The summit brought together the usual G7 leaders – Canada, France, Germany, Italy, Japan, the UK, and the US, as well as the European Commission – along with invited leaders from Australia, India, South Africa, and the Republic of Korea.
On WTO reform, the leaders’ communiqué calls for new rules that would reflect “transformations underway in the global economy, such as digitalisation and the green transition”.
The leaders commit to collectively ensure one billion additional vaccine doses for international distribution over the coming year, through support to the WHO-led ACT Accelerator and the COVAX Facility.
Leaders from the Group of 7 (G7) endorsed a shared agenda on a series of trade topics during their recent summit in Cornwall, UK, with a view to informing major decision-making meetings of the World Trade Organization (WTO) planned for this year.
This agenda, they say, could lead to greater prosperity, a faster and fairer pandemic recovery, and improve environmental and labor protections. They also suggest that it could be a valuable opportunity to address long-standing inequities in the trading system, while creating innovative law and policy frameworks for the future.
“We, the leaders of the Group of Seven, met in Cornwall on 11-13 June 2021 determined to beat COVID-19 and build back better,” they said in their opening lines, noting that the lives lost and affected have provided an important, albeit painful, reminder that collaboration is key against those challenges that transcend borders.
The summit, held in the seaside town of Carbis Bay, brought together the usual G7 leaders – Canada, France, Germany, Italy, Japan, the UK, and the US, as well as the European Commission – along with invited leaders from Australia, India, South Africa, and the Republic of Korea.
Multilateral, plurilateral processes in the spotlight
The section of the G7 communiqué devoted to “free and fair trade” focuses on ways that, in the leaders’ view, trade can ensure improved economic growth and prosperity across the board, from advanced economies to least developed countries (LDCs).
In that context, leaders refer extensively to “multilateral” and “plurilateral” work and the role that both can play in delivering on that vision. In the WTO context, “multilateral” is normally used to refer to those initiatives that involve the Organization’s entire membership, while “plurilateral” involves those efforts where only a subset of the WTO’s 164 members has chosen to participate.
Currently there are a series of plurilateral efforts underway, including negotiations on investment facilitation, e-commerce, and domestic regulation in services. There is also non-negotiating work on supporting micro-, small, and medium-sized enterprises (MSMEs) as they engage in trade, as well as on trade and women’s economic empowerment. Two newer endeavors, namely the structured discussions on trade and environmental sustainability (TESSD) and an initiative on trade and plastic pollution, are still in the early stages and have not yet determined whether negotiating new rules will be part of their approach.
At the multilateral level, there is an extensive agenda at the WTO dating back to 2001, known as the Doha Development Agenda. While a few select aspects of that agenda have led to new rules, especially the WTO’s Trade Facilitation Agreement, much of it has been effectively stalled over more than a decade.
Critics of the plurilateral initiatives, many of which are now known as “Joint Statement Initiatives” for the joint documents that launched those processes, warn that these efforts can draw attention away from long-standing issue areas that not only have a multilaterally-agreed mandate, but would be game-changers for members’ development prospects.
Some, like India and South Africa, have also questioned whether there is or could be a legal basis to bring these initiatives into the WTO, given that there is no consensus among the organization’s 164 members to do so. Questions over institutional “mission creep” and whether these initiatives, especially those of a rule-making nature, will be able to foreground development considerations successfully, also abound.
A notable exception are the talks to discipline harmful fisheries subsidies, with WTO members gearing up for a ministerial-level meeting on 15 July that has the objective of clinching a deal.
“We will work with other WTO members to make progress on immediate issues, including reaching a meaningful conclusion to the multilateral negotiation on fisheries subsidies,” leaders said. They also pledged to help in “advancing negotiations on e-commerce,” referring to the Joint Statement Initiative on the subject that is underway.
Industrial subsidies, tech transfer, labor, and environment
The term “WTO reform” has become a buzzword in trade circles, referring to ideas being explored by groups of WTO members on how to address many of the “systemic” challenges that the institution faces. Among the common concerns raised, for instance, is that the WTO’s dispute settlement mechanism has become overburdened with increasingly frequent and technical cases. The paralysis of the institution’s Appellate Body due to a lack of consensus over starting the selection process for new judges has only reinforced those questions.
Another recurring issue is whether the WTO’s trade monitoring function can remain effective in the long term when many members struggle to meet their requirements to notify the institution over their subsidy levels and other policy measures. What this means for members’ ability to finalize negotiations on existing issues is also a frequent complaint by some, as is the concern that “new issues” are cropping up that are in need of the trade community’s attention.
While WTO reform talks span across these issues, in practice these ideas tend to focus on updating the Organization’s rulebook to cover issues that do not yet have a multilateral mandate or existing rules.
