TWN Info Service on WTO and Trade Issues (Dec17/22)
13 December 2017
Third World Network

WTO, from negotiating to "litigation-centered" body, complains US
Published in SUNS #8595 dated 13 December 2017

Buenos Aires, 12 Dec (D. Ravi Kanth) - The United States on Monday (11 December) remained isolated at the World Trade Organization's eleventh ministerial conference (MC11) in Buenos Aires, as it voiced its unilateral stance that the WTO is transformed from a negotiating body to "a litigation-centered organization" where members think they can win concessions through lawsuits which they can never get at the negotiating table.

In sharp contrast, many ministers who spoke at the plenary session continued to accord primacy to the WTO for bringing multilateral outcomes for all members.

"It is the US versus 163 countries but the US rules the roost at the organization," said a trade minister who asked not to be quoted.

Another significant development at the end of the second day of MC11 was the manner in which the European Union along with other developed countries and several developing countries orchestrated support for electronic commerce (a new work programme leading to negotiating rules).

The proponents made it appear as though all roads in Buenos Aires lead to electronic commerce, said several participants who asked not to be quoted.

But trade ministers from India, South Africa, and a large majority of developing and poorest countries sharply opposed any change/departure from the 1998 e-commerce work program.

The developing and poorest countries stated their opposition to what they called new issues while demanding the resolution of unresolved issues in the Doha work program. (See SUNS #8594 dated 12 December 2017).

The USTR, Ambassador Robert Lighthizer, issued a bleak statement in which he emphasized the institutional reform proposals, particularly transparency and notification requirements.

Lighthizer said many members are concerned "that the WTO is losing its essential focus on negotiation and was becoming a litigation-centered organization."

"Too often members seem to believe they can gain concessions through lawsuits that they could never get at the negotiating table," he said, asking "whether this is good for the institution and whether the current litigation structure makes sense."

[Trade analysts and observers, who have been following and monitoring the WTO and its predecessor GATT 1947, however, point out that it was the United States that began the "litigation" route, rather than the "negotiations" route right from the beginning of the WTO.

[For example, when the question of quantitative restrictions (QRs) maintained by India for balance-of-payments (BOP) reasons, and the issue of which QRs India could continue and which to remove and the pace of removal was under negotiations in the BOP Committee, it was the US that raised a dispute and insisted on the issue being decided through the dispute settlement process - panel and appellate proceedings.

[The WTO's legal division was then headed by a US national, and the Appellate Body Secretariat by a Canadian, and the US was confident that it would win its dispute with help from the two secretariats in their roles of servicing panel and AB proceedings. India's protests and complaints, backed by former GATT law officials, were brushed aside. SUNS]

Ambassador Lighthizer, however, remained totally silent on the outcomes that are being considered at Buenos Aires.

In his extremely brief statement, he also challenged the current architecture of special and differential treatment (S&DT) flexibilities at the WTO saying members need to clarify their understanding of "development within the WTO."

"We cannot sustain a situation in which new rules only apply to the few, and that others will be given a pass in the name of self-proclaimed development status," he said.

"There is something wrong, in our view, when five of the six richest countries in the world presently claim developing country status," said Ambassador Lighthizer, implying that China, India, Brazil, South Africa, and Indonesia among others are continuing to avail special and differential flexibilities.

[China, India, Brazil, South Africa and Indonesia however do not fall within the World Bank or UN ranking of "five richest countries". that position is ocupied by some Gulf states and Singapore. SUNS]

"Indeed, we should all be troubled that so many Members appear to believe that they would be better off with exemptions to the rules," Ambassador Lighthizer maintained.

"If in the opinion of a vast majority of Members playing by current WTO rules makes it harder to achieve economic growth, then clearly serious reflection is needed," he said.

The US said "it is impossible to negotiate new rules when many of the current ones are not being followed."

Therefore, the US wants "a discussion on the need to correct the sad performance of many Members in notifications and transparency".

"Some Members are intentionally circumventing these obligations, and addressing these lapses will remain a top US priority," Ambassador Lighthizer emphasized.

India's commerce minister Suresh Prabhu said that special and differential flexibilities are at the core of the multilateral trading system.

He said while India is notching high economic growth, it also faces massive poverty and underdevelopment.

The US, Lighthizer said, wants to revitalize "the standing bodies to ensure they are focused on new challenges, such as chronic overcapacity and the influence of state-owned enterprises," aiming a blow at China.

Ambassador Lighthizer also mentioned about "working closely with many Members in committee and elsewhere to address real-world problems such as SPS barriers."

"As President Trump said in his UN speech, institutions like this function best when all sovereign nations acting in their own best interest pull together and find ways that permit us all to prosper," he said, suggesting that multilateral trade liberalization is not a priority for the US.

He said that the US wants to work with all members for "using the WTO to create rules that will lead to more efficient markets, more trade and greater wealth for our citizens. Such outcomes will build public support not only for open markets, but for the WTO itself."