On Sunday, 12 June 2022, the long-awaited and long-overdue Twelfth Ministerial Conference (MC12) of the World Trade Organisation (WTO) finally took place. This event marked the return of the global apex trade body’s summit since 2017, after an unexpected series of delays caused by the COVID-19 pandemic. The “Geneva Package” coming out of the MC12 has been hailed by the WTO as an “unprecedented package”, covering, among others, fisheries subsidies, WTO response to emergencies, including a waiver of certain requirements concerning compulsory licensing for COVID-19 vaccines, food safety, agriculture, and WTO reform. [1],[2]
A Multilateral Agreement on Fisheries subsidies
The agreement may bring about positive effects on safeguarding the shrinking marine fishstock by imposing limits on harmful subsidies to curb overfishing; but it will require Members to act fast before the agreement reaches its expiry date.
There are several international instruments on the sustainable use and conservation of marine species, such as the 2001 IUU Fishing Plan of Action, the UN Fish Stocks Agreement 1995, the FAO Code of Conduct for Responsible Fisheries, and the 1994 FAO Compliance Agreement. However, not all WTO Members have ratified and therefore been binding by the rules of these instruments. For example, as of June 2019, there have been only 90 countries that have ratified the UN Fish Stocks Agreement.
The WTO does not deal with the overall management of marine resources, which fall under the purview of the UN Food and Agriculture Organisation (FAO) and Regional Fisheries Management Organisations or Arrangements (RFMO/A). However, fisheries subsidies have been at the core of the WTO negotiations for over 20 years since the launch of the Doha Development Agenda (DDA) in 2001. As an outcome of the MC12, the Agreement on Fisheries Subsidies, a multilateral deal responding to the UN Sustainable Development Goal (UN SDG) 14.6, has finally been adopted. For the first time in the WTO history, a multilateral agreement was reached in dealing with environmental sustainability.
SDG Target 14.6: by 2020, prohibit certain forms of fisheries subsidies that contribute to overcapacity and overfishing, eliminate subsidies that contribute to IUU fishing, and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the WTO fisheries subsidies negotiation.
The WTO Agreement on Fisheries Subsidies sets binding disciplines to prohibit subsidies to illegal, unreported, and unregulated (IUU) fishing;[3] subsidies regarding overfished stocks;[4] and subsidies provided to fishing or fishing-related activities on the unregulated high seas.[5]
Special and differential treatments (S&DT) are provided for developing country members and LDCs in terms of transition periods, exemptions, and other flexibilities. For example, DCs and LDCs Member Countries are provided with a transition period of 2 years from the date of entry into force of this Agreement to bring all measures into conformity. Consideration for specific situations, technical assistance, capacity building, and funding mechanism to help LDCs implement their obligations and undertake fisheries management regimes are also anticipated.
Like many other WTO agreements, the Agreement on Fisheries Subsidies promotes transparency through the notification mechanism independent of that under the Agreement on Subsidies and Countervailing Measures (SCMA). Dispute Settlement Mechanism under the SCMA and the Dispute Settlement Understanding (DSU) shall also apply to measures violating Members’ obligations under the Agreement.
The Agreement further includes a built-in agenda for the review and modifications to improve its operation,[6] in addition to the continued negotiations of outstanding issues covered in the earlier draft of the Agreement, with a view to feed in the recommendations for the MC13, including on the issues of fisheries subsidies that contribute to overcapacity and overfishing.[7] The Agreement, however, comes with a shelf-life: the final article of the agreement serves as a sunset clause that requires Members to further supplement comprehensive disciplines build on the existing Agreement; otherwise, the agreement shall terminate within four years after entry into force. The Agreement is now submitted to the Members for acceptance and shall enter into force in accordance with the provision of paragraph 3, Article X of the WTO Agreement.[8]
While some FTAs, such as the CPTPP, have included similar binding commitments on these issues, the Agreement on Fisheries Subsidies, when taking effect, can be expected to have a much larger geographical coverage and therefore impact against IUU fishing and unsustainable fishing practices. Using the words of WTO Director-General Ngozi Okonjo-Iweala, this is “a first but significant step forward to curb subsidies for overcapacity and overfishing by ending subsidies for fishing on the unregulated high seas.” The clock is however ticking for Members to work on a discipline framework to keep the Agreement alive.
