European Union

When human rights violations create trade distortions — the case of China’s treatment of the Uyghurs in Xinjiang

Earlier this week, the EU added a series of individuals and companies to its sanctions list including Chinese officials and entities involved in the alleged extreme human rights abuses of Uyghurs in Xinjiang, as well as others in Russia, Libya and the Democratic People’s Republic of Korea. See European Council, EU imposes further sanctions over serious violations of human rights around the world, 22 March 2021, https://www.consilium.europa.eu/en/press/press-releases/2021/03/22/eu-imposes-further-sanctions-over-serious-violations-of-human-rights-around-the-world/; Official Journal of the European Union, L 99 I, Council Implementing Regulation (EU) 2021/478 of 22 March 2021 implementing Regulation (EU) 2020/1998 concerning restrictive measures against serious human rights violations and abuses, Vol. 64, pages 1-12, 22 March 2021, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2021:099I:FULL&from=EN. The Official Journal regulation has as one of the bases of concern for a number of countries where individuals or entities are included on the sanctions list the following, “The Union remains deeply concerned about serious human rights violations and abuses in different parts of the world, such as torture, extrajudicial killings, enforced disappearances or systematic use of forced labour committed by individuals and entities in China, the Democratic People’s Republic of Korea (DPRK), Libya, Eritrea, South Sudan and Russia.” The regulation includes a page per person/entity being added. Some of the description of why WANG Junzheng has been added to the list is copied below.

“As Party Secretary and Political commissar of the XPCC since 2020, Wang Junzheng is involved in overseeing all policies implemented by the XPCC. In this position, he is responsible for serious human rights violations in China, in particular large-scale arbitrary detentions and degrading treatment inflicted upon Uyghurs and people from other Muslim ethnic minorities, as well as systematic violations of their freedom of religion or belief, linked, inter alia, to the XPCC’s implementation of a large-scale surveillance, detention and indoctrination programme targeting Uyghurs and people from other Muslim ethnic minorities.

“He is also responsible for the XPCC’s systematic use of Uyghurs and people from other Muslim ethnic minorities as a forced workforce, in particular in cotton fields. As Deputy Secretary of the Party Committee of the XUAR since 2020, Wang Junzheng is involved in overseeing all the security policies implemented in Xinjiang, including the aforementioned programme targeting Uyghurs and people from other Muslim ethnic minorities. As Secretary of the Political and Legal Affairs Committee of the XUAR (February 2019 to September 2020), Wang Junzheng was responsible for maintaining internal security and law enforcement in the XUAR. As such, he held a key political position in charge of overseeing and implementing the aforementioned programme.”

On the same day, the United States, United Kingdom and Canada issued a joint statement announcing sanctions on individuals and/or an entity in China involved with the alleged human rights abuses of Uyghurs in Xinjiang. See U.S. Department of State press release, Joint Statement on Xinjiang, March 22, 2021, https://www.state.gov/joint-statement-on-xinjiang/. The body of the joint message is copied below.

“We, the Foreign Ministers of Canada and the United Kingdom, and the United States Secretary of State, are united in our deep and ongoing concern regarding China’s human rights violations and abuses in Xinjiang. The evidence, including from the Chinese Government’s own documents, satellite imagery, and eyewitness testimony is overwhelming. China’s extensive program of repression includes severe restrictions on religious freedoms, the use of forced labour, mass detention in internment camps, forced sterilisations, and the concerted destruction of Uyghur heritage.

“Today, we have taken coordinated action on measures, in parallel to measures by the European Union, that send a clear message about the human rights violations and abuses in Xinjiang. We are united in calling for China to end its repressive practices against Uyghur Muslims and members of other ethnic and religious minority groups in Xinjiang, and to release those arbitrarily detained.

“We underline the importance of transparency and accountability and call on China to grant the international community, including independent investigators from the United Nations, journalists, and foreign diplomats, unhindered access to Xinjiang.

“We will continue to stand together to shine a spotlight on China’s human rights violations. We stand united and call for justice for those suffering in Xinjiang.”

Australia and New Zealand, while not imposing sanctions themselves, added their voices of concern over the alleged human rights abuses in Xinjiang of the Uyghurs. See Minister of Foreign Affairs Australia, Joint statement on Human Rights Abuses in Xinjiang, 23 March 2021, https://www.foreignminister.gov.au/minister/marise-payne/media-release/joint-statement-human-rights-abuses-xinjiang. The Joint Statement is copied below.

“The Australian and New Zealand Governments today reiterate their grave concerns about the growing number of credible reports of severe human rights abuses against ethnic Uighurs and other Muslim minorities in Xinjiang.

“In particular, there is clear evidence of severe human rights abuses that include restrictions on freedom of religion, mass surveillance, large-scale extra-judicial detentions, as well as forced labour and forced birth control, including sterilisation.

“Australia and New Zealand welcome the measures announced overnight by Canada, the European Union, the United Kingdom and the United States. We share these countries’ deep concerns, which are held across the Australian and New Zealand communities.

“Since 2018, when reports began to emerge about the detention camps in Xinjiang, Australia and New Zealand have consistently called on China in the United Nations to respect the human rights of the Uighur people, and other religious and ethnic minorities.

“Today, we underscore the importance of transparency and accountability, and reiterate our call on China to grant meaningful and unfettered access to Xinjiang for United Nations experts, and other independent observers.”

While China argues that their treatment of the Uyghurs is an internal matter, the allegations of serious human rights abuses have raised widespread international condemnation and increasing use of sanctions. The sanctions, however, typically are limited to freezing assets (if any) of individuals or entities in the sanctioning country, banning travel to the country imposing the sanctioning, etc.

Trade Implications

While allegations of human rights violations do not necessarily carry trade distortion implications, the case of the forced labor of Uighurs in Xinjiang clearly does. Xinjiang produces some 80% of the cotton grown in China, much of it produced by forced labor according to reports. As China is a major producer of textile and apparel products and a major exporter of the same, the distortions in trade flows should be obvious. Foreign cotton will have trouble competing in China with cotton produced with forced labor. Garment producers who don’t use the Chinese cotton will face distortions as competing against garments where a significant input has been obtained at artificially low prices. Some countries (e.g., the United States and Canada) have laws which permit them to prevent imports of products made with forced labor, although the breadth of the actions taken to date are typically quite limited.

In prior posts, I looked at the large number of products produced around the world with forced labor or with child labor and also looked specifically at the Chinese treatment of the Uyghurs reviewing a number of publications and reports. See Child labor and forced labor in cotton production — is there a current WTO mandate to identify and quantify the distortive effects?, January 25, 2021, ttps://currentthoughtsontrade.com/2021/01/25/child-labor-and-forced-labor-in-cotton-production-is-there-a-current-wto-mandate-to-identify-and-quantify-the-distortive-effects/ ; Forced labor and child labor — a continued major distortion in international trade for some products, January 24, 2021, https://currentthoughtsontrade.com/2021/01/24/forced-labor-and-child-labor-a-continued-major-distortion-in-international-trade-for-some-products/.

To ramp up pressure on China to reform its treatment of the Uyghurs, the United States, European Union, United Kingdom, Canada, Australia, New Zealand and all other countries concerned about the human rights should coordinate a broad-based denial of imports from China or from other countries where cotton from Xinjiang is part of the product until such time as the treatment of the Uyghurs has been corrected.

Climate change and a border tax — will the U.S. and EU have a unified position at the WTO in 2021?

The European Union has been working on reducing its carbon footprint consistent with the Paris Agreement commitments and its updated 2030 reduction levels. Part of its effort has been to impose costs on carbon content of certain high energy-consuming industries. To avoid carbon leakage, the EU has been looking at the possibility of imposing a carbon border adjustment mechanism. The European Commission’s work program has the EC presenting a draft proposal of such a mechanism in the second quarter of 2021. See EU Green Deal (carbon border adjustment mechanism), https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12228-Carbon-Border-Adjustment-Mechanism. The Inception impact assessment released by the European Commission is embedded below.

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The EU has indicated that whatever action it takes in its carbon border adjustment mechanism will be consistent with WTO obligations.

The Biden Administration, in the President’s 2021 Trade Policy Agenda, has indicated an openness to considering a carbon border adjustment. See 2021 Trade Policy Agenda and 2020 Annual Report of the President of the United States on the Trade Agreements Program, March 2021, page 3, https://ustr.gov/sites/default/files/files/reports/2021/2021%20Trade%20Agenda/Online%20PDF%202021%20Trade%20Policy%20Agenda%20and%202020%20Annual%20Report.pdf. The section on “Putting the World on a Sustainable Environment and Climate Path” is copied below (emphasis added).

“The United States and the global community face a profound climate crisis, and the Biden Administration is committed to pursuing action at home and abroad to avoid the increasingly disruptive and potentially catastrophic impact of climate change. The United States will work with other countries, both bilaterally and multilaterally, toward environmental sustainability.

“As part of this whole-of-government effort, the trade agenda will include the negotiation and implementation of strong environmental standards that are also critical to a sustainable climate pathway. These standards will include promoting sustainable stewardship of natural resources, such as sustainable fisheries management, and preventing harmful environmental practices, such as illegal logging and wildlife trafficking. This comprehensive approach may also entail leveraging our strong bilateral and multilateral trade relationships to raise global climate ambition.

“The Biden Administration will work with allies and partners that are committed to fighting climate change. This will include exploring and developing market and regulatory approaches to address greenhouse gas emissions in the global trading system. As appropriate, and consistent with domestic approaches to reduce U.S. greenhouse gas emissions, this includes consideration of carbon border adjustments. Additionally, the Biden Administration will work with allies as they develop their own approaches and act against trading partners that fail to meet their environmental obligations under existing trade agreements.

“The trade agenda will support the Biden Administration’s comprehensive vision of reducing greenhouse gas emissions and achieving net-zero global emissions by 2050, or before, by fostering U.S. innovation and production of climate-related technology and promoting resilient renewable energy supply chains.”

President Biden’s Special Envoy on Climate traveled to the United Kingdom and to the European Union the week of March 8. See U.S. Department of State, Special Presidential Envoy for Climate John Kerry Engages European Allies on Climate Ambition, March 6, 2021, https://www.state.gov/special-presidential-envoy-for-climate-john-kerry-engages-european-allies-on-climate-ambition/ (traveling to London, Brussels and Paris March 8-10). A Financial Times article indicated that Special Envoy Kerry was pushing the European Commission to hold up any announcement on a carbon border adjustment mechanism until after the November 2021 meeting of parties to the Paris Agreement in Glasgow (COP26) to see if sufficient commitments were made to make such a mechanism unnecessary. The article indicated that a draft proposal was expected from the EC in June. See Financial Times, John Kerry warns EU against carbon border tax, March 12, 2021, https://www.ft.com/content/3d00d3c8-202d-4765-b0ae-e2b212bbca98 (“The former secretary of state told the Financial Times he was ‘concerned’ about Brussels’ forthcoming plans for a carbon border adjustment mechanism and urged the EU to wait until after the COP26 climate change conference in Glasgow to move forward.”).

Obviously, Special Envoy Kerry’s comments prioritize diplomacy over development of a mechanism to deal with countries who are slow to address the pressing climate challenges. The EU system, of course, has a process for approving proposals like the carbon border adjustment mechanism which if followed as presently planned presumably would not result in adoption in 2021. It is not clear from the press article if the U.S. concern is with the planned June proposal or with ensuring that no adoption happens until after the Glasgow meeting in November. If the latter, there should be little problem for the EU to ensure no adoption in 2021, and the EC proposal could include language about the COP 26 meeting. If the former, postponing action by the EC would push back adoption by at least six months which may or may not be acceptable to the EU.

With USTR nominee Katherine Tai expected to be confirmed by the U.S. Senate later this week, it is unclear based on the press article of the meeting between the EC and Special Envoy Kerry if USTR would hold up efforts to find common ground with the EU on the trade approach on climate change, including on what a carbon border adjustment mechanism would look like so that there is a united front between the U.S. and the EU whenever the mechanism is presented (or at least adopted).

With China, the largest emitter, having announced that it will continue to increase it emissions until 2030, the efforts of the EU and U.S. to speed up the global reductions in emissions will face insurmountable obstacles if there isn’t greater efforts by all, including China. See Politico, US and EU search for a China climate doctrine that works, The first European trip by US climate envoy John Kerry sparks a joint effort to get China to cut its emissions, March 9, 2021, https://www.politico.eu/article/u-s-and-eu-search-for-a-china-climate-strategy-after-snub/.

There is little doubt that if all major emitters are not in solidarity on the need to increase the depth of carbon reductions quickly, there will be carbon border adjustment mechanisms put in place by the EU and likely by the U.S. to ensure actions taken in countries working hard toward major reductions in emissions by 2030 are not undermined by less ambitious objectives. A joint effort by the U.S. and EU would be more effective than the EU going it alone. Let’s hope common ground is found on how to proceed.

“No Quick Fixes for WTO Dispute Settlement Reform” — a skeptical view by the former Deputy USTR of the EU’s willingness to address core U.S. concerns

In yesterday’s post, I reviewed a program hosted by Georgetown Law’s Institute for International Economic Law that looked at opportunities for transatlantic cooperation in WTO reform. See March 10, 2021, Today’s webinar hosted by Georgetown Law’s Institute for International Economic Law “Rethinking the WTO:  Opportunity for Transatlantic Cooperation” — many areas for likely cooperation; some important challenges, https://currentthoughtsontrade.com/2021/03/10/todays-webinar-hosted-by-georgetown-laws-institute-for-international-economic-law-rethinking-the-wto-opportunity-for-transatlantic-cooperation-many-areas-for-likely-cooperation-some-impo/. The focus of the program was the mid-February EC Trade Policy Review paper and Annex on WTO Reform. While there was agreement that there were many areas of possible U.S.-EC cooperation in pursuing WTO reform, Thomas Graham, a former Appellate Body Member and Chair, raised a caution about how quickly meaningful reform of the WTO dispute settlement system could be achieved. He referenced a commentary published by CSIS from Amb. Dennis Shea, the former U.S. Ambassador and Permanent Representative to the WTO during the Trump Administration. See Amb. Dennis Shea, No Quick Fixes for WTO Dispute Settlement Reform, March 9, 2021, https://www.csis.org/analysis/no-quick-fixes-wto-dispute-settlement-reform.

Ambassador Shea’s commentary is worth separate review. Amb. Shea starts by sharing his experience in 2018 as the new U.S. ambassador to the WTO in pressing the EU on whether they shared U.S. concerns about overreach and other problems in the Appellate Body’s functioning and being told that the EU shared none of the U.S. concerns. He then contrasts that position with the position staked out in the EC’s Trade Policy Review paper where there is a recognition that the U.S. “has raised ‘a number of valid concerns'”. The point of Amb. Shea’s initial comments is both to show skepticism as to whether the EU change of position is real and to point out comments by the EU which suggests a lack of understanding of the U.S. concerns or which indicate needed reversal by the EU of a number of positions taken in the past. Amb. Shea urges the Biden Administration not to take up negotiations before the U.S. is able to explore with the EU and others “why the Appellate Body felt free to overreach and why the WTO membership allowed it to occur for so long. A shared diagnosis of the problem will help lead to more durable solutions, including a possible rethinking of the dispute settlement system itself.” This is, of course, the position that Amb. Shea,for the Trump Administration, took consistently at the WTO during his tenure there.

There is little doubt that many WTO Members have been looking at very limited modifications to the WTO dispute settlement system as being adequate to address longstanding U.S. concerns — an approach repeatedly rejected by the prior Administration and unlikely to result in forward progress with the Biden Administration.

The Appellate Body was a new concept added at the end of the Uruguay Round. The binding nature of dispute settlement with an Appellate Body was premised on a limited role for the Appellate Body and assumed an ability of WTO Members to correct erroneous decisions through either negotiations or through interpretations adopted by the Ministerial Conference or the General Council. After 25 years, it is clear that the checks on the dispute settlement system that are included in the WTO Agreements have not functioned as intended or functioned at all. Coupled with the collapse of the negotiating function more broadly, the reality has been a dispute settlement system that has often made up rights and obligations on the fly. Why WTO Members have been ok with that usurpation of sovereign states’ right to limit obligations to those negotiated and agreed to is the fundamental question. It is at the heart of Amb. Shea’s commentary.

From some thirty years of traveling to Geneva, I have heard from nearly every major Member using the dispute settlement system that based on how the Appellate Body was operating, the Member believed it could obtain results through disputes that should be the subject of negotiations and that the Member knew had not been agreed by trading partners. Thus, obtaining rights without negotiations is certainly one of the reasons that many Members have accepted the actions of the Appellate Body that have exceeded its limited authority over time. There are undoubtedly other reasons. Understanding the reasons for Member acceptance of a dispute settlement system operating outside of its limited mandate presumably would be relevant to identifying solutions that would put dispute settlement back into its proper role and ensure errors can be addressed in fact, not just in theory.

Amb. Shea presents eight questions for European trade officials that raise some of the concerns the U.S. has and highlight where there have been significant differences in the positions staked out by the EU in prior cases from the statements in the EC Trade Policy Review paper.

The first question goes to the lack of precedent in WTO dispute settlement and whether the EU thus now recognizes that the Appellate Body erred when it mandated that panels follow Appellate Body reports “absent cogent reasons”. He also asks if the EU rejects “the view that the Appellate Body was vested with broad authority to develop ‘a coherent and predictable body of jurisprudence?'” The U.S. position has been that the dispute settlement process is intended to help the Members find a solution to a problem raised, and that the power to establish rights and obligations lies with the Members through negotiations.

The second question goes to the proper role of the Appellate Body — whether the role is limited to questions of law raised on appeal or extends to whether panels made an objective assessment of the facts under DSU Art. 11. The EU has supported the latter position in prior disputes which has often meant a relitigation of cases at the Appellate Body level.

The EU in its Trade Policy Review paper states that the 90-day deadline for Appellate Body reports should be “strictlly respected”. Because this is different than the position the EU exhibited during the first 25 years when the Appellate Body far exceeded 90 days on a regular basis, Amb. Shea in his third question asks “What has changed?” Problems with timeliness of reports exist both for the Appellate Body and for panels. The problem at the Appellate Body has been noteworthy because of early year compliance with the requirements and early outreach to disputants where 90 days couldn’t be met but an evolution of the Appellate Body’s approach to where extensions were taken without consultations with the disputants.

On the topic of “overreach” by the Appellate Body, Amb. Shea asks whether the EU agrees with the U.S. on cases other than the Appellate Body’s interpretation of “public body’ and if yes, how would the EU propose correcting these other prior rulings? (Question 4). Questions 5 and 6 address particular areas of concern (additional requirements in safeguard cases; the prohibition created by the Appellate Body on “zeroing” in antidumping duty investigations). As I have raised in prior posts, there will not be a resolution of the impasse on the Appellate Body until the problem of overreach is addressed and correction of past overreach has been achieved. While there has been overreach in areas besides trade defense agreements, the three examples raised in Questions 4-6 deal with major overreach problems in the subsidy/countervailing duty, safeguard and antidumping agreements.

Question 7 asks the EU if it agrees with the problems identified by former Appellate Body member Thomas Graham “including a ‘prevailing ethos’ to act like a court that was unaccountable to WTO members, an unjustified sense of infallibility, and an excessive degree of control exercised by its staff”. Mr. Graham at yesterday’s IIEL program argued for the need for greater accountability and the need for reexamining the structure of the dispute settlement — presumably addressing his prior observations on the problems of the Appellate Body. See March 10, 2021, Today’s webinar hosted by Georgetown Law’s Institute for International Economic Law “Rethinking the WTO:  Opportunity for Transatlantic Cooperation” — many areas for likely cooperation; some important challenges, https://currentthoughtsontrade.com/2021/03/10/todays-webinar-hosted-by-georgetown-laws-institute-for-international-economic-law-rethinking-the-wto-opportunity-for-transatlantic-cooperation-many-areas-for-likely-cooperation-some-impo/. The U.S.’s position has been that the Appellate Body is not a court. Indeed, the EU has agreed that the Appellate Body is not a court. See October 1, 2020:  Thoughts on the Geneva Trade Week session entitled “WTO Dispute Settlement – Where Do We Stand?”, https://currentthoughtsontrade.com/2020/10/01/thoughts-on-the-geneva-trade-week-session-entitled-wto-dispute-settlement-where-do-we-stand/ (EU Amb. Machado’s summary (as compiled by me) included that “The EU agrees that panels and the Appellate Body are not courts and that panelists and AB members are not judges. It is the role of WTO Members, not adjudicators, to establish new rules.”). The question in essence goes to how does reform of the dispute settlement system restore the very limited role panels and any second tier review have in helping parties find a solution to a dispute between Members.

Amb. Shea’s last question acknowledges two of the demands of the EU — binding decisions independently reached. But he questions the value of a two-tier system noting that over 25 years it has often been the U.S. view that panels reached the correct result and the Appellate Body the incorrect result. “Shouldn’t the focus be on reforming the WTO dispute settlement system (perhaps with an updated appellate review mechanism) rather than ‘reconstituting’ the Appellate Body?” Amb. Shea’s question seems to stress the institutional problems that the Appellate Body has developed over 25 years and the potential challenges to actually reforming the Appellate Body. But Amb. Shea doesn’t say a second-tier couldn’t work, just that Members should not be locked into restoring the Appellate Body as such.

Conclusions

USTR under the Trump Administration did an exceptional job of laying out U.S. concerns with the WTO Appellate Body over a 2-3 year period. Amb. Shea’s commentary reflects the fact that during the Trump Administration (and before), the EU’s positions on a host of issues important to the proper functioning of the dispute settlement system differed from those of the United States.

The EC’s Trade Policy Review paper and Annex on WTO Reform is an important document, including by showing movement by the EU on some issues of concern to the U.S. in the dispute settlement arena. Amb. Shea’s commentary highlights some of the issues that need to be resolved if there is to be a meeting of the minds between the U.S. and EU on Appellate Body reform, including addressing overreach including on past Appellate Body reports. As Mr. Graham reviewed yesterday and as Amb. Shea reviews in his question 7, reform includes the need for greater accountability of those involved. It also involves a significant contraction in the role any second-tier review handles.

While the approach advocated by Amb. Shea certainly has merit (gain an understanding of “why” the Appellate Body exceeded its authority and Members accepted such action before starting negotiations), it also is possible for the U.S. to start laying out reform needs realizing that some such reforms may go beyond the DSU and operating procedures of the Appellate Body to ensure meaningful checks and balances through the Members (currently hypothetically through Ministerial Conferences or the General Council) or through creating a different appeal mechanism for legal questions. But as Mr. Graham indicated yesterday, dispute settlement will not happen quickly and will be challenging based on the depth of the problems and the need for structural changes and changes in operating procedures as well as addressing the substantive needs.

While there seemed to be different views within the Trump Administration on whether dispute settlement should be binding, that is not the view of Amb. Shea in his commentary nor is it historically the view of the U.S. Congress (as long as Members have the authority to not implement an adverse decision and rather pay compensation or suffer retaliation) or prior Administrations (including the Trump Administration in its handling of disputes). While it is not known as yet the position of the Biden Administration, it is likely that a system that is binding and independent should be acceptable if properly limited and with meaningful crosschecks. I don’t know that there will be objections to a two-tier process, although the reforms needed may make the resulting second-tier look very different from the Appellate Body.

Reform of the dispute settlement system and restoration of a two-tier review is important to most WTO Members. Having focused Members attention on the importance of reform, the Trump Administration has handed off dispute settlement reform to the Biden Administration with WTO Members finally understanding that the longstanding concerns of the United States need to be addressed. The EC Trade Policy Review paper and Annex on WTO Reform shows movement by the EU on some issues of importance to the U.S. While the road forward is likely to be complicated and long, hopefully the Biden Administration will help the process move forward by identifying the array of changes that are needed in the coming months.

