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THIRD WORLD ECONOMICS

WTO secretariat reproached for vitiating negotiating climate

India has criticized the WTO secretariat for appearing to promote the contentious subjects of e-commerce and investment facilitation in the face of a lack of consensus among WTO member states on these issues.

by D. Ravi Kanth

GENEVA: India and several developing countries on 23 February reproached the World Trade Organization secretariat led by Director-General Roberto Azevedo for “vitiating” the negotiating climate by pushing controversial new issues such as e-commerce and investment facilitation despite opposition from a large majority of members, trade envoys told the South-North Development Monitor (SUNS).

At an informal meeting of heads of delegation (HOD), India delivered the harshest critique of the manner in which the negotiating process is vitiated by a push for “certain issues” by some members along with the WTO secretariat.

By pushing for controversial new issues, the secretariat seems determined to torpedo “the needs and interests of developing-country members and the LDCs [least-developed countries]”, according to members who took part in the meeting.

“This goes against the letter and spirit of what the Ministers have said [at the WTO’s tenth Ministerial Conference, held in Nairobi in 2015]; it is almost as if at least some parts of Ministerial Declarations remain merely on pieces of paper to be placed on the shelf after each Ministerial rather than directions to be acted upon,” India’s trade envoy Ambassador Anjali Prasad said, according to trade envoys who asked not to be identified.

The Indian envoy denounced what she called “selective visibility and hearing in favour of such issues [e-commerce and investment facilitation] and against those [issues] that are being taken up by many developing and least-developed countries to correct or rebalance existing asymmetrical rules.”

Without mentioning WTO Director-General Azevedo, who is also the chair of the WTO’s Trade Negotiations Committee (TNC) and who provided his assessment on the state of play in various negotiating bodies at the HOD meeting, Prasad said the officials/trade envoys in charge of various negotiating bodies have failed to provide an “impartial – more factual and less impressionistic” assessment, according to an African trade envoy who asked not to be cited.

She suggested that biased views and assessments by officials in charge of negotiations “vitiate the discussions on all issues and raise questions on the conduct of the concerned officials.”

In an organization which prides itself on being a “consensus-driven body”, it is imperative that the officials chairing the different bodies “assess the state of play and the extent of consensus or divergence, impartially, objectively and factually and not in a value-loaded manner”, the Indian envoy emphasized.

Prasad urged the TNC chair to direct the chairs of the different negotiating bodies to “desist from value-loaded assessments” as members move towards the eleventh Ministerial Conference, so as to avoid “vitiating” the process. (The eleventh Ministerial Conference will take place this December in Buenos Aires.)

She said the manner in which the TNC chair and the chairs of negotiating bodies held meetings in “formats” lends itself to selective hearing and visibility on the part of those assessing consensus or divergence.

“Therefore, it is imperative that the Geneva process should be as transparent, impartial and fair as possible, with negotiations being structured in inclusive and representative formats; only if this is done can we as members have faith in the legitimacy of the process,” India emphasized, according to trade envoys present at the meeting.

Secretariat presentations

India’s trenchant critique centred around the manner in which the WTO secretariat pushed for negotiations in areas such as e-commerce, investment facilitation, and disciplines for micro, small and medium enterprises (MSMEs) at a March meeting in Berlin of officials from the G20 grouping of the world’s leading economies.

In “a member-driven organization”, India said, the secretariat “is meant to be an impartial institution [which ought to be] exclusively international in character.”

Further, “the Agreement Establishing the WTO bars the secretariat from taking any action which might adversely reflect on their position as international officials ... The secretariat, therefore, should not only be impartial but also be seen to be so,” India emphasized, according to trade envoys who took part in the HOD meeting.

However, the recent representations made by the WTO secretariat to the Working Group on Trade and Investment under the G20 in Berlin gravely undermined the role of a member-driven WTO.

On investment facilitation, the secretariat made a presentation in which it not only attempted to “define investment facilitation but has also proposed next steps.” India sought to know how the secretariat adopted a position on this despite investment facilitation being a contentious issue, according to trade envoys present at the HOD meeting.

Commenting on the secretariat’s (PowerPoint) presentation on e-commerce, India said the last two slides of the presentation actually called for “further discussions towards a multilateral outcome.” The secretariat official concerned presented the following bullet points:

(i)    Transparent and inclusive discussions – Lay the ground for advancing work multilaterally.

(ii)   Consider adopting general principles/best endeavour provisions on e-commerce.

(iii) Binding principles/obligations could be considered – TFA (Trade Facilitation Agreement) approach – Flexibilities; TA (technical assistance) and CB (capacity building).

