Postponing the WTO Ministerial Conference – Making the Unexpected Breathing Space a Turning Point

and | 6 December 2021
Trade, Blog | Tags: Agricultural Trade, Health, Services Trade, Trade Governance, WTO

The WTO 12th Ministerial Conference (MC12), which was due to take place in Geneva from 30 November – 3 December, was postponed indefinitely last minute due to new COVID-19 travel restrictions. Despite hectic activity on a rather modest agenda during the run-up to the event, considerable gaps remained and expectations for significant outcomes were low. The MC12 was originally planned to take place in Kazakhstan in June 2020 but was then delayed because of the first wave of COVID-19.  Given the travel bans – the cancellation was inevitable also this time.

The main topics on the agenda were agriculture, fisheries subsidies, trade and health – addressing access to vaccines, medicines and protective equipment during the pandemic – as well as the e-commerce moratorium and three Joint Statement Initiatives (JSIs). If the postponed MC12 eventually arrives with no ambitious agreement on agriculture, no meaningful ban on fisheries subsidies and tariffs on electronically transmitted content, it is hard to see the WTO in the driving seat on global trade governance going forward. The WTO could, however, make the unexpected breathing space a turning point.

After decades of discussions, progress on agriculture is limited: on many topics, the expected outcomes of the MC12 were declarations that negotiations ought to continue and agreeing on specific Work Programs to prepare the ground for a solution. Specifically on trade-distorting domestic support measures, neither “a broad numerical target, nor […] a pre-determined timeframe” is on the horizon. The discussions on public stockholding for food security purposes (PSH) have also reached a stalemate. While especially poorer countries argue that a wide PSH agreement is an important tool for addressing food security and supporting rural livelihoods, other countries worry about the inclusion of too many market-distorting mechanisms to provide food security and unlimited price support beyond the Uruguay Round commitment levels. Even the commitment that countries won’t restrict food purchases by the World Food Programme, will most likely end up as another JSI, due to concerns by some countries where the foodstuff is purchased.[1] ,[2]

Regarding an agreement on stronger cooperation in tackling the ongoing pandemic, neither the more centrist US proposal for a narrow TRIPS waiver[3] nor the EU proposal for using compulsory licensing seem to have gained much support.[4] Stronger support, but also serious opposition, exists for a much more expansive 3-year TRIPS Waiver which would suspend IP rights for many health products. This proposal, initially started by South Africa and India,[5] has seen considerable disagreement on its merits[6] and drawbacks,[7] and it would still only partially shield countries from being brought before investment arbitration panels if they acted on such a waiver.[8] An opposing proposal with several signatories focuses instead on, e.g., promising to review and remove existing unnecessary restrictions, to strengthen cooperation in trade facilitating measures, and to intensify support for innovation, production, and distribution of medical goods, especially in LDCs.[9]

The Joint Statement Initiatives

With little progress at the multilateral level, the three JSIs offer some hope for progress on modernizing global trade governance. JSIs are plurilateral negotiations open to all members that share their objectives. The ultimate objective is to integrate the agreements into the WTO rulebook. The three JSIs for discussion are on Services Domestic Regulation, E-commerce, and Investment Facilitation for Development.

The most advanced of them is the one on Services Domestic Regulation. The initiative picks up a mandate in the 1995 GATS to negotiate disciplines on procedures related to licensing, qualifications requirement and standards in services (Box 1). The negotiations have resulted in a Reference Paper that WTO members may include in their GATS schedules. The 67 participants have committed to do so and at a press conference on 2 December, they announced the deal despite the cancellation of the MC12.

The implementation of the JSI will yield substantial benefits stemming from transparency and predictability about decisions related to obtaining a license, a permit, or being in conformity with standards. These are precisely the issues preventing many SMEs from entering foreign markets. Furthermore, since transparency and regulatory procedures are largely non-discriminatory in nature, all WTO members will benefit from the JSI.[10]

The JSI on E-commerce is less advanced. A negotiation text with language on low-hanging fruits such as on electronic signature, electronic contracts, open government data, and consumer protection – and wide gaps on more contentious issues such as data localization, privacy and cyber security is on the MC12 agenda.  No major breakthroughs were expected. Moreover, if suggestions on lifting the moratorium on tariffs on electronic transmissions came to fruition, this would be a step backwards for the JSI (see previous blog).

Box 1: The Reference Paper on Services Domestic Regulation

Article VI in the GATS gives a mandate for WTO members to negotiate disciplines on domestic regulation with the objective to ensure transparency and predictability in services regulation in the areas of licensing procedures, qualification requirements and technical standards. The reference paper agreed by the JSI on Services Domestic Regulation is based on this mandate. It spells out the principles and practices for regulators and competent authorities, including timely processing of authorizations at reasonable costs, electronic applications, independent authorities, publication of regulations and consultations during the regulatory process.

