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TWN
Info Service on WTO and Trade Issues (Jun22/26)
WTO: South suffers loss at MC12, EU & US biggest winners Geneva, 20 Jun (D. Ravi Kanth) -- As the World Trade Organization's 12th ministerial conference (MC12) concluded in the early hours of 17 June, trade ministers of the developing countries seem to have vacated the field on their core developmental concerns and allowed the European Union and other major developed countries to claim success, said people who asked not to be quoted. In a way, by the time the developing countries "wake up" after five intensely exhaustive days of negotiations, they may come to realize the incalculable damage done to their hopes, aspirations, and demands, said several people, who asked not to be quoted. Notwithstanding the rather "positive" statements about the "success" of MC12 made by some developing countries, the "writing on the wall" seems to be pretty clear: "You (the developing countries) have little or no place in this 164- member, inter-governmental, rule-making, and member-driven trade body." The last chance for developing countries to "stay afloat" in the WTO begins now. Before they "wake up" on the concluding day of the 13th ministerial conference, whenever it takes place in 2024, they may realize that they are almost dismembered with no rights and entitlements. HOW DID THINGS COME TO THIS LOW POINT? In the run-up to MC12, sufficient dangerous signals were emitted with several articles in the SUNS having cautioned about the eleventh hour deals in a "pressure-cooker" format. The exclusion of a large number of developing countries from the "green rooms" was repeatedly echoed in articles that this writer has written. And that is what the WTO Director-General, Ms Ngozi Okonjo-Iweala, apparently did by circulating the draft texts a day before the start of MC12 on 12 June. Then she asked ministers to negotiate on the allegedly "rigged" texts with facilitators who were working according to her advice, several ministers complained privately. MC12 concluded in the early hours of 17 June with Ms Okonjo-Iweala having declared it as an "unprecedented" meeting with "very, very substantive outcomes". The "substantive outcomes" seemed to have included three major decisions: (1) extending the e-commerce moratorium for two more years with the promise, for the first time, of "terminating" the decision at the end of this period; (2) the TRIPS waiver; and (3) the Ministerial "Outcome" document that paves the way for starting discussions on WTO reforms under the direction of the WTO General Council and the subsidiary bodies with a footnote that could raise more problems. TRIPS DECISION The much-touted TRIPS Decision emerged at midnight of 16 June following consultations between the US and China over the controversial issue of the eligibility criteria. Initially, the agreement excluded China for availing the flexibilities for developing countries due to its exports of COVID-19 vaccines in the global share exceeding 10%. China said the eligibility criteria is a "red-line" and made it known that Beijing will opt out from availing of the flexibilities, provided that the second square bracketed sentence in footnote 1 of the draft Decision is removed. Until recently, the US was not engaging with China on this issue but as the pressure mounted, the US trade negotiators in Geneva agreed on language that removed the second square bracketed sentence in footnote 1. In the final text issued late Thursday evening, the compromise language was announced. It now states: "For the purpose of this Decision, all developing country Members are eligible Members. Developing country Members with existing capacity to manufacture COVID-19 vaccines are encouraged to make a binding commitment not to avail themselves of this Decision. Such binding commitments include statements made by eligible Members to the General Council, such as those made at the General Council meeting on 10 May 2022, and will be recorded by the Council for TRIPS and will be compiled and published publicly on the WTO website." In short, the US quietly conceded to the removal of the eligibility criteria but apparently managed to tighten the language on opting out. The other stringent conditions introduced by the United Kingdom and Switzerland seem to have their concerns in the agreement. Even then, until Thursday (16 June) evening, the UK blocked a final agreement, saying that it needs its capital to study the agreement, said people, who asked not to be quoted. The US Trade Representative (USTR), Ambassador Katherine Tai, who left Geneva around 9 am on Thursday, did not even mention the compromise it had reached with China. In her press statement issued on 17 June, Ambassador Tai merely said that through "difficult and protracted discussions, Members were able to bridge differences and achieve a concrete and meaningful outcome to get more safe and effective vaccines to those who need it most." Ambassador Tai said that "this agreement shows that we can work together to make the WTO more relevant to the needs of regular people." "During a global pandemic, under difficult circumstances, the WTO moved quickly to address a major global challenge and respond to the strong desire of our African partners to produce something meaningful," she said. She acknowledged that "consultations with our stakeholders in the