TWN Info Service on UN Sustainable Development (May22/01)
2 May 2022
Third World Network

WTO: DG espouses reforms based on Northern priorities inimical to South
Published in SUNS #9566 dated 2 May 2022

Geneva, 29 Apr (D. Ravi Kanth) – As countries are finalizing their positions on the deliverables for the WTO’s 12th ministerial conference (MC12) scheduled for 12-15 June, the World Trade Organization’s director-general has stepped up her campaign to reform the 164-member intergovernmental, member-driven, and rules-based multilateral trade organization ostensibly to address the 21st century challenges.

After meetings with the United States Trade Representative (USTR), ranking members of the House Ways and Means Committee as well as the Senate Finance Committee and other trade lobbies in Washington DC on 28 April, the DG listed the challenges that must be addressed.

They include the issue of climate change, battling the COVID-19 pandemic an d warding off a global food crisis created by the war in Ukraine.

However, the DG, Ms Ngozi Okonjo-Iweala, did not elaborate on how these challenges would be addressed and what rules would need to be changed in order to accomplish results.

But, in her recent statements, Ms Okonjo-Iweala called for a “new multilateralism” that would require substantial changes to the rules enshrined in the Marrak esh Agreement in order to do away with the principle of consensus-based decision-making so as to enable members to pursue plurilateral negotiations at the WTO.

The DG observed that the Multilateral Trading System (MTS) is a global public good, cautioning that a retreat from multilateralism into a system of competing and adversarial trading blocs would diminish the flow of technology, create insufficiencies and shave as much as 5% off global economic growth.

The DG urged WTO members to pursue a policy of “re-globalization” which use s the trading system to bring in those who have been left behind.

Apparently, during her meeting with the USTR, Ambassador Katherine Tai, in Washington DC, the DG discussed how to arrive at an agreement on the WTO’s response to the COVID-19 pandemic including the intellectual property component, on curbing harmful fisheries subsidies, and on efforts to reform the organization.

She also discussed with the USTR the non-mandated issues, including industrial subsidies, which are at the core of the Group of Seven (G-7) industrialized countries’ trade agenda.

But her omission of the issue of agriculture in her statement raises doubts as to whether anything substantial, particularly on the permanent solution for public stockholding (PSH) programs for food security, could be accomplished at MC12.

Ms Okonjo-Iweala said that she discussed with the US Treasury Secretary, Ms Janet Yellen, WTO reform, climate change, the global economy and the disruption of global supply chains brought about by the COVID-19 pandemic and the war in Ukraine.

She said that her discussions on US Capitol Hill, which houses both the House of Representatives and the Senate, revolved around the reform of the dispute settlement system and how best to move forward on intellectual property issues pertaining to access to vaccines against the COVID-19 pandemic.

However, she did not dwell on the issue of the leaked IP text concerning the TRIPS waiver.

She underscored her commitment to reform of the WTO during the meetings, without revealing what aspects of the reforms she had discussed with member s of Congress.

The DG’s incursion into these issues seems to be a violation of her functions under Article VI:4 of the Marrakesh Agreement.

“CRYPTIC” STATEMENT BY USTR

In contrast to the DG’s rather overly optimistic statement, the USTR, Ambassador Tai, issued a somewhat “cryptic” statement after her meeting with Ms Okonjo-Iweala.

The USTR said that the DG and she “agreed that the WTO needs to show that it can be a relevant force for good in the lives of all people.”

According to the statement, they discussed the COVID-19 pandemic and the ongoing discussions among WTO Members to reach a meaningful outcome on the pandemic response.

The USTR said that she stressed her commitment to continued engagement with members of Congress and stakeholders as the WTO works to break the deadlock on this issue (the WTO’s pandemic response) and get as many safe and
effective vaccines to as many people as fast as possible.

According to the USTR, they also discussed “the upcoming 12th Ministerial Conference, global food security concerns, and broad supply chain challenges in key sectors.”

It remains unclear whether there is a convergence of views on the leaked IP text or the level of US ambition in fisheries subsidies, agriculture, and even WTO reforms, particularly in making the WTO suitable for pursuing plurilateral negotiations without any prior approval by all the members.

LDCs OUTLINE THEIR VIEWS ON WTO REFORM

Coincidentally, on the day that the WTO DG and the USTR discussed the proposed WTO reforms, the LDCs put forth their views on what must be included in these reforms.

In a revised proposal (Job/GC/223/Rev.1) titled, “LDC Views on WTO Reform Discussions and Proposals,” the LDC group underscored the need for ensuring “inclusive negotiating processes and consensus-based decision-making” as well as the right to “access promptly all documents examined during the negotiations”.

The LDC group, led by Chad, said all discussions in the run-up to MC12 “should take place under the auspices of the General Council in its dedicated sessions led by the General Council Chair.”

