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There’s A Crucial WTO Summit In Days. Can Members Agree On Anything?

There’s no point clinging to a one-sided romance with the WTO, writes Raj Bhala.

There’s A Crucial WTO Summit In Days. Can Members Agree On Anything?

India and the world can expect the 12th World Trade Organization Ministerial Conference will be a mixture of promises, hope, and despair.

Act I: Setting The WTO Ministerial Conference Stage

In days, the international trading community will focus its attention on the World Trade Organization’s Twelfth Ministerial Conference, or MC12. Will the WTO, a pillar of global economic governance, advance the rules-based liberalised trading system to which it is dedicated and on which the community relies?

There’s A Crucial WTO Summit In Days. Can Members Agree On Anything?

One extreme answer is ‘nope’. That’s what Indian Minister of Commerce Piyush Goyal and United States Trade Representative Katherine Tai suggested when they met on Nov. 3 and Nov. 22-23. Absent from the readouts of their meeting were details about how to reach ‘meaningful outcomes’ among the 164 WTO members at MC12.

<div class="paragraphs"><p>U.S. Trade Representative Katherine Tai, and Indian Commerce Minister Piyush Goyal meet in New Delhi, on Nov. 22, 2021. (Photograph: Piyush Goyal)</p></div>

U.S. Trade Representative Katherine Tai, and Indian Commerce Minister Piyush Goyal meet in New Delhi, on Nov. 22, 2021. (Photograph: Piyush Goyal)

The opposite extreme answer is “yup.” That’s what the WTO projects on its website, and what it suggests in emails distributed to trade geeks like this columnist, namely, that various negotiating groups are progressing toward a successful outcome.

Both extremes should be eschewed, and the better approach delineates two types of expectations. William Shakespeare’s elegant categorisation in Act II Scene I of All’s Well That End’s Well sets the stage for what to expect from MC12:

Oft expectation fails, and most oft there where it most promises; and oft it hits where hope is coldest, and despair most fits.

First, some expectations go unmet. They correlate directly with their promise, i.e expectations that fail most spectacularly are those that promised the most grandly. That’s depressing, but no surprise. Second, other expectations ‘hit’—by which Shakespeare means to succeed—even when hope is faint, and despair would be appropriate. Therein are pleasant surprises.

India and the world, get ready for both, played out in two Acts, each comprised of three Scenes.

Act II: MC12 Expectations That Will Fail

On three promises—agriculture, fishing, and dispute settlement—which seemed so promising in the WTO’s early years, expectations of an ambitious outcome will fail.

Scene I: Unlucky Seven

Save for the December 2015 ‘Nairobi Package’ where WTO members agreed to dispense with agricultural export subsidies, set disciplines on export competition, ensure developing countries had the right to a Special Safeguard Mechanism (SSM), and deal with public stockholding (PSH) for food security, there has been no significant progress either on liberalising farm trade or rooting out distortions in it since the 1986-1994 Uruguay Round.

Market access, domestic support, and export subsidies were the three pillars of the Uruguay Round Agreement on Agriculture on the Doha Round agenda, launched in 2001, to strengthen. In 2003, this columnist wrote of “world agricultural trade in purgatory.” Purgatory is a big promise: souls cleansed in purgatory go to heaven.’

At MC12, hell is the better metaphor for farm talks.
<div class="paragraphs"><p>Three combine harvesters drive through a field of wheat, in Ust-Labinsk, Russia. (Photographer: Andrey Rudakov/Bloomberg)</p></div>

Three combine harvesters drive through a field of wheat, in Ust-Labinsk, Russia. (Photographer: Andrey Rudakov/Bloomberg)

Despite a July 29, 2021, draft text, followed by a revision expected before the Conference, members will fail to resolve most, if not all, of the seven specific issues about which they’ve been arguing for one-quarter of a century: domestic support; market access; export competition; cotton subsidies; PSH; SSM; and transparency. After all, “no major shifts in positions have occurred” toward convergence on the three primary issues, domestic support, PSH, or market access. At best, members might accept Singapore’s good idea that World Food Program humanitarian food purchases be exempt from export restrictions, and push on to a(nother) work plan.

Scene II: Keep Fishing

No less than the new, first-ever, female person of colour to lead the WTO as Director-General, Dr. Ngozi Okonjo-Iweala, hopes for an agreement to stop the ‘tragedy of the commons’ that is drowning the world fishing industry. As world population heads to 10 billion by 2050, the 56% food gap between crop calories produced in 2010 and those needed in 2050 must close.

