TWN Info Service on UN Sustainable Development (Jun17/04)
8 June 2017
Third World Network

Trump Climate NO makes MC11 developmental outcomes unlikely
Published in SUNS #8475 dated 6 June 2017

Geneva, 2 Jun (D. Ravi Kanth) - The developing and least-developed countries are unlikely to secure "developmental" outcomes as mandated in the Doha Work Program (DWP) at the World Trade Organization's eleventh ministerial meeting in Buenos Aires in December, after the Trump administration withdrew from the Paris Climate accord and continued to remain non-committal on multilateral trade initiatives, sources told SUNS.

On Thursday (1 June), US President Donald Trump announced his administration's decision to withdraw from the Paris Climate accord on grounds that the previous administration led by Barack Obama had agreed to onerous and burdensome conditions, including a commitment under the Paris Climate accord to contribute up to about $3 billion to the Green Climate Fund (headquartered in South Korea), to provide aid to developing countries to cope with climate mitigation and take measures to reduce greenhouse gas emissions.

Coincidentally, on the same day as the Trump announcement, the WTO director-general Roberto Azevedo held a one-on-one meeting with the new US Trade Representative Robert Lighthizer to seek clarity on whether the WTO could address the specific concerns raised by the Trump administration.

Azevedo would have briefed the new USTR about the ongoing work at the WTO, particularly the "deliverables" that are being planned for the Buenos Aires meeting, as well as the US concerns on trade remedies.

In the run-up to the meeting with the USTR, the director-general had indicated that he is willing to sit down with Ambassador Lighthizer to understand the specific concerns expressed by the Trump administration on the Dispute Settlement Body rulings.

After the meeting, the USTR issued a bland, non-committal statement on Thursday. The statement says the USTR "welcomed World Trade Organization Director-General Roberto Azevedo for a meeting to discuss the important role of the WTO in the global economy."

"Ambassador Lighthizer reaffirmed his support for improving the WTO and his commitment to working closely with US trading partners to increase the WTO's ability to promote free and fair trade," according to the statement.

Further, "Ambassador Lighthizer communicated his goal of building a strong working relationship with Director- General Azevedo and the WTO member economies, and he looks forward to engaging them in further discussion next week in the margins of the Organization for Economic Co-operation and Development (OECD) Ministerial Council Meeting in Paris."

But, this did not disclose whether Azevedo and Ambassador Lighthizer discussed about the possible "deliverables" for the eleventh ministerial meeting.

It is also not clear whether the US remains committed to addressing the outstanding Doha issues, particularly the mandated issues like the permanent solution for public stockholding programs for food security purposes and the Special Safeguard Mechanism for developing countries.

[At the informal Rules Negotiating Group this week, in declining to engage with China on its proposal on trade remedies, the US is reported to have said that there was no consensus at the Nairobi Ministerial Conference on reaffirming the DWP mandates (in the Doha Ministerial Declaration, and reaffirmed at the General Council in 2004, and reiterated in subsequent Ministerial Conferences). It claimed that Doha was totally obsolete and disconnected from the current reality. See SUNS #8474 dated 2 June 2017. SUNS]

Further, there is no indication yet whether the US will pursue issues of its own interest such as fisheries subsidies and electronic commerce that are being accorded the highest priority by several industrialized and some developing countries.

Against this backdrop, the developing and least-developed countries must remain cautious and reassess whether they will secure any outcomes on their developmental issues at the eleventh ministerial meeting in Buenos Aires starting on 10 December, and/or what strategies and tactics they must adopt in the run-up to and at Buenos Aires to get results on their developmental outcomes, including on the mandated permanent solution to public stockholding programs for food security and a Special Safeguard Mechanism for developing countries.

The outstanding "Doha" issues ought to be resolved as per the Nairobi ministerial declaration and decisions, but the Trump administration is in no mood to stick to the commitments made by the previous administration in multilateral accords like the Paris agreement or the WTO's Nairobi ministerial declaration.

Over the past several months, a concerted attempt has already been made by major industrialized countries and their allies in South America to erase Doha or DDA (Doha Development Agenda) or the Doha Work Program (DWP) from their proposals on agriculture, rules and services.

The G-33 group of developing countries led by Indonesia has already expressed its frustration about lack of any engagement to finalize the permanent solution for public stockholding programs for food security.

The developed countries and their allies are also questioning the need to have the permanent solution despite a clear directive from the Nairobi ministerial declaration to finalize the permanent solution before the eleventh ministerial meeting in Buenos Aires.

