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TWN Info Service on WTO and Trade Issues (Jul20/19)
24 July 2020
Third World Network


South rebuffs attempts to create new rules at WTO amid COVID-19
Published in SUNS #9167 dated 24 July 2020

Geneva, 23 Jul (D. Ravi Kanth) – Many developing countries have rebuffed attempts by the United States and the Cairns Group of farm-exporting countries to create new rules at the World Trade Organization under the pretext of the Covid-19 pandemic, trade envoys told the SUNS.

At a General Council (GC) meeting on 22 July, the developing countries – China, India, South Africa, the African Group, and the ACP (Africa, Caribbean, and Pacific) group among others – rejected the US move to change the negotiating function of the WTO by bringing about differentiation among developing countries for availing special and differential treatment (S&DT), said trade envoys, who asked not to be quoted.

The developing countries also rejected a proposal from the European Union, Canada, and several other countries on “procedural” guidelines for WTO councils and committees addressing trade concerns, said trade envoys, who asked not to be quoted.

At the GC meeting, members could not arrive at a consensus on the date and venue of the WTO’s 12th ministerial conference (MC12), despite an in-principle agreement on Kazakhstan’s offer to host the meeting in Nur Sultan in June 2021.

Several members suggested that Kazakhstan’s offer must be treated as work in progress due to the evolving Covid-19 situation.

Several developing countries, including India, South Africa, the African Group, and the ACP group also suggested that given the challenges posed by the Covid-19 on international travel, the June 2021 date can be agreed as a working hypothesis.

“It should be continuously reviewed by the General Council based on the evolution of COVID-19,” South Africa said, according to participants present at the meeting.

On the venue for MC12, Brazil suggested bluntly that Geneva must be considered for hosting the ministerial meeting, said a trade envoy, who asked not to be quoted.

APPOINTMENT OF ACTING DG

Prior to the meeting, the Chair of the WTO General Council, Ambassador David Walker of New Zealand, suspended a discussion on the designation of an acting director-general during the extended selection process for finalizing the post of the new director-general to replace the current incumbent Roberto Azevedo, who steps down on 31 August, said trade envoys, who asked not to be identified.

Earlier, he had informed members in various configurations that two deputy directors-general – Mr. Alan Wolff from the United States and Mr Karl Brauner from Germany – are being considered for the post of acting DG, said trade envoys, who asked not to be quoted.

Apparently, there is no consensus on either Mr Wolff or Mr Brauner because of objections raised by some members, said a trade envoy, suggesting that more consultations will be held to find an acceptable candidate.

APPOINTMENT OF NEW DG

On the appointment of a new DG from the ongoing race among eight candidates, several countries highlighted the important role that the DG has to play in these times of existential crisis at the WTO.

“The next DG is expected to lead an institution that is facing an existential crisis,” and, “the situation is further exacerbated by COVID-19 which is taking place at a time when the global economy was in a period of low growth even before COVID-19,” South Africa said at the meeting.

“The WTO, as a Member-driven institution, has a role to play to promote economic recovery, build resilience … and promote inclusive growth and development,” South Africa argued.

It suggested that “the DG plays a facilitative role and we need someone who can bring Members around the negotiating table, and as the Chair of the TNC (Trade Negotiations Committee) will focus discussions on mandated issues and those required to deliver on the DDA (Doha Development Agenda) so as to have a fair, development-oriented rules-based MTS (multilateral trading system)”.

South Africa underscored the need for “the process” to be fair, inclusive, transparent, and enable effective participation of all members.

E-COMMERCE MORATORIUM

On items concerning the implementation of the outcomes at Bali, Nairobi and Buenos Aires, India and South Africa drove a strong message for accelerating work on the 1998 e-commerce work program, particularly the moratorium on customs duties on electronic transmissions (ET), said several participants, who asked not to be quoted.

Earlier, India and South Africa had introduced several proposals for a re-think about the moratorium on customs duties on e-commerce because of the damage it has caused to developing countries in terms of the revenue loss to the tune of more than $10 billion, as well as the adverse effects on digital industrialization.

At the GC meeting, South Africa argued that, “When the moratorium on customs duties on ET was agreed in 1998, there was no clarity on the scope of the moratorium and how this may unfold with the digital revolution,” and “countries therefore agreed to discipline ET without a clear indication of the fiscal, industrial and economic implications.”

“The key concern is the impact of the moratorium on customs duties on ET on our efforts to industrialize digitally, including its impact in undermining existing industries,” South Africa argued.

It said that “meaningful progress on the work programme is important due to the value we attach to effective and inclusive participation in e-commerce and the digital economy and the role it can play in the development of our economies.”

MARKET ACCESS UNDER COVID-19

During the discussions on the Cairns Group’s proposal on “Covid-19 initiative: protecting the global food security through open trade,” India, South Africa, China, and many developing countries opposed attempts to set new rules using the Covid-19 pandemic as a pretext, without resolving the fundamental problems such as the permanent solution for public stockholding programs for food security, the removal of AMS (aggregate measurement of support) and other historical asymmetries in the global farm trade.

The sponsors of the proposal – Australia, Brazil, Canada, New Zealand, and other members of the Cairns Group – claimed that “at this critical time, when countries are responding to the challenges of the COVID-19 pandemic, the risks posed by additional distortive subsidies, the disposal of subsidised stocks (whether privately held or in public storage), and other measures that distort or disrupt trade cannot be overestimated.”

