Misplaced claims of deadline sanctity for TFA

The failure to adopt the trade facilitation protocol by 31 July was only the latest instance in a long line of missed deadlines in WTO talks, many of which involved key issues of interest to developing countries.

by Chakravarthi Raghavan

GENEVA: The impasse at the WTO General Council over the adoption of a Protocol of Amendment to incorporate the Trade Facilitation Agreement (TFA) into Annex 1A of the Marrakesh Agreement, and much of the discussions thereon at the WTO, focused on the importance of meeting the deadline of 31 July included in the Bali Decision on the TFA and the WTO losing all credibility otherwise.

Missing the indicative deadline in the Bali Decision was represented by some WTO members as tantamount to “killing the Bali agreement” and as jeopardizing good faith and goodwill in the negotiations.

However, the inability to meet the deadline for the TF protocol was only one in a long line of missed deadlines from the inception of the WTO on 1 January 1995: those deadlines mandated by WTO Ministerial Conferences and which were thus “Ministerial political commitments”, and those which were legally binding mandated deadlines set by the Marrakesh Agreement.

A review of the track record of the WTO negotiations under the Doha mandate reveals a long list of missed deadlines and unfulfilled obligations. Many of these are central to the demands of developing countries and the fulfilment of the development mandate under the Doha negotiations, and a vast majority of the missed deadlines came about because of the US and other developed countries withholding consensus.

The Preparatory Committee on Trade Facilitation was mandated by the Bali Ministerial Conference to draw up a Protocol of Amendment to insert the TFA into Annex 1A of the Marrakesh Agreement, thus making it part of WTO law and a covered agreement under the WTO Dispute Settlement Understanding. The Bali Decision provided that “the General Council shall meet no later than 31 July 2014 to ... adopt the Protocol drawn up by the Preparatory Committee...” The Preparatory Committee was established under the General Council and is open to all WTO members.

The General Council meeting held on 24-25 July heard a report on the TFA from the Chairman of the Preparatory Committee and the positions of several WTO members in regard to the Agreement. The discussion on the Protocol was subsequently suspended due to lack of consensus.

Several developing-country members, including India, South Africa, Bolivia, Cuba, Venezuela, Zimbabwe and the Solomon Islands, had taken the position that the TFA is not a standalone agreement and that its entry into force must be part of the single undertaking under the Doha negotiations.

In the meetings of the Preparatory Committee, these countries had asked that their position be reflected in the content of the Protocol, through inserting specific language subjecting the entry into force of the TFA to the conclusion of the single undertaking in the Doha Work Programme, as agreed upon in paragraph 47 of the Doha Ministerial Declaration. WTO members taking this position often highlight that they have difficulty joining a consensus on the Protocol while no progress has been made on the areas of interest to developing countries, including the elements of the Bali package where a permanent binding solution was not achieved at the Bali Ministerial Conference.

(“According to Mr. Jayant Dasgupta, then Indian ambassador to the WTO, the agenda and format of the [Preparatory Committee] precluded any discussion of other parts of the Bali package, including the food security issue. The earliest this was possible in a comprehensive manner was at the General Council, negotiations on the other parts of the Bali package having been remitted to different bodies in the WTO.”)

Some members have argued that a failure to meet the deadline of 31 July set in the Bali Decision would be considered a breach of the Bali mandate agreed by ministers and would put the credibility of the WTO at stake.

In his statement at the General Council session on 25 July, Deputy US Trade Representative Ambassador Michael Punke focused on the importance of keeping commitments and taking obligations seriously at the WTO. In regard to the outcomes of the Bali Ministerial Conference, the US Ambassador said that “there are specific commitments ... which we have made to each other, including the implementation deadlines for the Trade Facilitation Agreement. Today a small number of WTO Members are indicating that they may no longer stand by their commitments to implement the TFA”. He added that the deadline of 31 July was “fixed and firm”.

The US statement added: “We are extremely discouraged that a small handful of Members in this organization [WTO] are ready to walk away from their commitments at Bali, to kill the Bali agreement, to kill  the  power of that good faith and goodwill we all shared, to flip the lights in this building back to dark.”

South Africa, in its statement to the General Council on 25 July, reminded WTO members that the “repeated failure to deliver meaningful outcomes on issues of interest to the poorest members ... can equally be characterized as harming the credibility of our organization”.

Multiple misses

The years of the Doha Round saw multiple deadlines being missed and commitments unfulfilled, many of which are directly concerned with the development mandate under the Round.

The whole Doha Round, launched in 2001, was scheduled to be finalized by 1 January 2005. The Doha Ministerial Declaration provides that “the negotiations to be pursued under the terms of this declaration shall be concluded not later than 1 January 2005”.

Soon after the Doha meet and declaration, the then EU Trade Commissioner Pascal Lamy told an informal meeting of Members of the European Parliament that he had bought Europe 10 years for changes to the EU’s Common Agricultural Policy (CAP) as the Doha Work Programme could not be completed for at least 10 years. He also went to India to tell businessmen etc that the EU could not cut its agricultural subsidies since it needed to keep farmers on the land.

