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Buenos Aires Ministerial preview: Will the WTO have to tango without the US?

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It is becoming increasingly common for delegates to head to a World Trade Organization (WTO) ministerial conference with little idea of what the outcome will be.

This is particularly the case with next week’s meeting in Buenos Aires (December 10-13), even though lengthy preparatory sessions in Geneva may have sorted out some issues in the final hours before delegations fly out to Argentina.

Part of the problem is that they have been dealing with a smattering of apparently random topics. The preparations mean they still have only a hazy notion of which are more likely to see actual agreement, which will fall into the WTO’s default setting of a “work programme”, and which will drop out completely.

On top of that, for the first time ever, they may have little clue as to whether their ministers will be able issue a concluding declaration. The US, with its new trade priorities, has been blocking what is normally routine: a statement of faith in the multilateral trading system — the reason why the WTO was created in the first place — and the priority to be given to development.

Since the Doha Round negotiations stalled in 2008, the topics put before the ministerial conferences have become much more diffuse. Some of them were drawn from the 2001 Doha agenda even although members are divided about whether that agenda still exists.

The main deals in Bali in 2013 were about acquiring stocks for food security and cutting red tape for goods crossing borders (‘trade facilitation’); in Nairobi two years later they included scrapping agricultural export subsidies. All three subjects came from an unbundled Doha package. 

This time the most promising candidates seem to be further refinement of the 2013 deal on acquiring food security stocks, making food export restrictions more transparent, new disciplines on some aspects of fisheries subsidies, and future work on a raft of issues — from domestic support for farmers to electronic commerce and helping smaller companies trade more effectively.

Even the apparently simpler issue of food export restrictions has turned into a bargaining chip for countries who argue that focusing on this would mean a lower priority for their own preferred topics.

The WTO used to favour grabbing “low-hanging fruit”. Now, “cherry-picking” has become a dirty word.

 

Confused and confusing US signals

To some extent, these are variations on what have become familiar WTO themes. What is new this time is a major question about the future of the whole WTO system, and the approach of Donald Trump and his US Trade Representative Robert Lighthizer.

How much of this becomes an explicit issue in Buenos Aires remains to be seen. Delegates may find themselves focusing on the issues proposed for decisions, and some argue that despite his reservations about key aspects of how the WTO works, Lighthizer doesn’t want to wreck it.

Nevertheless, officials in Geneva are deeply worried, but also puzzled by the contradictory signals from Washington. Many wonder if the US has a coherent approach at all, a problem exacerbated by the fact that key members of Lighthizer’s team still have not been appointed, including the US ambassador to the WTO.

What is new this time is a major question about the future of the whole WTO system, and the approach of Donald Trump and his US Trade Representative Robert Lighthizer.

For months Lighthizer has played down the chances of a significant deal in Buenos Aires. “We do not advocate a meeting that seeks major deliverables or significant negotiated outcomes,” he told two Congressional committees in June. But more recently the US has opposed some decisions on the grounds they are not ambitious enough.

The US has also surprised WTO members by submitting its own proposal for a decision at the ministerial conference. This would set much tighter disciplines on members to meet deadlines for notifying their use of farm subsidies and other trade measures.

It would introduce penalties if they are seriously in arrears, including limiting their participation in decision-making. Although other members are also concerned about late notifications, the proposal itself has no support.

Binning ‘motherhood and apple pie’?

Then came the US refusal to allow WTO ministers to declare their routine commitment to the multilateral trading system — until to now, ‘motherhood and apple pie’ (as Americans would put it) for all WTO members — and development, a priority developing countries.

The US did the same at meetings of the Organization for Economic Cooperation and Development (OECD) and Asia-Pacific Economic Cooperation (APEC).

Trump’s approach to trade focuses on zero-sum bilateral deals and trade balances, not win-win multilateral rule-making. It marks a complete about-turn from the American approach that helped set up the system in the first place.

Without consensus on a formal declaration, the meeting could end with a personal statement by the conference’s chairwoman, Argentine minister Susana Malcorra. It’s an approach previously reserved for occasions when decisions had been ruled out in advance.

Causing even more concern in Geneva is a US block on the appointment of new WTO appeals judges, threating the WTO dispute settlement system. Although this is not on the agenda for Buenos Aires, it was a concern raised by ambassadors in the final preparatory meetings in Geneva. 

The appointments are needed to replace Appellate Body members whose terms have ended or are ending. Already, the seven-member Appellate Body will see its number reduced to four on December 11, although those whose terms have expired will continue to work on cases they have already started.

The US’s justifications are procedural, but officials and analysts blame Lighthizer’s dissatisfaction with some rulings, particularly those against a method (‘zeroing’) that the US has used in anti-dumping calculations. Lighthizer has previously represented steel and other US industries seeking tough remedies against dumping.

