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Info Service on WTO and Trade Issues (Jan26/10) Geneva, 26 Jan (D. Ravi Kanth) — Trade ministers from 21 countries voiced divergent views on 22 January regarding the major challenges facing the seemingly “ruptured” global trading system and the issues to be addressed at the upcoming World Trade Organization’s 14th ministerial conference (MC14), with the United States striking a discordant note by emphasizing its “national interests.” The brief meeting, hosted by Switzerland on the margins of the World Economic Forum (WEF) in Davos, Switzerland included ministers from Argentina, Cameroon, China, Egypt, the European Union, Gambia, Japan, Korea, New Zealand, Nigeria, Norway, Qatar, Saudi Arabia, Singapore, Switzerland, the United States, the United Kingdom, the United Arab Emirates, and Ukraine, among others. WTO Director-General Ms. Ngozi Okonjo-Iweala and the facilitator overseeing the discussions on the reform of the WTO, Ambassador Petter Olberg of Norway, also participated. With the multilateral trading system in a “topsy-Trumpy” moment, according to an Indian analyst, the prospects of the WTO rising to stop either unilateral actions or blatantly state-driven policies appear to be slim. The statements delivered by trade ministers at the informal ministerial meeting appear to carry little or no weight at this juncture, said people familiar with the development. Before the informal ministerial meeting, the WTO DG made it known in no uncertain terms that unilateral actions and measures fall outside the ambit of the WTO, the custodian of the multilateral trading system (MTS). When asked about the unilateral tariffs and actions imposed by the US, Ms. Okonjo-Iweala told CNN last week prior to the informal ministerial meeting: “Well, we’re engaging with the US on trade issues. Yes, they may be doing things unilaterally, which may be outside of the WTO system, which it’s not me, which are outside of the WTO system, but they [the US] are still part of the WTO.” “NATIONAL INTERESTS” At the informal ministerial meeting on 22 January, the US Trade Representative (USTR), Ambassador Jamieson Greer, underscored the need to “address longstanding trade barriers” while pursuing “national interests” to “achieve fair, balanced, and reciprocal trade.” Ambassador Greer gave a foretaste of pursuing “national interests” at the Davos meeting when he made a rather lengthy pitch on why the US is openly pursuing “national interests” because of the manner in which it was denied the benefits of a balanced trading framework. In his statement prior to the informal ministerial meeting, the USTR said, “with the WTO, we created a rigid dispute settlement system built by unaccountable bureaucrats in Geneva, a couple of whom are here who work for the United States, and they interpreted the rules so narrowly that they lost much of their intended flexibility, and oftentimes the United States ended up changing our laws to accommodate what was found in Geneva, even though we had negotiated for something different at the bargaining table.” Ambassador Greer continued: “And we [the US] allowed large non-market economies [China] into the world trading system, gave them the same tariff treatment as we did to market economies, and we didn’t hold them accountable to the commitments they made in the process.” “At the same time,” the USTR said, “the United States unilaterally disarmed,” adding that “we [the US] slashed our tariff rates below the rates of nearly all our trading partners.” “We opened our borders to unprecedented and nearly unlimited flows of foreign labour, capital, goods, and services,” Ambassador Greer added. “And meanwhile, other countries continue to use the tools that America had innovated, but they used them against us,” he said, suggesting that “they [China and the European Union] were often hidden behind non-tariff barriers, like unfair standards or regulatory restrictions based on what I think are a basic third.” In his marathon critique, the USTR denounced non-market economies for using “their state budget and regulatory apparatus to build massive export capacity, disconnected from the market realities of profit, capital allocation, and consumer demand.” He said the US “let them do it, and others did, too”, warning, “that era is over. The United States is now moving forward to fix the core problem with historic solutions.” He said that “as Americans take active steps to re-balance our own trade, our partners, of course, are free to join with us to build a new international economic system that’s adapted to today’s challenges.” “So, this time around,” Ambassador Greer said, “we think that the goal of the international system should be to prioritize and protect national interest while also ensuring balance and fairness.” Effectively, the US is telling other countries that they must either follow the American lead by doing away with the binding dispute settlement system and pursuing plurilateral negotiations, or Washington will do what it deems fit to achieve its “Make America Great Again” policies, said analysts. While acknowledging that the US continued “to benefit from a lot of rules across many areas, whether it’s IP (intellectual property rights) or services,” the USTR said that the US wants “to make sure that business has certainty, et cetera, but we can’t allow our national interest to be boxed in by outdated frameworks that