TWN Info Service on WTO and Trade Issues (Feb18/05)
2 February 2018
Third World Network

Major ICs step up efforts to smuggle E-com pluri at WTO
Published in SUNS #8610 dated 30 January 2018

Davos, 29 Jan (D. Ravi Kanth) - Major industrialized countries and their developing country allies have stepped up their efforts to smuggle-in plurilateral negotiations on electronic commerce by stealth at the World Trade Organization while erasing the unresolved issues of the Doha multilateral trade agenda, several trade ministers and envoys told SUNS.

An early indication of what is in the offing on the plurilateral project of the major industrialized countries, including the United States, on e-commerce, came at an informal trade ministerial summit on Friday in Davos on the margins of the annual World Economic Forum (WEF).

Under the dubious slogan of a "political dialogue", major industrialized countries and their allies are attempting to bring plurilateral negotiations on e-commerce by ignoring the 1998 work program which was multilaterally agreed by all members, said a trade envoy who asked not to be identified.

During the three-hour meeting, trade ministers from industrialized countries and their developing country allies pressed in chorus for plurilateral negotiations in e-commerce.

While some of the industrialized countries present at the meeting also flagged other issues - investment facilitation and disciplines for micro, small, and medium enterprises (MSMEs) - the United States Trade Representative Ambassador Robert Lighthizer said the plurilateral route is not viable for all areas of rule-making.

Ambassador Lighthizer said only e-commerce is the suitable candidate for plurilateral negotiations, said a participant who asked not to be quoted.

South Africa and India among others demanded prior multilateral consensus before approaching any plurilateral initiatives on new issues.

South Africa's trade minister Rob Davies who spoke before Ambassador Lighthizer said pursuing plurilateral initiatives without multilateral consensus can also be easily replicated for improving special and differential flexibilities and securing policy space by developing countries in other areas.

Davies referred to the proposal for improving special and differential flexibilities mooted since 2001 by more than 100 countries of the G90 group.

A large number of trade ministers and envoys present at the meeting demanded an immediate resolution to the continued impasse at the Appellate Body in which the US has repeatedly blocked filling of three vacancies on unreasonable grounds, said a trade minister after the meeting.

But the United States Trade Representative (USTR) Ambassador Robert Lighthizer, who attended the meeting, remained stoically silent on the calls issued by almost all participants during the meeting, said another trade minister who asked not to be quoted.

Many industrialized countries, including the USTR, raised the issue of "differentiation" of developing countries - "the question of how to take into account different and evolving levels of development" of members.

The USTR said, "exemptions are not the best way forward, particularly among the biggest economies."

Many participants at the meeting also emphasized the importance of reaching an agreement on fisheries subsidies by end 2019 but the USTR cautioned that it cannot accept a low-level ambition in the final outcome.

South Africa, India, China, Thailand, Saudi Arabia, and Turkey among others called for resolving the unfinished issues.

But major industrialized and several developing countries did not mention the Doha trade negotiations at all.

During the interventions, Korea's trade minister, Mr. Hyun Chong Kim, voiced his concern over the punitive US safeguard duties on solar cells and large washing machines, and said that members must ensure that trade remedies such as anti-dumping, countervailing, and safeguard actions are consistent with the WTO rules.

Participants, including the WTO director-general Roberto Azevedo, welcomed India's initiative to convene an informal ministerial meeting on March 19.

The three-hour meeting attended by trade ministers from the US, Argentina, Australia, Costa Rica, the European Union, Guyana, Japan, Korea, New Zealand, Nigeria, Norway, Pakistan, Saudi Arabia, Turkey, and trade envoys from China, India, Singapore, Mexico, Kenya, Indonesia, Colombia, and Cambodia, brought to the fore divergent views among members on both old and new issues such as plurilateral initiatives for electronic commerce, disciplines for micro, small, and medium enterprises, and trade and gender issues.

WTO director-general Roberto Azevedo said there is a need for "political dialogue on all issues".

The challenge is how to get a "meaningful agreement based on multilateral consensus and for this trade-offs are important to make it possible," Azevedo said, according to a participant who asked not to be quoted.

The Swiss economy, education and research minister Johann N. Schneider-Amman who hosted the meeting issued a chair's summary at the end of the meeting.

According to the summary, ministers and trade envoys who spoke at the meeting expressed "disappointment" about lack of further convergence and outcomes at the WTO's eleventh ministerial conference in Buenos Aires last month.

"With reference to the decision on Fisheries Subsidies, a need to complete the negotiations by 2019 was emphasized frequently [during the meeting]," the summary noted.

"Moreover, in many interventions, the adoption of Joint Ministerial Statements by groups of Members was referred to as a significant development at MC11 [eleventh ministerial conference]."