Only six weeks before Buenos Aires, Donald Trump himself claimed the WTO was unfair because the US lost almost all “lawsuits” (untrue), and because the US did not have a majority of dispute panellists (a misunderstanding of how dispute settlement works and how panellists are chosen).

In Buenos Aires, a number of delegations may well be as concerned about rescuing the system from the US administration’s hostility as about the issues actually up for decision.

Fish and food stocks

In the final week of preparations, predictions changed daily about which of those issues were the most likely to succeed in Buenos Aires.

Fisheries subsidies, at one time the favourite candidate, started slipping. Members are under pressure to strike a deal that would implement targets for 2020 in goal 14 of the UN’s 2030 Agenda for Sustainable Development.

Consultations continued over the final weekend (December 2–3) as the only possible decision appeared to be a commitment to plunge straight back into talks in the new year.

It had been clear for some time that members were still too divided to strike a deal on how to tackle subsidies that cause over-fishing.

Then, hopes faded of a deal on tackling illegal, unreported and unregulated (IUU) fishing as differences emerged, for example on who decides whether an activity is illegal — an issue that is entangled with territorial disputes. Talks continued into Monday, December 4.

Without a deal on fisheries, officials said the best hope of a decision in Buenos Aires might be an update of the 2013 agreement on public stockholding for food security in developing countries, which is already effective.

Neither stockholding nor food security is a problem under WTO rules. Difficulties arise only if the stocks are acquired at government-supported prices, bringing the programmes into WTO domestic support disciplines.

The 2013 decision is temporary until a permanent solution is agreed. It shields developing countries from legal challenge if the purchases take the calculated support above their WTO entitlements. In return, the countries concerned have to meet transparency requirements to allay concerns of other countries that the supported stocks will not affect supplies and prices on international markets.

India and other countries say the transparency requirements are too onerous, so one option for a permanent solution would be to tweak these requirements. India and company prefer changing the rules on domestic support. They face opposition from a number of other countries, including the US, EU and agricultural free traders such as Australia.

Domestic farm support and export restrictions

Some other proposals on stockholding are linked to curbing domestic support as a whole. But since at best members will agree to continue work on domestic support after Buenos Aires, this is unlikely to be a solution for stockholding next week.

Worse, members are said to differ on possible terms of reference for future work on domestic support, which suggests the meeting will produce little more than a bland statement on this. 

If a deal can be struck on public stockholding, India and its allies might drop their objection to an apparently innocuous proposal on food export restrictions.

This is an issue affecting the food security of importing countries such as Japan and Switzerland. For Buenos Aires, no major new disciplines have been proposed. Instead, Singapore is seeking a decision to clarify members’ obligations to notify the WTO when they restrict exports in order to deal with domestic shortages.

It also wants to prevent the restrictions from obstructing purchases by the World Food Programme’s relief efforts.

Although some countries have concerns about both aspects, officials say wording should be found to allay the concerns — provided India and others drop their objection to this issue being agreed in isolation. A deal on public stockholding might do the trick, but nothing is guaranteed.

Other agricultural issues have also been discussed, including market access, and a special safeguard mechanism for developing countries to raise tariffs temporarily to deal with import surges and price falls. Differences are so wide that few see any chance of a decision next week.

The same goes for a number of other proposed topics, including on: “investment facilitation”; micro, small and medium size enterprises (MSMEs); and electronic commerce.

 

“If an issue doesn’t get on this one, there’s another ministerial coming along in two years. What matters at any given ministerial is that it keeps the lights on in the WTO.”

 

Don’t worry, another will come along soon…

 

Should we be optimistic about next week’s conference? It depends who you talk to. Even then, “yes” has two flavours.

WTO spokesman Keith Rockwell says he’s “not discouraged” because of the efforts a wide range of members have put into the preparations, including with their own proposals.

“A number of members which heretofore have not been seen in the forefront of leadership are taking up the mantle,” he told IEG Policy.

Some would not even be discouraged if Buenos Aires produced no decision of any significance. Ministerial conferences are “like buses, not comets,” says Robert Wolfe of the School of Policy Studies, Queen’s University, Ontario.

“If an issue doesn’t get on this one, there’s another ministerial coming along in two years. What matters at any given ministerial is that it keeps the lights on in the WTO.”

Wolfe is not discouraged by the US stance either. “The US proposal for a ministerial decision on improved notifications is unlikely to be accepted, but here too, agreement on a work programme would be good. And the US has apparently been helpful in trying to move discussions on fisheries subsidies forward.”

Whoever joins the dance this time, for the WTO it won’t be a last tango in Buenos Aires.

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