Tag Archives: COTED

Why WTO Reform Matters for Caribbean Small States

Alicia Nicholls

At the conclusion of its 47th Meeting this week, the Caribbean Community (CARICOM) Council for Trade and Economic Development (COTED) released a statement in support of the multilateral trading system and its guardian, the World Trade Organisation (WTO), which are currently under threat. All independent CARICOM member States, with the exception of the Bahamas which is currently in the process of accession, are WTO members and have a rich history of engagement in the WTO. WTO reform is more than a moot point for the Caribbean, but a question of economic and sustainable development importance for the region.

What is the Multilateral Trading System and the WTO?

The multilateral trading system was formed at the end of the Second World War with the creation of the General Agreement on Tariffs and Trade (GATT), the progenitor to the WTO, in 1947. This rules-based system has provided for the predictable and peaceful conduct of global trade for more than a half century to the benefit of the global economy.

Since its inception in 1995, the WTO has been the guardian of the multilateral trading system. Its 164 members account for over 97% of global trade, with 22 other countries currently in the accession process. Despite its flaws, some of which I will come to shortly, the WTO has been an important building block in the global economic governance structure. Among its functions, the organisation serves not just as a permanent forum for negotiation of global trading rules among its members, but its dispute settlement system provides to WTO members an exclusive and compulsory system for the timely and orderly settlement of trade disputes.

Why the need for reform?

The core functions of the WTO have become increasingly under strain. Calls for reform are not new, but have intensified in recent years. Without doubt, the United States’ threat of withdrawal unless its own demands are met, has invigorated political will for reform of the WTO.

Firstly, the negotiation function of the WTO is in a paralytic state given the inability of member states to conclude the Doha Development Agenda – the latest round of trade negotiations which were launched at the Doha Ministerial in 2001 and whose only major agreement so far is the Trade Facilitation Agreement. The paralysis has been due largely to current decision-making procedures and the increased number of members which has made multilateral rule-making on ever more complex trade issues difficult. Secondly, the US has been blocking the appointment of judges to the WTO’s Appellate Body, which means there are currently only three judges, the minimum needed to hear a dispute. The once vaunted system will grind to a halt by December 2019 when two other judges’ terms are up for renewal. Thirdly, there are concerns with the lack of compliance by some States with notification and transparency requirements which impacts on the WTO’s monitoring function.

In response, many countries have not just pivoted their attention away from the multilateral table towards the regional arena, but there is growing protectionism and resort to unilateral measures. In its latest economic outlook released November 21st , the Organisation for Economic Cooperation and Development (OECD) warned that global GDP growth has peaked on the back of a slowdown in global trade and investment flows owing to current trade tensions. The OECD has, therefore, called for renewed international cooperation and dialogue to tackle global trade issues and reform of the global trading system. Similar warnings have been made by other multilateral institutions and bring into sharp focus the importance of the stability of the multilateral trading system for the global economy in general, and for Caribbean small states, in particular, whose small open economies are susceptible to global economic shocks.

These systemic risks suggest that the WTO requires more than superficial tinkering, but comprehensive, inclusive and transparent reform. The challenge is making the WTO, an institution born in a different era and different economic landscape, “fit for purpose” for twenty-first century global trading realities, and in a way that caters to the unique needs of its smallest and most vulnerable members.

Why does WTO reform matter to Caribbean small States?

Caribbean small states, and small States in general, comprise only a tiny fraction of world trade, but their equitable integration into the global economy is essential for their economic survival. These States comprise primarily small island States, but also some small continental States. Compromised by limited bargaining power and inherent economic and other vulnerabilities, they depend on the certainty and predictability of the rules-based multilateral trading system not just to ensure that their traders face fair trading conditions in external markets, but that they could hold (at least in theory) larger states to account through the WTO’s dispute settlement body when they do not play by the rules.

It is of importance to Caribbean small States that updated trade rules for the twenty-first century not be made in negotiation theatres to which they are often not party (such as in Regional Trade Agreements and Mega-Regional Trade Agreements), but in the multilateral system where they have an equal seat at the table.

What proposals are on the table?

