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Info Service on WTO and Trade Issues (Nov21/19) Geneva, 18 Nov (D. Ravi Kanth) – A revised draft unofficial room document on the WTO’s 12th ministerial conference (MC12)’s “outcome document” issued by the chair of the General Council on 17 November seems to suggest the launch of a new round of trade negotiations on several non-mandated issues such as WTO reforms, including on the WTO’s negotiating function based on controversial “flexible approaches” to facilitate trade negotiations, “digital trade,” and “trade and environment,” as well as on special and differential treatment among others, said people familiar with the document. According to former trade envoys, if these negotiations get a nod from trade ministers, meeting at MC12 in Geneva from 30 November, then the developing countries will be the losers for the umpteenth time in global trade negotiations akin to what happened in the previous Uruguay Round (UR) of trade negotiations. That the UR agreement, which was concluded in 1994 with binding commitments, for the first time resulted in the General Agreement on Trade in Services (GATS), the TRIPS Agreement, and a host of other agreements that provided a menu of entitlements to the developed countries, is well known. That the developing countries are being penalized due to the UR agreements even now is also well established, according to several studies. More disturbingly, this is the first time in the history of global trade negotiations that a new round is sought to be launched without a prior ministerial mandate and without completing the existing Doha Development Agenda (DDA) trade negotiations that were started in 2001. In the seven-page room document, the General Council (GC) chair, Ambassador Dacio Castillo from Honduras, did not even mention the word “Doha” or “Doha work program” even though certain key phrases on special and differential treatment (S&DT) were borrowed from paragraph 44 of the Doha work program. Also, it seems to signify that the mention of Doha is being erased, without formally closing the round. Under apparent pressure from the United States, the European Union, and other industrialized as well as some developing countries, the chair seems to have not included references to the Doha work program, said people who took part in the negotiations. The room document also seems to suggest that the US and the EU have managed to insert language on fundamental changes in the WTO’s rule-book, as enshrined in the Marrakesh Agreement that established the WTO in 1995, said people familiar with the development. Perhaps, this appears to be the biggest rule-of-law crisis set to undermine the multilateral trade negotiating system, according to people, who asked not to be quoted. The fate of the proposed new issues, which are not part of any mandate, will be known at the WTO’s 13th ministerial conference (MC13) envisioned to be held in the year 2023. The venue of that meeting will be decided sometime next year. The seven-page draft bracketed text issued by the GC chair could still undergo changes between now and the General Council meeting scheduled for 22-23 November, as most of the controversial provisions have already raised sharp divisions, according to people, who asked not to be quoted. WORKING GROUP ON WTO REFORMS On the proposed WTO reforms, the EU-Brazil push to establish a working group on this issue is reflected in the chair’s draft document in paragraph 7. (See SUNS #9460 dated 16 November 2021). The chair has included the EU’s efforts as well as opposition to the working group in paragraph 7. It states: “Ministers acknowledge the need to take advantage of available opportunities, address the challenges that the WTO is facing, and ensure the WTO’s proper functioning. “Ministers commit to work towards necessary reform of the WTO. [Ministers [establish a Working Group open to all Members] [agree to a review] under the auspices of the General Council to [review and] consider, based on contributions from Members, institutional and other improvements to the functioning of the WTO [, with the view to work towards necessary reform of the WTO] [as agreed by all WTO Members].] Ministers agree that the discussions should be open, transparent, inclusive, and must address the interests of all Members [including the development and policy space needs of developing and least-developed countries]. [It shall prepare recommendations on the following issues, among others: dispute settlement function, negotiating function, and monitoring and deliberating function.] Ministers undertake to engage closely in this process, instruct officials to prepare recommendations [and update them regularly], and take appropriate decisions [at the next Ministerial Conference] [on the review as appropriate] [bearing in mind at all times the development issue].” TRADE AND ENVIRONMENT The European Union along with a group of industrialized and some developing countries appear to have upped the ante on the issue of trade and environment in the draft ministerial outcome document, preparing the ground for making the WTO the nodal body for addressing all trade-related climate measures with binding rules. In the chair’s draft outcome document, the biggest paragraph is devoted to the bracketed language on trade and environment. It states: “[Ministers recognize global challenges such as climate change [and related natural disasters], loss of biodiversity and pollution.] We note the importance of the contribution of the multilateral trading system to promote the UN 2030 Agenda and its Sustainable Development Goals in its three economic, social and environmental dimensions. We [note the outcome of COP26 and] reaffirm support to the UNFCCC and the Paris Agreement [and its principles]. We believe trade and environmental policies should be mutually supportive and [contribute to optimal use of the world’s resources in accordance with the objectives of sustainable development.] [We reaffirm that measures to protect the environment should be WTO consistent [and should not result in trade protectionism and unnecessary barriers to trade and must safeguard the multilateral trading system. Ministers support integrating sustainability considerations in line with the SDGs throughout the work of the WTO.] We note the role of the Committee on Trade and Environment as a [standing] forum dedicated to dialogue [between Members] on the relationship between trade measures and environmental measures. We affirm the importance of providing appropriate support to developing and least developed Members in order to help their national transition towards resource efficient, sustainable [employing technological innovation], climate and environment-friendly development to enable them to seize opportunities, [including] through Aid for Trade [and transfer of technology]. [Ministers acknowledge the traditional and agricultural farming, traditional health practices such as yoga and meditation and eco-tourism among others in developing and least-developed countries that are contributing to protecting environment and sustainable development. Therefore, we urge for extending further support in promoting such practices and capacity