Today’s webinar hosted by Georgetown Law’s Institute for International Economic Law “Rethinking the WTO: Opportunity for Transatlantic Cooperation” — many areas for likely cooperation; some important challenges

On March 10, 2021 Georgetown Law’s Institute for International Economic Law (IIEL) held the second in a series of events on “Rethinking the WTO”, this time on “Opportunity for Transatlantic Cooperation”. See Georgetown Law, Rethinking the WTO: Opportunity for Transatlantic Cooperation, March 8, 2021, https://www.law.georgetown.edu/news/rethinking-the-wto-opportunities-for-transatlantic-cooperation/. The program was introduced by David Kleimann, Senior Visiting Research Fellow, IIEL. The program was moderated by Joost Pauwelyn, Murase Visiting Professor of Law, Georgetown Law and also a professor at the Graduate Institute of Geneva. The four panelists included Sabine Weyand, Director General, Directorate General for External Trade, European Commission; Jennifer Hillman, Professor from Practice, Georgetown Law, Senior Fellow, Council on Foreign Relations and a former member of the WTO Appellate Body; Thomas Graham, partner at Cassidy Levy Kent and former member and Chair of the WTO Appellate Body; and Henry Gao, Associate Professor of Law, Singapore Management University, Dongfang Scholar Chair Professor, Shanghai Institute of Foreign Trade and Advisory Board Member of the WTO Chairs Program.

Ms. Weyand provided an overview of the European Commission’s revised trade policy paper, focusing on the Annex dealing with WTO reform. I had reviewed the revised policy paper in a prior post. See February 18, 2021, The European Commission’s 18 February 2021 Trade Policy Review paper and Annex — WTO reform and much more proposed, https://currentthoughtsontrade.com/2021/02/18/the-european-commissions-18-february-2021-trade-policy-review-paper-wto-reform-and-much-more-proposed/. Ms. Weyand’s comments expressed hope that early statements by the Biden Administration meant that there were many areas for possible cooperation, although she started with reviving the Appellate Body — an area where cooperation is more challenging. She articulated that the EU was looking for an early commitment by the Biden team that the U.S. supported a two-tiered, binding, independent dispute settlement system — that which was promised in the Dispute Settlement Understanding. She acknowledged that the U.S. had valid concerns including on overreach on some cases.

Ms. Weyand reviewed areas where collaboration had occurred during the Trump Administration — the joint consultations on subsidies, SOEs, forced technology transfer — and opined that the process should be taken back up. She also mentioned new areas where rules were needed, including Joint Statement Initiatives (electronic commerce where the U.S. is active and others where the U.S. is not) where there should be opportunities for collaboration. She viewed that open plurilaterals were the likely necessary option for reform with benefits limited to those participating. She acknowledged that WTO Members need to address how to make folding plurilaterals into the WTO easier to do. The EU supports the U.S. view that the Special and Differential Treatment provisions and approach don’t make sense in 2021 though the revised policy.

Jennifer Hillman, after the disclaimer that she is not part of the Biden Administration and hence doesn’t speak for them, agreed that the early pronouncements by the Biden team showed significant areas of likely cooperation on WTO reform between the U.S. and the EU based on its revised trade policy paper. She believed that the period of time for getting collaboration started and showing early results was short and that many of the topics for collaboration would require time, hence raising concerns about the ability to actually see forward movement. During her direct comments, Ms. Hillman focused on areas other than dispute settlement. She noted that the concept of sustainable development appeared to have different meanings depending on whom one was talking to. For Europe, it seemed to focus on environment whereas for the Biden Administration there is a heavier focus on labor rights whereas for many WTO Members (developing and least developed countries), the focus would be development. She viewed it as important for the EU to realize focus on labor by U.S. in seeking and obtaining collaboration on sustainable development. She agreed on areas of cooperation on gender equality and empowerment of women and girls, on having the WTO contribute to addressing climate change, including on border taxes that are WTO consistent, on plurilaterals and the need for change to how Special and Differential Treatment is addressed, and on the need for new (e-commerce) or revised rules (industrial subsidies).

Thomas Graham, as a former Appelate Body who had left after eight years at the end of 2019 (his and a colleague’s departure reduced the number of Appellate Body Member below the number needed to hear an appeal), believed that the problems with the dispute settlement system could not be easily addressed and would take significant time to resolve in a way that would address the underlying problems. He urged greater accountability by Appellate Body members. He noted in particular the tension between the second and third sentences of DSU 3.2 (as referenced as well in 19.2) where the bar to creating rights and obligations (important to the U.S.) was neutered by actions of the Appellate Body in clarifying existing provisions (historically the focus of the EU). Mr. Graham did not see an easy resolution to this problem without changing the language itself. He also reviewed the Appellate Body’s elimination in effect of Art. 17.6(ii) of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Antidumping Agreement or ADA), a provision intended to grant discretion to administering authorities in interpreting provisions of the Agreement which were capable of more than one interpretation. Mr. Graham noted that members of the Appellate Body viewed there being either no or very few situations where the Antidumping Agreement provisions would be capable of more than one interpretation. He also raised the question of how Members would deal with past decisions made by and principles adopted by the Appellate Body. He referenced a commentary by Amb. Dennis Shea (the Trump Administration Deputy U.S. Trade Representative in Geneva) posted on the CSIS website on March 9, 2021, “No Quick Fixes for WTO Dispute Settlement Reform” and indicated the questions raised in the paper needed to be addressed. See Center for Strategic & International Studies, No Quick Fixes for WTO Dispute Settlement Reform, March 9, 2021, https://www.csis.org/analysis/no-quick-fixes-wto-dispute-settlement-reform (article includes eight questions Amb. Shea believes the EU needs to answer as it thinks about WTO Dispute Settlement reform).

Mr. Gao provided his perspective on how the types of reform issues identified in the EC revised trade policy paper would be viewed by China, among others. Mr. Gao indicated that China has been unwilling to consider reforms which it views as discriminating against China. Thus, initiatives like the EU’s to start a plurilateral on competitive neutrality (SOEs, heavy subsidization, etc.) is viewed by China as aimed at them and hence will never be supported by China. China’s response has been to assert that there should be ownership neutrality (no special rules for SOEs or for differences in economic systems). China has participated in Joint Statement Initiatives where it does not view itself as targeted including e-commerce, domestic services regulation, investment for development, SMSEs, etc. China is supportive of restoration of the Appellate Body. On S&DT, China does not agree to a change in classification of Members but has agreed to take on responsibilities that it views as consistent with its level of development.

Observations

The above review is undoubtedly incomplete and doesn’t include the discussion during the question and answer portion., but hopefully provides enough of a summary to show large areas of agreement and some of caution between the U.S. and the EU. Both the EU and the US (under the Biden Administration) are putting a lot of focus on recovery from the COVID-19 pandemic and both are interested in supporting global distribution of vaccines, therapeutics and diagnostics through COVAX, though there are short term issues in terms of supplies for national needs for both the U.S. and EU.

In general, the two U.S. panelists agreed with Ms. Weyand that there are areas where cooperation between the U.S. and the EU is possible and viewed the revised EC trade policy paper as helpful, particularly in terms of perceived movement by the EU on dispute settlement. Mr. Gao’s comments show that any reform will not likely be easy or quick because of the large differences in views of existing Members and the challenges posed by China’s economic system to global commerce since consensus decision making permits China to effectively derail multilateral solutions and it can opt not to participate in plurilaterals that it views as not in its interests.

While the U.S. and EU have each articulated the need to have unilateral response capabilities if solutions can’t be found through the WTO or bilaterally, the EU position (and likely Biden Administration position) is that cooperation should be sought between the U.S., EU and possibly others before unilateral actions are taken to permit coordination.

Much of the forward movement at the WTO on new rules is likely to be through plurilateral deals. The JSIs are generating most of the energy at the moment. India and South Africa have submitted a paper arguing that such plurilaterals area not proper under the WTO or require consensus (which doesn’t exist) to be included within the WTO. See February 20, 2021, Will India and South Africa (and others) prevent future relevance of the WTO?, https://currentthoughtsontrade.com/2021/02/20/will-india-and-south-africa-and-others-prevent-future-relevance-of-the-wto/. Ms. Weyand’s position was that the WTO will need to find ways to incorporate the plurilaterals into the WTO or action will happen outside of the WTO which cannot be beneficial to the WTO. In a post in recent days, I have argued that the U.S. should joint the JSIs that it is not a party to. See March 9, 2021, The Biden Administration should join the Joint Statement Initiatives that it is not presently party to, https://currentthoughtsontrade.com/2021/03/09/biden-administration-should-join-the-joint-statement-initiatives-that-it-is-not-presently-part-to/. The new Director-General has also put significant emphasis for obtaining forward movement in the JSIs. So despite the current importance of the JSIs, there are challenges to how much the U.S. and EU can achieve through plurilaterals within the WTO without changes to the Marrakesh Agreement Establishing the WTO, and Members will be divided on having WTO plurilaterals where benefits are limited to the parties vs. all Members (i.e., non-MFN, but open for later membership of non-participants).

On Dispute Settlement, the EU has stated that it understands the long-standing U.S. concerns that are bipartisan and reflected both in the Biden Administration and in Congress. While Ms. Weyand’s view is that the U.S. must signal that it accepts a two-tier, binding, independent dispute settlement system early for negotiations to move forward, the comments of Thomas Graham and the paper by Amb. Shea suggest that such an early commitment may be inappropriate. This would be true if the underlying problems laid out over the last years by the U.S. cannot be rectified satisfactorily under such a system — currently unknown as negotiations haven’t taken place.

Since the problems for the U.S. and others with the Appellate Body flow in part from an ineffective mechanism for Members to correct Appellate Body errors (i.e., the negotiating a clarification and/or Ministerial Conference/General Council adoption of an interpretation (Marrakesh Agreement Establishing the WTO Art. IX:2)), reform of the dispute settlement will likely exceed review of the Dispute Settlement Understanding and procedures.

Ms. Hillman has suggested and Mr. Graham has supported Ms. Hillman’s proposal for a separate process for trade remedy or trade defense cases in light of the large number of cases in the area where there has been longstanding disagreement on Appellate Body decisions and because of the failure of the Appellate Body to respect Art. 17.6(ii) of the Antidumping Agreement.

In earlier posts, I had suggested some modifications to Amb. Walker’s 2019 draft General Council Decision that (1) would interpret both DSU Art. 3.2 and 19.2 and possibly deal with the tension Mr. Graham reviewed in his comment and that have led to much of the overreach problem; (2) would address ADA Art. 17.6(ii); and (3) would deal with past erroneous decisions. See July 12, 2020, WTO Appellate Body reform – revisiting thoughts on how to address U.S. concerns, https://currentthoughtsontrade.com/2020/07/12/wtos-appellate-body-reform-revisiting-thoughts-on-how-to-address-u-s-concerns/ (relevant section copied below; modifications are in bold and underlined).

‘Overreach’

As provided in Articles 3.2 and 19.2 of the DSU, findings and recommendations of Panels and the Appellate Body and recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements.   In a large number of Panel and Appellate Body reports, one or more parties and/or third parties have raised concerns about the Panel or Appellate Body adding to or diminishing the rights and obligations contrary to Articles 3.2 or 19.2 of the DSU.

To clarify situations where rights and obligations are being added to or diminished, Panels and the Appellate Body will not fill gaps in agreements, construe silence to indicate obligations or construe ambiguities in language of existing agreements to require a particular construction.  Any such actions by a Panel or by the Appellate Body is inconsistent with Articles 3.2 and 19.2 of the DSU.

Any party to an Appellate Body report that raised at the DSB meeting considering adoption of the Appellate Body report concerns about the creation of rights or obligations inconsistent with Articles 3.2 or 19.2, will have 90 days from the adoption of this General Council decision to request a review of the Appellate Body decision.  Such request will be for the limited purpose of having the Appellate Body determine whether on the specific issues raised where the party complained of creating rights or obligations the clarification of meaning provided in this General Council decision would result in a changed decision on the particular issue.  The Appellate Body will render decisions on all such requests within 90 days and will accept no additional briefing or argument from parties.  Where the report would have been different on one or more particular issues, it is sufficient for the Appellate Body to so indicate.  Where the same decision on an issue would have been made, the Appellate Body shall provide a detailed explanation.      

Panels and the Appellate Body shall interpret provisions of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (“antidumping agreement”) in accordance with Article 17.6(ii) of that Agreement.  Any party to an Appellate Body report that raised at the DSB meeting considering adoption of the Appellate Body report that Article 17.6(ii) was not applied in interpreting the antidumping agreement, will have 90 days from the adoption of this General Council decision to request a review of the Appellate Body decision.  Such a request will be for the limited purpose of having the Appellate Body determine whether a different outcome on one or more issues would have resulted had the Appellate Body applied Article 17.6(ii)  of the antidumping agreement.  The Appellate Body will render decisions on all such requests within 90 days and will accept no additional briefing or argument from parties.  Where the report would have been different on one or more particular issues, it is sufficient for the Appellate Body to so indicate.  Where the same decision on an issue would have been made, the Appellate Body shall provide a detailed explanation.       

There presumably are many other ways (and perhaps better ways) to deal with these issues, but the above suggests that solutions could be found that would support a two-tiered system. Perhaps, the EU proposal for what it needs from the U.S. early should be supplemented by an understanding that any such commitment assumes ability to address U.S. concerns meaningfully with a two-tier, binding, independent dispute settlement system.

Conclusion

Ms. Weyand’s statement was that cooperation between the U.S. and the EU was a necessary but not sufficient condition to a successful effort at WTO reform. The European Commission in its revised trade policy paper demonstrated some movement from prior positions that had made resolution of matters such as the impasse on the Appellate Body unlikely. Similarly, the Biden Administration has been indicating on a range of issues including environmental sustainability movement that makes a united front between the U.S. and EU more likely. Actions reported in the press in recent weeks show movement by both the U.S. and the EU to improve bilateral relations in the trade sphere. All are very promising signals.

But the path forward is complicated by a lack of common objectives with many third countries, including China. Hence, the correctness of the observation that U.S.-EU cooperation is necessary but not sufficient.

Programs like today’s IIEL program provide a useful opportunity for large numbers of members of the public to gain a better understanding of the possible road forward and challenges to be faced. All of the panelists (and moderator) did an excellent job. It will be interesting to see how the WTO responds in the coming months if the U.S. and EU can in fact mount a united front on reform.

WTO Director-General Okonjo-Iweala’s statement on International Women’s Day, a broader read on gender equality; U.S., EU and New Zealand actions and statements

In my post yesterday, I pulled some information from a short video put together by the WTO, UNCTAD and ITC that dealt with the issue of priorities for the three organizations in terms of recovering from the pandemic. I also reviewed some actions President Biden was taking in the United States. See March 8, 2011, March 8, 2021, International Women’s Day — statements of UN Women Executive Director,  heads of WTO, UNCTAD and International Trade Centre, and U.S. Executive Orders and Statement by President Biden, https://currentthoughtsontrade.com/2021/03/08/march-8-2021-international-womens-day-statements-of-un-women-executive-director-heads-of-wto-unctad-and-international-trade-centre-and-u-s-executive-orders-and-statement-by-president-biden/.

WTO Director-General Ngozi Okonjo-Iweala

Yesterday the WTO hosted a virtual event entitled “Women in leadership: Achieving an equal future in a COVID-19 world,” Director-General Okonjo-Iweala gave an opening statement which chronicles both the disproportionate harm women have encountered during the COVID-19 pandemic but also some of the actions some governments are taking to address the challenges facing women. See WTO, International Women’s Day: Focus on women for a stronger recovery, March 8, 2021, https://www.wto.org/english/news_e/news21_e/women_08mar21_e.htm. While the two priorities of the Director-General (DG) reviewed in yesterday’s post are also present in her statement at yesterday’s event (equitable and affordable access to vaccines, therapeutics and diagnostics; eliminating or phasing out export restraints), there is a lot more ground covered in the statement. The women and trade agenda at the WTO is relatively limited at the present time. Having a woman as Director-General can lead to changes in the organization and structure of the Secretariat — which is identified as a topic DG Okonjo-Iweala will be addressing — and can help ensure that women are at the table for all negotiations so that trade policy and negotiations include an understanding of the implications for gender equality and empowerment of women and girls. DG Okonjo-Iweala reviews the reasons women have been disproportionately affected — including being overrepresented in sectors heavily impacted by the pandemic (textile and apparel manufacturing, tourism), being heavily concentrated in the informal economy of countries with limited or no safety net if jobs are lost, for entrepreneurs, being in small businesses with limited financial resources making surviving a pandemic more challenging, shouldering heavy loads at home in terms of child care, and facing great health care risks because of the concentration in medical and essential services jobs, The text of DG Okonjo-Iweala’s statement, which ls linked to the press release is copied below. See Speeches — DG Ngozi Okonjo-Iweala, 2021 WTO International Women’s Day: “Women in Leadership: Achieving an Equal Future in a COVID-19 World”, March 8, 2021, https://www.wto.org/english/news_e/spno_e/spno2_e.htm.

“Ladies and gentlemen,

“Today is my first International Woman’s Day as the WTO Director-General. Given the particular challenges the pandemic has brought to women globally, I wish to focus my opening remarks today on what the WTO can do to help address these challenges. But I am keenly aware that achieving gender equality is also one of the top priorities for the Secretariat itself, and we will find an occasion soon to have a focused discussion on gender issues for the Secretariat.

“The COVID-19 pandemic has deepened inequalities of every kind. Between countries with money to spend on vaccines and economic relief, and those that cannot. Between workers who must risk their health every day, and those who can safely work from home. Between big firms and small businesses.

“But perhaps no divide has deepened more than that between men and women.

“In both paid and unpaid work, women bore the brunt of the pandemic’s social and economic impact.

“Globally, 5% of women lost jobs in 2020.  The employment loss of men was 3.8%. Women have also been much more likely than men to drop out of the labour market and become inactive.

“In low-income countries without the means to offer economic support during lockdowns, many women lost their only source of income. As family incomes fell, many girls stayed home when schools reopened, or went to work.

“Why has the recession caused by the pandemic had such a disproportionate impact on women?

“First, women are overrepresented in sectors that have been more negatively affected than others.

“This includes jobs requiring in-person contact, such as food service and retail — sectors that either shut down or became much riskier. Women also account for a large share of workers in services such as tourism — sectors directly affected by travel restrictions.

“Women also outnumber men in the manufacturing sectors hardest hit by the pandemic, such as textiles and apparel, where factories shut down early in the pandemic in response to plummeting export demand. In Bangladesh, for example, female employees represent 80 per cent of the workforce in ready-made garment production. Industry orders declined by 45.8 per cent over the first quarter of 2020 — by 81 per cent in April 2020 alone.

Second, more women work in informal sectors than men. Women make up 58% of employment in informal sectors, and the numbers are higher in developing and least-developed economies. In Africa, for example, almost 90% of employed women work in the informal sector.​ These women workers are hurt the most because they are likely to have lost their only source of income and been left with no social and legal protection. 

“Third, many women entrepreneurs own or manage small businesses that already struggle with limited financial resources and borrowing capacity. The pandemic worsened these pressures.

“And within families, women continue to shoulder a heavier burden than men. Temporary school closures made fathers step up a little, but mothers stepped up much more. Working mothers changed work schedules, reduced hours or took unpaid leave far more frequently than working fathers. In Germany, 6% of fathers but 62% of mothers indicate they have taken on the primary responsibility for their children during school closures.

“Finally, women face greater health risks as they work more in areas such as health and social care, sales of food and other necessary goods. In many countries, women comprise over 75% of the healthcare workforce. In certain countries (Italy, Spain, and the US), a higher proportion of women healthcare workers (69%, 75.5%, and 73% respectively) were found infected with COVID-19: although work is still ongoing to understand the reasons for this, one possible reason is that personal protection equipment has been designed to fit for men and even the smallest size is too big for some women.

“Even before COVID-19, progress towards gender parity had been too slow, too uneven. Now, unless we act quickly, the pandemic’s disproportionate impact on women could last for decades. This would be a moral failure — and an economic disaster.

“The biggest thing the WTO can do right now is to work with Members to keep trade open.

“As the economic data shows, trade has proven crucial in the global fight against the pandemic.

“While too many export restrictions remain in place, trade helped improve access to key medical products over the past year. In the first half of 2020, while global trade contracted by 14% compared to the year before, total imports of personal protective equipment and other COVID-related products rose by 29%. The value of trade in textile face masks grew six-fold. PPE trade grew by 50%. Trade thus enhanced supply resilience, particularly for those countries without manufacturing capacity.

“The pandemic has also highlighted how the temporary movement of healthcare workers, of whom many are women, has particularly helped the most affected countries to deal with the crisis. Open trade will continue to be key to building faster and more inclusive growth.

“Second, WTO Members must minimize or remove existing export restrictions that are impeding access to essential medical supplies and disrupting supply chains. Transparency on any export trade restrictions should also be improved through prompt notifications.

“In all these efforts, our priority should be to contribute to making vaccines, therapeutics and diagnostics available and affordable in all countries. Until we have successfully tackled health challenges for everyone, we cannot tackle economic ones.

“Third, trade can be a source of more and better jobs, and increased purchasing power for women. Overall, countries that are more open to trade, as measured by the ratio of trade to gross domestic product, have higher levels of gender equality.

“For one, women are more likely to be in formal jobs if they work in trade-integrated sectors with higher levels of exports, thereby giving them opportunities for benefits, training, and job security. A recent World Bank survey shows that, for women, the probability of being informal declines from 20% in sectors with low levels of exports to 13% in sectors with high levels of exports. 

“Digital technologies can also help women overcome gender-based barriers to trade, reach broader markets, and weather the impact of crises better. Women facemasks producers in Kenya, for example, found ways to develop and even expand their businesses during lockdowns using growing e-commerce opportunities. Rwandan women coffee producers were able to export their products directly to China. Let’s close the existing gender digital divide and help all women benefit from the opportunities created by digital technologies.

“Finally, all these efforts must be supported by targeted support measures for women.

“Women could be left behind in the recovery unless adequate measures are put in place to address the uneven impact of the pandemic on them. Let me give you one example of how targeted intervention can make a difference: in Zambia, the Enhanced Integrated Framework (EIF) and the International Trade Centre (ITC) helped women-owned businesses selling textiles, leather, and honey to attend trade fairs and other B2B activities. The result: they were able to break into 10 new international markets, and generate hundreds of thousands of dollars worth of new sales. They also expanded their supplier networks, and many of those new suppliers were also run by women.

“Governments need to prioritize women in the labour force and in the home through financial, legal, and educational measures. Fiscal support for women will be particularly crucial. Yet currently less than 40 per cent of all measures taken globally for the recovery are gender sensitive, with only 7 per cent containing measures supporting women’s economic security.

“This is a crude reminder for all of us that women must be at all decision-making tables equally as men. As Dame Graça Machel once said, “…socio-economic transformation will only be realized once we aggressively address gender-specific challenges, prioritize gender equality and women’s participation, and firmly entrench women in leadership positions at all levels in society.”

“The cost of gender inequality is enormous. A few years ago McKinsey estimated that if women played a fully equal role to men in the labour market, global economic output could increase by as much as $28 trillion per year. To put it in perspective, this pandemic reduced global output last year by between $3 and 4 trillion.

“The COVID-19 pandemic is setting women back in all domains of society.

“At the same time, it has reminded everyone of the enormous value of care and other kinds of work traditionally associated with women. And it has highlighted the power and effectiveness of women’s leadership. Although no analytical study has been conducted yet, anecdotal examples show that economies led by woman leaders (e.g. New Zealand, Denmark, Chinese Taipei, Iceland, Finland, and Norway) have outperformed their peers in terms of management of this pandemic.

“We cannot expect to make good policy for all members of society if half of the population is not properly and equally represented at the table.

“Gender equality is a fundamental human rights issue and also an economic empowerment issue. We should all work harder in our respective roles to achieve complete gender equality.

“I wish you all a happy International Women’s Day!”

