TWN Info Service on WTO and Trade Issues
18 December 2023
Third World Network
www.twn.my

WTO: Members push mandated issues to trade ministers at MC13
Published in SUNS #9919 dated 18 December 2023

Geneva, 15 Dec (D. Ravi Kanth) — Members at the year-end meeting of the World Trade Organization’s General Council (GC) on 14 December appear to have pushed several mandated issues to trade ministers to decide at the upcoming WTO’s 13th ministerial conference (MC13), raising serious questions on the utility of the GC meetings in finding any solutions/compromises, said people familiar with the discussions.

MC13, scheduled to be held in Abu Dhabi from 26-29 February 2024, will be chaired by Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade of the United Arab Emirates (UAE), as is the normal practice of a host country to chair the meeting.

At the GC meeting that started on 13 December, members agreed on the three vice-chairs for MC13.

They include Mr Luc Magloire Mbarga Atangana, Minister of Trade (Cameroon); Mr Todd McClay, Minister for Agriculture, Forestry, Hunting and Fishing, and Trade  (New Zealand); and Mr Jorge Rivera Staff, Minister of Trade and Industry (Panama).

The GC meeting, which continued on 14 December, appears to have cast a dark shadow on issues like the extension of the MC12 Ministerial Decision on the TRIPS Agreement to cover COVID-19 diagnostics and therapeutics; the proposed termination of the moratorium on customs duties on electronic transmissions; the Least Developed Countries (LDCs) graduation issue concerning transition support measures in favour of those LDCs that have graduated from the LDC category; and several other issues, said people who asked not to be quoted.

Significantly, on the issue of LDC graduation, which is a development issue to help COVID-19 ravaged-LDCs, the US appears to have raised a point of order on the report submitted by the chairperson of the Committee on Trade and Development.

The US said that there is no evidence for granting a blanket extension for LDCs, adding that it will grant it on a case-by-case basis, said people present at the meeting.

Without naming the US, India appears to have said that while some members want to grant duty-free and quota-free market access to the LDCs on a case-by-case basis, the industrialized countries in particular have continued to enjoy duty-free and quota-free access through the current moratorium on customs duties on electronic transmissions, said people familiar with the discussions.

The same countries never provided any evidence for the continuation of the moratorium, said people familiar with the discussions.

Several countries including China, Indonesia, India, South Africa, and other developing countries supported the LDC graduation measures, said people, who asked not to be quoted.

US JONES ACT

On the continuation of the GATT exemption on the US Merchant Marine Act of 1920, or the Jones Act, since 1995, the European Union, China, Japan, Korea, and Norway severely criticized the specific exemption granted to the US on grounds that it allegedly destroyed the global shipping industry.

The EU said that the Jones Act is a piece of legislation that “restricts fair competition in the shipbuilding and shipping markets and no longer serves a legitimate purpose in today’s global economy.”

The EU argued that “even more, new implementing rules show an increasingly protectionist interpretation of the Jones Act, going even further beyond its original intention.”

“The prevailing situation has negative economic consequences for the EU’s and other countries’ shipbuilding, logistics, dredging, and energy industries,” the EU said.

It added that “the costs are also high for the United States, which is faced with higher costs for off-shore energy production, coastal protection from flooding, adapting to climate change, and haulage services due to the closure of the US market for foreign-built, serviced, and operated ships.”

However, the US seemed rather unfazed by the criticism and went on to express its obdurate position that the exemption must continue as the conditions that existed at the time of the granting of the exemption continue to be there even today, said people who asked not to be quoted.

FOOD INSECURITY

On another proposal by Singapore concerning the “immediate steps to respond to food insecurity”, several members severely criticized the proposal, with Brazil saying that it is a “red herring”.

Singapore’s proposal calls on members to refrain from imposing export restrictions or prohibitions on essential foodstuff.

Indonesia said that more than export restrictions, it is important to conclude a decision on the permanent solution for public stockholding (PSH) programs for food security purposes, “which to this date remains an outstanding mandate from previous MCs [ministerial conferences].”

Even though the overall tone of the discussions seemed pretty mild at the GC meeting unlike the previous meetings, there was little or no progress on any of the issues, said people who asked not to be quoted.

COVID-19 DIAGNOSTICS & THERAPEUTICS

Among the decisions adopted at the WTO’s 12th ministerial conference (MC12) last June, the apparent failure to implement paragraph eight of the MC12 Ministerial Decision on the TRIPS Agreement on extending the decision to cover COVID-19 diagnostics and therapeutics seems like a proverbial “eyesore” and has raised serious doubts on the credibility of the ministerial decisions, said people familiar with the development.

