How can the WTO help its ‘weaker’ members?
The 12th Ministerial Conference (MC12) of the World Trade Organization (WTO) finally took place during June 12-16, 2022 after being cancelled twice due to the Covid-19 pandemic. The MC12 was held at a time of unprecedented global economic downturn.
Prior to the MC12, the Director General of the WTO, Okonjo-Iweala, put forward five possible deliverables for MC12. These are: (i) food security and agriculture; (ii) a fisheries subsidies agreement; (iii) WTO's response to emergencies, including a waiver of certain requirements concerning compulsory licensing for Covid-19 vaccines; (iv) a decision on extending or discontinuing the current moratorium on levying customs duties on electronic transmissions; and (v) WTO reforms.
The WTO has termed the outcome of the MC12 successful, saying that the organisation has secured multilaterally negotiated outcomes on some key trade issues. The "Geneva package" confirms the historical importance of the multilateral trading system and underlines the important role of the WTO in addressing the world's most pressing issues, especially at a time when global solutions are critical.
For least developed countries (LDCs) and developing countries, the Geneva package is a mixed bag. Of course the MC12 is a success, since the past several ministerial meetings failed to conclude any significant agreements. Despite agreements on a few key trade initiatives by 164 member countries of the WTO, the MC12 declaration provides a compromised outcome on some areas.
Food security and agriculture has been the topmost agenda for LDCs and developing countries, particularly in the context of high food prices. More than 80 developing countries were trying to secure a permanent solution to the problem of public stock for protecting farmers' rights and for expanding food security programmes by giving out higher support to farmers. Developed countries wanted to take up the issue in the MC13. The MC12 declaration states that the WTO members recognise the need for adequate food stocks that can contribute to domestic food security and encourage WTO members to release their available surplus on international markets, following the WTO rules. Poor countries, which are disproportionately being affected by the food price hike, are expected to benefit from this measure.
Another important outcome of the MC12 is the agreement on fisheries. This agreement was being negotiated for the last two decades or so. The objective of the negotiation on fisheries subsidies was to reduce and eliminate subsidies and other practices in fishing which led to overcapacity and overfishing. The agreement recognises the appropriate and effective special and differential treatment for LDCs and developing countries. In case of subsidy to a vessel or operator engaged in illegal, unreported, and unregulated fishing, the agreement provides exemption to LDCs and developing countries for a period of two years within exclusive economic zones (EEZ). Moreover, in case of subsidies for fishing or fishing-related activities regarding an overfished stock, LDCs and developing countries will be exempted for a period of two years from the date of entry, to implement this agreement. However, during the negotiating phase, there was a lack of consensus on fisheries subsidies. Developing countries asked for a 25-year transition period for subsidies. The argument is based on the reality that the interests of these countries' fishermen should be protected. They sought a fair, balanced and just outcome on fisheries subsidies for the future of their fishing industries. LDCs and developing countries do not operate large fleets and their fisheries sectors are mostly small-scale and consist of poor fishing communities.
The third issue is the waiver on the agreement on Trade Related Intellectual Property Rights (TRIPS). India and South Africa made a submission to the Council of TRIPS on October 2, 2020 requesting a temporary "waiver from certain provisions of the TRIPS Agreement for the prevention, containment and treatment of Covid-19." The US was in favour of waiver of patent rights only for Covid vaccines, while several developed countries were against this. The MC12 decision offers a patent waiver for manufacturing Covid vaccines. The waiver does not apply to diagnostics and therapeutics. However, a decision on that will be taken in six months. This decision on patent waiver will last for five years.
Fourth is the issue of the extension of the moratorium on custom duties on e-commerce. Developing countries have been opposing the moratorium and have requested for its withdrawal. The General Council of the WTO established Work Programme on E-commerce in 1998. At that time, LDCs and developing countries had little idea of the importance and relevance of this decision. They could also not have predicted the growth of electronic commerce and its economic potential. Due to the moratorium on customs duty, LDCs and developing countries are now losing millions of dollars. Therefore, many developing countries such as India, South Africa and Pakistan want an end to this provision as they are losing revenue. Hence, they have been opposing any permanent moratorium on custom duties on electronic transmissions. The MC12 agreed on maintaining the current practice of not imposing custom duties on electronic transmissions until the next WTO ministerial conference.
The fifth issue is about WTO reform. Since the WTO works on the principle of the consensus of all its members, it has been very difficult to arrive at decisions during most of its journey since 1995. However, one has to agree that the WTO has successfully provided a framework of trade rules which provides predictability for commercial transactions across borders. It has also provided a platform for amicably settling trade disputes.
On the other hand, this rules-based system has been in crisis for quite some time. The Doha round, launched in 2001, is yet to be completed due to opposition from various blocs. The global financial meltdown of 2008, the ongoing economic crisis in view of the Covid-19 pandemic and the Russia-Ukraine war have given rise to protectionist measures. The role of the WTO and other global institutions has been undermined by their powerful members. However, the WTO is an important public good and it should be strengthened and protected. As for a WTO reform, it should uphold its foundational principles, which is to take decision by consensus and protect the interests of LDCs and poor countries through special and differential treatment provisions.
Dr Fahmida Khatun is the Executive Director at the Centre for Policy Dialogue. Views expressed in this article are personal.