With limited successes in its first 26 plus years, the WTO faced a challenging set of circumstances as the 12th Ministerial Conference commenced on June 12 and concluded in the early hours of June 17 — a global pandemic which had created multiple challenges for most countries including increased food insecurity, contractions in GDP for many countries, problematic access to vaccines, growing debt problems; an unprovoked war by the Russian Federation in Ukraine which has exacerbated food insecurity, increased food price volatility as well as volatility on fertilizers and energy. The WTO has been characterized as suffering from a lack of trust amongst Members for many years. The former WTO Director-General Roberto Azevedo had characterized achieving new agreements as challenging because of a lack of common purpose with Members in his view falling into three groups — those who didn’t want the WTO to succeed (or wanted to roll back trade liberalization); those Members happy with the agreements in place but not wanting to expand areas of activity; and those Members looking to expand and update the functioning of the organization. See May 17, 2022: “The Future of the World Trade Organization” a virtual event by the Bipartisan Policy Center, discussion of dispute settlement, https://currentthoughtsontrade.com/2022/05/17/the-future-of-the-world-trade-organization-a-virtual-event-by-the-bipartisan-policy-center-discussion-of-dispute-settlement/. Moreover, with Russia’s invasion of Ukraine, a significant number of countries would not negotiate with Russia at the WTO – creating potential challenges in a consensus-based decision making system.
Despite the challenging circumstances and the actions of some countries in staking out seemingly extreme positions, the WTO announced a number of agreements in the early morning hours of June 17. The WTO press release on the 17th described the results as follows, “WTO members secure unprecedented package of trade outcomes at MC12”. https://www.wto.org/english/news_e/news22_e/mc12_17jun22_e.htm. Members and the WTO not surprisingly use glowing terms to describe affirmative outcomes. That is reflected in the WTO press release. Nonetheless, the list of agreed texts is interesting and reflects some important forward movement, even if the fisheries subsidies agreement is a partial agreement only with an important section removed and subject to further negotiations. Part of the WTO press release is copied below.
“WTO members secure unprecedented package of trade outcomes at MC12
“WTO members successfully concluded the 12th Ministerial Conference (MC12) in Geneva on 17 June, securing multilaterally negotiated outcomes on a series of key trade initiatives. The ‘Geneva Package’ confirms the historical importance of the multilateral trading system and underlines the important role of the WTO in addressing the world’s most pressing issues, especially at a time when global solutions are critical.
“Round-the-clock negotiations among delegations produced the ‘Geneva Package’, which contains a series of unprecedented decisions on fisheries subsidies, WTO response to emergencies, including a waiver of certain requirements concerning compulsory licensing for COVID-19 vaccines, food safety and agriculture, and WTO reform.
“’The package of agreements you have reached will make a difference to the lives of people around the world. The outcomes demonstrate that the WTO is, in fact, capable of responding to the emergencies of our time,’ said WTO Director-General Ngozi Okonjo-Iweala. ‘They show the world that WTO members can come together, across geopolitical fault lines, to address problems of the global commons, and to reinforce and reinvigorate this institution. They give us cause to hope that strategic competition will be able to exist alongside growing strategic cooperation.’
“DG Okonjo-Iweala expressed her conviction that ‘trade is part of the solution to the crises of our time’ and noted that the WTO ‘can and must do more to help the world respond to the pandemic, tackle environmental challenges and foster greater socio-economic inclusion.’
“The package adopted by members include:
“o an outcome document (WT/MIN(22)/W/16/Rev.1);
“o a package on WTO response to emergencies, comprising:
“o a Ministerial Declaration on the Emergency Response to Food Insecurity (WT/MIN(22)/W/17/Rev.1);
“o a Ministerial Decision on World Food Programme (WFP) Food Purchases Exemptions from Export Prohibitions or Restrictions (WT/MIN(22)/W/18);
“o a Ministerial Declaration on the WTO Response to the COVID-19 Pandemic and Preparedness for Future Pandemics (WT/MIN(22)/W/13); and
“o Ministerial Decision on the Agreement on Trade-related Aspects of Intellectual Property Rights (WT/MIN(22)/W/15/Rev.2)
“o a Decision on the E-commerce Moratorium and Work Programme (WT/MIN(22)/W/23)
“o an Agreement on Fisheries Subsidies (WT/MIN(22)/W/22).
