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TWN Info Service on WTO and Trade Issues
5 July 2021
Third World Network
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WTO DG tasks DDGs to deliver on controversial, non-mandated issues
Published in SUNS #9380 dated 5 July 2021

Geneva, 2 Jul (D. Ravi Kanth) – The developing and least-developed countries seem concerned over the inclusion of non-mandated issues such as “labour issues”, “industrial subsidies”, “level-playing field issues”, and the controversial Joint Statement Initiatives among others in the list of “deliverables” prepared by the WTO Director-General Ms Ngozi Okonjo-Iweala for her new deputy director-generals to deliver in the run-up to MC12 to be held in Geneva in end-November, said people familiar with the development.

Other issues included in the list of “deliverables” include “trade and health” and “special and differential treatment.”

That these issues are being proposed by the United States as well as the European Union and other developed countries is well known, said people, who asked not to be quoted.

Furthermore, the list of “deliverables” does not include the inclusive and developmental reforms of the WTO as proposed by a large majority of developing countries, said people, preferring not to be quoted.

Without mentioning the word “JSIs” (Joint Statement Initiatives), the DG has included all the issues that are part of the JSI basket such as digital trade, investment facilitation, disciplines for micro, small and medium enterprises (MSMEs), domestic regulation in services, and trade and gender.

These “deliverables”, which are tilted heavily in favour of the United States and other industrialized and some developing countries, have never been agreed to, either at the General Council, which is the highest forum for taking decisions during the inter-ministerial sessions, or at the last ministerial meeting in Buenos Aires, Argentina, in December 2017, said a former trade envoy, who asked not to be quoted.

The list of “deliverables” for the DDGs, and seen by this writer, was unveiled on 30 June.

The four new DDGs include Ms Angela Ellard from the United States, Ms Anabel Gonzalez from Costa Rica, Ambassador Jean-Marie Paugam from France, and Ambassador Zhang Xiangchen from China. They assumed office on 25 June.

Ms Ellard has been tasked to deliver on “fisheries subsidies,” “trade and health (in collaboration with DDG Ms Anabel Gonzalez), “labour issues”, and “Dispute Settlement Body.”

Incidentally, Ms Ellard had worked with the US Trade Representative Katherine Tai when they both worked as trade counsels at the US House Ways and Means Committee.

LABOUR ISSUES

The controversial deliverable on “labour issues”, which is one of the top trade priorities for the Biden-Harris administration, has been rejected twice during the past ministerial meetings.

The labour issue figured prominently at the WTO’s first ministerial meeting in Singapore, in 1996.

At that meeting in Singapore, a large majority of developing countries outrightly rejected the issue following which it was abandoned, said people, who had attended that meeting.

It surfaced again at the WTO’s third ministerial meeting in Seattle, in 1999, during President Bill Clinton’s administration.

The developing countries fiercely opposed both the trade and labour and trade and environment issues, which are called “social clauses”, at the Seattle ministerial meeting.

The third ministerial meeting collapsed due to these two controversial issues among others, said people familiar with the development.

The labour issues are now being introduced by the US in the fisheries subsidies negotiations in the form of tackling forced labour in global fishing-related activities.

Assigning the deliverable of labour rights and fisheries subsidies to Ms Ellard from the US has raised eyebrows among trade envoys as it is primarily targeted against China, said people who asked not to be quoted.

TRADE AND HEALTH

The DDG from the United States is also being asked to deliver on “trade and health”, which is being promoted by the DG based on her “third way” approach.

The non-inclusion of the TRIPS waiver as proposed by the developing countries in the list of “deliverables” remains a proverbial eyesore, said people who asked not to be quoted.

Coincidentally, a day before the finalization of the “deliverable” on trade and health, the Ottawa Group of countries led by Canada and a few other countries issued a third revised draft text on “COVID-19 and Beyond: Trade and Health” that includes issues such as export restrictions, customs and services, technical regulations, tariff liberalization, and cooperation with other international organizations to be delivered at the 12th ministerial conference (MC12).

JOINT STATEMENT INITIATIVES

In a similar vein, the DG has asked Ms Anabel Gonzalez from Costa Rica to deliver on “Domestic Support; Industrial Subsidies; Level Playing Field Issues; Digital & E-Commerce; Services Domestic Regulation; and Investment Facilitation”.

Ms Gonzalez had worked as a director of the WTO’s Agriculture Division from 2006-2009 and resigned in 2009 during DG Pascal Lamy’s administration at the WTO, said a person, who asked not to be quoted.

She is now being tasked to deliver on another set of un-mandated issues that include “industrial subsidies”, and “level playing field issues” that include state-owned enterprises and market-oriented issues.

That these issues have been 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, said a former trade envoy, who asked not to be quoted.

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 any prospects for any agreement, said a trade envoy, who asked not to be quoted.

Although the DG can bring 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.

After having been told in a recent Trade Negotiations Committee (TNC) meeting that her decision to include the Joint Statement Initiatives violated the TNC chair’s mandate, Ms Ngozi had admitted her “mistake”. But now, she has brought the same JSI issues as “deliverables”, the envoy said.

To the new DDG Mr Jean-Marie Paugam, who has been the French trade envoy until recently, the DG proposed the following “deliverables” such as (1) agriculture, (2) domestic support (in collaboration with Ms Gonzalez), and (3) Dispute Settlement Body (in collaboration with Ms Ellard).

The DG has, however, not included mandated issues such as the permanent solution for public stockholding programs for food security and the special safeguard mechanism as “deliverables” in the agriculture dossier, said an analyst, who asked not to be quoted.

As regards the allocation of responsibilities for the fourth DDG from China, Ambassador Zhang Xiangchen, who was the Chinese trade envoy until recently, the DG has fixed the following “deliverables” such as “inclusion of MSMEs, or micro, small, and medium enterprises and women in trade, and special and differential treatment.”

At a time when the WTO appears to be suffering from a lack of trust, the DG’s decision to jump over the chairs of the negotiating bodies and members of the organization to deliver on the non-mandated issues is bound to erode trust in her ability to work as an honest broker, which is what previous director-generals followed to the letter and spirit, said a former trade envoy, who asked not to be quoted.

Further, the chart of “deliverables” handed down to the four DDGs appears to be diametrically opposed to the rules set out in the Marrakesh Agreement, said a person, who asked not to be quoted.

According to paragraph three of Article VI of the Marrakesh Agreement, the DG is required to “appoint the members of the staff of the Secretariat and determine their duties and conditions of service in accordance with regulations adopted by the Ministerial Conference.”

Further, 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.”

STRUCTURAL REVIEW

Meanwhile, in another development, the DG wrote to trade envoys on 30 June about the contract given to McKinsey & Company to carry out the structural review of the WTO Secretariat, which is currently underway, said trade envoys familiar with her missive.

Ms Okonjo-Iweala informed the trade envoys that McKinsey & Company will adopt an inclusive, open, and transparent process that would involve the members.

She said that she is happy to say that “many of the staff are enthusiastic to be part of the change process”, while admitting that the proposed changes can be “unsettling or frightening to some and this will inevitably lead to some resistance or counter-productive behaviour, targeted at those spearheading the change.”

In short, the DG appears to be unwittingly contributing to the rapid erosion of trust and confidence ahead of MC12, said people, who asked not to be quoted.

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