Worldwide: Events Of The 11th WTO Ministerial Conference In Buenos Aires

Last Updated: 30 January 2018
Article by Şahin Ardiyok and Pınar Artiran

The 11th WTO Ministerial Conference was held in Buenos Aires, Argentina during December 10-13, 2017, and ended with neither a major breakthrough agreement nor a Ministerial Declaration, which seems to have signaled that the multilateral trading system is rather fragile at this point in time and that the WTO members are increasingly reluctant and unable to reach a consensus on global trade issues.

The Ministerial Conference, attended by trade ministers and other senior officials from the organization's 164 members, is the highest decision-making body of the WTO. Under the Marrakesh Agreement Establishing the WTO, the Ministerial Conference is to meet at least once every two years. It brings together all members of the WTO, all of which are countries or customs unions. As such, the Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.

The 11th Ministerial Conference in Buenos Aires began under tense conditions awaiting the US administration's sharp criticism of the WTO, since both US President Trump and the US Trade Representative (USTR), Robert Lighthizer, had already set a rather negative tone during the previous months. Moreover, although not on the formal Ministerial Conference agenda, but being fiercely debated, the ongoing US block on the appointment of new members to the WTO Appellate Body was and actually is still a major issue that was of concern to the entire Membership. Under such a heavy atmosphere, the USTR Lighthizer addressed the trade ministers and said that, "It is impossible to negotiate new rules while many of the current rules are not being followed; the WTO is losing its focus and becoming too litigation-focused."

Lighthizer also complained that too many countries were not following WTO rules and that too many of the wealthier members had been unfairly granted developing country status. It is known to everyone by now that the Trump administration clearly prefers unilateralism and is nostalgic about the GATT era that was defined by a power-based trading system where the US was the dominant actor. This said, it would probably not be wrong to say that many WTO members were probably relieved when they heard USTR Lighthizer stating that the US was looking forward to working with those WTO members who were seeking free and fair trade through the implementation of WTO agreements and decisions as negotiated by members and that he welcomed the opportunity in 2018 to continue to discuss how the functioning of the WTO could be improved. The USTR also contended that the MC11 would be remembered as the moment when the impasse at the WTO was broken. Certainly, referring to plurilateralism, the USTR argued that many members recognized that the WTO should pursue a fresh start in key areas so that like-minded WTO Members and their constituents would not be held back by the few members that were not ready to act. Accordingly, the USTR expressed the US' willingness to work with willing members on e-commerce, scientific standards for agricultural products and the challenges of unfair trade practices that distort world markets. Further, the US intends to continue pushing meaningful disciplines on harmful fisheries subsidies based on guidance agreed to by Ministers at Buenos Aires.1

In contrast with USTR Lighthizer's remarks regarding the outcome of the Ministerial Conference, the EU Trade Commissioner Cecilia Malmström expressed her disappointment at the failure of the Conference to deliver any multilateral outcomes and called it "a missed opportunity.2" "All WTO Members have to face a simple fact: We failed to achieve all our objectives, and we did not achieve any multilateral outcome. The sad reality is that we did not even agree to stop subsidizing illegal fishing. Now, I hope that several WTO members, whose actions here in Buenos Aires prevented an outcome, will use the time following this Ministerial meeting for valuable self-reflection."

Surely there were other frustrated members in Buenos Aires. India for instance, was disappointed by the WTO Members, including the EU, that refused to grant a permanent waiver from the WTO rules related to food support programs. Consequently, it blocked various incentives related to the renewal of a 20-year-old moratorium on levying duties on electronic transmissions. The members nonetheless agreed on a Work Program whereby they agreed to maintain the current practice of not imposing customs duties on electronic transmissions until the next session which they have decided to hold in 2019.3

On an important note that depicts the possibility of cooperation between the US, EU and Japan, despite their recent and quite diverging opinions and policies regarding international, these three counties joined their voices in Buenos Aires in promising to combat market-distorting policies (in particular in China) that give rise to excess industrial capacity in key sectors, including subsidies for state-owned enterprises and forcing companies to transfer their proprietary technology abroad. Also, importantly, India aimed at receiving exemptions to a prospective trade agreement that would aim to curb subsidies for illegal fishing operations. However, the US refused the proposal and took the view that such exclusions and exemptions could not be accepted as they would permit overfishing and harm global fish stocks.

Although there are some modest steps that are taken here and there by a group of members, the WTO is nonetheless facing an existential threat given the Trump administration's negative approach towards the WTO. The trade ministers from Europe, to the US, India and South Africa heavily criticized their trading partners for the inability to agree on key issues relating to international trade in Buenos Aires. As such, the WTO Members were sharply divided over the WTO's aptitude to manage international trade regime. In particular, the US Trade Representative Robert Lighthizer expressed the view that the organization spent too much time and energy on litigating disputes instead of negotiating. The EU's Trade Commissioner Malmström echoed a similar disappointment related to the inability of the members to reach multilateral negotiations, but she also advocated for the crucial role that the WTO plays with a strong support to its appeal procedures that the US administration is blaming for judicial activism.

