|
||
|
TWN Info
Service on WTO and Trade Issues (Mar21/26) Geneva, 29 Mar (D. Ravi Kanth) – The new chair of the WTO General Council, Ambassador Dacio Castillo from Honduras, wants “to discuss how to advance work towards a possible MC12 document”, notwithstanding the sharp polarization between developed countries and a large majority of developing countries on their respective deliverables, said people familiar with the development. In an email sent to members on 24 March, Ambassador Castillo merely said that the purpose of the informal General Council (GC) meeting on 30 March “is to discuss how to advance work towards a possible MC12 document.” The two-hour virtual meeting on 30 March will be co-chaired by the GC chair and the WTO director-general Ms Ngozi Okonjo-Iweala. It appears to be a first shot to kick-start the process for mapping out the possible deliverables for the WTO’s 12th ministerial conference (MC12) scheduled to be held in Geneva towards the end of November this year. Following her meetings with various groups, the DG has apparently zeroed in on several deliverables, said people familiar with the development. THE WTO DG’S PRIORITIES The deliverables being prioritized by the DG include: (1) the WTO’s response to addressing the COVID-19 pandemic; (2) concluding the fisheries subsidies negotiations; (3) the delayed outcome on the permanent solution on public stockholding programs for food security and the removal of export-related restrictions on food items procured by the World Food Programme (WFP); and (4) acceleration of work on the Joint Statement Initiatives (JSIs) on services domestic regulation, e-commerce, micro-, small and medium-sized enterprises (MSMEs) and the environment despite their alleged violation of the core provisions of the Marrakesh Agreement that established the WTO, said sources familiar with her discussions. At this juncture, the fisheries subsidies negotiations remain deadlocked due to unbridgeable positions on the disciplines in the overcapacity and overfishing pillar, particularly paragraph 5.2 of the second revised draft consolidated text that allows major subsidizers to continue with their industrial-scale fishing subject to demonstrating their implementation of proper conservation management policies. The DG wants a mid-year outcome on fisheries subsidies, but if negotiations in the just-concluded March cluster of meetings are any indication, then, she should change her deadline, an official said. Of late, the DG has not been highlighting the need for disciplines to tackle industrial subsidies and state-owned enterprises, a priority issue for the United States, the European Union, and Japan to allegedly target China, said sources familiar with her meetings. In her last major statement on 15 February, Ms Okonjo-Iweala said that “we (members) must also strengthen disciplines on industrial subsidies. In that regard, it would be important to ensure that subsidies granted by Members to their state-owned enterprises in certain situations do not distort the conditions of competition.” She has also remained silent on the issue of Special and Differential Treatment (S&DT), merely acknowledging in that same statement that it “is a divisive one that undermines trust”. She had suggested that her preference is towards “the voluntary action of some developing country Members to not avail themselves of S&DT.” Against this backdrop, the informal GC meeting on 30 March could witness diametrically opposed narratives being advanced by different groups, said people familiar with the development. Members of the new Ottawa Group of countries seem determined to use the COVID-19 pandemic for launching negotiations on trade and health, trade and environment, and trade and gender that seek to liberalize tariffs and bring about new regulatory measures. DELIVERABLES DEMANDED BY DEVELOPING COUNTRIES The majority of developing countries want text-based negotiations on the proposed TRIPS waiver and the restoration of the Appellate Body on an expeditious basis. The developing countries also want the much-delayed decision on the public stockholding programs for food security, which was blocked by the United States at the WTO’s eleventh ministerial conference (MC11) in Buenos Aires, Argentina, in December 2017. Many developing countries have opposed the US-proposed differentiation/graduation among developing countries for availing of special and differential treatment (S&DT) as well as attempts to eliminate the consensus principle of decision-making at the WTO. More than 53 developing countries had circulated a proposal on 4 December 2020, titled “Strengthening development and inclusivity”, to drive home the message that “preserving the core principles of the multilateral trading system” must be the main goal underlying the deliverables at MC12. Without naming the United States, the 53 signatories said that “recent actions by some WTO Members indicate a weakening of commitment to the multilateral trading system.” Preserving and strengthening the WTO must include: (1) laws and regulations of WTO Members which mandate unilateral action on trade issues that are inconsistent with WTO rules would need to be amended to ensure that WTO Members are not perpetually under threat of unilateral action on trade issues by some Members; (2) the following rules in the Marrakesh Agreement are fundamental such as Articles II and III on the multilateral functions of the WTO, Article IX on the continuation of the practice of decision-making by consensus, and Article X on amendments, which must be decided on the basis of consensus and so on. The developing countries also demanded that the Joint Statement Initiatives must adhere to the provisions governing plurilateral