TWN Info Service on WTO and Trade Issues (Jul22/12)
28 July 2022
Third World Network

WTO: Developing countries rally around development-oriented reforms
Published in SUNS #9625 dated 28 July 2022

Geneva, 27 Jul (D. Ravi Kanth) -- China has strongly supported a proposal by the African Group, Cuba, India and Pakistan for "strengthening the WTO to promote development and inclusivity", amidst the renewed push for WTO reforms by the Northern countries, said people familiar with the development.

The United States, the European Union, and several other developed countries want to bring about differentiation among developing countries for availing of special and differential treatment (S&DT) and allegedly doing away with the principle of consensus-based decision-making, said people, who asked not to be quoted.

At the WTO's General Council (GC) meeting that concluded on 26 July, a large majority of developing countries including China endorsed the proposal on the strengthening of the WTO to promote development and inclusivity.

The eleven-page proposal (WT/GC/W/778/Rev.5) submitted to the GC on 18 July by the African Group, Cuba, India and Pakistan highlighted several issues such as the "imbalances and development challenges at the WTO," including the negotiating function of the WTO; the urgent need to preserve "the architecture of special and differential treatment"; rules to safeguard development concerns; resolving the dispute settlement function; and allowing for different economic models to co-exist, among others.

In its conclusion, the proposal by the African Group, Cuba, India and Pakistan highlighted the following priorities:

1. The negotiating function of the WTO

* Strengthening the multilateral character of the WTO. Critically, this must include the preservation of consensus decision-making and respecting Art. X of the Marrakesh Agreement on Amendments with regards to new rules;

* Addressing the unilateral and protectionist actions taken by some Members;

* Reaffirming the principle of S&D, which is a treaty-embedded, non-negotiable right for all developing countries in the WTO; and promoting inclusive growth, widening spaces for states to pursue national development strategies in the broad framework and principles of a rules-based system;

* Keeping development at its core through delivering on the long-promised development concerns, in particular the outstanding development issues of the DDA; as well as address the asymmetries in WTO Agreements such as those in Agriculture, the Subsidies Agreement, TRIMs and the related GATT articles (Art. III and XI), TRIPS and other areas; continuing with the on-going multilaterally mandated negotiations; reinvigorating the discussions in the 1998 E-Commerce Work Programme particularly looking at the E-Commerce Moratorium and the issues of digital divide.

2. The dispute settlement function

* Restoring the AB and the two-tier WTO DSU, and addressing challenges of access to the dispute settlement system by developing countries.

3. The monitoring function of regular bodies

* Reaffirming existing commitments and not adding more obligations in the areas of transparency; specific trade concerns and the functioning of regular bodies. The WTO must also allow for different economic models rather than push for one form or another.

4. COVID-19

* Responding to the COVID-19 pandemic, including through introducing a Moratorium on trade measures and providing sufficient flexibilities on intellectual property disciplines for developing countries. Such a Moratorium will be in place for the duration of the pandemic for governmental action taken to directly respond to the pandemic. Unlike developed countries, developing countries without deep pockets must be more creative, including by using trade policy measures to provide medicines, diagnostics, health equipment, and to address the serious balance of payments crises many developing countries now find themselves in.

* To address COVID-19, developing countries should not be asked to relinquish their required trade policy space such as through the permanent liberalization of tariffs or agreement to end the use of export restrictions.

Several developed countries appeared to turn a deaf ear to the above proposal, as their reform proposals are still in the pipeline. It is not clear whether the reform proposals will be brought to the GC or discussed behind the scenes, said people familiar with the development.

CHINA SUPPORTS JOINT PROPOSAL

At the GC meeting, China said it supports "this proposal and shares many views in this proposal on WTO reform."

China listed the following markers for WTO reform based on the above proposal. The markers include:

1. The reform should respond to the development needs of developing members. It is essential to address the development deficit in the existing WTO rules, resolve the difficulties they encounter in their integration into economic globalization and help them respond to the unprecedented multiple challenges, including the pandemic, food security, supply chain disruptions etc. Special and Differential Treatment (SDT) is a treaty-embedded and non-negotiable right for all developing members.

2. WTO Reform could only succeed with mutual trust and full respect of members' differences, including diverse historical and cultural backgrounds, different economic models and development paths.

3. The two-tiered dispute settlement system is essential to ensure security and predictability of the multilateral trading system. We welcome the recent informal discussions on dispute settlement reform led by the US and hope this exercise could help us to have a fully and well-functioning Dispute Settlement System by 2024.

4. Last but not least, the basic principles of the WTO, such as non-discrimination, openness and consensus-based decision-making should be well preserved.

China said that "reform is never an easy task," suggesting that "the success of MC12 has provided us with an invaluable opportunity for WTO reform."

"Let us seize the opportunity to build momentum and confidence and work together for a well-functioning WTO," China concluded.

ENHANCED TRANSPARENCY & NOTIFICATION REQUIREMENTS

At the GC meeting, all the developed countries as well as several developing countries made a strong pitch for their draft GC decision on "procedures to enhance transparency and improve compliance with notification requirements under WTO agreements."

The proposal, based largely on the US initiative (Job/GC/204/Rev.11), calls for "complete notifications" by members of all WTO agreements.

