This is a guest post by several people from the Research Chair on New Challenges of Economic Globalization, Laval University, Quebec City, Canada: Antoine Comont, Ph.D. Researcher; Carla Gomez, Ph.D. Researcher; Van Anh Ly, Ph.D., Deputy Director of the Research Chair on New Challenges of Economic Globalization; Richard Ouellet, Full Professor of International Law, Faculty of Law and Graduate School of International Studies; Holder of the Research Chair on New Challenges of Economic Globalization.
The thirteenth WTO Ministerial Conference will be held from February 26th to 29th in Abu Dhabi. Among the observers, there is a strong feeling that this Conference could well be the last chance to save the WTO and the multilateral trading system. However, this concern for the WTO in the run-up to MC13 should not dampen our optimism.
As a reminder, WTO Members have been engaged in a round of negotiations on development since 2001, and of the 20 issues raised in the Work Programme established by the Doha Ministerial Declaration[1], only trade facilitation has been the subject of an agreement at the margin. Although other commitments have been made, such as the Agreement on information technologies or, more recently, the Agreement on fisheries subsidies reached at MC12, they do not address the priority issues of the Doha Round. It should also be pointed out that, as of December 2019, the Appellate Body of the Dispute Settlement Body is no longer operational. The WTO is facing a major institutional polycrisis.
Paradoxically, the drive to overcome these difficulties is at its strongest. The discussions and negotiations leading up to MC13 are numerous and promising. Here is a summary of the key issues in these negotiations, which also highlights the challenges facing the WTO and the pitfalls it must avoid if the conference is to be a success.
- Accession of Two New Members :
Let's start on a note of optimism. The Comoros and Timor Leste have both completed negotiations on their respective accession modalities with the WTO working groups. In principle, and barring any major reversal, the MC13 should therefore be no more than a formality to ratify the two accession protocols and officially open the WTO agreements to ratification by these two States. They will then bring the number of Members to 166. Despite the institutional and functional poly-crisis facing the WTO, it is interesting to note that the attractiveness of the multilateral trading system persists.
- Negotiations on Agriculture :
Negotiations on agriculture are a priority for at least ¾ of WTO Members. For many, an agreement on agriculture is also a prerequisite for any other agreement at MC13. With few days to go before the start of the conference, government representatives are only just beginning to work on the negotiating text presented by the Chairman of the Committee on Agriculture[2].
Current trade negotiations on agriculture focus on 7 key points:
- Internal support measures
- Export competition
- Export restrictions
- Cotton
- Access to markets
- The special safeguard mechanism for developing countries
- The holding of food stocks by public authorities
When it comes to agricultural trade negotiations, it is hard to conceal our pessimism. Firstly, no major decision has been taken on the subject since 2001, which is a sign that agricultural products affect particularly sensitive policy issues (environment, public health, food safety, food sovereignty). Secondly, developed countries are quite content with the status quo, while developing countries want to put an end to the laissez-faire of protectionist agricultural policies. Finally, it also seems inevitable that the protests by European farmers three weeks ahead of the MC13 will have a major impact on the extent of concessions the EU will be able to provide without further inflaming this sector, which still enjoys the highest level of internal protection in the world.
Faced with these different realities, the big question is just how much of a priority agriculture is for India and the rest of the "G-33". Are they ready to compromise a declaration on agriculture if it does not include satisfactory concessions, and would they be ready to compromise the entire Ministerial Conference if there is no consensus on this issue?
- TRIPS Waiver
COVID-19 led to the adoption by Members of a waiver of intellectual property rights affecting the trade and production of pandemic vaccines. At MC12, developed states agreed to waive intellectual property rights for their industries, so that developing, and least-developed countries could produce vaccines exclusively for their domestic markets. In other words, developing countries with surplus production could not, in principle, export their vaccines, including to the territories of other developing countries. The lack of pharmaceutical industrial infrastructure, which allows only very limited production capacity in most developing and least-developed countries, remains the source of many inequalities. Despite this, the waiver has been positive for most developing countries. It should also be pointed out that China had undertaken to renounce its status as a developing country (exclusively within the framework of this waiver) for the United States to agree to join the necessary consensus.
