South countries establish “common platform” on WTO reform

Developing-country trade diplomats gathered at a retreat on 19 June to discuss how to achieve inclusive and development-centred reform at the WTO.

by D. Ravi Kanth

GENEVA: Trade envoys from 38 developing countries, at a retreat here on 19 June, decided to establish a “common platform” for pursuing an “inclusive” and “developmental” agenda in the ongoing discussions on “reforms” at the WTO, several trade envoys told the South-North Development Monitor (SUNS).

“From New Delhi to Geneva, we have established a platform for developing countries to discuss reforms of the WTO from a developmental perspective,” said China’s Ambassador to the WTO, Zhang Xiangchen, who hosted the day-long retreat at a Geneva hotel.

“There are many groups in this town, but this is a developing country group. Being the biggest group at the WTO, we want to pursue reforms with development dimension,” he said, according to a trade envoy who asked not to be quoted.

The developing countries, said Zhang, “want to protect the core values of the WTO such as non-discrimination and special and differential treatment” while safeguarding “our offensive and defensive interests”, according to the participant.

Trade envoys from India, South Africa, Indonesia, Malaysia, Jamaica, Pakistan, Honduras, Brazil, Argentina, Uganda, Benin and Turkey, among others, concurred with Zhang on the urgent need for developing countries to provide a “counter-narrative” for bringing about “inclusivity” and the “developmental dimension” in the multilateral trading system and the WTO.

Notwithstanding the differences among some of them on such issues as the plurilateral negotiations on electronic commerce, investment facilitation, and disciplines for micro, small and medium enterprises (MSMEs), Zhang said, the developing countries want the conclusion of the Doha Development Agenda (DDA) negotiations and reforms to address the specific concerns of the developing countries.

As a follow-up to the discussions at an informal meeting of developing-country trade ministers in New Delhi in May, he said, China would like to play its part in establishing a solid developing-country platform.

Discussions at the Geneva retreat centred on the topics of “WTO reform to enhance development dimension”, “transparency and procedural reforms”, “ongoing negotiations and discussions (on fisheries subsidies, e-commerce and investment facilitation)” and “US-EU-Japan trilateral joint statements and implications to developing countries.”

Development dimension

During the session on “WTO reform to enhance development dimension”, the two panellists – Indian Ambassador to the WTO J.S. Deepak and Richard Kozul-Wright, Director of the Globalization and Development Strategies Division at the United Nations Conference on Trade and Development (UNCTAD) – presented their assessments on how to enhance the development dimension in the multilateral trading system and the WTO.

Deepak said 17 trade ministers from developing countries had decided at the New Delhi meeting to work “collectively” for strengthening the WTO while advancing the development dimension in the WTO reforms.

Expressing concern over the “one-sided narrative” in the reform proposals tabled by the United States and other major developed countries, he said there is an urgent need for developing and least-developed countries to “join forces” to safeguard the core values and objectives of the WTO, particularly consensus-based rule-making, non-discrimination, and special and differential treatment (S&DT) for developing countries.

He circulated a concept paper that India had prepared after discussion with several other developing countries, the WTO Centre in New Delhi and the South Centre, an intergovernmental developing-country think-tank.

The six-page concept paper calls for amending “laws and regulations of WTO members” which mandate unilateral action on trade issues.

It says that “rules in the Marrakesh Agreement are fundamental and must be respected.”

“Multilateral avenues, based on consensus, remain the most effective means to achieve inclusive development-oriented outcomes,” the concept paper emphasized. It added that “provisions governing plurilateral agreements in the Marrakesh Agreement must be adhered to. If they are to be multilateral agreements, the outcomes of these initiatives [the so-called Joint Statement Initiatives on electronic commerce, investment facilitation, disciplines on MSMEs, and disciplines on domestic regulation in services], by way of new rules, can only be introduced into the WTO when there is consensus.”

Deepak said “new multilateral agreements need to be based on the Doha work programme and the ministerial mandates of the Bali, Nairobi and Buenos Aires meetings”.

He also suggested that negotiating new trade agreements is futile without resolving the systemic crisis in the WTO’s dispute settlement mechanism, particularly the Appellate Body.

He praised China for its initiative to develop a counter-narrative to the proposal presented by the US for bringing about differentiation/graduation among developing countries to curtail their recourse to special and differential flexibilities in current and future trade negotiations.

The concept paper, said Deepak, sets out the immediate priorities for reform at the WTO, including resolving the crisis in the Appellate Body and addressing the unilateral actions taken by some members.

Any reform, he said, must:

l keep development at its core through delivering on longstanding development concerns, in particular the outstanding development issues of the DDA, as well as address the asymmetries in WTO agreements such as the Agreement on Agriculture and others;

l    strengthen the multilateral character of the WTO, especially preservation of consensus decision-making and respecting Article X of the Marrakesh Agreement (on amendments to the WTO rules);

l     continue with the ongoing multilaterally mandated negotiations; and

l     reaffirm the principle of S&DT, which is a treaty-embedded, non-negotiable right for all developing countries in the WTO, and promote inclusive growth, widening spaces for states to pursue national development strategies in the broad framework and principles of a rules-based system.

In her comments on Deepak’s presentation, South Africa’s Ambassador Xolelwa Mlumbi-Peter said the concept paper has clearly laid out the immediate priorities for developing countries to pursue at the WTO.

During his presentation on what ought to be the development dimension in global trade, Richard Kozul-Wright said that developing countries are facing a common set of challenges which stem from the imbalanced and asymmetrical Uruguay Round agreements. The “muted” celebrations this year of the 25th anniversary of the conclusion of the Uruguay Round are an indication that it was not development-friendly for developing countries, even though the developed countries projected it as such.

Kozul-Wright countered the arguments advanced by the European Union and other developed countries for enhancing transparency and notification requirements in the WTO, saying they are “bait-and-switch” for advancing  “dangerous” reforms to curtail the “policy space” for developing countries to pursue industrial development.

Kozul-Wright urged the developing countries to vigorously pursue “catching-up” policies to overcome their structural and other problems, policies that he said the developed countries had followed for several centuries.

Plurilateral talks

During the discussion on electronic commerce and the plurilateral negotiations pursued by developed and some developing countries,  India’s Deepak challenged the need for framing rules on e-commerce.

He said the plurilateral e-commerce negotiations strike at the very roots of the multilateral talks being conducted in the WTO under a 1998 work programme, and are aimed at bringing in the rules from the failed Trans-Pacific Partnership agreement.

China, which has joined the plurilateral e-commerce negotiations, expressed concern over data flows and removal of restrictions on foreign servers for storing data. The Chinese envoy suggested that if the negotiations are not balanced, then Beijing could walk out of the process, according to a trade envoy who asked not to be quoted.

On investment facilitation, South Africa’s Mlumbi-Peter said it is not clear why the issue has to be taken up at the WTO, which is a multilateral body for trade rules. She said that if the issue’s proponents are seeking best practices in investment facilitation, then the WTO is not the forum.

WTO Director-General Roberto Azevedo, who also spoke at the retreat, said pursuing development through WTO reforms is extremely important. WTO reforms and development are intrinsically linked, and without strong international trade rules there will be chaos, he argued.

While acknowledging that the crisis at the Appellate Body needs to be resolved without delay, he said WTO members must work on other reforms as well.

The retreat brought developing countries together to collectively face the reform-related challenges at the WTO, said several trade envoys who asked not to be quoted. (SUNS8930)                   

Third World Economics, Issue No. 683, 16-28 February 2019, pp7-8