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Info Service on WTO and Trade Issues (Jun22/12) Geneva, 10 Jun (D. Ravi Kanth) — With less than 48 hours left for the World Trade Organization’s 12th ministerial conference (MC12) in Geneva, the WTO Director-General Ms Ngozi Okonjo-Iweala, while apparently acknowledging that negotiations are in a difficult stage, also allegedly said that two out of five possible outcomes could materialize at MC12, said people familiar with the development. At a dinner meeting of select trade ministers hosted by Australia on the margins of the annual Organization for Economic Cooperation and Development (OECD) ministerial meeting in Paris on 9 June, the DG apparently acknowledged that MC12 will not be a “smooth” meeting. She appealed to trade ministers/senior officials present at the Paris meeting to conduct work in a business-like atmosphere, which appears to contradict her expectations that MC12 will not be a “smooth” meeting, said a participant, who asked not to be quoted. Ms Okonjo-Iweala outlined five possible deliverables for MC12. They include: (1) WTO reforms; (2) a fisheries subsidies agreement; (3) agriculture; (4) WTO response to the pandemic; and (5) a decision on extending or discontinuing the current moratorium on levying customs duties on electronic transmissions. Despite the rules laid out in paragraph 4 of Article VI of the Marrakesh Agreement on the WTO Secretariat’s functioning, particularly the DG’s functioning, the DG appears to have waded again into the non-mandated issues concerning the informal Joint Statement Initiatives (JSIs), apparently highlighting the JSI to be concluded on domestic regulation in services. That paragraph states that: “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 proposed JSI agreement on domestic regulation in services has not only undermined the WTO work program on domestic regulation in services but has also divided the organization, said a person, who asked not to be quoted. At the Paris meeting, the DG also upped the ante on non-mandated controversial issues such as an agreement on plastics pollution, environment and on other JSIs that remain in square brackets in the third revised draft unofficial room document issued by the WTO’s General Council (GC) Chair Ambassador Didier Chambovey of Switzerland (see GC chair’s room document below). The DG allegedly said that everybody present at the Paris meeting talked about their priorities. She apparently said members must contribute to accomplish results, said people familiar with the development. At the start of the meeting, the DG apparently posed a question to trade ministers/senior officials on “what concrete outcomes we can deliver at MC12” in the next 48 hours, said people, who asked not to be quoted. E-COMMERCE MORATORIUM The DG’s mention of the e-commerce moratorium being a difficult issue appears to be true, as there is no agreement between the developing countries, who are seeking the discontinuation of the moratorium because of billions of dollars of lost revenue, and the industrialized countries and some developing countries that want the moratorium to continue, said people, who asked not to be quoted. According to a recent South Centre study, the cost of not removing the moratorium has been very high during the pandemic, especially for the least developed countries (LDCs). The study estimates that in the period 2017-2020, developing countries lost $48 billion, while LDCs lost $8 billion. To put this in context, the study further notes that with a combined population of around one billion, the LDCs needed approximately $4 billion to finance two shots of the cheapest Oxford-AstraZeneca vaccine. This loss of tariff revenue accrues on imports of only 49 digitized products which have been identified by the WTO. There are now attempts being made to increase the scope of the moratorium by including “digital services”, which will expand the trade coverage of the moratorium by manifolds. With no clarity on the definition of electronic transmissions, the continuation of the moratorium is not only depriving developing countries of their precious financial resources but is also taking away their regulatory power as unchecked imports of luxury items like video games, movies, and music are rising rapidly leading to an exponential rise in the profits of digital giants like Apple and Amazon. When the small and medium-sized exporters of physical products from developing countries face customs duties, there is no reason why the big-tech firms and digital giants should be exempted and given special and differential treatment. RESPONSES FROM MINISTERS AT PARIS In their respective statements at the Paris meeting, trade ministers/senior officials appear to have provided differing assessments. The United States Trade Representative (USTR), Ambassador Katherine Tai, apparently said that ministers should come to deliver outcomes that address the aspirations of the people, said people familiar with her statement. Ambassador Tai is understood to have suggested that what ministers say and what they deliver or don’t deliver