TWN Info Service on WTO and Trade Issues (Oct21/14)
14 October 2021
Third World Network

Battle shifts to WTO on “take-it-or-leave-it” agreements at MC12
Published in SUNS #9437 dated 14 October 2021

Geneva, 13 Oct (D. Ravi Kanth) – The sustained international campaign in support of the temporary TRIPS waiver in combating the COVID-19 pandemic appears to have forced the G20 trade ministers to include the issue of “trade-related aspects of intellectual property rights (TRIPS)” as a pivotal component of the WTO’s response to the pandemic, people who took part in the meeting told the SUNS.

However, there is still no clarity on what is going to be the final language on the TRIPS component in the WTO’s response to the pandemic, as there are differences on issues such as scope and product coverage.

The WTO’s response to the COVID-19 pandemic appears to be a concrete “deliverable” at the WTO’s 12th ministerial conference (MC12) to be held in Geneva from 30 November.

Because of the sustained international campaign by former world leaders, parliamentarians, and international civil society groups, there appears to be a turnaround towards including the TRIPS waiver as a key component in the WTO’s response to the pandemic, said people, who preferred not to be quoted.

The final G20 ministerial statement adopted at Sorrento, Italy on 12 October says: “Trade-related aspects of intellectual property rights, contributions to international efforts to expand production and delivery of vaccines, therapeutics and essential medical goods, diversifying manufacturing locations and fostering equitable distribution, trade facilitation measures, export restrictions, encouraging regulatory compatibility, are among the areas where our constructive engagement in the WTO, notably in the TRIPS Council, the Council for Trade in Goods, the Council for Trade in Services, and other relevant bodies and processes, can enhance global public health efforts.”

Although the G20 Statement highlights the need for “diversifying manufacturing locations and fostering equitable distribution,” it appears to remain silent on the issue of technology transfer.

The TRIPS waiver proposal co-sponsored by 64 developing countries seeks to suspend certain provisions of the WTO’s TRIPS Agreement relating to copyrights, industrial designs, patents, and protection of undisclosed information, for a period of three years to ramp-up global production of diagnostics, therapeutics, and vaccines to combat COVID-19.

During the discussions, the United States, for example, has suggested that the waiver should be limited to only vaccines, while remaining silent on all other aspects, including on the transfer of technology and know-how, said people who took part in the meeting.

The European Union appears to have insisted on its proposal relating to the use of compulsory licensing, and later grudgingly accepted a truncated version of the TRIPS waiver. The EU was apparently prepared to cover other items apart from vaccines such as diagnostics and therapeutics.

South Africa, India, and several other developing countries insisted on their proposal on the TRIPS waiver to be the basis for arriving at a solution on the WTO’s response to the pandemic.

At the insistence of the US and other developed countries, the G20 Statement says that “we will work actively and constructively with all WTO members in the lead up to the 12th ministerial conference and beyond to enhance the capacity of the multilateral system to increase our pandemic preparedness and resilience by adopting a multi- faceted response.”

It also says that emergency trade-related measures designed to tackle the COVID-19 pandemic have to be “proportionate, transparent, and temporary” so that they do not become unnecessary barriers to trade or disruptions to global supply chains.

SHARP DIVERGENCES ON WTO REFORMS, INDUSTRIAL SUBSIDIES, JSIs

Amidst sharp divergences on a range of issues, the G20 trade ministers apparently settled for a whittled-down statement on trade and investment that reveals ambiguous language on WTO reforms, fisheries subsidies, and industrial subsidies.

The G20 is largely dominated by the European countries, the United States, Canada, and Japan among others. The G20 includes Argentina, Australia, Brazil, Canada, China, France, Germany, Japan, India, Indonesia, Italy, Mexico, Russia, South Africa, Saudi Arabia, South Korea, Turkey, the United Kingdom, the United States, and the European Union. Spain is a permanent guest of the G20.

The G20 trade ministers appear to have adopted polarized positions on a range of issues in their two-day meeting in Sorrento, Italy, particularly on the proposed WTO reforms and fisheries subsidies among others.

FEARS OVER “TAKE-IT OR LEAVE-IT” DEAL ON FISHERIES SUBSIDIES

On fisheries subsidies, which was brought under the section on “trade and environmental sustainability” in the G20 Statement, there are growing fears that a “take-it-or-leave-it” agreement could be foisted on members during the final hours of the discussions because of the unbridgeable differences.

The chair of the Doha fisheries subsidies negotiations, Ambassador Santiago Wills from Colombia, who was supposed to commence line-by-line discussions from 11 October, has not done so due to differences on the three pillars of the negotiations.

The three pillars include IUU (illegal, unreported, and unregulated) fishing; overcapacity and overfishing; and overfished stocks.

During the discussions on fisheries subsidies at Sorrento, India warned that it will not accept any outcome on fisheries subsidies that preserves the current status quo – as was the case with the Uruguay Round’s Agreement on Agriculture – and that would perpetuate asymmetries and allow the big subsidizers to continue with their industrial- scale fishing, said people familiar with the development.

Under the slogan of trade and environmental sustainability, the issue of fisheries subsidies was brought into the discussion despite huge differences in all the three pillars of the negotiations – IUU fishing, overcapacity and overfishing, and overfished stocks, said people, who asked not to be quoted.

While the European Union and several other countries supported the chair’s revised draft text, the developing countries demanded that the outcome on fisheries subsidies must be in accordance with the United Nations Sustainable Development Goal (SDG) 14.6.

SDG 14.6 has mandated WTO members to, by 2020, “prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU fishing, and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the WTO fisheries subsidies negotiation.”

