India

Wheat prices spike following Indian export ban

In yesterday’s post, I reviewed India’s decision to restrict exports of wheat last Friday. May 15, 2022:  India bans exports of wheat, complicating efforts to address global food security problems posed by Russia’s war in Ukraine, https://currentthoughtsontrade.com/2022/05/15/india-bans-exports-of-wheat-complicating-efforts-to-address-global-food-security-problems-posed-by-russias-war-in-ukraine/. Despite India’s efforts to walk back the extent of the export ban on Saturday, world market prices for wheat shot up on May 16. See, e.g., Financial Times, Wheat prices rise almost 6% as India export ban shakes markets, May 16, 2022, https://www.ft.com/content/226f3f09-33ff-40c8-b439-08a36c515aba (“Wheat prices rose by the maximum amount allowed on Monday after India imposed a ban on exports, stoking pressure on food costs as tight global supplies roiled international markets. Futures traded in Chicago rose as much as 5.9 per cent to $12.47 a bushel, their highest level in two months.”); Bloomberg, Wheat Soars in Risk to Food Inflation as India Restricts Exports, May 15, 2022 updated May 16, 2022, https://www.bloomberg.com/news/articles/2022-05-15/world-s-food-problems-piling-up-as-india-restricts-wheat-exports (“Wheat jumped by the exchange limit to near a record high after India’s move to restrict exports, exposing just how tight global supplies are during the war in Ukraine and threatening to drive up food prices even more.”); Market Watch,  Wheat prices surge to highest in more than 2 months following India’s ban on exports, May 16, 2022, https://www.marketwatch.com/story/wheat-prices-surge-to-highest-in-more-than-two-months-following-indias-ban-on-exports-11652683058 (“India’s Commerce Secretary B.V.R. Subrahmanyam told reporters on Sunday that the country’s wheat production has dropped by 3 million tons from 106 million tons last year. Prices have surged 20% to 40% in India. However, India also said Sunday that it would continue to export to needy nations — the country mainly provides wheat to Bangladesh, Nepal and Sri Lanka. India consumes most of what it produces, exporting 7 million tons of wheat last year out of 109 million tons produced, said Subrahmanyam.”); Quartz India, India’s wheat export ban is another reality check for its lofty soft power goals, May 16, 2022, https://qz.com/india/2165965/indias-wheat-export-ban-sends-global-prices-soaring/ (“A few weeks ago, it [India] claimed it could feed the world should the World Trade Organization allow it. Later, on May 4, prime minister Narendra Modi reiterated his desire to “save the world from hunger.” After all, in the wake of the Russia-Ukraine war, India had got the perfect window to become a major wheat exporter. On May 14, however, India banned the export of wheat, largely owing to a record high domestic food inflation. Lower yield due to intense heat waves piled on the country’s agony.”).

Based on the price spike today being capped by daily exchange rate increase limits, India’s action will likely result in even higher prices in the coming days.

The U.S., EU and others are looking at ways to reduce the food insecurity flowing from the Russian war in Ukraine including looking to help Ukraine export its agricultural products through western Europe. U.S. Secretary of State Anton Blinken was in Berlin this past weekend and at a press conference noted efforts that will take place in New York this week. See U.S. Department of State, Secretary Antony J. Blinken at a Press Availability, Berlin, May 15, 2022, https://www.state.gov/secretary-antony-j-blinken-at-a-press-availability-18/ (excerpts copied below).

“We’ve marshaled a robust transatlantic response to the humanitarian crisis caused by the war – more than 6 million Ukrainians have fled their homeland.  They’ve been welcomed in countries across Europe and across the Atlantic.  The United States has provided millions of dollars in assistance to countries taking in Ukrainian citizens to help provide essential support and services.  Our countries are also coming together to address some of the broader consequences that are flowing from Russia’s aggression, like the global food shortages and rising food prices that we’re seeing.  Ukraine supplies a great deal of the world’s corn, its wheat, its oil seeds for cooking oil.

“Russia is blocking Ukraine’s ports; it’s destroying its farmland, warehouses, roads, equipment.  That’s not only striking a major blow to Ukraine’s economy, but it’s also designed to inflict pain on the rest of the world to weaken support to the Ukrainian people.  Later this week in New York, we will be convening an emergency session of the UN Security Council and also the foreign ministers to focus on the steps that we can take together to address the immediate challenges for food and to address food insecurity, as well as to look at some of the medium-term and longer-term answers to food insecurity.”

While the WTO Director-General and a significant number of WTO Members are looking for action at the WTO’s 12 Ministerial Conference starting on June 12th not only on a WTO response to the COVID-19 pandemic but also on addressing the problem of rising food insecurity, a number of major countries are having trouble not restricting agricultural exports and hence are exacerbating the challenges of food insecurity which have been worsened by the Russian war in Ukraine. Actions like that taken by India will complicate the global response to food insecurity and cause even higher world prices for core agricultural commodities.

India bans exports of wheat, complicating efforts to address global food security problems posed by Russia’s war in Ukraine

While the WTO permits countries to restrict exports of agricultural products in certain circumstances, history is replete with examples of price swings being exacerbated by the imposition of export restraints on food. As reviewed in a recent post, Russia’s war in Ukraine has caused already high food prices to spike to all time highs in products like wheat where Ukraine and Russia are major exporters. April 19, 2022:  Recent estimates of global effects from Russian invasion of Ukraine, https://currentthoughtsontrade.com/2022/04/19/recent-estimates-of-global-effects-from-russian-invasion-of-ukraine/; March 30, 2022:  Food security challenges posed by the Russian invasion of Ukraine, https://currentthoughtsontrade.com/2022/03/30/food-security-challenges-posed-by-the-russian-invasion-of-ukraine/.

While many WTO Members are urging the WTO membership to avoid imposition of export restraints at the present time to reduce food insecurity, a number of countries have shut down exports to protect their domestic consumers. India, which is the world’s second largest producer of wheat and had been looked to to help reduce the challenges in Africa and Asia from Ukraine’s inability to get grain harvested or exported, has faced very high temperatures this spring. In the last days, it has reversed its position of increasing exports to help countries in need to the position of shutting off exports immediately with the exception of volumes under contract and with a possible willingness to work with countries with food security issues. See Reuters, India bans wheat exports as heat wave hurts crop, domestic prices soar, May 15, 2022, https://www.reuters.com/markets/commodities/india-prohibits-wheat-exports-with-immediate-effect-2022-05-14/ (“India banned wheat exports on Saturday days after saying it was targeting record shipments this year, as a scorching heat wave curtailed output and domestic prices hit a record high. The government said it would still allow exports backed by already issued letters of credit and to countries that request supplies ‘to meet their food security needs’.”); Washington Post, India bans wheat exports amid soaring global prices, May 14, 2022, https://www.washingtonpost.com/world/2022/05/14/india-wheat-ban-ukraine/ (“In a Commerce Ministry order, Indian officials said they made the decision after considering India’s own needs and those of neighboring countries. India’s food security was ‘at risk’ because of surging international prices, the ministry said. The announcement was an abrupt reversal weeks after Indian officials and international analysts talked up the possibility of India’s significantly ratcheting up exports to fill the gap created partly by the war in Ukraine. International food prices have soared to record highs in recent months, putting pressure on billions of people, particularly the world’s poorest, officials at the United Nations have warned.”); ABC News, India open to exporting wheat to needy nations despite ban, May 15, 2022, https://abcnews.go.com/International/wireStory/india-open-exporting-wheat-needy-nations-ban-84728532 (“India on Sunday said it would keep a window open to export wheat to food-deficit countries at the government level despite restrictions announced two days earlier. India’s Commerce Secretary B.V.R. Subrahmanyam told reporters the government will also allow private companies to meet previous commitments to export nearly 4.3 million tons of wheat until July. India exported 1 million tons of wheat in April.”); The Times of India, Explained: Why India has banned wheat exports despite big trade plans, May 14, 2022, https://timesofindia.indiatimes.com/business/india-business/explained-why-did-india-ban-wheat-exports-despite-big-trade-plans/articleshow/91565703.cms; Hindustan Times, G7 criticises India decision to stop wheat exports: Germany, May 14, 2022, https://www.hindustantimes.com/world-news/g7-criticises-india-decision-to-stop-wheat-exports-germany-101652533657311.html (“‘If everyone starts to impose export restrictions or to close markets, that would worsen the crisis,’ German agriculture minister Cem Ozdemir said at a press conference in Stuttgart.”).

Press accounts indicate that China’s wheat production for this year is uncertain because of weather considerations as well. See New York Times, War and Weather Sent Food Prices Soaring. Now, China’s Harvest Is Uncertain, May 12, 2022, https://www.nytimes.com/2022/05/11/business/china-wheat-food-prices-inflation.html (“Ukraine’s wheat exports have been mostly halted since Russia’s invasion, while drought has damaged crops in India and the United States. China’s upcoming harvest is another concern..”).

The U.S. Department of Agriculture develops periodic forecasts for production and consumption of major agricultural crops. USDA released its latest global forecast for various crops for 2022-2023 including wheat on May 12, 2022. See USDA, World Agricultural Supply and Demand Estimates, May 12, 2022, https://www.usda.gov/oce/commodity/wasde/wasde0522.pdf. The description of wheat supply and demand is copied below.

“WHEAT: The outlook for 2022/23 U.S. wheat is for reduced supplies, exports, domestic use stocks,
and higher prices. U.S. 2022/23 wheat supplies are projected down 3 percent, as lower beginning
stocks more than offset a larger harvest. All wheat production for 2022/23 is projected at 1,729
million bushels, up 83 million from last year, as higher yields more than offset a slight decrease in
harvested area. The all wheat yield, projected at 46.6 bushels per acre, is up 2.3 bushels from last
year. The first survey-based forecast for 2022/23 winter wheat production is down 8 percent from last
year as lower Hard Red Winter and Soft Red Winter production more than offset an increase in White
Wheat production. Abandonment for Winter Wheat is the highest since 2002 with the highest levels in
Texas and Oklahoma. Spring Wheat production for 2022/23 is projected to rebound significantly from
last year’s drought-reduced Hard Red Spring and Durum crops primarily on return-to-trend yields.

“Total 2022/23 domestic use is projected down 1 percent on lower feed and residual use more than
offsetting higher food use. Exports are projected at 775 million bushels, down from revised 2021/22
exports and would be the lowest since 1971/72. Projected 2022/23 ending stocks are 6 percent
lower than last year at 619 million bushels, the lowest level in nine years. The projected 2022/23
season-average farm price (SAFP) is a record $10.75 per bushel, up $3.05 from last year’s revised
SAFP. Wheat cash and futures prices are expected to remain sharply elevated through the first part
of the marketing year when the largest proportion of U.S. wheat is marketed.

“The global wheat outlook for 2022/23 is for lower supplies and consumption, increased trade, and
lower ending stocks. Global production is forecast at 774.8 million tons, 4.5 million lower than in
2021/22. Reduced production in Ukraine, Australia, and Morocco is only partly offset by increases in
Canada, Russia, and the United States. Production in Ukraine is forecast at 21.5 million tons in
2022/23, 11.5 million lower than 2021/22 due to the ongoing war. Canada’s production is forecast to
rebound to 33.0 million tons in 2022/23, up significantly from last year’s drought-affected crop.

“Projected 2022/23 world use is slightly lower at 787.5 million tons, as increases for food use are more
than offset by declining feed and residual use. The largest feed and residual use reductions are in
China, the European Union, and Australia as well as a sizeable decline in food use in India.
Projected 2022/23 global trade is a record 204.9 million tons, up 5.0 million from last year. Imports
are projected to rise on increased exportable supplies from Russia and Canada more than offsetting
reductions for Ukraine and Australia. Russia is projected as the leading 2022/23 wheat exporter at
39.0 million tons, followed by the European Union, Australia, Canada, and the United States.
Ukraine’s 2022/23 export forecast is 10.0 million tons, down sharply from last year on reduced
production and significant logistical constraints for exports. India is expected to remain a significant
wheat exporter in 2022/23. Projected 2022/23 world ending stocks are reduced 5 percent to 267.0
million tons and would be the lowest level in six years. The largest change is for India, where stocks
are forecast to decline to 16.4 million tons, a five-year low.”

With likely reduced availability of product globally and with reduced stocks of wheat on hand, tThe G7, led by the EU and US, are working to find ways to help Ukraine move its wheat production to export despite Russia’s closure of the Black Sea. Such efforts if successful will reduce the global damage done on food security on products like wheat. As reviewed in my last post,

“The EU is working to facilitate movement of Ukrainian agricultural products by land through EU member states. But the main challenges are the blockage of Black Sea ports by Russia and the reported theft of agricultural products and equipment from Ukrainian farms and depots. See, e.g., CNN, Russians steal vast amounts of Ukrainian grain and equipment, threatening this year’s harvest, May 5, 2022, https://www.cnn.com/2022/05/05/europe/russia-ukraine-grain-theft-cmd-intl/index.html; Voice of America, Russian Blockade of Ukrainian Sea Ports Sends Food Prices Soaring, May 7, 2022, https://www.voanews.com/a/russian-blockade-of-ukrainian-sea-ports-sends-food-prices-soaring/6561914.html; Politico, EU plans to help Ukraine’s food exports dodge Black Sea blockade, EU farm chief warns Russia wants to portray itself as feeding the poor, while it destroys Ukraine’s farmland. May 10, 2022, https://www.politico.eu/article/eu-plans-to-boost-ukraines-food-exports-black-sea-blockade/.”

May 11, 2022:  Less than five weeks to the WTO’s 12th Ministerial Conference — what are likely deliverables?, https://currentthoughtsontrade.com/2022/05/11/less-than-five-weeks-to-the-wtos-12th-ministerial-conference-what-are-likely-deliverables/.

Hopefully, India will in fact work to facilitate exports to many of the nations dependent on wheat from Ukraine in the coming months to help reduce the food insecurity flowing from Russia’s war in Ukraine. But the announcement on Friday of banning exports is a concerning signal and will likely lead to even higher prices for wheat in the coming weeks and months.

Less than five weeks to the WTO’s 12th Ministerial Conference — what are likely deliverables?

On May 9-10, the WTO held a General Council meeting which followed an informal Trade Negotiations Committee (TNC) and Heads of Delegation meeting from May 4. The meetings resulted in a series of news releases from the WTO focusing on the Director-General’s views on areas for focus for the upcoming Ministerial as well as initial reactions from Members to the paper put forward following negotiations between the European Union, United States, India and South Africa on what, if any, modifications to TRIPS obligations were needed to help WTO Members address the COVID-19 pandemic. See WTO News Release, General Council, Members welcome Quad document as basis for text-based negotiations on pandemic IP response, 10 May, 2022, https://www.wto.org/english/news_e/news22_e/gc_10may22_e.htm; WTO News Release, General Council, DG Okonjo-Iweala urges WTO members to “meet the many challenges of our time”, 9 May 2022, https://www.wto.org/english/news_e/news22_e/gc_09may22_e.htm; WTO News Release, Trade Negotiations Committee, DG Okonjo-Iweala: Members can deliver results at MC12 despite challenging circumstances, 4 May 2022, https://www.wto.org/english/news_e/news22_e/tnc_04may22_e.htm.

The Director-General highlighted at the May 4 informal TNC and Heads of Delegation meeting a possible list of achievables by the 12th Ministerial Conference in the difficult political and economic environment that Members find themselves in.

“One potential MC12 deliverable is a WTO response to the current and future pandemics, including intellectual property issues, where members will discuss possible elements of a compromise at a time to be determined by the Chair of the TRIPS Council, the DG said. Other potential deliverables include concluding an agreement on fisheries subsidies, achieving outcomes on agriculture and making progress on reforming the WTO in addition to various initiatives members are taking forward, she added.

“The Director-General pointed to the threat of a global crisis in food security, with prices for food, fertilizer and energy rising sharply from already high levels.  She suggested members could use MC12 as a platform to take actions on these issues separately from the ongoing agriculture negotiations.”

A WTO Response to the COVID-19 Pandemic

The WTO achieving a response to the COVID-19 pandemic became more likely with the release of the draft text from the EU, US, India and China. I reviewed the main changes from the earlier draft in a recent post. May 4, 2022:  Access to vaccines – the public release of the text from the U.S., EU, India and South Africa to the full WTO Membership for consideration by the Council for Trade Related Aspects of Intellectual Property Rights, https://currentthoughtsontrade.com/2022/05/04/access-to-vaccines-the-public-release-of-the-text-from-the-u-s-eu-india-and-south-africa-to-the-full-wto-membership-for-consideration-by-the-council-for-trade-related-aspects-of-intellectual-prop/. While Members were not ready to sign off on the draft language and were awaiting instructions from capitals on positions to take, it is clear that the text will be the basis for negotiations. Moreover, as reflected in the WTO press release on the May 10 General Council session, China indicated it would not avail itself of the flexibilities on vaccines in the proposal. As reviewed in my May 4th post, China’s action will facilitate agreement on the text as it will permit adoption of language that makes the provisions available to all developing countries but encourages countries with strong export capabilities to not avail themselves of the provisions. China has self-identified itself as a developing country, but has been the largest manufacturer and exporter of COVID-19 vaccines, The U.S. and EU had drafted language that would have excluded China’s eligibility (as the only developing countries with exports of more than 10% of global totals in 2021). China’s position permits broader eligibility, hence avoiding what China would view as discriminatory language aimed at it. The implicit quid pro quo for using the broader language was China indicating it would not utilize the provisions.

However, there are remaining issues needing resolution in the draft text including whether diagnostics and therapeutics will be included in the provisions immediately versus subject to a separate determination to include within six months. And there is the broader set of issues including transparency, export restrictions, trade facilitation important to many countries as part of any WTO response to the pandemic. The European Union reviewed its views on the broader issues during the General Council meeting. See European Union interventions at the General Council, 09-10 May 2022, https://www.eeas.europa.eu/delegations/world-trade-organization-wto/european-union-interventions-general-council-09-10-may_en?s=69,

Item 4. A. WTO RESPONSE TO THE PANDEMIC – REPORT BY THE CHAIR

“The European Union thanks the Facilitator for his report.

“The European Union has been a strong proponent of the WTO response to the pandemic from the onset of discussions that members had in this forum. We argued for a holistic approach, which would encompass all the necessary elements of the response, including intellectual property.

Now that we have made a substantial step forward in the TRIPS Council, it is high time we had a fresh look at other elements of the pandemic, such as transparency, export restrictions, or trade facilitation. The “strategic pause” allowed us to reflect deeper on how to move the process forward and arrive at a multilateral outcome demonstrating that the WTO can meaningfully contribute to a response to the crisis and learn from it. In that regard, we also note the statement of Brazil in document WT/GC/W/845 on various aspects of the response to the pandemic.

“The European Union and the United States have invested great efforts into allowing progress towards a credible outcome. We have reached a common understanding on the minimum or the landing zone that could be the final outcome in a number of areas, acknowledging that other Members have additional issues of interest that they would like to see reflected in the text. Our new compromise paper presents the essentials of the Walker text, which we value the most, in a condensed format. We are encouraged by the positive feedback we have received so far and we will take account of the comments received.

The new paper attempts to propose a balance that would be acceptable to all members. Even if slightly shorter on ambition than the Walker text, we believe that it still maintains the credibility of the WTO.

“As MC12 will start in a month time, we do not have the luxury of time. Our collective interest is to engage in a spirit of self-restraint and in a consensus-oriented mode.

We are hopeful that all members will be able to engage constructively so that we could all resume and promptly finalize the negotiating process before Ministers arrive in Geneva.

To get to a final agreement on a WTO response to the pandemic will require significant effort, but is looking hopeful at the moment.

Agriculture negotiations

While there has been a large agenda of items being discussed in agriculture, there are several possible deliverables besides a work program going forward. First, there has been agreement on tariff rate quota administration. See WTO News Release, General Council, General Council endorses final decision on Bali tariff rate quota underfill mechanism, 31 March 2022, https://www.wto.org/english/news_e/news22_e/gc_31mar22_e.htm; WTO Committee on Agriculture, REVIEW OF THE OPERATION OF THE BALI DECISION ON TRQ ADMINISTRATION REPORT BY THE CHAIRPERSON TO THE GENERAL COUNCIL, Addendum, G/AG/32/Add.1 (29 March 2022). G/AG/32/Add.1 is enclosed below.

32A1

It is unlikely that other aspects of the agriculture reform program will have concrete results by the 12th Ministerial with the possible exception of not blocking exports of agricultural goods to the UN World Food Programme. See WTO News Release, Agriculture Committee, MC12 outcome must help end hunger, improve food security, says chair, 27 April 2022, https://www.wto.org/english/news_e/news22_e/agng_02may22_e.htm; WTO, State of Play 13 December 2021, Agriculture negotiations, https://www.wto.org/english/thewto_e/minist_e/mc12_e/briefing_notes_e/bfagric_e.htm (topics include Public stockholding for food security purposes, Domestic support, Cotton, Market access, Special safeguard mechanism, Export prohibitions or restrictions, Export competition, Transparency).

Specifically, it is not clear that much progress has been made in 2022 on any of the topics being pursued. The last draft text from the Chair that has been released publicly dates from November 2021. COMMITTEE ON AGRICULTURE IN SPECIAL SESSION, REPORT BY THE CHAIRPERSON, H.E. MS GLORIA ABRAHAM PERALTA, TO THE TRADE NEGOTIATIONS COMMITTEE, TN/AG/50 (23 November 2021). The document is embedded below and basically lays out a work program on each topic going forward with an annex exempting food purchases by the UN World Food Programme from any export restrictions. Presumably some modified version of the November 2021 draft text will be presented to Ministers at the `2th Ministerial Conference.

50

Food security flowing from Russian invasion of Ukraine

As reviewed in prior posts and reflected in the various WTO news releases, there is a current food security crisis flowing from the Russian invasion of Ukraine. See, e.g., April 19, 2022:  Recent estimates of global effects from Russian invasion of Ukraine, https://currentthoughtsontrade.com/2022/04/19/recent-estimates-of-global-effects-from-russian-invasion-of-ukraine/; March 30, 2022:  Food security challenges posed by the Russian invasion of Ukraine, https://currentthoughtsontrade.com/2022/03/30/food-security-challenges-posed-by-the-russian-invasion-of-ukraine/; WTO News Release, Agriculture Committee, MC12 outcome must help end hunger, improve food security, says chair, 27 April 2022, https://www.wto.org/english/news_e/news22_e/agng_02may22_e.htm. Multilateral organizations have been calling for swift action to address the food security concerns. WTO News Release, WTO and other organizations, World Bank, IMF, WFP and WTO call for urgent coordinated action on food security, 13 April 2022, https://www.wto.org/english/news_e/news22_e/igo_13apr22_e.htm.

At this week’s General Council meeting there were two agenda items that addressed the food security issue. Item 8 and item 12. See WTO General Council, Proposed Agenda, WT/GC/W/846, 6 May 2022. Item 8 dealt with a document entitled “Joint Statement on Open and Predictable Trade in Agricultural and Food Products” and was presented by the United Kingdom. Signatories to the document included Albania; Australia; Canada; Chile; Costa Rica; European Union; Georgia; Iceland; Israel; Japan; Republic of Korea; Liechtenstein; Mexico; Republic of Moldova; Montenegro; New Zealand; North Macedonia; Norway; Paraguay; Singapore; Switzerland; The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Ukraine; United Kingdom and United States (51 WTO Members). The document is embedded below.

248

A number of countries have imposed export restrictions which worsen the pricing spikes being experienced on key agricultural commodities where Ukraine is a major exporter. The action by the 51 WTO Members is an important step whether or not it will generate a consensus document by the 12th Ministerial Conference meeting or not.

The EU’s comments on item 8 are likely representative of those supporting maintaining open markets for agricultural products at the present time.

“Item 8 – JOINT STATEMENT ON OPEN AND PREDICTABLE TRADE IN AGRICULTURAL AND FOOD PRODUCTS – REQUEST FROM THE UNITED KINGDOM

The European Union would like to thank the United Kingdom and other co-sponsors for their support in raising attention in the WTO to the global food security crisis that we see emerging.

The crisis triggered by Russia’s unprovoked, illegal and unjustified aggression against Ukraine, is not only a dramatic humanitarian crisis for Ukraine. It has increased food insecurity in many developing countries around the world.

We are witnessing a dramatic surge in food, fertilizer and energy prices, which exceed the levels reached during the last major food crisis in 2011, as well as risks to supply of staple commodities with immediate impacts on world food security and nutrition.

Let me be clear that any negative impact on agricultural production in Ukraine, and therefore on global food security, prices or availability of commodities on the world market is a result of the destabilising effects of the Russian aggression and military activities on Ukrainian soil.

The EU considers that the emerging food security challenges should be addressed as a priority at the 12th WTO Ministerial Conference.

We hope this plurilateral statement may help in focussing attention on the crucial importance of responding to these challenges.

The discussions in the recent food security seminar, including contributions from FAO, WFP and other organisations, were also useful.   

The plurilateral statement is also a  response to the call of  Director-General Okonjo-Iweala for coordinated actions in areas like export restrictions on food, and transparency, including transparency of stocks.

We call for unanimous support for a decision exempting World Food Programme humanitarian purchases from export restrictions. This would facilitate sourcing supplies by the WFP in these critical times. The EU expects the WTO and its members to act at this critical moment in order to help ensure open trade, strong rules, resilient markets, and less trade distortions.

The EU will remain engaged in negotiations towards MC12 for outcomes, which will provide a tangible response to the food security challenges.

European Union interventions at the General Council, 09-10 May 2022, https://www.eeas.europa.eu/delegations/world-trade-organization-wto/european-union-interventions-general-council-09-10-may_en?s=69

Item 12 was a topic raised by the Russian Federation in its submission of 16 March 2022 (WT/GC/245) in which it alleges that the food security and other supply chain problems flow from sanctions imposed on Russia by various WTO members. See COMMUNICATION FROM THE RUSSIAN FEDERATION, WT/GC/245 (16 March 2022). The document is embedded below.

WTGC245

The countries imposing sanctions on Russia strongly disagree with Russia’s characterization of the causes for the food security challenge as the EU’s intervention at the General Council meeting makes clear.

Item 12 – TRADE-DISRUPTIVE PRACTICES OF CERTAIN MEMBERS AND THEIR IMPLICATIONS FOR THE WTO – COMMUNICATION FROM THE RUSSIAN FEDERATION (WT/GC/245)

Let us be clear from the outset: it is the Russian army that has invaded the Ukrainian territory. We strongly condemn the illegal, unprovoked, unjustifiable aggression of Ukraine by the Russian Federation, which has brought catastrophic loss of life and human suffering in Ukraine and poses a direct threat to the European and international security order.

The Russian Federation’s hostile act is a blatant violation of international law and the rules-based international order, the consequences of which have already extended well beyond Ukraine’s borders.

We are greatly concerned about the global trade consequences of the aggression; in particular as regards the supply of a number of commodities, including oil and gas, staple foods, and critical minerals.

The European Union also strongly specifically condemns Russia’s actions targeting Ukraine’s food supply and production. Credible reports highlighted that Russian forces are attacking and plundering grain silos in Ukraine as well as damaging and removing Ukrainian farm equipment. Furthermore, the closure of the Black Sea by Russian armed forces effectively blocks the exports of grains via Ukrainian seaports.