will remain an open issue, said people familiar with the proceedings of the meeting. The USTR apparently remained silent on Washington’s priorities, leaving members guessing as to what the US is going to do at MC12, said a person, who asked not to be quoted. In contrast, the European Union trade commissioner Ms Valdis Dombrovskis and close supporters of the DG like Australia, Canada, and Brazil among others made voluble statements spelling out a long list of outcomes that they are expecting at MC12. The EU trade commissioner, for example, indicated the EU’s priorities that ranged from WTO reforms, fisheries subsidies, the WTO response to the pandemic, the informal Joint Statement Initiatives to the environment, said people, who asked not to be quoted. The EU trade commissioner apparently asked China what it intends to do in relation to the proposed fisheries subsidies agreement, a query that seems to have been ignored by China’s trade envoy, said people, who asked not to be quoted. India is understood to have made a general statement saying that New Delhi is constructively engaged by putting up its positions to address the concerns of the people. India apparently reminded the participants at the Paris meeting that it has constructively engaged in negotiations by putting-up its positions on the permanent solution for public stockholding (PSH) programs for food security and on fisheries subsidies, among others. Indonesia also highlighted the importance of the PSH issue and its concerns on the e-commerce moratorium as well as fisheries subsidies, said people, who asked not to be quoted. Brazil is understood to have pitched for its proposal to conduct annual ministerial meetings like the OECD or the World Bank and IMF. Brazil is planning to join the OECD and its President had already announced in the presence of former US President Donald Trump that it is giving up its entitlement to special and differential treatment. “TURMOIL” IN GENEVA As compared to the Paris ministerial meeting, the negotiations in Geneva remained rather rough and replete with problems on 9 June. Differences over the draft decisions on agriculture issued by the DG continued to escalate on 9 June, as several members have proposed new changes in the draft decisions two days before the start of MC12 on Sunday in Geneva, said people familiar with the development. At an informal Doha agriculture negotiating body meeting on 9 June, apparently differences came into the open among several members, including those who have been participating in the “green room” consultations of select countries, said people, who asked not to be quoted. Apparently, the DG and several members of the Cairns Group of farm-exporting countries appeared rather taken aback when India, Sri Lanka, and Tanzania among others made strong statements that challenged the DG’s draft decisions. Tanzania, which has been allegedly under intense pressure from the DG’s office, said it will not agree to the “Plan B” draft decision on the World Food Programme’s food purchases from countries without any export restrictions. In a strong statement at the Doha agriculture negotiating body meeting, Tanzania questioned the underlying rationale to allow the WFP, a humanitarian organization and a member of the UN family, to make food purchases without export restrictions, while placing limitations on countries to pursue their food security policies, said people, who asked not to be quoted. India reiterated its statement delivered at the closed-door meeting of select trade envoys on 8 June that for New Delhi, the question of sequencing is important, suggesting that a decision on the permanent solution for PSH programs is an imperative at MC12. India also said that there has to be a clear work program on cotton and the special safeguard mechanism. On domestic support, India said that Article 6.2 of the Agreement on Agriculture dealing with “development box” subsidies for developing countries cannot be touched, while emphasizing the need to eliminate tens of billions of dollars of AMS (aggregate measurement of support or the most trade-distorting subsidies) primarily given by the European Union and the US, said people who asked not to be quoted. In the face of the statements and differences among members, the chair of the Doha agriculture negotiations, Ambassador Gloria Abraham Peralta of Costa Rica, is expected to issue new documents incorporating some changes, said people familiar with the development. Another rather alarming development is that members remained divided on the third revised draft unofficial room document issued by the WTO’s General Council chair, Ambassador Didier Chambovey of Switzerland, at a “green room” meeting on 9 June, said people familiar with the development. India said the whole document has to be negotiated, suggesting that there are controversial issues on WTO reforms and the inclusion of the JSIs in square brackets, according to people familiar with the development. TEXT OF DRAFT MC12 OUTCOME DOCUMENT The full text of the draft outcome document issued by the GC chair as an unofficial room document is as