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The outcomes of the WTO Ministerial and impact on developing countries

The “Geneva package” adopted by the members includes a package on WTO response to emergencies including food security, pandemic, IPR, e-commerce and fisheries, among others.

WTO
WTO is the only organization that deals with the rules of trade between countries, all decisions are by consensus and any member can exercise a veto. (Photo source: WTO)

By (Mrs) Amb Narinder Chauhan

The 12th Ministerial Conference (MC12) of the World Trade Organization (WTO) ended on 17 June 2022, with an outcome that included several multilaterally negotiated decisions on a series of key trade initiatives. The “Geneva package” adopted by the members includes a package on WTO response to emergencies including food security, pandemic, IPR, e-commerce and fisheries, among others.

The agreed outcome on fisheries subsidies sets new global rules to restrict harmful subsidies over the next four years to illegal, unreported, and unregulated fishing and to the fishing of overfished stocks. India and other developing countries were able to win a concession in favour of small scale artisanal and traditional farmers who would not face any restriction. Developing countries will enjoy a two-year exemption for subsidies granted within their Exclusive Economic Zone (EEZ) i.e., up to 200 nautical miles from their coast.  No member, however, can subsidise fishing in the unregulated high seas. The agreement sets up notification requirements and a voluntary mechanism to assist developing countries by providing technical assistance and capacity building through the WTO Fisheries Funding mechanism. The WTO has for the first time concluded an agreement to promote environment safety which affects the livelihood of 260m people dependent directly or indirectly on marine fisheries. Critics, however, argue it is not enough as it would only ‘restrict’ and not ‘eradicate’ subsidies on illegal fishing and ‘even allowed countries to pillage the world’s oceans.’While it limits rather than eliminates subsidies, it is nevertheless a step towards crafting trade rules and practice that can better save the planet.

In response to the pandemic and future such emergencies, the members adopted a ministerial declaration which includes a waiver of certain requirements under the WTO Agreement on Trade Related Intellectual Property Rights (TRIPS) regarding use of compulsory licenses to produce Covid 19 vaccines. It was agreed to temporarily waive Intellectual Property (IP) patents on Covid 19 vaccines without the consent of the patent holder for 5 years, so that they can more easily manufacture them domestically. It is a watered-down version of the original proposal made in 2000 by India and South Africa, who had wanted broader IP waivers on vaccines, treatments, and tests. The rich pharma industry had strongly opposed this, arguing that IPs do not restrict access to covid vaccines, and that the removal of patent protection gives researchers who had quickly produced lifesaving vaccines, a negative message. In parallel, it was agreed to provide a platform for members to work together to diversify vaccine production capacity given the glut in the market. The outcome also opens the way for technical support from WHO, WIPO, the WTO etc. By the end of 2022, WTO will take a call on whether to extend the waiver to production and supply of Covid 19 diagnostics and therapeutics. A feeling that commercial considerations outweigh human health would be severely damaging to global trade; countries need to ensure trade helps and is seen to help health concerns. Members reiterated the importance of trade facilitation and cross border services such as logistics, health services and IT in combating future pandemics. Noting the severe effect of border restrictions on tourism, countries encouraged dialogue to mitigate this.

On Food security, members agreed to a binding decision to exempt food purchased by the UN’s World Food Programme (WFP) for humanitarian purposes, from any export restrictions. This was an emergency response to food insecurity with a view to address food shortages and soaring prices with the vulnerable having access to emergency food aid. This helps tackle food security risks stemming from war in Ukraine and poor harvests. However, countries will be allowed to restrict food supplies to ensure domestic food security needs. India’s key demand to allow it to export food from its public stockholdings to other countries is expected to be discussed in the next ministerial meeting in 2023.

On e-commerce, it was agreed to maintain the current practice of not imposing customs duties on electronic transmissions and to intensify discussions among members on this topic, with a view to provide an enabling environment to the global digital economy and the businesses and jobs dependent on it. India has asked the WTO to review the extension of the moratorium on customs duties arguing that developing countries faced the brunt of the financial consequences of such a moratorium. During 2017-20, developing countries lost potential tariff revenue of around $50b on only 49 such digital products. The moratorium will remain in force till the next ministerial or till March 2024, whichever is earlier.

The outcome document also committed the members to continue to work towards reforms of the WTO and the review will be carried out by the WTO’s General Council. Members also agreed to hold talks on a dispute settlement mechanism to secure a fully functioning system by 2024. The appellate body has been dormant since 2020 when the US refused to agree to the appointment of new judges.

The declaration also committed members to launch a work programme to identify new challenges to the implementation of the WTO’s Sanitary and Phytosanitary (SPS) Agreement, with the aim of enhancing the application of the agreement.

Ministers also committed to a work programme on small economies. Another decision extends a moratorium on TRIPS ‘non-violation and situation complaints, where a country may have been deprived of an expected benefit because of another government’s action, even if no agreement has been violated.

The importance of the MC12 arises from the fact that the 164 member WTO held its ministerial conference after a gap of nearly 5 years, following Covid 19 postponements. The agreement included WTO reform, vaccine production and fishing subsidies, among others.Negotiations prevailed despite geopolitical tensions. The tackling of trade rules and disputes is tough enough, but with numerous countries refusing to negotiate with Russia, making the agreement that much more elusive and difficult.  The Ukraine war is triggering an evaluation of global systemic risk.

Indian diplomacy has rightly claimed success in securing ‘a favorable outcome’ at the WTO after many years and in portraying before the world priority issues for India and the developing world. The Indian Minister, Mr. Piyush Goel said that ‘India turned the tide of negotiations from full failure, gloom and doom to optimism, enthusiasm and consensus-based decision.’ He further said, ‘India’s efforts to bring members to the table to discuss issues irrespective of the existing geopolitical order has ensured that the world order is not broken.’ In his words, ‘India has been cent percent successful, whether related to agriculture or fulfilling the national food safety programme, TRIPS waiver, e-commerce moratorium, response to covid and fisheries etc. No restrictions have been placed on India, rather India has been successful in introducing checks on illegal fishing, under-reporting or outside regulation.’

Going forward, while the WTO Ministerial Conference 2022 focused on multilateral outcomes needing consensus, plurilateral discussions among small groups of members will be important to make progress on many of these issues. The WTO has done its part-now the onus is on the governments to ratify what they have agreed, deliver reforms on the ground, and return to build new collaborations. WTO is the only organization that deals with the rules of trade between countries, all decisions are by consensus and any member can exercise a veto. Claiming that the conference yielded an unprecedented package of deliverables, the WTO Director Generalsaid,‘not in a long time has the WTO seen such a significant number of multilateral outcomes.’

(Author is former Indian Ambassador. She also served as Counsellor/ Minister dealing with Trade Policy at the Indian Embassy in Brussels, accredited to EU, Belgium and Luxembourg. Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited).

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