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TWN
Info Service on WTO and Trade Issues (Dec21/04) Geneva, 3 Dec (D. Ravi Kanth) – The WTO director-general Ms Ngozi Okonjo-Iweala appears to have gone overboard on 2 December in celebrating an agreement among the 67 WTO members participating in the non-mandated plurilateral Joint Statement Initiative (JSI) on services domestic regulation (DR), even as the legal status of the JSIs remains under challenge on grounds that it goes against the Marrakesh Agreement that established the WTO, said people familiar with the development. Further, the JSI agreement on services domestic regulation seems to be aimed at undermining the ongoing multilateral work in the WTO’s Working Party on Domestic Regulation (WPDR), said people familiar with the development. Hailing the JSI agreement on DR as a great success in the WTO’s services negotiations, Ms Okonjo-Iweala has made somewhat hyperbolic claims that it would generate gains to countries to the tune of $150 billion. In the past, such astronomical figures like the $1 trillion in gains from the Trade Facilitation Agreement (TFA) claimed by the former WTO director-general Pascal Lamy fell flat on the ground because these gains were actually few and far between. Often, such figures allegedly turned out to be “mere lies” to mislead the WTO members, said an analyst, who asked not to be quoted. AN “UNUSUAL” PRESS CONFERENCE At a rather unusual press conference moderated by the chief of the International Chamber of Commerce (ICC), a business organization, the DG Ms Okonjo-Iweala said, “I congratulate JSI members” for this “fantastic” outcome. She said the agreement will help MSMEs (micro, small and medium enterprises) and it will lower the services trade costs while generating gains to the tune of $150 billion. She also claimed that the Information Technology Agreement (ITA) has generated $1.2 trillion (in gains), suggesting that the agreement will reduce services costs. She said the growth in services trade was higher than the trade in goods. When asked whether it was proper for the ICC to moderate the press conference, the DG said the WTO has been working with the ICC. Several non-JSI members expressed grave concern over the DG’s participation as well as her blessings given to the JSI members in concluding the agreement, saying that it is a very “serious” issue, said people, who asked not to be quoted. On 4 May this year, Ms Okonjo-Iweala acknowledged her mistake in bringing the issue of the non-mandated Joint Statement Initiatives into an informal meeting of the Trade Negotiations Committee (TNC). (See SUNS #9340 dated 5 May 2021). At a time when the legal status of the JSIs is being challenged, the DG’s comments at the press conference cannot be pushed aside, said a Geneva-based trade official, who preferred not to be quoted. “She appears determined to undermine the multilateral trade framework of the WTO, particularly the work being undertaken by the WTO’s Working Party on Domestic Regulation,” the person said. “This is a serious issue and it needs to be taken up in the coming days,” said another person, who asked not to be quoted. AUSTRALIA & EU “PAT THEIR BACKS” ON JSI ON DR In their separate statements, the EU and Australia presented an upbeat assessment of the JSI agreement on services domestic regulation, which has been opposed by a large majority of developing countries, including India and South Africa. According to Australia, the new disciplines under the JSI agreement cover licensing and qualification requirements and procedures as well as technical standards. The EU claimed that the outcome of the negotiations will be applied on a “most-favored nation” basis. The US Trade Representative (USTR), Ambassador Katherine Tai, praised the agreement, saying that Washington “has long championed transparency and fairness of regulatory rules as a fundamental feature of good governance, and the DR JSI is an opportunity to strengthen such standards around the globe.” She said “this initiative is the first successful WTO services negotiation in years, and shows how WTO Members can take practical, common sense steps to address clearly defined trade problems.” Surprisingly, the JSI agreement on DR is not expected to do away with the numerous barriers being imposed on the movement of short-term services providers under Mode 4, said a services trade analyst, suggesting that it is only beneficial to the major industrialized countries. ATTEMPTS TO SABOTAGE THE MULTILATERAL WPDR With the DG joining the chorus of praise for the JSI outcome on DR, it appears that the WTO may not advance multilateral outcomes on issues such as the WPDR’s attempt to craft disciplines on domestic regulation, said people, who asked not to be quoted. Perhaps, except for an agreement on fisheries subsidies, the DG seems determined to throw her full weight behind accomplishing the JSIs on digital trade, investment facilitation, and disciplines on MSMEs as well as on attempts to terminate the principle of consensus-based decision-making and bringing about differentiation among developing countries for availing of special and differential treatment, said an analyst, who asked not to be quoted. To safeguard the ongoing work in the WPDR, India and South Africa had issued a joint statement at a meeting of the WPDR on 30 June. The five-page joint statement, circulated as a restricted room document (RD/Serv/WPDR/1) at the meeting, expressed sharp concern over the alleged violation of GATS commitments. India had already expressed its concerns over the JSI on domestic regulation in services on two grounds at a WPDR meeting in 2019. India had said, (a) any “additional commitments” under GATS Article XVIII by the Members of the JSI cannot purport to be a fulfilment of the GATS mandate under Article VI:4, which clearly envisaged only a multilateral process, and the WTO Members have constituted the Working Party on Domestic Regulation (WPDR) for this purpose; and (b) while each Member has the right to incorporate “additional commitments” into its schedule, the underlying principle is that none of these additional commitments should directly or indirectly amount to a dilution or amendment of any of the provisions of the GATS, and that what is incorporated pertain to “Specific Commitments”, not “General Obligations and Disciplines”. India had argued in 2019 that Article XVIII (of the General Agreement on Trade in Services) only envisages “additional commitments” pertaining to “Specific Commitments” regarding measures affecting trade in services. India and South Africa had highlighted in their proposal on the “Legal Status of Joint Statement Initiatives and their Negotiated Outcomes” (WT/GC/W/819) as to how the JSIs are working against the multilateral mandates including the JSI on domestic regulation in services (INF/SDR/W/1/Rev.2). The JSI proponents referred to a reference paper in their document which says that “Members have agreed to the disciplines on Services Domestic Regulation in this Reference Paper (“disciplines”) with the objective of elaborating upon the provisions of the General Agreement on Trade in Services (“Agreement”), pursuant to paragraph 4 of Article VI of the Agreement.” According to India and South Africa, the JSI document “highlighted that there is a contradiction between JSIs and the fundamental principles and objectives of the multilateral system, enshrined in the Marrakesh Agreement including Article II.1 (“The WTO shall provide the common institutional framework for the conduct of trade relations among its Members …”); Article III.2 (“The WTO shall provide the forum for negotiations among its Members concerning their multilateral trade relations”); Consensus-based decision-making, as enshrined in Arts. III.2, IX, X, and also X.9 and the procedures for amendments of rules as articulated in Art. X.” According to India and South Africa, the JSI action on domestic regulation would “lead to the marginalization or exclusion of issues which are difficult but which remain critical for the multilateral trading system, such as agriculture, development, thereby undermining balance in agenda setting, negotiating processes and outcomes [and] leave Members with no option other than to choose between remaining outside the discussions or participating on matters that are inconsistent with their economic development priorities, needs, concerns and levels of economic development and fragment the multilateral trading system and undermine the multilateral character of the WTO.” In short, they said the JSI proponents “have subverted the WPDR’s multilateral mandate by not just undertaking exploratory discussions, but actually negotiating such disciplines through a parallel discussion format designed to bypass the multilateral process.”
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