TWN Info Service on WTO and Trade Issues (Nov18/01)
2 November 2018
Third World Network

Ottawa meet's move for launching new round of talks at MC12
Published in SUNS #8783 dated 29 October 2018

Geneva, 26 Oct (D. Ravi Kanth) - Trade ministers from 13 countries on Thursday (25 October) set the ground towards launching a new round of trade negotiations at MC12, arguing that "the current situation at the WTO is no longer sustainable".

This appeared to be an euphemism for burying the Doha work program once and for all while launching plurilateral negotiations at the WTO's 12th ministerial meeting (MC12) in Astana, Kazakhstan, in June 2020, trade envoys told SUNS.

[Since the Dillon Round, at the old GATT, leading ICs have always engaged i n this game: launch a new round, with all issues on the agenda, negotiate accords on issues of concern to them, and then end the round, placing unfinished issues on a new work program. Developing countries will only have themselves to blame, if they swallow this bait once again and agree by consensus to the Canadian initiative. It is also time for them to call DG Azevedo to account at the next General Council meeting, by tabling a formal agenda item and proposal. SUNS]

The 13 trade ministers from the European Union, Japan, Canada, Norway, Switzerland, Australia, New Zealand, Singapore, South Korea, Kenya, Brazil, Mexico, and Chile, along with the WTO Director-General Roberto Azevedo, finalized a one-and-half page communique that emphasized that they will "move forward urgently on transparency, dispute settlement and developing 21st century trade rules."

The communique includes a hotchpotch of unspecified multilateral issues as well as plurilateral issues, without mentioning a word about the Doha work program.

The United States, which gave a tacit approval for the meeting, stayed out of the meeting.

China, India, South Africa, and Indonesia were not invited for the meeting, which took place in Ottawa, Canada.

[In trade history, Ottawa was hitherto known for the infamous Ottawa Pact of the 1930s, for British Imperial preferences. If the new initiative succeeds, Ottawa will be associated with winding up multilateralism. SUNS]

In many ways, the 13-member coalition, which was very carefully chosen, is the new ginger group that will produce ideas with the able support of the WTO DG for launching plurilateral negotiations in the so-called five joint initiatives - electronic commerce, investment facilitation, disciplines for micro, small, and medium enterprises (MSMEs), domestic regulation for services, and trade and gender - at the WTO's 12th ministerial meeting in Astana in June 2020, said trade envoys, who asked not to be identified.

The Group will also simultaneously prepare the groundwork for the launch of negotiations by using the multilateral route in issues that would involve "flexible and open negotiating approaches" for "the market distortions caused by [industrial] subsidies and other instruments."

These issues fall under the rubric of "level playing field", said a member of a participating country.

The Ottawa communique remains ambitious on how the market-distortions will be determined, he suggested.

Though the communique underscored the need to "unblock" the appointment of Appellate Body members so as to make the Dispute Settlement Body effective, Canada's trade minister Jim Carr, who chaired the two-day meeting, said "there should be [a] consideration for an alternative which would focus on mediation among disputants," according to the Washington Trade Daily of 26 October.

Effectively, the Canadian minister's suggestion amounted to what the US Trade Representative Ambassador Robert Lighthizer had insisted over the past two years.

Ambassador Lighthizer had maintained several times unambiguously that Washington would prefer to go back to the GATT-phase of negotiating the panel rulings as opposed to the Appellate Body's decisions that went far beyond its mandated role.

The three main points of the communique cover the three functions of the trade body - the negotiating function, the dispute settlement system, and the WTO Secretariat.

The underlying danger is that, by clubbing all three areas, work on two are as - i.e. preparing the ground for the launch of plurilateral negotiations and the transparency and monitoring role of the WTO - will move at warp speed.

But work on dispute settlement reform will be held hostage because the US is unlikely to move on filling the vacancies at the Appellate Body (AB) for unblocking the "systemic" crisis at the WTO, said trade envoys, who asked not to be quoted.

So the danger is by the time trade ministers meet at the 12th ministerial meeting in Astana, the AB would have become dysfunctional while members could launch new plurilateral negotiations that have been multilaterally disapproved.

The communique's three main points are:

I. The dispute settlement system is a central pillar of the WTO. An effective dispute settlement system preserves the rights and obligations of WTO members, and ensures that the rules are enforceable. Such a system is also essential in building confidence amongst members in the negotiating pillar. That continued vacancies in the Appellate Body present a risk to the WTO system as a whole. Therefore, there is the urgent need to unblock the appointment of Appellate Body members. The concerns raised about the functioning of the dispute settlement system [by the US] need to be addressed - while preserving the essential features of the system and of its Appellate Body.

II. Reinvigorating the negotiating function of the WTO by concluding "negotiations on fisheries subsidies in 2019 consistent with instructions from WTO Ministers at MC11" and simultaneously "rules must also be updated to reflect 21st century realities, such as the Sustainable Development Goals". Addressing modern economic and trade issues, and tackling pending and unfinished business is key to ensuring the relevance of the WTO. This may require flexible and open negotiating approaches toward multilateral outcomes.

Work that is being undertaken through the plurilateral initiatives on electronic commerce, investment facilitation, disciplines for micro, small, and medium enterprises, domestic regulation in services, and trade and gender will be intensified so as to launch negotiations at the WTO's 12th ministerial conference.

Further, "market distortions caused by subsidies and other instruments" will also be issues during the launch of the negotiations at the 12th ministerial conference.

On "development", the Ottawa communique says that it will "remain an integral part of our work," including exploring "how the development dimension, including special and differential treatment, can be best pursued in rule-making efforts", a pointer towards "differentiation".

III. Strengthening the monitoring and transparency of members' trade policies which play a central role in ensuring WTO members understand the policy actions taken by their partners in a timely manner - which is largely centered around strong notification requirements.

The 13 ministers said they are concerned "with the overall record of compliance by WTO members with their notification obligations", and underscored the need for "improvements" to ensure "effective transparency and functioning of the relevant agreements".

Clearly, it is a reference to the recent trilateral - the US, the EU, and Japan - proposal on transparency and notification requirements.

In short, the Ottawa communique seems to have the Secretariat's imprint, particularly the DG, who was all over the place during the meeting in Ottawa, said a trade envoy in Geneva.

Canadian minister Carr, who hosted the meeting, said the group will act as a "catalyst" in convincing other members about the urgent need for reforms.

He said he will soon brief his counterparts from the US and China. And the next meeting of the group will be held in January on the margins of the annual informal ministerial summit that Switzerland convenes during the World Economic Forum meeting in Davos.

The large majority of developing and least-developed countries now face a do-or-die battle: either they preserve the consensus principle, the special and differential treatment architecture, and the multilateral negotiating framework, or allow the WTO to become a body of a select group of countries to ram through rules that will deny them the policy space to develop forever.