After missing the 2005 deadline, ministers at the WTO’s Hong Kong Ministerial Conference agreed to “complete the Doha Work Programme fully and to conclude the negotiations launched at Doha successfully in 2006”. This target was also missed.

In the area of agriculture, a priority issue for developing countries, the Doha Ministerial Declaration provided that “modalities for the further commitments, including provisions for special and differential treatment, shall be established no later than 31 March 2003”. This deadline went unmet.

Later, at the Hong Kong Ministerial Conference (2005), ministers set the date of 30 April 2006 to complete disciplines on agricultural export credits, export credit guarantees or insurance programmes, exporting state trading enterprises and food aid, including appropriate provisions in favour of least-developed and net food-importing developing countries. This deadline was again missed.

During the post-Bali discussions held in the Committee on Agriculture, some WTO members attempted to discard the revised draft modalities for agriculture reached in 2008, which are the result of years of intensive negotiations. Except for the US, everyone was ready to accept or willing to work on the basis of the 2008 Rev.4 draft modalities text, which, among others, would update the Agreement on Agriculture such that procurement for public stockholding purposes from low-income or resource-poor farmers in developing countries would not be taken into account for AMS (Aggregate Measurement of Support) calculations.

At the 2005 Hong Kong Ministerial Conference, WTO members had agreed to the elimination of all forms of agricultural export subsidies by the end of 2013. The Hong Kong Ministerial Declaration provides that members “agree to ensure the parallel elimination of all forms of export subsidies and disciplines on all export measures with equivalent effect to be completed by the end of 2013”. This is another deadline that remains unfulfilled.

Similarly, ministers agreed in the Hong Kong Ministerial Declaration that the modalities for non-agricultural market access (NAMA) were to be established no later than 30 April 2006, but this became another missed deadline.

Several deadlines were missed in regard to the issue of cotton. Ministers convening at the Hong Kong Ministerial Conference had reaffirmed commitment to ensure an explicit decision on cotton within the agriculture negotiations. They agreed to work through the Sub-Committee on Cotton ambitiously, expeditiously and specifically, and to eliminate all forms of export subsidies for cotton provided by developed countries in 2006.

In the area of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and public health, WTO members originally set themselves until 1 December 2007 to formally amend the TRIPS Agreement through ratifying the Protocol of Amendment of the TRIPS Agreement, adopted by the General Council on 6 December 2005. The amendment will formally be built into the TRIPS Agreement when two-thirds of the WTO’s members have accepted the change.

The deadline has been extended four times. The latest General Council decision of 26 November 2013 extended the deadline to 31 December 2015.

Under the General Agreement on Trade in Services (GATS), Article X provides for a built-in negotiations mandate on emergency safeguard measures. Article X.1 of the GATS provides that: “There shall be multilateral negotiations on the question of emergency safeguard measures based on the principle of non-discrimination. The results of such negotiations shall enter into effect on a date not later than three years from the date of entry into force of the WTO Agreement.” This, in addition to the mandate to negotiate multilateral disciplines to avoid trade-distortive effects of subsidies (Article XV of the GATS), has not been fulfilled.

Several of the deadlines set in the Marrakesh Agreement in terms of mandated further work programmes have also been missed. For example, the end-1998 deadline set for completing a work programme on harmonization of MFN rules of origin remains unfulfilled. The work programme went on and on, and then some issues were referred to the General Council for decisions, where they remain bottled up without conclusion or even consideration.

Double standards

In the General Council session held on 25 July 2014, a member had sounded disappointment with the double standards and selective approach reflected by the narrative of some members when addressing the agreements undertaken in Bali compared to the agreements and commitments agreed over the course of the Doha Round negotiations before the Bali Ministerial Conference. This member noted that some commitments undertaken prior to Bali have been entirely unfulfilled, such as the elimination of cotton subsidies. This member added that several of the rulings by the WTO Dispute Settlement Body (DSB) have been ignored as well.

For example, the United States failed to comply with the ruling of the panel, the Appellate Body and the compliance panel in the case addressing measures affecting the cross-border supply of gambling and betting services (US – Gambling). The case had started with a request for consultations in March 2003. The panel report was issued in November 2004, while the Appellate Body report was issued in April 2005. The complainant – Antigua and Barbuda – requested authorization from the DSB, pursuant to Article 22.2 of the Dispute Settlement Understanding (DSU), to suspend the application to the US of concessions and related obligations of Antigua and Barbuda under the GATS and the TRIPS Agreement, and requested the DSB to authorize the suspension of concessions and obligations to the US in respect of intellectual property rights.

Similarly, the US failed to comply with the ruling of the Appellete Body in the case on measures affecting the production and sale of clove cigarettes (US – Clove Cigarettes). Consequently, on 12 August 2013, Indonesia requested the authorization of the DSB to undertake remedial action through suspending concessions  or  other  obligations pursuant to Article 22.2 of the DSU. (SUNS7855)                                          

This article was written with contributions from Kinda Mohamadieh.

Third World Economics, Issue No. 575, 16-31 Aug 2014, pp4-6