The LDC members emphasized the importance of the following principles regarding discussions and proposals, saying that WTO reforms should be base d on the following objectives:

i. Take full account of the widespread capacity constraints of LDC Members, in the levels of obligations and implementation expected of them;

ii. Ensure inclusive negotiating processes and consensus-based decision-making; and that whatever the negotiating format, all WTO Members have the right to access promptly all documents examined during the negotiations;

iii. Ensure that proposed reform measures, including those related to the provision of technical assistance to LDCs, help to effectively and sustainably address their structural capacity constraints in order to enable them to meet their commitments;

iv. Guarantee the preservation and improvement of the benefits granted to LDCs in terms of the legal and procedural flexibilities contained in WTO agreements and decisions;

v. Observe Article XI.2 of the Marrakesh Agreement that LDCs “will only be required to undertake commitments and concessions to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capabilities”;

vi. Ensure that relevant discussions in WTO Councils and Committees contribute to strengthening the monitoring, and implementation, of all decisions taken in favour of LDCs, and to achieve more results that positively impact their economies;

vii. Consider the capacity limitations of LDCs and allow them to continue with LDC-specific flexibilities for an additional period of time for smooth transition after graduation from the LDC category, in line with the relevant provision s of the resolutions adopted by the UN General Assembly;

viii. Extend sufficient flexibility to the acceded LDC Members in taking needful policy decisions, as and when required; and

ix. Explore additional flexibilities and complementary resources within the framework of special and differential treatment.

As regards the Appellate Body reform, the LDC group views “a functioning dispute settlement system, including fair and effective appellate review, a s essential to the role of the WTO.”

It called on members to “resolve the impasse on the Appellate Body through the nomination of its members at the earliest time possible.”

It urged members to “avoid creating rules and procedures that impose administrative burdens and additional complexity that would disproportionately affect potential LDC parties or third parties in disputes in any further discussions on Appellate Body reform.”

More importantly, the LDC group sought the WTO Secretariat’s “legal advice, and assistance to that LDC Member during each stage of a dispute settlement proceeding, including additional flexibilities and resources for LDCs.”

On the issue of transparency, the LDC group argued that while it recognizes that “effective transparency and notification requirements are part of the backbone of the WTO,” the developed country members should be prepared to lead by example.

The group underscored the need for “technical and financial assistance to fulfill their notification and transparency obligations. Conditions placed on making requests for help are also tantamount to new obligations and creating burdens.”

Commenting on the functioning of the different WTO bodies, the LDC group said it welcomes the Secretariat’s recent ongoing work on a “one-stop-shop” WTO Notification Portal.

The group said it “does not support the imposition of punitive measures”, as was suggested by the United States in the past.

Finally, the LDCs said “with respect to Ministerial Conferences, the LDC Group supports full transparency and inclusivity in decision-making in the preparation and organization of the conferences both in terms of process and substance. Multilateral approaches should be encouraged with respect to the negotiation of possible agreements.”

Earlier, on 26 November 2021, India had also submitted a draft ministerial decision (Job/GC/287) on “WTO Reform”, suggesting what needs to be discussed, under the auspices of the General Council, on ways to improve the functioning of the WTO.

India suggested the following:

i. enhancing the capacity of the WTO to perform its function as the forum for negotiations among all its Members concerning their multilateral trade relations as collectively decided by the Ministerial Conference, in accordance with Articles II.1 and III.2 of the Marrakesh Agreement Establishing the World Trade Organization;

ii. facilitating the effective participation of developing and least-developed Members in the multilateral trading system and its decision-making process, including through precise, effective and operational special and differential treatment in current and future rules;

iii. enhancing inclusiveness and transparency across the entire functioning of the WTO, taking due regard of limited resources and institutional capacities available to developing countries and least-developed countries;

iv. addressing the challenges facing the WTO dispute settlement system;

v. safeguarding the multilateral trading system from fragmentation and upholding the founding principles under the Marrakesh Agreement Establishing the World Trade Organization.

India said that any steps or outcomes under this review shall be consistent with the following principles:

i. not alter, or in any manner affect, Members’ rights and obligations under WTO Agreements and agreed mandates;

ii. preserve the principles and objectives of the multilateral trading system as set out in the Marrakesh Agreement Establishing the World Trade Organization an d its multilateral trade agreements;

iii. be organized so as to enable the full, effective and equal participation of developing and least-developed countries in recognition of the limited resources and institutional capacities available to them;

iv. take into account the development and policy space needs of developing and least-developed countries.

India said the General Council shall present a report to the 13th Ministerial Conference on the status of the review.

In short, the battle over WTO reforms seems to be fraught with colliding narratives between the Northern countries, who are being supported by the DG, and the developing and least-developed countries who are calling for inclusive reforms without undermining the Marrakesh Agreement.

It remains to be seen whether the developing and least-developed countries will be able to avert the danger of turning the WTO on its head by the Northern countries, with their proposals that appear to strike at the heart of the Marrakesh Agreement.