Thankfully, the silver lining to this story is that most WTO members have thus far expressed continued support for the multilateral trading system and have exhibited interest in WTO reform. The EU and Canada have both publicly shared their initial reform proposals and Canada held a meeting with thirteen other ‘like-minded’ governments in Ottawa to discuss WTO reform. The proposals have touched, for example, on decision and rule-making, improving the dispute settlement function and improving transparency and notification requirements.

In November 2018, the US, EU, Japan, Argentina and Costa Rica laid a proposal for tightening transparency and notification requirements under the WTO agreements. Among the recommendations were changes to the current Trade Policy Review mechanism, special consideration for developing countries and penalties for non-compliance by members.

Many of the proposals currently on the table have direct implications for Caribbean small States. For example, the EU and Canadian proposals evince growing appetite by the more advanced economies to change the current model of decision-making, that is, the consensus-based approach which requires absence of any formal objection to the decision. This approach has made the WTO one of the most democratic of the multilateral economic institutions. It allows small States to have bargaining power they otherwise would not have had and by mere numbers has led to a shift in the balance of bargaining power in favour of developing countries in the WTO. Though this approach has accounted for some of the stalemate, the wholesale move to a less democratic form of decision making would be disadvantageous to small States beset by limited negotiation might.

There are also calls for reforming the application of special and differential treatment (SDT) since currently any WTO member can self-designate as a developing country, entitling it to the flexibilities under the Agreements. This concern is due to the inclusion of large emerging economies such as China, India and Brazil in particular as developing countries. While not specifically supporting the creation of special categories, the EU concept paper notes the lack of nuance in the concept of a ‘developing country’. This is a good reason why small States should redouble their advocacy efforts for the translation of the Small Vulnerable Economy (SVE) informal group into a formal sub-category of developing countries.

What should we do?

The current crisis in the multilateral trading system has implications for Caribbean small states which rely on the certainty of the multilateral trading system and on the health of the global economy. It, however, also opens the door for our States to advocate for reforms as well. CARICOM countries have always played an active role in WTO negotiations, including pushing for the SVE grouping. For this reason, the COTED statement supporting the multilateral trading system and the WTO, and demanding a space for small States in the negotiations, was a good initial step.

The next step should entail formulating our own carefully considered responses to the proposals already on the table and advancing our own concrete proposals where we deem necessary. For instance, as noted before, given the dissatisfaction by advanced economies with the current carte blanche approach to SDT, this may be the opportune time to raise the reconsideration of making the SVE category a formal category. Additionally, as the on-going US-Antigua Gambling dispute shows, even though a small State may win a dispute, obtaining compliance is another matter. For this reason, dispute settlement reform is another area on which Caribbean small States should take particular interest.

Indeed, CARICOM governments will not have to depend solely on the vast knowledge and experience of their technocrats, but there are an increasing number of regional scholars and academic institutions, such as the University of the West Indies’ Shridath Ramphal Centre for International Trade Law, Policy & Services, which are pro-actively considering these issues, and whose technical expertise and research capacity could be drawn upon. There is also no need to reinvent the wheel given the growing corpus of literature, developed by the Commonwealth Secretariat for example, which has analysed the drawbacks of the WTO for small States and making proposals for reform. This work can be drawn upon in the formulation of our own proposals.

The Caribbean has a strong history of multilateral engagement within the WTO. The current situation gives us an appropriate moment to contribute to the comprehensive reform of the guardian of the multilateral trading system to ensure it remains fit for purpose for 21st century trading realities and for the global economy, and that it better serves its smallest and most vulnerable members. Caribbean small States can ill-afford to be perceived as backseat participants, but must be fully engaged and mobilized in this critical moment.

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.

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COTED concludes 42nd Meeting; Deputy SG calls for greater ease of doing business

Alicia Nicholls

The Council for Trade and Economic Development (COTED) of the Caribbean Community (CARICOM) convened its 42nd meeting in Georgetown, Guyana last week, with the Caribbean Single Market & Economy (CSME) as one of the main areas for discussion for CARICOM trade ministers. COTED is the organ of the Community responsible for the promotion of trade and economic development and consists of Ministers designated by CARICOM Member States.