no longer serve their purpose, if they ever did.” He argued that “we have to make sure that the new system builds in the flexibility we need to address economic vulnerability, to prevent exposure to economic coercion, and to unlock productivity gains in our domestic markets.” And, “most importantly, such a system must address structural imbalances head-on and make long-term balance a cornerstone of international economic policy,” the USTR argued, stressing that “I think it’s important for all of us, not just the United States.” He maintained that the US is “the world’s consumer of last resort, so we have to have a longer-term reset to higher average tariff rates, which we’ve already done.” Ambassador Greer warned other countries (in particular China) that “they would require opening long-closed markets for greater domestic consumption and reining in capacity, and we’re seeing some of that going forward, too.” PRESERVING MTS However, several participants at the informal ministerial meeting, including China, are understood to have emphasized the need to respect the core WTO provisions such as non-discriminatory trade and the most- favoured-nation (MFN) treatment principle, while still welcoming WTO reforms, according to people familiar with the discussions. The proposed reforms include weakening the principle of consensus-based decision-making, reviewing special and differential treatment for developing countries, and using plurilateral negotiations as a primary route for pursuing issues instead of multilateral negotiations, they said. A press release issued after the informal meeting stated that trade ministers “discussed the role of the WTO in addressing global trade policy challenges.” They particularly “discussed possible avenues for compromise on certain negotiating topics and priorities for WTO reform,” noting that “these issues will be at the heart of the 14th WTO Ministerial Conference, to be held in Cameroon in March.” According to the press release, the first part of the discussions focused on finding possible compromises on issues where consensus was nearly reached, facilitated by a frank and interactive dialogue between ministers. These include the Investment Facilitation for Development Agreement and the moratorium on customs duties on electronic transmissions. During the second part of the meeting, “ministers offered political guidelines and exchanged views on reform priorities, which will be at the heart of the 14th WTO Ministerial Conference set to take place in Yaounde, Cameroon at the end of March.” CHAIR’S CONCLUSIONS The chair, Swiss President Guy Parmelin, offered several insights in a personal concluding statement. He reaffirmed Switzerland’s “support for a rules-based multilateral trading system, which is a key pillar of its foreign trade policy.” Noting that Switzerland is “an open economy that is closely integrated into global value chains,” he said that it “depends on reliable rules to ensure stable and predictable trade.” He added that “Switzerland will continue to promote a multilateral approach and support WTO reform in order to preserve rules-based international trade.” President Parmelin summarised the meeting’s key points as follows: * “Ministers expressed concerns about ongoing geopolitical trade tensions and emphasized the need to reform the WTO system, noting the organization is at a critical juncture for its credibility. * On possible landing zones, there was broad agreement that plurilateral initiatives such as the Investment Facilitation for Development Agreement (IFDA) must be incorporated into the WTO rulebook and that the e-commerce moratorium must be extended to keep the WTO relevant. Members called for a flexible and pragmatic approach in order to advance work and achieve common objectives. [However, Switzerland and the US, which oppose the moratorium on TRIPS non-violation complaints at the WTO, remained silent on this point.] * Building on the reform process led by the facilitator, H. E Ambassador Petter Olberg, Ministers stressed their commitment to engage in a meaningful exchange at MC14 that can deliver the political guidance required to strengthen and preserve the rules-based multilateral trading system. * Ministers agreed that a dedicated work programme should be adopted at the 14th Ministerial Conference (MC14) in Yaounde to structure subsequent work and ensure concrete progress in the near future. * Many Members also emphasized the importance of the development dimension, as well as the need to make progress on agriculture. * Turning to the non-discrimination principles, for most Ministers, they see it as fundamental for the multilateral trading system, especially in light of rising discriminatory practices. * However, a few Ministers suggested exploring creative approaches to the most favoured nation (MFN) principle that could help ensure a more level playing field. * Finally, Ministers agreed that the format of the discussion at MC14 needs to be structured and frank.” People familiar with the development noted that without the participation of countries like India, Brazil, Australia, and Canada, the conclusions reached at the meeting might not gain much traction at the WTO. They also noted that the informal meeting, an annual event organized by Switzerland on the margins of the WEF, historically had limited or no influence on formal WTO discussions. +
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