Extending E-Commerce Moratorium and Reinvigorating E-Commerce Work Programme
The WTO Members appears as divided as ever on e-commerce, and a lacklustre extension of the e-commerce moratorium is the best outcome achieved.
The WTO Work Programme on Electronic Commerce was adopted in September 1998 by the General Council to examine trade-related issues relating to global e-commerce,[9] following the Declaration on Global Electronic Commerce at the Second Ministerial Conference in May 1998. Under the Work Programme, the four WTO bodies [10] are tasked with exploring the relationship between e-commerce and existing WTO agreements under their purview. Additionally, the Work Programme gives the General Council the central role of continuous review of the Programme, exploring cross-cutting issues, and example all aspects of the imposition of customs duties on electronic transmission (the “moratorium”).[11]
Since then, substantive discussions have been carried out under the auspices of the four Councils as well as the General Council, however, the level of engagement has waned over time. In 2016, the discussion under the Work Programme regained momentum, with more than 30 submissions by Members to the General Council during the 2016-2017 period, in the run-up to the MC11.[12] Given this renewed momentum, ministers agreed to reinvigorate discussions on Electronic Commerce during the MC11 and MC12. While Members’ positions on the moratorium continue to differ,[13] the moratorium has also been periodically renewed.
As a result of MC12, under the Ministerial Decision on the Work Programme on Electronic Commerce, the e-commerce moratorium has been extended until MC13. The members also agreed to reinvigorate their work under the Work Programme on Electronic Commerce, particularly in line with the development dimension to deal with challenges and opportunities affecting the developing countries and LDCs.[14]
While this presents a reassuring outcome, it was elusive whether or when there will be a draft set of rules at the multilateral level on e-commerce. As stated by South Africa and India, “[e-commerce] discussions, even from a trade policy perspective, have not been adequately explored, and where it has, it has barely touched the surface.”[15] In the absence of such multilateral rules, digital trade provisions, either embedded in a single agreement or an FTA’s e-commerce chapter, remain the major avenue for countries to explore ways to support the fast-growing digital economy.
Response to the COVID-19 pandemic and TRIPS waiver
The Draft Ministerial Decision on the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement becomes a crucial instrument to clarify the scope for governments to waive certain procedural obligations under the TRIPS to address the need of equitable access to medicines by developing countries.
Similar to environmental issues, public health remains at the junction between trade and other policy domains – human rights, development policy, and intellectual property (IP). Access to medicine has long been a core issue for cooperation at the global level, and the COVID-19 pandemic has only emphasised the need for stronger effort in this area.
In response to the constraints in access to medicines and other essential products during the pandemic, the Ministerial Declaration on the WTO response to the pandemic and preparedness for future pandemics affirms Members’ commitment to transparency, timely and comprehensive information sharing, and restraint on imposing export restrictions. Pertaining to Members’ obligations under TRIPS, the Ministerial Declaration reaffirms that the TRIPS should be interpreted and implemented in a manner “supportive of WTO Members’ right to protect public health and promote access to medicines for all”. [16] Since the outbreak of the pandemic, WTO Members have voiced opposing views regarding the TRIPS waiver. As such, the Ministerial Decision on the TRIPS Agreement came out as a crucial instrument to clarify the scope for governments to waive certain procedural obligations under the Agreement on TRIPS in response to the COVID pandemic and to address the need of equitable access to medicines by developing countries.
Specifically, under paragraph 1 of the Ministerial Decision on the TRIPS Agreement, [17] an eligible Member may limit the patent rights provided for under the TRIPS by authorising the use of the subject matter of a patent required for the production and supply of COVID-19 vaccines without the consent of the patent owner. Negotiated jointly by the United States and China, Footnote 1 to paragraph 1 supposedly aims to increase the responsibilities of emerging markets in the WTO system. It declares that while all developing countries are eligible under the Decision, “developing country Members with existing capacity to manufacture COVID-19 vaccines are encouraged to make a binding commitment not to avail themselves [of this Decision].” This ‘opt-out’ option, if further adopted in other instruments, could facilitate in balancing responsibilities within the WTO and bringing much-needed flexibility to the multilateral trading system.[18]
Additionally, paragraph 3(b) also allows eligible Members to export products manufactured under the authorisation of the Decision to other eligible Members under initiatives that aim to ensure the equitable access of eligible Members to the COVID-19 vaccine. While the re-exportation of the products manufactured under the authorisation is generally discouraged, in exceptional circumstances, an eligible Member may re-export COVID-19 vaccines to another eligible Member for humanitarian and not-for-profit purposes, subject to notification requirements. The permissions provided under the Decision are indispensable for the development of and access to vaccines and medicines, as well as for building the production capacity of eligible developing countries. It will be interesting to observe in the upcoming months how eligible developing Members will utilise the permission under the waiver.
