Economic Times, June 19, 2022
By Pradeep S. Mehta
Ranging from decisions to enhance global food security to a holistic pandemic response, the Geneva Package has served as a decisive victory for the multilateral trading order and will help rejuvenate a moribund WTO.
The WTO has delivered when the world doubted it most. Despite massive geopolitical turmoil and ongoing geoeconomic churns, Members were able to arrive at consensus on a range of issues at the 12th Ministerial Conference (MC12), now dubbed the “Geneva Package”. This is a good sign for the future of the WTO that it can be a multilateral bulwark.
Ranging from decisions to enhance global food security to a holistic pandemic response, the Geneva Package has served as a decisive victory for the multilateral trading order and will help rejuvenate a moribund WTO.
Most importantly, for India, this is perhaps the first time since at least Bali ministerial in 2013 that the government has been unconditionally pleased with the outcomes of a Ministerial Conference, according to statements by Piyush Goyal, India’s trade etc minister. Such jubilance is well earned. India maintained an offensive yet constructive negotiating stance at MC12, which translated into leadership and not mere obstructionism. This is something, we had cautioned earlier in these columns and are therefore very pleased with such a pragmatic and constructive approach.
Overall, MC12 was nobody’s loss and a win for everyone, especially the WTO. Not only did Ministers not go back “empty-handed”, in the words of the WTO D-G, Ngozi Okonjo-Iweala, they also showed that “strategic competition” could indeed co-exist with “strategic cooperation”. This is a powerful message for our troubled times. Compromise by Members allowed for breaking gridlocks on long-held positions, incremental progress on various issues and considerable momentum for taking forward the various negotiation modalities.
Agreement on Fisheries Subsidies
The Agreement on Fisheries Subsidies (Agreement) has garnered mixed reactions. While it marks the revitalisation of the negotiating function of the organisation, it is also only a partial bargain with many contentious issues such as the scope of Special and Differential Treatment (SDT) as well as treatment of subsidies leading to overcapacity or overfishing being pushed for the next Ministerial Conference. Nonetheless, sealing the deal as an early harvest agreement of sorts was a very pragmatic call, and has probably saved the WTO from crossing an institutional tipping point.
For now, the Agreement prohibits subsidies for fishing or fishing related activities concerning overfished stocks or leading to illegal, unreported and unregulated (IUU) fishing. The Agreement also prohibits subsidisation of fishing and related activities outside of the jurisdiction of a coastal Member.
Importantly, the demand made by India and several other developing countries for the extension of fishing limits to 200 nautical miles has been accepted. Consequently, for developing and least developed countries, all of the aforementioned subsidies when provided within the exclusive economic zone (EEZ) shall be exempt from the Agreement’s disciplines for a grace period of two years.
However, going forward, developing countries will probably try to secure a permanent exemption or a longer grace period for certain subsidies provided to low income, resource-poor and livelihood fishing or fishing related activities, within their EEZ. Such exemptions will be required to balance the objective of sustainability with concerns of livelihood and employment.
In fact, as far as sustainability is concerned, the Agreement has ramifications far beyond marine lives. This is the first multilateral agreement at the WTO which directly links trade with sustainable development. This will probably translate into positive momentum for ongoing plurilateral negotiations under the Trade and Environmental Sustainability Structured Discussions framework.
Could it also shift the WTO’s Overton window on sustainability? If the WTO is to be the multilateral watchdog of both trade and certain sustainability regimes, then this could imply that non-discriminatory carbon border measures, duly protected by SDT provisions, may also be received more warmly, despite their impacts on production patterns and trade.
Package on WTO Response to Emergencies
The package on WTO response to emergencies is particularly noteworthy, as it directly addresses one of the key criticisms the WTO has faced in the past two years – that it is not responsive to crises. This package seeks to ameliorate the two most pressing challenges of our time – the impacts of the Ukraine crisis, now in its fourth month; and of the Covid-19 pandemic, soon entering its fourth year. It also aims at future-proofing to manage the impacts of similar adversities.
As a part of the Ministerial Declaration on the Emergency Response to Food Insecurity, WTO Members reaffirmed various steps to keep agricultural trade flowing and improve levels of global food security in these difficult times. For its part, the Decision to exempt World Food Programme’s (WFP) food purchases from export prohibitions or restrictions will be binding on Members. A provision to the effect that such obligations should not prevent Members from taking measures to ensure domestic food security has been added, in order to assuage concerns of countries (including India) who were apprehensive of the effects of a blanket exemption for WFP purchases on domestic food security.
Ministerial Decision on the TRIPS Agreement
At the outset, it’s unfitting to classify the Ministerial Decision on the TRIPS agreement as a waiver. It is mostly a clarification of existing TRIPS flexibilities in Article 31, complemented by Members’ past efforts to liberalise exports of products made under compulsory licensing (Article 31bis). What has been achieved is a multilateral guarantee against legal consequences and behind the scenes intimidation for availing these TRIPS flexibilities.
Nonetheless, the Decision is still a big political win for more than one reason – not only is it a document symbolising consensus between the global north and south on an issue as polarising as intellectual property, but it is also a nod towards WTO’s capability to defuse geopolitical tensions through multilateral cooperation. The earlier quad outcome laid down an objective but exclusionary definition of eligible developing country members – if a developing country’s share crossed more than 10% of global vaccine exports, it was to be excluded from availing the benefits of the outcome. China was the lone developing country matching this criterion.
Now however, on China’s insistence, each developing country shall determine for itself if it chooses to not avail the flexibilities under the Decision, through a binding declaration to that effect. In fact, the example chosen to illustrate such a commitment is that of China’s statement to the General Council on May 10, 2022. Even though the ultimate impact of the two texts remains the same, the adopted decision is clearly inclusionary and a diplomatic courtesy.
Nonetheless, as politically significant as the TRIPS Decision is, it seems just as technically redundant at this stage. Not only has the world witnessed a reversal in trends – from a shortage to a glut in vaccine supply, with the demand side for vaccines being plagued by regulatory hurdles, lack of overall health infrastructure and vaccine apathy as well as hesitancy in vaccine deficient countries. Further, without any agreement on how to address trade secrets (which protect technical know-how for manufacturing vaccines), it is anyone’s guess if five years will suffice to build capacity in Low and Medium Income Countries (LMICs) for this pandemic or the next. The poor countries will still have to depend upon rich countries or emerging economies like India to help them with medicines etc whenever they face an epidemic or pandemic.
For its part, the agreement has done away with certain contentious clauses in the initial quad outcome text. For instance, there is no need to stipulate all the patents that will be covered by the authorisation. This is certainly a lower administrative burden to discharge for countries interested in utilising the Decision. However, in the overall, the compulsory licensing of patents will probably work far better for diagnostics and therapeutics (both less complicated to manufacture than vaccines that are biologicals). These will see negotiations in the next 6 months, so the jury is still out.
E-commerce
On another closely watched issue, Members have decided to maintain the moratorium on the imposition of customs duties on electronic transmissions until 31st March 2024 or until MC13, whichever is earlier. The mandate to the General Council to hold periodic reviews on matters such as the impacts of the moratorium is welcome, as is the specific mention of development dimensions as a focus area to be pursued under the Work Programme on Electronic Commerce. This work over the next two years should be adequate to guide the WTO on whether or not to further extend the moratorium.
Till this Ministerial, such an extension, along with renewal of a similar moratorium on Members initiating non-violation complaints based on TRIPS, was considered standard fare. While there was already consensus on extending the TRIPS moratorium in the run up to MC12, the fate of the former had kept digital players across the world on tenterhooks, who had left no stone unturned in urging governments to further extend the freeze.
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