TWN Info Service on WTO and Trade Issues (Feb23/03)
7 February 2023
Third World Network

Trade: Widening divide among WTO members over development, S&DT
Published in SUNS #9738 dated 6 February 2023

Geneva, 3 Feb (D. Ravi Kanth) — Many developing and least-developed countries on 2 February apparently tore down the arguments advanced by the United States and the European Union on the need to provide special and differential treatment (S&DT) based on a self-designated framework at the World Trade Organization, said people familiar with the discussions.

At an informal closed-door two-day retreat that began on 2 February at the WTO’s premises, developing countries including South Africa, Indonesia, India, Egypt, and many others seemed to have stood their ground that S&DT is a treaty-bound and an integral part of the rule-based WTO’s architecture, said people, who asked not to be identified.

The discussions, which took place on the basis of Chatham House rules, apparently revealed a sharp and widening divide between the US, the EU, and other developed countries on the one side, and a large majority of developing and least-developed countries, on the other, on what ought to be the development modalities as part of WTO reforms.

As reported in SUNS #9735 dated 1 February 2023, the chair of the WTO’s General Council (GC), Ambassador Didier Chambovey of Switzerland, posed several questions to members to address at the informal retreat.

The guiding questions for breakout sessions and plenary meetings include:

(1) How do members view development in the WTO?

(2) How can the opportunities in the WTO system help Members achieve their development objectives?

(3) Within the WTO context, what challenges need to be addressed to ensure that all Members are in a position to achieve their development objectives?

(4) What concrete steps and actions are needed to use the opportunities in the WTO system and address identified challenges to achieve Members’ development objectives?

The GC chair appointed four facilitators to oversee the discussions. The facilitators include Ambassador Mr Ahmad Makaila of Chad, Ambassador Petter Olberg of Norway, Ambassador Ms Sofica Boza Martinez of Chile, and Ambassador Dr Muhammad Mujtaba Piracha of Pakistan.

At the beginning of the meeting, before members went into a huddle, the WTO Director-General Ms Ngozi Okonjo-Iweala touted the WTO’s 12th Ministerial Conference (MC12) goals as outlined in its Outcome Document (WT/MIN(22)/24) concerning S&DT and other issues.

She apparently cited paragraphs two, three, and four, as well as the LDC issues from the Outcome Document.

According to paragraph two of the Outcome Document, members reaffirmed “the provisions of special and differential treatment for developing country Members and LDCs as an integral part of the WTO and its agreements. Special and differential treatment in WTO agreements should be precise, effective and operational. In addition, we recall that trade is to be conducted with a view to raising standards of living, ensuring full employment, pursuing sustainable development of Members, and enhancing the means for doing so in a manner consistent with Members’ respective needs and concerns at different levels of economic development. We instruct officials to continue to work on improving the application of special and differential treatment in the CTD SS and other relevant venues in the WTO, as agreed and report on progress to the General Council before MC13.”

According to paragraph 3 of the Outcome Document, members acknowledged “the need to take advantage of available opportunities, address the challenges that the WTO is facing, and ensure the WTO’s proper functioning. We commit to work towards necessary reform of the WTO. While reaffirming the foundational principles (the Marrakesh Agreement) of the WTO, we envision reforms to improve all its functions. The work shall be Member-driven, open, transparent, inclusive, and must address the interests of all Members, including development issues. The General Council and its subsidiary bodies will conduct the work, review progress, and consider decisions, as appropriate, to be submitted to the next Ministerial Conference.”

In a similar vein, paragraph four of the Outcome Document acknowledges “the challenges and concerns with respect to the dispute settlement system including those related to the Appellate Body, recognize the importance and urgency of addressing those challenges and concerns, and commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024.”

The DG also cited issues concerning the LDCs in the Outcome Document, said people familiar with the discussions.

Ms Okonjo-Iweala seems to have spoken about “new issues” and “implementation” issues at the plenary meeting before members went on to address the GC chair’s questions in four different groups. Members were divided into four groups for breakout sessions during the retreat.

S&DT DIFFERENTIATION

Despite the explicit wording on S&DT in the MC12 Outcome Document, the US, which has single-handedly pushed the issue of differentiation among developing countries for availing of S&DT at the World Trade Organization for the past five years, apparently stuck to its position on differentiation, said people, who asked not to be quoted.

The US seems to have suggested a kind of case-by-case approach for considering S&DT among developing countries, said people familiar with the discussions.

The US struck a discordant note on the provision of S&DT, which is an integral part of the WTO architecture, said a participant, who asked not to be quoted.

SOUTH ADOPTS STRONG POSITION ON S&DT

In contrast, many developing and least-developed countries in the group in which the US participated, called for robust S&DT as well as policy space in various areas under the TRIPS Agreement, the TRIMs (trade-related investment measures) Agreement, agriculture, and other WTO agreements, said people familiar with the discussions.

A majority of developing and least-developed countries underlined their developmental priorities with varying emphasis, while the major developed countries spelled out their opposing views on development, said people, who asked not to be quoted.

