TWN Info Service on WTO and Trade Issues (May18/07)
14 May 2018
Third World Network
       
Concerns voiced over trade tensions, AB blockage at HOD
Published in SUNS #8678 dated 9 May 2018

Geneva, 8 May (Kanaga Raja) - A large number of developing and developed countries, without naming the United States, have castigated it over its recent unilateral trade measures as well as its continued blockage of appointments to the WTO's Appellate Body.

These concerns were voiced at a meeting of Heads of Delegation (HoD)/Trade Negotiations Committee (TNC) on Monday.

At the meeting, Switzerland, on behalf of some 36 members, voiced concern "about increased trade tensions and related risks for the multilateral trading system and world trade."

[Some 41 WTO members have now co-sponsored the statement.]

Switzerland encouraged WTO members to refrain from taking protectionist measures and to avoid risks of escalation.

Without naming the United States, Switzerland also emphasised the importance of filling all current and future vacancies on the Appellate Body without delay.

The meeting heard remarks by WTO Director-General Roberto Azevedo as well as reports by the Chairs of the various Doha negotiating bodies.

A number of delegations took the floor following these reports.

According to trade officials, there was disagreement among the WTO members at the meeting over the issue of development, specifically the question of special and differential treatment (S&DT) vis-a-vis the Agreement-specific proposals ta bled by the G90 group of developing countries (see separate story).

Many developing countries made clear that S&DT should be made available for all developing countries and LDCs. They rejected a case-by-case approach to the issue.

There was also sharp disagreement among the members over the so-called informal joint plurilateral initiatives on e-commerce, investment facilitation for development, disciplines for micro, small and medium sized enterprises (MSMEs), domestic regulation in services, and the economic empowerment of women (see separate story).

At the informal meeting, the developing countries stressed the importance of obtaining outcomes on trade-distorting domestic support, cotton, public stockholding for food security purposes, and Special Safeguard Mechanism (SSM).

REPORT BY DG

According to trade officials, WTO Director-General Roberto Azevedo reported on his recent consultations with members, as well as several meetings that he had recently attended. He also had bilateral contacts with Brazil, Portugal, the United Kingdom, the United States, and India.

He said that in his bilateral discussions, he found strong support for the WTO, a desire to re-engage on work but also serious concerns of major economic and systemic importance due to rising trade tensions and the blockage (at filling vacancies) at the Appellate Body.

In his remarks (also posted on the WTO website), the DG said: "Concerns about rising trade tensions and the blockage in appointments to the Appellate Bod y are very widely shared among the membership. As long as tensions persist between major trading partners, the risk of a serious escalation remains very real. "

"We must do all we can to avoid going down this path and taking measures that are difficult to reverse. When trade restrictions are pursued in this way i t can threaten growth and job creation everywhere."

Today, said Azevedo, two thirds of global trade takes place through global value chains - and this clearly illustrates the potential for knock-on effects.

"And in these situations it is often the smaller players and the poorest communities that stand to lose the most. Resolving these issues is in every one's urgent interest.

"I am continuing to talk to members, and urge all sides to be very cautious in how they proceed," Azevedo said.

He said that it is positive that these matters are being taken up in the re gular bodies of the WTO. The issues have been discussed in the Safeguards Committee and in the Council on Trade in Goods, for example, as well as in the General Council.

In addition, said Azevedo, members continue to bring their disputes to the WTO. The system was built to resolve these problems in a way that prevents further escalation - and so it is right that members are using it.

"I believe that the WTO has a crucial role to play here - as we have done m any times before."

"I also encourage members to continue pursuing their bilateral contacts, to complement multilateral processes. The important thing is that conversation s are taking place, and that members are trying to find solutions," said the DG.

He said that it is also of utmost importance that members work to resolve the impasse regarding nominations for the Appellate Body.

According to trade officials, the DG said that he regrets to report that he does not have any new information that would indicate changes to the current scenario.

Azevedo said that they were no closer to a solution than before and as yet he does not see a promising path forward.

"If we do not find a solution here - whatever shape that solution may take - we could severely compromise the whole multilateral trading system. I can't emphasize enough the systemic importance of this point. So again I urge members to engage and talk to each other in a solution-finding mode," he said, without mentioning the United States.

Referring to the forecasted growth in trade this year, Azevedo said that we have seen trade growing at the fastest sustained clip since before the global financial crisis - growing at 4.7% last year and forecast to grow at 4.4% this year, and 4.0% in 2019.

He said that all of this progress could be easily undermined by an escalation in the current situation.

On the negotiating work, Azevedo reported that all the Chairs have been appointed, adding that "we are still in early stages of our work after Buenos Aires, but I think it is very positive to see members meeting and engaging."

"And I think that we need to maintain a sense of urgency. This applies particularly in areas where we have specific deadlines, such as in fisheries subsidies - but also in areas where we are already behind the schedule that members set themselves, for example, on public stockholding."

On the joint plurilateral initiatives/statements by groups of members issue d on the sidelines of the Buenos Aires ministerial last December, Azevedo said that it is a matter for the proponents to determine the pace and structure of their work .

