Benin

Trade and Health at the WTO’s 12th Ministerial Conference

· November 22, 2021 · COVID-19 vaccinations, trade and health · , , , , , , , , , , , , , , , , , , , , , , , , , , · No Comments

An area of focus the last two years at the WTO has been addressing the COVID-19 pandemic. This has included various statements from Members, monitoring by the Secretariat of export and import actions either impeding or expediting the flow of medical goods and services, and various proposals for actions to address the pandemic or for future preparation. The proposal for a waiver from various TRIPS obligations from India and South Africa (and now supported by a range of countries) is one proposal. A number of countries (Ottawa Group) have put forward a proposal for a trade and health initiative to permit a more rapid response by WTO Members in the future. See COVID-19 AND BEYOND: TRADE AND HEALTH, COMMUNICATION FROM AUSTRALIA, BRAZIL, CANADA, CHILE, THE EUROPEAN UNION, JAPAN,
KENYA, REPUBLIC OF KOREA, MEXICO, NEW ZEALAND, NORWAY, SINGAPORE AND SWITZERLAND, 24 November 2020, WT/GC/223; November 27, 2020:  The Ottawa Group’s November 23 communication and draft elements of a trade and health initiative, https://currentthoughtsontrade.com/2020/11/27/the-ottawa-groups-november-23-communication-and-draft-elements-of-a-trade-and-health-initiative/. The WTO Director-General and the Members have engaged in a number of meetings with other multilateral organizations and the private sector exploring options for expanding production of COVID-19 vaccines and expanding distribution to countries in need.

Amb. David Walker of New Zealand has been tasked to work with Members to see if a declaration on trade and health can be agreed to at the 12th WTO Ministerial Conference that starts on November 30.

A former Deputy Director-General of the WTO, Alan Wolff, provided his thoughts on likely outcomes at the 12th Ministerial during a WITA virtual event on November 18th and opined that a declaration on trade and health was likely only if there was some resolution of the waiver proposal for vaccines. See PIIE, Alan Wm. Wolff, Defining Success for MC12, 18 November 2021, Presented at WITA, slides 5, 7, 10-11. Slide 10 is presented below.

I have written before on the challenges of the waiver of TRIPs obligations proposal put forward by India and South Africa. See, e.g., November 2, 2020:  India and South Africa seek waiver from WTO intellectual property obligations to add COVID-19 – issues presented, https://currentthoughtsontrade.com/2020/11/02/india-and-south-africa-seek-waiver-from-wto-intellectual-property-obligations-to-address-covid-19-issues-presented/.

The EU and some others have not agreed to a waiver but have focused on making compulsory licensing more effective. See, e.g., DRAFT GENERAL COUNCIL DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH IN THE CIRCUMSTANCES OF A PANDEMIC, COMMUNICATION FROM THE EUROPEAN UNION TO THE COUNCIL FOR TRIPS, 18 June 2021, IP/C/W/681.

Thus, the outcome on trade and health heading into the Ministerial is uncertain. See WTO News Release, Members to continue discussion on a common COVID-19 IP response up until MC12, 19 November 2021, https://www.wto.org/english/news_e/news21_e/trip_18nov21_e.htm.

A driver behind the waiver proposal has been the limited availability of vaccines to least developed and some developing countries. Vaccine equity is the shorthand term for the concerns about availability and affordability of vaccines for all people. While the issue of availability and access is complicated and beyond just WTO competence, the world’s vaccine manufacturers have ramped up capacity and production, governments have belatedly gotten involved in expanding donations and some of the major bottlenecks to getting vaccines to COVAX in 2021 appear to be resolved going forward, though many LDCs and developing countries will not get large volumes of vaccines until 2022.

The pandemic and the challenges of ramping up production and ensuring access to all people has been the subject of dozens of my prior posts. See, e.g., October 12, 2021: See WTO Information Notes on COVID-19 Vaccine Production and Potential Bottlenecks, https://currentthoughtsontrade.com/2021/10/12/wto-information-notes-on-covid-19-vaccine-production-and-potential-bottlenecks/; September 27, 2021:  Global efforts to expand COVID-19 vaccine production and distribution — an all hands on deck effort being led by the U.S. and EU with active support of many governments and others, https://currentthoughtsontrade.com/2021/09/27/global-efforts-to-expand-covid-19-vaccine-production-and-distribution-an-all-hands-on-deck-effort-being-led-by-the-u-s-and-eu-with-active-support-of-many-governments-and-others/; May 6, 2021:  COVID-19 vaccines — role of WTO and developments at May 5-6, 2021 General Council meeting on TRIPS Waiver, https://currentthoughtsontrade.com/2021/05/06/covid-19-vaccines-role-of-wto-and-developments-at-may-5-6-2021-general-council-on-trips-waiver/.

Prior to 2021, global capacity for all vaccines was estimated at 5 billion doses/year. In 2021, COVID-19 vaccine production alone will be around 10 billion doses. As of November 20, 2021, UNICEF’s COVID Vaccine Market Dashboard shows 8.624 billion doses delivered to countries and territories of which COVAX deliveries were 524 million (and 565 million delivered or cleared for shipment). https://www.unicef.org/supply/covid-19-vaccine-market-dashboard (visited on November 20, 2021).

Administration of vaccine doses to populations has been less than doses delivered. Data from Blomberg’s COVID Vaccine Tracker as of November 19, 2021 9:34 a.m., shows 7.63 billion doses administered. https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribution/ (visited November 20, 2021). From the Vaccine Tracker data, there are a large number of countries or territories (95) that have administered 100 or more doses to every 100 people in the country. As major vaccines like Pfizer and Moderna need two shots, and as some countries have started supplying boosters, data are not necessarily comparable across countries in terms of percentage of people vaccinated. But the doses administered per 100 people is a reasonable measure of equitable distribution. A review of the data do show large differences in administration of doses. However, which countries or territories have administered large numbers of doses/100 people is not tied to a country or territory having vaccine production capacity, nor is it tied to level of income in the country or territory.

