On October 7, the WTO General Council held the first of two days of its fall meeting at the WTO (combination in person/virtual) with a typical agenda including many elements of what has been under negotiation for possible outcomes at the 12th Ministerial Conference in Geneva starting November 29. See WTO General Council 7-8 October 2021, Proposed Agenda (5 October 2021), WT/GC/W/828. The WTO press release from yesterday, is entitled “General Council chair briefs members on work towards MC12 outcome document”. https://www.wto.org/english/news_e/news21_e/gc_07oct21_e.htm. Obviously further discussion of the agenda items before the General Council will occur today.
However, with the exception of progress on several Joint Statement Initiatives separately reported (e.g., MSMEs and Services Domestic Regulation), the WTO Members are struggling to find results in a host of areas, including concluding fisheries subsidy negotiations that have dragged on for 20 years, agriculture negotiations, response to the COVID-19 pandemic, e-commerce, WTO reform and more. See, e.g., WTO News, Working group on small business finalises MC12 draft declaration, 27 September 2021, https://www.wto.org/english/news_e/news21_e/msmes_28sep21_e.htm; WTO News, Participants in domestic regulation talks conclude text negotiations, on track for MC12 deal, 27 September 2021, https://www.wto.org/english/news_e/news21_e/serv_27sep21_e.htm; JOINT INITIATIVE ON SERVICES DOMESTIC REGULATION, REFERENCE PAPER ON SERVICES DOMESTIC REGULATION, NOTE BY THE CHAIRPERSON, 27 September 2021, INF/SDR/1; Financial Times, WTO clambers towards an unambitious summit,30 September 2021, https://www.ft.com/content/50109953-45e8-4e01-8d2a-d543aa821a6e; Bloomberg, Okonjo-Iweala Grows Frustrated With WTO Inertia, Floats Quitting, September 30, 2021, https://www.bloomberg.com/news/articles/2021-09-30/okonjo-iweala-grows-frustrated-with-wto-inertia-floats-quitting.
The October 7 WTO news on the General Council’s Chairman’s report doesn’t show significant progress on the few items addressed in the news release.
“The chair of the General Council, Ambassador Dacio Castillo of Honduras, briefed WTO members on 7 October regarding his consultations on a possible outcome document for trade ministers to adopt at the WTO’s upcoming 12th Ministerial Conference (MC12). He encouraged delegations to continue to work towards producing a draft document by the end of October.
“‘Work towards a possible MC12 outcome document is a member-led process,’ the chair declared. ‘As always, it is the members that decide what goes into any agreed outcome document.’
“Ambassador Castillo has been assisting WTO members in his capacity as General Council chair with work on the first part of the outcome document, which would cover: (i) the context in which MC12 takes place; (ii) broader political messages; and (iii) guidance from ministers on additional elements members may agree on.
“Work has taken place in a small group format broadly representative of the membership and comprising all group coordinators and several other delegations, he noted. Transparency is being ensured through group coordinators who keep their members up to date on the ongoing discussions and feed their views and suggestions back into the process, as well as through the chair’s regular reports at informal General Council meetings.
“The chair said that, based on the preliminary exchanges in the small group, members believe the first part of the outcome document should take into account both the external and internal environments in which MC12 is taking place, namely the pandemic, the changed trading landscape, and the systemic/internal challenges that the WTO is facing.
“Members have also expressed views that ‘political messages’ should note the need for greater solidarity and collaboration amongst members, the role of international trade and the WTO in global economic recovery, a reaffirmation of the principles enshrined in the Marrakesh Agreement, and the needs and interests of developing country members, in particular the least developed members.
“The chair has followed members’ guidance in drafting possible language for an outcome document, focusing on the broader messages where possible convergence could be detected. The small group had a useful and constructive first exchange on the draft language earlier this week and work will continue in the coming days and weeks, he noted.
“* * *
“Ambassador Castillo also briefed on his consultations with members regarding the WTO’s Work Programme on Electronic Commerce as well as the possible continuation of the e-commerce moratorium. Since 1998, WTO members have periodically renewed the moratorium at each Ministerial Conference and have continued addressing e-commerce related issues in the Goods Council, the Services Council, the TRIPS Council and the Committee on Trade and Development as part of the e-commerce work programme.
“The chair said he highlighted in the consultations the need to intensify work towards a possible draft decision for the consideration of ministers at MC12. He noted that, despite the well-known differences in members’ positions, many continue to attach importance to e-commerce and that the pandemic had highlighted e-commerce opportunities as well as its challenges, both of which should continue to be discussed within the WTO.
