UN Sustainable Development Goals

U.S. proposed Draft Ministerial Decision — making weak or unenforced environmental standards potentially countervailable

· December 26, 2020 · lack of environmental standards as potentially countervailable subsidies · , , · No Comments

As reviewed in prior posts, there is ongoing interest in reducing domestic subsidies for agricultural producers and an interest in revising rules for industrial subsidies to address the problem that has arisen in the last several decades of massive subsidization creating global excess capacity in products or sectors. Moreover, there are no rules on subsidies in the services area despite the issue having been of ongoing interest to many Members at the start of the WTO with ongoing talks provided for within the GATS. See, e.g., November 24, 2020, Responding to a comment received on yesterday’s post, WTO subsidy disciplines – an update and coordination across areas is long overdue, https://currentthoughtsontrade.com/2020/11/24/responding-to-a-comment-received-on-yesterdays-post-wto-subsidy-disciplines-an-update-and-coordination-across-areas-is-long-overdue/; November 23, 2020, WTO subsidy disciplines – an update and coordination across areas is long overdue, https://currentthoughtsontrade.com/2020/11/23/wto-subsidy-disciplines-an-update-and-coordination-across-areas-is-long-overdue/; February 22, 2020: WTO Reform – Addressing The Disconnect Between Market and Non-Market Economies, https://currentthoughtsontrade.com/2020/02/22/wto-reform-addressing-the-disconnect-between-market-and-non-market-economies/.

The WTO Members have struggled for 19 years on trying to limit fisheries subsidies to achieve one of the UN Sustainable Development Goals (SDG 14.6) by stopping overfishing and illegal fishing practices that are harming wild fish stocks. While an agreement was due to be completed in 2020, the negotiations will continue into 2021. See, e.g., December 16, 2020, The fisheries subsidies negotiations – U.S. comments from December 2 meeting add clarity to the inability to achieve an agreement and the lack of “like-mindedness” among Members, https://currentthoughtsontrade.com/2020/12/16/the-fisheries-subsidies-negotiations-u-s-comments-from-december-2-meeting-add-clarity-to-the-inability-to-achieve-an-agreement-and-the-lack-of-like-mindedness-among-members/; December 15, 2020, The fisheries subsidies negotiations – failure by WTO Members to deliver an agreement by the end of 2020, https://currentthoughtsontrade.com/2020/12/15/the-fisheries-subsidies-negotiations-failure-by-wto-members-to-deliver-an-agreement-by-the-end-of-2020/.

At the latest General Council meeting held on December 16-18, the United States, in its second intervention on the topic of the importance of market-oriented conditions to the world trading system (agenda item 10, WT/GC/W/813), alerted Members that it would be filing a new paper on the topic of sustainability dealing with treating weak or unenforced environmental laws and regulations as being potentially countervailable under the Agreement on Subsidies and Countervailing Measures.

“The United States would like to thank all the Members who took the floor to provide their
comments. We look forward to continuing this important conversation in future meetings.

“On another subject, let me now take this opportunity to inform colleagues that the United States
will be circulating a draft Ministerial Conference Decision shortly entitled, ‘Advancing
Sustainability Goals through Trade Rules to Level the Playing Field.’

“We look forward to submitting this proposal for consideration during the upcoming Structured
Discussions on Trade and Sustainability.

“The draft Ministerial Conference Decision aims to reinforce our view that failure to adopt,
maintain, implement and effectively enforce laws and regulations that ensure environmental
protections at or above a threshold of fundamental standards constitutes an actionable subsidy
under the Agreement on Subsidies and Countervailing Measures.”

Meeting of the WTO General Council, December 16-17, 2020, U.S. Statements delivered by Ambassador Dennis Shea, page 7, https://geneva.usmission.gov/wp-content/uploads/sites/290/AmbassadorShea-WTOGeneralCouncil-Dec2020.pdf.

The United States draft Ministerial Decision was submitted and circulated to WTO Members on December 17 and is embedded below.

