TWN Info Service on WTO and Trade Issues (Jul19/31)
29 July 2019
Third World Network

South rallies around proposals to advance developmental agenda
Published in SUNS #8955 dated 26 July 2019

Geneva, 25 Jul (D. Ravi Kanth) – After four years of fractious divisions, amid sustained attempts to hijack the Doha Development Agenda (DDA) negotiations, the developing and least-developed countries have finally rallied around two proposals at the World Trade Organization seeking to advance their developmental agenda as part of the WTO reforms.

A “ray of hope” was provided at the General Council (GC) meeting on Wednesday (24 July), when the two proposals, “Strengthening the WTO to promote development and inclusivity” and “An inclusive approach to transparency and notification requirements in the WTO”, came up for discussion, trade envoys told the SUNS.

Ever since the infamous WTO’s tenth ministerial meeting in Nairobi in December 2015, the developing countries and LDCs have remained divided on one issue or the other, said a trade envoy, who asked not to be quoted.

If, as evident at the GC meeting before the summer break, the developing and least-developed countries remain united, they can counter the one-sided narrative on WTO reforms that is being advanced by the United States and other developed countries, the envoy said.

At the meeting, the two proposals tabled by developing countries dominated the proceedings while the proposal by the US for bringing about differentiation/graduation among developing countries for availing special and differential flexibilities (S&DT) suffered a setback, several trade envoys told the SUNS.

In sharp contrast to these two proposals, a proposal from the European Union and several other countries for improvements in the functioning of the WTO committees, and the US proposal to introduce differentiation/ graduation were largely rejected by developing countries and LDCs at the GC meeting.

To start with, India introduced the joint proposal by Bolivia, Cuba, Ecuador, India, Malawi, South Africa, Tunisia, Uganda, and Zimbabwe (WT/GC/W/778), saying the proponents want to “bring balance to the on-going discussions on WTO reform by reaffirming the importance of development to the work of this organization.”

With WTO reforms at the centre-stage of discussions at the WTO, India’s trade envoy Ambassador J S Deepak said “as the original proponents of reforms to correct the asymmetries in the covered Agreements, developing Members are more than willing to engage constructively in these discussions.”

He expressed sharp concern over “a one-sided narrative” being advanced by major developed countries, especially the US, that disregards “issues of importance and concern to developing countries.”

Moreover, the one-sided narrative “erodes the core principles of consensus-based decision making, non- discrimination and S&DT,” Ambassador Deepak said, maintaining that the recent proposals “to differentiate between developing Members, impose punitive strictures for non-compliance with notification obligations, and do away with S&DT in negotiations on fisheries subsidies are illustrative of the lack of balance in the reform proposals that have been tabled.”

“This [one-sided narrative] needs to be remedied and soon”, the Indian envoy said, emphasizing that “we need to have on the table reform proposals that reflect the views of developing countries including LDCs.”

The concept paper circulated by nine developing and least-developed countries, said Ambassador Deepak, aims to “ensure that issues of their interest are not sidelined in ongoing discussions on WTO reform.”

The concept paper, said Ambassador Deepak, states emphatically that “the Marrakesh Agreement establishing the WTO recognizes that international trade is not an end in itself, but a means of contributing to certain objectives including ensuring that developing countries and LDCs secure a share in international trade commensurate with the needs of their economic development.”

Therefore, discussions on WTO reform “should be premised on the principles of inclusivity and equity, and not serve to widen existing asymmetries in the covered agreements,” the Indian envoy emphasized.

He said that preserving the core values of the multilateral trading system with a view to building trust among members must remain the central goal of the WTO members.

Consequently, preserving and strengthening the WTO must include:

* Disciplining laws and regulations of WTO Members which mandate unilateral action on trade issues that are inconsistent with WTO rules.

* Strengthening the multilateral character of the WTO, especially through the preservation of the practice of decision-making by consensus and respecting Article X of the Marrakesh Agreement on Amendments.

* Ensuring that plurilateral joint statement initiatives do not change the fundamental architecture of the WTO.

