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TWN
Info Service on WTO and Trade Issues (Jun24/10) Geneva, 18 Jun (D. Ravi Kanth) — The leaders of the Group of Seven (G7) industrialized countries have underscored the need for reforming the three functions of the World Trade Organization, namely, negotiating, implementation, and enforcement, as well as differentiation among developing countries for availing of special and differential treatment (S&DT). At the end of their two-day summit in Apulia, Italy, on 14 June, the G7 leaders issued a long communique comprising calls to reform the WTO as well as pleas to China to adhere to the WTO rules. The G7 members include the United States, Canada, Germany, France, the United Kingdom, Japan, and Italy, as well as being joined by the European Union. Over the last several years, the G7 leaders seemed heavily preoccupied with China on several grounds after it became the world leader in several frontier technologies, including in green goods and critical raw materials, said people familiar with the discussions. In response, some of the policies followed and implemented by the G7 countries, particularly the US, appear to be hypocritical and replete with double standards, said people who asked not to be identified. RULES-BASED MTS Against this backdrop, in their communique, the G7 leaders reaffirmed their “commitment to the rules-based, free and fair, equitable, and transparent multilateral trading system (MTS), with the World Trade Organization (WTO) at its core”. They lamented over the lack of “ambitious outcomes” at the recently concluded WTO’s 13th ministerial conference (MC13) in Abu Dhabi. Yet, they welcomed the “decision to maintain the moratorium on customs duties on electronic transmissions until MC14”, which is scheduled to be held in early 2026 in Cameroon. Meanwhile, the G7 leaders announced their commitment “to working towards a prompt conclusion of negotiations on the Joint Statement Initiative on E-commerce”, a non-mandated plurilateral initiative that was launched in 2019. WTO REFORM The Apulia communique made several important observations on the stalled WTO reforms due to the lack of consensus on several proposals tabled by the industrialized countries. The G7 leaders said: “We underscore the need to reform the WTO’s monitoring, deliberative, and negotiating functions and remain committed to conducting discussions with a view to having a fully and well-functioning dispute settlement system accessible to all Members by the end of 2024”. Interestingly, there is no “deliberative” function in the WTO rule-book, and not even in the Abu Dhabi Ministerial Declaration adopted by trade ministers at MC13 on 2 March. As previously reported, the EU had underscored the need for reinforcing the “deliberative” function of the WTO to respond to trade policy changes, including discussing issues on trade and climate change. However, the EU’s proposal failed to attract consensus and it also failed to get a mention in the Abu Dhabi Ministerial Declaration. However, the Apulia communique said that it supports “WTO deliberations that contribute to achieve COP28 commitments, including plurilateral initiatives such as those facilitating and promoting trade in environmental goods, services and technologies, and fighting plastic pollution.” As regards the negotiating function, several attempts were made by the previous Trump administration to move away from “consensus-based decision-making”, which was also pursued with varying levels of emphasis by the current Biden administration. However, proposals for “responsible consensus” and other changes for advancing the plurilateral initiatives, have also failed to attract consensus, as many developing countries rejected such calls at a recent WTO General Council meeting, said people familiar with the development. S&DT In the same paragraph in the communique dealing with the reform of the WTO, the G7 leaders said: “We call on relevant countries to refrain from claiming special and differential treatment in the WTO commensurate with their economic weight and role in the global trading system.” The proposal for seeking differentiation among developing countries for availing of S&DT was first made by the Trump administration and it has now been echoed in the Apulia communique, at the insistence of the Biden administration, said people familiar with the discussions. The G7 leaders also called for “an ambitious and comprehensive agreement on global fisheries subsidies.” In give-and-take trade negotiations, the fate of the fisheries subsidies agreement will likely hinge on progress in the agriculture negotiations where the major industrialized countries with huge levels of Amber Box subsidies are unlikely to agree to any ambitious commitments to reduce their subsidies, said people familiar with the negotiations. In the Apulia communique, the G7 leaders reaffirmed “our attachment to transparency, to coordination, and to the respect of WTO rules in our respective policies.” In the wake of the Russia-Ukraine war, which led to global shortages of fertilizers in which Russia is a main supplier, the Apulia communique acknowledged “the importance of supporting fertilizer value chains including local fertilizer production in line with the WTO rules and through supporting the use of local sources of energy in consistency with a 1.5 degrees warming limit and goals of the Paris Agreement.” FOCUS ON CHINA Aside from the Russia-Ukraine war, the Apulia summit largely focused on China. The G7 leaders remain concerned by China’s industrial progress, and went on to say: “We are not trying to harm China or thwart its economic development, indeed a growing China that plays by international rules and norms would be of global interest.” “However, we express our concerns about China’s persistent industrial targeting and comprehensive non-market policies and practices that are leading to global spillovers, market distortions and harmful overcapacity in a growing range of sectors, undermining our workers, industries, and economic resilience and security,” the G7 leaders maintained. Significantly, they said that “we are not decoupling or turning inwards. We are de-risking and diversifying supply chains where necessary and appropriate, and fostering resilience to economic coercion.” Amidst the pursuit of “friend-shoring” policies based on national security grounds, it is doubtful whether the G7 communique would have any impact on China, said people familiar with the discussions. While the US is implementing export sanctions on advanced semiconductors and other critical exports on national security grounds, it seems rather unconvincing to “call on China to refrain from adopting export control measures, particularly on critical minerals, that could lead to significant global supply chain disruptions,” said people familiar with the development. In a similar vein, the G7 leaders said that they “will support local value creation in critical minerals supply chains in line with the WTO rules”, but questions are already being raised as to whether the policies adopted by the industrialized countries are consistent with the global rules. Without naming China, the Apulia communique drew attention to tackling “non-market policies” that are allegedly being implemented by some countries. “We will also tackle non-market policies and practices, such as harmful subsidies, including by state-owned enterprises (SOEs) and forced technology transfers, notably when these policies and practices are used targeting sectors for dominance,” it said. Without mentioning the huge tariffs imposed on Chinese electric vehicles and other green goods, the communique said its members are committed to “effectively use our trade tools, including new ones, as appropriate, to identify, challenge, and counter these practices, and to promote stronger international rules and norms, together with partners.” In short, the G7 Apulia communique seems like a proverbial hogwash of pronouncements that may not gather much consensus at the WTO as some of these positions have been repeatedly rejected. +
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