building for meeting NTM requirements to export in their destinations.]” Issues such as transfer of technology and traditional health practices seem to have been included by Nepal, said a person, who asked not to be quoted. SPECIAL AND DIFFERENTIAL TREATMENT (S&DT) According to the chair’s formulation on S&DT in paragraph 5, “We reaffirm [the principle of] special and differential treatment for developing and least-developed countries as an integral part of the WTO and its agreements. Special and differential treatment in WTO agreements should be [precise,] [adequate,] effective and operational. In addition, Ministers recall that trade is to be conducted with a view to raising standards of living, ensuring full employment, pursuing sustainable development of Members, and enhancing the means for doing so in a manner consistent with Members’ respective needs and concerns at different levels of economic development. We instruct officials to continue to work on improving the application of special and differential treatment [in the appropriate venues including the CTD SS] [and report on progress to the General Council before MC13].” The words “precise” and “adequate” as well as the reference to the Doha Committee on Trade and Development (CTD) were put in brackets under pressure from the United States. DISPUTE SETTLEMENT SYSTEM & NEGOTIATING FUNCTION There are sharp differences over the issues of the dispute settlement system and the negotiating function of the WTO in paragraphs 8 and 10, respectively. The language on the dispute settlement system doesn’t even mention the two-stage dispute settlement adjudication process, apparently due to opposition from the United States, said people, who asked not to be quoted. Although paragraph 8 mentions the need to conduct discussions “with a view to having a fully and well-functioning dispute settlement system [accessible to all members][by MC13][as soon as possible],” it does not talk explicitly about the restoration of the Appellate Body, or the two-stage dispute settlement system itself. The proposed language on the dispute settlement system (DSS) states: “Ministers acknowledge the challenges and concerns with respect to the dispute settlement system including those related to the Appellate Body, recognize the importance and urgency of addressing those challenges and concerns, and commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system [accessible to all Members] [by MC13] [as soon as possible].” As regards the negotiating function of the WTO in paragraph 10, which appears to be based on a concerted push by the US and other developed countries, it states: “[Ministers commit to revitalize the proper functioning of the WTO negotiating function and to strengthen its rulemaking [by facilitating trade negotiations] [including through flexible approaches].] “[Ministers commit to revitalizing the function of the WTO as the forum for negotiations among all its Members concerning their multilateral trade relations and to strengthen its rulemaking by facilitating trade negotiations.] “[as collectively decided by the Ministerial Conference in fulfilment of Article II.1 and III.2 and other relevant articles of the WTO Agreement, and with a view to strengthening its ability to develop an integrated, more viable multilateral trading system.]” DIGITAL TRADE The paragraph on digital trade remains in brackets. Proposed by Japan, it states that “[Ministers appreciate the positive impact that digitalization had on global trade during the pandemic. Ministers believe [digital trade] [digitalization efforts] [digital economy] should be strengthened to sustain economic activity, promote development and open new opportunities to all our citizens and businesses for inclusive growth.]” Also, the proposed language on the informal plurilateral Joint Statement Initiatives (JSIs) on micro, small, and medium sized enterprises (MSMEs), and women’s economic empowerment remain in brackets. LDCs Finally, the language proposed on the concerns raised by the least-developed countries (LDCs) in Paragraph 9A and 10A states: “[We also recommit to improve on the implementation of the letter and spirit of decisions taken in our previous sessions in favour of LDCs, in Bali and Nairobi, such as on services waiver, rules of origin, and DFQF. “On services waiver, we reaffirm our decision in Nairobi on this issue and we instruct the Secretariat to explore improvements in LDC services export data; to monitor LDC services suppliers and consumers of LDC services in preference providing Member markets; evaluate options beyond the preferences themselves, to facilitate the use of preferences; and evaluate if any changes in information on LDC services improves or new opportunities emerge since the COVID-19 pandemic. “We further urge Members having notified preferences to introduce programmes to orient LDC suppliers of services and consumers of services from LDCs in the preference providing country, to the LDC services waiver notifications they have made; and we agree that the LDC services waiver is made permanent, given the difficulties to track the data and information difficulties faced, as well as fluctuating capacities in LDCs. “On DFQF (duty-free, quota-free market access), we acknowledge Members who have already taken steps to implement our Ministerial Decision on Duty Free Quota Free Market Access for LDCs (WT/MIN(13)/44, WT/L/919) and invite them to improve their programmes. In addition, Members are urged to fulfil the mandate in this decision to provide at least 97 per cent of products from LDCs and reduce non-tariff barriers, especially sanitary and phytosanitary measures, impacting LDC market access afforded under DFQF schemes. We also instruct the Committee on Trade and Development to re-commence the annual review process on preferential DFQF market access for LDCs. “We further draw Members’ attention to our Ministerial Decision taken on Cotton at the WTO Tenth Ministerial Conference in Nairobi (WT/MIN(15)/46, WT/L/981) and reaffirm our commitment in accordance with paragraphs 2-5. “On rules of origin, we call on Members to commit to our shared responsibility to identify and address the specific challenges that LDCs face in effectively using trade preferences. Towards that end, we urge Members to reinvigorate and strengthen the mandate of the Committee [on] Rules of Origin to implement the Nairobi decision and further examine the linkages between existing origin requirements and the utilization of trade preferences, adopt best practices on preferential rules of origin and related administrative requirements and report at the next Ministerial Conference. “On all of these elements, to improve implementation of our decisions in favour of LDCs, we instruct the General Council to report to our next Session on progress.]” In short, the draft “outcome document” for MC12 seems to clearly reveal a concerted push to transform the WTO to address only the concerns of the developed countries, while leaving the developing countries to remain forever marginalized at the WTO, akin to what the world had seen in the past two centuries of trade, industrial, and climate colonization.
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