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Info Service on WTO and Trade Issues (Mar21/01) Geneva, 26 Feb (D. Ravi Kanth) – Members of the World Trade Organization remain sharply polarized in their respective narratives on the structure, scope, and objectives of the proposed WTO reforms, disciplines for curbing fisheries subsidies, and the legal status of the informal Joint Statement Initiatives (JSIs), trade envoys told the SUNS. At an informal Doha Trade Negotiations Committee (TNC) meeting on 25 February, the developed countries led by the European Union largely aligned their statements with the priorities set out for the WTO’s 12th ministerial conference (MC12) by the new director-general Ms Ngozi Okonjo-Iweala, said trade envoys present at the meeting. Ms Ngozi, in her acceptance speech at a special General Council meeting on 15 February, emphasized: (1) the need to accelerate work on JSIs for reaching probable outcomes at MC12 on electronic commerce, investment facilitation, disciplines for micro, small, and medium enterprises (MSMEs), and domestic regulation in trade in services; (2) voluntary withdrawal from availing of special and differential treatment by major developing countries, in strengthening the WTO’s negotiating function; (3) enhanced transparency and notification requirements among others; and (4) starting negotiations on trade and environment. In sharp contrast, a large majority of developing countries spelled out “development and inclusive” reforms that include: (1) strengthening the special and differential treatment, which is a treaty obligation; (2) an urgent decision on the proposed TRIPS waiver in combating the COVID-19 pandemic; (3) common but differentiated responsibilities in the disciplines on prohibiting harmful fisheries subsidies; (4) restoring the Appellate Body to ensure that the two-stage dispute settlement system remains functional; and (5) the need to review and re-assess the moratorium on customs duties on electronic transmissions, because of their negative impact on revenues and digital development in developing countries, as per the 1998 e-commerce work program, among others. In effect, the “development and inclusive” reforms proposed by the developing countries seemed diametrically opposed to Ms Ngozi’s priorities that are apparently tilted in favour of the Northern trade agenda, said several participants after the informal TNC meeting. Even on the most burning issue of the day, i.e., the COVID-19 pandemic and what the WTO can do to address the worsening crisis, Ms Ngozi and the industrialized countries stood on one side by propagating the ACT-Accelerator (Access to Covid-19 Tools Accelerator) and COVAX facility, including trade liberalization measures to combat the pandemic, said participants, who asked not to be quoted. However, more than two-thirds of the developing countries demanded an urgent decision to temporarily suspend several provisions of the WTO’s TRIPS Agreement relating to copyrights, industrial designs, patents, and protection of undisclosed information to ramp up production of diagnostic equipment, therapeutics, and vaccines among others to combat the COVID-19 pandemic, the participants said. Significantly, the US did not make any statement at the informal Doha TNC meeting held virtually on 25 February. Kazakhstan, which was scheduled to host MC12 in Nur Sultan in June, has now informed members that it will be difficult to convene the meeting as scheduled due to the COVID-19 pandemic, said participants after the meeting. PROCEEDINGS AT THE INFORMAL TNC MEETING The new director-general Ms Ngozi Okonjo-Iweala apparently watched the proceedings from Washington DC. She did not make any statement at the meeting. The outgoing deputy director-general Mr Alan Wolff made a detailed statement on the priorities listed out by Ms Ngozi in her acceptance speech, said a participant, who asked not to be quoted. “Dr Ngozi’s remarks at the Special General Council meeting last Monday, subsequently circulated to delegations in document JOB/GC/250, presented a worthy and ambitious agenda for the members of this organization,” said Mr Wolff. Mr Wolff, whose tenure will be decided by the new director-general as he was appointed by the previous Trump administration, overly praised Ms Ngozi’s priorities and explained why they are so important at this juncture. He asked “what did she say,” and then, went on to list them such as “to act with a sense of urgency to assist in controlling the COVID-19 pandemic through the nexus of trade and public health,” and “by broadening access to new vaccines, therapeutics, and diagnostics by facilitating technology transfer within the framework of multilateral rules.” Other major important challenges announced by the new DG, according to Mr Wolff, include: * To swiftly conclude the fisheries subsidies negotiations, and thus pass a key test of the WTO’s multilateral credibility while contributing to the sustainability of the world’s oceans. * To build on the new energy in the multilateral trading system from the joint statement initiatives attracting greater support and interest, including from developing countries. * To address more broadly the nexus between trade and climate change, using trade to create a green and circular economy, to reactivate and broaden negotiations on environmental goods and services, to