private sector and civil society, with Members of Congress and their staffs, and colleagues across the Administration, were critical in informing USTR's understanding of the nuances in the global market, production challenges, and the public health needs of the world's people." According to unconfirmed reports, the UK allegedly carried out a proxy war to further tighten the TRIPS Agreement at the behest of a trans-Atlantic power, which seems to have asked the UK to drop its opposition on Wednesday, a TRIPS interlocutor told SUNS, preferring not to be quoted. The Decision, now valid only for five years after it comes into force, also includes language that states: "No later than six months from the date of this Decision, Members will decide on its extension to cover the production and supply of COVID-19 diagnostics and therapeutics." However, the chances of any agreement on this issue seem to be slim, the TRIPS interlocutor said. Civil society organizations have said that the agreement is "skewed" and "rigged" against the developing countries with stringent conditions and burdensome requirements for implementation. (See SUNS #9597 dated 17 June 2022). Max Lawson, the Co-chair of the People's Vaccine Alliance and Head of Inequality Policy at Oxfam, said on late Thursday night that "the conduct of rich countries at the WTO has been utterly shameful". He suggested that "the EU has blocked anything that resembles a meaningful intellectual property waiver." "The UK and Switzerland have used negotiations to twist the knife and make any text worse", while "the US has sat silently in negotiations with red lines designed to limit the impact of any agreement," the Oxfam representative said. EXTENSION OF E-COMMERCE MORATORIUM This is the "big-ticket" item for the US, the EU, and other industrialized countries at MC12. They seemed alarmed that a group of developing countries, including India, South Africa, Indonesia, and several other countries, could secure the termination of the moratorium due to its huge fiscal impact with the loss of billions of dollars of revenue. In an interview with US-based journalists, the USTR apparently said that the extension of the moratorium is a top priority, said a person, who attended the press briefing. For the informal Joint Statement Initiative (JSI) on digital trade, the extension of the moratorium was crucial because of its overall impact on the negotiations. In fact, the US and several other members wanted a permanent moratorium on customs duties on electronic transmissions, even though there is still no clarity among the JSI participants on the definition and scope of electronic transmissions, said people familiar with the discussions. When the issue came up for discussion at the horizontal "green room" meeting in the DG's office, the US apparently suggested that there should be at least a nine month extension before the termination of the moratorium. The US suggestion amounted to terminating the moratorium some time in March next year, said people familiar with the discussions. However, South Africa and Pakistan pressed for its termination. After considerable discussion, the two developing countries seemed open to considering a nine month extension with an iron-clad guarantee decision, said people, who asked not to be quoted. Apparently, at one point during the discussions, the trade ministers of the EU and the United Kingdom went out of the room and came back with a proposal to extend the moratorium until December 2023 or till the 13th ministerial conference in December 2024 or beyond, with the explicit language of "termination" at the end of the period. The final language of the agreement suggests that India and other developing countries may be on board with a deal that is worse than the existing one, said a negotiator, who asked not to be quoted. The e-commerce decision that was gaveled states: "We reinvigorate the work under the Work Programme on electronic commerce based on the mandate as set out in WT/L/274 and particularly in line with its development dimension. We shall intensify discussions on the moratorium and instruct the General Council to hold periodic reviews based on the reports that may be submitted by relevant WTO bodies, including on scope, definition, and impact of the moratorium on customs duties on electronic transmissions. We agree to maintain the current practice of not imposing customs duties on electronic transmissions until MC 13, which should ordinarily be held by 31 December 2023. Should MC 13 be delayed beyond 31 March 2024, the moratorium will expire on the date unless Ministers or the General Council take a decision to extend." The so-called "Pyrrhic victory" for the developing countries was to get the word "terminate" into the decision for the first time, while the real victory went to the US, the EU, and other industrialized countries who managed to stall the termination of the moratorium for two more years with a chance of further extending it, said people, who asked not to be quoted. FOUR DECISIONS RELATING TO ADDRESSING THE PANDEMIC Under the rubric of "Response to Emergency Texts", the declaration on "Trade and Food Security" and the "Decision on the WFP (World Food Programme)" were added to the Declaration on the WTO response to the COVID-19 pandemic and the controversial decision on the TRIPS waiver. For example, the Declaration on "Trade and Food Security", which