TWN Info Service on WTO and Trade Issues
14 February 2022
Third World Network
www.twn.my

WTO’s MC12 to be held in May amid lack of progress in all areas?
Published in SUNS #9513 dated 14 February 2022

Geneva, 11 Feb (D. Ravi Kanth) – The WTO director-general Ms Ngozi Okonjo-Iweala is considering reconvening the organization’s 12th ministerial conference (MC12) in May, even as the major issues, particularly the WTO’s response to the pandemic, appear to be stuck due to unbridgeable differences among members on these issues, said people familiar with the development.

The chair of the WTO’s General Council (GC), Ambassador Dacio Castillo from Honduras, and the DG may announce the date for MC12 at the upcoming General Council meeting on 23-24 February, said people familiar with the development.

More importantly, the “strategic pause” in the ongoing discussions on the WTO’s response to the pandemic announced by the GC chair on 4 February (Job/GC/291) is apparently being influenced by a major developed country that is not keen to discuss, at this juncture, the recommendations made by the former facilitator of the WTO’s response to the pandemic, Ambassador David Walker from New Zealand, said a source, preferring not to be identified.

In his statement at an informal meeting of the GC on 4 February, the GC chair had said “while I had convened a second Representative Group yesterday [3 February] to continue the theme-by-theme discussion, it was evident that delegations needed more time to engage with each other first, in different configurations to work through these differing perspectives, before reverting to the Representative Group discussions.”

“In other words”, he said, “a strategic pause is needed at [this] point. This is precisely why I proposed the use of a cocktail approach – to enable us to quickly adapt.”

Although the DG was present at the same meeting, she appears to not have made any statement on the issue of the “strategic pause” in the discussions or on the unbridgeable divergences among members on Walker’s text.

Walker’s text, contained in document Job/GC/281, has suggested a range of trade-related measures such as transparency, trade facilitation, tariffs and other issues in order to address the WTO’s response to the pandemic, said people familiar with the development.

Ms Okonjo-Iweala, who spoke at an earlier informal open-ended GC meeting on 25 January, had said “on the WTO Response to the Pandemic and the TRIPS Waiver, everybody knows that we have been trying in a small group format to try to break through and see if we can come to some agreement.”

She said “it is not easy… But we are trying.” She said the issue belongs to the TRIPS Council, adding that “the whole idea is to make that kind of breakthrough with a small group and then see if there is something we can bring to a larger group and eventually it would come to the TRIPS Council.”

Ms Okonjo-Iweala said at that meeting, “since we have all agreed that response to the pandemic must be a comprehensive package that is made up of IP [intellectual property] and trade and health issue.”

She also said “it would be very important that work to close on this issue should begin and that we not be caught behind. If we should have a breakthrough on the IP issue, we should also be ready with the rest of the response so that we can indeed go forward with a comprehensive package.”

On the small-group meetings being held by the DG and her deputy, Ms Anabel Gonzalez from Costa Rica, on the TRIPS waiver, it appears that the talks are stuck as one major player is “back-peddling” on some commitments it had made during the consultations, said people familiar with the development.

PUSH BY THE OTTAWA GROUP

Meanwhile, the Ottawa Group of countries led by Canada on 9 February decided to step up their outreach efforts with the United States as well as India, South Africa, Sri Lanka, and Pakistan among others on the WTO’s response to the pandemic, including the TRIPS component, in an attempt to break the impasse in the negotiations on this crucial issue, said people familiar with the development.

The Ottawa Group, particularly the European Union, New Zealand and other members, as well as China, apparently demanded that the report issued by the facilitator, former New Zealand’s trade envoy Ambassador David Walker, must remain as the basis for further discussions.

At the meeting on 9 February, the Ottawa Group decided that Walker’s text cannot be reopened.

Some members of the Group, particularly the EU, also called for a higher level of ambition over and above the recommendations made in the facilitator’s text.

In line with the Ottawa Group’s proposal on trade and health, the former facilitator had proposed far-reaching changes on the trade-related issues to address the WTO’s response to the pandemic.

Walker’s text called for a political statement at MC12 on “transparency and monitoring”; “export prohibitions or restrictions”; “trade facilitation, regulatory cooperation and coherence, and tariffs”; “the role of trade in services”; “supporting inclusive recovery and resilience”; “collaboration with other intergovernmental organizations and stakeholders”; and a “framework for future preparedness” that includes an “action plan on pandemic response, preparedness and resilience,” said people familiar with the discussions.

Several members filed their specific objections to the above proposal, and called for inserting their specific comments on Walker’s text.

Apparently, many of the changes proposed by the developing countries, as well as the United States are not acceptable to the Ottawa Group members, said people familiar with the development.

Clearly, a major impasse has arisen in the GC chair’s consultations with members. Hence, the chair called for a “strategic pause”, encouraging members to resolve their differences through sustained outreach efforts.

OTHER ISSUES

Meanwhile, little progress has been made even in other areas such as on fisheries subsidies, agriculture, and proposed WTO reforms.

