TWN Info Service on WTO and Trade Issues (Mar18/04)
8 March 2018
Third World Network
       
Strong concerns over AB impasse, US move on steel, aluminium
Published in SUNS #8636 dated 7 March 2018

Geneva, 6 Mar (Kanaga Raja) - Many members at the World Trade Organisation (WTO), both developed and developing, expressed strong concerns Monday over the recent announcement by US president Donald Trump of his intention to impose steep tariffs on imports of steel and aluminium.

The concerns were voiced at an informal Heads of Delegations (HOD) meet of the WTO Trade Negotiations Committee (TNC) where many members also expressed strong concerns over the continuing impasse over the launch of the selection processes for filling three current vacancies in the seven-member Appellate Body (AB).

The United States has continued to block efforts to launch the selection processes to fill these vacancies, the latest at the meeting of the Dispute Settlement Body (DSB) on 28 February (see SUNS #8634 dated 5 March 2018).

According to trade officials, nearly every member that spoke at the informal meeting expressed strong concerns over the impasse in filling of the vacancies in the Appellate Body.

Trade officials said that linked to this was the very strong concerns expressed by many members including the European Union (28 member states), Mexico, Japan, Australia, China, Korea, Brazil, Norway, Canada, India and Venezuela on the recent announcement from Washington last Thursday (1 March) on proposed tariffs on steel and aluminium under section 232 of the US tariff law.

In some remarks on this issue at the informal HOD/TNC on Monday, WTO Director-General Roberto Azevedo said: "I have been saying for quite some time that while the trade environment has shown some positive signs of recovery lately, there are still uncertainties and risks that we cannot ignore."

"In light of recent announcements on trade policy measures, it is clear that we now see a much higher and real risk of triggering an escalation of trade barriers across the globe," said Azevedo, without either naming the members concerned or even what these "trade policy measures" are.

"We cannot ignore this risk and I urge all parties to consider and reflect on this situation very carefully. Once we start down this path, it will be very difficult to reverse direction. An eye for an eye will leave us all blind and the world in deep recession. We must make every effort to avoid the fall of the first dominoes. There is still time," the DG said.

Earlier on 2 March, following the announcement by Washington of its intention to impose tariffs on steel and aluminium, Azevedo, in a statement released by the WTO press office, had said: "The WTO is clearly concerned at the announcement of US plans for tariffs on steel and aluminium. The potential for escalation is real, as we have seen from the initial responses of others."

"A trade war is in no one's interests. The WTO will be watching the situation very closely," he had added.

According to media reports, following the US announcement on plans to impose tariffs on steel and aluminium, the EU has said that it was considering imposing its own safeguard duties on imports of steel and aluminium from the United States.

Media reports further cited president Trump as warning over the weekend that in retaliation he would impose taxes on imports of automobiles from the EU.

According to trade officials, the United States did not address either of the issues that had been raised by the members at the informal meeting.

At the informal HOD/TNC meeting, the African Group and least-developed countries expressed displeasure with the outcome at the Buenos Aires Ministerial Conference (MC11) last December saying that the WTO was not able to deliver on the development issues.

The ACP group said that development issues remain paramount and that the Doha Development Agenda (DDA), which is being opposed by developed countries, is something that needs to be given new life.

The developing countries also said that it is absolutely essential that the DDA is preserved together with special and differential treatment (S&DT). They also highlighted the importance of the issues of public stockholding for food security purposes and the Special Safeguard Mechanism (SSM).

Many African countries also stressed the "Agenda 2063: The Africa We Want" initiative and the importance of Africa's ability to industrialise.

In his other remarks at the informal meeting, DG Azevedo reported that the Negotiating Group on Rules had met twice. There is convergence with respect to the technical work moving ahead on fisheries subsidies. There is a sense among the members that it is urgent that they get beyond any reflective period.

With respect to activities in the negotiating process, the DG said that he has asked the negotiating group chairs to look closely at the way in which the negotiations have been going on. He said if we repeat the same approaches we are very likely to arrive at the same result. We can't go back to business as usual.

The Director-General also mentioned the issues of importance to the like-minded members who are proponents of the plurilateral initiatives. He said it is up to the proponents of these issues to take these initiatives forward.

He was pleased about what they have said about these initiatives in that they will be open-ended, inclusive and transparent, and that the objective is to multilateralise the agreements or processes that may emerge plurilaterally. He urged flexibility, saying that without it there is little hope that we can make progress.

On the situation regarding the Appellate Body, the DG urged action very soon, saying that this is a major cause for concern. He said that members are beginning to talk about this issue in a way that is different. They are starting to talk about it more forcefully, as well as starting to talk about options that may lead to a quick solution.

The DG said that he has explored many different alternatives. He has spoken to the parties including the key party, the United States, and as yet he has not seen a solution that would keep everybody happy.

