Developing Countries

Revision to draft fisheries subsidies text presented by Chair of the Negotiating Group on Rules at November 2 informal open-ended meeting

· November 5, 2020 · Fisheries Subsidies negotiations · , , , · No Comments

In late June, the Chair of the Negotiating Group on Rules presented to the negotiating group a draft consolidated text in a room document, that was not made publicly available. RD/TN/RL/126. In two posts in June, I reviewed developments and the elements of the draft consolidated text based on its publication by Washington Trade Daily on June 26. See June 29, 2020, Update on fisheries subsidies draft consolidated text from June 25, https://currentthoughtsontrade.com/2020/06/29/update-on-fisheries-subsidies-draft-consolidated-text-from-june-25/; June 27, 2020, Chair of Rules Negotiating Group releases draft consolidated fisheries subsidies text at informal meeting on June 25, https://currentthoughtsontrade.com/2020/06/27/chair-of-rules-negotiating-group-releases-draft-consolidated-fisheries-subsidies-text-at-informal-meeting-on-june-25/

The latest round of informal open-ended meetings of the Negotiating Group on Rules (Fisheries Subsidies) occurred this week on November 2-4. On the first day, November 2, the Chair of the Negotiating Group speaking to heads of delegation, presented a revised draft consolidated text. RD/TN/RL/126/Rev. 1. This document has similarly not been released to the public, but was posted in the November 3, 2020 issue of Washington Trade Daily. Reference in this post to the contents of either version of the draft text or the presentation of text itself is based on my review of the documents as printed in the Washington Trade Daily issues noted.

The WTO Secretariat released a press release on November 2 entitled “Fisheries subsidies negotiations chair introduces revised draft consolidated text”. Within the body of the press release was a link to “Excerpts from the peaking notes of the Chair of the Negotiating Group on Rules, Ambassador Santiago Wills”. Both documents are embedded below.

WTO-_-2020-News-items-Fisheries-subsidies-negotiations-chair-introduces-revised-draft-consolidated-text

WTO-_-Excerpts-from-the-speaking-notes-of-the-Chair-of-the-Negotiating-Group-on-Rules-Ambassador-Santiago-Wills

The June draft consolidated text contained ten articles. The first revision released on November 2nd contained eleven (adding Article 11, Final Provisions” and modifying the title of Article 8 to delete “and/or surveillance” leaving “Notification and transparency”).

The articles in the revised draft consolidated text are:

  1. Scope;
  2. Definitions;
  3. Prohibition on subsidies to illegal, unreported and unregulated fishing (“IUU fishing”);
  4. Prohibition on subsidies concerning overfished stocks;
  5. Prohibition on subsidies concerning overcapacity and overfishing;
  6. Specific provisions for LDC members;
  7. Technical assistance and capacity building;
  8. Notification and transparency;
  9. Institutional arrangements;
  10. Dispute settlement;
  11. Final provisions.

The negotiations have always been limited to marine wild capture fishing and don’t cover aquaculture or inland waters. Article 1 is consistent with the intended reach of any agreement. There has been no change to the text of Article 1. Footnote 1 has been modified from “For greater certainty, this excludes aquaculture and inland fisheries” to read “For greater certainty, aquaculture and inland fisheries are excluded from the scope of this [Instrument].”

Article 2, definitions, has been expanded from just three — “fishing”, “fishing related activities” and “vessel” to five in the revised draft by adding a definition for “fish” [“means all species of living marine resources, whether processed or not”] and for “operator” [“means the owner of the vessel, or any person on board, who is in charge of or directs or controls the vessel”]. “Operator” had previously been defined as part of footnote 2 to Art. 3.1