Additional actions by President Biden

In yesterday’s post, I also reviewed actions President Biden was taking in the form of two Executive Orders (one Executive Order on Establishment of the White House Gender Policy Council, a second Executive Order on Guaranteeing an Educational Environment Free from Discrimination on the Basis of Sex, Including Sexual Orientation or Gender Identity). But President Biden on March 8th reviewed additional actions he has taken including nominating two women to hold command positions in the U.S. Military and putting forward to Congress the Violence Against Women Reauthorization Act of 2021. See Statement by President Biden on the Introduction of the Violence Against Women Reauthorization Act of 2021 and Remarks by President Biden on International Women’s Day (“On Friday, I submitted to the Senate for confirmation my first slate of nominations for four-star command positions in our Armed Forces — among them, two outstanding and eminently qualified warriors and patriots.  General Jacqueline Van Ovost in the United States Air Force is currently the only female four-star officer serving in our military.  I nominated her as Commander of the United States Transportation Command.  And when confirmed, the Lieutenant General Laura Richardson, of the United States Army, will be promoted in rank and join General Van Ovost as the only four-star — as another four-star general.  I nominated her as Commander in the United States Southern Command.  And, when confirmed, they will become the second and third women in the history of the United States Armed Forces to lead combatant commands.”). The Biden Administration also had a press briefing with the two co-chairs of the Gender Policy Council. See Press Briefing by Press Secretary Jen Psaki, Co-Chair of the Gender Policy Council and Chief of Staff to the First Lady Julissa Reynoso, and Co-Chair and Executive Director of the Gender Policy Council Jennifer Klein, March 8, 2021. And Vice President Kamala Harris reported participated in a discussion with an EU Parliamentary Committee. See eudebates.tv, We are all in this together! Jacinda Ardern on International Women’s Day, March 8, 2021, https://www.eudebates.tv/debates/world-debates/australia/we-are-all-in-this-together-jacinda-ardern-on-international-womens-day/ (“.During the plenary session of the European Parliament in Brussels, Jacinda Ardern, Prime Minister of New Zealand joined MEPs to celebrate the International Women’s Day during a debate. Prime Minister Jacinda was one of a number of high-profile guests, including US Vice President Kamala Harris, to address the European Union Parliament for International Women’s Day.”)..

So the Biden Administration has been taking actions to bring women into positions of power in a unprecedented manner in the United States and to embark on reviews to ensure problems to achieving gender equality are identified and addressed.

European Commission President Ursula von der Leyen

The EU has had relatively strong programs promoting gender equality over time. Like the United States, the EU is looking to do more. European Commission President Ursula von der Leyen made a statement yesterday at the EP FEMM Interparliamentary Committee meeting reviewing the important contributions of women to the development of COVID-19 vaccines and the actions the EU will be taking to improve gender equality. Like President Biden’s cabinet, EC President von der Leyen has much greater balance in the Commission composition in terms gender representation. See Opening speech by President von der Leyen at the EP FEMM Interparliamentary Committee meeting, on the occasion of the International Women’s Day 2021, March 8, 2021, https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_21_1017. Her speech is copied below.

“Thank you very much Evelyn Regner,

“Presidents and Honourable Members,

“It is an honour to be with you today, in the company of so many amazing women. And allow me to begin by mentioning three women who are not with us today. Doctor Özlem Türeci. Professor Sarah Gilbert. Doctor Kizzmekia Corbett. Some of you may have never heard their names before. But we owe them a lot. They are three scientists from Germany, the UK and the U.S. And these three extraordinary women lead the teams that developed the first three vaccines against coronavirus. BioNTech, Moderna and AstraZeneca.

“And I am sure that they, like many of us, have fought against all sorts of stereotypes. But this is how women respond to stereotypes: By going their way, showing leadership and excelling in their field. And today the whole world can see that we are all better off when women get the opportunities they deserve. Of course, women are made for science. Of course, women are fit to lead. Of course, career and motherhood can go together. It is obvious, but unfortunately it still needs to be said.

“This year’s International Women’s Day is for women like these three scientists. This Women’s Day is for women on the front-line, and for women in the back-office. It is for the health workers, who have been our guardian angels, and it is for our sales assistants, who have kept our supermarkets open. And indeed, let us never forget that almost 80% of them are women.

“Women’s Day is also for all the mothers who have taken care of their children during the lockdowns, while also working from home. But this Women’s Day is also for the women who lost their job during the crisis. And Women’s Day is for those who no longer want to settle for discriminations, insecurity and unfairness. As a female leader, I would like 2021 to bring good news to all of them, to all European women. And this is what we are working on: Putting women at the centre of all our policies.

“And let me start with the basics. Later this year we will propose new legislation to fight violence against women. This has become even more urgent because of the lockdowns. Living free from fear and violence is a basic human right. And we must ensure adequate protection for all women, in all European countries, online and offline, and especially at home.

“Second, women must be at the centre of the recovery. This is a clear requirement for all national recovery plans. NextGenerationEU will finance good jobs for women and men alike. It will invest in quality education for girls and women, including scientific education. NextGenerationEU will be for all Europeans, women and men.

“Third, today indeed we are presenting our new Action Plan to implement the European Pillar of Social Rights. We have set ambitious targets on jobs, skills, and poverty reduction. These are clear and measurable goals to drive our work.

“And let me take one of them: By 2030, at least 78% of European adults should be employed. And this can only be achieved by having more women in the labour market. But to do this we need to make progress on work-life balance. Ensuring parental leave for mothers and fathers. Investing in childcare and good schools. And indeed creating a child guarantee, so that all parents, from all social backgrounds, can send their kids to childcare and school. And this is what empowerment means. Freedom to be a mother and to have a career, for all women.

“And this adds up to the fourth point, today we are also proposing a Directive for pay transparency. It builds on a very simple idea: Equal work deserves equal pay. And for equal pay, you need transparency. Women must know whether their employers treat them fairly. And when this is not the case, they must have the power to fight back and get what they deserve.

“And finally, women should always be able to reach for the top, including in private companies. I fought for this when I was a Minister in Germany. And I will not stop pushing for gender quotas on boards until we get a fair system for all European countries. We simply cannot exclude half of our talents from leadership positions.

“Having women in leadership position should become the norm, not the exception. And slowly but steadily, Europe is changing. Five EU governments are now led by women. For the first time, an EU country, Estonia, is led by two women, as President and Prime Minister. And you, President Sakellaropoulou, are the first woman to be elected as Greek President.

“For the first time in our history, not only the European Commission is led by a woman, but we have also achieved gender-balance in the College of Commissioners. As you know, this is something I promised on my nomination. I asked every European country to present a man and a woman as candidates for each post. It was not always easy. But we made it. And it shows that everything can change, with tireless perseverance.

“All of this matters. It matters to the quality of our decision-making. And it matters to our daughters. It tells them that they can reach for the top. It tells them that hard work pays off. That they will be judged on their ideas, their dedication and their talent, not for their chromosomes. A gender-balanced Europe is a better Europe. Not just for women, but for all of us.

“And in this spirit: Long live Europe, and happy Women’s Day!”

New Zealand Prime Minister Jacinda Arden

New Zealand’s Prime Minister Jacinda Arden also spoke to the European Parliament yesterday. Her speech can be found here. eudebates.tv, We are all in this together! Jacinda Ardern on International Women’s Day, March 8, 2021, https://www.eudebates.tv/debates/world-debates/australia/we-are-all-in-this-together-jacinda-ardern-on-international-womens-day/. New Zealand has done a lot to promote gender equality and has leadership in government that is roughly in number equal between women and men. But challenges remain as the Prime Minister notes in her speech including women being “overrepresented in job loss and low paid work and domestic violence statistics.” The Prime Minister’s speech is copied below (headers are from the webpage).

“Jacinda Ardern European Parliament speech on International Women’s Day 

“I’m honoured to see this kind invitation to speak with you and I bring warm greetings from New Zealand. President Sassoli, thank you for convening this session and for the focus on women’s empowerment and leadership during the covid crisis. To say this is a challenging time would be, of course, a monumental understatement. The world is reeling from the effects of the covid-19 pandemic.

“It has had far reaching consequences that have affected every one of us. This is a critical time for us as leaders and representatives to come together, even if it is by video in these constrained times. Covid-19 highlights how truly interdependent we all are, how reliant we are on cooperation, communication and compassion to successfully combat the virus.

“Jacinda Ardern puts people at the centre

“It highlights how important it is that we work together for a sustainable recovery that delivers for our economies and our planet. But it also puts people at the centre of our decision making. In New Zealand our approach in battling covid-19 has been one of inclusivity. The idea that everyone needs to do their bit to protect one another, especially our most vulnerable.

“I want to talk about our population as the team of five million, and we may be a small team, but one that nonetheless has proven the power and importance of the collective. And now that’s exactly what we need from the world. It’s a haunting legacy if the virus drags on around the globe. It has become clear no country is safe until every country is safe. As we move to a phase of vaccination we are not a team of five million, but we are a team of seven point eight billion

“The success of individual countries or regions means little unless we are all successful. In New Zealand‘s indigenous language Te Reo Maori, we say “we are all in this together”. But some have felt the effects of covid-19 even more acutely than others. Covid-19 has ravaged our health systems, our economies, our livelihoods. But it is also exacerbated structural inequalities that disproportionately impact women and girls.

“Women are at the forefront

“Women are at the forefront of fighting the covid crisis. Amongst the doctors, nurses, scientists, communicators, caregivers and frontline and essential workers who face the devastations and challenges of this virus every day. Along with being directly affected by the virus itself and its immediate impacts on our livelihoods, we’re also the subjects of intensified domestic violence.

“Now this is being reported as the shadow pandemic in all corners of the world. Not only by fully and meaningfully including women and girls in leadership and decision making at all levels can we ensure that our responses to the pandemic meet the needs of everyone. As prime minister of a small country on the far side of the world, I’m proud of what our team of five million in New Zealand has been able to achieve over the last year.

“We have a proud history of championing gender rights since we became the first country in the world to give all women the right to vote in 1893. I’m part of the most diverse and inclusive parliament New Zealanders have ever elected, with women making up forty eight per cent of our parliament and fifty five per cent of my party in government.

“Women hold top positions

“Women also hold the post of Governor-General, Prime Minister, Leader of the Opposition and Chief Justice, and increasingly holding senior roles in our public service and business sector. And now, for the first time and long overdue, I might add, New Zealand‘s Minister of Foreign Affairs is a woman. She is a skilled, values driven indigenous woman with a contemporary worldview.

“And yet for all of that, we have so much more to do because it doesn’t matter how many women are in leadership, so long as we have women overrepresented in job loss and low paid work and domestic violence statistics. In my mind, that is the true measure of whether we have made progress and whether we have equality.

“As we look towards the year ahead we all know it will be tough. There will be big challenges and demands made of all of us as leaders. We will be tested. We must all do more to support women lead business, including small enterprises, to be part of the covid-19 economic recovery so they can more readily experience the benefits of trade.

“The European Union and New Zealand. We are Like-Minded Partners with so many values and interests in common, we both desire the stability and freedom afforded us all by global rules and institutions, free and open markets and a world where human rights are valued and prioritised.

“As we all turn towards creating a sustainable global economic recovery, my message to you is simple. We need to stick together because we are all in this together. I wish your Parliament and all our people the very best for the challenges that lie ahead. Stay safe. Stay well.”

Conclusion

Gender equality is an issue that needs a permanent place on agendas of organizations and governments to ensure progress is made for half the world’s people. Progress has been too slow in too much of the world and discrimination or unequal treatment can be found in various forms in nearly all countries. It is unimaginable that the world has not progressed more. We can and must do better.

Biden Administration should join the Joint Statement Initiatives that it is not presently party to

President Biden has made it clear that his Administration will work within multilateral organizations to the extent possible to move the U.S. agenda forward. During the Trump Administration, the U.S. participated actively in the World Trade Organization but was active in only one of the Joint Statement Initiatives that were initiated at the end of the Buenos Aires Ministerial Conference in late 2017.

Thus, the United States is an active participant in the ongoing negotiations following the Joint Statement on Electronic Commerce (WT/MIN(17)/60, 13 December 2017), but is not a party to the other Joint Statement Initiatives. See Joint Ministerial Statement on Services Domestic Regulation (WT/MIN(17)/61, 13 December 2017); Joint Ministerial Statement on Investment Facilitation for Development (WT/MIN(17)/59, 13 December 2017); Joint Ministerial Statement, Declaration on the Establishment of a WTO Informal Work Programme for MSMEs (WT/MIN(17)/58, 13 December 2017); Joint Declaration on Trade and Women’s Economic Empowerment on the Occasion of the WTO Ministerial Conference in Buenos Aires in December 2017.

While India and South Africa have challenged the legitimacy of the Joint Statement Initiatives (JSIs), a great deal of the energy in the WTO in the last several years has been put into the JSIs. See, e.g., February 20, 2021, Will India and South Africa (and others) prevent future relevance of the WTO?, https://currentthoughtsontrade.com/2021/02/20/will-india-and-south-africa-and-others-prevent-future-relevance-of-the-wto/; WTO, Coordinators of joint initiatives cite substantial progress in discussions, 18 December 2020, https://www.wto.org/english/news_e/news20_e/jsec_18dec20_e.htm. The WTO press release is copied below.

“The coordinators of the joint initiatives on e-commerce, investment facilitation, services domestic regulation and micro, small and medium-sized enterprises (MSMEs) said on 18 December that substantial progress has been achieved in their respective discussions and that they are on track to deliver concrete results or additional progress at the WTO’s 12th Ministerial Conference (MC12) scheduled for next year.

“In their communication, the coordinators noted that they have delivered summary statements to WTO members outlining how far the four initiatives have advanced since they were launched three years ago, where they stand today, and what their next steps in the discussions will be.

“’What these statements clearly show is the substantial progress [of the initiatives] in a short period of time, that they are on track to delivering concrete results or progress at MC12, and that they are contributing to building a more responsive, relevant and modern WTO — which will be critical to restoring global trade and economic growth in the wake of the COVID-19 crisis.’

“’These initiatives have grown into an increasingly important part of the agenda of the WTO, with an expanding number of participants from both the developed and developing worlds that account for a significant part of the WTO’s membership, and based on the principles of openness, transparency and inclusiveness,’ the coordinators added.

“The new joint initiatives were launched at the WTO’s 11th Ministerial Conference in Buenos Aires in December 2017 with the aim of commencing negotiations or discussions on issues of increasing relevance to the world trading system.

“The joint initiative coordinators are Ambassador José Luis Cancela Gómez (Uruguay) for the Informal Working Group on MSMEs; Ambassadors George Mina (Australia), Yamazaki Kazuyuki (Japan) and Tan Hung Seng (Singapore) for the Joint Statement Initiative on E-Commerce; Deputy Permanent Representative Jaime Coghi Arias (Costa Rica) for the Joint Statement Initiative on Services Domestic Regulation; and Ambassador-designate Mathias Francke (Chile) for the Structured Discussions on Investment Facilitation for Development.

“The coordinators noted that the consolidated negotiating text on e-commerce will provide a foundation for intensified negotiations in 2021. They highlighted that the negotiations on services domestic regulation are at a ‘mature stage’, with a genuine potential for an outcome by MC12.

“The coordinators also said that substantive provisions of an investment facilitation agreement are being negotiated by the participating members in this initiative. In addition, they noted the recent announcement by the Informal Working Group on MSMEs of a package of declarations and recommendations to help small business trade internationally.

“The coordinators underscored that the shared and ultimate goal of these initiatives is to strengthen and reinforce the multilateral trading system, that they are open to all WTO members, and that they seek the participation of as many members as possible.

“The coordinators stated: ‘The initiatives on e-commerce, investment facilitation, services domestic regulation, and MSMEs clearly demonstrate that the WTO can respond to new economic and technological challenges in a flexible, pragmatic, and timely way. These initiatives — and their innovative approach to cooperation and negotiation — can provide a valuable illustration of WTO reform in action.’”

While the Joint Declaration Trade and Women’s Economic Empowerment on the Occasion of the WTO Ministerial Conference in Buenos Aires in December 2017 is not treated as a JSI, it does have many Members supporting the Declaration and engaging in the informal work programme.

Some of the other countries participating in all of the JSIs and Joint Declaration

While the number of WTO Members participating in the JSIs and supporting the Joint Declaration vary, the following is a partial list of Members who are signatories to all of the JSIs and the Joint Declaration. Other than the Electronic Commerce initiative, the U.S. is presently not a signatory or participant in any of the other JSIs or Joint Declaration.

Argentina, Australia, Brazil, Canada, Chile, China, Colombia, European Union, Japan, Korea, Mexico, New Zealand, Russian Federation, Switzerland are participants in all of the JSIs and supportive of the Joint Declaration. Dozens of other Members are participating in some or many of the JSI’s that the U.S. is not presently supporting or active in.

Conclusion

While the United States has a large agenda of issues it wishes to address at the WTO (including trade and the environment, WTO reform, industrial subsidies), it makes no sense that the United States would not actively participate in work programs where most of the major economies are active and where new rules will be relevant to areas of significance for the United States as well as for trading partners. While the work program on women and trade is in an informal working group, President Biden has made empowerment of women an important priority for his Administration as a range of actions during International Women’s Day made clear. See, e.g., March 8, 2011, March 8, 2021, International Women’s Day — statements of UN Women Executive Director,  heads of WTO, UNCTAD and International Trade Centre, and U.S. Executive Orders and Statement by President Biden, https://currentthoughtsontrade.com/2021/03/08/march-8-2021-international-womens-day-statements-of-un-women-executive-director-heads-of-wto-unctad-and-international-trade-centre-and-u-s-executive-orders-and-statement-by-president-biden/. Similarly, MSMEs are an important part of the U.S. economy and a major driver of economic growth. The U.S. has a very strong services sector which has an interest in domestic regulatory issues both in the U.S. and as addressed overseas. Finally, the U.S. is both a major investor in foreign countries and a recipient of large amounts of foreign investment and has a significant interest in helping the global community address issues involved in investment in developing and least developed countries on a more predictable basis.

Hopefully, the Biden Administration when its USTR nominee is confirmed in the coming days, will opt to engage in all of the JSIs. It is time.

U.S. and EU issue joint statement suspending for four months retaliatory tariffs from large civil aircraft WTO disputes (Airbus-Boeing)

Yesterday, the U.S. and United Kingdom announced a four month suspension of retaliatory tariffs from the Airbus-Boeing WTO disputes to provide time to seek a negotiated solution. As noted in my post on the development, it was expected that a similar agreement would be reached with the EU. See March 4, 2021, First step in resolving the Airbus-Boeing WTO dispute — U.K. and U.S. announce four month suspension of retaliatory tariffs effective March 4, 2021, https://currentthoughtsontrade.com/2021/03/04/first-step-in-resolving-the-airbus-boeing-wto-dispute-u-k-and-u-s-announce-four-month-suspension-of-retaliatory-tariffs-effective-march-4-2021/

Today a joint statement was released by the U.S. and the European Union on a similar four-month suspension of retaliatory tariffs. See USTR, Joint Statement of the European Union and the United States on the Large Civil Aircraft WTO Disputes, March 5, 2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/march/joint-statement-european-union-and-united-states-large-civil-aircraft-wto-disputes. The text of the joint statement is copied below.

“’The European Union and the United States today agreed on the mutual suspension for four months of the tariffs related to the World Trade Organization (WTO) Aircraft disputes. The suspension will cover all tariffs both on aircraft as well as on non-aircraft products, and will become effective as soon as the internal procedures on both sides are completed. 

“’This will allow the EU and the US to ease the burden on their industries and workers and focus efforts towards resolving these long running disputes at the WTO.

“’The EU and the US are committed to reach a comprehensive and durable negotiated solution to the Aircraft disputes. Key elements of a negotiated solution will include disciplines on future support in this sector, outstanding support measures, monitoring and enforcement, and addressing the trade distortive practices of and challenges posed by new entrants to the sector from non-market economies, such as China.

“’These steps signal the determination of both sides to embark on a fresh start in the relationship.’”

The agreement to suspend the retaliatory tariffs for four months was the result of a phone call between President Biden and EC President von der Leyen.

The White House has the following readout of the phone call:

Readout of President Joseph R. Biden, Jr. Call with European Commission President Ursula von der Leyen

“MARCH 05, 2021 • STATEMENTS AND RELEASES

“President Joseph R. Biden spoke today with European Commission President Ursula von der Leyen. He underscored his support for the European Union and his commitment to repair and revitalize the U.S.-EU partnership. Noting our shared values and the world’s largest trade and investment relationship, the leaders agreed to suspend the tariffs related to the World Trade Organization (WTO) Aircraft disputes for four months and to work toward resolving these long running disputes at the WTO.  They discussed the importance of close U.S.-EU cooperation to contain the COVID-19 pandemic and enhance global health security, pursue a sustainable global economic recovery, tackle the climate crisis, and strengthen democracy.  The leaders also agreed to coordinate on issues of shared interest, including China, Russia, Belarus, Ukraine, and the Western Balkans.” https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/05/readout-of-president-joseph-r-biden-jr-call-with-european-commission-president-ursula-von-der-leyen/.

The European Commission President von der Leyen issued a press release after her conversation with President Biden. See European Commission, Statement by President von der Leyen following her phone call with President of the United States Joe Biden, March 5, 2021, The press release is embedded below but the relevant paragraphs on the suspension of tariffs are copied below before the full press release.

“As a symbol of this fresh start, President Biden and I agreed to suspend all our tariffs imposed in the context of the Airbus-Boeing disputes, both on aircraft and non-aircraft products, for an initial period of 4 months. We both committed to focus on resolving our aircraft disputes, based on the work our respective trade representatives. This is excellent news for businesses and industries on both sides of the Atlantic, and a very positive signal for our economic cooperation in the years to come.”

Statement_by_President_von_der_Leyen_following_her_phone_call_with_President_of_the_United_States_Joe_Biden

EC Trade Commissioner Valdis Dombrovskis in a tweet indicated the suspension had been agreed and stated that “This is a major breakthrough that provides a welcome boost to EU exporters & it gives both sides time & space to resolve this long-running dispute.” https://twitter.com/VDombrovskis/status/1367888145505783810. See also Financial Times, EU and US agree to suspend tariffs in Airbus-Boeing dispute, March 5, 2021, https://www.ft.com/content/3da1759f-894e-4c1d-813f-5012d96bf52b.

While the development was not unexpected in light of yesterday’s announcement, it is a further sign of the major effort of the Biden Administration to work with our allies such as the European Union and is another manifestation of the Biden Administration’s embrace of multilateral solutions and working with allies.

First step in resolving the Airbus-Boeing WTO dispute — U.K. and U.S. announce four month suspension of retaliatory tariffs effective March 4, 2021

For the U.S., EU and U.K., finding a path to resolving the long-running dispute on civil aircraft subsidies is a major priority. Both the U.S. and the EU have been authorized to retaliate by the WTO in recent years. Some efforts at finding a resolution were pursued during the Trump Administration. The Biden Administration has made it clear that it wants to find ways to work with our allies and resolving the underlying civil aircraft dispute has been a topic covered by President Biden’s USTR nominee Katherine Tai in her confirmation hearing. See March 2, 2021, Katherine Tai, USTR designate, on addressing WTO reform including dispute settlement if confirmed; the USTR 2021 Trade Policy Agenda, https://currentthoughtsontrade.com/2021/03/02/katherine-tai-ustr-designate-on-addressing-wto-reform-including-dispute-settlement-if-confirmed-the-ustr-2021-trade-policy-agenda/.

Today the U.S. and the United Kingdom released a joint statement following agreement to suspend retaliatory tariffs for four months from March 4, 2021 to provide space for seeking a negotiated solution. The U.K. had suspended retaliatory tariffs since January 1st. See USTR, Joint US-UK Statement on Suspension of Large Civilian Aircraft Tariffs, March 4, 2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/march/joint-us-uk-statement-suspension-large-civilian-aircraft-tariffs. The joint statement is embedded below.

US-UK-4-month-tariff-suspension-to-ease-the-burden-on-industry-while-seek-resolution-of-Airbus-Boeing-disputes

The announcement does not include the EU as a party, but it is expected that the EU will join such action since they are the major European party and face the largest amount of retaliation. In early December 2020, during the last months of the Trump Administration, EC Trade Commissioner Valdis Dombrovskis had indicated the EU would suspend retaliatory tariffs if the U.S. did as well. See Bloomberg, EU Says Boeing-Airbus Dispute Can Be Settled Under Trump, December 3, 2020, https://www.bloomberg.com/news/articles/2020-12-03/eu-says-boeing-airbus-dispute-can-be-settled-under-trump (“EU Trade Commissioner Valdis Dombrovskis said ‘it’s possible’ that both sides will reach an agreement by Jan. 20 governing aid to Boeing Co. and Airbus SE. He reiterated an offer to remove EU retaliatory tariffs on $4 billion of American goods if the U.S. does the same for its duties on $7.5 billion of European products. ‘The solution which would be preferred by the EU would be that both sides withdraw or at least suspend their tariffs and we reach agreement on future disciplines in the area of civil aviation,’ Dombrovskis said in an interview with Bloomberg TV on Thursday. ‘We are still intensively engaged with the current U.S. administration.'”).