Sorry, Kansas, beef ain’t the closer. Beef production entails significant methane emissions as cattle are the world’s top agriculture greenhouse gas emitter; releases additional carbon dioxide thanks to cutting forests to create new pastureland; and consumes 1,847 gallons of water per pound of beef.

<div class="paragraphs"><p>A worker stacks sliced beef steaks on a tray, in Paramus, New Jersey, on May 12, 2020. (Photographer: Angus Mordant/Bloomberg)</p></div>

A worker stacks sliced beef steaks on a tray, in Paramus, New Jersey, on May 12, 2020. (Photographer: Angus Mordant/Bloomberg)

Rather, fish could be an environmentally sustainable alternative. But only if at MC12…

  • China and other sea powers with major commercial fleets stop subsidising most aspects of operations that facilitate illegal, unreported, and unregulated (IUU) fishing.

  • China backs away from exempting waters it claims in its disputed Nine-Dash Line.

  • India and other developing countries stop claiming all their fisherman are artisanal and thus should be free of encumbrances.

  • America persuades other WTO members to stop using forced labour in IUU fishing.

  • All WTO members agree to prudent resource stewardship to allow fisheries to restock, plus fair special and differential treatment for poor countries.

All that won’t happen. The draft fishing deal will remain at sea, grounded by bracketed text on these and other topics.

Scene III: Rule Of Law Erosion

Until December 2019, the WTO delivered on the Uruguay Round promise to advance the international rule of law through adjudication of disputes. But that month, the Appellate Body ceased to function. To be sure, Panels continue to operate, and a minority of members agreed to an arbitral Multi-Party Interim Appeal Arrangement.

Alas, MC12 will not address the core dilemma concerning judicial interpretation. On the one hand, how can Members assure the Appellate Body, like any judicial authority, has discretion to apply an array of interpretative methodologies, all of which Articles 31-32 of the Vienna Convention on the Law of Treaties permit, to reach the best possible rulings on the meaning and application of vague or ambiguous terms in WTO rules? On the other hand, how can Members ensure the Appellate Body does not engage in judicial activism and usurp the legislative function of the Ministerial Conference and General Council?

Indeed, MC12 won’t even draw a road map for how to deal with what, in essence, is an American fixation on exporting its strict textualist ideology to the rest of the members, none of which are so narrow-minded about judicial philosophies in their legal systems.

So, expect continued deterioration in the multilateral rule of law.
<div class="paragraphs"><p>The WTO’s Appellate Body, then headed by Ujal Singh Bhatia, in Geneva, on June 8, 2017. (Photograph: WTO)</p></div>

The WTO’s Appellate Body, then headed by Ujal Singh Bhatia, in Geneva, on June 8, 2017. (Photograph: WTO)

Of the 8 Panel Reports issued since December 2019, 7 have been appealed. To what? The Appellate Body! But with its death, the appeal goes into a legal void. The losing WTO member lodging the appeal knows that, pending the appeal outcome, the WTO cannot adopt the underlying Panel Report. Loser wins. It doesn’t have to comply with Panel recommendations that it remove its illegal trade measures.

Act III: MC12 Expectations That Will Hit

On three topics, where throughout the WTO’s life despair encircled cold hope—women’s rights, intellectual property flexibilities, and climate change—expectations of modest progress will succeed.

Scene I: Women Actors

Domestic regulation of services under Article VI of the General Agreement on Trade in Services is about limiting non-tariff barriers or NTBs to cross-border supply of services. One pernicious NTB the WTO traditionally ignored is discrimination against women.

Expect MC12 to confirm a precedent-setting rule:

For the first time in multilateral trade history, women will receive equal protection when WTO members set authorisation requirements for service providers.

So, for example, it will be illegal to discriminate against them when fixing licensing rules.

No, this reform won’t extend to treaties other than GATS, and there may be loopholes to it. And no, the reform isn’t as ambitious as Article 23:4 of the Comprehensive and Progressive Agreement for a Trans-Pacific Partnership or Article 23:9 of the United States Canada Mexico Agreement. Both forbid discrimination against women in employment, and USMCA also does regarding sexual orientation and gender identity. Still, given its patriarchal participants, MC12 producing a consensus for the change, and these old guys adding on a Joint Ministerial Declaration for the Advancement of Gender Equality and Women’s Empowerment, will be pleasant surprises.