Prohibiting subsidies on IUU fishing is a critical part of the UN sustainable development goal 14.6. Article 3 lays out the prohibition and how the actions of a fishing vessel are determined to be “illegal, unreported or unregulated”. Various Members (coastal, flag State, port State, subsidizing) or regional fisheries management organizations or arrangements (Art. 3.2) can make such findings where the result is “based on positive evidence and follows due process” (Art. 3.3(b)). Most provisions in Article 3 remain unchanged. However, Art. 3.3 is broken into parts in the revised draft. Revised Art. 3.4 deletes the second sentence from the June draft (“The subsidizing Member may refrain from implementing the prohibition under paragraph 3.1 in case of a minor infraction.”), Articles 3.5 and 3.6 from the June draft are Articles 3.6 ad 3.5 in the revised draft. Article 3.3 from the June draft is reproduced below followed by the revised draft:

Art. 3.3 from RD/TN/RL/126 (June 25, 2020)

“3.3 A determination[6] under paragraph 3.2 refers to the final finding by a Member that a vessel [or operator] engaged in IUU fishing, or the final listing of a vessel [or operator] by an RFMO/A as a vessel [or operator] engaged in IUU fishing. [Determinations under subparagraphs 3.2[(a), 3.2(c), and 3.2(e)] shall be based on positive evidence; follow fair, transparent, and non-discriminatory procedures,] including prompt notification to the flag State [or subsidizing Member], if known, through appropriate channels, of the initiation of investigation, [and an opportunity to the flag State or subsidizing Member to provide information to be taken into account in the determination]; [and be in accordance with relevant international law.]”

Art. 3.3 from RD/TN/RL/126/Rev. 1 (November 2, 2020)

“3.3 (a) A determination[6] under paragraph 3.2 refers to the final finding by a Member and/or the final listing by an RFMO/A that a vessel [or operator] has engaged in IUU fishing.
“(b) [The prohibition under paragraph 3.1 shall apply where the determination under subparagraphs 3.2[(a), 3.2(c), and 3.2(e)] is based on positive evidence and follows due process, [in accordance with relevant international law]].
“(c) [If the flag State [or subsidizing Member] is known, a Member shall promptly notify the flag State [or subsidizing Member] of the initiation of an IUU investigation [, and provide an opportunity to the flag State [or subsidizing Member] to provide information to be taken into account in the
determination.]]”

Footnotes to Article 3 are basically unchanged in the revised draft text.

Articles 4 and 5 address the other core objective of UN Sustainable Development Goal 14.6, prohibiting subsidies on overfished stocks, overcapacity and overfishing. Both articles contain exceptions or special and differential treatment for developing and least developed countries (LDCs). Depending on whether advanced developing countries waive such provisions, there will be problems for some Members (including the U.S.) in having such exceptions or S&D provisions included in the text. Specifically, LDCs are exempted from the prohibitions of Art. 5.1 “for fishing or fishing related activities” (revised Art. 5.7(a)) and developing countries “for fishing or fishing related activities at sea within their territorial sea” (revised Art. 5.7(b)). The draft consolidated text attempts to cover some developing and LDC countries despite the above two exceptions where certain criteria are met (revised Art. 5.7(c)). It is assumed that Korea, Singapore and Brazil consistent with their prior statements that they would forego special and differential treatment in future agreements would not be eligible for the exceptions or S&D contained in the draft agreement if the final agreement contains such provisions.

There are no changes for Article 4 between the June draft and the revised draft released on November 2. For Article 5, Article 5.1.1, 5.1.2 and 5.1.3 of the June draft text are now in 5.1.1 and 5.2. Other than renumbering (e.g., old Art. 5.2 is revised Art. 5.3, etc.), the rest of Article 5 is substantively unchanged. The June Art. 5.1.1.-5.1.3 and the November revised 5.1.1 and 5.2 are copied below.

