In prior posts, I have reviewed the challenges facing the WTO as it approaches the 12th Ministerial Conference in Geneva at the end of November, beginning of December. See, e.g., October 8, 2021: The gap between WTO activity and the needs of businesses and workers for the international trading system, https://currentthoughtsontrade.com/2021/10/08/the-gap-between-wto-activity-and-the-needs-of-businesses-and-workers-for-the-international-trading-system/; September 18, 2021: The WTO’s 12th Ministerial Conference in Late November – early December 2021 — the struggle for relevance, https://currentthoughtsontrade.com/2021/09/18/the-wtos-12th-ministerial-conference-in-late-november-early-december-2021-the-struggle-for-relevance/; May 10, 2021: World Trade Organization — possible deliverables for the 12th Ministerial Conference to be held in Geneva November 30-December 3, 2021, https://currentthoughtsontrade.com/2021/05/10/world-trade-organization-possible-deliverables-for-the-12th-ministerial-conference-to-be-held-in-geneva-november-30-december-3-2021/.
The G20 Trade and Investment Ministerial Statement of October 12, 2021
WTO Reform
While the vast majority of WTO Members profess an interest in a successful MC12 beginning in late November, the reality is that success means very different things to different Members. The G20 countries have repeatedly called for a successful MC12, but this week’s meeting in Sorento Italy and resulting Ministerial statement on trade and investment shows limited actual convergence on what should be achieved at the upcoming WTO Ministerial Conference. See G20 TRADE AND INVESTMENT MINISTERIAL MEETING – OCTOBER 12, 2021, G20 MINISTERIAL STATEMENT ON TRADE AND INVESTMENT, https://www.g20.org/wp-content/uploads/2021/10/G20-TIMM-statement-PDF.pdf.
Paragraph 6 of the G20 Trade and Investment Ministerial statement reiterates support for a successful MC12.
“We commit to a successful and productive WTO 12th Ministerial Conference as an important opportunity to advance WTO reform to revitalise the organisation. We commit to active engagement in this work to provide the political momentum necessary for progress.”
Yet the statement is short on specific areas of reform other than improving rule making and dispute settlement — areas where there has been no meaningful forward movement ahead of MC 12 and where there are major divisions among G20 countries.
Trade and Health
On the topic of “trade and health” there is support among G20 countries for equitable access to vaccines, therapeutics, diagnostics and personal protective equipment, and G20 countries are making belated contributions to increased supplies to the most vulnerable. However, with the exception of export restraints where there is language recognizing the right of countries to take actions in limited circumstances, the divisions amongst the G20 make specifics on WTO issues merely aspirational.
“10. We will work actively and constructively with all WTO members in the lead up to the 12th Ministerial Conference and beyond to enhance the capacity of the multilateral trading system to increase our pandemic and disaster preparedness and resilience by adopting a multifaceted response. Trade-related aspects of intellectual property rights, contributions to international efforts to expand production and delivery of vaccines, therapeutics and essential medical goods, diversifying manufacturing
locations and fostering equitable distribution, trade facilitation measures, export restrictions, encouraging regulatory compatibility, are among the areas where our constructive engagement in the WTO, notably in the TRIPS Council, the Council for
Trade in Goods, the Council for Trade in Services, and other relevant bodies and processes, can enhance global public health efforts.”
While there may be language in an MC12 declaration and a work program for the future, there will not likely be any meaningful results announced at MC12.
Services and Investments
Embarrassingly for the WTO, Members, efforts to develop multilateral rules for digital trade and e-commerce continue to be far from concluded. This has led to the Joint Statement Initiative (“JSI”) on E-Commerce and other JSIs being launched at the 11th WTO Ministerial Conference in Buenos Aires in 2017 amongst a subset of WTO Members but open to all. Two of the other JSIs are Investment Facilitation for Development and Services Domestic Regulation. The JSI on Services Domestic Regulation has reportedly reached an agreement that will be presented at MC12. However, within the G20, there are some countries who oppose bringing JSIs into the WTO — most notably, India and South Africa. See 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; THE LEGAL STATUS OF ‘JOINT STATEMENT INITIATIVES’ AND THEIR NEGOTIATED OUTCOMES, submission from India, Namibia and South Africa, 30 April 2021, WT/GC/W/819/Rev.1. This difference of views is reflected in the G20 Trade and Investment Ministerial Statement.
