WTO DG’s sleight of hand on new issues

The contentious issues of investment and competition policy are back in the WTO frame following a decision by the WTO Director-General to widen the remit of two secretariat bodies to incorporate these topics.

by D. Ravi Kanth

GENEVA: Without consulting members and in an apparent violation of rules of business, the World Trade Organization (WTO) Director-General Roberto Azevedo has expanded two existing divisions of the WTO secretariat to oversee work on investment and competition policy respectively, trade negotiators familiar with the development told the South-North Development Monitor (SUNS).

The controversial issues of investment, competition policy and government procurement were shot down at the WTO’s fifth Ministerial Conference in Cancun in 2003 following massive opposition from the developing countries, and that entire meeting collapsed.

Subsequently, in July 2004, the WTO General Council adopted the July Framework agreement to put the Doha Round talks back on the rails, but decided to keep the three so-called “Singapore issues” outside any work at the WTO during the Round. Accordingly, the Doha Work Programme was modified in these terms in paragraph 1(g) of the July Framework: “Relationship between Trade and Investment, Interaction between Trade and Competition Policy and Transparency in Government Procurement: The Council agrees that these issues, mentioned in the Doha Ministerial Declaration in paragraphs 20-22, 23-25 and 26 respectively, will not form part of the Work Programme set out in that Declaration and therefore no work towards negotiations on any of these issues will take place within the WTO during the Doha Round.”

This decision of the General Council remains in force unless specifically decided otherwise by the Council (acting in between sessions of the Ministerial Conference) or by the Ministerial Conference.

The tenth Ministerial Conference, held in Nairobi in 2015, could reach no decision for lack of consensus, neither to end the Doha Work Programme nor on taking up any new issues.

As a result, ever since the General Council decision in July 2004, these three issues have hovered around the Centre William Rappard that houses the WTO, unable to make an entry. The developing countries have not given any “explicit” approval at the subsequent Ministerial Conference or General Council meetings. As such, for all practical purposes, the three issues remain multilaterally “untouchable” due to lack of consensus among the WTO’s 164 members.

Comeback

But, in an astonishing development, Azevedo has brought back these issues through a sleight of hand, said a trade negotiator who asked not to be quoted.

In a move that raises serious systemic concerns, the WTO Director-General took decisions without any specific mandate from any of the WTO bodies to rename the secretariat divisions on services and intellectual property.

Members were “informed” in the week of 6 June that the division on services is being rechristened as the “Trade in Services and Investment Division”, while the division on intellectual property will be called the “Intellectual Property, Government Procurement and Competition Division.”

The new division on intellectual property, government procurement and competition, according to the WTO website, “is responsible for the WTO’s work in trade-related intellectual property rights (TRIPS), government procurement and competition policy (it should be noted that substantive work in the latter area in the WTO has been on hold since 2004).”

(The division on intellectual property had already included a section on government procurement for specifically servicing “the Committee established under the [existing] plurilateral Agreement on Government Procurement and dispute settlement panels that may arise”.)

The decision to include competition policy in the intellectual property division is startling since “substantive work in the … area in the WTO has been on hold since 2004.” If competition policy has been on hold since 2004, did the WTO members now decide and has the WTO Budget Committee agreed that the division should monitor “developments at the international level and would be responsible for any further work in the WTO Working Group on the Interaction between Trade and Competition Policy, in the event that that body should resume its work”?

After the Doha Ministerial Conference, any additional work and the budget for it, even an expansion in activities of the WTO’s information division on the Doha Work Programme agenda, had to be approved by the Budget Committee, which insisted on having the official minutes of that Conference before it in order to give its approval.

It is also legally unclear as to what is meant by saying that competition policy “has been on hold since 2004”, because there was no decision to keep the work on hold. That competition policy was buried at the WTO’s fifth Ministerial Conference is well known, the trade negotiator said.

In a similar vein, the decision to include work on investment along with issues of trade in services is not legally justifiable as there is no formal decision by the members to consider investment as part of services. Investment, for example, can form part of trade in goods and even intellectual property. On what basis therefore has the Director-General decided to include investment in the work on trade in services without a proper discussion involving all 164 members, a negotiator who spoke to SUNS asked.

The “Singapore issues”

It is common knowledge that the three areas of investment, competition policy and government procurement – along with trade facilitation – constituted the four “Singapore issues”, which were introduced at the WTO’s first Ministerial Conference in Singapore in 1996. In the face of combined opposition from developing countries, the four issues were brought into the Doha Work Programme in 2001 on the condition that negotiations on each of the four issues would commence only on the basis of “explicit consensus” at the WTO’s fifth Ministerial Conference. The European Union, which was the principal demandeur for the four issues, tried hard to start negotiations at Cancun but gave up in the face of developing-country opposition.

Subsequently, the four issues were dropped until the United States, the EU and other developed and some developing countries which were part of the Colorado Group brought trade facilitation back into the 2004 July Framework agreement, promising the developing and the least developed countries that their core issues in agriculture and other areas of the Doha Work Programme shall be addressed on the basis of special and differential treatment and less than full reciprocity. Effectively, the three other Singapore issues – investment, competition policy and government procurement – were obliterated from the Doha Work Programme.

In the next 11 years between 2004 and 2015 in the Doha Round negotiations, the developing countries were forced to run in circles to secure minimal results in areas such as tackling trade-distorting domestic agriculture subsidies, addressing tariff peaks and tariff escalation, improving anti-dumping rules, and securing credible market access for the movement of short-term services providers in Mode 4.

After pocketing a binding and comprehensive outcome in the form of an agreement on trade facilitation at the WTO’s ninth Ministerial Conference in Bali in 2013, a handful of developed countries – the US, the EU and Japan – sought to torpedo the Doha Work Programme at the tenth Ministerial Conference in Nairobi in 2015. They were unable to get a consensus for ending the Doha Work Programme but, with some assistance from the secretariat, have been torpedoing any work on other measures post-Nairobi.

Now, the Director-General who helped these handful of developed countries in their efforts to put the Doha Work Programme to bed has quietly initiated work to bring in investment, competition policy and government procurement without multilateral consent, said a South American trade envoy.

Trade observers said that, following the example set by the US on the reappointment of a WTO Appellate Body member, the Director-General, whose current term will be ending next year, may face a similar experience. (SUNS8260)                                         

Third World Economics, Issue No. 618, 1-15 June 2016, pp10-11