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Info Service on WTO and Trade Issues (Jan25/01) Cochin, 21 Jan (D. Ravi Kanth) — The members of the World Trade Organization on 16 January held a day-long retreat on “development” at the Hilton Hotel in Geneva ostensibly to discuss ideas proposed by the chair of the WTO’s General Council, including on operationalizing “differentiation” among developing countries for availing of special and differential treatment (S&DT), said people familiar with the development. In what appears to be an alleged attempt to appease the new United States administration under President-elect Donald Trump, the chair of the General Council (GC), Ambassador Petter Olberg of Norway, framed the discussions revolving around how developing countries ought to consider giving up special and differential treatment, said people familiar with the development. It may be recalled that Trump’s trade policy team led by former US Trade Representative (USTR) Ambassador Robert Lighthizer had launched a sustained campaign to bring about “differentiation” based on a controversial framework to compel developing countries to give up their S&DT entitlements. Some countries like Singapore and South Korea had voluntarily announced that they would not avail of S&DT provisions while the former Brazilian President Jair Bolsonaro, in the presence of President Trump during his first term, also announced that Brasilia is opting out from availing of S&DT. Against this backdrop, the GC chair’s move to bring in the issue of “differentiation” among developing countries for availing of S&DT appears to be a cause for concern among developing countries who are being told to give up their hard-fought S&DT entitlements based on the Enabling Clause at the end of the Tokyo round of trade negotiations, said people familiar with the development. Significantly, at the retreat, attempts were seemingly made to push investment as part of the new “development agenda” in global trade, notwithstanding the fierce opposition to the incorporation of the proposed “Investment Facilitation for Development Agreement” into Annex 4 of the Marrakesh Agreement, said people familiar with the development. Amidst tumultuous changes like the proposed trade measures being suggested by President-elect Trump against Washington’s trading partners, the leadership at the WTO appears to be making attempts to deliver on the previous demands made by the former USTR during 2017-2020, said people familiar with the development. At the day-long retreat convened by the outgoing GC chair at the Hilton Hotel in Geneva, there was little or no discussion on how Trump’s trade policies could change the WTO’s architecture irreversibly, said a trade envoy, who asked not to be quoted. TOP-DOWN APPROACH Instead of negotiating on the mandated issues on “development”, including the 10 Agreement-specific proposals on improvements in the S&DT provisions, the GC chair has apparently proposed a top-down approach that allegedly sets aside the existing mandated issues while underscoring the need for a wholesale change, said people familiar with the discussions. In a restricted note (Job/GC/419) sent to members on 13 December 2024, seen by the SUNS, the GC chair highlighted an increase in the per capita incomes in low- and middle-income countries during the past 30 years. “Since the WTO’s establishment nearly 30 years ago, per capita incomes in low- and middle-income economies have nearly tripled, and the share of people living in extreme poverty has fallen from 40 percent to 11 percent,” he maintained. Ambassador Olberg, however, acknowledged that “progress has been uneven”, as “one-third of low- and middle-income economies have grown slower than high-income economies, leading to divergence rather than convergence.” The GC chair said that “high trade costs are a key barrier” and “for least-developed economies, these costs are 47 percent higher for manufactured goods and 50 percent higher for services compared to high-income economies.” “Trade policies – such as high tariffs, challenges in meeting foreign standards, and gaps in trade facilitation – play a role,” as well as that “domestic constraints, including weak infrastructure, unreliable energy, and poor contract enforcement, further exacerbate the problem.” The GC chair said that in “today’s changing global landscape, the WTO must adapt to better serve developing economies within its mandate”, adding that “reducing trade costs, increasing trade participation, and fostering diversification require both sound trade policies and complementary domestic reforms.” While remaining silent on the persisting mandated issues in agriculture, development, and other areas, the GC chair suggested that “trade will be shaped by three key trends: resilience, digitalization, and sustainability.” The rationale he provided is that since “businesses diversify their supply chains, new trade opportunities will emerge for economies currently on the margins of globalization.” In addition, he said “the rapid growth of digitally delivered services, accelerated by advances in AI (artificial intelligence), could become a game-changer for trade-led development”. Finally, the GC chair said, “sustainability will define future comparative advantages, with many developing economies well-positioned to lead the green transition by leveraging their abundant renewable energy resources and critical minerals.” While maintaining that “Development is crosscutting and for every Member,” he said that the “focus of this retreat will be on developing Members and LDCs.” In a member-driven and rules-based organization like the WTO, the GC chair said in a rather emphatic tone that “the WTO cannot do everything but should deliver within the tools at Members’ disposal: (1) Make rules; (2) Flexibilities in rules; (3) Technical assistance and capacity building (TACB); (4) Dialogue to solve trade problems and arrive at solutions; (5) WTO’s convening power.” His suggestions seem to indicate that the WTO members should resolve and set rules through consultations and not through give-and-take negotiations, said people familiar with the GC chair’s note. Without indicating how many members were actually consulted and in which groups, the GC chair said that his “key takeaways from my consultations on the retreat include the following: * Momentum and willingness to deliver for developing Members and LDCs. * Different developing Members and LDCs have different priorities and needs. * Barriers to results: trust deficit, lack of political will and procedural challenges; “To cure properly, must diagnose specifically”. * Broad call to operationalize differentiation and revisit past ways of arriving at consensus without re-categorizing developing Members and LDCs.” Using obfuscatory terms like a “broad call” as well as “without re-categorizing developing Members and LDCs”, the GC chair went on to say that it is his hope to launch “a different conversation from what we normally have” at the retreat. “One where we are open, frank, and forward-looking,” he suggested. However, Ambassador Olberg did not explain what would constitute a “forward-looking” approach in the current phase that appears to be characterized by the relentless recourse to unilateral measures by the US and other industrialized countries, said a person who asked not to be quoted. The GC chair wants members to “actively listen to each other”; “One where we start with agreeing that development is cross-cutting, and that trade has an important role to play”; and “more specifically, I hope we can do three things: 1. Come to a common understanding of what the challenges and opportunities are. 2. Identify actionable ideas for what should be done in the WTO to address these. 3. Suggest concrete next steps on how to proceed from here.” With 166 members at the table, surely it would be difficult to arrive at “a common understanding of what the challenges and opportunities are”, as what is good for Norway may not be good for Mozambique, said a person, who asked not to be quoted. Clearly, countries are not existing in an era where the proverbial notion that what is good for the goose ought to be good for the gander, the person said. MAIN QUESTIONS According to the GC chair’s note, the retreat, with 20-30 Heads of Delegation distributed among several groups, will have the following guiding questions: Diagnose – Common understanding of the challenges and opportunities In breakout session one, the GC chair wants members to “come to an understanding of challenges developing Members and LDCs are facing in achieving their development objectives, and opportunities going forward.” According to the proposed schedule, in the first session, one developing member or LDC in each group is asked to “briefly and concretely share from their individual perspective, what their challenges are and where they see opportunities going forward.” The GC chair suggested the following questions to guide the reflection: * Key factors: What are the key factors (in WTO/domestically/externally) that have enabled or hindered your development? * Trade not working for all: Why has the share of LDCs in global trade stagnated at 1% and Africa at around 3%? Why is a staggering percentage not exporting, and many that are, mostly exporting commodities? * Commitments/flexibilities: What works best to foster trade going forward, commitments or flexibilities? Which types of flexibilities are most efficient? * Opportunities: Where do you see opportunities for trade growth in developing economies going forward? * Priorities: How do we agree on priorities in the WTO when needs, perspectives on “what works” and focus (past versus future) are different? Solutions – Given the diagnosis in Session 1: What should we do in the WTO? The GC chair sought to know what can the WTO “do within our mandate and available tools to meet the challenges and seize the opportunities we identified in Session 1.” The key guiding questions proposed by the GC chair include: 1. How can WTO deliver on the challenges and seize opportunities identified in session 1? 2. Differentiation: How can we efficiently operationalize differentiation (in WTO Rules, Special and Differential Treatment (S&DT), Technical Assistance and Capacity Building (TACB)) to deliver better on the different needs of developing Members and LDCs? 3. Industrialization: How can the WTO contribute to resilient, diversified, and integrated supply chains in areas developing economies have competitive advantages? 4. Policy space: Could the WTO explore pragmatic approaches on levelling playing field issues and policy space for development in a way that limits negative spillovers? If so, how? 5. Technical Assistance and Capacity Building: How can the WTO’s technical assistance and the Aid for Trade initiative respond better to the evolving needs of developing Members? Finally, in the third session, members will explore concrete next steps, including “what actions should members take after the retreat and towards MC14 (WTO’s 14th ministerial conference to be held in Cameroon in end- March next year.” The following facilitators have been nominated for overseeing the discussions: * Group 1: H. E. Dr. Jose Roberto Sanchez Fung (Dominican Republic) * Group 2: Ms. Winky So (Hong Kong, China) * Group 3: H. E. Mrs. Heidi Schroderus-Fox (Finland) * Group 4: H. E. Mr. Ram Prasad Subedi (Nepal) * Group 5: H. E. Ms. Nella Pepe Tavita-Levy (Samoa) * Group 6: H. E. Dr. Mzukisi Qobo (South Africa) In short, the GC chair appears to be working on an agenda to appease the new Trump administration, which will take office at the White House on 20 January, said people familiar with the development. +
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