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TWN
Info Service on WTO and Trade Issues (Sept22/06)
The G7, comprising the United States, Canada, Germany, France, Italy, the United Kingdom, and Japan, seem determined to target China under the pretext of "leveling the playing field and addressing economic coercion", notwithstanding the economic coercion that is currently being applied on the developing countries through economic sanctions imposed by the US and other members of this so-called elite club. In several ways, the statement of the G7 and its seemingly continued "imperial powers" sounds somewhat like the imperial trade order of old and subtly issues a message to the developing countries to either fall in line or face the consequences. The time has come for developing countries to stay united in pursuing their development-oriented reforms. Otherwise, the Global South could face a new form of de-multilateralization based on the neoliberal trade rules that would severely undermine the member-driven, rules-based, and inter-governmental trade body, said an analyst, who asked not to be quoted. REFORMING THE WTO After condemning "Russia's brutal, unprovoked, unjustifiable and illegal war of aggression against Ukraine," including the adoption of measures suspending most-favoured-nation treatment to Russia, the G7 statement focuses largely on how to reform the WTO and modernize its rule-book. Although the G7 members maintain that they are committed to reviving and reforming "the rules-based multilateral trading system with the WTO at its core," they seem to have conveniently ignored the fact that one of their most powerful members i.e., the United States, has made the enforcement function of the WTO redundant by making the Appellate Body dysfunctional. Even though they insist that "the WTO needs to reflect our shared values such as openness, transparency, fair competition, and the rule of law", it is they who prefer the rather opaque negotiating processes beyond the glare of the majority of the members as demonstrated at the WTO's 12th ministerial conference (MC12) that concluded on 17 June. The G7 members say that they "stand behind the vision that our global trade rule-book must enable economic transformation, promote sustainable, inclusive, and resilient growth, and be responsive to the needs of people globally." This claim over "our global trade rule-book" appears somewhat misleading as it is not clear whether they are referring to the security-driven trade pacts like the recent Indo-Pacific Economic Framework for Prosperity led by the US. The statement says that the G7 members "will work together with our partners in developed and developing countries towards realizing this vision for all and we will defend against any attempt to undermine it." It goes on to praise "the 12th WTO Ministerial Conference (MC12)" as it "has demonstrated that the WTO can deliver meaningful results as the global rulemaking organization on trade by providing responses to today's challenges such as sustainable development, the future of our oceans, the continued health crisis, and the food security crisis, exacerbated by the Russian war of aggression against Ukraine." The above claims reveal that the Northern countries managed and manipulated the outcomes at MC12, as many developing countries, comprising almost three-quarters of WTO members, feel that they were excluded from the final process of the negotiations. In her statement at the last General Council meeting in July (Job/GC/315), the WTO Director-General, Ms Ngozi Okonjo-Iweala, however, pushed back against the views of these developing countries, claiming that it was not true. THREE IDEAS MOOTED In their statement, the G7 members said that they are committed "to engage constructively on ideas to reform all functions of the WTO as agreed at MC12, with a view to achieving concrete progress by MC13." The statement highlights three ideas, namely, "(1) conducting discussions with a view to having a fully and well- functioning dispute settlement system accessible to all WTO Members by 2024, (2) working toward improving the WTO monitoring function, to ensure greater transparency and effective dialogue in WTO bodies, and (3) working toward improving the WTO negotiating function, by engaging in discussions to better integrate developing and least developed country members into the global economy and to develop flexible and creative approaches through, for example, plurilateral joint statement initiatives." The three ideas entail several tradeoffs that the US may demand in the process of agreeing on a fully-functioning dispute settlement system. It is not clear whether Washington will accept the restoration of the Appellate Body with its original mandate because the US seems to prefer a weakened Appellate Body or no Appellate Body at all. Statements issued by successive US trade representatives suggest that they would prefer the old GATT-type of dispute panels that are allegedly ineffective in enforcing the panel decisions. As regards the WTO monitoring function to strengthen the role of the Secretariat, proposals introduced by several members led by the US suggest that they want stringent and burdensome commitments, including "naming and shaming" measures. PLURILATERAL JOINT STATEMENT INITIATIVES It is hardly surprising that the G7 trade ministers, who are the originators of the allegedly illegal plurilateral Joint Statement Initiatives (JSIs), expressed their support for "plurilateral joint statement initiatives in which we participate." They signaled their intent "to significantly advancing the WTO E-commerce negotiations by MC13." The JSI on digital trade is mired in irreconcilable