For example, the top ten countries or territories for administering doses of COVID-19 vaccine in the Bloomberg report were:

Gibraltar, 279.2 doses/100 people

Cuba, 244.2 doses/100 people

Chile, 207.5 doses/100 people

Maldives, 204.8 doses/100 people

UAE, 201.6 doses/100 people

Bahrain, 191.7 doses/100 people

Uruguay, 190.7 doses/100 people

Malta, 185.9 doses/100 people

Cayman Islands, 183.7 doses/100 people

Seychelles, 182.7 doses/100 people

China ranked 16th at 172.1 doses/100 people; the United States ranked 66th at 134.0/100 people; EU members were generally greater than 100 doses/100 people but had several member states below that (Bulgaria at 45.4 doses/100 people; Romania at 73.0 doses/100 people) and had an overall average of 138.7. Morocco had the most doses/100 people for a country from Africa — 136.5.

Twenty-eight countries or territories have administered between 75 and 99.4 doses/100 people (including India at 84.6 doses/100 people); twenty-three countries or territories have administered between 50 and 73 doses/100 people (including Rwanda at 65.2 doses/100 people and Botswana at 52.8 doses/100 people); twenty-two countries or territories have administered between 25 and 47.1 doses/100 people (including South Africa at 41.4 doses/100 people); thirty-three countries or territories have administered between 0.2 and 18.7 doses/100 people.

Obviously, there are a large number of countries (including some developed countries) where vaccines administered are far too limited. For many developing and LDC countries with low numbers of doses administered, the failure of supplies to be delivered to COVAX for shipment is certainly a significant cause. India’s need to keep vaccine doses at home was a major cause of the shortfall to COVAX in 2021, but not the only reason.

Belatedly larger volumes of vaccine doses are making it to those in greatest need. The increases flow from a combination of increased production volumes globally, India resuming exports, increases in donations from a number of countries and more. For example, the UNICEF data on deliveries shows that there have been some significant increases in doses available to the countries or territories with very low doses administered levels. For example, Nigeria shows only 4.6 doses/100 people administered in the Bloomberg vaccine tracker data. The UNICEF vaccine market dashboard shows roughly three times the number of doses delivered to Nigeria as are reported administered (29.689 million vs. 9.254 million). Benin has 1.968 million doses delivered and just 0.347 million administered (2.9/100 people). It is also true for countries receiving doses from COVAX with higher existing doses administered. For example, Zimbabwe which had 42.3 doses administered per 100 people in the Bloomberg data showed nearly twice as many doses delivered in the UNICEF data as had been administered (11.322 million doses delivered vs. 6.31 million doses administered).

What the two reports suggest is that while vaccine equity is a real issue, the causes of the very different experiences of different countries or territories in the same general area are complex and not easily or completely understood by the current discussion. For example, Zimbabwe’s per capital GNI in 2020 was $1,090 and yet they had administered 42.3 COVID vaccine doses/100 people. Cameroon, with a per capita GNI in 2020 of $1,100, had COVID vaccines administered of only 2.4/100 people. Similarly, Morocco had a 2020 per capita GNI of $2,980 and COVID vaccines administered of 136.5/100 people. In comparison, South Africa with a much higher per capita GNI in 2020 ($5,410) had COVID vaccines administered at less than 1/3rd the rate of Morocco – 41.4 vs.136.5/100 people. Nigeria, with a 2020 per capita GNI of $2,000 had administered only 4.6 COVID vaccines/100 people.

Thus, those working on improving vaccine equity need to identify and address the other causes besides vaccine production and availability through COVAX in the coming months.

I paste below the data from the Bloomberg COVID Vaccine Tracker ranked in descending order of COVID vaccine doses administered per 100 people as of November 19, 2021.

Countryvaccines

Forced labor and child labor — a continued major distortion in international trade for some products

· January 24, 2021 · forced labor and child labor · , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , · No Comments

In recent years, the United States has paid more attention to the trade distortions flowing from forced labor and child labor in other countries, particularly in China. While there has been significant progress in the last twenty years in reducing forced labor and child labor globally according to the International Labor Organization (“ILO”), the COVID-19 pandemic has seen some retrenchment and efforts by China to address minorities in country have created an international backlash and concern.

The ILO webpage on forced labor reflects the global nature of the problem. The webpage states in part,

“Although forced labour is universally condemned, ILO estimates show that 24.9 million people around the world are still subjected toit. Of the total number of victims of forced labour, 20.8 million (83 per cent) are exploited in the private economy, by individuals or enterprises, and the remaining 4.1 million (17 per cent) are in State-imposed forms of forced labour. Among those exploited by private individuals or enterprises, 8 million (29 per cent) are victims of forced sexual exploitation and 12 million (64 per cent) of forced labour exploitation. Forced labour in the private economy generates some US$ 150 billion in illegal profits every year: two thirds of the estimated total (or US$ 99 billion) comes from commercial sexual exploitation, while another US$ 51 billion is a result from forced economic exploitation in domestic work, agriculture and other economic activities (Note 1).

“Vestiges of slavery are still found in some parts of Africa, while forced labour in the form of coercive recruitment is present in many countries of Latin America, in certain areas of the Caribbean and in other parts of the world. In numerous countries, domestic workers are trapped in situations of forced labour, and in many cases they are restrained from leaving the employers’ home through threats or violence. Bonded labour persists in South Asia, where millions of men, women and children are tied to their work through a vicious circle of debt. In Europe and North America, a considerable number of women and children are victims of traffickers, who sell them to networks of forced prostitution or clandestine sweat-shops. Finally, forced labour is still used as a punishment for expressing political views.

“For many governments around the world, the elimination of forced labour remains an important challenge in the 21st century. Not only is forced labour a serious violation of a fundamental human right, it is a leading cause of poverty and a hindrance to economic development. ILO standards on forced labour, associated with well-targeted technical assistance, are the main tools at the international level to combat this scourge.”

ILO, International Labour Standards on Forced labour, https://www.ilo.org/global/standards/subjects-covered-by-international-labour-standards/forced-labour/lang–en/index.htm. See also ILO and Walk Free, 2017, Global Estimates of Modern Slavery, Forced Labor and Forced Marriage, https://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/documents/publication/wcms_575479.pdf.