The joint statements refer to the plurilateral initiatives on electronic commerce, investment facilitation, services domestic regulation, and gender and trade.

The chair's summary suggested that the WTO is facing important challenges and that fundamental reflections, including at political level, will be required on issues where major divergences exist.

The participants, according to the summary, underscored the "need to preserve and enhance the functioning of the multilateral trading system and the existing WTO framework, in particular: the work of the regular WTO bodies; and the WTO's dispute settlement mechanism, with particular concern being expressed about the situation of the Appellate Body."

"Among horizontal challenges faced in multilateral negotiations, the question how to take into account different and evolving levels of development of Members was highlighted," the summary noted.

The summary is not a reflection of what WTO members want as it was dominated by the proponents of new issues and not of the large majority of WTO members, South Africa's trade minister Rob Davies told SUNS (see Davies' interview in separate story).

Trade ministers and envoys echoed their respective positions on unresolved Doha issues as well as new issues such as plurilateral initiatives for electronic commerce, disciplines for micro, small, and medium enterprises, investment facilitation, and trade and gender.

The United States Trade Representative Ambassador Robert Lighthizer said the US wants an ambitious plurilateral outcome on electronic commerce and a comprehensive agreement on fisheries subsidies.

Ambassador Lighthizer said the US doesn't think the eleventh ministerial conference is a disappointment suggesting that Washington had low expectations.

The USTR said he would concur with his South African counterpart Rob Davies that all sectors - investment facilitation, disciplines for micro, small, and medium enterprises, and trade and gender - are not suitable for plurilateral outcomes.

But only in some areas like e-commerce plurilateral action is possible to make a forward movement in the WTO.

Plurilateral outcome on e-commerce can establish a good standard at the WTO, Ambassador Lighthizer suggested.

He said the US remains optimistic that the WTO can take things forward. "We reject the notion that most WTO members can be exempted from WTO rules, especially the large economies [China, India, Brazil]," the USTR maintained.

Three issues are important for the US, according to a trade minister who asked not to be quoted.

They are development (thus bringing in differentiation), transparency, and an ambitious outcome on fisheries subsidies, the trade minister said.

At the meeting, Argentina which spoke first expressed support for all the new issues.

Korea said the WTO must reflect the changing realities, particularly the need for rules for e-commerce in the context of the fourth industrial revolution.

Korea's trade minister Hyun Chong Kim expressed sharp concern over the safeguard duties, arguing that they must be consistent with the WTO rules. Minister Kim also said the prolonged vacancies at the Appellate Body are not desirable.

Russia, Singapore, the European Union, Norway, and Pakistan among others supported the new issues.

The EU's trade commissioner Ms Cecilia Malmstrom called for new "approaches", saying business as usual will not be acceptable.

Malmstrom called for immediate work on the new issues.

Several other countries - Costa Rica, Colombia, Nigeria and Brazil among others - also spoke in favour of e-commerce and other new issues such as investment facilitation.

India said the multilateral route must be the basis for further work at the WTO for building trust and confidence.

India's trade envoy Ambassador J. S. Deepak, who spoke at the meeting in the absence of his trade minister Suresh Prabhu who had to leave Davos because of his country's Republic Day celebrations, said negotiations must be resumed on the basis of the existing agenda while simultaneously addressing institutional issues, particularly the impasse at the Appellate Body.

As regards new issues, India said they must be approached only on the basis of multilateral consensus.

China's trade envoy Ambassador Zhang Xiangchen urged the participants to make a "balanced" assessment on the relationship between current WTO functions and their commitments.

The Chinese trade envoy said the WTO system is indispensable for trade and cooperation. He said China will pursue both old issues based on previous negotiated ministerial decisions and also ready to address new issues that are relevant for the future.

South Africa's trade minister Rob Davies expressed grave concern at the manner in which countries after failing to secure multilateral consensus went out and issued joint statements for plurilateral initiatives.

If such practices are adopted then more than 100 countries of the G90 can go out of the WTO and frame rules on stronger special and differential flexibilities for policy space as part of a plurilateral outcome and later bring it to the WTO for all members to follow, Davies said.

Brazil which spoke immediately after the US at the meeting said special and differential treatment flexibilities were part of the balanced concession in the Uruguay Round.

Thailand called for addressing the unresolved Doha issues in the Doha Development Agenda while Indonesia said members must pursue issues based on the United Nations Sustainable Development Goals (SDGs).

In short, the battle on the dubious plurilateral project which lacks integrity and consistency with the WTO rules has started taking shape within a month after the collapse of the WTO's eleventh ministerial meeting in Buenos Aires last month.

Unless the developing and poorest countries remain vigilant to nip the plurilateral dialogue in the bud, they might be drawn into the negotiations by next year, said a trade envoy who asked not to be quoted.