While there are calls by many in the sustainable development policy community for the multilateral trading system to make further progress, both for the issue areas on the agenda at MC12 and elsewhere, the achievement of the Geneva Package is a laudable milestone.
Coming just days before the UN Ocean Conference convenes in Lisbon, Portugal, the new WTO Agreement on Fisheries Subsides has drawn a largely favorable welcome from intergovernmental officials, governments, and many NGOs.
At MC13, both multilateral and plurilateral initiatives are likely to be sharing the limelight, unlike at MC12, where the attention of the trade community was focused primarily on the multilateral negotiating agenda.
By Sofia Baliño, Senior Manager, Communications & Engagement, IISD
The Twelfth Ministerial Conference (MC12) of the World Trade Organization (WTO) was gaveled to a close in the early hours of Friday, 17 June 2022, with the adoption of the “Geneva Package” following days and nights of intense negotiations that went well over time. The final outcomes, which range from a large multilateral trade agreement to reduce harmful fisheries subsidies to individual decisions on select agenda items, are slated to open a new chapter in the institution’s history, as officials look to where else the trading system can serve to address crucial sustainability challenges.
The events of 12-17 June marked a striking reversal from the WTO’s last ministerial conference in Buenos Aires, Argentina, in December 2017. Four and a half years ago in the Argentine capital city, ministers and senior officials ended that conference with few multilaterally agreed decisions, and even those that were reached often fell well short of hopes or expectations. The result added further fuel to a long-standing debate over whether the WTO’s negotiating pillar might be beyond repair. In the years since, trade officials in Geneva and in capitals have been working to answer those concerns, both with concrete results at MC12 and with the start of a process to improve the functioning of the WTO overall.
The Geneva Package is a notable outcome and was far from being guaranteed. Heading into MC12, whether geopolitical and health crises would lead to insurmountable tensions in the negotiating room was an open question. It also remained unclear whether existing divergences among WTO members on certain topics would remain intractable at decision time. In the end, the parallel pressures of the COVID-19 crisis and the war in Ukraine added to the sense of urgency among trade officials to ensure the WTO could deliver results and show its potential to do more in the future.
WTO members can come together, across geopolitical fault lines, to address problems of the global commons, and to reinforce and reinvigorate this institution.
These MC12 outcomes “show the world that WTO members can come together, across geopolitical fault lines, to address problems of the global commons, and to reinforce and reinvigorate this institution,” said WTO Director-General Ngozi Okonjo-Iweala at the closing ceremony on Friday morning. “They give us cause to hope that strategic cooperation will be able to exist alongside growing strategic competition.”
In the wake of MC12, WTO officials said the attainment of the Geneva Package as part of this overarching history is a promising sign of where things could go next. While there are calls by many in the sustainable development policy community for the multilateral trading system (MTS) to make further progress, both for the issue areas on the agenda at MC12 and elsewhere, the achievement of the Geneva Package is a laudable milestone. It is even more noteworthy given that these outcomes were endorsed by consensus by all 164 WTO members. This is a very difficult bar to clear in international trade negotiations. It is also worth noting, however, that to achieve consensus, some of the outcomes in the Geneva Package do not go as far as earlier draft texts or have left some issues on the table for future work.
Throughout its history, the multilateral trading system’s evolution has a been a story of continual and incremental progress, with setbacks and collapses followed by major steps forward and outright negotiating achievements. The milestones along this journey have involved a combination of grand bargains, small packages, standalone decisions, pledges for future work, and reflections on the state of health of the trading system. Dealing with issues that are commercially sensitive, have varying implications on different countries given their respective levels of development, and often involve new rules that would be enforceable by the WTO’s dispute settlement mechanism adds even further complexity to this dynamic.
Fisheries deal: a landmark achievement for trade law and ocean governance
The new WTO Agreement on Fisheries Subsides had been in the making for over two decades and is one of only two major multilateral agreements that the Organization’s entire membership has negotiated and adopted since the WTO opened its doors in January 1995. This result also marks the first time that WTO members have adopted a multilateral trade deal with environmental issues at its very core. Experts and policymakers alike have been watching this deal closely to see how its design and implementation can help inform the development of potential new disciplines at the WTO or elsewhere on other environmentally harmful subsidies.
“This agreement matters because it will require governments to think critically about their subsidy policies and how they interact with efforts to manage natural resources sustainably,” said Alice Tipping, Lead, Sustainable Trade at IISD, in a statement welcoming the new deal.
Coming just days before the UN Ocean Conference convenes in Lisbon, Portugal, which has the stated objective of “[propelling] much needed science-based innovative solutions aimed at starting a new chapter of global ocean action,” the agreement has drawn a largely favorable welcome from intergovernmental officials, governments, and many non-governmental organizations (NGOs). Many have noted, however, that this deal really must be a first step to even more ambitious action further down the line.
