The World Trade Organization has done a good job of tamping down any expectation that its upcoming ministerial meeting will agree on much of anything. Few people anticipate that the biennial conference will yield any outcome of significance, as “members’ positions continue to diverge significantly on the substantive issues”, WTO chief Roberto Azevedo said last week. “Despite our best efforts, I don’t think there will be agreed negotiated outcomes in Geneva.”
Even as ministers from around the planet head to Buenos Aires for the four-day meeting that begins on Sunday, the most viable “big” deal to be secured at the conference is one on fisheries subsidies. But any outcome on this issue is likely to be limited rather than big, as the WTO committee in charge of the dossier has already said that lengthy negotiations would be required after the ministerial gathering before any accord is wrapped up. And there’s no guarantee that one will be, either.
Many governments and trade aficionados say – rightly so – that the US is partially responsible for the low ministerial expectations. Not only has President Donald Trump underscored his disdain for the WTO, particularly on dispute settlement, but the US has weakened the organisation by blocking efforts to fill vacant Appellate Body seats. There are reports that EU trade chief Cecilia Malmström “extended an olive branch” to Trump, saying she was open to discussing an overhaul of the WTO provided Washington stopped hindering efforts to appoint new appeals judges.
Some observers accuse the US of trying to force WTO members to revert to a power-based system of settling disputes that prevailed before the organisation was founded in 1995 and to unravel the current rules-based system. Others say that, despite Trump’s threats, it’s unlikely that the US will exit the system it helped create, to rely entirely on bilateral trade deals and remedies.
But the US keeps the world guessing. Indeed, it’s not even clear at this point whether US Trade Representative Robert Lighthizer will show up at the ministerial. Bloomberg BNA reported today that the US hasn’t confirmed that its top trade official will participate and that international trade officials have no idea what sort of position the country’s delegates will take when they arrive in the Argentine capital.
Low-ambition fisheries text
On Wednesday, the WTO’s Negotiating Group on Rules sent a draft decision to ministers listing five options with different levels of ambition in tackling handouts of illegal, unreported and unregulated fishing. These options include continuing negotiations after the ministerial conference, prohibiting aid that contributes to IUU fishing through self-policing, and pledging not to grant new subsidies or extend existing ones.
The three-page text also proposes obligations for governments to be transparent about their subsidy programmes, as well as a process to review implementation of the measures that are adopted. Finally, the draft includes a provision to underscore that “nothing in this decision shall be interpreted as having any legal implications regarding territoriality, sovereignty or maritime jurisdiction”.
For subsidies harming overfished stocks, committee members were only able to agree to include a placeholder in the draft as, according to a Geneva trade official, “they ran out of time to produce clear options for ministers to choose from on this issue”. The EU, Canada, Iceland, New Zealand and Norway yesterday circulated a proposal to fill this placeholder that reads: “In the interim, until a negotiated Agreement is adopted, each member [agrees] [shall endeavour] not to grant or maintain subsidies to fishing that negatively affects targeted fish stocks in an overfished condition.”
But at the committee’s last meeting, China reiterated its position that it was prepared only to consider a commitment on IUU fishing. And ministerial approval of the text is far from a sure bet: some countries including South Korea have already said the draft should stick solely to a commitment to continue negotiations after the conference.
India is hoping for a deal in Buenos Aires on a permanent solution for public stockholding programmes for food-security purposes. Stephen Karau, the Kenyan ambassador who chairs the WTO’s agriculture committee believes it’s possible. An agreement on export prohibitions and restrictions and a decision on cotton are also achievable at the ministerial, he says.
But Karau warned committee members on Monday that “some serious work will need to be done in Buenos Aires” on the public stockholding issue. “I will be working … to find the way which has thus far eluded us. The will to embark on this journey would, however, have to come from you.”
Public stockholding is one of the more contentious topics at the WTO. Negotiations on the issue largely dominated the 2013 ministerial in Bali, and members finally agreed on an interim solution that would protect public stockholding programmes from legal challenges for four years – until next week’s ministerial meeting, that is – when a permanent solution would be agreed.
Members including China and India – which says it needs an exemption to legalize its public distribution program of grains at a reduced price – insist there must be “legal certainty” to shield governments that use public stockholding programmes from trade challenges. This implies amending the trade body’s Agreement on Agriculture for a permanent solution.
But other WTO members, such as Norway and Singapore, say countries using the instrument should be required to guarantee that stocks procured for their public stockholding programmes aren’t eventually exported. In July, the EU – along with Brazil, Colombia, Peru and Paraguay – tabled a proposal linking public stockholding reform to a Doha Round deal on all farm aid. And in the meantime, the US has backtracked on its 2012 offer for tailored flexibilities. The Trump administration is now blocking any reference in a joint ministerial declaration to the “importance of development” or the “centrality of the multilateral trading system”.
‘Modest’ outcome equals success
Since the WTO effectively abandoned the Doha talks two years ago, little progress has been made on a new negotiating agenda to update global trade rules. As a result, members now aim to deliver relatively low-stakes outcomes at the ministerial, and even that is proving to be tricky.
That’s why International Trade Centre chief Arancha Gonzalez says that even a “modest” outcome at the summit would be a successful outcome.
The conference must contend with “strong headwinds on multilateralism, including issues such as migration and climate change, and also on trade, with some believing that trade is a zero-sum game and not a win-win”, she told journalists in Geneva on Monday. “These headwinds are stronger today than they’ve been since the organization was created in 1995, so something that keeps members engaged is good. A modest ministerial is a successful ministerial.”
Gonzalez does expect “two concrete outcomes” on administrative issues, including the launch of two trade administration portals. She also expects members to discuss “some of the difficulties they are having on dispute settlement” at the conference.
“These are more political and less legal or technical in nature,” she said. “There are avenues to do that – there is an ongoing negotiation to update the Dispute Settlement Understanding. But like in any organisation, you have to negotiate.”
Gonzalez also said ministers should use the summit as an opportunity to discuss “some of the shortcomings that some members feel the system has”. Referring largely to the US, she added: “When some members that are systemically important have these questions, it is important that we recognise it. The challenge today is to keep the system functioning.”
With the WTO’s deal-making arm struggling for years and some members hindering accords rather than helping them along, addressing this challenge will be on the minds of ministers in Buenos Aires. But as Andrew Crosby, managing director of the International Centre for Trade and Sustainable Development, told the Economist: “Even the US at its most constructive isn’t going to fix the system where it is now.”