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Info Service on WTO and Trade Issues (Apr26/05) Geneva, 8 Apr (D. Ravi Kanth) — The New Zealand Minister-Facilitator who also led the reform discussions at the recently failed World Trade Organization’s 14th Ministerial Conference (MC14) in Yaounde, Cameroon, acknowledged that countries “agreed on the continuing value of the WTO” while conducting trade through “the principles of Most-Favoured Nation (MFN) and non-discrimination.” In his summary report (WT/MIN(26)/39) circulated on 2 April, New Zealand’s trade minister, Todd McClay, states that “some core functions of the Organization are working well, such as those relating to Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, and Customs Valuation.” It remains unclear whether McClay is suggesting that other functions – particularly the partially paralyzed WTO enforcement mechanism meant to ensure compliance with the agreements – are not operating in accordance with the WTO rules, said people familiar with the development. However, the Minister-Facilitator notes that “there was a sense that the functions of the Organization are not as effective as they should be, with many commenting on the weakened dispute settlement system and the fractured negotiating function.” He said that “the WTO supports development and poverty alleviation, with some emphasizing that the current reform process should have development at its centre, and some also recalled the importance of Special and Differential Treatment (S&DT).” The Minister-Facilitator said that countries “noted that the WTO provides a framework for predictable trade, particularly important for smaller and vulnerable economies that might lack the capacity to negotiate the number and types of bilateral trade agreements offering the same coverage as the multilateral system.” Emphasizing “the importance of a rules-based trading system,” McClay points out that “many raised the need to refocus on existing mandates, such as agriculture, while also being open to discuss new issues where the current rule book is incomplete or not effective.” Yet on the second day of MC14, the United States reportedly killed the agriculture negotiations, even as many members sought a clear mandate from trade ministers at MC14 on agriculture – a fact not seemingly reflected in the Minister-Facilitator’s summary report, said a South American participant who asked not to be quoted. McClay said despite “widespread willingness to discuss reform and a willingness to discuss change including modernizing the Organization while also delivering on existing mandates,” several issues such as “geopolitics, unilateral measures, trade imbalances, new technologies, and environmental sustainability were raised as requiring a modernization of the Organization to provide effective solutions.” He added that “some further noted there can be unfairness in the WTO, which sometimes manifests itself through power asymmetries.” Without naming countries such as the United States and the European Union, the Minister-Facilitator points out that “a strongly held view by a minority was that a discussion is needed on principles such as the MFN and whether it is still fit for purpose in a changing world.” He said: “Some confirmed a willingness to discuss these issues further as part of a wider reform agenda including how to ensure the WTO responds to the challenges of our times.” During the discussion on the “draft Ministerial Statement and Workplan,” McClay says that participants “noted that Ministers needed to provide a clear and strong political mandate for reform work to continue in Geneva, with some considering the Organization could not wait for the next Ministerial for such mandate.” However, there was no agreement on either the draft Ministerial Statement or the Workplan when MC14 concluded amid chaos in the early hours of 30 March, said participants who asked not to be quoted. On decision-making and past mandates, New Zealand’s Minister-Facilitator notes that the “session on Decision Making and Past Mandates saw constructive exchanges and generated some concrete ideas.” According to McClay, participants discussed four topics: “namely: consensus; the role of plurilateral initiatives; past mandates; and the draft Ministerial Statement and work plan.” On the issue of consensus, according to the Minister-Facilitator, “all participating representatives agreed that consensus in the adoption of WTO decisions remains highly valued and the cornerstone of the institution.” He argues that though it is not perfect, “it helps mitigate asymmetries of power and ensure inclusiveness, equality and fairness.” More importantly, decision-making by consensus “protected smaller economies, ensuring they benefited from the multilateral trading system (MTS).” Without naming the United States, the EU, China, or the “Friends of the System” group (in which New Zealand is an active member), the Minister-Facilitator said that “some representatives acknowledged that consensus as currently practiced was holding up decision-making, noting that there had been only two changes to the rulebook in recent times.” Without naming Indonesia, McClay suggested that “reference was made, as an example, to the inability of members to agree to the additional provisions on fisheries subsidies, held up by one Member.” (New Zealand is also the coordinator of the “Friends of the Fish” group at the WTO.) Without quantifying the number of countries, McClay notes that “many representatives recognized that consensus could not be a veto, with some emphasizing the need to take account of minority concerns and protect the interests of all Members, in particular developing countries and LDCs.” He further said: “Concerns were raised that efforts to move away from or undermine consensus would hurt the interests of smaller economies and that they could lead to inflexibility or lack of transparency and inclusiveness in decision-making processes.” The discussion on “plurilateral initiatives,” according to the Minister-Facilitator, “showed some support but also unease with plurilateral initiatives, with some representatives concerned about a two-speed WTO and the impact on small and vulnerable economies.” Echoing the participants’ views, he says that “a balance should be struck between past mandates and plurilateral negotiations,” adding that “plurilaterals should support the WTO and advance the rulebook by reinforcing and building on the existing rules.” In the same vein, he notes that “many representatives emphasized the need for transparency and inclusivity in any discussions on plurilaterals to ensure that the views and interests of all Members were taken into account, even those of Members that might not adhere to plurilateral outcomes from the start.” In reality, the discussions on plurilateral initiatives are invariably dominated and decided by powerful members while