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While the current definition of subsidy contained in Art. 2 of the ASCM (Agreement on Subsidies and Countervailing Measures) does not appear to cover distortions that flow from the level of environmental protection an/or the lack of enforcement of such requirements, there is little doubt that in the coming years, a number of countries will likely be imposing taxes or taking other action to support sustainable development and prevent competition being determined by production of products in countries that are not moving rapidly to sustainable development. The EU is pushing its producers to become dramatically more environmentally responsible. and is committed to introducing a tax on products not meeting the desired environmental standards. Under the Biden Administration, it is likely the U.S. will be looking for ways to push a similar sustainable trade policy by neutralizing “false” advantages for products produced less environmentally responsibly.

In that context, the U.S. paper of December 17 provides an additional path to pursuing sustainable development and ensuring that responsible production methods are not penalized by competition from producers using less environmentally responsible approaches. WTO Members have not indicated an interest in doing a broad review of subsidy disciplines to ensure the rules reflect current economic realities and address all significant types of distortions found in the trade of goods and services. Such a review is long overdue in my view and would permit an evaluation of a host of issues not presently covered by the ASCM including the issue raised in the Draft Ministerial Decision.

While historically many developing nations would oppose proposed actions like the U.S. draft Ministerial Decision on the theory of limited existing capacities in developing countries or a perceived “entitlement” to develop in manners not significantly different than current developed countries, the climate crisis, UN Sustainable Development Goals and the reality of the potential destruction facing many countries from climate warming and rising oceans essentially make a decades-long approach to achieving sustainable development self-defeating. Whether the U.S. proposal will garner support and/or becomes an additional tool to help Members move to sustainable development is obviously unknown at the present time.

The WTO has proven itself unable in its first 25 years to modernize the rules of international trade to keep pace with global developments and with the pressing needs for more sustainable approaches to international trade. 2021 provides the WTO with the opportunity to change course and reestablish its role in developing rules that address the needs of Members, businesses, workers and the global population in international trade. Hopefully, the WTO will have a new Director-General early in 2021. Hopefully, Members can come together on the pressing needs of relevancy and sustainability by agreeing on core principles of the WTO. A comprehensive reform initiative is desperately needed and could be agreed to, though agreement on reform is unlikely based on current differences among Members. Yet even if a comprehensive reform program is agreed to, without a change in how the WTO operates, the organization and its Members will be unable to be nimble enough to make a timely difference. Leadership and a joint willingness to move forward have been missing. Let’s hope that 2021 will be different.

The Bill and Melinda Gates Foundation’s 2020 Goalkeepers Report, COVID-19, A Global Perspective is a Reminder of the Critical Importance of Global Collaboration

· September 15, 2020 · COVID-19 · , , · No Comments

In its annual report on progress on various UN Sustainable Development Goals (“SDGs”) released on September 15, 2020, the Bill and Melinda Gates Foundation calls out the reversal in trends on many sustainable development goals caused by the world’s effort to deal with the COVID-19 pandemic and provides a strong call for collaboration and cooperation among governments and the private sector to address the pandemic and ensure global access to therapeutics and vaccines on an equitable and affordable basis. The report is an important document that should help governments, international organizations, business associations and other NGOs focus on the pending challenges/risks and potential forward movements that are achievable. One of the stunning statements from Bill and Melinda Gates in recent interviews is that availability of vaccines has been set back twenty-five years in the past twenty-five weeks. See Business Insider, September 15, 2020, Bill Gates says the pandemic wiped out 25 years of vaccine progress in 25 weeks, https://www.businessinsider.com/bill-gates-pandemic-wiped-out-25-years-progress-vaccines-2020-9. The link to the Gates Foundation report is here, https://www.gatesfoundation.org/goalkeepers/report/2020-report/#GlobalPerspective.

While the bulk of the report does not directly deal with trade, trade is certainly an important element in global collaborative efforts needed to help with the recovery from the pandemic — whether it is movement of medical goods including therapeutics and vaccines as they get developed, movement of agricultural goods, restoration of services critical for many economies – like travel and tourism, trade facilitation efforts, aid for trade, trade finance, development of rules on digital trade and more.