Child labor involves more people – an estimated 152 million of which 73 million are involved in hazardous work. See ILO, International Programme on the Elimination of Child Labour and Forced Labour (IPEC+), https://www.ilo.org/global/about-the-ilo/how-the-ilo-works/flagships/ipec-plus/lang–en/index.htm.

While the incidence of forced labor and child labor is declining, the COVID-19 pandemic has complicated trends as these populations are most vulnerable. See, e.g., ILO, The International Labour Organization
and the US Department of Labor partnership to eliminate child labour and forced labour, 2019, https://www.ilo.org/wcmsp5/groups/public/@ed_norm/@ipec/documents/publication/wcms_710971.pdf (“The ILO’s most recent global estimates of child labour indicate, however, that significant progress is
being made. From 2000 to 2016, there was a net reduction of 94 million children in child labour and
the number of children in hazardous work was halved. In parallel, the ILO Worst Forms of Child
Labour Convention (No. 182) was ratified by 186 countries, reaching almost universal ratification.
The challenges ahead, however, remain formidable: in 2016, 152 million girls and boys were in child
labour and 25 million men, women and children were trapped in forced labour.”); ILO, COVID-19 impact on
child labour and forced labour: The response of the IPEC+ Flagship Programme, 2020, https://www.ilo.org/wcmsp5/groups/public/—ed_norm/—ipec/documents/publication/wcms_745287.pdf (“COVID-19 has plunged the world into a crisis of unprecedented scope and scale. Undoubtedly, restoring global health remains the first priority, but the strict measures required are resulting in massive economic and social shocks. As lockdown, quarantine, physical distancing and other isolation measures to suppress transmission continue, the global economy has plunged into a recession. The harmful effects of this pandemic will not be distributed equally. They are expected to be most damaging in the poorest countries and in the poorest neighbourhoods, and for those in already disadvantaged or vulnerable situations, such as
children in child labour and victims of forced labour and human trafficking, particularly women and girls.
These vulnerable groups are more affected by income shocks due to the lack of access to social protection,
including health insurance and unemployment benefits. * * * Experience from previous crisis situations, such as the 2014 Ebola epidemic, has shown that these factors play a particularly strong role in exacerbating the risk to child labour and forced labour.”).

In China, the government’s efforts to “reeducate” minority populations (e.g., Uyghurs from the western region of Xinjiang) has led to allegations of forced labor on a range of products and actions by the United States to restrict certain imports from China from the region. The Washington International Trade Association is holding a virtual webinar on January 27 looking at the challenges in China and the forced labor problem of the Xinjiang Uyghur Autonomous Region and the resulting U.S. ban on cotton and tomato products. See WITA, WITA’s Friday Focus on Trade, Vol. 206, January 22, 2021 (containing various articles on the China forced labor issue and referencing the webinar on January 27, WITA Webinar: The U.S. Moves Against Forced Labor in Xinjiang).

The U.S. Department of Labor in September released its 2020 list of products believed to be produced in foreign countries with forced labor or with child labor. See USDOL, 2020 List of Goods Produced by Child Labor or Forced Labor, September 2020, https://www.dol.gov/sites/dolgov/files/ILAB/child_labor_reports/tda2019/2020_TVPRA_List_Online_Final.pdf. The report provides the following statement of purpose:

“The U.S. Department of Labor (USDOL or the Department) has produced this ninth edition of the List of Goods Produced by Child Labor or Forced Labor in accordance with the Trafficking Victims Protection Reauthorization Act (TVPRA), as amended. The TVPRA requires USDOL’s Bureau of International Labor Affairs (ILAB or the Bureau) to “develop and make available to the public a list of goods from countries that
[ILAB] has reason to believe are produced by forced labor or child labor in violation of international standards” (TVPRA List or the List; 22 U.S.C. § 7112(b)(2)(C)). It also requires submission of the TVPRA List to the United States Congress not later than December 1, 2014, and every 2 years thereafter (22 U.S.C. § 7112(b)(3)).

“The Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2018 expanded ILAB’s mandate to require the TVPRA List to include, ‘to the extent practicable, goods that are produced with inputs that are produced with forced labor or child labor’” (22 U.S.C. 7112(b)(2)(C)).

“The TVPRA directs ILAB ‘to work with persons who are involved in the production of goods on the list … to create a standard set of practices that will reduce the likelihood that such persons will produce goods using [child labor or forced labor],’ and ‘to consult with other departments and agencies of the United States Government to reduce forced and child labor internationally and ensure that products made by forced labor and child labor in violation of international standards are not imported into the United States’ (22 U.S.C. § 7112(b)(2)(D)–(E)).” (pages 1 and 3).

This year’s publication lists 77 countries that have one or more products believed to be produced with child labor, with forced labor or with both child and forced labor. Fourteen countries are listed as having products believed to be produced with forced labor. Thirty-six countries are listed as believed to produce products with child and forced labor. Sixty-four countries produce some products with child labor. The 77 countries are listed below along with whether products are believed produced with child labor, forced labor, or child labor & forced labor.