(iv)  Greater coherence; certainty; consumer confidence.

E-commerce, according to India, “remains a highly contentious area in the WTO, which is a fact not even mentioned in the presentation.”

“We wonder what gives the WTO secretariat the authority or the mandate to propose next steps or multilateral outcomes on subjects on which discussions have not even begun in the WTO,” India said.

“Were the contents of these presentations [on investment facilitation and e-commerce] discussed by members and was there a consensus on the propositions contained therein that the WTO should be encouraged to launch a dialogue on strengthening trade and investment policy coherence or that there should be further discussions towards a multilateral outcome on e-commerce?” India asked.

Such presentations, according to India, went well beyond “the remit of the functions of the WTO secretariat, and violate the letter and spirit of the Agreement Establishing the WTO.”

In fact, these two presentations, said India, “seem to convey [to] my delegation that the WTO secretariat hold a brief for certain constituency of members, thereby raising a question on its impartiality and international character as required in the Agreement Establishing the WTO.”

India also referred to the TNC chair’s comments, made during a recent visit to India, on public stockholding programmes for food security (PSH) and special safeguard mechanism (SSM) for developing countries, in which he purportedly said that “the primary responsibility for any proposal rests with the proponents and not the WTO.” If this were the case, India said, “the question that comes to mind is whether the WTO secretariat has also become a proponent on these two issues [e-commerce and investment facilitation].”

“If the secretariat continues to act in this manner, it would further vitiate the negotiating process in the WTO and the members’ attempts to reiterate strongly the relevance and primacy of the WTO as an institution central to the global trading system,” India warned.

Development dimension

On substantive issues, India emphasized “the primacy of the development dimension of the DDA [Doha Development Agenda] and that the unfinished work in the decisions taken at the Bali and Nairobi Ministerial Conferences must get precedence over any other areas [e-commerce or investment facilitation], which can only be negotiated multilaterally if there is agreement by all the members as stated in the Nairobi Ministerial Declaration.”

Prasad underscored the need for urgent “constructive engagement on public stockholding programmes for food security and special safeguard mechanism without linkages with other areas of agriculture negotiations”, according to trade envoys present at the meeting. Both PSH and SSM, according to India, “are fundamental to bringing about development that is broad-based and balanced in many developing and least-developed countries.”

Prasad also referred to the draft negotiating text introduced by India on trade facilitation in services which seeks “to remove unnecessary regulatory and administrative obstacles to trade in services.”

India’s position on e-commerce, she said, is crystal clear suggesting that New Delhi wants discussions to proceed in accordance with the 1998 work programme in the relevant WTO negotiating bodies.

Rules for e-commerce as proposed by some countries are “completely premature”, India said. At a time when the e-commerce market is highly monopolistic in nature, such rules would only benefit a few major companies while simultaneously “constraining the policy space of the developing countries to develop their e-commerce space.”

Referring to statements made by WTO officials that e-commerce rules would meet the needs of MSMEs or that they would automatically help economic development in developing and least-developed countries, India dismissed these as “profoundly simplistic – almost like the $1 trillion spin-off of the TFA.”

India cautioned that “there is a risk of further deepening the divide in case undue importance is given to the so-called new issues where even the narratives are not still clear.”

“Any attempts to cherry-pick ministerial decisions or a few members projecting consensus on issues where none exists, would seriously undermine the credibility of the WTO,” India warned, according to trade envoys present at the meeting.

Many African countries told the TNC chair that work on e-commerce and other new issues must not proceed without first addressing the outstanding Doha issues.

Several African countries and India also said the Nairobi Ministerial Conference process should not be repeated as it produced outcomes that failed to reflect members’ views.

Uganda’s trade envoy Ambassador Christopher Onyanga Aparr said “we would like to call upon you, Mr Chairman, to put in place a credible process that does not seek to replicate Nairobi ... It has to be bottom-up, transparent, predictable and inclusive ... The small club of five should be abandoned ... We are all equal representatives of sovereign states and are recognized under public international law.”

Aparr said “any text to be presented to the Ministerial Conference must have been agreed to by consensus by the membership of the whole at least six weeks before the Ministerial Conference.”

In conclusion, the WTO secretariat’s dubious role in advancing the interests of powerful developed and some developing countries is exposed most grotesquely as never before. But it is highly unlikely that Azevedo, who will be securing a second term as Director-General, will draw any lesson from what was said at the HOD meeting, several trade envoys said. (SUNS8410)                         

Third World Economics, Issue No. 633, 16-31 January 2017, pp8-9


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