The MC13 will be an opportunity for countries to extend the derogation and review its terms (mandatory licensing or possible export). The status quo and abrogation of the waiver are also possible. As a reminder, waivers are intended to be temporary, and the waiver in question has been granted for a period of 5 years[3]. In this case, the General Council or the Ministerial Conference must determine each year whether the exceptional circumstances that justified the decision still require it to be maintained.
- E-Commerce
Discussions on e-commerce are based on the WTO Work Program and a joint initiative. Within the framework of the work program, there are no real negotiations. The main contribution of the work program, over and above the various reports on the implications of e-commerce[4], is the moratorium (temporary duty free) on electronic transmissions, which has been in force since 1998. Automatically renewed at each ministerial conference, the moratorium is now being strongly challenged. South Africa, India, and Indonesia have come to formally propose the termination of the moratorium on electronic transmissions for the MC12[5]. Other proposals by WTO Members insist that the overall benefits of the moratorium (lower production costs, elimination of transport costs, increased demand and consumer welfare, etc.) far outweigh any potential tariff losses[6]. Neither the permanence nor the renewal of the moratorium, both of which require consensus, are assured.
As regards the joint initiative on e-commerce, although negotiations are certainly progressing, the prospect of a final agreement at CM13 is highly unlikely. Even though negotiations have been completed on more than a dozen articles of the draft agreement, certain provisions are still highly divisive, such as customs duties on electronic transmissions and special and differential treatment for developing countries. However, the main stumbling block concerns the protection of personal data, which is a cross-cutting issue since it has repercussions on discussions on privacy, information flows, telecommunications, and, above all, restrictions on the location of computer equipment and data collected. While there is a consensus on the possibility of adopting restrictive measures justified by legitimate public policy objectives, there is open opposition as to whether, and to what extent, the protection of personal data forms part of these legitimate objectives. The negotiating text on these key provisions comprises proposals from China (on restrictive measures to ensure legitimate public policy objectives), the UK (on restrictive measures to ensure the protection of personal data), and Nigeria (on restrictive measures adopted by developing and least-developed countries to promote development).
Despite the major disagreements that remain, MC13 should nevertheless be a good opportunity to move forward with the negotiations on the joint initiative on e-commerce, which will celebrate their fifth anniversary at MC13.
- Additional Provisions on the Fisheries Subsidies Agreement
At MC12, the Fisheries Subsidies Agreement became the second multilateral trade agreement to be adopted since the launch of the Doha Development Round, following the Trade Facilitation Agreement (signed in 2013 and entered into force in 2017). This new agreement has already been ratified by 56 members, and DG Ellard hopes that MC13 will encourage a series of states to deposit their instruments of ratification (54 are still required for the entry into force of the agreement).
The Fisheries Subsidies Agreement is the first WTO agreement to incorporate binding environmental sustainability objectives for the preservation of oceans and fisheries resources, by prohibiting fisheries subsidies that contribute to overcapacity and overfishing. To achieve this, the agreement imposes a number of disciplines:
- Ban on subsidies for illegal, unreported, and unregulated fishing
- Ban on subsidies for fishing overexploited stocks
- Ban on subsidies for unregulated high sea fishing
However, the agreement adopted at MC12 recognizes "appropriate and effective" special and differential treatment, which will be the subject of a second round of negotiations to be concluded at MC13. Current negotiations therefore focus on the establishment of a transition fund to support developing countries, as well as its procedures and governance. The new negotiations must also specify the scope of technical assistance and capacity building that the Secretariat can provide to developing countries that request it.
To date, 16 donors have contributed CHF 8 million, with an additional pledge of CHF 4 million. It is essential that this second component is adopted before the initial agreement enters into force, which could happen in the months following MC13.
