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Info Service on WTO and Trade Issues (Nov21/33) Geneva, 29 Nov (D. Ravi Kanth) – Negotiations on the proposed “outcome document” for the WTO’s 12th ministerial conference (MC12) remained at an impasse due to sharp differences on several issues in the second revised draft outcome document issued by the WTO General Council chair, particularly on the proposed WTO reforms, said people familiar with the consultations. The chair of the General Council (GC), Ambassador Dacio Castillo from Honduras, on Friday issued the second revised draft text following his consultations on 25 November. The chair had said at the meeting on 25 November that he would hold consultations on his second revised draft text. Consequently, the outcome document was not sent to ministers for their consideration. In any event, MC12 now stands postponed. GC CHAIR’S SECOND REVISED DRAFT OUTCOME DOCUMENT The 7-page restricted draft outcome document (RD/GC/17/Rev.2), reviewed by this writer, contains several clean paragraphs as well as heavily bracketed paragraphs on the WTO reforms, particularly on the negotiating function of the WTO, the language on the informal plurilateral Joint Statement Initiatives (JSIs) including on digital trade, disciplines for MSMEs (micro, small, and medium enterprises), and the EU’s proposal on trade and environment, among others. Significantly, there is no mention of the Doha work program and the reforms it had mandated members to negotiate during the past 20 years. Even though the second revised draft outcome document remains in brackets, consultations held by the chair led to consensus on paragraphs one to seven, including on the need to strengthen the “rule-based, non-discriminatory, open, fair, inclusive, equitable, and transparent multilateral trading system with the WTO at its core”, in paragraph six. Paragraph six states, “we resolve to strengthen the rules-based, non-discriminatory, open, fair, inclusive, equitable and transparent multilateral trading system with the WTO at its core. In this regard, we reaffirm the principles and objectives set out in the Marrakesh Agreement Establishing the World Trade Organization and underscore the relevance and critical role of international trade and the WTO in global economic recovery, growth, prosperity, alleviation of poverty, welfare of all people, sustainable development and to facilitate cooperation in relation to the protection and preservation of the environment in a manner consistent with respective needs and concerns at different levels of economic development.” Even paragraph seven, which deals with the issue of special and differential treatment, remains clean without any brackets. Paragraph seven states: “We reaffirm the provisions of special and differential treatment for developing country Members and LDCs as an integral part of the WTO and its agreements. Special and differential treatment in WTO agreements should be precise, effective and operational. In addition, we 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 CTD SS and other relevant venues in the WTO, as agreed and report on progress to the General Council before MC13.” DIFFERENCES OVER WTO REFORMS Differences over the WTO reforms, particularly the EU-Brazil push for a working group, are listed in paragraph eight. Barring the first paragraph, which is clean, the second paragraph, with two alternatives, remains in brackets. Paragraph 8 states: “We acknowledge the need to take advantage of available opportunities, address the challenges that the WTO is facing, and ensure the WTO’s proper functioning. We commit to work towards necessary reform of the WTO. [We [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 [as agreed by all WTO Members].] We 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 country Members and LDCs]. [It shall prepare recommendations on the following issues, among others: dispute settlement function, negotiating function, and monitoring and deliberating function.] We 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].” The developing countries, especially India and South Africa, have proposed language that currently remains in brackets. While Alternative 1 seems to reflect the language proposed by the ACP (African, Caribbean, and Pacific) group, Alternative 2 has been proposed by India, said people familiar with the consultations. “Alternative 1 [We agree to launch a comprehensive review of the operations of the WTO under the auspices of the General Council with the view to making the necessary reforms to improve its functions. The process should be open, transparent, inclusive, and must address the interests of all Members. We undertake to engage closely in this process and to instruct officials to prepare recommendations. We will consider the outcome of this process and take appropriate decisions on WTO reform at the next Ministerial Conference.] Alternative 2 [We agree to review the operations of the WTO with the view to making the necessary reforms to improve its functions, consistent with the principles and objectives of the multilateral trading system as set out in the Marrakesh Agreement Establishing the World Trade Organization and its multilateral trade agreements. The process as well as the outcomes of the review should be transparent, inclusive and give due regard to the development and policy space needs of developing and least-developed countries. The review and its outcomes shall not alter, or in any manner affect, Members’ rights and obligations under the WTO Agreements and agreed mandates. We undertake to engage closely in this process and instruct officials to prepare recommendations. The review shall be undertaken in the dedicated sessions of the General Council led by the General Council Chair and the rules of procedure of the General Council Meetings shall be applicable to these sessions. The General Council shall present a report to the Ministers at the Thirteenth Ministerial Conference on the status of the review.]” INDIA’S DRAFT MINISTERIAL DECISION ON PROCESS India also submitted a draft ministerial decision on process-related issues, but it was not included in the chair’s draft outcome document due to intense opposition from the EU, Brazil, and several other