is best endeavour in nature with "vacuous" language, maintains that members are determined "to make progress towards the achievement of a fair and market-oriented agricultural trading system, ending hunger, achieving food security and improved nutrition, promoting sustainable agriculture and food systems, and implement resilient agricultural practices that enhance productivity and production in fulfilment of Sustainable Development Goal 2 of the United Nations, taking into account the interests of small-scale food producers in developing countries." There was little opposition to the declaration because it did not require anything from the members. It appears like an ornament without much value in the overall package, said a person, who asked not to be quoted. The decision on the removal of export restrictions on the food purchases made by the WFP whose annual budget is about $2 billion, is as good as a contradictory one. Initially, India and Tanzania had opposed it for the last two years, while a large majority of countries led by the US, the EU, Singapore, and many others wanted the complete removal of export restrictions on purchases made by WFP. The WFP normally procures its food grains through mega agri-corporations who are involved in trading food grains, edible oils, and several other food items. During the discussions, India apparently suggested government-to-government purchases instead of procurement by the WFP, but the proposal did not get much traction, said people, who preferred not to be quoted. Meanwhile, under intense pressure from various quarters, Tanzania settled for protecting its right to take appropriate measures, if there is a domestic food crisis. The final decision contains two parts, each apparently undermining the other: "Members shall not impose export prohibitions or restrictions on foodstuffs purchased for non commercial humanitarian purposes by the World Food Programme," says the first part of the decision. Perhaps, this is the first time that an inter-governmental, rules-based, member-driven multilateral organization is forced to take a decision to protect the interests of a humanitarian organization. The second part of the decision states: "This Decision shall not be construed to prevent the adoption by any Member of measures to ensure its domestic food security in accordance with the relevant provisions of the WTO agreements." According to several negotiators, developing countries are now saddled with an outcome that will gradually create a window for prohibiting export restrictions in other areas. This could adversely impact the ability of developing countries to address their domestic food needs, particularly during times of global food shortages. The long-term implications of this decision do not bode well for developing countries, said a person, who asked not to be quoted. On the WTO response to the pandemic, after considerable squabbling over its provisions, with the US having blocked the automaticity of using TRIPS flexibilities, the final declaration is another best endeavour outcome, said many people, who asked not to be quoted. In a similar vein, the declaration, which has been narrowed down in its overall purpose, states: "We note that over the course of the COVID-19 pandemic, Members experienced supply constraints of COVID-19 vaccines, therapeutics, diagnostics, and other essential medical goods. These experiences were not shared equally during the pandemic, in particular due to Members' differing levels of development, financial capabilities, and degrees of import dependence on those products." It asks members "to understand and build upon the experience of the pandemic, as contemplated by this declaration, in order to support increased resilience for COVID-19 and future pandemics." It states that countries recognize "the importance of a stable and predictable trading environment for the provision of goods and services in accordance with WTO rules to facilitate manufacturing, and supply and distribution of COVID-19 vaccines, therapeutics, diagnostics, and other essential medical goods, including their inputs." Significantly, it states that "the pandemic has highlighted the importance of working towards enhancing timely, equitable and global access to safe, affordable and effective COVID-19 vaccines, therapeutics, diagnostics and other essential medical goods. We recognize the role of the multilateral trading system in supporting the expansion and diversification of production of essential goods and related services needed in the fight against COVID-19 and future pandemics, including through identifying opportunities and addressing barriers. We underscore the critical role the WTO can play in promoting inclusive growth including industrialization, development, and resilience." AGRICULTURE MC12 is the first major ministerial meeting where there is no text on agriculture, despite the mandated decision on the permanent solution for public stockholding programs for food security being postponed with an intensive agenda, while killing the rest of the issues, said people who asked not to be quoted. Not only has the Doha work program on agriculture been successfully decimated, despite the establishment of the Trade Negotiations Committee (TNC) that was created for completing work on Doha issues, the WTO may never address the historical inequities of the results of the Uruguay Round. Those