- Dispute Settlement Reform
Even though the Members have largely stressed their commitment to a multilateral rules-based system with a functional dispute settlement mechanism, some of the grievances voiced by the US are shared by many Members. Despite Biden's election in 2020, the AB is still unable to sit, a situation in which USTR Katherine Tai seems to be wallowing for want of proposals and a real desire to get out of this state of crisis.
However, by June 2022, Members had undertaken to reform the DSB. Agreement is within reach on the reform of the panel procedure. This progress obviously augurs well for future negotiations on the appeal procedure, but it is also a success that could have an impact on unblocking the AB itself. Many countries have already formally proposed the appointment of new Members at MC13 (such as Guatemala and the European Union). The negotiations to be held in Abu Dhabi will be of crucial importance for the multilateral trading system over the next two years i.e. until the next MC.
- Trade and Sustainability
Among the key issues to be tackled is the question of the link between trade and environmental sustainability, which is far from being a matter of consensus. Although many Members are still reluctant to do so, there is a clear fear of fragmentation of the multilateral trading system, which the environmental issue could provoke. Of course, the results of the COP28, which was also held in the United Arab Emirates, will influence the discussions, but it’s worth pointing out that its final declaration calls for the multilateral trading system to be strengthened to mainstream climate action. There is a strong will, and a great deal of work is being done to integrate the issue of sustainability into the negotiations.
Sustainability issues are currently being raised,in the negotiations on agriculture. One can also highlight the existence of three initiatives which should be the subject of a ministerial declaration at the MC13 :
- Structured discussions on trade and sustainability are progressing, and an agenda should be adopted at MC13 with a view to reaching agreement at MC14[7].
- Participants in the dialogue on plastic pollution are also finalizing a text for a ministerial declaration at MC13[8].
- The working group on fossil fuel subsidy reform is also making progress towards results to be presented at MC13[9].
- Development
We have deliberately chosen to deal with discussions on development in the last part, as it is a cross-cutting issue. The current round of negotiations is supposed to be about development. However, since 2001, initiatives to promote the economic development of developing and least-developed countries have unfortunately been negligible. The multilateral trading system is increasingly undermined by the perception that the rules only benefit the developed countries and that developing, and least-developed countries receive only a very marginal share of global trade benefits. Development-friendly negotiations must succeed if the system is to retain its legitimacy.
The first text should be adopted at MC13. This is the agreement on the facilitation of investment for development, which was agreed in principle in the Summer of 2023. Over the past five months, there have been lively discussions to determine the procedure for incorporating this agreement into the WTO's legal architecture. The main obstacle is that this agreement is the fruit of a plurilateral initiative involving 112 of the WTO's 164 Members. Three particularly influential Members did not take part in the negotiations: India, South Africa, and the United States, the first two having already declared their opposition to plurilateral initiatives at the WTO[10]. At present, amending Annex 4 (plurilateral agreements) of the agreement establishing the WTO would be the preferred approach. However, a major hurdle remains to be overcome, since this procedure requires a consensus from all WTO Members (including those who do not wish to become party to this new plurilateral agreement).
The second development text addresses the issue of integrating small economies into the multilateral trading system, examining issues such as the impact of non-tariff measures on trade costs, the link between trade policies and climate change adaptation, global supply chains, e-commerce, and digital ecosystems. This is the first draft decision to achieve consensus in the run-up to MC13[11]. Although this decision only deals with the definition of sensitive issues, it provides a much more precise framework for the work program for small economies that was adopted at MC12.
Conclusion : Plurilateralism to the WTO's Rescue: The Inexorable Decline of Multilateralism
In an increasingly fragmented world, where the international order is increasingly being called into question, the question of economic development, symbolized by the North/South divide among WTO Members, is becoming an essential issue. The common denominator between all the most dynamic negotiations taking place at the WTO today is that they seem to break with the sacrosanct multilateralism. Blocked by the consensus that multilateralism requires, and aware of the limited scope of regional negotiations, plurilateralism is gradually forging a place of choice among the various negotiating modes. While we may lament the inevitable disappearance of the multilateral trading system, supplanted by ‘clubs within the club’, we can also hope that plurilateralism proves to be no more than a stage on the road to a renewed multilateralism.