Scene 2: Backstage Drugs

Amidst a pandemic of hopelessness and despair, MC12 might yield a patent protection waiver under the Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPs for Covid-19 vaccination production. That won’t be a panacea for the scourge. Its causes include insufficient warehousing (particularly cold storage) capacity and decrepit infrastructure distribution networks. But, especially in WTO members with manufacturing capacity and technological knowhow, a waiver could boost output, plus facilitate resilience against the next pandemic.

MC12 will extend the existing ban on non-violation nullification and impairment TRIPs lawsuits. That forbids members from claiming an action of another member deprives the claimant of an expected benefit under the TRIPs Agreement, even though the respondent didn’t violate any specific TRIPs obligation. That extension won’t address the concern non-violation complaints should be entertained to ensure a proper balance of rights and obligations under the Agreement.

But, the extension will help India and other developing countries that believe non-violation complaints about intellectual property rights are inappropriate because they create legal insecurity and curtail flexibility.
<div class="paragraphs"><p>A vial of the Pfizer-BioNTech Covid-19 vaccine, in Belgrade, Serbia, on Jan. 10, 2021. (Photographer: Oliver Bunic/Bloomberg)</p></div>

A vial of the Pfizer-BioNTech Covid-19 vaccine, in Belgrade, Serbia, on Jan. 10, 2021. (Photographer: Oliver Bunic/Bloomberg)

Scene III: Not Entirely Climate Change ‘Blah Blah Blah’

The WTO isn’t the pre-eminent international organisation to deal with climate change adaptation and mitigation. Yet, is it reasonable to expect MC12 might address untoward environmental effects of trade?

Yes, if the expectation isn’t too grand.

First, MC12 will adopt the Declaration on Responding to Modern Sanitary and Phytosanitary Challenges, which the WTO SPS Committee drafted, concerning challenges in trade in food, animals, and plants, namely: “population growth and distribution; changing climatic conditions and associated stresses on food production; shifting pressures due to pests and diseases; and innovation in tools and technologies.” The Declaration will set a work program on sustainable agri-food systems.

Unfortunately, there’s no sense of urgency. Thematic meetings aren’t scheduled until March and June 2022.

Second, the WTO will advance the Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade it commenced in November 2020. Expect MC12 to produce an IDP statement covering topics such as:

  1. Transparency and monitoring trade trends;

  2. Promoting best practices;

  3. International cooperation;

  4. Collective approaches;

  5. Policy coherence; and

  6. Capacity and technical assistance needs.

<div class="paragraphs"><p>Solid waste bound for landfill, in Sharjah, U.A.E., on July 13, 2021. (Photographer: Christopher Pike/Bloomberg)<br></p></div>

Solid waste bound for landfill, in Sharjah, U.A.E., on July 13, 2021. (Photographer: Christopher Pike/Bloomberg)

Unfortunately, only 18 WTO members are IDP participants. Petrochemical behemoths such as China, Saudi Arabia, and America haven’t shown up. “Come on,” as President Joe Biden would say.

Act IV: Beyond MC12, A Different Stage?

Though originally classified as comedic, All’s Well That Ends Well now is counted as a ‘problem’ play, because of its tragic elements.

What will MC12 be?

The answer depends on whether (1) India and the world realise expectations of ambitious multilateral or plurilateral deals are doomed, and (2) they channel hopelessness and despair constructively toward last-minute breakthroughs.

Even if they do, they’ll do well to recall Shakespeare’s play shifts from Paris to Florence. Likewise, MC12 might accelerate a shift away from the multilateral stage.

There’s no point clinging to a one-sided romance with the WTO. MC12 may prove the love once professed for the WTO following its birth now is unrequited. For all to be well in world trade, the ends may have to play out on the stages of regional and bilateral trade agreements.

Raj Bhala is the inaugural Brenneisen Distinguished Professor, The University of Kansas, School of Law, Senior Advisor to Dentons U.S. LLP, and Member of the U.S. Department of State Speaker Program. The views expressed here are his and do not necessarily represent the views of the State of Kansas or University, Dentons or any of its clients, or the U.S. government, and do not constitute legal advice.

The views expressed here are those of the author, and do not necessarily represent the views of BloombergQuint or its Editorial team.