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Multilevel Failure of WTO Ministerial at Buenos Aires

D Ravi Kanth (dravi_kanth@hotmail.com) is a journalist based in Geneva who writes on developments at the World Trade Organization and other multilateral institutions.

The World Trade Organization’s 11th Ministerial Conference at Buenos Aires witnessed multiple failures on all fronts. The United States blocked the only mandated outcome on the permanent solution for public stockholding programmes for food security at the meeting, a priority issue for India and other developing countries. But the chair of the meeting and the WTO director general claimed gains from controversial new plurilateral initiatives announced by groups of countries that seek to wipe out the unfulfilled Doha multilateral trade negotiations.

“I do not know any system that is perfect, none, not even my family,” said Roberto Azevedo, the director general of the World Trade Organization (WTO), minutes after the Buenos Aires ministerial summit came crumbling down on 13 December 2017. The WTO is the best system member countries have and it works, he said proudly. The director general claimed at the concluding press conference that it was because of the WTO that protectionism was averted after the 2008 financial crisis.

Members have to do “some soul-searching,” Azevedo argued, without suggesting why it is required at this juncture. “Very important decisions were delivered in the last two meetings [the Ninth Ministerial Conference in 2013 and the 10th Ministerial Conference in Nairobi in 2015] and we cannot do it all along, there may be moments we may not be delivering concrete outcomes, and the work goes on,” he has suggested.

Nevertheless, members adopted decisions under the regular work of the General Council (the WTO’s highest decision-making body) at Buenos Aires, Azevedo has maintained. These include extending the current work programme of 1998 for exploring all the issues connected to electronic commerce for two more years, including the moratorium for not levying customs duties on electronic transmissions (not goods or services traded electronically), the extension of the moratorium on Trade-Related Aspects of Intellectual Property Rights (TRIPS) non-violation situation complaints, and a work programme for small and vulnerable economies (SVEs).

He said that the Buenos Aires ministerial meeting provided direction to the work programme on fisheries subsidies: “For the first time, the WTO members have committed to achieving the SDG [the United Nations Sustainable Development Goal] goal 14.6.” This SDG aims to prohibit

certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to illegal, unregulated, and unreported fishing and refrain from introducing new such subsidies, recognising that appropriate and effective special and differential treatment for developing and least-developed countries should be an integral part of the World Trade Organization fisheries subsidies negotiation.

He seems to have forgotten that disciplines on fisheries subsidies are at the core of the Doha work programme on rules, which was concluded well before the SDGs were finalised. The Doha rules negotiation under which the fisheries subsidies are being negotiated include major issues, such as improving the provisions in anti-dumping and subsidies and countervailing measures agreement (Anti-Dumping Agreement and Agreement on Subsidies and Countervailing Measures), and transparency and notification requirements in the Regional Trade Agreements (RTAs). The United States (US) has all along opposed any improvements in the anti-dumping provisions, which are a mainstay for its illegal actions as pronounced by the WTO’s Appellate Body.

“Also, it is important to note the outbreak of dynamism in other areas,” the director general emphasised:

you will have seen a number of statements by a large group of members; they include disciplines for MSMEs (micro, small, and medium enterprises), e-commerce (electronic commerce), investment facilitation, and women’s economic empowerment, and domestic regulations. ...

There are big, medium, and small countries engaged but how those conversations are going to advance depends on those members, they will have to move forward those consultations involving all members that want to participate, at the end of the day we want [the] whole membership in anything we do

The chair of the Buenos Aires conference, Susana Malcorra, who is a former United Nations (UN) diplomat from Argentina and who was specifically tasked with overseeing the ministerial meeting, said that the 11th ministerial meeting will be remembered for “moving forward with fisheries subsidies” and opening the gates for “a significant number of plurilateral initiatives of the 21st century.” She said, “disciplines [for] MSMEs, e-commerce, investment facilitation, and gender and employment” are important issues for a significant number of countries.

Multiple Failures

Indeed, it is somewhat jarring to hear the director general of a 164-member multilateral trade organisation and the chair of the 11th ministerial meeting claiming in one voice about the “new dynamism” based on the plurilateral initiatives. None of these new issues—tweaking the mandate for electronic commerce, disciplines for MSMEs, investment facilitation, and women’s economic empowerment—are part of the Doha work programme, nor are they contained in any of the previous ministerial declarations since the adoption of the Doha work programme in 2001.

In short, the concluding remarks from the chairperson of the 11th Ministerial Conference and her navigator, Azevedo, fail to explain the unmitigated fiasco witnessed at Buenos Aires last week. If they are echoing the goals of a group of industrialised countries and their developing countries allies at the WTO in utter disregard of an unequivocal rejection by more than 100 countries to these new issues, then surely the director general and the chair can be accused of vitiating the overall negotiating climate and further undermining the integrity of the WTO.