Afghanistan — child larbor; child labor & forced labor

Angola — child labor & forced labor

Argentina — child labor; child labor & forced labor

Azerbaijan — child labor

Bangladesh – child labor; child labor & forced labor

Belize — child labor

Benin — child labor; child labor & forced labor

Bolivia — child labor; forced labor; child labor & forced labor

Brazil — child labor; forced labor; child labor & forced labor

Burkina Faso — child labor; child labor & forced labor

Burma — child labor; forced labor; child labor & forced labor

Cambodia — child labor; child labor & forced labor

Cameroon — child labor

Central African Republic — child labor

Chad — child labor

China — forced labor; child labor & forced labor

Colombia — child labor; child labor & forced labor

Costa Rica — child labor

Cote d’Ivoire — child labor & forced labor

Democratic Republic of the Congo — child labor; child labor & forced labor

Dominican Republic — child labor; child labor & forced labor

Ecuador — child labor

Egypt — child labor

El Salvador — child labor

Eswatini — child labor

Ethiopia — child labor; child labor & forced labor

Ghana — child labor; child labor & forced labor

Guatemala — child labor

Guinea — child labor

Honduras — child labor

India — child labor; child labor & forced labor

Indonesia — child labor; child labor & forced labor

Iran — child labor

Kazakhstan — child labor & forced labor

Kenya — child labor

Kyrgyz Republic — child labor

Lebanon — child labor

Lesotho — child labor

Liberia — child labor

Madagascar — child labor

Malawi — child labor; child labor & forced labor

Malaysia — forced labor; child labor & forced labor

Mali — child labor; child labor & forced labor

Mauritania — child labor

Mexico — child labor; child labor & forced labor

Mongolia — child labor

Mozambique — child labor

Nepal — child labor & forced labor

Nicaragua — child labor

Niger — child labor; forced labor

Nigeria — child labor; child labor & forced labor

North Korea — forced labor

Pakistan — child labor; forced labor; child labor & forced labor

Panama — child labor

Paraguay — child labor; child labor & forced labor

Peru — child labor; forced labor; child labor & forced labor

Philippines — child labor

Russia — forced labor; child labor & forced labor

Rwanda — child labor

Senegal — child labor

Sierra Leone –child labor; child labor & forced labor

South Sudan — child labor & forced labor

Sudan — child labor

Suriname — child labor

Taiwan — forced labor

Tajikistan — child labor & forced labor

Tanzania — child labor

Thailand — child labor; forced labor; child labor & forced labor

Turkey — child labor

Turkmenistan — child labor & forced labor

Uganda — child labor

Ukraine — child labor

Uzbekistan — forced labor

Venezuela — forced labor

Vietnam — child labor; child labor & forced labor

Yemen — child labor

Zambia — child labor

Zimbabwe — child labor

While the number of products obviously vary by country and category, the report categorized agriculture as having 68 child labor listings and 29 forced labor listings. This compares to manufacturing with 39 child labor and 20 forced labor listings; mining showed 32 child labor and 13 forced labor listings and pornography showed one each.

Looking at specific products for individual countries provides the most information.

As an example, China is shown as having the following products believed to be produced with forced labor — Artificial Flowers, Christmas Decorations, Coal, Fish, Footwear, Garments, Gloves, Hair Products, Nails, Thread/Yarn, and Tomato Products. China is also shown as having the following products believed to be produced with child labor and forced labor — Bricks, Cotton, Electronics, Fireworks, Textiles, and Toys. As a USDOL separate post notes, gloves, hair products, textiles, thread/yarn and tomato products were added in 2020 because of research on the forced labor situation in Xinjiang. See USDOL, Bureau of International Labor Affairs, Against Their Will: The Situation in Xinjiang, Forced Labor in Xinjiang, 2020, https://www.dol.gov/agencies/ilab/against-their-will-the-situation-in-xinjiang. The document is embedded below.

Against-Their-Will_-The-Situation-in-Xinjiang-_-U.S.-Department-of-Labor

Looking at India, products believed to be produced with child labor include the following — Bidis (hand-rolled
cigarettes), Brassware, Cotton, Fireworks, Footwear, Gems, Glass Bangles, Incense (agarbatti), Leather Goods/
Accessories, Locks, Matches, Mica, Silk Fabric, Silk Thread, Soccer Balls, Sugarcane, Thread/Yarn. Products believed produced with child labor & forced labor include the following — Bricks, Carpets, Cottonseed (hybrid), Embellished Textiles, Garments, Rice, Sandstone, Stones.

While the USDOL reports don’t estimate the portion of exports from any country of individual products that are produced with child and/or forced labor, the trade consequences can be significant as such labor is artificially valued creating distortions in competitiveness and resulting trade flows. For example, the list of products for China are either important export products for China or important inputs into exported products. The same would true for India and for many other of the 77 countries on the list.

Conclusion

The U.S. has in place statutory provisions which permit the exclusion from entry into the United states of products produced with forced labor. The Trump Administration did a somewhat better job enforcing U.S. law on imports of products produced with child or forced labor. Much more can be done and should be done domestically.

Similarly, the ILO is working to eliminate forced labor and child labor consistent with UN Sustainable Development Goals. “The objective of the IPEC+ Global Flagship Programme – in line with Target 8.7 of the 2030 Sustainable Development Agenda, adopted by the United Nations in 2015 – is to provide ILO leadership in global efforts to eradicate all forms of child labour by 2025 and all forms of contemporary slavery and human trafficking by 2030. It also aims to ensure that all people are protected from – and can protect themselves against – these gross human rights violations.” ILO, IPEC+ Global Flagship Programme Implementation, Towards a world free from child labour and forced labour, page 4, 2020, https://respect.international/wp-content/uploads/2020/01/wcms_633435.pdf.

The WTO could play a role in the fight against forced labor and child labor. Such labor practices distort global trade flows in addition to the challenges created for countries engaged in such practices in terms of poverty and human rights abuses. The WTO could gather information from Members on the volume of production and exports of products produced with child and forced labor both as finished products and as inputs into other products. Such an exercise would facilitate an understanding of the extent of global trade represented by such products and help focus attention on trade actions that could be taken to help Members eliminate such harmful practices. While it is unlikely that Members will agree to such a data gathering undertaking, one is surely needed and would add transparency to a source of an important global issue with trade as well as non-trade dimensions.

WTO Dispute Settlement Body Meeting of August 28, 2020 — How disputes are being handled in the absence of reform of the Appellate Body

· August 29, 2020 · Appellate Body reform, WTO Dispute Settlement · , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , · No Comments

No forward movement has been made on resolving the impasse of the WTO’s Appellate Body which effectively ceased to operate for new appeals after December 10, 2019 when the number of active Appellate Body members fell below the minimum of three needed to hear appeals. At every monthly Dispute Settlement Body meeting, one of the Members presents the proposal to start the process of selecting new Appellate Body members and the U.S. indicates it is not in a position to agree to that action.

