TWN Info Service on WTO and Trade Issues (Oct21/26)
28 October 2021
Third World Network

Is WTO's MC12 paving the way for new trade negotiations?
Published in SUNS #9447 dated 28 October 2021

Geneva, 27 Oct (D. Ravi Kanth) - A report issued by the chair of the WTO's General Council on 25 October suggests that the upcoming twelfth ministerial conference (MC12) could pave the way for the launch of new trade negotiations akin to the Doha Round of trade negotiations that was launched back in 2001, said people familiar with the development.

Although the Doha Round, which was launched in Doha, Qatar in 2001, still remains on paper, MC12, which takes place in Geneva from 30 November, could pave the way for launching negotiations on proposed WTO reforms, on controversial social clauses like labour and climate change, and on integration of the controversial plurilateral Joint Statement Initiatives (JSIs) into the multilateral trading system, said people, who asked not to be quoted.

More importantly, MC12 could substantially undermine the multilateral architecture of the WTO, as embodied in the Marrakesh Agreement.

Even as the draft Part I of the ministerial document of MC12 mentions the Marrakesh Agreement, it seems more like the proverbial "shedding of crocodile tears", as one pillar of the WTO, namely, the dispute settlement system, may not be restored soon because of the US demand for a fundamental reform of the trade body.

As WTO members race towards MC12, the developing countries are expected to face numerous difficulties on both process and substance due to the heavy-loading of the package of possible "deliverables" that are far from achieving convergence at this juncture.

On 25 October, the chair of the WTO's General Council (GC), Ambassador Dacio Castillo from Honduras, provided a list of issues to be decided at MC12.

He said "the list may include individual decisions and/or work programs, separate declarations, or reports."

In the restricted document (JOB/GC/279 or JOB/TNC/99) circulated on 26 October, the list of issues includes:

(1) Fisheries subsidies;

(2) Agriculture;

(3) WTO's response to the pandemic;

(4) E-commerce work program and moratorium;

(5) Moratorium on TRIPS non-violation and situation complaints;

(6) Work program on small economies;

(7) TRIPS waiver;

(8) Development;

(9) Services;

(10) Paragraph 4 of the underfill mechanism - follow-up to TRQ decision reached at MC10 in Nairobi, Kenya, in 2015;

(11) Preferential rules of origin - LDC proposal;

(12) SPS (sanitary and phytosanitary) measures' declaration by a group of members;

(13) LDC graduation - LDC proposal;

(14) Trade finance and debt servicing - ACP proposal;

(15) Other areas.

Surprisingly, controversial issues concerning the proposed WTO reforms and the restoration of the Appellate Body seem to be missing from the list of issues.

Perhaps, they may surface under "other areas" at the eleventh hour of the four-day ministerial meeting, said people familiar with the issues.

All these decisions, according to the GC chair, "will come in Part 2 of the outcome document, whichever form it may take, [and] would reference or list separate individual decisions, work programmes, separate declarations or reports that are the subject of ongoing work in various processes - under the Trade Negotiations Committee and its subsidiary negotiating bodies, and the General Council and subsidiary bodies."

Many developing and least-developed countries are likely to be the worst affected due to the paucity of the negotiations and resources, and navigating through the issues appears to be a challenging task, particularly when they are excluded from the "green room" meetings.

The "green room" meetings are already taking place on agriculture and fisheries subsidies, with only five or seven countries participating.

A "green room" meeting of seven countries - the United States, the European Union, China, India, Australia, Brazil, and South Africa - is expected to take place on agriculture on 27 October.

In his report, the GC chair said that delegations are presently working on ten draft paragraphs for Part 1 of the outcome document that cover (i) the context in which MC12 takes place; (ii) some broad political messages; and (iii) guidance from Ministers on additional elements Members may agree on.

He informed members that in his small-group consultations on Part 1, work was completed on the ten draft paragraphs.

However, the draft language in these ten paragraphs remains "work in progress," he said.

He said these ten draft paragraphs should be seen as a snapshot of where discussions were left off last week (18-22 October).

There are a number of square brackets and alternative texts within the paragraphs. Importantly, he stressed that the entire text is in square brackets.

The first three paragraphs of Part 1 "cover broadly some of the external and internal context, including the pandemic and other challenges that the world, the multilateral trading system, the WTO and the global economy have been facing."

The fourth paragraph reaffirms "the principles and objectives set out in the Marrakesh Agreement and underscores the critical role that international trade and the WTO play, for instance, in global economic recovery as well as in facilitating cooperation in relation to the protection and preservation of the environment."

The fifth paragraph speaks about "safeguarding and strengthening the open, inclusive, non-discriminatory, transparent and rules-based multilateral trading system and reaffirming the importance of development."