Consequently, the G20 Statement says that “we support the ongoing WTO fisheries subsidies negotiations to reach a “meaningful” (a word often used by the US Trade Representative Ambassador Katherine Tai) agreement by the 12th WTO Ministerial Conference with comprehensive and effective disciplines on harmful fisheries subsidies, in line with SDG 14.6, which would respond to the imperative of sustainability of our oceans, seas and marine resources.”

The G20 Statement, however, failed to acknowledge the continuing differences among members on a range of issues in all three pillars of the fisheries subsidies negotiations.

The G20 Statement has also not reflected the “appropriate and effective special and differential treatment” provisions as highlighted in SDG 14.6.

The G20 Statement also brought the issue of climate change into the WTO context by affirming the importance of providing “appropriate support to developing and least developed countries in order to help their national transition towards resource efficient, sustainable, climate and environment-friendly development, enhance their resilience and better enable them to seize sustainable trade opportunities through Aid for Trade.”

According to the G20 Statement, the G20 participants in the Trade and Environmental Sustainability Structured Discussions and in Informal Dialogue on Plastic Pollution and Environmentally Sustainable Plastic Trade encouraged and supported the active participation of all WTO members in these processes.

CONTROVERSIAL WTO REFORMS

On the “Reform of the WTO,” the G20 trade ministers said they will work with WTO members “to undertake the necessary reform of the WTO”.

The ministers underscored “the need to implement this commitment in practice through an inclusive and transparent approach, including tackling the development issues.”

The trade ministers from India, South Africa, Indonesia, and Argentina among others inserted the words “inclusive” and “development issues” to safeguard their priorities, said people familiar with the discussions.

The G20 Statement, at the insistence of the developing countries, reaffirmed “the foundational principles of the WTO” that include the rules-based architecture of the Marrakesh Agreement.

It envisions “reforms to improve all its (the WTO’s) functions” that would include issues concerning (1) the negotiating pillar; (2) the dispute settlement pillar; and (3) the implementation pillar.

After the US derailed the two-stage dispute settlement system, the reform process ought to begin in the dispute settlement pillar first, said a negotiator, who asked not to be quoted.

At the insistence of the US and the European Union as well as other industrialized countries in the G20, language was inserted on strengthening the WTO’s rule-making arm “by facilitating trade negotiations and fostering the update of the global trade rule-book.”

In this regard, the G20 ministers also underscored “the importance of the ongoing negotiations in the WTO.”

Essentially, the notion of strengthening the WTO’s rule-making arm aims at covering the issues of negotiating agreements without basing them on the principle of consensus-based decision-making; differentiation among developing countries for availing of special and differential treatment to replace the self-designation framework; and the ongoing informal plurilateral Joint Statement Initiative (JSI) negotiations that currently do not appear to have legal status, according to people, who preferred not to be quoted.

Apparently, when many members of the G20 sought to address the crisis in the dispute settlement system and the restoration of the Appellate Body, the US stuck to its position that there has to be a “fundamental reform of the dispute settlement system,” said people, who asked not to be quoted.

Hence, the language proposed in the G20 Statement on the quid pro quo between the reform of the dispute settlement system and the negotiating function of the WTO, as sought by the US, is reflected as: “we will work together at the WTO and with the wider WTO membership to advance the proper functioning of the WTO negotiating function and dispute settlement system, which require addressing longstanding issues.”

The G20 Statement highlighted that “the correct implementation and monitoring of commitments are essential to maintaining the integrity of an effective multilateral rules-based system.”

The G20 ministers emphasized that a successful and productive 12th ministerial conference is essential to “advance WTO reform to revitalize the organization.”

INDUSTRIAL SUBSIDIES AND LEVEL PLAYING FIELD

The G20 Statement said that “reducing trade tensions, tackling distortions in trade and investment, addressing supply chain disruptions and fostering mutually beneficial trade relations will be critical as economies respond to and recover from the COVID-19 pandemic.”

Maintaining that “structural problems in some sectors, such as excess capacities, can cause a negative impact,” the G20 Statement says that “many G20 members affirm the need to strengthen international rules on industrial subsidies and welcome ongoing international efforts to improve trade rules affecting agriculture.”

Significantly, the language in the G20 Statement on “government support and level playing field” reflects the concerns of the industrialized countries against China.

Surprisingly, China’s call for including language on trade remedies was not included in the G20 Statement.

While the industrialized countries in the G20 wanted to address the issue of industrial subsidies, the developing country members – Brazil, Argentina, South Africa, India and China – sought to address the staggering levels of trade-distorting farm subsidies provided by the European Union, the US, and Japan among others.

The G20 ministers said that “many of us highlighted agricultural subsidies and agricultural market access (the US, Argentina, and Brazil).”

The G20 Statement also drew attention to “services and investments”, including the JSI on domestic regulation “as well as fulfilment of the GATS objectives, to develop the service sector, facilitate trade in services and reduce its costs.”

It says that the “G20 participants in the Joint Statement Initiatives on E-Commerce, Investment Facilitation for Development and Services Domestic Regulation encourage and support the active participation of all WTO members in the initiatives and look forward to meaningful progress in the lead up to the 12th WTO Ministerial conference.”

However, India and South Africa expressed “concerns on rule-making” through the JSI route.

The G20 Statement includes language on the JSI demand for disciplines on micro, small and medium enterprises (MSMEs).

In conclusion, it seems that the developing countries have a huge battle to wage to ensure that they are not being pushed under the bus, as attempts are underway to force a take-it-or-leave-it agreement on them at MC12. The solidarity among developing countries can play an important role in achieving the desired objectives of the Doha Development Agenda (DDA), for which the developing countries have fought for so long.