The GATS schedules of commitments are legally binding documents where countries include the sectors for which they commit to grant market access and national treatment to foreign services suppliers - and reservations they may take. There is also a rubric for “other commitments” that may go beyond market access and national treatment. The reference paper provides a blueprint of such “other commitments” ensuring consistency across countries and sectors. The JSI can thus be seamlessly incorporated into the GATS architecture and implemented with or without a Ministerial decision.

With 110 members, the JSI on Investment Facilitation for Development has the broadest participation among the JSIs.  It is an initiative by developing countries and aims at concluding the negotiations by the end of 2022.

To conclude, the WTO must heed the Secretary General’s call for keeping up the momentum from the last few weeks. By the time the MC12 eventually happens, it must at a minimum close the gaps on agriculture, fisheries subsidies and global access to vaccines and medicines. It must also take steps to become part of the solution to some of the most exigent issues of our time, climate change and the digital transition of the world economy.

 

[1] Abraham Peralta, H.E. Ms Gloria. 2021. ‘Committee on Agriculture in Special Session’. Report by the Chairperson to the Trade Negotiations Committee TN/AG/50. Committee on Agriculture. Geneva, Switzerland: WTO. https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/TN/AG/50.pdf&Open=True.

[2] See also: Organization of the African, Caribbean and Pacific States (OACPS). 2021. ‘OACPS Ministerial Declaration on the Twelfth WTO MInisterial Conference’. Communication WT/MIN(21)/3. Ministerial Conference 12. Geneva, Switzerland: WTO. https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/MIN21/3.pdf.

[3] United States Trade Representative. 2021. ‘Statement from Ambassador Katherine Tai on the Covid-19 Trips Waiver’. USTR Webpage. 5 May 2021. https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/may/statement-ambassador-katherine-tai-covid-19-trips-waiver.

[4] European Union. 2021. ‘Draft General Council Declaration on the TRIPs Agreement and Public Health in the Circumstances of a Pandemic’. Communication IP/C/W/681. Council for Trade-Related Aspects of Intellectual Property Rights. Geneva, Switzerland: TRIPS Council. https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/IP/C/W681.pdf.

[5] By mid-August, 20 individual countries, the African group (44 countries), and the LDC group (35 countries) had signed on. Due to the large overlap in these groups, the total individual countries is 47 (own calculations).
the African Group, the Plurinational State of Bolivia, Egypt, Eswatini, Fiji, India, Indonesia, et al. 2021. ‘Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of Covid-19, Revised Decision Text’. Communication IP/C/W/669/Rev.1. Council for Trade-Related Aspects of  Intellectual Property Rights. Geneva, Switzerland: WTO. https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/IP/C/W669R1.pdf.

[6] International Commission of Jurists (ICJ). 2021. ‘Human Rights Obligations of States to Not Impede the Proposed COVID-19 TRIPS Waiver’. Expert Legal Opinion. Geneva, Switzerland: International Commission of Jurists (ICJ). https://www.icj.org/wp-content/uploads/2021/11/Human-Rights-Obligations-States-Proposed-COVID-19-TRIPS-Waiver-2021-ENG.pdf.

[7] Crosby, Daniel, Evan Diamond, Isabel Fernandez de la Cuesta, Jamieson Greer, Jeffrey Telep, and Brian White. 2021. ‘Update on the Proposed TRIPS Waiver at the WTO: Where Is It Headed, and What to Expect?’ JD Supra (blog). 8 June 2021. https://www.jdsupra.com/legalnews/update-on-the-proposed-trips-waiver-at-8411942/.

[8] Figueiredo, Roberto Castro de. 2021. ‘TRIPS COVID-19 Waiver, Patent Breaking and Investment Treaty Arbitration’. Kluwer Patent Blog (blog). 27 July 2021. http://patentblog.kluweriplaw.com/2021/07/27/trips-covid-19-waiver-patent-breaking-and-investment-treaty-arbitration/.

[9] In mid-July it stood at 25 signatories, by late August another three countries had joined: the Kingdom of Bahrain, Costa Rica, and the Kingdom of Saudi Arabia. Australia, Kingdom of Bahrain, Brazil, Brunei Darussalam, Canada, China, Chile, et al. 2021. ‘Covid-19 and Beyond: Trade and Health (Revised)’. Communication WT/GC/W/823/Rev.2. General Council. Geneva, Switzerland: WTO. https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/W823R2.pdf.

[10] See a joint study from the OECD and WTO with estimates of the benefits from the JSI on Services Domestic Regulation https://www.wto.org/english/news_e/news21_e/jssdr_26nov21_e.htm.  Although the exact numbers are uncertain, there is no doubt that they are significant.

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