Alicia Nicholls

Last week, the Caribbean countries of Barbados and Jamaica joined 21 other developing country members of the World Trade Organization (WTO) for a WTO Ministerial Meeting of Developing Countries on May 13-14, 2019. The Informal Ministerial, which was hosted by India, aimed “to discuss recent developments at the WTO and explore ways for working with all Members to strengthen the multilateral trading system”, according to the official press release.

The presence of not one but two of our Caribbean small States at this meeting was important for two major reasons. Firstly, it shows the Caribbean’s engagement and commitment to safeguarding the rules-based multilateral trading system and to making the region’s voice heard in the WTO reform debate. Secondly, having small States like those in the Caribbean represented brings a small vulnerable economy perspective which is not always represented in WTO reform discussions.

In the official press release, the participants reiterated their support for the rules-based multilateral trading system and “agree to work together with all WTO Members to strengthen the WTO, make it more effective and continue to remain relevant to the diverse needs of its Members, in line with objectives of the WTO”. Further, they agreed to consult on “various issues of common interest to developing Members, including comprehensive and effective disciplines on fisheries subsidies with appropriate and effective Special & Differential Treatment provisions for developing Members”.

Special and Differential Treatment

Special and differential treatment (SD&T) – the term used the describe the flexibilities, rights and privileges to which developing countries and Least Developed Countries (LDCs) are entitled under the WTO’s agreements – has become an increasingly thorny and polarised issue in the WTO. Developing countries have long criticised the effectiveness of the current S&DT provisions as many are largely best endeavour with little enforceability.

However, this concern has arguably become overshadowed by the “eligibility” debate. That is, developed countries are increasingly disenchanted with the current eligibility model for S&DT in the WTO which is based on a Member self-designating as a developing country. As such, large emerging economies such as China and India are entitled to the same level of S&DT as small island developing States like Barbados and Fiji.

Earlier this year, the US submitted a proposal to the WTO General Council which, if successful, would exclude four categories of countries from S&DT, including some Caribbean small States due to the classification as ‘high income’ based on their GNI per capita under the World Bank’s lending classification. This US proposal was quickly rebuffed by a consortium of developing countries in a paper noting the continued relevance of S&DT. However, the US has indicated that it is not backing down from its proposal and reintroduced it at the last WTO General Council meeting.

It is little surprise, therefore, that the developing countries represented at the New Delhi Informal Ministerial last week strongly reiterated the continued importance of S&DT. They noted that:

“We recall that international trade is not an end in itself but a means of contributing to certain objectives, including raising standards of living. Special and Differential Treatment is one of the main defining features of the multilateral trading system and is essential to integrating developing Members into global trade. Special and Differential Treatment provisions are rights of developing Members that must be preserved and strengthened in both current and future WTO agreements, with priority attention to outstanding LDC issues.

They stressed the importance of technical assistance and capacity building provided to developing Members, in particular LDCs, including through the Enhanced Integrated Framework, Aid for Trade and other tools.

They further noted that:

The process of WTO reform must keep development at its core, promote inclusive growth, and fully take into account the interests and concerns of developing Members, including the specific challenges of graduating LDCs. The way forward must be decided through a process that is open, transparent and inclusive. We agree to work collectively with the aim to develop proposals to ensure that our common interests are reflected in the WTO reform process.

Support for moving away from ‘consensus model’?

Decision-making in the WTO is based primarily on consensus – that is, once no Member formally objects. This model of decision-making has been particularly favoured by developing countries because it gets them leverage they ordinarily would not have. However, it has become increasingly criticised and blamed for the deadlock in the WTO’s rule-making function as effectively any one State or group of States can block the adoption of a decision.

It seems that there is some softening of developing countries’ stance on wholesale retention of the consensus-model. They noted that “multilateral avenues, based on consensus, remain the most effective means to achieve inclusive development-oriented outcomes. Members may need to explore different options to address the challenges of contemporary trade realities in a balanced manner.”

They further note, however, that “in the post-MC 11 phase, many Members have evinced interest in pursuing outcomes in some areas through joint initiatives approach”, but cautioned that “the outcomes of these initiatives should be conducive to strengthening the multilateral trading system and be consistent with WTO rules”.

Calls to action/Developing Country Priorities

The developing countries represented took the opportunity to issue several calls to action and to outline developing country priorities, which have in some cases, been drowned out in the WTO reform debate. As such, they:

  1. Urged WTO Members to engage constructively to address the WTO Appellate Body impasse without any delay in filling the vacancies in the Appellate Body, while continuing discussions on other issues relating to the functioning of the dispute settlement mechanism. 
  2. Urged WTO Members to adopt measures that are compatible with WTO rules to avoid putting the multilateral trading system at risk. 
  3. Called for the Ministerial Conferences of the WTO to be organized in a more open, transparent and inclusive manner.
  4. Noted that WTO notification obligations must consider the capacity constraints and implementation related challenges faced by many developing Members, particularly LDCs.
  5. Called for a more cooperative and gradual approach as the best way in dealing with the issue of transparency, where many developing Members struggle to comply with their notification obligations. 
  6. Highlighted the need to provide adequate policy space to the developing Members to support their farmers through correcting the asymmetries and imbalances in the Agreement on Agriculture, on priority. This, they argued, “should be undertaken on the basis of work done and progress already made in the past, and provide further flexibilities to the LDCs and Net Food Importing Developing Countries”.
  7. Strongly noted that “it is really time that cotton receives concrete and appropriate responses it deserves.”

Besides Barbados and Jamaica, the other countries represented were Arab Republic of Egypt, Central African Republic, Federal Republic of Nigeria, Kingdom of Saudi Arabia, Malaysia, People’s Republic of Bangladesh, People’s Republic of China, Republic of Benin, Republic of Chad, Republic of India, Republic of Indonesia, Republic of Malawi, Republic of South Africa, Republic of Uganda and Sultanate of Oman.

The official press release may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Advertisements