TWN Info Service on Trade, IP and Agriculture
25 January 2022
Third World Network
www.twn.my

Trade ministers fail to converge on major WTO issues
Published in SUNS #9499 dated 25 January 2022

Geneva, 24 Jan (D. Ravi Kanth) – Trade ministers and senior officials from 28 countries issued sharply conflicting messages at a virtual meeting hosted by Switzerland on 21 January, with the majority of the developing country participants demanding an urgent resolution to the TRIPS waiver in the WTO’s response to the COVID-19 pandemic, said people familiar with the proceedings of the meeting.

The trade ministers of India, South Africa, Cameroon on behalf of the African Group, Chad on behalf of the LDC group and a senior official from Indonesia among others flagged the TRIPS waiver as the most important issue to be resolved in the face of the worsening COVID-19 pandemic due to the new Omicron variant of the SARS-CoV-2 virus, said people, who asked not to be quoted.

The temporary TRIPS waiver seeks to suspend certain provisions in the WTO’s TRIPS Agreement relating to copyrights, industrial designs, patents, and protection of undisclosed information to ramp up production of diagnostics, therapeutics, and vaccines across countries to combat the COVID-19 pandemic.

Also, the deputy trade minister from China joined the above developing countries, saying that China supports the TRIPS waiver, adding that the waiver for vaccines must be agreed, said people familiar with the development.

Among the developed countries, the United States apparently indicated at the meeting that it is willing to accept the waiver, though in its official readout after the meeting, the US Trade Representative (USTR) Ambassador Katherine Tai highlighted the WTO’s important role in facilitating a robust economic recovery from the pandemic and pragmatic solutions to increase vaccine production.

The European Union, Switzerland, the United Kingdom, and the members of the Ottawa Group of countries led by Canada, while highlighting the need to address the WTO’s response to the pandemic with an intellectual property (IP) component, echoed calls that seemed to be not in favour of the TRIPS waiver.

The EU, however, touted its proposal relating to the use of compulsory licensing, which has already been rejected by a large majority of developing countries, said people familiar with the proceedings.

At the meeting, the WTO director-general Ms Ngozi Okonjo-Iweala apparently spoke about the ongoing consultations among the US, the EU, India, and South Africa, suggesting that she is facilitating these consultations to arrive at an agreement.

However, according to a statement posted on the WTO’s website, the DG called ministers’ attention to the key sticking points on the WTO’s response to the pandemic, fisheries subsidies and agriculture, while also making the case for moving ahead with WTO reform, including dispute settlement.

But, so far, the consultations convened by WTO deputy-director general Ms Anabel Gonzalez from Costa Rica seem to have made modest progress. However, Ms Gonzalez’s recent statements made in her blog seem to have revealed her apparent “biases” in favour of the Trade and Health Initiative as proposed by the Ottawa Group, said people, who asked not to be quoted.

In that blog post on 10 January, Ms Gonzalez had said: “First, 2022 should be the year where WTO members deliver a trade and health response to the pandemic, including on intellectual property issues. Trade in medical products proved to be a lifeline for people across the world in 2021, but more is needed. A strong framework that would facilitate trade in vaccines and critical medical gear and the inputs necessary for their production would go a long way in saving lives, supporting a more widespread recovery and helping prepare for the future with increased and diversified manufacturing capacity in all regions. This agreement is not only feasible, it’s within reach early in the year.”

PROCEEDINGS OF VIRTUAL MEETING

The virtual meeting on 21 January, held in lieu of the cancelled World Economic Forum’s annual Davos meeting, revealed nuanced differences on almost all other issues as well.

They include as to when the cancelled WTO’s 12th ministerial conference (MC12) can be rescheduled; whether an exclusive virtual ministerial meeting should be held on the TRIPS waiver, as demanded by India and South Africa last December; whether a virtual ministerial meeting can be held in areas where apparently some progress has been made such as in fisheries subsidies; the need to deliver on the mandated issues including the permanent solution for public stockholding programs for food security and the special safeguard mechanism as well as improvements in special and differential treatment provisions raised by the G90 countries; and on proposed WTO reforms.

