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Info Service on WTO and Trade Issues (Aug23/09) Jaipur, 25 Aug (D. Ravi Kanth) — Under the Indian Presidency, the trade ministers of the Group of 20 (G20) industrialized countries and several developing countries concluded a two-day meeting in Jaipur, India, on 25 August, in which the dominant industrialized countries, particularly the United States and the European Union, appeared to have weakened the core priorities of the developing countries at the World Trade Organization and in global trade, said participants familiar with the discussions. The G20, which was established in the shadows of the global financial crisis in 2008, includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, South Korea, Japan, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union. The G20 trade ministers apparently gave short shrift to the mandated issues like the permanent solution for public stockholding (PSH) programs for food security, the reform of the WTO based on development-oriented priorities as proposed by more than 100 developing and least-developed countries, ensuring effective special and differential treatment and the principle of consensus-based decision-making as enshrined in the Marrakesh Agreement that established the WTO in 1995. They seem to have agreed on what appears to be a rather anaemic text that may not advance the priorities/ interests of the Global South, a developing country participant told the SUNS after the meeting. The participant, who preferred not to be quoted, said that the final “Outcome Document and Chair’s Summary” fails to guarantee the continuation of a binding two-stage dispute settlement system, with the Appellate Body continuing to serve as the final adjudicating body for resolving global trade disputes. For hundreds of trade disputes raised since 1995, when the WTO was established, the findings/rulings of the Appellate Body became binding on governments to implement regardless of their status. The 18-page text also inserted language favourable to the proponents of the controversial non-mandated Joint Statement Initiatives (JSIs) on digital trade, investment facilitation, disciplines for micro, small and medium enterprises (MSMEs), and trade and gender among others. Apparently, the language on the JSIs reflected the consensus achieved at the Sorrento trade ministers’ meeting during the Italian G20 Presidency almost two years ago while setting aside the consensus agreed at the Bali trade ministers’ meeting last year. The European Union and several other industrialized countries also managed to include language on trade and environment, though, in somewhat ambiguous terms, said participants, who asked not to be quoted. Due to differences over the language inserted on the Russia-Ukraine conflict, Russia and China rejected the negotiated text, but agreed to the rest of the items. Consequently, the chair of the G20 Trade and Investment Ministerial Meeting, Mr Piyush Goyal, issued what is called an “Outcome Document and Chair’s Summary” along with three annexes. Despite a lack of consensus on the final text because of the proposed language on the ongoing Russia-Ukraine conflict, the Indian minister claimed success on account of what he called “new outcomes which were not part of the previous agenda.” He referred to the three annexes as “G20 Generic Framework for Mapping GVCs (Global Value Chains), the Jaipur Call for Action for Enhancing MSMEs’ Access to Information, and High-Level Principles on Digitalization of Trade Documents.” Amidst the seemingly unprecedented pomp and circumstance rarely witnessed in previous G20 trade ministers’ meetings, the Jaipur meeting brought to the surface the aspirations of the current Indian government, notwithstanding the Indian minister’s repeated calls for ensuring that the WTO and global trade must serve and address the interests of the poorest communities during the first session on “trade for growth and prosperity” held behind closed doors, said participants who asked not to be quoted. In the introduction to the Outcome Document, trade ministers acknowledged that they “remain in the middle of a multi-dimensional crisis that raises global challenges such as macroeconomic instability, food insecurity and disruptions across Global Value Chains (GVCs).” It says: “This crisis is undermining resilient, sustainable and inclusive economic growth and poses a threat to economic development and to global trade growth, with a particular impact on developing countries and Micro, Small and Medium Enterprises (MSMEs).” TRADE FOR GROWTH AND PROSPERITY The Outcome Document reaffirmed that “a rules-based, non-discriminatory, fair, open, inclusive, equitable, sustainable and transparent multilateral trading system, with the WTO at its core, is indispensable to advancing our shared objectives of inclusive growth, innovation, job creation and sustainable development.” During the closed-door meetings of senior trade officials at the conference center on 21-23 August, it became somewhat apparent that the United States is distancing itself from the rules-based multilateral trading system, said people familiar with the discussions. It appears that the US is opposed to including any language in the G20 text that would explicitly refer to “WTO- inconsistent” measures in the section on the WTO reforms, said people, who asked not to be identified. As reported in the Washington Trade Daily (WTD) on 24 August, the spokesperson for the United States Trade Representative (USTR), Mr Sam Michel, said the US rejects the above assessment that Washington is distancing itself from the WTO. The spokesperson said the above assertion “is absolutely incorrect.” “We have never distanced ourselves from the multilateral rules-based trading system.” “On the contrary,” he said, “we are strong supporters of it and we remain deeply committed to multilateral institutions, including the WTO.” Mr Michel continued: “Our focus is making sure the WTO works for all Members and addresses the needs that our people face, and this view is shared by members.” The USTR’s statement says that Ambassador Katherine Tai “underscored continued US commitment to the WTO, and to (her) leadership in reforms that ensure the WTO effectively works on behalf of all its members, and all people.” The G20 Outcome Document issued at the end of the meeting acknowledged that “mounting challenges are adversely affecting predictability and resilience of global trade, aggravating poverty and inequality and negatively impacting achievement of sustainable development objectives.” It emphasized that the G20 members are “committed to reinforcing cooperation on international trade and investment to avoid unnecessary disruptions and to achieve SDGs [Sustainable Development Goals].” It reiterated that the G20 members “will continue to ensure a level playing field and fair competition to foster a favorable trade and investment environment for all.” The G20 trade ministers said they will support “policies that enable trade and investment to serve as an engine of growth and prosperity for all, thereby supporting the UN 2030 Agenda and its Sustainable Development Goals in its three dimensions.” They underscored the importance of the WTO’s “Aid-For-Trade Initiative” to enable developing countries, notably LDCs, “to effectively participate in global trade including through enhanced local value creation.” The Outcome Document also referred to strengthening “cooperation to increase transparency of SPS [sanitary and phytosanitary] and TBT [technical barriers to trade] measures in accordance with WTO agreements and continue to assist developing countries, notably LDCs through technical assistance and capacity building to strengthen their ability to establish and comply with technical requirements.” Apparently, at the insistence of India, the Outcome Document “reaffirmed the importance of services trade in global growth and generating employment”. It underscored the “importance of sound, predictable and transparent domestic regulatory frameworks for trade in services.” Without referring to the movement of short-term services providers under Mode 4 of the General Agreement on Trade in Services (GATS), the G20 trade ministers recalled “the importance of ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services.” The G20 trade ministers welcomed “the voluntary sharing of best practices by G20 members on Mutual Recognition Agreements (MRAs) for professional services and the proposed development of a “Presidency’s Compendium of best practices on MRAs for Professional Services”.” Although the G20 trade ministers made no mention of extending the WTO’s 12th ministerial conference (MC12) Ministerial Decision on the TRIPS Agreement to cover COVID-19 diagnostics and therapeutics, they recognized that “global economic recovery since the Covid-19 pandemic has been uneven and underline the need for increased preparedness of the multilateral trading system and its members to address any future global exigencies and pandemics in an effective manner and according to members’ specific needs.” The G20 Outcome Document recalled that “trade and environment policies should be mutually supportive, consistent with WTO and multilateral environmental agreements. We further acknowledge the essential role of multilateral cooperation to effectively address common environmental and sustainable development challenges. We will engage in further discussions on trade and sustainability.” Yet, the EU is pushing ahead with its controversial carbon border adjustment measures, knowing full well that such measures are inconsistent with the Paris Climate Change Agreement of 2015, said a participant, who asked not to be quoted. The G20 trade ministers underlined “our adherence to the rules and foundational principles of the World Trade Organization (WTO) and reaffirm our commitment to fulfilling its objectives, underscore the need to ensure that gains from trade are shared by all and that international trade and investment can help to bridge inequalities, promote greater resilience and address economic vulnerabilities.” It also acknowledged “the need for the WTO to tackle trade issues important to our people and promote inclusivity and fair competition, thereby contributing to the fulfillment of the Sustainable Development Goals (SDGs).” WTO REFORM Aside from reiterating “the essential role of the multilateral trading system with the WTO at its core,” the ministers emphasized the need to “work constructively towards necessary WTO reform to improve its functioning and to strengthen trust in the