The report reviews the series of catastrophes flowing from the pandemic. On the economic catastrophe, the report references information from the International Monetary Fund that projects that the global economy will contract by some $12 trillion by the end of 2021 despite some $18 trillion in stimulus spending by governments to reduce the economic impact of the pandemic. “The last time this many countries were in recession at once was in 1870, literally two lifetimes ago.” (Page 7) The report notes that the ability of many countries to provide economic backstops to their economies is quite limited regardless of their economic growth in recent years or effectiveness of management of their governments. Thus, stimulus funding by G20 countries has averaged about 22% of GDP compared to just 3% for countries in sub-Suharan African countries. (Page 8)

The results of the economic impact from the pandemic has been a 7.1 percent increase in the number of people living in extreme poverty in just a few months after some twenty years of progress in reducing those numbers. The rising number of people in poverty are more likely to be women than men reflecting both women’s heavy participation in the informal sector and their handling of such a huge portion of unpaid care work. (Pages 9-10)

The report has a section entitled, “Innovating with Equity in Mind” on pages 14-17 which reviews the need to get the virus under control.

“To get it under control, to end the pandemic, the world should collaborate on three tasks as quickly as possible:

“1. Develop diagnostics and treatments to manage the pandemic in the short term and vaccines to end it in the medium term.

“2. Manufacture as many tests and doses as we can, as fast as we can.

“3. Deliver these tools equitably to those who need them most, no matter where they live or how much money they have.” (Page 14)

The report reviews the low percentage of vaccine candidates that historically have proven successful which supports the need for many candidates to be supported. The report also notes that even with the funding provided by some governments, there is a severe shortage of manufacturing capacity at the present time meaning a likely “longer pandemic, more deaths and a longer global recession.” (Page 15) The report includes the results of a model run by Northeastern University which looks at likely changes in the number of deaths if 2/3rds of vaccine doses are taken by high-income countries compared to the situation where vaccine doses are distributed to all countries based on population. The model’s projection is that a much higher proportion of deaths would be averted where there is equitable distribution of vaccine doses (61% of deaths averted) than if the high income countries take two-thirds of vaccines (33% of death averted). (Page 16)

The report notes that the costs of achieving equitable and affordable distribution of vaccines are high but tiny in comparison to the economic costs to the global economy.

“To be clear, funding these organizations and other key partners adequately will cost a lot of money — but not compared to the cost of a festering pandemic. Every single month, the global economy loses US$500 billion, and a collaborative approach will shave many months off of the world’s timeline. Countries have already committed US$18 trillion to economic stimulus to treat the symptoms of the pandemic. Now they need to invest a small portion of that total to root out its cause.” (Page 17)

The remainder of the report looks at projections for a series of sustainable development goals (SDGs) and particular elements of individual SDGs. The projections provide best case, worst case and a reference scenario as well as showing the 2030 target within the UN SDGs. Elements looked at include poverty, stunting, agriculture, maternal mortality, neonatal mortality, HIV, tuberculosis, malaria, neglected tropical diseases, family planing, universal health coverage, smoking, vaccines, education, gender equality, sanitation, and financial services for the poor. (Pages 21-45) For nearly all of these issues, progress went from positive to negative in 2020 and the projections typically show even the optimistic scenario as being far off of the 2030 UN SDG target following the pandemic.

Conclusion

The 2020 Goalkeepers Report makes a convincing case that the extraordinary costs of the COVID-19 pandemic have harmed all countries and have generated greater inequality among countries and worsened the outlook for global reforms agreed to by nearly all nations in 2015. The end of the Introduction explains the need for a collaborative response and the costs of not pursuing one:

“There is no such thing as a national solution to a global crisis. All countries must work together to end the pandemic and begin rebuilding economies. The longer it takes us to realize that, the longer it will take (and the more it will cost) to get back on our feet.”

Hopefully the world is listening.