While the impasse continues, Members are dealing with how to proceed on specific disputes that have been filed and how to deal with panel decisions that get issued. For the EU and 22 other Members who are parties to the multi-party interim appeal arrangement (MPIA), disputes involving two members of the MPIA are handled through the MPIA after a panel decision if one or both parties are dissatisifed with the panel decision. Current members of the MPIA are Australia, Benin, Brazil, Canada, China, Chile, Colombia, Costa Rica, Ecuador, the European Union, Guatemala, Hong Kong (China), Iceland, Mexico, Montenegro, New Zealand, Nicaragua, Norway, Pakistan, Singapore, Switzerland, Ukraine and Uruguay. This means that more than 110 WTO Members are not parties to the MPIA including the United States, Japan, Korea, India, Indonesia, Malaysia, Argentina, Peru, Egypt, South Africa, Saudi Arabia, the Russian Federation and many others.

Disputes between all other WTO Members or between other Members and one of the MPIA members require the parties to the dispute either before the panel decision or afterwards to decide how they will proceed. Concerns of many WTO Members is that a party dissatisfied with a panel decision will take an appeal which will effectively stop resolution of the matter as an appeal cannot be heard while there is no functioning Appellate Body.

MPIA members can take appeals where they are in a dispute with a non-MPIA member instead of seeking resolution through other means. For example, the Russian Federation is not a member of the MPIA. Their dispute with the EU on its antidumping methodology resulted in a panel decision that the EU found problematic. The EU filed an appeal on August 28, 2020. See WTO, Dispute Settlement, EU appeals panel report on EU dumping methodologies, duties on Russian imports, https://www.wto.org/english/news_e/news20_e/ds494apl_28aug20_e.htm. When raised at the August 28 dispute settlement body (DSB) meeting, Russia provided the following comment:

“The Russian Federation made a statement regarding the European Union’s appeal of the panel ruling in in DS494 (https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds494_e.htm) (EU —
Cost Adjustment Methodologies and Certain Anti-Dumping Measures on Imports from Russia). Russia said it was disappointed with the EU’s decision and that that the EU’s action, in the absence of a functioning Appellate Body, essentially meant that the matter was being appealed “into the void.” The EU was seeking to escape its obligations by not trying to resolve the dispute,
Russia said.” https://www.wto.org/english/news_e/news20_e/dsb_28aug20_e.htm.

Interestingly, the EU has been working to be able to retaliate on any WTO Member who is not a party to the MPIA who appeals from a panel decision where the EU is a party. Presumably they understand that their action will encourage countries like the Russian Federation to take unilateral action against the EU where the EU appeals a panel decision instead of seeking a mutually agreeable solution.

The United States has reviewed at prior DSB meetings that there are many ways for Members to resolve disputes between themselves. At the recent DSB meeting, the U.S. in its prepared statement, after reviewing its ongoing concerns with the Appellate Body and the need to understand why the Appellate Body ignored the clear limits on its authority under the Dispute Settlement Understanding, provided examples of how Members are resolving disputes since December 10, 2019:

“ As discussions among Members continue, the dispute settlement system continues to function.

“ The central objective of that system remains unchanged: to assist the parties to find a solution to their dispute. As before, Members have many methods to resolve a dispute, including through bilateral engagement, alternative dispute procedures, and third-party adjudication.

“ As noted at prior meetings of the DSB, Members are experimenting and deciding what makes the most sense for their own disputes.

“ For instance, in Indonesia – Safeguard on Certain Iron or Steel Products (DS490/DS496), Chinese Taipei, Indonesia, and Vietnam reached procedural understandings that included an agreement not to appeal any compliance panel report.3

“ Similarly, in the dispute United States – Anti-Dumping Measures on Certain Oil Country Tubular Goods from Korea (DS488), Korea and the United States agreed not to appeal the report of any compliance panel.4

“ Australia and Indonesia have agreed not to appeal the panel report in the dispute Australia – Anti-Dumping Measures on A4 Copy Paper (DS529).5

“ Parties should make efforts to find a positive solution to their dispute, consistent with the aim of the WTO dispute settlement system.

“ The United States will continue to insist that WTO rules be followed by the WTO dispute settlement system. We will continue our efforts and our discussions with Members and with the Chair to seek a solution on these important issues.

“3 ‘Understanding between Indonesia and Chinese Taipei regarding Procedures under Articles 21 and 22 of the DSU’, (WT/DS490/3) (April 11, 2019), para. 7 (‘The parties agree that if, on the date of the circulation of the panel report under Article 21.5 of the DSU, the Appellate Body is composed of fewer than three Members available to serve on a division in an appeal in these proceedings, they will not appeal that report under Articles 16.4 and 17 of the DSU.’) and ‘Understanding between Indonesia and Viet Nam regarding Procedures under Articles 21 and 22 of the DSU’, WT/DS496/14 (March 22, 2019), para. 7 (‘The parties agree that if, on the date of the circulation of the panel report under Article 21.5 of the DSU, the Appellate Body is composed of fewer than three Members available to serve on a division in an appeal in these proceedings, they will not appeal that report under Articles 16.4 and 17 of the DSU.’).

“4 ‘Understanding between the Republic of Korea and the United States regarding Procedures under Articles 21 and 22 of the DSU’, (WT/DS488/16) (February 6, 2020), para. 4 (‘Following circulation of the report of the Article 21.5 panel, either party may request adoption of the Article 21.5 panel report at a meeting of the DSB within 60 days of circulation of the report. Each party to the dispute agrees not to appeal the report of the Article 21.5 panel pursuant to Article 16.4 of the DSU.’).

“5 Minutes of the Meeting of the Dispute Settlement Body on January 27, 2020 (WT/DSB/M/440), paras. 4.2 (‘Indonesia also wished to thank Australia for working together with Indonesia in a spirit of cooperation in order to reach an agreement not to appeal the Panel Report’ and 4.3 (‘Australia and Indonesia had agreed not to appeal the Panel Report and to engage in good faith negotiations of a reasonable period of time for Australia to bring its measures into conformity with the DSB’s recommendations and rulings, in accordance with Article 21.3(b) of the DSU.’).”

Statements by the United States at the Meeting of the WTO Dispute Settle- ment Body, Geneva, August 28, 2020 at 14, https://geneva.usmission.gov/wp-content/uploads/sites/290/Aug28.DSB_.Stmt_.as-deliv.fin_.public.pdf.

Thus, there are ways for WTO Members to resolve disputes between themselves even with the Appellate Body inoperative. Some countries, like Australia, have sought positive resolutions where the other disputing party is not a member of MPIA. To date, the European Union has not sought resolution with members who are not party to the MPIA but have rather filed appeals so cases will sit in limbo until such time as the impasse is resolved.