The U.S. goal is certainly to find a solution that works for the Boeing Company and that permits the U.S., EU and U.K. to turn their attention to the challenges in the civil aircraft industry by major new entrants like China. Today’s action with the U.K. is the first step in the Biden Administration’s efforts to get this dispute resolved.

INTELLECTUAL PROPERTY AND INNOVATION: MAKING MSMES COMPETITIVE IN GREEN TECH

Climate change is a major global concern. Indeed, the UN has indicated there is less than a year for countries to get serious about saving the planet by getting their updated national climate action plans (NDCs) submitted. See Time, ‘If This Task Was Urgent Before, It’s Crucial Now.’ U.N. Says World Has 10 Months to Get Serious on Climate Goals, February 26, 2021,https://time.com/5942546/un-emissions-targets-climate-change/; UN Climate Change, Greater Climate Ambition Urged as Initial NDC Synthesis Report Is Published, 26 February 2021, https://unfccc.int/news/greater-climate-ambition-urged-as-initial-ndc-synthesis-report-is-published (“’2021 is a make or break year to confront the global climate emergency. The science is clear, to limit global temperature rise to 1.5C, we must cut global emissions by 45% by 2030 from 2010 levels.  Today’s interim report from the UNFCCC is a red alert for our planet. It shows governments are nowhere close to the level of ambition needed to limit climate change to 1.5 degrees and meet the goals of the Paris Agreement. The major emitters must step up with much more ambitious emissions reductions targets for 2030 in their Nationally Determined Contributions well before the November UN Climate Conference in Glasgow,’ said UN Secretary-General António Guterres.”).

While the largest polluters — China and the United States — haven’t submitted updated NDCs, the Biden Administration is planning on hosting a climate summit in the summer and plans on having more ambitious plans for the U.S. prepared by that time. See Roadmap for a Renewed U.S.-Canada Partnership, February 23, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/02/23/roadmap-for-a-renewed-u-s-canada-partnership/ (“The Prime Minister and the President expressed their commitment to have their two countries work together on cooperative action ahead of the US-hosted Leaders’ Climate Summit that will allow both countries to increase their climate ambition. The President, in addition to acknowledging Canada’s new strengthened national climate plan and its globally ambitious price on pollution, reiterated his aim to have ready the US nationally determined contribution (NDC) in advance of the Summit and welcomed the Prime Minister’s aim to announce the enhanced 2030 emissions target for its NDC by the Summit as well.”).

At the World Trade Organization, many countries are anxious to explore ways that trade can facilitate addressing the challenges from climate change. Because of the large share of employment around the world by micro-, small- and medium’sized businesses (MSMEs), such businesses are playing and will have to play a critical role in adopting technologies to permit reduction of pollutions threatening the planet.

On February 25, 2021 a group of WTO Members (largely developed countries) submitted a communication to the WTO membership outlining ways that MSMEs can use intellectual property to green their businesses. See INTELLECTUAL PROPERTY AND INNOVATION: MAKING MSMES COMPETITIVE IN GREEN TECH, COMMUNICATION FROM AUSTRALIA, CANADA, CHILE, THE EUROPEAN UNION, JAPAN, SINGAPORE, SWITZERLAND, THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU, THE UNITED KINGDOM AND THE UNITED STATES, IP/C/W/675 (26 February 2021). The paper lays out the purpose of the communication in its introduction copied below.

“1. Some of today’s critical global challenges include climate change, biodiversity loss, environmental degradation and food security. As an example, climate change matters to our health and increases the risk of infections and pandemics.1

“2. Several international efforts such as the Sustainable Development Goals (SDGs), the Convention on Biological Diversity, the UN Framework Convention on Climate Change and the Paris Agreement are designed to address these challenges. In this context, the role of Green Technology2 is important to provide new alternatives to address these challenges and create opportunities that have economic, social, and environmental benefits, as underscored by the framework of the SDGs. Of these, several underline the importance of Environmentally Sound Technologies (ESTs) for the accomplishment of the above objectives.

“3. Micro-, Small and Medium-sized Enterprises (MSMEs) can play a pivotal role in this change towards more sustainability. As they provide for more than 50 percent of employment (G20/OECD, 2015), they can constitute core engines of innovation and growth. MSMEs working in the green tech sector represent key economic actors in the effort towards finding solutions to address the abovementioned global challenges. The role of intellectual property rights (IPRs) to enhance the competitiveness of MSMEs should be looked at closely. IPRs enhance the dissemination and protection of innovations – which is key for MSMEs, including those in the green tech sector (Friesike, Jamali, Bader et al, 2009). This submission presents IPR approaches for making MSMEs more competitive in green tech.

“1 Harvard T.H Chan School of Public Health: https://www.hsph.harvard.edu/cchange/subtopics/coronavirus-and-climate-change/ (last consulted: 09.01.2021).”

The communication then provides information on international and national approaches to helping SMSEs obtain IP protection and/or obtain through license or otherwise existing IP technologies to address greening their businesses. For example, on international approaches, the communication reviews the role WIPO and WTO play in providing easy access to lots of information on intellectual property systems of many countries. WIPO has set up support through WIPO Green to facilitate collaboration on environmentally sound technologies (ESTs) including what technologies are available for licensing, etc.

“5. One important initiative to accelerate the development and dissemination of ESTs is WIPO GREEN, a marketplace designed to connect providers and seekers of ESTs. All technologies listed in the online database of WIPO GREEN are available for license, collaboration, joint ventures, and sale. In addition to establishing a network of various partners, WIPO GREEN contains a database of IP experts, supports acceleration projects in different countries and produces briefs and seminars for various green tech areas. It is thus particularly valuable for MSMEs, given that it facilitates the diffusion of their technologies and provides information to technology providers and seekers in all countries.”

The communication from the WTO Members also includes information on the Technology Mechanism provided by the United Nations Framework Convention on Climate Change and provides information on classification of green technology patents by WIPO, the European Patent Office (EPO) and US Patent and Trademark Office (USPTO).

On national approaches Members can take, the communication focuses on actions the national patent office can take.

“12. There are several ways for IP offices to assist MSMEs in making the best use of IPRs.

“• IP offices can provide basic guidance and assistance on various IPR aspects. By preparing reader-friendly IP material, including patent and trademark basics, examination overviews, information on patent searching and resources on legal assistance that could be used by inventors and businesses in the green tech sector, individual questions and needs may be met.

“• IP offices may provide support in the form of assisting applicants with patent searches, landscape analyses and also facilitate free legal assistance.

“• Specifically with a view to promoting ESTs, IP offices could consider accelerated patent examination procedures for such green tech patent applications. This process shortens the time between application and grant, enabling MSMEs to attain financial support more quickly.

“• Customized workshops, seminars, or awards for the best green tech inventions may also help to make MSMEs that are involved in the green tech sector more aware of the benefits that the IP system may hold for them.”

The complete communication is embedded below.

W675-1

Conclusion

While there are presently limited environmental negotiations going on at the WTO (fisheries subsidies), the global race to address a warming world requires greater focus by WTO Members on the role trade can play to improve the global response. Restarting the environmental goods negotiations is one obvious area for negotiations. Addressing carbon leakage through national laws and international negotiations is another. Encouraging collaboration to spread green technology requires no negotiations but is a potentially important component in the global response. Hence the February 25 communication is a valuable contribution to increasing the global focus on how to address the challenges of a warming planet.

WTO Director-General Ngozi Okonjo-Iweala’s first week on the job starts with a two day General Council meeting

While the WTO’s General Council, in special session, appointed Dr. Ngozi Okonjo-Iweala to be the next Director-General on February 15, 2021, her term starts on Monday, March 1. The challenges facing the WTO membership and the incoming Director-General are many and complex. At the same time, there is a lot of useful work that is done within the WTO including efforts of non-members to join the WTO (accessions).

In speaking to an informal Trade Negotiations Committee and Heads of Delegation meeting on February 25, Deputy Director-General Alan Wolff spoke in part on “The Ngozi Okonjo-Iweala Era”. See WTO, DDG Wolff calls on members to work with new Director-General to reform WTO, 25 February 2021, https://www.wto.org/english/news_e/news21_e/ddgaw_25feb21_e.htm. Part of the section of his statement on the new DG’s era is copied below.

“The Ngozi Okonjo-Iweala Era

“The landmark event of the last six months was the appointment of the new Director-General ten days ago after what turned out to be a lengthy process.  91 member delegations spoke last week to congratulate the new Director-General. The DDGs and the Secretariat join you in welcoming Dr Okonjo-Iweala’s appointment with great enthusiasm.

“Of course, member enthusiasm, optimism and hope need to be translated into concrete action.  

“There is much that needs to be done at this critical juncture for the WTO. World trade must contribute to a more effective pandemic response as well as a strong and sustainable economic recovery. Climate issues are demanding more urgent attention. WTO reform is overdue, having been called for repeatedly by you, by your ministers and by many heads of government. 

“The challenges are many but so are the opportunities. Dr Ngozi’s remarks at the Special General Council meeting last Monday, subsequently circulated to delegations in document JOB/GC/250, presented a worthy and ambitious agenda for the members of this organization.

“What did she say?

“To act with a sense of urgency to assist in controlling the COVID-19 pandemic through the nexus of trade and public health:

“First, by playing a more forceful role in exercising the WTO’s monitoring function. Part of this would involve encouraging members to minimise or remove export restrictions that hinder supply chains for medical goods and equipment. WTO monitoring suggests that as of yesterday, 59 members and 7 observers still had pandemic-related export restrictions or licensing requirements in place, mostly for personal protective equipment, disinfectants and to a lesser extent, for medicines and food. This represents a significant level of rollback compared to the 81 members and 10 observers that had implemented such measures over the past year. A welcome development — but there is much room to improve this record.  

“And second, by broadening access to new vaccines, therapeutics, and diagnostics by facilitating technology transfer within the framework of multilateral rules.

“Beyond these immediate responses to the pandemic, Dr Ngozi set out a number of other, also vitally important, challenges:

“To swiftly conclude the fisheries subsidies negotiations, and thus pass a key test of the WTO’s multilateral credibility while contributing to the sustainability of the world’s oceans.

“To build on the new energy in the multilateral trading system from the joint statement initiatives attracting greater support and interest, including from developing countries.

“To address more broadly the nexus between trade and climate change, using trade to create a green and circular economy, to reactivate and broaden negotiations on environmental goods and services, to take the initiative to address the issue of carbon border adjustments as they may affect trade.

“To level the playing field in agricultural trade though improving market access and dealing with trade distorting domestic support, exempting from export restrictions World Food Programme humanitarian purchases.

“To strengthen disciplines on industrial subsidies, including support for state-owned enterprises. 

“To defuse the divisions over Special and Differential Treatment (SDT).

“And to develop a work programme for restoring two-tier dispute resolution, to be agreed no later than MC12.

“I sense from my discussions with members that you chose this leader, Ngozi Okonjo-Iweala, because she has shown herself during her career to be fearless in the face of daunting challenges — and is experienced in knowing how to work with others to make progress toward solutions. 

“Each of the challenges the WTO faces, I am sure, can be met and overcome.  Echoing Dr Ngozi’s words, the trading system that we inherited, now only three-quarters of a century old, is about people.  This is inscribed in the opening section of the Marrakech agreement: ‘to raise living standards, ensure full employment, increase incomes, expand the production of and trade in goods and services, and seek the optimal use of the world’s resources in accordance with the objective of sustainable development.”’

DDG Wolff’s summation correctly lays out many of the issues needing to be addressed by the WTO membership. The vast majority of the issues are highly controversial among at least some Members.

The first major order of business is a two day General Council meeting on March 1-2 which has several agenda items that lay out controversies on important potential deliverables by the WTO in 2021. The agenda for the two day meeting contains sixteen items. See WT/GC/W/820 (26 February 2021) embedded below.

W820

General Council meetings deal with updates on ongoing work at the WTO and address issues teed up by particular Members for consideration at the meeting. This post does not take up all agenda items but highlights a few of possible interest. Because DDG Wolff’s statement on February 25 reviews many of the activities of the WTO in the last six months which shows some of the positive developments, the full statement is embedded below.

WTO-_-2021-News-items-Speech-DDG-Alan-Wolff-DDG-Wolff-calls-on-members-to-work-with-new-Director-General-to-reform-WTO

The 12th WTO Ministerial Conference

Agenda item 4 deals with the 12th WTO Ministerial Conference. It is expected that there will be a decision on the timing and location of the twelfth Ministerial Conference at the General Council session on Monday-Tuesday. The 12th MC was postponed from June 2020 because of the COVID-19 pandemic. With the continued challenges from the pandemic the likely date will be the end of 2021. Kazakhstan which had offered to host the conference in 2020 and again in the summer of 2021 has recently indicated a willingness to host in December of this year as well. The ministerial had originally been scheduled for June because of challenging weather conditions in Kazakhstan in December. See TWELFTH SESSION OF THE MINISTERIAL CONFERENCE, COMMUNICATION FROM KAZAKHSTAN, 8 February 2021, WT/GC/229 (24 February 2021)(embedded below).

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Report on WTO Accessions

Deputy Director-General Wolff will provide a statement on the annual report on WTO accessions. The report is WTO ACCESSIONS, 2020 ANNUAL REPORT BY THE DIRECTOR-GENERAL, WT/ACC/38, WT/GC/228 (18 February 2021). Activity on accessions was challenged by the pandemic and inability to travel/hold in person meetings. More technical assistance and virtual meetings were held. Accessions are important for acceding governments in terms of promoting reforms at home and obtaining increased certainty in their international trade relations. Accessions are also an important benefit of membership for existing Members as acceding Members reduce tariffs and various non-tariff barriers to gain accession. The first eight paragraphs of the report provide an overview of activities in 2020 and are copied below.

Overview of activities in 2020

“1. 2020 was an unprecedented year in recent history due the COVID-19 pandemic outbreak and its consequences which have touched upon every single aspect of our lives in every corner of the world. It was a challenging year for the WTO, not least because the pandemic disrupted its core activities, especially during the first half of the year, and it also disrupted the international trade of Members, except for supplies of essential goods critical to combatting the health crisis as trade in these goods expanded dramatically. The difficulties and challenges arising from the pandemic were particularly pronounced in acceding governments due to the uncertainties of being outside of the multilateral trading system. In fact, the desire and urgency to be part of the WTO was never felt stronger than in the pandemic year. This was reflected in the level of accession activities in 2020, which was sustained vis-à-vis previous years, with a significant increase in technical assistance and outreach activities.

“2. The year for accessions started with the establishment of a new Working Party for the accession of Curaçao, a constituent country within the Kingdom of the Netherlands (WTO Member), following its application for an independent membership as a separate customs territory pursuant to Article XII of the Marrakesh Agreement. This constituted the 59th request by a state or separate customs territory for membership since the establishment of the Organization in 1995. In July, Turkmenistan was granted observer status in the WTO, with the understanding that it would apply for accession no later than in five years. This brought the total number of observer governments with the intention to accede to the WTO to 24, an increase by five since 2016 when Afghanistan and Liberia became the Organization’s most recent Members. The continuing interest to become part of the multilateral trading system is a testament to the attraction and relevance of its values and principles for all economies, regardless of their size or level of development.

“3. The COVID-19 pandemic undoubtedly hampered or delayed the technical work by acceding governments, Members and the Secretariat to prepare for, engage in and follow up on Working Party meetings. However, thanks to the firm commitment of the acceding governments to advance their work, four Working Parties met, including through the use of virtual platforms that connected the acceding governments which were unable to travel to Geneva. One acceding government had to cancel its already scheduled meeting due to the suspension of all WTO meetings in March. Out of the four accession Working Party meetings held in 2020, three were on LDC accessions (Ethiopia, Comoros and Timor-Leste). In two cases – the Working Parties of Ethiopia and Uzbekistan – this also represented the formal resumption of accession processes after several years of inactivity (8 and 15 years, respectively), signalling their desire to use WTO membership negotiations to drive domestic economic reforms, which have broader implications in the regions where they are located.

“4. When the pandemic halted planned missions, technical assistance, and outreach activities which required air travel, the Secretariat rapidly shifted the mode of operation to virtual format and took advantage of the opportunities provided thereby. In addition to the formal accession Working Party meetings which took place via Interprefy, the Accessions Division organised virtual technical meetings and briefing sessions with acceding governments, Working Party Chairpersons and partners in support of accessions. Moreover, the Division delivered a number of technical assistance, training and outreach activities in response to articulated needs of acceding governments, using various virtual platforms, such as MS Teams, Zoom and WebEx. In fact, the number of activities delivered by the Division and of participants who attended or were trained in 2020 exceeded considerably the numbers in previous years.

“5. One of the novel outreach programs developed in 2020 was two week-long activities which consisted of a series of webinars combining lectures, training and panel discussions. The first Accessions Week was organised from 29 June to 3 July, and the first edition of the Trade for Peace Week took place from 30 November to 4 December. These virtual events brought together a large number of resource persons and panellists from around the world and reached out to a larger number of participants, in a highly cost-effective manner, in comparison with traditional in-person activities. While the full values and benefits of in-person interaction cannot be replaced or replicated, the Accessions Week enabled the Secretariat to remain engaged with acceding governments and Members, experts and partners, beyond Geneva and around the world. The Trade for Peace Week provided an effective networking platform to expand the WTO’s partnership with the peace and humanitarian communities in support of fragile and conflict affected (FCA) countries in accession.

“6. The importance of collaboration and cooperation with partners was never felt more strongly than in 2020. The Secretariat made concerted efforts to enhance and expand the “Trade for Peace through WTO Accession” Initiative to support FCA countries in accession and those recently acceded to the WTO. In 2020, nine acceding governments were identified as being in a FCA situation according to the World Bank’s classification1, while conflicts emerged or resurged in some others. The pandemic hit hardest countries which had already been suffering from years of conflict, political crises, drought and other natural disasters, compounded by declines of the price of oil and other commodities. Nonetheless, some FCA acceding LDCs showed remarkable resilience in sustaining their engagement in accession. The Working Party on the Accession of the Union of Comoros resumed its work with determination to finalise the process as soon as possible. The Working Party on the Accession of Timor-Leste activated the Working Party by holding its first meeting nearly four years after its establishment, despite various challenges faced on the domestic front. Moreover, Somalia submitted its Memorandum on the Foreign Trade Regime, the base document to start its accession engagement with Members. Furthermore, the Secretariat continued to provide support to the g7+ WTO Accessions Group, which was coordinated by Afghanistan.

“7. The year 2020 marked the 25th anniversary of the WTO. The Secretariat used its annual flagship event, the China Round Table on WTO Accessions, to review the contributions made by accessions to the multilateral trading system since 1995. The event also provided an opportunity for an exchange of ideas to explore the future expansion of WTO membership towards universality, including through possible improvements in the accession process. The year also marked a significant anniversary milestone for five Article XII Members2 – Albania, Croatia, Georgia, Jordan and Oman which joined the WTO in 2000, the year with the largest number of new members to date. Other anniversary milestones included the fifth anniversaries of Membership of Kazakhstan and Seychelles and the fifteenth anniversary for the Kingdom of Saudi Arabia. In recent years, membership anniversaries have become an important occasion to reflect on the benefits and values of being part of the Organization.

“8. Finally, the thematic focus of the 2020 Annual Report was on the complementarities and synergies in negotiating WTO membership and regional trade agreements. Almost all acceding governments are involved in regional integration initiatives in parallel with their efforts to achieve WTO membership. The highlight of the year was the implementation of the African Continental Free Trade Area (AfCFTA) to which all African WTO applicants are signatories. The Report’s thematic section builds on the rich discussions held on the topic during the 2020 Regional Dialogues on WTO Accessions for Africa and for the Arab Region, as well as other meetings on Central Asia and Eurasia. It aims to explore key opportunities and challenges that may arise in a simultaneous pursuit of regional and global integration efforts and to provide a checklist of issues for trade negotiators to consider in maximising the benefits from the participation in multiple trade arrangements.”

The full report is embedded below.

WTACC38

Waiver of TRIPS Obligations During COVID-19 Pandemic

The sixth agenda item involves the effort from India and South Africa with a number of other developing or least developed countries to obtain a waiver from most TRIPS obligations on medical goods needed for the COVID-19 pandemic. This has been a very controversial issue with developed countries with pharmaceutical companies involved in the production of vaccines and other items opposing the waiver on the basis of existing flexibilities within the TRIPS Agreement and on the global efforts through the WHO, GAVI and CEPI to provide vaccines to low- and middle-income countries through COVAX with financial contributions from many countries, NGOs and others. See, e.g., February 19, 2021, COVAX’s efforts to distribute COVID-19 vaccines  to low- and middle income countries — additional momentum received from G-7 virtual meeting, https://currentthoughtsontrade.com/2021/02/19/covaxs-efforts-to-distribute-covid-19-vaccines-to-low-and-middle-income-countries-additional-momentum-from-g-7-virtual-meeting/

The TRIPS Council received the proposal back in October but has been unable to provide a recommendation to the General Council. A meeting of the TRIPS Council earlier this month continued the lack of agreement. Thus, the agenda item will simply result in the item being continued on the General Council’s future agendas until resolved or dropped. See WTO, Members discuss TRIPS waiver request, exchange views on IP role amid a pandemic, 23 February 2021, https://www.wto.org/english/news_e/news21_e/trip_23feb21_e.htm (” In this context and given the lack of consensus on the waiver request, members agreed to adopt an oral status report to be presented to the General Council at its next meeting on 1-2 March. The report indicates that the TRIPS Council has not yet completed its consideration of the waiver request and therefore will continue discussions and report back to the General Council.”); December 11, 2020, Council for Trade-Related Aspects of Intellectual Property Rights meeting of December 10, 2020 – no resolution on proposed waiver of TRIPS obligations to address the pandemic, https://currentthoughtsontrade.com/2020/12/11/council-for-trade-related-aspects-of-intellectual-property-rights-meeting-of-december-10-2020-no-resolution-on-proposed-waiver-of-trips-obligations-to-address-the-pandemic/; December 6, 2020, Upcoming December 11th Council for Trade-Related Aspects of Intellectual Property Rights meeting – reaction to proposed waiver from TRIPS obligations to address COVID-19, https://currentthoughtsontrade.com/2020/12/06/upcoming-december-11th-wto-council-for-trade-related-aspects-of-intellectual-property-rights-meeting-reaction-to-proposed-waiver-from-trips-obligations-to-address-covid-19/; 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/.

Fisheries Subsidies negotiations — Draft Ministerial Decision

The WTO has been pursuing negotiations on fisheries subsidies to address sustainable fishing concerns since the end of 2001. Conclusion of the negotiations were supposed to take place in 2020 but WTO Members were unable to get the job completed in part because of disruptions from the COVID-19 pandemic. While completing the negotiations remains a key objective of Members and the incoming Director-General and such completion is needed to fulfill the UN Sustainable Development Goal 14.6, WTO Members continue to face a large number of challenging issues. See, e.g., WTO press release, WTO members hold February cluster of meetings for fisheries subsidies negotiations, 24 February 2021, https://www.wto.org/english/news_e/news21_e/fish_24feb21_e.htm; February 22, 2021, An early test for the incoming WTO Director-General — helping Members get the Fisheries Subsidies negotiations to a conclusion, https://currentthoughtsontrade.com/2021/02/22/an-early-test-for-the-incoming-wto-director-general-helping-members-get-the-fisheries-subsidies-negotiations-to-a-conclusion/.