“Delegations generally reiterated their views with respect to the moratorium and the Work Programme in the consultations, he said. On the moratorium, proponents considered its extension a priority for MC12 and reiterated its role in providing a stable and predictable trading environment. On the other hand, some delegations said that it would be difficult for them to agree to an extension of the moratorium without clarifying its scope and implications.
“On the Work Programme, Ambassador Castillo said, no delegation opposed its continuation, although some indicated that they could not accept a decision to continue its work without at least an extension of the moratorium.
“Following the chair’s intervention, Ambassador David Walker of New Zealand provided his report on his consultations within the Facilitator-led Multilateral Process on the WTO response to the COVID-19 pandemic.
“Ambassador Walker said a large number of delegations in the consultations he undertook as facilitator attached high priority to a meaningful outcome at MC12 on the use of export restrictions and prohibitions in the context of the pandemic, with discussions underscoring the importance of keeping markets open.
“He also said many delegations believe an outcome on trade and health at MC12 should address both the WTO’s response to the current pandemic as well as future crises. To this end, a framework to guide the WTO’s work post-MC12 on how to make the multilateral trading system more resilient and better prepared for such crises was proposed. Such a framework could build on lessons learned from the current pandemic and set out guidelines and best practices for more coordinated responses in the future.
“Ambassador Walker said he will be continuing his consultations in the coming weeks and will continue to report on this process through open-ended and formal meetings as well as formally to the General Council.”
Separately Chairman Castillo’s report on Agenda Item 2 (implementation of the Bali, Nairobi and Buenos Aires Outcomes) was released and can be found at JOB/GC/272 (8 October 2021) but shows little progress on the items covered therein. The report of Amb. David Walker (summarized in the news release) was not released publicly although is identified in “recent documents” on the WTO webpage. See General Council – Agenda item 5.C : WTO response to the COVID-19 pandemic – Report by the Facilitator, H.E. Dr. David Walker (New Zealand) – 7 October 2021, JOB/GC/273. The same is true of other reports from Chairman Castillo and the Director General. See General Council – Agenda item 5.A : Preparations for the Twelfth Session of the Ministerial Conference – MC12 outcome document – Report by the chair – Thursday, 7 October 2021, JOB/GC/274; General Council – Agenda item 5b : Work programme on electronic commerce – Report by the Chair – Thursday, 7 October 2021, JOB/GC/275; General Council – Agenda item 1 : Report by the Chair of the Trade Negotiations Committee and report by the Director-General – Friday, 8 October 2021, JOB/GC/276.
The challenges at the WTO flow from some historical challenges (the preference of India to see no agreements imposing obligations on them, now supported by South Africa and others), from the growing divergence in views as to the purpose of the WTO, from the increased importance of non-market economies in the global trading system and the current failure of existing rules to address their distortions to global trade flows and competition, and the inability of a consensus system with 164 Members to move forward in a timely manner, if at all.
The challenges posed by India and South Africa can be seen in the fisheries subsidy negotiations where they are seeking a huge hole in the agreement’s obligations for developing countries with a duration of 25 years, by their opposition to Members moving forward within the WTO on a plurilateral basis (the Joint Statement Initiatives) where any agreements are open to others to join, from their pursuit of an overly broad waiver request from TRIPs obligations for some undetermined period to address the pandemic, and their recent request for the WTO to examine vaccine passports required by countries to permit the resumption of travel. See, e.g., Inside U.S. Trade’s World Trade Online, India, others propose new exceptions in fisheries talks, September 24, 2021, https://insidetrade.com/daily-news/india-others-propose-new-exceptions-fisheries-talks; THE LEGAL STATUS OF ‘JOINT STATEMENT INITIATIVES’ AND
THEIR NEGOTIATED OUTCOMES (submission of India, Namibia and South Africa), 30 April 2021, WT/GC/W/819/Rev.1; WAIVER FROM CERTAIN PROVISIONS OF THE TRIPS AGREEMENT FOR THE PREVENTION, CONTAINMENT AND TREATMENT OF COVID-19, 25 May 2021, IP/C/W/669/Rev.1; The Economic Times, Covid passport, vaccine discrimination new trade barriers: India to WTO, October 7, 2021, https://economictimes.indiatimes.com/news/economy/foreign-trade/covid-passport-vaccine-discrimination-new-trade-barriers-india-to-wto/articleshow/86849838.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.; Financial Times, WTO clambers towards an unambitious summit, 30 September 2021, https://www.ft.com/content/50109953-45e8-4e01-8d2a-d543aa821a6e (“Okonjo-Iweala convened an ad hoc virtual ministerial in July to try for progress on fisheries subsidies, a move she herself admitted was unusual. It was a gamble that did not really come off. India (often with South Africa in a supporting role) has now established a role in the WTO objecting to more or less everything. In the fisheries subsidy talks it has demanded massive loopholes that are politically a total non-starter. There’s talk around the WTO of Okonjo-Iweala going to India to make a direct appeal to Narendra Modi. But the Indian prime minister has resisted all entreaties and openings to do serious trade liberalisation so far, including passing up the chance to join the Regional Comprehensive Economic Partnership, the Asian mega-deal.”).