“In addition, ministers adopted two decisions – on the Work Programme on Small Economies (WT/MIN(21)/W/3) and on the TRIPS non-violation and situation complaints (WT/MIN(21)/W/4) — and a Sanitary and Phytosanitary Declaration for the Twelfth WTO Ministerial Conference: Responding to Modern SPS Challenges (WT/MIN(22)/W/3/Rev.3).
“All documents can be found here.
“Acknowledging the ‘vital importance of agriculture,’ DG Okonjo-Iweala noted that differences on some issues, including public stockholding for food security purposes, domestic support, cotton and market access ‘meant that we could not achieve consensus on a new roadmap for future work.’ However, she added, ‘members found a renewed sense of purpose: they are determined to keep at it on the basis of existing mandates, with a view to reaching positive outcomes at MC13.'”
The efforts to address food security concerns resulted in adopting two of the documents that had been forwarded (with some revisions) to ministers ahead of the Conference but did not include the Draft Ministerial Decision on Agriculture (WT/MIN(22)/W/22) based on sharp differences on the elements needing to be addressed.
Response to the COVID-19 Pandemic and Possible TRIPS Waiver
Similarly, Members agreed to the Ministerial Decision on the Agreement on Trade-related Aspects of Intellectual Property Right — clarifying flexibilities to address compulsory licensing of patented vaccines during the COVID-19 pandemic (for a period of five years from adoption) with a decision in six months to extend the flexibilities to therapeutics and diagnostics for the pandemic. The last modification was to the language as to who was eligible, with the U.S. and China agreeing to language that made all developing countries eligible, encouraged developing countries who export vaccines to opt out and language from a General Council meeting where China had indicated it would opt out. The TRIPS decision and the Ministerial Declaration on the WTO Response to the COVID-19 Pandemic and Preparedness for Future Pandemics are the two documents agreed to which address the WTO’s response to the Pandemic.
As I have reviewed in prior posts, the more important of the two documents is the non TRIPS one. In 2022, the world has massive unused capacity for COVID vaccines, making greater access to vaccines not about availability of product nor even geographical diversity of production. As reported in a prior post, a number of facilities which produce COVID vaccines have closed or are in danger of closing from a lack of orders. See May 1, 2022: Financial Times article from May 1, 2022 reaffirms current excess capacity for COVID-19 vaccines, https://currentthoughtsontrade.com/2022/05/01/financial-times-article-from-may-1-2022-reaffirms-current-excess-capacity-for-covid-19-vaccines/; April 30, 2022: World Trade Organization 12th Ministerial Conference — the possible response to the COVID-19 pandemic amid the declining demand for vaccines, https://currentthoughtsontrade.com/2022/04/30/world-trade-organization-12th-ministerial-conference-the-possible-response-to-the-covid-19-pandemic-amid-the-declining-demand-for-vaccines/.
The latest data from the UNICEF COVID Dashboard on COVID-19 vaccine deliveries over time (by month) show the dramatic decline in vaccine deliveries globally since December 2021. See COVID-19 Vaccine Market Dashboard, https://www.unicef.org/supply/covid-19-vaccine-market-dashboard, accessed June 17, 2022. Had vaccines been delivered just at the rate of December 2021 in January – May 2022 (ignoring expansions announced for 2022), 4.74 billion additional doses would have shipped by the end of May.
The most disappointing document is the only new “agreement” — the Agreement on Fisheries Subsidies. The agreement reached deletes the bulk of Article 5 from the document forwarded to ministers (” SUBSIDIES CONTRIBUTING TO OVERCAPACITY AND OVERFISHING”), replacing it with an Article 5 (Other Subsidies) which is limited to barring Members from granting or maintaining subsidies “provided to fishing or fishing related activities outside of the jurisdiction of a costal Member or a coastal non-Member and outside the competence of a relevant RFMO/A.” While India was reported to be protecting the interests of developing and LDC countries by insisting on a 25 year period and a 200 mile zone for subsidizing low income, resource-poor and livelihood fishing or fishing related activities under the prior draft of Article 5.5(c), the vast majority of developing and LDC countries would have had a total exclusion from the subsidy provisions of Article 5 under prior draft Article 5.5(b)(i) because of the size of their marine capture production [“A developing country Member may grant or maintain the subsidies referred to in Article 5.1 to fishing and fishing related activities if its share of the annual global volume of marine capture production does not exceed [0.8] per cent as per the most recent published FAO data as circulated by the WTO Secretariat.”). India was not eligible for the prior Art. 5.5(b)(i) provision based on its percent of global volume of marine capture production. See June 11, 2022: WTO 12th Ministerial Conference — Draft documents forwarded to Ministers for Consideration; a review of the Fisheries Subsidies latest text, https://currentthoughtsontrade.com/2022/06/11/wto-12th-ministerial-conference-draft-documents-forwarded-to-ministers-for-consideration-a-review-of-the-fisheries-subsidies-latest-text/ (India in 2018 had 3.62 million tonnes of marine capture production out of a global total of 84.41 million tonnes (4.29%)).