The participants who took part in the meeting include Australia, Brazil, Canada, Cameroon which coordinates the African Group, Chad which coordinates the LDC group, China, Costa Rica, the European Union, India, Indonesia, Jamaica which coordinates the ACP (African, Caribbean, and Pacific) group, Japan (with its three ministers), Kazakhstan, Kenya, Korea, Mexico, Morocco, New Zealand, Nigeria, Norway, the Russian Federation, Saudi Arabia, Singapore, South Africa, Switzerland, the United Kingdom, and the United States.

The chair of the WTO’s General Council (GC), Ambassador Dacio Castillo from Honduras, and the WTO DG also participated in the meeting.

The Swiss economy, education and research minister Mr Guy Parmelin chaired the meeting. He also issued his personal concluding remarks at the end of the meeting (see below).

DIFFERENCES PERSIST IN ALL AREAS

There seems to be little convergence on when MC12 needs to be rescheduled as well as over the virtual ministerial meeting on the TRIPS waiver or other issues where some progress has been made such as fisheries subsidies, said people familiar with the discussions.

Australia, for example, suggested a strategy for moving things forward with different small groups of ministers tackling all the big issues such as the WTO’s response to the pandemic, fisheries subsidies, agriculture, and proposed WTO reforms among others, according to people familiar with the discussions.

However, there seemed to be no takers for Australia’s proposed strategy at the meeting. Further, Australia also apparently proposed reconvening MC12 in March or June, said people familiar with the proceedings.

Interestingly, the DG apparently said that she can convene a ministerial meeting in March, even though she was non-committal on India’s demand in early December on convening an urgent virtual ministerial meeting on the WTO’s response to the pandemic and the TRIPS waiver, said people, who asked not to be quoted.

The European Union, which appears to be a strong proponent of linking a virtual ministerial meeting on the WTO’s response to the pandemic and the TRIPS waiver with the issue of fisheries subsidies, apparently suggested that virtual ministerial meetings can be held in areas where progress has been made, said people, who asked not to be quoted.

Kazakhstan, which has been experiencing massive protests since January following a sharp rise in domestic fuel prices, said it is ready to host the meeting in March.

In the end, there was no convergence on the reconvening of MC12, even though participants expressed disappointment over the postponement of the meeting due to the sudden emergence of the Omicron variant of the SARS-CoV-2 virus.

Trade ministers from major industrialized countries including the United States, the European Union, Australia, Canada, Norway, Switzerland, and the United Kingdom apparently held to their positions on all four issues including the WTO’s response to the pandemic, fisheries subsidies, and proposed WTO reforms.

In sharp contrast, China, India, Indonesia, South Africa, Cameroon on behalf of the African Group and other developing countries apparently stated their immediate demands with varying levels of emphasis on the WTO’s response to the pandemic with the TRIPS waiver at the heart of an agreement; and the need to ensure that the proposed fisheries subsidies agreement must remain consistent with the United Nations Sustainable Development Goal (SDG) 14.6. More urgently, they also demanded an outcome on the permanent solution for public stockholding programs for food security given the economic difficulties they are facing due to the pandemic as well as on other developmental issues.

The UN SDG 14.6 calls for prohibiting, by 2020, “certain forms of fisheries subsidies which contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU fishing, and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the WTO fisheries subsidies negotiation(s).”

The differences between the trade ministers of the developing countries on the one side, and the industrialized countries on the other, remained sharp on the immediate need to restore the Appellate Body in safeguarding the WTO’s enforcement function in resolving trade disputes and on the proposed WTO reforms, said people familiar with the proceedings at the meeting.

POSITIONS VOICED BY THE DEVELOPING COUNTRIES

The Indian trade minister Mr Piyush Goyal apparently issued the strongest statement yet on the WTO’s response to the pandemic with the TRIPS waiver, including his call for convening a virtual ministerial meeting on the issue.

India suggested that more work needs to be done on fisheries subsidies, suggesting that the text is “imbalanced” and also inconsistent with UN SDG 14.6.

India apparently spoke about the need for robust special and differential treatment provisions in the fisheries subsidies agreement, suggesting that they are inadequately addressed. Most importantly for India, the WTO members must deliver on the mandated permanent solution for public stockholding programs for food security as and when MC12 is reconvened.