* Correcting the existing imbalances in the covered agreements as mandated in the Doha Round by building on the work done so far, in accordance with existing mandates.

Ambassador Deepak went on to elaborate on other aspects such as:

A. Resolving the impasse in the dispute settlement system, particularly resolution of the Appellate Body impasse as a central priority in the reform agenda.

B. Safeguarding development concerns based on Special and Differential Treatment (S&DT) – which is a non-negotiable, treaty-embedded right for developing Members and LDCs.

C.  Rebalancing the asymmetric rules of the Uruguay Round by strengthening S&DT provisions in accordance with paragraph 34 of the Doha Ministerial Declaration.

D.  Transparency and notification requirements without any punitive measures and taking into consideration capacity constraints faced by developing countries and LDCs.

E.  The developed Members should lead by example in submitting comprehensive, timely and accurate notifications especially regarding their final bound AMS commitments, mode 4 market access commitments, Article 66.2 of the TRIPS Agreement and disclosure of origin of biological resources and associated traditional knowledge in patent applications.

F.  The need to ensure that transparency should permeate the full spectrum of the operation of the WTO, from its day-to-day meetings, as well as Ministerial Conferences.

G.  The need to take into account the resource constraints of small delegations by rationalizing the number of meetings at the WTO to ensure that there are no overlaps. In areas where there are active negotiations for outcomes, these meetings should as far as possible take place in formal mode, including having a minuted record of discussions.

Ambassador Deepak concluded his elaborate statement by emphasizing that “our immediate priority in WTO reforms should be to resolve the ongoing impasse in the Appellate Body and to address the unilateral measures as these pose serious existential challenges for the organisation.”

More important, “any reforms must be development centric, preserve the core values of the system, strengthen the provisions of special and differential treatment in existing and future agreements and preserve the multilateral character of WTO,” Ambassador Deepak said.

In response to the joint proposal by the nine developing countries, the US said that it would completely reject the proposal seeking “development and inclusivity” by reopening the Uruguay Round agreements, said a trade envoy, who asked not to be quoted.

The US further claimed that the Doha development negotiations were closed at the WTO’s tenth ministerial meeting in Nairobi.

The US trade envoy said their own proposal for bringing differentiation/graduation for availing special and differential treatment among developing countries must be concluded, the envoy said.

The EU did not reject the joint proposal by the nine developing countries but said there are several aspects that it cannot support.

Several other developed countries such as Canada and Japan among others adopted a nuanced approach in response to the joint proposal.

Among the developed countries, only Norway showed a degree of acceptability towards the joint proposal by the nine developing and least-developed countries.

A few middle group developing countries such as Peru said they would support the joint proposal.

Several developing country coalitions – the African Group, the ACP (Africa, Caribbean and Pacific) Group, and Chad on behalf of the least-developed countries – strongly supported the joint proposal by the nine developing countries.

China’s trade envoy Ambassador Zhang Xiangchen commended “India and other co-sponsors for their efforts in putting forward” the joint proposal.

He said “China shares similar views on various issues raised in the paper, on which we have clearly expressed our positions in China’s Proposal on WTO Reform.”

“In particular, we agree that WTO reform does not mean accepting either inherited inequities or new proposals that would worsen imbalances,” the Chinese envoy said, emphasizing that  “reforms must be premised on the principles of inclusivity and development.”

He said “the priorities for WTO reform must be addressing immediate existential crises including Appellate Body selection impasse and the resort to unilateral measures.”

“Also, any reform must reaffirm the principle of Special and Differential Treatment, which is a treaty-embedded and non-negotiable right for all developing members,” the Chinese envoy said.

Ambassador Zhang said he would agree that “the multilateral process remains the most effective means to achieve inclusive development-oriented outcomes, while we may also need to explore different options to address the challenges of contemporary trade realities in a balanced manner.”

He said “developing members, including LDCs, are catching up and getting more and more involved in the WTO reform process. This document is a very good example. This kind of effort is extremely important because the WTO reform should never be one-sided but inclusive and balanced.”

“China will continue working with other members to ensure developing members’ voices are not ignored in this process,” the Chinese envoy maintained.