Members agreed to continue negotiating on the subsidies contributing to overcapacity and overfishing and included a new Article 12 (Termination of Agreement if Comprehensive Disciplines are Not Adopted) that would terminate the agreement if comprehensive disciplines are not adopted within four years of the agreement’s entry into force.
As European Commission Executive Vice-President Dombrovskis stated at the conclusion of the 12th WTO Ministerial Conference, 17 June 2022, https://ec.europa.eu/commission/commissioners/2019-2024/dombrovskis/announcements/statement-executive-vice-president-dombrovskis-conclusion-12th-wto-ministerial-conference_en
“Today we have taken a truly significant step. This is the first time that we have established a multilateral agreement at the WTO to support sustainability and clamping down on subsidies that lead to over-fishing.
“Under international law, it will now be illegal to subsidise vessels involved in illegal and unregulated fishing, subsidise fishing in unregulated areas of the high seas.
“Given that we did not yet fully deliver on our mandate under the UN Sustainability Development Goals, the EU will continue to work with our partners towards multilateral sustainability disciplines on those subsidies not covered by this first agreement.”
E-commerce moratorium on customs duties until MC13
An important result for companies engaged in e-commerce was the extension of the moratorium on the imposition of customs duties until the 13th Ministerial Conference as part of a decision to continue and “reinvigorate the Work Programme on Electronic Commerce”. The extension is good only to 31 March 2024 unless the General Council takes a further decision to extend.
TRIPS non-violation disputes
At past Ministerial Conference the e-commerce customs duty moratorium had been extended at the same time as Members agreed to extend the period when non-violation complaints would not be brought under the TRIPS Agreement. The General Council had agreed in November to forward to the 12th Ministerial Conference the extension of the ban on bringing non-violation TRIPS cases until the 13th Ministerial Conference. It was adopted as noted above.
Work Programme on Small Economies
The decision adopted continues the work programme on small economies and the evaluation of challenges such economies face and any actions that may be appropriate to be considered by various WTO bodies.
Ministerial Declaration on Sanitary and Phytosanitary Work
The declaration reviews the important work of the SPS Committee and the need to have the SPS Agreement fully implemented and how the SPS Agreement can support a number of themes flowing from changes to the world agriculture scene:
“How to facilitate global food security and more sustainable food systems, including through sustainable growth and innovation in agricultural production and international trade, and through the use of international standards, guidelines, and recommendations developed by the Codex Alimentarius Commission, the World Organisation for Animal Health and the International Plant Protection Convention as the basis of harmonized SPS measures to protect human, animal or plant life or health.
“How to support basing SPS measures on scientific evidence and principles, including where international standards, guidelines, or recommendations do not exist or are not appropriate; and how to promote the use by Members of principles employed by the international standard setting bodies for considering scientific uncertainty in risk analysis.
“How to enhance the safe international trade in food, animals and plants and products thereof through the adaptation of SPS measures to regional conditions, including pest- or disease-free areas and areas of low pest or disease prevalence which can strengthen Members’ ability to protect plant and animal life or health through efforts to limit the spread of pests such as the Mediterranean fruit fly, diseases such as African swine fever, disease-carrying organisms, or disease-causing organisms.
“How to encourage cooperation with observer organizations that support the work of the SPS Committee and the international standard setting bodies through technical exchanges and assistance in the context of this work programme.
“How to increase participation of and support for the special needs of developing and least developed country Members in the development and application of SPS measures; and in particular, to increase awareness of and sensitivity to the impacts of SPS measures on the export possibilities of such Members.
