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TWN
Info Service on WTO and Trade Issues (Apr20/20) Geneva, 23 Apr (D. Ravi Kanth) – Saudi Arabia has attempted, through its Riyadh Initiative for the consideration of the year-end G20 summit meeting, to bring about a “one-size-fits-all approach” for the “WTO system,” in order to “reflect a shared concept of all members, including by members of all levels of economic development.” In a “confidential” draft report circulated to the G20, Saudi Arabia, currently holding the presidency of the 19-member group, has also mooted several other proposals that aim to put forward trade liberalization and non-agreed WTO reform proposals – burdensome transparency requirements and investment facilitation among others. These are mooted as “Covid-19 related-actions” even as the COVID-19 pandemic is piling up hundreds of thousands of body bags each day, said a trade envoy, who asked not to be identified. In the “confidential” draft report on the Riyadh Initiative for the future of the WTO, seen by the SUNS, Saudi Arabia seems to have signalled an end to the special and differential treatment (S&DT) for developing countries on a self-designated framework, treating all WTO members on an equal footing regardless of their levels of economic development and disparities on various counts. The S&DT for developing countries is a crucial part of the WTO’s contractually agreed architecture. However, ever since the Donald Trump administration over the last two years inveighed against S&DT and has attempted forced differentiation/graduation for availing S&DT among developing countries, Saudi Arabia seems ready to say goodbye to S&DT, said a person, who asked not to be identified. More disturbingly, the Riyadh initiative is silent on how to resurrect the two-stage dispute settlement system, which remains broken because of the US actions to spike the Appellate Body in December last year. [The Saudi Initiative has surfaced soon after the Kingdom had started an oil price-war by pumping and putting more oil supplies on the market, hitting the revenues of the Kingdom badly. As a result, the Saudis reached an accord among major producers to cut back production, but had to seek US help for a compromise of sorts with Mexico. Over the last few days, despite this, the oil market has collapsed, with Brent Crude futures, the benchmark for oil pricing, in negative territory — meaning producers are willing to pay a premium of about $40 to consumers for lifting supplies and storing it! SUNS] In an unrelated development on 22 April, the US made it known to the WTO that Washington will not comply with an Appellate Body (AB) report adopted by the WTO Dispute Settlement Body, claiming the AB report and its adoption by negative consensus is invalid. The US also rejected Canada’s request for authorization to retaliate against US countervailing duties on supercalendered paper based on an AB report. It claimed that none of the three AB members who sat on the AB panel were qualified to make a ruling. “Therefore, as the United States made clear at the March 5 DSB meeting, because there was no valid Appellate Body report in this dispute, the appellate and panel reports could only be adopted by positive consensus,” the US said. According to the US, “as there was no consensus on adoption, the DSB did not adopt any reports in this dispute. Accordingly, there is no recommendation for the United States to bring a measure in covered agreement,” (into compliance). The report signed by the AB members – Ujal Singh Bhatia and Thomas Graham – was invalid because their terms had expired, the US argued. The US said the remaining member – Hong Zhao of China – should not be sitting on the panel because she is affiliated with the Chinese government, the US argued. [Trade law experts, writing at the IELP blog, have questioned the US stand on the Chinese member. The member, they note, is not connected with a Chinese state body, but as one receiving aid as US universities do. Moreover, they note, the US knew about the affiliations of the Chinese member three years ago when she was selected, but it had not objected. SUNS] “The United States does not consider it appropriate to proceed with adoption of the appellate report in light of this extraordinary and unprecedented situation,” the US said. Against this backdrop, the Riyadh initiative seems to reflect the views of the United States and other developed countries that commitments should be harmonized for all members – regardless of varying levels of development and the asymmetries in the global trading system, the person said. Saudi Arabia sought responses to the specific questions posed in the confidential draft from G20 members. Under the sub-heading “Re-confirming the basic objectives and principles underlying the multilateral, rules- based trading system,” Saudi Arabia asked two questions: 1. What are the objectives that the WTO should pursue? 