Agenda item 7 is entitled “Supporting the Conclusion of Fisheries Subsidies Negotiations for the Sustainability of the Ocean and Fishing Communities — Draft Ministerial Decision — Communication from Brazil (WT/GC/W/815. The draft Ministerial Decision is an effort by Brazil to highlight the critical aspect of the negotiations which is to address environmental sustainability and presumably reflects Brazil’s concerns with the efforts of so many Members to protect their subsidies versus ensuring sustainable fishing. The document is embedded below.

WTGCW815

An attack on Joint Statement Initiatives

As reviewed in the incoming Director-General’s statement on February 15 and the summary of her statement by DDG Wolff on February 25, an important aspect of ongoing work at the WTO is a number of Joint Statement Initiatives that were started at the end of the 11th Ministerial Conference in Buenos Aires, including on e-commerce/digital trade.

Agenda item 10 is a frontal attack on such initiatives by India and South Africa through their paper, “Legal Status of Joint Statement Initiatives and Their Negotiated Outcomes”, WT/GC/819. I had reviewed the submission in an earlier post. See February 20, 2021, Will India and South Africa (and others) prevent future relevance of the WTO?, https://currentthoughtsontrade.com/2021/02/20/will-india-and-south-africa-and-others-prevent-future-relevance-of-the-wto/. The agenda item will like see many delegations take the floor to support the use of joint statement initiatives within the WTO or to oppose them. While there won’t be a resolution of the issue, the challenge to the process could significantly handicap some of the efforts envisioned by the incoming Director-General to help developing and least developed countries take advantage of the e-commerce/digital trade world and eventually participate in talks and/or in an agreement. WT/GC/W/819 is embedded below.

WTGCW819-1

Agenda item 8 is viewed as related to agenda item 10. India has been seeking to limit WTO consideration of e-commerce issues to the multilateral efforts over many years within the existing Councils and Committees of the WTO (but where limited progress has been made).

COVID-19 and possible future pandemics — addressing existing trade restrictions and improving the functioning of the WTO to better handle in the future

The incoming Director-General has as a high priority to work with Members to improve monitoring of export restraints on medical goods and agricultural goods during the pandemic and working with Members to see that the WTO helps Members recover and better handle any future pandemics. The Ottawa Group had put forward a trade and health initiative in November 2020. See COVID-19 AND BEYOND: TRADE AND HEALTH, WT/GC/223 (24 November 2020). The communication was made by Australia, Brazil, Canada, Chile, the European Union, Japan, Kenya, Republic of Korea, Mexico, New Zealand, Norway, Singapore and Switzerland. The document contains an annex reviewing the types of actions Members could take to improve the response to the pandemic and improve conditions going forward. Included in the annex to the communication are sections on export restrictions; customs, services and technical regulations; tariffs; transparency and review; cooperation of the WTO with other organizations. Several paragraphs in the communication review the issue of possible export restrictions on vaccines and are copied below.

“9. We realize that the challenges related to the scarcity of essential medical goods, now alleviated to some extent by the response on the supply side, may be repeated at the moment of the development of a vaccine or new medical treatments. In this context, we welcome the COVID-19 Vaccine Global Access Facility (COVAX), a global pooled procurement mechanism for COVID-19 vaccines, managed by Gavi, the Vaccine Alliance, the Coalition for Epidemic Preparedness Innovations (CEPI) and WHO. This mechanism is critical in securing an equitable share of vaccines for all Members of the international community. As we strongly support the objective of this facility, we call on WTO Members to ensure that any export-restricting measures do not pose a barrier to the delivery of necessary supplies under the COVAX facility.

“10. We recognize the collaborative efforts of private and public stakeholders in the research and development of COVID-19 diagnostics, vaccines and treatments. We encourage the industry to take actions to ensure access at affordable prices to COVID-19 diagnostics, vaccines and treatments for vulnerable populations and support voluntary pooling and licensing of IP rights to accelerate the development of such diagnostics, treatments and vaccines and scaling up their production. We recognize the importance of the IP system in promoting R&D and innovation for access to effective treatments. We note that the flexibilities provided by the TRIPS Agreement and reaffirmed in the Doha Declaration on the TRIPS Agreement and Public Health remain available to protect public health and to promote access to medicines for all.”

The full document is embedded below.

WTGC223

Canada will be providing an update on the initiative at the General Council meeting and will likely see many Members provide comments on the agenda item.

Agenda item 9 was added by Colombia, Costa Rica, Ecuador, Panama and Paraguay reflecting concerns by them (and presumably many other trading partners) about actions taken by the European Union to exert control over exports of vaccines from the EU in light of EU concerns about its own access to vaccines from manufacturers. See CALL TO PREVENT EXPORT RESTRICTIONS ON COVID-19 VACCINES, WT/GC/818 (18 February 2021). The document is embedded below.

WTGCW818

Since the EU is one of the Members who has pushed the trade and health initiative, there is concern by some WTO Members that its actions on vaccines run counter to the initiative it is supporting. Presumably the EU will argue that its actions are consistent with its rights under the WTO and is consistent with the language laid out in paragraphs 9 and 10 above.

The two agenda items are likely to show the concerns of many Members on equitable access to medical goods during the pandemic and the reluctance of at least some Members to reduce their flexibilities under the existing WTO rights and obligations.

Conclusion

DDG Wolff indicated that Members selected the incoming Director-General because she is “fearless in the face of daunting challenges”. There is no shortage of daunting challenges facing the WTO and its new Director-General. A few have been reviewed above.

Some good news is that the EU and the United States are supportive of many of the priorities laid out by DG Ngozi Okonjo-Iweala in her February 15 statement to the Special Session of the General Council as seen in the recent EU revised trade policy and the opening statement of USTR nominee Katherine Tai at yesterday’s Senate Finance Committee confirmation hearing See February 18, 2021, The European Commission’s 18 February 2021 Trade Policy Review paper and Annex — WTO reform and much more proposed, https://currentthoughtsontrade.com/2021/02/18/the-european-commissions-18-february-2021-trade-policy-review-paper-wto-reform-and-much-more-proposed/; February 25, 2021, U.S. Trade Representative nominee Katherine Tai confirmation hearing before the U.S. Senate Finance Committee, https://currentthoughtsontrade.com/2021/02/25/u-s-trade-representative-nominee-katherine-tai-confirmation-hearing-before-the-u-s-senate-finance-committee/.

The challenges the new Director-General and the WTO Members face will be made harder by the lack among Members of a common vision and agreed purpose of the WTO, by the current inability of the WTO system to address fundamentally different economic systems, by the structure of decision making, by the failure of obligations to be updated to match level of economic development and role in global trade and by the related issue of how special and differential treatment is used. These challenges have resulted in a negotiating function that is broken, in a dispute settlement system that has no checks on the reviewers for errors or failures to operate within the bounds of authority granted in the Dispute Settlement Understanding and in the underperformance of the monitoring and implementation function.

Hopefully, DG Okonjo-Iweala will develop a strong personal staff and group of DDGs to help her attempt the seemingly impossible — getting meaningful progress and reform from the 164 current WTO Members. See February 13, 2021, Leadership change at the WTO — with Dr. Ngozi Okonjo-Iweala’s arrival next week, what support team and early changes in the role of the Secretariat could help WTO Members move forward?, https://currentthoughtsontrade.com/2021/02/13/leadership-change-at-the-wto-with-dr-ngozi-okonjo-iwealas-arrival-next-week-what-support-team-and-early-changes-in-the-role-of-the-secretariat-could-help-wto-members-move-forward/

Director-General Ngozi Okonjo-Iweala will get her first reality check at the General Council meeting on March 1-2.


Roadmap for a Renewed U.S.-Canada Partnership — Implications for WTO initiatives

On February 23, 2021 President Biden and Prime Minister Trudeau had a virtual meeting to review a wide range of topics and released an agreed “Roadmap for a Renewed U.S.-Canada Partnership”. Major topics addressed included (1) combating COVID-19, (2) building back better (i.e., economic recovery after the pandemic), (3) accelerating climate ambitions, (4) advancing diversity and inclusion, (5) bolstering security and defense and (6) building global alliances. A number of these topics are relevant to the work of the World Trade Organization (ongoing or possible). See Roadmap for a Renewed U.S. Canada Partnership, February 23, 2021,https://www.whitehouse.gov/briefing-room/statements-releases/2021/02/23/roadmap-for-a-renewed-u-s-canada-partnership/. This post reviews briefly some of the issues in the roadmap that resonate more broadly in a global trade context.

Combating COVID-19

For example, on combating COVID-19, several of the paragraphs in the roadmap review working together to help ensure equitable access to vaccines through COVAX. Whether sufficient vaccines can be made available to low- and middle-income countries is a matter of concern to many WTO Members including some who have been pushing for waiving TRIPS Agreement obligations during the pandemic. Many developed countries have viewed there being adequate flexibility within the TRIPS Agreement to address the present pandemic and have pointed to the collective efforts of the WHO, GAVI and CEPI in setting up COVAX to procure billions of doses of vaccines both for countries needing assistance and for other countries wanting to acquire vaccines through COVAX. The big issue for COVAX has been adequate funding. The U.S. is donating $2 billion in the near term and another $2 billion over the rest of 2021 and 2022. Canada has also made pledges of support to COVAX. Thus, the roadmap is both supportive of global efforts to get vaccines to countries in need and likely supportive of opposing efforts to waive TRIPS rights and obligations during the pandemic. Some excerpts from the combating COVID-19 section are copied below.

“The top priority of the President and the Prime Minister is to end the COVID-19 pandemic. They agreed to strengthen comprehensive and cross-sectoral efforts to control the pandemic, collaborate on public health responses, and build resilience against future outbreaks.

‘The Prime Minister and the President committed to working closely together to defeat the virus, including by surging the health and humanitarian response to the global pandemic, responding to new variants, following expert advice, and supporting global affordable access to and delivery of COVID-19 vaccines, including through the COVAX Facility.

“The leaders emphasized their strong support for the multilateral institutions that are on the front lines of COVID-19 response, including the World Health Organization (WHO) and UN development agencies, and committed to rapidly fulfilling national pledges to COVAX.”

While not addressed in the roadmap document, both Canada and the U.S. at the WTO have been supportive of not imposing restrictions on agricultural exports and through the G-20 have been supportive of limiting the role of export restraints on medical goods. There is discussion in the building back better section of strengthening “Canada-U.S. supply chain security” which may have implications for whether some actions relevant to medical goods are adopted that will diversify supply or encourage more production within the U.S. and Canada.

The interest by the United States under the Biden Administration in supporting multilateral organizations like the WTO may also suggest that the U.S. will now be more amenable to working with the Ottawa Group (of which Canada is a member) on the Trade and Health Initiative that was introduced last December. See Government of Canada, Minister Ng announces tabling of Ottawa Group’s Trade and Health Initiative at WTO General Council, December 17, 2020, https://www.canada.ca/en/global-affairs/news/2020/12/minister-ng-announces-tabling-of-ottawa-groups-trade-and-health-initiative-at-wto-general-council.html (“Through this Trade and Health Initiative, Canada and the other 12 Ottawa Group member nations are calling for further cooperation among all WTO members to strengthen global supply chains and facilitate the flow of essential medicines and medical supplies, including vaccines, amid the current crisis. The Trade and Health Initiative identifies a range of actions that members are encouraged to adopt. These include implementing trade-facilitating measures in the areas of customs and services, limiting export restrictions, temporarily removing or reducing tariffs on essential medical goods, and improving transparency overall.”); December 18, 2020, The WTO ends the year with General Council and Dispute Settlement Body meetings, https://currentthoughtsontrade.com/2020/12/18/the-wto-ends-the-year-with-general-council-and-dispute-settlement-body-meetings/; 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/.

Building back better (recovery from the pandemic)

Much of the section on building back better addresses the collective needs to support groups that have been disproportionately affected by the pandemic including “women, youth, underrepresented groups and indigenous peoples.” Assistance to such groups and to small and medium-sized enterprises is an important component of building back better. It also reflects present WTO focus on helping women and micro-, small- and medium-sized businesses better participate in the global economy and in international trade in particular. Actions by Canada and the U.S. will be pursued in part under existing commitments within the USMCA but also will be supportive of WTO initiatives and UN Sustainable Development Goals.

Other agreed steps by Canada and the U.S. in this section deal with building supply chain for battery development and production which is consistent with the leaders’ objective of advancing reductions in greenhouse gases. The U.S. and Canada also encourage “international regulatory cooperation” to enhance “economic competitiveness” “while maintaining high standards of public health, safety, labor, and environmental protection.” As reviewed below, trade and climate change/environment are likely to be of greater interest within the WTO moving forward. The WTO SPS and TBT Agreements also encourage international regulatory cooperation to facilitate trade. Thus, U.S.-Canada actions are supportive of existing rights and obligations and leading the way on future needs.

Accelerating Climate Ambitions

With the U.S. having rejoined the Paris Agreement since President Biden took office, the U.S. position is now more aligned with Canada and with that of the European Union in terms of needing “to increase the scale and speed of action to address the climate crisis and better protect nature.” Of particular interest is the commitment to action against countries who don’t take adequate action to reduce greenhouse gases .

“The President also restated his commitment to holding polluters accountable for their actions. Both the President and the Prime Minister agreed to work together to protect businesses, workers and communities in both countries from unfair trade by countries failing to take strong climate action.”

The language in the roadmap suggests that the U.S. and Canada will be interested in exploring options similar to those being prepared by the European Union on a duty or tax on imported products produced with higher levels of greenhouse gases to prevent leakage. The incoming Director-General has acknowledged that Members are looking at how to make trade help address the climate crisis. See APPOINTMENT OF THE NEXT DIRECTOR-GENERAL, STATEMENT OF THE DIRECTOR-GENERAL ELECT DR. NGOZI OKONJO-IWEALA TO THE SPECIAL SESSION OF THE WTO GENERAL COUNCIL, 15 February 2021, JOB/GC/250 (16 February 2021)(para. 1.14, “1.14. We should also work to ensure that the WTO best supports the green and circular economy and addresses more broadly the nexus between trade and climate change. Trade and environmental protection can be mutually reinforcing, both contributing to sustainable development. It will be important for Members to reactivate and broaden the negotiations on environmental goods and services. This would help promote trust and encourage Members to explore further ways in which trade can contribute positively to an improved climate. Care must, however, be taken to ensure that any disciplines are not used arbitrarily or as a disguised restriction on trade, and that they take into account the need for developing countries to be assisted to transition to the use of greener and more environmentally friendly technologies.”); February 16, 2021, Special Session of the General Council at WTO appoints Dr. Ngozi Okonjo-Iweala as the seventh Director-General, https://currentthoughtsontrade.com/2021/02/16/special-session-of-the-general-council-at-wto-appoints-dr-ngozi-okonjo-iweala-as-the-seventh-director-general/.

Building Global Alliances

While much broader than just trade, the commitment to multilateralism announced by President Biden and Prime Minister Trudeau included “firm commitment to the United Nations, G7 and G20, as well as NATO, the WTO, and the Five Eyes community.” Both Canada and the United States support significant reform at the WTO. One can expect closer collaboration between the U.S. and Canada on many reform initiatives at the WTO.

This section of the roadmap also addresses the need to jointly address China. “They also discussed ways to more closely align our
approaches to China, including to address the challenges it presents to our collective interest and to the international rules-based order. This includes dealing with its coercive and unfair economic practices, national security challenges, and human rights abuses, while cooperating with China on areas where it is in our interest, such as climate change.” WTO reform to be meaningful will have to have elements that will address the noncoverage of various actions by state-capital countries like China that distort global trade flows, create massive excess capacity, force technology transfer, limit transparency and market access in fact. While some efforts can be through consultations by the U.S. with other trading partners like Canada and the EU, multilateral reform is also critical for the functioning of the global trading system.

Conclusion

President Biden’s efforts are restoring strong relationships with our neighbors and renewed engagement with multilateral organizations has been apparent during the first five weeks of his Presidency. Yesterday’s virtual meeting between President Biden and Prime Minister Trudeau reflects the strong bonds between the U.S. and Canada. The roadmap presents areas of joint interest and future activity to deepen our close partnership. The roadmap also has a number of signals of likely U.S.-Canada cooperation in global trade and on WTO reform which should attract support from a number of other major trading partners at the WTO.

The roadmap and joint press statements are embedded below.

Roadmap-for-a-Renewed-U.S.-Canada-Partnership-_-The-White-House

Remarks-by-President-Biden-and-Prime-Minister-Trudeau-of-Canada-in-Joint-Press-Statements-_-The-White-House

An early test for the incoming WTO Director-General — helping Members get the Fisheries Subsidies negotiations to a conclusion

Dr. Ngozi Okonjo-Iweala in her statement to the WTO membership during the virtual Special Session of the General Council on February 15 after the Members appointed her the next Director-General made clear that an early deliverable for the WTO was completion of the Fisheries Subsidies negotiations which have been going on since the end of 2001 and were due to have been completed in 2020. See February 16, 2021, Special Session of the General Council at WTO appoints Dr. Ngozi Okonjo-Iweala as the seventh Director-General, https://currentthoughtsontrade.com/2021/02/16/special-session-of-the-general-council-at-wto-appoints-dr-ngozi-okonjo-iweala-as-the-seventh-director-general/.

The Chair of the Negotiating Group on Rules, Amb. Santiago Wills of Colombia, has held two sets of meetings so far in 2021, one in January and one just last week. See WTO Negotiations on Fisheries Subsidies, WTO members resume work on fisheries subsidies negotiations using latest revised text, 22 January 2021, https://www.wto.org/english/news_e/news21_e/fish_22jan21_e.htm; Inside U.S. Trade’s World Trade Online, Fisheries talks chair: Divides remain, but members have what they need for a deal, February 19, 2021, https://insidetrade.com/daily-news/fisheries-talks-chair-divides-remain-members-have-what-they-need-deal. The press releases following the meetings indicate that there has been little movement in fact in 2021 on the host of major issues that remain for Members to resolve. A review of the second revision of the draft text that was released on December 18, 2020 and the Chair’s explanatory note that accompanied the second draft make clear that Members remain divided on a huge array of issues. See RD/TN/RL/126/Rev.2 and RD/TN/RL/126/Rev.2/Add.1.

For example, there is still no agreement on whether the scope of the agreement will cover fuel subsidies (Article 1.2).

Similarly there is not currently agreement on whether the definition of “fishing related activities” in Article 2(c) include coverage of provisions “of personnel, fuel, gear and other supplies at sea”.

Article 3 which deals with the “prohibition on subsidies to illegal, unreported and unregulated fishing” (IUU) consists of nine sub-articles, many of which remain bracketed whether it revolves around which entity can make a finding of IUU activity, whether leniency will be provided for non-serious violations and which violations will always be addressed, the length of sanctions, the level of transparency and obligations of Members, and whether there are exceptions (special and differential treatment (S&DT)) from the prohibitions on IUU. As is true throughout the revised draft, there are deep divides on the special and differential treatment provisions reflecting the concerns expressed by Members like the U.S. and EU on the overbreadth of Members seeking such treatment and the views of Members like India who view such S&DT as applicable to all who claim developing country status.

Article 4 addresses prohibition on subsidies concerning overfished stocks, there continues to be disagreement, inter alia, on when a fish stock is overfished (two alternatives provided) and on what S&DT will be provided.

Article 5 addresses the prohibition on subsidies concerning overcapacity and overfishing contains. Article 5 contains seven sub-articles, a number of which maintain brackets including on “non-recovery of payments under government-to-government access agreements” (Art. 5.3.2), for subsidies provided to a vessel “not flying the flag of the subsidizing member” (Art. 5.4) on whether there will be a provision for “capping” (Art. 5.5) or a “list of non-harmful subsidies” (Art. 5.6) or for S&DT language (Art. 5.7). Art. 5.3 also deals in part with subsidies for fishing or fishing activities outside of a Member’s territory, obviously a very important and contentious issue.

Article 6 dealing with “specific provisions for LDC Members” has not been discussed and remains in brackets but reflects the proposal put forward by LDC Members.

Article 7 is for technical assistance and capacity building. While bracketed, the proposal has not received significant opposition at this point and appears to be largely non-controversial.

On Articles 8-10 (notification and transparency, institutional arrangements, dispute settlement), discussions are ongoing as to what needs to be notified and ability of Members to request additional information. Articles 9 and 10 depend on whether the fisheries subsidies agreement is treated as a stand-alone Agreement or is treated as an Annex to the Subsidies and Countervailing Measures Agreement. If an Annex, dispute settlement is already provided for; if treated as a stand alone Agreement, then there will need to be an article providing for dispute settlement.

Article 11 covers final provisions and addresses issues such as whether Members will “exercise due restraint” when providing subsidies to fishing or fishing related activities for stocks where the status of the stock (overfished or not) is unknown (Art. 11.2). It also lays out possible exceptions for responding to disasters (and what limits such response shall have)(Art. 11.3) The article also makes clear that the Agreement (or Annex) is not germane to issues of “territoriality or delimitation of maritime jurisdiction” (Art. 11.4).

While the revised draft consolidated text could result in meaningful reform and limitations on harmful subsidies, much of the ongoing debate amongst Members seems to be about how to create exceptions that will permit continued subsidy practices for many Members both within territorial waters and outside of them. The perennial problem within the WTO that reform should be undertaken by others, not by me, is present in the fisheries subsidies negotiations. Can Members demonstrate the ability to come together for the common good? Hard to know as WTO Members have been negotiating for twenty years on fisheries subsidies reform. The Sustainable Development Agenda item 14.6 is designed to help save fishing for all peoples for generations to come. The WTO and the incoming Director-General have an important opportunity to show that global trade can promote sustainability. Let’s hope that a meaningful agreement is yet achievable.

Afterthought

While the revised draft consolidated text provided to Members on December 18, 2020 is clearly a Chairman’s draft, like many drafts in other areas that have routinely be released publicly, the WTO has been slipping into an increased pretense that such texts are “unofficial room documents” and hence not released publicly. While both documents (RD/TN/RL/126/Rev.2 and RD/TN/RL/126/Rev.2/Add. 1) can be found on the internet for those trying to understand the ongoing negotiations, the WTO does not promote transparency and public understanding by pretending that core negotiating documents or draft texts are “unofficial room documents”. Hopefully, the chairs of Committees and leadership within the WTO will correct course and improve transparency in fact and end the misuse of room documents, job documents and other “unofficial” documents which often are the core documents in a negotiation or Committee work.

Will India and South Africa (and others) prevent future relevance of the WTO?

The WTO has struggled to remain relevant as global technology and trade issues evolve from where they were in the 1980s. Part of the challenge flows from the widely divergent interests of a growing membership (currently 164 countries) which coupled with the consensus principle for decision making means any Member can shut down or prevent progress. Part flows from the failure/inability to update commitments based on changing stages of economic development and share of global trade. Part flows from the increased importance of Members whose economic systems are not market-premised under rules which assume such a market orientation. Part flows from the effort of some to seek new rights through dispute settlement and by ineffective controls to prevent excesses by the panels and Appellate Body system adopted in 1994. Part flows from the crises of the COVID-19 pandemic and climate change and the glacier pace of deliberations within the WTO.

All of these forces have led WTO Members to focus energies on bilateral and plurilateral trade agreements and to start a process of so-called Joint Statement Initiatives to let countries desiring to address new or uncovered issues do so.

With the WTO finally having appointed a new Director-General whose priorities include addressing longstanding issues, but also achieving progress on the Joint Statement Initiatives — including digital trade/e-commerce and others — and with the European Union’s 18 February trade policy paper and Annex dealing with WTO reform and indicating the importance of flexibility for bringing open plurilaterals into the WTO, India and South Africa have filed a communication for discussion at the March 1-2, 2021 General Council meeting challenging the “legal status of Joint Statement Initiatives and their negotiated outcomes”. See WT/GC/W/819, 19 February 2021. The Indian and South African paper is embedded below.