follows with square brackets indicating no consensus yet: “In the lead-up to MC12, I undertook extensive consultations on the MC12 outcome document. Based on the draft text contained in RD/GC/17/Rev. 2, and taking into account further progress made during my consultations, I have decided to present a revised draft text of the MC12 outcome document, under my own responsibility. This proposed revision contains compromise language on WTO reform in paragraph 3, put forward under my own responsibility, mindful that differences remain. Consultations among Members with respect to the possible inclusion of paragraphs on women’s economic empowerment, MSMEs and environment are ongoing. To ensure full transparency, I reproduce these draft paragraphs in brackets. This revised draft text is without prejudice to Members’ positions and to any action that Ministers may decide to take. *** We, the Ministers, meet in Geneva from 12 to 15 June 2022 for our Twelfth Session. 1. We resolve to strengthen the rules-based, non-discriminatory, open, fair, inclusive, equitable and transparent multilateral trading system with the WTO at its core. In this regard, we reaffirm the principles and objectives set out in the Marrakesh Agreement Establishing the World Trade Organization and underscore the relevance and critical role of international trade and the WTO in global economic recovery, growth, prosperity, alleviation of poverty, welfare of all people, sustainable development and to facilitate cooperation in relation to the protection and preservation of the environment in a manner consistent with respective needs and concerns at different levels of economic development. 2. We reaffirm the provisions of special and differential treatment for developing country Members and LDCs as an integral part of the WTO and its agreements. Special and differential treatment in WTO agreements should be precise, effective and operational. In addition, we recall that trade is to be conducted with a view to raising standards of living, ensuring full employment, pursuing sustainable development of Members, and enhancing the means for doing so in a manner consistent with Members’ respective needs and concerns at different levels of economic development. We instruct officials to continue to work on improving the application of special and differential treatment in the CTD SS and other relevant venues in the WTO, as agreed and report on progress to the General Council before MC13. 3. We acknowledge the need to take advantage of available opportunities, address the challenges that the WTO is facing, and ensure the WTO’s proper functioning. We commit to work towards necessary reform of the WTO. While reaffirming the foundational principles of the WTO, we envision reforms to improve all its functions. The work shall be Member-driven, open, transparent, inclusive, and must address the interests of all Members, including development issues. The General Council will oversee the work, review progress, and consider decisions, as appropriate, to be submitted to the next Ministerial Conference. 4. We acknowledge the challenges and concerns with respect to the dispute settlement system including those related to the Appellate Body, recognize the importance and urgency of addressing those challenges and concerns, and commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by MC13. 5. In this difficult context, we note with satisfaction the progress achieved by LDC Members who have met or who are about to meet the graduation criteria set by the United Nations Committee for Development Policy (CDP) and acknowledge the particular challenges that graduation presents, including the loss of trade-related international support measures, as they leave the LDC category. We recognize the role that certain measures in the WTO can play in facilitating smooth and sustainable transition for these Members after graduation from the LDC Category. 6. We underscore the importance of accessions, noting that although no new accession has taken place since July 2016, several applicants have made encouraging progress. In this regard, we remain committed to facilitate the conclusion of ongoing accessions, especially for least-developed countries fully in line with the General Council Guidelines on LDC Accessions, and to provide technical assistance, where appropriate, including in the post-accession phase. 7. We recognize the special situation of the Members acceded in accordance with Article XII of the Agreement Establishing the World Trade Organization who have undertaken extensive commitments at the time of accession, including in market access. This situation shall be taken into account in negotiations. 