2. What are the foundational principles that should underlie the WTO? Given the US determination to bring about differentiation/graduation for availing special and differential treatment for developing countries, responses to the above two questions would indicate whether other G20 members will approve the Riyadh Initiative to transform the WTO using the Covid-19 pandemic as an opportunity to foist drastic changes, said a trade envoy who asked not to be quoted. As part of “re-confirming the core functions of the WTO,” Saudi Arabia sought to know how members “should share a vision of how the WTO should function to fulfil its purpose of helping to achieve our shared objectives.” It asked: “what is the policy vision for how agreed functions of the WTO should be fulfilled to meet our objectives?” For “elaborating G20 leaders’ vision on the role of the multilateral trading system in promoting economic growth and development,” the Riyadh Initiative argued that “the G20 leaders have repeatedly stated that “International trade and investment are important engines for growth, productivity, innovation, job creation and development”.” It suggested that “in Buenos Aires (G20 leaders’ meeting held in 2018), they recognized the contribution that the multilateral trading system has made to that end.” The Riyadh Initiative sought to know how “the multilateral trading system [can] be used to advance our shared goal of promoting growth, productivity, innovation, job creation and development.” In a related development, G20 officials on 22 April discussed the Saudi chair’s “synthesis of members’ recommendations in response to Covid-19.” The Saudi chair’s synthesis of actions appears to be drafted by the WTO Secretariat and the OECD, and UNCTAD, using Covid-19 as a grand opportunity to push commitments that lacked consensus among WTO members until now. The Saudi chair’s synthesis, which was issued in his own responsibility, reinforces business-as-usual approach without acknowledging the problems faced by hundreds of millions of people in developing countries. According to the Saudi Chair, the following items need to be agreed by G20 officials. The list of actions include: 1. Short-term collective actions 1.1. Trade regulation 1.1.1. Ensure that any emergency trade measures designed to tackle COVID-19 are targeted, proportionate, transparent, and temporary; do not create unnecessary barriers to trade or disruption to global supply chains; and are consistent with WTO rules. 1.2. Trade facilitation 1.2.1. Accelerate the implementation of the WTO Trade Facilitation Agreement, to the extent possible, particularly Article 7.1 (Pre-arrival processing), Article 7.3 (Separation of release from final determination of customs duties, taxes, and fees), and Article 7.8 (Expedited shipment), implementation of which is especially critical during the pandemic. 1.2.2. Speed up and streamline customs procedures, in line with the WTO Trade Facilitation Agreement and encourage the use of electronic documentation and processes, where possible and practical, including use of smart applications. 1.2.3. Reduce technical barriers by encouraging greater use of international standards and ensuring technical standards for medical supplies and equipment, PPEs, and other essential products are freely available. 1.2.4. Encourage expanded production capacity for medical devices and personal protective equipment, including by ensuring that facilities can operate to the fullest capacity possible, consistent with public health guidance. 1.2.5. Provide necessary information regarding medical suppliers, so as to facilitate trade deals. 1.2.6. Promote wide application of online services and e-commerce, to ensure the flow of essential goods and services during the pandemic. 1.2.7. Encourage our Governments to identify actions that could facilitate the movement of health and business personnel across borders. 1.2.8. Support the efforts of international organizations (WTO, OECD, FAO etc.) to address the impacts of COVID-19 on global agricultural supplies and agri-food production and trade. 1.3. Transparency 1.3.1. Share experiences and best practices on measures that countries have put in place at their borders at this time. 1.3.2. Notify trade-related measures, including customs and other border operations, introduced in response to COVID-19, to the WTO. 1.4. Operation of logistics networks 1.4.1. Cooperate to expedite necessary approvals for mobilizing additional cargo aircraft, including by encouraging the increase of air cargo capacity through temporarily converting passenger aircraft into freighters to carry goods. 1.4.2. Ensure global flight connectivity and work with the private sector to prioritize movement of essential goods in having access to airfreight, in order to achieve a critical mass to maintain connectivity and safeguard jobs. 1.4.3. Commit to abide by international practices and guidelines to ensure the movement of goods through maritime channels. 1.4.4. Make publicly accessible enforcement procedures for vehicles, drivers, and cargo or passengers and travelers, especially for quarantine areas. 1.5. Support for MSMEs (micro, small, and medium enterprises) 1.5.1. Call for IOs to prepare in-depth reports, within their mandates, on the disruption of global value chains caused by the pandemic on MSMEs. 1.5.2. Enhance communication channels and networks for MSMEs, including through deepened collaboration with the private sector. 2. Longer-term collective actions 2.1. Supporting the multilateral trading system 2.1.1. Reaffirm the crucial role of the rules-based MTS, with the WTO at its center, to ensure the stability and predictability of international trade flows. 2.1.2. Support the continuation of the discussion on how the G20 can support the work at the WTO under the Riyadh Initiative on the Future of the WTO. 2.1.3. Strengthen transparency and notify the WTO of any trade-related measures taken. 