WTO reform, which is recognized as important to achieve by most Members, is not an agreed set of measures with the U.S., EU, Japan and others seeking reforms to industrial subsidies and to state-owned and state-invested enterprises to address problems faced from China and others. China to date does not agree. Many countries also seek greater transparency and completeness in notifications, particularly on subsidies. There has been only limited progress to date, and those not providing complete notifications presumably oppose the proposal (e.g., China). The U.S., EU and others also want to make objective criteria determinative of which Members are entitled to special and differential treatment, something opposed by some “developing countries” who have self-selected the designation. Many countries want a return of a two-tier dispute settlement system, something that won’t happen against U.S. opposition absent serious reform and restrictions on the second tier, as such restrictions which currently exist in the Dispute Settlement Understanding have been ignored by the Appellate Body and not addressed by Members.
Thus, the WTO is struggling to demonstrate continued relevance. The WTO rules that exist were negotiated during 1986-1993 with limited updates despite the extraordinary changes to trade, technology and make-up of important trading nations.
How far away the WTO Members are from embracing an agenda that meets the needs of business, labor and civil society can be seen from the views put forward by the business community and reviewed at the recent public forum. The International Chamber of Commerce and B20 Italy presented views on what the business community needs from the WTO moving forward. See WTO News, Business groups highlight need for WTO reform, MC12 outcomes, 29 September 2021, https://www.wto.org/english/news_e/news21_e/bus_30sep21_e.htm; ICC, Global Business Priorities for the WTO, September 2021, https://iccwbo.org/content/uploads/sites/3/2021/09/icc-document-wto-policy-paper.pdf. While the paper on the Global Business Priorities doesn’t reflect priorities of labor or civil society, it is an interesting list in terms of what is needed at least by much of the business community for the WTO to reclaim relevancy and address needs of 21st century business. The 27 specific recommendations are listed below grouped under the broad topics shown:
“1. Agree on a coherent holistic vision for WTO reform
“2. Put market access back on the agenda
“3. Agree on a path forward to improving the negotiation function
“4. Adopt a new evidence-based approach to Special and Differential Treatment
“5. Agree on a path forward for reforming the dispute settlement system
“6. Promote full compliance with and improvements to the WTO Agreement on Subsidies and
Countervailing Measures (SCM)
“7. Improve the Secretariat’s capacity to monitor trade policy developments
“8. Create a crisis management protocol for future crises
“9. Create a business advisory council and a civil society council
“Trade and Health
“10. Ensure trade policies facilitate vaccine manufacturing and distribution
“11. Creation of a Health Market Information System
“12. Adopt cooperative ways to speed up vaccine production
“13. Adopt and go beyond the Trade and Health Initiative
“Trade and environmental sustainability
“14. Finalise the fisheries subsidies negotiations
“15. Agree to a formal roadmap to address specific issues on trade and environmental
“16. Develop a package of recommendations on trade and the circular economy
“17. Deal with carbon leakage in a multilateral way
“Trade and the digital economy
“18. Accelerate the e-commerce negotiations
“19. Develop market access provisions for the digital economy
“20. Make permanent the moratorium on customs duties on electronic transmissions
“21. Create an enabling legal environment for paperless trade
“22. Finalise negotiations for the JSI on Services Domestic Regulation
“Trade and inclusivity
“23. Identify new areas for rulemaking based on best practice from bilateral and regional trade
“24. Adopt the full package of recommendations of the MSME group
“25. Commit not to impose export restrictions on humanitarian aid
“26. Adopt a declaration with concrete and measurable proposals to advance trade and
women’s economic empowerment
“27. Launch discussions on the negative impact of illicit trade.”
Many of the recommendations made by the ICC and B20 Italy have been identified by one or more Members in the past, many are the subject of proposals, and a few are the subject of active negotiations. Some recommendations may be inconsistent with objectives of civil society (e.g., addressing vaccine equity through waving TRIPs obligations), and few deal with concerns of labor. Some are actively opposed by particular Members. However, the priorities reflect the hope and needs of the business community that Member governments find a path back for the WTO to regain relevancy and permit a more flexible structure to address changing needs on a more timely basis.
The next two months will reveal whether WTO Members can start the process of forward movement and improved relevancy. It seems unlikely that meaningful progress will be made on many fronts, but there is still time if there is a collective will.