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WTO post MC13: Hope springs eternal 

Optimism is not in short supply among trade officials and diplomats in Geneva. But it is hard to escape a sense that given the strong political headwinds buffeting the World Trade Organization, optimism may be the only thing that officials still have to fall back on. 

Most of the people Borderlex recently spoke with about the state of the international rules-based trading system believe is still possible to reach deals on the various thorny issues on the table.  

But there are equally plenty of reasons to believe that such progress will remain elusive. 

Following a very disappointing MC13 in Abu Dhabi in February, almost all ongoing WTO work is beset by delays and blockages.  

The complexity of the technical issues at stake is compounded by geopolitical tensions.  

“There’s a lot of uncertainty beyond what we do here in the WTO building. And that of course has an impact on how members visualise possible results,” said one senior WTO official. 

Political leadership in short supply 

The country which historically provided leadership to the organisation – the United States – is now all but absent from the most important negotiations. 

The US’s ambassador to the WTO, Maria Pagán, is given credit by her peers for at least engaging with the issues.  

But under the Trump presidency, Washington largely withdrew from multilateral discussions. Trump’s successor Joe Biden sees few political upsides, and many potential pitfalls, from doing deals with any group of countries that might include China. 

The world’s other two economic superpowers – the European Union and China – are both supportive of multilateralism. But as trade and political disagreements mount between them they are unable to provide any effective counterweight to the WTO-scepticism which is emanating from both Washington and New Delhi. 

India was widely blamed for having prevented agreement at MC13, as well as for refusing to allow the plurilateral agreement on investment facilitation to be integrated into the WTO’s treaty architecture.

New Delhi’s perceived obstructionism led a group of countries, headed by Singapore, to engage in a debate on so-called ‘responsible consensus’.

But this debate only served to clarify the fact that all WTO members – including Singapore – remain fully committed to the principle of decision-making by consensus. This is a principle which gives all parties the ability to block any proposals with which they do not agree. 

As no-one supports any change to this fundamental approach, the ‘responsible consensus’ debate is widely viewed in Geneva as little more than a howl of frustration against India’s willingness to block initiatives which are supported by a majority of members, rather than a serious mission to change the decision-making rules. 

India seems unlikely to change its stance in Geneva – especially now that prime minister Narendra Modi’s BJP party lost its overall majority in the country’s recent general election.  

Plurilateralism’s uncertain future 

There is increasing speculation by WTO-watchers that members will respond to this state of affairs by making more use of plurilateral negotiations to create ‘coalitions of the willing’ – forging limited agreements in areas where groups of countries are keen to move ahead. 

But officials and diplomats are sceptical about the prospects of this happening at any scale. 

The investment facilitation negotiations showed that even where an agreement can be concluded among a subset of WTO members, the deal cannot be formally ratified unless all members are in favour. 

The plurilateral negotiations on e-commerce looks set to suffer a similar fate if and when the talks are finally wrapped up. 

“I think plurilateralism is an alternative. I don’t think it’s the only way,” said one WTO official. 

“Apart from being a rules-based system, the WTO is also a very good forum for members to actually have discussions on the global challenges they’re facing. So even when some of these issues are pretty sensitive, members tend to come back here to have those discussions.” 

An ‘advocate-general’ system for the dispute settlement body? 

Efforts to reform the WTO’s dispute settlement mechanism are currently struggling against opposition from the US. 

WTO ambassadors launched a work programme aimed at agreeing a package of reforms to the WTO dispute settlement system by the end of the year – in fulfilment of a ministerial mandate from MC12.

The core issue in the negotiations is to find an alternative to the now-defunct appellate body, which the US closed down by refusing to approve the appointment of new members. 

The aim of current negotiations, overseen by Mauritian ambassador Usha Dwarka-Canabady, is to find a compromise formula allowing the creation of “a second-tier appeals system which doesn’t scare the Americans too much” – in the words of one observer. 

One of the more interesting options under consideration is the idea of a preliminary assessment by the dispute settlement panel which preceded the final verdict.  

Proponents view the system as analogous to an opinion delivered by an advocate-general in the European Court of Justice. This would allow the legal issues at stake to be given a public airing prior to delivery of the definitive verdict. 

A lot of work still has to be done on fleshing out these ideas. It remains far from clear whether the details of any such system could be firmed up in the second half of this year.  

The US would then have a two-month ‘window’ after the presidential election in early November to decide whether it could accept an approach along these lines before the end-2024 deadline. 

Fisheries subsidies: close to a deal, but still elusive 

Another issue on which agreement is technically within reach, but politically elusive, is the proposed new agreement on fisheries subsidies. 

WTO diplomats are hoping to secure a deal this summer, taking forward the draft agreement which came close to being agreed at MC13.  

The WTO general council meeting on 22-23 July is being targeted for a debate on this topic. Some delegations are pressing for this meeting to be in effect a continuation of the MC13 agenda. 

The main outstanding issue on fisheries is the length of time that developing countries would be exempt from the disciplines set out in the agreement after its entry into force.  

Most countries believe seven years would be an appropriate period but India is still holding out for 25 years. 

“The overwhelming majority of members would like to try to conclude the negotiations by July, using the current draft text as a basis. But there are two or three members that are sceptical about doing that,” said a diplomatic source close to the talks. 

This latter fact makes it improbable – barring an unpredictable change in the political weather – that there will be an early conclusion to the talks. 

Another reason is that there is still no consensus on language in the draft text requiring countries to notify non-specific fuel subsidies benefiting the fishing sector. This is demanded by India, but strongly opposed by the EU and others. 

A proposal to require members to notify instances of forced labour about fishing vessels is similarly backed by the US – but by virtually no-one else.  

Sequencing row overshadows agriculture negotiations  

Another issue on which progress is being targeted at the July general council meeting is agriculture. 

Brazil is pushing for members to sign up to a ‘roadmap’ setting out an indicative timetable for advancing negotiations on the agriculture agenda.

But India continues to demand progress on public stockholding for food security before addressing other issues. 

“How do you set up a process where the first big fight is around ‘why are you asking us to discuss this first and not the other topic first?’”, one perplexed official asked. 

It would be no surprise if July’s general council meeting ends in deadlock, just as MC13 did. 

But the officials involved still live in hope.  

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