|
||
|
TWN
Info Service on WTO and Trade Issues (Mar22/04) Geneva, 7 Mar (D. Ravi Kanth) – The United States along with its developed-country allies have apparently intensified their trade and economic war against Russia on two different fronts that could potentially undermine the global multilateral trading system, including the World Trade Organization, in what appears to be a concerted attempt to “weaponize” economic and trade sanctions against Moscow for its military invasion of Ukraine. On one front, the US and the European Union, which are spearheading the Developed Countries Coordinating Group (DCCG) at the WTO, have decided to “name and shame” Russia at every meeting since 24 February. Apparently, a meeting of the Doha agriculture negotiating body was cancelled on 7 March due to a complaint from some members that they would not participate in the meeting if Russia attended the meeting, said people, who asked not to be quoted. Also significantly, the small-group meetings seem to have been cancelled due to the opposition from some powerful members who apparently made it clear that Russia needs to be kept out of the meetings, said people, who asked not to be quoted. The US and the EU on 4 March informed the chair of the WTO’s General Council (GC), Ambassador Didier Chambovey from Switzerland, that Russia is being “suspended” from the Developed Countries Coordinating Group, saying that Moscow can no longer “partake in the deliberations” in the DCCG due to its “reprehensible assault on Ukraine.” The DCCG includes the US, Canada, the EU, Switzerland, Norway, Iceland, the United Kingdom, Japan, Australia, and New Zealand among others. Amidst moves to condemn Russia at every WTO meeting since 24 February, including at the informal meeting of the Committee on Agriculture on 4 March, the US and its allies seem to be contributing to a “vitiating” negotiating climate ahead of the WTO’s 12th ministerial conference (MC12) scheduled to be held in the second week of June, said people familiar with the development. Never in the recent history of the WTO has military conflicts that have resulted in huge losses of lives figured even remotely at the trade body, as they are not part of its core mandate, said people, who asked not to be quoted. It appears alarming over the manner in which Russia’s invasion that is currently taking place on European soil has now been made a central issue of the WTO by the US and its allies, said people, who preferred not to be quoted. In their letter to the GC chair, the US and the EU said that “we consider that the Russian Federation’s actions are an unprovoked, pre-meditated attack against a sovereign democratic state, and the egregious violation of international law, the UN Charter and fundamental principles of international peace and security.” However, these two members have failed to show under which WTO rule they are raising this issue in either their letter to the GC chair, or why they reckon it is important to bring issues that are not part of the WTO’s mandate at informal and formal WTO meetings, said people who preferred not to be identified. In consequence of the suspension of Russia from the DCCG, the US and the EU asked the GC chair to inform Russia that “any information, deliberations and proposal by our Group relating to appointments to chair WTO bodies will no longer include Russia or Russian nominees, and that henceforth revert to you or the chairs of the Goods and Services Councils during these procedures.” Meanwhile, in a separate development, the US, the EU, Canada, Australia, and Norway among others condemned Russia at an informal meeting of the Committee on Agriculture on 4 March, after discussing the Bali decision on tariff rate quotas. Already, the US is on the verge of moving to deny Permanent Normal Trade Relations (PNTR) status, which provides MFN (most-favored-nation) treatment, to Moscow. (See SUNS #9527 dated 4 March 2022). A former US member of the WTO’s Appellate Body, Mr James Bacchus, has called for the expulsion of Russia from the WTO, in a signed article that was published in the US newspaper The Hill on 3 March. He said that, though “there is no specific provision in the WTO Agreement relating to expelling a WTO member … Looking more closely at the agreement, however, it is possible for two-thirds of the WTO’s 164 members to alter the rights and obligations of members and – if a member refuses to agree – for three-fourths of the members to expel that member from the organization. (This option is set out in Article X of the Agreement).” Mr Bacchus, however, did not specify under which specific provision of Article X of the Marrakesh Agreement that Russia could be expelled. It appears that he seems to be banking on Paragraph 3 of Article X dealing with amendments, which states that “the Ministerial Conference may decide by a three-fourths majority of the members that any amendment made effective under this paragraph is of such nature that any Member which has not accepted it within a period specified by the Ministerial Conference in each case shall be free to withdraw