WTO Members Set their Sights on Kazakhstan Ministerial Conference in June 2020
The WTO is due to hold its next ministerial conference in June 2020 in Astana, Kazakhstan, after the General Council formally endorsed the Central Asian country’s bid as host last week. The global trade club is due to have a busy agenda, both on the negotiating front and in various other substantive areas of work, when meetings resume in September.
The ministerial news comes just three years after Kazakhstan joined the WTO, which was finalised in November 2015. The June 2020 date is a slight departure from the normal WTO ministerial schedule, given that the global trade club generally holds these events every two years. The last one in Buenos Aires was held in December 2017, with participants expecting at that time to reconvene in late 2019.
When WTO members return to Geneva in September, they will have a busy season of work ahead, as they work to advance negotiations on multiple fronts, with some, such as fisheries, having a 2019 target for delivery. They will also be dealing with the continued ramifications from trade tensions among members, particularly but not exclusively between the US and China, as well as the ongoing impasse in selecting new Appellate Body members, with a fourth vacancy on the seven-member court due to open in late September if the situation is not resolved.
In the meantime, discussions among some WTO member groups at the working group level on crafting and pursuing a “reform” agenda for the global trade club are also expected to continue this autumn, with working groups in place between the EU, US, and Japan; the EU and US; the EU and China; and Canada with various other “like-minded” members. (For more on the international trade calendar, see related story, this edition)
Negotiations update: fisheries talks prepare for next phase
Negotiators working to craft a deal disciplining harmful fisheries subsidies by the end of 2019 will have a busy agenda when they reconvene in mid-September, with more “clusters” of meetings planned at almost monthly intervals through the end of the year.
For the past few months, the “rules negotiating group,” which is tasked with this process, has met informally in this “cluster” format to streamline past proposals from members into a series of “working documents.” These documents could eventually help members move towards a negotiating text. Members have also debated substantive issues in these meetings, with each cluster dealing with a particular chosen theme, along with exchanging information. These clusters have included meetings in plenary, meetings bilaterally among delegations, and workshops. (See Bridges Weekly, 21 June 2018 and 24 May 2018)
The most recent meetings were held from 23-25 July, with members discussing subsidies to illegal, unreported, and unregulated (IUU) fishing. According to a Geneva trade official, members continued to express past positions on certain long-standing concerns, such as whether to include transition periods for developing economies as they build up their enforcement capabilities to tackle IUU fishing, or whether and how to use IUU lists developed by regional fisheries management organisations (RFMOs). These RFMOs are multi-country agencies that work on managing either a particular fish stock that lives in and migrates between different geographic areas, or all of the fish species in a particular region.
Members did, however, make additional progress in their efforts to streamline the working documents, with a new version of these texts now online. The latest addition to the working documents, following last week’s meetings, involves articles on “transitional provisions” and “institutional arrangements” for a potential deal on fisheries subsidies. Other topics already covered in these working documents include definitions and scope; notifications and transparency; overfished stocks; overcapacity; capacity-enhancing subsidies; IUU fishing; and special and differential treatment.
The new article on transitional provisions is brief, featuring two lines of bracketed text that would potentially prohibit the extension or renewal of existing programmes whose terms do not comply with the fish subsidies accord. Meanwhile, the new article dealing with institutional arrangements features 10 heavily bracketed paragraphs involving the planned accord’s implementation. These paragraphs cover topics such as how the relevant WTO committee, such as the existing committee on Subsidies and Countervailing Measures (SCM), would examine and respond to members’ efforts at putting a future fish deal in place. It also covers topics such as how that committee might engage with other international agencies with a fisheries management focus, as well as text effectively prohibiting legal disputes under this fish deal if they have sovereignty, marine jurisdiction, or territoriality implications.
WTO members will continue this streamlining work when they return this autumn. The chair’s communication on the updated set of working documents notes that only “some of the many issues” involved in the negotiations are covered in these texts so far, thus requiring further talks to complete the exercise. Negotiators will also be testing out a new meeting format, in addition to the normal plenary sessions, known as “incubator groups,” according to a Geneva trade official. These would essentially involve select groups of members who would brainstorm new ideas and options that they could then transmit back to the plenary for consideration, with the hopes of breaking new ground in the fish talks.
Other negotiating groups, such as agriculture, have also met in recent weeks. In the farm trade talks, five new proposals are now on the table from the US, China and India, the G33 coalition of developing economies, the Cairns Group of agricultural exporters, and Paraguay and Uruguay. Some proposals, such as the one from the US, are focused on market access, while others, such as the India-China submission, look at domestic agricultural support.