Art. 5.1.1, 5.1.2, and 5.1.3 from RD/TN/RL/126 (June 25, 2020)

“5.1.1 A subsidy contributes to overcapacity or overfishing if it reduces capital costs or operating costs of fishing or fishing related activities at sea regarding a stock that is being fished at a rate of fishing or with a measure of fishing capacity that is greater than would allow the stock to be maintained at a sustainable level.[11]

“5.1.2 For the purposes of this Article:
“(a) capital costs include costs of construction, acquisition, modernization, renovation or upgrading of vessels, purchase of machines and equipment for fishing vessels (including fishing gear and engine, fish-processing machinery, fish-finding technology, refrigerators, or machine for sorting or
cleaning fish); and
“(b) operating costs include costs of fuel, ice, bait, personnel, social charges, insurance, and gear; subsidies that reduce operating costs include, inter alia, income support of vessels or operators or the workers they employ, payments based on the price of fish caught, subsidies for at-sea support, and subsidies to cover operating losses of vessels or fishing or fishing related activities.

“5.1.3 Notwithstanding paragraph 5.1, a Member may grant or maintain the subsidies set out in paragraph 5.1 if the subsidizing Member can demonstrate that it has other policies in place that [effectively ensure] the stock or stocks in the relevant fishery or fisheries are maintained at a sustainable level.”

Art. 5.1.1 and 5.2 from RD/TN/RL/126/Rev. 1 (November 2, 2020)

“5.1.1 For the purpose of paragraph 5.1, subsidies that contribute to overcapacity or overfishing [include]:
“(a) subsidies to construction, acquisition, modernisation, renovation or upgrading of vessels;
“(b) subsidies to the purchase of machines and equipment for vessels (including fishing gear and engine, fish-processing machinery, fish-finding technology, refrigerators, or machinery for sorting or cleaning fish);
“(c) subsidies to the purchase/costs of fuel, ice, or bait;
“(d) subsidies to costs of personnel, social charges, or insurance;
“(e) income support of vessels or operators or the workers they employ;
“(f) price support of fish caught;
“(g) subsidies to at-sea support; and
“(h) subsidies covering operating losses of vessels or fishing or fishing related activities.

“5.2 Notwithstanding paragraph 5.1, a Member may grant or maintain subsidies referred to in paragraph 5.1 if it demonstrates that measures are implemented to maintain the stock or stocks in the relevant fishery or fisheries at a biologically sustainable level.[11]”

Article 6 has two subparts, one giving LDCs a transition period once a country is no longer an LDC and the other having Members “exercise due restraint in raising matters involving an LDC Member”. There are no changes in the revised draft from the June draft.

Article 7 calls on developed country Members and such developing country Members who indicate being in a position to do so to “provide targeted technical assistance and capacity building assistance” to developing countries and LDCs. There are no changes to the revised draft from the June original draft text.

As noted in my June posts, Articles 8-10 had not been fleshed out in the June draft consolidated text. The November 2 revised draft consolidated text has elements of each of these Articles as well as some material on the new Article 11, Final Provisions. The text is copied below.

“ARTICLE 8: NOTIFICATION AND TRANSPARENCY

“8.1 In order to strengthen and enhance notifications of fisheries subsidies, and to enable more effective surveillance of the implementation of fisheries subsidies commitments, each Member shall [, to the extent possible,] provide the following information as part of its regular notification of fisheries subsidies under Article 25 of the SCM Agreement[15]:
“(a) [PLACEHOLDER – LIST OF SPECIFIC INFORMATION TO BE NOTIFIED]

“8.2 Each Member shall notify [the relevant SCM body/the Committee established under paragraph 9.1] in writing on an annual basis of:
“(a) any list of vessels and operators that it has determined as having been engaged in IUU fishing; and
“(b) where applicable, a list of its fisheries access agreements in force with another government or governmental authority, and such notification shall consist of the titles of the agreements and a list of their parties.

“8.3 A Member may request additional information from the notifying Member regarding the notifications and information provided under paragraphs 1 and 2. The notifying Member shall respond to that request as quickly as possible in writing and in a comprehensive manner. If a Member considers that a notification or information under paragraphs 1 and 2 has not been provided, the Member may bring the matter to the attention of such other Member or to the [Committee].

