TWN Info Service on WTO and Trade Issues (Mar17/04)
2 March 2017
Third World Network
   
Azevedo gets second term, South Africa to chair General Council
Published in SUNS #8413 dated 2 March 2017

Geneva, 1 Mar (Kanaga Raja) - The General Council of the World Trade Organisation (WTO) on Tuesday formally re-appointed Roberto Azevedo to a second four-year term as Director-General of the organisation.

Azevedo, the sole candidate for the position when nominations closed on 31 December 2016, will begin his second term of office on 1 September 2017.

The General Council also approved by consensus Ambassador Xavier Carim of South Africa as its Chair for 2017, and Ambassador Junichi Ihara of Japan as the Chair of the Dispute Settlement Body (DSB).

However, the outgoing Chair of the General Council, Ambassador Harald Neple of Norway, reported that there was a blockage with respect to the entire slate of Chairs of the other regular WTO bodies for this year.

According to trade officials, the Chair also reported that it has been difficult to come up with a replacement for Ambassador Vangelis Vitalis of New Zealand, the Chair of the Agriculture Committee in Special Session, who has left Geneva. A replacement has not yet been found.

Apart from the Chairs of the General Council and of the DSB, this is the first time that there has been a blockage on the entire slate of chairs of the other regular bodies, according to trade officials.

RE-APPOINTMENT OF AZEVEDO AS DG

At a media briefing after the General Council meeting on Tuesday, Azevedo, referring to his re-appointment, said that this was a great honour to him and pledged to continue to serve "all WTO members to the best of my ability, and to do all that I can to safeguard and strengthen the multilateral system itself."

Referring to the presentation he had made to the membership on Monday, Azevedo said that he made the case that the WTO is significantly stronger today than it was in 2013.

At that point the WTO had not delivered any major multilaterally negotiated outcomes but since then "we have achieved a run of important agreements. Within 100 days of taking office as DG, we agreed the Bali package which includes the Trade Facilitation Agreement, and that success belongs to members."

"Two years later we did it again. In Nairobi, we delivered a new package of measures including our biggest agricultural reforms. Development issues were also at the heart of both of these packages."

The DG also said that at Nairobi, a group of members struck a deal to expand the Information Technology Agreement.

"So this is a dramatic shift in gears. We also worked to bring the DDA to the fore, though of course progress was hard to come by. We worked hard and we tried every approach that we could think of but still we could not bridge the gaps between members' positions," he said.

Those gaps remain today, he pointed out, saying that the work must continue.

"These issues are critical for a large number of members and we must keep working to take them forward, and we need to maintain the momentum that we have built up."

"So we need to continue this habit of delivering. And we need to make incremental progress wherever and whenever we can. So it is encouraging that members are implementing the commitments that they make here and the entry into force of the TRIPS amendment [on access to essential medicines] last month and the Trade Facilitation Agreement last week are clear signs of that," he said.

"This is a sign that we are getting the system to work again and it is underlined by the speed of ratifications of the Trade Facilitation Agreement which only opened for ratifications two years ago in November 2014."

"As you know nothing happens overnight here but against the more than 11 years that it took to bring the TRIPS amendment into force, the TFA process has been completed very efficiently," he said.

"As we look forward, I think we can achieve much more. We must learn from the lessons that we got from Bali and Nairobi including, for example, from the innovative and flexible approaches that gave us the Trade Facilitation Agreement and we must seek to be more open, inclusive and transparent," said the DG.

Looking to MC11 in Buenos Aires and beyond, Azevedo said, "I want to see us moving further, faster across the board and particularly in support of the smaller players."

He envisaged that technical assistance and capacity-building will become increasingly important.

"I want to put more focus on this work to empower members so that they feel ownership of the system and this applies to the smallest and the least developed members the most."

"So we must keep strengthening all pillars of our work. For example, the dispute settlement system is performing well despite a huge caseload and we acted to deal with the queue of cases that had built up. So we fixed that but that doesn't mean that the situation is sustainable. We must ensure that the system will continue to respond in case we see a further rise in cases."

Azevedo further said: "So we have a lot of work ahead of us. These are challenging times for the multilateral trading system. Global economic growth is low. Trade growth is low. The threat of protectionism cannot be ignored. Multilateralism faces momentous hardships and we struggle with the persistent challenges of poverty, inequality and under-development."

"Now many feel excluded from the benefits of trade and it is being connected, wrongly I must note, with structural unemployment. We must respond to this. I think we must work harder to ensure that the benefits of trade reach more people especially in the most vulnerable countries."

