At Latest WTO Ministerial Conference, Developing Countries Must be on Guard

The atmosphere in the run-up to the meeting has already been vitiated with the naming and shaming tactics that was so effectively used at the Glasgow climate change meeting early this month.

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With little time left for the World Trade Organisation’s 12th ministerial conference (MC12), the contours of what could happen at the four-day meeting are becoming clearer by the hour.

“Ministers will hold the future of international trade in their hands when they meet in Geneva next week,” thundered Valdis Dombrovskis, the European Union trade commissioner, in a signed article published in Financial Times on Thursday.

He says the “WTO’s rulebook is badly out of date” and “its ability to referee trade disputes is paralyzed and it is out of touch with current imperatives such as action on climate change and the expansion of digital trade”. Dombrovskis argues “intellectual property has to be part of the global response” for concluding a targeted waiver on compulsory licenses. He warns that “failure” to bring about reform and other fundamental changes in the WTO’s rulebook “would represent an unconscionable dereliction of duty to our citizens, our workers, and to hopes of a truly sustainable global recovery”.

It is not surprising that he did not suggest what ministers should do with the Doha Development Agenda trade negotiations launched in 2001, which sought fundamental reforms in all areas of WTO’s covered agreements.

For the past 26 years, those covered agreements – in agriculture, market access for industrial goods, problems encountered by the least-developed countries, cotton, and rules governing anti-dumping, which were concluded in the Uruguay Round of trade negotiations during 1986-1994 – remained as the major barriers for the developing countries in international trade.

This is despite the fact that the resolution in the EU parliament, which called for a temporary IP waiver for coronavirus vaccines, therapeutics and diagnostics, passed on Thursday with 338 votes in favour and 31 against.

Also read: As Corporate Ties Stain UN Food Systems Summit, Focus Must Remain on Farmers

Perhaps, he knew that the EU along with the United States and several other developed countries blocked the Doha trade negotiations successfully after pocketing trade facilitation agreement and now an asymmetrical fisheries subsidies agreement that goes against the mandate provided in the UN Sustainable Development Goal 14.6 and the Buenos Aires ministerial decision of December 2017.

It appears that the best way to advance WTO reforms, without addressing the core issues of the Doha work programme, is to throw sand in the eyes of the developing countries and insist on the need for reforms. 

Such reforms demand the termination of the consensus principle for arriving at decisions in an inter-governmental, multilateral trade organisation. 

Such reforms call for differentiating between developing countries for availing their treaty rights on special and differential treatment provisions.

Such reforms seek to destabilise the Marrakesh Agreement, particularly Article 9 on decision making. 

Such reforms seek to liberalise digital trade to benefit the GAFA companies like Google, Amazon, Facebook, Apple, as well as Microsoft, Alibaba, Tencent and other companies. 

Such reforms want to perpetuate the asymmetries in the Uruguay Round agreements in agriculture and other areas. 

Such reforms want to use the pandemic to ram through a host of trade liberalisation measures that have not benefited developing countries. 

Such reforms want to use the Glasgow climate change agreement to erect new barriers through the carbon border tax measures, which will make developing countries forego their comparative advance in this liberal trade system. 

The EU is directly championing these dubious reforms that are being opposed by developing countries, particularly India, which are standing up for the first principles as enshrined in the Marrakesh Agreement. It appears to have justified the need to do away with the consensus principle at the meeting. 

Brussels apparently said that the consensus principle is blocking new agreements to be pursued at the WTO. The United States and other industrialised countries, as well as some developing countries like Brazil (who has voluntarily given up its developing country status) have become the votaries of these reforms. 

Unlike, the EU, which is known as past master of spinning ambiguous narratives, Uncle Sam is somewhat direct in stating what it wants. Often, the US’s demands are included in the EU’s overall agenda like the inclusion of removal of industrial subsidies, the trade and environment agenda and the WTO reforms among others. Imagine the manner in which the US brought the issue of forced labour into the fisheries subsidies negotiations, knowing full well that issues connected with trade and labour are not part of the WTO’s mandate.

Naming and shaming countries

For those who are monitoring the trade negotiations since the Marrakesh Agreement in 1994, the technique of naming and shaming countries at the WTO ministerial conferences is put to use selectively. 

If the US or the EU block an agreement at the WTO, the spin doctors of the trade body invariably project it as the problem of the entire organisation. Nobody is naming and shaming the US for paralysing the two-stage dispute settlement system, despite calls for WTO reforms.

On the other hand, if a developing country like India raises sharp concerns about any new agreement such as the ongoing discussions on the WTO reforms, then the spin doctors will emit messages to their favourite Western newspapers and studios that India is blocking the process. 

Also read: TRIPS Waiver: A BIT of a Challenge for India

Little wonder that the atmosphere prior to the meeting has already been vitiated with naming and shaming tactics that were so effectively used at the Glasgow climate change meeting early this month. It is bound to come up in a big way at the MC12 that will start on next Tuesday and end on Friday. 

Attempts are already underway to “name and shame” countries that are standing-up for the multilateral principles, as enshrined in the Marrakesh Agreement that established the WTO in 1995.

On Monday (November 22), a Central American country apparently took potshots at India for blocking the proposed language on reforms and other controversial issues in the restricted draft outcome document prepared by the General Council chair Ambassador Dacio Castillo from Honduras. The General Council is the highest decision-making body during the biennial ministerial meetings.

That outcome document, reviewed by this author, contains language in square brackets on several controversial topics.

They include 1) the WTO reforms; 2) change of the negotiating function to do away with the consensus principle and to bring differentiation among developing countries for availing the special and differential treatment for implementing the WTO agreements; 3) bring through the backdoor controversial measures like the carbon-border-tax arrangements under the pretext of addressing environment; 4) attempts to legalise the informal plurilateral negotiations that were not multilaterally mandated at the WTO’s 11th ministerial conference in Buenos Aires in December, 2017; and so on.

