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Tuesday, September 28, 2021

The bumpy road to 12th WTO Ministerial

The WTO membership now stands united to end the pandemic and have underscored their commitment to be flexible and engage continuously. This momentum should be built upon


Updated: August 6, 2021 9:03:34 pm
WTO Director-General Ngozi Okonjo-Iweala. (AP photo)

Written by Priyanka Pandit

Preparations for the 12th Ministerial Conference of the World Trade Organisation (WTO), to be held in Geneva from November 30 to December 3, have been afoot since the appointment of its new Director-General, Ngozi Okonjo-Iweala, in March 2021. The event, delayed by two years, presents an excellent opportunity to move towards reviving the multilateral trading system that has long suffered from recurrent deadlocks, the weakening of its dispute settlement mechanism and broken trust among the members. Although the Covid-19 pandemic has accentuated the adverse impacts on the global trade front and exerted new pressures on WTO, desires still run high in many governments to integrate into the global economy, as documented in the Global Trade Alert Report, October 2020.

At the General Council meetings held through videoconferencing, many WTO members expressed their intention to devise a collective strategy to mitigate the impacts of the pandemic. The continuing work on new proposals to be presented for discussions during the forthcoming ministerial reveals that there is little indication of WTO becoming irrelevant in the near future. Revitalising the WTO, however, is likely to be a long-drawn process, and its return to prominence would likely be determined by its ability to reduce vulnerabilities in the supply of essential goods and services and foster recovery.

Talks about reforming the WTO have been on for well over a decade and have repeatedly faced logjams due to disagreements between developed and developing countries over priorities and modalities of negotiations. On the reform proposals, the developed countries have strongly pitched for “plurilateral” over the prevailing “consensus” principle so that they can pursue negotiations with allies on issues where a multilateral mandate is missing. Although open plurilateral is an effective tool in overcoming multilateral gridlock the growing trend of a closed and exclusive variant of plurilateral negotiations led by the US and Australia has accentuated fears of getting sidelined from its decision making among WTO’s smallest and poorest nations.

These apprehensions, therefore, are likely to obstruct the ongoing plurilateral initiatives, especially in contentious areas like investment facilitation, and e-commerce from achieving concrete outcomes. Also, the failure to conclude the Doha Round negotiations for over two decades is likely to cast a shadow on the upcoming Geneva Ministerial. The G20 coalition of developing countries, which fundamentally shifted the terms of engagement on agriculture failed to persuade the developed countries to undertake substantial cuts in their agricultural tariffs and scale back farm subsidies. The unwillingness on the part of the US and EU to deliver on agricultural reform commitments made it difficult to reach a compromise over general modalities in the July 2008 meeting. The prevalent power asymmetries between developed and developing countries further complicated the divide on agriculture issues coupled with colonial legacies that affected perceptions of each other’s trustworthiness during the negotiations. Since then, very little substantive negotiations have taken place on agriculture, at least on domestic support and market access issues.

The overall trend now portends to moving away from the old issues to new areas such as trade in services, digital trade, and investment facilitation. The shift to a new trade narrative gained significant traction during US President Donald Trump’s four-year term. Trump aggressively sought to strip many developing countries off the Special and Differential Treatment (S&DT) provisions in the name of creating a fair and equal trading system. He accused the WTO of corralling China’s economic behaviour and blocked appointing new judges to the Appellate Body, thereby rendering it dysfunctional.

S&DT has particularly emerged as a controversial area where the disunity of the Southern powers has grown considerably. From agriculture to cotton to fishing, the developing countries have failed to agree on a common criterion that would qualify for S&DT treatment and transition periods. In particular, the negotiations on fisheries and the difficulty of reaching an agreement on eliminating harmful subsidies contributing to overcapacity and overfishing has been evident at the trade ministers meeting held on July 15. Although the WTO members have set the target to conclude negotiations by the 12th Ministerial, getting closer to a deal might prove tricky owing to a host of structural, definitional, and legal challenges.

But the most pressing challenge facing the WTO is the difficulty to reach an agreement on the production and distribution of Covid-19 vaccines, medicines and diagnostics aimed at fostering an inclusive recovery. To address the global inequities in global production and distribution, India and South Africa have called for a temporary suspension of crucial intellectual property (IP) rights related to Covid-19 drugs, vaccines, and technology. The vaccine nationalism embraced by the rich WTO members has exacerbated the trust deficit between the developed and developing bloc. Although the Biden administration has extended support to the proposed waiver of IP rights, significant hurdles remain. The US has not clearly stated how it would like to materialise it, and a considerable ambiguity exists around the transfer of knowledge and technology needed to manufacture vaccines and other medical products. The EU opposing the waiver proposal has suggested alternate pathways that rely on using existing TRIPS flexibilities through compulsory licensing.

Despite the disagreements, India has been pushing for a serious engagement on the text-based negotiations over the temporary waiver of crucial IP rights needed to address vaccine shortages. New Delhi, however, remains reluctant to invoke compulsory licensing for the development of Covid-19 vaccines, which the EU and other advanced economies are recommending. In its view, the compulsory licencing route cannot be a global solution or replace the need for a comprehensive TRIPS waiver and active partnerships, given the urgency to deal with subsequent waves of the pandemic. Not only does compulsory licensing require fulfilling cumbersome conditions, but it also involves complex coordination, particularly in the case of vaccine production.

The other issue which India has been actively pursuing is to work out a permanent solution on public stockholding at the upcoming Geneva conference. The pandemic has severely affected the global food supply chains, posing a major threat to life and livelihood, especially in the developing world. India, therefore, makes a strong case for wider trade and food security agenda and argues against pursuing negotiations on new issues like e-commerce, investment facilitation in the WTO till the issues from Doha Round are addressed. New Delhi also invokes similar food and livelihood security concerns in the WTO fisheries negotiations as it defends the need for S & DT to protect small and artisanal fishers in the developing countries.

To be sure, the new Director-General Okonjo-Iweala has a formidable task ahead which is to break the current rut in the organisation and help members reach mutually beneficial agreements at the 12th Ministerial. She could do this by finding the right balance in the negotiating text, which considers members’ varying levels of economic development and ensures that the flexibilities do not undermine environmental sustainability or the global commons. What helps is that the WTO membership now stands united to end the pandemic and have underscored their commitment to be flexible and engage continuously. Okonjo-Iweala should therefore seize the momentum and work towards building confidence between the members, who have increasingly grown indifferent to each other’s concerns and the gains of cooperation.

The writer is an Ashoka-Harvard Yenching Postdoctoral Fellow at the Department of International Relations and Governance Studies, Shiv Nadar University

 

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