“ARTICLE 9: [INSTITUTIONAL ARRANGEMENTS]

“[9.1 There is hereby established a [COMMITTEE NAME] composed of representatives from each of the Members. The Committee shall elect its own Chair and shall meet not less than twice a year and otherwise as envisaged by relevant provisions of this [Instrument] at the request of any Member. The Committee shall carry out responsibilities as assigned to it under this [Instrument] or by the Members and it shall afford Members the opportunity of consulting on any matter relating to the operation of this [Instrument] or the furtherance of its objectives. The WTO Secretariat shall act as the secretariat to the Committee.]*

“9.2 Each Member shall, within one year of the date of entry into force of this [Instrument], inform the [Committee] of measures in existence or taken to ensure the implementation and administration of this [Instrument], including the steps taken to implement prohibitions set out in Articles [3, 4 and 5]. Each Member shall also inform the [Committee] of any changes to such measures thereafter. The [Committee] shall review annually the implementation and operation of this [Instrument], taking into account the objectives thereof.

“9.3 Each Member shall, within one year of the date of entry into force of this [Instrument], provide to the [Committee] a description of its fisheries regime with references to its laws, regulations and administrative procedures relevant to this [Instrument], and promptly inform the [Committee] of any modifications thereafter. A Member may meet this obligation by providing to the [Committee] an up-to-date [URL][electronic link] to the Member’s or other appropriate official web page that sets out this information.

“[9.4 The Committee shall examine [frequency] all information provided pursuant to Articles 3 and 8 and this Article.]

“9.5 The [Committee] shall maintain close contact with the relevant international organizations in the field of fisheries management, especially with the Food and Agriculture Organization of the United Nations (FAO) and relevant RFMO/As.

“9.6 Not later than [X] after the date of entry into force of this [Instrument] and periodically thereafter, the [Committee] shall review the operation of this [Instrument] with a view to making all necessary modifications to improve the operation of this [Instrument], taking into account the objectives thereof.

“ARTICLE 10: DISPUTE SETTLEMENT

“[The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding, and Article 4 of the Agreement on Subsidies and Countervailing Measures shall apply to consultations, the settlement of disputes, and remedies under this [Instrument], except as otherwise specifically provided herein.]

“ARTICLE 11: FINAL PROVISIONS

“11.1 Except as provided in Articles [3 and 4], nothing in this [Instrument] shall prevent a Member from granting a subsidy for [natural] disaster relief, provided that the subsidy is:
“(a) limited to the relief of a particular [natural] disaster;
“(b) limited to the affected geographic area;
“(c) time-limited; and
“(d) in the case of reconstruction subsidies, limited to restoring the affected area, the affected fishery, and/or the affected fleet up to [a sustainable level of fishing and/or fishing capacity as established through a scientific-based assessment of the status of the fishery and in no case beyond] its pre-disaster level.

“11.2 (a) This [Instrument], including any findings, recommendations, and awards with respect to this [Instrument], shall have no legal implications regarding territoriality or delimitation of maritime jurisdiction.
“(b) A panel established pursuant to [Article 10 of this Instrument] shall not entertain any claim that would require it to address any issues of territoriality or delimitation of maritime jurisdiction that is contested by a party or a third party.”

Conclusion

It is obviously useful to have progress being made on a draft text, even if it is simply a draft from the Chair of the Negotiating Group. The Chair’s comments at the start of the meeting which are presented above show that the WTO Members remain far from an agreed deal. There remain some important “placeholders” in the draft text as well. In the end, it will be up to Members to decide if they can get past their differences and achieve an agreement that is meaningful in fact and will help the world move towards sustainable development in the handling of the global fish supplies.