WTGCW819

The paper from India and South Africa raises interesting points about existing WTO provisions for modifications of existing agreements and for adding plurilateral agreements and other issues. But the real question for the WTO is whether updating of rules and coverage of technological change and global developments will happen within or outside of the WTO. No issue describes this better than digital trade. Existing WTO rules don’t really address digital trade which has become increasingly important for all countries. While the WTO has had digital trade on its radar since 1998, there has been no meaningful progress within the WTO on multilateral rules. See WTO, Electronic commerce, https://www.wto.org/english/tratop_e/ecom_e/ecom_e.htm. The Joint Statement Initiative on digital trade started in Buenos Aires in late 2017 is an effort by some WTO Members to develop rules for those willing to participate that address important issues affecting digital trade today. See WTO Ministerial Conference, New initiatives on electronic commerce, investment facilitation and MSMEs, https://www.wto.org/english/news_e/news17_e/minis_13dec17_e.htm; JOINT STATEMENT ON ELECTRONIC COMMERCE,WT/MIN(17)/60, 13 December 2017, https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN17/60.pdf&Open=True. The JSI on e-commerce presently has 86 WTO Members participating in the negotiations and is making progress towards potential results as early as the 12th WTO Ministerial Conference in late 2021. See, e.g., Joint Statement on E-Commerce, 18 December 2020, Coordinators of joint initiatives cite substantial progress in discussions, https://www.wto.org/english/news_e/news20_e/jsec_18dec20_e.htm. Embedded below is the 2017 Joint Statement Initiative, the December 2020 Joint Statement on E-Commerce and the December draft text.

60

jsec_18dec20_e

wto_plurilateral_ecommerce_draft_consolidated_text

Conclusion

The paper from India and South Africa may reflect a desire to have an early discussion of what additional flexibilities are needed in the WTO to permit easier inclusion of plurilateral agreements within the WTO. The paper could also be an effort to add leverage to obtaining focus on issues of importance to India and South Africa. It could also be a signal that two Members who historically have had problems with many liberalization efforts are simply looking to lock the WTO down from timely reform and rule updates at least among the willing. If so, the WTO’s drift to irrelevance will continue and solutions outside of the WTO will become the main focus of global trade rules.

COVAX’s efforts to distribute COVID-19 vaccines to low- and middle income countries — additional momentum from G-7 virtual meeting

With the COVID-19 pandemic affecting populations around the world with more than 110 million people having been infected and with more than 2.4 million deaths, the world is anxiously awaiting vaccines to permit vaccinations for vulnerable populations. The Coalition for Epidemic Preparedness Innovations (CEPI), Gavi, the Vaccine Alliance (Gavi) and the World Health Organization (WHO) are co-leads of the COVAX initiative which seeks to provide equitable global access to COVID-19 vaccines. More than 2 billion vaccine doses have been or are being contracted to supply to 92 low- and middle-income countries as well as other countries who have agreed to buy vaccines through COVAX.

The World Health Organization’s Director-General Dr Tedros Adhanom Ghebreyesus has expressed concern about “vaccine nationalism” as large and wealthier countries have contracted for large amounts of vaccines. In a joint statement with the UNICEF Executive Director on February 10, the WHO DG laid out what is needed in 2021 to achieve vaccine equitable distribution. See In the COVID-19 vaccine race, we either win together or lose together, Joint statement by UNICEF Executive Director Henrietta Fore and WHO Director-General Dr. Tedros Adhanom Ghebreyesus, 10 February 2021, https://www.who.int/news/item/10-02-2021-in-the-covid-19-vaccine-race-we-either-win-together-or-lose-together. The joint statement is embedded below.

In-the-COVID-19-vaccine-race-we-either-win-together-or-lose-together

The problem of vaccine availability can be traced to a number of sources including the inability to predict which development efforts would succeed, efforts by governments to support development through funding and advance contracts which do not always support the early vaccine successes, challenges of approval processes in different countries and more. However, it is clear that in the early days of the vaccine rollout, a handful of countries have been able to obtain the largest amount of vaccine doses and to provide vaccinations to citizens. For example, the Financial Times has an update of its “Covid-19 vaccine tracker: the global race to vaccinate” published today (February 19) that looks at data for 99 countries or territories where vaccinations are reported through mid-February. Of a global total of 194.4 million vaccinations, 91.6% are reported by the following 10 countries or groups of countries: United States, 57.2 million; China 40.5 million; European Union, 24.7 million; United Kingdom, 17.0 million; India, 10.2 million; Israel, 7.1 million; Brazil 6.2 million; Turkey, 5.9 million; United Arab Emirates, 5.4 million; Russian Federation, 3.9 million. Of the 99 countries or territories, 24 reported vaccinations of at least 10/100 residents, an additional 30 reported vaccinations of at least 5.0-9.9/100 residents and an additional 10 reported vaccinations of at least 3.0-4.9/100. Gavi views 3% as the percent of population needed to be vaccinated to address health care workers. See Financial Times, Covid-19 vaccine tracker: the global race to vaccinate, February 19, 2021, https://ig.ft.com/coronavirus-vaccine-tracker/?areas=gbr&areas=usa&areas=eue&areas=ind&cumulative=1&populationAdjusted=0

At today’s G-7 virtual meeting, there were new pledges from G-7 countries to contribute to COVAX to permit the purchase of vaccine doses contracted and with some countries agreeing to share surplus vaccine doses with the world’s poorest countries. The Gavi press release of today is embedded below.

G7-backs-Gavis-COVAX-Advance-Market-Commitment-to-boost-COVID-19-vaccines-in-worlds-poorest-countries-_-Gavi-the-Vaccine-Alliance

In the December 2020 stimulus package, Congress authorized some funding for COVAX. President Biden outlined the U.S. contributions in a Fact Sheet posted on the White House webpage yesterday and at the G-7 virtual meeting today. See White House, Fact Sheet: President Biden to Take Action on Global health through Support of COVAX and Calling for Health Security Financing, February 18, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/02/18/fact-sheet-president-biden-to-take-action-on-global-health-through-support-of-covax-and-calling-for-health-security-financing/; New York Times, Biden Declares ‘America is Back’ on International Stage: Live Updates, February 19, 2021, https://www.nytimes.com/live/2021/02/19/world/g7-meeting-munich-security-conference#global-leaders-chart-a-new-course-in-post-trump-era. The fact sheet is embedded below and reports the U.S. will be contributing $2.0 billion quickly and $2.0 billion more over the remainder of 2021 and 2022.

Fact-Sheet_-President-Biden-to-Take-Action-on-Global-Health-through-Support-of-COVAX-and-Calling-for-Health-Security-Financing-_-The-White-House

Conclusion

Much of the activity at the WTO over the last year has focused on the trade challenges flowing from the COVID-19 pandemic. Trade restrictions on exports of medical goods and agricultural goods have been tracked with various efforts to minimize scope and duration. Efforts at expediting the movement of medical goods and agricultural products have also been pursued, and debates have occurred on whether TRIPS rights should be waived during the pandemic to improve access to medical goods during the pandemic. Most advanced countries with pharmaceutical producers have argued that there are sufficient flexibilities within the WTO TRIPS Agreement to handle the current challenges. At the same time over recent years there have been efforts through the WHO, CEPI and GAVI and with the assistance of UNICEF to provide the infrastructure to permit collective purchasing of vaccines and other medical goods and the collection of funds to permit assisting low- and middle-income countries in terms of vaccine availability. COVID-19 is a truly global pandemic. The pressure on governments to find solutions is obviously enormous. Actions like those by the G-7 today and by other governments, NGOs and others to address the COVID-19 challenge are along the lines of what is needed to have more equitable distribution of vaccines. As the UN and WHO keep saying, no one is safe until all are safe.

The challenges for COVAX are huge and the goal for 2021 is to get 20% of the populations part of the program vaccinated. Developed countries and others able to do so need to continue to cooperate to see that these goals for 2021 are met and that further help is available moving into 2022. A study commissioned by the ICC estimates the global costs of not moving quickly to get all people in the world vaccinated at being more than $8 trillion — a figure that dwarfs the costs to get the vaccines produced, distributed and shots given. Hopefully, the world will cooperate and do what is needed to see that all countries can recover from the current pandemic in a timely manner.

The European Commission’s 18 February 2021 Trade Policy Review paper — WTO reform and much more proposed

In a 23 page communication from the European Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions dated 18 February 2021 [COM(2021)66 final] with an accompanying 19 page Annex that looks at WTO reform, the European Commission lays out its vision for EU trade policy moving forward. The communication, at pages 1-3 lays out the background and global trends leading to the trade policy proposals presented. The discussion is copied below (any emphasis in quotes is from the original text unless otherwise noted).

“Trade is one of the EU’s most powerful tools. It is at the centre of Europe’s economic prosperity and competitiveness, supporting a vibrant internal market and assertive external action. As a result of the openness of our trade regime, the EU is the world’s largest trader of agricultural and manufactured goods and services and ranks first in both inbound and outbound international investments. Thanks to the common commercial policy, the EU speaks with one voice on the global scene. This is a unique lever.

“With new internal and external challenges and more particularly a new, more sustainable growth model as defined by the European Green Deal and the European Digital Strategy, the EU needs a new trade policy strategy – one that will support achieving its domestic and external policy objectives and promote greater sustainability in line with its commitment of fully implementing the UN Sustainable Development Goals. Trade policy must play its full role in the recovery from the COVID-19 pandemic and in the green and digital transformations of the economy and towards building a more resilient Europe in the world.
Making the right policy choices in designing a trade policy for the world of 2030 means taking into account recent political, economic technological, environmental and social shifts and the global trends emerging from them1.

Global uncertainty is on the rise fuelled by political and geo-economic tensions. Instead of international cooperation and multilateral governance, there is growing unilateralism, with the consequent disruption or bypassing of multilateral institutions. These trends have their roots in several developments.

“First, globalisation, technological evolutions and the build-up of global value chains have had a dichotomous impact on economies and societies. On the one hand, they have created massive efficiency gains, fuelling sustained, trade-led economic growth in many parts of the world. This has helped to lift millions of people out of poverty. On the other hand, these developments sometimes have had a strong disruptive effect leading to growing inequalities and leaving some individuals and communities behind. What were expected to be transitory adjustment costs have sometimes turned into permanent losses in living standards, employment opportunities or wages and other working conditions. In many cases, governments are perceived to have been insufficiently responsive to economic adjustments and mitigating their negative impacts2. This has led to calls for de-globalisation and to the rise of inward-looking and isolationist reactions.

“Second, the rapid rise of China, demonstrating global ambitions and pursuing a distinct state-capitalist model, has fundamentally changed the global economic and political order. This poses increasing challenges for the established global economic governance system and affects a level playing field for European companies competing globally and at home.3

“Third, the acceleration of climate change, together with biodiversity loss and environmental degradation, paired with tangible examples of their devastating effects have led to the recognition of the green transition as the defining objective of our time.

“The European Green Deal is the EU’s new growth strategy which facilitates resetting our economic policy to better correspond to the challenges of the 21st century. Its overarching objective is the transition towards a climate neutral, environmentally sustainable, resource efficient and resilient economy by 2050, with the ambition to reduce GHG emissions by at least 55% by 2030 as well as the protection, conservation and enhancement of the EU’s natural capital. As such, it will be the driving force behind our competitiveness and will lead to a progressive but profound transformation of our economies, which in turn will have a strong bearing on trade patterns.

“The green transition needs to go together with social equity. A serious decent work deficit persists in global supply chains in many parts of the world4, from serious violations of freedom of association to poor working conditions5. Depriving workers of their fundamental rights puts downward pressure on social conditions globally and fuels people’s disenchantment with globalisation and open trade.

“Fourth, the digital transformation is another key enabler of sustainable development, but also a space of competition and inadequate multilateral governance. As it embarks on its Digital Decade, supporting Europe’s digital transformation is a priority both in internal and external policies including trade policy and instruments. At the same time, the nature of trade will continue to evolve. It will become more innovation-driven, supported by intellectual property (IP) protection, with an increasing role of services trade compared to goods.6 Services not only contribute directly to the value chain (financial services, telecommunication, IT, transport and logistics) but – often even more importantly – they contribute by being incorporated in manufacturing products. The servicification of the economy and the rise of digital technologies have created well-paid and high quality jobs and have fuelled economic growth.

“The COVID-19 pandemic has accelerated and focused attention on these shifts, while creating challenges of its own. It has highlighted the interconnected nature of economies, which rely on stable and predictable international rules and resilient transportation channels. It has exposed the risk of a breakdown of global cooperation and trust. It has also raised questions regarding the right policy mix in terms of diversification of domestic and external sources of supply and the build-up of strategic production capacities and reserves. It has also shown the importance of expanding production of health products in a crisis situation and the need for cooperation to ensure equitable access for the more vulnerable populations. Moreover, it has led to a significant increase in government support and involvement in the economy, which is necessary to rescue healthy companies and protect jobs, but may not be sustainable in the long-run and may generate tensions.

“Finally, the economic outlook across the globe needs to be factored in. The EU will remain a global economic power and a leader on sustainable growth. The latest OECD long-term forecasts indicate that real GDP in the euro area will increase by 1.4% annually (compounded annual growth rate) over the next 10 years7. Nevertheless, these growth prospects will be eclipsed by developments in other regions, and Europe’s relative position in the international economy will change. Already in 2024, 85% of the world’s GDP growth is expected to come from outside the EU. The continued rise of China will impact heavily on global economic developments over the next 10 years – the OECD predicts Chinese GDP will grow by 4.7% annually.

“EU trade policy has to take into account these global trends and challenges to reflect the political ambition of ‘a stronger Europe in the world’8. It should also respond to the expectations of stakeholders as signalled in discussion with Member States, the resolution adopted by the European Parliament9 and the views expressed in the public consultation10.

“1 The Commission’s 2020 Strategic Foresight report analyses the impact of the COVID-19 pandemic on the dynamics of some relevant megatrends, COM(2020) 493 final. The Commission’s 2021 Strategic Foresight Report will focus on open strategic autonomy.

“2 At the EU level, the European Globalisation Fund aims at making a contribution to deal with such adjustment costs; cf Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/2006. A new regulation is being adopted, allowing the Fund to continue supporting workers and self-employed persons whose activity has been lost.

“3 This challenge is particularly visible in the area of energy intensive industries and notably the steel sector, where global solutions are needed to address the immense imbalances on the world market negatively affecting European companies and undermining the successful green transition of this ecosystem.

“4 According to the International Labour Organization (ILO), an estimated 25 million people remain in forced labour, 152 million are victims of child labour and 2.78 million workers around the world die from work-related accidents or diseases every year; Sources: Global estimates of modern slavery: forced labour and forced marriage, ILO (2017); Global Estimates of Child Labour, ILO (2017) and ILO website.

“5 Commission Staff Working Document: Promote decent work worldwide, SWD(2020) 235 final.

“6 In 2016, taking both goods and services into account, 80% of EU imports and 82% of EU exports were generated by the IP-intensive industries. IPR-intensive Industries and Economic Performance in the European Union, Industry-Level Analysis Report, joint EPO/EUIPO study, 3nd edition, September 2019.

“7 OECD (2020), Real GDP long-term forecast (indicator).

“8 Political guidelines for the next European Commission 2019-2024.

“9 European Parliament resolution on the EU Trade Policy Review (2020/2761(RSP).

“10 https://trade.ec.europa.eu/consultations/index.cfm?consul_id=266&utm_source=dlvr.it&utm_”

The European Commission then lays out its vision of how the proposed trade policy supports the EU’s open strategic autonomy, identifies “[t]hree core objectives for trade policy for the medium term” which are (1) “supporting the recovery and fundamental transformation of the EU economy in line with its green and digital objectives,” “shaping global rules for a more sustainable and fairer globalisation,” and “increasing the EU’s capacity to pursue its interests and enforce its rights, including autonomously where needed”. Communication at 9-10. The communication then lays out “six areas that are critical to achieving the EU’s objectives in the medium term”, Id. at 10. The six areas are listed on page 11 and then described in significant detail in the remainder of the communication:

  1. “Reform the WTO
  2. “Support the green transition and promote responsible and sustainable value chains
  3. “Support the digital transition and trade in services
  4. “Strengthen the EU’s regulatory impact
  5. “Strengthen the EU’s partnerships with neighbouring, enlargement countries and Africa
  6. “Strengthen the EU’s focus on implementation and enforcement of trade agreements, and ensure a level playing field”.

The communication is embedded below.

tradoc_159438

The Annex provides a detailed explanation of what the European Commission intends to pursue as part of the WTO reform area but lists two “Headline actions” in the communication (id at 11).

“The Commission will:

“1. Seek the adoption of a first set of reforms of the WTO focusing on enhancing the WTO’s contribution to sustainable development, and launch negotiations on reinforced rules to avoid distortions of competition due to state intervention. It will
give priority to enhancing transatlantic cooperation on WTO reform.

“2. Work to restore a fully-functioning WTO dispute settlement with a reformed Appellate Body.”

For the other five actions listed above, the European Commission outlines areas for focus. Several include actions to be pursued at the WTO — including environment, sustainable development and digital trade (actions 2, 3 above).

On the action of strengthening the EU’s focus on implementation and enforcement, The European Commission reviews a range of action steps dealing with enforcing existing agreements, also reviews the FDI screening regulation, a modernized export control regulation and then identifies some new tools that need to be developed “to confront new challenges” and lists four such potential new tools (id. at 20-21):

“Nevertheless, the EU needs to develop its tools to confront new challenges and protect European companies and citizens from unfair trading practices, both internally and externally.

“ The Commission will propose a new legal instrument in the area of trade policy, to protect the EU from potential coercive actions of third countries.

“ The Commission will propose a legal instrument to address distortions caused by foreign subsidies on the EU’s internal market.

“ To enhance reciprocal access for EU operators in public procurement the Commission will seek to advance the International Procurement Instrument and calls on the Council to finalise its work as a matter of urgency.

“ Finally, to ensure a better level playing field for EU businesses on third country markets, in which they increasingly have to compete with the financial support foreign competitors receive from their governments, the Commission will explore options for an EU strategy for export credits. This will include an EU export credit facility and enhanced coordination of EU financial tools. In line with the Green Deal objective to phase out fossil fuel subsidies, it will also incentivise climate friendly technology projects and propose to immediately end support for the coal-fired power sector, and to discourage all further investments into fossil fuel-based energy infrastructure projects in third countries, unless they are fully consistent with an ambitious, clearly defined pathway towards climate neutrality in line with the long-term objectives of the Paris Agreement and best available science.”

These issues will generate significant interest among trading partners (either supportive, such as the U.S. for tools to deal with coercive actions and possibly ability to address distortions on the domestic market by foreign subsidies to U.S. businesses, or in opposition, such as China on the same two items).

Annex

The Annex is entitled “Reforming the WTO: Towards a Sustainable and Effective Multilateral Trading System” and reviews the challenges in all three pillars of the WTO (negotiations, dispute settlement and monitoring of trade policies) as well as the U.S.-China trade conflict. The European Commission reviews the lack of a common purpose among the WTO Members and the multiple challenges posed by multiple crises including the pandemic, climate change, increased unilateralism and more. The EC’s view on how to restore trust and a sense of common purpose is presented in part 2 of the Annex (portion copied below from pages 3-4).

2. Restoring trust and a sense of common purpose: the WTO’s contribution to sustainable development

“The collapse of the Doha Development Agenda in 2008 exemplified the lack of common purpose of the WTO membership. Despite the success in concluding the Trade Facilitation Agreement at the 9th WTO Ministerial Conference in Bali and the Decision on agricultural export competition at the 10th WTO Ministerial Conference in Nairobi, the WTO membership has become increasingly divided as to what it expects from the WTO. While part of the membership has argued that the ‘centrality of development’ in the WTO means that there should be a focus on exceptions and flexibilities from agreed and future commitments, another part has grown increasingly frustrated at the failure of progress in WTO negotiations and shifted its attention to bilateral trade agreements. Without a sense of common purpose, it has been extremely difficult to find a way forward for any initiative and to ensure that the WTO evolves in line with the changes in global trade.

“However, the vast majority of the membership remains committed to the idea of multilateralism, fully cognizant of the benefits of a rules-based system for global trade and development. The instability of the last few years, the climate and environmental crisis, the increased use of unilateral measures and now the COVID-19 pandemic have led to a clear realisation that the WTO is a vital component of healthy global economic governance but that reform is necessary. The G20 Leaders’ statement4 in Riyadh contains the strongest commitment to reform yet, at the highest political level.

“As global challenges proliferate, WTO members should be able to coalesce around the objective of addressing the most pressing problems they face: economic recovery and development, free from competitive distortions, as well as environmental and social sustainability as part of the green transition of economies. Addressing these problems would be in line with the objectives of the UN Sustainable Development Goals (the ‘SDGs’), to which all WTO members have committed. Such a focus could offer the sense of common purpose that the WTO has lacked in recent decades and rebuild trust among the membership. It could generate the confidence needed to modernise the WTO rulebook in a manner that isresponsive to the challenges of digitalisation and greening, as well as preventing and defusing conflicts caused by trade-distorting state intervention in the economy.

“4 Leaders’ Declaration G20 Riyadh Summit November 21 – 22, 2020.”

The EC mentions completing the fisheries subsidies negotiations, taking action on the trade and health initiative put forward by the Ottawa Group and developing a trade and environment work program. The EC also addresses issues of importance to many countries including the United States, such as revising how special and differential treatment (S&DT) is handled, and developing new rules to address distortions to competition from state intervention. However, the EC’s approach calls for a case by case approach on S&DT though recognizes that various countries should not be eligible for S&DT including many of the groups identified by the Untied States and doesn’t seek a convergence approach for non-market economic systems but rather seeks an approach to address distortions flowing from the different systems.

Not surprisingly, the EC places a high priority on restoring the full functioning of the WTO dispute settlement system. Throughout the communication and Annex, the EC calls for increased outreach to the United States and finding common approaches. On dispute settlement, the EC is waiting for a signal from the U.S. that it will address its concerns and seek solutions. In other communications, the EC has seemed to acknowledge that U.S. concerns on overreach and a need to limit the Appellate Body to the parameters of the Dispute Settlement Understanding could be addressed by the EU. I have previously posted my belief that with the extensive record compiled by the prior Administration, it would be appropriate for the U.S. to pursue modifications to the WTO dispute settlement system under the Biden Administration. See, e.g., December 12, 2020, The Incoming Biden Administration and International Trade – Katherine Tai, nominee for U.S. Trade Representative, https://currentthoughtsontrade.com/2020/12/12/the-incoming-biden-administration-and-international-trade-katherine-tai-nominee-for-u-s-trade-representative/ (“The U.S. has been correct in my view in insisting that the problems flagged with the WTO Appellate Body’s operation need to be fixed before the U.S. releases its blockage of appointment of new members. What has been lacking to date has been a specific set of proposals from the U.S. that would address their concerns and rebalance rights and obligations. While it will likely take the Biden Administration time to determine how to proceed on the Appellate Body issue, the U.S. can and should indicate that it will be providing its proposals for reform of the Appellate Body hopefully during the first half of 2021.”). Hopefully the U.S. will engage on reform needs later this year after the full trade team is in place for the new U.S. Administration.

The EC also identifies modernizing WTO rules to cover digital trade, services and investment, “addressing imbalances between members’ market access commitments,” and moving forward at least selected agricultural issues (domestic support reform).

The EC also makes a push for “integrating open plurilateral agreements in the WTO” by making it easier to add such agreements without needing consensus and avoiding free-ridership. In previous posts, I have argued for permitting plurilaterals that are open to all but where benefits are limited to the signatories. See, e.g., January 18, 2021, Revisiting the need for MFN treatment for sectoral agreements among the willing, https://currentthoughtsontrade.com/2021/01/18/revisiting-the-need-for-mfn-treatment-for-sectoral-agreements-among-the-willing/ Section 4.2 of the Annex (pages 11-12) is copied below.

“Although the WTO cannot regain its credibility and effectiveness without modernising its rules, it is abundantly clear after 25 years that such modernisation cannot be achieved through multilateral agreements based on a single undertaking. In parallel, a great number of bilateral or regional trade agreements are being negotiated, including on issues for which the WTO has so far failed to produce multilateral outcomes, for example on digital trade or on state-owned enterprises. The most positive development in recent years has been the interest of a growing number of countries to develop such rules in the WTO framework through open, plurilateral negotiations. If no effective formula is found to integrate plurilateral agreements in the WTO, there would be no other option than developing such rules outside the WTO framework.