The G-33 also circulated a Job document (Job/AG/96) on Special Safeguard Mechanism - "Building Bridges on Key Outstanding Issues for Concrete MC11 Outcome" - on 29 May.

It says the "SSM is a trade remedy tool for addressing agricultural volatility causing import surges and/or price depressions in developing country Members, which discourage investments to agriculture and undermine food security, livelihood security, and rural development."

"While some developing country Members have access to a similar mechanism (i.e. the Special Safeguard Provisions (SSG) under the Agreement on Agriculture (AoA)), its design is not attuned to their needs and conditions that the G-33 has been seeking to address through the SSM for more than a decade now," the G-33 stated categorically.

The G-33 addressed the specific concerns raised by the US, the European Union, Australia, and other members.

"However, simply denying the legitimacy of the need for SSM and holding up meaningful engagement and progress on the SSM has been a remissness of the mandates under the Doha Development Agenda (DDA), July Framework, Hong Kong Declaration, and Nairobi Decision," according to the three-page statement reviewed by SUNS.

The developing country coalition of more than 40 members appealed to "those Members to meaningfully engage and submit mutually workable solutions/proposals to the difficult issues they themselves have identified."

It provided clear solutions for the concerns raised by the US, Australia, and other developed countries.

The solutions offered by the G-33 for the concerns raised by "those Members" include:

i. Addressing the outstanding issues on product coverage: the SSM disciplines that apply to them must, first and foremost, able to meet the intended purpose of the mechanism, which is the ability to instantaneously and effectively arrest import surges and price depressions as they occur.

ii. Addressing the issue of FTA trade: While the G-33 is open to reasonable concerns on FTA trade, it is important to appreciate that FTA trade is not exempt from any WTO trade remedy, be it under the WTO agreements on the SSG, safeguards, anti-dumping (AD), or countervailing and subsidies (CVD).

In fact, paragraph 5 of the preamble of the Understanding on the Interpretation of Article XXIV of the GATT reaffirms that the formation of an FTA should to the greatest possible extent avoid creating adverse effects on trade of other Members - suggesting that the framers of Article XXIV understood then that FTA trade is neither to be treated differently from MFN trade nor this should discourage or divert trade away from non-FTA parties (MFN suppliers).

Thus, suggesting or making a WTO rule that FTA arrangements should prevail over the MFN principle in the WTO context is not only unwarranted but also a grave systemic concern under the multilateral trading system, unless of course parties to a FTA that are also WTO Members have agreement in the FTA that the treatment under the latter should apply.

iii. Addressing the issue of remedies that can breach the UR bindings: Capping the remedies to the UR tariff bindings is not the way forward since this restriction essentially negates access to and effectiveness of the SSM especially for products with particularly low tariff bindings. This is the premise/understanding in which the Rev. 4 text on SSM was complemented, modified, and/or supplemented by another draft text on SSM contained in TN/AG/W/7 of December 2008.

Additionally, a notion of a UR tariff binding ceiling is not a feature in any trade remedy tool in the WTO, be it in the SSG, Safeguard, AD, or CVD. Any of these WTO remedies permits full or proximate compensation of a defined price gap, import surge, margin of dumping, or subsidy.

iv. Addressing a confusion on the use of a price-based SSM vs. a volume-based SSM: While both volume-based and price-based SSMs should not be applied at the same time, the utilization of the price and volume SSGs suggests that both mechanisms serve a complementary role in arresting import surges and price depressions.

Thus, there is no question on the importance of both price-based and volume-based SSMs. However, it is acknowledged that there are numerous outstanding issues and negotiation elements remaining on the text of the volume-based SSM under Rev.4 awaiting resolution.

v. Addressing the lack of concrete and operational outcome on the SSM: Given the great deal of time, efforts, and other resources spent by the WTO Members in the SSM negotiations in Geneva and capitals over more than a decade now, and given the mandates under the Doha Round, July Framework, the Hong Kong Declaration, and the Nairobi Decision on the SSM, it has been long overdue that Members seriously engage in the negotiations with open mind and work for a concrete and operational outcome on SSM in MC11.

Despite sustained efforts by the G-33 group of developing and least-developed countries, there is either a conspicuous silence or outright stonewalling and diversionary tactics from major developed countries and their allies to address the SSM and the permanent solution for public stockholding programs for food security.

In short, the developing and poorest countries of the South have to make a clear choice soon. If they are not able to secure on the mandated issues - the permanent solution for public stockholding programs for food security and SSM - then, should they allow other issues such as fisheries subsidies to progress on grounds of food security, said a trade envoy who asked not to be quoted.