TWN Info Service on WTO and Trade Issues (Feb22/08)
8 February 2022
Third World Network

WTO: GC chair calls for "strategic pause" in WTO response to pandemic talks
Published in SUNS #9509 dated 8 February 2022

Geneva, 7 Feb (D. Ravi Kanth) -  The chair of the WTO's General Council, Ambassador Dacio Castillo from Honduras, on 4 February called for a "strategic pause" in the ongoing discussions for the time being, following seemingly unbridgeable differences among members over the recommendations of the Walker report on the WTO's response to the pandemic, said people familiar with the development.

At an informal open-ended meeting on 4 February, the General Council (GC) chair provided an account of the various meetings held on the WTO's response to the pandemic through a "cocktail" approach involving consultations with "delegations in different configurations."

The chair held meetings with a small group of members on 1 and 3 February.

The aim of these meetings, he said, "was to discuss shared objectives and principles that Members wished to see reflected under each theme/area; identify whether those had already been reflected in the Facilitator's Text; and if not, how the text could be improved."

In a restricted document (Job/GC/291) issued on 4 February, he said that "we covered the Preamble, Introduction and the Transparency and Monitoring theme."

Later, a summary of the delegations' responses was circulated after the meeting to review their responses to the questions that he had posed.

The GC chair sought to know from the members whether his questions "had been reflected correctly, confirm what they believed had not been reflected in the Facilitator's text, what needed to be improved and how."

Ambassador Castillo said that "several delegations submitted specific drafting suggestions, additional comments, textual additions, and corrections to the summary."

These views were later incorporated into the "Facilitator's Text - without prejudice to any Member's position on that Text."

On 3 February, the chair presented "the compilation of responses to group coordinators and other delegations - and subsequently shared it electronically."

Barring the coverage of "introductory sections and the "transparency and monitoring theme"," he said "divergent perspectives in Members' positions were evident - not only during the discussions, but also in the compilation."

He said that he convened meetings with "a second Representative Group" on 3 February on "theme-by-theme discussion, [and] it was evident that delegations needed more time to engage with each other first, in different configurations to work through these differing perspectives, before reverting to the Representative Group discussions."

In other words, he said, "a strategic pause is needed at this point" in order "to bridge different perspectives to move everyone in one direction."

He said, "I am only here to assist you in your endeavour."

Commending members for their "engagement and commitment to work towards a credible WTO response to the pandemic," Ambassador Castillo appealed to members "to use the coming days meaningfully by engaging with each other on the critical gateway issues that you all know."

However, the GC chair did not elaborate on these "critical gateway issues".

FUNDAMENTAL DIFFERENCES AMONG MEMBERS

There are fundamental differences among members on almost all the issues in Walker's text including on the "introduction"; "transparency and monitoring"; "export prohibitions and restrictions"; "trade facilitation, regulatory cooperation and coherence, and tariffs"; "the role of trade in services"; "supporting inclusive recovery and resilience"; "collaboration with other intergovernmental organizations and stakeholders"; and "framework for future preparedness" that includes an "action plan on pandemic response, preparedness and resilience," said people familiar with the discussions.

The differences on Walker's text stem from the divergent perspectives of three different sides. On the one side is the European Union, China, and members of the Ottawa Group of countries led by Canada, while on the second side is India, South Africa, Sri Lanka, Pakistan, Egypt and several other developing countries. On the third side is the United States which remains opposed to several provisions in Walker's text.

EU, CHINA & OTTAWA GROUP

The EU, China, and the Ottawa Group of countries continued to champion Walker's text as the basis for any further discussions.

China had maintained that "the Walker text should be the basis for our further work."

China, however, acknowledged that "consensus has not been reached yet" on some controversial areas, requiring further consultations. (See SUNS #9503 dated 30 January 2022, available at https://twn.my/title2/wto.info/2022/ti220201.htm ).

On the WTO's response to the pandemic, China said it should be based on two equally important components like intellectual property and the trade-related elements, said people who took part in the meeting.

Brussels said that it fully supports an immediate resumption of the discussions on the Walker text, suggesting that a few delegations want to improve the text, but that this does not undermine the broad support to proceed on the basis of that text, said people who asked not to be quoted.

Brussels argued that the Walker text includes "two components: an action plan, which is looking at the future and is non-prejudicial; and a declaration - which is equally important as it includes valuable political commitments."

The EU also cautioned that if the "valuable political commitments" in Walker's text are not included in the final outcome, the perception would simply be that the membership is not able to provide a "here and now response".

