Info Service on WTO and Trade Issues (Oct18/10)
16 October 2018
Third World Network
Secretariat violates WTO Treaty to promote US agenda at WTO
Published in SUNS #8773 dated 15 October 2018
Geneva, 12 Oct (D. Ravi Kanth) - The World Trade Organization (WTO)
Secretariat has violated the Marrakesh Agreement by advocating a set
of reforms without prior approval from its 164 members.
The reforms proposed by the WTO Secretariat, along with the World
Bank and the International Monetary Fund (IMF), include jettisoning
the consensus principle, launching plurilateral negotiations on new
issues, and introducing a case-by-case approach for availing special
and differential flexibilities, several trade envoys told SUNS.
In a 34-page joint report along with the World Bank and the International
Monetary Fund, the WTO crossed the Marrakesh Rubicon that clearly
laid out rules for the conduct of business for the Secretariat.
[In 1993, when the Uruguay Round (UR) accords and Marrakesh Treaty
were settled at the level of officials, despite repeated efforts of
then GATT DG , Peter Sutherland, the UR participants, including the
US, EU and leading developing countries like India and Brazil, refused
any role for the WTO secretariat, akin to that of executives of UN
and system organisations. The secretariat was mandated to undertake
only what members (at Ministerial Conferences or General Council)
asked it to do. It is time developing countries call the WTO DG to
account, and decline to allow the WTO-WB-IMF declaration to be tabled
at WTO bodies. It may also be time for developing countries to decline
to enable Azevedo's remarks and interventions before WTO bodies.
Even though the WTO Secretariat is required to remain neutral in negotiations
without advancing any member's positions, the reforms proposed in
the joint report tilted towards the proposals made by the United States
at the WTO's eleventh ministerial conference (MC11) held in Buenos
Aires, Argentina in December 2017.
The Secretariat has "opted" for a change by setting aside
the consensus principle on grounds that it is disrupting the negotiating
activity at the trade body, said a trade envoy from South America,
who asked not to be quoted.
Moreover, the report remained totally silent on the existential crisis
facing the dispute settlement system, particularly the gradual demise
of the Appellate Body.
Significantly, even as the report vociferously argued for new "rules"
and "rulebook" in five areas - electronic commerce, investment
facilitation, disciplines for micro, small, and medium enterprises
(MSMEs), domestic regulation for services, and gender - that would
penetrate into the autonomous space of domestic regulatory structures,
it failed to answer the vital question as to how the se rules are
going to be enforced and whether there will be a dispute settlement
system to oversee trade disputes that would arise from the new rules
in these areas.
The report's central goal is aimed at preparing the ground for the
WTO's 12th ministerial conference to be held in Astana, Kazakhstan,
in June or July 20 20, for a formal burial of the Doha Round and simultaneous
launch of plurilateral negotiations in electronic commerce, investment
facilitation, disciplines for MSMEs, domestic regulation for services,
and gender, several trade envoys familiar with the report told SUNS.
The joint report, titled "Reinvigorating Trade and Inclusive
Growth", in which the Secretariat provided major inputs, argues
that "reliance on an approach [consensus principle] in which
all members must agree on all issues [the Single Undertaking] risks
driving negotiating activity outside the WTO."
Under the sub-title "Role of the International Trading System,"
the WTO has argued that "the practice of bundling negotiating
issues together in giant, all-or-nothing trade rounds [based on the
Single Undertaking] has become extremely difficult to manage."
The report suggested that the "single-undertaking approach",
which was earlier adopted in the Uruguay Round and now the unfinished
Doha Round, "became increasingly vulnerable to delays and deadlocks
as progress on more feasible issues was held back by a lack of progress
on more controversial and intractable ones."
According to the report, "the multilateral trading system has
not always relied on large-scale "single undertakings" like
the Uruguay Round."
The report unabashedly spoke about the American priorities in the
trade policy since 1995.
The US had all along pressed for "compact" agreements such
as the ITA (Information Technology Agreement), the "Trade Facilitation
Agreement," and Competition Policy among others.
But the European Union, which was required to make a payment in agriculture,
had proposed the Millennium Agreement based on a Single Undertaking
that would include the four controversial Singapore Issues such as
trade and investment, government procurement, competition policy,
and trade facilitation.
Without providing the historical background, the report said "when
the WTO was created in 1995 many expected it would foster a flow of
new agreements on various topics."
It argued that "many approaches have been deployed over the years
- some fully multilateral, and others not," suggesting that "key
parts of the current WTO rule book were initially agreed by and applied
(in the 1970s and 1980s) only to those countries adopting the Tokyo
"In certain areas - especially those emerging issues where policy
innovation is needed and where not all 164 WTO members are equipped
or ready to engage - some countries wish to move further and faster
than others, and are doing so," the report maintained.