“The WTO Agreement provides for plurilateral agreements to be incorporated into the legal architecture of the WTO in Article X:9, whereby the Ministerial Conference may decide by consensus to add trade agreements concluded by a group of WTO members to the list of WTO plurilateral agreements in Annex 4. However, Article X:9 has not been used since the WTO’s establishment. Reaching consensus on adding a plurilateral initiative to Annex 4 has been perceived to be an insurmountable difficulty, even if the rights of non-participants were not diminished by the plurilateral commitments taken by a group of WTO members. The methodology used to integrate plurilateral agreements in the WTO architecture so far has been for every participant to incorporate the additional commitments unilaterally into their schedule of commitments, as was done for the Understanding in Financial Services Commitments and the Reference Paper on Telecommunications. However, this has its drawbacks. Not every additional commitment fits neatly into a schedule of commitments. In addition, non-participants could bring dispute settlement proceedings against a participant for breach of these additional commitments, even if they, as non-participants, are not bound by such commitments.

“Meaningful WTO reform will have to recognise this reality and the Commission will call for a reflection on how to create an easier path for plurilateral agreements to be integrated in the multilateral architecture. The EU would favour an inclusive approach to open, plurilateral agreements that facilitates participation by developing countries and allows them to decide whether they wish to join the agreement, leaving the door open for them to join in the future. That is not to say that the WTO should accommodate all plurilaterals. Discussions could identify certain principles that plurilaterals should comply with in order to be incorporated into the WTO framework. These principles could relate to openness to participation and future accession by any WTO member, facilitation of the participation of developing countries, transparency of the negotiating process, as well as means of protecting the existing rights of non-participants while avoiding free-riding.”

The EC makes various proposals for the improvement of the functioning of the WTO system including “Reinforcing the monitoring and deliberative functions of the WTO” (an issue with strong support from the U.S. and others), “The role of the Director-General and the WTO Secretariat,” and “More effective stakeholder engagement: Business and civil society.”

The EC recognizes that reform at the WTO requires alliance building and that objectives for the next Ministerial Conference (likely in December 2021) have to be realistic. Section 6.2 of the Annex lays out the EC’s views on what can be achieved by the next Ministerial (MC12)(pages 17-18). The section is copied below (emphasis is in original).

6.2 What can be achieved by MC12 – the next steps

“The agenda for WTO reform must be ambitious, but it must also be realistic. The different work strands of WTO reform need to be properly sequenced. Not all elements can or should be deployed simultaneously, but rather different components will follow different processes and be brought forward in different configurations – be it multilateral or plurilateral – and with different groups of members. The next WTO Ministerial Conference will be key for the WTO reform process, both in terms of delivering a potential package of outcomes and in launching new processes and areas of work that can serve as a springboard for the reform agenda.

“Three areas where work should intensify prior to MC12 are trade and health, fisheries subsidies and the reform of the dispute settlement system.

“In addition, the following outcomes could be achieved by MC12:

“1. An agreement should be reached to reinvigorate WTO work on trade and environment in view of mainstreaming sustainability issues in the WTO’s work. Ideally, this should be done multilaterally, although certain elements may only be pursued by subgroups of interested WTO members, such as the liberalisation of selected climate-mitigating goods and environmental services.

“2. Work should be launched amongst interested countries on the development of rules on competitive neutrality, including modernised rules on industrial subsidies.

“3. Substantial progress should be recorded on the plurilateral initiatives on e-commerce and investment facilitation. The Joint Statement Initiative on services domestic regulation could be concluded at MC12.

“4. The renewal of the multilateral e-commerce and TRIPS moratoria should be ensured at MC12.

“5. Improvements to the WTO’s regular work function, through agreements on the horizontal transparency in notifications and trade concerns proposals.

“6. On agriculture, a package of transparency improvements across the board and on export restrictions could be agreed at MC12. The initiative on the exemption of the World Food Programme humanitarian purchases from export restrictions could also be part of such an outcome. The EU is open to discuss how to progress after MC12 on the main aspects of the negotiations, in particular on trade distorting domestic support.

“Beyond these outcomes, a Ministerial Declaration articulating a political commitment to reform would be a significant additional element to support future work. This Declaration could focus on issues such as improvements of the negotiating, monitoring and deliberating functions of the WTO; and look into institutional improvements in the functioning of the Organization. The Ministerial Declaration could establish a Working Group on WTO Reform to consider these issues and guide the membership towards delivering outcomes. MC12 should thus set the agenda for further work on the medium to long-term areas of reform, some of which should be completed before the subsequent Ministerial Conference (MC13).”

The text of the Annex is embedded below.

tradoc_159439

Conclusion

The European Commission’s communication and Annex lay out a thoughtful and interrelated set of objectives and action steps to try to achieve EU objectives. The Annex is an excellent document in laying out EC’s objectives for WTO reform and articulating priorities for the rest of 2021.

The Biden Administration in its first month in office has indicated support for many of the areas of interest contained in the European Commission’s trade policy, including addressing climate change, working to help the world come through the pandemic and restore economic growth. Many of the WTO reforms identified by the European Commission are consistent with where the U.S. and many other countries would like to see reform occur, although some take a more practical (and more limited) approach than the approach teed up by the Trump Administration (S&DT, need for convergence by state capitalist economies). While dispute settlement reform will be complicated, hopefully the WTO membership can coalesce around modifications that address the full array of U.S. concerns including the failure of the Appellate Body in fact to respect its limited role, the creation of rights and obligations through disputes contrary to the express limitations which of necessity upset the balance of rights and obligations agreed to during the Uruguay Round, and will address correcting major overreach situations from the first 25 years. While one would expect much greater cooperation between the U.S., the EU and other countries in the coming months ahead of MC12, meaningful progress at the WTO is far from certain. A number of the issues raised by the EU (and supported by others) are controversial and actively opposed by some Members. However, the proposals reflect the reality of a changed global economy from 1995 when the WTO commenced operations.

The incoming Director-General should find the EC’s Annex a useful document for understanding EU priorities and objectives. It should also help many other Members decide to compile their own lists to help move the WTO reform process forward.

The amended European Union enforcement regulation — hypocrisy or a reasonable move?

The amended EU enforcement regulation took effect on February 13, 2021. The amendment was pursued within the EU following the collapse of the Appellate Body at the WTO and is designed to give the EU the ability to impose retaliation whenever it perceives it has won some part of a panel proceeding at the WTO but the other party has filed an appeal where the Appellate Body is not functioning. The amended regulation also permits such action against trading partners under other agreements where dispute settlement is blocked or there is no dispute settlement. The announcement by the European Commission is embedded below and is followed by the amended regulation..

Strong_EU_trade_enforcement_rules_enter_into_force_-1-1

CELEX_32021R0167_EN_TXT

The EU presents itself as simply ensuring that it receives the benefits of the agreements it is a party to. The challenge of disputes at the WTO being appealed to a non-functioning WTO Appellate Body is a real one as reviewed in a prior post and as can be seen from the WTO webcite. See January 14, 2021, First dispute settlement cases of 2021 at the WTO — Costa Rica requests consultations with Panama for various restrictions on agricultural products viewed as violating SPS obligations and more; EU requests establishment of a panel to address its concerns with Indonesia’s export restrictions on inputs for stainless steel, https://currentthoughtsontrade.com/2021/01/14/first-dispute-settlement-cases-of-2021-at-the-wto-costa-rica-requests-consultations-with-panama-for-various-restrictions-on-agricultural-products-viewed-as-violating-sps-obligations-and-more-eu-re/; WTO, Dispute Settlement, Appellate Body, https://www.wto.org/english/tratop_e/dispu_e/appellate_body_e.htm. The following cases have been appealed to the WTO Appellate Body but are not currently being heard because of the lack of any Appellate Body members:

Current Notified Appeals 

  • 22 January 2021:  Notification of Appeal by Korea in DS553: Korea — Sunset Review of Anti-Dumping Duties on Stainless Steel Bars (WT/DS553/6)
     
  • 17 December 2020:  Notification of Appeal by Indonesia in DS484: Indonesia — Measures Concerning the Importation of Chicken Meat and Chicken Products (Article 21.5 — Brazil) (WT/DS484/25)
     
  • 26 October 2020:  Notification of Appeal by United States in DS543: United States — Tariff Measures on Certain Goods from China (WT/DS543/10)
     
  •  28 September 2020: Notification of Appeal by United States in DS533: United States — Countervailing Measures on Softwood Lumber from Canada (WT/DS533/5)
     
  •  28 August 2020:  Notification of Appeal  by the European Union in  DS494: European Union — Cost Adjustment Methodologies and Certain Anti-Dumping Measures on Imports from Russia (Second Complaint) (WT/DS494/7)
     
  •  28 July 2020: Notification of Appeal by Saudi Arabia in DS567: Saudi Arabia — Measures Concerning the Protection of Intellectual Property Rights (WT/DS567/7)
     
  •  18 December 2019: Notification of Appeal by the United States in DS436: United States — Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India (Article 21.5 — India) (WT/DS436/21)
     
  • 6 December 2019: Notification of Appeal by the European Union in DS316: EC and certain member States — Large Civil Aircraft (Article 21.5 — EU) (WT/DS316/43)
     
  • 19 November 2019: Notification of Appeal by India in DS541: India — Export Measures (WT/DS541/7)
     
  • 9 September 2019: Notification of Appeal by Thailand in DS371: Thailand — Customs and Fiscal Measures on Cigarettes from the Philippines (Article 21.5 — Philippines II) (WT/DS371/30)
     
  • 15 August 2019: Notification of Appeal by the United States in DS510: United States — Certain Measures Relating to the Renewable Energy Sector (WT/DS510/5)
     
  • 4 June 2019: Notification of Appeal by Canada in DS534: United States — Anti-Dumping Measures Applying Differential Pricing Methodology to Softwood Lumber from Canada (WT/DS534/5)
     
  • 25 January 2019: Notification of Appeal by the United States in DS523: United States — Countervailing Duty Measures on Certain Pipe and Tube Products from Turkey (WT/DS523/5)
     
  • 9 January 2019: Notification of Appeal by Thailand in DS371: Thailand — Customs and Fiscal Measures on Cigarettes from the Philippines (Article 21.5 — Philippines) (WT/DS371/27)
     
  • 14 December 2018: Notification of Appeal by India in DS518: India — Certain Measures on Imports of Iron and Steel Products (WT/DS518/8)
     
  • 20 November 2018: Notification of Appeal by Panama in DS461: Colombia — Measures Relating to the Importation of Textiles, Apparel and Footwear (Article 21.5 — Colombia)(Article 21.5 — Panama) (WT/DS461/28)
     
  • 21 September 2018: Notification of Appeal by the European Union in DS476: European Union and its member States — Certain measures Relating to the Energy Sector (WT/DS476/6)

Hypocrisy or a reasonable measure

The action of the European Union can be viewed as “reasonable” as an effort to maintain a right to binding dispute settlement. However, the unilateral action by the EU obviously invites mirror actions by trading partners which could quickly spiral out of control.

Moreover, the amended regulation looks only at actions by trading partners and fails to recognize similar actions by the EU that are identical to those they are objecting to by others. In fact, three of the seventeen cases listed above where appeals have been filed but are not presently being heard were filed by the European Union including two when the Appellate Body had either ceased to have at least three members and hence could not handle the appeal or was just four days from that situation. As there are many ways to resolve a dispute besides taking an appeal, what is the justification for the EU filing appeals into the void where they are on the losing side of a dispute at the panel report stage but complaining about trading partners doing the same? Is the EU position not hypocritical?

In addition, the dispute settlement system of the WTO is premised on Members awaiting a final dispute settlement decision and providing a trading partner a reasonable period of time to come into compliance before retaliation is permitted (and is then limited by arbitration if, as is almost always the case, the party seeking retaliation puts forward retaliation far out of line with actual harm — e.g., EU’s $12 billion requested retaliation on Boeing dispute compared to $4 billion authorized (WT/DSB353/ARB, 13 October 2020)). But the EU has at least in one case opted to retaliate before a panel case had been completed (EU challenge of US Section 232 national security action on steel and aluminum). The U.S. has not retaliated against the unilateral EU retaliatory action but rather pursued consultations and panel proceedings at the WTO. See WT.DS559: European Union — Additional Duties on Certain Products from the United States, https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds559_e.htm. Retaliating by creating a self-serving description of the action of a trading partner (safeguard vs. national security) is hardly faithful adherence to the obligations the EU has undertaken with trading partners in the WTO. Is the amended enforcement regulation in light of such flouting of agreed obligations not a sign of hypocrisy by the EU?

Reform of the WTO Dispute Settlement System, particularly the Appellate Body, is a high priority for Members and for the incoming Director-General. As reviewed in a prior post, the EU is finally making sounds like it will address U.S. concerns about overreaching by the Appellate Body (exceeding its limited mandate). Hopefully, the Biden Administration will be working within the WTO for meaningful reform of the Appellate Body to limit the Appellate Body to its originally envisioned limited role. The EU amended regulation will not contribute to an early resolution of the impasse and could make resolution more difficult depending on how it is used.

U.S. decides not to modify retaliation list of goods from WTO dispute with EU on Airbus subsidies

The Biden Administration has continued its efforts at greater international outreach and collaboration by deciding, in consultation with the U.S. civil aircraft industry, not to modify the retaliation list of EU goods as the U.S. and the EU look to find a resolution to the long-running Airbus-Boeing dispute hopefully by mid-year. The Federal Register notice of today is copied below. See USTR, Notice Regarding Periodic Revision of Section 301 Action: Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute, 86 FR 9420 -9421(February 12, 2021).

SUMMARY: The U.S. Trade Representative together with the affected United States industry have agreed that it is unnecessary at this time to revise the action in the Section 301 investigation involving the enforcement of U.S. rights in the World Trade Organization (WTO) dispute involving Large Civil Aircraft subsidies provided by certain current or former member States of the European Union. The U.S. Trade Representative will continue to consider the action taken in the investigation.

DATES: This exception to periodic revisions is applicable as of February 8, 2021.

FOR FURTHER INFORMATION CONTACT: For questions about the investigation or this notice, contact Associate General Counsel Megan Grimball, at (202) 395– 5725, or Director for Europe Michael Rogers, at (202) 395–3320.

SUPPLEMENTARY INFORMATION

“A. Proceedings in the Investigation

“For background on the proceedings in this investigation, please see the prior notices issued in the investigation, including: Notice of initiation (84 FR 15028 (April 12, 2019)); notice of determination and action (84 FR 54245 (October 9, 2019)); and notices of revision of action (85 FR 10204 (February 21, 2020), 85 FR 50866 (August 18, 2020), and 86 FR 674 (January 6, 2021)).

B. Periodic Revisions and Exceptions Thereto

“Section 306(b)(2)(B)–(F) of the Trade Act of 1974, as amended, provides for periodic revisions of the list of goods subject to additional duties imposed in response to the failure of a U.S. trading partner to implement a WTO Dispute Settlement Body (DSB) recommendation. The statute includes exceptions to the periodic revisions. As relevant here, section 306(b)(2)(B)(ii)(II) provides that no revision is required if the U.S. Trade Representative and the U.S. industry affected by the noncompliance with the DSB recommendation agree that a revision of the list is unnecessary.

“The most recent revision to the list of goods subject to additional duties was effective on January 12, 2021. See 86 FR 674 (January 6, 2021). In light of the recent revision, the U.S. Trade Representative has agreed with the affected U.S. industry that it is unnecessary at this time to revise the action. The U.S. Trade Representative will continue to consider the action taken in this investigation.

William Busis,

“Deputy Assistant USTR for Monitoring and Enforcement and Chair, Section 301 Committee, Office of the United States Trade Representative

Both the U.S. and EU have been interested in finding a resolution to the seventeen year dispute on subsidies to Airbus and Boeing. See, e.g., Bloomberg, EU Looks Past Trump to Defuse Transatlantic Trade Conflict, January 11, 2021, https://www.bloomberg.com/news/articles/2021-01-11/eu-looks-past-trump-to-defuse-transatlantic-trade-conflict; Reuters, EU trade official wants swift engagement with Biden on aircraft, digital taxes, WTO, January 15, 2021, https://www.reuters.com/article/us-usa-trade-eu/eu-trade-official-wants-swift-engagement-with-biden-on-aircraft-digital-taxes-wto-idUSKBN29K1X5. The action by the United States is one of a series of actions demonstrating an interest by the Biden Administration in finding resolutions to transatlantic issues and reengaging in multilateral organizations.

On his first day as President, President Biden sent notices of the U.S. rejoining the Paris Climate Agreement and of its revoking its withdrawal from the World Health Organization. These actions were obviously positive steps by the U.S. in the eyes of many countries including the European Union member states. See White House, January 20, 2021, Paris Climate Agreement, https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/paris-climate-agreement/; President Biden, Letter to His Excellency António Guterres, January 20, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/letter-his-excellency-antonio-guterres/.

Similarly Treasury Secretary Janet Yellen in communications with some of her European counterpart has indicated the U.S. interest in finding a resolution within the OECD/G-20 process to the issue of digital services taxes, an issue where 301 investigations under the Trump Administration found various EU member state actions as unfair to U.S. interests. Yellen has indicated that resort to 301 duties remain on the table if there isn’t a resolution. Obtaining an international agreement on taxes has been an objective of many countries, including the European Union. International Tax Review, Yellen picks notable experts to join the US Treasury’s digital tax talks, February 5, 2021, https://www.internationaltaxreview.com/article/b1qfh1hw0xy7z2/yellen-picks-notable-experts-to-join-the-us-treasurys-digital-tax-talks. Resolution by the end of June 2021 is the current timeline being pursued by parties.

Similarly, while the Biden Administration doesn’t have its full trade team in place as yet, USTR issued a release last Friday that, following the announcement that the South Korean Trade Minister Yoo Myung-hee was withdrawing from the contest for the Director-General of the WTO position, the U.S. was throwing its support behind Dr. Ngozi Okonjo-Iweala. Dr. Okonjo-Iweala is the candidate that pursuant to the procedures being followed in the selection process had been identified as the candidate most likely to attract a consensus back in October before the U.S. had indicated its unwillingness to join a consensus behind her. With the special General Council meeting scheduled for February 15 at 3 p.m., the WTO will have a new Director-General in a matter of days. Nearly all WTO Members, including the EU and its member states, have been anxious for a resolution to the selection of the next Director-General.

And as the Reuters article cited above reviews, the European Union has been looking at WTO reform including the possibility of agreeing to a limiting of the role of dispute settlement and is looking to engage with the U.S. on solving the longstanding U.S. concerns of the WTO dispute settlement system, particularly the operation of the Appellate Body. Assuming the Biden Administration will move in the coming months once its trade team is in place to identify modification in the DSU or needed elements of a General Council decision, the EU has been sending signals that it may be willing to address core U.S. concerns which could lead to the resolution of a core WTO Member concern — the existing impasse on getting the Appellate Body refunctioning.

There is an additional major trade dispute between the U.S. and the EU dealing with the application of additional tariffs on steel and aluminum products following Commerce investigations under Section 232 of the Trade Expansion Act of 1962, as amended, and action by President Trump. It is less clear what the off ramp for the parties is here. The EU and a number of other WTO Members have WTO disputes pending panel reports that will be released at the earliest in the second half of 2021. Similarly, the U.S. has disputes with the EU and others who imposed duties on U.S. exports allegedly because countries were treating the national security law used by the Trump Administration as essentially a safeguard law. Decisions in those cases are now due in the second half of 2021. The EU would like the U.S. to simply terminate the duties. There are steel using industries that support such possible action. However, the global excess capacity problems created by China and others in steel and aluminum remain and have no obvious solution particularly in light of China’s refusal to address the massive capacity increases in the sectors which has destabilized global markets. U.S. steel companies, primary aluminum producers and workers support maintaining the duties.

But all in all, the United States in the first weeks of the Biden Administration is working to reengage multilaterally and to see if there are solutions available to resolve a range of long standing conflicts. USTR during the Trump Administration did an admirable job in identifying and documenting problems with WTO dispute settlement and providing approaches under U.S. law to deal with vexing problems where multilateral approaches were not progressing or were inadequate. The Biden Administration has the opportunity now to hopefully find solutions that work for America and restores greater cooperation in Transatlantic relations. With the efforts being made by the Biden Administration, one is seeing interest within the EU to resolve all or many of the major disputes with the U.S. and work on pressing issues of interest to the EU and the U.S. including.recovery from the pandemic, climate change, WTO reform and more.

Better transatlantic relations is an important element in moving the global economy forward in ways that reflect democratic and market-based principles. Let’s hope that win-win solutions are possible on the existing challenges so long delayed momentum on existential issues can be generated.

COVID-19 agricultural fall out — higher prices for many consumers and greater food insecurity

The World Bank’s President David Malpass in a February 1st posting on Voices flagged the challenges for many of the world’s poorest people flowing from the COVID-19 pandemic — higher food prices, greater hunger, more people pushed into extreme poverty. See World Bank blog,COVID crisis is fueling food price rises for world’s poorest, February 1, 2021, https://blogs.worldbank.org/voices/covid-crisis-fueling-food-price-rises-worlds-poorest. The post was originally published in the Guardian. The post is copied in its entirety below (emphasis in the original webpost).

“Over the last year, COVID-19 has undone the economic, health and food security of millions, pushing as many as 150 million people into extreme poverty. While the health and economic impacts of the pandemic have been devastating, the rise in hunger has been one of its most tangible symptoms. 

Income losses have translated into less money in people’s pockets to buy food while market and supply disruptions due to movement restrictions have created local shortages and higher prices, especially for perishable food.  This reduced access to nutritious food will have negative impacts on the health and cognitive development of COVID-era children for years to come.

“Global food prices, as measured by a World Bank food price index, rose 14% last year. Phone surveys conducted periodically by the World Bank in 45 countries show significant percentages of people running out of food or reducing their consumption. With the situation increasingly dire, the international community can take three key actions in 2021 to increase food security and help prevent a larger toll on human capital.

“The first priority is enabling the free flow of food. To avoid artificial shortages and price spikes, food and other essential goods must flow as freely as possible across borders.  Early in the pandemic, when perceived shortages and panic generated threats of export bans, the international community helped keep food trade flows open. Credible and transparent information about the state of global food inventories – which were at comfortable levels pre-COVID – along with unequivocal free-trade statements from the G20, World Trade Organization, and regional cooperation bodies helped reassure traders, and led to helpful policy responses. Special rules for agriculture, food workers and transport corridors restored supply chains that had been briefly disrupted within countries.

“We need to remain vigilant and avoid backsliding into export restrictions and hardened borders that make food – and other essentials – scarce or more costly.

“The second priority is bolstering social safety nets. Short-term social safety nets offer a vital cushion for families hit by the health and economic crises. In Ethiopia, for example, households that experienced problems in satisfying their food needs initially increased by 11.7 percentage points during the pandemic, but participants in our long-running Productive Safety Net program were shielded from most of the negative effects.

“The world has mounted an unprecedented social protection response to COVID-19. Cash transfers are now reaching 1.1 billion people, and innovative delivery mechanisms are rapidly identifying and reaching new groups, such as informal urban workers. But ‘large scale’ is not synonymous with ‘adequate’. In a review of COVID-19 social response programs, cash transfer programs were found to be:

“–Short-term in their duration – lasting just over three months on average

“–Small in value – an average of $6 (£4.30) per capita in low-income countries

“–Limited in scope – with many in need remaining uncovered

“The pandemic has reinforced the vital imperative of increasing the world’s investments in social protection systems. Additional measures to expedite cash transfers, particularly via digital means, would also play an important role in reducing malnutrition.

“The third priority is enhancing prevention and preparedness. The world’s food systems endured numerous shocks in 2020, from economic impacts on producers and consumers to desert locust swarms and erratic weather.  All indicators suggest that this may be the new normal. The ecosystems we rely on for water, air and food supply are under threat. Zoonotic diseases are on the rise owing to growing demographic and economic pressures on land, animals and wildlife.

“A warming planet is contributing to costlier and more frequent extreme weather events. And as people pack into low-quality housing in urban slums or vulnerable coastal areas, more are living in the path of disease and climate disaster.

“Development gains can be wiped out in the blink of an eye. Our experience with hurricanes or seismic events shows that it is more effective to invest in prevention, before a catastrophe strikes. That’s why countries need adaptive social protection programs – programs that are connected to food security early warning systems and can be scaled up in anticipation of shocks.