In the closing statement on the joint proposal, South Africa’s trade envoy Ambassador Xolelwa Mlumbi-Peter emphasized that “developing countries have been proponents for the reform of the WTO virtually from the first moment the ink on the Uruguay Agreements dried as many countries have alluded to.”

“The Doha Round,” she said, “was commonly seen as an opportunity to address unfinished business, however, virtually 20 years to date, we have not been able to cement the Doha issues and there is no agreement regarding the direction of the reform.”

She said the WTO members had committed in the Marrakesh Agreement to continue to make positive efforts to ensure that developing countries, and especially LDCs, secure a share in the growth of world trade commensurate with the needs of their economic development.

Sharply disagreeing with the US position that “the Doha Development Round is dead,” the South African trade envoy reminded the US that “decisions in the WTO are reached by consensus and there is no decision by the WTO that declares the Round concluded.”

Ambassador Xolelwa told the US and other developed countries that “the CTD SS [the Doha negotiating body for trade and development] has fulfilled its mandate and it is for this reason that the G90 will submit its revised proposals on S&DT.”

“The trade and development nexus is a recognized principle and development has to be core to the work of the WTO,” she told her counterparts from the developed countries.

“S&DT is a right which is embedded in WTO Agreements and has to be preserved and is not subject to the whims of members and abstract prognostications,” she emphasized.

Without naming Brazil and Kenya among others, who want to opt-out of availing S&DT, the South African envoy said “we note that there might be WTO members who wish to opt-out of S&DT, it is their prerogative to self-declare that they do not require flexibility in implementation of WTO Agreements.”

Without mentioning the US President Donald Trump, who has been identified by the US envoy to the WTO as having a personal interest in pushing differentiation/graduation at the WTO, the South African envoy said “any attempts to put pressure on Members to give up their rights are not acceptable and will continue to be rejected with the contempt it deserves.”

The developing countries, she said, have reiterated the view “that WTO reform must preserve the core values and basic principles of this organisation, including S&DT and consensus decision making which are critical to preserve the functioning of the multilateral trading system and are important to build trust.”

“In this context,” she asserted, “as developing countries we continue to be guided by the Doha Mandate, [and] in our paper we express the importance of balance, inclusivity and priorities outlined under this mandate.”

“The WTO reform agenda cannot be in only one direction as some Members seem to suggest, imbalances and inequities continue to exist which advantage developed Members,” she said, arguing that “there remains a substantial body of unfinished business under the Doha Development Agenda including addressing asymmetries in Agriculture, strengthening Special and Differential Treatment and addressing Implementation Issues amongst other things.”

Further, “the credibility and continued relevance of the multilateral trading system is premised on two essential features – mutual benefit from the system and mutual trust. Also important, is the need to ensure that multilateral rules are supportive to the country`s development objectives,” she argued.

She expressed sharp concern that “the reform is happening without a discussion and consensus about its objectives and expected outcomes.”

“In our view, “WTO reform” does not mean accepting inherited inequities or new proposals that would worsen imbalances,” she argued, demanding that “reforms must be premised on the principles of inclusivity and development and respond to the underlying causes of the current backlash against trade and the difficulties that developing Members continue to face vis-a-vis their industrialisation challenges.”

Therefore, she said, the two most serious and immediate risks to the relevance of the MTS are:

* First, the unprecedented challenges of unilateral trade measures that violate WTO rules and principles and the manner in which national security measures are implemented which has taken us into uncharted territory.

* Second, the continuing impasse in the Appellate Body selection process threatens the DSM that is the foundation of a functioning MTS.

Without a resolution by 10 December 2019, the DSM will be rendered obsolete. In the absence of a functional, effective and independent mechanism for enforcing the rules, negotiating new rules becomes futile.

While the joint proposal by developing countries garnered support from many members, a proposal from the US for introducing differentiation/graduation among developing countries was denounced by many developing countries and LDCs.

The US, said a trade envoy who asked not to be quoted, “remained isolated as there was little support with the EU offering some conditional support.”