Trade: North countries succeed in foisting WTO "reforms" at G20 meet

Major developed countries on Saturday succeeded in foisting, in the final G20 Leaders' Declaration from Buenos Aires, "reforms" at the World Trade Organization ostensibly to salvage the multilateral trading system from "falling short of its objectives", trade envoys told SUNS.

Despite the writing on the wall that the multilateral trading system is being subjected to trade wars launched by the United States for pursuing its "America First" trade policies, the G20 Sherpas meekly agreed to the US demand to shift the blame for the current crisis in global trade to the multilateral trading system and the WTO, said a trade envoy, who asked not to be quoted.

During the crucial negotiations among the Sherpas of the 19-member G20 in Buenos Aires on 30 November, the developing countries, especially South Africa and India among others, resisted the use of the term "reforms" at the WTO, and its negative effects on the developing and poorest countries, said a trade envoy, who asked not to be quoted.

But major industrialized countries, especially the European Union and its members such as Germany and France among others, insisted that "reforms" are needed at the WTO on a war footing for addressing the crisis in the multilateral trading system.

The EU was supported by its allies such as Japan, Canada, Australia, and some South American countries like Argentina, Brazil, and Chile for launching reforms at the WTO.

The United States, which spurned multilateral trade liberalization for pursuing its "America First" trade policies, inserted language based on the US President Donald Trump's incessant criticism that the WTO has failed to address the American concerns.

The US also insisted that the declaration must include language for addressing "unfair" trade practices.

China emphasized the importance of resisting unilateral and protectionist measures in the final declaration, but the US said that it will block the declaration if it included language on curbing "unilateral and protectionist" measures.

Ahead of the Sherpas meeting, China, India, and Russia had agreed to step up their interaction and cooperation at the multilateral institutions, including the unfinished Doha trade negotiations, said a trade envoy, who asked not to be quoted.

The negotiations on the final declaration were also influenced by the likely standstill agreement between the US and China for not imposing tit-for-tat tariffs against each other for the next three months ending on 1 March 2019, said a Sherpa, who asked not to be quoted.

Besides, the US, the EU, and Japan, which had launched the trilateral process last year, remained united on initiating reforms at the WTO, particularly for strengthening the transparency and notification requirements and enhancing the oversight role of the WTO.

The three countries also demanded for reforms to include creating new rules against industrial subsidies, stopping the mandatory transfer of technologies, and enhanced new rules for intellectual property provisions.

Unlike the Hamburg declaration of the G20 leaders last year, the Buenos Aires declaration largely reflected the US concerns. The Hamburg declaration, for example, suggested that, "to further improve the functioning of the WTO, we will cooperate to ensure the effective and timely enforcement of trade rules and commitments as well as improve its negotiating, monitoring and dispute settlement functions."

In sharp contrast, the G20 leaders' declaration from Buenos Aires said in paragraph 5 that, "We renew our commitment to work together to improve a rules-based international order that is capable of effectively responding to a rapidly changing world."

After the US accepted language on recognizing "the contribution that the multilateral trading system has made to that end," the rest of the members agreed to President Trump's general assertion in paragraph 27 that "the [multilateral trading] system is currently falling short of its objectives and there is room for improvement."

"We therefore support the necessary reform of the WTO to improve its functioning," the leaders' declaration said, without clarifying what that reform would include. "We will review progress at our next Summit" which will take place in Tokyo, in 2019, the declaration added.

Clearly, the battle lines are drawn on what would constitute "reforms" and the next few months will indicate whose "reforms" will succeed, said a trade envoy, who asked not to be quoted.

For a large number of countries, including the EU, India, China, and South Africa among others, the first priority of reforms is filling the vacancies at the Appellate Body (AB) as well as ensuring the independent and impartial functioning of the AB.

But the US remains firmly opposed to filling the vacancies at the AB. Effectively, the "reforms" have no meaning unless the first major challenge i.e. filling the vacancies at the AB, is addressed.

The US is only interested in bringing intrusive notification requirements and embarking on plurilateral negotiations on electronic commerce, said a trade envoy who asked not to be quoted.

The EU and Japan as well as several other countries are also with the US on reforms/new rules for notification requirements.

Unless the developing countries remain united on their priorities within the reforms/new rules, they will face the prospect of onerous and burdensome commitments being imposed by the developed countries.

The plurilateral negotiating issues of electronic commerce, new disciplines for micro, small, and medium enterprises, and investment facilitation were also inserted in paragraph nine of the G20 leaders' declaration from Buenos Aires.

It says: "To maximize the benefits of digitalization of and emerging technologies for innovative growth and productivity, we will promote measures to boost micro, small and medium enterprises and entrepreneurs, bridge the digital gender divide and further digital inclusion, support consumer protection, and improve digital government, digital infrastructure and measurement of the digital economy. We reaffirm the importance of addressing issues of security in the use of ICTs. We support the free flow of information, ideas and knowledge, while respecting applicable legal frameworks, and working to build consumer trust, privacy, data protection and intellectual property rights protection."

It further adds that "we [leaders] welcome the G20 Repository of Digital Policies to share and promote the adoption of innovative digital economy business models. We recognize the importance of the interface between trade and the digital economy. We will continue our work on artificial intelligence, emerging technologies and new business platforms."

To counter the demands on electronic commerce and new disciplines, the developing countries must demand that the reforms must address "food security" and "hunger" in developing countries, said a trade envoy who asked not to be quoted.

The developing countries must ensure that the permanent solution for public stockholding programs for food security is concluded as part of negotiating reforms, the envoy said.

In paragraph eleven of the G20 leaders' declaration from Buenos Aires, countries have agreed to a robust framework for "tackling the challenges of food security, which is crucial to achieving a world free of hunger and all forms of malnutrition."

It says the G20 countries "will promote dynamism in rural areas and sustainable agriculture, conscious of the importance of sustainable soil, water and riverbanks management supported by individual countries voluntarily, taking into consideration the specific needs of family and small-holder farmers."

"We encourage the voluntary use and sharing of innovative as well as traditional agricultural practices and technologies. We highlight the importance of collaboration among public and private stakeholders to strengthen risk management, facilitate adaptation to a changing environment, protect biodiversity and provide effective responses to reduce the impacts of extreme weather on agriculture."

In crux, battle lines at the WTO have been drawn by the G20 leaders' declaration from Buenos Aires. Unless there is complete unity of purpose and collective resolve to fight the US-EU mooted reforms at the WTO, the developing countries will be forced to implement new rules that are harmful to their interests, said trade envoys, who asked not to be quoted.

By D. Ravi Kanth.

Source: SUNS - South North Development Monitor, SUNS #8809 Tuesday 4 December 2018.