TWN Info Service on WTO and Trade Issues (Sept16/03)
13 September 2016
Third World Network

G20 affirm DDA on post-Nairobi work, but open door to RTA issues
Published in SUNS #8310 dated 13 September 2016

Geneva, 7 Sep (D. Ravi Kanth) -- Major developing countries led by China have ensured, in the Hangzhou communique issued by G20 leaders, strong language on the post-Nairobi work program, "with development at its center" for addressing the remaining "DDA [Doha Development Agenda] issues" on a priority basis at the World Trade Organization, trade envoys told the SUNS.

After their two-day meeting which concluded in Hangzhou, China, on Monday (5 September), the G20 leaders reiterated their commitment to address the unresolved DDA issues in "agriculture, including all three pillars of agriculture (i. e. market access, domestic support and export competition), non-agricultural market access, services, development, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and Rules."

Despite their sustained efforts for finalizing the post-Nairobi work program based on the remaining DDA issues, developing countries have faced over the past eight months numerous hurdles and roadblocks because of opposition from the US and other industrialized countries.

The US, for example, has vociferously maintained that it will not negotiate the DDA issues because of lack of agreement among members to continue with the Doha Round of negotiations at the WTO's tenth ministerial conference in Nairobi, Kenya, last year, according to trade envoys familiar with the negotiations.

The US has also blocked efforts to negotiate on the remaining DDA issues in the market access for industrial goods, rules, and services over the past eight months on grounds that members will have to agree to "new approaches" before commencing negotiations.

The US indicated its plurilateral approaches for issues in Doha rules dossier, particularly on fisheries subsidies, while setting aside other issues concerning improvements in anti-dumping provisions, trade envoys said.

Other major industrialized countries such as the European Union, Australia, Canada, Switzerland, and Norway among others have signalled their intention to continue work on the Doha issues without insisting on any new approaches, trade envoys maintained.

Effectively, work on the post-Nairobi work program with DDA issues at its center remains nearly paralysed over the last eight months at the WTO.

Against this backdrop, the leading developing countries in the G20 such as China, India, Turkey, and South Africa among others succeeded in bringing back development-centered issues in the DDA in the Hangzhou communique.

The fact that the US had to agree to include the "DDA" issues in the leaders' communique is significant.

Whether the US will actually participate in shaping the post-Nairobi work program based on these issues, however, remains to be seen, said a trade envoy who asked not to be quoted.

In paragraph 26 of the Hangzhou communique, the G20 leaders reiterated their commitment "to shape the post- Nairobi work with development at its center and commit to advancing negotiations on the remaining DDA issues as a matter of priority, including all three pillars of agriculture (i. e. market access, domestic support and export competition), non-agricultural market access, services, development, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and rules."

For agreeing to inserting language on the DDA issues, the US and other industrialized countries forced the developing countries at the Hangzhou summit, to agree to include language such as "we also note that a range of issues may be of common interest and importance to today's economy, and thus may be legitimate issues for discussions in the WTO, including those addressed in regional trade arrangements (RTAs) and by the B20," according to trade envoys familiar with the negotiations.

Effectively, it opens the door slightly for bringing the RTA issues into the WTO even though a large majority of members are not part of those agreements such as the Trans-Pacific Partnership or other major regional agreements, said an envoy of a G20 member country.

More important, the Hangzhou communique paves the way for discussing issues such as the electronic commerce work program when it says, "we will work together with all WTO members with a sense of urgency and solidarity and with a view to achieving positive outcomes of the MC11 and beyond and we will work together to further strengthen the WTO."

In short, major industrialized countries led by the US and the EU along with their developing country partners such as Singapore, Hong Kong, Costa Rica, Mexico, and Korea among others will make a sustained effort to either launch or conclude negotiations on e-commerce at the eleventh ministerial meeting, the envoy maintained.

The language on global trade issues in the communique issued by Group of 20 leaders from Hangzhou, China on Monday (5 September) is a grand "compromise" between developing countries led by China, and the industrialized countries, particularly the United States, the envoy argued.

The industrialized countries also succeeded in introducing language on the important role "that bilateral and regional trade agreements can play in liberalizing trade and in the development of trade rules, while recognizing the need to ensure they are consistent with WTO rules."

Effectively, this would be tantamount to bringing disciplines agreed in bilateral and regional agreements such as the rules on e-commerce in the TPP agreement into the WTO work program, a developing country trade envoy said.

The US, for example, had suggested 15 concepts in the e-commerce work program at the WTO which were largely based on what was agreed on e-commerce in the TPP agreement, the envoy suggested.

The US proposal called for "prohibiting digital customs duties", "enabling cross-border data flows", "promoting a free and open Internet", "preventing localization barriers", "barring forced technology transfers", "protecting critical source code" and so on.

The concept of "preventing localization barriers" calls on "companies and digital entrepreneurs relying on cloud computing and delivering Internet-based products and services should not need to build physical infrastructure and expensive data centres in every country they seek to serve. Such localization requirements can add unnecessary costs and burdens on providers and consumers alike. Trade rules can help to promote access to networks and efficient data processing".

Leading developing countries such as China, India, and South Africa among others want foreign companies to build physical infrastructure as well as data centers for availing their services instead of depending on cloud computing in which the US maintains a near monopoly, the envoy argued.

Further, the continued differences in the ongoing negotiations on the plurilateral initiative on environmental goods agreement between China on one side, and the US and its allies on the other spilled over into the G20 leaders' communique.

The two sides struck a compromise to include language that "seeks to eliminate tariffs on a broad range of environmental goods by the end of 2016," said an EGA trade envoy of the G20 (see SUNS #8305 dated 1 September 2016).

The Hangzhou communique says: "G20 Environmental Goods Agreement (EGA) participants welcome the landing zone achieved in the WTO EGA negotiations, and reaffirm their aim to redouble efforts to bridge remaining gaps and conclude an ambitious, future-oriented EGA that seeks to eliminate tariffs on a broad range of environmental goods by the end of 2016, after finding effective ways to address the core concerns of participants."

China also agreed to language on excess capacity in steel and other industries as well as subsidies and other types of support from governments.

The communique says: "we recognize that the structural problems, including excess capacity in some industries, exacerbated by a weak global economic recovery and depressed market demand, have caused a negative impact on trade and workers. We recognize that excess capacity in steel and other industries is a global issue which requires collective responses. We also recognize that subsidies and other types of support from government or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention."

In short, while the developing countries held their ground on the DDA issues as reflected in the Hangzhou communique, they conceded ground on bringing RTA-related issues into the WTO through the backdoor.

"The developing countries must now ensure that negotiations on DDA issues are conducted on the existing Doha work program before they agree to discuss the new issues," said a trade envoy from a G20 country. +