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Info Service on WTO and Trade Issues (Feb24/12) Geneva, 15 Feb (D. Ravi Kanth) — With just about 11 days left for the World Trade Organization’s 13th ministerial conference (MC13) in Abu Dhabi, members on 14 February echoed sharply divergent views on the proposed deliverables as well as what needs to be included in the draft texts that are expected to be issued on 16 February, said people familiar with the discussions. A special meeting of the WTO General Council, which began with the statements of the WTO Director-General, Ms Ngozi Okonjo-Iweala, and the chairs of the respective Doha negotiating bodies, revealed their assessments, though somewhat non-comprehensive, on the issues in the respective deliverable dossiers at MC13. While the DG and the chairs issued their statements, with the DG having informed members that all draft texts will be released on 16 February, the actual work on downsizing/slimming down/streamlining the texts is being done simultaneously by the WTO Secretariat officials in their respective silos, said people familiar with the development. Several members privately expressed serious doubts/concerns over whether the draft texts being prepared by the Secretariat will adequately/properly reflect their views or will be tilted/biased in favour of certain members and groups, as happened in the previous ministerial meetings, said people, who asked not to be quoted. The DG appears to have cautiously expressed optimism about the possible outcomes at MC13, emphasizing on digitally delivered services among others in the outcome document, said people who asked not to be quoted. IFD Towards the end of the General Council (GC) meeting on 14 February, there were some rather sharp exchanges on the proposed plurilateral Agreement on Investment Facilitation for Development (IFD), an issue that appears to have been raised by one South American member in the GC discussions, said people who asked not to be quoted. It is almost unusual and rarely witnessed in the history of the GC meetings, when a Director-General, the custodian of the 164-member inter-governmental, member-driven, and rules-based multilateral trade body, chose to challenge the views expressed by India and South Africa against the proposed plurilateral IFD agreement. IFD was rejected at the WTO’s fifth ministerial meeting in Cancun, Mexico, in September 2003, in the 2004 July Framework Agreement in Geneva, and at MC11 in Buenos Aires, Argentina, in December 2017, said people, who asked not to be quoted. After thanking the GC chair, Ambassador Athaliah Lesiba Molokomme of Botswana, for clarifying the procedural issues involved in the manner in which the IFD issue was raised at the GC meeting, the DG said that she wants to make a statement on the substance of the issue, said people, who asked not to be quoted. “You know I am a DG and not a member,” Ms Okonjo-Iweala said. “As a Director-General, I am a little bit puzzled, we have been in this house stating how we want to help developing countries to create jobs, industrialize, have policy space, attract investment,” she said. “And we come to do this through special and differential treatment, we have to make major moves,” Ms Okonjo- Iweala said. “Right now, there is a chance for developing countries to attract supply chains and try to diversify to countries to build resilience and there are many developing countries from all over the world who are part of this agreement (on IFD),” she argued. The WTO DG said, “From the re-globalization standpoint that we are talking about, I think that if there is any instrument to attract investments, we should try to encourage them.” While “I respect the views of India and South Africa (on) systemic (grounds), we need to have a dialogue,” she said, adding that she wants to see a dialogue with India and South Africa. Ms Okonjo-Iweala suggested that 123 countries (who are members of the plurilateral agreement on IFD) need to create the right investment environment to attract investments in their countries. “To deny them that opportunity to do this,” she said, “if we are really talking about development, I think we should reflect very carefully on this.” “You talk about systemic issues and procedural issues, we also need to think how we can make this organization with new ways of doing things,” the DG argued. She said, “The multilateral instrument remains a premium, we all treasure it and I totally agree with India on that.” But, she said, “When we see such a thing of benefit when three-quarters of the organization” support an agreement on IFD, “I would urge India and South Africa to please reflect on it and please talk to the opponents.” “And please give poor countries a chance to get something good going,” the DG said, adding that “if you see the agreement, you know what people are looking for that would enable them to get something done that countries would not normally