TWN Info Service on WTO and Trade Issues (Apr19/06)
9 April 2019
Third World Network

EU and allies push back against India’s move to strengthen MTS

Published in SUNS #8883 dated 8 April 2019

Geneva, 5 Apr (D. Ravi Kanth) – The European Union and other major developed countries have expressed sharp concern over India’s attempts to build a strong coalition of developing countries for safeguarding the developmental concerns and strengthening the multilateral trading system (MTS).

In the face of the worst assault yet on the World Trade Organization (WTO) by the trans-Atlantic powers, India is convening on 13 May an informal meeting of trade ministers, restricted to developing countries, with the objective of building a strong coalition against this assault, trade envoys told the SUNS.

The EU and other major developed countries seem determined to decouple the impasse at the WTO’s Appellate Body (AB) from other issues such as an outcome in the negotiations on fisheries subsidies and transparency and notification provisions.

The US, according to several trade envoys, is in no mood to resolve the AB impasse that it has created. If the vacancies are not filled in time, the AB will cease to function after 11 December 2019, when it will no longer have the minimum number of members for a division bench to hear and decide appeals.

The EU and its allies, while expressing concern at the DSB, want to turn a blind eye to the US stance and proceed with other issues such as fisheries subsidies and “WTO reforms.”

India, which is convening an informal ministerial meeting of developing countries, has said repeatedly that the resolution of the AB impasse must take precedence over other WTO reforms.

Without a common understanding on the way forward on the AB impasse, India warned, the multilateral trading system could become more asymmetric.

While WTO reforms are important, developing countries cannot be expected to take the same obligations as the developed countries, India has insisted.

The reform process, according to India, must ensure that development remains at “its core and must preserve the fundamental rules of the WTO, namely, non-discrimination, decision-making by consensus, and special and differential treatment for developing countries and LDCs.”

The proposed two-day New Delhi meeting is likely to be attended by trade ministers from around 20 developing countries, and will focus on issues concerning the dispute settlement system, strengthening the multilateral tr ading system, safeguarding the developmental concerns, transparency and notifications, and addressing the asymmetries in the WTO agreements.

On safeguarding the developmental concerns, India wants the invited trade ministers to discuss the need for strengthening the contractual provisions for special and differential treatment in the current and future trade agreements.

New Delhi wants the implementation problems faced by the developing countries, raised even at Marrakesh in 1994, and reiterated and mandated in 2001, to be addressed as part of the WTO reforms.

As part of transparency and notification requirements, India wants timely notifications such as on Maximum Residue Limits on Goods and visa-related requirements corresponding to the categories of natural persons committed under the GATS (General Agreement on Trade in Services) for effective mode 4 market access in services sectors.

India also wants timely disclosure of traditional knowledge and genetic resources in annual notifications of members, but without any punitive action. New Delhi has highlighted various asymmetries in the WTO agreements which need to be addressed.

During a closed-door outreach meeting with trade envoys from several countries on 2 April, the EU said India’s proposal on fisheries subsidies as well as its attempts to convene a ministerial meeting of select developing countries in New Delhi next month pose a threat to outcomes in the fisheries subsidies negotiations and the reforms of the WTO, said sources familiar with the development.

At the meeting with the so-called Middle Group countries from Asia, the EU sought to discuss a common approach on the WTO reforms regardless of the impasse at the Appellate Body.

The EU specifically sought the advice of the invited trade envoys on fisheries subsidies and transparency and notification requirements.

The EU also asked the participants about the Indian meeting on May 13-14 that seeks to build a coalition of developing countries to address multiple challenges, including issues such as the crisis at the dispute settlement system and the grave threat to the development dimension of the WTO.

The EU said India’s proposal to modify the language in the draft fisheries negotiating text by including that “fuel subsidies, even if non-specific, when granted for [wild] marine capture fishing at sea, will be subject to disciplines” is unacceptable, according to these sources.

During the Doha rules negotiating body meeting on 27 March, India said that both specific subsidies as well as non-specific subsidies, including the fuel subsidies provided by the developed countries, pose a threat to conserve and sustainably use marine resources for sustainable development.

The United Nations Sustainable Development Goal target 14.6 is cited as the overarching goal of WTO members to frame disciplines for curbing certain forms of subsidies which contribute to overcapacity and overfishing and IUU (illegal, unreported, and unregulated) fishing, India pointed out at the meeting, according to negotiators familiar with the proceedings.

After the launch of the Doha Development Agenda trade negotiations in 2001, major developed countries – the United States, the European Union, and Norway among others – shifted their subsidies from harmful categories to non-harmful categories as per the WTO provisions.

For example, leading developed countries shifted tens of billions of dollars of harmful subsidies in agriculture to the green box to avoid reduction commitments.

In a similar vein, the US, the EU, and other developed countries, which were largely responsible for overfishing, had shifted their specific subsidies into the non-specific category so that they could successfully avoid any commitments in the fisheries subsidies disciplines, shifting the entire burden of reduction commitments in the Doha fisheries subsidies negotiations onto the developin g countries.

Against this backdrop, India insisted that “the fisheries subsidies negotiations are not permitted to regulate trade, but instead to address the issue of sustainability of marine resources.”

The share of fuel subsidies which are treated as non-specific subsidies by the developed countries are about 22%, according to the data compiled by the WTO, while some other agencies have maintained that the fuel subsidies would amount to 60% of the total costs of fishing, India said at the meeting.

“Since our proposal is on “scope” part of the disciplines, it will apply to the proposed disciplines horizontally – while doing so, we also reserve our rights to have appropriate and effective S&DT [special and differential treatment] in the final outcome of these negotiations,” India maintained.

A large majority of developing and least-developed countries, including the ACP (Africa, Caribbean, and Pacific) group of countries, welcomed India’s proposal, saying it simplifies the proposed disciplines on fisheries subsidies.

Negotiators from South Africa, Argentina, Peru, Senegal, Brazil, Vietnam, and China among others said that by “bringing non-specific fuel subsidies within the scope”, a major asymmetry in the proposed fisheries subsidies disciplines can be eliminated.

Several developed countries such as the European Union, the US, and Australia among others expressed serious reservations on India’s proposal to include non-specific subsidies in the overall category of harmful subsidies.

The US, for example, said the issue of non-specific subsidies remains an “unresolved issue when the fisheries subsidies negotiations had led to a stalemate”.

Clearly, India’s objections have rattled the developed countries, said a trade envoy, who asked not to be quoted.

With the traditional champions of the developing country alliances like Brazil having switched sides, India needs to build a new alliance of like-minded group of countries that can offer a developmental narrative to address the challenges facing the multilateral trading system, the envoy said.