It wants members to reaffirm "existing commitments", particularly existing notification obligations and "recommit to submitting timely and complete notifications."

It calls for "engagement in WTO bodies to facilitate compliance", proposing that the "General Council instructs the Working Group on Notification Obligations and Procedures (Working Group), which is open to participation by all Members, to: meet initially within six months of this decision to develop recommendations on improving Member compliance with notification obligations;

A. consult with relevant committees and other working groups and bodies to identify both systemic and specific improvements, as appropriate, such as introducing simplified notification formats, greater use of electronic notification systems, updating reporting requirements, holding additional training and workshops at the committee level, and using new digital tools that can help Members improve compliance with notification obligations;

B. consult with the WTO Secretariat as appropriate, including the WTO Institute for Training and Technical Cooperation (ITTC), to assess the contribution of WTO trade-related technical assistance, particularly for developing and LDC Members, to improving notification compliance and submission of notifications to the Central Registry of Notifications;

C. work with the Secretariat to update the Technical Cooperation Handbook on Notification Requirements for each of the agreements and understandings listed in paragraph 1 and present it to the Council for Trade in Goods;

D. review G/L/223 and recommend enhancements to the report relating to the factual presentation of information on Members' notification compliance;

E. consult with the Secretariat on ways to enhance access to notification-related information and the WTO Notification Portal, including with regard to how it may be used to improve notification compliance;

F. work with the relevant committees and the Secretariat to create a dedicated page on the WTO website with resources, guidance, training videos, and other materials as relevant to aid Members in completing notifications;

G. work with the Secretariat to establish automatic reminder emails to Members before a notification is due;

H. report to the Council for Trade in Goods (CTG) on its findings and recommendations within two years of the adoption of this decision; and

I. report to the CTG on its continuing work annually or as appropriate thereafter.

At the GC meeting, several developing countries opposed the burdensome and punitive requirements under the so-called moniker of improving transparency and compliance with notifications.

Given the paucity of resources in many developing and least-developed countries, it would be a huge burden to undertake these commitments, said a trade official from a developing country.

China apparently said that it has "some concerns on the revised proposal," adding that "there is no definition of complete notification; the word "complete" in paragraph 2 could lead to different interpretation and assessment on a member's implementation of notification."

China said that "paragraph 3(e) regarding the Secretariat's report on updating the list of notification obligations and the compliance, we wonder here how the Secretariat will report compliance, what criteria the Secretariat is expected to use for assessing the compliance."

In short, the proposal from the US, the EU, and many other developed countries failed to garner consensus at the meeting.

DG PUSHES BACK AGAIN

In her full statement issued as a restricted document (Job/GC/315), the WTO Director-General, Ms Ngozi Okonjo- Iweala, pushed back against the concerns raised over the exclusion of some members from crucial meetings at MC12.

At the General Council meeting on 25 July, the DG made some rather startling remarks in her concluding statement.

On the confusion expressed by Pakistan's trade envoy, Ambassador Muhammad Mujtaba Piracha, as to why the Trade Negotiations Committee (TNC) meeting was not held prior to the GC meeting, Ms Okonjo-Iweala said "I do not think you should be confused, Your Excellency."

She said "the issue is that sometimes when I listen, I hear the same statements at the TNC as you hear at the GC," adding that "since there was no big negotiating agenda before us, I thought it would save Members' time by having just the GC and give a report out."

The DG went on to say, "but the TNC is not going anywhere ... It is there ...We have done this only to be more efficient and to save time from having yet another meeting. ... That was why we did that."

After the US complained that there is no mandate on the implementation issues, the DG said that "on the issue of Implementation Matters and the table circulated from the Secretariat, I want to reassure everyone that this is not a list of mandates or an attempt to get Members to do things they do not want to do."

She said "it was an attempt to try and put together a guide or some kind of list of things that we might follow up on."

The DG said that while "many Members have stressed that even though MC12 is billed as a success or we have achieved some things, we are not yet there."

She said that members "have a lot to deliver before the end of the year and I hope we have the appetite for trying to do that."

Commenting on the "very challenging times with respect to the way we negotiate," she said that "everybody knows it. It has been a miracle that we were able to have the outcomes we had, given the tough negotiating position we are in."

She said that "sometimes when I listen to Members, you would almost believe that three quarters were not in some of the negotiating rooms from the comments I have heard."

"But that is not the case," the DG insisted, adding that "most people were in these rooms."

"I really want to insist on that. I just want to, again, push back a bit," the DG said, pointing out that "if we (members) allow these comments to keep going on, they become fact."

The DG said "this is not a fact," but for the people excluded, it is a fact, said a trade official, who asked not to be quoted.

In her statement, the DG asserted that "most people were in the rooms," adding that "there were some who were not in some rooms ... and there were reasons why we had these rooms in the way we did - because we are in a tough situation now with respect to how we negotiate in this organization."

She claimed that "we had to be very creative" and "that creativity has led us to get some results."

For the DG to come back to the issue of transparency and inclusivity during MC12 twice over the last fortnight and to push back against members' repeated concerns over their exclusion from crucial small group/green room meetings, clearly there are missing elements that need to be addressed, said a person, who asked not to be quoted. +