take the initiative to address the issue of carbon border adjustments as they may affect trade. * To level the playing field in agricultural trade through improving market access and dealing with trade-distorting domestic support, exempting from export restrictions the World Food Programme (WFP)’s humanitarian purchases. * To strengthen disciplines on industrial subsidies, including support for state-owned enterprises. * To defuse the divisions over Special and Differential Treatment (S&DT). * And to develop a work programme for restoring two-tier dispute resolution, to be agreed no later than MC12. CHAIRS’ REPORTS At the meeting, the chairs of the different Doha negotiating bodies provided an account of the work being conducted in their respective bodies. Apparently, the new DG held a virtual meeting with all the chairs on 23 February. The chair of the Doha Rules negotiating body, Ambassador Santiago Wills from Colombia, made a long statement about the current impasse on several issues in the ongoing fisheries subsidies negotiations, especially the textual proposals on the disciplines for prohibiting subsidies for overcapacity and overfishing. The chair alluded to a “tug of war” between countries seeking prohibition of harmful subsidies that have led to overcapacity and overfishing and the depletion of global fisheries stocks, on the one side, and the major subsidizers, who want to retain the subsidies with appropriate marine conservation measures, on the other, said a participant, who asked not to be quoted. Ambassador Wills posed several questions to members, urging them to state their positions unambiguously whether they accept the proposed textual language, and if not, to indicate the reasons for their opposition. The chair of the Doha trade and development negotiations, Ambassador Kadra Ahmed Hassan from Djibouti, explained about the focused negotiations that were launched on 8 February on the 10 special and differential treatment proposals submitted by the G90 group of developing and least-developed countries. The ten proposals submitted by the G90 relate to: (1) Agreement on Trade-related Investment Measures; (2) Article XVIII of GATT 1994 dealing with safeguard issues, particularly section A and C; (3) GATT Article XVIII, section B, dealing with balance of payments; (4) Agreement on the Application of Sanitary and Phytosanitary Measures; (5) Agreement on Technical Barriers to Trade; (6) Agreement on Subsidies and Countervailing Measures; (7) Agreement on Customs Valuation and decision on minimum values; (8) the 1979 decision on differential and more favorable treatment, reciprocity and fuller participation of developing countries or what is referred to as the Enabling Clause; (9) Article 66.2 of the TRIPS Agreement dealing with transfer of technology; and (10) accession. Ambassador Hassan has already taken up two issues such as the Enabling Clause and accession. While developing countries encouraged the chair to press ahead with the dedicated sessions on the remaining eight issues, the industrialized countries remained indifferent to engaging on the ten proposals, said a participant, who asked not to be quoted. The chair of the Doha agriculture negotiations, Ambassador Gloria Abraham Peralta from Costa Rica, presented a mixed report of the work being conducted on different issues in the Doha agriculture agenda. THE DEVELOPED COUNTRIES The new DG’s agenda for MC12, according to the statements made by the EU, Switzerland, and several other industrialized countries, has inspired members as it sets the ground for accomplishing positive outcomes, said a participant, who asked not to be quoted. The European Union, which recently unveiled an expansive and ambitious agenda, spoke about building on global rules, including WTO reforms. The EU said its ambition for MC12 includes an outcome on fisheries subsidies, the trade and health initiative which was launched by Brussels along with other members of the Ottawa Group, trade and environment, restoration of the two-stage dispute settlement system, and JSIs among others, according to participants, who asked not to be quoted. Without naming India and South Africa, which have challenged the legal status of the JSIs and the overall status of plurilateral negotiations, the EU said it wants to address the negotiating function for incorporating the plurilaterals at MC12, said a person, who asked not to be quoted. Switzerland, the host country which is expected to convene the MC12, spoke about the recent informal trade ministerial meeting chaired by its President Guy Parmelin. Switzerland said its priorities for MC12 include a significant agreement on fisheries subsidies, full restoration of the two-stage dispute settlement system, and a JSI outcome on domestic regulation for trade in services. Australia presented a report on the JSI work on electronic commerce, suggesting that there has been an agreement on spam, and that by the summer there will be clear progress on 10 potential agreements, including on source code and artificial intelligence. However, the JSI negotiators have not been able to address the crucial issue of scope and definition of what would constitute electronic transmissions, said a participant, who asked not to be quoted. Uruguay presented a report on the JSI’s work on MSMEs, and the coordinator on investment facilitation also