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TWN
Info Service on WTO and Trade Issues (Nov24/12) Geneva, 18 Nov (D. Ravi Kanth) — In their Machu Picchu Declaration issued on 16 November, the Economic Leaders of the Asia-Pacific Economic Cooperation (APEC) forum reaffirmed their “support for the rules-based multilateral trading system [MTS], with the WTO at its core” while committing to work “toward necessary WTO reform, in order to improve all its functions.” However, the Economic Leaders of the 21-member regional grouping comprising Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; The Republic of the Philippines; the Russian Federation; Singapore; Chinese Taipei; Thailand; the United States; and Viet Nam remained conspicuously silent on the selection process of the incumbent WTO Director-General, Ms Ngozi Okonjo-Iweala, for a second term, which is expected to be finalized on 28-29 November. More importantly, the APEC leaders’ Declaration has seemingly ignored the likely impact of the new US administration of President Donald Trump on the existing bilateral, regional, and multilateral trading arrangements, particularly at the World Trade Organization. The new Trump administration has signalled that it would impose up to 20 percent tariffs on imports from all countries, except China, which is expected to be subjected to a baseline tariff of 60 percent, which could go up to 100 percent. Significantly, on the margins of the APEC leaders’ meeting in Lima, Peru, on 16 November, China’s President Xi Jinping stated that Beijing is prepared to work with the incoming Donald Trump administration to “manage differences,” according to a news report in the Financial Times. In a meeting with outgoing US President Joe Biden, the Chinese President said, “China is ready to work with the new US administration to maintain communication, expand cooperation, and manage differences… for the benefit of the two peoples.” Biden, according to the FT report, responded by saying that the US-China relationship was the most important “alliance” in the world, and later corrected himself by saying the “most important relationship.” On trade, the APEC leaders, in paragraphs five and six of the Machu Picchu Declaration, laid emphasis on delivering “a free, open, fair, non-discriminatory, transparent, inclusive and predictable trade and investment environment.” They reaffirmed their “support for the rules-based multilateral trading system, with the WTO at its core, and remain committed to working toward necessary WTO reform, in order to improve all of its functions.” “We will continue working constructively towards the full implementation of the MC13 outcomes, and we recall our commitment at MC13 to accelerate discussions with other WTO members with the view to having a fully and well-functioning dispute settlement system accessible to all members by 2024.” However, it is not clear to which of the MC13 results the leaders were referring to, as MC13, which concluded in Abu Dhabi on 2 March 2024, failed to achieve meaningful results other than extending the deadline on the reform of the WTO’s dispute settlement system, said people familiar with that meeting. The leaders of APEC also reaffirmed their “support for the prompt entry into force of the WTO Agreement on Fisheries Subsidies and the conclusion of negotiations on further disciplines.” However, the second wave of the fisheries subsidies negotiations dealing with disciplines concerning subsidies contributing to overcapacity and overfishing remain stuck due to some fundamental differences over the allegedly asymmetrical disciplines that have been proposed, particularly for the distant-water fishing nations, said people familiar with the negotiations. The APEC leaders also touted “the positive role of multilateral and plurilateral negotiations and discussions at the WTO, including Joint Statement Initiatives (JSIs)” in digital trade; investment facilitation for development (IFD); disciplines for MSMEs (micro, small, and medium enterprises); and trade and gender. Barring the JSI on services domestic regulation, the other JSIs remain deadlocked due to opposition from India and several other developing countries, said people familiar with the development. SUPPLY CHAIN CONNECTIVITY At a time when the global supply chains are seemingly being disrupted due to geopolitical and geoeconomic tensions, resulting in “friend-shoring” and “re-shoring” policies being adopted by the outgoing Biden administration, it is not clear whether the Machu Picchu Declaration will have much impact on “advancing Phase Three of the Supply Chain Connectivity Framework Action Plan and enhancing supply chain connectivity to minimize adverse effects of disruptions, lower costs, facilitate trade and investment in the aim of establishing secure, resilient, sustainable, inclusive supply chains, and encourage capacity building to support these efforts.” The APEC leaders also pledged to “accelerate the full implementation of the WTO Trade Facilitation Agreement and promote trade facilitation through the use of digitalization, automation, international standards where relevant, while strengthening border agency cooperation through existing mechanisms.” The APEC leaders aim to “enhance transparency, efficiency, and reliability of trade by improving single window systems, digitalizing key processes, and promoting cross-border paperless trade, including through exchanging information on different paperless trade systems, electronic authentication and the recognition of electronic trade-related documents, such as the electronic bill of lading and electronic invoice.” In short, at a time when the multilateral trading system, including the WTO, is facing systemic crises, as well as the likely “hostility” of the new US administration to the incumbent WTO Director-General, it remains unclear whether the Machu Picchu Declaration will have any impact on developments in Washington, said people familiar with the development. +
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