The food security situation is already dramatic for those directly involved in Ukraine. The impact of the Russian aggression is however not just restricted to Ukraine and its citizens but is seriously challenging food availability in some vulnerable net food-importing countries in particular. Russia’s war of aggression in Ukraine is thus jeopardizing the food supply to some of the most vulnerable parts of the world, particularly in developing countries, and pushing millions of people into food insecurity.

The Russian Federation has now embarked on a further campaign of disinformation in the context of the WTO. In the face of this, the European Union, alongside our partners, deems it important to set the record straight for the benefit of the membership.

In a transparent manner, the European Union have issued a Joint Statement together with partners in relation to the trade measures that the European Union and other members are adopting towards Russia, including measures that deny the Russian Federation the benefits which the WTO Agreement provides, such as the benefit of the most-favoured nation treatment. The measures include export restrictions and import restrictions targeting the Russian Federation.

The European Union considers these actions necessary to protect its essential security interests within the meaning of the applicable security exceptions of the WTO Agreement. The purpose of these measures is to restore peace and security, in full respect of Ukraine’s territorial integrity, sovereignty and independence within its internationally recognised borders. Therefore, these measures are fully consistent with WTO rules.

The European Union would like to underline that the EU’s sanctions do not target the agricultural sector of the Russian Federation. The sanctions are primarily directed at the Russian Government, the financial sector and the economic elites. They target the ability to finance the Russian aggression against Ukraine and its people.

Therefore, the European Union, alongside our partners, strongly condemns Russia’s attempts at putting the blame on international sanctions for the global food security crisis that is directly caused by Russia’s aggression against Ukraine and its people.

“In this context, we are committed to helping Ukraine cope with the trade consequences of the aggression. We will seek to facilitate access and transit for imports from Ukraine to our markets and encourage Members to do likewise – including by eliminating tariffs and other restrictions to imports, facilitating the use of infrastructure and facilitating customs procedures in a manner commensurate with their capacity and consistently with WTO rules.

The European Union will continue to provide humanitarian aid to alleviate the suffering of Ukrainian civilians by securing their access to basic goods and services, notably food. The European Union will also help Ukrainian farmers to continue planting and growing cereals and oilseeds, much needed for themselves and for the world, and to facilitate their exports.

We call on the Russian Federation to immediately stop its military aggression in Ukraine, which is also the only way to stop the humanitarian and food security crisis.

European Union interventions at the General Council, 09-10 May 2022, https://www.eeas.europa.eu/delegations/world-trade-organization-wto/european-union-interventions-general-council-09-10-may_en?s=69.

A number of WTO Members are providing temporary duty free treatment to goods from Ukraine besides the EU — Canada and U.K.. The U.S. has removed Section 232 tariffs on steel from Ukraine for the next year as well.

The EU is working to facilitate movement of Ukrainian agricultural products by land through EU member states. But the main challenges are the blockage of Black Sea ports by Russia and the reported theft of agricultural products and equipment from Ukrainian farms and depots. See, e.g., CNN, Russians steal vast amounts of Ukrainian grain and equipment, threatening this year’s harvest, May 5, 2022, https://www.cnn.com/2022/05/05/europe/russia-ukraine-grain-theft-cmd-intl/index.html; Voice of America, Russian Blockade of Ukrainian Sea Ports Sends Food Prices Soaring, May 7, 2022, https://www.voanews.com/a/russian-blockade-of-ukrainian-sea-ports-sends-food-prices-soaring/6561914.html; Politico, EU plans to help Ukraine’s food exports dodge Black Sea blockade, EU farm chief warns Russia wants to portray itself as feeding the poor, while it destroys Ukraine’s farmland. May 10, 2022, https://www.politico.eu/article/eu-plans-to-boost-ukraines-food-exports-black-sea-blockade/.

While many WTO Members will push for a WTO decision to bolster food security, it is unlikely that Russia and those engaging in export restraints will permit a consensus decision.

Fisheries Subsidies

While many Members and the WTO Director-General talk about delivering an agreement on fisheries subsidies, there has not been a lot of progress in recent months according to WTO news releases on meetings to review the issues. See, e.g., WTO News Release, Negotiations on Fisheries Subsidies, Chair of fisheries subsidies negotiations reports on consultations with members, 15 February 2022, https://www.wto.org/english/news_e/news22_e/fish_15feb22_e.htm.

After more than 21 years of negotiations, there is obviously a feeling that Members need to reach agreement. However, considering the entrenched positions of some and the current geopolitical situation, any agreement is likely to be modest in actual effect. I have reviewed developments in the negotiations in prior posts. See, e.g., https://www.wto.org/english/news_e/news22_e/fish_15feb22_e.htm.

WTO Reform

Much has been written on WTO reform in recent years. What is important to WTO Members varies although most support the need for reform. Changes to reinvigorate the negotiating function, improving transparency, agricultural reform, addressing dispute settlement concerns of the U.S. and others, addressing industrial subsidies (and subsidies more broadly), state-owned and state-invested enterprises, problems of global excess capacity in various industries, special and differential treatment, compatability of state-directed economies with WTO rules are just a handful of issues important to some Members. I have addressed some of these topics in prior posts. See, e.g., April 28, 2022:  WTO Reform and the 12th Ministerial Conference — What Is likely on Dispute Settlement?, https://currentthoughtsontrade.com/2022/04/28/wto-reform-and-the-12th-ministerial-conference-what-is-likely-on-dispute-settlement/; April 23, 2022:  The WTO’s upcoming 12th Ministerial Conference to be held in Geneva the week of June 13, 2022 — What can be expected in the current geopolitical environment?, https://currentthoughtsontrade.com/2022/04/23/the-wtos-upcoming-12th-ministerial-conference-to-be-held-in-geneva-the-week-of-june-13-2022-what-can-be-expected-in-the-current-geopolitical-environment/; February 14, 2022:  Dispute Settlement Reform at the WTO — What Needs to Precede Negotiations?, https://currentthoughtsontrade.com/2022/02/14/dispute-settlement-reform-at-the-wto-what-needs-to-precede-negotiations/.

There will likely be a document identifying some areas for future negotiations with a timeline of the 13th Ministerial as the target date for completion of the analysis. The level of ambition agreed up is not likely to be high in the current environment. Certainly, there won’t be agreement on tackling core issues such as the need for convergence of economic systems. While I would expect dispute settlement to be included, there has been no real movement by Members to come to grips with underlying U.S. concerns. Without that happening, there will likely be little chance of an agreed reform package by the 13th Ministerial.

There could also be a decision on transparency at the 12th Ministerial. See, e.g., General Council agenda item 9 and JOB/GC/204/Rev.9 (document from 50 Members). The latest version of the proposed decision is embedded below. The key to movement is eliminating any “penalties” for noncompliance and addressing concerns of some developing countries and LDCs on the challenges they face (capacity building, assistance, etc.). Those seem to be addressed in the latest draft, so hopefully agreement can be reached in the coming weeks.

JobsGC204R9

Joint Statement Initiatives (JSIs)

As reviewed in prior posts, there has been good progress in a number of the JSIs which are essentially open plurilaterals. A few have results which will be presented at the 12th Ministerial. Others have ambitions to be concluded in the next year or so. See, e.g., April 23, 2022:  The WTO’s upcoming 12th Ministerial Conference to be held in Geneva the week of June 13, 2022 — What can be expected in the current geopolitical environment?, https://currentthoughtsontrade.com/2022/04/23/the-wtos-upcoming-12th-ministerial-conference-to-be-held-in-geneva-the-week-of-june-13-2022-what-can-be-expected-in-the-current-geopolitical-environment/ (“There are a host of Joint Statement Initiatives that are at various stages of progress on a plurilateral basis, with India and South Africa raising objections to plurilateral agreements being part of the WTO without consensus agreement. See, e.g., April 14, 2022:  Challenging China’s Trade Practices — What Role for the WTO?,  https://currentthoughtsontrade.com/2022/04/14/challenging-chinas-trade-practices-what-role-for-the-wto/ (“Ongoing JSI include those on electronic commerce, investment facilitation for development, plastics pollution and environmentally sustainable plastics trade, services domestic regulation, informal working group on MSMEs, and trade and environmental sustainability.  The WTO issues periodic press releases on developments in the talks.  See, e.g., JOINT INITIATIVE ON E-COMMERCE, E-commerce negotiators seek to find common ground, revisit text proposals, 21 February 2022,  https://www.wto.org/english/news_e/news22_e/jsec_23feb22_e.htm (hoping to have convergence on majority of issues by end of 2022)(86 WTO Members participating accounting for 90% of e-commerce trade including China, U.S. and most other major countries);  INVESTMENT FACILITATION FOR DEVELOPMENT, Investment facilitation negotiators take steps to assess needs of developing countries, 15 February 2022, https://www.wto.org/english/news_e/news22_e/infac_23feb22_e.htm (looking to complete by end of 2022)(over 100 WTO Members participate including China and most developed countries, but not the U.S.); INFORMAL DIALOGUE ON PLASTICS POLLUTION AND ENVIRONMENTALLY SUSTAINABLE PLASTICS TRADE, Plastics dialogue emphasizes need for international collaboration, cooperation, 30 March 2022, https://www.wto.org/english/news_e/news22_e/ppesp_31mar22_e.htm  (70 Members participate including China and most major developed countries but not the U.S.); Joint Initiative on Services Domestic Regulation, Negotiations on services domestic regulation conclude successfully in Geneva, https://www.wto.org/english/news_e/news21_e/jssdr_02dec21_e.htm (67 Members participated including China, the U.S. and other major developed countries); . MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES (MSMES), Working group on small business welcomes three more members, 8 February 2022, https://www.wto.org/english/news_e/news22_e/msmes_08feb22_e.htm (94 participants including China and most major developed countries but not the U.S.).”).

India, Namibia and South Africa have raised issues with whether such plurilateral agreements can be made part of the WTO body of agreements without consensus. See THE LEGAL STATUS OF ‘JOINT STATEMENT INITIATIVES’ AND THEIR NEGOTIATED OUTCOMES, Revision, WT/GC/W/819/Rev.1 (30 April 2021). While that question will not likely be resolved at the 12th Ministerial Conference, important progress is being made on the JSIs.

Moratorium on Imposing Customs Duties on Electronic Transmissions

During prior Ministerial Conferences there was agreement both on Members holding off on non-violation nullification and impairment cases under the TRIPS Agreement and also agreement to extend the moratorium on imposing customs duties on electronic transmissions. WTO Members have already agreed to extend til the 13th Ministerial the ban on non-violation TRIPS cases. But a number of developing countries are seeking to end the moratorium on customs duties citing studies on loss of government revenue from the moratorium and the increased importance of electronic commerce.

Some Members have also expressed concern about the JSI on e-commerce in light of the ongoing work program on e-commerce within the WTO.

In the briefing note on e-commerce on the WTO webpage from January 11, 2022, the following is a discussion of activities in 2020 and 2021 on the topics.

“In summer 2020, WTO members put forward proposals on the implications of the moratorium, its scope, the definition of electronic transmissions and the implication of the moratorium on revenue loss for developing countries. This discussion is part of the broader developmental aspect of e-commerce: developing and least-developed countries face various challenges related to e-commerce, such as connectivity, infrastructure and capacity to implement policies related to e-commerce.

“The General Council continued to review progress in the Work Programme based on reports submitted by the chairs of the relevant WTO bodies. The General Council Chair convened a Structured Discussion under the Work Programme in July 2021. The discussion focused on three themes: electronic transmissions, imposition of internal non-discriminatory taxes on electronic transmissions, and e-commerce challenges and opportunities particularly in light of the COVID-19 pandemic.

“In a subsequent submission in November 2021, some members outlined that it is necessary to have more clarity on the definition of electronic transmissions, consensus on the scope of the moratorium and an understanding of the impact of the moratorium in order to enable the WTO members to take an informed decision at MC12 on whether or not to extend the moratorium on customs duties.

“In November 2021, a group of WTO members put forward a proposal that contains draft ministerial text for possible adoption by ministers at MC12 for the extension of the moratorium and continuing the reinvigoration of the work programme. Views of members vary and consultations led by the General Council chair continued ahead of the conference scheduled to start on 30 November.”

It is likely that the moratorium will be extended to the 13th Ministerial but it will likely be a late agreed topic and will be coupled with a “reinvigorated” WTO work program on e-commerce and a likely lack of agreement on the role of plurilaterals moving forward.

Conclusion

At a time of tremendous trade challenges globally, the WTO continues to struggle to demonstrate its relevance to addressing current issues. The large number of Members, the very different perspectives on what they look to the WTO to provide, the emergence of economically important Members with economic systems not really compatible with existing WTO rules, the consensus based system and many other factors make restoring relevance for many of the current challenges a daunting task. The geopolitical crisis flowing from Russia’s invasion of Ukraine has both expanded the challenges and made resolution through the WTO more difficult.

The WTO Director-General is urging Members to achieve results at the 12th Ministerial even if less ambitious than might have been possible in a different environment. As the above review suggests, a modest package is possible but not at all certain. There is very little time to close the gaps and get a meaningful package ready. Let’s hope that Members can rise to the occasion.

Possible Compromise on Access to Vaccines — draft understanding between EU, US, South Africa and India

Press articles and a release from the World Trade Organization indicate that the small group negotiations between the European Union, United States, India and South Africa have reached a compromise on the India-South Africa proposal for a broad waiver of TRIPS requirements during the COVID-19 pandemic and the European Union’s proposal for a different solution that wouldn’t constitute a waiver. See PoliticoPro, SCOOP: There’s a TRIPS waiver compromise. It’s been reached between EU, SA, India & US and currently only covers vaccines, March 15, 2022, https://twitter.com/ashleighfurlong/status/1503799100214583300; Inside U.S. Trade’s World Trade Online, USTR: High-level TRIPS waiver talks yield compromise; text not yet agreed to, March 15, 2022,https://insidetrade.com/daily-news/ustr-high-level-trips-waiver-talks-yield-compromise-text-not-yet-agreed; Inside U.S. Trade’s World Trade Online, Okonjo-Iweala hails TRIPS compromise as industry remains opposed, March 16, 2022, https://insidetrade.com/daily-news/okonjo-iweala-hails-trips-compromise-industry-remains-opposed; Washington Trade Daily, Details of TRIPS Waiver Compromise, March 17, 2022, https://files.constantcontact.com/ef5f8ffe501/abdf1d95-8d5b-4bb6-87e9-9ad73bcae287.pdf.

The agreement, which still requires final agreement on text by the small group and then consideration and acceptance by the full WTO Membership, is a staged one, applying first to vaccines and six months later (if subsequently agreed) to diagnostics and therapeutics. The agreement would apply to developing countries other than those who exported 10% or more of vaccines in 2021. Based on the WTO-IMF COVID-19 Vaccine Trade Tracker, the only developing country with 10% or more of global exports in 2021 was China. https://www.wto.org/english/tratop_e/covid19_e/vaccine_trade_tracker_e.htm.

By picking exports in 2021 as the test for eligibility for developing countries, India remains eligible for the proposed compromise simply because the country, one of the world’s largest vaccine producers and a country that had contracts to export huge quantities to many of the world’s poorest countries in 2021, closed off exports for much of 2021 because of internal needs.

Press reports have indicated that some other countries, like Brazil, are not eligible. If true, this would flow from something other than export volume (e.g., indication that it would not seek special and differential treatment going forward) as Brazil had a negligible share of global exports of COVID vaccines in 2021.

The WTO’s Director-General released a press statement on March 16 which is copied below. See WTO news release, Director-General Okonjo-Iweala hails breakthrough on TRIPS COVID-19 solution, 16 March 2022, https://www.wto.org/english/news_e/news22_e/dgno_16mar22_e.htm

“World Trade Organization Director-General Ngozi Okonjo-Iweala today warmly welcomed the breakthrough among four WTO Members on a waiver of the Trade Related Intellectual Property agreement for the production of vaccines against the COVID-19 pandemic.

“’This is a major step forward and this compromise is the result of many long and difficult hours of negotiations. But we are not there yet. We have more work to do to ensure that we have the support of the entire WTO Membership,’ the Director-General said.

“While the agreement between the European Union, India, South Africa and the United States is an essential element to any final deal, she cautioned that not all the details of the compromise have been ironed out and that internal domestic consultations within the four members are still ongoing. Moreover, she stressed that work must commence immediately to broaden the discussions to include all 164 members of the WTO.

“’In the WTO we decide by consensus, and this has not yet been achieved. My team and I have been working hard for the past three months and we are ready to roll up our sleeves again to work together with the TRIPS Council Chair Ambassador Lansana Gberie (Sierra Leone) to bring about a full agreement as quickly as possible. We are grateful to the four Members for the difficult work they have undertaken so far,’ said Dr. Okonjo-Iweala.”

Neither the EU nor the U.S. have released statements which is consistent with the apparent state of play of the negotiations in the small group. One of the parties or one of those private parties being consulted by WTO Members presumably has leaked the text which is available on Stats News. See Stat News, Ed Silverman, A compromise is reached on an intellectual property waiver for Covid-19 vaccines, but does it go far enough?, March 15, 2022, https://www.statnews.com/pharmalot/2022/03/15/covid19-vaccine-patents-wto/. The two page document is embedded below.

TRIPS-COVID-19-solution-document

Proponents and opponents of a TRIPS waiver responded quickly as reflected in press releases and other articles. See, e.g., KNOWLEDGE ECOLOGY INTERNATIONAL, QUAD’s tentative agreement on TRIPS and COVID 19, March 15, 2022, https://www.keionline.org/37544; In These Times, New “Compromise” on an IP Waiver for Covid Vaccines Is Worse Than No Deal, Activists Say, March 16, 2022, https://inthesetimes.com/article/wto-trips-waiver-intellectual-property-biden-vaccines-diagnostics-treatments; Devex, Devex Check Up: At last, a TRIPS waiver compromise. But who’s happy?, March 17, 2022, https://www.devex.com/news/devex-checkup-at-last-a-trips-waiver-compromise-but-who-s-happy-102844; InfoJustice, STATEMENT ON THE LEAKED COVID-19 TRIPS WAIVERPROPOSAL, Posted by
Sean Flynn, Mar 16, 2022, http://infojustice.org/archives/43947; Relief Web, MSF responds to potential compromise on the ‘TRIPS Waiver’, 16 March 2022, https://reliefweb.int/report/world/msf-responds-potential-compromise-trips-waiver; U.S., Chamber of Commerce, U.S. Chamber of Commerce Opposes Proposal at WTO to Waive Intellectual Property Rights , March 16, 2022, https://www.uschamber.com/intellectual-property/u-s-chamber-of-commerce-opposes-proposal-at-wto-to-waive-intellectual-property-rights; , International Federation of Pharmaceutical Manufacturers & Associations, IFPMA statement on TRIPS discussion document, 16 March 2022, https://www.ifpma.org/resource-centre/statement-ifpma-trips-discussion-document/.

The proponents of a waiver are basically unhappy with the compromise which is not a waiver but rather a modification to requirements under TRIPS Art. 31. They are also unhappy with the fact that only vaccines are covered initially and the fact that the draft agreement deals with patents only versus the broader array of intellectual property rights. The statement from Doctors Without Borders reflects the types of concerns from those wanting a broader agreement and is copied below.

“MSF responds to potential compromise on the ‘TRIPS Waiver’

“Compromise neglects COVID-19 treatments and diagnostics and fails to address intellectual property barriers beyond patents, but there’s still time to get it right

“Geneva, 16 March 2022

“– The European Union, India, South Africa and the United States are working on a possible compromise to address intellectual property (IP)barriers on COVID-19 medical products. Médecins Sans Frontières/Doctors Without Borders (MSF) acknowledges the efforts towards a final resolution, but notes that the text that was leaked today is far from being an IP ‘waiver’ for pandemic medical tools.

“MSF urges all World Trade Organization (WTO) members to be aware of the limitations of the leaked text. WTO members should work together to ensure that any agreement tackles the current barriers to accessing all COVID-19 medical tools, including treatments and diagnostics, and also addresses patents and non-patent barriers in an effective way.

“According to MSF’s initial analysis, key limitations of the leaked text include that it covers only vaccines, is geographically limited, and covers only patents and does not address other intellectual property barriers, such as trade secrets, which may cover critical information needed to facilitate manufacturing. Regarding compulsory licensing for patents on COVID-19 vaccines, the leaked text introduces unnecessary reporting requirements for WTO members that could undermine the effectiveness of the mechanism.

“The leaked text appears to leave the door open for possible inclusion of treatments and diagnostics at a later stage. But delaying the decision on treatments is unacceptable, as many people will have no access to generic antivirals and countries are paying high prices for access to lifesaving treatments like baricitinib due topatent monopolies that block more affordable generic versions.

“The leaked text also fails to cover all countries. It limits ‘eligible members’ to developing countries and only those who exported less than 10 percent of the world’sCOVID-19 vaccine exports in 2021, effectively excluding Brazil and China from being able to use the ‘waiver’.

“The proposed compromise would require authorisation by governments on a product-by-product basis, which was one of the shortcomings of the existing mechanism in a pandemic context and makes its use very cumbersome. There is also a new obligation to identify all patents covered by the authorisation, something not required today under WTO trade rules.

“MSF points again to our position underlining the necessary scope and duration of an effective TRIPS Waiver for COVID-19.

Dimitri Eynikel, EU Policy Advisor for MSF’s Access Campaign:

“‘While it is good to see the groundwork for a potential compromise on addressing COVID-19 intellectual property barriers, all WTO members should remain vigilant to the fact that this leaked text contains considerable limitations, and needs to be urgently improved.

“It is incredibly concerning that the leaked text currently only covers vaccines, but neither treatments nor diagnostics. Excluding treatments and diagnostics is acritical weakness, especially as access to COVID-19 treatments remains a significant problem in many low- and middle-income countries, particularly in Latin America, in part because of patent barriers and restrictive licensing deals controlled by pharmaceutical corporations. Excluding countries with significant manufacturing and supply capacity like Brazil is highly problematic as it arbitrarily blocks potential critical avenues to increase access to COVID-19 medical tools for low- and middle-income countries.

“‘The world needs effective solutions to the inequities in access for all COVID-19 medical tools witnessed in this pandemic. The good news is there is still room for governments to improve and make sure that any final agreement adequately addresses the remaining barriers now missing in the leaked text. We urge all WTO members to do so.’”

The pharmaceutical industry’s concerns basically follow their longstanding position that with the rapid increase in vaccine production in 2021 and ongoing in 2022, there is no need for the agreement and it sends the wrong message to innovators. The statement from the IPFMA is copied below.

Following reports on the status of informal discussions led by the WTO Secretariat with the European Union (EU), India, South Africa, and the USA, on 16 March 2022, biopharmaceutical companies reaffirm their position that weakening patents now when it is widely acknowledged that there are no longer supply constraints of COVID-19 vaccines, sends the wrong signal. 

“2022 kicked off with COVID-19 vaccine production from both developing and developed country manufacturers reaching 12 billion within a year of the first vaccine being authorized. Today industry is able to produce over a billion vaccine each month. COVAX is now fully meeting its commitments. Since the beginning of 2022, there has been broad consensus that the challenge now is how to get the vaccines into the arms of people who need them, rather than vaccine supply. When the IP TRIPS Waiver was first proposed in 2020, it was to the wrong solution to the problem of scaling up manufacturing of potential COVID-19 vaccines which at the time had not yet even been authorized. Now the problem of supply has been addressed thanks to unprecedented collaboration involving companies from industrialized and developing countries, the TRIPS Waiver is not only the wrong solution, it is also an outdated proposal, that has been overtaken by events.

“Weakening intellectual property (IP) will do nothing to help the scaling up of vaccine manufacturing. There is a broad consensus among experts that waiving patents would not add a single additional vaccine dose, because technology transfer goes far beyond the patent, is built on trust, know-how sharing and voluntary licensing. This is exactly what manufacturers have done on an unprecedented scale. As of now, there are 371 collaborations on vaccines manufacturing and 155 for therapeutics and, in addition, the multiple announcements of partnerships to improve geographical diversity of vaccine production, are proof in themselves that the proposed IP TRIPS waiver is unnecessary and irrelevant, at worst sends the wrong signal at the wrong time.

“The IP TRIPS Waiver proposals should be recognized for what they are – political posturing that are at best a distraction, at worse creating uncertainty that can undermine innovation’s ability to respond to the current and future response to pandemics. The current proposals should be shelved; and the focus should be directed, to admittedly more difficult actions that will change lives for the better: supporting country readiness, contributing to equitable distribution, and driving innovation (Ref Three priorities to urgently increase access to COVID-19 vaccines).”

Comments

Over the last eighteen months, I have posted regularly on the COVID-19 pandemic and the Indian and South African proposal for a broad TRIPS waiver. Following the recent European Union – African Union meeting in Brussels, it was clear that the EU was committed to finding a mutually agreeable solution with the countries of Africa in the coming months. Thus, the announcement of a breakthrough in the small group negotiations is not surprising. See February 21, 2022:  The EU – AU Summit and the promise of a resolution to the WTO pandemic response package, https://currentthoughtsontrade.com/2022/02/21/the-eu-au-summit-and-the-promise-of-a-resolution-to-the-wto-pandemic-response-package/.

Data gathered and published by various multilateral organizations confirm the enormous ramp up in both vaccine capacity and production. And there has been significant movement in increasing production of vaccines in more developing countries, including a number in Africa. See, e.g., February 16, 2022:  Building Vaccine Capacity in Africa – Exciting News from BioNTech, https://currentthoughtsontrade.com/2022/02/16/building-vaccine-capacity-in-africa-exciting-news-from-biontech/.

Articles also confirm that the challenge in low-income countries is now not access to vaccines but rather all of the other requirements to achieve much higher vaccination rates (including better access to testing). See, e.g., WHO, WHO Director-General’s remarks atSession 2 – Potential Opportunities for Innovation and Collaboration, 3 March 2022, https://www.who.int/director-general/speeches/detail/who-director-general-s-remarks-at-session-2-potential-opportunities-for-innovation-and-collaboration-covid-19-dialogue-with-ministers-of-health-3-march-2022.

Thus, it is hard for me to find merit in the ongoing claims for a need for a broad TRIPS waiver or even the draft agreement at least as it pertains to the COVID-19 pandemic and equitable access to vaccines. WTO relevance requires addressing either current pressing issues or those that will continue to be present in the future. The draft agreement may meet the need for some compromise between Members like the EU and India, South Africa and other supporters of the waiver. However, the agreement doesn’t appear to serve a useful purpose by addressing current challenges (e.g., testing) or addressing a road forward for future pandemics.


The WTO’s efforts to address the COVID-19 pandemic — will Members reach agreement by the end of February?

Throughout the current pandemic, the WTO has generated large amounts of information to help Members examine the response to the pandemic that would minimize disruptions and maximize availability of medical goods. See, e.g., WTO webpage and series of reports generated by the Secretariat (WTO, COVID-19 and world trade, https://www.wto.org/index.htm; https://www.wto.org/english/tratop_e/covid19_e/covid19_e.htm. The WTO Secretariat provides periodic updates on reports as well as tracking import and export restrictions on medical goods and inputs. See, e.g., WTO news, WTO Secretariat updates members on COVID-19 reports and new tools, 28 January 2022, https://www.wto.org/english/news_e/news22_e/nama_28jan22_e.htm.