"It seems to me in these challenging times that the value of mutually agreed global rules is evident as is the ability to resolve economic problems between nations according to those rules."

In his view, this organisation is more important than ever.

Asked about the trade policies of the US and what advice he would give Mexico about the renegotiation of NAFTA, Azevedo cited the article (in the Financial Times) that quoted the White House Deputy Press Secretary as saying, 'We aren't going to comment on trade policy until we have a USTR in place. It would be premature to say that the administration is committed to any specific policy until that point'.

Azevedo said that he entirely shared this position.

"So I would not be in a position to be commenting on any kind of specific policy on the part of an administration where the nominee for USTR has not even been confirmed."

"That's normally my main interlocutor. Once confirmed, I hope that we will have a fruitful dialogue with the new administration and with the new trade team. But until then I will refrain from commenting on any kind of policy that may or may not be put in place."

As far as bilaterals are concerned and the fact that maybe the US is unhappy with trade deals or agreements that were put in place in the past, the DG said, "the parties of those agreements or those undertakings are better placed to answer your questions than I am."

"What I would say is that normally in these situations the best way forward is dialogue."

Asked about Trump's 'America First' policy, Azevedo again said that it is difficult for him to comment on specific policies when they are not in place.

Asked whether the risk of a trade war is now bigger, the DG said: "I try to not speculate about trade wars because they are serious. I said before that we should not be talking ourselves into a trade war."

"We saw examples in the past where unilateral actions on all sides ended up by wiping out two-thirds of global trade in just three years. And we saw what happened after that in terms of economic depression, and also in terms of conflict among nations."

"So I hope we can avoid anything that even remotely resembles that," he said.

Asked about the WTO dispute settlement system which is being seen as being extremely slow, the DG said that if it does exist - the perception that the system is extremely slow - it is mostly because the headlines usually confine themselves to those issues which are very difficult to be handled.

At the end of the day, he said, "we have to end up with a mutually agreed solution and there is nothing that the system can do to impose that mutually agreed solution on members. It recommends. It makes determinations. It says which actions are in violation of WTO rules and which ones are not. But it stops there."

At that point in time, members then have to talk to each other and find solutions amongst themselves. If they don't want to find a solution, there is nothing that the system can do to force a solution on them.

But that is the minority of the situations. Ninety percent of all WTO disputes have been implemented, and ten percent are still ongoing, in the sense that a mutually agreed solution has not been found yet, he said.

The DG maintained that compared to other international courts and international tribunals, the WTO is by far the fastest dispute settlement system that there is out there.

The DG was asked about the fact that four years ago in 2013 several developing countries including India had given maximum support to Azevedo (for his first term) and that last week on 23 February (informal HOD meeting), India had levied several charges against the manner in which things are happening in the WTO under his leadership, mentioning in this context selective visibility, the way meetings are conducted, the way the negotiating climate is vitiated, and the way the Secretariat tends to be the proponent of the issues of the developed countries. In this regard, the DG was asked what lessons he would take for the next four years.

In response, the DG said that he was in New Delhi a few weeks back "and I heard none of that whatsoever. I heard comments about the fact that the Secretariat may have been giving more visibility to some issues than others, and they took exception to that."

"What I have to say about that is that not all members want the same thing in the WTO. There are a very large number of developed and developing countries who want to see those issues being discussed, who want to have a conversation about many issues. There are others though."

"Now it is my job as Director-General to ensure that a fair chance for any member and for all members to discuss whatever they want to discuss. I am not going to be precluding conversations. I am not selective on conversations. I try to help all those who ask for help," the DG maintained.

The DG was also asked about the fact that when he was in New Delhi he had pointed out specifically that issues such as public stockholding and SSM are all proponent-driven issues and that the proponents have to talk while on e-commerce or micro, small and medium sized enterprises, which a small number of countries, primarily the developed countries, are pushing, the DG is acting as a proponent here, putting up positions at the G20 meetings. There seems to be an inconsistency in what he said in New Delhi and what he actually does here in Geneva.

Azevedo replied that it was actually a quote from an Indian newspaper, that he claimed, misrepresented what he said.

"I did not say that the proposals were member-driven with regard to public stockholding or any of those issues. I said that all WTO issues are member-driven, and any proponent that wants to push his issue has to find traction and engagement on the part of other members. All issues. I was not referring to one or two issues in specific," he maintained.

"All the issues on the table will have to be the responsibility of the proponents. They will have to get traction. They will have to get engagement on the part of the other members. They will have to convince the other members that they have to talk about this. And this applies to everything. And by the way, I have said this consistently in every single meeting that I participated."