do.” “And so, I want to add my voice because I am completely baffled, if we say we want to help developing countries, an instrument comes out to help that, I am baffled.” The DG directed her comment at South Africa, saying, “I am looking at South Africa, (as) there are many African countries on this list and many of them are least-developed countries.” “I am looking really at you South Africa, please reflect because I owe an explanation to these countries to attract the investments that they can’t due to some procedural issue.” “So, I want to put that out, I am known for speaking bluntly, and trying to do this would be extremely sad if we were to block this particular investment,” the DG concluded. In a rules-based organization, the DG’s statement on IFD could constitute a violation of her role as the head of the WTO under paragraph four of Article VI of the Marrakesh Agreement, said a legal expert, who asked not to be identified. At the special GC meeting, China, which has been spearheading the IFD initiative since 2018, said that the “IFDA is supported by three-quarters of WTO members, including more than 85 developing members and LDCs.” Without naming the non-participants like the United States, China said, “In addition, most non-participants support adding the IFDA into Annex 4 of the WTO agreement, on a consensus basis.” China argued that “the overwhelming support by WTO members on the IFDA represents, first and foremost, a recognition of its potential benefits to promote investment, economic growth and sustainable development; and, secondly, a recognition of the value and benefits of this open plurilateral agreement to all WTO members, including non-participants; and, last but not least, represents the common aspiration and concerted efforts, by participants and non-participants, to revitalize the negotiating function of the WTO while upholding the principle of consensus decision-making.” China said, “As the DG pointed out in the CTE SS recently, development has a central place in the WTO’s work. We need to respond to the needs and concerns of developing countries”. According to China, “the potential benefits to, and the extensive support by, the developing members makes the Investment Facilitation for Development Agreement (IFDA) the exact kind of development deliverable for MC13.” “Failing this would deal a heavy blow, not only to the development agenda at the WTO and also to the WTO itself,” China warned. It called upon “all WTO members, to take a step forward for this initiative, help build the bridges in the discussions, and join the consensus in the successful delivery of this agreement at MC13.” More importantly, it said that “this milestone achievement will mark a significant moment in our history, as we approach the 30th anniversary of the WTO, and it is a moment that each and everyone in this room will be a part of, and should embrace.” “If we do care about the development dimension,” China said, members “should support it.” FISHERIES SUBSIDIES The chair of the Doha fisheries subsidies negotiations, Ambassador Einar Gunnarsson of Iceland, appears to have suggested that his text will identify landing zones and options. The chair seems to have said that he was asked to produce a balanced text and that he will be removing the square brackets in the text. The chair also indicated that it is not possible to close the most important gaps, adding that members increased our understanding of the issues in front of us, said people familiar with the discussions. On fisheries subsidies, the US went against the “flexibilities” in the proposed outcome on disciplines on subsidies contributing to overcapacity and overfishing (OCOF) that has caused the global depletion of fish stocks, saying that the big subsidizers should not have any flexibilities. The US trade envoy Ambassador Maria Pagan said that Washington wants to see special and differential treatment (S&DT) to be made more precise, effective, and operational. She said that for Washington, “flexibilities are for those who need them for actual needs and circumstances,” adding that “it also means that large fishing nations and large subsidizers regardless of their subsidies cannot qualify for those flexibilities,” otherwise, the agreement would become meaningless. China said that it “remains committed to delivering phase II agreement at MC13. Without underestimating the difficulties and challenges ahead of us, I believe we could reproduce the success of MC12, if the delicate balance is struck between main disciplines and SDT, and respective red-lines and key concerns of members are properly addressed.” The European Union expressed confidence that “an agreement on the phase 2 disciplines is still attainable.” Indonesia said that “as the biggest archipelagic country in the world with 80% of fishers are small-scale and artisanal,” it places “great importance in a strong OCOF discipline, balanced with an effective and