TWN Info Service on WTO and Trade Issues (Jul18/23)
30 July 2018
Third World Network
       
Concerns voiced over US unilateral actions, AB deadlock
Published in SUNS #8730 dated 26 July 2018

Geneva, 25 Jul (Kanaga Raja) - A number of developing and developed countries have voiced concerns at an informal meeting of Heads of Delegation(HOD)/Trade Negotiations Committee (TNC) on Tuesday over the recent US unilateral trade measures under Section 232 of US trade law (national security), as well as the continued blockage of appointments to the WTO's Appellate Body (AB).

The informal meeting also heard remarks by WTO Director-General Roberto Azevedo as well as reports by the Chairs of the various Doha negotiating bodies.

According to trade officials, concerns were raised by many members on the use by the US of Section 232 national security provisions of its trade law in imposing additional tariffs on imports of steel and aluminium products as well as investigations initiated on imports of automobiles and auto parts.

Delegations, both developed and developing, also voiced serious concerns over the situation in the Appellate Body, where the US has repeatedly blocked consensus over efforts to launch the selections processes to fill three current vacancies on the seven-member body.

Many developing countries made clear at the meeting that special and differential treatment (S&DT) should be extended to all developing countries and LDCs. They rejected a case-by-case approach to this issue mooted by the US, and now the EU in its non-paper.

Many developing countries also stressed the importance of gaining outcomes in agriculture supports, on the aggregate measurement of support, mainly accorded to some developed countries; on public stockholding for food security purposes (PSH); the Special Safeguard Mechanism (SSM); and cotton.

The meeting also saw disagreements among the members over the so-called informal joint plurilateral initiatives on e-commerce, investment facilitation for development, disciplines for micro, small and medium enterprises (MSMEs), domestic regulation in services, and the economic empowerment of women.

Those opposed to these plurilateral initiatives said that they undermine the multilateral nature of the WTO work. They also pointed out that there is already a multilateral track ongoing in the areas of e-commerce and domestic regulation in services.

Others such as Korea, Panama, Canada, Hong Kong-China, Chile, Russia and the European Union expressed support for some/or all of the plurilateral initiatives.

REMARKS BY DG AT INFORMAL MEETING

According to trade officials, DG Azevedo said while there had been some important progress made at Buenos Aires last December, MC11 (eleventh ministerial conference) had exposed fundamental differences and divisions over both substance and process. There is need to come up with new ideas that can lead to convergence.

He said that there is a temptation that the trade tensions will lead people to ignore the regular work, and this temptation should be resisted.

Azevedo said that "Members are well aware of the growing crisis in global trade. Tensions are growing. New measures are being announced with increasing frequency. There is real and justified concern about the escalation we are seeing."

"Whether or not you call it a trade war, certainly the first shots have been fired. Continued escalation would risk a major economic impact, which would pose a serious threat to jobs, growth and recovery in all countries."

He warned that there is also a potential systemic impact, posing a greater threat in the longer term, particularly if countries begin to accept this tit-for-tat dynamic as the new normal.

"The situation requires an urgent response. We have a duty to help resolve these issues, and to alert people to the potential risks and consequences. That is what I have been working to do. I have been consulting with members on these issues, and I have been meeting with leaders and ministers - urging dialogue and exploring steps to resolve the current situation."

"But I have also been talking to a wider range of contacts - such as parliaments, business, think tanks and the media - in order to increase awareness and understanding of what is at stake. Trade touches all of our lives. So I am calling on everyone who believes in trade as a force for good to speak up. Now is the time."

Azevedo further said: "In some ways I actually think we may be seeing some progress. Leaders are increasingly aware and engaged in WTO issues - in a way that I haven't seen before. There is renewed engagement from many members on systemic issues, bringing more focus on the WTO and how it can be improved. I think that this could be positive - and could potentially help us to find a path out of the current crisis."

The DG maintained that it is not his role to put forward solutions, and that it is not his role to point fingers at specific members or specific policies. He said that he has never done this and will not start doing this now. He has to preserve the role of the Director-General as an impartial facilitator, and that this is something that he is trying to do.

With respect to WTO reforms, Azevedo noted that people have been discussing a number of issues. It is very important that any process be member-driven and be inclusive. Members need to sit and talk to each other.

On the situation in the Appellate Body, Azevedo said that we are not moving forward and that he has had nothing that would indicate the prospect of a breakthrough. This is something that could compromise the entire multilateral trading system, he added.

VIEWS OF MEMBERS

According to trade officials, South Africa, on behalf of the African Group, highlighted the retreat of the African Group that took place on 8-9 July.

The African Group reaffirmed the development objectives in the Doha mandate of transparency, bottom-up approach, inclusiveness and member-driven process.

It highlighted the importance of agriculture. The issue of trade-distorting domestic support and PSH are key. On fisheries subsidies, it highlighted the importance of S&DT for developing countries.

On the G90 proposals on S&DT, it said that the question of S&DT is ingrained in the WTO rules, just as the consensus decision-making process is.

The African Group is concerned that the MFN principle may in some way be undermined by the discussions on the joint plurilateral initiatives.

It is also very concerned about the Appellate Body being undermined as well.

Korea said that it is happy with what is happening with respect to the joint plurilateral initiatives. These are open, transparent and inclusive processes, it maintained.

