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TWN
Info Service on WTO and Trade Issues (May25/26) Yerevan, 22 May (D. Ravi Kanth) — The United States on 21 May appears to have rejected a proposal at the World Trade Organization for establishing a monitoring mechanism for conducting simulations on the impact of tariffs on members, a proposal that was seemingly floated by several countries and backed by the WTO Director- General, Ms Ngozi Okonjo-Iweala, said people familiar with the development. On the second day of the two-day (20-21 May) meeting of the WTO’s General Council (GC) on 21 May, tensions between the US and the DG came into the open over the issue of establishing a monitoring mechanism on tariffs as well as the alleged lack of transparency over the activities of the WTO Secretariat, said people familiar with the development. At the core of the differences/tensions between the US on the one side, and the DG, on the other, is whether things are being done properly at the WTO in a transparent framework and whether there is need for a monitoring mechanism to evaluate the impact of allegedly unilateral tariffs imposed by the US against countries, said a person, who asked not to be quoted. The US seems to have raised serious concerns about the lack of transparency and the manner in which certain things are being done at the WTO without Washington’s prior knowledge/approval, said people familiar with the development. On the other hand, the DG, according to several people, wants to pursue issues like the tariff simulation exercise by the WTO Secretariat based on requests/demands by some members who have not been identified, and without prior approval from the members, said people familiar with the development. The WTO, which is a member-driven organization, needs the prior consensus of members on any issue, including on any new activity or work program such as establishing a monitoring mechanism to study the impact of tariffs on members, said people familiar with the discussions. When the US highlighted the issue of the lack of transparency at the GC meeting on 21 May, the DG appears to have taken the floor to insist that the WTO Secretariat has been transparent and that it has been doing everything based on members’ demands, said people familiar with the development. In the past, when India asked the Secretariat to conduct a study on whether countries complied with their Mode 4 commitments under the General Agreement on Trade in Services (GATS) concerning the movement of short- term services providers, the Secretariat seemingly dodged the issue and did not conduct the study, said a former trade envoy, who asked not to be identified. In a sharp response to the DG’s comment, the US took the floor at the GC meeting on 21 May to say, “oh, we are also a member,” said people, who asked not to be identified. In a retort to the US argument, the DG apparently said, “you are a valued member, but the Secretariat does not know what is your concern,” said people familiar with the discussions. The DG appears to have pointed out that the US had earlier raised concerns that bilateral free trade agreements were not being examined as required under Article XXIV of the GATT, said people familiar with the development. At one point, the US said that it is not supportive of any Secretariat monitoring exercise on tariffs, said people familiar with the development. The fact that the US had to voice its concerns repeatedly at the GC meeting suggests that Washington appears to be upset over the functioning of the Secretariat, said a former trade envoy, who asked not to be quoted. “SDR” APPROACH Meanwhile, at the GC meeting on 20 May, China proposed an SDR approach – “Stability, Development, and Reform” – for the WTO to combat “unilateral tariffs” and the threat of “reciprocal tariffs” being pursued by the Trump administration that are adding “fuel to the fire”. During a discussion on “heightened trade turbulence and responses from the WTO”, China called on members to embrace the SDR approach at the WTO, which is “facing mounting challenges.” China argued that “an open, stable and rules-based international economic and trade order serves the common interests of all.” China said the bilateral meeting held with the US (which resulted in bringing down tariffs by 115 percentage points during the first round of discussions held in Geneva ten days ago), was “in the spirit of cooperation and mutual respect, and towards achieving a mutually beneficial economic and trade relationship.” “It is an important step to bridge gaps and further cooperation between China and the US,” China said in its statement. China said it “believe(s) the multilateral solution is also indispensable,” proposing the “SDR approach for the next steps of the WTO: Stability as the cornerstone, Development as the priority, and Reform as the pathway.” As a first step of the SDR approach, China called on members to anchor trade measures under the WTO rules, and to stabilize trade relations with each other. At a time when the US has raised sharp concerns over the WTO Secretariat’s functioning, China said it “supports the Secretariat’s monitoring role to enhance transparency and predictability under current circumstances.” According to Beijing, as a second step, members need “to further expand unilateral opening of trade for LDCs, and support fora such as CTD [Committee on Trade and Development] and the Aid for Trade Initiative to provide developing members with more effective assistance by focusing on their real needs.” As a third step involving the reform of the WTO, China advocated for “advancing WTO reform on the existing agenda, as well as contemporary trade issues like climate mitigation and green transition, supply chain resilience and industrial policy.” It said that “rules should evolve in a more flexible way, including investment facilitation and e-commerce.” China said, “while bilateral talks may sometimes work,” it believes that “multilateralism is the inevitable and ultimate choice to address global challenges.” Beijing said it is ready “to cooperate with all WTO members and inject more certainty and predictability into the global economy.” In its second intervention at the GC meeting, China highlighted the general convergence on “globalization, rather than fragmentation; multilateralism, rather than unilateralism; multilateral rules, rather than arbitrary tariffs; stability, rather than uncertainty.” Declaring itself “a responsible member of the WTO,” China said that it “will continue to work with all parties to practice genuine multilateralism and firmly safeguard the rules-based multilateral trading system and strive for a successful MC14 [WTO’s upcoming 14th ministerial conference in Yaounde, Cameroon], next year.” Surprisingly, the US appeared to remain silent on China’s call for practising “genuine multilateralism”. At the GC meeting, several countries supported China’s SDR approach to overcome the worst crisis that the WTO is facing at this juncture, said people familiar with the development. +
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