differences, particularly on the issues of cross-border data flows and data localization, source code, and allegedly opaque methods. In their statement, the G7 trade ministers reiterated "our commitment to the G7 Digital Trade Principles as adopted in 2021 and remain united in our support for open digital markets and data free flow with trust, and in our opposition to digital protectionism and digital authoritarianism." Here again, China and several other developing countries, including India seem to be targeted under the pretext of "digital protectionism and digital authoritarianism." Another important G7 goal is its commitment "to finding a permanent solution to the Moratorium on Customs Duties on Electronic Transmissions." Hence, the prospects of the termination of the moratorium by MC13 or by March 2024, which was agreed at MC12, seem unlikely as the G7 wants to overturn that decision agreed by 164 members. The MC12 decision states, "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." SUPPLY CHAINS The G7 statement says that "recent crises have highlighted systemic vulnerabilities to chronic risks and acute supply chain shocks, affecting economic growth and security." In this context, the G7 trade ministers underlined that diversifying "trade and expanding trading relations on a mutually beneficial basis is key to ensuring well-functioning supply chains and to improving the resilience and sustainability of our economies." However, the seven trade ministers did not clarify whether such diversification would involve "re-shoring" or agreeing to special deals with Vietnam, Thailand, and Malaysia among others as part of the Indo-Pacific Economic Framework. The G7 statement says that "building on the report on Security of Supply for Critical Raw Materials, prepared by the Organization for Economic Co-operation and Development (OECD) and submitted to Leaders for the Elmau summit, we will further intensify our work towards building responsible, sustainable, and transparent critical minerals supply chains, and, to that end, establishing a strategy via international cooperation� policy, and financial tools. This includes addressing export restrictions and trade barriers at the international level." Linking trade with the environment and climate change has been echoed by the G7 trade ministers on grounds that "trade and trade policy can be drivers for environmental and social sustainability." Further, the statement adds that the seven members "share the view that supply chains should promote our climate goals and the sustainable use of resources." But the statement is silent on whether the G7 countries will introduce punitive trade measures such as carbon border tax arrangements, which is already being propagated by the European Union and the US. As part of the supply chain rules, the G7 trade ministers said that they "will actively engage in the discussions at the WTO, including on facilitating trade in environmental goods and services, on promoting the circular economy, and on how trade-related climate measures and policies can best contribute to climate and environmental goals and to meeting our Paris Agreement and Glasgow Pact commitments while being consistent with WTO rules and principles." The G7 emphasis on "facilitating trade in environmental goods and services, on promoting the circular economy," and on "trade-related climate measures and policies" poses a new threat to developing countries who may have to face punitive trade measures ostensibly to advance climate measures. The G7 countries insist that "as leading industrialized countries, we recognize our responsibility to be at the forefront of this debate." In the face of likely opposition from the US concerning the issues of plastics pollution and removal of fossil fuel subsidies, the G7 statement merely notes "the discussions on fighting plastics pollution at the WTO and on inefficient fossil fuel subsidies reform in the WTO and in other international fora." FORCED LABOUR In their statement, the G7 trade ministers reiterated their "concern of the use of all forms of forced labour and child labour in global supply chains." This is another controversial area under which developing countries may be targeted in the coming days. LEVELING THE PLAYING FIELD At a time when the G7 countries are providing hundreds of billions of dollars of subsidies, they said that they will sustain and further step up "our efforts working toward a level playing field through more effective use of existing tools, as well as developing appropriate new tools and stronger international rules and norms on non-market policies and practices." They said that their "shared concerns include unfair practices, such as all forms of forced technology transfer, intellectual property theft, lowering of labour and environmental standards to gain competitive advantage, market-distorting actions of state-owned enterprises, and harmful industrial subsidies, including those that lead to excess capacity." Without naming China as their principal target, the seven trade ministers said that they "will also promote discussions at the WTO on how to improve transparency to shed light on and reduce challenges posed by non-market policies and practices that harm the global economy, and on modernizing the global trade rule-book." In a crux, the G7 trade ministers' statement seems like a unilateral trade agenda that could result in "Balkanizing" the WTO and turning it into an "us and them" trade body. The developing countries must pool all their energies to resist this agenda and ensure that the trade body continues to work on the basis of the Marrakesh Agreement. +
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