“Other topics as identified over the course of the work programme or as a result of emerging sanitary or phytosanitary challenges or risks worldwide.”
The SPS Committee has been recognized by many as performing very useful work in helping Members understand developments, improve implementation of obligations and reduce disputes. The adopted declaration should help ensure positive momentum within the Committee.
MC12 Outcome Document
The outcome document offers an abbreviated discussion of WTO reform (paras. 3 & 4), indicating a fully functioning dispute settlement system will be achieved by 2024. The document reaffirms the role of special and differential treatment for developing countries and LDCs (without addressing U.S. and other developed country concerns about lack of differentiation or graduation from developing, etc.). The outcome document includes a range of paragraphs addressing needs of LDCs including for countries who graduate from LDC status. The bulk of the document focuses on prior commitments for assistance to LDCs and developing countries. Considering the critical need for reform of the WTO, the outcome document is disappointing in the lack of focus on the needs of the organization going forward.
Consider the comments of EC Executive Vice-President Dombrovskis earlier today on the importance of the reform effort.
“The difficult discussions over the last five days confirm the EU’s strong belief that the WTO is in an urgent need of root-and-branch reform.
“A full reboot is the only way it can remain relevant and reactive to 21st century challenges. I remind that you that the EU published a clear WTO reform roadmap one year ago to show the way forward.
“The WTO must be able to resolve disputes effectively. It must provide a trust-based and constructive forum for negotiations, and be the guardian of the international rules-based system.
“Ultimately, it is also about restoring the trust and political buy-in of its members.
“We will now get to work immediately on this essential reform, with a view to getting it agreed by the next Ministerial, MC13.”
Statement by Executive Vice-President Dombrovskis at Conclusion of 12th WTO Ministerial Conference, 17 June 2022, https://ec.europa.eu/commission/commissioners/2019-2024/dombrovskis/announcements/statement-executive-vice-president-dombrovskis-conclusion-12th-wto-ministerial-conference_en.
While the outcome document notes that reform will be discussed, it is hard to imagine agreement on an agenda and actual reforms being accomplished by the 13th Ministerial Conference. This is equally true for resolving dispute settlement, at least if U.S. longstanding concerns are actually going to be addressed.
Interestingly, a major push for many WTO Members since the 11th Ministerial Conference in Buenos Aires has been plurilateral work on so-called Joint Statement Initiatives (JSIs) . India and South Africa have opposed addressing results from JSIs within the WTO. There was no mention by DG Okonjo-Iweala or in the released documents of the work undertaken on the JSIs or the concluded work on services. Without a change to consensus decision making, JSIs offer the main alternative within the WTO for responding to emerging challenges to global trade. One can expect resolution of the role of open plurilaterals to be a major issue in establishing a reform agenda.
Today is a day for celebrating that that a dysfunctional organization and membership were able to come together for a group of decisions that at least suggest multilateralism can play a role going forward to address important issues confronting the global trading system, nations, and workers/citizens. As Director-General Ngozi Okonjo-Iweala stated last Sunday, an agreement on two issues is better than one on one issue, an agreement on one issue is better than no agreement. Today’s outcome is significant by the low standards created by the WTO over its 26+ years of existence. There are some positive results that have emerged. Hopefully the announced results will improve the lives of people around the world.
But the agreement and decisions/declarations are collectively relatively small in what is actually achieved and have taken way too long to achieve. Food security may be the most important, and the decision not to block shipments to the World Food Programme is potentially important. But the response to the pandemic while having some useful elements in terms of transparency and urging greater cooperation is dependent on the willingness of Members to act. The TRIPS decision will have virtually no real world benefit during the COVID-19 pandemic as the current challenge is lack of demand for vaccines not a lack of availability.
The extension of the e-commerce moratorium on customs duties will have ongoing importance to e-commerce companies and consumers globally but should have been easy to extend versus being the increasingly divisive issue it has become.
After 21 years, the fisheries subsidies agreement is at best a modest agreement with a major part of the subsidies disciplines removed from the package and kicked down the road for further negotiations.
Bottom line – what was achieved is better than no deal. For that, we should be thankful. To all those who made the outcome possible, have a relaxed weekend and enjoy a toast to a successful ministerial. Multilateral challenges will be awaiting you again next week.