TWN Info Service on WTO and Trade Issues (Jul18/24)
30 July 2018
Third World Network

WTO investment facilitation & technical assistance activities deferred
Published in SUNS #8731 dated 27 July 2018

Geneva, 26 Jul (D. Ravi Kanth) - The WTO General Council Chair Ambassador Junichi Ihara of Japan on Thursday informed members that all decisions concerning the activities and technical assistance projects being pursued by the Secretariat on investment facilitation "are deferred".

This announcement came following the firestorm of opposition from India, South Africa, and several other countries on violations committed by the WTO Secretariat in undertaking projects that lack multilateral approval, trade envoys told SUNS.

In a decision read out at the GC meeting, Ambassador Ihara said several decisions indicated in "document No. WT/BFA/W/450 and WT/BFA/W/454 [that deal with investment facilitation]" will not be considered at this meeting and are being deferred to be considered in subsequent meetings of the General Council," said a trade envoy who asked not to be quoted.

Earlier on Thursday, the World Trade Organization director-general Roberto Azevedo denied that the WTO Secretariat had abrogated rules laid out in the Marrakesh Agreement for pursuing projects on investment facilitation without multilateral approval.

Azevedo said the organization has accomplished major successes such as the "Trade Facilitation Agreement," "the export subsidy programs," and "ITA-II" (expansion of the Information Technology Agreement).

But he did not even mention once what is going to be the fate of the Doha Development Agenda (DDA) negotiations under which he continues to function as the chair for the Trade Negotiations Committee.

The director-general repeatedly said rules need to be updated so as to adjust to the new realities and expressed confidence in the ongoing discussions among leaders of major developed countries for modernizing and reforming the WTO.

He spoke about his discussions with the German Chancellor Angela Merkel, and French President Emmanuel Macron on major global trade issues but said he did not meet the US President Donald Trump. Azevedo said he is in regular dialogue with the US Trade Representative Ambassador Robert Lighthizer.

Hours after Azevedo's comments at a meeting convened by the United Nations Correspondents Association (ACANU) in Geneva, the US President Donald Trump and the President of the European Commission Jean Claude-Juncker said they had agreed on reforming the WTO.

At a meeting convened by the Geneva-based United Nations Correspondents Association on Wednesday, Azevedo was grilled on issues raised at the WTO's Budget, Finance, and Administration (BFA) Committee meeting where serious charges of the Secretariat's failure to conduct business as per the Marrakesh Agreement and financial impropriety were raised.

India and South Africa among others challenged the WTO deputy director-general Karl Brauner and the chair for the BFA committee, Ambassador Juan Esteban Aguirre Martinez from Paraguay, to come clean on how the Secretariat pursued workshops and programs on investment facilitation that was blocked at the General Council last year.

The WTO Secretariat had informed members that the proposal to undertake technical assistance programs were "approved on a fast track basis by DG and has not been procedurally put up to the CBFA, as laid down in the regulations for reporting and review, though it was approved in November 2017 and the expenditure on the project was incurred last year," according to a trade envoy who attended the BFA committee meeting on Wednesday.

Members asked the chair and WTO deputy director-general to provide the agreement reached between the DG and China on investment facilitation for the sake of transparency so as to be able to review all the activities.

But the Secretariat refused to provide information, saying it is a confidential document.

Members protested that the Secretariat's failure to provide basic information raises serious issues of transparency and financial impropriety. They argued that the Secretariat has blatantly violated Article VII of the Marrakesh Agreement that clearly laid down that the CBFA will review the annual budget, financial statements as also frame the financial regulations.

Article VII of the Marrakesh Agreement states unambiguously that "the Secretariat shall not seek or accept instructions from any government or any authority external to the WTO. They shall refrain from any action which might reflect on their position as international officials."

In a member-driven multilateral organization dealing with multilateral goods and objectives, it is improper for the Secretariat to generate resources or decide its own policies in areas of work for which there is expressly no mandate and consensus, members argued.

India said the proposals drawn up by the Secretariat "go much beyond justifying approval for projects already undertaken without reporting to the membership" and "they raise serious systemic issues, questions regarding the role of the Secretariat, by engaging in activities in non-mandated areas without review or reporting, the consensus (decision-making) principle, allowing any member or group to set policies and objectives for the WTO with contributions even on non-mandated areas and even calling into question Article VII of the Marrakesh Agreement".

"Since this [Secretariat's] proposal is also embedded in the WTO 2017 Financial Performance Report, we would also request the discussion on this report," India maintained.

Several other members - Korea, Japan, and Turkey among others - pressed the WTO deputy director-general Karl Brauner to provide all the details of the agreement reached between the WTO director-general Roberto Azevedo and China on the trust fund for investment facilitation.

Members also sought to know whether the Secretariat conducted a workshop in Abuja with the funds provided by China on investment facilitation.

Asked (at the ACANU briefing) whether he or the Secretariat violated or abrogated rules of the Marrakesh Agreement, Azevedo said "No, it [the quest ion] was not correct."

He said "there is a discussion now on how to make the process better and I'm all for that," Azevedo said.

When asked again whether what the Secretariat did on investment facilitation amounted to violating Article VII, Azevedo said it is not correct and went on to say "but what I cannot allow in any circumstances is that one or two countries or groups of countries decide what technical assistance should be, it is something that they have to decide, and I can't make determinations on the basis of some groups of countries."

"If there is a request for technical assistance we will provide and that determination I'm entitled to do," he said.

In short, Azevedo defied critics, by suggesting that he is going to do what he thinks is right regardless of the rules laid out in the Marrakesh Agreement .