results are beneficial to the big subsidizers that managed to secure special entitlements that they may never want to give up. In fact, the developing countries must call into question how the DG, as the chair of the TNC under the mandate of the Doha work program, can pursue new negotiations under Article 20 of the WTO's Agreement on Agriculture, which is not the mandate she is supposed to pursue, two former Indian trade envoys told the SUNS on 19 June. Apparently, credit goes to the US at MC12 for allegedly undermining the agriculture negotiations, and it may never allow the permanent solution. Washington did the same at MC11 in Buenos Aires, Argentina, in December 2017. MC12 OUTCOME DOCUMENT The MC12 outcome document, though appears to be a compromise, has all the crucial provisions to pave the way for WTO reforms, which is going to be the next battle for the developing countries. Paragraph 3 of the document states: "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 and its subsidiary bodies will conduct the work, review progress, and consider decisions, as appropriate, to be submitted to the next Ministerial Conference". It comes with a footnote that states: "For greater certainty, in this context, this does not prevent groupings of WTO Members from meeting to discuss relevant matters or making submissions for consideration by the General Council or its subsidiary bodies." In effect, it allows all the JSI groups to ramp up their controversial proposals to do away with the principle of consensus-based decision making and other issues by MC13. More importantly, it opens the gates for a controversial environment agenda, though it is much narrowed down as compared to the original EU proposal. The text on environment states: "We recognize global environmental challenges including 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, in so far as they relate to WTO mandates and in a manner consistent with the respective needs and concerns of Members at different levels of economic development. In this regard, we reaffirm the importance of providing relevant support to developing country Members, especially LDCs, to achieve sustainable development, including through technological innovations. 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 measures and environmental measures." There is no mention of carbon border arrangements, or the circular economy. But these issues will be brought to the center stage by the EU, the US, and their allies, said a developing country trade envoy, who asked not to be quoted. On the other JSIs like trade and gender, and disciplines for micro, small, and medium enterprises (MSMEs), the text states: "We recognize women's economic empowerment and the contribution of MSMEs to inclusive and sustainable economic growth, acknowledge their different context, challenges and capabilities in countries at different stages of development, and we take note of the WTO, UNCTAD and ITC's work on these issues." FISHERIES SUBSIDIES There was a lot of intense activity on fisheries subsidies on Wednesday, when the entire text worked on by the facilitator, New Zealand's trade minister Mr Damien O'Connor, was apparently dropped before afternoon. That "truncated" text excluded the pillar on subsidies contributing to overcapacity and overfishing. It included disciplines only on IUU (illegal, unreported, and unregulated) fishing and overfished stocks. But the ACP (African, Caribbean, and Pacific) group blocked the decision to drop the text on these items and called for the restoration of the text in the afternoon. The issue was resolved around 10 pm on Wednesday night. It is not clear whether the US or the EU allegedly played a major role behind the ACP group. The US has all along wanted only IUU disciplines to be addressed, said a fish negotiator from West Africa. The US apparently failed to secure textual language on the issue of forced labour in the fisheries subsidies agreement that was agreed at MC12, SUNS has learned. In the "truncated" agreement, ministers agreed on pared-down disciplines for IUU fishing and overfished stocks, while the disciplines in the most crucial overcapacity and overfishing pillar have all gone, as the entire Article 5 was dropped. The "pared-down" fisheries subsidies agreement will stand terminated in four years, unless otherwise decided by the General Council. Article 12 states that "if comprehensive disciplines are not adopted within four years of the entry into force of this Agreement, and unless otherwise decided by the General Council, this agreement shall stand terminated." One major change seems to be that the developing countries and LDCs are allowed to carry out fishing activities up to and within the exclusive economic zone (EEZ) of 200 nautical miles, which shall be exempt from actions based on Articles 3.1 and 10 of the agreement. Ms Okonjo-Iweala claimed success, saying it protects environmental sustainability. THE LDCs UPSET The LDCs are upset that their issues have been brushed aside because of opposition from the US, which did not negotiate with the LDCs despite repeated appeals, said a LDC minister, who asked not to be quoted. In conclusion, the developing countries seemed to have suffered a significant loss at MC12, while the EU and the US appear to be the biggest winners, said people, who asked not to be quoted. +
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