"Now if they misconstrue what I said over there, I don't have responsibility for that," said Azevedo.

Asked if he told the Bild newspaper that without trade America will never be great again, the DG said that he did not recall saying that textually. "But I think American development and greatness passes through trade. I have no doubts about that in my mind whatsoever."

Asked about what issues he sees as the most promising for an outcome at MC11, the DG said that the promising issues are the issues that make progress. At this point in time, he had told the informal HOD meeting, all the issues were lagging behind.

"And I didn't see a whole lot of progress in any of the issues and that proponents needed to do better. If they wanted to actually have deliverables by MC11 they would have to put proposals on the table. They would have to do better in terms of clarifying the issues and moving from a conceptual conversation to a more specific conversation where that is needed."

Asked about the blockage over the slate of chairs for this year and whether this will affect the work for MC11, Azevedo pointed out that this process is being conducted by the General Council Chair.

The DG said that this is not the first time we have difficulties in selecting the chairs. There are a number of things that go together with that, which is geographical representation, nominations by groups, and rotation as well.

"It is normally and usually difficult to get the slate done," he said, adding that he had urged members to show flexibility so that we can get it done as quickly as possible.

He pointed particularly to areas "where we have important conversations and negotiations ongoing, for example, the case of agriculture. If we don't have a chair, that could have an impact on the development of the work, and that could affect the ability to get outcomes in time for the ministerial conference in Buenos Aires."

Q&A WITH THE DG

Earlier on Monday, under the first agenda item on the appointment of the Director-General, Azevedo made a presentation and this was followed by a Q&A session.

Guyana (for the ACP), Colombia, Mexico, Chile, Luxembourg, Japan, Pakistan, China, the United States, Uganda, Spain, Argentina, Montenegro, Korea, Thailand, Ukraine, Finland, Cameroon, Uruguay, Bulgaria, and Canada posed questions to the Director-General.

[The General Council Chair had informed members on 17 February about the process that he was going to adopt for the selection of the DG. This "compressed" process had caused some concern among the developing and least-developed countries, according to several trade envoys. See SUNS #8407 dated 22 February 2017.]

According to trade officials, Guyana, on behalf of the African, Caribbean and Pacific (ACP) group, asked the DG that as he prepares for his second term in leading the organisation, what will he do as the DG and the Chair of the Trade Negotiations Committee (TNC) to engage and activate development deliverables to support economies that are lagging behind.

Azevedo said that development has to be first and foremost, the issue that is taken up in all of our conversations. It has to be at the centre. The Doha Development Agenda (DDA) has had development woven through it. And we can't lose what has been done there, he said.

He highlighted the importance of trade-related technical assistance and capacity-building.

There are too many issues right now where there is a large degree of asymmetry, where countries are indeed lagging behind, and e-commerce is one of these issues.

It is very difficult to have a discussion on e-commerce when you have many members who do not really even have connectivity, he said.

Implementation of WTO commitments - those taken at ministerial conferences, for example, the LDC package, duty-free quota-free market access for LDC products (DFQF), rules of origin, cotton - are things which absolutely must be resolved in the course of the coming years.

He said that he understands that these are difficult issues. Rules of origin is a tremendously difficult issue, but it needs to be tackled, Azevedo added.

Luxembourg asked the DG as to what are his main achievements and what are his main disappointments.

The DG replied that the main achievement was to put the WTO back on the map. With the results in Bali, things changed, and after Nairobi they changed even more. This means that now businesses, NGOs and academics have shown interest that had been lagging for many years.

He said the WTO is now even in more demand but for the wrong kinds of reasons because there is a lot of anti-trade, anti-globalisation (sentiment) and everyone wants to know what we are going to do about it.

Azevedo said that there is only so much that we can do. The members have got to get their act together and they have to make the case for trade as well. He said that he will be active in making the case for trade, but we need to do this together.

Japan pointed out that there are 164 members and that it is not so easy to get things done in a multilateral context. It asked the DG how he felt about amongst others plurilateral initiatives.

The DG replied that multilateral outcomes are to be prioritised. We should try do as much multilaterally as we can.

But doing things multilaterally is not easy. If you are going to have an agreement that is multilateral, you need to have flexibility so that you can take into account the differences among the members, he said.

China asked what specific actions will Azevedo take to try and counter the rising levels of new protectionism.

The DG said that it is a joint effort. We all must do our part. The members need to take the lead on this too. You are all opinion makers, he said, adding that their word counts. So use your word.

We will be speaking up for trade, Azevedo said, noting that in Hangzhou (the G20 summit), many members and leaders said that they were extremely concerned about what they were hearing.