With support from WTO Members, the WTO has worked with other multilateral organizations to promote a coordinated response. See, e.g., WTO press release, WHO, WIPO, WTO heads chart future cooperation on pandemic response, 1 February 2022, https://www.wto.org/english/news_e/news22_e/igo_01feb22_e.htm; WTO press release, International organizations discuss how to improve access to COVID vaccines, countermeasures, 22 December 2021, https://www.wto.org/english/news_e/news21_e/covid_22dec21_e.htm (IMF, World Bank, WHO, WTO); WTO-IMF COVID-19 Vaccine Trade Tracker, Last updated: 17 January 2022, https://www.wto.org/english/tratop_e/covid19_e/vaccine_trade_tracker_e.htm.

Most WTO Members view agreeing on a multilateral response to the pandemic as of critical importance. This includes both addressing a host of non intellectual property issues [“These include issues relating to trade facilitation, export restrictions, regulatory coherence, transparency and monitoring, scaling-up of production and distribution on essential goods, services and crisis preparedness and resiliency, and coordination with relevant stakeholders, including international organizations and the private sector.”] and resolving whether there should be a waiver from some TRIPS obligations as requested by India, South Africa and supported by others. The WTO Secretariat put out a briefing note on the issue of trade and health looking at the state of play as of 6 January 2022. See Trade and health: WTO response to the COVID-19 pandemic, 6 January 2022 (above quote is from the briefing note), https://www.wto.org/english/thewto_e/minist_e/mc12_e/briefing_notes_e/bftrade_and_health_e.htm.

As I have reviewed in prior posts, the waiver of TRIPS obligations proposal from India and South Africa has been challenging for a number of Members to accept. See, e.g., WTO efforts to address the COVID-19 pandemic — the January 10, 2022 General Council meeting and some current developments of interest, https://currentthoughtsontrade.com/2022/01/11/wto-efforts-to-address-the-covid-19-pandemic-the-january-10-2022-general-council-meeting-and-some-current-developments-of-interest/. The briefing note provides a good summary of the TRIPS waiver proposal and is copied below.

“TRIPS Council

“In parallel to the process facilitated by Ambassador Walker, members have been seeking convergence on how best to use the global intellectual property (IP) system to tackle COVID-19 in the context of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS).

“Waiver request

“Over the past year, members have engaged in discussions based on various texts. On 15-16 October 2020, India and South Africa introduced at the TRIPS Council document IP/C/W/669 requesting a waiver from certain provisions of the TRIPS Agreement for the prevention, containment and treatment of COVID-19. The proposal has since been co-sponsored by the delegations of Kenya, Eswatini, Mozambique, Pakistan, Bolivia, Venezuela, Mongolia, Zimbabwe, Egypt, the African Group, the LDC Group, the Maldives, Fiji, Namibia, Vanuatu, Indonesia and Jordan.

“Since the introduction of the document, discussions have taken place in various formal and informal TRIPS Council meetings. Delegations have exchanged views, asked questions, sought clarifications and provided replies, clarifications, and information on the waiver request. On 21 May 2021, the co-sponsors issued a revised proposal which was circulated in document IP/C/W/669/Rev.1 and on 29 September 2021 they circulated a summary of their interventions in document IP/C/W/684.

“In the course of discussions on the revised waiver proposal, delegations have held focused discussions on the topics of scope, both from the perspective of products and of IP rights, on duration, implementation and the protection of undisclosed information.

“All delegations remain committed to the common goal of providing timely and secure access to high-quality, safe, efficacious and affordable vaccines and medicines for all, but discussions have shown that disagreement persists on the fundamental question of whether a waiver is the appropriate and most effective way to address the shortage and inequitable distribution of and access to vaccines and other COVID-related products.

“EU proposal

“In addition, a proposal (IP/C/W/681) for a draft General Council declaration on the TRIPS Agreement and Public Health in the circumstances of a pandemic, issued by the European Union, has also been discussed in meetings since its circulation on 21 June 2021.

“The European Union proposal, which is backed by other developed country members, calls for limiting export restrictions, supporting the expansion of production, and facilitating the use of current compulsory licensing provisions in the TRIPS Agreement, particularly by clarifying that the requirement to negotiate with the right holder of the vaccine patent does not apply in urgent situations such as a pandemic, among other issues.

“While recognizing that intellectual property rights (IPRs) should not stand in the way of deploying and creating capacity, or of ensuring equitable access to vaccines and therapeutics, several developed and developing members have cautioned that this can be attained while maintaining IP as the basis for incentivizing investment in innovation, and for licensing technology transfer, so that members can effectively fight new strains of COVID-19 and any future diseases and pandemics. Some are particularly concerned that waiving IP rights might undermine the existing efforts and arrangements for large scale production of vaccines that rely, in part, on the IP system.  

“State of play

“Since the General Council held on 7 October 2021,  members have held intense contacts in various configurations. Some members have noted encouraging exchanges at small group discussions and bilateral meetings which have helped to identify points of convergence on how to provide a common IP response to COVID-19. Others have said that further conversations that move the TRIPS Council towards evidence-based and pragmatic solutions should guide their discussions at this critical juncture.

“At a meeting of the TRIPS Council on 18 November, members formally adopted an oral status report for the General Council on 22-23 November indicating that the TRIPS Council has not yet completed its consideration of the revised waiver request. The TRIPS Council will therefore continue its consideration, including through small-group consultations and informal open-ended meetings, and report back to the 12th Ministerial Conference (MC12) as stipulated in Article IX:3 of the Marrakesh Agreement. In addition, the TRIPS Council will also continue in the same manner its consideration of the other related proposals by members.

“This means the TRIPS Council remains in session so that it  can continue to provide a forum for delegations to provide transparency on their ongoing talks, and to adopt any elements or solutions they may have found.”

Despite the postponement of the 12th Ministerial Conference due to the increase in COVID cases from the omicron variant, WTO Members have indicated a desire to push ahead to resolve some matters, including the multilateral response to the pandemic. Last month, Director-General Ngozi Okonjo-Iweala urged WTO Members to push forward and seek a resolution on the WTO’s response to the pandemic by the end of February this year. See WTO press release, Members discuss way forward in dedicated meeting on WTO pandemic response, 27 January 2022,https://www.wto.org/english/news_e/news22_e/gc_27jan22_e.htm (“WTO members met on 27 January to discuss the WTO response to the COVID-19 pandemic. The informal meeting convened by the Chair of the General Council, Ambassador Dacio Castillo of Honduras, looked at issues related to cross-border trade flows and the proposal to waive certain intellectual property protections related to COVID-19 countermeasures. Director-General Ngozi Okonjo-Iweala called on members to move swiftly to try and reach a comprehensive outcome by the end of February.).

One week later according to press reports, Amb. Castillo called for a “strategic pause” in the formal negotiations on a WTO response to permit WTO Members to discuss their differences with each other outside of the full group format. See Inside U.S. Trade’s World Trade Online, General Council chair: WTO pandemic package talks need ‘strategic pause’, February 4, 2022, https://insidetrade.com/daily-news/general-council-chair-wto-pandemic-package-talks-need-%E2%80%98strategic-pause%E2%80%99.

Observations

The chances of a final resolution on a pandemic response package by the end of February seem remote if not nonexistent at the present time. The United States is reportedly not actively engaged and has raised some concerns with the export restraint portion of the package. There seems little likelihood that the EU and others supporting an approach other than TRIPS waiver will agree to a waiver, while those supporting a waiver don’t seem inclined to accept an alternative approach.

There are a number of reasons why a waiver is unlikely to be accepted. First, vaccine equity in 2021 had more to do with India’s failure to export the volumes of vaccines contracted with COVAX than any other single cause although slowness in shifting supplies from countries with surplus product was also an issue. In 2022, there will be sufficient supplies of vaccines for the entire world, and there have been major commitments by major countries to supply large volumes of doses to countries in need. UNICEF tracks capacity to produce COVID vaccines and shipments of vaccines. Around 11 billion doses were shipped globally (including in-country) in 2021 and projections for shipments in 2022 range from 16.8-20.9 billion doses. See COVID-19 Vaccine Market Dashboard, 5 February 2022, doses delivered collectively, 11.771 billion, https://www.unicef.org/supply/covid-19-vaccine-market-dashboard; forecasted COVID-19 vaccine supply availability, 2022 (low estimate 16.8 billion doses; base estimate, 18.7 billion doses; high estimate 20.9 billion doses) (under capacity tab), A waiver of TRIPS obligations would be unlikely to change the quantity of vaccines available for shipment in 2022, so seems unnecessary to address vaccinating the world’s population in 2022.

Second, multilateral efforts and efforts of some pharmaceutical companies has resulted in a rapid expansion of production capacity around the world as the above figures confirm. Even where pharmaceutical companies have not licensed their vaccine technologies, there have been independent breakthroughs including on mRNA vaccines. See, e.g., Reuters, In world first, South Africa’s Afrigen makes mRNA COVID vaccine using Moderna data, February 4, 2022, https://www.reuters.com/world/africa/world-first-safricas-afrigen-makes-mrna-covid-vaccine-using-moderna-data-2022-02-03/ (“CAPE TOWN, Feb 3 (Reuters) – South Africa’s Afrigen Biologics has used the publicly available sequence of Moderna Inc’s (MRNA.O) mRNA COVID-19 vaccine to make its own version of the shot, which could be tested in humans before the end of this year, Afrigen’s top executive said on Thursday. The vaccine candidate would be the first to be made based on a widely used vaccine without the assistance and approval of the developer. It is also the first mRNA vaccine designed, developed and produced at lab scale on the African continent.”).

Third, recent press articles indicate that some countries with very low vaccination rates have nonetheless developed significant antibodies in their populations due to prior waves of infections of COVID-19. With lower average age of populations, COVID-19 has had less severe consequences on their populations, such that there is a belief they are moving to an endemic situation with COVID-19. See my recent post, January 30, 2022:  Recent National Public Radio story, “Africa may have reached the pandemic’s holy grail,” raises interesting questions on a country’s age distribution and ability to get past the pandemic stage with lower vaccination rates, https://currentthoughtsontrade.com/2022/01/30/recent-national-public-radio-story-africa-may-have-reached-the-pandemics-holy-grail-raises-interesting-questions-on-a-countrys-age-distribution-and-ability-to-get-past-the-pandemic-stage-wit/.

All of the above suggests that the case for a waiver, at least at this time, is not strong, which will likely keep opposition of the EU and others strong.

The WTO has served as a depository for information on the types of restrictions and has permitted Members to encourage limiting restrictions on access to critical medicines and inputs. It has also developed reports helpful to Members to understand existing barriers or restrictions as well as to do outreach to the private sector for a better understanding of bottlenecks in production and distribution ramp-ups. The WTO in conjunction with other multilateral organizations has helped generate information to better inform the needs of countries for assistance and develop more coordinated efforts at support.

The WTO Members may yet be able to reach agreement on a response to the pandemic that will not only help with the current pandemic but establish a common frame of reference of dealing with future pandemics in a more effective manner that promotes greater equity. It is just unlikely to happen in the next 23 days.

The trade and investment restrictions flowing from censorship — a recent U.S. International Trade Commission Report and the implications for the ongoing Joint Statement Initiative on E-Commerce

Eighty-six WTO Members are engaged in the ongoing Joint Statement Initiative negotiations on e-commerce. See WTO, Joint Initiative on E-Commerce, https://www.wto.org/english/tratop_e/ecom_e/joint_statement_e.htm (“As of January 2021, there are 86 WTO members participating in these discussions, accounting for over 90 per cent of global trade. As is the case for all the joint initiatives, participation in the e-commerce JI is open to all WTO members. The initiative is jointly co-convened by Ambassador George Mina (Australia), Ambassador YAMAZAKI Kazuyuki (Japan) and Ambassador Tan Hung Seng (Singapore).”). Among the 86 Members who are participating in the negotiations are China, Russia, Indonesia and Turkey as well as major developed countries from Europe, the U.S., Japan, Korea, Canada, Australia, and New Zealand. Not included in the list as of January last year were India and Vietnam. The lack of meaningful rules on e-commerce is a reflection of the challenges the WTO negotiating function has faced in moving forward with multilateral rules.

Reports from the WTO have been that the plurilateral negotiations on e-commerce have made good progress through the end of 2021. See WTO news release, E-commerce co-convenors welcome substantial progress in negotiations, 14 December 2021, https://www.wto.org/english/news_e/news21_e/ecom_14dec21_e.htm; WTO Joint Statement Initiative on E-commerce, Statement by Ministers of Australia, Japan and Singapore, December 2021, https://www.wto.org/english/news_e/news21_e/ji_ecom_minister_statement_e.pdf. The Joint Statement is copied below.

“The COVID-19 pandemic has highlighted the digital economy’s importance, accelerated the digital
transformation and heightened the need for global rules governing digital trade. As Co-convenors of the
Joint Statement Initiative on Electronic Commerce, we are committed to responding to this challenge. This
initiative will update the WTO rulebook in an area of critical importance to the global economy.

“We recognise the importance of the digital economy in post-COVID-19 economic recovery. The digital
economy offers enormous opportunities for developing Members and least-developed country (LDC)
Members, including by lowering the costs for businesses, particularly MSMEs, to access and participate in
global markets. WTO rules and commitments on digital trade can help unlock these opportunities.

“In this context, we will continue to drive negotiations towards a high standard and commercially meaningful outcome building on existing WTO agreements and frameworks. We will continue to promote inclusiveness and encourage the participation of as many WTO Members as possible in the negotiations, which were launched in our January 2019 Ministerial statement.

“We welcome the substantial progress made to date in the negotiations. We have achieved good
convergence in negotiating groups on eight articles – online consumer protection; electronic signatures and authentication; unsolicited commercial electronic messages; open government data; electronic contracts; transparency1; paperless trading; and open internet access. The outcomes already achieved in these areas will deliver important benefits including boosting consumer confidence and supporting businesses trading online.

“In addition, we have seen the consolidation of text proposals in other areas, including on customs duties on electronic transmissions, cross-border data flows, data localisation, source code, electronic transactions frameworks, cybersecurity, and electronic invoicing, as well as advanced discussions on market access. We will intensify negotiations in these areas from early 2022. We note that provisions that enable and promote the flow of data are key to high standard and commercially meaningful outcome.

“Participants in the initiative support the continuation of the multilateral e-commerce moratorium in
fostering certainty and predictability for businesses. The co-convenors consider it crucial that the initiative
makes permanent among participants the practice of not imposing customs duties on electronic
transmissions.

“”In light of the strong progress that has been achieved to date, the co-convenors will arrange the JSI work programme to secure convergence on the majority of issues by the end of 2022. We will identify
opportunities throughout 2022 for Ministers to provide guidance on key issues in the negotiations.
We look forward to working with all participating Members as we intensify the negotiations and work
towards a successful conclusion.

“The Hon Dan Tehan MP, Minister for Trade, Tourism and Investment, Australia
“H.E. Mr HAYASHI Yoshimasa, Minister for Foreign Affairs, Japan
“H.E. Mr HAGIUDA Koichi, Minister of Economy, Trade and Industry, Japan
“H.E. Mr Gan Kim Yong, Minister for Trade and Industry, Singapore

“____

“1 Subject to the final scope of provisions and architecture”

Absent from the topics being discussed (based on the joint statement) are rules around censorship, although some topics can indirectly affect censorship actions (localisation and free flow of data).

Censorship is a major problem for digital trade and service providers, a fact made clear by a recent study from the U.S. International Trade Commission in response to a request from the U.S. Senate Finance Committee. See U.S. International Trade Commission, Foreign Censorship, Part 1: Policies and Practices Affecting U.S. Businesses, Inv. No. 332-585, Publ. 5244 (December 2021), https://www.usitc.gov/publications/332/pub5244.pdf. It is hard to understand how the U.S., EU countries and others can sign off on an e-commerce agreement that doesn’t address the enormous harmful trade effects from censorship.

Part of the Executive Summary of the USITC report (pages 7-13) is copied below and identifies the importance of addressing censorship practices. The countries focused on in the report are China, the Russian Federation, India, Indonesia, Turkey and Vietnam. However, as recognized in the report, censorship is practiced by many more WTO Members.

“Executive Summary

“This report identifies and describes various foreign government censorship policies and practices,
including examples that U.S. businesses consider impediments to trade and investment. It is the first of
two reports requested by the U.S. Senate Committee on Finance (Committee) in its letter to the U.S.
International Trade Commission (Commission) dated April 7, 2021. The Committee stated that censorship
and its impact on the flow of information and services are critical issues for the digital economy and
requested that this first report include detailed information on the following:

“1. Identification and descriptions of various foreign censorship practices, in particular any
examples that U.S. businesses consider to impede trade or investment in key foreign markets.
The description should include to the extent practicable:

“a. the evolution of censorship policies and practices over the past five years in key
foreign markets;

“b. any elements that entail extraterritorial censorship; and

:c. the roles of governmental and nongovernmental actors in implementation and
enforcement of the practices.

“In response to the Committee’s request, this report identifies and describes censorship and censorship enabling policies and practices and the evolution of these policies and practices over the past five years in
six key foreign markets: China (including Hong Kong), Russia, Turkey, Vietnam, India, and Indonesia. For
these key markets, the report also describes elements that entail extraterritorial censorship and the roles
of governmental and nongovernmental actors in implementation and enforcement of censorship policies
and practices.

“In preparing this report, the Commission relied on information provided by a review of relevant
literature, a public hearing, written submissions, interviews with representatives from industry,
academia, the U.S. government, and nongovernmental organizations (NGOs), and publicly available data.
The Commission held a public hearing on July 1, 2021, and participants included representatives of
academic institutions, NGOs, and trade associations. The Commission also received written submissions
for that hearing from a similar cross section of interested parties.

“Defining Censorship

“Censorship can be defined in various ways. For the purposes of this investigation, based on the request
letter from the Committee to the Commission dated January 4, 2021, censorship is defined as the
prohibition or suppression of speech or other forms of communication. This report addresses foreign
government censorship policies and practices, including laws, regulations, and other measures that either
directly target the suppression of speech or may be used to enable or facilitate its suppression. For
purposes of this report, we refer to these measures generally as “censorship-related policies and
practices” or simply “policies and practices.” This investigation focuses on foreign government
censorship-related policies and practices that impede trade and investment by U.S. businesses in key
markets.1 Industries commonly subject to censorship include digital and non-digital media (such as
newspapers, journals, and magazines); producers and distributors of audiovisual content (such as movies
and online video, television, books, and music); and social media and internet search providers, as well as
computer services more generally. The broad trend toward online publication and communication in the
global media and audiovisual services sectors and the heavy reliance on digital distribution for the crossborder provision of news, information, and audiovisual content imply that foreign censorship of the flow of information over digital platforms is having a significant impact on the digital economy. Given this and consistent with the Committee’s request, this report focuses on censorship in the online environment.

“This report in chapter 1 briefly describes how international human rights law has sought to distinguish
between measures that are and are not censorship and whether an instance of censorship may represent
a legitimate exception to freedom of expression. For example, international human rights law considers
such factors as whether a law provides clear direction and is not vague or ambiguous. However, it is
beyond the scope of this report to determine whether a given law may be appropriate or inappropriate
under international human rights law or other legal frameworks.

“Key Markets Where Foreign Censorship Affects U.S. Businesses

“In response to the Committee’s request for information about foreign censorship policies and practices in key markets, the Commission identified six markets: China, Russia, Turkey, Vietnam, India, and Indonesia.

“These six key markets were selected because they meet two broad criteria. First, governments in these
markets have introduced a wide range of censorship policies and practices, in particular with respect to
digital content, that involve restrictions on firms, including U.S. businesses. Second, for the digital and
media services most likely affected by censorship, demand in each of these markets is large enough to
represent a significant market opportunity for U.S. firms. In identifying key markets, the Commission
considered a range of potential foreign censorship policies and practices, noting that these may affect
U.S. businesses either by restricting their existing access or limiting new access to a foreign market.

“While the Commission relied on a variety of sources to inform its identification of key markets, an
important starting point was information from Freedom House, a well-known human rights advocacy
NGO, and its annual Freedom on the Net reports, which provide internet freedom scores related to
obstacles to access, limits on content, and violations of internet user rights, as well as data on
governments’ use of nine ‘key internet controls’ in regulating online platforms, content, and users. To
assist in identifying the key markets with relevant censorship policies and practices, the Commission also
reviewed data on the incidence of internet shutdowns, government requests for moderation of content,
legal guarantees of freedom of expression, and the degree of freedom afforded the press in various
countries around the world. To identify markets where demand is large enough to represent a significant
market opportunity for U.S. businesses, the Commission looked at indicators of demand for digital media
and audiovisual content. These included demographic indicators of consumer demand such as population
and gross domestic product (GDP) per capita, as well as indicators of the size of a market’s digital
economy, including the percentage of the population with access to the internet and the United Nations
Conference on Trade and Development Readiness for Frontier Technologies Index, which assesses
countries’ rate of adoption of important internet technologies.

“Overview of Censorship-Related Policies and Practices

“To get a full picture of foreign government censorship regimes in the key markets, it is useful to
understand the ‘who,’ ‘what,’ and ‘how’ of these policies and practices, as well as their evolution, and
the concepts of extraterritoriality and self-censorship. Many different governmental agencies and actors
have a role in censorship-related policies and practices in the key markets—the ‘who’ of censorship.
Also, governments in the key markets often require the cooperation of nongovernmental actors, such as
U.S. internet companies, to carry out censorship, given the growing importance of the internet for
communication and speech.

“Governments in the key markets censor a wide variety of content—the ‘what’ of censorship. This
content includes political, social, and national security-related topics as well as internet tools that can be
used to circumvent censorship (such as virtual private networks). For example, based on an empirical
analysis conducted by researchers at Harvard University’s Berkman Klein Center for Internet & Society, 26
of 45 countries engaged in state-sponsored filtering of internet content through technical means in
2015–17 and before.2 In particular, all of the key markets engaged in “pervasive” or “substantial” filtering
of political content as well as other topics (figure ES.1).

“Governments in the key markets operationalize censorship—the “how” of censorship—through policies
and practices that can be broadly grouped into two categories: those that directly target speech for
suppression and those that can in some circumstances operate to enable government censorship.

“Government policies and practices in the first category include laws that prohibit particular categories of
speech, as well as the premarket review of audiovisual and other creative works by censors. They also
include, in the online environment, government policies and practices that shut down the internet, block
entire websites, filter access to particular content on sites, or make it more difficult to access websites
(e.g., throttling).

“By contrast, censorship-enabling policies and practices facilitate governments’ ability to suppress speech.
Such measures may include, for example, internet intermediary rules, data localization or local presence
requirements, and foreign investment and market access restrictions. However, whether such measures
should be considered censorship enabling depends on context and the end to which such measures are
used. As detailed in chapters 3 and 4, in the key markets various measures work together, or may work
together, to facilitate government censorship. For example, broad definitions of prohibited content are
often combined with short deadlines for internet companies to identify and takedown prohibited content
and substantial penalties for noncompliance. Or, for example, internet intermediaries are required to
keep data and personnel in the jurisdiction, which can make it easier for governments to ensure
compliance with content prohibitions. In addition, whether a policy or practice should be considered
direct censorship or censorship enabling can be difficult to determine. This is particularly the case in the
key markets where, for example, the same law may combine direct elements (such as banning specific
categories of content) with censorship-enabling elements (such as data localization and local presence
requirements). Table ES.1 provides examples of different types of censorship-related policies and
practices (both direct censorship and censorship enabling) in the key markets. It also highlights some of
the industries particularly affected by these policies and practices. (See chapters 3 and 4 for details of the
examples listed in table ES.1.

“The evolution of censorship policies and practices in the past five years in the key markets has largely
been driven by the growing importance of the internet. U.S. internet companies report ever-growing
numbers of government requests for the takedown of online content. Moreover, governments are using
multiple levers—from data and personnel localization requirements to threats of retaliation—to pressure
compliance with censorship policies. Technological developments, such as the growing reliance on
artificial intelligence by governments and internet companies to identify and suppress large quantities of
online content, also present substantial challenges.

“Foreign governments’ censorship policies and practices may be augmented by extraterritoriality and self-censorship. Extraterritorial censorship occurs when governments seek to suppress speech outside of
their borders. In some cases, a law or policy will expressly state that its prohibition on certain content
applies to companies or persons outside the jurisdiction. A recent example of this would be the Hong
Kong National Security Law, which criminalizes broad categories of offenses (including speech in favor of
Hong Kong independence) and states that it applies regardless of where the crime is committed or who
commits it. In other cases, which arise most notably in China, economic coercion is used to advance
censorship goals even when the targeted speech is legal in the jurisdiction where it occurred. A well- known example involves the Houston Rockets of the National Basketball Association (NBA), whose
general manager posted images on Twitter supportive of Hong Kong independence. The Chinese
government responded by, among other actions, stopping the broadcast of NBA games on Chinese state-owned television stations for more than a year.

“Self-censorship involves censoring or suppressing one’s own speech to avoid offending government
censors or to facilitate market access. It is reportedly present in all of the key markets. Moreover, self-censorship can also occur extraterritorially; for example, movie studios reportedly have removed images
from the master version of films, rather than just the China-specific version, that they believe may offend
the Chinese government. Another example is Bloomberg reportedly not publishing a follow-up story on
the wealth of Chinese officials in order to protect its financial markets terminal business in China.
Additionally, in Turkey, almost two-thirds of Turkish citizens responding to a survey in 2018 reported that
the fear of being jailed for posting political views or opinions on the internet contributed to self-censorship in the country.”

Conclusion

Developing multilateral rules at the WTO or plurilaterally through the Joint Statement Initiative to address e-commerce is of great importance to global trade and prosperity. Failure to come to grips with rules on censorship would greatly reduce the utility of an agreement and permit those who engage in widespread censorship to deprive trading partners of the benefits of an e-commerce agreement. And this is just a reflection of challenges on the trade front, ignoring human rights and other international concerns.

WTO negotiations on agriculture — slow if any progress to date

When the Uruguay Round was concluded, the Agreement on Agriculture included provision for periodic renewed negotiations to improve market access and address market distortions. See Agreement on Agriculture Art. 20. Negotiations started in 2000 and then were folded into the Doha Development Agenda in 2001. While there have been some important accomplishments — including an agreement for eliminating export subsidies at the Nairobi Ministerial in 2015 (EXPORT COMPETITION, MINISTERIAL DECISION OF 19 DECEMBER 2015, WT/MIN(15)/45, WT/L/980) — the divisions between Members has meant limited progress first during the Doha negotiations and in the years since 2008 in preparation for periodic Ministerial Conferences.

While eight topics are being pursued in ongoing negotiations, the current Chair of the negotiations, Ambassador Gloria ABRAHAM PERALTA (Costa Rica), has put out two texts in 2021, the latest of which from late November essentially calls for most topics to be the subject of ongoing negotiations aiming for resolution by the 13th Ministerial Conference (presumably December 2023 or later). The eight topics are public stockholding for food security purposes, domestic support, cotton, special safeguard mechanism, export prohibitions or restrictions, export competition, cotton and transparency (a cross-cutting issue). See COMMITTEE ON AGRICULTURE IN SPECIAL SESSION, REPORT BY THE CHAIRPERSON, H.E. MS GLORIA ABRAHAM PERALTA, TO THE TRADE NEGOTIATIONS COMMITTEE, 19 November 2021, TN/AG/50 (23 November 2021). Only Annex I presents a hoped for agreement on not blocking exports to the World Food Programme as doable by the now postponed 12th Ministerial Conference.

