TWN Info Service on WTO and Trade Issues (Jul18/22)
27 July 2018
Third World Network

India gravely concerned Secretariat undermining multilateral issues
Published in SUNS #8730 dated 26 July 2018

Geneva, 25 Jul (D. Ravi Kanth) - India on Wednesday blocked a decision of the World Trade Organization Secretariat effort for a decision enabling it to pursue economic and technical cooperation projects on investment facilitation without prior approval from the members, trade envoys told SUNS.

During a meeting of the WTO's committee on budget, finance and administration, India raised a host of concerns over the manner in which the WTO Secretariat and the director-general Roberto Azevedo approved "on fast track basis" projects and activities on Investment Facilitation.

At the budget committee meeting on Wednesday, India said the proposals drawn up by the Secretariat "go much beyond justifying approval for projects already undertaken without reporting to the membership."

"They raise serious systemic issues, questions regarding the role of the Secretariat, by engaging in activities in non-mandated areas without review or reporting, the consensus principle, allowing any member or group to set policies and objectives for the WTO with contributions even on non-mandated areas and even calling into question Article VII of the Marrakesh Agreement," India said.

"Since this [Secretariat's] proposal is also embedded in the WTO 2017 Financial Performance Report, we would also request the discussion on this report," India maintained.

Earlier, India voiced grave concerns over the manner in which the World Trade Organization Secretariat is undermining "multilateral" issues based on "mandates" while aligning itself with the "positions of particular members or groups" on plurilateral initiatives, trade envoys told SUNS.

A large majority of developing and poorest countries led by India, South Africa on behalf of the African Group, and Malawi on behalf of the ACP (African, Caribbean, and Pacific) group expressed their frustration on the failure to address the outstanding Doha issues, particularly in agriculture and development.

Indonesia, on behalf of the G33 group, emphasized the importance of finalizing mandated outcomes on the permanent solution for public stockholding programs for food security and the special safeguard mechanism (SSM).

Chad, on behalf of the least-developed countries (LDCs), said the failure to address duty-free and quota-free market access and cotton which were clearly laid out in the 2005 Hong Kong Ministerial Declaration and the 2015 Nairobi Ministerial Declaration is causing grave difficulties to the LDCs.

Both developing and developed countries inveighed against the unilateral trade measures imposed by the US under Section 232 of its trade law, and the repeated blocking of the selection process for filling vacancies at the AB by the United States.

The developed countries, particularly the US and the EU, signalled their intention to press ahead with the "differentiation" for ensuring that special and differential flexibilities are granted to developing countries only on case-by-case basis and not uniformly as mandated in the Uruguay Round agreements.

At an informal Trade Negotiations Committee meeting on Tuesday, India made a searing criticism on the manner in which the WTO Secretariat is functioning in promoting the plurilateral initiatives, according to trade envoys who took part in the meeting.

India, said a trade envoy who asked not to be identified, highlighted the importance of the Marrakesh Agreement for the Secretariat to follow in its regular work on the multilateral track.

The Marrakesh Agreement, according to India, "clearly demarcates and lays down that the primary role of the Secretariat is to support and strengthen the multilateral track."

"Moreover, it lays emphasis on the neutrality and [the] need for the Secretariat not to align itself or take positions of particular members or groups," India said, hinting that the WTO Secretariat is throwing its weight behind plurilateral initiatives while turning a blind eye to the regular mandated multilateral work.

"The work of the Secretariat should be based on mandates rather than areas for which funds are available," India said.

Apparently, the WTO Secretariat is promoting the plurilateral initiative on investment facilitation with the funds provided by one member, said a trade envoy from a South American country.

When India pointed to the violation of the budget committee rules by the Secretariat in accepting funds on an issue where there is no multilateral consensus, the Secretariat admitted its mistake, but then went on to argue that the Director-General has the powers to use funds from the internal financial resources, the South American trade envoy said.

Against this backdrop, India said "we would not like to see the day where the golden rule in the WTO becomes: one who has the gold, makes the rules! Or even decide the work programme or the areas on which we work!", according to the South American trade envoy.

On the outstanding Doha issues, South Africa's trade envoy Xavier Carim said "the African Group reaffirmed the developmental objectives embedded in the Doha Mandate as well as the principles of full participation, transparency, inclusive processes and consensus-based, Member-driven negotiations and decisions."

Malawi, on behalf of the ACP group, said that it had "proactively submitted proposals in agriculture, fisheries, and with the G90, the Doha Declaration paragraph 44 mandate on special and differential treatment."

Indonesia, on behalf of the G33 group of developing and poorest countries, said "members must continue the work based on the Article 20 of the Agreement on Agriculture and existing mandates given by Bali, Nairobi and preceding Ministerial Conferences."

The G33, according to Indonesia, urged members "to redouble efforts to find acceptable solutions" for the permanent solution for public stockholding programs for food security and the special safeguard mechanism for developing countries.

"The collective efforts to agree on such policy instruments, will also facilitate the achievement of a number of Sustainable Development Goals (SDGs), relating to the elimination of poverty, malnourishment and hunger to which we are all committed," Indonesia maintained.

