Abu Dhabi ahoy: The WTO’s reform path remains strewn with hurdles

There is unanimity among members on the need for WTO reform. Their opinions, however, differ on the processes for it. The MC-12’s outcome chose its words carefully in emphasizing reform through a “member-driven process." The Senior Officers Meeting (SOM) summary points to a need to “engage with a wider cross-section of stakeholders." It is clear that governments undertake their own consultative processes with businesses, NGOs, etc. The WTO also organizes annual public forums for non-government stakeholders. However, any opening up of the WTO’s inter-governmental structure to direct engagement by external stakeholders would run the risk of resource-rich industries or NGOs gaining access while MSMEs, farmers or fish-workers from the developing world get marginalized. Caution is therefore needed to preserve the core of the WTO as a member-driven organization.

Then, negotiation aspects require reform. The MC-11 had opened up WTO processes for plurilateral discussions between a few groups of members, a significant departure from the practice of multilateral negotiations. The process of small clubs is inherently exclusionary. But it does not have to be. The SOM summary highlights two initiatives—Services Domestic Regulation (DR) and Investment Facilitation for Development (IF). Of these, the need for disciplines on DR is embedded in the WTO’s General Agreement for Trade in Services, and India had been a proponent of multilateral negotiations till about 2011. The issue of IF does not have any specific negotiation mandate, but negotiations since 2017 have resulted in support from 112 out of 164 members. Members like India and South Africa have stayed out of those joint initiatives as a matter of principle—that such plurilateral initiatives drive a wedge in the framework of multilateralism and put on hold the unfinished business of mandated negotiations, such as the one on public stock holding for food security.

The challenge at MC-13 is whether the ideal of multilateralism can be woven into each of these areas to ensure meaningful participation in rule-making by all members:

E-Commerce: Since 1998, WTO members have been progressively extending a moratorium on customs duties for electronic transmissions. With rising product digitalization, however, there has been a rethink among developing countries on the implications of the moratorium, particularly when imports of digitalized products are high. In a 2019 research paper, UNCTAD estimated that the potential tariff revenue loss to developing countries was $10 billion in 2017. Members need a common understanding of the scope of that moratorium so that it does not usurp policy space, particularly for services such as 3-D printing or IT-enabled services.

Trade and the environment: The WTO has always had a dedicated Committee on Trade and Environment, tasked with understanding the relationship between trade and the environment, with a view to achieving sustainable development. The WTO’s preamble recognizes the significance of facilitating cooperation for protection of the environment in a way consistent with needs at different levels of economic development.

The SOM summary notes a need to ensure that trade serves as a solution to our climate crisis. This will need open and clear discussions, particularly about the need to honour obligations under multilateral environmental agreements, such as the Paris Agreement, including on technology transfers and financial assistance—promises that remain unfulfilled. Also crucial is a need to call out unilateral trade measures such as the European Union’s (EU) Carbon Border Adjustment Mechanism, which, by mandating that imported products meet the same level of emission norms that the EU implements, runs counter to the balance of differential commitments under the Paris Agreement. These also go against the WTO obligations of not differentiating between like products based on methods of production or emissions during production.

In general, it is important that commitments are implemented harmoniously even as we ensure that unilateral trade measures do not hamper trade and climate change mitigation. The WTO is reportedly working on a methodology for determining carbon prices aligned with the obligations of members under the Paris Agreement. A formal process to discuss this proposal should be initiated in Abu Dhabi.

TRIPS waiver: The MC-12’s TRIPs decision achieved agreement on a limited intellectual property (IP) waiver for covid vaccines after tenuous discussions on balancing IP’s role in stimulating innovation and the need for a waiver to ensure affordable access to life-saving vaccines. Members, however, differed on the waiver’s extension to covid diagnostics and therapeutics to December 2022. Eleven months down the line, this has not been settled, and the SOM summary kicks that goal post to the MC-13.

Can the MC-13 deliver? The path to success is strewn with challenges. It will need deftness and dedication to arrive at an outcome that marks progress and upholds the recent G20 vote of confidence in multilateral solutions which work for all.