The US was placed in the group facilitated by Norway’s trade envoy Ambassador Petter Olberg during the breakout sessions.

Other countries that were included in this group comprised China, Chile, South Africa, New Zealand, Albania, Austria, Barbados, Botswana, Cote d’Ivoire, Costa Rica, Cuba, Djibouti, Estonia, Germany, Grenada, Guinea-Bissau, Honduras, Iceland, Ireland, Israel, Italy, Kuwait, Vanuatu, and Zimbabwe among others.

The US trade envoy Ambassador Maria Pagan is understood to have stuck to Washington’s allegedly controversial position on differentiation that was first raised by the former Trump administration, said people familiar with the discussions.

The US position veered around country-specific S&DT flexibilities but not an informal framework for all the members, said people, who asked not to be identified.

In contrast, South Africa made a strong case for S&DT, and, more importantly, for policy space for developing countries to pursue their developmental goals.

South Africa also apparently highlighted the barriers posed by the TRIPS and TRIMs agreements in pursuing development-oriented industrial policies, said people, who asked not to be quoted.

South Africa also highlighted the unfinished mandated issues on development from the Doha Development Agenda of 2001 and subsequent ministerial/General Council mandates, said people, who asked not to be quoted.

China, which was also in the same group as the US and South Africa, seems to have asked somewhat pointedly whether there is any use in talking about development in the WTO reforms when one major pillar of the WTO, namely, the two-stage dispute settlement system and the Appellate Body, remains atrophied.

China apparently said unless the two-stage dispute settlement system is fully restored, with the Appellate Body in its place to enforce rulings, there is little purpose in talking about development, said people, who asked not to be quoted.

In the group facilitated by Chad’s trade envoy Ambassador Ahmad Makaila, Australia spoke about the importance of tackling trade-distorting domestic subsidies, arguing that billions of dollars of subsidies provided by developed countries and some developing countries posed a threat to global farm trade, said people, who asked not to be quoted.

Indonesia and Egypt, which are part of the group facilitated by Chad’s trade envoy, apparently underscored the need for delivering on the previous ministerial mandates, particularly on those concerning development provisions.

Indonesia and Egypt also highlighted the importance of policy space for developing countries to pursue their specific development-oriented goals, and strong S&DT provisions among other issues, said people, who asked not to be quoted.

On behalf of the LDC group, Bangladesh underlined the importance of “multilateralism” as against divisive plurilateral initiatives.

It suggested that while countries can pursue their own specific initiatives, they must remain mindful of the dangers posed by plurilateral initiatives.

It also pointed out that the previous ministerial mandates, particularly the Nairobi ministerial mandate (adopted at MC10 in December 2015), called on members to pursue only mandated issues, suggesting that plurilateral initiatives are not part of the previous ministerial mandates.

Bangladesh also raised the issue of the LDC services waiver, which is still pending as well as the package of issues concerning the extension of S&DT to graduating LDCs.

Brazil, which had voluntarily given up S&DT under the previous Jair Bolsonaro government, apparently spoke about proportional S&DT, something along the lines of case-by-case S&DT for developing countries.

Brazil and Uruguay also raised issues concerning trade-distorting domestic subsidies, said people, who asked not to be quoted.

India, which is in the group of countries that include the European Union, Korea, the United Kingdom, Uganda, and Saudi Arabia among others, drove home the importance of S&DT for developing countries.

Earlier, India along with several other developing countries had highlighted that developing countries must be allowed to make their own assessments regarding their own developing country status, emphasizing that S&DT must be provided in current and future negotiations.

India had also warned in the past that attempts to water down the core treaty principles governing S&DT would be a recipe for an intractable deadlock at the WTO.

Apparently, the EU cited poverty figures to drive home the message that S&DT can only be availed of on a case-by-case approach, as was the case with the Trade Facilitation Agreement, said people, who asked not to be quoted.

According to several participants who spoke to the SUNS, the EU’s arguments on S&DT were challenged, and apparently, the EU faced a hard time from developing countries at the meeting, said people, who asked not to be quoted.

In the third group facilitated by Chile’s trade envoy Ambassador Ms. Sofica Boza Martinez, countries that took part are Switzerland, Yemen (which undertook huge commitments to join the WTO), Pakistan, Mexico, Russia, Singapore (which also gave up its entitlement to S&DT), Turkiye, and the Dominican Republic among others.

Several developing countries also raised a range of issues such as (1) rising protectionism and increase in unilateral measures by major developed countries; (2) the need to restore the Appellate Body, and implementation of existing WTO commitments; (3) ensuring and safeguarding the Marrakesh Agreement/ multilateral trading system; (4) the continued lack of outcomes from the Doha Round, including S&DT; (5) LDC-graduation transition; (6) course correction, UN’s SDGs; and (7) the role of the WTO Secretariat and eroding the member-driven nature of work in the WTO, including agenda-setting and partiality by the Staff of the Secretariat, among others.

The informal meeting on WTO reforms and modalities for development is expected to conclude on 3 February. It remains to be seen what the four facilitators will conclude on the basis of the arguments/proposals made by members, said people, who asked not to be quoted. +