The latest draft, is much more limited than the July 2021 draft (COMMITTEE ON AGRICULTURE IN SPECIAL SESSION, DRAFT CHAIR TEXT ON AGRICULTURE, 29 July 2021, JOB/AG/215 (29 July 2021) reflecting widely divergent positions by Members on many of the proposed steps put forward by the Chair. The July document is 27 pages in length (20 of proposed text) and compares to a 16 page document in November (7 pages of text). Both pale in comparison to the text being considered during the Doha Development Agenda. See REVISED DRAFT MODALITIES FOR AGRICULTURE, TN/AG/W/4/Rev.4, 6 December 2008 (120 page document). On topic after topic, the Chair indicated that her discussions with delegations indicated an inability to come to closure quickly, hence proposals for work programs to go forward. See, e.g., TN/AG/50 at 4 (domestic support), para. 2.6 (“2.6. Taking into account the limited time left until MC12, and the persistent differences over how to discipline TDDS, it is clear that Members will be unable to achieve a substantive outcome at the Conference involving agreement on concrete modalities for the reduction of TDDS entitlements. I continue to believe, however, that MC12 can benefit all Members by delivering a useful step forward in the domestic support reform process that would set the direction for work after the Conference. I also believe that it is our collective duty to make every effort to find a way forward in this important area where an outcome is long overdue. I therefore suggest Members establish modalities by MC13 to substantially reduce trade-distorting domestic support by the date to be agreed upon by Members, coupled with some guiding principles and improved transparency requirements.”); at 5 (market access), para. 3.4 (“3.4. On the issue of applied tariff transparency, some Members remain concerned about logistical constraints or the implications of the proposed decision for possible legislative changes that it might necessitate. I sensed the reluctance of those Members to consider a definitive agreement at MC12, even on a ‘best endeavour’ or voluntary basis. Accordingly, I have proposed that Members’ work in this area continues in the Committee on Market Access, anchored by their sharing of current national practices when changing applied tariffs, and with a view to developing a non-exhaustive list of good practices for national customs authorities.”); at 5 (export competition), para. 4.2 (“4.2. Most of the discussions addressed the question of transparency, including a post-MC12 work programme and the possibility of encouraging Members to provide export data with the support of the Secretariat if deemed necessary.”); at 5-6 (export prohibitions or restrictions), paras. 4.5-5.8 (concerns of some re World Food Programme Annex, proposed work program on transparency); at 7 (cotton), para. 6.6 (“6.6. On the other hand, other Members considered that agreement on modalities for reductions by MC12 was out of reach in light of the short time left, the remaining strong divergence in positions, and the overall level of ambition for an agricultural package at MC12. The draft text therefore aims at finding a possible way forward reflecting Members’ commitment to continue the negotiations with a view to agreeing on modalities for the reduction of trade-distorting domestic support for cotton, in accordance with the mandate to address cotton ambitiously, expeditiously, and specifically, while also taking into account the overall context of the agriculture negotiations.”); at 7 (special safeguard mechanism), para. 7.1 (“7.1. Several developing Members attach importance to an outcome on SSM at MC12, especially in the wake of the COVID-19 pandemic. However, given the deep divergence among Members on some fundamental aspects of the SSM negotiations, including on the issue of linkage with market access, it has become apparent that a substantive outcome on SSM at MC12 – even in a limited or temporary setting – is increasingly unlikely. In these circumstances, and taking into consideration the current technical deficit in the SSM negotiations, my revised text proposes that Members engage in targeted thematic discussions post-MC12 to address this aspect – as my July draft text did as well. Technical elements of the SSG may inform these discussions to facilitate timely agreement on the numerous highly technical parameters of an SSM, including on scope, triggers and remedies. My draft revised text also proposes that the General Council makes recommendations on this matter to MC13 for the consideration of Ministers.”); at 8 (public stockholding for food security purposes), para. 8.6 (“8.6. My assessment that it would be extremely difficult to achieve a permanent solution at MC12 was not shared by some developing country Members, who insisted that I forward this issue to Ministers for their consideration and decision.6 Several Members strongly objected to this proposed course of action, notably due to the lack of detailed technical work on elements for a permanent solution and the absence of parallel progress on domestic support. Consequently, given the stalemate, my recommendation to Ministers is for the adoption of a work programme with a view to agreeing on a permanent solution by MC13. I also propose that the General Council regularly reviews progress in these negotiations. Given the importance attached to the PSH issue by several developing country Members, Ministers may, if they so wish, consider revisiting it, bearing in mind the significant divergent positions as outlined above, among the Membership.”).

Given the postponement of the 12th Ministerial Conference because of the COVID pandemic, some of the time pressures reflected in the documents from the Chair of the Agriculture Negotiations are reduced. Yesterday, January 24, 2022, there was an informal meeting of the Committee on Agriculture in Special Session. While there is no WTO press release on the meeting as of this post, press articles indicate that there was a split between agricultural exporting countries and others who were willing to work with the revised text and those calling for rejecting the revised text (India, the African Group, the African, Caribbean and Pacific Group and China). See, e.g., Inside U.S. Trade’s World Trade Online, WTO members debate fate of agricultural negotiating text, January 24, 2022, https://insidetrade.com/daily-news/wto-members-debate-fate-agricultural-negotiating-text. The United States has viewed agriculture negotiations as having potential to achieve short term agreement on transparency issues. The press reports indicate WTO Members are nowhere near a significant agriculture package for Ministers to consider whenever the 12th Ministerial occurs and obviously won’t achieve an early harvest ahead of the Ministerial.

Observations

Few topics are as important to as many WTO Members as the topic of agriculture. Despite the importance of the issue to populations around the world, governments have starkly different views of where WTO negotiations should go. India, South Africa and others have pushed for reducing obligations assumed during the Uruguay through proposals on public stockholding and special safeguard mechanisms. Major agricultural exporters have focused on market access liberalization and reduction of export and domestic subsidies. The U.S., EU and others have had concerns about the lack of transparency of many Members agricultural systems and the failure of timely and complete notifications. China, India and others have not wanted limits on special and differential treatment to developing countries and have not supported the level of differentiation between developing and least developed countries that is being proposed by the Chair.

The inability to move broad-based agricultural reform and liberalization forward at the WTO despite ongoing negotiations since 2000 is a good example of the breakdown of the WTO system to achieve results through negotiations. The 2008-2009 financial crisis and the ongoing COVID pandemic with resulting significant export prohibitions or restrictions of some agricultural products have not resulted in long term solutions or rules even on this limited issue. It is hard to see multilateral progress in the coming months or even years in the agriculture space on many of the present issues. This will place ongoing pressure on countries with agriculture export or import interests to explore regional or bilateral arrangements. It also undermines the ability of the world to meet UN sustainability goals.

Without a common vision of the goals for the WTO, WTO Members are likely to continue talk past each other rather than move forward together. These challenges are complicated by the different economic systems of major players, some of which are incompatible with the WTO system.

The concept that negotiations can go on for decades is plainly unacceptable if the WTO is to maintain relevance. Unfortunately, the path forward to relevance is unclear at best.

WTO efforts to address the COVID-19 pandemic — the January 10, 2022 General Council meeting and some current developments of interest

As the world enters the third full year of fighting the COVID-19 pandemic, the WTO continues to seek both a response to the current challenges and a path forward for future pandemics. India, which along with South Africa (and later support from other countries), has sought since October 2020 a waiver from certain intellectual property protections provided under the WTO’s Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) to address the COVID-19 pandemic, in late December 2021 sent a letter to the General Council Chair of the WTO seeking a virtual ministerial meeting to address the WTO response to the pandemic. This followed the postponement of the 12th WTO Ministerial Conference because of restrictions on travel flowing from the increase in COVID cases from the omicron variant.

The WTO press release on the General Council informal meeting held on January 10, 2022 to explore India’s request put a largely positive spin on the meeting, although press accounts suggest that there was push back from many other WTO Members to holding such a virtual Ministerial for various reasons, including lack of progress in developing an agreed text on any TRIPS waiver, need to address other pressing issues and the challenges of doing a Ministerial meeting virtually based on last year’s experience. See WTO news release, General Council discusses India’s call for virtual ministerial meeting on pandemic response, 10 January 2022, https://www.wto.org/english/news_e/news22_e/gc_10jan22_e.htm (” General Council Chair Ambassador Dacio Castillo (Honduras) convened the 10 January meeting in response to India’s recent proposal to hold a virtual Ministerial Conference on the WTO’s response to the COVID-19 pandemic, including a proposed waiver of relevant intellectual property protections. At the meeting, Director-General Ngozi Okonjo-Iweala urged WTO members to urgently step up their efforts, suggesting that with the requisite political will, members can in the space of the coming weeks reach multilateral compromises on intellectual property and other issues so that the WTO fully contributes to the global response to COVID-19 and future pandemics.”); Inside U.S. Trade’s World Trade Online, WTO members reluctant to hold virtual ministerial on TRIPS waiver, January 10, 2022, https://insidetrade.com/daily-news/wto-members-reluctant-hold-virtual-ministerial-trips-waiver (“India’s bid to schedule a virtual ministerial meeting focused on the proposed waiver of some intellectual property obligations to fight the pandemic did not win the support of other World Trade Organization members on Monday, as they raised concerns about the virtual format as well as with a lack of progress in the negotiations.”). While the U.S. was reportedly favorably disposed to such a meeting with greater clarifications, the European Union statement noted all of the issues raised in the Inside U.S. Trade article. See also The Hindu, WTO General Council discusses India’s call for holding virtual Ministerial meet on COVID-19 pandemic response, 11 January 2022, https://www.thehindu.com/business/wto-general-council-discusses-indias-call-for-holding-virtual-ministerial-meet-on-covid-19-pandemic-response/article38231454.ece.

While the U.S., under the Biden Administration, has stopped posting on the U.S. Mission website their statements at meetings other than the Dispute Settlement Body (unclear if this is due to a policy change or simply the lack of a Deputy USTR confirmed by the Senate), the EU is posting their statements on their Geneva website. See EU Statement at the General Council Informal Meeting, 10 January 2022, https://eeas.europa.eu/delegations/world-trade-organization-wto/109489/eu-statement-general-council-informal-meeting-10-january-2022_en. The entirety of the EU statement is copied below.

“Statement delivered by Ambassador João Aguiar Machado

“For the European Union, the WTO needs to put in place a process that is conducive to progress on all topics of the MC12 agenda.

“Of course, the European Union shares the view that the response to the pandemic is important. However, we need to be careful that a focus on this part of the MC12 agenda must not lead to a loss of momentum on the other key components, which are equally essential to the revitalisation of the organisation – such as the conclusion of the fisheries subsidies negotiations, agreeing on a way forward on agriculture, and finalising the Ministerial Declaration with a strong commitment on WTO reform – and this, building upon the work done by you, Chairman [Chairman of the General Council], in the run-up to the Ministerial meeting in November. These elements are all essential for the credibility and viability of this organisation. WTO reform is also essential from a health perspective. We need an efficient and effective organisation if we are going to be in a position to act decisively in the case of future pandemics.

“Before any decision to call a virtual Ministerial meeting and topics to be decided, we believe the WTO Director General and the Chair of the General Council should hold consultations with Members, to assess the way forward on all four issues that I referred to.

“As regards trade and health, the aim should be to seek consensus on the way forward both on intellectual property and on the Declaration and Action Plan. As regards the latter, Ambassador Walker’s draft text should be the basis for such consultations. And as regards intellectual property rights, consultations should continue with a view to identifying a text on which the WTO Membership can agree.

“Any virtual Ministerial should take place only once there is a consensus both on intellectual property rights and on the Declaration and Action Plan on the wider pandemic response. Only a comprehensive trade response to the pandemic can make a difference and address the identified bottlenecks as regards the production and distribution of COVID-19 vaccines such as restricted access to raw materials and other inputs as well as complex supply chains. Agreeing on the comprehensive elements contained in the Walker text will be important not only to tackle Covid-19, but also to address future pandemics.

“If we want to take forward work on all elements of the MC12 agenda, we must have a credible process in place.

“In summary, the European Union is open to consider the proposal by India and to reach an agreement on all aspects of the response to Covid-19 as quickly as possible. However, in the European Union’s view, it is premature to decide at this point in time on either the principle or on the date for such a virtual meeting.”

Thus, while the Director-General is pushing Members for an early resolution of the pandemic response (including any TRIPS waiver), the path forward looks certain to take significantly more time than a few weeks to reach agreement.

The WTO has added a page to its website entitled “Trade and health: WTO response to the COVID-19 pandemic”. The page accessed today states “State of Play – 6 January 2022” — i.e., before the informal General Council meeting on January 10th. However, it provides a good overview of what has been proposed and differences that exist on the waiver issue. See Briefing Note, State of Play 6 January 2022, Trade and health: WTO response to the COVID-19 pandemic, https://www.wto.org/english/thewto_e/minist_e/mc12_e/briefing_notes_e/bftrade_and_health_e.htm. The briefing note is embedded below.

WTO-_-Ministerial-conferences-MC12-briefing-note

Some current developments of interest

By the end of 2021, COVID vaccines were being produced at a rate of about 1.5 billion doses per month. Additional vaccines are being added which will drive production up even higher during the early months of 2022. See, e.g., BBC, Covovax and Corbevax: What we know about India’s new Covid vaccines, 28 December 2021, https://www.bbc.com/news/world-asia-india-55748124.

Corbevax has received a lot of attention in the media in the last few weeks. The Indian producer has 150 million doses ready for distribution, will be producing 100 million doses per month and plans to export one billion doses to other countries. The developers and the Indian producer are working with the WHO to pursue emergency use authorization through the WHO as well. See, e.g., NPR, A Texas team comes up with a COVID vaccine that could be a global game changer, January 5, 2022, https://www.npr.org/sections/goatsandsoda/2022/01/05/1070046189/a-texas-team-comes-up-with-a-covid-vaccine-that-could-be-a-global-game-changer (“A vaccine authorized in December for use in India may help solve one of the most vexing problems in global public health: How to supply lower-income countries with a COVID-19 vaccine that is safe, effective and affordable. The vaccine is called CORBEVAX. It uses old but proven vaccine technology and can be manufactured far more easily than most, if not all, of the COVID-19 vaccines in use today. ‘CORBEVAX is a game changer,’ says Dr. Keith Martin, executive director of the Consortium of Universities for Global Health in Washington, D.C. ‘It’s going to enable countries around the world, particularly low-income countries, to be able to produce these vaccines and distribute them in a way that’s going to be affordable, effective and safe.'” “Hotez says that unlike the mRNA vaccines from Pfizer and Moderna, and the viral vector vaccine from Johnson & Johnson, protein subunit vaccines like CORBEVAX have a track record. So he and Bottazzi were relatively certain CORBEVAX would be safe and effective. ‘And it’s cheap, a dollar, dollar fifty a dose,’ Hotez says. ‘You’re not going to get less expensive than that.'”); The Times of India, Discussions underway for WHO approval for
Corbevax Covid-19 vaccine, says developer, 31 December 2021, https://timesofindia.indiatimes.com/world/us/discussions-underway-for-who-approval-for-corbevax-covid-19-vaccine-says-developer/articleshow/88604880.cms.

These developments are occurring at a time of record breaking numbers of new infections due to the more highly contagious omicron variant. While many parts of the world are seeing huge surges, Europe and the United States are seeing particularly huge increases. See, e.g., Reuters, U.S. reports 1.35 million COVID-19 cases in a day, shattering global record, January 11, 2022, https://www.reuters.com/business/healthcare-pharmaceuticals/us-reports-least-11-mln-covid-cases-day-shattering-global-record-2022-01-11/; WHO, WHO: 7 million new omicron COVID cases in Europe last week, January 11, 2022, https://www.washingtonpost.com/politics/who-7-million-new-omicron-covid-cases-in-europe-last-week/2022/01/11/7e901e28-72cc-11ec-a26d-1c21c16b1c93_story.html.

A few thoughts

When one looks at vaccination distribution in 2021, the concerns about inequity center largely on the vary small volume of vaccines that have gone to low income countries (as classified by the World Bank) and to some lower middle-income countries. See, e.g., December 30, 2021:  COVID-19 and vaccine equity — outlook for 2022, https://currentthoughtsontrade.com/2021/12/30/covid-19-and-vaccine-equity-outlook-for-2022/.

The largest volume of vaccines that COVAX had envisioned going to these countries were lower cost ones that would be easier to store, handle and administer than some of the high cost new technology vaccines. Production problems and export bans of the more cost effective and easier to store vaccines in 2021 were the largest reasons of poor distribution of vaccines to lower income countries.

With large volumes of donations committed for 2022 from countries like the U.S. and EU and others and with Indian production both ramping up significantly and exports having resumed and with the availability of low cost options, including new vaccines like Corbevax already approved in India and likely to be produced in various countries around the world at very low costs, and with the overall very high levels of global vaccine production by the end of 2021 continuing to expand, the question of getting the world vaccinated in 2022 against COVID will almost certainly be more about issues other than availability of vaccines.

So the WTO’s most important role in the coming weeks and months is to focus on reducing barriers to trade such as those covered by the Walker draft text (discussed in the briefing paper). The TRIPS waiver issue is one that has attracted a lot of attention because of the perception of global needs and whether intellectual property rights were restricting access. In my view, while the proposal was popular with many groups, the evidence of production during 2021 did not support the concern that the TRIPS agreement was restricting production. More than 10 billion doses of COVID-19 vaccines were produced and shipped in 2021 — twice as many doses as all vaccines produced and shipped in 2020 for all other needs. Many licenses were granted for production in other countries. A waiver would not have resulted in significantly more production in 2021.

Production in 2022 and the arrival of new low cost vaccines should mean there is adequate volumes for the world to achieve 70% vaccination rates this year. The issue of equity in 2021 had to do with distribution of the production, infrastructure in many countries, trade restrictions on vaccines and inputs. These do not require a TRIPS waiver to address in 2022.

Looking forward to the next pandemic, there is much that the WTO Members could agree to that would reduce many of the challenges COVID-19 has posed. It is not clear that actions on intellectual property beyond what is being proposed by the EU are needed or justified by the experience gained these last several years.

Conclusion of Joint Statement Initiative on Services Domestic Regulation — a win for the WTO and services trade

For an organization seeking to regain relevance and facing continued delays in holding its 12th Ministerial Conference because of restrictions on travel from increased COVID-19 cases, the conclusion of the Joint Statement Initiative (JSI) on Services Domestic Regulation through the issuance of a declaration on December 2 was an important accomplishment. Sixty-seven WTO Members agreed to a reference paper and a process for amending services schedules for the participants over the next months with benefits accruing to all WTO Members and with transition periods for developing and least developed countries. See Declaration on the Conclusion of Negotiations on Services Domestic Regulation, 2 Deember 2021,WT/L/1129 (includes Annex 1, Reference Paper on Services Domestic Regulation, 26 November 2021, INF/SDR/2 and Annex 2S, Schedules of Specific Commitments, 2 December 2021, INF/SDR/3/Rev.1). The 67 WTO Members participating the JSI reportedly account for 90% of services trade. The 67 countries are Albania, Argentina, Australia, Kingdom of Bahrain, Brazil, Canada, Chile, China, Colombia, Costa Rica, El Salvador, European Union (and member states), Hong Kong, Iceland, Israel, Japan, Kazakhstan, Republic of Korea, Liechtenstein, Mauritius, Mexico, Republic of Moldova, Montenegro, New Zealand, Nigeria, North Macedonia, Norway, Paraguay, Peru, Philippines, Russian Federation, Kingdom of Saudi Arabia, Singapore, Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Kingdom, United States and Uruguay.

According to the WTO press release on the completion of negotiations, the aim of the JSI was “slashing administrative costs and creating a more transparent operating environment for service providers hoping to do business in foreign markets.” WTO Press Release, Negotiations on services domestic regulation conclude successfully in Geneva, 2 December 2021, https://www.wto.org/english/news_e/news21_e/jssdr_02dec21_e.htm.

It is the first agreement at the WTO barring discrimination between men and women. WT/L/1129 at 10 (Annex I, para. 22(d), development of measures — “such measures do not discriminate between men and women.”).

The WTO and OECD released a short paper looking at the benefits to global services trade through a successful conclusion to the JSI on services domestic regulation. The study estimated that savings to service providers and their customers would be around $150 billion/year. See World Trade Organization and OECD, Services Domestic Regulation in the WTO: Cutting Red Tape, Slashing Trade Costs and Facilitating Services Trade, 19 November 2021, https://www.wto.org/english/news_e/news21_e/jssdr_26nov21_e.pdf. The four “key messages” in the study (page 1) are copied below.

“Key messages

“• Improving business climate: At the 12th WTO Ministerial Conference, the Joint Initiative on Services
Domestic Regulation will conclude negotiations on a set of good regulatory practices with a focus on procedural aspects of licensing and authorization procedures for services suppliers. By enhancing the transparency, efficiency, and predictability of regulatory systems, the disciplines on services domestic regulation that the Joint Initiative has negotiated will address the practical challenges that affect the ability of businesses and suppliers to operate.

“• Facilitating services trade: Building on efforts to identify and disseminate good regulatory practice, an
increasing number of “new generation” trade agreements have moved beyond the removal of quantitative restrictions and discriminatory measures to include a comprehensive set of disciplines largely equivalent to those developed by the Joint Initiative. At the same time, economies at all levels of income have also implemented reforms with a view to making their regulatory environment more trade facilitative for services businesses.

“• Lowering trade costs and generating broader trade benefits: Through the full implementation of the
disciplines on services domestic regulation, economies can lower trade costs and reap substantial trade
benefits: annual trade cost savings could be in the range of USD 150 billion, with important gains in financial services, business services, communications and transport services. Moreover, a positive correlation between the implementation of services domestic regulation measures and services trade by all four modes of supply, as well as a more active engagement of economies in global value chains, hints to even broader economic benefits.

“• Widespread gains beyond participants: Exporters from all WTO members will benefit from the improved regulatory conditions when they trade with participants of the Joint Initiative. However, significantly larger benefits will accrue to WTO members that are implementing the disciplines themselves in their internal regulatory frameworks.”

The study provides a summary of improved disciplines the 67 WTO Members have identified in the reference paper. The improved disciplines are grouped under transparency, legal certainty and predictability, regulatory quality and facilitation. See id at 2.

While the estimated savings once fully implemented is small in comparison to global services trade ($150 billion of 2019 estimated trade of $6.1 trillion (2.6%)(UNCTAD, 2020 Handbook of Statistics, page 33, data for 2019, https://unctad.org/system/files/official-document/tdstat45_en.pdf) as noted in the WTO press release, it is the first update of WTO rules on services in more than a quarter century. The negotiations had three co-chairs — Costa Rica, Australia and the European Union. Part of the EU’s statement by Ambassador Aguiar Machado from the December 2 meeting and announcement of the declaration is provided below. See Services Domestic Regulation Joint Initiative Meeting to conclude the negotiations (co-hosted by Costa Rica, the European Union and Australia), 2 December 2021, Geneva, https://eeas.europa.eu/delegations/brazil/108266/services-domestic-regulation-joint-initiative-meeting-conclude-negotiations-co-hosted-costa_en.

“Today, we are following up on a joint commitment we collectively took two years ago in Paris to finalize the negotiations that had started with the Joint Statement of Buenos Aires in 2017. Since then, several new Members have joined the group and a tremendous amount of work has been done by our negotiators under the valued Chairmanship of Costa Rica. In particular, warm welcome to the Philippines and Bahrain who joined our negotiations most recently.

“We are here today to conclude our negotiations in this JSI and on the Reference Paper with domestic regulation disciplines. This step will allow us to commence our respective domestic procedures required for the certification of our improved schedules of commitments, which will give legal effect to the negotiated disciplines.

“The work on services domestic regulation is of critical importance. It is the first WTO deliverable in the area of trade in services since a very long time. Our additional commitments for domestic regulation will benefit all other WTO Members by giving them the reassurance that we will apply good regulatory and administrative practices also to their service suppliers. 

“Good regulatory practices are crucial for the well-functioning of today’s economy. I believe that the clear rules on transparency and authorisation in the area of services – that were agreed as part of this initiative – will facilitate trade in services significantly. Especially for micro, small and medium-sized enterprises who do not have the same resources and experience to cope with complex processes as their larger competitors.

“The services sector has been hit hard by the pandemic – as other parts of our economy. The adoption and implementation of the disciplines of the reference paper will reduce trade costs for service suppliers substantially and thus help the sector in its recovery. It is a sector where women entrepreneurs often play an important role. The reference paper recognises this role by ensuring non-discrimination between men and women in authorisation processes. This is the first rule of this kind in the WTO.

“Delivering on the WTO services agenda is a long overdue objective we all have. Since Buenos Aires, we have collectively developed a pragmatic approach to negotiations. We have allowed groups of interested Members to advance negotiations on some important issues – through open, inclusive and transparent processes.

“Today, we prove that this plurilateral approach can lead to tangible results. This demonstrates that the Joint Initiative model is a viable one. A large and diverse group of WTO Members can work together towards a common objective, overcome their differences, show flexibility and agree on tangible results that are important for businesses and consumers.

“I believe that this Joint Initiative can be a source of inspiration for work in other areas, allowing interested Members to move ahead while ensuring that the outcome, in its substance and its form, remains supportive of and strengthens the multilateral trading system.”

Since the collapse of the Doha Development talks in 2008, the reality has been that most progress on trade talks have taken place in bilateral, and plurilateral settings. The sole meaningful exception was the completion of the Trade Facilitation Agreement which hopefully will be supplemented by a completion to the Fisheries Subsidies negotiations in the near future. Stating at the WTO’s 11th Ministerial, many WTO Members have started Joint Statement Initiatives to seek progress on important issues facing the trading system.

As noted in earlier posts, India and South Africa (WTO Members who are not participating in any of the Joint Statement Initiatives) have raised objections to the use of JSIs to update rules claiming such approaches are inconsistent with existing WTO requirements. See, e.g., November 17, 2021:  The role of plurilaterals in the WTO’s future, https://currentthoughtsontrade.com/2021/11/17/the-role-of-plurilaterals-in-the-wtos-future/.

The view of the participants in the services domestic regulation JSI is that existing WTO provisions permit the updating of service schedules by Members. The reference paper will apply to those who have participated or who later accept the reference paper. New obligations taken on by the 67 Members are applied by them on an MFN basis to all WTO trading partners.

The Declaration on Services Domestic Regulation and actions to implement it will be an early test of whether the WTO can proceed to update rules through open plurilaterals. While one can expect continued objections from India and South Africa, the path to renewed relevancy for the WTO will almost certainly run through finding room for open plurilaterals.

WTO-IMF COVID-19 Vaccine Trade Tracker provides useful information in analyzing vaccine equity

On November 22, 2021, the WTO and IMF announced and released their COVID-19 Vaccine Trade Tracker. See WTO News Release, WTO, IMF launch Vaccine Trade Tracker, 22 November 2021, https://www.wto.org/english/news_e/news21_e/covid_22nov21_e.htm. While the data on access to vaccines is not as granular as the UNICEF COVID Vaccine Dashboard, the new tracker provides data under six topics: summary, exports (options being by producing economy or by supply arrangement type), imports (options being by income group or by continent), total supply (options being by producing economy or by vaccine type), supply to continents (Africa, Asia, Europe, North America, Oceania, South America) and vaccination status (options being by income group and by continent). Data in the initial release are through October 31, 2021. Income groups are the World Bank’s groupings — Low income, lower-middle income, upper middle income and high income.