The sixth paragraph focuses on WTO accessions.

Crucially, the seventh to the ninth paragraphs provide some "Ministerial guidance on specific elements, including WTO reform, dispute settlement and work in WTO bodies."

The seventh paragraph, for example, says that "to respond to emerging opportunities, address the challenges that the WTO is facing and ensure its sound working in all its functions, Ministers [commit] [agree] to undertake necessary reforms of the WTO, and instruct officials to take this work forward with the view to presenting reports periodically. Ministers undertake to review progress regularly and take appropriate decisions by the next Ministerial Conference. Subject to discussion on WTO Reform - European Union."

The eighth paragraph says that "ministers acknowledge the [concerns surrounding] [unprecedented challenges] the two-tier Dispute Settlement System is facing and recognize the importance and urgency of addressing those

* [challenges] [including those related to Appellate Body] and commit to conduct solution-oriented discussions towards an improved and fully functioning] OR

* [concerns] in order to [improve the functioning of the] OR

* [challenges to ensure a fully functioning]

Dispute Settlement System accessible to all Members [, while preserving the essential features of a two-tier adjudication process]."

Mauritius, which is the coordinator of the African Group, proposed the merger of paragraphs seven and eight.

The merged paragraphs 7 and 8, which remains bracketed, suggests: [To respond to emerging opportunities, and assist countries avail of such opportunities and to address the challenges that the WTO is facing and ensure its sound working in all its functions including the dispute settlement system, Ministers [commit] [agree] to pursue a solution-oriented discussion and undertake necessary reforms of the WTO as appropriate. They instruct officials to take this work forward and to periodically present reports thereon. Ministers undertake to review progress and take appropriate decisions at the next Ministerial Conference.]

Brazil, which is seeking membership in the Organization for Economic Cooperation and Development (OECD), has proposed an additional paragraph that states that "ministers commit to revitalize the proper functioning of the WTO negotiating function and to strengthen its rule-making by facilitating trade functions."

The ninth paragraph states that "ministers take note of the important work that is taking place in WTO Bodies and instruct officials to continue to carry this work forward and build on it and, as appropriate, work towards [delivering outcomes soon]. [Noting in particular:]"

The tenth paragraph says that "ministers reaffirm their commitment to strengthen international collaboration and coherence of action between international organizations to restore trust, certainty and predictability in the world economy and effectively address current and future multi-dimensional challenges."

INCLUSION OF JSIs AND CLIMATE CHANGE

In addition to these ten paragraphs, Japan and other members of the informal plurilateral Joint Statement Initiatives group subtly included all their issues in Part I of the outcome document.

For example, on the COP (UNFCCC Conference of the Parties), Japan included a bracketed paragraph that states: [Ministers take note of the recent outcome from COP 26 and acknowledge that climate change is among the most pressing challenges of our time. Ministers stress that international trade and the multilateral trading system should contribute to tackling climate change [and achieving global carbon neutrality]. Ministers reaffirm that measures to combat climate change should be WTO-consistent.]

On digitalization, Japan says that: [Ministers appreciate the positive impact that digitalization had on global trade during the pandemic. Ministers believe digital trade should be strengthened to sustain economic activity, promote development and open new opportunities to all our citizens and businesses for inclusive growth.].

On the issue of a level-playing field, which was finalized first at the trilateral process involving the US, the EU, and Japan, and later at the Group of Seven (G7) industrialized countries, Japan proposes that: [Ministers also commit to work to ensure a level playing field to foster an enabling business environment and to support the integrity and sustainability of the rules-based multilateral trading system.]

Also, Article XII members, referred to as the recently acceded members to the WTO, stated that, "[We recognize the special situation of the Members acceded in accordance with Article XII of the Agreement Establishing the World Trade Organization who have undertaken extensive commitments at the time of accession, including in market access. This situation shall be taken into account in negotiations, with a view to address existing imbalances and achieving a level playing field.]"

Saudi Arabia introduced its proposal on the Riyadh initiative on the future of the WTO, which says that "[ministers take note of the G20 Ministerial Statement on Trade and Investment recalling Riyadh Initiative on the future of the WTO and the commitment to undertake the necessary reforms of the WTO.]"

Without naming these countries, the GC chair said that some members proposed the inclusion of other issues in the outcome document, which are the JSI plurilateral issues as well as the G90 issues.

These issues include: (1) [MSMEs] or disciplines for micro, small, and medium enterprises; (2) [women's economic empowerment]; (3) [workers]; (4) [G90 on development]; (5) [contribution of the WTO to SDGs]; and (6) [Trade for peace/WTO G7+ Accessions group].

In crux, unless the developing and least-developed countries remain united at MC12, they could face the ugly prospect of being reduced to irrelevance at the WTO once and for all.