from the WTO or to remain a Member with the consent of the Ministerial Conference.” ECONOMIC WARFARE In addition to the trade-related measures, the US and its partners have intensified their elaborate war of financial and economic sanctions at various levels, starting with the blocking of Russian banks from participating in the global financial system through SWIFT (Society for Worldwide Interbank Financial Telecommunication) from 12 March. In its actions, the US appears determined to include oil and gas supplies from Russia, despite opposition from Germany, according to media reports. For the sake of achieving its goals by “hook or crook”, the US has apparently sent a high-level delegation to Venezuela to discuss securing enhanced supplies of oil products from the US-sanctioned South American country. Interestingly, the latest US move to hold talks with Venezuela comes at a time when Washington has caused untold pain and destruction to the Venezuelan economy through its sanctions over the past several years. Though the sanctions and trade embargo against Venezuela continue, the US seems to have no remorse in talking to a country that had already suffered most through continued sanctions, according to media reports. While Russia’s unprovoked actions against Ukraine and its violation of the sovereignty and territorial integrity of the country have been condemned in various forums, including the United Nations General Assembly last week, the economic and internet sanctions imposed by the US and the US-based digital giants would also constitute an “act of war”, according to diplomats and policy analysts. The global networks and supply chains that are touted as the peaceful bulwark of globalization are now being “weaponized” in every possible manner due to the Russian invasion of Ukraine. As war rages between Russia and Ukraine, it is not just fought “with only guns and bombs but economic tools,” says Rana Foroohar, in her Financial Times column on 7 March. “It is worth asking whether we are actually in a truly new and different age, one of weaponized rather than pacifying war.” THE US AGAINST THE WTO While financial and economic warfare, including the diversion of oil and natural gas from Russian sources, is being intensified, little is being said about the US war against the WTO. For more than three years, the US has single-handedly chosen to make dysfunctional the Appellate Body, the highest adjudicating body at the WTO for global trade disputes. The US actions seem to have made the enforcement function of the trade body somewhat “toothless”. So far, the US has not proposed any specific solution to allow the two-tier dispute settlement system to function as it did for almost 25 years. Yet, the US continues to claim that it plays by the WTO rules, say people, who asked not to be quoted. Contrary to the multilateral trade rules as set out in the WTO agreements, US President Joe Biden on 4 March touted “a new rule aimed at strengthening Buy American to ensure the bulk of government procurement contracts go to domestic companies,” according to a report in the Washington Trade Daily (WTD). “In my Administration, Buy American is a reality,” the President said, according to the WTD report, suggesting that the new rule hikes the content threshold required for products to be considered US-made from the current 55 percent to 65 percent by 2024, and 75 percent by 2029. “If 55 percent is made in America, it’s “substantially all”,” the President said. “To me, 55 percent isn’t substantially all; it’s slightly over half. Today, we’re issuing a rule to raise the amount of domestic content required to be considered Made in America from 55 percent to 75 percent. Substantially all is going to start meaning substantially all.” Apparently, President Biden also announced a new framework for critical products that require a domestic supply chain in order to avoid the shortages experienced during the global COVID-19 pandemic. According to the WTD report, “through the creation of a new “price preference,” products identified as critical to national security, health or resilience will be purchased domestically, even if foreign sources are cheaper. “We’re talking about things like semiconductors, some pharmaceutical ingredients, advanced batteries – among other things,” the President said. “It’s worth it for us to ensure we have a domestic capacity to protect us from shortages and price spikes in the future.” In short, the US actions are apparently not only protectionist but are allegedly inconsistent with the WTO rules. While Washington denied that “Buy American” and President Biden’s push to manufacture more products in the United States amount to protectionism, there is ample evidence that these measures are the source of tensions between the US on the one side, and other countries, on the other. The two-front war being waged by the US seems to be ultimately contributing to “weaponizing” trade, financial, and economic sanctions while “atrophying” the rules-based multilateral trading system, according to people familiar with the development.
|
||