Some of the solutions being discussed would make some members unhappy but we are going to reach the point sooner or later where a decision is going to have to be taken, said Azevedo.

VIEWS OF WTO MEMBERS AT INFORMAL MEETING

According to trade officials, Nigeria said that the outcome of MC11 at Buenos Aires was disappointing. The way in which we have been trying to negotiate is not the way to do business. There is need for a degree of elasticity in our approach.

It would also like to see the consensus rule applied in a more responsible way. The previous decisions taken at ministerial conferences and the General Council should be respected and implemented.

It said that it is supportive of (the initiatives on) MSMEs, e-commerce, investment facilitation and the work on gender.

New Zealand supported the plurilateral initiatives. It said that the multilateral trading system is now facing severe challenges. It said part of this challenge is the threat to the dispute settlement system due to the failure to fill the vacancies in the Appellate Body.

Rwanda, on behalf of the African Group, said we must recognize that the outcomes at MC11 were unsurprising.

"The African Group had advocated the moment of truth while we were still in Geneva. The deliberations prior to MC11 had already underscored the depth and scope of Members' divergences across the board, and this played out predictably in Buenos Aires. We also learnt that the process leading to the MC11 was not suitable for any tangible outcome."

Rwanda said that while some Members have expressed disappointment that MC11 delivered limited outcomes, the African Group is most disappointed that the WTO has once again not delivered on any developmental outcome of interest to the G-90 which includes the African Group.

"We welcome however the decision to continue work on Fishery subsidies. The African Group fully supports to seriously undertake negotiations on this issue as early as possible until its completion, by MC12."

On other negotiating issues, a deep reflection is not only important, but necessary. This period of reflection could be exploring ideas but within the framework that all Members signed onto. "We believe this is feasible. But in order to succeed, all WTO Members need to take into account the wider context, notably the growing inequalities and marginalization of poor countries and the need for positive measures for industrialization of African economies so as to contribute to national development and global prosperity."

The African Group therefore called for pursuing an inclusive and developmental multilateralism in line with the Agenda 2030 for sustainable development targets for all.

The test of WTO rules therefore - past and future - is whether they promote inclusivity and development or its opposite: marginalization and inequality. In line with the Nairobi Declaration paragraph 31, work must be done to address longstanding demands on Agriculture domestic support; Cotton; S&D for industrialization among many other issues.

For Africa: "The Agenda 2063: The Africa We Want" constitutes the overarching framework for integration, industrialization, economic diversification and structural transformation for sustainable growth.

Regarding the way forward, the African Group stands ready to engage constructively on all issues in accordance with their respective mandates, notably under the DDA, said Rwanda.

It recommended review of the process, and to get it right "if we are to achieve successful results by the MC12."

The African Group paper on process submitted in the run up to Buenos Aires is a good basis for this exercise, said Rwanda. Likewise, a collective reflection should also touch on the nature of outcomes we want: multilateral versus plurilaterals.

The African Group strongly supports a rules-based, fair and inclusive Multilateral Trading System (MTS). It therefore encouraged all Members to join efforts in strengthening the MTS.

Uruguay, in its capacity as the spokesperson for the informal working group on MSMEs, said that there were 88 members in this group and that the group has met twice on 30 January and 27 February. It said that all members should feel free to join and it is looking at ways to facilitate the participation of smaller enterprises in regional and global markets.

Right now, the group is talking about the parameters, trade facilitation, technical assistance and how to lower trade costs including for logistics and shipping, it said.

The EU said that it is disappointed by what took place in Buenos Aires. The fact that we are not even able to discuss issues due to "tactical blocking" by some members has created a crisis for the organisation, it claimed.

It spoke specifically on the difficulty in getting an agreement on banning subsidies for illegal fishing. The EU said that it is going to be very active in its work, and that it needs a flexible approach.

It would like to see the talks on fisheries subsidies pick up in earnest soon. On the plurilateral initiatives, it said that these were open to everyone and that any results coming out of these will be on an MFN basis. So all members will benefit from whatever the agreements may be.

On the issue of trade and development, it said that we need to have an in-depth discussion. According to the EU, all members believe that development is crucially important. On the question of development, we cannot use a one-size-fits-all format. When talking about development types of issues, it must be on a case-by-case basis, it maintained.

It is extremely important that we begin to address the issue of the Appellate Body, the EU said.

In what was seen as a reference to the US announcements about new steel and aluminum tariffs, the EU said it had very strong concerns about actions taken by one member, that had used illegitimate reasons to suggest that they would be taking an action on the basis of national security.

It expressed hope that this member will rethink this, otherwise they may trigger a process that would be in nobody's interest.

Guyana, on behalf of the African, Caribbean and Pacific (ACP) group, said the development issues remain paramount.

There were things that came out of MC11 that were positive. The reaffirmation of the multilateral trading system (MTS) was important but there are difficulties now with members in terms of trust, and how to reform the organisation.

