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Info Service on WTO and Trade Issues (May26/05) Geneva, 8 May (D. Ravi Kanth) -- Brazil on 7 May seemingly presented a sharp conclusion of how the Minister- Facilitator processes at the failed World Trade Organization's 14th ministerial conference (MC14) in Yaounde, Cameroon, in March drastically altered the texts dispatched from Geneva on WTO reform and agriculture, raising serious concerns about the integrity of the conduct of MC14, said people familiar with the development. On the second and final day of the WTO's General Council (GC) meeting on the "follow-up" to MC14, Brazil apparently said it left Geneva with two overarching objectives to be achieved at MC14, which concluded on 30 March. According to Brazil, the two objectives include maintaining the centrality of the Geneva process and the progress seemingly made on WTO reform to be preserved at the ministerial conference, said people who asked not to be quoted. The Brazilian trade envoy to the WTO, Ambassador Guilherme de Aguiar Patriota, is understood to have said that the shape of the Geneva texts was completely altered at MC14, suggesting that the way the six Minister- Facilitators conducted the process was opaque and seemed fluid, said people familiar with the GC proceedings. Ambassador Patriota apparently said somewhat astonishingly that the Geneva texts were altered by a margin of 20 to 70 percent, adding that the draft texts of the Minister-Facilitators were circulated in a selective way, said people familiar with the development. On WTO reform, the Brazilian trade envoy appears to have said that three key issues - the role of industrial policy, development flexibility for developing countries, and emerging agricultural trade issues - were apparently excluded from the draft Minister-Facilitators' texts on WTO reform, said people familiar with the development. In the face of the rather disconcerting developments at MC14, Brazil was apparently left without any option, the Brazilian trade envoy seems to have said. Against this backdrop, Brazil was only left with the option of agreeing to a two-year moratorium on customs duties on electronic transmissions, which has been the practice adopted for the past 30 years, Brazil argued, according to participants familiar with the development. Without naming the United States, Brazil seemingly suggested that one delegation insisted on a duration for the e-commerce moratorium beyond four years as a sine qua non for discussing any other issue, pointing out that this was not an acceptable situation at MC14, said participants familiar with the development. Brazil, in effect, explained the underlying rationale for its decision to stick to a two-year e-commerce moratorium at MC14, without revealing its intention as to what it would do in the coming months, said people familiar with the development. India changes stand on e-com moratorium At the GC meeting, India said that it was ready to accept a four-year e-commerce moratorium as well as a similar duration for the moratorium on TRIPS non-violation and situation complaints, said participants who asked not to be quoted. To recall, India had pressed hard for the termination of the e-commerce moratorium at MC12 in Geneva in June 2022, and at MC13 in Abu Dhabi in February-March 2024. However, India changed its position in the face of requests from then US Trade Representative (USTR) Ambassador Katherine Tai at MC12, and later at the requests of the Abu Dhabi trade minister and the European Union at MC13, having agreed to only a two-year extension at each conference. India had maintained that the e-commerce moratorium must be terminated at MC14, which was actually reflected in the MC13 ministerial decision. That decision (WT/MIN(24)/38) clearly provided language for the termination of the e-commerce moratorium. It said unambiguously: "We agree to maintain the current practice of not imposing customs duties on electronic transmissions until the 14th Session of the Ministerial Conference or 31 March 2026, whichever is earlier. The moratorium and the Work Programme will expire on that date." However, India - apparently under the pressure of the ongoing bilateral negotiations with the US - has changed its position and reportedly sought a four-year moratorium at MC14, said sources who asked not to be identified. Secretariat involvement During the GC discussions, some members apparently sought to know the views of India, South Africa, and Brazil about the WTO Secretariat's involvement in initiatives outside the WTO's purview - for example, the WTO Director-General Ms. Ngozi Okonjo-Iweala's alleged embrace of controversial initiatives like the Joint Statement Initiative (JSI) decision on an e-commerce agreement at MC14, said people familiar with the development. In response to the question, South Africa is understood to have said that the Secretariat's involvement should be limited to agreements that are part of the WTO. India is understood to have asked whether the DG can be involved in an agreement that is not part of the WTO legal framework. Brazil apparently conveyed that the Secretariat's involvement in a non-WTO agreement is controversial. In effect, South Africa, India, and Brazil seemingly highlighted serious systemic concerns when the Secretariat openly pursues issues that are not part of the WTO's mandate, said people familiar with the development. Singapore, a strong voice in the "Friends of the System" group that did some heavy lifting in articulating on controversial WTO reforms, apparently said somewhat emphatically that it is highly disingenuous to say