agreements in the Marrakesh Agreement. Shockingly, in a statement delivered at the Ottawa Group meeting of industrialized and a few developing countries on 22 March, the WTO director-general had backed the efforts of the JSI members to accelerate work on services domestic regulation, e-commerce, micro-, small and medium-sized enterprises (MSMEs) and the environment despite their alleged violation of the core provisions of the Marrakesh Agreement that established the WTO, said sources familiar with her discussions. In a similar vein, a large majority of developing countries, including 58 co-sponsoring countries and 61 other supporters, want an outcome on the temporary TRIPS waiver, which is currently being blocked by a handful of industrialized countries, including the US, the official said. Unless these two issues – the restoration of the Appellate Body (AB) and the TRIPS waiver – are addressed without delay, the progress on other issues could be hampered, the official said. More importantly, developing countries will not make any payment for restoring the AB which has been made dysfunctional by only one member, namely the United States, the official said. THE NEW USTR Significantly, the new US Trade Representative (USTR) Ambassador Katherine Tai is yet to indicate the US priorities for MC12. However, a large majority of WTO members except the US want an expeditious resolution of the impasse at the dispute settlement system so as to restore the Appellate Body without which there is little credibility for negotiating any new agreements, nor embarking on any reforms at this juncture, said a capital-based official. In an interview to the Wall Street Journal published on 28 March, the new USTR has indicated that she will not lift tariffs on Chinese imports in the near future, “but might be open to trade negotiations with Beijing.” The Trump administration had imposed tariffs on about $370 billion of goods from China annually, while China retaliated with tariffs on $110 billion of American goods. Ominously, the new USTR has indicated that she will negotiate from a position of strength or using “leverage” after imposing unilateral trade measures that are allegedly inconsistent with the WTO rules. According to the WSJ report, the new USTR is “committed to trade policy focused on workers as individuals, rather than solely as consumers. In practice, she said during her confirmation hearing, that means focusing on trade policy on the jobs and wages, not only lower prices and greater product choice.” Given the continuation of the former Trump administration’s trade policies, it seems clear that the US will demand a payment for removing the unilateral measures such as the Section 232 tariffs on steel and aluminum, the paralysis at the AB, and various other measures, through approval of its proposed WTO reforms, said the capital-based official. US OPPOSITION TO DIGITAL TAXES Meanwhile, on 26 March, the new USTR announced “the next steps in its Section 301 investigations of Digital Services Taxes (DSTs) adopted or under consideration by ten US trading partners,” regardless of their alleged violation of the WTO’s dispute settlement recommendations. The USTR said that it found in January that “the DSTs adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom were subject to action under Section 301 because they discriminated against US digital companies, were inconsistent with principles of international taxation, and burdened US companies.” The USTR is proceeding with the public notice and comment process on possible trade actions to preserve procedural options before the conclusion of the statutory one-year time period for completing the investigations. “The United States is committed to working with its trading partners to resolve its concerns with digital services taxes, and to addressing broader issues of international taxation,” said Ambassador Katherine Tai. “The United States remains committed to reaching an international consensus through the OECD process on international tax issues. However, until such a consensus is reached, we will maintain our options under the Section 301 process, including, if necessary, the imposition of tariffs.” The USTR said “the remaining four jurisdictions – Brazil, the Czech Republic, the European Union, and Indonesia – have not adopted or not implemented the DSTs under consideration when the investigations were initiated.” The USTR said that it is “terminating these four investigations without further proceedings. If any of these jurisdictions proceeds to adopt or implement a DST, USTR may initiate new investigations.” A digital trade policy expert, who preferred not to be quoted, told the SUNS that “taxing foreign providers is within the ambits of the national policy of developing countries and GATS (General Agreement on Trade in Services) and the WTO provides this flexibility.” “Countries which have not taken any commitments in Mode 1 on national treatment to foreign services providers have the flexibility to impose discriminatory taxes and charges on foreign services providers,” the expert said. “However, this policy space available to developing countries is also being restricted. On one hand, the developed countries emphasize that developing countries can apply internal taxes on imports of digital goods and services and therefore do not need to apply customs duties on digital imports, while on the other hand, they challenge countries that do so,” the expert argued. Therefore, the digital trade policy expert urged “developing countries to insist on removing the WTO moratorium on customs duties [on electronic transmissions] so that they are able to regulate the operations of digital firms in their national territories.”
|
||
