TWN Info Service on WTO and Trade Issues (Jul19/20)
15 July 2019
Third World Network

US countered on transparency requirement by key developing countries
Published in SUNS #8944 dated 11 July 2019

Geneva, 10 Jul (D. Ravi Kanth) - South Africa, India, and six other developing countries on Tuesday (9 July) countered the US proposed "reforms" in transparency and notification requirements at the World Trade Organization by offering "an inclusive and developmental approach" that calls for rationalizing the "existing notification obligations" commensurate with the level of development of members, trade envoys told the SUNS.

"Developing countries and LDCs [least-developed countries] should not be expected to take on notification obligations which are beyond their capacity," South Africa's trade envoy Ambassador Xolelwa Mlumbi-Peter told her counterparts, at a meeting of the WTO's Council for Trade in Goods (CTG) on Tuesday (9 July).

In a joint statement along with India, Cuba, Nigeria, Tunisia, Uganda, Zimbabwe, and Mauritius at the CTG meeting, Ambassador Xolelwa offered a counter-narrative to the developed countries led by the United States that called for enhanced transparency and notification requirements, including punitive and naming and shaming provisions for non-compliance.

The US along with the European Union, Japan, Canada, Australia, Costa Rica, and Argentina among others argued for enhanced transparency and notification obligations to stop what they called "willful non-compliance" by many WTO members.

Introducing the proposal at the CTG meeting that began on Monday (8 July), the US informed members that it has made several changes in its revised proposal on transparency and notification requirements issued on 27 June by removing the controversial paragraph on "counter-notification" by members.

The US argued that enhanced transparency and notification obligations will accelerate negotiations and strengthen the trade body if members comply with timely notification requirements in various WTO agreements.

The US, supported by the EU, Japan, and other proponents, argued that without timely notifications as required in various WTO agreements, work at the trade body will be impeded, said a trade envoy who asked not to be quoted.

Around 20 countries supported the revised proposal circulated by the US, the EU, Japan, Canada, Australia, Costa Rica, and Argentina among others.

Responding to the proposal by the US and its allies, South Africa's trade envoy said "the changes in the revised document [submitted by the US and other proponents] fail to address the concerns raised by developing countries," according to a trade envoy from a South American country, who asked not to be quoted.

"We believe that the persistence with punitive approaches is not helpful and represents a disproportionate response to the inability of many developing countries to fulfill their notification obligations," she cautioned.

Ambassador Xolelwa challenged the claim of US and other proponents that the "issue of counter-notifications" has been actually dropped from their revised proposal, suggesting that "a closer reading confirms that paragraph in the revised proposal provides for possibility," the trade envoy said.

"A fundamental difficulty that underlies the approach advocated under paragraph 9 [in the revised proposal concerning counter-notifications] is that it proposed to expand counter-notifications to all the Agreements and Understandings listed under paragraph 1 [of the revised proposal], without following the amendment processes prescribed under the Marrakesh Agreement, thus severely affecting the rights and obligations of Members," the South African trade envoy maintained.

She also questioned the rationale (in the revised US proposal) for the WTO's trade policy review mechanism (TPRM) to expand "inquisitions on transparency and notification."

The WTO's TPRM, she said, "is not intended to serve as a basis for the enforcement of specific obligations or to impose new policy commitments on Members."

South Africa and India asked the US and other developed countries whether they complied with all their own notification requirements, suggesting that there are chronic notification shortcomings in other covered agreements.

"Selective approaches and cherry-picking cannot be supported," said Ambassador Xolelwa, before presenting the joint proposal with seven other developing countries.

She said that "transparency is one of the pillars of the multilateral trading system and is important for the functioning of the WTO system."

However, it is important to recognize "the challenges that developing countries face in meeting their transparency obligations due to limited capacities and resources," she said.

"The inability of many developing countries and LDCs in fulfilling their notification obligations does not and should not equate to willful neglect of multilateral obligations," she repeatedly emphasized.

Non-compliance has to be placed in the proper context of the specific problems faced by developing countries and LDCs, particularly "the lack of central databases containing all the legislation, statistics and data for different government agencies," she said.

"Notifications are complex and require not only familiarity and training in respect of the WTO Agreements and obligations, but also capacity to collect, validate, analyse and present the required information," Ambassador Xolelwa maintained, pointing out that many problems faced by the developing countries and LDCs "relate to the lack of proper infrastructure."

Therefore, WTO members must pursue a "more cooperative approach" that incentivizes the developing countries and LDCs for complying with obligations, she said, arguing that "punitive approaches" are unhelpful.

The cooperative approach, she said, must be based on the following elements:

* While the problem of non-compliance regarding notifications is real, constructive and effective solutions based on the nuancing of obligations in the context of an S&DT approach and incentives is required. This will go a long way in building trust that this organisation so desperately needs.