[In terms of the WTO Treaty, such plurilateral accords need agreement
by consensus of all Members at Ministerial Conference. - SUNS]
The report made a strong case for launching plurilateral negotiations
into electronic commerce, investment facilitation, disciplines for
micro, small, and medium enterprises, domestic regulation for services,
These "open-plurilateral discussions on e-commerce, investment
facilitation, services domestic regulation, and micro, small, and
medium scale enterprise s (MSMEs)" are not aimed at "exchanging
market access concessions but to improve regulatory coordination -
in order to minimize policy frictions and advance shared goals in
a "least trade restrictive" way - they could lead to a more
cooperative, less mercantilist, approach to WTO negotiations in the
New rules negotiated through plurilaterals in e-commerce, domestic
regulation, investment facilitation, disciplines for MSMEs, and gender
"would likely be inherently non-discriminatory - because they
involve domestic regulations that cannot be easily tailored to benefit
specific trade partners - making concerns about "discrimination,"
like calculations of "reciprocity," less relevant."
The report maintained that the General Agreement on Trade in Services
(GATS ) offers a structure for new agreements in electronic commerce,
domestic regulation for services, investment facilitation, disciplines
for micro, small, and medium enterprises (MSMEs) and gender.
It explained the core features of the GATS but did not reveal the
gross asymmetries in the market access commitments of Mode 3 concerning
commercial participation and Mode 4 dealing with the movement of natural
On electronic commerce, the report advocated that members must be
guided by the Comprehensive Progressive Trans-Pacific Partnership
(CPTPP) which had replaced the TPP (Trans-Pacific Partnership) Agreement.
The report (in Box 2) has cited the following benefits flowing from
the CPT PP Electronic Commerce chapter:
* The CPTPP seeks to promote the free flow of data and prevent "localization
requirements" of technologies and servers, while allowing the
pursuit of legitimate public policy objectives. It includes disciplines
ensuring that companies and consumers can access and move data freely
(subject to safeguards, such as for privacy).
* CPTPP countries retain the ability to maintain and amend regulations
related to data flows, including those oriented to protecting privacy,
but have under aken to do so in a way that does not create barriers
* Also innovative [in the CPTPP] is the prohibition against forcing
businesses to build data storage centers or use local computing facilities
in CPTPP markets.
* CPTPP countries have committed not to impose these kinds of "localization"
requirements on computing facilities, thus ensuring that information
can travel across borders and business and consumers can benefit from
the advantages o f the "cloud."
* Restrictions on data flows and localization requirements may be
imposed for a "legitimate public policy objective," including
the protection of privacy, to the extent that that measure is not
a disguised restriction to trade, or that it imposed restrictions
"greater than required" to achieve the desired policy objective.
* Another new provision in the chapter is the prohibition of measures
that force suppliers to share software source code with governments
or commercial rivals when entering a CPTPP market.
* Continuing the trend found in previous trade agreements, the chapter
prohibits the imposition of customs duties on digital products, including
products distributed electronically, such as software, music, video,
e-books, and games.
* A similar provision prevents CPTPP countries from favouring national
producers or suppliers of such products through measures such as discriminatory
taxation or outright blocking or other forms of content discrimination.
* To facilitate electronic commerce, the chapter includes provisions
encouraging CPTPP Parties to promote paperless trading between businesses
and the government, such as electronic customs forms; and providing
for electronic authentication and signatures for commercial transactions.
The agreement also requires CPTPP members to maintain a legal framework
for electronic transactions consistent with the principles of the
UNCITRAL Model Law on Electronic Commerce 1996 or the United Nations
Convention on the Use of Electronic Communications in International
* To protect consumers, CPTPP members agree to adopt and maintain
consumer protection laws related to fraudulent and deceptive commercial
activities online and to ensure that privacy and other consumer protections
can be enforced in CPTPP markets. Parties also are required to have
measures to stop unsolicited commercial electronic messages (spam).
The agreement recognizes that governments have different ways of implementing
privacy protections, and CPTPP promotes interoperability between those
diverse legal regimes.
Many developing countries, including China and India among others,
have proposed for retaining the data in the local servers and sought
clear localization requirements.
Trade envoys from the developing and poorest countries said the Secretariat
has chosen to "compromise" the core principles of the Marrakesh
Agreement that established the 164-member inter-governmental trade
The Secretariat's open advocacy for undermining the special and differentia
l flexibilities and for launching plurilateral negotiations on all
issues, except fisheries subsidies, does not augur well for the organization
as it could polarize the membership horizontally, said trade envoys.
The long-standing developmental issues, particularly improving the
special and differential flexibilities, have been ignored in the reforms
proposed by the WTO Secretariat, said a trade envoy from South America,
who asked not to be identified.
More crucially, the Secretariat's reforms which lean towards addressing
the US' concerns have also completely ignored the most important issue
of strengthening the dispute settlement system by filling the vacancies
at the Appellate Body.
In crux, there has never been such a moment in the history of the
GATT/WTO when the WTO Secretariat has chosen to behave like a global
Minotaur in trade by openly undermining the rules-based organization.
The writing on the wall for developing and poorest countries is loud
and clear: either they survive by safeguarding the consensus principle,
the special and differential flexibilities, and the multilateral trade
negotiating framework of give-and-take, or face the prospect of becoming