Concluding comments

While each of the eight candidates to become the next Director-General of the WTO believe resolution of the dispute settlement system impasse is an important priority for the WTO, they differ in how quickly they believe Members will be able to overcome the impasse — Dr. Jesus Seade (Mexico) believes it can be resolved in the first 100 days. Amb. Tudor Ulianovschi believes that the challenges presented will not be resolved ahead of the 12th Ministerial Conference in 2021 but will be resolved sometime thereafter. Most other candidates hold out hope that the impasse can be resolved by the next Ministerial in 2021. Thus, the current situation of no functioning Appellate Body may continue for some time.

The U.S. Trade Representative Robert Lighthizer in an Op Ed last week in the Wall Street Journal suggested that reform of the dispute settlement system is critical but may involve changing the system from its existing two-tiered configuration under the DSU to a one-tier process more like commercial arbitration. If that is the path that the United States pursues, resolution of the current situation will take years. See August 24, 2020,  USTR Lighthizer’s Op Ed in the Wall Street Journal – How to Set World Trade Straight, https://currentthoughtsontrade.com/2020/08/24/ustr-lighthizers-op-ed-in-the-wall-street-journal-how-to-set-world-trade-straight/.

Similarly, if dispute settlement reform is lumped into the broader WTO reform being discussed, the timing will be significantly delayed if reform of the WTO is to be meaningful and return the organization to a place of relevance in the 21st century.

With the queue of panel decisions that are yet due this year involving some high profile issues (e.g., national security actions by the United States on steel and aluminum and retaliation taken by many trading partners) and with the recent panel report on the U.S. countervailing duty order on Canadian softwood lumber, pressure will likely build on WTO Members to find a lasting solution to the current impasse. Increased pressure suggests heightened tensions in an organization already suffering from distrust among Members and, as a result, largely nonfunctioning pillars of negotiation, notification/monitoring, dispute settlement. In short, 2021 promises to be a challenging environment for the WTO Members and the incoming Director-General.

Candidates for the Next Director-General of the WTO — four and counting, an update

· June 22, 2020 · Selection of WTO Director-General · , , , , , , , , , , , , , , , , , , , , · No Comments

Two weeks after the WTO opened the nomination process for candidates to fill the Director-General post which becomes vacant on September 1, 2020, four countries have put forward candidates — Mexico, Nigeria, Egypt and Moldova. The period for nominations will come to a close on July 8 (COB Geneva time), so there are still sixteen days for additional candidates to be put forward.

There are many rumors and a few facts on possible candidates not yet announced. Press have indicated that Benin, which had had a candidate identified for consideration by the African Union, has withdrawn H.E. Mr. Eloi Laourou (Benin’s current Ambassador and Permanent Representative to the WTO) from consideration and will be supporting Nigeria’s candidate, Dr. Ngozi Okonjo-Iweala. See The Africa Report, Benin drops its WTO candidate in support of Nigeria’s Okonjo-Iweala (15 June 2020), https://www.theafricareport.com/29941/benin-drops-its-wto-candidate-in-support-of-nigerias-okonjo-iweala/.

The other African name floated as a possible candidate has been Kenya’s Amina Mohamed, current sport and culture minister and former Kenyan Ambassador to the WTO who was the first woman to chair the WTO’s General Counsel. She was also a candidate for the Director-General position in 2012-2103 when Roberto Azevedo of Brazil was selected. While mentioned early, there has been little in the press indicating Kenya will be nominating her, but there is obviously still time if Kenya so chooses. See Financial Times, Contenders Set Out Stalls to Succeed Azevedo at Helm of WTO, May 17, 2020, https://www.ft.com/content/fc5fda8e-56cb-4866-b477-f4c3af603b5c.

Possible Developed Country Candidate(s)?

It has been rumored that there would be one or more developed country candidates and some WTO Members or their trade ministers, like the EU, have articulated a belief that the next Director-General should be from a developed country, consistent with the recent rotation between developed and developing country having the post of Director-General. Since DG Azevedo is from Brazil, a developing country, developed countries should take the next turn, according to this logic.

An article in the New York Times indicates that the European Trade Commissioner, Phil Hogan (Ireland) has confirmed he is considering a bid. See New York Times, Who’s Bidding to Be Next World Trade Organization Chief?, June 22, 2020, https://www.nytimes.com/reuters/2020/06/22/business/22reuters-trade-wto-factbox.html.

Spain’s Foreign Minister Arancha Gonzalez Laya has also been repeatedly identified as a potential candidate. She was chef de cabinet for Director-General Pascal Lamy who served from 2005-2013.

Other developed countries could decide to nominate one or more candidates, though press accounts indicate that Australia is not planning on submitting a candidate (at least not at present) and the U.S. has historically not put forward a candidate from the U.S. See Financial Review, No Australian candidate for WTO boss, Birmingham says, June 22, 2020, https://www.afr.com/world/europe/no-australian-candidate-for-wto-boss-birmingham-says-20200619-p554gf

Rumors have suggested that the Republic of Korea may submit a candidate. Japan has been very active in recent years through their ambassadors to the WTO but is not believed to be likely to put forward a candidate.

New Zealand had a Director-General two decades ago, Michael Moore, and its Trade Minister and former Ambassador to the WTO, Tim Groser, ran in 2012-2013. It is unclear whether New Zealand will put forward a candidate, whether former Minister Groser or someone else.

There is a rumor in Geneva that more nominations are likely and that at least one more may materialize later this week. If such an event materializes, I would suspect someone from an EU country or from Korea will become the fifth candidate.

Outreach by existing candidates and legal wrangling between African countries

The advantage of being an early announced candidate in the current process is that candidates can get their views out through the media ahead of the General Council meeting, and there is more time for their governments to court support from other WTO Members. Particularly when there is interest in expediting the selection process because of the near-term departure of existing Director-General Azevedo, such opportunities for pre-General Council wooing of other Members and media outreach will be more limited for candidates joining closer to the end of the nominating time period. The General Council meeting to meet and hear from the candidates is understood to likely be sometime in the week of July 12. If there is actually an effort to expedite the selection process after July 8, time will be very limited for candidates after the General Council meeting.