Some other negotiating groups, such as those which deal with non-agricultural market access (NAMA), trade and environment, and intellectual property rights, have seen little to no substantive developments this year to date.
US, Chinese ambassadors spar over economic models, WTO rule compliance
Last week’s General Council meeting also saw the US and Chinese ambassadors spar openly over a series of trade irritants, after the US submitted two reports to the General Council on China’s trade practices. While one of these was an annual report by the Office of the US Trade Representative (USTR) on China’s WTO rule compliance, the second was a new document entitled “China’s trade-disruptive economic model” that featured a series of complaints over Beijing’s economic practices and what they mean for WTO members.
“This discussion is long overdue. Few issues are as critical to the future viability of this institution as the unique economic system embraced by China,” said US Ambassador to the WTO Dennis Shea as he began his remarks on the subject.
Shea particularly took issue with the role of the Chinese government in the country’s economy, along with Beijing’s pledges to be pursuing reforms to transform its economy towards a more market-oriented model. He cited numerous concerns, ranging from the use of industrial subsidies and other tools to implement the “Made in China 2025” strategy to the recent Chinese government “white paper” on the country’s contributions to the WTO since joining in 2001. (See Bridges Weekly, 5 July 2018)
“Despite China’s repeated portrayal of itself as a staunch defender of free trade and the global trading system, China is in fact the most protectionist, mercantilist economy in the world,” Shea said last week.
The statement and the related US submissions prompted a detailed response from China, with the country’s WTO ambassador countering the US’ claims on substance, approach, and tone.
“The remarks by the US Ambassador Shea moments ago have made the air smell like gunpowder in this Council room. We should thank Ambassador Shea, as he reminded us that we are now in an unprecedented crisis of the multilateral trading system, and we can no longer sit leisurely by the lakeside, enjoying the sunshine and summer breeze,” said Chinese Ambassador to the WTO Zhang Xiangchen.
He also noted that the WTO recently conducted its review of China’s trade policies, which he suggested was a more appropriate venue for such discussions. He further said that China works to uphold global trade rules, and defended China’s approach to various policy areas. For example, he argued that there is no mandatory technology transfer requirement for foreign companies wishing to do business in China, and that Beijing follows WTO rules and ensures compliance to dispute rulings that have found WTO-inconsistent measures. He also countered that state-owned enterprises (SOEs) “are market entities.”
“Should any members wish to criticise other members' trade policy under other mechanism, I have no objection. If you feel like having more to say, I am then all ears. Although I do not believe the WTO is the appropriate place to discuss the economic models of members, I chose not to block the adoption of this agenda item at today’s meeting of the General Council. Because blocking the normal proceedings and forcing a WTO body out of operation is definitely not our way of doing things,” he said.
Plurilaterals, moratoriums draw scrutiny
The joint initiatives by some WTO members to explore a potential multilateral framework on investment facilitation and possible negotiations for rules on electronic commerce, launched during the Buenos Aires ministerial conference last December, have held meetings throughout the first part of the year, with work due to resume this autumn. (See Bridges Daily Update, 14 December 2017)
The work is still exploratory in nature, and participants are not yet involved in formal negotiations. Additional meetings are planned throughout the rest of 2018. However, the chairs of some WTO regular bodies, such as the Council for Trade in Services (CTS), reported to the General Council last week that some members who are not involved in these “plurilateral” initiatives, namely the one on e-commerce, have raised concerns over their potential implications for the organisation’s work on multilateral tracks.
“A number of members expressed concern with regard to the plurilateral initiative on e-commerce being pursued in parallel to the multilateral Work Programme discussions. These delegations said they could not support an approach for which there was no mandate, which had a rule-making objective that ran contrary to the exploratory mandate of the Work Programme and which could lead to the fragmentation of the multilateral trading system,” said the CTS chair in his report.
Ahead of the General Council meeting, India and South Africa also submitted a document calling for a “re-think” on the long-standing moratorium on electronic transmissions duties, questioning whether prohibiting such duties permanently would deprive developing economies of useful government revenue, among other concerns. The moratorium, along with a separate moratorium on non-violation and situation complaints under the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), have been renewed and extended at biennial intervals for around two decades.
While members have debated whether to make the moratoriums permanent, they have not yet agreed to do so. These moratoriums are often re-approved in tandem, though their renewal was briefly in jeopardy at the WTO’s last ministerial conference in Buenos Aires, Argentina. (See Bridges Daily Update, 14 December 2017)
Sources familiar with the meeting noted that various members spoke in support of the moratorium on electronic transmissions duties, noting its benefits to members, consumers, and the development of the digital economy. Some also noted that such moratoriums are in place in numerous regional trade agreements.