TWN Info Service on WTO and Trade Issues (Apr21/01)
1 April 2021
Third World Network

Several WTO members oppose hybrid negotiating sessions at MC12
Published in SUNS #9318 dated 1 April 2021

Geneva, 31 Mar (D. Ravi Kanth) – Several countries have opposed any negotiating sessions in a hybrid format at the World Trade Organization’s 12th ministerial conference (MC12) that is likely to start in Geneva on 30 November, highlighting the pitfalls due to the raging COVID-19 pandemic and lack of vaccination across countries, said people familiar with the development.

At an informal WTO General Council (GC) meeting held on a virtual platform on 30 March, several developing countries such as Pakistan, Zimbabwe and South Africa, as well as the European Union among others echoed their opposition to convening negotiating sessions in a hybrid format, said people, who asked not to be identified.

The United States and India did not take the floor during the two-hour meeting.

The new General Council chair, Ambassador Dacio Castillo from Honduras, spoke largely on the process-related issues, particularly on what ought to be the outcome document for MC12.

WTO DG’S TOP-DOWN, DIVISIVE AGENDA

Ahead of her visit to Washington DC next week, the new WTO Director-General Ms Ngozi Okonjo-Iweala unveiled her priorities at the GC meeting that seem to be bordering on a few multilaterally-mandated Doha issues such as fisheries subsidies, and several divisive issues like the non-mandated Joint Statement Initiatives (JSIs) that allegedly violate the core provisions in the Marrakesh Agreement.

As part of the so-called “third way” which is expected to be mentioned at the G7 trade ministers’ meeting on 31 March, the DG highlighted her second round of meetings with Big Pharma to address the shortage of vaccines, an attempt that appears to be aimed at chipping away at the TRIPS waiver proposal, said people familiar with the development.

In a move that appears to please the US, which has single-handedly atrophied the Appellate Body (AB), the DG has brought a subtle linkage between the “Appellate Body impasse and [developing] work programs for future reforms, including the WTO’s response to climate change and other environmental challenges.”

This linkage, according to one trade envoy, has an ominous implication that could be interpreted as a payment for restoring the Appellate Body, in return for agreeing to the future reforms as being sought by the US.

WTO DG’S PRIORITIES

At the GC meeting, Ms Okonjo-Iweala urged members to “leverage the power of trade in pursuit of” objectives set out in the Marrakesh Agreement to improve the living standards and create new jobs.

She said that members “can deliver new rules that curb overfishing, overcapacity and IUU [illegal, unreported and unregulated] fishing and make our oceans more sustainable.”

She argued that “the multilateral trading system can provide a meaningful collective response to this and future pandemics.”

Ms Okonjo-Iweala said that members can advance on agriculture and development, without suggesting whether there should be an outcome on the much-delayed mandated issues such as the permanent solution on public stockholding programs for food security for developing countries, the special safeguard mechanism, and other issues involving sharp reduction commitments in domestic support by the US and other developed countries, said people, who preferred not to be quoted.

In the face of serious legal challenges being raised on the status of the Joint Statement Initiatives and whether the JSIs are inconsistent with the core provisions in the Marrakesh Agreement, the DG said “groups of Members can foster greater certainty and inclusiveness in the 21st century global economy through the Joint Statement Initiatives.”

On the immediate restoration of the Appellate Body as being demanded by more than 125 countries, Ms Okonjo- Iweala merely said “we can find a way forward on the Appellate Body impasse and develop work programmes for future reforms, including the WTO’s response to climate change and other environmental challenges.”

“If we can do this,” she said, “I think the outcome document, such as it will be, will fall out naturally.”

Although she remains “very hearted” about the progress in fisheries subsidies negotiations, Ms Okonjo-Iweala said, “but sometimes, as I walk around, I am also a little bit worried” because of the issues of familiar positions in some of the agenda items.

“And, I would want to continue to stress that if we want to deliver results, we have to do things differently,” she stressed, suggesting that “the world is changing and we cannot afford for us to be left behind in this change.”

The DG said that it will not look so good if trade ministers come out with no agreement, “no contribution to the meaningful issues that are being faced by the world today, nothing to add in terms of a framework for tackling the next pandemic.”

“Looking good means, being seen by the world, as having delivered for today’s problems,” she emphasized.

Ms Okonjo-Iweala urged members “to be focused on the menu of issues that are before us”, warning that “bringing a lot of unresolved issues to this meeting will be a recipe for failure.”

“What I am asking, is for us to create a recipe for success up-front,” she said, suggesting that “two or three or four concrete deliverables will be such a recipe, starting with those we are working on like fisheries, together with work programmes on other items we’ve not agreed on, so that we can have a way forward for the future.”

By July, she said, members “should identify those issues we can agree on and agree on them so that Ministers can stamp these when they come together.”

For those issues that members cannot agree on, the DG suggested developing “a meaningful work programme to move forward on them or a framework, depending on the nature of the issue. But for all of this to happen, we really have to exercise the needed flexibility now, not later.”