WTO reform
While an across-the-board reform is widely recognised as indispensable, a clear agenda and timeline have not yet been concluded, except for a commitment to restore the DSB’s full function by 2024.
The WTO reform has been raised by its members in recent years, citing the need to update rules written more than a quarter of a century ago. It even got to the point of what is dubbed the “existential crisis”[19],[20] of the multilateral rule-based trading system when the WTO dispute settlement system – the WTO’s crown jewel – was paralysed as the United States blocked the appointment of new Appellate Body (AB) members. While many may disagree with how the US handled its discontentment so as to cause the deadlock in the AB, a broad-base WTO reform is inevitable. Over the years, Members have tabled several proposals to tackle challenges in the WTO’s functioning. Revitalising the negotiating function, tackling market distorting practices, modernising rules on health and the environment, e-commerce, and women’s economic empowerment – the list of reform areas go on.[21] COVID-19 further underscores the asymmetries in the global system across economic, social, and health aspects. Reform, however, is not an easy task in this member-driven institution operating by consensus rule.
As an outcome of the MC12, the Ministerial Statement on WTO Reform states Members’ commitment to undertake a major reform of the WTO across all aspects of its functions.[22] The General Council is tasked with conducting a review to identify the institutional challenges facing the multilateral trading system. Facilitating the effective, full, and inclusive participation of developing countries, including least developed countries; rebalancing the inequitable trade rules; and safeguarding the necessary policy space needed for developing countries for their structural transformation, industrialisation and economic recovery form the core pillars of this review process.[23] More importantly, the Ministers are also committed to restoring a fully functioning dispute settlement system by 2024.[24]
The MC12 happened on a global landscape in turmoil: the COVID-19 pandemic, trade and geopolitical conflicts, the Russia-Ukraine war, the looming food crisis, climate change, etc. Against this backdrop, reforming the WTO should be considered an essential priority to ensure the stability maintained by the international trade rules-based system. This should reinforce the WTO’s capacity as a credible forum for collaboration to tackle global trade issues and fulfilling its leading role in the negotiations, implementation, and monitoring of global trade policy developments.
Agriculture and food security
Positive decisions were made on food security and trade of foodstuffs for non-commercial humanitarian purposes; however, the agriculture package, coming out of MC12, is missing its biggest piece on agriculture negotiation work programme.
In a joint Ministerial Declaration on the Emergency Response to Food Insecurity (Declaration on Food Security),[25] WTO members committed to avoiding unjustified export restrictions on food and improving transparency on any export restrictions. Specifically, the Declaration requires that any emergency measures introduced to address food security concerns shall “minimise trade distortions as far as possible; be temporary, targeted, and transparent; and be notified and implemented in accordance with WTO rules,” considering the possible impact on developing countries, LDCs, and net food-importing developing countries (NFIDCs). Moreover, a Ministerial Decision on World Food Programme (WFP) Food Purchases Exemption from Export Prohibitions or Restrictions (Decision on WFP Food Purchases Exemption) [26] was taken to completely exempt humanitarian purchases for the WFP from export restrictions. The decision also confirms that it shall not affect the right of Members to adopt measures aimed at ensuring their internal food security, so long as such measures comply with the relevant provisions of the WTO agreements.
The Declaration on Food Security and Decision on WFP Food Purchases Exemption were supposed to be complementary to the Draft Ministerial Decision on Agriculture.[27],[28] Members, however, were not able to overcome their differences on a work programme for agriculture. As such, the agriculture package came out of the MC12 missing its biggest piece on agriculture negotiations,[29] prolonging the stagnation in this area since Doha.
