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Info Service on WTO and Trade Issues (Jul25/24) Geneva, 21 Jul (D. Ravi Kanth) — The World Trade Organization’s Director-General, Ms Ngozi Okonjo-Iweala, has told members that they “must listen to the US and its criticisms [on reforms] because a lot of those are right,” after a meeting with the US Trade Representative Ambassador Jamieson Greer in Washington almost a fortnight ago, said people familiar with the development. “I also want to mention that, on my way to the BRICS Summit (6-7 July), I had a very constructive meeting in Washington DC with the USTR, Ambassador Jamieson Greer and his team, and I am very grateful for the time they spent following up on WTO matters and current trade challenges,” she said. Without mentioning the continued threats and in some cases the imposition by the Trump administration of what some members are calling “predatory” reciprocal and sectoral tariffs, which have upended the multilateral trading system, the DG merely said: “One of the things I raised and which I have also been advocating for is whether the poor and vulnerable WTO members who are the markets of the future and who may not have a very big stake in trade could also be looked at differently for a favourable treatment as we want to encourage them to integrate into the world trading system – not keep them away from it.” However, the DG did not comment whether there was any response from the USTR to her concerns, said people familiar with the development. It is also unclear whether she pointed out to the USTR that the baseline US tariff of 10%, and the varying levels of proposed reciprocal tariffs against countries, as well as sectoral tariffs of 50% on steel and aluminium and 25% on automobiles and auto parts are inconsistent with the core provisions of the GATT pertaining to most- favoured-nation (MFN) treatment and non-discrimination, said people familiar with the development. The above interventions by the DG were made at a meeting of the Doha Trade Negotiations Committee (TNC) on 15 July, highlighted in a restricted document (Job/TNC/128) issued on 18 July, and seen by the SUNS. At that TNC meeting, the DG appears to have pressed members on the need to embrace “deep”, “fundamental” reforms, though she did not elaborate what would constitute such sweeping reforms, said people familiar with the development. Ms Okonjo-Iweala said “given the prevailing context, calls for WTO reform and repositioning are getting louder than ever,” adding that “I heard strong calls for “deep reform” from Leaders and Ministers, emphasizing that change must go beyond mere institutional updates.” The Rio de Janeiro Declaration issued at the XVII BRICS Summit on 6 July severely criticized the US unilateral tariffs and called for the restoration of the two-tier dispute settlement system, which did not appear to figure in the DG’s interventions. “As the world watches,” the DG said, “we at the WTO cannot afford to be ineffectual.” Commenting on the state of play, she said: “As someone noted, we also cannot afford to stand still. We must keep working. We must keep moving. And we must keep building trust so that together we can deliver. That is what I have to say on the present conjuncture and its link to the work we are doing. I see them as very much linked. They are not two separate things. We are where we are because we have problems. We can solve those problems if we deliver and we change our ways. So, the two are linked and we have to move.” Ahead of the WTO’s General Council (GC) meeting on 22-23 July, before the summer break, the DG seemingly openly promoted the US stand on reforms, and her silence on the continued threats by the Trump administration and its likely imposition of reciprocal tariffs appears to have cast serious doubts on the proposed reforms, said several trade envoys, who asked not to be identified. There is no clarity yet on the reforms that the US is now seeking as it has so far not submitted a formal proposal. However, some of the ideas on reforms which were proposed during US President Donald Trump’s first term (2016-20) are now being actively pushed by the facilitator overseeing the reform discussions at the WTO, said trade envoys, who asked not to be quoted. The facilitator, Ambassador Petter Olberg of Norway, is understood to have held a meeting on 18 July. The restricted document highlighting the DG’s interventions at the TNC meeting included her calls for “deep reforms” and incorporating the Investment Facilitation for Development Agreement (IFDA) into Annex 4 of the WTO Agreement dealing with plurilateral agreements, as well as her criticisms over the lack of movement on the multilateral issues. However, the DG remained silent on the issue of the restoration of the binding two-tier dispute settlement system that has remained paralysed since December 2019, while pressing WTO members on the need for “deep” and “fundamental” reforms of the global trade body, said trade envoys, who prefer not to be identified. Ms Okonjo-Iweala has seemingly not commented on how the proposed reforms will put a stop to the spate of unilateral US reciprocal tariffs, as well as sectoral tariffs on steel and aluminium, and automobiles and auto- parts, said trade envoys, who asked not to be quoted. It seems somewhat perplexing how the DG can promote the interests of the US in pushing for fundamental reforms to do away with the principle of decision-making by consensus as enshrined in Article IX of the Marrakesh Agreement that established the WTO in 1995. Being an international civil servant, who, according to paragraph four of Article VI of the Marrakesh Agreement, is not expected to take any sides in the negotiations, the DG’s comments on several issues appear to have “gone overboard”, said people familiar with her statement. Yet, the DG seems to be silent even in mildly conveying that what the US is doing by preparing the ground to impose reciprocal tariffs from 1 August has already made the WTO “ineffectual”. BRICS SUMMIT Commenting on the recent BRICS Summit in Rio de Janeiro, Brazil, the DG said that it was the first time that she attended a BRICS meeting since its inception in 2009, emphasizing that “I used the opportunity to meet multilaterally and bilaterally with Leaders to urge political will we are seeking for the necessary multilateral reforms at the WTO.” “I urged emerging market Leaders, if they want to see the organization deliver, they have to take hold of these reforms and to shape it,” she said. Yet, the BRICS Rio de Janeiro Declaration did not suggest “deep reforms”, as Ms Okonjo-Iweala has claimed. Paragraph 13 of the BRICS Declaration merely said: “… We recall the commitment made at the 12th WTO Ministerial Conference and reaffirmed at the 13th WTO Ministerial Conference to work towards a necessary reform of the Organization to ensure its relevance and restore the credibility of the multilateral trading system …” However, the