Update on fisheries subsidies draft consolidated text from June 25

· June 29, 2020 · Fisheries Subsidies negotiations · , , , · No Comments

In my last post, I reviewed the fact that a draft consolidated text on fisheries subsidies had been pulled together by the Chair of the Negotiating Group on Rules (fisheries subsidies) and distributed to members at a meeting on June 25. See Chair of Rules Negotiating Group releases draft consolidated fisheries subsidies text at informal meeting on June 25, https://currentthoughtsontrade.com/2020/06/27/chair-of-rules-negotiating-group-releases-draft-consolidated-fisheries-subsidies-text-at-informal-meeting-on-june-25/

While the document (RD/TN/RL/126) was released as a “room document” and hence not publicly available, a copy of the draft consolidated text was published on June 26 by Washington Trade Daily (pages 2-7 of its June 26th edition). As the Washington Trade Daily article reviews, the Chair has made specific (as is often done on these types of texts but particularly on this draft), nothing is viewed as agreed to regardless of whether text is bracketed or not.

The draft consolidated text has ten articles, although the last three are placeholder titles only awaiting further work. The articles are:

  1. Scope;
  2. Definitions;
  3. Prohibition on subsidies to illegal, unreported and unregulated fishing (“IUU fishing”);
  4. Prohibition on subsidies concerning overfished stocks;
  5. Prohibition on subsidies concerning overcapacity and overfishing;
  6. Specific provisions for LDC members;
  7. Technical assistance and capacity building;
  8. Notification, transparency and/or surveillance;
  9. Institutional arrangements;
  10. Dispute settlement.

The negotiations have always been limited to marine wild capture fishing and don’t cover aquaculture. Article 1 is consistent with the intended reach of any agreement.

Article 2, definitions, has just three — “fishing”, “fishing related activities” and “vessel”.

Prohibiting subsidies on IUU fishing is a critical part of the UN sustainable development goal 14.6. Article 3 lays out the prohibition and how the actions of a fishing vessel are determined to be “illegal, unreported or unregulated”. Various Members (coastal, flag State, port State, subsidizing) or regional fisheries management organizations or arrangements (Art. 3.2) can make such findings “based on positive evidence; follow fair, transparent , and non-discriminatory procedures” (Art. 3.3).

Articles 4 and 5 address the other core objective of UN Sustainable Development Goal 14.6, prohibiting subsidies on overfished stocks, overcapacity and overfishing. Both articles contain exceptions or special and differential treatment for developing and least developed countries (LDCs). Depending on whether advanced developing countries waive such provisions, there will be problems for some Members (including the U.S.) in having such exceptions or S&D provisions included in the text. Specifically, LDCs are exempted from the prohibitions of Art. 5.1 “for fishing or fishing related activities at sea” (Art. 5.6(a)) and developing countries “for fishing or fishing related activities at sea within their territorial sea” (Art. 5.6(b)). The draft consolidated text attempts to cover some developing and LDC countries despite the above two exceptions where certain criteria are met (Art. 5.6(c)). It is assumed that Korea, Singapore and Brazil consistent with their prior statements that they would forego special and differential treatment in future agreements would not be eligible for the exceptions or S&D contained in the draft agreement if the final agreement contains such provisions.

There may also be concerns for some Members with what is and isn’t included within the terms capital costs (Art. 5.1.2.(a)) and operating costs (Art. 5.1.2.(b)) as some may feel the terms cover too much while others may view the terms as permitting significant subsidization to continue.

Art. 5.2 lays out some limitations on subsidies for fishing and fishing related activities beyond a Member’s jurisdiction and will also likely be the subject of close scrutiny as being either too limited or too broad depending on Member views.

Article 6 has two subparts, one giving LDCs a transition period once a country is no longer an LDC and the other having Members “exercise due restraint in raising matters involving an LDC Member”.

Article 7 calls on developed country Members and such developing country Members who indicate being in a position to do so to “provide targeted technical assistance and capacity building assistance” to developing countries and LDCs.

As noted, Articles 8-10 have not been fleshed out in the draft consolidated text.

