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Info Service on WTO and Trade Issues (Sept23/09) Geneva, 19 Sep (D. Ravi Kanth) — The chair of the World Trade Organization’s General Council, Ambassador Athaliah Lesiba Molokomme of Botswana, is convening an informal retreat on “trade and industrial policy” at the World Trade Organization on 25-26 September, in an apparent move to institutionalize the European Union’s proposal on “reinforcing the deliberative function of the WTO to respond to global trade policy challenges.” Even though several countries have opposed the EU’s proposal on reinforcing the deliberative function of the WTO to discuss current challenges without concluding work on the core mandated issues that were decided at the previous ministerial conferences, attempts are apparently underway to bring in new issues on the grounds of “WTO deliberations”, said people familiar with the development. Explaining the objectives of the informal retreat in a restricted document (Job/GC/355) circulated on 15 September, the General Council (GC) chair said: “This retreat is intended to facilitate WTO deliberations on the interface between trade and industrial policy nexus and economic development in general.” She added: “The retreat is intended to facilitate WTO deliberations on the interface between trade and industrial policy among members and to identify possible pathways and outcomes.” According to the restricted document, “the informal meeting will be structured with a view to ensuring full participation, inclusivity, and transparency, as per modalities.” Under the sub-heading of “overview of themes and process”, the GC chair said that she held consultations with the proponents (the African Group) and took into account Members’ discussions in the General Council on this topic. The main themes that are expected to be addressed in the plenary and breakout sessions at the retreat are “policy space in support of industrialization in developing countries, including LDCs (least-developed countries)”, “industrial subsidies: opportunities and challenges for the global trading system”, and the “way forward”. BREAKOUT SESSIONS In the first breakout session focusing on “policy space in support of industrialization in developing countries, including LDCs”, members will share their ideas on two issues. They include: (1) Taking into account the scale and deepening of the poly-crises, what are the challenges faced by developing countries, including LDCs, to industrialize? (2) What are the key policy tools for industrialization that can contribute to fair, equitable, and sustainable development and structural transformation of the economies of developing countries, including LDCs? How can the WTO rule book be adapted to provide policy space for industrialization for developing and LDC Members? INDUSTRIAL SUBSIDIES Under the sub-heading of “Industrial Subsidies: opportunities and challenges for the global trading system”, members, at the second breakout session, will discuss issues such as: (i) Improving transparency – transparency is a key requirement of the proper functioning of a rules-based system; what are Members’ views about the current gaps in the available information on industrial subsidies? (ii) Is there a need to adapt the WTO rule book on industrial subsidies so as to effectively respond to contemporary challenges? To what extent should disciplines be strengthened and is there scope for identifying subsidies that contribute effectively to global public goods while having a minimum distortive impact on trade?” The GC chair has appointed four facilitators for the two breakout sessions: Ambassador Matthew Wilson of Barbados, Ambassador Nella Pepe Tavita-Levy of Samoa, Ambassador Erwin Bollinger of Switzerland, and Ambassador Pimchanok Pitfield of Thailand, who is currently the chair of the TRIPS Council. Surprisingly, there are no facilitators from South America in the list. After the retreat, the facilitators and Members are expected to reflect on the key messages stemming from the discussions, while the GC chair and the WTO Director-General, Ms Ngozi Okonjo-Iweala, will provide their reflections. Interestingly, no discussions are slated on the EU’s unilateral “green” tariffs that are coming into force. Also, there is no focused discussion on how the developing and LDCs were stymied in undertaking concerted industrialization policies due to the Uruguay Round (UR) rule book, particularly the Agreement on Trade- Related Investment Measures (TRIMs), and the TRIPS Agreement, said people familiar with the discussions. There should be an upfront payment to the developing countries and LDCs by the United States and the EU because the latter both allegedly undermined any prospects for industrialization in the developing countries, including LDCs under the proverbial “Damocles Sword” of the UR rules, said people, who asked not to be quoted. Among several proposals listed in the footnote to the restricted document issued by the GC chair, those tabled by the African Group figure prominently. As reported earlier in the