The new WTO Agreement on Fisheries Subsidies is part of a “great wave of positive Ocean Action [that] is sweeping around the planet in 2022,” said Ambassador Peter Thomson of Fiji, the UN Secretary-General’s Special Envoy for the Ocean, on Twitter. He also called for this wave to continue throughout different meetings and processes under UN bodies over this year and next, including those related to ocean governance directly and those focused on biodiversity and climate change.
The fisheries subsidies agreement includes legally binding prohibitions to subsidies for illegal, unreported, and unregulated (IUU) fishing, as well as those subsidies for the fishing of stocks that are deemed overfished, with the text spelling out who is responsible for making that designation. Also notable is a provision, under Article 5, that prevents subsidies going to fishing that takes place in the unregulated high seas (i.e. those fisheries not managed by regional fisheries management organizations). The final version of the treaty does not, however, feature the broad prohibition on subsidies that contribute to overcapacity and overfishing that had been in the earlier draft text forwarded to ministers for their consideration at the beginning of June. This provision, then under Article 5, was dropped after challenging negotiations over the special and differential treatment (S&DT) provisions that would apply to it – namely, those flexibilities that developing country members would be able to avail themselves of – threatened to scupper the entire deal outright.
While not featuring in the current treaty, these provisions may still be to come. The ministerial decision for the fisheries subsidies agreement commits WTO members to continue negotiating with the goal of developing, by the next ministerial conference, further rules to make the treaty more comprehensive. These should entail “further disciplines on certain forms of fisheries subsidies that contribute to overcapacity and overfishing, recognizing that appropriate and effective special and differential treatment for developing country Members and least developed country Members should be an integral part of these negotiations.”
The fisheries subsidies deal itself includes an incentive for WTO members to make good on this directive. Its Article 12 sets out that the Agreement will expire four years after entry into force unless “comprehensive disciplines” are obtained, though if those results are not achieved within that window, the WTO’s General Council can extend the timeframe for the Agreement’s application.
Ministerial decisions on trade and health, food security
Nearly all of the draft decisions forwarded to ministers ahead of MC12 made it through to adoption in some format, with the exception of a proposed draft decision on a work programme on trade and agriculture. Two other decisions that did make it through, however, cover other facets of agricultural trade.
One of these decisions commits WTO members to exempt purchases of non-commercial humanitarian food aid by the World Food Programme (WFP) from export prohibitions and restrictions, with the proviso that this does not affect the ability of WTO members to act towards ensuring food security at home, so long as these actions remain in line with global trade rules. This decision has been under negotiation for several years. Separately, WTO members endorsed a decision on “the emergency response to food insecurity more broadly” in light of growing concerns over rising food prices, hunger levels, and other challenges.
Separately, two decisions from MC12 focus on trade and public health. One of these decisions covers pandemic preparedness and response more broadly, along the lines of voluntary measures that members can take to make it easier for trade to flow across borders, avoid undertaking export restrictions on key inputs for health products, pursue greater regulatory cooperation, and other steps. WTO members will also be pursuing a review of what COVID-19 has shown about the trading system and its ability to handle similar challenges further down the road. This process will take place within the Organization’s regular bodies and may include related proposals. It is due to go on through at least 2024.
The other decision is the hotly debated TRIPS waiver, which culminated with language “authorizing the use of the subject matter of a patent required for the production and supply of COVID-19 vaccines without the consent of the right holder for the extent necessary to address the COVID-19 pandemic,” with various related clarifications. It also includes a footnote where developing country members “with existing capacity to manufacture COVID-19 vaccines are encouraged to make a binding commitment not to avail themselves of this decision,” in an apparent reflection, in legal text, of a commitment by China to follow through with its earlier pledge not to make use of the waiver itself.
The TRIPS waiver further notes that, depending on forthcoming talks, WTO members could extend the waiver’s application by the end of this year to cover COVID-19-related diagnostics and therapeutics. The current waiver applies for five years, with annual review and the possibility of an extension by the WTO’s General Council after those five years are up. WTO rules state that waivers must be timebound and subject to review, among other requirements.
The final waiver has drawn a mixed reaction from public health experts, ranging from lukewarm to outright critical, with many questioning how useful it will be in practice given its very limited scope and the current stage of the pandemic. While waivers are not unfamiliar territory for the WTO, this particular one has proven to be one of the most contentious in the Organization’s recent history. It has revived a discussion that long predates the COVID-19 pandemic on whether the WTO’s current rules on trade-related aspects of intellectual property rights (IPRs) are sufficiently flexible for addressing public health needs, especially for developing economies.
