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TWN
Info Service on WTO and Trade Issues (Apr20/15) Geneva, 17 Apr (D. Ravi Kanth) – A deputy director-general (DDG) of the World Trade Organization has called for “WTO structural reform” that would include massive tariff-reduction commitments and elimination of tariffs on health-related, environmental, and information technology goods among others. The WTO DDG Alan Wolff, a US national, appointed as DDG, after Ambassador Robert Lighthizer was named USTR in the Donald Trump administration, said “it is not too early to consider what lessons are being learned now during the pandemic, and what experience from the prior 25 years of the WTO’s history suggest areas of improvement – for the rules and the processes, for how negotiations are conducted and how disputes are settled, for the way in which the Members organize their activities, and for the kind and amount of support that the Members would expect from the WTO’s professional secretariat.” Even as the COVID-19 continues to claim fatalities of more than 135,000 with ever rising confirmed cases of more than 2 million people around the world, Wolff, ever since he took over as DDG, has been subtly promoting the US trade agenda while glossing over the damage inflicted on the WTO by the Trump administration, said a trade envoy who asked not to be quoted. In contrast, the European Union trade commissioner Phil Hogan on 16 April urged his trade ministers that EU members must “toughen their vetting of foreign takeover bids” as “the Coronavirus pandemic had left the bloc’s “strategic assets” vulnerable to acquisition from abroad (particularly China),” according to a report in the Financial Times. “Remember, the acquisition of a company in your country may have security effect in other member states or it may negatively affect a project of union interest,” the EU trade commissioner warned, according to the FT report. “Today more than ever, the EU’s openness to foreign investment needs to be balanced by appropriate screening tools,” he said. The EU, which has been hitherto the champion of the multilateral agreement on investment, is today striking a discordant note, and arguing on the need to promote national protection measures while promoting an investment facilitation agreement at the WTO, said an analyst on globalization, preferring anonymity. On the DDG Wolff’s virtual talk to the Washington International Trade Association on 9 April, posted on the WTO website, Wolff has suggested that he represents the WTO for suggesting reforms even though the WTO is a member-driven organization where decisions are reached on the basis of the consensus principle, and there is no WTO mandate for “structural reforms”. Wolff’s suggestions indicate the WTO Secretariat’s determination to accelerate trade liberalization using the COVID-19 as a portal. Wolff’s suggestions on “how negotiations are conducted” is based on a US proposal for introducing differentiation/ graduation among developing countries for availing special and differential treatment; on “how disputes are settled” follows the US decision to spike the Appellate Body, the major arm for enforcing trade rules; and on the way in which the members organize their activities, is based on decisions reached among major developed countries; and “for the kind and amount of support that the Members would expect from WTO’s professional secretariat” follows the US proposal for “naming and shaming” of countries for failing to comply with notification requirements. “A shut down of facilities during this health emergency does not require a shutdown of planning for what should follow,” Wolff has argued. Trade envoys who did not want to be identified noted that while remaining silent on the unilateral trade measures imposed by the US and the world-wide disruptions caused by Washington over the past three years, including its latest coercive actions to divert vital supplies of medical equipment from other countries, Wolff has complained that “tariffs on some products” such as “the average applied tariff for hand soap” at 17% and tariffs on protective supplies used in the fight against COVID-19 at 11.5% and 27% in some countries, remains a major concern. He expressed concern that “the number of export restrictions on exports is substantial and growing,” but, he chose not to mention that it is the US and several European countries that are largely responsible for the restrictions. Several developing countries such as India have also placed export restrictions on hydroxychloroquine, and were also forced to remove them at virtual gunpoint by the US President Donald Trump. After discussing the recent trade figures indicating a massive decrease in global merchandize trade in volume and value terms because of the COVID-19 pandemic, Wolff has suggested that “liberalized trade in medical products stems from five developments.” They include: 1. The schedules of bound tariffs, the results of almost a half century of prior tariff negotiations; 2. The plurilateral zero tariffs Agreement on Pharmaceutical Products in the Uruguay Round and its four subsequent reviews; 3. The Expansion of the Information Technology Agreement in 2015. 4. SPS – rules based on international scientific standards are to be applied. 5. TBT – technical regulations, standards, and conformity assessment procedures are to be non-discriminatory and not create unnecessary obstacles to trade. The DDG has suggested that “positive responses have been made by individual members” such as the European Union and the US with respect to China. However, Wolff has failed to suggest why the US had to reduce the unilateral Section 301 tariffs imposed on Chinese products. He praised New Zealand, Singapore, Australia and four other regional countries for having affirmed “the importance of refraining from the imposition of export controls or tariffs and non-tariff barriers and of removing any existing trade-restrictive measures on essential goods, especially medical supplies, at this time.” While acknowledging “the urgent need to find a vaccine” and “urgent attempts” to ramp up “production of medicines to overcome shortfalls,” Wolff failed to suggest the need for the waiving of WTO TRIPS (trade-related aspects of intellectual property rights) provisions that would impose an onerous burden on developing and poorest countries through the exclusive marketing rights and other monopoly patent provisions. He admitted that “the market is not a perfect means of allocating scarce supplies when human lives are at risk,” suggesting that “governments are limiting exports and demanding that domestic production be reserved for national consumption.” Without naming his own country the US that is responsible for the grave shortage of supplies of vital surgical gloves, personal protective equipment, and ventilators, he suggested “there is a rising chorus of cries of “foul” with current allocations, including claims of “modern piracy” when expected shipments are said to disappear en route” and “supplies are being priced out of the reach of developing countries and competing purchasers.” Wolff has claimed that “when governments are involved, it is the opposite side of the coin from the conduct that the Government Procurement Agreement is designed to regulate, and arguably should receive international attention.” Importantly, according to Wolff, “the WTO has tools that are adaptable to meet a number of the current challenges”. However, if the US is going to blatantly violate the WTO rules, there is little that countries can address through the WTO rules, particularly in the absence of a two-stage enforcement mechanism for resolving global trade disputes. He has complained that “three major emerging pharmaceutical manufacturing nations, namely, China, India and Brazil, are notably absent from this agreement, as are major importing nations such as Russia, Mexico and Turkey,” from the WTO pharmaceutical agreement that came into force on 1 January 1995. “Given that WTO Pharmaceutical Agreement members such as the US, EU, Switzerland, and Japan are amongst the biggest players in the global pharmaceutical market, this implies that a large proportion of global trade in pharmaceuticals is tariff-free,” he has argued. Wolff has also suggested that a WTO committee on crisis response should be established. In short, as the COVID-19 pandemic is expected to establish a new normal in the world economy, Wolff’s proposals are not only favourable to his country, the US, but also reinforce the business as usual model at the WTO with reforms based on Washington’s proposals.
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