The Ottawa Group of countries led by Canada and several developing countries seem to have become the proverbial "torch-bearers" of the Walker text.

Interestingly, on the day that the GC chair announced the "strategic pause," the EU, China, and the Ottawa Group circulated their "trade and health" initiative (WT/GC/W/823/Rev.7) with the addition of some new members.

The document states, "the trade policy related actions set out in this declaration are designed to contribute to the WTO response to the current COVID-19 pandemic and to enhance resilience against future pandemics. These actions may be complemented by additional aspects of trade policy, including those related to intellectual property."

PROPOSALS FROM DEVELOPING COUNTRIES

In their separate proposals, India, and South Africa, Egypt, Pakistan, Sri Lanka, Tunisia, Uganda, and Venezuela, proposed almost identical demands that centered around fundamental changes as well as additions in addressing the WTO's response to the pandemic.

For example, South Africa, Egypt, Pakistan, Sri Lanka, Tunisia, Uganda, and Venezuela proposed (Job/GC/278) that the WTO's response to the pandemic must be based on trade rules to address resilience-building; response and recovery from domestic and global crises; food security that includes waiver on subsidies, policy flexibility for food stocks; economic resilience and recovery that includes making pandemic-related subsidies non-actionable, services, and suspension of intellectual property provisions based on the TRIPS waiver co-sponsored by 64 countries.

The seven countries argued that "proposals considered under the WTO pandemic response should in no way constrain the policy tools and space for developing countries and least-developed countries" in responding to pandemics and similar crises.

They also put forward their specific assessments on export restrictions, regulatory coherence and cooperation, trade facilitation, tariffs, services, transparency, and collaboration with other international organizations.

As previously reported in the SUNS, the former facilitator on the WTO's response to the pandemic, Ambassador David Walker from New Zealand, unilaterally decided not to include the proposals tabled by India, and the seven countries.

The facilitator chose to deny "flexibility" and "policy space" in the WTO's response to the pandemic, said a member, who asked not to be quoted.

The US view on Walker's text revealed fundamental differences on every recommendation that the former facilitator made in the WTO's response to the pandemic.

In a way, international civil society organizations, including the Third World Network, had warned against the dangers arising from Walker's text.

Given the apparent divergent views among the four members - the US, the EU, India, and South Africa - on deciding on the issue of the TRIPS waiver, and now on Walker's text, the road ahead looks somewhat rough on finalizing the WTO's response to the pandemic, the member said.

DG'S LETTER ON CONTROVERSIAL REFORMS OF SECRETARIAT

The WTO director-general, Ms Ngozi Okonjo-Iweala, on 3 February touted the launch of the "Transformation Process/Structural Review" carried out by McKinsey & Company and the creation of a "Transformation Unit", forewarning that there will be a residual "noise in the system" by those who are "comfortable" with the status quo, said people familiar with the development.

In a letter sent to members on 3 February, the DG said she has appointed Ms Victoria Donaldson, a Counsellor in the Delivery Unit until now, to head the Transformation Unit.

She claimed that the staff have shown their "receptivity" to new changes at a Town Hall meeting held last week.

Ms Okonjo-Iweala appears to have ignored growing fears among the staff about the changes to be brought about in the coming days.

The DG has not shared the McKinsey & Company report with the members so far, raising issues of credibility and accountability about what was exactly recommended, said people familiar with the letter.

The DG said "the world is changing and so is the multilateral trading system", requiring "fresh perspectives, new skills, and incentivize our excellent staff as they can serve you the members better."

She thanked the senior staff for their work and members for their contributions during the diagnostic process.

The DG maintained that the change process "can be unsettling" and "there will always be residual "noise in the system" by those who feel more comfortable with the status quo."

The letter mentions that the change process "may manifest in counterproductive behaviour that targets the change process itself or those implementing it."

"We are seeing some evidence of this but it will not distract us from implementing these changes," the DG said.

In short, the DG's letter to members appears akin to an early warning to the WTO staff to behave according to her dictates, failing which they would pay a high price, said people, who preferred not to be quoted.

It is somewhat puzzling as to why the DG is shying away from sharing the full McKinsey & Company report with members.

It is not clear what is contained in the full report and whether the analysis and recommendations of McKinsey & Company can withstand scrutiny.

There are also doubts centering on the commissioning of the report and whether it apparently violated the WTO's procurement rules, said people familiar with the development.