The United States said that it does not consider trade remedies to be protectionist. Anti-dumping (AD) duties and countervailing duties (CVD) are used to address unfair trade practices. Trade remedies are an essential part of the global trading system. How does he view these kinds of actions, the US asked the DG.

In response, the DG said that members have the right to use these tools. Members understand that the rules allow for these practices. And we need to have more discussion.

One of the things that need to be done is that people need to discuss how these things are applied so that people understand them, and this can help reduce trade frictions.

There has been a variety of papers that have been put forward that gives some idea as to how these anti-dumping and countervailing measures might be applied in the most effective, transparent rule-oriented manner.

The DG reiterated that anti-dumping and countervailing duties are not protectionism. And very often the country that has these duties applied is the one that is adopting practices that are not fair.

Uganda (represented by Ambassador Christopher Onyanga Aparr) asked the DG: There is a growing perception that you, as Chair of the Trade Negotiations Committee (TNC), have tended to lean heavily towards the developed countries. What do you intend to do differently during your second term that would help address the needs, concerns and interests of developing countries and especially the LDCs?

According to trade officials, Azevedo said he disagreed with the premise of the question. Developing countries and LDCs have been big beneficiaries both from Bali and Nairobi, he maintained.

The Trade Facilitation Agreement is going to be very positive for developing countries. It was a fantastic outcome for them, he said. The agreement on export competition is also a fantastic outcome for developing countries.

He said that he has a very clear conscience on this. But it is true that nobody gets everything they want here, but they are getting the best of what is out there.

After Bali, there was a full agenda for LDCs. We have to work to get this done, whether it is DFQF or rules of origin.

These are very important and we also need to look at the supply-side concerns, that even with the opportunities, the capacity constraints for producing remain in many of the world's poorest countries, he said.

Developing countries and LDCs were the biggest winners from Bali and Nairobi, the DG claimed.

Uganda then asked: Is technical assistance and capacity building sufficient compensation for the adoption of legally binding multilateral disciplines by LDCs even if it would lead to loss of policy space for, inter alia, structural transformation and industrialisation?

Azevedo said that there have been big gains but more needs to be done. He pointed to the Sixth Global Review of Aid for Trade, saying that when the programme started in 2006, the annual disbursements were $20.8 billion, and in 2014 they were $42.8 billion.

The Trade Facilitation Agreement Facility (TFAF) has been very helpful. The founders of the WTO did not consider capacity-building to be one of the columns of the work of the WTO, but now everyone acknowledges that this is a major part of our mission, he said.

Argentina, in reference to lessons learned from Bali and Nairobi, asked the DG what lessons have been learned for MC11 in Buenos Aires, in terms of what should be done the same and what should be done differently.

The DG replied that on the negotiating process, Bali was done relatively well but it was different for Nairobi.

In Bali, he said that there was a handful of issues under discussion - public stockholding, trade facilitation, LDC issues, cotton - and we were close when we left Geneva. At Nairobi, this was not the case.

In Bali, there was no need for big meetings, there were some one-on-one delegation by delegation discussions and a few bilaterals here and there. But Nairobi was difficult.

He said that he had warned members about this before they left Geneva for Nairobi.

He is worried about it for MC11 as well. I don't see a lot of progress. We don't need to despair just yet but we must walk a good deal of the road before we get to Buenos Aires, he said.

Azevedo added that it is very important that we continue with a successful outcome that delivers. We've had two successful ministerials in a row. We need to maintain momentum.

But he said that Buenos Aires in any event will not be the end of the road. It could be that we make progress in (some) areas and lock that progress in and then we move on.

We need to move forward soon and we need to start looking at delivery-oriented outcomes in the coming weeks and months, said Azevedo.

We need to walk a good deal of the way to an outcome here in Geneva and at this point we have not yet even walked 20% of the road yet, he added.

Thailand asked the DG what was his feeling about trying to conclude issues like domestic support and market access in agriculture. Have these issues been sidelined by those who are seeking to talk about 'new issues' like e-commerce and micro, small and medium sized enterprises?

The DG replied that we have to move ahead on the Doha issues. They are extremely important.

He has been trying to push this forward but one of the problems with agriculture is that we do not have a chair.

He said that you - the members - have the power to get a chair, so do it.

The WTO spent all of 2015 trying to address the three pillars of agriculture and at MC10 in Nairobi, they could harvest export competition, but the other two issues were absolutely impossible, said Azevedo.

There could be space for some progress possibly in trade-distorting domestic support. In agriculture market access, he has not seen too much progress or heard too much new, he said.

We have to align the stars and the way to do that is to get a chair, he added.