Descent into the “abyss of lawlessness” at the WTO?

WTO. Samhitha Bhat. Creatice Commons.

Geneva, 12 Jan (D. Ravi Kanth) –  The World Trade Organization has put out on its official website “five best wishes for WTO members in 2022”, in a blog written by one of its deputy director-generals, in what appears to be a dangerous attempt to “cross the Rubicon” in a member-driven, rules-based, inter-governmental organization.

The “five best wishes” written in a blog by WTO DDG Ms Anabel Gonzalez of Costa Rica consist of “20 percent aspirational and 80 percent pragmatic and achievable (goals).”

The goals, she writes, include that “2022 should be the year where WTO members deliver a trade and health response to the pandemic, including on intellectual property issues” as well as “trade in medical products” and “a strong framework that would facilitate trade in vaccines and critical medical gear and the inputs”, among others.

Ms Gonzalez says that “this agreement is not only feasible, it’s within reach early in the year.”

Interestingly, she is heading the expert-level talks between the United States, the European Union, India, and South Africa on the WTO’s response to the COVID-19 pandemic, including the TRIPS waiver.

It appears that the first goal on “trade and health” raises serious questions of conflict of interests, said a former trade envoy, who asked not to be quoted.

The DDG said secondly, with the adoption of several ministerial statements in December 2021, governments put the WTO on route to strengthen the role of trade rules in effectively combating climate change and supporting environmental objectives, including by exploring work in areas like trade in environmental goods and services.

She wants plurilateral negotiations to be launched on “sustainable plastics trade, and fossil fuel subsidies, among others”.

Thirdly, she says that “more than two thirds of the WTO membership participating in the negotiations on investment facilitation for development have set the target of concluding a deal in 2022 with the goal of helping countries improve their business climate and make it easier for investors to invest, manage their business and expand operations.”

Fourth, she said that “concerns about growing levels of government support distorting international markets, coupled with limited transparency and perceptions of unfairness, erodes public backing for open trade and stifles innovation, competition and productivity.”

She said that “it is increasingly acknowledged that revising and updating WTO rules dealing with subsidies and state intervention in the economy would help reduce some of the trade frictions that are fueling uncertainty and geopolitical tensions.”

Her fifth and last wish is about engaging in the business of rule-making concerning the restoration of the dispute settlement system to ensure a fully functional and “binding mechanism for sorting out conflicts among WTO members.”

However, the DDG failed to mention the two-stage dispute settlement system, with an Appellate Body that has been made dysfunctional by the United States.

WHAT IS A BLOG?

There are several definitions of what would constitute a blog on the web.

According to one definition, a blog is a “frequent, chronological publication of personal thoughts” or “as a regularly updated website or web page, typically one run by an individual or small group”.

Therefore, a personal blog being carried on the masthead of the WTO, a 164 member-driven organization, has dangerous implications, including the alleged violation of the rules concerning the functioning of the WTO Secretariat.

For example, Article VI.4 of the Marrakesh Agreement states: “The responsibilities of the Director-General and of the staff of the Secretariat shall be exclusively international in character. In the discharge of their duties, the Director-General and the staff of the Secretariat shall not seek or accept instructions from any government or any other authority external to the WTO. They shall refrain from any action which might adversely reflect on their position as international officials. The Members of the WTO shall respect the international character of the responsibilities of the Director-General and of the staff of the Secretariat and shall not seek to influence them in the discharge of their duties.”

“They (the WTO DG and the Secretariat) are blurring the difference between the WTO’s multilateral negotiations and other discussions taking place on the sidelines of the WTO,” said a former trade envoy, who asked not to be quoted.

“The Secretariat has gone overboard by taking away the impartial role and views of the Secretariat,” the envoy said. “They (the Secretariat) are not sensitive to members’ concerns,” the envoy added.

The envoy cited the examples of how the WTO DG Ms Ngozi Okonjo-Iweala seemingly went overboard in giving her blessings to the controversial Joint Statement Initiative (JSI) on domestic regulation in services and on the digital trade negotiations among a group of countries.

The envoy said that putting out the wishes expressed by a DDG on the WTO’s website is like going a step further in violating the WTO’s rules.

