The gridlocks at the WTO

Published March 4, 2024
Director general of the World Trade Organization (WTO) Ngozi Okonjo-Iweala addresses delegates during a session on fisheries subsidies during the 13th WTO Ministerial Conference in Abu Dhabi of February 26.—File photo
Director general of the World Trade Organization (WTO) Ngozi Okonjo-Iweala addresses delegates during a session on fisheries subsidies during the 13th WTO Ministerial Conference in Abu Dhabi of February 26.—File photo

Fisheries, agriculture and World Trade Organisation (WTO) reforms were at the heart of intense negotiations among trade ministers from around the world who gathered in Abu Dhabi last week.

Here are the main issues that were on the table during the ministerial conference known as MC13, which saw an extension of an e-commerce moratorium but no deals on agriculture and fisheries.

Fisheries — the next step

During the WTO’s last ministerial meeting, held at its Geneva headquarters in June 2022, trade chiefs managed to nail down a historic agreement banning harmful fisheries subsidies after more than two decades of negotiations.

Debate surrounds a rule allowing countries, such as China, to self-declare as developing and access trade benefits

The agreement banned subsidies that contribute to illegal, unreported or unregulated fishing, as well as for fishing of overstretched stocks and in unregulated high seas, with additional flexibility baked in for developing nations.

The agreement, which has yet to take effect, was seen as a major achievement, marking just the second accord concluded by the WTO’s full membership since the global trade body was created in 1995, and the first focused on environmental protection.

In Abu Dhabi, countries had aimed to finalise a “second wave” of negotiations towards broadening the net to also include a ban on subsidies that contribute to overfishing more broadly. While observers had said an agreement on the second portion of the deal was possible, in the end, it proved elusive.

One bone of contention was the text’s two-tier approach, entailing greater surveillance, constraints and penalties for the countries that dish out most fishery subsidies.

Another sticking point was a demand from India, which single-handedly forced WTO members to water down the initial agreement for a 25-year transition period — something many countries reject as too long.

Covid booster?

Despite the very vocal resistance from pharmaceutical companies and their host countries, WTO members in 2022 agreed to a temporary patent waiver for Covid-19 vaccines aimed at providing more equitable access to jabs.

But they pushed off efforts to extend the waiver to patents for other products needed to fight the pandemic, like tests and treatments.

The plan had been to decide on that issue by December 2022, but the deadline was repeatedly postponed amid continued disagreement.

There was deep disagreement over a demand from India and others for a temporary measure, allowing countries to hold public stockpiles of food, to be made permanent

It now appears that India and South Africa, who championed the waiver, have given up the fight.

Fallow harvest for agriculture

Agriculture has always been a highly sensitive issue at the heart of discussions at the WTO, and ministers in Abu Dhabi were unable to agree on a new package of rules.

At a ministerial meeting in 2015, WTO members took the historic decision to eliminate export subsidies for agricultural products. Many now want action on domestic measures that distort trade, and discussions revolved around issues including market access and export competition and restrictions.

Food security was also once again on the agenda, with deep disagreement over a demand from India and others for a temporary measure, allowing countries to hold public stockpiles of food to be made permanent. They also wanted it extended to encompass all developing countries and to include other staples like cotton.

Several countries fiercely opposed those moves, warning that such public stocks could disrupt global food markets if released beyond a country’s borders.

Elusive reform

Since its creation in 1995, the WTO is credited with facilitating globalisation by making international trade more fluid. But weighed down with the post-Cold War rules it inherited from its predecessor, the General Agreement on Tariffs and Trade (GATT), the organisation is struggling to show it remains relevant.

Since her arrival at the WTO helm in 2021, director-general Ngozi Okonjo-Iweala has infused fresh energy into that quest. During the ministerial meeting a year later, countries agreed to a roadmap towards reform.

But so far the discussions have only progressed on smaller technical issues rather than on reforming the organisation itself and its rules.

Among the rules up for debate is one allowing countries themselves to decide if they should be labelled a developing nation and access the trade benefits that entails. The fact that China is among the countries to claim that label has sparked calls from Washington and others to demand an end to the self-declaration practice.

Perhaps the thorniest issue is how to overhaul the WTO’s embattled dispute settlement system.

Washington brought the WTO’s Appellate Body to a grinding halt in December 2019 after years of blocking the appointment of new judges.

The United States had long accused the appeals court of unfair treatment and overreach, insisting it could not rule on issues involving “national security”.

Countries agreed during the 2022 ministerial to get a new system up and running this year, but so far the discussions appear hopelessly blocked.

At Abu Dhabi, the final outcome mainly reiterated the commitment made at MC12 to have a fully and well-functioning dispute settlement system in place by 2024.

Published in Dawn, The Business and Finance Weekly, March 4th, 2024

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