It said that the Doha Development Agenda (DDA), which is being opposed by developed countries, is something that needs to be given new life. It also stressed that an agreement on fisheries subsidies must come by 2019 so that we can adhere to our obligations under the SDGs.

Guyana agreed with the notion that there needs to be flexibility and the need to prioritise issues. But there were certain things that were absolutely essential - there is need to ensure that the DDA is preserved, as well as special and differential treatment (S&DT).

There is need to understand that there are key issues for the ACP countries notably the issue of fisheries subsidies, agriculture in particular trade-distorting domestic support, and cotton.

Mexico said that it is also disappointed with the outcome of the work that had been done in Buenos Aires. It is important to strike a right balance between the so-called traditional areas and the "21st century issues".

Fisheries subsidies is a very important issue for Mexico as well as domestic regulation in services. Trade distorting domestic support needs to be addressed.

Mexico noted that a large percentage of members are focusing now on trying to get results in e-commerce, MSMEs and investment facilitation. The idea is to have multilateral participation.

It expressed severe concerns about the dispute settlement system and the failure to appoint the AB members.

Mexico also expressed very serious concerns about what one prominent member has done pertaining to actions involving tariffs on steel and aluminium.

It recognised that members have the right to safeguard industries but these have to be done in a way that is in compliance with WTO rules. Without these rules, you have the law of the jungle, it said.

It looked forward to the mini-ministerial meeting in New Delhi on 19-20 March, It sees this as a way to have a dialogue. We need to be talking to each other as trade partners, not trade enemies, it said.

Colombia said it supports the initiatives on MSMEs and investment facilitation. On the issue of the Appellate Body, it said that we are in a very serious crisis.

The Central African Republic, on behalf of the Least Developed Countries (LDCs), said that the organisation is facing difficulties across its main pillars of activity. It was not pleased with the outcome at MC11.

It is very keen to see the work begin again on S&DT, domestic support, cotton and fisheries subsidies. It said it is extremely important to implement the results of the Hong Kong, Bali and Nairobi ministerial declarations.

It said that central to all of this is cutting trade-distorting domestic support in agriculture. This kind of support by developed countries has made it extremely difficult for LDCs and other developing countries to compete in global agriculture markets.

China said we have to carry out the instructions from MC11 particularly the work program on fisheries subsidies which will have to be implemented as quickly as possible. This was one area where quite a lot of work was done in Geneva before Buenos Aires but on many of the other issues, we found it difficult to make progress.

It said it is extremely important as well that we make progress towards agreement on public stockholding for food security purposes, and that work beginning again on non-agricultural market access (NAMA) and on rules.

Flexibility is the key for our work, China said. It is also important to understand the positions of other trading partners.

China said that it is very concerned by the measure taken by one member pertaining to an announcement on tariffs on steel and aluminium.

We all smell the smoke of a trade war. Only the dispute settlement system could avert terrible individual retaliation coming from members, China underlined.

It has great concerns about the functioning of the dispute settlement system because of the problem with (filling vacancies on) the Appellate Body. The dispute settlement system, if it is not functioning, will have an impact not only on disputes but also on areas of the multilateral trading system.

On the so-called non-DDA issues, namely the plurilateral initiatives, China said that it is important that while we continue to work on agriculture and rules, it is also important that we can take advantage of opportunities to keep the WTO relevant in these other sectors.

Uganda pointed out that there was no mandate to negotiate multilaterally on the plurilateral issues. It said efforts to get away from the multilateral approach on e-commerce were unfortunate. It said that there is need to ask the question as to what is the place of the WTO in development.

Have the rules aided or impeded the development programmes? How do trade-distorting domestic support in agriculture fit into the free trade narrative?

It said there should be an audit of all WTO rules to see what impact they have. It is very important that these rules do not inhibit structural transformation and industrialisation of Africa.

Ecuador stressed the importance of S&DT and flexibilities for the developing countries, while Nepal said that the issues of importance to the LDCs such as duty-free quota-free market access for LDC products, rules of origin and the LDC services waiver have not been fully implemented yet.

Japan said that it is clear that the WTO and the multilateral trading system are at a crossroads. It had very strong concerns vis-a-vis the situation in the Appellate Body. It also said that on the issue of unilateral actions being considered by one member, the concerns are that this will cause a spiral of measures and countermeasures that will be damaging to the multilateral trading system.

Japan also highlighted the plurilateral initiatives on e-commerce, MSMEs and investment facilitation.

Australia said that a business-as-usual approach is not going to work. The multilateral trading system is under threat and it needs to be protected.

On the US announcement on tariffs on steel and aluminium, it said that there is a global challenge with respect to the question of capacity and it is important that this is addressed in a way that is in compliance with multilateral rules. Unilateral measures that are not in compliance can damage the global trading system, it said.