“14. G20 participants in the Joint Statement Initiatives on E-Commerce, Investment Facilitation for Development and Services Domestic Regulation encourage and support the active participation of all WTO members in the initiatives and look
forward to meaningful progress in the lead up to the 12th WTO Ministerial conference. Concerns have been expressed on rule-making by some G20 members that are not part of the JSIs.”
Government Support and Level Playing Field
The section of the Ministerial Statement looking at government support and level playing field issues recognizes that there are “structural problems in some sectors, such as excess capacities” which cause problems and note that “Many G20 members affirm the need to strengthen international rules on industrial subsidies and welcome ongoing international efforts to improve trade rules affecting agriculture.” As is clear “many of us” means a number of G20 countries don’t agree. Industrial subsidy rule improvement is intended to address the distortions caused by China’s programs (and of others). Agriculture market access and agricultural subsidies and transparency are also issues where there is a significant division among G20 countries.
Trade and Environmental Sustainability
The challenges to the world from a warming climate are existential. The Ministerial Statement contains useful language of a general nature in terms of the importance of addressing environmental issues and that “trade and environmental policies should be mutually supportive”. The G20 support reaching a conclusion to the fisheries subsidies negotiations even though there have been recent actions by some G20 countries — again, India and South Africa — to weaken disciplines on “developing” countries which threaten the achievement of a meaningful agreement 20 years after negotiations commenced.
MSMEs
Micro-, small- and medium-sized enterprises are a critical part of most countries economies and make up a larger share of business in lower income countries. While the Ministerial Statement addresses MSMEs importance and need for additional assistance, there is no mention of the Joint Statement Initiative on MSMEs among some WTO Members and the fact that an agreement is ready for presentation at MC12 with the agreement being open to all. See 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. India and South Africa and others have raised the same objection to the MSME JSI as they have to the others.
Conclusion on G20 Trade and Investment Ministerial Statement
The deep divisions within the WTO membership are reflected as well among the G20 countries with China, India, South Africa and others having much different priorities that the historic leadership of the GATT/WTO including the U.S., EU, Canada, United Kingdom, Australia and others. It is the lack of a common purpose and agreement on basic principles that has largely paralyzed the negotiating function at the WTO. The disappointing G20 Trade and Investment Ministerial Statement reflects that same lack of common purpose and agreement on basic principles.
USTR Katherine Tai’s October 14, 2021 Prepared Remarks on the WTO
The U.S. Trade Representative traveled to Geneva after the G20 Trade and Investment Ministers meeting in Italy and spoke on the WTO at an event hosted by the Graduate Institute of International and Development Studies’ Geneva Trade Platform on October 14. Ambassador Tai’s prepared statement is available on the USTR webpage and is reproduced below. See USTR,Ambassador Katherine Tai’s Remarks As Prepared for Delivery on the World Trade Organization, October 14, 2021, https://ustr.gov/about-us/policy-offices/press-office/speeches-and-remarks/2021/october/ambassador-katherine-tais-remarks-prepared-delivery-world-trade-organization.
” Good afternoon. Thank you to Dmitry and Richard, the Geneva Trade Platform, and the Graduate Institute of International and Development Studies for hosting me today and putting together this event.
“It is a pleasure to be back in Geneva. I have looked forward to making this trip since becoming the United States Trade Representative in March, and I am grateful to be here with all of you today.
“I spent a lot of time in this city earlier in my career representing the United States Government with pride before the World Trade Organization.
“I appreciate the importance of the institution. And I respect the dedicated professionals representing the 164 members, as well as the WTO’s institutional staff working on behalf of the membership. I also want to thank Director-General Dr. Ngozi for leading this organization through a difficult and challenging year.
“Let me begin by affirming the United States’ continued commitment to the WTO.
“The Biden-Harris Administration believes that trade – and the WTO – can be a force for good that encourages a race to the top and addresses global challenges as they arise.
“The Marrakesh Declaration and Agreement, on which the WTO is founded, begins with the recognition that trade should raise living standards, ensure full employment, pursue sustainable development, and protect and preserve the environment.
“We believe that refocusing on these goals can help bring shared prosperity to all.
“For some time, there has been a growing sense that the conversations in places like Geneva are not grounded in the lived experiences of working people. For years, we have seen protests outside WTO ministerial conferences about issues like workers’ rights, job loss, environmental degradation, and climate change as tensions around globalization have increased.