In recent posts I have noted that much of the discussion on vaccine equity focuses on access and affordability but doesn’t necessarily help understand widely different outcomes for countries or territories that are at the same stage of economic development. See November 22, 2021:  Trade and Health at the WTO’s 12th Ministerial Conference, https://currentthoughtsontrade.com/2021/11/22/trade-and-health-at-the-wtos-12th-ministerial-conference/. The WTO-IMF Tracker doesn’t include the identification of countries/territories within income groups but rather reports on the entire grouping. The World Bank’s 2020 listing is the most recent. See World Bank, GNI per capita, Atlas method (current US$), https://data.worldbank.org/indicator/NY.GNP.PCAP.CD; November 15, 2021:  The folly of self-selection as a developing country at the WTO, https://currentthoughtsontrade.com/2021/11/15/the-folly-of-self-selection-as-a-developing-country-at-the-wto/.

Of the listed producing countries involved in exports of COVID-19 vaccines all are WTO Members. The EU, USA, Japan and Republic of Korea are listed as high income countries by the World Bank though Korea has treated itself as a developing country at the WTO. China, the Russian Federation and South Africa are included as upper middle income countries by the World Bank based on per capita GNI, though both China and South Africa claim developing country status at the WTO. India is listed as a lower-middle income country by the World Bank and claims developing country status at the WTO. There is a small amount of exports from other countries not broken out by individual country n the WTO-IMF tracker.

On total supply (“Total supply contains both exported and domestically delivered doses), China is the largest producing country with a total supply of 4.0811 billion doses of which 1.3294 billion doses have been exported. The European Union is the second largest producer with a total supply of 1.7077 billion doses producers of which 876.5 million have been exported. India is the third largest producers with total supply of 1.3608 billion doses of which just 66.0 million doses have been exported. The United States is fourth with total supply of 941.1 million doses and exports of 300.8 million doses. Others have much smaller total supplies and exports.

The vast majority of exports have been through bilateral deals (77.5%). The second largest source of exports has been doses contracted via COVAX (8.1%). Because of several major problems COVAX experienced from suppliers — the largest being the shut down of exports from India for much of 2021 — COVAX has been unable to supply the large volume of vaccine doses in 2021 to low income and lower middle income countries that had been planned on. The third largest source of exports was donations via COVAX (7.5%), followed by direct donations from producing countries to receiving countries (6.1%) and supply via the African Vaccine Acquisition Trust (“AVAT”)(0.8%).

The vaccination status data (item six in the Tracker) is helpful in identifying regions with the greatest needs as well as the breakout by World Bank income level. However, because of the lack of granularity to the individual country or territory, the data don’t help understand the large differences between members in the same continent or in the same income grouping.

By continent, all continents except Africa have received more than 50 courses of doses per 100 people (with North America the highest at 81.4 and Europe at 76.2). Africa was just 11.2 courses per 100 people. All but Africa have more than 50% of the population with at least one dose administered. Africa was just 8.7%. And all but Africa have more than 40% of the population fully vaccinated. Africa was only 5.8%. Thus, there is a need to expand availability of vaccine doses to most African countries

When vaccination status is examined by income level, high income and upper middle income countries and territories have much larger vaccination rates than lower middle income and low income. On courses of vaccines per 100 people, high income countries were at 89.5, upper middle income countries averaged 74.8, lower middle income countries were at just 34.8 and low income countries were at just 7.0. Similar discrepancies exist on percent with at least one dose administered and percent fully vaccinated. The inability of COVAX to receive the volumes of doses contracted for in 2021 and the slowness of donations for richer countries are certainly core reasons for the differences in doses for lower middle income and low income countries.

Yet there are major discrepancies among countries or territories in the same continent or same income grouping. I identified a few in yesterday’s post. See November 22, 2021:  Trade and Health at the WTO’s 12th Ministerial Conference, https://currentthoughtsontrade.com/2021/11/22/trade-and-health-at-the-wtos-12th-ministerial-conference/. For example, Morocco is classified as a lower middle income country by the WTO but had the highest level of administered vaccines/100 people in Africa (136.5 (assumed to be 68.25 courses of doses/100 people)) while South Africa, classified as an upper middle income country had a rate of administered vaccine doses less than 1/3 that of Morocco (41.4 (assumed to be 20.7 courses of doses/100 people). Similarly, two low income countries as classified by the World Bank have drastically different administered doses despite nearly identical per capita GNIs and both being countries in Africa. Specifically, Zimbabwe’s per capital GNI in 2020 was $1,090 and yet they had administered 42.3 COVID vaccine doses/100 people. Cameroon, with a per capita GNI in 2020 of $1,100, had COVID vaccines administered of only 2.4/100 people.

Conclusion

The WTO-IMF COVID-19 Vaccine Trade Tracker provides very useful information, although much is at a continent or income group level. It appears likely that the tracker will be updated only monthly. If not being considered, the designers of the new tracker should provide a link to a data base that provides the type of data shown in the aggregate for each country or territory. Such data would permit a better understanding of differences within continents and within income groups and potentially improve the ability to improve vaccine equity moving forward. It is also possible to update the tracker more frequently than once a month, though some charts, etc. are fine with monthly updates. .

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

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

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

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

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

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

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

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

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

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

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

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

Gibraltar, 279.2 doses/100 people

Cuba, 244.2 doses/100 people

Chile, 207.5 doses/100 people

Maldives, 204.8 doses/100 people

UAE, 201.6 doses/100 people

Bahrain, 191.7 doses/100 people

Uruguay, 190.7 doses/100 people

Malta, 185.9 doses/100 people

Cayman Islands, 183.7 doses/100 people

Seychelles, 182.7 doses/100 people

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

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

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

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

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

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

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

Countryvaccines

The role of plurilaterals in the WTO’s future

As the WTO is less than two weeks from the start of its 12th Ministerial Conference, an important question for the WTO Membership is whether or not the WTO will incorporate results from plurilaterals started at and after the 11th Ministerial (the so-called Joint Statement Initiatives) into the WTO or will rather limit the role of plurilaterals and effectively further reduce the relevance of the WTO going forward.

As reviewed in prior posts, India and South Africa have challenged the role of plurilaterals where WTO requirements are not followed to make it part of the WTO acquis. 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/. The paper from India and South Africa, THE LEGAL STATUS OF ‘JOINT STATEMENT INITIATIVES’ AND THEIR NEGOTIATED OUTCOMES, 19 February 2021, WT/GC/W/819 and one revision (WT/GC/W/819/Rev.1) was the subject of discussions at the March 1-2 and 4, 2021 General Council meeting and has been raised in subsequent General Council meetings as well. See GENERAL COUNCIL, MINUTES OF MEETING HELD IN VIRTUAL FORMAT ON 1-2 AND 4 MARCH 2021, WT/GC/M/190 (23 April 2021), pages 65-78; GENERAL COUNCIL, 7-8 October 2021 PROPOSED AGENDA, WT/GC/W/828 (5 October 2021), agenda item 11 (PAPER TITLED “THE LEGAL STATUS OF ‘JOINT STATEMENT INITIATIVES’ AND THEIR NEGOTIATED OUTCOMES” BY INDIA, SOUTH AFRICA AND NAMIBIA (WT/GC/W/819/REV.1)). Neither India nor South Africa are participating in any of the Joint Statement Initiatives (“JSIs”) at the present time.

Below are some excerpts from the March 2021 General Council meeting which lays out the views of a few of the WTO Members on the topic. The excerpts start with the views of India and South Africa as the sponsors of the paper and then follows with the reaction of a number of Members who support the JSI process. Many more Members expressed views. The controversy basically revolves around whether WTO Members will pursue initiatives among those with an interest with all Members being able to monitor, participate and join when desired or be limited by a system which has proven largely unable to address new issues in a timely manner.

India (pages 65-67 of WT/GC/M/190)

“10.2. The representative of India recalled that India and South Africa had submitted the paper in document WT/GC/W/819 dated 19 February 2021 on the “The Legal Status of ‘Joint Statement Initiatives’ and their Negotiated Outcomes”. As a co-sponsor, India was not questioning the right of Members to meet and discuss any issue. However, when such discussions turned into negotiations
and their outcomes were to be brought into the WTO, the fundamental rules of the WTO should be followed. The WTO had been established as a forum concerning multilateral trade relations in matters dealt with under the agreements in the Annexes to the Marrakesh Agreement and for further negotiations among its Members concerning their multilateral trade relations and to provide a framework for the implementation of results of such negotiations.

“10.3. The Marrakesh Agreement defined ‘Plurilateral Agreements’ as the agreements and associated legal instruments that were included in Annex 4 to the Agreement. The Ministerial Conference, upon the request of the Members party to a trade agreement, decided exclusively by consensus to add that agreement to the said Annex 4. Procedures for amending rules were enshrined in Article X of the Marrakesh Agreement. On the other hand, the GATT and GATS contained specific provisions for modifications of Schedules containing specific commitments of Members.

“10.4. Amendments or additions to the rules were governed by multilateral consensus based decision-making or voting – right from the outset when a new proposal for an amendment was made. On the other hand, negotiations on modifications or improvements to Schedules could arise either as the outcomes of consensual multilateral negotiations pursuant to Article XXVIII of GATT or Article XXI of GATS or be reached through a bilateral request and offer process or as a result of a dispute. In fact, even changes to Schedules could not be made unilaterally as other Members had the right to protect the existing balance of rights and obligations.

“10.5. The GATS read in concert with the Marrakesh Agreement provided for different rules and procedures for amendment of rules and modification of schedules. While the GATS rules were governed by the GATS Part II, “General Obligations and Disciplines”, Part III of the GATS contained provisions concerning Members individual “Specific Commitments” pertaining to distinctly identified services sectors which were inscribed in Members’ Schedules. In case of conflict in interpretation, Article XVI.3 of the Marrakesh Agreement provided that in the event of a conflict between a provision of the Marrakesh Agreement and a provision of any of the Multilateral Trade Agreements, the provisions of the Marrakesh Agreement should prevail.

“10.6. Each of the JSIs was likely to pose different legal challenges to the existing WTO rules and mandates given the differences in the nature and scope of issues covered under each of those initiatives. However, any attempt to bring in the negotiated outcomes of the JSIs into the WTO by appending them to Members’ Schedules, even on MFN basis, following modification of Schedules
procedures, bypassing multilateral consensus would be contrary to the provisions of the Marrakesh Agreement.”10.7. Any attempt to introduce new rules, resulting from JSI negotiations, into the WTO without fulfilling the requirements of Articles IX and X of the Marrakesh Agreement would be detrimental to the functioning of the rules-based multilateral trading system. Among others, it would erode the integrity of the rules-based multilateral trading system, create a precedent for any group of Members to bring any issue into the WTO without the required mandate. bypass the collective oversight of Members for bringing in any new rules or amendments to existing rules in the WTO, usurp limited WTO resources available for multilateral negotiations, result in Members disregarding existing multilateral mandates arrived at through consensus in favour of matters without multilateral mandates, lead to the marginalization or exclusion of issues which were difficult but which remained critical for the multilateral trading system such as agriculture and development thereby undermining balance in agenda setting, negotiating processes and outcomes and fragment the multilateral trading system and undermine the multilateral character of the WTO.

“10.8. The document listed various options to move ahead. As per the provisions of the Marrakesh Agreement, for bringing in their negotiated outcomes in the WTO, the JSI Members could seek consensus among the whole WTO Membership, followed by acceptance by the required proportion of Members according to Article X of the Marrakesh Agreement. Alternatively, they could get the new agreements included in Annex 4 following Article X.9 of the Marrakesh Agreement. They also had option to pursue agreements outside the WTO Framework, as had been envisaged in the Trade in Services Agreement (TISA) or as had been done in multiple bilateral or plurilateral FTAs or RTAs. The proponents of a “flexible multilateral trading system” could even seek amendment to Article X of the Marrakesh Agreement following procedures enshrined therein to provide for such an approach.

“10.9. Through the paper WT/GC/W/819, India and South Africa reiterated that basic fundamental principles and rules of the rules-based multilateral trading system as enshrined in the Marrakesh Agreement should be followed by all Members including the participants of various JSIs. Negating the decisions of past Ministerial Conferences by decisions taken by a group of Ministers on the sidelines of a Ministerial Conference or the side-lines of any other event would be detrimental to the existence of the rules-based multilateral trading system under the WTO.”

South Africa (pages 67-68 of WT/GC/M/190)

“10.10. The representative of South Africa said that the WTO had been established as a forum concerning multilateral trade relations. South Africa’s interest in submitting the paper was to remind Members of the legal architecture that governed the functioning of the WTO which was critical to preserve its multilateral character. The pandemic was a sharp reminder of the importance of global cooperation in dealing with global challenges. The challenges facing humanity were not limited to
the pandemic but included rising inequality both within and between countries, poverty and food insecurity, among others. Those necessitated that Members avoided measures that undermined or fragmented the trading system.

“10.11. Any group of Members could discuss any issue informally. However, when discussions turned into negotiations, and their outcomes were sought to be formalized into the WTO framework, it could only be done in accordance with the rules of procedure for amendments as well as decision-making as set out in the Marrakesh Agreement. The plurilaterals were provided for in the Marrakesh Agreement and were included in Annex 4 to the Agreement – and there were specific rules to be followed to integrate those into the WTO framework. It was however important to note that the Ministerial Conference, upon the request of the Members party to a trade agreement, decided exclusively by consensus to add that agreement to the said Annex 4.

“10.12. The provisions in the Marrakesh Agreement had been carefully negotiated and were a result of the experience acquired in the GATT which had been characterized especially after the Tokyo Round by agreement on a number of plurilateral codes. There had been recognition that those plurilateral codes had created a fragmented system of rules. In respect of some Contracting Parties,
the GATT rules had been applicable, while in respect of the rest, both the GATT rules and the rules of plurilateral codes had been applicable. That created considerable complexity in determining what obligations had been applicable in respect of which Contracting Party.

“10.13. The Preamble to the Marrakesh Agreement clearly articulated Members’ vision for the WTO and it was to develop an integrated, more viable and durable multilateral trading system. Article II.1 stated that “The WTO shall provide the common institutional framework for the conduct of trade relations among its Members.” Article III.2 stated that “The WTO shall provide the forum for negotiations among its Members concerning their multilateral trade relations”. It provided for consensus-based decision-making as enshrined in Articles III.2, IX, X and also X.9 as well as procedures for the amendments of rules as articulated in Article X.

“10.14. The Marrakesh Agreement did not make provision for the so-called open plurilaterals and flexible multilateralism. Therefore, any suggestion that when offered on MFN basis, no consensus was required for bringing new rules into the WTO was legally inconsistent with the fundamental principles and procedures of the Marrakesh Agreement. Importantly, new rules could not be brought into the WTO through amendment of Members’ Schedules. It had also been suggested that the Telecommunications Reference Paper justified why the consensus principle could be bypassed. However, as part of the package of the Uruguay Round outcome, there had been a multilateral consensus and a formal mandate for the negotiations, including agreement on inscribing outcomes into Schedules without an amendment procedure.

“10.15. There were systemic and developmental implications inherent in plurilaterals especially if they attempted to subvert established rules and foundational principles of the Marrakesh Agreement. They risked eroding the integrity of the rules-based multilateral trading system, creating a precedent for any group of Members to bring any issue into the WTO without the required consensus, including disregard of existing multilateral mandates, marginalizing issues which were difficult but yet critical
for the multilateral trading system such as agriculture and development thereby undermining balance in agenda setting, negotiating processes and outcomes, fragmenting the system and undermining the multilateral character of the WTO which Members had sought to resolve by creating the WTO following the GATT experience.

“10.16. The legal framework of the WTO provided clear options for Members who were part of JSIs as outlined in the paper. South Africa was therefore calling on Members to respect the rules which continued to underpin the functioning of the WTO.

Australia (page 69 of WT/GC/M/190)

“10.24. The representative of Australia noted Members’ commitment to improving the effectiveness of the WTO’s rulemaking function. Australia was a participant in all the current JSI negotiations under way and strongly supported that important work at the WTO. Plurilateral initiatives were neither novel nor revolutionary in the multilateral trading system. They had always been a part of the WTO architecture had constituted the predominant form of rulemaking in the multilateral trading system for decades. WTO-consistent plurilateral trade agreements with wide participation played an important role in complementing global liberalization efforts. The current JSIs had the potential to deliver vital outcomes that strengthened the WTO’s rulemaking function and its health more generally. More than 110 Members were participating in one or more of the current JSI negotiations – demonstrating the wide acknowledgement from across the Membership that that was a legitimate and useful form of rulemaking. They had and continued to be inclusive, open and transparent.

“10.25. Australia did not agree with the legal analysis in India and South Africa’s paper. For instance, the suggestion that Members could not improve their GATT or GATS Schedules without consensus agreement was not accurate. Members could always incorporate improvements to their Schedules whether unilaterally or as a group of Members. That was the legal architecture which participants had agreed to use in the services domestic regulation JSI. Australia had full confidence in the WTO consistency of that approach. In the case of the e-commerce JSI, its participants were still exploring the legal structure options they could best use to incorporate eventual outcomes into the WTO legal framework but were confident that those pathways could be found. Australia encouraged all Members to participate in or at least keep an open mind on those plurilateral discussions to pursue
outcomes that modernized and enhanced WTO rules for the whole Membership.”

Costa Rica (pages 69-70 of WT/GC/M/190)

“10.26. The representative of Costa Rica was focused on ensuring that the WTO operated within the legal framework agreed by the Members. Costa Rica would reject any attempt to force Members to abide by new obligations without their consent. Costa Rica was a participant in the Joint Statement Initiatives on Electronic Commerce, Investment Facilitation for Development, MSMEs and Services Domestic Regulation. The reason for that was simple. Costa Rica was recognizing the need to adapt to the trade policy challenges of the 21st century. But that did not mean that any Member who chose to remain outside those discussions would be forced to adhere to any new obligations.

“10.27. Costa Rica focused its remarks that day on the negotiations on services domestic regulation as that was the initiative that it had the pleasure of coordinating. Those negotiations and the outcome they would produce were firmly within the rules of the WTO. 59 proponents of services domestic regulation had established the initiative at the end of 2017 after they had to accept with
great regret that no further progress had been possible in the Working Party on Domestic Regulation. Each and every proposal submitted had been rejected in its entirety by South Africa and other Members. Proponents of domestic regulation had no choice but to accept that position.

“10.28. Since that time, work on the subject had so far advanced in the Joint Statement Initiative on Services Domestic Regulation. To the extent that participants considered it to be a viable prospect for an outcome to be delivered that year, Costa Rica clarified that the outcome would consist of a set of disciplines on licensing, qualification and standards which would bind only participating
Members but would benefit services suppliers from all Members who traded with the participating Members which currently represented more than 70% of world services trade.

“10.29. The outcome that was envisaged would be incorporated into participating Members’ GATS schedules of specific commitments. In substance, it covered precisely those types of measures that were listed in the GATS as areas for additional commitments, namely, qualification standards and licensing matters That was important because the paper introduced by India and South Africa suggested that the disciplines developed by the initiative constituted some form of not further specified rules which did not fit under the architecture of services schedules. That was quite untrue. Rather, the disciplines constituted improvements of participating Members’ existing commitments.

“10.30. Participating Members would give legal effect to the outcome by inscribing the disciplines as additional commitments in the respective GATS schedules. That would not be done by seeking to add a new agreement to the WTO architecture but by applying well established multilateral WTO procedures to improve Members’ schedules of specific commitments. Concerns about the work of the JSI had been raised already at the end of 2019. At that time, India had argued that some of the disciplines could be of a GATS minus nature and the GATS Article VI.4 mandate could be affected by the work of the initiative. As the Coordinator of the initiative, Costa Rica had had the pleasure of discussing those concerns with India in more detail and to report back to the group. While participants in the initiative did not agree that the disciplines in question could be understood to undercut existing GATS obligations, they agreed wholeheartedly with India that the disciplines should not be understood to weaken any provision contained in the GATS.

“10.31. Indeed, participants had recently incorporated in the negotiating text language expressing clearly that the disciplines should not be constructed to diminish any obligations under the GATS. The GATS Article VI.4 mandate to develop any necessary domestic regulation disciplines was not, would not and could not be affected by the fact that Members participating in the JSI would undertake additional commitments on domestic regulation. Costa Rica was therefore disappointed to see that India currently appeared to question the right of any WTO Member to improve its services commitments. The JSI on Services Domestic Regulation remained open and transparent and all Members were welcome to join the meetings and to constructively engage ensuring that the outcome benefited service suppliers across the world and included as many Members as possible.”

Chinese Taipei (page 70 of WT/GC/M/190)

“10.32. The representative of Chinese Taipei noted that the plurilateral approach had contributed to global trade in the past. The ITA was an example. Certain limited use of the plurilateral approach could support and supplement the multilateral trading system by facilitating international trade. The discussions under JSIs had given the WTO new momentum which was necessary and healthy for the multilateral system. It was an unavoidable trend that more and more trade issues were emerging that urgently needed Members to establish new disciplines for them. It was highly important to update WTO rules and to make the WTO a living organization and not be left behind by the world.

“10.33. Through Joint Statement Initiatives, Members had developed a creative way to address the trend so that the WTO’s legislative function could be improved for it to maintain its relevancy given new developments in the world – with Members still maintaining the flexibility not to opt in. Chinese Taipei called on Members to jointly think about how plurilateral agreements could be integrated into the multilateral trading system while considering Members’ needs for their respective development stages and maintaining the existing rights and obligations of non-participating Members.”

Colombia (page 70 of WT/GC/M/190)

“10.34. The representative of Colombia believed that that was an important discussion for the future of the organization as those initiatives covered the interests of many Members to move forward on crucial issues in global trade relations. Colombia appreciated the interest the Director-General had expressed on JSIs. That was a necessary step for the strengthening of the WTO. Colombia was happy to see how the path that had begun with previous processes such as the ITA was currently joined by many Members who were involved in the JSIs – an important space to resolve pending priorities.

“10.35. Such perspective had led Colombia to actively and formally participate in the JSIs on ecommerce, investment facilitation for development, services domestic regulation, MSMEs and trade and gender. Colombia also expressed its interest in other nascent initiatives which would likewise have an important impact on the WTO’s future as a driver of development for Members. With regard to the document being reviewed that day, Colombia did not share the legal analysis that the paper had set out but remained ready to continue that discussion in the appropriate forum. Colombia reiterated its commitment to the JSIs and its support for any work that could be done in that area.”

Mexico (page 70 of WT/GC/M/190)

“10.36. The representative of Mexico said that JSIs provided an excellent opportunity to furnish the WTO with tools that would allow it to face the current challenges in global trade. Members were in a situation where some of them believed that they were still not in a position to fully integrate themselves into the work under way. The JSI participants had never foreclosed the possibility for more Members to join those initiatives when they deemed it appropriate to do so nor did those initiatives diminish the rights and obligations of non-participating Members. Rather, the JSIs offered a possibility to move forward and help the WTO become more relevant by promoting trade as a vehicle for development. Mexico had been a strong proponent of the JSIs as the work had taken place openly, inclusively and transparently with voluntary participation at its core.”

Russian Federation (page 71 of WT/GC/M/190)

“10.37. The representative of the Russian Federation found the paper by India and South Africa upsetting. There was no doubt that Members should respect the right of any of them to express its attitude towards current developments within the multilateral legal system and to point out issues which it could see as contradictory to the system’s rules. The paper was however not about that but
dealt with the issue of whether the WTO should move forward and regain its relevancy amid the changing global economic environment or should it be further bogged down by disagreements among Members and lack of consensus eventually turning into an archaic and useless institution.

“10.38. The multilateral outcomes at MC11 had clearly been quite poor. The decision to promote and accelerate fisheries subsidies negotiations – the only multilateral and negotiation-related result achieved in Buenos Aires – was evidently not enough to chart a way forward for the WTO. The JSIs in which Russia was proud to participate in had been considered globally as a signal of Members’ ability and readiness to explore possible formats to move ahead. The progress achieved in all JSIs since then demonstrated the effectiveness of that approach. For example, the JSI on Services Domestic Regulation was an attempt to deliver on a long standing commitment of all Members to develop the respective disciplines as set out in GATS Article VI.4.

“10.39. As for the incorporation of new plurilateral initiatives into the WTO Agreements, Russia agreed with suggestion of India and South Africa that it should be done in accordance with the relevant provisions of the Marrakesh Agreement. However, the final goal of the JSIs was not to create a set of isolated rules among like-minded Members but rather to update the multilateral legal
system as a whole. That was why the JSIs remained open to all Members at any stage.

“10.40. The most disappointing fact about the submission was that while attacking JSIs, it did not provide any way forward essentially keeping the WTO to languish in the current limbo. No Member had taken the position to leave behind the core WTO mandated issues like agriculture or ‘horizontal’ S&DT. However, if the needs of the businesses and the people worldwide including in developing countries required Members to agree on adequate and up-to-date rules on other important issues, they had no right to keep those requests as hostages of their inability to reach progress on all fronts.”

Japan (page 71 of WT/GC/M/190)

“10.41. The representative of Japan appreciated the Joint Statement Initiatives as an essential framework to allow the WTO to address in a flexible and realistic manner the changing global economic needs of the 21st century. The JSIs responded to calls from a broad range of stakeholders by discussing key economic issues and would contribute to updating the WTO rulebook and to
ensuring the relevance of the WTO in today’s world. Without the JSIs, the WTO risked becoming less relevant and even losing its raison d’être as a cornerstone of the multilateral trading system. The JSI meetings were organized in an open, transparent and inclusive manner.

“10.42. While taking into account the convenience of respective Members including the size of their delegations in organizing the process, the fact that many of them were participating in the JSIs and actively engaging in negotiations in a creative and innovative way clearly showed the JSI’s importance. A number of achievements made in the GATT and the WTO had initially been taken up
or discussed in plurilateral initiatives which were later merged in the system. Japan believed that the JSIs were consistent with the WTO and had high hopes that they would be a key part of the MC12 outcomes. Japan would continue to work with other Members to deliver substantial outcomes in the JSIs as a positive achievement of the WTO.”

Republic of Korea (page 71 of WT/GC/M/190)

“10.43. The representative of the Republic of Korea, as a staunch supporter of the multilateral trading system, was disappointed to see the WTO in limbo in particular its failure to function as a forum for multilateral trade negotiations in response to the diverse needs and interests of Members. Upon such impasse and trade liberalization shifting weight to regional agreements outside the WTO, plurilateral negotiations could be a meaningful stepping-stone for multilateral agreement. It also served as a test pad for pioneering new trade rules as demonstrated by the GPA and the ITA. The JSIs which were held parallel with multilateral negotiations were essential to maintain the WTO’s relevance in the changing trade environment. Those negotiations were responsive to the demands of diverse stakeholders which would help rebuild trust in the multilateral trading system. Korea
therefore expressed its concern on the communication submitted by India and South Africa which raised questions on the concerted endeavours for revitalizing the WTO’s negotiating function.”

