of the Bali package.

India made a strong statement wherein it said that it was of the view that the TFA must be implemented only as part of a single undertaking including a permanent solution on food security.

“In order to fully understand and address the concerns of Members, my delegation is of the view that the adoption of the TF Protocol be postponed till a permanent solution on public stockholding for food security is found. In this context we have suggested a modification to the Protocol in the [Preparatory Committee on Trade Facilitation]. We stand by that proposal,” said Indian Ambassador Anjali Prasad.

“The Bali outcomes were negotiated as a package and must be concluded as such. Timelines are important but we cannot afford to act in haste in the WTO ignoring the concerns expressed by Members,” India added.

India then went on to suggest the following course of action: (1) Establish immediately an institutional mechanism such as a dedicated Special Session of the WTO Committee on Agriculture to find a permanent solution on public stockholding for food security. (2) There must be clear-cut procedures, timelines and outcomes under this institutional mechanism so as to arrive at a permanent solution by 31 December 2014. (3) A similar approach must be adopted on all other development and LDC (least developed country) issues. In this regard, India welcomed the submission of the collective request on services by the LDC group. (4) The progress of these accelerated discussions must be reviewed in October 2014 by the General Council.

“If WTO Members demonstrate the same energy and commitment on the other Bali issues as they have done on TF, we will not only be able to find a permanent solution on the issue of public stockholding for food security but will also be able to implement TF in the agreed timeframe as well as deliver favourable outcomes on all development and LDC issues,” India had said.

India had received support from Bolivia, Cuba and Venezuela, who had said that they were now watching a TFA that was about to be implemented without there being progress in the other areas of the Doha Development Agenda, including the other nine Bali outcomes. This was why they would have difficulty joining a consensus on the Protocol of Amendment while no progress had been made on the areas of interest to developing countries.

Meanwhile, in a statement issued on 31 July, US Trade Representative Michael Froman said: “The United States is fully committed to the multilateral trading system embodied in the WTO. But the WTO system relies on its Members to implement the commitments to which they have agreed.”

“Geneva will be quiet for the next several weeks. This is a good time for all of us to reflect on these developments and to consider the implications going forward. We will consult with our trading partners on potential paths forward,” he added. (SUNS7856)

Third World Economics, Issue No. 575, 16-31 Aug 2014, pp2-4