“We all know that trade is essential to a functioning global economy. But we must ask ourselves: how do we improve trade rules to protect our planet and address widening inequality and increasing economic insecurity?
“Today, I want to discuss the United States’ vision for how we can work together to make the WTO relevant to the needs of regular people.
“We have an opportunity at the upcoming 12th ministerial conference – or MC12 – to demonstrate exactly that.
“Throughout the pandemic, the WTO rules have kept global trade flowing and fostered transparency on measures taken by countries to respond to the crisis. But many time-sensitive issues still require our attention. We can use the upcoming ministerial to deliver results on achievable outcomes.
“The pandemic has placed tremendous strain on peoples’ health and livelihoods around the world. The WTO can show that it is capable of effectively addressing a global challenge like COVID-19, and helping the world build back better.
“There are several trade and health proposals that should be able to achieve consensus in the next month and a half.
“I announced in May that the United States supports text-based discussions on a waiver of intellectual property rights for COVID-19 vaccines. The TRIPS Council discussions have not been easy, and Members are still divided on this issue. The discussions make certain governments and stakeholders uncomfortable. But we must confront our discomfort if we are going to prove that, during a pandemic, it is not business as usual in Geneva.
“The United States is also working on a draft ministerial decision aimed at strengthening resiliency and preparedness through trade facilitation. Our proposal would improve the sharing of information, experiences, and lessons learned from COVID-19 responses to help border agencies respond in future crises.
“It is important that our work on trade and health does not end at MC12. This pandemic will not be over in December, and it will not be the last public health crisis we encounter. In the next six weeks, we also have an opportunity to conclude the two-decades-long fisheries subsidies negotiations and show that the WTO can promote sustainable development.
“We want to continue working with Members to bridge existing gaps in the negotiations.
“To this end, the United States is sharing options to respond to developing countries’ request for flexibilities. We believe that any agreement must establish effective disciplines that promote sustainability.
“It must also address the prevalence of forced labor on fishing vessels. We call on all Members to support these goals.
“I recognize that discussing these complex issues during a pandemic is hard. Despite this challenge, we can reach meaningful outcomes and set ourselves up for candid and productive long-term conversations on reforming the WTO.
“As I mentioned earlier, the reality of the institution today does not match the ambition of its goals. Every trade minister I’ve heard from has expressed the view that the WTO needs reform.
“The Organization has rightfully been accused of existing in a ‘bubble,’ insulated from reality and slow to recognize global developments. That must change.
“We are used to talking to each other, a lot. We need to start actually listening to each other.
“We also must include new voices, find new approaches to problems, and move past the old paradigms we have been using for the last 25 years.
“We need to look beyond simple dichotomies like liberalization vs. protectionism or developed vs. developing. Let’s create shared solutions that increase economic security.
“By working together and engaging differently, the WTO can be an organization that empowers workers, protects the environment, and promotes equitable development.
“Our reform efforts can start with the monitoring function. In committees, Members deliberate issues and monitor compliance with the agreements. This important work is a unique and underappreciated asset of the WTO.
“Increasingly, however, Members are not responding meaningfully to concerns with their trade measures. The root of this problem is a lack of political will. But committee procedures can be updated to improve monitoring work.
“At MC12, Ministers can direct each committee to review and improve its rules.
“It is also essential to bring vitality back to the WTO’s negotiating function. We have not concluded a fully multilateral trade agreement since 2013.
“A key stumbling block is doubt that negotiations lead to rules that benefit or apply to everyone. But we know that negotiations only succeed when there is real give and take.
“We can successfully reform the negotiating pillar if we create a more flexible WTO, change the way we approach problems collectively, improve transparency and inclusiveness, and restore the deliberative function of the organization.
“Over the past quarter century, WTO members have discovered that they can get around the hard part of diplomacy and negotiation by securing new rules through litigation.
“Dispute settlement was never intended to supplant negotiations. The reform of these two core WTO functions is intimately linked.
“The objective of the dispute settlement system is to facilitate mutually agreed solutions between Members. Over time, ‘dispute settlement’ has become synonymous with litigation – litigation that is prolonged, expensive, and contentious.
“Consider the history of this system.