SUNS, the African Group has proposed several initiatives that call for “policy space for industrial development” based on “re-balancing” the existing WTO rules in order to promote their own industrialization, said people familiar with the development. As the GC chair convenes meetings on 25-26 September, the African Group’s six proposals are expected to set the ground for further discussions. With six months to go before the WTO’s 13th ministerial conference (MC13) commences in Abu Dhabi in February 2024, the WTO seems to be embroiled in a clash of narratives on the WTO reforms. According to paragraph three of the Outcome Document of the WTO’s 12th ministerial conference (MC12) held in Geneva last June, WTO members are required to work towards “necessary reform of the WTO” based on the “foundational principles (enshrined in the Marrakesh Agreement of 1994) of the WTO.” The reforms are envisioned to improve all the functions of the WTO including the negotiating function, the enforcement function, and the implementation and monitoring function. The MC12 mandate requires that “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.” Paragraph three of the Outcome Document also carries a footnote that states: “For greater certainty, in this context, this does not prevent groupings of WTO Members from meeting to discuss relevant matters or making submissions for consideration by the General Council or its subsidiary bodies.” At a time when the major industrialized countries, including the United States and the European Union among others, seem to be resorting to national industrialization policies in apparent violation of the WTO rules, the African Group of more than 50 developing countries is seeking the “re-balancing” of the WTO rules to enable them to industrialize in different areas. The six proposals tabled by the African Group on 5 July highlight six different themes with a central message: reform of the organization must begin with addressing the mandated issues that have been hanging in limbo for more than 23 years. They touch upon issues that have remained unaddressed since the WTO’s fourth ministerial conference in Doha, Qatar, in November 2001. The proposals by the African Group appear to drive home the message that it is time that “charity begins at home” namely, at the WTO, in the area of “re-balancing” the WTO rules, unlike pursuing unilateral industrialization initiatives worth billions of dollars like the US Inflation Reduction Act of 2022, which seeks to provide subsidies for developing green industries; the US CHIPS Act of 2022 that allegedly aims to perpetuate the US hegemony in advanced digital areas; and carbon border tax measures as recently put in place by the EU. ATTENUATION OF WTO BODIES At a time when the WTO is being increasingly attenuated by the US to ensure that there is no robust two-tier dispute settlement system, and the sudden plunge into controversial plurilateral discussions involving the Joint Statement Initiatives, the African Group said what they are seeking is a mere “re-balancing” of the existing WTO rules that would allow them to pursue their own specific industrialization paths. The six proposals circulated by the African Group touched on the following themes:
REINVIGORATING TALKS ON TRANSFER OF TECHNOLOGY According to the African Group, an examination of the role of transfer of technology in trade was mandated by trade ministers at the fourth WTO ministerial conference in Doha in 2001. The discussions highlighted that “technology and technical know-how were essential for improving productivity, promoting growth, and attaining the development aspirations of less developed Members; and, that technology transfer can be an important tool to narrow the technological gap between developed and developing countries, and for integrating developing countries into the multilateral trading system.” Several cross-cutting issues have emerged in the WTO, particularly due to a health crisis in the form of the COVID-19 pandemic, food insecurity and climate change. The African Group said, “WTO rules on the transfer of technology are relevant in the context of the TRIPS Agreement.” It said that the COVID-19 pandemic is the latest illustration of “how WTO rules and the so-called flexibilities in the TRIPS Agreement have hampered Members’ ability to respond reasonably to the multiple crises that ensued.” Moreover, it said the COVID-19 pandemic has also “prompted a deeper reflection on the utility of the TRIPS Agreement vis-a-vis the manufacturing capacity of developing and least developed countries notably in the pharmaceutical and industrial sectors.” Therefore, it said that the reinvigoration of the discussions in the TRIPS Council would “delve deeper into the relationship between the promotion and dissemination of technology in [a] way that benefits both its producers and users.” The African Group said the role that digital technologies play “in trade facilitation reform is an area of growing interest to WTO Members.” It said this paves the way for a deeper reflection on the effects of digital