Setting their sights on MC13
With MC12 now in the rearview mirror, trade watchers and policymakers alike are looking for signals to emerge on what the international trade policy agenda will look like over the months to come and what this agenda could mean for sustainable development. Already the contours of the WTO’s Thirteenth Ministerial Conference (MC13) are beginning to emerge, as indicated by many of the ministerial decisions and announcements made in Geneva during MC12.
Many of these texts set MC13 as a target date, either for decisions or updates on ongoing discussions. Some Geneva Package decisions refer to MC13 as the date by which they hope to see concrete outcomes, such as more comprehensive disciplines on fisheries subsidies. Others name it as a deadline for renewing existing decisions or taking an alternative approach to the same, such as the moratorium on customs duties on electronic transmissions. While this moratorium was ultimately renewed at MC12 as part of the e-commerce work programme, it may expire unless another decision is taken by the next conference. The decision on the e-commerce work programme indicates that MC13 “should ordinarily be held by 31 December 2023,” noting that if it is delayed past the first quarter of 2024, the moratorium’s fate would need to be dealt with by the WTO’s General Council or ministers, or it will risk lapsing entirely.
Members have agreed to pick up right where we left off this morning, raising the possibility of an earlier MC13.
At MC13, both multilateral and plurilateral initiatives are likely to be sharing the limelight, unlike at MC12, where the attention of the trade community was focused primarily on the multilateral negotiating agenda. In WTO parlance, multilateral negotiations refer to those topics where new rules are being developed by the Organization’s entire membership. By comparison, the so-called plurilateral initiatives involve several WTO members, but not all have chosen to take part at this stage. Many of these plurilateral initiatives were launched at the Buenos Aires Ministerial Conference, including initiatives on trade and women’s economic empowerment, e-commerce, investment facilitation, domestic regulation in services, and micro-, small, and medium-sized enterprises (MSMEs).
Since Buenos Aires, three different environmentally focused initiatives have also been announced by groups of WTO members. These involve plastics pollution and environmentally sustainable trade, fossil fuel subsidies, and trade and environmental sustainability, respectively. While coordinators of some of these initiatives provided updates at MC12, the prospect that MC13 could lead to the announcement of concrete outcomes from some or all of these initiatives is likely to draw renewed attention to the debate over how plurilateral and multilateral efforts will operate alongside one another within the overarching trading system.
How the WTO itself functions is also likely to take center stage when MC13 convenes. The MC12 ministerial outcome document states that ministers “acknowledge the need to take advantage of available opportunities, address the challenges that the WTO is facing, and ensure the WTO’s proper functioning.” In that vein, they pledge to undertake “reforms to improve all its functions” and that these efforts will “be Member-driven, open, transparent, inclusive, and must address the interest of all Members, including development issues.” The target date for potential decisions is MC13.
These conversations on WTO reform will take place in both the Organization’s General Council as well as in its subsidiary bodies. The outcome document includes a footnote clarifying that WTO member groups will still be able to meet on the subject independently and make their own submissions to any of those WTO bodies or councils. While scant in substantive details, this reference to WTO reform talks is notable in that it brings conversations that have happened largely in other settings about the challenges facing the Geneva-based body into the Organization itself.
Also notable is the fourth paragraph of the outcome document, which sets the target of having a “fully and well-functioning dispute settlement system accessible to all Members by 2024.” This pledge ultimately gives a nod to the ongoing paralysis of the WTO’s Appellate Body, which currently has no sitting members, and to broader concerns that have plagued the WTO’s dispute settlement mechanism for years. These concerns include the difficulty in maintaining the mandated timetables for issuing dispute panel or Appellate Body reports on cases, the increasing complexity of disputes, and persistent questions over how to deal with the WTO-consistency of measures where the rules of the current trading system may not be fully clear. Given that WTO rules are made enforceable through its dispute settlement mechanism, addressing the various challenges that this system has faced over the years is vital for ensuring that existing and new agreements and decisions can operate securely in practice.
Ultimately, the timing of MC13 will fall to the WTO’s General Council, which determines the date and venue of ministerial conferences. While WTO ministerial conferences are usually held biennially, this has not always been the case, and some members have signaled that they would like the next conference to happen even sooner. For instance, ahead of MC12, Brazil submitted a proposal for annual ministerial conferences so that members can “show their continued commitment to the rules-based multilateral trading system; bring fresh approaches to Geneva’s long outstanding issues; and, also importantly, to address specific trade-related issues and urgencies in a timely manner.” Whether this approach gains traction remains to be seen. Trade officials indicate, however, that they are already gearing up for whatever may come next.
“Members have agreed to pick up right where we left off this morning, raising the possibility of an earlier MC13. I promise to go back to work immediately. Get ready, tomorrow is another day post-MC12,” said Okonjo-Iweala at the closing ceremony.