“It started as a quasi-diplomatic, quasi-legal proceeding for presenting arguments over differing interpretations of WTO rules. A typical panel or Appellate Body report in the early days was 20 or 30 pages. Twenty years later, reports for some of the largest cases have exceeded 1,000 pages. They symbolize what the system has become: unwieldy and bureaucratic.
“The United States is familiar with large and bitterly fought WTO cases. Earlier this year, we negotiated frameworks with the European Union and the United Kingdom to settle the Large Civil Aircraft cases that started in 2004.
“We invoked and exhausted every procedure available. And along the way, we created strains and pressures that distorted the development of the dispute settlement system.
“With the benefit of hindsight, we can now ask: is a system that requires 16 years to find a solution ‘fully functioning?’
“This process is so complicated and expensive that it is out of reach for many – perhaps the majority – of Members.
“Reforming dispute settlement is not about restoring the Appellate Body for its own sake, or going back to the way it used to be.
“It is about revitalizing the agency of Members to secure acceptable resolutions.
“A functioning dispute settlement system, however structured, would provide confidence that the system is fair. Members would be more motivated to negotiate new rules.
“Let’s not prejudge what a reformed system would look like. While we have already started working with some members, I want to hear from others about how we can move forward.
“Reforming the three pillars of the WTO requires a commitment to transparency. Strengthening transparency will improve our ability to monitor compliance, to negotiate rules, and to resolve our disputes.
“I began these remarks with an affirmation of commitment. I’d like to conclude with an affirmation of optimism.
“I am optimistic that we can and will take advantage of this moment of reflection.
“In reading over the Marrakesh Agreement’s opening lines, I was struck by the founding Members’ resolve to develop ‘a more viable and durable multilateral trading system.’
“These words are just as relevant today as they were then. We still need to work together to achieve a more viable and durable multilateral trading system.
“It is easy to get distracted by the areas where we may not see eye to eye. But in conversations with my counterparts, I hear many more areas of agreement than disagreement.
“We all recognize the importance of the WTO, and we all want it to succeed.
“We understand the value of a forum where we can propose ideas to improve multilateral trade rules. We should harness these efforts to promote a fairer, more inclusive global economy.
“WTO Members are capable of forging consensus on difficult, complicated issues. It’s never been easy, but we’ve done it before. And we can do it again.
“Thank you.”
Comments on USTR Tai’s statement on the WTO
The Biden Administration has been supportive of multilateral institutions, and that support is relfected in Amb. Tai’s comments. At the same time, the U.S. has believed that a small package of deliverables is achievable for MC12 with hopefully a work program for the serious reform that is needed also being agreed to at MC12. Amb. Tai’s comments reflect both optimism and a limited set of deliverables being sought.
The Fisheries Subsidies negotiations has made limited progress on a range of important issues. The U.S. is attempting to find answers to problems raised by others while still achieving a meaningful outcome. With the limited time remaining, this suggests either a less robust agreement or movement by others to a higher level of ambition or to no agreement being finalized. Addressing forced labor in fishing and more broadly should be important to all WTO Members, was raised by the U.S. (and is important to Democratic leadership in the Congress) but is opposed by some, including China. If the U.S. continues to pursue the addition of this issue to the fisheries subsidies text,
On greater transparency, Members agreeing to have Committees review their procedures to improve the monitoring function are important steps that could be taken to improve Member confidence in actions of trading partners and affect negotiations and dispute settlement as well. Even such seemingly simple steps, however, may not move forward as at least one major country — China — has as one of its negotiating priorities not changing transparency obligations.
Revitalizing the negotiating function and restoring a dispute settlement system are longer term efforts, with the U.S. vision on dispute settlement (focus on what dispute settlement is doing vs. ensuring a two stage process) far apart from that of the EU and many other Members.
And, of course, the U.S. is supportive of some form of outcome on addressing the pandemic and trade and health moving forward. Whether there will be outcomes in this area are dependent more on flexibility by others as the U.S. has been looking for solutions that will meet the pandemic needs and prepare for the future.
Conclusion
With very limited time until the 12th WTO Ministerial Conference begins at the end of November, it is hard to see an ambitious outcome emerging from the efforts of WTO Members. The G20 Trade and Investment Ministerial Statement from October 12 reflects the divisions amongst the major WTO Members. Amb. Tai’s statement yesterday in Geneva while positive on the WTO and its important role tees up a relatively limited outcome as likely for MC 12. Even Amb. Tai’s more realistic set of expectations are likely to be challenging to achieve.