TWN Info Service on WTO and Trade Issues (Jun22/29)
30 June 2022
Third World Network

Trade: G7 demands permanent solution to continue e-commerce moratorium
Published in SUNS #9606 dated 30 June 2022

Geneva, 29 Jun (D. Ravi Kanth) -- The Group of Seven (G7) industrialized countries on 28 June issued a clarion call for a "permanent solution" to enable the continuation of the current moratorium on customs duties on electronic transmissions at the World Trade Organization, a call that seemingly exposed the G7's "hypocritical" stance and "double-standards", said people familiar with the development.

With the apparent blessings of the WTO director-general Ms Ngozi Okonjo-Iweala, who was present at the two- day G7 meeting (26-28 June) in Elmau, Germany, the G7 leaders issued a comprehensive agenda of issues to be tackled in the arena of global trade at the WTO's 13th ministerial conference (MC13), scheduled to be held sometime in 2024.

However, the stand adopted by the G7 leaders seems somewhat at odds with what they assured at the WTO's 12th ministerial conference (MC12) that concluded in Geneva on 17 June.

Apparently, at a "green room" meeting at MC12 on 16 June, the United States Trade Representative (USTR), Ambassador Katherine Tai, said that Washington can consider the full termination of the e-commerce moratorium but that it would need time for its digital industries to adjust to the termination, said people, who asked not to be quoted.

The US apparently said it is ready to agree to the full termination of the moratorium but that it would need time to prepare the ground, said people, who asked not to be quoted.

During the discussion on the e-commerce moratorium in the "green room" meeting, South Africa, Indonesia, Pakistan, and Sri Lanka initially called for the termination of the moratorium with immediate effect.

It appears that the USTR had called on the Indian trade minister Mr Piyush Goyal for a discussion on the moratorium outside the "green room" and both appear to have agreed on a period of nine months on the termination of the moratorium, said people who asked not to be identified.

Subsequently, when the USTR and India announced the understanding they had reached on the moratorium, there was a sigh of relief at the meeting.

However, the European Union, the United Kingdom and several other developed countries seemed unconvinced about the nine-month period to end the moratorium.

Some of these countries went out of the "green room" and came back to say that they are ready to terminate the moratorium only at the end of 2023, or at the end of MC13 in 2024, said people who asked not to be quoted.

The Decision on the E-commerce Moratorium and Work Programme (WT/MIN(22)/32- WT/L/1143) that was subsequently adopted at MC12 states:

"We agree to reinvigorate the work under the Work Programme on Electronic Commerce, based on the mandate as set out in WT/L/274 and particularly in line with its development dimension.

"We shall intensify discussions on the moratorium and instruct the General Council to hold periodic reviews based on the reports that may be submitted by relevant WTO bodies, including on scope, definition, and impact of the moratorium on customs duties on electronic transmissions.

"We agree to maintain the current practice of not imposing customs duties on electronic transmissions until MC13, which should ordinarily be held by 31 December 2023. Should MC13 be delayed beyond 31 March 2024, the moratorium will expire on that date unless Ministers or the General Council take a decision to extend."

Against this backdrop, the G7 proposal to seek a "permanent solution" for the continuation of the e-commerce moratorium revealed the continued display of "double-standards" to undermine the interests/concerns of the developing countries, said people, who asked not to be quoted.

In their communique issued at Elmau on 28 June, the G7 leaders applauded "the outcome of the 12th WTO Ministerial Conference in response to major global issues such as fisheries subsidies, the emerging food security crisis and equitable access to vaccines and the commitment to work towards necessary reform of the WTO."

"With a revived multilateral trading system," the G7 leaders said, "we look forward to matching this ambitious progress at the 13th WTO Ministerial Conference, advancing negotiations on E-Commerce and finding a permanent solution for the moratorium on E-Commerce customs duties, closing the gap in the fisheries negotiations, addressing agricultural reform, and making concrete progress on WTO reform."