presented a report. THE DEVELOPING COUNTRIES While the developing countries welcomed the appointment of the first woman and first African DG of the WTO, they spoke about their respective priorities on “development and inclusive” reforms. On behalf of the largest group of developing and least-developed countries at the WTO, namely the ACP (Africa, Caribbean and Pacific) Group, Jamaica issued a strong statement touching on the issues of fisheries subsidies, agriculture, services, intellectual property, and WTO reforms, said participants, who asked not to be quoted. On fisheries subsidies, Jamaica said, “an outcome should be an effective policy tool in the global fight against IUU (illegal, unreported and unregulated) fishing and global fish stock depletion.” Jamaica emphasized the need to target the “major subsidizers and large-scale industrial fishing” as they are the central priorities of the negotiations. “An outcome should provide adequate policy space for developing countries and LDCs to develop their fisheries sector responsibly and sustainably, at their own pace, without WTO scrutiny, as well as facilitate the narrowing of the development divide between the fisheries sectors in developed and developing countries,” Jamaica said. It argued persuasively that the “ACP Group cannot accept transition periods alone with technical assistance and capacity building, neither can we accept that Article 5.2 [of the Rules chair’s second revised draft text] provides enough policy space for developing countries, when that provision is a disguised exemption for large subsidizers.” On agriculture, the ACP Group said “an outcome package at MC12 should include PSH (permanent solution for public stockholding programs for food security), SSM (special safeguard mechanism for developing countries), cotton and trade-distorting domestic support, particularly as it relates to eliminating AMS above de minimis.” Commenting on the devastating impact of the pandemic on services, particularly travel and tourism services, Jamaica said “the ACP Group looks forward to presenting the submission during the next CTS-SS and to continuing our positive engagement with other WTO Members, particularly, on the sectors identified in our communication.” On the central demand concerning the strengthening of special and differential treatment, Jamaica said that “we prioritize an outcome for MC12” given the importance of S&DT in assisting developing countries and LDCs to enhance their integration in the global economy and global value chains. Commenting on the IP (intellectual property) issues, the ACP Group said “the WTO has an important role to play in facilitating swift, timely, affordable and equitable access to the vaccines and therapeutics to combat the pandemic.” Jamaica thanked South Africa and India for proposing the TRIPS waiver, emphasizing that it agrees with its general objectives. “The ACP Group urges constructive dialogue and flexibility to arrive at an outcome on this very critical issue.” Given the structural and institutional constraints faced by the LDCs (least-developed countries) in the application of the TRIPS Agreement, the ACP Group said it will “support an extension of the transition period for LDCs under Article 66.1, and call for special consideration to be given to recently graduated LDCs.” As regards the WTO reform, the ACP Group called for “a comprehensive dialogue on the structure, scope and objectives of WTO reform”, cautioning that “the piecemeal, one-sided approach in which the discussions are being undertaken fuels an atmosphere of distrust and a feeling that the process is neither transparent nor inclusive.” Moreover, Jamaica said “the process and substance of reform should undergird the development dimension of international trade, accelerate the attainment of the Sustainable Development Goals, be pursued in a fair, transparent and equitable manner, and, importantly, reinforce the core development principles framed in the Marrakesh Agreement.” The ACP Group said that it is time to resolve the Appellate Body impasse, arguing that “a two-tier, transparent, independent dispute settlement system, as envisaged by the DSU, is critical to the functioning and credibility of WTO.” INDIA’S INTERVENTION After welcoming the new DG, India said “the continued impasse of the Appellate Body and our inability to agree on a package of meaningful measures to address the pandemic is symbolic of the deep divisions.” India said that members “are also quite far from an agreement on fish subsidy negotiations,” emphasizing that the need of the hour “is finding practical solutions that are needed during a pandemic to save human lives, livelihood, bring back consumers’ confidence and arrests the losses in the world output and thereby restore growth in trade.” On the TRIPS waiver proposal, India said that “there is no difference of opinion on ramping up manufacturing of Covid-related products including vaccines.” “The proposal for temporary waiver from the provisions of TRIPS Agreement is first on our priority list,” India reiterated, adding that members “need true vaccine internationalism and the Waiver is an effective and pragmatic way to achieve it.” Stressing on the urgent need to approve the TRIPS waiver, it said “all sectors of economy are equally important for growth, therefore, interest of few (pharmaceutical) companies