It endorsed the G33 statement. It is also worried about the WTO becoming dysfunctional. It said the WTO is an indispensable public good and we need to do what we can to try and strengthen it. It is also very concerned about the situation in the Appellate Body.

Korea urged members to refrain from any new measures. Escalation by the major members will affect other members as well, particularly those who are involved in global supply chains.

Panama, on behalf of the Article 12 countries (formerly the recently acceded members), said that the average commitments of the recently acceded members (RAMs) exceed those of the original members.

There is a situation now in which the average tariff in agriculture for an original member is 60%, and 16% for the Article 12 member. The average tariff for industrial goods among the original members is 34%, and 13% for the Article 12 members.

On behalf of itself, Panama said it supported the plurilateral initiatives on e-commerce, investment facilitation, empowerment of women and MSMEs.

Canada said that these are very challenging times. It is profoundly disappointed that the US has invoked S.232 of its trade law on imports of steel and aluminium, and is engaged in an investigation on automobiles. Canada pointed out that there is no link to national security, and that it is an abuse of the national security exemption (in Art. XXI of the GATT 1994).

It is pleased with the progress being made on the joint initiatives on e-commerce, domestic regulation, MSMEs and women's economic empowerment.

Canada also said that it is very concerned about the US continuing to block AB appointments. It urged the US to step up efforts to find a solution to this problem.

Malawi, on behalf of the ACP group of countries, said that it is important that development needs and capacity constraints of developing countries are taken into account. It is because of these needs and constraints that S&DT must be part of any discussions going forward.

ACP countries would like a better chance to integrate into the global value chains. They want to enhance their export diversification and innovation.

It supported the G90 proposals. It also wants to see something on fisheries subsidies that must be transparent, inclusive and consensus-driven and with S&DT.

It expressed concern over the situation at the DSB. It said that because of the situation in the AB, the dispute settlement system could be rendered dysfunctional.

The European Union said that the failure of MC11 was a strong statement of the degree of division and of the strong challenges in front of the multilateral trading system and the WTO.

The trade tensions have taken us a step further, it said, adding that there is now a situation in which rule-making, dispute settlement and monitoring are facing big problems.

It said with respect to the question of transparency and trade monitoring, the problem here is that governments are not notifying the WTO of their subsidy commitments or of changes to their trade regimes. This is hampering efforts everywhere.

The EU said that a trade war is in no one's interest and it will lead to a very difficult situation in the WTO. The public good that is the WTO has been serving us well for a very long time. It is time that we make sure that we bring new issues into the mix, it said.

It claimed that there are fundamental gaps in the rule-book. In this context, it referred to what non-market polices and economies are doing to distort the situation in the trading system. We need to modernise the WTO before the system collapses, it added.

It said that on 28 June, EU leaders called for a modernisation of the WTO agreements. They want to unblock the Appellate Body selection process. They called for a more comprehensive proposal to make the dispute settlement system more efficient.

The EU said it was pleased with the joint plurilateral initiatives and looked forward to more detailed discussions.

China expressed support for the Article 12 statement made by Panama. It said that the multilateral trading system is facing grave challenges, and that the principles and core values are being challenged. The AB is stalled.

It said that it is unhappy with the use (by the US) of the S. 232 and S. 301 provisions and the unilateral measures that have come through this process.

China pointed out that the aggregate measurement of support is the most trade-distorting type of subsidy in agriculture. Some say it is impossible to totally eliminate AMS. It should not be a question of what is possible but a question of what is right or wrong, it said.

It noted that developing countries have difficulties and challenges and S&DT is necessary to help to address the capacity divide. S&DT is a decision that should be taken by developing countries.

Graduation and differentiation are explosive issues and there is no possibility to reach consensus on this, so it is a waste of time even having a discussion about it, it said.

Chad, for the LDCs, said the multilateral trading system is facing fundamental challenges. It said that the LDC decisions taken at Hong Kong, Bali and Nairobi need to be implemented, specifically the duty-free, quota-free market access for LDC products (DFQF).

It also called for full implementation of the rules of origin, the services waiver for LDCs, and action on Article 66.2 of the TRIPS Agreement pertaining to technology transfer. It called for an agreement on PSH and SSM before MC12.

The US said that the specific areas of interest to the US relate to the long term credibility of the WTO. It said that the negotiation on fisheries subsidies were very high-stakes and that there was good energy in the negotiations. There must be an ambitious way to address the more than $20 billion in subsidies for illegal, unreported and unregulated (IUU) fishing, and for overcapacity in fishing.

On the question of development, the US said that it thinks that the system will suffer if we have a set of rules that apply only to some members while we give a pass to self-described developing countries or so-called newly acceded members.

On S&DT, the US said that this is something that should be looked at on a case-by-case approach. It is a difficult situation when five of the six wealthiest nations on earth choose to determine themselves as developing countries, it maintained.

It is important that transparency is improved in the WTO. The failure of some to notify is causing damage to the system, it said.

According to the US, the challenge for the WTO and the multilateral trading system is to find a way to deal with non-market economies. The WTO rules do not address these non-market economies. This is the biggest challenge facing the WTO today and the WTO cannot be used as a shield by some countries to allow them to take on non-market policy approaches, it said.

Australia, Brazil, New Zealand, Chile, Egypt, Norway, Peru, Turkey and Singapore also expressed concern over the impasse in the Appellate Body.