United States (pages 71-72 of WT/GC/M/190)

“10.44. The representative of the United States believed that plurilateral negotiations at the WTO could be a useful means to advance issues of interest to Members and to keep the WTO relevant. It did not view plurilateral negotiations and outcomes as undermining multilateral ones. In fact, plurilateral initiatives could foster new ideas and approaches and build momentum toward
multilateral outcomes. The various rigid positions expressed in the paper would seem to foreclose Members’ ability to pursue creative and flexible approaches at the WTO to the challenges of today and tomorrow.”

Possible JSI outcomes at the WTO’s 12th Ministerial Conference

The WTO is hoping that the 12th Ministerial Conference will finally deliver a fisheries subsidies agreement after 20 years of negotiations. It would be a multilateral agreement and only the second such agreement (the other being Trade Facilitation) concluded since the creation of the WTO in 1995. There are hopes for collective action on trade and health and some other issues. But many of the likely deliverables will involve Joint Statement Initiatives. Hence the position of India and South Africa may muddy the outlook for whether such initiatives when concluded will be incorporated into the WTO acquis.

Press accounts of a recent Chatham House event noted the view of the European Union that the WTO needs to be able to bring these initiatives into the WTO. See Inside U.S. Trade’s World Trade Online, Weyand: WTO reform should include easier’ path for plurilateral deals, November 15, 2021, https://insidetrade.com/daily-news/weyand-wto-reform-should-include-easier-path-plurilateral-deals (“World Trade Organization members need an ‘easier’ way to integrate plurilateral agreements into the organization’s rulebook, European Commission Director-General for Trade Sabine Weyand said on Friday, calling for the idea to be a part of broader WTO reform discussions.”). The EU, like most other WTO Members, has been an active participant in various JSIs.

A former Deputy Director-General of the WTO, Alan Wolff, presented views in Singapore earlier this week on the subject of the role of plurilaterals in the WTO. See Peterson Institute for International Economics, Alan Wm. Wolff, Plurilateral Agreements and the Future of the WTO, November 16, 2021, Remarks delivered at the Nanyang Technological University, Singapore, https://www.piie.com/commentary/speeches-papers/plurilateral-agreements-and-future-wto. His speech is worth reading in its entirety. A few excerpts are provided below and highlight the critical importance of plurilaterals going forward. Whether plurilaterals are within the WTO or outside will basically determine whether the WTO can maintain relevance in the future.

“Plurilateral agreements have become and will remain the primary path forward for improving the conditions for international trade.

“Insofar as the future health of the multilateral trading system is concerned, there are three alternatives:

“(1) coalitions of the like-minded will be able to conclude open plurilateral agreements within the WTO,

“(2) forward-leaning agreements are negotiated outside the WTO but become templates for the multilateral rules, or

“(3) the WTO becomes increasingly irrelevant to new global challenges and there is a consequent fragmentation of the world trading system.”

After reviewing the JSIs and other initiatives on climate change, trade and health and other matters, Amb. Wolff notes that

“Global problems need global solutions.

“The only practical way forward for the WTO is through open plurilateral agreements. Otherwise, Members who are looking for solutions will view the WTO as being increasingly irrelevant. The WTO to thrive needs to become more flexible.

“Notionally, various subjects can be negotiated on their own, in disparate venues, each unrelated to the other, without full transparency, without interested countries having a say. That is a recipe for global incoherence. It is the opposite of what is needed.

“Where trade is a vitally important aspect of meeting a global challenge – such as a pandemic or climate change, there is no clear alternative venue for addressing fully countries’ needs. The WTO must be pressed into service.

“It is time for the WTO’s Members to take the next step and embrace the open plurilateral agreements being negotiated now and those that are going to be launched to meet their needs for the 21st century.”

The 12th Ministerial Conference is the opportunity for WTO Members to embrace the future or commit the WTO to reduced relevancy. By early December, we should understand the likely direction of the WTO.

The folly of self-selection as a developing country at the WTO

In prior posts I have reviewed efforts by the United States and others to have the WTO membership modify who is entitled to special and differential treatment in light of the rapid changes in economic capabilities of a number of countries who have classified themselves as “developing” countries at the WTO under the self-designation approach that has characterized the GATT and now the WTO. See, e.g., December 14, 2020:  WTO December 14th Heads of Delegation meeting – parting comments of U.S. Ambassador Dennis Shea, https://currentthoughtsontrade.com/2020/12/14/wto-december-14th-heads-of-delegation-meeting-parting-comments-of-u-s-ambassador-dennis-shea/; August 13, 2020 [updated August 27]:  The race to become the next WTO Director-General – where candidates are on important issues:  eligibility for special and differential treatment/self selection as a developing country, https://currentthoughtsontrade.com/2020/08/13/the-race-to-become-the-next-wto-director-general-where-candidates-are-on-important-issues-eligibility-for-special-and-differential-treatment-self-selection-as-a-developing-country/; February 15, 2020: The U.S. Modifies the List of Developing and Least Developed Countries Under U.S. Countervailing Duty Law, https://currentthoughtsontrade.com/2020/02/15/the-u-s-modifies-the-list-of-developing-and-least-developed-countries-under-u-s-countervailing-duty-law/; December 28, 2019: WTO Reform – Will Limits on Who Enjoys Special and Differential Treatment Be Achieved?, https://currentthoughtsontrade.com/2019/12/28/wto-reform-will-limits-on-who-enjoys-special-and-differential-treatment-be-achieved/.

The issue is one of importance because of the concern that many Members who have economically advanced to be fully internationally competitive or internationally competitive in significant areas of goods or services are not opening their markets to a level commensurate with their actual stage of development. A number of Members have indicated that they will not seek Special and Differential treatment in new agreements while maintaining rights under existing ones. The U.S., the EU and others have sought a more factual basis for any entitlement to differential treatment.

On November 10, 2021, Director-General Ngozi Okonjo-Iweala addressed the WTO Committee on Trade and Development (“CTD”) See WTO News Release, “Development issues should be at the heart of work at the WTO“— DG Okonjo-Iweala, 10 November 2021, https://www.wto.org/english/news_e/news21_e/devel_10nov21_e.htm. The press release starts with an overview of the importance of development in the overall WTO mission,

“Director-General Ngozi Okonjo-Iweala highlighted the key role that trade plays in economic development during a meeting of the WTO’s Committee on Trade and Development (CTD) on 10 November. She stressed that development is a priority for the WTO and that the CTD plays an important role in addressing the development dimension in the multilateral trading system.

“DG Okonjo-Iweala stressed that the work of the WTO is important for developing and least  developed countries (LDCs),  hence, it is critical for the WTO to deliver on issues of importance to them. Trade is a significant driver for economic growth and poverty reduction and ultimately for development, she added.”

The press release later has a statement that “The Secretariat presented the findings of its latest report concerning the participation of developing economies in global trade.” The latest report is PARTICIPATION OF DEVELOPING ECONOMIES IN THE GLOBAL TRADING SYSTEM, NOTE BY THE SECRETARIAT, 28 October 2021, WT/COMTD/W/262.

The problem with the note from the Secretariat and the functioning of the Committee on Trade and Development and other aspects of the WTO work is that developing countries in the note is treated as all Members so designating themselves and hence provides little useful information on the role of countries in actual need of assistance. Data in the note is skewed by information on developing Asia — an area that includes China, Singapore, the Republic of Korea and Chinese Taipei (Taiwan). On pages 8-9 of the Secretariat note, the major “developing” country traders are reviewed. The top 15 developing country exporters in 2020 were Chins (34.0%), Republic of Korea (6.7%), Mexico (5.5%), Singapore (4.8%), Chinese Taipei (4.6%), United Arab Emirates (4.2%), Viet Nam (3.7%), India (3.6%), Malaysia (3.1%), Thailand (3.0%), Brazil (2.8%), Kingdom of Saudi Arabia (2.3%), Turkey (2.2%), Indonesia (2.1%), South Africa (1.1%), other (16.4%). The top 15 importer developing countries included all of the top exporters with the exception of South Africa (Hong Kong, China was the 15th largest importer).

The World Bank provides Gross National Income per capita for most countries/territories (China blocks provision of data for Chinese Taipei). The latest data are for 2020 and include the following ranges for the four categories of World Bank countries:

Low income countries, less than $1,048/capita GNI

lower middle-income economies, $1,048-4,095/capita GNI

upper middle-income economies, $4,096-12,695/capita GNI

high income economies, $12,696 or more/capita GNI.

China in 2020 had a per capita GNI of $10,610; Singapore had a 2020 per capita GNI of $54,920; Republic of Korea had a 2020 per capita GNI of $32,860; Chinese Taipei had a per capita GDP in 2021 of $33,402; Mexico had a 2020 per capita GNI of 8,480; the United Arab Republic had a 2019 per capita GNI of $43,470; the Kingdom of Saudi Arabia had a 2020 per capita GNI of $21,930; Hong Kong, China, had a 2020 per capita GNI of $48,630; Thailand had a 2020 per capita GNI of $7,050; Malaysia had a 2020 per capita GNI of $11,230; Turkey had a 2020 per capita GNI of $9,030; Brazil had a 2020 per capita GNI of $7,850.

See New World Bank country classifications by income level: 2021-2022, July 1, 2021, https://blogs.worldbank.org/opendata/new-world-bank-country-classifications-income-level-2021-2022; World Bank Country and Lending Groups, ← Country Classification, https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups; GNI per capita, Atlas method (current US$) – China, https://data.worldbank.org/indicator/NY.GNP.PCAP.CD?locations=CN (lists all countries); Wikipedia, Economy of Taiwan, https://en.wikipedia.org/wiki/Economy_of_Taiwan.

There is obviously no justification in high income economies receiving special and differential treatment as though they are developing countries in fact. Thus, data for Singapore, Korea, Hong Kong, UAE, Saudi Arabia shouldn’t be in the developing country data base. Similarly, China and Malaysia with per capita GNIs above $10,000 and purchasing power parity gross national income per capita (2019) above the minimum high income economy threshold ($16,790 for China; $28,830 for Malaysia) shouldn’t be eligible for special and differential treatment as a general rule. Brazil, Thailand, Turkey and Mexico while below $10,000 per capita GNI in 2020 have 2019 per capita purchasing power parity GNI higher than the high income economy threshold ($14,890 for Brazil; $26,840 for Mexico; $18,570 for Thailand; $27,660). There is no apparent logic in having these countries have automatic rights to special and differential treatment.

The Secretariat, of course, cannot change the classification of Members. But the lack of a rational standard for determining appropriateness of receiving special and differential treatment undermines the functioning of the WTO and permits countries who have succeeded at rapid economic development from assuming full obligations of WTO membership. The problem also results in statistical reports that are largely meaningless.

In a consensus based system like the WTO, the road to rationality will be long at best with many WTO Members who should have accepted full obligations by now continuing to hide behind the self-selection process to claim lesser obligations.

The APEC 2021 Ministerial Meeting Joint Statement — portion relevant to WTO 12th Ministerial Meeting

The APEC 2021 Ministerial meeting was held remotely on November 8-9 and resulted in a joint statement which included ambitions of APECs 21 members for the upcoming 12th WTO Ministerial Conference which starts in Geneva at the end of November (November 30-December 3). New Zealand has chaired APEC in 2021. Because the APEC countries include members accounting for 38% of the world’s population, 62% of the world’s GDP and 48% of global trade in 2020 and includes both the United States and China among the 21 territories, what APEC members support for the upcoming WTO ministerial may offer a glimpse of what may be possible in Geneva in the coming weeks. The APEC Ministerial Meeting Joint Statement and a publication on APEC in Numbers can be found here. See 2021 APEC Ministerial Meeting Joint Statement, Wellington, New Zealand, 09 November 2021, https://www.apec.org/meeting-papers/annual-ministerial-meetings/2021/2021-apec-ministerial-meeting; APEC in Charts 2021, https://www.apec.org/docs/default-source/publications/2021/11/apec-in-charts-2021/221_psu_apec-in-charts-2021.pdf?sfvrsn=50537c36_2. APEC members include Australia, Brunei Darussalam, Canada, China, Hong Kong (China), Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russian Federation, Singapore, Chinese Taipei, Thailand, United States, and Viet Nam.

While the Declaration contains coverage of a number of issues, it has a separate section on the World Trade Organization (pages 4-5, paras. 17-22). The six paragraphs from the Joint Statement are copied below.

“World Trade Organization

“17. APEC takes pride in its long history of active support for the rules-based multilateral trading system (MTS), with the WTO at its core. The MTS has been a catalyst for our region’s extraordinary growth and we will work together to improve it. We seek a responsive, relevant, and revitalised WTO. We must support the WTO and its membership to modernise trade rules for the twenty-first century. Together, we will engage constructively and cooperate to ensure the 12th WTO Ministerial Conference (MC12) is a success and delivers concrete results.

“18. As a priority for MC12, we see an opportunity for the WTO to demonstrate that the MTS can continue to help address the human catastrophe of the COVID-19 pandemic and facilitate recovery. We call for pragmatic and effective ministerial outcomes that makes it easier to respond swiftly and effectively to the COVID-19 pandemic and accelerate the recovery. Our priorities include supporting the facilitation of manufacturing, distribution, and supply chains of essential medical goods, including vaccines. We will work proactively and urgently in Geneva to support text-based discussions, including on a temporary waiver of certain intellectual property protections on COVID-19 vaccines.

“19. We reiterate our determination to negotiate effective disciplines on harmful fisheries subsidies in line with SDG 14.6, and call for agreement to a comprehensive and meaningful outcome by MC12 in a few weeks’ time.

“20. Despite its importance for ensuring global food security and sustainable economic development, agriculture is one of the most protected sectors in global trade. We recognise the need for a meaningful outcome on agriculture at MC12, reflecting our collective interests and sensitivities, with a view towards achieving substantial progressive reductions in support and protection, as envisaged in the continuation of the reform process provided in Article 20 of the WTO Agreement on Agriculture and existing mandates.

“21. We recognise the positive role that existing plurilateral negotiations and discussions are playing in progressing outcomes. APEC member participants in the relevant Joint Statement Initiatives (JSIs) call for conclusion of negotiations on services domestic regulation by MC12; and substantial progress by MC12 in the JSIs on e-commerce; micro, small and medium-sized enterprises; and investment facilitation for development. We take note of the efforts by the APEC economies who endorsed the Joint Declaration on Trade and Women’s Economic Empowerment to deliver an ambitious outcome at MC12 that supports the advancement of trade and gender equality.

“22, We continued our frank and constructive discussions regarding improvement to the WTO’s monitoring, negotiating and dispute settlement functions. We continue to support the ongoing and necessary reform work to improve the WTO’s functioning, including the importance of making progress on enhancing transparency to support its monitoring and negotiating functions. We will work together at the WTO and with the wider WTO membership to advance the proper functioning of the WTO’s negotiation and dispute settlement functions, which require addressing longstanding issues. We urge WTO members to seek a shared understanding of the types of reform needed.”

The Joint Statement has some specific items where outcomes are pursued — conclusion of the fisheries subsidies negotiations, some outcomes in the Joint Statement Initiatives (services domestic regulation should be completed; micro, small and medium-sized enterprises is completed; progress on others). As reviewed in yesterday’s post, WTO Members still have a challenging road to achieve a completed fisheries subsidies agreement at the 12th Ministerial. See November 9, 2021:  WTO Fisheries Subsidies Negotiations — a second revised text from November 8 holds out hope for a deal by MC12; how realistic is the hope?, https://currentthoughtsontrade.com/2021/11/09/wto-fisheries-subsidies-negotiations-a-second-revised-text-from-november-8-holds-out-hope-for-a-deal-by-mc12-how-realistic-is-the-hope/. Moreover, India, South Africa and others are raising objections to having any plurilaterals being negotiated included in the WTO which will complicate what comes out of the 12th Ministerial Conference (as opposed to encouraging Members to pursue plurilaterals outside of 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/; September 18, 2021: The WTO’s 12th Ministerial Conference in Late November – early December 2021 — the struggle for relevance, https://currentthoughtsontrade.com/2021/09/18/the-wtos-12th-ministerial-conference-in-late-november-early-december-2021-the-struggle-for-relevance/.

The Joint Statement also seeks “pragmatic and effective” outcomes in the health and trade space to address responding to the COVID pandemic. Specifics are lacking although there is support to expanding production and access to vaccines and other medical goods. While supporting text based negotiations in the area, including on a possible temporary waiver of some TRIPS provisions on COVID vaccines, the lack of greater specificity reflects differences in positions of APEC members.

Similarly, while supporting WTO reform in all three areas of WTO activity (monitoring, negotiating and dispute settlement), APEC members have significantly different views on what is needed in these areas. Hence only general language is included in the Joint Statement.

In a prior post, I have opined that recent actions by the U.S. and EU to find ways around the civil aircaraft and steel and aluminum frictions suggests that the U.S. may agree to the start of a process to review the dispute settlement system issues raised by it as part of the 12th Ministerial (a high EU priority) and that the U.S. and EU could coalesce around an outcome acceptable to both in the TRIPS waiver dispute. See November 2, 2021:  What does the U.S.-EU Agreement on steel and aluminum imply for the upcoming 12th WTO Ministerial Conference?, https://currentthoughtsontrade.com/2021/11/02/what-does-the-u-s-eu-agreement-on-steel-and-aluminum-imply-for-the-upcoming-12th-wto-ministerial-conference/.

China has opposed greater transparency obligations and has tied reform of industrial subsidies to looking at agricultural subsidies as well. A recent post of mine reviews the need for better information on subsidies. See October 30, 2021:  WTO reform — distortions to market access and the need for better information, https://currentthoughtsontrade.com/2021/10/30/wto-reform-distortions-to-market-access-and-the-need-for-better-information/. Despite differences of view on some issues among major Members, it is not out of the question that a reform program will cover an examination of all three functions going forward.

On agriculture, there is a shared view for a need for results at the WTO 12th Ministerial and reflects on the fact that Article 20 of the WTO Agreement on Agriculture calls for periodic rounds of liberalization. However, the language of the Joint Statement doesn’t specify the areas where agreement is possible by the 12th Ministerial, reflecting different views among APEC members.

Nothing in the APEC Joint Statement addressed what, if anything should be agreed at the 12th WTO Ministerial on the climate crisis and what role trade can play in addressing the crisis. This omission is unfortunate but likely reflects large differences in views within APEC members on the topic. As I reviewed in a recent post, much more is needed but unlikely to come from the WTO and its members. See November 4, 2021:  The WTO and the environment — will the 2020s be different in terms of trade policies that are environmentally supportive?, https://currentthoughtsontrade.com/2021/11/04/the-wto-and-the-environment-will-the-2020s-be-different-in-terms-of-trade-policies-that-are-environmentally-supportive/.

Conclusion

The APEC 2021 Ministerial Meeting Joint Statement, being released three weeks before the start of the WTO’s 12th Ministerial Conference is a positive statement of support for the multilateral trading system. Coming from a group of WTO Members accounting for nearly 50% of global trade, it is a useful guide for topics these countries and territories will be pursuing in Geneva. Other group statements have been released as well as individual country or group objectives. But even within the APEC group of countries, large differences exist on outcomes of interest. With the exception of a possible conclusion to the fisheries subsidies negotiations and conclusions on several Joint Statement Initiatives, there may be only limited positive outcomes. There may be some limited agreement on the broad topic of health and trade and some agreement on topics for future negotiation. There may also be at least some provisions in a declaration dealing with the climate crisis and the important role trade can play in addressing the crisis.

Such a limited set of outcomes will likely be viewed as a success for an organization hamstrung by Members with no common vision for the role of the organization, with large differences in development levels, a cumbersome governance system and growing divergence on whether the organization can support global trade where market rules are not the required framework. More is needed for a truly relevant WTO and for a sustainable global trading system. The world is unlikely to achieve meaningful reform at the WTO in the coming decade. Progress, if any, will likely be slow and piecemeal.

The WTO and the environment — will the 2020s be different in terms of trade policies that are environmentally supportive?

With the world rapidly approaching the point of no return on rising temperatures, can an organization like the WTO characterized by negotiating paralysis play a meaningful role in seeing that trade rules support sustainable growth and a livable planet in a timely manner?. Recent history would suggest the answer is no or at least not in a timely manner.

Fisheries subsidies negotiations have dragged on for more than two decades, suggesting that even if a robust trade and environment work program is agreed to at the WTO’s 12th Ministerial Conference, the chances of meaningful progress in the current decade are modest at best.

The negotiations for an environmental goods agreement amongst 17 countries and groups accounting for 90% of trade in environmental goods which began in 2014 was essentially discontinued in 2016 despite the obvious global benefit from tariff reductions on the trade in goods that can improve the environment. While many have urged the restart of the talks, it is unclear whether talks will restart and how quickly they could conclude.

There are no ongoing negotiations to address the need to reduce the carbon footprint of industry and agriculture despite some 69 countries having adopted some form of carbon price and the impending start of carbon border adjustment measures (“CBAMs”) by some WTO Members. A global agreement on a carbon price is aspirational at this point without negotiations agreed to or started. Countries working to reduce carbon emissions are concerned about “leakage” of production and jobs to countries with low standards ensuring that there will be CBAMs imposed by some. Some WTO Members are threatening retaliation if such measures are adopted. So the 2020s will likely be a period of conflict among WTO Members on the topic instead of being a period of time in which the WTO and its Members are able to make a critical contribution to controlling the global warming crisis.

Efforts at plurilateral agreements (so-called Joint Statement Initiatives or JSIs) which include some in the environmental area (e.g., marine plastics pollution) are not certain to become part of the WTO, facing opposition from India and South Africa and others.

So recent history does not shout out that the WTO will play an important role in addressing the existential threat flowing from global warming.

This is not to say that the WTO Director-General isn’t advocating for trade to play its role in addressing the problems. Moreover, the Secretariat is attempting to generate information on the role trade can play in addressing global warming through a series of information notes. See, e.g., WTO news, DG Okonjo-Iweala highlights trade’s role in ambitious and just climate action at COP26, 2 November 2021, https://www.wto.org/english/news_e/news21_e/clim_02nov21_e.htm; WTO news, WTO issues information briefs on trade, climate, related issues with COP26 talks underway, 3 November 2021, https://www.wto.org/english/news_e/news21_e/clim_03nov21_e.htm. The press release reviewing DG Ngozi’s statement is copied below.

“Trade can and must make a contribution to a comprehensive climate action agenda, Director-General Ngozi Okonjo-Iweala declared in her engagements with world leaders and stakeholders at the United Nations COP26 Climate Summit in Glasgow, Scotland, highlighting the need for ambitious yet fair commitments that ensure a green transition that is just and inclusive to all economies.

“The Director-General highlighted trade and the WTO’s role in a wide breadth of approaches to climate action in her panels and bilateral meetings, covering carbon emission reductions, the conservation of forests as critical carbon sinks, climate adaptation, and finance.

“On carbon reduction and pricing, she championed a coordinated approach at the high-level event organized by Canada and the Carbon Pricing Leadership Coalition, saying: ‘Let’s move towards a global carbon price. We have a great deal of fragmentation and we are hearing increasingly from businesses that they are finding regulations difficult to navigate and sometimes it results in higher prices for consumers and others. We also have members who are afraid this measure is somehow disguised protectionism which will prevent them from selling products abroad. Their issues need to be respected as we develop these systems.’

“’The WTO provides a forum where we can initiate this dialogue and involve developing and least-developed countries in the conversation. Leaders should task the International Monetary Fund, Organisation for Economic Co-operation and Development, World Bank and the WTO to work together and come up with a global approach,’ she said.

“Halting deforestation and establishing sustainable markets for agriculture must also be part of the comprehensive trade and climate agenda, she said at a session of the World Leaders Summit on Forests and Land Use, organized by the United Kingdom, host of COP26, and the UN Framework Convention on Climate Change. WTO members have already notified an increasing number of policies relating to forestry management (514 measures from 2009 to 2019) as well as sustainable agriculture management (over 1,200 measures). However, more action is needed, such as reforming subsidies that create perverse incentives for market actors to deplete natural resources, the Director-General said.

“At the Africa Adaptation Acceleration Summit, moreover, the Director-General said: ‘Adaptation for Africa must be a priority for the international community. This region contributes the least to emissions but suffers the most. Climate finance for Africa to meet adaptation costs must be ramped up.’

“’We also need to put in place trade policies to cushion against and adapt to the negative impacts of climate change. Trade is part of the solution,’ she said, noting the need for trade to ensure food security in the face of climate threats, provide access to adaptation technologies, and create synergies in Aid for Trade and climate finance.

“The Director-General will also underline the importance of support for developing countries and least developed countries (LDCs) at the 3 November event organized by the United Kingdom on mobilizing climate finance.”

The five information papers released from the Secretariat on November 3, 2021 are:

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°1, MAPPING PAPER: TRADE POLICIES ADOPTED TO ADDRESS CLIMATE CHANGE, https://www.wto.org/english/news_e/news21_e/clim_03nov21-1_e.pdf.

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°2, CLIMATE CHANGE IN REGIONAL TRADE AGREEMENTS, https://www.wto.org/english/news_e/news21_e/clim_03nov21-2_e.pdf.

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°3, TRADE RESILIENCE IN THE FACE OF A RISING BURDEN OF NATURAL DISASTERS, https://www.wto.org/english/news_e/news21_e/clim_03nov21-3_e.pdf.

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°4, CARBON CONTENT OF INTERNATIONAL TRADE, https://www.wto.org/english/news_e/news21_e/clim_03nov21-4_e.pdf.

TRADE AND CLIMATE CHANGE, INFORMATION BRIEF N°5, AFRICA UNDER A CHANGING CLIMATE: THE ROLE OF TRADE IN BUILDING RESILIENT ADAPTATION IN AGRICULTURE, https://www.wto.org/english/news_e/news21_e/clim_03nov21-5_e.pdf.

A former Deputy Director-General of the WTO, Alan Wolff, in comments to the Harvard JFK School last week, identified a third required outcome of the WTO’s 12th Ministerial Conference (besides a statement on trade and health and the conclusion of the fisheries subsidies negotiations) to be —

“3. A clear pledge to deal with trade and climate, and other environmental issues (marine plastics pollution, fossil fuels, etc. – this last, probably unspecified).

“• The effort is likely to take the form of an open plurilateral negotiation, a joint statement initiative. This is now a path more often chosen, as agreement among 164 disparate sovereigns is becoming close to impossible to achieve.”

See Defining Success for MC12, Notes for remarks of Alan Wm. Wolff, Peterson Institute for International Economics, Harvard JFK School, 29 October 2021, https://www.piie.com/sites/default/files/documents/wolff-2021-10-29.pdf (page 3).

While the start of a JSI on trade and climate is the most that can be hoped for at the Ministerial, even if achieved, the question will be can progress be made quickly enough to affect global warming. The fact that the scope of any such negotiations is uncertain strongly supports the view that efforts at the WTO on a plurilateral or multilateral basis will be too limited and too late to make a difference.

This will likely mean any meaningful movement will be implemented by individual Members or potentially small groups and probably occur outside of the WTO. In the absence of global or plurilateral agreements, actions by individual Members will be needed but almost certainly not enough.

Let’s hope that the above analysis proves too pessimistic. For our children and grandchildren, a lot depends on a global robust response to global warming in many policy areas, including trade.

WTO reduces transparency of Trade Policy Reviews — what is the possible justification?

Through September 2021, when a country went through a Trade Policy Review, a large amount of material was made available to the public at the time of the TPR meeting with additional information (minutes, questions and answers, corrections to Secretariat report and/or government report) released a number of months later. The WTO press releases at the time of the TPR meeting were similar. The one for Singapore from 22 and 24 September 2021 is typical.

