Brazil rebuffed on effort to wind up CTS subordinate bodies

Brazil has been unable to secure sufficient backing for a proposal to suspend the subsidiary bodies of the WTO’s Council for Trade in Services, reports D. Ravi Kanth.

GENEVA: An attempt by Brazil, supported by the United States, to wind up the subsidiary bodies now functioning under the WTO Council for Trade in Services (CTS) and effectively focus all discussions on trade in services and negotiations at the CTS itself, has failed, inflicting a major setback to Brazil and its new-found ally, several trade negotiators told the South-North Development Monitor (SUNS).

These negotiators see Brazil and the US in an alliance on services and the e-commerce talks that the two appear to be promoting.

The failed Brazilian move to wind up the subordinate bodies of the CTS was made on 26 July at the CTS.

Brazil along with the US, the EU, Australia and several other countries also failed at the meeting to get support for a proposal to update the GATS 1998 mandate on e-commerce.

On the issue of e-commerce, the US for its part blocked an attempt to prepare a compilation of all proposals that have been submitted by members on the issue, arguing that it would prefer its non-paper on the e-commerce work programme to remain a “standalone” document.

Restructuring

At the 26 July CTS meeting, Brazil pressed members to “brainstorm” on restructuring the subsidiary bodies of the CTS. It did not table any written proposal but made an “invitation to brainstorm” on the basis of an oral statement. It had made the request for “brainstorming” the issue at the June cluster meeting of the CTS.

Brazil said it wanted to suspend the subsidiary bodies of the CTS. Any issue arising from these bodies can be put onto the CTS agenda and discussed there, Brazil suggested.

Currently, there are six subordinate bodies under the CTS.

Negotiations on market access in services in terms of the Doha Work Programme (DWP) take place at the Special Session of the CTS, which functions under the Trade Negotiations Committee of the DWP.

The CTS regular session comes under the purview of the WTO General Council.

There are four subsidiary bodies that function under the CTS regular session. They include the Working Party on Domestic Regulation and the Working Party on GATS Rules. These two bodies have been established as per the in-built agenda in the WTO’s General Agreement on Trade in Services (GATS) and have specific negotiating mandates to develop disciplines on domestic regulation, subsidies, emergency safeguard measures and government procurement. Once these bodies achieve these objectives, they will no longer serve a purpose and are therefore temporary in that sense.

There are two other subsidiary bodies: the Committee on Trade in Financial Services and the Committee on Specific Commitments. The two are permanent bodies established as per the Decision on Institutional Arrangements for the GATS. They serve specific roles and are mandated to keep under continuous review and surveillance the application of the GATS in relation to financial services and oversee the implementation of specific commitments in all modes of services supply.

Brazil said at the 26 July meeting that it was merely throwing up some ideas for brainstorming which must not be considered as a proposal. It maintained that its “invitation to brainstorm” on the restructuring of the subsidiary bodies stemmed from factual analysis of reality over the last several years, and that it is difficult to identify substantive discussions that have taken place in these bodies.

Brazil argued that the Committee on Specific Commitments without market access cannot proceed on scheduling commitments.

The Working Party on Domestic Regulation, Brazil maintained, is at a crossroads unless there are text-based discussions in the body.

The four committees – Working Party on Domestic Regulation, Working Party on GATS Rules, Committee on Trade in Financial Services and Committee on Specific Commitments – must suspend their activities, suggested Brazil, and the chair must decide if and when activities should resume, according to participants at the meeting.

Brazil said it is open to considering standing items on the agenda of the CTS but added that it doesn’t want to put it in writing.

It maintained that there could be ways of tackling the issue but does not want to defend the suggestions. It said it is merely inviting members to a collective brainstorming on the issues it raised.

Turkey said that while it was ready to brainstorm, it will not do so without a written submission.

The African, Caribbean and Pacific (ACP) Group, the African Group, Australia, Canada, New Zealand and Paraguay said they will not agree to suspend the subsidiary bodies of the CTS. The ACP Group said the Committee on Trade in Financial Services is of specific interest to it.

Canada, Australia and New Zealand, among others, informed Brazil that it would be better to convene meetings when there are substantive proposals on the table demanding such a discussion.

