TWN Info Service on WTO and Trade Issues (Jul19/02)
1 July 2019
Third World Network

Azevedo, as TNC chair, extends support for plurilateral initiatives

Published in SUNS # 8931 dated 24 June 2019

Geneva, 21 Jun (D. Ravi Kanth) – While admitting that he was functioning as chair of the Trade Negotiations Committee (TNC) under the Doha Work Programme, WTO Director-General Roberto Azevedo nevertheless extended support to non-mandated plurilateral initiatives on e-commerce and domestic regulation for services, that undermine multilateralism.

The Director General of the World Trade Organisation was speaking at a media briefing on 20 June and responding to questions.

Azevedo suggested that the Joint Statement Initiatives (JSIs) on electronic commerce, the disciplines on micro, small, and medium enterprises (MSMEs), investment facilitation, domestic regulation for services, and trade and gender are important, even if they don’t have a multilateral ministerial mandate.

The WTO DG admitted that without the Appellate Body (AB), the negotiating work being conducted by members will be compromised, but suggested that members are working hard on different options, including “sub-optimal” solutions.

The European Union has been working on a proposal involving an Arbitration mechanism for resolving trade disputes in the absence of the AB.

Azevedo spoke of the need for accelerating work on “WTO reforms” even if the AB impasse is not resolved anytime soon.

Members must strive hard to accomplish outcomes on “WTO reforms” at the WTO’s 12th ministerial conference in Nur-Sultan (which was previously called Astana) in June 2020, Azevedo argued.

At a press conference with journalists at the Palais des Nations in Geneva on 20 June, Azevedo provided his assessment on a number of issues ranging from President Donald Trump’s unilateral tariff measures under national security provisions, the “credibility” of the WTO reforms in the absence of the highest adjudicating body for resolving trade disputes, the continued campaigning for the controversial JSIs by the director-general even as he remains the TNC (Trade Negotiations Committee) chair under the Doha work program, the future of the dispute settlement system, and the political direction that the G20 leaders must provide for accelerating work on the Doha reforms.

In his introductory remarks, Azevedo provided his assessment about the rising trade tensions and their damaging impact on the global trade and economy.

Trade tensions, he said, are “weighing down on the [international] economic growth and trade and also a number of systemic issues at the WTO.”

He said the WTO will publish figures on the latest trade-restrictive measures imposed by the G20 members.

The report would coincide with the G20 leaders’ meeting in Osaka on 29 June. “These measures [concerning trade restrictions] are above the historic levels,” he said, suggesting that “we don’t see any signs of abating” in the near future.

Azevedo called for an urgent response from global leaders when they congregate for the G20 summit meeting in Osaka. He said he will convey the message about the worsening global trade climate to the G20 leaders.

Azevedo said that the proposed meeting between the US President Donald Trump and the Chinese President Xi Jinping is a welcome sign.

The DG claimed that the proposals for “WTO reforms” have gained momentum. If members could achieve some outcomes at the 12th ministerial conference, it would be good, he said, adding that there are no “pre-determined” deadlines for completing the work on reforms.

He said the proposed reforms will center on the dispute settlement system, including the impasse at the Appellate Body which is a critical area, the regular work at the WTO, and the negotiating function of the trade body.

Azevedo said there is an informal process to resolve the impasse at the AB at the General Council (GC). He urged members to find an urgent solution, maintaining that December (when the AB will become dysfunctional) is not six months away and it starts today.

Azevedo said there is a lot of work happening around the improvements in the WTO’s regular work, particularly transparency and notifications and the committee-specific improvements.

The third area where members are working hard are on the negotiations, he said. The key test for the multilateral work is on the fisheries subsidies (FS), and there is good progress in the FS negotiations, he said. “We want progress [in the FS negotiations] now” by stabilizing the negotiating texts.

In addition, multilateral work is continuing in agriculture, he claimed, but did not indicate which areas of the agriculture negotiations are progressing at this juncture.

“And we are also seeing, if we are talking about negotiations, new negotiating models are being tested in the Joint Statements initiatives,” the director-general said.

“We have those initiatives in the e-commerce, facilitation for investment, micro, small, and medium enterprises, domestic regulation [for services] and women and empowerment,” he said.

Azevedo particularly mentioned about the work in the JSI meetings on electronic commerce that concluded on Thursday.

“We see lot of progress in [other Joint Statements initiatives] and how far they will go will depend on the proponents,” he said.

Asked about the “credibility” of the WTO reforms without resolving the systemic crisis at the AB, as pointed out in a concept paper issued at the meeting of the trade envoys of the developing countries on 19 June, Azevedo said “I share the views of those who believe that this is [the continuation of the AB] a very critical element of the WTO and if we don’t have a fully functioning dispute settlement system the work we are doing will be compromised.”

He said members are working precisely on this issue to find the solutions for addressing the crisis at the WTO.

Azevedo admitted that some solutions to address the systemic crisis at the dispute settlement system are “sub- optimal”.

Azevedo was asked why he emphasized the JSIs, particularly on electronic commerce that strikes at the very roots of the multilateral 1998 e-commerce work program and the Domestic Regulation for services that goes against the multilateral work being conducted at the WTO’s Working Party on Domestic Regulation (WPDR).

In his reply on the JSIs on electronic commerce and domestic regulation for services which are undermining the multilateral work in these two areas, Azevedo said: “As far as the negotiations [on Joint Statements initiatives on e-commerce and domestic regulation for services are concerned] every avenue that members want to explore regardless of how one feels about it, they should be explored to the extent that members want to do that.”

“Whatever format, whatever substance, members are the ones to [decide] whatever they want to explore.”

Azevedo’s answer only reinforced fears that the director-general and his office are promoting the work of the JSIs at the cost of undermining the WTO’s mandated multilateral work on the Doha Development Agenda negotiations, said a trade envoy, who heard his recorded transcript.

At the retreat of the trade envoys of the developing countries on 19 June, a large number of countries voiced sharp concern for not resolving the unfinished Doha work program while pursuing the anti-multilateral JSIs.

When asked pointedly at the media briefing whether he continues to function as the TNC chair under the Doha mandate of 2001 and if so, why he remains silent on the unresolved DDA (Doha Development Agenda) issues, Azevedo said “every time that we have a meeting of the Trade Negotiations Committee, I am the chair and we are working on the basis of the mandate under the Doha Development Agenda.”

In short, he admitted that he works under the mandate of the DDA, even if he doesn’t utter a word on the unfinished Doha work program while campaigning publicly at all fora around the world for the JSIs that have no mandate.

On whether the US President understands the adverse impact of tariff-measures on the economy, Azevedo said it is clear that President Trump believes that tariffs are an important instrument to leverage negotiations with China and other countries. He called for lowering trade-restrictive measures.

On trade measures imposed on national security grounds/exceptions, he said the WTO dispute settlement system will find it difficult to address these issues, as they are “political” by definition. Even if a panel hears a case concerning the national security exceptions and is later taken-up to the AB, it would be better to resolve the case among parties.

About the recent withdrawal of cases by China against the EU on market economy status and on the intellectual property dispute with the US, he said it is good practice if parties withdraw or defer their disputes through mutual resolution.

The director-general said the US proposal to deny special and differential treatment flexibilities to more than 30 developing countries in the current and future trade negotiations is “rejected” by members.

He admitted it is a sensitive issue that cannot be decided one way or the other.

About the recent US decision to deny benefits to India under the Generalized System of Preferences and whether the US action is consistent with WTO rules, Azevedo said he will not comment on the issue.