On agriculture, India said it is "a gateway issue for a large number of members in this organisation and a "must have" for any package to be harvested at MCXII [at the 12th ministerial conference in Astana, Kazakhstan]."

India said the domestic support is full of "asymmetries", pointing out that "the large trade-distorting subsidies of developed countries cannot be treated at par with the minimal subsidies of developing countries targeted at subsistence farmers."

To address the asymmetries, India said it "has jointly submitted a proposal with China for eliminating, in a phased manner, AMS beyond the de-minimis, which is the most trade-distorting form of domestic support."

India said its joint AMS proposal with China offered "a calibrated approach of taking incremental steps to eliminate AMS, rather than eliminating it at one go."

Commenting on the permanent solution on public stockholding for food security for all developing countries and LDCs, India said this is the only instrument that can "address the basic issues of poverty, hunger and malnutrition in the developing world and would also help achieve the SDG goals 1 & 2."

Expressing regret over the manner in which the mandated outcome on PSH was not fulfilled at the WTO's eleventh ministerial meeting in Buenos Aires in December 2017, India urged members to "galvanise" and accelerate efforts for finalizing the outcomes on the PSH and SSM.

India reminded the developed countries that "the fight against hunger is a fundamental commitment which cannot be derailed by archaic trade rules."

Commenting on electronic commerce, India said the 1998 work program on e-commerce remains as the basis for continuing the exploratory work.

"It is in this spirit that we have submitted a proposal jointly with South Africa, to understand the implications of the moratorium on customs duties on electronic transmissions," India maintained.

India said while it acknowledges the "transformational changes and opportunities in trade and investment that electronic commerce can bring", members must come to terms with "significant infrastructure, regulatory and other challenges, particularly, for developing countries which will not benefit from the opportunity, due to the huge digital divide."

India cautioned that if members "do not first address this issue urgently and on priority and instead move onto negotiations, e-commerce has the potential of creating further asymmetries and disruption for developing countries and LDCs."

India urged its counterparts to "engage to reinvigorate the multilateral work programme which in the long run will build a foundation for our future work on E-Commerce."

Commenting on the controversial joint initiatives involving plurilateral outcomes on electronic commerce, disciplines for micro, small, and medium enterprises, investment facilitation, and gender and trade, India said it remains gravely concerned that "the joint initiatives are being pursued in areas of regular work where there is a multilateral mandate in the WTO like on E-Commerce and domestic regulation."

"Though proponents are suggesting that these are new pathways and approaches to multilateral agreements," India said it doesn't "see the advantages of this approach and feels that this would further undermine our multilateral work, mandates and the consensus principle."

Further, India maintained that it has "consistently voiced serious concerns and reservations on the introduction of new issues such as Investment Facilitation and MSMEs in the WTO till existing mandates have been addressed."

On joint initiatives, South Africa said while the African Group would "agree that the matters under consideration are important, we continue to disagree that multilateral rulemaking is the way to address the challenges that they pose."

South Africa said "it is still unclear whether participants would reach agreement amongst themselves [on joint initiatives] and, even if they do, whether and how they would try to bring them under the cover of the DSU."

As regards attempts to bring about "differentiation" among developing countries for availing special and differential flexibilities, South Africa, on behalf of the African Group, "reaffirmed the centrality of Development as set out in the Marrakesh Agreement, and the existing architecture and rights under special and differential treatment."

South Africa said "the African Group, as part of the G90, continue to pursue the S&D proposals as mandated, and to consider refining those proposals within the existing mandate."

India said, "development is a critical issue for a large majority of the Membership."

"The provisions of special and differential treatment for all the developing countries and LDCs are an integral part of the WTO agreements and need to be carefully preserved and protected in future agreements as well," India maintained.

India warned that "any talk of differentiation or graduation of developing countries is likely to be divisive, and a case by case approach a complete non-starter."

"The centrality of development is part of the basic structure of the WTO and a core principle enshrined in the Marrakesh Agreement," India pointed out.

China said it will never accept "differentiation", pointing out that it is an explosive issue.

The ACP Group said it would "seek to ensure that results from the S&D mandate complements the respective national trade policies of the member states."

"This approach is aimed at improving export performance by facilitating, inter alia, enhanced competitiveness, increased productivity, innovation, exports diversification, policy resilience, and integration into global value chains," Malawi argued.

India said "‘everyday we [members] see a fresh attack on the principles and processes of the WTO... As a result, the WTO weeps, it bleeds and each new day a gash is added to its wounds!"

"Since the beginning of the year India has constructively engaged in suggesting ways to strengthen the multilateral track and take our agenda forward," India said. "However, the crisis has only deepened with the organisation facing multifaceted challenges," India maintained.

Therefore, "It is important to realise that we now run the risk of dismantling the system which has been built with several decades of work," India said.

In short, the informal Trade Negotiations Committee witnessed a sharp divide between a large majority of developing and poorest countries seeking the much-promised developmental outcomes from the Doha Round on the one side, and major industrialized countries and their developing country partners running away with new issues after pocketing the Trade Facilitation Agreement in December 2013.