“The time is long overdue to shift to practices that safeguard and increase food and nutrition security in ways that will endure. The to-do list is long and urgent. We need sustained financing for approaches that prioritize human, animal and planetary health; restore landscapes and diversify crops to improve nutrition; reduce food loss and waste; strengthen agricultural value chains to create jobs and recover lost incomes; and deploy effective climate-smart agriculture techniques on a much greater scale.

“The World Bank Group and partners are ready to help countries reform their agriculture and food policies and redeploy public finance to foster a green, inclusive, and resilient recovery.

Focusing on food security would address a basic injustice: almost one in 10 people live in chronic hunger in an age of food waste and plenty.  This focus would also strengthen our collective ability to weather the next storm, flood, drought, or pandemic – with safe and nutritious food for all.”

Food insecurity is an issue for all countries although most pressing for the poorest countries

The challenges noted by the World Bank President also face most other countries. For example, in the United States, there has been a massive increase in the number of people getting food from food banks and estimates are that one in seven Americans needs food assistance. Feeding America, The Impact of Coronavirus on Food Insecurity, October 2020, https://www.feedingamerica.org/research/coronavirus-hunger-research (“Combining analyses at the national, state, county, and congressional district levels, we show how the number of people who are food insecure in 2020 could rise to more than 50 million, including 17 million children.”) The challenges for schools not being able to have in school education has complicated the challenge in the United States as millions of children receive food from their schools but need alternative sources when schools are not able to provide in school classes. See, e.g., Brookings Institution, Hungry at Thanksgiving: A Fall 2020 update on food insecurity in the U.S., November 23, 2020, https://www.brookings.edu/blog/up-front/2020/11/23/hungry-at-thanksgiving-a-fall-2020-update-on-food-insecurity-in-the-u-s/ (reviews the increase in food insecurity and the various safety net programs in the U.S. attempting to address).

World Trade Organization involvement in addressing the problem

The World Trade Organization is directly involved in addressing the first priority identified by World Bank President Malpass — enabling the free flow of food. However, the WTO also monitors government support efforts and has the ability to be tackling trade and environment issues which could affect the third priority by reducing climate change.

WTO Members under WTO rules can impose export restraints under certain circumstances and in the first half of 2020, a number of members imposed export restraints on particular agricultural products and many imposed export restraints on certain medical goods. At the same time, the lockdown of countries had significant effects on the movement of goods and people. Many WTO Members have urged limiting such restraints and the WTO Secretariat has monitored both restraints imposed, when such restraints have been lifted (if they have), and trade liberalization efforts to speed the movement of important goods. See, e.g., WTO, COVID-19 and world trade, https://www.wto.org/english/tratop_e/covid19_e/covid19_e.htm; WTO, COVID-19 AND AGRICULTURE: A STORY OF RESILIENCE, INFORMATION NOTE, 26 August 2020, https://www.wto.org/english/tratop_e/covid19_e/agric_report_e.pdf; WTO, COVID-19: Measures affecting trade in goods, updated as of 1 February 2021, https://www.wto.org/english/tratop_e/covid19_e/trade_related_goods_measure_e.htm. The August paper on COVIDE-19 and Agriculture is embedded below.

agric_report_e

There have been a number of proposals by certain WTO Members to forego export restraints on agricultural products during the pandemic. None have been acted upon by the membership as a whole, but the communications often reflect commitments of certain Members to keep agricultural markets open during the pandemic. See, e.g., RESPONDING TO THE COVID-19 PANDEMIC WITH OPEN AND PREDICTABLE TRADE IN AGRICULTURAL AND FOOD PRODUCTS, STATEMENT FROM: AUSTRALIA; BRAZIL; CANADA; CHILE; COLOMBIA; COSTA RICA; ECUADOR; EUROPEAN UNION; GEORGIA; HONG KONG, CHINA; JAPAN; REPUBLIC OF KOREA; MALAWI; MALAYSIA; MEXICO; NEW ZEALAND; NICARAGUA; PARAGUAY; PERU; QATAR; KINGDOM OF SAUDI ARABIA; SINGAPORE; SWITZERLAND; THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU; UKRAINE; UNITED ARAB EMIRATES; UNITED KINGDOM; UNITED STATES; AND URUGUAY, WT/GC/208/Rev.2, G/AG/30/Rev.2, 29 May 2020. The document is embedded below.

208R2-3

More can and should be done, including a WTO-wide agreement to forego agricultural export restraints during the current pandemic or future pandemics. However, there are strong objections to any such limits from a number of WTO Members including large and important countries like China, India and South Africa.

Indeed, efforts to get agreement at the December 2020 General Council meeting that countries would not block agricultural exports to the UN’s World Food Programme for humanitarian purposes was blocked by a number of countries. While 79 WTO Members in January 2021 provided a joint pledge not to prevent agricultural exports to the UN World Food Programme, it is a sign of the sensitivity of food security to many countries that a very limited humanitarian proposal could not obtain the agreement of all WTO Members in a period of hightened need by many of the world’s poorest countries. See January 23, 2021, WTO and the World Food Programme – action by 79 Members after a failed December effort at the General Council, https://currentthoughtsontrade.com/2021/01/23/wto-and-the-world-food-programme-action-by-79-members-after-a-failed-december-effort-at-the-general-council/.

Conclusion

The COVID-19 pandemic has extracted a huge cost from the world economy, has pushed tens of millions of people into extreme poverty, has cost hundreds of millions people employment (full or partial), is complicating the education of the world’s children with likely long lasting effects, has exposed potential challenges to achieving global cooperation on a range of matters including the desirability of limiting or not imposing export restraints on agricultural and medical goods.

While the focus of countries and the media in the last several months has shifted to access to vaccines and ensuring greater equitable distribution of such vaccines at affordable prices, there remains much that needs to be done to better address food insecurity during the pandemic. International organizations like the World Bank, IMF and WTO, countries, businesses and NGOs need to se that both core issues are addressed in the coming months.


Early trade action by Biden Administration — reinstating aluminum duties on imports from the United Arab Emirates

On February 1, 2021, President Biden revoked an action by the Trump Administration on aluminum products from the United Arab Emirates (UAE). The UAE’s exports of aluminum had been subject to additional duties as a result of an investigation of global imports of aluminum under Section 232 of the Trade Expansion Act of 1962, as amended, where the Secretary of Commerce found that imports were a threat to national security and President Trump had imposed additional duties of 10%. Countries with security relationships with the United States were able to seek alternative approaches to addressing U.S. concerns.

The United States and the UAE have a security relationship of importance to the U.S. Specifically, the United States had worked with the UAE in its efforts to secure greater recognition for the state of Israel. The Abraham Accords Peace Agreement: Treaty of Peace, Diplomatic Relations and Full Normalization Between the United Arab Emirates and the State of Israel was agreed by the UAE and Israel on August 13, 2020, signed at the White House on September 15, 2020 and ratified by the two governments in mid-October 2020.

Shortly before leaving office, on January 19, 2021, President Trump through Proclamation 10139 indicated that tariffs would be lifted on imports of aluminum from the UAE with an effective date of 12:01 a.m. on February 3, 2021. In their place, quotas at “historic levels” were agreed to on aluminum exports to the U.S. from the UAE. The Trump Proclamation is found at 86 FR 6,825-31 (January 25, 2021) and is embedded below.

2021-01711

By proclamation on February 1, 2021, President Biden revoked President Trump’s Proclamation 10139. The discussion contained in President Biden’s Proclamation indicates that his Administration views Section 232 as an important tool, that the aluminum industry is critical to U.S. national security and that the tariffs that were imposed on aluminum were having the desired effect prior to the pandemic and were worth maintaining. The Biden Proclamation is reproduced below. While it is not yet published in the Federal Register, the Proclamation can be found on the White House website in the briefing room. See A Proclamation on Adjusting Imports of Aluminum Into the United States, February 1, 2021, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/01/a-proclamation-on-adjusting-imports-of-aluminum-into-the-united-states/.

BRIEFING ROOM

A Proclamation on Adjusting Imports of Aluminum Into the United States

FEBRUARY 01, 2021 • PRESIDENTIAL ACTIONS

ADJUSTING IMPORTS OF ALUMINUM INTO THE UNITED STATES

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA

A PROCLAMATION

  1. Proclamation 10139 of January 19, 2021 (Adjusting Imports of Aluminum Into the United States), amended Proclamation 9704 (Adjusting Imports of Aluminum Into the United States), as amended, with respect to tariffs on certain imports of aluminum articles proclaimed under section 232 of the Trade Expansion Act, as amended (19 U.S.C. 1862). Proclamation 10139 provides that those amendments will not take effect until 12:01 a.m. on February 3, 2021.
  2. I consider it is necessary and appropriate in light of our national security interests to maintain, at this time, the tariff treatment applied to aluminum article imports from the United Arab Emirates (UAE) under Proclamation 9704, as amended, as they are currently in effect as of this date. Accordingly, and as provided for in clause (6) of Proclamation 10139, I am terminating the modifications contained in that proclamation before they take effect.
  3. Proclamation 9704 applied tariffs to help ensure the economic viability of the domestic aluminum industry — an industry that the Secretary of Commerce had previously identified as essential to our critical industries and national defense. Because robust domestic aluminum production capacity is essential to meet our current and future national security needs, Proclamation 9704 aimed to revive idled aluminum facilities, open closed smelters and mills, preserve necessary skills, and maintain or increase domestic production by reducing United States reliance on foreign producers.
  4. In my view, the available evidence indicates that imports from the UAE may still displace domestic production, and thereby threaten to impair our national security. Proclamation 9704 authorized the Secretary of Commerce to grant exclusions from the aluminum tariffs based on specific national security considerations or if specific imported aluminum articles were determined not to be produced sufficiently in the United States, such that the imports would not diminish domestic production. Tellingly, there have been 33 such exclusion requests for aluminum imported from the UAE, covering 587,007 metric tons of articles, and the Secretary of Commerce has denied 32 of those requests, covering 582,007 metric tons. This indicates the large degree of overlap between imports from the UAE and what our domestic industry is capable of producing.
  5. Since the tariff on aluminum imports was imposed, such imports substantially decreased, including a 25 percent reduction from the UAE, and domestic aluminum production increased by 22 percent through 2019, before the coronavirus pandemic began. In light of that history, I believe that maintaining the tariff is likely to be more effective in protecting our national security than the untested quota described in Proclamation 10139.
  6. Section 232 of the Trade Expansion Act of 1962, as amended, authorizes the President to adjust the imports of an article and its derivatives that are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.
  7. Section 604 of the Trade Act of 1974, as amended (19 U.S.C. 2483), authorizes the President to embody in the Harmonized Tariff Schedule of the United States the substance of statutes affecting import treatment, and actions thereunder, including the removal, modification, continuance, or imposition of any rate of duty or other import restriction.
    Now, Therefore, I, Joseph R. Biden Jr., President of the United States of America, by the authority vested in me by the Constitution and the laws of the United States of America, including section 232 of the Trade Expansion Act of 1962, as amended, section 301 of title 3, United States Code, and section 604 of the Trade Act of 1974, as amended, do hereby proclaim that Proclamation 10139, including the Annex, is revoked.
    IN WITNESS WHEREOF, I have hereunto set my hand this
    first day of February, in the year of our Lord two thousand twenty-one, and of the Independence of the United States of America the two hundred and forty-fifth.

JOSEPH R. BIDEN JR.

___________________________________________________________

Pending WTO disputes; UAE does not have a pending dispute with the U.S.

While China, India, the European Union, Norway, the Russian Federation, Switzerland and Turkey all have ongoing panel proceedings at the WTO challenging the U.S. imposition of duties on steel and aluminum pursuant to Section 232 investigations, the UAE is not a country that has filed a request for consultations on the additional duties on aluminum on its exports to the United States. See WT/DSB 544 (China), WT/DSB547 (India), WT/DSB/548 (European Union), WT/DSB/552 (Norway), WT/DS554 (Russian Federation), WT/DS556 (Switzerland) and WT/DS564 (Turkey); challenges by Canada and Mexico were withdrawn after agreement with the United States (WT/DS550 (Canada) and WT/DS551 (Mexico). The panel reports were to go to parties in the fall of 2020 and released to the public once translations into the official languages was accomplished. But no report has been released to date. With the impasse on the Appellate Body, it is unclear if the Biden Administration will opt to file appeals should the panel reports not recognize the U.S. national security concerns. Thus, absent a decision by the Biden team, should it lose the WTO cases and not appeal, to eliminate the additional duties on imports from all countries, the UAE’s exports will continue to face the additional 10% duties for the foreseeable future.

Broader interest in Biden Administration approach to Section 232

A recent article in Politico reviews contact by the EU with the Biden team last week seeking an immediate end to tariffs on imports from the EU of both steel and aluminum with a corresponding withdrawal of EU retaliatory tariffs if accomplished. As noted in the Politico article, the tariffs are supported by steel producers, unions (e.g., the USW has many workers in both the steel and aluminum industries) and the primary aluminum producers. Politico, Biden, in first trade move, reimposes a Trump tariff, February 1, 2021, https://www.politico.com/news/2021/02/01/biden-aluminum-tariff-uae-464794.

Conclusion

It is unlikely that the U.S. will agree to withdraw the 232 duties at the present time. The Biden team doesn’t have its trade people in place; there are pending WTO disputes; the underlying problems of global excess capacity in both steel and aluminum continue on with no resolution in sight. The main driver of the excess capacity has been China (though others have contributed). There are no WTO rules that permit effective addressing of such problems, and China has largely ignored calls by its trading partners to address the problem in a meaningful manner.

Still the reversal of President Trump’s January 19, 2021 Proclamation is an interesting first step in the trade arena by the Biden Administration to emphasize that restoring economic health to the U.S. economy is an important component of his starting game plan (along with meaningfully addressing the pandemic). Trade issues will likely be seen through that prism even as the U.S. works within multilateral organizations and with allies on a host of issues of common interest and concern.

The EU’s export authorization requirement for COVID-19 vaccines — contrary to their oft repeated position of maintaining open markets during the pandemic

If one ever needed confirmation that WTO Members can easily fall out of supporting open markets and working together during a global crisis, the European Union’s actions over the last week to come up with an implementing regulation “making the exportation of certain products subject to the production of an export authorization” provide a glaring example.

Faced with the receipt of fewer doses of vaccines by the three manufacturers approved (with one only approved last week) for distribution within the EU, the EU faced harsh criticism from member states over the inadequate supplies of vaccines in the December – February period to vaccinate their populations. Harsh criticism was also reflected in press coverage. See, e.g., New York Times, Vaccine Shortages Hit E.U. in a Setback for Its Immunization Race, January 27, 2021, https://www.nytimes.com/2021/01/27/world/europe/europe-covid-vaccinations.html; Der Spiegel, Europe’s Vaccine Disaster, Commission President Ursula von der Leyen Seeking to Duck Responsibility, 29 January 2021, https://www.spiegel.de/international/europe/europe-s-vaccine-disaster-commission-president-ursula-von-der-leyen-seeking-to-duck-responsibility-a-1197547d-6219-4438-9d69-b76e64701802; Financial Times, Shortage of coronavirus shots heaps pressure on European leaders, 29 January 2021, https://www.ft.com/content/fe851440-abcb-43e0-a7c9-a86a05d275db.

The response was to resort to a form of export restraints on vaccines and inputs for vaccines where the European Union and its member states would decide whether shipments to certain third countries (largely wealthier countries around the world) would be allowed. Some statements made by the European Commission and the implementing regulation are embedded below.

CELEX_32021R0111_EN_TXT

Commission_statement_on_the_vaccine_export_authorisation_scheme

Opening_remarks_by_Executive_Vice-President_Valdis_Dombrovskis_at_the_press_conference_on_the_transparency_and_authorisation_mechanism_for_exports_of_COVID-19_vaccines

Opening_remarks_by_Commissioner_Stella_Kyriakides_at_the_press_conference_on_the_transparency_and_authorisation_mechanism_for_exports_of_COVID-19_vaccines

Questions_and_Answers__Transparency_and_authorisation_mechanism_for_exports_of_COVID-19_vaccines-1

The action of the European Union last week is in sharp contrast to the joint initiative from the Ottawa Group, of which the EU is a member. In a post last November, I reviewed a text put forward by the Ottawa Group which called for limiting the use of export restraints during the pandemic. See 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/. Several excerpts from the earlier post are provided below.

“The Ottawa Group agreed to put forward a communication seeking action by WTO Members. Each of Canada and the EU (and likely other members) put out press releases. See, e.g., Government of Canada, November 23, 2020, Minister Ng hosts successful ministerial meeting of the Ottawa Group on WTO reform, https://www.canada.ca/en/global-affairs/news/2020/11/minister-ng-hosts-successful-ministerial-meeting-of-the-ottawa-group-on-wto-reform.html; European Commission, Directorate-General for Trade, 23 November 2020, Ottawa Group proposes a global Trade and Health Initiative, https://trade.ec.europa.eu/doclib/press/index.cfm?id=2215&title=Ottawa-Group-proposes-a-global-Trade-and-Health-Initiative.

“The Canadian press release states in part, ‘As countries face a rise in COVID-19 cases, it is essential that governments minimize disruptions to trade flows in essential medical supplies. Today, members of the Ottawa Group took important steps toward a proposed WTO Trade and Health Initiative, which identifies short-term actions to strenghten supply chains and ensure the free flow of medicines and medical supplies.’

“Similarly the European Commission press release stated that –

“‘Today the Ottawa Group, a group of 13 like-minded World Trade Organisation (WTO) partners including the EU, agreed today on an initiative, calling on the WTO members to increase their cooperation and work toward enhanced global rules to facilitate trade in essential medical goods. The agreement took place as an outcome of the Ottawa Group Ministerial meeting, hosted virtually by Minister Mary Ng of Canada.

“‘The Ottawa Group members called for immediate actions in response to the coronavirus crisis such as exercising a restraint in using any export restrictions, implementing trade-facilitating measures in the area of customs and services, as well as improving transparency.'”

Needless to say, the reaction from trading partners to the imposition of export controls on vaccines was swift and negative. See, e.g., Financial Times, EU faces global criticism over curbs on vaccine exports, 31 January 2021, https://www.ft.com/content/5c15d7ea-aaf6-46f4-924e-30f168dd14dd (“Brussels faces an international backlash over its new controls on vaccine exports as European Commission president Ursula von der Leyen struggles to quell a firestorm over the EU’s handling of vaccine shortages. Canada and Japan raised concerns over export rules requiring manufacturers to obtain permission before shipping Covid-19 jabs outside the EU. South Korea also warned governments against a grab for more vaccines than they need.”); BBC News, Coronavirus: WHO criticises EU over vaccine export controls, 30 January 2021, https://www.bbc.com/news/world-europe-55860540. Because the EU action seemed largely aimed at discontent with news from the British-Swedish company AstraZeneca’s announcement of a sharp contraction in likely shipments to the EU in the first quarter, the Commission’s initial draft of the implementing regulation had the EU creating problems for the Brexit agreement in terms of inspecting goods flowing from Ireland and Northern Ireland to prevent circumvention of products to the U.K. The EC retreated almost immediately on that front. See, e.g., NPR, EU Reverses Move To Restrict Export Of COVID-19 Vaccines To Northern Ireland, January 30, 2021, https://www.npr.org/sections/coronavirus-live-updates/2021/01/30/962454276/eu-reverses-move-to-restrict-export-of-covid-19-vaccines-to-northern-ireland (“The European Union reversed a brief decision to try to restrict the export of COVID-19 vaccines across the border from Ireland into Northern Ireland. European vaccination campaigns have been struggling as supplies of vaccines on the continent have run low. The decision to invoke an emergency protocol of the Brexit deal was seen as an effort to keep supplies from going from the EU to Britain. But within hours of the decision, which could have put checks on the border between the EU member the Republic of Ireland and British-controlled Northern Ireland, Irish and British officials condemned the move.”).

One concern for the global trading system from the EU action, of course, is retaliatory or mirror actions by trading partners. Such concerns are real. See, e.g., Politico, UK weighs vaccine export restrictions, January 29, 2021, https://www.politico.eu/article/uk-weighs-coronavirus-vaccine-export-restrictions/ (“The U.K. government has sought legal advice on preventing coronavirus vaccines or their ingredients being exported, suggesting that ministers are actively considering countermeasures they could deploy if other countries start restricting cross-border movements of vaccines.”).

The WHO and WTO have been advocating for cooperation among nations and businesses to ensure that all peoples are able to be vaccinated in a timely and cost affordable way. The phrase, “no one is safe until all are safe” typifies the call and is supported by research that indicates global GDP will be seriously restricted if that approach is not followed. See January 27, 2021, Recent WTO report on services trade and January 2021 International Monetary Fund World Economic Outlook Update — the future growth depends on vaccinations of peoples around the world, https://currentthoughtsontrade.com/2021/01/27/recent-wto-report-on-services-trade-and-january-2021-international-monetary-fund-world-economic-outlook-update-the-future-growth-depends-on-vaccinations-of-peoples-around-the-world/ (“The WHO’s Director-General references a report from the International Chamber of Commerce Research Foundation. The report and a press release can be accessed here: ICC, The Economic Case for Global Vaccinations, https://iccwbo.org/publication/the-economic-case-for-global-vaccinations/. The press release from the ICC describes the report as follows. ‘A study commissioned by the International Chamber of Commerce (ICC) Research Foundation has found that the global economy stands to lose as much as US$9.2 trillion if governments fail to ensure developing economy access to COVID-19 vaccines.'”).

The worrying actions by the European Union and the continued struggle to get vaccines to the world’s poorest countries led to a joint statement today by the WTO’s four Deputy Directors-General calling for heightened cooperation to get vaccines to all peoples of the world. WTO press release, WTO DDGs call for heightened cooperation on vaccine availability, 1 February 2021, https://www.wto.org/english/news_e/news21_e/ddgra_01feb21_e.htm. (“‘The pandemic is a global problem. This challenge calls for heightened international cooperation, including ensuring the global availability of vaccines. Recalling the joint statement by the Directors-General of the WHO and WTO on 20 April 2020, we call upon Members to work together towards making vaccines available to all. Moreover, the war against the pandemic can only be won when universal coverage in vaccination is achieved.’”). The press release includes a link to the 20 April 2020 joint statement by the Directors-General of the WHO and WTO (embedded below).

WTO-_-2020-News-items-Heads-of-WTO-WHO-cite-importance-of-open-trade-in-ensuring-flow-of-vital-medical-supplies

As the world enters the month of February, there are 69 countries that report vaccinating at least some people by the end of January. The list, number of vaccinations and number of vaccinations per 100 people are tracked by the Financial Times in its “Covid-19 vaccine tracker: the global race to vaccinate” last updated on February 1, 2021. https://ig.ft.com/coronavirus-vaccine-tracker/. While there are many vaccines in late stage of trials or going through approval processes by the WTO or individual countries, the world is a long way from ensuring equitable access to vaccines at affordable prices at the beginning of February. Hopefully, with production ramp up and more vaccines approved in the coming months, that situation will change by the second quarter of 2021.

Conclusion

While export restraints are not prohibited by the WTO, the world has struggled during the COVID-19 pandemic to keep markets open and ensure availability of medical products to all nations. The EU had early challenges with export restraints that member states were imposing on medical goods including personal protective equipment. However, the EU has attempted to provide leadership in limiting those restraints and supporting the COVAX mechanism for getting vaccines to the poorest countries as well as others participating in the COVAX approach.

The combination of a greater than expected second surge of COVID-19 cases in the fall and the rapid spread of more contagious variants in the last several months has posed significant challenges to many countries but including those within the EU. Some internal challenges and different approaches to vaccine contracting led the EU to sign contracts later and to approve vaccines for use later than some other countries. With manufacturing challenges for a number of suppliers, the EU has found itself in a situation where member states were extremely unhappy with the inability to get more people vaccinated sooner. The European Commission’s efforts to improve its vaccine situation has generated a great deal of negative press, led to the imposition of export restraints that could lead to a significant breakdown in supply chains and potential retaliation by trading partners adversely affected and harms the EU’s efforts to be a leader for global unity in addressing the pandemic.