At the end of the Tokyo Round, in the absence of consensus, the most proactive GATT parties adopted plurilateral codes of conduct. Most of these were multilateralized at the Uruguay Round. There is therefore a possibility that the vocation of the plurilateral initiatives concluded today will be multilateral in the future. The narrative of plurilateralism is common sense: at a time of global challenges (health crisis, environmental crisis, geopolitical crisis, exponential growth of e-commerce and new technologies), it is necessary to provide concrete legal responses, without the most proactive States being slowed down by the least proactive.
However, the legitimacy of plurilateral procedures remains fragile. India and South Africa have already expressed their opposition to any forms of plurilateralism. At a time when WTO Members have embarked on a development round of negotiations, the only a fortiori difficult results achieved in 23 years (Trade Facilitation Agreement and Fisheries Subsidies Agreement) can only address priority concerns of developed countries, and further crystallize the North/South divide. Today, the most dynamic plurilateral discussions are generally initiated by developed countries, and developing or least-developed countries are generally under-represented. It's hard to explain why this is the case, between a lack of interest in the issues raised (trade and gender, MSMEs, fossil fuel subsidy reform, plastic pollution, e-commerce, domestic regulation of trade in services, etc.) and the financial and human difficulties involved in taking part in all these informal negotiating groups, which are growing exponentially.
The plurilateralism that seems to be setting the tempo for this MC13 should not be an opportunity for developed countries to make commitments relating to their own concerns and turn away from the work program established at Doha in 2001. This undoubtedly means that concrete results will have to be obtained on economic development issues, and developed countries will have to accept compromises and concessions to ensure the legitimacy and success of this promising Ministerial Conference. While the agreement on the facilitation of investment for development may contribute to this, its integration into the WTO's legal architecture is not yet assured.
Failing to preserve the multilateral trading system, the WTO must reinvent itself, and plurilateralism seems to be the key. The WTO's survival will therefore inevitably depend on the legitimacy of the initiatives and plurilateral commitments made at MC13. If these commitments fail to take sufficient account of the economic and political realities of the countries of the South (particularly in this context of a rethinking of the international order), then they may conclude that the WTO has always been, is, and always will be a win/lose trading system from which developing and least-developed countries, with the exception of a few, will never have been able to benefit. If these commitments are not ambitious enough to meet global challenges, then the WTO is not the right international forum to meet the new challenges of economic globalization. And the absence of commitments, even plurilateral ones, is unthinkable for an organization so dependent on this new breath of fresh air.
[1] https://www.wto.org/french/thewto_f/minist_f/min01_f/mindecl_f.htm#services
[2] https://www.wto.org/french/news_f/news24_f/agng_30jan24_f.htm
[3] See §6: https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=r:/WT/MIN22/30.pdf&Open=True
[4] https://www.wto.org/english/res_e/booksp_e/dtd2023_e.pdf
[5] WTO, Communication from South Africa, India and Indonesia, WTO Doc WT/GC/W/838/Rev.2 (2021).
[6] Two communications in particular point in this direction (WTO, Communication from Australia et al, Broadening and deepening discussions on the moratorium on customs duties for electronic transmissions, WTO Doc WT/GC/W/799 (2020); and WTO, Communication from Australia et al, Moratorium on customs duties for electronic transmissions, WTO Doc WT/GC/W889 (2023)).
[7] https://www.wto.org/english/news_e/news24_e/tessd_25jan24_e.htm
[8] https://www.wto.org/english/news_e/news24_e/ppesp_26jan24_e.htm
[9] https://www.wto.org/english/news_e/news23_e/ffsr_24nov23_e.htm
[10] WTO, Communication from India and South Africa, The Legal Status of 'Joint Statement Initiatives' and Their Negotiated Outcomes, WTO Doc WT/GC/W/819 (2021).
[11] https://www.wto.org/english/news_e/news23_e/msmes_09oct23_e.htm
