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Info Service on WTO and Trade Issues (Dec20/22) Geneva, 18 Dec (D. Ravi Kanth) – The United States, Japan, and Brazil failed to secure support from many developing countries on advancing market-oriented conditions in the global trading system, which has already been rejected in the previous WTO General Council meeting in October, participants said. At the General Council (GC) meeting on 17 December, the outgoing US trade envoy, Ambassador Dennis Shea, introduced the proposal on the importance of the market-oriented conditions to the global trading system, saying that “market-oriented conditions are essential to solving the problems we face.” Washington, he said, sees that “the WTO is an appropriate place for Members to work to address these problems of non-market conditions that undermine fair trade.” “To say that the WTO is not the place to discuss these concerns is really to assert that the WTO is and should be irrelevant,” is disagreeable, Ambassador Shea said. He said that “the elements and criteria identified in our joint statement with Brazil and Japan are essential to ensuring that market-oriented conditions exist across sectors – not just in steel – so that all market participants compete on a level playing field.” Ambassador Shea said that “the continued relevance of the WTO will depend on whether it can deliver on the promises of a world trading system based on open, market-oriented policies.” Further, “the success of our reform efforts will depend on our ability to ensure the fundamental premise of free, fair, and mutually advantageous trade remains intact,” Ambassador Shea argued. He said that the US would submit their joint proposal “for consideration during the upcoming Structured Discussions on Trade and Sustainability.” Moreover, “the draft Ministerial Conference Decision aims to reinforce our view that failure to adopt, maintain, implement and effectively enforce laws and regulations that ensure environmental protections at or above a threshold of fundamental standards constitutes an actionable subsidy under the Agreement on Subsidies and Countervailing Measures,” he stressed. While several developed countries such as the European Union, Canada, Australia, and other members of the Ottawa Group lent support to the US proposal, there was a strong push-back against the proposal by several developing countries, including China, India, and South Africa, said participants, who asked not to be quoted. In a sharp response, China’s trade envoy Ambassador Zhang Xiangchen criticized the joint proposal by the US, Japan, and Brazil by insisting that what needs to be discussed in today’s world are “(1) who is actually going against this common sense?; (2) who is undermining the common rules of the international market, such as the “Most-Favoured-Nation” principle?; (3) who is artificially altering and impeding the international flow of production factors?; and (4) who is bringing WTO back to the ages of “might is right?”.” Commenting on the US trade envoy’s earlier mention of the recommendations contained in the Report of the Global Forum on Steel Excess Capacity, the Chinese envoy said “the question [that] immediately comes to my mind is who is taking measures in the name of national security to distort normal trade in steel sector?” Ambassador Xiangchen said “if we cannot have a clear answer to these questions, and if we, as WTO members, cannot take effective measures to undo the damages and prevent future disruptions to the system, empty talk about market orientation is nothing but a quixotic quest that leads us to nowhere.” Casting doubts on Ambassador Shea’s remarks that the US wants to ensure “fair competition and a level playing field; and not interfering with the ability to govern”, the Chinese envoy said the “market-oriented conditions” in the US proposal is nothing new. Ambassador Xiangchen said that the US proposal is “an extension of the “non-market economy” standard in countervailing investigations under the US domestic law.” “These unilateral actions have made a lot of companies both from China and other developing members suffer from unjust duties, affecting millions of jobs,” the Chinese envoy argued. South Africa’s trade envoy Ambassador Xolelwa Mlumbi-Peter said, “While as a principle, we agree with the importance of promoting market-oriented policies, we reiterate that most if not all WTO Members have mixed economies and intervene in the economy to achieve a developmental mandate.” She cited the regulatory failures that occurred in the 2008 financial crisis, arguing that “whilst the role of the market is important, government policies are required not only to address market failures but to also achieve development objectives.” The South African trade envoy pointed out that “in the context of COVID-19, many governments have stepped in to support businesses as well as give direction, incentives, and subsidies regarding production decisions.” Ambassador Xolelwa said that “in some cases governments had to step in and direct companies to produce much needed equipment such as ventilators,” and “some governments also have laws that give them authority to control the allocation of supplies, as well as order manufacturers to boost production.” The South African trade envoy said the WTO consists of diverse countries with different levels of development, national challenges and development priorities, suggesting “the WTO was never conceptualized as a forum that will define nor change economic models of Members.” Lastly, “in view of the peculiar challenges facing each country, the WTO should not attempt to define the economic model that countries should follow,” and “this is not its role nor an area it should venture into,” Ambassador Xolelwa argued.
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