Indonesia issued a strong statement on the need to conclude the TRIPS waiver in the WTO’s response to the pandemic, said people familiar with the development.

Indonesia, which coordinates the G-33 coalition of developing countries on agricultural issues, emphasized the need to deliver on the permanent solution for public stockholding programs for food security (PSH) and the special safeguard mechanism. Indonesia apparently said these two issues are most important for developing countries, said people familiar with the development.

South Africa and Cameroon on behalf of the African Group, apparently called for an agreement on the PSH issue.

South Africa, which along with India first proposed the TRIPS waiver in October 2020 to combat the COVID-19 pandemic, demanded an outcome on the waiver. Earlier, South Africa along with India highlighted the need to convene a virtual ministerial meeting on the issue.

Jamaica, which coordinates the ACP group, apparently called for a decision on enabling the WFP to procure food items without any barriers.

FISHERIES SUBSIDIES

China’s deputy trade minister Mr Wang Shouwen called for an outcome on non-specific fuel subsidies in the fisheries subsidies agreement. India was the originator of the proposal on non-specific fuel subsidies.

However, the US, the EU, and other industrialized countries continue to vehemently oppose language inserted in the draft agreement on fisheries subsidies by the chair of the fisheries subsidies negotiations, Ambassador Santiago Wills of Colombia.

China apparently raised its concerns about the language on the issue concerning territoriality in the chair’s draft text.

DEVELOPED COUNTRIES VOICE OPPOSING POSITIONS

The US Trade Representative Ambassador Katherine Tai stated that the US would support the TRIPS waiver for vaccines. Responding to the calls at the meeting for the restoration of the Appellate Body to ensure the smooth functioning of the two-stage dispute settlement system, the USTR has not given up on Washington’s “obstructive” position to block the restoration of the Appellate Body, said people familiar with the discussions.

The USTR spoke about the importance of WTO reforms along with the reform of the dispute settlement system. However, she did not elaborate as to what would constitute the reform of the DSS (dispute settlement system). Earlier, she spoke at a virtual meeting in Washington, saying that WTO members should go back to the “First Principles”, without elaborating on them.

As regards fisheries subsidies, the USTR said that it needs to be concluded on a priority basis, suggesting that the fisheries subsidies negotiations have been going on for more than 20 years, a position that seems to concur with the DG’s oft-repeated statements, said people, who asked not to be quoted.

In an official readout issued by the Office of the USTR on Ambassador Tai’s remarks at the virtual meeting on 21 January, the USTR highlighted the WTO’s important role in facilitating a robust global economic recovery from the pandemic and finding pragmatic solutions to increase vaccine production. She acknowledged the opportunity to conclude the fisheries subsidies negotiations and emphasized the need for an ambitious agreement that improves the status quo.

Without commenting on the demand to deliver on the mandated outcome on the permanent solution for PSH by India, Indonesia, China, and other developing countries, Ambassador Tai noted that “important work remains to be done on agriculture issues.”

Lastly, the USTR reiterated “the United States’ deep commitment to the WTO and the urgent need to begin innovative discussions about reforming the institution,” perhaps hinting at the possible doing away with Articles 2.3 and 3.2 of the Marrakesh Agreement to multilateralize the plurilateral decisions.

Article 2.3 of the Marrakesh Agreement states: “The agreements and associated legal instruments included in Annex 4 (hereinafter referred to as “Plurilateral Trade Agreements”) are also part of this Agreement for those Members that have accepted them, and are binding on those Members. The Plurilateral Trade Agreements do not create either obligations or rights for Members that have not accepted them.” And Article 3.2 states that: “The WTO shall provide the forum for negotiations among its Members concerning their multilateral trade relations in matters dealt with under the agreements in the Annexes to this Agreement. The WTO may also provide a forum for further negotiations among its Members concerning their multilateral trade relations, and a framework for the implementation of the results of such negotiations, as may be decided by the Ministerial Conference.”

Several countries have fiercely opposed any changes to Articles 2.3 and 3.2 of the Marrakesh Agreement, said people familiar with the development.