countries. India’s draft ministerial decision states: “The 12th Ministerial Conference, Having regard to paragraph 1 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization; Reaffirming the principles and objectives set out in the Marrakesh Agreement Establishing the World Trade Organization and its multilateral trade agreements; Recognizing the need to advance the fulfilment of the founding WTO objective of developing an integrated, more viable and durable multilateral trading system; Decides as follows: 1. Agrees to a review, under the auspices of the General Council, of ways to improve the functioning of the WTO with a view towards: 2. (i) enhancing the capacity of the WTO to perform its function as the forum for negotiations among all its Members concerning their multilateral trade relations as collectively decided by the Ministerial Conference, in accordance with Articles II.1 and III.2 of the Marrakesh Agreement Establishing the World Trade Organization; (ii) facilitating the effective participation of developing and least-developed Members in the multilateral trading system and its decision-making process, including through precise, effective and operational special and differential treatment in current and future rules; (iii) enhancing inclusiveness and transparency across the entire functioning of the WTO, taking due regard of limited resources and institutional capacities available to developing countries and least-developed countries; (iv) addressing the challenges facing the WTO dispute settlement system; (v) safeguarding the multilateral trading system from fragmentation and upholding the founding principles under the Marrakesh Agreement Establishing the World Trade Organization. 3. Issues to be covered by this review, shall be agreed by all WTO members, without prejudice to the right of any Member to propose issues for consideration pursuant to paragraph 1 above. 4. The review shall be undertaken in dedicated sessions of the General Council led by the General Council Chair and would meet as necessary and agreed by Members for the purposes of undertaking this review. The rules of procedure of the General Council shall apply to this review process. 5. Any steps or outcomes under this review shall be consistent with the following principles: (i) not alter, or in any manner affect, Members’ rights and obligations under WTO Agreements and agreed mandates; (ii) preserve the principles and objectives of the multilateral trading system as set out in the Marrakesh Agreement Establishing the World Trade Organization and its multilateral trade agreements; (iii) be organized so as to enable the full, effective and equal participation of developing and least-developed countries in recognition of the limited resources and institutional capacities available to them; (iv) takes into account the development and policy space needs of developing and least-developed countries. 6. The General Council shall present a report to the 13th Ministerial Conference on the status of the review.” Significantly, Brazil, whose former president Luiz Inacio Lula da Silva promoted multilateral initiatives for global trade problems, seems to have opposed the revitalization of the WTO’s negotiating function “within the multilateral trading system.” Consequently, paragraph ten, which remains in brackets, states: “[We commit to revitalize the WTO negotiating function and to strengthen its rulemaking by facilitating trade negotiations [within the multilateral trading system]. Many Members reaffirm our commitment to exclusive multilateral negotiations. Many other Members believe that new approaches are necessary to achieve meaningful outcomes in WTO negotiations.] [We commit to preserve the WTO negotiating function and to strengthen the capacity of the WTO to perform its function as the forum for negotiations among all its Members concerning their multilateral trade relations as collectively decided by the Ministerial Conference, in accordance with Articles II.1 and III.2 of the Marrakesh Agreement Establishing the World Trade Organization 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.]” Paragraph nine, which deals with the dispute settlement system and remains as clean text, states: “We 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.” Surprisingly, paragraph nine does not mention the two-stage dispute settlement system, with the Appellate Body being the highest adjudicating arm. The chair’s draft outcome document also reveals sharp differences over the JSIs, and trade and environment, said people who asked not to be quoted. GC CHAIR’S DRAFT OUTCOME DOCUMENT The text of the GC chair’s second revised draft outcome document is as follows: [Part I Paragraph 1: We, the Ministers, gather in the spirit of solidarity at the Twelfth WTO Ministerial Conference, despite the COVID-19 pandemic, which continues to cause tragic loss of life and suffering and has triggered a significant socioeconomic crisis with devastating effects including on lives and livelihoods across the globe. Paragraph 2: We note that since our last meeting in 2017, the world and the multilateral trading system have been confronted with several challenges. The WTO itself has continued to face significant challenges in its core functions. Paragraph 3: We acknowledge that opportunities in the international trading environment, including through digitalization and in the services sector, have emerged although the ability to avail of these opportunities differs significantly including due to the digital divide, lack of digital infrastructure and capacity constraints. Paragraph 4: We further note that the global economy experienced high levels of uncertainty and low levels of growth, which impacted global GDP and trade. These have been further exacerbated by the current pandemic. We affirm our commitment to keep markets open and ensure a strengthened multilateral trading system that helps drive the global economic recovery. In this regard, we welcome the recent positive trajectory of global trade growth but note that this recovery remains uneven across WTO Members, especially developing and least-developed country Members. Paragraph 5: We note that many trade-related measures were taken in the context of the pandemic. While several