* Whilst technical capacity and support provided by the WTO Secretariat is very important, there should also be an understanding that countries with chronic lack of capacities are likely to still struggle to varying degrees to meet the multiple notification requirements, and require improvement in institutional capacities.

* Further, punitive approaches to enforce notification and transparency obligations are not acceptable. Any work in this area must support developing countries' ability to address their difficulties through inclusive and mutually agreed approaches, such as through simplified notification formats. In some situations, prolonged time-frames can also be considered. Technical assistance and capacity building must be central components; however, technical assistance and capacity building will not completely resolve the human resource and institutional limitations facing many developing countries.

*  It is also important to emphasise that Notifications can only be made by the concerned Member and no counter-notifications will be valid. Neither the Secretariat nor any other Member of the WTO shall have the right to notify information on behalf of another Member unless this possibility has been provided for in existing agreements.

More importantly, she said transparency is a holistic issue that includes "how an organisation like the WTO is run".

"It should underpin the day-to-day function of the WTO, decision-making processes, the organisation of various types of committee meetings to ensure effective participation and that the process is inclusive," South Africa maintained in the joint statement.

Ambassador Xolelwa said several members had raised concerns about the opaque processes adopted at the ministerial meetings, suggesting that "there is, therefore, a need for a holistic approach to address all these limitations in the system."

She argued that "transparency issues arise because some discussions take place in small committees, informal open-ended meetings, Green rooms etc" - which limit the ability of developing country Members to effectively participate in important deliberations.

The joint statement also drew attention to the notification requirements not complied with by the developed countries in the context of the Agreement on Agriculture around final Bound AMS commitments, GATS Article III:3 and GATS Mode 4. Article 66.2 of the TRIPS Agreement is another area where more transparency could assist the promotion of technology transfer to LDC Members.

Further, the "TRIPS Agreement establishes an obligation for Members to require patent applications to disclose the origin of biological resources and/or associated traditional knowledge, including Prior Informed Consent (PIC) and Access to Benefit Sharing (ABS)."

"However, despite a long discussion in the TRIPS Council in Special Session, no outcome has been produced on this important issue," the joint statement said.

In her closing remarks, she reiterated that "it is not in developing countries' interests to expand their notification obligations any further" than what were undertaken under "the Marrakesh Agreement and its annexes".

"There is no doubt that treaty obligations must be performed in good faith" as per the Marrakesh Agreement, she said.

Clearly, the obligation to comply cannot be "blind to the situation that a particular Member or groups of Members may find themselves in," she said, arguing that "if developing countries are not able to meet current notification obligations, there would be no possibility of meeting even higher notification requirements in [the] future."

"No further transparency obligations should be undertaken by developing countries," she said.

Further, it is imperative that there is "simplification of notification formats and longer timeframes to comply with notification periods" so as to assist developing countries, while LDCs in specific should not be subject to any notification except in areas where they may have interest, she argued.

"Any work in this area should be on supporting and incentivizing developing countries to address these difficulties, while punitive approaches suggested by some will not resolve such capacity constraints and will tend to target Members who are already not able to comply and who remain under financial administrative measures currently," South Africa maintained.

While technical assistance and capacity building may contribute to assisting developing countries to meet their notification obligations, "it cannot be seen as a panacea since much of the capacity to meet such obligation simply does not exist," Ambassador Xolelwa concluded.

Supporting the cooperative approach advanced by South Africa, India said it is wrong to attribute "delays" in complying with notification obligations to "wilful non-compliance."

"Therefore, instead of punitive measures, we need to adopt an inclusive, cooperative approach to incentivize the participation of LDCs and developing countries for complying with notification obligations," India's trade envoy J S Deepak said.

"The other aspect which we need to consider is that transparency permeates all areas of our work in the WTO including processes of decision making in the organisation and the ministerial conferences," said Ambassador Deepak.

"It should, therefore, be applied to all our work including priorities in negotiations and deliberations in the various regular bodies. We also need to ensure that the processes are transparent, inclusive and provide opportunity for participation of all Members," he maintained.

India's trade envoy reiterated that "the key motivation for this submission [by eight developing and least- developed countries] is to highlight the need for an inclusive, cooperative and developmental approach to transparency."

India warned against punitive measures for non-compliance, saying such an approach ignores "the underlying ground realities of the developing world and would further deepen the divide on the issue."

Ambassador Deepak inveighed against a suggestion "by some Members that the Secretariat should issue counter-notifications on behalf of the Members," saying that it "goes against the spirit of the Marrakesh Agreement and the ethos of a member-driven organisation like the WTO."

He urged the developed countries to focus "on creating a suitable eco-system to strengthen the capacity and ability of members in this area. In WTO, bestowing faith and trust is important for a friendly atmosphere."

In short, the "inclusive and development approach" offered by the eight developing countries has put paid to the transparency debate being advanced by the developed countries, several trade envoys told the SUNS.