Photo: Reuters
Photo: Reuters

Developing nations wary of WTO’s reforms proposals

The report fails to answer how the rules were going to be enforced and if there will be a system to settle disputes

Geneva: Several developing countries are concerned over a set of sweeping reforms advocated by the World Trade Organization Secretariat, along with the World Bank and the International Monetary Fund, which seeks to terminate the principle of consensus-based multilateral rule-making for pursuing plurilateral negotiations in new issues, said four people familiar with the development.

The proposed reforms include jettisoning the consensus principle, launching plurilateral negotiations on new issues, and introducing a case-by-case approach for availing special and differential flexibilities. “The WTO Secretariat has “opted" for a change by setting aside the consensus principle on grounds that it is disrupting the negotiating activity at the global trade body," said a trade envoy, requesting anonymity.

Clearly, the WTO Secretariat has crossed the “Marrkesh-Rubicon", which had clearly laid out the rules for the conduct of business for the Secretariat, the envoy suggested.

According to the Marrakesh agreement, the WTO Secretariat, unlike the Secretariats in the World Bank and the IMF, is required to remain neutral in negotiating new trade rules without advancing the positions of any one country or groups of countries, and is expected to respect rules in a member-driven, inter-governmental organization, he added.

Significantly, the 34-page report titled, Reinvigorating trade and Inclusive Growth, has called for negotiating new “rules" in five areas--electronic commerce, investment facilitation, disciplines for micro, small and medium enterprises (MSMEs), domestic regulation for services, and gender--that would penetrate into the autonomous space of domestic regulatory structures.

But the report, reviewed by Mint, has failed to answer the vital question as to how these rules were going to be enforced and whether there will be a dispute settlement system to oversee trade disputes arising from these rules in these areas.

“The report’s central goal is aimed at preparing the ground for the WTO’s 12th ministerial conference to be held in Astana, Kazakhstan, in June or July 2020, for a formal burial of the Doha Round, and simultaneous launch of plurilateral negotiations in electronic commerce, investment facilitation, disciplines for MSMEs, domestic regulation for services, and gender," said a trade envoy from a South American country.

Under the subtitle Role of the International Trading System, the WTO has argued that “the practice of bundling negotiating issues together in giant, all-or-nothing trade rounds (based on the Single Undertaking) has become extremely difficult to manage".

The report suggested that the “single-undertaking approach", which implies that nothing is agreed until everything was agreed as in the Doha negotiating framework “became increasingly vulnerable to delays and deadlocks as progress on more feasible issues was held back by a lack of progress on more controversial and intractable ones".

According to the report, “the multilateral trading system has not always relied on large-scale ‘single undertakings’ like the Uruguay Round". It spoke about American priorities in the trade policy since 1995, said a trade envoy from South America, who asked not to be identified.

It argued that “many approaches have been deployed over the years, some fully multilateral, and others not", suggesting that “key parts of the current WTO rule book were initially agreed by and applied (in the 1970s and 1980s) only to those countries adopting the Tokyo Round Codes".

“In certain areas, especially those emerging issues where policy innovation is needed and where not all 164 WTO members are equipped or ready to engage, some countries wish to move further and faster than others, and are doing so," said the report.

The “open-plurilateral discussions on e-commerce, investment facilitation, services domestic regulation, and micro, small, and medium scale enterprises (MSMEs)" are not aimed at “exchanging market access concessions, but to improve regulatory coordination, in order to minimize policy frictions and advance shared goals in a ‘least trade restrictive’ way, (and) they could lead to a more cooperative, less mercantilist, approach to WTO negotiations in the future".

New rules negotiated through plurilaterals in e-commerce, domestic regulation, investment facilitation, disciplines for MSMEs, and gender “would likely be inherently non-discriminatory, because they involve domestic regulations that cannot be easily tailored to benefit specific trade partners, making concerns about “discrimination," like calculations of “reciprocity," less relevant".

The report maintained that the General Agreement on Trade in Services (GATS) offers a structure for new agreements in electronic commerce, domestic regulation for services, investment facilitation, disciplines for MSMEs and gender.

It explained the core features of the GATS, but did not reveal the gross asymmetries in market access commitments of Mode 3 concerning commercial participation and Mode 4 dealing with the movement of natural persons.

On electronic commerce, the report advocated that members must be guided by the Comprehensive Progressive Trans-Pacific Partnership (CPTPP), which had replaced the TPP (Trans-Pacific Partnership) Agreement.

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