WTO Ministerial Conference Delivers only Mini Results

11th WTO Ministerial Conference © WTO/Cuika Foto

Trade rules and the dispute settlement system of the World Trade Organization (WTO) remain indispensable. Although even low expectations regarding the eleventh Ministerial Conference of the WTO (MC11) were disappointed, members should look ahead. Now it's key to shape a modern negotiation agenda.

Despite enormous efforts of the Director-General of the WTO, Roberto Azevêdo, and constructive negotiation proposals by several delegations, the 164 WTO members failed to agree on concrete rules to limit fishery subsidies or a permanent solution for the public stockholding of food. Even the usual adoption of a joint declaration has failed for the first time since 2009 due to a lack of consensus. In spite of visible disagreement in the run-up to the conference, these elements had been views as the most promising topics to reach agreement on at MC11 in mid-December 2017 in Buenos Aires.

Mincing steps forward

On fishery subsidies, WTO members only committed to agree on effective rules at the upcoming ministerial conference in two years. At the last minute, they avoided the failure to extend the moratorium not to impose customs duties on electronic transmissions. This multilateral self-commitment has been prolonged in every ministerial conference for the next two years since 1998. At the same time, a moratorium on a specific part of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was extended.

A failure of the moratorium on the transfer of data would have resulted in new customs and duties and therefore would have caused additional burden on the world trading system. The decision also includes a fairly general plan to continue working on the topic of electronic commerce. Beyond that, an informal and open working group has been established, which is to bring about a mandate decision for formal negotiations on promoting Micro, Small and Medium-Sized Enterprises (MSMEs) at the forthcoming conference. Ultimately, conditions for the beginning of accession negotiations for South Sudan have been agreed upon.

No leadership by USA

In the Argentine capital, U.S. Trade Representative Robert Lighthizer critically assessed the WTO and left the conference already after three days. In light of the fundamental criticism of the WTO by the USA, this came as no surprise. However, regarding topics relating to subsidies, the USA participated constructively in the negotiations. Concerning the topic of fishery subsidies, it was on other members to thwart the process. The USA stood offside with its blocking of efforts to fill a number of vacancies at the WTO Appellate Body. This underlines the withdrawal of the USA from its leadership role in the WTO. While the USA has so far not broken with the multilateral trading system, negotiations will remain difficult.

A common declaration of the U.S. Trade Representative and his Japanese and European counterparts, Minister Horishige Seko and Commissioner Cecilia Malmström, at the margins of MC11 confirmed that a strong common interest exists to take action in the frame of the WTO against unfair trade practices such as subsidies, state-owned enterprises, and forced transfers of technology. This declaration was mainly addressed at China and has been received critically by many participants.

Cooperation on Digital Trade

Nevertheless, the WTO remains more important than ever. An open and rules-based multilateral trading system and dispute resolution mechanisms are indispensable. All G20 members have to engage in a more flexible way, in order to revive the negotiating process of the WTO. It is imperative to move forward and to shape a modern multilateral trading agenda. The new initiative on e-commerce, which is open to all interested stakeholders, is therefore a step in the right direction. 70 like-minded WTO members, among them most G20 members, have agreed during MC11 to hold discussions on facilitating digital trade.