the majority of small and vulnerable economies remain marginal or insignificant players, said participants who asked not to be quoted. McClay notes “there was openness and support for integrating plurilaterals in the WTO,” with “many [countries] pointing to existing mechanisms in the rulebook for doing so.” He said other participants noted during the discussion that “progress on plurilaterals was being blocked, including with respect to the Investment Facilitation for Development Agreement (IFDA), by a minority.” (The IFDA’s incorporation into Annex 4 of the WTO Agreement was blocked by one member – India.) Without providing the number of countries, the Minister-Facilitator says that “some noted that consensus decision-making and plurilateral agreements were not incompatible, noting that other international frameworks regularly completed negotiations that were not adhered to by all parties from the start.” Without naming India, he said participants “noted that plurilaterals should not be adopted to the detriment of non-parties, some pointing to the need to include guardrails, such as trial periods and impact assessments, and a process to identify them.” The Minister-Facilitator further says that “it was suggested that a modest change could be made to the WTO Agreement to enable plurilateral rulemaking without fracturing the principle of consensus decision making.” McClay added, “some recalled the existing mandate on agriculture and its development dimension as a context for thinking about plurilaterals.” PAST MANDATES Even though the “past mandates” were negotiated and adopted by previous ministerial conferences, it is common knowledge that they were repeatedly brushed aside by the US and other powerful countries, particularly in agriculture. During the discussions on “past mandates”, it appears that some considered them “unfinished businesses” that “were also recognized as an important issue, central to the legitimacy and credibility of the organization.” Participants also felt “it was important to honour past commitments, particularly those that are development- oriented, such as agricultural reform.” “A suggestion was made to create a list of all past mandates to ensure a shared understanding of all issues that were in play,” the Minister-Facilitator notes. “There was strong support for prioritizing past mandates, especially those with a development focus,” while “some considered that delivering on past mandates was necessary to ensure collective credibility.” Also, a dangerous narrative appears to have emerged: to deliver on past mandates, there was acknowledgment of “the willingness to use plurilaterals to advance rules. It was noted that not all past mandates had the same legal status.” Another seemingly puzzling observation made by the Minister-Facilitator is that “treaty-based mandates, such as the one included in Article 20 of the Agreement on Agriculture, may not be the same as Ministerial mandates, such as those emerging from Doha and subsequent Ministerial Conferences.” On the work plan, the Minister-Facilitator says that “there was a general recognition that this Ministerial Conference centred on WTO reform” and “it was also considered that Members had to achieve an outcome that ensured an effective reform process, avoiding a repetition of MC13.” However, MC13 repeated itself at MC14, with no agreement on the way forward following the WTO reform discussions. DEVELOPMENT According to the Minister-Facilitator, “the session on development saw strong engagement from delegations, sharing specific perspectives and ideas.” He says, “the session focused on three issues, namely: reforms for economic growth through trade; special and differential treatment (S&DT); and the draft Ministerial Statement and Workplan.” On reform for development, McClay says that “several representatives called for a greater commitment to development, emphasizing that reform should include a focus on technical assistance to support capacity- building and implementation, bridge the digital divide, address environmental degradation and climate resilience, reinforce food security and rural development, and preserve policy space for industrial development and economic diversification.” He added, “almost all representatives referred to agriculture reform, some specifically mentioning cotton, as critical drivers of development, noting how important the delivery of past mandates on agriculture and cotton remained for Members to integrate into the world economy and global value chains.” On special and differential treatment (S&DT), according to the Minister-Facilitator, “several representatives referred to S&DT as a fundamental pillar of the MTS and a treaty right, emphasizing that it had enabled participation in the WTO in general, and in international trade in particular, especially for smaller economies.” In contrast, he said, “some emphasized the need for strengthened, operational, targeted and expanded S&DT, noting it was an enabler of the respect of specific commitments and to ensure and assist in their implementation.” During the discussions, he said “several representatives considered S&DT as an instrument that should preserve policy space and enable members to diversify their economies, develop their industries and work on new issues, such as digital trade, climate change and resilience, especially following natural disasters and shocks. Technology transfer and TRIPS Article 66.2 were also raised in this context.” Without naming the countries, the Minister-Facilitator says, “other Members however raised doubts about S&DT,” while “some representatives queried whether a one-size-fits-all approach continued to be appropriate considering structural and economic developments since the WTO had been established.” Without naming the US, the Minister-Facilitator points out that “some raised concerns about past, current and potential future abuses of S&DT, both by developing and developed countries.” Again seemingly echoing the views of the US, the EU, and other industrialized countries, McClay said that “several representatives called for tighter definitions, restrictions and more clarity on who could avail themselves of S&DT, while some raised a more existential question about S&DT and its utility today, proposing to move away from self-definitions and towards the establishment of objective criteria for development status and S&DT eligibility.” On level playing field issues (LPF), during the final sessions on challenges to ensure a LPF for all, what reforms were required and the draft Ministerial Statement and Workplan, the Minister-Facilitator says “representatives demonstrated a widespread recognition that LPF is at the heart of many challenges that Members are currently facing, while recognizing the term meant different things across the membership and what sectors should be covered.” +
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