appropriate S&DT as an integral part.” Using the adage in the trade negotiations that “no agreement is better than a bad agreement,” Indonesia said “we are aware that an imperfect document is arguably better than none.” Indonesia warned that it will “never accept an imbalanced agreement,” especially “one that provides loopholes for a handful of members contributing to more than 50% of harmful subsidies.” Moreover, “an agreement that restrains the policy space of developing countries and LDCs in such a way – that seals their weak position in an eternity,” is not acceptable, Indonesia said. In its statement, South Africa said that one of the tension points is that the largest subsidizers are not taking on meaningful commitments. It emphasized that the largest subsidizers must bear greater responsibility for safeguarding the sustainability of global fish stocks, said people familiar with the discussions. DS REFORM The facilitator overseeing the informal discussions on the reform of the WTO’s dispute settlement system (DSS), Mr Marco Molina, deputy trade envoy of Guatemala, seems to have suggested some strange and weird examples of sharing pumpkins, soaps, and deodorants efficiently, said a participant, who preferred not to be quoted. But the US trade envoy, Ambassador Maria Pagan, appeared to overly praise the Guatemalan facilitator for his work on “DSS reform and for his comprehensive report.” She said, “we agree with the facilitator that the text is not complete, not perfect, and is not a consensus document, but that does not mean we should diminish the value” of the text, said people familiar with Ambassador Pagan’s statement. Effectively, the US pitched for more work to be done on the text, indicating that the MC12 mandate of restoring a fully functioning dispute settlement system will not be concluded at MC13, as previously reported in the SUNS. China expressed its disappointment at missing the opportunity of delivering on an outcome on DSS reform at MC13, adding that it values “the progress made so far, and recognizes the tremendous efforts devoted by all, and in particular Mr. Marco Molina.” It called “upon all members to maintain the positive momentum and further accelerate the work with more sense of urgency, among others, to find a proper solution to the appeal/review issue, the most important element and gateway issue in DS reform.” China emphasized that “in order to have a fully and well-functioning DSS as soon as possible, we believe an early formalization of the process and a clear post-MC13 road map is crucial.” The EU’s trade envoy, Ambassador Joao Aguiar Machado, also showered praised on the facilitator, saying that “we should preserve all the good work that we have done, and put Ministers in a position to lay out the path towards an agreement on the outstanding issues by the end of 2024.” Brazil also said the work done in the DSS reform negotiations should be preserved, while emphasizing on the need to restore the two-tier dispute settlement system, including the Appellate Body, a comment also echoed by Mexico, said people who asked not to be quoted. Indonesia raised several probing questions about the conduct of the informal DSS reform discussions by the facilitator. Indonesia said, “A fully functioning and accessible two-tier dispute settlement system by 2024 should remain as our main goal in this endeavour.” It regretted that members are “unable to reach consensus, notably on the appeal/review mechanism.” Indonesia said the appeal/review mechanism is “not the only outstanding issue, especially when views and reservations raised by developing countries, including LDCs remain invisible, with no brackets nor rainbow text, as noted by the facilitator.” Indonesia’s trade envoy Ambassador Dandy Iswara said, “Indeed, on the surface, it looks like the pumpkin is equally shared,” drawing the facilitator’s attention to document JOB/DSB/8 from Bangladesh, Egypt, India, Indonesia, and South Africa that was circulated on 12 February. Ambassador Iswara said the joint communication focuses on such outstanding issues arising from the informal discussion on dispute settlement reform that were raised by developing members and LDCs, but continued to be ignored. Indonesia demanded “formalization of the discussion post-MC13”, adding that “we should make space for new ideas and proposals to be discussed, alongside the now version seven of the draft Ministerial Decision.” South Africa’s new trade envoy to the WTO, Ambassador Mzukisi Qobo, is understood to have called for a fully and well-functioning dispute settlement system that is accessible to all members and that considers all the concerns in a balanced manner, said people familiar with the discussions. Bangladesh, as well as several other developing countries, criticized the facilitator for his allegedly non- transparent process, said people familiar with the discussions.+
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