multilateral trading system while reaffirming the foundational principles and objectives set out in the Marrakesh Agreement Establishing the WTO.” However, they seemingly remained silent on the mandated issues such as the permanent solution for public stockholding programs for food security, the special safeguard mechanism (SSM) for developing countries in agriculture, the ten Agreement-specific proposals by the G90 developing countries to make the special and differential treatment provisions simple and effective, and several other issues. It is commonplace that these mandated issues have been hanging in limbo since the WTO’s 10th ministerial conference (MC10), held in Nairobi, Kenya, in 2015. While these issues have been negotiated in the face of hurdles placed by the US, the EU, and some developing countries, there appears to be a constant display of diversionary tactics during the discussions. Pushed into the backburner for almost eight years, the industrialized countries shifted the goalposts to WTO reforms under which they intend to legitimize the controversial Joint Statement Initiatives (JSIs), allow the WTO to discuss new issues without any formal multilateral ministerial mandates, and undermine the WTO’s enforcement function that covers the dispute settlement system. Despite reaffirming “the guidance of the MC12 Outcome Document including on the need to pursue WTO reform through a member-driven, open, inclusive and transparent process that must address the interests of all its members, including on development issues,” the G20 Outcome Document calls on “the wider WTO membership to continue advancing all WTO reform efforts.” “The excessive focus on WTO reforms seems to be a testimony as to who gained from the Jaipur meeting,” said a developing country delegate, who preferred not to be quoted. DISPUTE SETTLEMENT REFORM At a time when a large number of developing and several developed countries made the restoration of the two- stage dispute settlement system as a must-have for the credibility of the WTO at the upcoming WTO’s 13th ministerial conference (MC13), to be held in Abu Dhabi in February next year, the G20 Outcome Document seems to have touched a new low on the dispute settlement reform. The G20 Jaipur document is silent on the restoration of the two-stage dispute settlement system, apparently due to opposition from the United States. It merely says, “… We note the ongoing discussions on Dispute Settlement reform and remain committed to conducting discussions with a view to having a fully and well-functioning Dispute Settlement System, accessible to all members, by 2024.” ENHANCED ROLE FOR TRADE & INVESTMENT In what appears to be a bolt from the blue, perhaps at the insistence of the US and the EU, the G20 Outcome Document sends a signal about the “importance of deliberations at WTO on all issues impacting the multilateral trading system including the intersection between trade, investment, and industry-related matters and on efforts to make trade transparent, open, fair, more inclusive and accessible for all.” Oddly, this issue was never agreed upon at any prior WTO ministerial meeting, and for the G20 to get this on the mandate under the Indian Presidency appears to have troubled some developing countries that took part in the deliberations. In an apparent attempt to assuage the developing countries, the trade ministers inserted a line stressing that “the development dimension should be an integral part of such deliberations.” JSIs Even though the Joint Statement Initiatives (JSIs) were first raised at the WTO’s eleventh ministerial conference (MC11) in Buenos Aires, Argentina, in 2017 and rejected by members at that conference, several proponents of the JSIs on digital trade, investment facilitation, disciplines for micro, small, and medium enterprises (MSMEs), and trade and gender went ahead to negotiate these respective initiatives regardless of their alleged WTO- illegality. The JSI proponents seem to have secured a green light at the G20 trade ministerial meeting in Jaipur without the JSIs being mentioned. According to the G20 Outcome Document, the trade ministers said that they remain “committed to strengthening the rule-making arm of WTO by facilitating trade negotiations and fostering the update of global trade rulebook, and underscore the importance of the ongoing [JSI] negotiations in WTO.” India and South Africa have consistently opposed the JSIs on grounds of their alleged violation of the rules set out in the Marrakesh Agreement, particularly Article IX (on decision-making) and Article X (on amendments). Yet, India’s emphasis on “Trade and Investment for Resilient Global Value Chains (GVCs)”, the Jaipur call on “Integrating MSMEs in Global Trade”, “high-level principles for digitalization of trade-related documents,” and a greater role for logistics for trade among other issues appears to have sent mixed signals, said a participant, who asked not to be quoted. In short, the Jaipur meeting of the G20 trade ministers seems to have taken the trade agenda in the direction of the trade majors while not seemingly neglecting the trade concerns of the Global South, which is a crying call of the current Indian government, said a developing country participant. +
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