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Info Service on WTO and Trade Issues (Oct23/01) Geneva, 27 Sep (D. Ravi Kanth) — A two-day retreat organized by the chair of the World Trade Organization’s General Council concluded on 26 September without any consensus on how to proceed further on issues concerning trade and industrial policy in the run-up to the WTO’s 13th ministerial conference (MC13), to be held in Abu Dhabi in February 2024, said people familiar with the retreat. At the end of the meeting on 26 September, South Africa apparently said that African countries, which had submitted six comprehensive proposals highlighting several issues that seemingly impeded industrialization in the continent, want an outcome on their proposals at MC13, said participants familiar with the discussions held under Chatham House rules. The six proposals submitted by the African Group seek a “re-balancing” of the existing WTO rules that would allow them to pursue their own specific industrialization paths. The six proposals circulated by the African Group touched on the following themes: 1. The role of transfer of technology in resilience building – Reinvigorating the Discussions in the WTO on Trade and Transfer of Technology (WT/GC/W/883); 2. The role of transfer of technology in resilience building – The TRIPS Agreement (WT/GC/W/884); 3. The role of transfer of technology in resilience building – Agriculture (WT/GC/W/885); 4. The role of transfer of technology in resilience building – Climate Change Adaptation, and Mitigation (WT/GC/W/886); 5. The role of transfer of technology in resilience building – Trade Facilitation (WT/GC/W/887); and 6. The role of transfer of technology in resilience building – The Work Program on Electronic Commerce (WT/GC/W/888). At the concluding session on 26 September, Brazil apparently sought clarity on the core issues, particularly agriculture and food security, suggesting that things are not clear on the proposed deliverables for MC13 and what is being sought to be discussed at the upcoming Senior Officials’ Meeting, to be held on 23-24 October. Brazil apparently brought up three issues: agriculture reforms and food security, the strengthening of the WTO’s enforcement function, i.e., the dispute settlement system to ensure that agreements are implemented as per the WTO rules, and other general issues like transparency, industrial subsidies, and state-owned enterprises, said people, who asked not to be identified. In response, the WTO Director-General, Ms Ngozi Okonjo-Iweala, seems to have indicated that she will hold a heads of delegation meeting on 10 October concerning the preparations for the Senior Officials’ Meeting. She also indicated that two lists will be circulated ahead of the Senior Officials’ Meeting, said participants, who asked not to be quoted. According to some other participants, the retreat on 25-26 September appears to be primarily aimed at opening a permanent door at the WTO to institutionalize the European Union’s move to reinforce the WTO’s deliberative function, which could act as a counter to the actual negotiating function, by taking up controversial issues like climate change. At the meeting, the EU suggested that discussions should go on till MC13 so that a decision on these issues could be clinched at MC14, scheduled to be held in Cameroon, an idea that was already floated by the United States Trade Representative, Ambassador Katherine Tai, last week, said people, who asked not to be quoted. The US seems to have stuck to its positions on industrial subsidies and non-market economies. The US apparently brought a linkage between the flexibilities for developing countries and enhanced transparency requirements, said people, who asked not to be quoted. The US, according to people present at the meeting, apparently said it is not ready to agree to blanket special and differential treatment (S&DT) for all developing countries, said a participant, who preferred not to be quoted. Given the huge financing required in implementing industrial policies in the developing countries, unlike in the US where the current administration is ready to spend hundreds of billions of dollars in subsidies under its 2022 CHIPS Act as well as other “green” subsidies, several developing countries seem to have raised this issue during the deliberations, as well as other unilateral measures. However, the US seemingly complained that people are bringing in many issues such as financial assistance which can only be addressed by the International Monetary Fund and the World Bank, said people, who asked not to be quoted. A participant, who asked not to be identified, pointed out that when the US is allegedly willing to violate the WTO rules and claim S&DT on its priority issues, including the infamous Jones Act of 1920 in relation to maritime shipping, it has little moral ground to preach on or deny S&DT to other countries. According to The Economist issue of 11 April 2022, the Jones Act is a protectionist measure specifically availed of by the US. The