The Cairns Group argued that “producers who are already under pressure could be put in an unviable position and the supply chains that are critical to the global agricultural and food system could be put at risk,” adding that “such developments could increase the levels of global food insecurity as a result of COVID-19.”

“To avoid this, Members must show restraint and live up to their commitments, including in recent declarations and statements to ensure all emergency measures in response to COVID-19 are targeted, temporary, proportionate, science-based where relevant, and transparent – including by informing and notifying all relevant COVID-19 related measures as soon as practicable to the WTO Secretariat,” the Cairns Group argued.

“The international community must continue to respond to the COVID-19 food security threat by ensuring open and predictable agricultural markets, which will result in market-based price signals and preserved supply chains,” it argued.

The United States, which endorsed the Cairns Group’s proposal, criticized China for disrupting food supply chains at a time of extreme fragility.

The US suggested that China is spreading Covid-19 through its food products, said a participant, who asked not to be quoted.

In its intervention, India said while it has not used export restrictions either on medical items or food products so far, it argued that India has a huge problem to address food security.

India said issues concerning food security, particularly the permanent peace clause, must be pursued without delay.

China said that it “strongly believes that the impact of the COVID-19 pandemic has clearly further indicated the importance of the food security issue in WTO negotiations.”

China urged “members to make joint efforts in PSH (public stockholding) negotiations for the permanent solution that will benefit all developing members for the food security.”

In its intervention on the Cairns Group proposal, South Africa said that “the imbalances in the Agreement on Agriculture (AoA) has a significant impact on national and global structures relating to agriculture production and trade and have left developing countries in very fragile positions.”

“As a result, their capacity to cope with the pandemic and economic devastation is extremely limited,” South Africa argued, suggesting that “the more sustainable way of protecting global food security is to urgently address these imbalances, the priority being trade-distorting domestic support.”

Without naming the major subsidizing farm-exporting countries, South Africa expressed sharp concern “about the impact of the disposal of subsidized stocks at a time when our producers are under immense pressure as a result of COVID-19.”

South Africa drew attention to the adverse effects it is facing in agriculture products such as frozen potato chips, arguing that members need “a meaningful outcome on trade-distorting domestic support.”

It also called for dealing with trade-restrictive SPS (sanitary and phytosanitary) requirements as they add to the series of costs faced by exporters.

“Key steps to respond to the crisis should include safeguarding food security and ensuring that agricultural production is sustained,” and “the flexibility under Article 6.2 of the AoA to support low-income or resource-poor producers, remains relevant. COVID-19 further highlights the urgent need to deliver on PSH for food security purposes and to make provision for the inclusion of new programmes,” it argued.

Members “must therefore prioritize the conclusion of work on mandated issues, including SSM (special safeguard mechanism) to address the destabilizing and crippling effects of import surges and downward price swings in the increasingly volatile global agricultural markets,” South Africa argued.

India, South Africa, the African Group and the ACP group challenged the Cairns Group members to engage sincerely in the negotiations to finalize the permanent solution for public stockholding programs for food security.

Even the European Union severely attacked the Cairns Group proposal, saying that some of its members have resorted to export restrictions which have not been notified until now.

ISSUE OF DIFFERENTIATION

The US again raised the issue of differentiation among developing countries for availing special and differential treatment (S&DT) in the current and future trade negotiations.

The US lamented that there is little progress on the issue of differentiation, emphasizing that S&DT reforms, particularly self-designation for availing S&DT, must be addressed on a priority basis. Otherwise, “the WTO faces a stark choice: reform or irrelevance.”

China and several other developing countries said that they had already stated their position to oppose the differentiation formulation, adding that it is not tenable with the WTO’s treaties and rules.

China quoted Thomas Jefferson’s famous statement that “there is nothing more unequal than the equal treatment of unequal people,” suggesting that “truth when applied in the context of the WTO, it means that in an international organization with developed and developing members, “non-reciprocity” is a means and a principle to realize equity.”

“Special and differential treatment is our institutional right which we will not give up,” China said, arguing that it is ready to assume more responsibilities and make greater contributions.

Responding to the US proposal on the negotiating function of the WTO, South Africa recalled the joint proposal co-sponsored by China, India, and Venezuela (WT/GC/W/765), saying that it “continues to be our response on this issue.”

The US proposal still maintains the arbitrary criteria for determining which WTO Members should continue to access S&DT, South Africa argued, adding that the mandate members have on S&DT is in accordance with paragraph 44 of the Doha Ministerial Declaration, which calls for strengthening the “S&DT provisions to make them precise, effective and operational.”

It is important to address the G90’s revised proposal, South Africa said.

Elaborating on S&DT, South Africa said it is an essential feature of various WTO agreement provisions.

“The preamble to the Marrakesh Agreement Establishing the WTO encourages “positive efforts” to ensure that developing countries secure a share in the growth of international trade commensurate with the needs of their economic development,” South Africa emphasized, arguing that “these positive efforts take the legal form of provisions on S&DT, which are recognized under the Doha Declaration to be an integral part of the WTO Agreements”.

Furthermore, “developing countries are going to be disproportionately affected by the COVID-19 pandemic, especially in Africa,” it suggested.

“The pandemic and its effects are exacerbated by the crisis in achieving clean water and sanitation targets (SDG 6), weak economic growth and the absence of decent work (SDG 8), pervasive inequalities (SDG 10), and above all, entrenched poverty (SDG 1) and food insecurity (SDG 2) which are more prevalent in developing countries,” South Africa argued.

 


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