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TWN
Info Service on WTO and Trade Issues (Jul21/15) Geneva, 15 Jul (D. Ravi Kanth) – The World Trade Organization Director-General Ms Ngozi Okonjo-Iweala has apparently made some “outlandish” remarks on special and differential treatment (S&DT) based on self-designation by developing countries, thus allegedly crossing the “red line” of her stated responsibilities under the WTO’s Marrakesh Agreement, said people familiar with the development. During a virtual address to the US-based Atlantic Council on 13 July, the DG apparently said that there is a “design” problem as regards availing of special and differential treatment based on self-designation by developing countries, according to media reports. Subscribing unabashedly to the Trump administration’s assault on special and differential treatment, Ms Okonjo- Iweala appears to have aligned herself with Washington’s demand to change the negotiating function of the WTO to bring about differentiation among developing countries for availing of S&DT, as well as other priorities, according to media reports. She also said that the WTO lacks the “clear rules of the game” as compared to the International Monetary Fund and the World Bank, the so-called Bretton Woods institutions. “It is very puzzling to me that when the WTO and the GATT (General Agreement on Tariffs and Trade) was created, the rules that were put in place were very different”, she said, implying that she doesn’t have the executive authority to decide on issues like in the IMF and the Bank where the heads of these institutions have considerable leeway in taking decisions. It is very clear, she said, “what is a least developed country, what is a developing country, what is a developed country, because there are clear rules of the game with respect to per capita income.” “But it’s the same countries that created the WTO and at the WTO there was no such delineation. It is said that countries could self-designate themselves as developing and developed as they reach (it). So this is very bad,” she said. She called it a “design problem”, according to a report in Inside US Trade. The DG also supported issues that are close to Washington’s wish list such as new disciplines on industrial subsidies, and the “level-playing field” issues ostensibly aimed at targeting China among others. ALLEGED VIOLATION OF MARRAKESH AGREEMENT Ms Okonjo-Iweala’s statement has exposed her apparent gross ignorance of how the WTO was created after the United States blocked the Havana Charter and the creation of the International Trade Organization in 1948. Subsequently, the GATT, which was founded largely on the priorities of the United States and the European Union among others, included various provisions. According to the US academic Quinn Slobodian’s book on “Globalists: The End of Empire and the Birth of Neoliberalism’, special and differential treatment appears to have started with the EU seeking special flexibilities. Subsequently, the issue of self-designation by developing countries for availing of S&DT was enshrined in the GATT’s rules. Further, by making these remarks at a time when there is a great division among countries, Ms Okonjo-Iweala has allegedly violated her duties as per paragraph four of Article VI of the Marrakesh Agreement. Paragraph four of Article VI states: “The responsibilities of the Director-General and of the staff of the Secretariat shall be exclusively international in character. In the discharge of their duties, the Director-General and the staff of the Secretariat shall not seek or accept instructions from any government or any other authority external to the WTO. They shall refrain from any action which might adversely reflect on their position as international officials. The Members of the WTO shall respect the international character of the responsibilities of the Director-General and of the staff of the Secretariat and shall not seek to influence them in the discharge of their duties.” The WTO DG has allegedly violated the letter and spirit of Article VI of the Marrakesh Agreement. Moreover, many developing countries and least developed countries (LDC) that aspire to graduate to developing country status — Benin, the African Group, Bolivia, Cambodia, China, Cuba, India, Lao People’s Democratic Republic, Oman, Pakistan and Venezuela — have stated unequivocally that the issue of self-designation is at the core of the S&DT architecture. They stated in 2019 and 2020 that “the WTO’s Marrakesh Agreement recognizes that Members’ relations in the field of trade and economic endeavour “should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income…”.” These countries argued that “the GATT and WTO have recognized that developing countries need S&D to access and benefit from international markets as they face more serious challenges compared to developed countries. As a result, S&D is an unconditional and treaty-embedded right that has been provided to all developing countries, including in Part IV of the GATT. The WTO allows developing countries to make their own assessment about their development status.” They argued that “S&DT has provided developing Members including LDCs the space to calibrate their trade integration and formulate their domestic trade policies in ways that help them reduce poverty, generate employment and integrate meaningfully into the global trading system. Nevertheless, to date, the development challenges and divide persist and have in fact deepened in significant areas.” Further, “due to these continued challenges, Ministers at the Doha Ministerial agreed to strengthen and make the WTO’s S&D provisions “more precise effective and operational”. Today, S&D remains extremely important for trade to be more inclusive and equitable, as well as for developing countries to meet their Sustainable Development Goals (SDGs).” Therefore, “any unilateral action depriving developing Members including LDCs of treaty-embedded rights would be inconsistent with Members’ obligations, and would in fact erode the foundation of the multilateral trading system which functions on the basis of being “rules-based”. This will cause lasting and systemic damage to the trading system.” The DG, who is apparently known for her ignorance about the WTO’s rules-based system, must keep in mind the following recommendations: * Developing countries’ unconditional rights to S&D in WTO rules and negotiations must continue; * Developing countries must be allowed to make their own assessments regarding their own developing country status; * Existing S&D provisions must be upheld; * S&D must be provided in current and future negotiations. The developing countries also warned that “attempts to water down these principles would be a recipe for intractable deadlock at the WTO, including in the negotiations on fisheries subsidies. It is in the interest of the entire membership to avoid this situation.”
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