As can be seen from the press release, the public could access the full report of the Secretariat, the full report of the Government of Singapore, the concluding comments of the Chairperson as well as an Executive Summary of the Secretariat report at the time of the two day meeting to review the reports. Moreover, minutes from the meeting were available to the public typically about six weeks after the meeting as were the written questions and written answers.

Beginning in October, the press release has been modified and far less information is made available immediately to the public. There have been two TPRs so far in October, the Republic of Korea (13 and 15 October) and China (20 and 22 October). A TPR of the Russian Federation is scheduled for next week.

The WTO press release for the Republic of Korea is copied below. The current one for China is similar.

All that is made available to the public at the time of the meeting is a short executive summary of the Secretariat report and the concluding remarks of the Chairperson. No reference is made to how to access the full report of the Secretariat or the Government (here Republic of Korea), nor is there an indication as to when minutes or written questions and written answers will be available.

There is nothing on the WTO webpage which describes why so little information is being provided beginning this month on new Trade Policy Reviews. For the public, the drastic reduction in transparency makes the WTO operations even less understandable.

If the WTO will be releasing all of the documents it has historically but with significant time delays on all documents, what is the justification? For 25 years, TPRs have been conducted with the type of information released that gave the public a good understanding of the Secretariat’s and the government’s review of its trade policy. That understanding has been timely, consistent with the meeting and supplemented within several months with minutes and the written questions and answers.

If the WTO is not intending on releasing all of the documents it has historically released, what is the possible justification?

China, which is going through a Trade Policy Review this week, also went through a TPR in 2018. In 2018, the Secretariat Report released to the public at the time of the TPR meeting was 193 pages (along with a summary of 6 pages). See WT/TPR/S/375. China’s Report on its trade policy was 23 pages. See WT/TPR/G/375. These documents are dated 6 June 2018. A revision to the Secretariat Report is dated 14 September 2018 and was also 193 pages ( WT/TPR/S/375/Rev.1). The Concluding remarks by the Chairperson are contained in a separate press release from the WTO at the time of the TPR meeting but linked from the main notice of the TPR. See WTO news, Trade Policy Review: China, 11 and 13 July 2018, https://www.wto.org/english/tratop_e/tpr_e/tp475_e.htm linking to the concluding remarks of the Chairperson at https://www.wto.org/english/tratop_e/tpr_e/tp475_crc_e.htm. The minutes of the meeting are contained in WT/TPR/M/375, 21 November 20218 and are 98 pages in length with statements from 66 Members (two on behalf of larger groups). The written questions and answers are contained in WT/TPR/M/375/Add.1, dated 1 February 2019 and being 729 pages in length. The WTO Members who submitted questions (including follow-up questions) are shown on pages 2-3 of the document.

Because the current TPR on China (20 and 22 October) does not provide either of the full reports (Secretariat and Government) and because there is no indication of when minutes or written questions and answers will be available, there is certainly delayed access and potentially denial of access of the same type of information on China (or any other country) that was been released in the past. This should be viewed as unacceptable by the WTO Secretariat and WTO Members and certainly should be so viewed by the public.

Conclusion

What is available to the public from a Trade Policy Review is critical for an understanding of concerns raised by WTO Members about any other Member’s trade policy as well as the level and openness of the response from the Member being reviewed. The Secretariat’s report is an important factual analysis of developments in the Member being reviewed. The recent curtailment of access to the full Secretariat Report and the full Government Report greatly harms transparency and the ability of the public to understand developments within WTO Members in a timely manner. Should the WTO cease to release any of the information heretofore available to the public in current and future TPRs, the WTO will be further damaging the public’s perception of the WTO and will be further retreating from openness and transparency towards the public..

What role China could play in WTO reform — possibilities are real but chances of a positive role are not

On October 14, 2021, Amb. Alan Wolff (former Deputy Director General of the WTO, former Deputy U.S. Trade Representative and now Distinguished Visiting Fellow at the Peterson Institute for International Economic Policy) spoke to the PIIE-CF40 Young Economist Forum on the topic “China in the World Trade System, The Role of China in WTO Reform”. Amb. Wolff’s paper provides an interesting overview of the many areas where China could provide positive leadership at the WTO to achieve meaningful reform. The paper also identifies what China has identified as its priorities for reform, most of which cut against positive leadership. His paper can be found here. Ala Wm. Wolff, China in the World Trading System, The Role of China in WTO Reform, October 14, 2021, https://www.piie.com/commentary/speeches-papers/china-world-trading-system.

Amb. Wolff, when he was Deputy Director General at the WTO made points on the need for reform, key values of the WTO, some of which to be continued would require China to make some important adjustments to its economic system. See November 10, 2020:  The values of the WTO – do Members and the final Director-General candidates endorse all of them?, https://currentthoughtsontrade.com/2020/11/10/the-values-of-the-wto-do-members-and-the-final-director-general-candidates-endorse-all-of-them/. As DDG, Amb. Wolff spoke often on the future of the WTO, reforms needed, and more. He has continued that since leaving the WTO. See, e.g., May 1, 2021:  Alan Wolff’s vision for saving the WTO — aspirational but is it achievable?, https://currentthoughtsontrade.com/2021/05/01/alan-wolffs-vision-for-saving-the-wto-aspirational-but-is-it-achievable/.

Among the values of the WTO identified by Amb. Wolff while serving as DDG were two that remain critical in the continued relevance of the WTO:

The primacy of market forces — Commercial considerations are to determine competitive outcomes.

Convergence —The WTO is not simply about coexistence; differences among members affecting trade which deviate from the principles governing the WTO, its core values, are to be progressively overcome.”

These two issues are among the areas where Amb. Wolff identifies the opportunity for China to take an active role in ensuring WTO relevance and WTO reform. But there are many areas where China could be active in a positive maner.

Many of the suggested areas for Chinese action are straight forward. For example, China is not a member of the Pharmaceutical Agreement but is now a very important producer and trader of pharmaceutical products. Joining would be an important step. Similarly, Amb. Wolff urges China to participate in updating the Information Technology Agreement to include medical equipment and eliminate duties on such equipment.

On the negotiating function, Amb. Wolff states,

“There are a number of important opportunities for Chinese leadership in negotiations.

“A positive substantive outcome is necessary in the fisheries subsidies negotiations, which it is hoped will be concluded shortly. China has by far the world’s largest long distance fishing fleet. China’s full and active participation is essential to attaining this objective.

“Another marine issue in which China is prominent is its co-sponsoring with Fiji of an environmental initiative targeting the problem of plastic waste in the oceans. This is a praiseworthy endeavor in which all should join.

“China should also take a lead in re-starting and concluding an Environmental Goods Agreement (EGA).” (pages 10-11).

On the Joint Statement Initiatives, China has the ability to determine the level of ambition in the e-commerce negotiations on issues like privacy, cross border data flow and forced localization of servers. It also is involved in JSIs on Investment Facilitation for Development and on Domestic Regulation of Service. Amb. Wolff notes that China will need to take a position on whether JSIs become part of the WTO acquis or not –

“Any results from the JSIs will add to the world trade rule book and constitute reform. It remains to be seen how valuable these agreements will be, and it is not yet clear how they will be incorporated into the WTO acquis. Either the WTO will be a venue for the negotiation of these crucial open plurilaterals or it will not, and China will have to make a choice as to its position on
the subject. Open plurilateral agreements are essential to the future health of the international trading system.” (page 12)

On WTO reform, both in terms of new rules and restoring the dispute settlement system, Amb. Wolff notes that the two areas will be intertwined and will require addressing “industrial subsidies, state intervention in the economy and technology transfer.” China views these issues defensively which will not help restore the system.

“As a major economy and important stakeholder in the multilateral trading system, China has a pivotal role to play which it should approach positively and constructively – rather than defensively, engaging actively in deliberations on reform. There is a choice between seeing areas of emerging rules as targeting or threatening China’s practices or, more fruitfully, seeing how they can serve the trading system more broadly. Either the WTO will be the venue for setting the rules of engagement or it will be done regionally, bilaterally or unilaterally. It should be in China’s interest to seek resolutions where it has a seat at the table.” (page 13)

On transparency, China will play an important role in whether the WTO 12th Ministerial Conference requires greater transparency and whether Members requires the Secretariat to “independently and aggressively report on all measures affecting trade flow, those that impede trade and those that facilitate it.” (page 14)

Amb. Wolff then addresses several sensitive issues: self-designation of developing country, “market-oriented policies” (what the U.S. would term China’s non-market economy). Amb. Wolff views the self-designation issue as less important for China since China “states that it will accept obligations commensurate with its capacity.” (page 14)

On the question of “market oriented policies,” Amb. Wolff has a long section.

“More serious than the rhetorical issue of whether China is or is not a developing country is the heated discussion over ‘market-oriented policies’. The Riyadh Initiative for the Future of the WTO reached a highly interesting outcome in its November 2020 G20 meeting. The Saudi chair reported that all members agreed to the following list as part of the principles of the WTO under the heading of ‘Rule of Law’:

“o Transparency

“o Non-discrimination

“o Inclusiveness

“o Fair competition

“o Market openness

“o Resistance to protectionism

“o Reciprocal and mutually advantageous arrangements, acknowledging that agreements provide for differential and more favorable treatment for developing economies, including special attention to the particular situation of least developed countries

“The Saudi chair reported that Members could not reach agreement that ‘market-oriented policies’ is a principle of the WTO.

“China defends the role of the state in its economy. However, whether it should be as sensitive as it is to the adoption of this principle is questionable. China already committed in the Working Party Report accompanying its Protocol of Accession that its state-owned enterprises (SOEs) would behave in effect in a market-oriented manner:

“‘44. In light of the role that state-owned and state-invested enterprises played in China’s economy, some members of the Working Party expressed concerns about the continuing governmental influence and guidance of the decisions and activities of such enterprises relating to the purchase and sale of goods and services. Such purchases and sales should be based solely on commercial considerations, without any governmental influence or application of discriminatory measures. . . …

“‘46. The representative of China further confirmed that China would ensure that all state-owned and state-invested enterprises would make purchases and sales based solely on commercial considerations, e.g., price, quality, marketability and availability, and that the enterprises of other WTO Members would have an adequate opportunity to compete for sales to and purchases from these enterprises on non-discriminatory terms and conditions. In addition, the Government of China would not influence, directly or indirectly, commercial decisions on the part of state-owned or state-invested enterprises, including on the quantity, value or country of origin of any goods purchased or sold, except in a manner consistent with the WTO Agreement. The Working Party took note of these commitments.

“This commitment already applies to government influence over private or quasi-private enterprises as well, foreign or domestic, where the role of the state is even less overt, because any government intervention that favors national goods, services, or IP, or treats one foreign supplier less favorably than another, violates fundamental and binding WTO non-discrimination rules: National Treatment and the Most-Favored Nation Principle. The hurdle is often not the legal principle involved but adducing proof of the influence.

“China’s Accession Protocol itself, providing other Members with additional flexibilities to restrict imports from China, indicates a belief of the negotiators for China’s entry into the WTO that there would be continuing progress toward China allowing market forces to determine competitive outcomes in its market, to determine investment, and to avoid artificially supporting
its exports.

The golden rule of the multilateral trading system is that competitive outcomes should be determined by market forces and not state intervention. Without this rule, the system cannot function as intended. As the world’s largest exporting country, China should recognize that this fundamental principle is in its commercial interest. Its enterprises require access to markets around the world. That market forces are to determine competitive outcomes is the basis for the WTO and the GATT before it. Were this precept not accepted and applied, there would no effective alternative but to adopt additional interface mechanisms, far beyond the transitional antidumping and safeguard flexibilities applied to China in the first 12-15 years of its WTO membership under the terms of its accession.” (pages 15-16)(Emphasis added)

Amb. Wolff flags climate change and how WTO Members chose to deal with it as a possible third major area of disagreement, focusing on carbon border adjustment measures.

Amb. Wolff then looks at what the WTO would look like if China’s proposals for reform were adopted. See page 17-19. While some of the proposals are noncontroversial, China argues for self-designation of developing country status, right to have as much state involvement in the economy without WTO scrutiny as a Member wishes, selective reductions in agricultural subsides (US and EU but not China or India), no disciplines on industrial subsidies among others which clearly are contrary to what Amb. Wolff has identified as the necessary course for maintaining WTO relevance.

The paper identifies a series of statements on “What can and should be anticipated going forward with respect to WTO reform, including China’s role in it?” (page 21; nine statements). The list identifies both what needs to be done and what is likely if such actions are not achieved.

“1) Despite the valuable everyday work of the WTO — from standards notifications, assisting developing countries with a wide variety of challenges posed by trade, to trade policy reviews that are among the most civilized interactions of sovereign nations in accepting scrutiny of their policies — absent negotiation of new agreements the WTO will continue to lose credibility. In particular the WTO Members must act to allow their organization to rise to the trade challenges of pandemics and climate change and conclude the fisheries subsidies negotiations. China is central to making the WTO responsive to current challenges.

“2) China is active in JSIs. It should press for open plurilaterals to become a regular and accepted feature of the WTO system.

“3) There will be no restoration of an appellate function for dispute settlement without dealing with issues surrounding China’s trade practices. This will of necessity include addressing substantive rules, and not just how the appellate and panel functions are managed. It will be a difficult negotiation.

“4) The WTO must adopt and implement an explicit rule that market-forces will determine competitive outcomes. China is already pledged to this. This prospective fight can be avoided because it is unnecessary and because it cannot be won by China.7 But then China would have to have its economy be consistent with any resulting new rules that might be constructed. China is not the only economy with state involvement, although it is more pervasive and has more global systemic relevance than is true for any other country. For the sake of the future of the WTO, for the multilateral trading system, this challenge, however daunting, must be met for the WTO to survive as an effective system of rules for global trade.

“5) China, the U.S. and the EU each need to recognize the essential value of the WTO and invest in it accordingly. (This goes for India, South Africa, and others as well.)


“6) De-globalization, were it more than a correction for overly lean and extended supply lines, is not in the interests of any of the WTO Members, least of all, China. It is, avoidable. Re-balancing too far inward, over-emphasizing near-shoring, will hurt all
economies, disproportionately for the largest trading WTO Members. Some shortening of supply lines as a hedge against disruptions can be expected but will be limited by the need to avoid unnecessary costs.

“7) International agreements function on trust. It is up to the Members with the largest trade to increase the level of trust in the system. Trust is not created by stipulating it; it must be earned by experience. To say that there is a trust deficit between the two
largest trading nations would be a gross understatement. Within the WTO, it is time to consider how they can engage in putting into place confidence-building measures.

“8) If the WTO is not able to function, regional agreements will be where serious trade negotiations take place. This will be against the interests of all, including the big three.

“9) China needs to become an effective champion in the cause of preserving and enlarging the scope and effectiveness of the WTO. A major objective of China’s national interest must remain integration into, not retreat from, the world economy.
This can only be achieved through investing in the multilateral trading system. “

“7 Two distinguished academics, Mavroidis and Sapir, have written that the WTO Members must reinforce the
WTO’s fundamentals, which means market-based trade. They say that China must evolve its system to be
compatible. There is little belief in academia that this will occur. It does not seem to be the direction of change in
China at present.” (pages 21-23)(Emphasis added)

Amb. Wolff adds “A cautionary note” several paragraphs of which are copied below

“The life span of any trade agreement, including the WTO acquis, depends on the underlying evolution of the commerce of the parties toward greater openness. If there is stasis, or retreat from openness, then the duration of the agreement will be short.

The WTO is about convergence not coexistence. That is why transition periods exist to deal with differences rather than permanent exclusions. The rules emerging from a process of ‘WTO reform’ will either trend toward reinforcing convergence or increasing the use of interface mechanisms, the safeguards against governmental measures that distort the market. There is no middle ground if the WTO is to be effective. What we do not know is how long the multilateral trading system can endure if convergence is not going to take place.” (page 24)(Emphasis added)

Comments and Conclusion

Trade and the WTO have obviously been highly beneficial to China and to many other Members. Nonetheless, China has been working hard not to have its economic system evolve to a market-based one. It has generally not pursued liberalization that benefits all versus favoring China. It insists on coexistence vs. convergence. It uses the consensus system to prevent evaluation of its practices which distort trade It has limited transparency of its actions and has engaged in actions against individual Members that are retaliatory and coercive. As the world’s largest exporter, China has a critical role in global trade. But the dangers Amb. Wolff has outlined in his speech where market principles and convergence are not the core values are manifesting themselves in the world marketplace as countries look for alternative approaches to deal with China’s trade distortions.

Amb. Wolff’s speech outlines a number of ways that China can improve the functioning of the WTO and exhibit leadership in WTO reform. His speech is an important one which hopefully has had a receptive audience in China. Unfortunately, while there are some identified actions that China may take, it is unlikely that China will do anything to address the critical differences that its economic system poses to the survival of the global trading system.

G20 Trade and Investment Ministerial Statement of October 12 and Amb. Tai’s comments on the WTO from October 14 — the ongoing divide among major Members makes a meaningful WTO MC12 less likely

In prior posts, I have reviewed the challenges facing the WTO as it approaches the 12th Ministerial Conference in Geneva at the end of November, beginning of December. See, e.g., October 8, 2021: The gap between WTO activity and the needs of businesses and workers for the international trading system, https://currentthoughtsontrade.com/2021/10/08/the-gap-between-wto-activity-and-the-needs-of-businesses-and-workers-for-the-international-trading-system/; September 18, 2021: The WTO’s 12th Ministerial Conference in Late November – early December 2021 — the struggle for relevance, https://currentthoughtsontrade.com/2021/09/18/the-wtos-12th-ministerial-conference-in-late-november-early-december-2021-the-struggle-for-relevance/; May 10, 2021:  World Trade Organization — possible deliverables for the 12th Ministerial Conference to be held in Geneva November 30-December 3, 2021, https://currentthoughtsontrade.com/2021/05/10/world-trade-organization-possible-deliverables-for-the-12th-ministerial-conference-to-be-held-in-geneva-november-30-december-3-2021/.

The G20 Trade and Investment Ministerial Statement of October 12, 2021

WTO Reform

While the vast majority of WTO Members profess an interest in a successful MC12 beginning in late November, the reality is that success means very different things to different Members. The G20 countries have repeatedly called for a successful MC12, but this week’s meeting in Sorento Italy and resulting Ministerial statement on trade and investment shows limited actual convergence on what should be achieved at the upcoming WTO Ministerial Conference. See G20 TRADE AND INVESTMENT MINISTERIAL MEETING – OCTOBER 12, 2021, G20 MINISTERIAL STATEMENT ON TRADE AND INVESTMENT, https://www.g20.org/wp-content/uploads/2021/10/G20-TIMM-statement-PDF.pdf.

Paragraph 6 of the G20 Trade and Investment Ministerial statement reiterates support for a successful MC12.

“We commit to a successful and productive WTO 12th Ministerial Conference as an important opportunity to advance WTO reform to revitalise the organisation. We commit to active engagement in this work to provide the political momentum necessary for progress.”

Yet the statement is short on specific areas of reform other than improving rule making and dispute settlement — areas where there has been no meaningful forward movement ahead of MC 12 and where there are major divisions among G20 countries.

Trade and Health

On the topic of “trade and health” there is support among G20 countries for equitable access to vaccines, therapeutics, diagnostics and personal protective equipment, and G20 countries are making belated contributions to increased supplies to the most vulnerable. However, with the exception of export restraints where there is language recognizing the right of countries to take actions in limited circumstances, the divisions amongst the G20 make specifics on WTO issues merely aspirational.

“10. We will work actively and constructively with all WTO members in the lead up to the 12th Ministerial Conference and beyond to enhance the capacity of the multilateral trading system to increase our pandemic and disaster preparedness and resilience by adopting a multifaceted response. Trade-related aspects of intellectual property rights, contributions to international efforts to expand production and delivery of vaccines, therapeutics and essential medical goods, diversifying manufacturing
locations and fostering equitable distribution, trade facilitation measures, export restrictions, encouraging regulatory compatibility, are among the areas where our constructive engagement in the WTO, notably in the TRIPS Council, the Council for
Trade in Goods, the Council for Trade in Services, and other relevant bodies and processes, can enhance global public health efforts.”

While there may be language in an MC12 declaration and a work program for the future, there will not likely be any meaningful results announced at MC12.

Services and Investments


Embarrassingly for the WTO, Members, efforts to develop multilateral rules for digital trade and e-commerce continue to be far from concluded. This has led to the Joint Statement Initiative (“JSI”) on E-Commerce and other JSIs being launched at the 11th WTO Ministerial Conference in Buenos Aires in 2017 amongst a subset of WTO Members but open to all. Two of the other JSIs are Investment Facilitation for Development and Services Domestic Regulation. The JSI on Services Domestic Regulation has reportedly reached an agreement that will be presented at MC12. However, within the G20, there are some countries who oppose bringing JSIs into the WTO — most notably, India and South Africa. See WTO News, Participants in domestic regulation talks conclude text negotiations, on track for MC12 deal, 27 September 2021, https://www.wto.org/english/news_e/news21_e/serv_27sep21_e.htm; THE LEGAL STATUS OF ‘JOINT STATEMENT INITIATIVES’ AND THEIR NEGOTIATED OUTCOMES, submission from India, Namibia and South Africa, 30 April 2021, WT/GC/W/819/Rev.1. This difference of views is reflected in the G20 Trade and Investment Ministerial Statement.

“14. G20 participants in the Joint Statement Initiatives on E-Commerce, Investment Facilitation for Development and Services Domestic Regulation encourage and support the active participation of all WTO members in the initiatives and look
forward to meaningful progress in the lead up to the 12th WTO Ministerial conference. Concerns have been expressed on rule-making by some G20 members that are not part of the JSIs.”

Government Support and Level Playing Field

The section of the Ministerial Statement looking at government support and level playing field issues recognizes that there are “structural problems in some sectors, such as excess capacities” which cause problems and note that “Many G20 members affirm the need to strengthen international rules on industrial subsidies and welcome ongoing international efforts to improve trade rules affecting agriculture.” As is clear “many of us” means a number of G20 countries don’t agree. Industrial subsidy rule improvement is intended to address the distortions caused by China’s programs (and of others). Agriculture market access and agricultural subsidies and transparency are also issues where there is a significant division among G20 countries.

Trade and Environmental Sustainability

The challenges to the world from a warming climate are existential. The Ministerial Statement contains useful language of a general nature in terms of the importance of addressing environmental issues and that “trade and environmental policies should be mutually supportive”. The G20 support reaching a conclusion to the fisheries subsidies negotiations even though there have been recent actions by some G20 countries — again, India and South Africa — to weaken disciplines on “developing” countries which threaten the achievement of a meaningful agreement 20 years after negotiations commenced.

MSMEs

Micro-, small- and medium-sized enterprises are a critical part of most countries economies and make up a larger share of business in lower income countries. While the Ministerial Statement addresses MSMEs importance and need for additional assistance, there is no mention of the Joint Statement Initiative on MSMEs among some WTO Members and the fact that an agreement is ready for presentation at MC12 with the agreement being open to all. See WTO News, Working group on small business finalises MC12 draft declaration, 27 September 2021, https://www.wto.org/english/news_e/news21_e/msmes_28sep21_e.htm. India and South Africa and others have raised the same objection to the MSME JSI as they have to the others.

Conclusion on G20 Trade and Investment Ministerial Statement

The deep divisions within the WTO membership are reflected as well among the G20 countries with China, India, South Africa and others having much different priorities that the historic leadership of the GATT/WTO including the U.S., EU, Canada, United Kingdom, Australia and others. It is the lack of a common purpose and agreement on basic principles that has largely paralyzed the negotiating function at the WTO. The disappointing G20 Trade and Investment Ministerial Statement reflects that same lack of common purpose and agreement on basic principles.

USTR Katherine Tai’s October 14, 2021 Prepared Remarks on the WTO

The U.S. Trade Representative traveled to Geneva after the G20 Trade and Investment Ministers meeting in Italy and spoke on the WTO at an event hosted by the Graduate Institute of International and Development Studies’ Geneva Trade Platform on October 14. Ambassador Tai’s prepared statement is available on the USTR webpage and is reproduced below. See USTR,Ambassador Katherine Tai’s Remarks As Prepared for Delivery on the World Trade Organization, October 14, 2021, https://ustr.gov/about-us/policy-offices/press-office/speeches-and-remarks/2021/october/ambassador-katherine-tais-remarks-prepared-delivery-world-trade-organization.

” Good afternoon.  Thank you to Dmitry and Richard, the Geneva Trade Platform, and the Graduate Institute of International and Development Studies for hosting me today and putting together this event.

“It is a pleasure to be back in Geneva.  I have looked forward to making this trip since becoming the United States Trade Representative in March, and I am grateful to be here with all of you today.  

“I spent a lot of time in this city earlier in my career representing the United States Government with pride before the World Trade Organization.  

“I appreciate the importance of the institution.  And I respect the dedicated professionals representing the 164 members, as well as the WTO’s institutional staff working on behalf of the membership.  I also want to thank Director-General Dr. Ngozi for leading this organization through a difficult and challenging year. 

“Let me begin by affirming the United States’ continued commitment to the WTO.  

“The Biden-Harris Administration believes that trade – and the WTO – can be a force for good that encourages a race to the top and addresses global challenges as they arise.  

“The Marrakesh Declaration and Agreement, on which the WTO is founded, begins with the recognition that trade should raise living standards, ensure full employment, pursue sustainable development, and protect and preserve the environment. 

“We believe that refocusing on these goals can help bring shared prosperity to all.

“For some time, there has been a growing sense that the conversations in places like Geneva are not grounded in the lived experiences of working people.  For years, we have seen protests outside WTO ministerial conferences about issues like workers’ rights, job loss, environmental degradation, and climate change as tensions around globalization have increased. 

“We all know that trade is essential to a functioning global economy.  But we must ask ourselves: how do we improve trade rules to protect our planet and address widening inequality and increasing economic insecurity?

“Today, I want to discuss the United States’ vision for how we can work together to make the WTO relevant to the needs of regular people.

“We have an opportunity at the upcoming 12th ministerial conference – or MC12 – to demonstrate exactly that.

“Throughout the pandemic, the WTO rules have kept global trade flowing and fostered transparency on measures taken by countries to respond to the crisis.  But many time-sensitive issues still require our attention.  We can use the upcoming ministerial to deliver results on achievable outcomes.

“The pandemic has placed tremendous strain on peoples’ health and livelihoods around the world.  The WTO can show that it is capable of effectively addressing a global challenge like COVID-19, and helping the world build back better. 
  
“There are several trade and health proposals that should be able to achieve consensus in the next month and a half.  

“I announced in May that the United States supports text-based discussions on a waiver of intellectual property rights for COVID-19 vaccines.  The TRIPS Council discussions have not been easy, and Members are still divided on this issue.  The discussions make certain governments and stakeholders uncomfortable.  But we must confront our discomfort if we are going to prove that, during a pandemic, it is not business as usual in Geneva.  

“The United States is also working on a draft ministerial decision aimed at strengthening resiliency and preparedness through trade facilitation.  Our proposal would improve the sharing of information, experiences, and lessons learned from COVID-19 responses to help border agencies respond in future crises.  