In Cornwall, the G7 leaders called for new rules that would reflect “transformations underway in the global economy, such as digitalisation and the green transition.” They also said steps should be taken that would empower action “against unfair practices, such as forced technology transfer, intellectual property theft, lowering of labour and environmental standards to gain competitive advantage, market-distorting actions of state-owned enterprises, and harmful industrial subsidies, including those that lead to excess capacity.”
Many of the G7 members are part of other configurations that have advanced versions of these objectives. For instance, Canada, the EU, and the UK are part of the “Ottawa Group” that has backed a successful conclusion to the fisheries talks, progress in the Joint Statement Initiatives, and a resolution to the Appellate Body crisis, among other priorities. The Ottawa Group has also developed a proposed “Trade and Health Initiative” covering some of the goods-related challenges to vaccine distribution, such as export restrictions, customs and border procedures, and tariff levels.
Learning from COVID-19
One of the most high-profile announcements that came out of the G7 summit is the leaders’ commitment to collectively ensure one billion additional vaccine doses for international distribution over the coming year, through support to the World Health Organization (WHO)-led “Access to COVID-19 Tools (ACT) Accelerator” and the COVAX Facility. This builds on the one billion doses that they have worked to ensure through those same mechanisms.
“Recognizing that ending the pandemic in 2022 will require vaccinating at least 60% of the global population, we will intensify our action to save lives,” the leaders said.
However, criticisms abound over the disparity between advanced and developing economies over vaccine access, production, and distribution. How to address this disparity in the trade arena has led to a split between those who back the Ottawa Group’s effort to target goods-related constraints and those in favor of a proposed waiver to some of the WTO’s intellectual property rules to support vaccine production and distribution.
The waiver, proposed by India and South Africa and now co-sponsored by a host of other WTO members, also has the backing of the US and the interest of some EU member States, despite public pushback by the EU, Canada, and some other advanced economies.
The European Commission released a proposal in recent weeks that has instead proposed that intellectual property-related concerns around the COVID-19 response should focus on improving and “clarifying” the use of compulsory licensing, one of the flexibilities provided under the WTO’s intellectual property rules, even as critics note that such licensing can be onerous to put into practice.
The G7 communiqué alludes to those differing views on intellectual property rights (IPRs) within their coalition, but does not seek to resolve them, only to continue conversations on both approaches.
“Emphasising the need for equitable access to COVID-19 vaccines, we will support manufacturing in low income countries and, noting the importance of intellectual property in this regard, we will engage constructively with discussions at the WTO on the role of intellectual property, including by working consistently within the TRIPS agreement and the 2001 Doha Declaration on the TRIPS agreement and Public Health,” they said.
Pledges and ambitions named at the G7 and similar summits – such as the G20, the Asia-Pacific Economic Cooperation (APEC) forum, and the BRICS summit of Brazil, the Russian Federation, India, China, and South Africa – are non-binding in nature and unenforceable. However, they are known for setting out political signals for ideas that will make their way to negotiating tables in Geneva and elsewhere, along with those approaches that could run up against WTO members’ “red lines” in practice.
The WTO will have two major political moments in 2021 that will show whether these political signals will translate into concrete action, for instance through negotiated outcomes, agreed workplans, and ministerial declarations.
One is the above-mentioned ministerial meeting on 15 July, being held virtually, where the focus will be primarily on fisheries subsidies. While a few select other items may make it onto the July meeting agenda, the big push outside of fisheries will take place in time for the WTO’s Twelfth Ministerial Conference (MC12) from 30 November until 3 December.
That event is slated to be a major checkpoint for the existing “plurilateral” processes, or Joint Statement Initiatives. It will also be a moment to see whether negotiators on multilateral agenda items, such as reforming the WTO’s agriculture rules, will be able to endorse a workplan for the coming years and sign off on any decisions, such as an exemption of humanitarian food aid purchased under the World Food Programme (WFP) from export restrictions. A decision on the COVID-19 waiver – or lack thereof – is also likely to make it to the MC12 agenda, with text-based negotiations on what this waiver might look like about to get underway.
Lastly, it will be a moment to take stock of where the WTO is headed as an institution and what it wants its future to look like, at least for the next two years. It will be the first ministerial conference under Director-General Ngozi Okonjo-Iweala, and is one that will also have to adapt to the continued challenges of the COVID-19 pandemic and its aftermath, including the practical challenges of travel. At the systemic level, the institution will continue to face calls to use trade and trade policy to build back better from COVID-19 so that other crises, exacerbated by climate change and biodiversity loss, do not catch the world unawares.
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By Sofía Baliño, Communications and Editorial Manager, Economic Law and Policy, IISD