The agenda for the two-day meeting which took place April 21-22 included the treatment of CARICOM nationals, trade in goods, trade in agriculture, the issue of correspondent banking and regional transportation. Dr. Arancha Gonzalez, Executive Director of the International Trade Centre (ITC)  was also present at the meeting.

Despite the Caribbean Court of Justice’s judgment in Myrie v Barbados, the vexing issue of the treatment of CARICOM nationals seeking entry into other CARICOM member states is a topic which has reared its head in the news media again in recent weeks.  The latest flare up surrounded the deportation of 12 Jamaicans by Trinidad & Tobago authorities over the Easter weekend, which prompted some Jamaicans, not for the first time, to call for boycotts of products from the twin-island republic.

Deputy Secretary General of CARICOM, Ambassador Manorma Soeknandan,touched on this issue in her opening remarks.  Noting that the average citizen judges integration by the ease by which he or she can cross regional borders, she highlighted that “more sensitization has to be done among our border officials in relation to the rules that are already in place and the procedures that should be followed”. She suggested to COTED Ministers that they may wish to consider “establishing a quick-response mechanism to resolve situations as they arise on the ground”.

Terming the CSME “the bedrock of our economic resilience”, Ambassador Soeknanda emphasised that CARICOM people wanted to see results and rightly noted that “consolidation and enhancement of the operations of the Single Market will also allow for a more coherent approach in our External Trade Negotiations”. She referenced the review of the Common External Tariff which is to be commenced.

Ambassador Soeknanda also spoke of the need to improve the ease of doing business in the region, an issue which I have touched on in previous articles. She said, “we are all complaining in our Region [about the ease of doing business], but what is each one of us doing to change the situation.” She noted that in addition to improving our individual country rankings, there are issues which Caribbean countries can address jointly, such as the time taken to start a business, registering property, and the enforcement of contracts.

The Deputy Secretary General’s remarks may be accessed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a 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.

 

41st COTED Meeting in Georgetown Concludes

Alicia Nicholls

The CARICOM Council for Trade and Economic Development (COTED) concluded its 41st meeting in Georgetown, Guyana last Friday, November 13. The two-day meeting was preceded by a special session with the Region’s private sector on Thursday, with representation from a cross-section of regional private sector associations, including the West Indies Rum and Spirits Association (WIRSPA), the Private Sector Association of Jamaica and Caribbean Export, among others.

COTED is responsible for the promotion of trade and economic development of the Community and consists of ministers designated by each CARICOM member state. The packed agenda centered on matters pivotal to the region’s growth and development, including the private sector, the CARICOM SIngle Market, external economic and trade relations, health and the regional investment promotion strategy.

According to the Statement by the Hon Maxine McClean, Minister of Foreign Affairs and Foreign Trade of Barbados,  Chair of COTED, the following comprised the key items discussed at the meeting:

  • Private Sector – The discussion focused on investment promotion, the challenges and the priorities for the business community, doing business in the Caribbean, and the successes of various private sector development interventions and how these successes may be replicated.
  • CARICOM Single Market – The implementation of the CARICOM Single Market and Economy (CSME) Application Processing System (CAPS) will begin on a phased basis next year.
  • External Economic and Trade Relations – COTED Ministers began deliberations on the regional External Trade Strategy and agenda, reviewed preparations for participation in the 10th WTO Ministerial Meeting in Nairobi, Kenya in December and also received an update from Member States with regard to their progress in implementing the provisions of the WTO Trade Facilitation Agreement.
  • Health Matters – COTED Ministers recognised the need for action on confronting non-communicable diseases and their impacts on the health of the region’s workforce and their potential impacts on competitiveness. A presentation on the proposed establishment of a Caribbean Regulatory System for Medicines was considered.
  • Regional Investment Promotion Strategy – COTED Ministers recognised the completion of the Regional Investment Promotion Strategy (RIPS) and are expected to agree on a medium-term work programme for the implementation of the RIPS at the Ministerial Meeting scheduled for March 31, 2016.

The full statement by Minister McClean may be accessed on CARICOM’s website here.

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