Conclusion
MC12 gave both supporters and critics of the multilateral trading system reasons to hang on to their beliefs. During the long run-up and the short span of less than a week of the official event, Members managed to reach a multilateral agreement – the first since 2014, at MC9 Bali. Some agreement was reached on on fishery subsidies, an IP waiver for COVID-19 vaccine, and a temporary extension of the moratorium on the imposition of customs duties on electronic transmission. There are however areas still not progressing. While members managed to agree on the reform agenda, it remains at a high level, and the deadline of 2024 to resolve the DSB deadlock, though encouraging, seems ambitious. Albeit the commitments on Food Security and WFP, Members, however, were not able to overcome differences to move forward on a programme for agriculture negotiations. Many other areas have also not been included in the MC12 agenda, such as the investment facilitation, the domestic regulation JSI, etc. Given the various pending issues, Members are keen on an early MC13 to “pick up right where we left off.” [30] It was true that many were not so optimistic about the MC12 outcomes given the long delay and the various tumultuous backdrop on which the event happened. However, that the summit was able to score some key deals in response to a group of urgent issues gives some hope that the WTO is still relevant as the forum for advancing contemporary global trade-related interests.
Paul Baker is the founder and CEO of IEC. He is a consultant for various governments in developed and developing countries, an adviser on global corporate strategies to multinationals, and a Visiting Professor at the College of Europe. Paul is an expert in the Working Group of the World Economic Forum’s (WEF) Digital Flows Initiatives, an Expert in the WEF/WTO’s TradeTech Working Group on trade technologies for trade, and is on the Board of the United Nations Economic and Social Commission for Asia Pacific’s Trade Intelligence tools. He is also a member of the UK’s All Party Parliamentary Group on Trade and Investment, and a regular contributor to the UK Parliament’s Trade Select Committee, and UNESCAP and UNCTAD panels and events regarding trade impact analysis.
References
[1] It should be noted that all the analysis in this article is done on the basis of the MC12 Package of Draft Decisions and Declarations as of the date of writing. The instruments are at draft status and subject to Members’ acceptance. See all available MC12 documents at https://www.wto.org/english/thewto_e/minist_e/mc12_e/documents_e.htm
[2] WTO (2022-06-17). WTO members secure unprecedented package of trade outcomes at MC12.
[3] Article 3, Agreement on Fisheries Subsidies
[4] Article 4, Agreement on Fisheries Subsidies
[5] Article 5, Agreement on Fisheries Subsidies
[6] Article 9.4, Agreement on Fisheries Subsidies
[7] WT/MIN(21)/W/5 and WT/MIN(22)/W/20
[8] WT/MIN(22)/W/22
[9] WT/L/274
[10] Including the Council for Trade in Services, the Council for Trade in Goods, the Council for Trade-related Aspects of Intellectual Property Rights (TRIPS) , and the Committee on Trade and Development.
[11] WTO (2022). Work Programme on E-Commerce.
[12] WTO (2011). eLibrary on E-Commerce.
[13] See, for example, positions discussed in IISD (2020-Jul-23). WTO Members Highlight Benefits and Drawbacks of E-commerce Moratorium.
[14] WT/MIN(22)/32 and WT/L/274
[15] WT/GC/W/812
[16] Paragraph 12, WT/MIN(22)/31
[17] WT/MIN(22)/30
[18] Anabel Gonzalez (2022-Jun-20). MC12: more than meets the eye.
[19] Akman et al (2020-Dec-10). The need for WTO reform: Where to start in governing world trade?
[20] Jeffrey J. Schott, Euijin Jung (2019). 19-19 The WTO’s Existential Crisis: How to Salvage Its Ability to Settle Trade Disputes. Peterson Institute for International Economics.
[21] WTO Public Forum (2021). Climate, pandemic, e-commerce, inclusivity — Public Forum addresses priorities for reform.
[22] WT/MIN(22)/18, WT/GC/250
[23] Paragraph 3, WT/MIN(22)/18, WT/GC/250
[24] Paragraph 3, WT/MIN(22)/W/16/Rev.1
[25] WT/MIN(22)/28
[26] WT/MIN(22)/29
[27] WT/MIN(22)/W/19
[28] WTO (2022-Jun-2). DG Okonjo-Iweala: Time for Members to show restraint and agree on texts for MC12.
[29] The Agriculture Negotiation Work Programme as proposed under the Draft Ministerial Decision on Agriculture (Document WT/MIN(22)/W/19) never get through to become part of the Geneva package.
[30] Ngozi Okonjo-Iweala (2022-06-17). MC12 Closing Session Speech.
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