There was no agreement at the meeting on the multilaterally mandated issues. These include: (i) the permanent solution for public stockholding programmes for food security; (ii) the work programme on special safeguard mechanism (SSM) for developing countries to curb unforeseen surges in imports of agricultural products; (iii) the work programme on 10 agreement-specific proposals for improvements in special and differential flexibilities; (iv) the long-standing cotton issue since the 2005 Hong Kong Ministerial Conference; and (v) a ministerial declaration which is the hallmark of a successful ministerial conference. Consequently, the chair of the conference merely issued what is called the chair’s statement, which has no legal bearing, and, for all practical purposes, the mandated issues stay in their respective places.

“It is a moment of truth for the multilateral organisation” which faces a grave systemic crisis, said Rob Davies, South Africa’s trade minister, minutes before the Buenos Aires meeting collapsed.

Unanswered Questions

There are too many questions that remain unanswered. Is it that the ministerial meeting was planned in such a way as to fail? Or is it that there is a grand design to usher in plurilateral sectoral initiatives through the back door as the Nairobi ministerial had required all members to agree to such negotiations “multilaterally”? More important, is there a concerted attempt to bury the Doha Development Agenda (DDA) negotiations at Buenos Aires and replace it with plurilateral agreements in which the large majority of developing and least-developed countries that have become vocal and assertive can be excluded from negotiating multilateral trade rules?

By their very nature and dynamic, the plurilateral agreements are largely crafted according to the priorities of the major players involved in such initiatives, especially by those who are first among equals. Besides, there are open-ended plurilateral agreements such as the Information Technology Agreement (ITA) that has been expanded to ITA-2 at the WTO and the failed plurilateral initiative on environmental goods in December 2016, which are about tariff elimination and not about setting new rules.

And, then, there are closed plurilateral agreements like the government procurement agreement where nearly two-thirds of members of the WTO are not parties. There is no legal clarity whether a group of members can commence plurilateral initiatives on rules concerning electronic commerce, disciplines for MSMEs, investment facilitation, and trade and gender.

How Did We Get Here?

Before addressing these issues and what happened at Buenos Aires, it is important to recall key milestones under which most of the WTO negotiating bodies are currently functioning. The Doha work programme, which was launched in 2001, in Doha, Qatar, immediately after the 9/11 terrorist attacks, remains the foundation for the functioning of the negotiating bodies. The director general is the chair of the Trade Negotiations Committee (TNC) under the Doha work programme. The chairs of different negotiating bodies for agriculture, development (improvements in special and differential flexibilities), market access for industrial goods, services, rules (that include fisheries subsidies), and TRIPS, draw their mandate from the Doha work programme, which is referred to as the DDA. Indeed, these negotiating bodies are called the Doha negotiating bodies.

The Doha work programme is premised on the single undertaking implying that nothing is agreed until everything is agreed. However, it provided for a caveat in paragraph 47, which says, 

agreements reached at an early stage may be implemented on a provisional or a definitive basis. Early agreements shall be taken into account in assessing the overall balance of the negotiations.

But, for inexplicable reasons, TNC chair Azevedo and the chairs for the negotiating bodies have deliberately refused to mention them as Doha negotiating bodies since December 2013, when the ninth ministerial meeting was concluded in Bali, Indonesia. In fact, Azevedo always sees the Trade Facilitation Agreement (TFA) as the first multilateral agreement since 1995 even though it is part of the Doha work programme. Ostensibly, the US does not want him to put the Doha tag on the TFA, which was removed from the Doha work programme in 2003 at the Cancun ministerial meeting and brought back in 2004 into the Doha framework agreement. Perhaps, it is a concerted effort to erase the word “Doha” from the decisions reached since the ninth ministerial meeting to satisfy the US, which says Doha is dead. If that is the case, why does not the director general dismantle all the existing negotiating bodies, including the one for fisheries?

The ups and downs in the Doha Round of negotiations began with the collapse of the Cancun ministerial meeting in 2003 due to irreconcilable differences on the controversial Singapore issues—trade and investment, competition policy, government procurement, and trade facilitation—and agriculture. The differences arose between a large majority of developing countries on the one side, and the European Union (EU) and the US, supported by other industrialised and several developing countries, on the other on agriculture and the four Singapore issues. An important development worth mentioning in this context was the emergence of the Group of 20 (G20) developing countries led by Brazil.