Already, the draft texts issued by the chairs of the fisheries subsidies negotiations and agriculture seem tilted against the interests of developing countries. 

The chair for the Doha agriculture negotiations has deferred India’s core demand for a permanent solution for public stockholding programs for food security to the 13th ministerial conference that would be held sometime in 2023. 

In a similar vein, the chair for fisheries negotiations has not addressed the proposed changes suggested by India in the three pillars of IUU (illegal, unreported, and unregulated) fishing, the overcapacity and overfishing pillar, and the fisheries stocks pillar. 

The chair has included provisions in the draft Agreement on Fisheries Subsidies (AoFS) that would allow the big subsidisers like China, the EU, the US, Canada, Japan, Korea and Taipei to, subject to some insignificant caveats, continue their industrial-scaled fishing that led to the depletion of global fish stocks. 

But India’s demand for availing special and differential treatment for a period of 25 years is not included, though he provided in square brackets X years to be negotiated by trade ministers at the MC 12.

A bird’s-eye view on MC12 outcomes for developing countries

Developing countries face the danger of losing the WTO as an organisation which can help them reap the development facets of international trade if they do not show solidarity at MC12 and work together to preserve their key interests. The latest draft of the Walker text has made it amply clear that the ‘development’ which was to be at the heart of the Doha Development Agenda will be sacrificed to safeguard the ‘market-access agenda’ of the developed countries this time. 

The WTO reforms are being used as a Trojan horse to bring in all the issues of interest of the developed countries, while ‘naming and shaming’ is being used as tactics to isolate the countries which are still fighting hard to preserve the development dimensions of the WTO. 

Taking a bird’s-eye view of the key areas of interest to developing countries in MC12, these include agreement on TRIPS waiver; permanent solution to public stockholding for enhancing food security; disciplining agricultural subsidies of developed countries; disciplining cotton subsidies of the developed countries; preserving the policy space on fish subsidies; right to apply customs duties on electronic transmissions; preserving self-designated special and differential treatment in the WTO; preserving the key principles of the WTO including consensus decision making and GATS flexibilities; liberalising trade in services in Mode 4; technical assistance for capacity building; technology transfers; and concluding the Doha Round which promised to deliver development through international trade.

On none of the above issues does there seem to be any progress in the negotiations, and many of these issues do not find any place in the Walker text – which implicitly implies that they will not even be negotiated. While around 100 developing countries supported the TRIPS waiver, they failed to negotiate any meaningful outcome because of their lack of solidarity in giving it a strong push because of which it remains in brackets with a danger of being completely dropped. 

Many of the proposals of the developing countries like the G33 proposal on public stockholding have not been considered in the chair’s text; instead a work programme has been proposed for further discussions. Developing countries’ long-sought outcome on cotton will still not be resolved, while on fishery subsidies an imbalanced outcome is being offered to the developing countries. 

Same is the case for moratorium on e-commerce, where further discussions are being proposed with no concluded outcome in favour of developing countries. No progress in made or even being discussed in the areas of interest of developing countries with respect to trade in services; instead, the existing flexibilities from the positive list approach under GATS (General Agreement on Trade in Services) is being curtailed. 

Other areas of interest to developing countries like facilitating technology transfers, capacity building and improving their market access have been completely ignored. 

Developing countries also are in danger of losing the core principles on which the multilateral trade negotiations are based i.e., consensus in decision making, dispute settlement and single undertaking. There are concerted efforts under the guise of WTO reforms to take away these flexibilities from the developing countries which strengthen their solidarity and bargaining power in the negotiations. 

What developing countries will have to agree to, to fulfil the ‘market access’ interests of the developed countries, is clearly stated in the Walker text. This includes “keeping markets open”, “not create unnecessary barriers to trade”,  “commitment to TRIPS agreement”, “commitment to transparency” , “technical assistance and capacity building in respect of transparency and monitoring”, “trade facilitation”, “regulatory cooperation and coherence”, “policy environment that facilitates flow of services trade” and “an Action Plan” which will include discussions on “lessons learned and challenges encountered in responding to the ongoing pandemic” and provide the results for MC13.

Along with the WTO negotiations, there will be a concerted push to legalise the various Joint Statement Initiatives (JSIs) in the MC12, which could be the final nail in the coffin of the DDA and any hopes of the developing countries of fostering development through international trade in their economies. Consensus decision making and single undertaking will be one of the first causalities to these JSIs among the like-minded countries. 

Non-mandated issues with binding commitments for developing countries will sneak into the negotiations. These issues may include taking onerous commitments to facilitate digital trade including permanent moratorium on e-commerce, restrictions on data localisation and source code sharing; commitments under trade and environment agenda which could further slowdown developing countries progress towards their climate goals by restricting their policy, fiscal and regulatory space; commitments on facilitating inward foreign direct investments, an issue which was rejected by the developing countries in Singapore; among others.

The only way forward for developing countries in these circumstances is to build solidarity among themselves and work together in the MC12 to save WTO from becoming a tool in the hands of the developed countries and big tech firms for pushing their market access and trade liberalisation agenda at the cost of development. Any tactics involving isolating some countries for ‘naming and shaming’, as seen during COP26, should not be allowed. Countries trying to do that should be exposed instead. 

In conclusion, it is an existential crisis for the WTO as an organisation which can deliver development through trade.  

Countries like India and some other developing countries are fighting hard. It remains to be seen whether they will be applauded for their efforts as they stand firm on their demands or will be named and shamed as seen post COP26. The answer will be known in seven days.

Ravi Kanth Devarakonda is a senior journalist.