The World Trade Organization (WTO)’s 12th Ministerial Conference (MC12) is being convened in Geneva, Switzerland at the end of this month, a year-and-a-half after it was scheduled to be held in Kazakhstan (June 2020, but postponed due to the novel coronavirus pandemic). The MC12 is being held at an important juncture when the global trade scenario is quite upbeat.
The outlook
Recent WTO estimates show that global trade volumes could expand by almost 11% in 2021, and by nearly 5% in 2022, and could stabilise at a level higher than the pre-COVID-19 trend (https://bit.ly/3EQTO55). The buoyancy in trade volumes has played an important role in supporting growth in economies such as India where domestic demand has not yet picked up sufficiently. Therefore, these favourable tidings provide an ideal setting for the Trade Ministers from the WTO member-states to revisit trade rules and to agree on a work programme for the organisation, which can help maintain the momentum in trade growth.
But above all, the MC12 needs to consider how in these good times for trade, the economically weaker countries “can secure a share in the growth in international trade commensurate with the needs of their economic development’, an objective that is mandated by the Marrakesh Agreement Establishing the World Trade Organization.
Does the run-up to the MC12 provide any evidence that the global trading system can be slightly less iniquitous than it has been? The answer lies in the possible outcomes in some of the areas that are currently witnessing intense negotiations. These include adoption of WTO rules on electronic commerce, investment facilitation, and fisheries subsidies. But there is one issue that surmounts all others, namely, the WTO’s response to demands that technologies necessary for producing vaccines, medicines, and other medical products for COVID-19 treatment should be available without the restrictions imposed by intellectual property rights (IPRs).
IPRs and vaccine issue
From the very outset of the COVID-19 pandemic it had become clear that IPRs protected using the provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) are formidable barriers to ensuring equitable access to vaccines. Pharmaceutical companies controlling the global markets have used monopoly rights granted by their IPRs to deny developing countries access to technologies and know-how, thus undermining the possibility of production of vaccines in these countries. The involvement of developing countries in vaccine production could have increased supplies of affordable vaccines to the low-income countries. Availability of vaccines remains a critical problem in these countries even after a year since the first dose of COVID-19 vaccine was administered. Recent statistics show that until now, a mere 4.1% of the population in low-income countries have received at least one dose of the vaccine (https://bit.ly/3mKDk8G).
To remedy this situation, India and South Africa had tabled a proposal in the WTO in October 2020, for waiving enforcement of several forms of IPRs on “health products and technologies including diagnostics, therapeutics, vaccines, medical devices … and their methods and means of manufacture” useful for COVID-19 treatment. By doing so, barriers created by IPRs to timely access to affordable medical products could be removed. This proposal, supported by nearly two-thirds of the organisation’s membership, was opposed by the developed countries batting for their corporates. However, after the Joe Biden Administration in the United States lent limited support to the India-South Africa proposal, there was a glimmer of hope that WTO members would agree to lift restrictions on access to technologies for COVID-19 vaccines and medicines; at least by the MC12. The unfortunate reality of the current discussions is that an outcome supporting affordable access to COVID-19 vaccines and medicines looks distant. A further confirmation of this possibly came from the WTO Director General, Ngozi Okonjo-Iweala, when in her recent musings on the MC12 in The Economist , she was completely silent on this issue.
Fisheries, e-commerce
Although discussions on fisheries subsidies have been hanging fire for a long time, there is considerable push for an early conclusion of an agreement to rein in these subsidies. However, the current drafts on this issue are completely unbalanced as they do not provide the wherewithal to rein in large-scale commercial fishing that are depleting fish stocks the world over, and at the same time, are threatening the livelihoods of small fishermen in countries such as India.
In recent months, the proposal by the members of the Organisation for Economic Co-operation and Development and the G-20 members to introduce global minimum taxes on digital companies has made headlines. But in the WTO, most of these countries have been investing their negotiating capital to facilitate the expansion of e-commerce firms. Discussions on e-commerce are being held in the WTO since 1998 (https://bit.ly/302dkgf), after the adoption of the Ministerial Declaration on Global Electronic Commerce wherein WTO members agreed to “continue their … practice of not imposing customs duties on electronic transmissions”. The more substantive outcome was the decision to “establish a comprehensive work programme” taking into “account the economic, financial, and development needs of developing countries”.
Fast forward to the discussions in 2021, and a key focus of the 1998 e-commerce work programme, namely “development needs of developing countries”, is entirely missing from the text document that is the basis for the current negotiations. On the negotiating table are issues relating to the liberalisation of the goods and services trade, and of course guarantee for free flow of data across international boundaries, all aimed at facilitating expansion of businesses of e-commerce firms. In fact, the decision on a moratorium on the imposition of import duties agreed to in 1998 has become the basis for a push towards comprehensive trade liberalisation — a perfectly logical way forward, given that the sole objective of the negotiations on e-commerce is to facilitate expansion of e-commerce firms.
Divisions over investment
Complementing the current focus of the WTO to promote the global interests of oligopolies is the initiative for the adoption of an investment facilitation agreement. Inclusion of substantive provisions on investment in the WTO has been one of the more divisive issues. In 2001, the Doha Ministerial Declaration had included a work programme on investment (https://bit.ly/3bJSeWw), but it was soon taken off the table as developing countries were opposed to its continuation because the discussions were geared to expanding the rights of foreign investors through a multilateral agreement on investment. An investment facilitation has reintroduced the old agenda of concluding such an investment agreement. The proponents have been careful not to load the agenda by seeking substantial commitments from the Government to promote the interests of foreign investors, but it should be clear even to the uninitiated that the ultimate objective is to bind host governments into a multilaterally agreed commitment to comprehensively protect investor interests.
One-sided negotiations
Besides the bias in favour of global oligopolies, the current negotiating processes in the WTO are fundamentally flawed. The negotiations on e-commerce and investment facilitation are being conducted not by a mandate given by the entire membership of the WTO in a transparent manner that are also consistent with the objectives of the WTO. Instead, these negotiations owe their origins to the so-called “Joint Statement Initiatives” (JSI) in which a section of the membership has developed the agenda with a view to producing agreements in the WTO. This will then be offered to the rest of the membership on a “take-it-or-leave-it” basis. This entire process is “detrimental to the very existence of a rule-based multilateral trading system under the WTO”, as India and South Africa have forcefully argued in a submission against the JSIs early this year (https://bit.ly/2ZXN5XV).
Biswajit Dhar is Professor of Economics at the Jawaharlal Nehru University,
New Delhi
