WTO members mull alternative scenarios as impasse continues

6 November 2014

Efforts to resolve the WTO impasse continued in Geneva this week, with multiple sources saying that a formal solution does not appear to have been finalised yet among the membership, despite continued discussions.

Various trade diplomats speaking to Bridges on Thursday dispelled suggestions that a potential resolution had been formalised, after some reports suggested yesterday evening that the US and India might have clinched a tentative deal.

While there indeed have been high-level meetings between the two sides this week to discuss some potential options, informed sources said, there was not yet a formal accord as Bridges went to press. Others noted that if any agreement were to be reached, it would have to be something that the rest of the membership is willing to sign off on.

In a statement issued today by the WTO on Director-General Roberto Azevêdo’s trip to Asia, the global trade chief welcomed the fact that dialogue between the US and India had resumed.

“He hopes that this dialogue will continue and will be fruitful in advancing efforts to resolve the current impasse, but he is not aware that any understanding has been reached as yet,” the WTO statement read.

Reviewing options

The week prior, Azevêdo had outlined three scenarios on what may lie ahead for global trade talks, in light of his latest round of consultations with members regarding the impasse on implementing the decisions agreed by trade ministers in Bali, Indonesia in December.

“We still do not have a solution to the impasse before us – the impasse that establishes a political link between the public stockholding programmes and the Trade Facilitation Agreement,” the WTO chief confirmed at a 31 October meeting at the level of heads of delegations.

However, a series of three possible scenarios – an immediate solution, a continued search for one, or an alternative approach to implementing the trade facilitation deal – has emerged that could “map out what lie ahead,” he said, stressing that these were not from his own initiative, but rather are the result of what he has heard from the membership since their last formal meeting on 21 October.

The impasse Azevêdo was referring to came following a decision by India in late July to block the adoption of a Protocol of Amendment that would have incorporated the Trade Facilitation Agreement (TFA) into the WTO’s legal framework. New Delhi explained at the time that it could not support the next step in TFA implementation given that there had been insufficient progress in advancing another one of the Bali decisions – namely, in developing a “permanent solution” to public food stockholding. (See Bridges Weekly, 31 July 2014)

The move – and the resulting demand that progress in the two areas be linked – has sparked months of discord among WTO members, with many saying that tying the issues together would essentially entail re-opening the hard-won Bali package, and would thus be untenable.

The subsequent fall-out has been blamed for a growing feeling of distrust among the membership, standing in sharp contrast to the positive mood seen after the December ministerial conference.

Plurilateral approach

A quick solution to the impasse would be the first possible scenario, while trying to continue the search for an answer would be scenario two, Azevêdo said last Friday. But the first scenario does not appear likely, he confirmed, even if it is the most ideal.

“It would put all of our other work back on track,” he said. However, he acknowledged that at this stage, he has “no concrete indications that it is about to happen.”

As for scenario two, he said that many members indicated they would be unwilling to keep looking for a solution to the impasse “indefinitely.” That left, he explained, a third scenario – that of looking for “alternative ways to make progress.”

“Again, I am not saying this because it’s my view – I am saying it because it is a real possibility which we need to recognise. There are actions that may be taken by some members, over which we have no control,” he said.

This third scenario involves the possibility of implementing the TFA on the plurilateral level, at least for the time being, among those willing. The plurilateral approach to TFA has been rumoured for several weeks as an option of last resort, should the talks to resolve the impasse fail. (See Bridges Weekly, 23 October 2014)

Whether this proposed plurilateral would take place outside or inside the WTO is one question that this third scenario raises, Azevêdo said, noting that with regards to the former there is “not much sympathy for this approach.”

A TFA undertaking outside the WTO not only lacks supporters, he said, but would also bode ill for the rest of the Bali decisions and the post-Bali agenda.

However, the possibility of advancing TFA on a plurilateral level within the WTO does seem to be building support, he acknowledged, noting that there is “clearly already an active discussion taking place between members” on how such an approach would take shape.

One way this could work, Azevêdo suggested, would be by those members willing to do so putting the terms of the TFA in place, on a most-favoured nation basis, while leaving “open the possibility of a full multilateral agreement at some point in the future.”

Ensuring the provision of technical assistance and capacity-building for developing countries that is promised in Section 2 of the trade facilitation pact would be key, he said, adding that this plurilateral approach could potentially be linked to advancing some or all of the other Bali decisions.

Sources familiar with the discussions among interested members on how the plurilateral option might work noted that these talks are still in the very preliminary stages, with one calling it a “fairly young idea.” One idea that has reportedly been floated, sources say, is that of individual members wishing to move forward with the trade deal’s implementation potentially incorporating the TFA provisions into their respective tariff schedules.

The response on Friday to the plurilateral scenario was mixed, sources say. For his part, Chinese Ambassador Yu Jianhua made clear that his country finds “any discussion” on TFA implementation outside the WTO to be “counterproductive,” adding that Beijing would have no part in such a discussion. “To translate the multilateral agreement into a plurilateral one is not a good idea either,” he added, according to a copy of his remarks seen by Bridges.

For his part, EU Ambassador to the WTO Angelos Pangratis made clear that the 28-nation bloc has “a clear preference to achieve a multilateral Trade Facilitation Agreement,” while adding that anything less should just be temporary in an effort to achieve full implementation in the long term.

“Only once a multilateral outcome is secured, can the trust that is necessary to move on the rest of the DDA be rebuilt,” he said, referring to the Doha Development Agenda.

December General Council

The next meeting of the WTO’s General Council – which is the organisation’s highest decision-making body outside of the ministerial conference – is currently slated for 10-11 December.

Along with potentially answering the outstanding question of what to do with TFA implementation itself – and the rest of the Bali decisions – trade observers will also be watching to see what announcement, if any, will be made regarding a post-Bali work programme to resolve the remaining Doha Round issues.

Such a work programme was mandated by ministers in Bali, and had been generally understood to mean actual modalities for how to advance the long-stalled Doha talks. Ministers had indicated as well that they hoped to see such a result by the end of this year.

However, given the little time left, the possibility of having a truly substantive work programme has probably “slipped through our grasp,” one source acknowledged, while not ruling out other forms.

Before the July impasse began, discussions on the work programme were only just finishing their preliminary stage: while members were generally on board with putting agriculture, non-agricultural market access, and services at the core of any such plan, the question of what to use as a negotiating starting point had not been fully resolved. Sources say that many of the questions left unanswered in July remain as such, given that formal work in the negotiating groups has also been halted in the wake of the impasse.

Talks on the state of the WTO negotiations in Geneva are expected to continue among members these next few weeks, as Azevêdo himself will be at various major international conferences, including the G-20 leaders’ summit and the Asia-Pacific Economic Cooperation (APEC) trade ministers meeting, where he is expected to raise the subject with high-level officials.

The December General Council meeting has been touted as the next potential turning point in this process, with the Director-General urging members to “be clear about how we see the future of the organisation.”

“We could confirm people’s worst thoughts about the negotiating arm of this organisation – or, like we did in Bali, we could confound expectations and make some real progress,” he suggested.

ICTSD reporting.

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