As reported in SUNS #9603 dated 27 June 2022, the Agreement on Fisheries Subsidies covering IUU (illegal, unreported, and unregulated) fishing, overfished stocks and other provisions remain only on paper until two-thirds of WTO members ratify it.

Effectively, several developing countries, who demanded the full termination of the e-commerce moratorium at MC12, will have to reckon with the prospect of a "permanent solution" on the e-commerce moratorium.

So, "the cat is out of the bag" in seeking a "permanent solution" for the e-commerce moratorium, said a former trade negotiator, suggesting that the same G7 countries almost killed the mandated and much-delayed "permanent solution" for public stockholding programs for food security.

CHINA TARGETED ON INDUSTRIAL SUBSIDIES

At a time when the G7 countries are offering subsidies worth tens of billions of dollars to their industries, they have chosen to target China on industrial subsidies in their communique, said several people, who asked not to be quoted.

The G7 communique states: "We will further step up our efforts working towards a level playing field through more effective use of existing tools, as well as developing stronger international rules and norms on non-market policies and practices, for example, harmful industrial subsidies and trade-distorting actions by state-owned enterprises, notably those that lead to excess capacity."

The allegedly "hypocritical" stance of the G7 countries seems to vindicate their "double-standards" on trade issues, said a trade envoy, who asked not to be quoted.

ENVIRONMENT

In their communique, the G7 leaders said that they "will support structured discussions at the WTO, on facilitating trade in environmental goods and services, and on how trade-related climate and environmental measures can contribute to meeting our Paris and Glasgow commitments while being consistent with WTO rules and principles."

The communique states that "trade flows play an important role for the green and just transition and for the diffusion of environmental goods, services, technologies and innovations."

The communique argues that "through a mix of binding and non-binding measures, we commit to advancing sustainable supply chains that are net-zero aligned and climate resilient, decouple agricultural production from forest loss and land degradation, use resources sustainably, reduce environmental impact, foster circularity, and promote decent work."

Further, the G7 leaders said they "will coordinate to maximize the coherent implementation of and compliance with international standards relating to human rights, environment, and labour across global supply chains."

In an apparent reference to China, the G7 leaders said that they want to tackle child labour and forced labour in global supply chains, including "state-sponsored forced labor of vulnerable groups and minorities, including in the agricultural, solar, and garment sectors."

WTO REFORM

Renewing their commitment to reform the WTO, the G7 leaders said that they intend to achieve "a fair, predictable, and stable trade environment."

The G7 communique states that "our global trade rulebook must enable economic transformation, sustainable, inclusive, and resilient growth, and be responsive to global citizens."

The G7 agenda on WTO reform includes "reforming the WTO's functions of monitoring, negotiation, and the dispute settlement mechanism."

The two-stage dispute settlement system at the WTO remains dysfunctional, with its highest adjudicating body, namely, the Appellate Body, being paralyzed by the US since December 2019.

In their communique, the G7 leaders underscored "the importance of plurilateral initiatives to negotiating meaningful and relevant outcomes at the WTO, including by fostering creative and practical approaches."

On Russia, the G7 leaders highlighted their actions over the last months in suspending the Most-Favoured-Nation (MFN) treatment to products and services from the Russian Federation.

"We will continue to remove unnecessary trade barriers, including by working against trade-restrictive measures and non-market practices to maintain open and transparent markets, and call on others to do likewise," they said.

Commenting on the disruption of global supply chains following the COVID-19 pandemic and the Russia-Ukraine war, the G7 leaders said that they "stand firmly for the principles of openness, inclusivity, and competition in a rules-based environment which facilitate sustainable, transparent, diverse and secure global supply chains through ambitious, values-led trade policy."

The G7 leaders said that they want to focus on "promoting market circularity and support diversification by exploring investment in alternative resources, processing capabilities, sustainable practices and new technologies."

In short, the G7 leaders appear to have set an agenda that is "self-serving" and useful to their own countries but seem to be least concerned as to how such an agenda would help the developing countries. +