in Abu Dhabi, a ministerial summit with multiple challenges

2024-02-21 15:45:32

The XIIIe World Trade Organization (WTO) Ministerial Conference will be held from February 26 to 29, 2024 in Abu Dhabi (United Arab Emirates). Between 1996 and 2022, the 12 ministerial summits have produced few results in total. We can count three successes in 26 years: the agreement on trade facilitation in Bali in 2013, which enabled improvement of customs procedures around the world ; the agreement on the elimination of export subsidies in agriculture in Nairobi in 2015; the fisheries agreement in Geneva in 2022, which prohibits subsidies to vessels operating illegal, unreported or unregulated fishing and those contributing to the fishing of “overfished” stocks.

In Abu Dhabi, many subjects, which today divide the 164 member countries, must be discussed. Firstly: the reform of the dispute settlement body (ORD), whose appeal mechanism has been blocked since December 2019.

Blocking dispute resolution

The DSB was created at the same time as the WTO, in 1995. This body allows any WTO member country to file a complaint against another that has violated multilateral trade rules. Once the complaint is filed with the WTO, the disputing parties have 60 days to negotiate an agreement between them.

If this consultation phase is unsuccessful, the complainant can ask the WTO to convene a panel which provides legal conclusions. Both parties to the dispute may appeal following these initial recommendations. If this is the case, the appellate body may confirm, modify or go against the initial recommendations. If the plaintiff is found in favor, the defendant must then bring the measure(s) concerned into compliance. If the latter refuses, the complainant may be authorized to take retaliatory measures against the defendant.

The DSB has played a key role in resolving commercial disputes. Since 1995, 621 consultation requests have been issued and overall involved 53 countries as complainants and 55 as respondents. Eliminating request renewals and taking into account cases with multiple complainants, there have been, since 1995, 616 cases of complaints from one country against another.

Table 1 shows the distribution of countries according to income groups and the most frequent actors. Developed and developing countries have used the DSB to resolve their disputes, and middle-income countries have brought complaints against richer countries. The disputes have covered a wide variety of subjects: anti-dumping measures, subsidies, agreements on agriculture, technical barriers to trade, sanitary and phytosanitary measures, etc.

In around one in six cases (108 out of 616), disputes were resolved through consultation, before a panel was convened or produced a report. Among the procedures which used a panel and which were subject to decision-making (295 out of 616), the most frequent outcomes were a cooperative solution (mutually negotiated solution or implementation of the panel’s recommendation ) and there are only twenty cases of authorization for the application of reprisal measures.

For four years now, the DSB, long considered the “crown jewel” of the multilateral trading system, has been in crisis with the blocking of the appointment of members of the appellate body by the United States. The latter is no longer able to function even though more than 70% of the panels’ conclusions have been appealed.

The average per year of disputes brought to the DSB fell from 23.8 between 1995 and 2018 to 6.5 between 2020 and 2023. Most panel reports are now subject to appeal “in a vacuum” and the resolution of these disputes is pending. There is an urgent need to find a solution, but it will be difficult for the American administration to make concessions on this issue in a presidential election year.

A new agreement on fishing

Subsidies for fishing activities concern both subsidies which can be described as beneficial, because they are intended to conserve and manage fishing resources, subsidies contributing to overcapacity or overfishing, and subsidies which are difficult to obtain. estimate the impact on fishing activity.

At the WTO, discussions focus on reducing subsidies contributing to overcapacity or overfishing, the most important for most members, with the exception of the United States and South Korea (graph 1). These subsidies include capital subsidies (purchase, modernization of vessels, etc.), intermediate consumption (fuel, ice, bait), personnel costs, income or price supports, or covering losses, or subsidies fishing in areas outside the jurisdiction of the country.

The sticking points in this issue concern special and differential treatment, that is to say taking into account the individual situations of WTO member countries (for example the distinction between least developed countries/developing countries/ developed countries, criterion crossed in this discussion with the case of the 20 countries practicing the largest subsidies) to define a specific rule for reducing subsidies by group of countries.

On the one hand, the United States wants an ambitious agreement with as few exemptions as possible. On the other hand, developing countries want to authorize significant flexibilities for their benefit.

Trade in electronic transmissions

The electronic transmissions business is a rapidly growing business. It corresponds to international online deliveries of music, e-books, magazines, daily newspapers, films, video games, etc. In 2020 and 2022, it was decided to renew a moratorium, temporary, which exempts these transactions from customs duties. In Abu Dhabi, participants will have to decide on either a new temporary moratorium, a permanent moratorium, or to end it.

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India, Indonesia and South Africa are already against a permanent moratorium: these countries say they are interested in taxing electronic transmissions, because this trade is booming. However, a recent assessment shows that at the global level, the potential losses in public revenue are low and that for these countries, they could be easily offset by a small increase in value added taxes.

Intellectual property and Covid-19

The Geneva conference in 2022 authorized a number of exemptions from the agreement on trade-related intellectual property rights to facilitate the production and export of vaccines against Covid-19. Discussions now focus on extending these exemptions to screening tests and therapies.

South Africa, India and other developing countries, but also less developed countries, are in favor of this extension. A coalition of the European Union, the United Kingdom and Switzerland opposes this, on the grounds that such tolerance would compromise innovation spending in the health sector and is not necessary for public health reasons .

Agriculture and food security

In Abu Dhabi, seven topics on agriculture and food security will be discussed:

1/No domestic support or national support for farmers : the Cairns group (South Africa, Argentina, Australia, Brazil, Canada) wants a significant reduction in domestic support. The European Union and the G10 countries (Switzerland, Japan, South Korea, Norway, Iceland, etc.) oppose it.

2/Market access : the United States wants a significant reduction in customs duties in agriculture; the European Union, the G10 countries and India are against.

3/The special safeguard clause is a protective instrument reserved for developing countries to temporarily increase their customs duties in agriculture during a strong growth in imports or a fall in prices. India wants to facilitate access to this instrument for developing countries; the United States is against it.

4/The export restrictions on agricultural products, implemented regularly by countries such as Argentina, India or Vietnam, play a certain role in the volatility of agricultural prices, volatility which can harm the interests of net importing countries and particularly poor countries among them (Bangladesh , Pakistan, many African countries). Discussions focus on tougher disciplines on these restrictions.

5/The export subsidies and aid : Canada, Chile and Switzerland want to strengthen disciplines on export credits, international food aid and the operations of state exporting companies.

6/The subsidies for cotton producers : it is a traditional subject of discussion at the WTO, pitting producer and exporting countries such as Benin, Burkina Faso, Mali and Chad against the European Union and the United States, the former wanting an end support programs for local secondary sectors.

7/The public stocks established for food security are programs for purchasing, storing and distributing food in the event of increasing insecurity. A number of developing countries, including India, want a permanent peace clause on stocks built up at administered or minimum prices (a temporary peace clause was adopted in Nairobi in 2015). The countries exporting these foodstuffs are against it.

On all these subjects, the positions of member countries seem difficult to reconcile. The only decision to be the subject of consensus today is access to the WTO of the Comoros and Timor-Leste.

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