WTO Heading for an Uncertain Future

The 13th Ministerial Conference (MC13) of the WTO ended on 1st March 2024 with Ministers from 160 plus WTO members adopted a “face-saving” outcome document after lot of cajoling and struggle. No permanent solution on PSH (Public Stockholding) of food, status-quo on e-commerce moratorium, and literally no progress on DSB (Dispute Settlement Body) reform, the MC13 abjectly failed to deliver any meaningful result. In other words, the MC13 has further added to already increasing ineffectiveness of WTO in regulating world trade with legally binding multilateral rules.  

Deadlock Continues Over Four Key Negotiating Issues

On dispute settlement reform, members adopted a Ministerial Decision recognizing the progress made with the view to having a fully and well-functioning dispute settlement system accessible to all members by 2024. Ministers instructed officials to accelerate discussions, build on the progress already made, and work on unresolved issues. The question arises, how realistic is the 2024 target? The US, which has created a major roadblock is unlikely to soften its stance as their Presidential election is due in November. USTR in her formal statement delivered at MC13 very categorically dismissed any possibility of US lending its support to revive the existing architecture of DSB. She said that the goal is not just to go back to the way things used to be, but rather to provide confidence that the system is fair and to better allow Members to settle their disputes.

On agriculture, the positions seem to be more polarized. Despite the intense negotiations members were not able to find convergence. Divergences remained on public stockholding (PSH) for food security purposes and in respect of timelines, expected outcomes and the scope of the flexibility to be provided to food imports by the most vulnerable countries from export restrictions. In fact, agriculture didn’t find any mention in the main Abu Dhabi Declaration. 

On electronic commerce, ministers adopted a Ministerial Decision instructing the General Council to hold periodic reviews on the E-commerce Work Programme with a view to presenting recommendations for action to the Ministerial Conference. Members also agreed to maintain the current practice of not imposing customs duties on electronic transmissions until the 14th Session of the Ministerial Conference (MC14) or 31 March 2026, whichever is earlier. This has been the ritual ever since moratorium was first introduced in 1998.

As regards Fisheries Subsidies, the DG WTO was pinning her hope on accelerating the pace of ratification of agreement agreed at MC12 and concluding the second phase of negotiation with some additional provisions. While on ratification front only ten additional members submitted their instrument of acceptance, raising the tally to 71, the gaps are still wide on negotiating additional disciplines on fisheries subsidies.  

In a nutshell, the consensus eluded key issues of negotiation at MC13. The release of an outcome document with a collective commitment to continue work at Geneva with an aim to find consensus by MC14, is a small consolation.    

Some Small Consolation

Nevertheless, there are few achievements of this Ministerial, though not very substantive. The Trade Ministers adopted a Ministerial Decision that responds to a 23-year-old mandate to review special and differential treatment (S&DT) provisions for developing and least developed countries (LDCs) with a view to making them more precise, effective, and operational. The main focus is to strengthen WTO Technical Assistance and Training Plan to assist LDCs and other developing nations, to overcome the challenges they face in timely engagement on SPS and TBT matters. 

On plurilateral agreement front, the Ministerial witnessed the entry into force of new disciplines on services domestic regulation. This is expected to lower trade costs by over US$125 billion worldwide. Supported by 72 WTO members, this joint initiative is designed to facilitate services trade by streamlining and simplifying regulatory procedures. It includes the first-ever commitment in a WTO agreement to ensuring non-discrimination between men and women when they seek permits to supply services.

The Road Ahead for WTO

The MC13 outcomes though disappointing but definitely not surprising. I don’t think anybody would have hoped for a consensus emerging on any different outcome on e-commerce moratorium other than simply endorsing the current practice of not imposing customs duties on electronic transmission. Similarly, a permanent solution eluded PSH since 2013 WTO Bali Ministerial meeting and there was hardly any consensus before going for the Ministerial at Abu Dhabi. Thirdly, on DSB reform, given the strong and inflexible stance of USA, hoping for even any small incremental progress wouldn’t have been less than a miracle.

Now why have we landed ourselves into the current situation and what is the road ahead? Frankly speaking, the entire WTO process is off-track. We must not forget that WTO is a process driven rule making multilateral trade body. Over the years we have repeatedly disregarded this fundamental feature of WTO. The failure of Doha Round and not respecting the Ministerial mandate of 2013 Bali Ministerial created a huge trust deficit amongst the members. The launch of several plurilateral initiatives at Buenos Aires Ministerial in 2017 has further accentuated this trust deficit and significantly dented the multilateralism, the very foundation of WTO. Today, we are in a situation where neither multilateral nor plurilateral negotiations are moving.  Undoubtedly, the road ahead for WTO is not very easy. Given the current state of affairs, it is hard to believe that WTO would come out of this turbulent phase anytime sooner. The businesses too have become disillusioned as there is hardly any core trade liberalisation agenda being discussed/negotiated. Countries are happy following the FTA route to pursue their market access agenda.

Deep Kapuria is the Chairman of The Hi-Tech Group of Companies comprising The Hi-Tech Gears, The Hi-Tech Engineering Systems, The Hi-Tech e-Soft, and Novus Hi-Tech Robotic Systemz. The Group has manufacturing, R&D and engineering facilities in India, Canada and USA. He is Chairman of Global Innovation & Technology Alliance (GITA – a PP project with Dept. of Science & Tech. Gov. Of India). He is the Past Co-Chair of Digital Economy and Industry 4.0 Task Force of B20, 2018 Argentina and Past Co-Chairman, CII National Committee on International Trade & Trade Policy.

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