The WTO’s 13th Ministerial Conference: A brief assessment of the outcome and of challenges to come

Title – The WTO’s 13th Ministerial Conference: A brief assessment of the outcome and of challenges to come

Authors – Patrick Low and Hamid Mamdouh

Introduction

A blog by Patrick Low and George Riddell posted on this website immediately prior to the WTO’s recent Ministerial Conference (MC13) argued that expectations of concrete results from the conference would be modest at best. The Conference did not disappoint. The sparsity of outcomes is an ongoing reflection of the considerable challenges the WTO has faced for almost three decades in fulfilling its negotiating function, and more recently, its dispute settlement function as well. Ministers cannot be faulted for their efforts, which included a prolongation by two days of the meeting, which was supposed to take place between 26-29 February 2024.

What follows is a brief account of MC13 outcomes, along with some commentary. A question for consideration that is not covered here is what all this means for African countries and how they might position themselves to extract maximum benefits from participating in the WTO.

WTO accessions

As anticipated, and in effect finalized before MC13 began, were the accessions of Comoros and Timor Leste. The Ministerial Conference formalized and celebrated the accessions. Accessions activity is a promising aspect of the WTO’s work.  The fact that more than 20 countries are in line for accession signals the value that these countries assign to WTO membership.

Dispute settlement

The WTO’s dispute settlement system has been dysfunctional since the Appellate Body (AB) ceased to function in 2019, when a block on the appointment of new AB members imposed by the United States made it impossible to process appeals. The United States acted on account of its dissatisfaction with a number of issues relating to the manner in which the AB operated. There was some optimism prior to MC13 that progress made in Geneva on the issue might lead to a solution in Abu Dhabi. In the event, the Ministers only managed to take note of progress made in discussions so far, and to reiterate a prior commitment to produce an outcome by the end of 2024.

Fishing subsidies

Similarly under the fishing subsidies mandate, there was some hope that progress to date could be built upon. The WTO Agreement on Fisheries Subsidies seeks to prohibit support for illegal, unreported and unregulated fishing, ban support measures for fishing overfished stocks, and prohibit subsidies to fishing on the unregulated high seas. In the event, the MC13 outcome came to nothing beyond an understanding that work would continue.

Agriculture

In agriculture there were no results, as disagreements persisted over the trade dimensions of public stockholdings and food security, as well as flexibilities regarding the use of export restrictions on food imports of vulnerable countries. The WTO Agriculture Agreement includes an ongoing negotiating mandate but this has been used to little avail over the years. MC13 was no exception.

Special and differential treatment for developing and least-developed countries and other areas of development interest

There is an outstanding commitment to continue efforts to render special and differential treatment (SDT) “precise, effective and operational”. This is language that can be found in the Doha Ministerial Declaration of November 2001 (WT/MIN(01)/DEC/1)[i]. Progress on a better understanding of entitlement to SDT among WTO members has been elusive for years. On the positive side there is an MC13 decision to support developing countries more effectively in the application of sanitary and phytosanitary measures and technical barriers to trade (WT/MIN(24)/W/23). Progress on this matter has been made in recent years, particularly with the Specific Trade Concerns process for addressing trade partners’ laws, regulations and practices in the standards area. 

An issue of relevance to least-developed countries in particular addresses measures aimed at ensuring a smooth transition of countries from the least-developed to the developing country category (WT/MIN(24)/W14/Rev.1). Paragraph 10 also recognizes the special needs of least-developed countries and calls for a continuation of work initiated at MC12 to address the relevant issues.

A reference is made to continuation of the work of a longstanding Working Group on Trade and Technology Transfer, whose deliberations have made little impact to date. Note is taken of challenges facing landlocked developing countries in the context of the Agreement on Trade Facilitation, with a call to continue work in the area. The Ministerial Declaration also calls for the continuation of ongoing work on the participation in trade of micro-, small- and medium-sized enterprises (MSMEs), and makes more general references in various places to supporting the development dimension for developing countries in terms of growth, sustainable development, and technical assistance.

The moratorium on import duties on electronic transmissions

An eagerly awaited positive result was the renewal of the moratorium on the imposition of customs duties on electronic transmissions, agreed in 1998 and periodically renewed ever since. Many governments and business organizations place considerable importance on the maintenance of the moratorium. However, this particular renewal stipulates that the moratorium will expire by the 14^th Ministerial Session or 31^st March 2026, whichever is earlier. The implication of this is that a future decision to extend the moratorium will have to be taken against a presumption of expiry rather than in the context of a choice between renewal and cessation. 