Thailand said that it is concerned about the situation in the Appellate Body.

Bolivia said that it needs to see agreement on public stockholding, trade distorting domestic support in cotton, and the special safeguard mechanism (SSM). It said that there is no sign of progress in these areas.

It said that the plurilateral initiatives could lead to fragmentation of the membership. Bolivia supported a multilateral approach. Transparency and inclusiveness can only be fully found in multilateral negotiations.

Peru also expressed concern about the situation with the Appellate Body. The multilateral trading rules can be undermined without progress here.

Cuba said that MC11 did not deliver on the promises. There is need for a roadmap for many of the areas that are under negotiations. We need to use as the starting point, the Bali and Nairobi ministerial declarations.

It noted that the DDA faces challenges but this is too important for too many developing countries to be abandoned.

It advocated a multilateral approach on all WTO work. It does not support the fragmented approach that comes with the plurilaterals. A multilateral approach guarantees that no one is left behind. It wants to see a deal on public stockholding and the SSM.

Korea noted that there have been concerns expressed about measures taken of a protectionist nature in some places. It was particularly concerned about a threat to the multilateral trading system that could emerge if people invoked certain kinds of measures.

It is also very much concerned about the situation involving the Appellate Body. It has the potential to cause damage to the multilateral trading system, said Korea.

Brazil said that it was pleased with the renewal of the commitment to the multilateral trading system but it was worried about unilateral actions by one important member, taking the risks to a new level. It urged this member to reconsider. It also expressed concern about the situation in the Appellate Body.

Brazil expressed support for the plurilateral initiatives on MSMEs, domestic regulation in services, e-commerce and investment facilitation.

Indonesia, on behalf of the G33, highlighted the issues of public stockholding and the SSM. It said it saw Article 20 as the road to negotiating on agriculture.

Norway said that it is important that all members realise they will benefit from the joint initiatives. It is deeply concerned about a potential situation in one member involving steel and aluminium. This could be a serious challenge to the multilateral trading system particularly given the problem that is happening with the Appellate Body. It urged this member to reconsider the announced measures.

Pakistan said that it was very pleased with respect to the joint plurilateral initiatives in Buenos Aires. It was of the view that the issues of e-commerce, MSMEs, and investment facilitation are overlapping and mutually self-supporting.

It is important that the work is coordinated, it said, stressing that the work being done here is going to be open and inclusive.

It said agriculture is important for Pakistan and that food security is of critical importance. The way in which food security measures are employed must be done in a way that does not affect the programs of others. It said the dispute settlement mechanism is the bedrock of the system.

Canada expressed concerns about the situation in the Appellate Body. It has strong concerns on measures taken on national security by one member. It said that Canada is a member of NORAD and NATO so it was illogical to apply national security concerns to them.

It said the Canadian Prime Minister and Foreign Minister had said that it was unacceptable to target Canadian steel and aluminium and that Canada will respond with measures to defend their industries and their workers.

The United States said that we are off to a slow start but being off to a slow start may raise anxiety with some members.

While the fact that the negotiating groups have not moved ahead as yet may cause some unease, the US does not see it quite this way. They think that perhaps by going slowly we can avoid some of the mistakes we made in the past.

In Davos, it noted, USTR Robert Lighthizer said that MC11 was an important meeting. It was important in terms of setting a new direction for the work of the WTO, work that might be taken up by like-minded members.

Not every subject however can be handled in this kind of way, it said, adding that the US has signed up for e-commerce.

It said MC11 has opened up a discussion for the first time on the question of development, on the question of self-designating and on the question of differentiation between developing countries.

There is need to take into account the idea that it may not be possible to solve all issues in a two-year negotiating cycle. It may take longer to settle some things.

It wanted to address the concerns expressed by some members with respect to the US on fisheries subsidies and on agriculture.

It said we are operating ostensibly on these issues in the dark because the necessary notifications have not been made. Transparency is undermined without knowing what the level of subsidies are because not all members are notifying.

On agriculture, the US said that in Buenos Aires, there was the idea that the US did not want to take this up in the multilateral context. This was not true. They cannot advance global work without having some kind of clarity with respect to what is going on in agricultural trade.

The US believes that the WTO has taken a new turn and there are opportunities to be seized.

Zimbabwe stressed on the public stockholding, the SSM and agricultural market access, as well as NAMA. The non-DDA issues are not welcome because they do not have the full membership involved.

Venezuela said it also had deep concerns about the situation in the Appellate Body. It was also concerned about a number of protectionist measures and coercive unilateral measures by certain members.

One member may implement a measure which could have serious effect on the multilateral trading system and may result in an unpredictable trade war, it said.

According to trade officials, South Africa voiced agreement with the African Group and the ACP group while India endorsed the statement of the G33 (see separate article on excerpts of their statements as well as that of several other members).