She said that “as Director-General, I am committed to a preparatory process that is transparent, effective and agile, where all members have the opportunity to put forward their views. But at the end of the day, those views have to come together. I have already started and I will work relentlessly until we get to the outcomes we need.”

She spoke about the newly established Delivery Unit that “will work closely with me and with units across the Secretariat, to better support you in your efforts to reach concrete outcomes.”

“The idea is to help me follow the deliverables relentlessly, day after day, until we get to the results,” Ms Okonjo- Iweala said, suggesting that she is planning “to convene a meeting of the TNC and a Heads of Delegation – ideally before the May General Council – to determine where we stand as we look ahead towards MC12.”

A SECOND MEETING WITH BIG PHARMA

As part of her much-publicized “third way” to address the COVID-19 pandemic, the DG informed members that she is “planning an event in mid-April with vaccine manufacturers from developing and developed countries.”

She said the underlying rationale for convening this meeting with Big Pharma “is to move us along on our quest to solve this unacceptable, inequitable access of poor countries to vaccines.”

Reflecting on the “very serious scarcity in supply” of vaccines and how to expand manufacturing in all its ways, the DG said that “we also need to look to the future and agree a framework where countries do not need to stand in the queue in order to get access to life-saving vaccines, therapeutics, and diagnostics.”

While remaining totally silent on the need to arrive at an expeditious decision on the TRIPS waiver proposal being co-sponsored by 58 countries with support from 61 other members, the DG expressed confidence in her meeting with Big Pharma.

“And, I hope we can come to a good arrangement on both increasing manufacturing volume, looking at the TRIPS Agreement and seeing how we land – what landing zone we have on that, and agreeing to something that we can take to the ministerial that will be equitable and that will engage with the problems that we have now,” she said.

According to the DG, the meeting with Big Pharma in two weeks “will enable manufacturers to tell us their problems and at the same time listen to our issues and our desire to improve on vaccine manufacture and delivery.”

The meeting will be held under “Chatham House rules (that require things discussed at the meeting to not be attributed to the speakers), so I hope to invite some Members along with representatives of other groups so that the membership can get reports back and be fully engaged in what is happening.”

GC CHAIR’S FIRST MAJOR STATEMENT

With seven months left for MC12, which could be held for four days beginning on 30 November, the GC chair Ambassador Castillo focused on what ought to be the outcome document.

He suggested that the “main types of outcome documents that have emerged in past Conferences include, with slight variations: (i) a consensual Ministerial Declaration; (ii) a Chair’s summary, under his/her own responsibility; and (iii) a “hybrid” document, containing on the one hand, a consensual part, negotiated and agreed by the General Council before the Conference, and on the other, a Chair’s summary under his/her own responsibility.”

In particular, he said, “looking at past Ministerial Declarations, at earlier Ministerial Conferences, these were fully-fledged, in as much as they contained a consolidated text of all decisions taken, as well as instructions or guidance provided by Ministers.”

Ambassador Castillo said “in more recent Ministerial Conferences, such as MC9 and MC10, we had Ministerial Declarations that were set out in three parts: Part one contained a preamble or introduction; Part two was a list of the individual decisions taken by Ministers at that particular Conference; and Part three contained Ministerial guidance on future work.”

He said the preparatory process in the run-up to MC12 will remain a bottom-up, transparent, and wholly inclusive process.

MEMBERS’ INTERVENTIONS

In what appears to be a sharp response to the DG’s priorities, South Africa said it is sine qua non to pursue two central priorities for MC12. They include (1) addressing the COVID-19 pandemic by agreeing to the TRIPS waiver expeditiously, and (2) restoring the Appellate Body without delay.

South Africa’s trade envoy Ambassador Xolelwa Mlumbi-Peter, who spoke from her country, said “we are living in extraordinary times, which require appropriate and exceptional measures.”

She said “the COVID-19 pandemic continues to rage globally, just short of 2.8 million deaths have been registered to date,” adding that “the world is also facing the deepest economic crisis since the Second World War.”

“In this context,” she said, “MC12 acquires added importance.”

“Whether a meeting in any format would be possible will depend on how well we deal with the pandemic,” said Ambassador Xolelwa, expressing “serious doubts that a fully digital ministerial could be possible given the huge time differences between members as well as uneven digital connectivity.”

Against this backdrop, she said, “the most important and immediate objective of the WTO is to deal with the pandemic by ensuring that the TRIPS Waiver is passed expeditiously.”

“Until and unless we scale up production across the world and ensure that everyone has equitable access to vaccines, therapeutics and diagnostics, none of us will be safe,” she emphasized.

She argued that “economic recovery depends on our ability to deal with the pandemic, including trade rules that facilitate manufacturing, growth and jobs.”

Commenting on the AB crisis, she said that “we also need to resolve the impasse at the Appellate Body as a matter of great urgency.”

“Without an operational multilateral, rules-based adjudication system, it makes no sense to negotiate new rules since they will not be enforced. Equally, if we cannot respect existing mandates, it makes it very difficult to agree on new ones,” she said.