In the fisheries subsidies negotiations, for example, there is little or no convergence on the treatment of non-specific fuel subsidies as proposed by India and supported strongly by China; on issues concerning territoriality including the standoff between Argentina and the United Kingdom on the Falkland Islands, the Philippines and China, and the United States over some other territories; on the special and differential treatment as demanded by India and other developing countries on which the US has said that it is not going to accept a longer duration for developing countries; and on whether the proposed fisheries subsidies agreement should be part of the Agreement on Subsidies and Countervailing Measures.

On agriculture and the alleged turmoil created by the chair of the Doha agriculture negotiations, Ambassador Gloria Abraham Peralta from Costa Rica, there is a standoff on the mandated issue of the permanent solution for public stockholding programs for food security as well as on the vital concerns of the developing countries, said people familiar with the discussions.

On the controversial WTO reforms and restoration of the WTO’s two-stage dispute settlement system, members remain sharply divided, said people familiar with the discussions.

TIMING OF MC12

The Ottawa Group members discussed the issue of the timing of MC12 to accelerate negotiations in all areas where there is currently a “chill” in the discussions, including on fisheries subsidies and proposed WTO reforms, in line with the DG’s recent statement.

While some members of the Group proposed that MC12 be reconvened before the summer break, some other members wanted the ministerial meeting to be held in June. There is no consensus yet among the Ottawa Group members on this issue.

Against this backdrop, it appears that the DG is adopting a “brinkmanship strategy” to force the negotiations, without any credible progress being made on all these issues.

Such a strategy could unravel as had happened with several previous ministerial meetings starting from the WTO’s 5th ministerial conference in Cancun, Mexico in 2003, the WTO’s tenth ministerial conference in Nairobi, Kenya, in 2015, and the WTO’s 11th ministerial conference in Buenos Aires, Argentina, in 2017, said people, who asked not to be quoted.

DG FACING “ROUGH” WEATHER ON SECRETARIAT REFORM

Meanwhile, the DG is expected to convene an urgent informal meeting of the Committee on Budget, Finance and Administration (CBFA) on 11 February to inform members about the recommendations made by McKinsey & Company on the “Transformation Process/Structural Review”.

In the face of growing disenchantment among members and the staff about the McKinsey report, the DG circulated a generic report that appears to be loaded with terms that are used typically in the management consultancy reports.

However, it appears that the report has not focused on the specific changes or challenges that are needed at this juncture, when negotiations are stuck in all areas, said people who asked not to be quoted.

Further, the DG has not mentioned as to why the full report is not being circulated for members to scrutinize its recommendations.

At a time when every activity in the Secretariat, such as the recent infrastructural changes, are being subjected to the procedures set out in the procurement manual, how is it that the DG seemingly has not followed these procedures in commissioning the McKinsey report, said people familiar with the development.

Some of these issues are expected to come up at the CBFA meeting on 11 February. The DG has allocated only 60 minutes to discuss all these difficult contentious issues, said people, preferring not to be quoted.

TRANSFORMATION PROCESS/STRUCTURAL REVIEW IMPLEMENTATION

The confidential internal report, titled “Transformation Process/Structural Review Implementation”, seen by the SUNS, starts with “Recap: WTO Secretariat embarked on a transformation process and structural review driven by the main external factions”.

It goes on to state the following: “International trade faces unprecedented uncertainty, driven by major trends” (geopolitical volatility and climate change); “members expressed, in 2019, their desire to improve WTO functioning (to strengthen the work of WTO committees and increasing transparency, improve the dispute settlement process, strive for negotiations to be concluded)”; and “the advance of COVID-19 has offered an opportunity to define the way of working in the WTO Secretariat.”

Questions are being raised as to how the recommendations could improve the Secretariat’s functioning in a member-driven organization where the members, and not the Secretariat, decide the issues, said a person familiar with the recommendations.

The Secretariat apparently has little to do with these extraneous factors, the member said.

In the second recap, “The secretariat to become future-responsive with an environment in which all staff can thrive and a vision to which all staff subscribe”, to “build a future-responsive Secretariat” seems to be full of fluff, the SUNS was told.

The recommendation made in the second recap suggests that the Secretariat has not been responsive so far.

Further, the role of the Secretariat as suggested by McKinsey & Company has apparently violated the mandate accorded to the DG and the Secretariat in Article VI.4 of the Marrakesh Agreement, said people familiar with the development.

Several issues highlighted in the third recap include “dedicated staff”, “culture of collegiality”, “good overall satisfaction of Members with Secretariat services” and so on.

The point here is that the WTO Secretariat has been considered as “one of the most professional and effective international Secretariats,” all these years since the establishment of the WTO in 1995.

The fourth recap states, “At the same time, diagnostic has uncovered some areas for improvement to be addressed.”

They include “strategic direction”, “structure and siloed ways of working”, “approach to talent management”, and “leadership and managerial capabilities”.

The fifth recap states, “Reaching Secretariat target state can be done through five programs.”