The next meeting on fisheries subsidies is the July 21st open-ended informal meeting of the negotiating group. The efforts of the Chair and his facilitators to explore options on various key issues and to develop this draft consolidated text are a welcome step in trying to get the fisheries negotiations back on track and over the finish line consistent with Ministers’ decision from the 11th Ministerial Conference and the deadline within the UN Sustainable Development Goals. If an agreement is to be reached before the end of the year, there is an urgent need for Members to step forward and find agreed text. Let’s hope for progress next month.

WTO Reform – Will Limits on Who Enjoys Special and Differential Treatment Be Achieved?

· December 28, 2019 · Uncategorized · , , , , , , , , , , , , , , , , · No Comments

The GATT had and now the WTO has a system of self-declared status as a developing country. The vast majority of WTO members have declared themselves to be developing countries. Some WTO members are categorized by the United Nations as Least Developed Countries (“LDCs”). Indeed the WTO webpage indicates that 36 of 47 LDCs are currently WTO members and that another eight countries who are listed as LDCs by the UN are in the process of negotiating accession to the WTO. “There are no WTO definitions of ‘developed’ or ‘developing’ countries. Developing countries in the WTO are designated on the basis of self-selection although this is not necessarily automatically accepted in all WTO bodies.” https://www.wto.org/english/thewto_e/whatis_e/tif_e/org7_e.htm.

The relevance of a WTO member declaring themselves to be a developing country has to do with access to special and differential treatment provisions in virtually every agreement and the likelihood of reduced trade liberalization obligations on the member and in any ongoing negotiations. Thus, in the Uruguay Round, developing countries typically faced lower percent reductions on tariffs and were given longer time periods to implement such reductions than were true for developed countries. A report by the WTO Secretariat reviews Special and Differential Treatment (“S&D”) by agreement and categorizes the S&D provisions under one of the following six groupings (WT/COMTD/W/239 at 4) which are quoted as presented:

  1. provisions aimed at increasing the trade opportunities of developing country Members;
  2. provisions under which WTO Members should safeguard the itnerests of developing country Members;
  3. flexibility of commitments, of action, and use of policy instruments;
  4. transitional time-periods;
  5. technical assistance;
  6. provisions relating to LDC members.

The listing of S&D provisions in the Secretariat document is provided as an attachment below along with a correction.

WTCOMTDW239

WTCOMTDW239C1

With the progress many countries or customs territories have made during their GATT and/or WTO membership, the self-selection designation process has raised concerns by other members about whether certain Members are carrying their weight in terms of market liberalization. Indeed, some have attributed the failure of the Doha Agenda to conclude in 2008 to what certain Members who have declared themselves to be developing countries were willing to do in terms of liberalization versus other major Members who are not “developing”. The issue of who should benefit from Special and Differential treatment takes as a given that all LDCs should receive such benefits. The issue is about whether those non-LDCs who have experienced strong growth and significant economic advancement since the start of the WTO should continue to enjoy those benefits in new agreements.

The United States at the beginning of 2019 made a major submission entitled “An Undifferentiated WTO: Self-Declared Development Status Risks Institutional Irrelevance”. WT/GC/W/757, 16 January 2019. A revision was submitted in February and was followed by a draft General Council Decision to limit who can claim S&D benefits in future negotiations and agreements. WT/GC/W/747/Rev.1; WT/GC/W/764. The U.S. proposal in February was as follows:

“The General Council,

“Acknowledging that full implementation of WTO rules as negotiated by Members can contribute to economic growth and development and the need to take steps to facilitate full implementation;

“Recognizing the great strides made by several WTO Members since the establishment of the WTO in accomplishing the goals set out in the Marrakesh Agreement Establishing the World Trade Organization, of ‘raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with
the objective of sustainable development…;’

“Recognizing that not all WTO Members have enjoyed equal rates of economic growth and development since the establishment of the WTO;

“Recognizing the plight of the least-developed countries and the need to ensure their effective participation in the world trading system, and to take further measures to improve their trading opportunities;