He said that he has urged members who are the proponents of these issues to be open, transparent and inclusive, with an eye to finding multilateral outcomes.

Azevedo said the Secretariat, on his instruction, has been told that they would be involved in the processes if they received requests or demands from members that they provide assistance.

The DG maintained that if members request assistance we always do what we can to provide it, but it is entirely on a demand basis.

He claimed that this was not unusual and that it has happened before with respect to issues like the Information Technology Agreement (ITA).

After Azevedo's remarks, the chairs of the various negotiating bodies under the Doha Work Programme reported on their recent consultations.

According to trade officials, the Chair of the Committee on Trade and Development in Special Session, Ambassador Tan Yee Woan of Singapore, said that some are saying that a one-size-fits-all approach to S&DT will not work.

They want a case-by-case application, and for differentiation among members with respect to their obligations and in terms of the commitments they would undertake as developing countries.

She said that others have rejected this out of hand and said it is the right of all developing countries to be able to have S&DT.

At this stage, there is an impasse on this issue. While many have said it i s their fundamental right as developing countries to be able to have S&DT due to capacity differences between developed and developing countries, others have said although there are these capacity constraints and development is crucially important in the WTO, this does not mean that two-thirds of members should be excluded from fundamental WTO disciplines, she said.

CONCERNS VOICED AT HOD

According to trade officials, Switzerland made a joint statement on behalf of some 36 WTO members.

These members included Argentina, Australia, Benin, Brazil, Canada, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Hong Kong-China, Iceland, Kazakhstan, Kenya, Korea, Lao People's Democratic Republic, Liechtenstein, Malaysia, Mexico, Moldova, Myanmar, New Zealand, Nigeria, Norway, Pakistan, Panama, Paraguay, Qatar, Singapore, Switzerland, Thailand, Macedonia, Turkey, Ukraine, Uruguay, and Vietnam.

[Bangladesh, Cote d'Ivoire, Dominican Republic, Mali and Peru have since joined the statement bringing the total to 41 members.]

Switzerland said they, developing and developed Members of the World Trade Organisation, consider a well-functioning, rules-based multilateral trading system embodied in the WTO to be of key importance for their economies as well as for global economic stability, prosperity and development.

"We welcome the marked recovery of world merchandise trade in 2017, to which all regions contributed, and are encouraged by the WTO's positive forecast for 2018 and 2019," it said.

"However, we are concerned about increased trade tensions and related risks for the multilateral trading system and world trade."

Switzerland encouraged WTO members to refrain from taking protectionist measures and to avoid risks of escalation.

"We call on Members to resolve their differences through dialogue and cooperation, including through WTO bodies and, as appropriate, recourse to WTO dispute settlement."

"We consider that action is needed to address major challenges facing the W TO. We particularly note difficulties in concluding negotiations and divergent positions on trade and development."

With respect to the WTO's dispute settlement mechanism, "we emphasise the importance of filling all current and future vacancies on the Appellate Body without delay."

"We underline the necessity for Members to contribute to keeping the WTO effective, relevant and responsive to all Members' needs, and we commit to continue working with all Members to improve the WTO," said the joint statement.

According to trade officials, South Africa, on behalf of the African Group, said work is proceeding unevenly. There is some way to go before we can say that we are restarting our work on the Doha issues.

There is a strong sense of frustration among the members of the African Group at the lack of progress on issues of importance to the African members of the group.

It said that ministerial conference mandates and ministerial declarations should continue to guide the negotiating process.

It said that there is traction on the issue of fisheries subsidies more than on other issues, but no one should think that coming to agreement here will be easy. There needs to be a balanced outcome and S&DT.

On agriculture, the African Group stressed the importance of obtaining outcomes on trade-distorting domestic support, cotton, public stockholding for food security purposes, and Special Safeguard Mechanism (SSM).

It said that S&DT is integral to an outcome, and that the issues of importance to LDCs and net food-importing developing countries must be taken into account. These countries should be exempt from any future commitments, it said.

The African Group continued to advocate the G90 proposals. It rejected the notion of differentiation on S&DT.

Development for the African Group means industrial policy which is being developed and put in place across Africa.

On behalf of itself, South Africa said, with respect to the joint statements/initiatives coming from Buenos Aires, that they are not part of the multilateral process. It is not clear where they will end up.

South Africa would like to know more about the role of the Secretariat in working in these groups, and it would welcome a focused discussion on the extent of the Secretariat's support in these discussions.

The US said that it has heard from others the importance of US leadership. It is committed to engaging with other WTO members to make the WTO better and more effective. It agrees that the WTO is currently in a pretty critical state, as does the USTR. There are some things with the WTO that need to be reformed.

It said that the discussion over development is disturbing. The US does not take issue with the importance of development in the WTO but it thinks that it does not advance development to have most of the membership saying that they will not abide by WTO rules.

It maintained that there are some clumsy structures that have been set up not least the self-designating system whereby developing countries can brand themselves as such.

The US said it sees very little likelihood of any multilateral outcome if the issue of the development status is not addressed.