that the JSI e-commerce agreement announced at Yaounde is not a WTO agreement, insisting that it was conceived and negotiated within the WTO, and therefore, nobody should question the involvement of the Secretariat. When India pointed out that e-commerce was not even remotely part of the MC14 agenda for trade ministers to discuss, Singapore apparently objected to India's remarks, said people familiar with the development. Korea's paper During the meeting, Korea's paper on "Preserving the spirit of open and predictable trade: collective restraint against actions undermining trade liberalization" raised several comments. Korea sought an exchange of views "on the need for collective restraint with respect to measures that may undermine the openness, predictability and stability of trade." In response to the Korean proposal, China thanked "Korea for setting this agenda and drawing members' attention to both the importance of preserving the spirit of open and predictable trade and the potential systemic ramifications of the proliferation of tariff measures taken under various names." China said that "tariff measures concerned are not limited to steel sectors," adding that "Members have no common understanding on what constitutes "structural challenges", just as there is no agreement on what constitutes "overcapacity", or other such names or labels." The Chinese trade envoy, Ambassador Li Yongjie, said that "in the WTO context, however, members do have agreed rules that govern tariff measures," emphasizing that "it is the rules, not labels, that provide the basis for any tariff measures" - in an apparent criticism of the US arguments on "overcapacity". "That is exactly why we should exercise restraint," China said, adding that "as the saying goes, do not do unto others what you would not have them do unto you." "In addition," according to China, "members have agreed to discuss specific issues of concern, including subsidies and industrial policies, under the WTO framework." China said members "should engage in in-depth dialogue with a view to updating and strengthening rules." Brazil is understood to have said the issues raised by Korea were apparently discussed in detail under the WTO reform issue of "the level-playing-field", suggesting that there are questions concerning measures adopted by the three leading members: the US, the European Union, and China. During the discussion, the Russian Federation pointed out that under the ongoing consultations launched by the EU under Article XXVIII of the GATT 1994 to raise tariffs by 50 percent on imports of steel, it was not even consulted despite being a principal supplier of steel products. Russia suggested that the rules are not being followed as per the Article XXVIII framework, said participants familiar with the development. Even the additional duties imposed by the US under Section 122 of the Trade Act of 1974 - which were notified to the WTO's Committee on Balance of Payments - were questioned, said participants familiar with the development. Without naming China, Chinese Taipei apparently raised concerns about non-market economy governments subsidizing outside their territory through transnational subsidies. Chinese Taipei seems to be suggesting that a non-market economy is allegedly pumping billions of dollars in subsidies outside its territory, said people familiar with the development. US raises issue of excess capacity Even though China dismissed the US arguments raised at the previous week's meeting of the Committee on Subsidies and Countervailing Measures (SCM) on excess capacity allegedly sustained by huge state-financed subsidies, the US again raised the issue at the GC meeting by suggesting that it is apparently causing distortions and problems for several countries, said people familiar with the development. The US is understood to have said that members simply cannot wait to address this issue on the grounds that there is no proper rule by the WTO to control them. The US justified its actions on excess capacity. The Office of the United States Trade Representative is currently holding public hearings regarding the Section 301 investigations into 16 countries' acts, policies, and practices relating to structural excess capacity and production in manufacturing sectors. Apparently, the EU also raised its concerns at the meeting on the issue of excess capacity, said participants familiar with the development. Meanwhile, at the GC meeting, Thailand has seemingly championed the cause of major tech giants such as Google, Amazon and Microsoft, by suggesting that the moratorium on TRIPS non-violation and situation complaints could also include the issue of alleged copyright violations in the development of artificial intelligence (AI) industries, said a person who asked not to be quoted. Over the past months, there have been several legal disputes raised in the US over alleged copyright violations by the major AI platforms, said people familiar with the development. On a separate issue, Thailand and Australia asked the WTO Secretariat to make a presentation on the current crisis in the Middle East and its impact on the trade in fertilizers and food items, said people familiar with the development. The DG apparently intervened on this issue, suggesting that the WTO Secretariat is already doing some work on it. In a sharp intervention following the DG's statement, the US apparently said that whenever the WTO Secretariat is doing some work, it must clarify that it is doing so based on a request from the members, said participants who asked not to be quoted. +
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