8. We reaffirm our decision at the Tenth Ministerial Conference in Nairobi on implementation of preferential treatment in favour of services and service suppliers of least-developed countries and increasing LDC participation in services trade, and instruct the Council for Trade in Services to review and promote the operationalization of the waiver including to explore improvements in LDC services export data; to review information on LDC services suppliers and consumers of LDC services in preference providing Member markets; and to assess best practices in facilitating the use of the preferences. On this matter, we instruct the General Council to report to our next session on progress. We reaffirm our decision at the Ninth Ministerial Conference in Bali on Duty-Free Quota-Free Market Access for Least-Developed Countries and instruct the Committee on Trade and Development to re-commence the annual review process on preferential DFQF market access for LDCs. On this matter, we instruct the General Council to report on the progress to our next session. We welcome the decision of the Committee on Rules of Origin (CRO) adopted on 14 April 2022 (G/RO/95) on Preferential Rules of Origin and the Implementation of the Nairobi Ministerial Decision. We instruct the CRO to report its work to the General Council ahead of the Thirteenth Ministerial Conference. We also acknowledge LDCs’ commitment and efforts in implementation of the TFA. We urge all Members to assist the LDCs in meeting their definitive category C deadlines. We recognize the importance of Aid for Trade initiatives in trade-related capacity building for the LDCs. We recommend that such programmes prioritise the objectives identified by the LDCs. 9. We instruct the Trade Facilitation Committee to hold a Dedicated Session on transit issues annually until the next review of the Trade Facilitation Agreement is completed. These dedicated sessions will highlight the importance of transit and reserve time for the Committee to discuss best practices, as well as the constraints and challenges faced by all landlocked WTO Members, including landlocked developing countries and LDCs as outlined in G/TFA/W/53. 10. We take note of the reports from the General Council and its subsidiary bodies. These reports, and the Decisions stemming from them demonstrate Members’ continued commitment to the work of the WTO, thereby strengthening its effectiveness and the multilateral trading system as a whole. 11. We recognize the importance of strengthened collaboration and cooperation with other intergovernmental organizations and other relevant stakeholders that have responsibilities related to those of the WTO, in accordance with the rules and principles of the WTO, to restore trust, certainty and predictability in the world economy and effectively address current and future multidimensional challenges. – [We recognize that women’s economic empowerment, particularly in developing and least developed country members, contributes to inclusive and sustainable economic growth. We acknowledge that the WTO, in collaboration with other relevant international organizations, such as UNCTAD and ITC, can provide a forum to engage on this topic.][1] – [We note the significant negative impact that the COVID-19 pandemic has had on Micro, Small and Medium- sized Enterprises (MSMEs). Furthermore, we recognize the important contribution of MSMEs to economic and social development, the creation of employment, and sustainable and inclusive recovery efforts. We affirm the importance of promoting MSMEs’ participation in international markets. We will continue to explore ways to promote MSMEs’ involvement in international trade, including secure, diversified, and resilient supply chains.][2] – [We recognize global environmental challenges such as climate change and related natural disasters, loss of biodiversity and pollution. We note the importance of the contribution of the multilateral trading system to promote the UN 2030 Agenda and its Sustainable Development Goals in its economic, social, and environmental dimensions. We reaffirm support to the UNFCCC and the Paris Agreement, and note the outcome of COP26. We believe trade and environmental policies should be mutually supportive and contribute to the optimal use of the world’s resources in accordance with the objectives of sustainable development. We reaffirm that measures to protect the environment should be WTO consistent, not constitute unnecessary barriers to trade and safeguard the multilateral trading system. We reaffirm the importance of providing appropriate support to developing country Members and LDCs in order to help their transitions, including through technological innovations, towards a more resource-efficient and sustainable development. We will reinvigorate our efforts geared towards enhancing the resilience of these Members and to better enable them to seize sustainable trade opportunities. These efforts include Aid for Trade and capacity-building support for the production and trade of goods and services that are respectful of the environment, through the development, deployment, dissemination, and transfer of environmentally sound technologies on voluntary and mutually agreed terms. We note the role of the Committee on Trade and Environment as a standing forum dedicated to dialogue among Members on the relationship between trade rules and environmental measures.] [1] Discussions are still ongoing. [2] Discussions are still ongoing.”
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