Economist says, “Section 27 of the Merchant Marine Act of 1920, to give the Jones Act its proper name, requires American waterborne domestic trade to be carried by vessels built, owned, operated, and flagged in America. This in effect prohibits foreign involvement in transport between any two American ports.” CONTEXT The two-day retreat convened by the General Council chair was aimed at addressing “policy space in support of industrialization in developing countries, including LDCs (least-developed countries)”, “industrial subsidies: opportunities and challenges for the global trading system”, and the “way forward”. During the two days, there were breakout sessions focusing on: (1) Taking into account the scale and deepening of the poly-crises, what are the challenges faced by developing countries, including LDCs, to industrialize?; and (2) What are the key policy tools for industrialization that can contribute to fair, equitable, and sustainable development and structural transformation of the economies of developing countries, including LDCs? How can the WTO rule book be adapted to provide policy space for industrialization for developing and LDC Members? INDUSTRIAL SUBSIDIES Under the sub-heading of “Industrial subsidies: opportunities and challenges for the global trading system”, members discussed issues such as: (i) Improving transparency – transparency is a key requirement of the proper functioning of a rules-based system; what are Members’ views about the current gaps in the available information on industrial subsidies? (ii) Is there a need to adapt the WTO rule book on industrial subsidies so as to effectively respond to contemporary challenges? To what extent should disciplines be strengthened and is there scope for identifying subsidies that contribute effectively to global public goods while having a minimum distortive impact on trade?” The GC chair appointed four facilitators for the two breakout sessions: Ambassador Matthew Wilson of Barbados, Ambassador Nella Pepe Tavita-Levy of Samoa, Ambassador Erwin Bollinger of Switzerland, and Ambassador Pimchanok Pitfield of Thailand, who is currently the chair of the TRIPS Council. At the end of the meeting, according to her statement posted on the WTO website, the GC chair said: “We had candid and interactive conversations.” “We are now better informed about the sensitivities around this topic. I was encouraged by the constructive spirit in which our discussions took place.” She admitted that divergences continue to persist on how to proceed further on the issue of policy space and industrialization. “Although divergence still persists, this informal meeting has shown your willingness to work together with a view to finding mutually agreeable solutions,” the chair said. “I urge all of you to build on this momentum.” The DG apparently threw her weight behind the EU’s proposal on the so-called deliberative function. “We’ve made progress,” Ms Okonjo-Iweala said. “We’ve shown that we can do this deliberative function in a very productive way and come up with ways to move forward. You’ve started with baby steps, but I hope we’ll proceed carefully along the way to try and get to some outcomes or conclusions on these issues.” “This has been the start of a useful conversation that will continue as we work towards preparing for meaningful engagement at MC13 and at the senior officials’ meeting,” the GC chair said. “Today is not the end, but a milestone on the journey to MC13.” DISAPPOINTING RETREAT Several members said that the retreat was disappointing as it apparently lacked serious engagement. However, a trade envoy of an industrialized country said the discussions were productive on the first day. Even though there were exhaustive discussions on a range of issues concerning industrial policy and policy space for developing countries, there was general recognition during the discussions that developing countries were seemingly harmed by the Uruguay Round agreements, namely, the Agreement on Trade-Related Investment Measures (TRIMs), the TRIPS Agreement, and Agreement on Subsidies and Countervailing Measures (ASCM) among others, said participants familiar with the discussions in four different groups. Several industrialized countries apparently sought to know how the flexibilities accorded in the WTO agreements have been used, or not used, by the developing countries and what needs to be done to enhance the prospects for industrialization in these countries. China, which appeared to be in the same group as the US, apparently suggested that for availing of special and differential treatment, the developing countries could decide on their own assessments/situations, said a person, who asked not to be quoted. Even though four informal meetings/retreats have taken place so far, what was achieved during these seemingly costly events is not clear, said people, who asked not to be quoted. However, the GC chair has claimed, “Today is not the end, but a milestone on the journey to MC13.” +
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