The EU said Brazil’s proposal would be tantamount to drastic surgery which is not warranted.

Brazil can, however, claim credit for support from its new ally, the US, said a developing-country services negotiator.

The US said Brazil’s ideas are useful for a conversation on the subsidiary bodies and are an important point of departure. It welcomed Brasilia’s ideas underscoring the need to reflect on whether or not the structure has overtaken substance. It argued that there is no problem whether the Brazilian suggestion is made orally or otherwise.

If Brazil’s proposal is successful, it would effectively move negotiating mandates on domestic regulation and rules to the CTS regular session, argued a developing-country negotiator. Further, issues concerning e-commerce are already discussed in the CTS, the negotiator said. Therefore, if domestic regulation and rules move there too, the question will then arise as to where market access negotiations should take place. That would make it easier for those members calling for the end of the Doha Round to have all their issues discussed in the CTS and do away with the Special Session.

It is similar to what Brazil is doing in the DWP rules negotiations, the negotiator maintained.

When a WTO secretariat official suggested the next cluster of meetings after the summer break, Brazil said its proposal might seem too radical but there is a need for another meeting on demand.

Turkey flatly rejected Brazil’s demand-driven meetings, while South Africa maintained that the next cluster of meetings must be done according to past practices. If Brazil still has concerns, an assessment can be made at the formal CTS meeting at the next cluster, South Africa argued.

China echoed South Africa’s position, suggesting that suspension of any bodies is up to the political will of members on what and when to speak. The value of having subsidiary bodies on every cluster is to compel members to think hard, China argued.

The chair of the CTS, Ambassador Gustavo Miguel Vaneiro Balbela of Uruguay, suggested that there is no consensus on the Brazilian ideas.

Update

Brazil also suffered a setback on another demand in which it asked the WTO secretariat to update the GATS 1998 mandate on e-commerce since there have been dramatic developments.

Brazil said that it is trying to see how it is possible to address its concerns and how the discussion on e-commerce can be approached. It said there has been an upsurge of e-commerce proposals in the General Council, arguing that the issues are getting more complicated. The secretariat can update on cloud computing. Brazil maintained that it is not asking for rewriting of the document but that some bits should be updated.

Brazil said it was ready to look into some suggestions on developmental aspects. It argued that there is a serious question at the dedicated session whether e-commerce should be discussed as a cross-cutting issue or bit by bit.

This update, Brazil said, is exactly the sort of discussion to understand what is happening in services. Such an update should be reproduced not only in the CTS but also in the Council for Trade in Goods, Brazil maintained.

The chair Vaneiro said that several delegations are not convinced on the need to update the 1998 document. He agreed that it is a complicated issue but e-commerce and the digital economy is a moving target in some ways. He urged members to continue with more consultations.

In a separate development, the chair for the dedicated session on e-commerce, Ambassador Alfredo Suescum from Panama, said the WTO secretariat must prepare for the next meeting a compilation of elements presented in papers by several delegations.

The US, which has tabled a non-paper on the e-commerce work programme based on the outcomes in the Trans-Pacific Partnership Agreement, said it does not understand the need for a compilation of elements. It said its proposals must sit on their own for the time being before there can be agreement to whatever it is. It said it doesn’t want its paper to be picked apart and put somewhere it’s not intended.

Concurring with the US opposition to a compilation of elements, Australia asked whether there will be value in the secretariat work, and whether there is a role for the secretariat or if that should be more member-driven.

India maintained that the proponents must present their proposals post-summer. The EU also called for a discussion on the proposals.

The chair said he will clarify the notion behind the compilation but Japan requested compiling the elements.

In the face of lack of consensus, the chair merely concluded by saying that the issue will be kept on hold.

Meanwhile, at the General Council on 27 July, the outgoing Brazilian ambassador Marcos Galvao declared that Brazil is now an aggressive demandeur on e-commerce as it is in agriculture.

It is difficult to know how this change in Brazil’s trade policy and its emphasis on e-commerce has come about, said a South American negotiator. “More important, Brazil is now a strategic partner of the United States in e-commerce and other issues at the WTO,” the negotiator added. (SUNS8293)                                           

Third World Economics, Issue No. 621/622, 16 July – 15 August 2016, pp25-26