TWN Info Service on WTO and Trade Issues (Dec17/32)
15 December 2017
Third World Network

North and its allies in South opt for plurilaterals on E-com and MSMEs
Published in SUNS #8597 dated 15 December 2017

Buenos Aires, 14 Dec (D. Ravi Kanth) - The major developed countries and their allies in the developing world resorted to a plurilateral initiative on electronic commerce on Wednesday (13 December) at the Buenos Aires ministerial meeting after failing to secure multilateral consensus for establishing a working party on electronic commerce, several trade ministers told SUNS.

Argentina's minister Ms Susana Malcorra, who chaired the ministerial summit, welcomed the plurilateral initiative for what she called 21st century issues.

Even the United States - which blocked the proposed outcomes on the permanent solution for public stockholding programs for food security and other issues - immediately embraced the plurilateral initiative on e-commerce.

Signed by 70 countries, the sponsors decided to "initiate exploratory work" that will eventually pave the way for negotiations.

The decision by the 70 countries came a day after the proponents failed to secure consensus on their proposal for establishing a Working Party/Working Group to accelerate work on e-commerce eventually for launching negotiations at the next ministerial meeting in 2019.

The US Trade Representative Ambassador Robert Lighthizer said the US "is pleased to partner with 70 members to initiate exploratory work on negotiations on electronic commerce issues in the WTO."

"Initiatives like this among like-minded countries offer a positive way forward for the WTO in future," said Ambassador Lighthizer in a statement.

The initiative is not being called plurilateral even though it is among the coalition of willing countries because one member is sensitive to the use of terms like plurilateral and multilateral and therefore it is being called an initiative of like-minded countries, said one of the co-sponsors.

The three countries who issued a statement on behalf of more than 60 countries said they want to advance "electronic commerce work in the WTO in order to better harness these opportunities."

The United States and the European Union are among the sponsors of the e-commerce plurilateral initiative that was announced by Japan, Australia, and Singapore.

Other members include Albania, Argentina, Australia, Bahrain, Brazil, Brunei, Cambodia, Canada, Chile, Colombia, Costa Rica, Guatemala, Hong Kong (China), Peru, and many other countries.

The 70 countries who circulated several proposals for establishing a working group to accelerate work on e-commerce with the aim of launching negotiations at the WTO said they "share the particular opportunities and challenges faced by developing countries, especially LDCs, as well as micro, small and medium enterprises, in relation to electronic commerce."

"We also recognize the important role of the WTO in promoting open, transparent, non-discriminatory and predictable regulatory environments in facilitating electronic commerce."

Many members of the group had already circulated several proposals on electronic commerce in the run-up to the Buenos Aires ministerial meeting, calling for a new mandate to commence work on e-commerce-related issues with the eventual aim of launching negotiations at the WTO.

But those proposals failed to garner support beyond those who signed onto it during a heads of delegations meeting convened by the facilitator for e-commerce at Buenos Aires on Monday.

Therefore, the sponsors said "we, as group, will initiate exploratory work together toward future WTO negotiations on trade-related aspects of electronic commerce."

"Participation will be open to all WTO members" regardless of their current proposals. The proponents said their "initiative will be undertaken without prejudice to existing WTO agreements and mandates."

"Modern trade will increasingly be by e-commerce," said Australia's trade minister Steven Clobo, while Japan's trade minister Hiroshige Seko said "the world is more interconnected than ever" in which the WTO has an important role to play.

"E-commerce presents developing Members and LDCs an opportunity to leapfrog, overcome traditional market barriers, and allow for more inclusive participation in global trade."

Major developing countries such as China, India, South Africa, and Indonesia among others stayed away from the initiative.

There is still no clarity whether the initiative can be discussed within the WTO when the e-commerce work program based on the 1998 decision is the basis for work within the WTO.

"The exploratory work cannot continue within the WTO," said a developing country trade envoy.

WTO director-general Roberto Azevedo said the initiative on e-commerce provided new "dynamism" to the organization even though it failed to make progress on the mandated issues.

In another plurilateral initiative, trade ministers from many developed and several developing countries issued a "joint ministerial statement" for commencing work on disciplines for micro, small, and medium enterprises (MSMEs) so as to arrive at "horizontal and non-discriminatory solutions" that will benefit MSMEs in international trade.

In a joint statement, the proponents for MSME disciplines led by Chile launched an informal work program for MSMEs at the WTO.

The work program includes "a comprehensive and strategic discussion on MSMEs in the WTO, as a contribution at the multilateral level to addressing obstacles related to foreign trade operations that represent a significant burden for MSMEs interested in participating in international trade."

[While proponents of this "new initiative" on e-commerce and MSMEs, at MC11 and elsewhere, claimed that it will help and promote Micro-, Small- and Medium-enterprises (MSMEs), especially in the developing countries, organisations of MSMEs across the globe, not only in developing countries, but in some European countries too, issued declarations and circulated documents at MC11, denouncing these efforts, and pointed out that these initiatives and rules would advantage the three or four US silicon valley technology giants, and secure them free access to data of individuals across the world, and it would disadvantage and make even budding enterprises in developing countries uncompetitive. SUNS]

The MSME proponents maintained that the informal group is open to "all members" for accomplishing a multilateral outcome "aimed at establishing a formal work program for MSMEs at the next ministerial conference."

The informal dialogue will focus on the following issues:

* To provide enhanced access to information for MSMEs;

* Ways to promote a more predictable regulatory environment for MSMEs;

* Reduction of trade costs, including areas such as trade facilitation;

* Shipping and logistics;

* Procedures and requirements related to [rules of] origin;

* Better access to trade finance for MSMEs;

* Technical assistance.

The informal working group on MSMEs at the WTO will continue to periodically share with the membership information on its work and discussions at the heads of delegations, General Council, and the ministerial conference.

The US, however, opted to stay out of the informal working group on MSMEs because of China's presence in the group, said a proponent who asked not to be identified.

In conclusion, the Buenos Aires ministerial meeting has achieved its goal of undermining the multilateral trade liberalization while paving the way for plurilateral trade liberalization of the coalition of the willing so as to deny the promised developmental benefits of the Doha work program to developing and poorest countries.