It is clear that at least the first three candidates are taking advantage of media to articulate their vision for the WTO and their role if selected as the next DG. Nominating governments are also doing outreach to trading partners seeking to build up support for their candidate.

For example, Jesus Seade Kuri, the Mexican candidate, provided an interview to the South China Morning Post which was published on June 18, 2020, Mexico’s nominee for top WTO job, Jesus Seade, vows to ‘bring US and China back to the table’, https://www.scmp.com/economy/china-economy/article/3089452/mexicos-nominee-top-wto-job-jesus-seade-vows-bring-us-and.

Similarly, Dr. Ngozi Okonjo-Iweala had her views on the WTO DG job published in various publications including the Pulse, ‘I’m a strong negotiator, reformer,’ Okonjo-Iweala makes her case for ‘challenging’ WTO job, June 17, 2020, https://www.pulse.ng/business/okonjo-iweala-former-minister-makes-case-for-wto-job/y123dsb.

Outreach has also been made by Egypt’s Abdel Hamid Mamdouh as he laid out what he considered to be important aspects of his candidacy in an article that appeared in The Africa Report on June 11. See Egypt’s Abdel Hamid Mamdouh bid for the WTO – Five things to know, June 11, 2020, https://www.theafricareport.com/29730/egypts-abdel-hamid-mamdouh-bid-for-the-wto-five-things-to-know/.

All candidates have recognized the challenges with the tensions between the United States and China, the need to be an honest broker, how their background gives them strengths needed to address the role of Director-General amidst the COVID-19 pandemic and need for reform at the WTO.

While Mexico is working on shoring up support for Mr. Seade amongst WTO Members in the Americas (and elsewhere), the two African candidates are working to gain support from their African colleagues (and others). Little has been in the press as yet as to what actions Moldova or its candidate are taking in the early days after Tudor Ulianovschi’s nomination.

Egypt has attempted to have Nigeria’s candidate disqualified on the grounds that Nigeria had another proposed candidate submitted to the African Union but withdrew that candidate and put forward Dr. Ngozi Okonjo-Iweala past the deadline for such nominations. The African Union’s counsel concurred but that position has been challenged by Nigeria. In any event, WTO procedures limit who may nominate candidates to WTO Members. Nigeria is a member while the African Union is not. Therefore, whatever is relevant for African Union member consideration, it is not relevant to whether Nigeria or any other AU member can propose a candidate to the WTO by July 8. See The Cable, Okonjo-Iweala still eligible to run for office of DG, says, WTO, June 20, 2020, https://www.thecable.ng/exclusive-okonjo-iweala-still-eligible-to-run-for-office-of-dg-says-wto. This type of public discord will not be helpful to obtaining solidarity around a single African candidate which has been the presumed purpose of the African Union’s process.

Conclusion

With roughly half of the nomination time period having run, it is clear that there will be a significant number of candidates. It is unclear how many developed country candidates will end up running and to what extent members will focus more on geographical area, development status, or gender of the candidates in their considerations.

With the U.S., the EU and China having very different views of what needs to be done to return the WTO to relevance and with the recent USTR statement that any candidate to receive U.S. backing must “understand the need for reform and the problems of free economies in dealing with China” (New York Times, U.S. Wants WTO Head Who Understands Problems Dealing with China: Lighthizer, June 17, 2020, https://www.nytimes.com/reuters/2020/06/17/world/asia/17reuters-usa-trade-wto.html), the road ahead will be challenging for all candidates with no guarantee that the process will succeed in either an expedited or normal time period.

Hopefully, the Chairman of the General Council (Amb. David Walker) and the WTO Secretariat have the four Deputy Directors-General warming up in case one of them is needed to serve as the Acting Director-General beginning September 1st.

Selecting a new WTO Director-General — “the game is afoot”; Mexico’s Jesus Seade Kuri is the first nominee

· June 8, 2020 · Selection of WTO Director-General · , , , , , , , , , , , , · No Comments

June 8, 2020 is the start of the one month process for WTO Members to put forward a nomination of a national to be considered for the position of the next Director-General. All nominations must be submitted to the Chair of the General Council by the close of business (Geneva time) on July 8. Using a term first expressed by Shakespeare in King Henry IV Part I but probably better known as uttered by Sir Arthur Conan Doyle’s Sherlock Holmes, “the game is afoot”.

There is little doubt that the selection of the next Director-General of the WTO will be important for an organization struggling from major divisions within its membership on direction, need for reform, and ensuring continued relevance while looking for collective action during the COVID-19 pandemic to facilitate trade and minimize the damage to Member and global economies.

In prior posts, I reviewed the general procedures that the WTO will follow in conducting the selection process and thoughts on how to expedite the selection process if WTO Members want to find a replacement before the current Director-General departs at the end of August. See World Trade Organization – Search for a new Director-General, https://currentthoughtsontrade.com/2020/05/15/world-trade-organization-search-for-a-new-director-general/; WTO selection of a new Director-General – one individual from a developed country previously reviewed could shorten the process, https://currentthoughtsontrade.com/2020/05/19/wto-selection-of-a-new-director-general-one-individual-from-a-developed-country-previously-reviewed-could-shorten-the-process/.

Potential nominees

The WTO Secretariat will be posting the names of nominees and their CVs as they are received. As of 5:15 p.m. Geneva time on June 8th, the WTO had listed the first nomination to be received, Jesus Seade Kuri nominated by Mexico. https://www.wto.org/english/news_e/news20_e/dgsel_mex_08jun20_e.htm.

Jesus Seade is a former Ambassador to the GATT, a former Deputy Director-General at the WTO and recently involved in concluding the U.S.-Mexico-Canada Agreement as Deputy Secretary for North America. Press from earlier today noted his nomination.https://www.bloomberg.com/news/articles/2020-06-08/mexico-to-nominate-seade-as-its-wto-candidate-el-universal; https://business.financialpost.com/pmn/business-pmn/mexico-to-nominate-seade-as-its-wto-candidate-el-universal. The WTO news contains his CV which is embedded below.

bio_mex_e

Information on other potential nominees is from press or other sources and doesn’t reflect information on actual nominations received by the WTO by the afternoon of June 8.