The European Union, which has repeatedly opposed the TRIPS waiver, apparently spoke about the need for a strong IP component as well as its own proposal relating to the use of compulsory licensing. The EU, which is a strong proponent of an agreement based on the current draft fisheries subsidies text, also appears to have suggested the need for convening a virtual ministerial meeting on the issue, said people familiar with the proceedings at the meeting.

Canada and other Ottawa Group members highlighted the importance of the IP component along with its Trade and Health initiative.

New Zealand called for intensifying the work on the Walker process on Trade and Health. But several members strongly opposed the recommendations made by the former New Zealand trade envoy David Walker, saying that they are overly tilted in favour of the industrialized countries. New Zealand also suggested that a virtual ministerial meeting can be convened to conclude the agreements, akin to what was done recently in the APEC (Asia-Pacific Economic Cooperation).

THE DG AND GC CHAIR

At the virtual meeting, the DG urged the trade ministers to give guidance to their respective trade envoys to accelerate the ongoing negotiations on fisheries subsidies as well as on other issues, said people familiar with the proceedings.

According to the statement posted on the WTO’s website, the DG called on ministers from a cross-section of WTO members to push ahead in all ongoing negotiations, and work with “pragmatism, creativity, and flexibility” to harvest agreements as and when they are within reach.

She said ministers broadly accepted her suggestion to accelerate work, both in Geneva and in capitals, so WTO members can deliver results despite the uncertainty regarding the rescheduling of the 12th Ministerial Conference (MC12) following its Omicron-induced postponement in November.

The GC chair, Ambassador Dacio Castillo from Honduras, reported on his consultations with members on the Indian proposal to convene a virtual ministerial meeting on the WTO’s response to the pandemic with the TRIPS waiver. He also indicated at the meeting that he would hold a second round of consultations this week.

The Swiss minister for economic affairs, education, and research, Mr Guy Parmelin, issued some concluding remarks, in his own capacity, as the chair of the virtual meeting.

The main points of his concluding remarks include:

* Ministers regretted the postponement of the twelfth WTO Ministerial Conference (MC12) due to the epidemiological situation. Many expressed their hope that MC12 will be held in person when circumstances permit.

* Ministers supported the continuation of work on all issues under negotiation with a view to achieving tangible results as soon as possible and underlined their readiness to intensify negotiations building on progress realized so far. Given the uncertainties about the timing and format of MC12, many favored a pragmatic approach to conclude negotiations on a given issue if sufficient progress has been achieved. All issues would have to be treated with the same intensity in order to reach meaningful and balanced outcomes in all areas. Many Ministers expressed their readiness to help advance and conclude negotiations.

* Ministers expressed their concerns about the considerable social and economic impact of the COVID-19 crisis. Ministers highlighted the important contribution that the WTO should bring to fight the current pandemic and future health crises as well as to foster economic recovery. They notably stressed the need to make rapid and concrete progress to promote the development, production, equitable access and efficient distribution of essential medical products, including vaccines. In this perspective, most Ministers considered that the WTO response to the pandemic should include the role of intellectual property protection and the TRIPS Agreement as well as the Walker process on rules and practices governing trade flows.

* Ministers concurred that a comprehensive and effective agreement on harmful fisheries subsidies, in line with Sustainable Development Goal 14.6, should be concluded as soon as possible. To that end, Ministers showed their readiness to continue the negotiations on outstanding issues in a focused manner based on progress achieved so far.

* Many participants argued for meaningful decisions to create the basis for effective negotiations on agricultural trade policy reform. Several Ministers highlighted food security as an issue of particular priority. In this context, several Ministers mentioned inter alia domestic support, export restrictions and public stockholding as priority issues.

* Ministers widely acknowledged the need to reform the WTO and highlighted the importance of a fully and well-functioning WTO dispute settlement system to provide security and predictability to the multilateral trading system.

* A number of Ministers highlighted the role of development and diverse issues related to the special and differential treatment of developing and least developed countries (LDCs).

* Several Ministers welcome the conclusion of the negotiations on Services Domestic Regulations. They also called for progress in the ongoing negotiations on E-commerce and on Investment Facilitation and supported further work in Trade and Environment, Trade and Women’s Economic Empowerment as well as Micro-medium-small enterprises.

In short, the virtual meeting revealed sharp divergences among the trade ministers and it remains to be seen how these divergences could be overcome in the coming months.