“It is important that our work on trade and health does not end at MC12.  This pandemic will not be over in December, and it will not be the last public health crisis we encounter.  In the next six weeks, we also have an opportunity to conclude the two-decades-long fisheries subsidies negotiations and show that the WTO can promote sustainable development.  

“We want to continue working with Members to bridge existing gaps in the negotiations.  

“To this end, the United States is sharing options to respond to developing countries’ request for flexibilities.  We believe that any agreement must establish effective disciplines that promote sustainability.  

“It must also address the prevalence of forced labor on fishing vessels.  We call on all Members to support these goals.

“I recognize that discussing these complex issues during a pandemic is hard.  Despite this challenge, we can reach meaningful outcomes and set ourselves up for candid and productive long-term conversations on reforming the WTO.

“As I mentioned earlier, the reality of the institution today does not match the ambition of its goals.  Every trade minister I’ve heard from has expressed the view that the WTO needs reform.  

“The Organization has rightfully been accused of existing in a ‘bubble,’ insulated from reality and slow to recognize global developments.  That must change.

“We are used to talking to each other, a lot.  We need to start actually listening to each other.

“We also must include new voices, find new approaches to problems, and move past the old paradigms we have been using for the last 25 years.  

“We need to look beyond simple dichotomies like liberalization vs. protectionism or developed vs. developing.  Let’s create shared solutions that increase economic security.

“By working together and engaging differently, the WTO can be an organization that empowers workers, protects the environment, and promotes equitable development. 

“Our reform efforts can start with the monitoring function.  In committees, Members deliberate issues and monitor compliance with the agreements.  This important work is a unique and underappreciated asset of the WTO. 

“Increasingly, however, Members are not responding meaningfully to concerns with their trade measures.  The root of this problem is a lack of political will.  But committee procedures can be updated to improve monitoring work.  

“At MC12, Ministers can direct each committee to review and improve its rules. 

“It is also essential to bring vitality back to the WTO’s negotiating function.  We have not concluded a fully multilateral trade agreement since 2013.

“A key stumbling block is doubt that negotiations lead to rules that benefit or apply to everyone. But we know that negotiations only succeed when there is real give and take.

“We can successfully reform the negotiating pillar if we create a more flexible WTO, change the way we approach problems collectively, improve transparency and inclusiveness, and restore the deliberative function of the organization.

“Over the past quarter century, WTO members have discovered that they can get around the hard part of diplomacy and negotiation by securing new rules through litigation.    

“Dispute settlement was never intended to supplant negotiations.  The reform of these two core WTO functions is intimately linked.  

“The objective of the dispute settlement system is to facilitate mutually agreed solutions between Members.  Over time, ‘dispute settlement’ has become synonymous with litigation – litigation that is prolonged, expensive, and contentious.  

“Consider the history of this system.  

“It started as a quasi-diplomatic, quasi-legal proceeding for presenting arguments over differing interpretations of WTO rules.  A typical panel or Appellate Body report in the early days was 20 or 30 pages.  Twenty years later, reports for some of the largest cases have exceeded 1,000 pages.  They symbolize what the system has become: unwieldy and bureaucratic. 

“The United States is familiar with large and bitterly fought WTO cases.  Earlier this year, we negotiated frameworks with the European Union and the United Kingdom to settle the Large Civil Aircraft cases that started in 2004.  

“We invoked and exhausted every procedure available.  And along the way, we created strains and pressures that distorted the development of the dispute settlement system.

“With the benefit of hindsight, we can now ask: is a system that requires 16 years to find a solution ‘fully functioning?’

“This process is so complicated and expensive that it is out of reach for many – perhaps the majority – of Members. 

“Reforming dispute settlement is not about restoring the Appellate Body for its own sake, or going back to the way it used to be.  

“It is about revitalizing the agency of Members to secure acceptable resolutions.

“A functioning dispute settlement system, however structured, would provide confidence that the system is fair.  Members would be more motivated to negotiate new rules.

“Let’s not prejudge what a reformed system would look like. While we have already started working with some members, I want to hear from others about how we can move forward.

“Reforming the three pillars of the WTO requires a commitment to transparency.  Strengthening transparency will improve our ability to monitor compliance, to negotiate rules, and to resolve our disputes. 

“I began these remarks with an affirmation of commitment.  I’d like to conclude with an affirmation of optimism.

“I am optimistic that we can and will take advantage of this moment of reflection.

“In reading over the Marrakesh Agreement’s opening lines, I was struck by the founding Members’ resolve to develop ‘a more viable and durable multilateral trading system.’  

“These words are just as relevant today as they were then. We still need to work together to achieve a more viable and durable multilateral trading system.

“It is easy to get distracted by the areas where we may not see eye to eye.  But in conversations with my counterparts, I hear many more areas of agreement than disagreement.  

“We all recognize the importance of the WTO, and we all want it to succeed. 

“We understand the value of a forum where we can propose ideas to improve multilateral trade rules.  We should harness these efforts to promote a fairer, more inclusive global economy.  

“WTO Members are capable of forging consensus on difficult, complicated issues. It’s never been easy, but we’ve done it before.  And we can do it again.  

“Thank you.”

Comments on USTR Tai’s statement on the WTO

The Biden Administration has been supportive of multilateral institutions, and that support is relfected in Amb. Tai’s comments. At the same time, the U.S. has believed that a small package of deliverables is achievable for MC12 with hopefully a work program for the serious reform that is needed also being agreed to at MC12. Amb. Tai’s comments reflect both optimism and a limited set of deliverables being sought.

The Fisheries Subsidies negotiations has made limited progress on a range of important issues. The U.S. is attempting to find answers to problems raised by others while still achieving a meaningful outcome. With the limited time remaining, this suggests either a less robust agreement or movement by others to a higher level of ambition or to no agreement being finalized. Addressing forced labor in fishing and more broadly should be important to all WTO Members, was raised by the U.S. (and is important to Democratic leadership in the Congress) but is opposed by some, including China. If the U.S. continues to pursue the addition of this issue to the fisheries subsidies text,

On greater transparency, Members agreeing to have Committees review their procedures to improve the monitoring function are important steps that could be taken to improve Member confidence in actions of trading partners and affect negotiations and dispute settlement as well. Even such seemingly simple steps, however, may not move forward as at least one major country — China — has as one of its negotiating priorities not changing transparency obligations.

Revitalizing the negotiating function and restoring a dispute settlement system are longer term efforts, with the U.S. vision on dispute settlement (focus on what dispute settlement is doing vs. ensuring a two stage process) far apart from that of the EU and many other Members.

And, of course, the U.S. is supportive of some form of outcome on addressing the pandemic and trade and health moving forward. Whether there will be outcomes in this area are dependent more on flexibility by others as the U.S. has been looking for solutions that will meet the pandemic needs and prepare for the future.

Conclusion

With very limited time until the 12th WTO Ministerial Conference begins at the end of November, it is hard to see an ambitious outcome emerging from the efforts of WTO Members. The G20 Trade and Investment Ministerial Statement from October 12 reflects the divisions amongst the major WTO Members. Amb. Tai’s statement yesterday in Geneva while positive on the WTO and its important role tees up a relatively limited outcome as likely for MC 12. Even Amb. Tai’s more realistic set of expectations are likely to be challenging to achieve.

WTO Information Notes on COVID-19 Vaccine Production and Potential Bottlenecks

On October 8, 2021, the WTO released the latest in a series of Information Notes pertaining to the COVID-19 pandemic. The first one is entitled “COVID-19 Vaccine Production and Tariffs on Vaccine Inputs”. The purpose of the information note was to examine public information to see if import tariffs in any of the 27 major vaccine manufacturing countries could pose challenges or create “choke” points in vaccine production. The second Information Note is entitled “Indicative List of Trade-Related Bottlenecks and Trade-Facilitating Measures on Critical Products to Combat COVID-19” and is an update on an earlier version released 20 July 2020. Both Information Notes are linked to a WTO press release from 8 October. See WTO news, WTO issues papers on vaccine inputs tariffs and bottlenecks on critical COVID-19 products, 8 October 2021, https://www.wto.org/english/news_e/news21_e/covid_08oct21_e.htm

The second Information Note is the more important of the two papers as it identifies a range of challenges to the expedited movement of vaccines and inputs. However, the first paper is interesting in terms of identifying tariffs on critical materials in major producing countries. However, as the paper acknowledges, the analysis has its limitations.

” 2. TECHNICAL DETAILS
“The MFN applied tariffs were based on the dataset used for World Tariff Profiles 2021, and 2020
imports were based on the TDM dataset3. Even if the national tariff line data (i.e. eight-digit tariff
line codes) were available, beyond the standard HS six-digit level there is no uniformity of codes
across national tariff nomenclatures. Thus, even if only a portion of the HS six-digit code pertains to
the COVID-19 vaccine input, the data used in the analysis both for tariffs and imports were the
six-digit MFN tariff average and the total six-digit imports from the world. Preferential tariffs were
not taken into consideration and thus intra-EU imports, imports from partners of free trade
agreements (FTAs) or any other preferential imports were treated as if MFN tariffs were levied.
Furthermore, there was definitely an over-estimation of the import value of the inputs, since
identification of the national breakdown pertaining to the actual product used in vaccine
manufacturing cannot be easily done. Sometimes even within the most detailed national tariff line
(or specific product) code available (eight digits or longer), the product coverage does not
necessarily refer only to the specific vaccine input and includes non-vaccine-related inputs. While
tariff estimates can be arguably good enough,4 the same cannot be said of the estimated imports
value.” (footnotes omitted)

Certainly for the EU, U.S. and some others, many of the potentially dutiable imports will have been duty free from FTAs or other preferential partners. But the Information is nonetheless useful in flagging general categories of products important to vaccine production that have bound tariffs at 5% or greater. While neither the U.S. nor Japan have any such categories, many other vaccine producing countries have one, several or many product categories where bound tariffs are 5% or higher. Table 4 of the Information Note provides a useful summary of the findings made.

Table 2 of the Information Note presents a summary of the weighted average MFN tariff rate by country.
Thus, from a bound tariff perspective, some countries, particularly developing countries are assessing ordinary customs duties on materials needed for the production of COVIDE-19 vaccines at relatively high rates that at a minimum increase costs, making it more expensive to provide vaccines to the domestic population or export populations.

A detailed review of each of the 27 countries is provided in the WTO’s Vaccine Production and Tariffs on Vaccine Inputs which is attached to the first Information Note.

The second note is the more interesting as it reflects issues and suggestions from various stakeholders on how to expand production and access to vaccines, therapeutics and medical devices needed to combat COVID-19. The introduction to the Information note provides useful background.

“1. INTRODUCTION
“This information note seeks to facilitate access to information on possible trade-related bottlenecks and trade-facilitating measures on critical products to combat COVID-19, including inputs used in vaccine manufacturing, vaccine distribution and approval, therapeutics and pharmaceuticals, diagnostics and medical devices. It is not meant to be an exhaustive list of all specific trade measures, nor does it make any judgement on the effect or significance of the reported bottlenecks, nor on the desirability of implementing any of the suggestions on trade-facilitating measures.3

“The indicative list is based on issues identified and suggestions made by stakeholders at various events and consultations convened by the WTO, as well as with vaccine manufacturers in the context of meetings organized by the Multilateral Leaders Task Force on COVID-19,4 which includes the heads of the International Monetary Fund (IMF), the World Bank Group, the World Health Organization (WHO) and the WTO.5 This revision includes information as of 4 October 2021. Entries under each subheading are presented in no particular order. One common theme that emerges is that essential goods and inputs need to flow efficiently and expeditiously to support the rapid scaling up of COVID-19 production capacity worldwide. As manufacturers scale up production and establish new sites in different countries, the production network is not only becoming larger but also increasingly complex and international. The delay of a single component may significantly slow down or even bring vaccine manufacturing to a halt, so it follows that inputs need to flow expeditiously, and each node within the supply chain network needs to operate seamlessly with the others.” (footnotes omitted)

There are a large number of potential trade-related bottlenecks including export restrictions (13 WTO Members are reported to have one or more), such restrictions as applied by manufacturers to “fill and finish” sites, effect of such restrictions on clinical trials, high applied tariffs, customs administration challenges (no green channels for expedited clearance, limited hours of customs operation, treatment of non-commercial samples sent for testing ad quality control, import barriers/delays on manufacturing equipment), challenges in completing consular transactions.

There are also many bottlenecks identified from vaccine regulatory approval including when looking at WHO Emergency Use Listing, requirements for application/registration and authorization, inspection, release, post-approval changes, donations, EUA and regular approval, scaling up production and other issues.

The paper also identifies bottlenecks in the distribution of finished vaccines and immunization supplies, bottlenecks in trade in pharmaceuticals, bottlenecks in trade in diagnostics and other medical devices.

All in all, a daunting list of challenges the vast majority of which involve the importing country and the complexity of systems for approval of medical goods and vaccines.

The last four pages of the Information Note then identify “possible trade-facilitating measures” that could be taken to improve movement of goods. Because the information note is providing a summary of proposals put forward by stakeholders and is not an agreed set of steps by WTO Members, the note states that “no judgement is made on the desirability of implementing any of these suggestions.” Page 7. That said, many of the suggestions relate to streamlining import operations, e.g., through implementation of the Trade Facilitation Agreement, seeing that customs operates 24 hours/7 days a week, exemptions from export restrictions, harmonization of regulatory approaches and many more.

Conclusion

The Information Notes developed by the WTO provide useful information either from public sources, such as the bound tariff rates of COVID-19 vaccine input materials or summaries of information gathered from stakeholders at events looking at how to ramp up production and distribution of vaccines. It is clear that the challenges for all WTO Members in addressing the global pandemic are many and not easily addressed. The Information Notes provide a data base that can be used by WTO Members to see that the current pandemic is fully addressed in fact in the coming months, and that Members consider ways to prepare for a better outcome to future pandemics.

The gap between WTO activity and the needs of businesses and workers for the international trading system

On October 7, the WTO General Council held the first of two days of its fall meeting at the WTO (combination in person/virtual) with a typical agenda including many elements of what has been under negotiation for possible outcomes at the 12th Ministerial Conference in Geneva starting November 29. See WTO General Council 7-8 October 2021, Proposed Agenda (5 October 2021), WT/GC/W/828. The WTO press release from yesterday, is entitled “General Council chair briefs members on work towards MC12 outcome document”. https://www.wto.org/english/news_e/news21_e/gc_07oct21_e.htm. Obviously further discussion of the agenda items before the General Council will occur today.

However, with the exception of progress on several Joint Statement Initiatives separately reported (e.g., MSMEs and Services Domestic Regulation), the WTO Members are struggling to find results in a host of areas, including concluding fisheries subsidy negotiations that have dragged on for 20 years, agriculture negotiations, response to the COVID-19 pandemic, e-commerce, WTO reform and more. See, e.g., WTO News, Working group on small business finalises MC12 draft declaration, 27 September 2021, https://www.wto.org/english/news_e/news21_e/msmes_28sep21_e.htm; WTO News, Participants in domestic regulation talks conclude text negotiations, on track for MC12 deal, 27 September 2021, https://www.wto.org/english/news_e/news21_e/serv_27sep21_e.htm; JOINT INITIATIVE ON SERVICES DOMESTIC REGULATION, REFERENCE PAPER ON SERVICES DOMESTIC REGULATION, NOTE BY THE CHAIRPERSON, 27 September 2021, INF/SDR/1; Financial Times, WTO clambers towards an unambitious summit,30 September 2021, https://www.ft.com/content/50109953-45e8-4e01-8d2a-d543aa821a6e; Bloomberg, Okonjo-Iweala Grows Frustrated With WTO Inertia, Floats Quitting, September 30, 2021, https://www.bloomberg.com/news/articles/2021-09-30/okonjo-iweala-grows-frustrated-with-wto-inertia-floats-quitting.

The October 7 WTO news on the General Council’s Chairman’s report doesn’t show significant progress on the few items addressed in the news release.

“The chair of the General Council, Ambassador Dacio Castillo of Honduras, briefed WTO members on 7 October regarding his consultations on a possible outcome document for trade ministers to adopt at the WTO’s upcoming 12th Ministerial Conference (MC12). He encouraged delegations to continue to work towards producing a draft document by the end of October.

“‘Work towards a possible MC12 outcome document is a member-led process,’ the chair declared. ‘As always, it is the members that decide what goes into any agreed outcome document.’

“Ambassador Castillo has been assisting WTO members in his capacity as General Council chair with work on the first part of the outcome document, which would cover: (i) the context in which MC12 takes place; (ii) broader political messages; and (iii) guidance from ministers on additional elements members may agree on.

“Work has taken place in a small group format broadly representative of the membership and comprising all group coordinators and several other delegations, he noted. Transparency is being ensured through group coordinators who keep their members up to date on the ongoing discussions and feed their views and suggestions back into the process, as well as through the chair’s regular reports at informal General Council meetings.

“The chair said that, based on the preliminary exchanges in the small group, members believe the first part of the outcome document should take into account both the external and internal environments in which MC12 is taking place, namely the pandemic, the changed trading landscape, and the systemic/internal challenges that the WTO is facing. 

“Members have also expressed views that ‘political messages’ should note the need for greater solidarity and collaboration amongst members, the role of international trade and the WTO in global economic recovery, a reaffirmation of the principles enshrined in the Marrakesh Agreement, and the needs and interests of developing country members, in particular the least developed members.

“The chair has followed members’ guidance in drafting possible language for an outcome document, focusing on the broader messages where possible convergence could be detected. The small group had a useful and constructive first exchange on the draft language earlier this week and work will continue in the coming days and weeks, he noted.

“* * *

“Ambassador Castillo also briefed on his consultations with members regarding the WTO’s Work Programme on Electronic Commerce as well as the possible continuation of the e-commerce moratorium. Since 1998, WTO members have periodically renewed the moratorium at each Ministerial Conference and have continued addressing e-commerce related issues in the Goods Council, the Services Council, the TRIPS Council and the Committee on Trade and Development as part of the e-commerce work programme.

“The chair said he highlighted in the consultations the need to intensify work towards a possible draft decision for the consideration of ministers at MC12. He noted that, despite the well-known differences in members’ positions, many continue to attach importance to e-commerce and that the pandemic had highlighted e-commerce opportunities as well as its challenges, both of which should continue to be discussed within the WTO.

“Delegations generally reiterated their views with respect to the moratorium and the Work Programme in the consultations, he said. On the moratorium, proponents considered its extension a priority for MC12 and reiterated its role in providing a stable and predictable trading environment. On the other hand, some delegations said that it would be difficult for them to agree to an extension of the moratorium without clarifying its scope and implications. 

“On the Work Programme, Ambassador Castillo said, no delegation opposed its continuation, although some indicated that they could not accept a decision to continue its work without at least an extension of the moratorium.

“Following the chair’s intervention, Ambassador David Walker of New Zealand provided his report on his consultations within the Facilitator-led Multilateral Process on the WTO response to the COVID-19 pandemic. 

“Ambassador Walker said a large number of delegations in the consultations he undertook as facilitator attached high priority to a meaningful outcome at MC12 on the use of export restrictions and prohibitions in the context of the pandemic, with discussions underscoring the importance of keeping markets open.

“He also said many delegations believe an outcome on trade and health at MC12 should address both the WTO’s response to the current pandemic as well as future crises. To this end, a framework to guide the WTO’s work post-MC12 on how to make the multilateral trading system more resilient and better prepared for such crises was proposed. Such a framework could build on lessons learned from the current pandemic and set out guidelines and best practices for more coordinated responses in the future.

“Ambassador Walker said he will be continuing his consultations in the coming weeks and will continue to report on this process through open-ended and formal meetings as well as formally to the General Council.”

Separately Chairman Castillo’s report on Agenda Item 2 (implementation of the Bali, Nairobi and Buenos Aires Outcomes) was released and can be found at JOB/GC/272 (8 October 2021) but shows little progress on the items covered therein. The report of Amb. David Walker (summarized in the news release) was not released publicly although is identified in “recent documents” on the WTO webpage. See General Council – Agenda item 5.C : WTO response to the COVID-19 pandemic – Report by the Facilitator, H.E. Dr. David Walker (New Zealand) – 7 October 2021, JOB/GC/273. The same is true of other reports from Chairman Castillo and the Director General. See General Council – Agenda item 5.A : Preparations for the Twelfth Session of the Ministerial Conference – MC12 outcome document – Report by the chair – Thursday, 7 October 2021, JOB/GC/274; General Council – Agenda item 5b : Work programme on electronic commerce – Report by the Chair – Thursday, 7 October 2021, JOB/GC/275; General Council – Agenda item 1 : Report by the Chair of the Trade Negotiations Committee and report by the Director-General – Friday, 8 October 2021, JOB/GC/276.

The challenges at the WTO flow from some historical challenges (the preference of India to see no agreements imposing obligations on them, now supported by South Africa and others), from the growing divergence in views as to the purpose of the WTO, from the increased importance of non-market economies in the global trading system and the current failure of existing rules to address their distortions to global trade flows and competition, and the inability of a consensus system with 164 Members to move forward in a timely manner, if at all.

The challenges posed by India and South Africa can be seen in the fisheries subsidy negotiations where they are seeking a huge hole in the agreement’s obligations for developing countries with a duration of 25 years, by their opposition to Members moving forward within the WTO on a plurilateral basis (the Joint Statement Initiatives) where any agreements are open to others to join, from their pursuit of an overly broad waiver request from TRIPs obligations for some undetermined period to address the pandemic, and their recent request for the WTO to examine vaccine passports required by countries to permit the resumption of travel. See, e.g., Inside U.S. Trade’s World Trade Online, India, others propose new exceptions in fisheries talks, September 24, 2021, https://insidetrade.com/daily-news/india-others-propose-new-exceptions-fisheries-talks; THE LEGAL STATUS OF ‘JOINT STATEMENT INITIATIVES’ AND
THEIR NEGOTIATED OUTCOMES (submission of India, Namibia and South Africa), 30 April 2021, WT/GC/W/819/Rev.1; WAIVER FROM CERTAIN PROVISIONS OF THE TRIPS AGREEMENT FOR THE PREVENTION, CONTAINMENT AND TREATMENT OF COVID-19, 25 May 2021, IP/C/W/669/Rev.1; The Economic Times, Covid passport, vaccine discrimination new trade barriers: India to WTO, October 7, 2021, https://economictimes.indiatimes.com/news/economy/foreign-trade/covid-passport-vaccine-discrimination-new-trade-barriers-india-to-wto/articleshow/86849838.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.; Financial Times, WTO clambers towards an unambitious summit, 30 September 2021, https://www.ft.com/content/50109953-45e8-4e01-8d2a-d543aa821a6e (“Okonjo-Iweala convened an ad hoc virtual ministerial in July to try for progress on fisheries subsidies, a move she herself admitted was unusual. It was a gamble that did not really come off. India (often with South Africa in a supporting role) has now established a role in the WTO objecting to more or less everything. In the fisheries subsidy talks it has demanded massive loopholes that are politically a total non-starter. There’s talk around the WTO of Okonjo-Iweala going to India to make a direct appeal to Narendra Modi. But the Indian prime minister has resisted all entreaties and openings to do serious trade liberalisation so far, including passing up the chance to join the Regional Comprehensive Economic Partnership, the Asian mega-deal.”).

WTO reform, which is recognized as important to achieve by most Members, is not an agreed set of measures with the U.S., EU, Japan and others seeking reforms to industrial subsidies and to state-owned and state-invested enterprises to address problems faced from China and others. China to date does not agree. Many countries also seek greater transparency and completeness in notifications, particularly on subsidies. There has been only limited progress to date, and those not providing complete notifications presumably oppose the proposal (e.g., China). The U.S., EU and others also want to make objective criteria determinative of which Members are entitled to special and differential treatment, something opposed by some “developing countries” who have self-selected the designation. Many countries want a return of a two-tier dispute settlement system, something that won’t happen against U.S. opposition absent serious reform and restrictions on the second tier, as such restrictions which currently exist in the Dispute Settlement Understanding have been ignored by the Appellate Body and not addressed by Members.

Thus, the WTO is struggling to demonstrate continued relevance. The WTO rules that exist were negotiated during 1986-1993 with limited updates despite the extraordinary changes to trade, technology and make-up of important trading nations.

How far away the WTO Members are from embracing an agenda that meets the needs of business, labor and civil society can be seen from the views put forward by the business community and reviewed at the recent public forum. The International Chamber of Commerce and B20 Italy presented views on what the business community needs from the WTO moving forward. See WTO News, Business groups highlight need for WTO reform, MC12 outcomes, 29 September 2021, https://www.wto.org/english/news_e/news21_e/bus_30sep21_e.htm; ICC, Global Business Priorities for the WTO, September 2021, https://iccwbo.org/content/uploads/sites/3/2021/09/icc-document-wto-policy-paper.pdf. While the paper on the Global Business Priorities doesn’t reflect priorities of labor or civil society, it is an interesting list in terms of what is needed at least by much of the business community for the WTO to reclaim relevancy and address needs of 21st century business. The 27 specific recommendations are listed below grouped under the broad topics shown:

“WTO Reform

“1. Agree on a coherent holistic vision for WTO reform

“2. Put market access back on the agenda

“3. Agree on a path forward to improving the negotiation function

“4. Adopt a new evidence-based approach to Special and Differential Treatment

“5. Agree on a path forward for reforming the dispute settlement system

“6. Promote full compliance with and improvements to the WTO Agreement on Subsidies and
Countervailing Measures (SCM)

“7. Improve the Secretariat’s capacity to monitor trade policy developments

“8. Create a crisis management protocol for future crises

“9. Create a business advisory council and a civil society council

“Trade and Health

“10. Ensure trade policies facilitate vaccine manufacturing and distribution

“11. Creation of a Health Market Information System

“12. Adopt cooperative ways to speed up vaccine production

“13. Adopt and go beyond the Trade and Health Initiative

“Trade and environmental sustainability

“14. Finalise the fisheries subsidies negotiations

“15. Agree to a formal roadmap to address specific issues on trade and environmental
sustainability

“16. Develop a package of recommendations on trade and the circular economy

“17. Deal with carbon leakage in a multilateral way

“Trade and the digital economy

“18. Accelerate the e-commerce negotiations

“19. Develop market access provisions for the digital economy

“20. Make permanent the moratorium on customs duties on electronic transmissions

“21. Create an enabling legal environment for paperless trade

“22. Finalise negotiations for the JSI on Services Domestic Regulation

“Trade and inclusivity

“23. Identify new areas for rulemaking based on best practice from bilateral and regional trade
agreements

“24. Adopt the full package of recommendations of the MSME group

“25. Commit not to impose export restrictions on humanitarian aid

“26. Adopt a declaration with concrete and measurable proposals to advance trade and
women’s economic empowerment

“27. Launch discussions on the negative impact of illicit trade.”

Many of the recommendations made by the ICC and B20 Italy have been identified by one or more Members in the past, many are the subject of proposals, and a few are the subject of active negotiations. Some recommendations may be inconsistent with objectives of civil society (e.g., addressing vaccine equity through waving TRIPs obligations), and few deal with concerns of labor. Some are actively opposed by particular Members. However, the priorities reflect the hope and needs of the business community that Member governments find a path back for the WTO to regain relevancy and permit a more flexible structure to address changing needs on a more timely basis.

The next two months will reveal whether WTO Members can start the process of forward movement and improved relevancy. It seems unlikely that meaningful progress will be made on many fronts, but there is still time if there is a collective will.