MC12, WTO Corner blog

WTO Corner : A frustrated DG, constructive joint statement initiatives, supply chain bottlenecks

Hi from Day 3 of the 2021 WTO Public Forum.

The twelfth ministerial conference is two months away and many participants are wondering whether the event that might define the fate of the global world trade institution will rise to the challenge.

Signals are mixed – at best. While there is a lot of frustration on the old topics that have been central to the WTO’s quagmire so far, the relatively new plurilateral initiatives are making headway and new areas of work could even emerge soon.

Make or break on core issues for the WTO

What everyone in Geneva agree on is that director-general Okonjo-Iweala is genuinely working incredibly hard to try to get members to come together to get to an outcome, with a focus on the following agreements: a fish subsidies agreement, an outcome on agriculture support, a work programme on trade and health, and potentially the announcement of other ‘plurilateral’ agreements.

But at a meeting of ambassadors held today in preparation of next week’s General Council, “the DG expressed quite a lot of frustration” about the state of negotiations in this field, a Geneva trade official said.

This came as rumours circulate that Ngozi Okonjo-Iweala has expressed in private that she is considering resigning from her post if MC12 fails.

Some exchanges among ambassadors at that meeting were “ill-tempered”, according to the same trade official.

The United States’ retreat from the system – or the Biden administration’s non-return to it – is being sorely felt. Washington is actively engaged in some plurilateral negotiations, notably services domestic regulation and e-commerce.

But many deplore its hands-off attitude towards the issue of negotiating a waiver on intellectual property protections on vaccines and its lack of readiness to start discussing seriously about the future of the institution’s dispute settlement body.

Only on Monday, the US blocked once again the appointment of new Appellate Body members. More generally the US is perceived as aloof. The fact that it still has no ambassador in Geneva doesn’t help.

Most interlocutors in Geneva think it will be very difficult to reach an agreement on the core issues of fish, health and agriculture.

But a deal on these issues is necessary to make sure the WTO continues to be seen as a viable institution.

Disagreements at today’s informal Heads of Delegation meetings ran deep on the issue of whether to agree on a waiver on intellectual property on vaccines or medical products. The matter is overshadowing the whole MC12 meeting.

There was also criticism of recent new proposals tabled by some WTO members in the fisheries and agriculture negotiations. Among the new proposals in the spotlight is the US proposal to include language that bans the use of forced labour on fishing vessels. Criticisms focused on the fact that the proposals came late and that to reach an outcome in the next two months, some “pragmatism” was required as some participants put it.

The frustrations show that WTO members now sense it is crunch time and difficult decisions need to be made.

Plurilateral initiatives make headway

Amidst the doom and gloom, there are some relatively bright spots.

There is a sense that the like-minded WTO members involved in the various Joint Statement Initiatives launched in Buenos Aires in 2017 are making good progress.

Not only are we now certain that the 65-country services domestic regulation plurilateral ‘deal’ will be endorsed at MC12, we are also pretty sure that the deal on MSMEs – micro, small and medium-sized enterprises – will feature there too.

There is also expectation that some form of joint statement initiative will be launched in the area of trade and the environment.

E-commerce coming along

Whereas everyone is aware that concluding effectively the ongoing talks on the highly anticipated agreement on e-commerce, negotiators are continuing to make headway.

“We are in a pretty good position”, boasted Singapore’s ambassador to the WTO Tan Hung Seng.

The plurilateral initiative now involves 86 participants and more than 90% of relevant world digital trade. “The fact that we have managed to secure agreement on a single text should not be underestimated.” Also, six areas of the text are now agreed (to read the provisions, check out this article).: spam, e-signatures, e-contracts, open government data, consumer protection and transparency.

“We also have achieved some momentum in some areas, such as on ‘open internet access’”, the Singaporean envoy said.

“We have set ourselves a target of achieving between ten and twelve clean articles by MC12, which I think is quite achievable.”

“But the road is still long”, reckoned Ambassdor Tan, when it comes to bringing the deal to a close after MC12. “The two most challenging issues will be, first, data [cross-border flows and localisation requirements], second, market access.”

Ambassador Tan told Borderlex that he doesn’t expect there to be a ministerial statement on the e-commerce talks at MC12, but that he and the two other co-conveners of the e-commerce negotiations will circulate a stock-taking text on the occasion.

Investment facilitation for development

There is another plurilateral agreement that is advancing steadily.

This is a deal that is strongly driven by developing countries and is very much made for developing countries: investment facilitation for development.

This initiative gathers more than 100 WTO members – it is the largest plurilateral negotiation among all those launched at Buenos Aires.

Small developing countries ranging from Guatemala to Laos have recently tabled language – showing how keen they are to be seen as doing what is right to attract investors.

Chile is currently holding the pen for this pact.

The South American’s ambassador to the WTO Matthias Franke said that negotiations were far advanced, even if more work was needed after MC12. A draft treaty is being prepared the same way as for e-commerce – with work ongoing to cleaning up text – removing brackets – as much as possible.

Francke’s aim is “to have as much clean text as possible so that ministers can take note of progress achieved and endorse it and even give political guidance for the last part of the process”. Francke’s assessment is that last part “shouldn’t take so much (sic) to finalise”.

The agreement is mainly a compendium of good bureaucratic practices for governments.

Topic areas covered include transparency and predictability of a country’s investment measures – including ‘boring’ but vital issues such as the establishment of “a single information portal” on legal and procedural requirements for foreign investors.

Another topic area is “reasonable, objective and impartial administration measures”.

The draft deal foresees potentially some language on transparency for temporary business visitors: their entry and temporary stay conditions.

The draft also envisages a programme on further areas of work.

Sections that need finalising include so-called ‘fire-wall’ provisions, i.e. treaty language that makes it clear that this treaty does not offer market access or investor protection (i.e. rights to launch investor-state dispute settlement cases).

Participants have also not agreed on what legal form the deal would take and how it would be integrated into the overall WTO treaty architecture.

New initiatives on supply chain bottlenecks and services?

There is a lot of talk in town about the potential launch of a new WTO initiative aimed at easing current supply chain bottlenecks.

The United Kingdom is experiencing an acute form of such shortages post Brexit and post-pandemic. But shortages of containers, trucks with their drivers and of critical inputs for production are a common feature of the post-pandemic economy across the world.

There is increasing support in the WTO for the idea having Okonjo-Iweala launch a working process involving key businesses in this area to help find pragmatic, informal solutions to ease the strains.

The work programme would be modelled on the current work on trade and vaccine production and distribution coordinated by Ms Okonjo-Iweala

It is early days, but this is a spot to watch.

There is also talk of seeing MC12 members endorsing the launch of new negotiations on services market access in areas critical for the delivery of health services as part of the WTO’s so-called built-in agenda for services.

The initiative is being pushed by Norway, Switzerland, Canada, Australia, New Zealand, the United Kingdom and Chile. So far – yes, so far – the initiative which Kazakhstan as MC12 convener is integrating into a potential programme or statement has not met formal resistance.

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