TWN Info Service on WTO and Trade Issues (Sept18/06)
14 September 2018
Third World Network

G20 meet to see efforts to begin process to negotiate new WTO rules
Published in SUNS #8752 dated 14 September 2018

Geneva, 13 Sep (D. Ravi Kanth) - Attempts are expected to be made at the G 20 trade ministers' meeting at Mar del Plata in Argentina today for starting the process for negotiating new rules at the World Trade Organization, particularly aimed at targeting China, on the basis of informal proposals floated by the European Union and Canada, trade envoys told SUNS.

Meanwhile, on Sunday (9 September), the World Economic Forum (WEF), the private think tank for neoliberal trade policies, joined the EU and Canada in calling on the G20 trade ministers to do three things.

The three things include (i) bringing "the US back into the fold," (ii) ensuring that "China must walk the talk," and (iii) consolidating "an agenda for WTO modernization."

The WEF says "the first priority for the G20's trade ministers must be to continue to engage the US and to agree on conducting trade relations based on multilateral rules, not by unilateral actions and harassment."

Despite the aggressive and unilateral positions that marked a new high in the US trade policy, the WEF's demand to engage with the US is almost on the lines of what the WTO director-general Roberto Azevedo has been sermonizing over the past one and a half years.

Instead of calling a spade a spade, Azevedo said repeatedly that it is his duty to hold sustained meetings with the US Trade Representative Ambassador Robert Lighthizer so as to engage Washington on its demands even though they are totally untenable.

WEF says "the rules of non-discrimination, transparency, fair competition and an independent dispute settlement system have become a fundamental part of the soft infrastructure of global business, and have benefited everyone - including the US."

It remains moot whether the US, a country that thrives on litigation and adjudicators on all issues, is unaware of these rules. Clearly, the US under the Trump administration is ready to cock a snook at all these multilateral rules that it had crafted during the past 70 years, according to several trade policy experts and analysts.

WEF wants the G20 trade ministers to convey to the US that its "withdrawal from the WTO would be an act of immense self-harm."

Here again, the WTO director-general must take the lead in cautioning the US to tone down its WTO-exit rhetoric, after repeated threats by President Trump to leave the multilateral trade body.

WEF has offered unsolicited advice to the largest economy in the world that it would be "self-harm" for Washington to leave the WTO.

WEF, which primarily serves the interests of the US in areas of finance, trade, and investment, wants the G20 trade ministers to tell the US at the Mar del Plata meeting that "without WTO membership, US exports would no longer enjoy most-favoured nation tariffs from over 100 trading partners with which the US does not have a free trade agreement (FTA)."

"The US only has 14 FTAs, and none with the world's largest traders such as the EU, Japan, and China," says WEF.

It argues that "if the US were to pull out of the WTO it would create a commotion, [and] either this or the next US administration would unquestion ingly return to the fold via WTO accession negotiations."

WEF says that "fear of the US' departure has already turned the WTO into a hostage of the Trump Administration, which has, for example, blocked the filling of vacancies on the WTO's Appellate Body - one of the "systemic challenges" described by WTO chief Roberto Azevedo."

"But the other G20 members should not bend to the US' threat to leave," it has advised the G20 trade ministers.

The G20 trade ministers, according to WEF, "should get the US to agree on two matters."

The two matters proposed by WEF are: "Firstly, that trade disagreements should be solved within the WTO's rule-based dispute settlement framework, not with unilateral action and harassment. Secondly, a deadline should be established to solve the Appellate Body crisis - say, by 31 December 2018 - and WTO members should take an emergency vote if and when that date is passed."

The point is will the EU, Japan, Canada, and other industrialized countries have the courage for calling a vote if the US does not relent from its decision to block the second term for the Appellate Body member Shree Baboo Chekitan Servansing.

At the WTO Dispute Settlement Body (DSB) meeting last month, the US left no room for any confusion about its intention to guillotine the life of the AB before President Trump completes his four years at the end of 2019.

The second major demand that WEF wants the G20 trade ministers to do during today's meeting is to deliver a strong message to China that it must "walk the talk" because it is the largest beneficiary from the WTO.

China must take "more responsibility and should aim to be part of the solution", according to WEF, because "China's GDP has grown from $1.3 trillion to $12 trillion since its accession to the WTO, and as such it is among the members who have benefited immensely from the WTO's predictable trading terms."

Therefore, China must "walk the talk" to "make economic globalization more open, inclusive, balanced and beneficial to all", as stated by President Xi Jinping in April 2018.

WEF wants G20 trade ministers to urge "China to refrain from escalating trade tensions by using further restrictive measures on trade and investment against the US."

This demand from WEF implies that China must take things lying low instead of legitimately responding to the US crowbar tariffs outside and inside the WTO.

"The uncontrolled consequences of these actions [by China] damage firms from third countries involved in global production and distribution chains," says WEF.

It has suggested to China that "the WTO dispute settlement system remains the best platform available for resolving trade conflicts."

But the WTO dispute settlement system has become impotent with the US brazenly defying the rulings issued by the Appellate Body. China is clearly aware that it has to take on the US on a measure-for-measure basis and simultaneously, at the WTO Dispute Settlement Body by invoking the DSB provisions.

More important for WEF and the EU and other industrialized countries, including the US, is that China must "respond constructively to issues raised by other G20 members, notably those in the trilateral joint statement made by the US, Japan and the EU in May that referred to state-owned enterprises (SOEs), industrial subsidies and coerced technology transfer."

China should also respond to other concerns that center on non-tariff barriers, transparency and notification obligations, it has argued.

In tune with the demands made by industrialized countries since the Cancun ministerial meeting in 2003, WEF wants China to take "further liberalisation measures - in particular by joining the WTO's government procurement agreement, which will open up digitally-enabled trade in services, and by committing to reciprocal treatment for foreign investors."

WEF has echoed the proposals made by the EU and Canada for modernizing the WTO, implying that developing countries must agree to rules that directly contradict the WTO agreement, particularly allowing the Secretariat to become the arbiter on a range of issues.

"It is time for the G20 to begin serious deliberations around developing a new strategic orientation for a modernised WTO," WEF has argued.

WEF wants G20 ministers to discuss an agenda that should balance the interests of developed and developing countries.

For example, on subsidies, the former pushes for greater discipline of the manufacturing sector, while the latter believes that a fairer approach to agriculture subsidies in, and better market access to, developed countries should be part of the discussion.

More important, it says, G20 trade ministers must set the ground for bringing new rules "in respect to state intervention in technology transfer."

Further, "new rules should prohibit governments from forcing foreign techno logy owners to transfer technology to domestic entities in non-market conditions, but they should also prohibit governments from restricting firms from exporting their technologies in market conditions."

WEF says "modernization should also reflect the needs of present and future generations. For example, the WTO should clarify or update its rules on climate-related issues, such as eliminating fossil fuel subsidies, considering more policy spaces to scale up the use of clean energies, and facilitating the transfer of climate-friendly technologies."

"The 10th anniversary of the G20 could be a crossroads. It's time to make a turn," WEF concluded.

In conclusion, it is clear that WEF is singing the same song that is already being sung by the EU, Canada, and WTO director-general Azevedo, according to trade envoys familiar with the paper.

[Some trade observers like Chakravarthi Raghavan, Editor Emeritus of the SU NS, view it as the "WTO's Munich moment", with Azevedo in the role of Chamberla in at Munich. See also "Contemplating the unthinkable, a WTO without the US" by Raghavan in SUNS #8590 dated 6 December 2017 - SUNS]