Some commentators argue that to the extent the moratorium is important, it is only in a symbolic sense. Various reasons for taking this view relate to the practical and potentially legal difficulties of assessing attributable import duties to digital products equivalent to their physical analogues. It may be noted that what was referred to as “digital products” 25 years ago, at the time of the adoption of the moratorium, are now classified as services products, according to the CPC classification system.[ii] So far, customs duties have never been applied to services imports.

Another consideration is that if countries choose an import substitution approach to developing their digital sectors, they risk foregoing competitiveness and timeliness in a rapidly evolving sector.

Perhaps the most telling doubt about the value of the moratorium, however, relates to its wording. In prohibiting import duties, it makes no reference to alternative tax bases such as excises or value-added internal taxes. The most-favoured nation (MFN) principle prohibiting discrimination among trading partners would partially constrain import restrictions unless they were uniform against all-comers. But the extensive absence of national treatment commitments[iii] in existing legal undertakings of WTO members under the General Agreement on Trade in Services (GATS) means that digital trade could be constrained by the discriminatory application of import duty equivalents in the form of discriminatory internal taxes. Since the moratorium only addresses customs duties and not internal taxes, this raises a question about the value of the moratorium in terms of facilitating digital trade

Trade in services

Notwithstanding an explicit recognition that services are the dominant source of value in the global economy, the Declaration contains soft and non-specific language about taking care of development interests and reinvigorating work in the area. It does not give any guidance regarding specific issues to be addressed in regard to the possibility of negotiated outcomes in sectors of export interest to developing countries, called for as an ongoing mandate under Article IV of the GATS. Moreover, GATS Article XIX mandates continuing negotiations in trade in services more generally, including those negotiations envisaged under Article IV.

The Declaration also calls for continuing work to prepare the trading system for any future pandemics. In addition, a strand of ongoing work referred to in a decision appended to the Ministerial Declaration mandates a continuation of work initiated in 2022 in the area of intellectual property to address TRIPS non-violation and situation complaints (WT/MIN(24)/W/16).

Another issue that was raised in the margins of the Ministerial Conference was industrial policy and trade, against a background of a resurgence of subsidies and other support policies designed to foster domestic production of various high technology products and products designed to mitigate climate change through the increased use of renewable energy. The effects of subsidies applied by richer countries on the export prospects of countries unable to afford such outlays is a further source of concern. This issue is bound to raise significant trade challenges of relevance to the WTO. 

Mention is made in the Ministerial Declaration of discussions by a group of members on gender and trade (Informal Working Group on Trade and Gender). In order to avoid characterizing a work programme like this involving a subset of the WTO membership as a Joint Statement Initiative[iv], it is characterized as a general message on a cross-cutting issue that does not affect rights and obligations under the WTO.  A similar status applies to other working groups dealing with Sustainable Plastics Trade (DPP), Trade and Environmental Sustainability Structured Discussions (TESSD), and Fossil Fuel Subsidies Reform (FFSR). These did not figure significantly in MC13 deliberations.  

Decision-making procedures and joint initiatives in the WTO

On account of opposition from certain countries to the existence of joint statement initiatives (JSIs), these were not explicitly a part of MC13. The JSIs are intended to be non-discriminatory. This means that they require signatories to take on new obligations, while non-signatories may de facto enjoy the benefits of new commitments without having to make any themselves. Nevertheless, the objectors assert that the JSIs contravene the spirit of the WTO with its consensus rule for decision-making. In the view of some, the objection to JSIs is founded in the fact that they are a mechanism that prevents the consensus principle from being transformed into a veto. 

In any event, this meant that the JSI on E-Commerce was not under consideration at MC13 despite the fact that this work is central to the WTO’s efforts to come to grips with new digital trade realities and what these portend for the future of trade and the WTO. Instead, a Ministerial Decision on Electronic Commerce (WT/MIN(24)/W/26/Rev.1) directed that work continue based on the  Work Programme on Electronic Commerce based on a 1998 decision (WT/L/274). Since the Work Programme is a deliberative mandate to conduct structured discussions in relevant WTO bodies, no actual negotiations have taken place in the two and a half decades since the launch of the work programme, except for the periodic renewal of the moratorium on import duties on electronic transmissions.  

One advance with respect to JSIs, however, was the withdrawal of the objection by India to the inclusion of new commitments on the domestic regulation of services in the respective services schedules of the participating countries. On the other hand, the Joint Ministerial Declaration on Investment Facilitation for Development, subscribed to by more than 120 members, the majority of whom are developing countries and LDCs, was not taken up under MC13 despite the fact that the Declaration exists as a fully developed agreement. The outstanding issue is how to incorporate it in the WTO Agreement, bearing in mind that it is considered by some to go beyond the existing purview of the WTO.    