were trade facilitating, some have resulted in negative impacts particularly in terms of vaccine inequality with regard to developing country Members and LDCs. We recognize the need for global solidarity, both for the current pandemic and future ones, to address all barriers to ramping up and diversification of global production as well as distribution of vaccines, therapeutics and diagnostics (incorporate relevant decisions, including outcome of TRIPS discussion). Paragraph 6: We resolve to strengthen the rules-based, non-discriminatory, open, fair, inclusive, equitable and transparent multilateral trading system with the WTO at its core. In this regard, we reaffirm the principles and objectives set out in the Marrakesh Agreement Establishing the World Trade Organization and underscore the relevance and critical role of international trade and the WTO in global economic recovery, growth, prosperity, alleviation of poverty, welfare of all people, sustainable development and to facilitate cooperation in relation to the protection and preservation of the environment in a manner consistent with respective needs and concerns at different levels of economic development. Paragraph 7: We reaffirm the provisions of special and differential treatment for developing country Members and LDCs as an integral part of the WTO and its agreements. Special and differential treatment in WTO agreements should be precise, effective and operational. In addition, we 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 CTD SS and other relevant venues in the WTO, as agreed and report on progress to the General Council before MC13. Paragraph 8: We acknowledge the need to take advantage of available opportunities, address the challenges that the WTO is facing, and ensure the WTO’s proper functioning. We commit to work towards necessary reform of the WTO. [We [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 [as agreed by all WTO Members].] We 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 country Members and LDCs]. [It shall prepare recommendations on the following issues, among others: dispute settlement function, negotiating function, and monitoring and deliberating function.] We 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]. Alternative 1: [We agree to launch a comprehensive review of the operations of the WTO under the auspices of the General Council with the view to making the necessary reforms to improve its functions. The process should be open, transparent, inclusive, and must address the interests of all Members. We undertake to engage closely in this process and to instruct officials to prepare recommendations. We will consider the outcome of this process and take appropriate decisions on WTO reform at the next Ministerial Conference.] Alternative 2: [We agree to review the operations of the WTO with the view to making the necessary reforms to improve its functions, consistent with the principles and objectives of the multilateral trading system as set out in the Marrakesh Agreement Establishing the World Trade Organization and its multilateral trade agreements. The process as well as the outcomes of the review should be transparent, inclusive and give due regard to the development and policy space needs of developing and least-developed countries. The review and its outcomes shall not alter, or in any manner affect, Members’ rights and obligations under the WTO Agreements and agreed mandates. We undertake to engage closely in this process and instruct officials to prepare recommendations. The review shall be undertaken in the dedicated sessions of the General Council led by the General Council Chair and the rules of procedure of the General Council Meetings shall be applicable to these sessions. The General Council shall present a report to the Ministers at the Thirteenth Ministerial Conference on the status of the review.] Paragraph 9: We 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. Paragraph 10: [We commit to revitalize the WTO negotiating function and to strengthen its rulemaking by facilitating trade negotiations [within the multilateral trading system]. Many Members reaffirm our commitment to exclusive multilateral negotiations. Many other Members believe that new approaches are necessary to achieve meaningful outcomes in WTO negotiations.] [We commit to preserve the WTO negotiating function and to strengthen the capacity of the WTO to perform its function as the forum for negotiations among all its Members concerning their multilateral trade relations as collectively decided by the Ministerial Conference, in accordance with Articles II.1 and III.2 of the Marrakesh Agreement Establishing the World Trade Organization 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.] Paragraph 11: In this difficult context, we note with satisfaction the progress achieved by LDC Members who have met or who are about to meet the graduation criteria set by the United Nations Committee for Development Policy (CDP) and acknowledge the particular challenges that graduation presents, including the loss of trade-related international support measures, as they leave the LDC category. We recognize the role that certain measures in the WTO can play in facilitating smooth and sustainable transition for these Members after graduation from the LDC Category. Paragraph 12: We underscore the importance of accessions, noting that although no new accession has taken place since July 2016, several applicants have made encouraging progress. In this regard, we remain committed to facilitate the conclusion of ongoing accessions, especially for least-developed countries fully in line with the General Council Guidelines on LDC Accessions, and to provide technical assistance, where appropriate, including in the post-accession phase. [, and call for concessions to be commensurate with their size, capacity and development needs.] Paragraph 13: 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. Paragraph 14: We reaffirm our decision at the Tenth Ministerial Conference in Nairobi on implementation of preferential treatment in favour of services and service suppliers of least-developed countries and increasing LDC participation in services trade, and instruct the Council for Trade in Services to