to the tune of tens of billions of dollars should not come in the way of restoring trillions of dollars of world output and saving hundreds of thousands of human lives.” India assured members that the “temporary waiver of certain provisions of TRIPS Agreement, by following due process does not mean that Members have given up on the principle of Intellectual Property Rights.” India also called for “ensuring easier cross-border movement of health care professionals,” including a multilateral initiative on this at MC12. It argued that the “resolution of the crisis in the Appellate Body is another priority.” Commenting on the reform agenda including S&DT as well as the legal status of the JSIs, India drew attention to document WT/GC/W/778/Rev.3 (proposed by the African Group, Cuba, and India) at the December 2020 General Council meeting that seeks to encompass “the priorities of developing countries including LDCs regarding an inclusive and balanced reform agenda for the WTO.” The joint proposal, India said, “emphasizes how S&DT is central to the founding principles of the WTO”. It strongly supported the G90 proposals for making 10 S&DT agreement-specific proposals effective and called for an outcome at MC12. On the joint proposal by India and South Africa on the legal status of JSIs and their negotiated outcomes, India said “members would find it useful and timely,” suggesting that “seeing the responses from members today, we are thankful that it has generated such interest and attention within a few days of its introduction.” Commenting on agriculture, India said its priorities include finding a permanent solution to the Public Stockholding (PSH) and addressing the “reverse S&DT” that is availed of by the major subsidizers of farm subsidies. On fisheries subsidies, India reiterated that “common but differentiated responsibility and “Polluter Pays” principle should be applicable in any agreement relating to sustainability.” Without naming the major fisheries subsidizers, India said “those who have provided huge subsidies leading to overfishing and overcapacity should take higher cuts in subsidy and capacity.” “We will not accept an outcome that favours those with advanced fisheries conservation and management measures while putting at a disadvantage developing countries who have to catch up on these measures,” India said. “Fishing nations with large number of industrial vessels should set the example by voluntarily reducing their harmful subsidies and capacity; and repay their overdue “debt”, in proportion to what they owe,” India argued, suggesting that the “S&DT in the final outcome must be effective and appropriate, having regard to the development needs, livelihood and food security concerns of millions of small fishers of developing countries including LDCs.” On electronic commerce, India said “the pandemic has shown that the need of the hour is to build capacity in areas such as digital skills and digital infrastructure, rather than negotiating binding rules on e-commerce.” More importantly, “it is time to bring clarity on the scope of the moratorium on custom duty on electronic transmission, its potential impact on the sustainability of the domestic industry and negative impact on job creation and revenue generation,” India said. It called for reinvigorating the mandated work under the 1998 Work Program on e-commerce in various Councils. SOUTH AFRICA’S INTERVENTION In its intervention, South Africa said it looks “forward to the DG`s facilitative role as Chair of the TNC on the mandated issues which need to be prioritized especially in the context of the upcoming Ministerial Conference.” Commenting on the biggest health and economic crises caused by the COVID-19 pandemic, South Africa said the pandemic “has devastating socio-economic implications for all our countries with a disproportionate impact on developing countries.” Therefore, members need to define the agenda, carefully informed by the unprecedented challenges presented by COVID-19, South Africa said, arguing that “such an agenda must promote inclusive economic recovery.” “The time is ripe for a conversation about the nexus between trade and development and the contribution of the WTO in achieving the goals set in the Marrakesh Agreement,” South Africa said, adding that “the agenda we set must be realistic, be responsive to the current context and recognize the strategic vulnerabilities exposed by the pandemic.” It cautioned that “economic recovery depends on our ability to deal with the pandemic, a solution-oriented conversation is urgently needed on securing timely, affordable and equitable access to vaccines and therapeutics and we must find a balanced outcome on the TRIPS Waiver.” On agriculture, South Africa said “substantial reform of domestic support is urgent and we must have an outcome at MC12,” arguing that “a food security agenda is going to be critical.” “This can start with a contribution to the WFP, to be complemented by a permanent solution for PSH and preserving support to resource-poor farmers under Art. 6.2 (of the Agreement on Agriculture concerning special and differential treatment). Commenting on fisheries subsidies, South Africa said that “the aim of the negotiations is sustainability, therefore the concept of common but differentiated responsibility is key.” “The outcome in fisheries subsidies must ensure