2.2. Building resilience in global supply chains 2.2.1. Support initiatives toward the development of best practices, specifically in terms of measures that could be taken during a global crisis to support trade in essential goods and services. 2.2.2. Task IOs to consider how to build economic resilience against future possible pandemics. 2.2.3. Establish long-term risk assessment and response protocols as an integral part of business-as-usual in industries to build resilient global supply chains. 2.2.4. Strengthen cooperation between authorities responsible for the regulation of trade, including customs authorities, with regard to the issues relating to electronic document management. 2.2.5. Enhance MSMEs’ access to global market information and ensure the transparency of trading information and its availability to MSMEs. 2.2.6. Act proactively to build up connection and establish policies to strengthen the connection and cooperation between MNCs and MSMEs. 2.3. Strengthening international investment 2.3.1. Share information on actions taken to strengthen international investment, as referenced in the G20 Guiding Principles for Global Investment Policymaking. 2.3.2. Share good practices on promoting investments in sectors related to or impacted by the COVID-19 pandemic. 2.3.3. Work together to identify key areas, like critical medical supplies and equipment and climate-smart agriculture, where investment is needed. 2.3.4. Encourage government agencies to work with companies and investors in identifying investment opportunities and activities. 2.3.5. Encourage participation of the private sector in policy making on foreign direct investment and engage companies in a continuous dialogue on their needs. 2.3.6. Increase cooperation on technical assistance and capacity building provided to developing and least developed countries on investment promotion. Individual country actions 3. Short-term individual country actions 3.1. Trade regulation 3.1.1. Refrain from introducing export restrictions on medical supplies related to COVID-19. 3.1.2. Refrain from introducing export restrictions on agri-food products and avoid excess food-stockpiling, while addressing the issue of domestic food security. 3.1.3. Exempt humanitarian aid for vulnerable DCs and LDCs from any export restrictions on exports of medical supplies, equipment and PPE. 3.1.4. Temporarily reduce or eliminate tariffs on COVID-19 related products including vital medical supplies and equipment (as identified by the WCO). 3.1.5. Extend timeframes for payments such as duties, taxes or fees on essential goods and services. 3.2. Trade facilitation 3.2.1. Agree on a common framework between countries to ensure the facilitation of cross-border trade in safe pharmaceuticals and medical supplies. 3.2.2. Adopt immediate measures to accelerate regulatory approval procedures for essential products, while preserving the right to regulate and ensuring that the products are fit for purpose. 3.2.2.1. Make available short-term temporary regulatory flexibilities on certain essential products such as hand sanitizer, PPE, medical devices and 3D printed products, to be applied if necessary, to ensure supply. 3.2.2.2. Relax marking and labelling requirement, and fast-track approvals. 3.2.3. Expedite customs procedures 3.2.3.1. Establish green lanes for essential goods. 3.2.3.2. Implement “contact-free” foreign trade methods through forming buffer zones, utilizing unmanned technology, etc. 3.2.3.3. Introduce accelerated customs procedures for selected traders and economic operators, including MSMEs. 3.2.4. Consider publishing and sharing equivalence assessments of technical regulations to support the entry of goods onto the market. 3.2.5. Encourage enterprises in the medical equipment industry to carry out practical international cooperation, and jointly improve their ability in R&D and production of high-end medical equipment. 3.2.6. Enhance public-private cooperation to help drive rapid and innovative responses to support the swift flow of essential goods, including by leveraging digital technologies. 3.2.7. Request support from IOs for conducting a horizontal scanning: share with IOs relevant data to identify potential bottlenecks and supply shortfalls, and to come up with strategic responses. 3.3. Transparency 3.3.1. Support access to research, including information related to clinical trial data, about COVID-19. 3.4. Operation of logistics networks 3.4.1. Enhance transparency of regulations on cargo and air shipments to facilitate continued movement of goods. 3.4.2. Encourage keeping critical infrastructure such as airports, land ports and sea ports open for freight. 3.4.3. Enhance public-private cooperation to help drive rapid and innovative responses to ensure smooth and continued operation of logistics networks. 4. Longer-term individual country actions 4.1. Building resilience in global supply chains 4.1.1. Prioritize full implementation of the Trade Facilitation Agreement, to include implementation of all voluntary commitments. 4.1.2. Support the internet of things (IoT) related solutions for logistics (e.g. supply chain monitoring, vehicle tracking, inventory management, etc.). 4.1.3. Develop multilateral action for capacity building; enabling MSMEs to conduct business and reach consumer online more efficiently.
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