Challenges to the WTO’s negotiating capacity

Nobody can accuse the WTO of being short of issues to address. But how effectively is the institution meeting the numerous challenges it faces? The answer given by MC13 must be not effectively enough. Little was achieved in Abu Dhabi that could be characterized as extending the frontiers or improved the workings of the multilateral rules-based system under the WTO. Many topics were kicked down the road for further reflection and discussion, and hopefully for negotiation as appropriate.

In recent times, especially since MC11 in Buenos Aires, many members have tired of facing barriers to progress imposed by the rigid application of the consensus decision-making rule. The Joint Statement Initiatives have proven to be a promising avenue for progress, even if they are considered by some to be second-best to a shared multilateral negotiation involving the entire membership. Plurilateral negotiations have, however, always been part of the WTO negotiating function, guided by the vision of where the WTO needs to venture if it is to remain relevant and keep up with the times. As long as the JSIs remain open and inclusive, and respect the MFN principle, they  should be considered a significant component of the WTO’s future work programme. 

Another issue is the distinction between negotiation and deliberation. It is generally easier to deliberate than to reach decisions that imply firm commitments. At the same time, in the past the WTO has sometimes been criticized for being too much about legislating and litigating, and not enough about deliberation. Deliberation is indeed a necessary precondition of arriving at justiciable commitments. But the WTO’s functioning will be impaired if decisions are continually pushed into the future and then characterized as a successful outcome.

Deliberation as a precursor to negotiated commitment is one thing. Most of the MC13 outcome fits into the deliberative category, with an as yet unfulfilled promise to yield concrete outcomes of mutual benefit to the membership. Another function of deliberation addresses issues that are not intended to lead to binding commitments, or at least not directly. Such deliberations as those that have been going on for some years now on MSMEs, for example, can be useful as exercises resulting in information exchange and learning about best policy practices. But such exercises should not masquerade as adequate substitutes for the fulfillment of the WTO’s core functions – those of negotiating, litigating and administering agreements.   

If the WTO is to continue to serve its core purposes, the membership must work hard to find common ground and mutually beneficial commitments. There seems to be a shared commitment among most members to preserve the WTO as an instrument of multilateral governance, albeit supported by a vast network of preferential trade agreements among subsets of the membership. A continued commitment to multilateral solutions was arguably demonstrated recently by the continued efforts of members to reach agreement for two days beyond the planned schedule of the Abu Dhabi meeting.

WTO effectiveness and challenges to come

Emerging issues are going to further test the determination of the WTO membership to defend multilateralism in trade relations. Mention has already been made of a growing tendency in many countries to rely on industrial policies for a variety of reasons – protectionism, strategic geopolitical considerations, and in order to generate public goods under-supplied by markets. When designed and applied to provide public goods in an inclusive manner, subsidies may be regarded as beneficial. Other subsidies can be distorting and divisive in terms of trade relations. Substantial challenges arise in distinguishing between ‘good’ and ‘bad’ subsidies, as well as in managing competition through trade in a world where a limited number of countries can afford to subsidize.

A second issue that the WTO will have to face soon is how to manage trade relations in the face of climate change and other environmental challenges. The MC13 Ministerial Declaration has little specific to say on how global warming is to be managed. Before long, however, the WTO will inevitably become involved in issues such as carbon border tax adjustments as a means of avoiding carbon leakage and the risk of inadequate joint action to arrest global warming before it is too late.

Finally, the WTO will need to ensure that its rules are adequate to address the rise of digitization in global economic activity. A failure to do so is likely to result in a fractured digital ecosystem that will further marginalize multilateralism as a force for peace and prosperity. A start – albeit one that is in contention – has been made in the WTO to address digital trade, and at present the WTO is the only forum that includes all the major players in digital rule-making as well as most of the rest of the world.                 

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i Patrick Low is a former chief economist of the WTO and a Director of the Nairobi-based Trade Negotiations and Investment Forum (TNIF). Hamid Mamdouh is a former Director of the WTO’s Trade in Services and Investment Division, a Senior Counsel at King and Spalding LLP, and a member of the TNIF Advisory Board. The opinions expressed here are attributable solely to the authors. 

ii This, and other document references can be found on the WTO’s website (https://www.wto.org/).

iii Central Product Classification, revised version 2.1, Chapter 84.

iv The national treatment rule is designed to prevent discrimination between foreign and domestic products and producers.

v Joint initiatives result from decisions taken by a subset of members to explore and perhaps negotiate on particular issues of mutual interest without a consensus decision from the whole WTO membership.