“Recognizing that reserving flexibilities for those WTO Members with the greatest difficulty integrating into the multilateral trading system can open new export opportunities for such countries; and

“Desiring to strengthen the negotiating function of the WTO to produce high-standard, reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations;

“Agrees as follows:

“To facilitate the full implementation of future WTO agreements and to ensure that the maximum benefits of trade accrue to those Members with the greatest difficulty integrating into the multilateral trading system, the following categories of Members will not avail themselves of special and
differential treatment in current and future WTO negotiations:

“i. A WTO Member that is a Member of the Organization for Economic Cooperation and Development (OECD), or a WTO Member that has begun the accession process to the OECD;

“ii. A WTO Member that is a member of the Group of 20 (G20);

“iii. A WTO Member that is classified as a “high income” country by the World Bank; or

“iv. A WTO Member that accounts for no less than 0.5 per cent of global merchandise trade (imports and exports).

“Nothing in this Decision precludes reaching agreement that in sector-specific negotiations other Members are also ineligible for special and differential treatment.”

The self-designation of developing country within the GATT and the WTO has generally been seen by Members and outside observers as a “third rail” that could not be modified because of the certain opposition from those enjoying S&D benefits. Not surprisingly, the U.S. proposal has met with opposition from some important WTO Members who have declared themselves to be developing countries, including China, India, South Africa, Venezuela, Bolivia, Kenya and Cuba. See, e.g., WT/GC/W/765 and 765/Rev.1 (it does not appear that the U.S. proposal would affect the last four Members listed).

The U.S. has included the topic in each General Council meeting since its submissions, has engaged in discussions with many WTO members, and submitted a revised proposal in November 2019, WT/GC/W/764/Rev.1, which incorporated language reflecting its arguments throughout the year that

(1) the proposal would not require any country to declare itself not a developing country, just limit whether they received blanket S&D coverage in new agreements;

(2) the change would affect new agreements/negotiations and not affect S&D from existing arrangements;

(3) Members had the right to seek special accommodations on issues of particular importance to them.

There was also clarification of the third and fourth criteria for non-eligibility to reflect a three year period of meeting the criteria.

A few WTO Members who would be subject to the elimination of automatic entitlement to new S&D provisions if the U.S. proposal were adopted by the General Council have indicated that they will forego automatic S&D from future negotiations/agreements. These Members to date are Korea, Singapore and Brazil.

While the strong opposition from major WTO Members such as China, India and South Africa would indicate the U.S. proposal is not likely to be adopted in the foreseeable future, the U.S. has also indicate that it will oppose S&D provisions in future agreements if they are applicable to certain Members.

Indeed, President Trump on July 26, 2019 issued a Memorandum on Reforming Developing-Country Status in the World Trade Organization. https://www.whitehouse.gov/presidential-actions/memorandum-reforming-developing-country-status-world-trade-organization/. The Memo notes that many WTO members who have declared themselves developing countries are “patently unsupportable in light of current economic circumstances. For example, 7 out of the 10 wealthiest economies in the world as measured by Gross Domestic Product per capita on a purchasing-power parity basis – Brunei, Hong Kong, Kuwait, Macao, Qatar, Singapore, and the United Arab Emirates – currently claim developing country status. Mexico, South Korea, and Turkey – members of both the G20 and the Organization for Economic Cooperation and Development (OECD) – also claim that status.” “China most dramatically illustrates the point.”

The memo goes on to instruct USTR to use all available means to secure changes at the WTO to prevent unwarranted use of S&D provisions and authorizes USTR to take action after 90 days if substantial progress is not made to no longer treat certain WTO members as developing countries and to not support any such country’s efforts to join the OECD.