The South African trade envoy underscored the need “to think carefully what issues we want to take forward at MC12. These must be realistic, be responsive to the current context and recognize the strategic vulnerabilities exposed by the pandemic.”

According to Ambassador Xolelwa, “MC12 must deliver food security, livelihoods and economic recovery outcomes, as well as preserve the core principles of the WTO.”

“An ambitious trade liberalisation agenda is therefore not realistic given the current context,” she cautioned.

South Africa demanded that “multilateral mandates and unfinished business under the DDA [Doha Development Agenda] must be given priority, since they are intended to re-balance the trading system and to build an inclusive world economy.”

“Even before the pandemic, much of the developing world was struggling with record high debt and weak growth,” she said.

She drew attention to her intervention at the TNC meeting last month by saying that “the time is ripe for a conversation about the nexus between trade and development and the contribution of the WTO in achieving the goals set in the Marrakesh Agreement and its alignment with the SDGs (United Nations Sustainable Development Goals).”

Ambassador Xolelwa expressed concern that “140 million people could fall into extreme poverty this year, with South Asia and Africa the hardest-hit regions.”

“This reinforces the importance of special and differential treatment (S&DT) in not only dealing with the crisis but to promote structural transformation of our economies and the G90 proposals are the most concrete and realistic to deliver on the existing mandate.”

She told the GC chair that his suggestion about holding consultations on the two moratoria – namely, the moratorium on customs duties on electronic transmissions (ET) under the 1998 work program and the moratorium on TRIPS non-violation and situation complaints – cannot be linked, according to people familiar with the development.

On e-commerce, said Ambassador Xolelwa, “the multilaterally mandated work is the 1998 Work Programme and we must reinvigorate the work through the various bodies of the WTO.”

She said “the outcome on the e-commerce moratorium at MC12 will depend on clarifications with regard to the scope and definition of ET.”

Ambassador Xolelwa emphasized that “in relation to WTO reform, we must safeguard the multilateral character and preserve the key principles of the WTO, as well as ensure an inclusive MTS [multilateral trading system] that promotes structural transformation, equitable growth and development, employment and improve living standards.”

Barbados, which is apparently assisting the DG in her efforts to find new deputy directors-general, has commended the GC chair and the DG for their efforts to find pragmatic outcomes.

Kazakhstan, which is expected to chair MC12, called for concrete results in four areas: (1) ensuring access to delivery of vaccines and medical goods to all countries; (2) conclusion of fisheries subsidies negotiations; (3) restoration of the Appellate Body; and (4) the initiatives being undertaken by the DG.

Australia said that good preparatory processes are currently underway, arguing that it endorses the DG’s call for concrete outcomes at MC12. It cautioned about the DG’s suggestion of a work program on agriculture.

Zimbabwe expressed grave concern over the mode of conducting MC12, suggesting that a virtual or hybrid meeting will not be able to deliver a transparent outcome.

It spoke of a non-negotiating meeting at MC12, saying that members should arrive at all decisions by consensus.

Zimbabwe argued that the DDA remains the only viable way to create a balanced and equitable system, and called for DDA-plus solutions at MC12.

Pakistan said several things about MC12 are not clear yet, arguing that members have not received any information about how the delegates will be vaccinated which in itself seems impossible. “A hybrid ministerial meeting cannot be the forum to address the meeting and for poor countries with infrastructural difficulties, it would be seriously problematic.”

The European Union said that this year’s ministerial meeting will not be like the past meeting, suggesting that it would not be a negotiating meeting as we have in the past. The pandemic will influence the meeting, the EU said.

The EU called for a modest agenda along with a work program for unresolved issues for the future. It argued that we can deliver some results – both the reform results and the policy issues.

It emphasized that members should not be distracted with the discussion on the outcome document and instead should focus “on substance and the flexibility.”

China said “the outcome document should deliver a positive signal to the international community demonstrating the solidarity at the WTO.”

Commenting on the process, China said it supports a transparent and inclusive process. As regards substance, China said supporting the outcome document discussions should not become hard negotiations, adding that they should not distract from the actual work.

Several other countries including Indonesia, Sri Lanka, Bangladesh, and Chad called for credible developmental outcomes at MC12.

Indonesia called for a “pragmatic approach” with a meaningful outcome on the pandemic. It emphasized that MC12 must deliver credible and developmental outcomes on the longstanding issues.

Indonesia said that it cannot agree to new issues, and that agriculture and curbing harmful subsidies on over-capacity and industrial-scale fishing must be targeted. It called for accelerating work on the 1998 e-commerce work program.

Jamaica, on behalf of the ACP (Africa, Caribbean, and Pacific) group, said that “priority should be given to securing tangible, inclusive and development-friendly outcomes at MC12. This includes in the areas of fisheries subsidies, Agriculture, Special and Differential Treatment, measures to ameliorate the impact of the COVID-19 pandemic and a post-MC12 work programme for WTO reform.”