Consequently, the WTO is currently immersed into a serious soul-searching exercise whereby many of the members suggest that a potential agreement on e-commerce could provide the WTO with a revival tool that would help the House to remain relevant given the changing dynamics of the multilateral trading system. On that note, the Trade Minister of Finland—where the creator of the Clash of Clans, Supercell is based—said at the meetings, "It's ridiculous that we don't have global rules for e-commerce in 2017. It would be quite problematic and quite hard to make it work if Clash of Clans had to pay duties in some countries and not in other countries. It would mean much more bureaucracy."

Echoing in fact the voice of many other WTO Members, technology companies such as Amazon and Google have expressed a vivid interest in launching the WTO negotiations on e-commerce that could basically serve to set the standards on how to define electronic contracts, signatures and consumer protections. These negotiations would be particularly important for technology companies since their business models heavily rely on data travelling the world flawlessly. In the same vein, the founder of the Alibaba e-commerce platform, Jack Ma, who has attended quite a few important WTO meetings to date was also in Buenos Aires and advocated for the rules to regulate e-commerce within the WTO. Following all these developments, and despite the Trump administration's assault on the WTO, the fact that the US nonetheless took part in the e-commerce proposal during the Buenos Aires Ministerial indicates that the country still considers the WTO as a "House" to work collectively on certain issues with other trading partners. Some 70 members out of 164 WTO Members, including the US, the EU and Japan, vowed to go ahead with negotiating rules on electronic commerce even in the absence of a broader, multilateral deal among the entire Membership. China, India, Vietnam and Indonesia were among the WTO members that did not want to take part in this initiative.

Towards the end of the Conference, some WTO members also took the initiative to hold talks related to investment facilitation and micro, small and medium size enterprises (MSMEs) under the WTO umbrella. In addition, of note are the important incentives to issue the Buenos Aires Declaration on Women and Trade and the announcement of Google that emerged as the Small Business Champion of the video competition organized by the WTO and ICC.

The sentiment that the delegates and participants left Buenos Aires with was essentially one that clearly revealed that the WTO now enters an era of variable geometry and multi-speed trade liberalization. That indicates, in essence, a preference towards plurilateral rather than multilateral agreements, in particular considering the US' reluctance to engage with other members and also its persistent blocking of the appointment of new Appellate Body members. The EU Commissioner Malmström took the view that "short-term plurilateral arrangements within the WTO framework" were the best way forward. Moving ahead with plurilateral agreements instead of multilateral agreements is not necessarily a negative development. In fact, given the difficulty of reconciling diverging priorities and approaches in today's world trade, the incentive to move at different speeds could increase the possibility of reaching an agreement. Apart from the initiative and the declaration on e-commerce—including WTO members that represent almost 80% of multilateral trade—the incentive declared by various members towards finding a common ground for an agreement to facilitate international investment and make rules easier for micro-businesses remains as a highlight of the Ministerial Conference.

To sum up, the WTO's 164 members did not reach full consensus on any of the major objectives it had set itself before the meeting. They agreed to continue to negotiate on agricultural and fishing subsidies as well as reaching a definition on what could be considered as illegal fishing. As such, a collective damage was given by the members to the rules-based multilateral trading system, and that raises concerns regarding the ability of the WTO to go with the flow of the global economy dynamics. Although unable to reach an agreement on many important issues, the EU and many other trading nations still are convinced and willing to support the WTO in moving forward on key issues that concern multilateral trade. It is likely that this may be the real meaning of the statements and declarations made by key WTO members, including the EU, on issues such as domestic regulation on services, e-commerce, investment facilitation—as well as supporting the integration of women and of small- and medium-sized enterprises in global trade. The WTO Director General Azevedo pointed out in his concluding remarks that all members agreed that the institution is the sole organization capable of policing global trade, and as such he invited all of the members to be more flexible during the negotiations. It is impossible not to agree with the DG Azevedo that "In taking this work forward, I think we need to do some real soul searching. The system is not perfect, but it is the best we have and we will all—all—deeply regret if we ever lost it."

To conclude, it would be quite fair to agree with the Chair of the Buenos Aires Ministerial Conference, Susanna Malcorra, who stated at the Closing Ceremony, "There is life after Buenos Aires".

Footnotes

1.See at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/december/ustr-robert-lighthizer-statement (Accessed January 26th, 2018)

2. See at http://trade.ec.europa.eu/doclib/press/index.cfm?id=1772 (Accessed January 26th, 2018)

3. See the Work Programme on Electronic Commerce, Ministerial Decision of 13 DECEMBER 2017WT/MIN(17)/65, WT/L/1032.

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Şahin Ardiyok
 
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