DG seems to have ignored other issues raised by the BRICS Declaration such as “the proliferation of trade-restrictive actions, whether in the form of indiscriminate rising of tariffs and non-tariff measures, or protectionism under the guise of environmental objectives,” that threaten “to further reduce global trade, disrupt global supply chains, and introduce uncertainty into international economic and trade activities, potentially exacerbating existing economic disparities and affecting prospects for global economic development.” More importantly, the BRICS Declaration voiced serious concerns over “the rise of unilateral tariff and non-tariff measures which distort trade and are inconsistent with WTO rules,” in an apparent reference to the unilateral reciprocal tariffs to be imposed by the US on all countries. The DG also did not mention that the BRICS leaders reiterated their support “for the rules based, open, transparent, fair, inclusive, equitable, non-discriminatory, consensus-based multilateral trading system with the World Trade Organization (WTO) at its core, with special and differential treatment (S&DT) for its developing members.” On the seeming pretext of “deep” and “fundamental” reforms, as echoed repeatedly by the DG in her interventions at the TNC meeting, Ms Okonjo-Iweala appears to have given a short shrift to the concerns raised by the BRICS leaders, said a BRICS member. LACK OF PROGRESS The DG expressed her deep frustration with the lack of progress on any of the issues on the multilateral front. “We seem more stuck on the multilateral negotiations and that is a shame because we prefer the multilateral instrument,” she said in her intervention at the TNC meeting. “If the multilateral instrument is preferred and it is blocked at every stand then what does that really mean?” she asked. “If for 25 years we say that the multilateral instrument is preferred and yet we take every opportunity to make sure it does not move, this is what breaks trust and brings pessimism,” she pointed out. Without naming the delegations, perhaps hinting at India, she said, “I have listened to some delegations – they have not changed one iota from what they have been saying. If you have been saying the same thing for the past four years since I have been here and nothing has happened to advance the course, isn’t it about time you looked at what you were saying and say I may need to do something differently?” “I have been taking notes on what you have been saying. When I go through them, it is the same thing for the past four years,” the DG said, appearing to ignore the fact that key WTO members have been making the same statements from the start of the Doha Round of trade negotiations in 2001 without budging an inch from their positions, said people familiar with the development. For example, the DG should revisit the statements made by key members since the WTO’s fifth ministerial conference in Cancun, Mexico, in 2003, and later in the run-up to the suspension of negotiations on agriculture and other areas because of the US mid-term elections in 2006, which a former chair of the Doha agriculture negotiations likened to a “King Charles I” moment when the British parliament was suspended in the 17th century, said people familiar with the negotiations. PLURILATERALS Seemingly frustrated over the repeated blocking of the incorporation of the Investment Facilitation for Development Agreement (IFDA) into Annex 4 of the WTO Agreement by India, South Africa and Turkiye, on procedural and systemic grounds, the DG said, “there are those against plurilaterals but they are not allowing multilaterals to move.” The DG appears to be factually incorrect on the issue of plutilaterals, as there have been no plurilaterals agreed to at any of the WTO ministerial conferences, as there was no consensus when the issue first came up at the WTO’s 11th ministerial conference (MC11) in Buenos Aires, Argentina, in December 2017. Subsequently, the proponents went outside the main meeting hall on the margins of MC11, and announced the Joint Statement Initiatives (JSIs) on digital trade, investment facilitation, disciplines for micro, small, and medium enterprises (MSMEs), and trade and gender, as reported in the SUNS. Interestingly, the proposed IFDA had earlier come under the ambit of “trade and investment” in the four “Singapore issues” – trade and investment, competition policy, trade facilitation, and transparency in government procurement – which led to the collapse of the Cancun ministerial meeting in 2003, and that along with agriculture, were dropped. Subsequently, in the July 2004 framework agreement, only trade facilitation was agreed to on the basis of concessions to be provided in agriculture and market access for industrial goods based on the less-than-full- reciprocity framework. The proposed Investment Facilitation for Development Agreement was opposed on both procedural and systemic grounds since the General Council meetings in 2015, as it had lacked consensus, said people familiar with the development. Despite the recorded facts of all the previous ministerial meetings, the DG said in her statement at the TNC meeting that “you must care about saving that instrument [“Fish 2″ Agreement]”. “If we do not get serious by September in really negotiating, then we are going to table the multilateral negotiations which have gotten the most pessimism here,” she said, adding that “it is sobering to me that people are saying that we are a multilateral organization and this is the instrument that was devised and yet we cannot move. That is what I have to say. Please think about that.” “We also need to reflect, if what is being negotiated in the plurilateral instrument is not blocking your interest, why would you prevent others from moving forward on incorporation? If it is harming the interest of any particular Member, they should table where those interests are being harmed,” said the DG. Characterizing the opposition to IFDA as “ideological”, the DG said, “If it is just ideological, then you need to reflect.” “If it is not harming your interest, Members will appreciate what you have said. Those who are stopping the incorporation of plurilaterals need to show Members clearly where this is damaging their interest.” “Otherwise, the negotiating function will be dead in this organization,” Ms Okonjo-Iweala said, arguing that “the Leaders are saying you have no results … But we have no results because people do not want to negotiate … They want to dictate or just state their views – and you take it or leave it.” While sharing her “thoughts” on the impasse in the negotiations, the DG asked “Members to reflect on during summer.” “Please do not come back with the same statement and review your statements that you have been making for the past four years,” she cautioned the members. “If you want success at MC14, change something so that we can move forward.” +
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