ANABEL GONZALEZ’S OFFICIAL TASKS

As reported in the SUNS last year, Ms Gonzalez had worked as a director of the WTO’s Agriculture Division from 2006 to 2009. She resigned from that post in 2009 following alleged tensions between her and the then chair of the Doha agriculture negotiations Ambassador Crawford Falconer from New Zealand, said people familiar with the development.

Apparently, Ambassador Falconer had refused to share information with Ms Gonzalez, said people, who preferred not to be quoted.

Last year, she was asked to deliver on another set of non-mandated issues that include “industrial subsidies”, and “level playing field issues” that include state-owned enterprises and market-oriented issues.

That these issues were proposed by the United States, the European Union, and Japan ostensibly aimed at targeting China and other developing countries is a serious cause for concern, a former trade envoy said.

For the DG to side with these issues is a clear demonstration of her “one-sided and imbalanced” approach to the controversial non-mandated issues that could further undermine prospects for any agreement, the envoy said.

Although the DG can put forward issues that are proposed by one or two members for discussion as part of the WTO mandate, she cannot put forward non-mandated negotiating issues as “deliverables”, the envoy said.

DANGEROUS IMPLICATIONS OF DDG’S “FIVE WISHES”

The DDG, in her first wish, fails to mention the TRIPS waiver which is an urgent issue being pushed by more than 100 developing countries.

In her second wish, she openly supports the developed countries’ proposals on trade and environment including an agreement on environmental goods and services which has been opposed by the developing countries, as there has been no agreement on what goods should enter this list.

According to the latest Trade and Development Report (TDR) of the United Nations Conference on Trade and Development (UNCTAD), tariff liberalisation in the combined list of environmental goods, as identified by the OECD (Organization for Economic Cooperation and Development), comprises 248 products.

In 2019, the top ten exporters of these goods were the European Union followed by China, the United States, Japan, the Republic of Korea, the United Kingdom, China Hong Kong SAR, Singapore, Canada and Switzerland, with a combined share of 88 percent of global exports, while most developing countries were net importers of these products.

The tariff revenue collected on these goods by developing countries amounts to $15 billion per annum (using applied duties).

Trade liberalization in these products will therefore entail a huge loss of tariff revenue for developing countries.

This may have substantial adverse effects especially now when domestic sources of finance are urgently needed both to fight the COVID-19 pandemic and address climate change.

The third wish of the DDG is equally supportive of the Joint Statement Initiatives (JSIs) of the developed countries, especially the EU, and whose legal status is being challenged by the developing countries.

The DDG wishes that the success of these initiatives will “help leverage the power of foreign investment for a strong and sustainable recovery”.

Ms Gonzalez further supports the JSI on e-commerce, claiming that this will help SMEs (small and medium sized enterprises), appearing to totally ignore the fact that the major gainers of e-commerce are the digital platforms whose profits have risen exponentially during the pandemic while the SMEs have been forced to shut businesses all around the world.

The rules being negotiated in the JSI on e-commerce, especially around data and data centers, can further reduce the export competitiveness of the SMEs in the developing countries and raise their costs of compliance.

Her fourth wish again openly supports the proposals of the developed countries including the US and the EU, as well as Japan on industrial subsidies and state-owned enterprises.

While UNCTAD is calling for a temporary WTO “Peace Clause” for the developing countries to use industrial subsidies in order to revive their industrial growth and subsequently their exports during the crisis, the DDG wishes to restrict the policy space of the developing countries in terms of reviving their industrial and export sectors by banning the governments from helping their SMEs and exporters.

Ms Gonzalez goes further to suggest that revising the WTO rules dealing with subsidies and state intervention can help reduce geopolitical tensions, appearing to completely ignore the ground realities where millions of people are losing their jobs and are being pushed into extreme poverty, as well as the important role which the State needs to play in this crisis in developing countries.

The DDG seems to have fallen out of step again by challenging the core WTO principle of consensus-based decision making.

In her list of wishes, she mentions, “Not all 164 WTO members may need to take part in crafting all of these responses, but they all must commit to make the WTO work and let it work”.

The question she needs to answer is – make the WTO work for whom? And let it work for whose benefit?

In short, the WTO DDG seems to have “crossed the Rubicon” by suggesting “five wishes” that allegedly violate the core provisions of the Marrakesh Agreement that established the WTO in 1995.

In a way, her “five wishes” appear to constitute a descent into the “abyss of lawlessness” at the WTO.

- Third World Network