review and promote the operationalization of the waiver including to explore improvements in LDC services export data; to review information on LDC services suppliers and consumers of LDC services in preference providing Member markets; and to assess best practices in facilitating the use of the preferences. On this matter, we instruct the General Council to report to our next session on progress. We reaffirm our decision at the Ninth Ministerial Conference in Bali on Duty-Free Quota-Free Market Access for Least-Developed Countries [and invite Members to improve their schemes] and instruct the Committee on Trade and Development to re-commence the annual review process on preferential DFQF market access for LDCs. On this matter, we instruct the General Council to report on the progress to our next session. [We underscore the importance of identifying and addressing, as appropriate, specific challenges that least- developed countries face, as we may agree, in complying with preferential rules of origin and origin requirements to effectively use trade preferences. Towards that end, the Committee on Rules of Origin should continue its efforts to facilitate the implementation of the Nairobi Ministerial Decision on preferential rules of origin for LDCs (WT/L/917/Add.1) with a view to ensuring that preferential rules of origin applicable to imports from LDCs are transparent and simple and contribute to facilitating market access. The work of the CRO could include identifying and agreeing upon best practices by all Members on preferential rules of origin and related administrative requirements and further analysing existing origin requirements and the utilization of trade preferences. We instruct the CRO to report its work to the General Council ahead of the Thirteenth Ministerial Conference.] We also acknowledge LDCs’ commitment and efforts in implementation of the TFA. We urge all Members to assist the LDCs in meeting their definitive category C deadlines. We recognize the importance of Aid for Trade initiatives in trade-related capacity building for the LDCs [and, in this regard, the contribution made by the Enhanced Integrated Framework]. We recommend that such programmes prioritise the objectives identified by the LDCs. Paragraph 15: [Recognizing that women’s increased participation in global markets and international trade will contribute to inclusive and sustainable economic growth, we acknowledge that the WTO can provide a forum to engage on trade and women’s economic empowerment particularly in developing country Members and LDCs.] Paragraph 16: [We note the significant negative impact that the COVID-19 pandemic has had on Micro, Small and Medium-sized Enterprises (MSMEs). Furthermore, we recognize the important contribution of MSMEs to economic and social development, the creation of employment, and sustainable and inclusive recovery efforts. We affirm the importance of promoting MSMEs’ participation in international markets. We will continue to explore ways to promote MSMEs’ involvement in international trade, including secure, diversified, and resilient supply chains.] Paragraph 17: We instruct the Trade Facilitation Committee to hold a Dedicated Session on transit issues annually until the next review of the Trade Facilitation Agreement is completed. These dedicated sessions will highlight the importance of transit and reserve time for the Committee to discuss best practices, as well as the constraints and challenges faced by all landlocked WTO Members, including landlocked developing countries and LDCs as outlined in G/TFA/W/53. Paragraph 18: We take note of the reports from the General Council and its subsidiary bodies. These reports, and the Decisions stemming from them demonstrate Members’ continued commitment to the work of the WTO, thereby strengthening its effectiveness and the multilateral trading system as a whole. Paragraph 19: We recognize the importance of strengthened collaboration and cooperation with other intergovernmental organizations and other relevant stakeholders that have responsibilities related to those of the WTO, in accordance with the rules and principles of the WTO, to restore trust, certainty and predictability in the world economy and effectively address current and future multi-dimensional challenges. ADDITIONALS Environment [We recognize global environmental 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 economic, social, and environmental dimensions. We reaffirm support to the UNFCCC, and the Paris Agreement and note the outcome of COP26. 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 and preserve the environment should be WTO consistent [, not constitute unnecessary barriers to trade] and safeguard the multilateral trading system. We reaffirm the importance of providing appropriate support to developing country Members and LDCs in order to help their transitions, including through technological innovations, towards resource-efficient and sustainable development. We will reinvigorate our efforts geared towards enhancing the resilience of these Members and to better enable them to seize sustainable trade opportunities including through Aid for Trade [, transfer of environmentally sound technology on mutually agreed terms] and other capacity-building support that assists in the promotion of production and trade of goods and services that are respectful of the environment. We note the role of the Committee on Trade and Environment as a standing forum dedicated to dialogue among Members on the relationship between trade rules and environmental measures.] Trade for Peace [We acknowledge that trade can play a role in promoting economic development, peace and stability in fragile and conflict affected states (FCS). We invite the Committee on Trade and Development to consider these issues and examine their interdependence. We encourage the CTD to report to the General Council on these discussions and the major issues raised on measures which may facilitate the integration of FCS into the multilateral trading system including through WTO accession, to the General Council by the end of 2022.] Part II [List or Reference to Decisions and/or Work Programmes, separate Declarations, Reports]]
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