technologies on the composition of trade especially in developing and least developed countries. Further, such reflections indicate how “intellectual property protections together with other institutional and regulatory determinants could affect the smooth transfer and diffusion of technology to developing countries, including least developed countries.” AGRICULTURAL RESILIENCE Faced with the continuing “poly-crises (a term coined by the former European Commission head Jean-Claude Juncker for multiple crises at any point of time)”, the African Group said that “the transfer of technology is fundamental when considering how to build agricultural resilience to withstand, amongst others, the food security emergencies.” Noting that technological developments including hybrid seed, fertilizers, pesticides, mechanical improvements, etc. have revolutionized agricultural trade in industrialized countries, the African Group said state intervention played a key role. Given the predominant role that international and regional agriculture research centres play in promoting and disseminating technology, the African Group said that it is important to know “how products and technologies are developed (inputs, production, harvest, etc.), as well as considering a range of issues relating to water management, nitrogen, and food waste reductions, etc.” CLIMATE CHANGE According to the African Group, “WTO Members will greatly benefit from resetting the climate change narrative in the WTO to an assessment of the application of existing WTO rules on technology transfer for diffusion of climate change technologies, including compulsory licensing.” It wants the discussions in the WTO to “focus on how to build deeper coherence and coordination to support existing mechanisms and frameworks” in the context of emerging environmental law principles. The EU’s carbon border adjustment mechanism (CBAM) could act as the biggest barrier for developing countries to carry on with their industrialization, said a person, who asked not to be quoted. 1998 E-COMMERCE WORK PROGRAM Even though the 1998 Work Programme on Electronic Commerce has provided a broad framework for discussion in an area of extreme importance, i.e., the safety and cybersecurity of hardware and software systems through Source Code, the major players appear to have circumvented the discussions on several important issues in the e-commerce work program, said people familiar with the discussions. The African Group said that the discussions on the E-commerce work program should “assess the policy and legal considerations of balancing accessibility to source codes in the context of a secure, transparent and trusted technology environment.” The African Group said the themes could be based on the following parameters: A. Analyzing the relationship between the transfer of technology and economic development. This may include but is not limited to: i. Assessing the role of technology transfer in increasing production and in enhancing agricultural productivity in developing and least developed countries. ii. Assessing the role of Transfer of Technology as a means to enhancing industrial development and in diversifying their economies to better integrate into the regional and global value chains, including in the green economy. B. Assessing the use of Information and Communications Technology (ICT) to promote technology transfer. C. Assessing the role of the “flexibilities” contained in the TRIPS agreement to promote technology transfer in areas relevant to pharmaceuticals and medical applications, treatments, medicines, diagnostics, therapeutics, and biodiversity. D. Assessing the role of the “flexibilities” contained in the TRIPS agreement to promote technology transfer in areas relevant to climate change mitigation, decarbonization or green industrialization technologies, and digitalization. E. Assessing the role of technical assistance and capacity-building programs offered or granted by donors to developing and least developed countries, including an examination of technology transfer flows. F. Identification and assessment of incentives provided by developed countries, by virtue of their national regulations, to their enterprises and institutions to promote and encourage technology transfer to developing countries and in particular to LDCs (Article 66.2). G. How to best enable MSMEs (micro, small, and medium enterprises), especially in developing and least developed countries to benefit from various technology transfer tools, instruments, agreements, and platforms? H. Assessing the effects of the introduction of patents on prices and welfare in developing and least developed countries (the case of pharmaceuticals and therapeutics). In a crux, the African Group’s comprehensive proposals call for a robust and fundamental “re-balancing” of the existing WTO rules. However, it remains to be seen how the African Group intends to invest its negotiating energies at the WTO and whether it will be able to change the terms of the debate on WTO reforms. +
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