TWN Info Service on WTO and Trade Issues (Nov19/05)
13 November 2019
Third World Network

Ministers call for addressing AB impasse as urgent priority
Published in SUNS #9015 dated 8 November 2019

Geneva, 7 Nov (D. Ravi Kanth) - Trade ministers and senior officials from more than 30 countries have called for addressing the grave impasse at the World Trade Organization's Appellate Body (AB) on a war footing so as to ensure that the highest adjudicating body for global trade disputes remained functional beyond 11 December 2019, participants told the SUNS.

At a half-day informal trade ministerial summit hosted by China on the sidelines of its annual trade fair in Shanghai on 5 November, participants from both developed and developing countries expressed grave concern about the continued impasse at the WTO over the Appellate Body that would be reduced to one member from its requisite strength of seven, and become dysfunctional from 11 December 2019.

[With the AB dysfunctional, but the DSU rules on appeal in force, adoption of panel reports will remain blocked, if a party losing in panel rulings simply gives notice of appeal. SUNS]

The United States, which did not attend the Shanghai meeting, has consistently blocked the selection process to fill the six vacancies on the Appellate Body for the past two years on grounds that Washington's systemic concerns about the functioning of the Appellate Body have not been addressed.

The WTO director-general Roberto Azevedo, who addressed the trade ministers and senior trade officials at the Shanghai meeting, underscored the need to conclude an agreement on disciplines for the fisheries subsidies by the end of the year.

However, Azevedo remained silent on the AB crisis, said a participant.

"We can show that the multilateral trading system can deliver meaningful results," the WTO director-general said, according to his statement posted on the WTO website.

"We can demonstrate that members are able to come together and reach decisions that enhance certainty and predictability in the 21st century global economy," he argued.

He briefed the trade ministers about developments in the Doha fisheries subsidies negotiations, cautioning that a failure to "successfully conclude these negotiations [on disciplines for fisheries subsidies] will not just be bad for marine fish stocks, it will damage the credibility of the WTO and discredit the feasibility of multilateral rule- making."

Azevedo said "attempts to negotiate a specific reform package would likely result in prolonged paralysis," adding that "a more promising approach to reform is to be pragmatic - harvesting what we can, when we can, moving forward without artificial deadlines."

"Reform will be - and should be - a constant process of adapting to economic conditions and responding to members' concerns. Every change to WTO rules and procedures is part of reform," Azevedo said at the meeting, according to the statement on the WTO website.

Significantly, the director-general remained silent on the blockage caused by the US at the Dispute Settlement Body for launching the selection process for filling the six vacancies at the AB, with the US intransigent, advancing the same grounds.

But several trade ministers who attended the Shanghai meeting said the urgent priority for members is salvaging the AB without any delay so as to start the selection process, said participants, who asked not to be quoted.

At the closed-door Shanghai meeting, India's commerce secretary Anup Wadhawan said it "is time for urgent action to protect and preserve the multilateral rules-based trading system."

"Despite engagement in an intensive process in Geneva for almost two years on the ongoing impasse in the Appellate Body, no solution is in sight, and next month, we will have a non-functional Appellate Body," India cautioned, according to the participant present at the meeting.

"Therefore, it should be our utmost priority to save the dispute settlement mechanism," India emphasized.

"It is important that in the way forward, we take into account the aspirations of the large majority of the membership and re-double our efforts for an inclusive, transparent and development-oriented agenda," India argued.

With only a few months left for the WTO's 12th ministerial conference in Nur Sultan, Kazakhstan, in June 2020, India called for putting in place "a structured process to finalise a focussed and balanced agenda including issues of priority for the whole membership, latest by March 2020."

India warned against "placing a "wish list of issues" before the Ministers at the Ministerial [at the last minute]", cautioning that "it would be a recipe for disaster."

New Delhi suggested that the concerns of the developing and least developed countries must be accorded primacy to restore trust and confidence in the multilateral trading system.

"The issues which must be on the agenda include a permanent solution for public stockholding in agricultural negotiations [and] an agenda of WTO reforms based on inclusiveness, keeping development central and addressing the historical imbalances and asymmetries in the Uruguay Round agreements," India demanded.

India said "the reform process should not be used to further restrict the flexibilities and policy space required by developing countries and LDCs to better integrate in the global trading system."

Expressing concern over the slow progress in the fisheries subsidies negotiations, India said there is utter "lack of clarity on special and differential treatment, which is making it difficult for developing and least developed countries to have clarity on their rights and obligations in the negotiations."

"Developing countries like India have a large population of subsistence level small and artisanal fishermen, who face hunger and abject poverty and rely on fisheries for their basic livelihood," India emphasized.

"Therefore, any outcome in fisheries needs to take into account their needs and the ground realities of such developing countries for a fair and equitable outcome," India said.

However, the prospects for concluding an agreement on fisheries subsidies by the end of this year hang in the balance, as another round of negotiations will end on 8 November with little progress on central issues such as the proposed disciplines for the IUU (illegal, unreported and unregulated) fishing and depletion of fish stocks among other issues, participants told the SUNS.

In a restricted room document circulated at the Doha fisheries negotiating body meeting on Monday (4 November), China insisted that the WTO dispute settlement mechanism should not address "political issues in the fisheries field, including territorial sovereignty and jurisdiction over disputed waters or jurisdictional overlapping waters."

Trade ministers had agreed at the WTO's eleventh ministerial conference in Buenos Aires in December 2017 to conclude an agreement on disciplines for curbing harmful fisheries subsidies by the end of 2019.

Due to continued differences among members on the appointment of a chair for the Doha rules negotiating body, the negotiations are now being conducted largely by the six facilitators for the major issues in the fisheries subsidies negotiations.

Apparently, six South American countries (Brazil, Argentina, Peru, Uruguay, Colombia, and Chile among others) had urged the WTO director-general to preside over the fisheries subsidies negotiations so as to accelerate the negotiating process, said a South American trade official, who asked not to be quoted.

In the past, during September-December of 2013, Azevedo, as the TNC chair, chose to oversee the negotiations for concluding the Doha Trade Facilitation Agreement prior to the WTO's ninth ministerial conference in Bali, Indonesia, the official noted.

But Azevedo apparently has refused to chair the fisheries negotiations on a daily basis because of his prior engagements, the official suggested.

Meanwhile, members held bilateral meetings on central issues in the fisheries subsidies disciplines during the past three days (Monday to Wednesday) and will hold open-ended informal meetings on Thursday and Friday to be chaired by the six facilitators.

In its latest revised proposal on "adjusting the WTO dispute settlement mechanism - when applied to the Fisheries Subsidies Disciplines," China suggested that "all members believe that WTO fisheries subsidies disciplines and WTO dispute settlement mechanism should have no bearing on Members' territorial sovereignty and maritime jurisdictions."

Due to the conflicting claims of sovereignty to the South China Sea between China and the Philippines, China argued that "members have different views on what kind of adjustments should be made to the WTO dispute settlement mechanism when applied to the fisheries subsidies disciplines for that purpose."

As regards fishery law enforcement and fisheries management, China said that "all members agree that the WTO is not and should not become a fisheries management organization."

It noted that "the issue of WTO reviews on fishery matters is further complicated by the fact that there are ocean and fishery governance regimes dealing with the same subject matter."