On dispute settlement, the US said that the system has become too litigious. The US claimed that there is a tendency for people to use the judiciary as a means of trying to write new rules, and that the Appellate Body has been reshaping
the system without member consent.

Leadership and complacency do not always mix well. The US is not content to be complacent about this institution and there is a willingness to be disruptive when necessary.

The US said that it is engaging on the Committee on Trade Facilitation, engaging with proposals in agriculture, engaging with respect to notification requirements, and engaging in the e-commerce discussion.

The Central African Republic, on behalf of the LDCs, said that the work programme on fisheries subsidies is detailed and offers prospects for success.

It would like to see a ban on subsidies that go to illegal fishing and strict disciplines on subsidies for overfishing.

It said that the LDCs should be exempt from any commitments. On agriculture, it would like to see trade-distorting domestic support tackled, an agreement o n a permanent solution for public stockholding, and the need for a SSM.

On S&DT, the membership should take up the G90 proposals, it said. The membership should also implement the Hong Kong, Bali and Nairobi ministerial declarations on the issues of duty-free quota-free market access for LDC products, rules of origin and the services waiver.

Malawi, on behalf of the African, Caribbean and Pacific (ACP) countries, said that it is crucially important to reform the trading system so as to make sure that development is central to what the organisation is all about.

It would like to see cotton and trade-distorting domestic support taken up as a priority in agriculture. It also stressed the importance of S&DT.

Indonesia, on behalf of the G33, stressed on outcomes on public stockholding, and the SSM which is both volume and price-based.

On behalf of itself, Indonesia said that it would like to see the Bali and Nairobi ministerial declarations adhered to.

China said that since the last TNC meeting (this March), there has been goo d news and bad news. The good news is the growth of trade last year and the projected growth this year and next.

It said China will continue to play the role of bedrock in terms of trade and investment. It said that it is ready to do more to contribute to world trade and the global economy, but unilateral and protectionist measures by one major member is putting unprecedented stress on the multilateral trading system.

On development, China said a key point to understand is the capacity divide between developed and developing countries. There is a huge capacity gap. The rules on S&DT are not perks but are written in black and white in the WTO rule-book.

It is a fundamental right to all developing countries and it is not a quest ion of developing countries having to prove themselves over and over again on a case-by-case basis.

Benin, for the Cotton-4 countries, supported the African Group, the G33, the ACP and LDC statements.

The European Union expressed grave concerns about the recent actions of a W TO member. It said that measures taken to safeguard individual industries under the auspices of national security requirements constitute a grave threat to the WTO and the multilateral trading system.

It said WTO agreements provide ample space to protect industries within the rules. It is also concerned about the crisis in the dispute settlement system which is now being undercut by the blockage at the Appellate Body.

It is ready to have a discussion on the issues that are of concern but it needs to know first what the issues are.

Honduras, on behalf of the informal group of developing countries except Israel, reiterated the importance of keeping markets open. Trade is an important route to growth and industrial development and welfare.

It said that every effort must be taken to ensure that measures outside of WTO rules are not implemented.

According to trade officials, India expressed support for the G33 statement and the joint statement made by Switzerland. It gave an account of the mini-ministerial meeting in New Delhi held on 19-20 March.

It said that the core issues in agriculture are to address the most distort ive of domestic support subsidies, the aggregate measurement of support.

The negotiations to tackle this must begin soon. It is a non-starter to say that developing countries should sharply lower their subsidies.

It said that public stockholding is of great importance. The Bali and Nairobi ministerial declarations and the November 14 General Council decision should provide the basis for work.

It is very unlikely that there will be any progress in agricultural market access without making headway first on domestic support.

India supported the 1998 e-commerce work programme. It said e-commerce does impose challenges. Should it be classified as trade in goods or services? To what extent do WTO rules currently apply? What is the financial impact?

They need to understand the extent and nature of digital trade better before endeavouring to try and negotiate legally binding disciplines.

On domestic regulation in services, it favours work in the Working Party on Domestic Regulation. It does not support discussions elsewhere.

On trade facilitation in services, it said there should be emphasis on mode 4.

It said that the trend towards joint initiatives, the plurilateral approach, is something that is contrary to the multilateral system.

It does not see the need for plurilateral negotiations on e-commerce and do mestic regulation when multilateral mechanisms already exist. It does not believe that the WTO is the place for discussion on investment facilitation and MSMEs.

With respect to the Secretariat, India said that it is important to understand the role of the Secretariat in these joint initiatives. It would like the Secretariat to update a paper on mode 4 for the Council for Trade in Services.

India said that it is imperative that the vacancies in the Appellate Body be filled. It said that sanctions on aluminium and steel by one member have raised systemic concerns.

They are an open and blatant abuse of WTO rules. National security should not be used in cases like this.

India also said that S&DT for all developing countries and LDCs is an integral part of WTO agreements. A case-by-case assessment is not acceptable.

Cuba said that there should be no case-by-case analysis of S&DT. The plurilateral initiatives are not part of the multilateral mandate. The Doha mandate should still be the negotiating path, it said.