In July 2004, the negotiations were kick-started after members agreed on a framework agreement under which the developing and poorest countries were offered explicit assurances that their developmental concerns in agriculture, industrial goods, and special and differential flexibilities, among others, would be addressed for their acceptance to negotiate on trade facilitation, which is the core demand for the US since 1996 (the WTO’s first ministerial conference in Singapore). The Hong Kong Ministerial Declaration in 2005 further clarified the provisions in agriculture, particularly cotton, which is a life-and-death issue for four West African countries (Benin, Burkina Faso, Mali, and Chad), services, industrial goods, and special differential treatment issues. Results in all these areas are premised on the single undertaking approach.

Considerable work was done between 2005 and 2008, particularly on agriculture, when the then chair, Crawford Falconer, the former trade envoy of New Zealand, issued revised draft negotiating modalities. These modalities were blocked by the US because of opposition from its powerful agricultural lobby—the American Farm Bureau Federation—on grounds that they allowed considerable flexibilities for developing countries while demanding exacting cuts in trade-distorting domestic subsidies. “The December 2008 draft modalities are the basis for negotiations and represent the end-game in terms of the landing zones of ambition ... The draft modalities embody a delicate balance achieved after ten years of negotiations,” said Azevedo, when he was the trade envoy of Brazil in 2011, before becoming the WTO director general in September 2013 (Ravi Kanth 2016).

But, a major shift occurred in the eighth ministerial conference in Geneva, in 2009, when the US and its allies cleverly resorted to a stratagem to set aside the single undertaking and address only those issues of importance to them in the Doha work programme. They successfully changed the narrative by using paragraph 47 of the Doha work programme, that is, “agreements reached at an early stage may be implemented on a provisional or a definitive basis” to finalise the controversial TFA. Azevedo, when he was Brazil’s trade envoy, was sceptical about the possibility of harvesting the TFA. “For Brazil and many others, this [trade facilitation] agreement is not a self-balancing issue,” Azevedo had said at the informal heads of delegations meetings of the general council on 7 June 2012. “Stand-alone outcomes for trade facilitation are simply not realistic,” he said. “If we want to advance in this, or in any other area actually, we must be sensitive to the need to also make progress in areas of interest to others,” he argued.

But, starting with the Bali ministerial meeting in December 2013, the narrative changed dramatically after the US and its allies pocketed the TFA. They started maintaining that Doha is dead and that there is nothing more to be achieved in the DDA. Even though India succeeded in securing the interim peace clause for public stockholding programmes for food security purposes at Bali with stringent transparency and anti-circumvention/safeguard conditions, the developed countries succeeded in creating an uneven playing field wherein the principle of reciprocity—which is the hallmark of mercantile trade negotiations based on give-and-take—was interred.

Between the ninth and the 10th ministerial meeting in Nairobi, in December 2015, the ground further shifted in favour of the US, the EU, Japan, and a handful of industrialised countries with the director general guiding them from behind the scenes. These countries refused to reaffirm the Doha mandates.

Unwittingly, and somewhat disastrously, India allowed this grave transformation to take place in Nairobi during the closed-door green room meeting between five countries—the US, the EU, China, India, and Brazil—that lasted for more than one day at the Nairobi meeting. Despite undermining the Doha ministerial negotiations (Ravi Kanth 2016), ministers had agreed in Nairobi on several mandates. These mandates provide for finalising the permanent solution for public stockholding programmes for food security purposes by the 11th ministerial meeting, which now took place in Buenos Aires and the SSM for developing countries and addressing the cotton issue.

From Nairobi to the 11th Ministerial Conference in Buenos Aires, the ground became shaky further due to several concerted developments. To start with, the US created a grave crisis by blocking the reappointment of a sitting Appellate Body member on spurious grounds. It continued to undermine the dispute settlement body further after US President Donald Trump’s trade representative Ambassador Robert Lighthizer declared his intention to make the Appellate Body, the highest limb of the binding dispute settlement system, ineffectual.

Negotiations and Failings

On the negotiations front, the US, the EU, Australia, Canada, Paraguay, and Pakistan, among others, adopted stonewalling and diversionary tactics during the meetings of the agriculture negotiating group on the permanent solution for public stockholding programmes and other issues such as the SSM. More so, after the Trump administration came to power in November 2016, the US simply refused to engage in the mandated issues. The EU joined forces with Brazil and several other South American countries to change the course of agriculture negotiations by putting forth proposals that linked an outcome on the permanent solution with domestic support for farm subsidies.

In sharp opposition, China and India tabled a proposal that called for eliminating the most trade-distorting domestic support for agriculture in the developed countries as a prerequisite for any further work in agriculture. Indonesia which is the coordinator for the G33 developing country coalition circulated proposals for the permanent solution and the SSM.