Press accounts over the weekend indicate that Nigeria has changed their desired candidate from Yonov Frederick Agah (currently one of the WTO’s Deputy Director-Generals) to Ngozi Okonjo-Iweala, a former Nigerian finance minister and former World Bank official. https://www.bloomberg.com/news/articles/2020-06-05/nigeria-nominates-okonjo-iweala-as-wto-director-general.

At least two other African officials are being considered by the African Union, a candidate from Egypt, Hamid Mamdouh, and a candidate from Benin, Eloi Laourou. Mr. Mamdouh is a former WTO Secretariat Director of the Trade in Services and Investment Division and now working for a law firm. https://www.kslaw.com/people/abdelhamid-mamdouh. He also has a webpage being developed for any run for Director-General with a media kit. https://hamid-mamdouh.com/. H.E. Mr. Eloi Laourou is the current Benin Ambassador and Permanent Representative to the WTO (and to UN entities in Geneva).

It appears that the African Union will be holding a meeting by video- conference this week in an effort to see if there is agreement on one candidate for the African Union countries.

European countries are also considering potential candidates including possibly European Commissioner for Trade Phil Hogan (Ireland) and Spain’s Foreign Minister Arancha Gonzalez (she previously served as Chef de Cabinet for Director-General Pascal Lamy). See, e.g., https://www.irishtimes.com/news/politics/phil-hogan-exploring-idea-of-wto-director-general-role-1.4266073; https://www.bloomberg.com/news/articles/2020-05-23/spain-foreign-minister-gonzalez-favorite-to-lead-wto-wiwo-says.

And there will undoubtedly be more Members considering whether to nominate an individual to be considered in the selection process.

The process is intended to focus first on qualifications, and then if there are equally qualified individuals, “Members … shall take into consideration as one of the factors the desirability of reflecting the diversity of the WTO’s membership in successive appointments to the post of Director-General”. WT/L/509 para. 13. For example, no individual from Africa has previously served as the Director-General (“DG”) of the WTO.

Other factors besides geographical location of the nominee could be whether the nominee is from a developed or developing country and whether the candidate is male or female.

Press has indicated that the EU is seeking a developed country DG in light of the fact that the last DG is from a developing country (Brazil). Indeed, the last four DGs have rotated between developed and developing country nominees. Other developed countries (besides EU members) would include the United Kingdom, Norway, Switzerland, Iceland, Canada, United States, Japan, Australia, New Zealand and possibly a few others. The United States has never put up a candidate and is unlikely to do so this time either, but has apparently communicated with Australia a desire to broaden the group of candidates.

As all WTO DGs up to the present have been male, if there are equally qualified male and female candidates, this may be a factor considered by Members.

Expediting the process?

Press accounts indicate an expressed desire to find a replacement for DG Azevedo by the end of August. This seems a nearly impossible objective in light of travel limitations from efforts to control the pandemic, the likely number of candidates and the normal closure of the WTO to most business during the month of August.

But the agreed procedures do permit expedition of the process if agreed by the Members. WT/L/509 para. 23.

It is understood that the General Council meeting with all candidates may be held the week immediately after the close of the receipt of nominations, i.e., the week of July 13. If correct, this approach would have this step occur three weeks earlier than the comparable timing during the 2012-2013 DG selection process when the General Council meeting happened January 29-31 after the nomination process concluded on December 31.

Whether other steps to expedite the process are possible will depend on the will of the Members, limited by the obligation “to be guided by the best interests of the Organization, respect for the dignity of the candidates and the Members nominating them, and by full transparency and inclusiveness at all stages.” Appointment of the Next Director-General, Communication from the Chairman of the General Council to Members, JOB/GC/230 (20 May 2020).

An obvious area where time could be saved would be the three month time frame that candidates have to get themselves known to Members. With travel limitations, meetings with Members in Geneva and in capitals will presumably have to happen virtually. It is possible that governments could agree to a one month period for such outreach by candidates but would require availability of Missions and of officials in capitals with an interest to meet the candidates. If handled during the first month of the post-nomination process, this would suggest conclusion by August 8 (with possible frontloading of meetings for Members who will not extend general operations into August).

If handled on such an expedited basis, the Chairman of the General Council and his two facilitators could do “confessionals” during August to reduce the field of candidates to the one deemed most likely to achieve consensus by the end of the month with a General Council meeting set for Friday, August 28 to permit confirmation of the candidate (if consensus is achieved). Such an timeline would permit a new DG to be confirmed one business day before the departure of DG Azevedo.

To achieve such an outcome, either WTO Members would need to remain in Geneva during August or permanent representatives would need to be reachable and able to provide input during the month and all would need to be amenable to participating in the GC meeting (possibly remotely for some) at the end of August.

If such expedition is not possible, then Para. 23 of the procedures (WT/L/509) calls for the selection by consensus of an acting Director-General from among the four current Deputy Directors-General.

If the full six months to a decision are needed, this would suggest the General Counsel meeting in early December to meet the December 8 timeline. Nothing in the procedures requires a new Director-General to wait three months after confirmation before taking up the position when there is a vacancy/use of an Acting Director-General.

Of course, the objective for the selection process is consensus. While voting is an option, if there were failure to achieve a consensus through the procedures agreed to in 2002, Members could continue to meet with the Chairman of the General Counsel and his facilitators to attempt to achieve consenus. They could also take the extraordinary step of voting although such an approach on a new Director-General would likely have significant negative effects from the imposition of a DG opposed by some significant part of the membership.

Conclusion

As the game is now afoot for the selection of a new Director-General, one can expect a lot of energy of trade officials to be diverted in coming weeks to examining the candidates and choosing preferred candidates. It is clear that there will be a significant number of candidates put forward in the coming weeks which will complicate the ability to expedite the selection process. WTO Members could significantly expedite the process if willing to telescope meetings with candidates virtually and remaining available for decisions and confessionals during August.

We should know in a few weeks whether Members have agreed to a process to find a new DG before DG Azevedo departs or whether there will be some period of time where an acting DG is needed.