USTR Robert Lighthizer issued a statement the day of the President’s Memo that reflected the position of the Administration:

“For far too long, wealthy countries have abused the WTO by exempting themselves from its rules through the use of special and differential treatment. This unfairness disadvantages Americans who ply by the rules, undermines negotiations at the WTO, and creates an unlevel playing field. I applaud the President’s leadership in demanding fairness and accountability at the WTO, and I look forward to implementing the President’s directive.” https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/july/ustr-robert-lighthizer-statement

Obviously trading partners have had an ongoing interest in the President’s Memo and how it is being implemented by the USTR. At the December 9, 2019 General Council meeting, as part of the U.S. discussion of its proposal, Ambassador Dennis Shea (Deputy USTR) stated as follows:

“Finally, I’d like to provide an update on the memorandum to USTR from the President of the United States in July.

“The President instructed USTR to no longer treat as a developing country for the purposes of the WTO any self-declared developing country that, in the USTR’s judgment, can inappropriately seek S&D in current and
future WTO negotiations. Some Members have asked how the USTR will carry this out.

“USTR consulted with the interagency Trade Policy Staff Committee on this issue. The interagency agreed that if a S&D provision is introduced in a WTO negotiation, the United States will indicate that it will not agree to that provision unless certain Members forego use of that provision. The United States will also use the TPR process to continue to press countries that we believe should not be claiming blanket S&D in future agreements. In addition, USTR is continuing to review additional steps that can be taken.

“The President issued two other instructions to the USTR.

“The USTR will not support the application for OECD membership of any self-declared developing country that, in the USTR’s judgment, can inappropriately seek S&D in current and future WTO negotiations.

“Also, USTR shall publish on its website a list of all self-declared developing countries that the USTR believes can inappropriately seek S&D in WTO negotiations.

“Members have asked when USTR will publish the list. USTR is consulting on this issue. The memo did not require USTR to publish the list by a speci􀃌c date.

“I’d like to emphasize two important aspects about the memo and the U.S. proposal that we would like Members to keep in mind.

“First, the President’s memo did not instruct USTR to ask any Member to change its self-declared development status. The U.S. proposal does not ask this of any Member, either.

“Second, the President’s memo did not instruct USTR to ask any Member to forego S&D in existing WTO agreements. The U.S. proposal does not ask this of any Member, either.”

https://geneva.usmission.gov/2019/12/09/ambassador-shea-procedures-to-strengthen-the-negotiating-function-of-the-wto/

As S&D provisions are part of every negotiation, the U.S. position obviously creates challenges to completing ongoing negotiations in any area, such as negotiations on fish subsidies, agriculture, digital trade without more countries agreeing not to seek S&D privileges or at least foregoing such privileges in certain agreements where there is U.S. opposition.

A quick look at some of the countries whom the U.S. proposal would remove from automatic S&D eligibility for new negotiations include the following:

Member of the OECD or in the accession process:

Chile, South Korea, Mexico, Turkey, Colombia, Costa Rica.

Member of the G-20:

India, South Africa, Turkey, Argentina, Brazil, Mexico, China, Indonesia, South Korea.

Classified by World Banks as “high income” for 2016-2018 (includes):

Antigua and Barbuda, Bahrain, Brunei Darussalam, Chile, Hong Kong, South Korea, Kuwait, Macao, Panama, Qatar, Seychelles, Singapore, St. Kitts and Nevis, Trinidad and Tobago, United Arab Emirates, Uruguay.

0.5% of Merchandise Trade (includes):

China, South Korea, Hong Kong, Mexico, Singapore, United Arab Emirates, Thailand, Malaysia, Vietnam, Brazil, Indonesia, Turkey, South Africa.

In light of the experience of the last two years on the need to reform the WTO Appellate Body, there should be little doubt that the United States will continue to push hard to achieve a more rational approach to the assumption of obligations at the WTO in terms of who should be eligible for S&D benefits in new agreements. Without movement by some major countries who currently enjoy S&D benefits to forego automatic eligibility in new agreements, the challenging negotiating environment at the WTO that has prevailed for many years now will become more challenging in 2020.