TWN Info Service on WTO and Trade Issues (Jul19/27)
25 July 2019
Third World Network

Trump has “personal interest” in differentiation, says US envoy

Published in SUNS #8953 dated 24 July 2019

Geneva, 23 Jul (D. Ravi Kanth) – The United States President Donald Trump has “personal interest” in bringing about differentiation/graduation among developing countries for availing special and differential treatment (S&DT) in the current and future trade negotiations at the World Trade Organization, the US trade envoy told the developing countries on Monday (22 July).

The US proposal on “procedures to strengthen the negotiating function of the WTO” that seeks to introduce graduation/differentiation has been rejected twice by developing countries at the WTO’s General Council meetings.

But the US has no intention of withdrawing its proposal because President Trump is personally interested in ensuring its entry into the WTO rulebook, the US trade envoy to the WTO, Ambassador Dennis Shea, has suggested.

Speaking at an outreach meeting convened by the informal group of developing countries (IGDC) on Monday (22 July), Ambassador Dennis Shea said that Washington will pursue the issue of “differentiation” in the current and future trade agreements at the WTO until it is adopted, according to several trade envoys, who asked not to be quoted.

“I know this issue is very important to the President of the US [Donald Trump] and this is an issue in which he has personal interest”, Ambassador Shea told developing countries at the meeting.

Elaborating on the US proposal on “procedures to strengthen the negotiating function of the WTO” (WT/GC/W/ 764), Ambassador Shea said any developing countries that would come under the four-point criteria will have to forego S&DT in the current and future trade negotiations.

The four-point criteria proposed by the US includes:

i. A WTO Member that is a Member of the Organization for Economic Cooperation and Development (OECD), or a WTO Member that has begun the accession process to the OECD;

ii. A WTO Member that is a member of the Group of 20 (G20);

iii. A WTO Member that is classified as a “high income” country by the World Bank; or

iv. A WTO Member that accounts for no less than 0.5 per cent of global merchandise trade (imports and exports).

Once a developing country qualifies under any of the four points, then, automatically it needs to cede S&DT in the current and future trade agreements negotiated at the WTO, the US envoy insisted.

Around 33 or 34 developing countries that include China, India, South Africa, Indonesia, Brazil, and many other countries need to forego the S&DT, he maintained.

The US trade envoy said Washington is committed to open all the proceedings at the Dispute Settlement Body to the pubic so as to enhance transparency in the WTO’s dispute settlement system.

“We feel as a general matter, all the meetings of the DSB should be [made] open and submissions by members are made available [to public] and we feel there is a lack of transparency in the WTO Dispute Settlement Body meetings,” Ambassador Shea said.

“The DSB [Dispute Settlement Body] would be better if we open it to the public and other members to see our submissions and allow the public to participate in our meetings,” he argued, and said the US had orally notified its “17-page, single-space intervention.”

China, India, and several developing countries, however, again firmly rejected the US proposal (at the WTO’s DSB meeting on Monday, 22 July) to throw open the DSB proceedings to the public.

Ambassador Shea, however, did not mention the current impasse at the Appellate Body due to its repeated blocking of the selection process for filling the six vacancies at the AB.

Around 114 countries at the WTO on Monday urged the US to allow the immediate selection process for filling the vacancies at the WTO. The US, however, rejected the demand, saying its concerns about the functioning of the AB have not been adequately addressed.

Asked by Sri Lanka about what is implied by graduation for availing S&DT and whether it is consistent with the WTO’s Agreement on Subsidies and Countervailing Measures (SCM), Ambassador Shea said: “Our proposal basically says if your country fits into one of the four-point criteria, you call yourself whatever you want, call yourself developing, call yourself developed, but you can’t in the current and future trade negotiations have an automatic right to S&DT.”

If you come under the US criteria, “then you are an advanced economy.” There are other countries that need S&DT, he added.

Speaking after the US trade envoy at the meeting, the facilitator for addressing the impasse on the AB, Ambassador David Walker of New Zealand, said he will press ahead with his consultations to see whether he can arrive at a decision based on the convergence reached among members on some issues concerning the functioning of the AB.

In her presentation at the IGDC meeting on the joint proposal by more than 50 countries on “an inclusive approach to transparency and notification requirements in the WTO”, South Africa’s trade envoy Ambassador Xolelwa Mlumbi-Peter said, contrary to the joint proposal by the US and other countries that call for punitive measures for non-compliance of notifications by WTO members, the developing countries want “developmental approaches” that address the specific technical, capacity and infrastructure constraints faced by them for complying with timely notifications.

She said, “we also acknowledge the reason why especially developing countries, are not able to comply is not because they are neglecting willfully their obligations to the WTO, but it is mainly because of the capacity building constraints.”

In the joint paper by more than 50 developing countries, she said, “we have highlighted the number of constraints that are being faced by developing countries – which include, both human resources and institutional capacity constraints, as well as lack of infrastructure that combines all of these issues.”

She said the developing countries want a “solutions-based approach” based on the recommendations made by a WTO working group in 1996. The recommendations include simplification of notification provisions, and longer time frames for countries that are not able to comply in a given time.

She said the technical assistance provided by the WTO does not adequately address all the challenges being faced by the developing countries for complying with notification requirements.

The developing countries, said Ambassador Xolelwa, would need targeted technical assistance from the WTO.

“We are also calling for the rationalization of notification obligations that take into account the level of development of the member countries,” she said, maintaining that the LDCs [least-developed countries] should not be asked to undertake any notification commitments because they are facing extreme challenges.

More important, the transparency procedures/provisions must permeate into areas of the functioning of the WTO, she argued.

Without mentioning the opaque processes and top-down approaches that are adopted at the WTO meetings, she said there have to be fundamental changes in the functioning of the WTO and its various bodies, including ministerial meetings, so that transparency is allowed to permeate into all areas.

When members look into the WTO notification requirements, it becomes clear that “not even one country is able to fully comply with them [the notification requirements] and the fact that you put punitive measures for notifications would imply all of us are going to be subjected to punitive measures and I don’t know whether it will assist members,” she said.

The joint proposal also raised the point that the developed countries have failed to comply in critical areas of interest for developing countries, Ambassador Xolelwa pointed out.

“And on critical issues that are important for development, such as in the TRIPS Agreement on issues related to the transfer of technologies to the LDCs, there is no adequate compliance,” the South African trade envoy said.

She said the developed countries did not regularly comply with notification requirements in Mode 4 in the General Agreement on Trade in Services.

“So effectively, what we are calling for is a development-oriented mechanism to support countries to be able to notify rather than a punitive approach,” Ambassador Xolelwa reiterated.

In his presentation on the joint proposal by nine countries on “strengthening the WTO to promote development and inclusivity” at the IGDC meeting, Indian trade envoy Ambassador J S Deepak said while the discussions on the “reforms agenda” are at the centre-stage, the developing countries had consistently demanded reforms to address the asymmetries in various WTO agreements since 2001.

“However what is happening is that the reforms agenda being propagated by a handful of developed members seek to push a one-sided narrative that is of serious concern to all of us,” the Indian trade envoy said.

“It is almost as if the Doha work program and its mandates are being displaced and the reform agenda [being advanced by the handful of developed countries] is to start a new round of trade negotiations with new items on the table,” he said.

“The various reform proposals advanced by the developed countries will erode the core principles of consensus- based decision-making, the principle of non-discrimination and the principle of special and differential treatment for developing countries,” he cautioned.

Also, the developed countries want to impose punitive strictures for non-compliance of notification obligations, and deny special and differential treatment in all present and future negotiations, including fisheries subsidies, said Ambassador Deepak.