that members that provide harmful subsidies cannot continue to do so,” South Africa said, arguing that “importantly, the management aspects should not be brought into the WTO.” Joining the ACP Group and India, South Africa said “disciplines must target large-scale industrial fishing and safeguard food security and livelihoods of small-scale fisheries.” “The outcome must deliver on all the pillars of the mandate, including S&D” and “S&D should be meaningful and cannot be limited to transitional periods,” South Africa said. South Africa thanked the chair of the Doha negotiating body on trade and development for convening the first of a series of substantive discussions among Members on the G90 ASPs (agreement-specific proposals). “S&D is a treaty embedded right and the mandate is to make it precise, effective and operational,” South Africa reiterated. Touching on the legal status of the JSIs, South Africa said that “any group of Members may discuss any issue informally.” “However, when such discussions under JSIs turn into negotiations and their outcomes are sought to be formalized into the WTO framework of rules, it can only be done in accordance with the rules of procedure for amendments and decision-making as set out in the Marrakesh Agreement,” South Africa cautioned. It reiterated “the importance of consensus decision making which remains a cornerstone for the multilateral trading system.” Commenting on e-commerce, South Africa said “the multilaterally mandated work is the Work Programme and we must reinvigorate the work through the various bodies of the WTO.” “The outcome on the e-commerce moratorium at MC12 will depend on clarifications with regard to the scope and definition of ET (electronic transmissions),” South Africa warned. Highlighting that the “dysfunctionality of the AB is a systemic issue that undermines the enforcement function of the WTO,” South Africa said it “renders the negotiations pointless and must be resolved as a matter of urgency.” In relation to WTO reform, South Africa said members “must safeguard the multilateral character and preserve the key principles of the WTO, as well as ensure an inclusive MTS (multilateral trading system) that promotes equitable growth and development. Importantly, WTO reform must support the structural transformation of our economies, employment and improving living standards.” INTERVENTION BY AFRICAN GROUP In its intervention at the meeting, Mauritius, on behalf of the African Group, called for an urgent decision on the TRIPS waiver. It expressed regret “that there is no agreement as yet” on the waiver, saying it remains open “to all proposals that will improve public health globally, financial aid of its own would not be sufficient to meet the target of equity in vaccines.” “We need to produce more and produce faster as variants come to further challenge our capacity to provide adequate vaccines, and indeed other medication for the global population,” Mauritius said, underscoring the “need to address this issue head-on alongside other proposals. And as part of a balanced outcome at MC12.” On “development”, Mauritius said “special and differential treatment remains essential for developing economies, including LDCs and small island developing states.” It expressed confidence that “the G90 document provides a good basis for discussions on the operationalization of the ten carefully identified SDT provisions.” Moreover, “without effective and operational SDT, existing or new trade rules would have little meaning for African countries as our rightful development aspirations will remain elusive,” Mauritius said on behalf of the African Group. As regards the priorities in agriculture, the African Group emphasized “that agriculture is an area of utmost priority and looks forward to a balanced and concrete outcome which would include a permanent solution on PSH and SSM for developing countries especially LDCs and NFIDCs, and which would address inequities arising from trade-distorting domestic support, including for cotton.” It called for an expeditious outcome on cotton. On fisheries subsidies, the African Group expressed “its concern over the lack of progress and persisting divergences on the approach to disciplining subsidies that contribute to overcapacity and overfishing.” It called for “a balanced outcome on fisheries subsidies that would embed sustainability in WTO rules. In so doing, the sovereign rights of members in managing their marine resources should remain untouched. The acceptance of the principle of common [but] differentiated responsibility should guide us in successfully concluding the negotiations.” On electronic commerce, the African Group underscored the need for reinvigorating the 1998 Work Programme with a view to comprehensively addressing the development aspects of e-commerce facing African countries. It called for the early resolution of the impasse for restoring the Appellate Body. On WTO reforms, the African Group said the “organization should adapt itself to changing conditions and that reform is a continuous process. Unfortunately, reform proposals have sometimes been discussed outside the context of any specific mandate.” It called for “inclusive, transparent, realistic [negotiations] and more importantly, enhance the development role of the organization.”
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