According to paragraph eight of the MC12 Ministerial Decision on the TRIPS Agreement, members ought to have decided on extending the decision to cover COVID-19 diagnostics and therapeutics by 17 December 2022.

The continued delay in extending the decision was on account of some members like the United States completing their internal processes. Despite those processes having been completed in the second half of October, there is still no forward movement.

It is against this backdrop that South Africa along with Bangladesh, Bolivia, Egypt, India, Indonesia, Pakistan, and Venezuela have asked the General Council to adopt a draft decision that they had proposed for consideration at the GC meeting.

Indonesia said: “We cannot apologize to the dead, particularly to the 7 million people whose lives tragically ended by COVID-19,” adding that members can at least “rectify our past mistakes through immediately extending the 17 June TRIPS Decision adopted by the Ministers by consensus after long protracted negotiations, mutatis mutandis to therapeutics and diagnostics, as requested by proponents in document WT/GC/W/913.”

The draft GC decision by the co-sponsors drew attention to the MC12 Ministerial Decision which, they argued, “is far removed from the comprehensive TRIPS waiver proposal contained in documents IP/C/W/669 and IP/C/W/669/Rev.1 (“original TRIPS waiver proposal”) co-sponsored by 65 WTO Members (co-sponsors).”

The proponents reiterated that: “A more comprehensive waiver decision as envisaged in the original TRIPS waiver proposal would support the efforts to ensure timely, equitable and universal access to safe, affordable and effective therapeutics and diagnostics, ramping up of production and expanding supply options.”

They said that “the MC12 Ministerial Decision on the TRIPS Agreement (document WT/MIN(22)/30) is the result of over one and a half years of arduous and lengthy discussions on the original TRIPS waiver proposal and intense negotiations heading towards the 12th Ministerial Conference in the midst of a global crisis. It is of limited scope covering only vaccines.”

Moreover, “Diagnostics and therapeutics are essential tools for a comprehensive approach to fight the pandemic, that it is not over,” the co-sponsors argued.

They pointed out that, “Omitting these vital tools will deter the effectiveness of the decision that aims [at] timely and affordable access to effective vaccines against the ongoing COVID-19 pandemic.”

Further, based on their earlier document, the co-sponsors argued that “at a minimum, the extension of the policy tools provided in document WT/MIN(22)/30 to therapeutics and diagnostics will result in a holistic approach to enable developing countries to address those IP barriers that prevent the expansion and diversification of production and increase accessibility to crucial life-saving COVID-19 tools.”

According to the co-sponsors, “the current outcome represents a narrow conditioned Decision due to demands of some WTO Members, requiring significant compromises on the part of the co-sponsors that had hoped for greater solidarity among WTO Members during a public health emergency and consequently a more comprehensive waiver decision as envisaged in the original TRIPS waiver proposal that would support ramping up of production and expanding supply options.”

They called on the General Council to adopt the following draft decision:

1. The MC12 Decision on the TRIPS Agreement is extended mutatis mutandis for the production and supply of COVID-19 therapeutics and diagnostics; and

2. An eligible Member may apply the provisions of this Therapeutics and Diagnostics Decision until 5 years from the date of this Decision. Any extension of the MC12 Decision on the TRIPS Agreement pursuant to paragraph 6 shall apply to this Decision as well.

However, the draft decision failed to garner consensus due to opposition from Switzerland and the United Kingdom among others.

They repeatedly maintained that there are no IP (intellectual property) barriers for accessing COVID-19 diagnostics and therapeutics, said people familiar with the discussions.

WTO BUDGET

WTO Members on 14 December agreed to a 3.6% hike in the WTO’s regular budget for 2024, an increase of about CHF 7.09 million, from CHF 197.2 million in 2023 to approximately CHF 204.29 million in 2024.

A separate proposal for an increased contribution to the WTO’s Pension Fund of CHF 4.4 million (around USD 4.5 million) was apparently dropped due to lack of consensus before the GC meeting.

During the GC meeting on 14 December, Russia seemed to have joined the consensus for increasing the WTO budget, as it did not raise any flag. The budget proposal appears to have been worked out by the European Union, said people familiar with the development.

Though the WTO Secretariat sought an almost similar increase for 2025, the issue has been deferred to next year.

It is doubtful whether the meagre hike in the WTO’s budget for next year would have satisfied the WTO Director-General, Ms Ngozi Okonjo-Iweala, who had asked for a “modest budget increase of CHF 14.56 million (around USD 15 million) for 2024”, and an additional CHF 1.94 million for 2025, said people familiar with the development.

As previously reported, despite the near rejection of her first budget-hike proposal in 2022, the DG chose to come back again with a new 43-page proposal, which came up for a first reading at the Committee on Budget, Finance and Administration on 18 July 2023. +