On a separate track, the EU, Japan, Canada, Australia, and several other industrialised and developing countries intensified their demands for new issues, including for tweaking the electronic commerce agenda, disciplines for MSMEs, and trade and gender. China, Nigeria, Mexico, Indonesia, Korea, Turkey and Australia circulated proposals on investment facilitation, an issue that was blocked by India.

The African Group countries joined the fight on both old and new issues as well as on the procedural issues concerning the Buenos Aires meeting. In short, as members proceeded to the Buenos Aires meeting, there was no agreement on anything: from agriculture to e-commerce, from fisheries subsidies to the developmental issues, and from regular issues to the draft ministerial declaration. India has built a huge coalition of countries to support its proposals on the issue of a permanent solution for public stockholding programmes for food security, eliminating the Aggregate Measurement of Support (AMS) or the most trade-distorting domestic support in industrialised countries, and against changing the e-commerce work programme and the new issues. The US has selectively blocked issues such as the ministerial declaration and allowed other issues to be taken up at Buenos Aires knowing fully well that they will not succeed.

Against this backdrop, the Buenos Aires meeting started with fanfare and pomp on the evening of 10 November at the Hilton Hotel, which was turned into a security fortress. By the second day, it became almost clear for the facilitators of agriculture (Amina Mohamed, the cabinet secretary for foreign affairs in Kenya), fisheries subsidies (Kamina Johnson Smith, the trade minister of Jamaica), developmental issues (Norway’s foreign minister Ine Eriksen Søreide), electronic commerce (Senegal’s trade minister Alioune Sarr), and services (Paraguay’s trade minister Eladio Loizaga Caballero), that there is not going to be any consensus given the unbridgeable differences.

On the third day (12 November), the US pulled the plug on the permanent solution for public stockholding programmes for food security, reneging on the assurances it gave to New Delhi. Afterwards, the United States Trade Representative (USTR) Ambassador Lighthizer apparently told India’s Minister of Commerce and Industry Suresh Prabhu that he has got nothing against India, suggesting that the US’s opposition was largely due to China, which would avail the permanent solution. Subsequently, the US also opposed a demand from India, South Africa and a large majority of developing countries for ensuring that the work programme in the draft Buenos Aires ministerial declaration is based on the DDA. The US vehemently opposed the language on domestic support, particularly cotton, and the SSM.

The US also blocked a demand from India, South Africa, and other developing countries to ensure that the post-Buenos Aires work programme is anchored in the Doha work programme. The Argentinean chair included language in the ministerial declaration as per the US’s demands, turning a deaf ear to the demands from India, South Africa, and other developing countries.

In the face of an impasse, Chairperson Malcorra and her foreign minister, Jorge Faurie, held a meeting with Suresh Prabhu to find a compromise. India said it will accept a ministerial declaration with clear language on unfinished Doha issues and primacy of the multilateral trade liberalisation based on the Marrakesh agreement, which was not acceptable to the US. 

India also blocked a draft ministerial decision on “policy dialogue” that was initiated to bring new issues such as gender and trade, labour and trade, and environment into international trade. “There was a view amongst Ministers that the WTO can play an important role in promoting the exchange of comparative experiences and a better understanding of the implications of different policy choices,” the draft decision suggested. India rejected the draft proposal on policy dialogue on the grounds that it was not part of the WTO mandate. The African Group countries opposed the chair’s proposal for its weak language for continuing work on 10 agreement-specific proposals after the Buenos Aires meeting.

Plurilateral Push

As the meeting was collapsing on all fronts, the plurilateral proponents went on to announce their initiatives even though they were rejected at the open-ended multilateral sessions in Buenos Aires. Effectively, the plurilateral champions cannot hold meetings on electronic commerce, the disciplines for MSMEs, trade and gender, or institutional reform under the WTO’s mandate, but can convene informal meetings that have no bearing on the regular work of the WTO. However, they will now create two negotiating engines at the WTO: while the work on the mandated multilateral issues such as the permanent solution for public stockholding programmes will proceed at a halting speed given the opposition from the US and other countries, work on the plurilateral initiatives will be intensified to create a miasma that multilateral outcomes on developmental trade issues have no future.

India and other developing countries have to live to fight another day for their core developmental issues. Clearly, they tried hard to recover lost ground on the DDA issues at Buenos Aires, but it remains to be seen how they will continue their war during the next two years.

Reference

Ravi Kanth, D (2016): “What Happened at Nairobi and Why: Dismantling of Doha Development Agenda and India’s Role,” Economic & Political Weekly, Vol 51, No 11, pp 44–50.

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