Nearly two years’ worth of negotiating will conclude next week at the World Trade Organization’s 13th ministerial conference in Abu Dhabi, United Arab Emirates, where trade ministers could be leaning toward agreements on fisheries subsidies and a path forward on reform issues as the fate of a moratorium on e-commerce transmission duties hangs in the balance.
The ministerial kicks off on Monday and is scheduled to run through Thursday, though it is not uncommon for ministers to extend talks if they are making progress.
Most of the optimism about negotiations this time around centers on supplementing the Agreement on Fisheries Subsidies. That deal, reached at MC12 in June 2022, did not include provisions on subsidies that contribute to overfishing and overcapacity. Addressing those types of subsidies has been a priority for members ever since.
A deal on fisheries is the “most important thing to expect” from next week’s ministerial, according to one Geneva-based official who was “cautiously optimistic” an agreement could be struck.
The technical work on fisheries subsidies has advanced as far as it can, according to another Geneva-based official. The only unresolved issues must be decided by the ministers, the official said: “Members have done the technical work to isolate the issues that require political will.”
All of the outstanding issues are tied together, according to Icelandic Ambassador to the WTO Einar Gunnarsson, the chair of the fisheries negotiations. “The remaining issues that we need to resolve are all very much interlinked, such that changing one provision in a certain direction will certainly provide for a push toward making a change somewhere else in the opposite direction,” he told reporters on Monday. “In other words, in searching for the final balance that will attract a consensus, members will need to start thinking about the internal trade-offs that they can make.”
India, according to a third Geneva-based official, is standing in the way of a deal. New Delhi has pushed for expansive special and differential treatment provisions, including a 25-year transition period, among other proposals that are not supported by the broader WTO membership. The draft fisheries text sent to ministers last week left the length of a transition period bracketed, indicating a lack of consensus.
Other potential hangups include provisions on distant-water and artisanal fishing, non-specific fuel subsidies and forced labor. Gunnarsson listed those issues as the most important for ministers to resolve.
A path forward on reform
Ministers also are primed to agree on broad language on dispute settlement reform, although an outcome is not certain, according to several officials. A four-sentence draft ministerial declaration on dispute settlement reform would instruct Geneva officials “to accelerate discussions, build on the progress already made, and work on unresolved issues, including issues regarding appeal/review and accessibility, to achieve convergence by 2024.”
Dispute settlement reform and the restoration of a dispute settlement system are top priorities across the WTO membership, according to the second Geneva official. Members have completed a significant amount of technical work on dispute settlement reform, addressing how to improve the system and ensure it operates efficiently, the official said. “At MC13, I would hope there would be a message that accurately reflects the progress that has been made and recommits ministers to the issue,” the official said.
The draft declaration is “the best we can get at this time,” according to a fourth Geneva-based official. “It is clearly suboptimal, but this is a very finely balanced outcome.”
But core issues such as national security and an appellate mechanism have not yet been seriously addressed, according to the first Geneva official. These too are political issues, the official said, and the U.S. does not want them to muck up the technical discussions.
The U.S. continues to be engaged in dispute settlement reform discussions but is “not really pushing for an extremely substantial outcome,” the third official noted. “I think they could also live without a ministerial declaration” on dispute settlement reform, the official said.
A draft ministerial declaration has placeholder text for an outcome on dispute settlement.
One issue likely to be discussed at the ministerial that to date has not been included in any of the draft declarations is what the second official referred to as “effective rules restoration.” The WTO has now been without an effective appellate mechanism for five years, the official noted, and many members are concerned that others can “frustrate rule enforcement by appealing into the void.”
European Commission Executive Vice President and Trade Commissioner Valdis Dombrovskis earlier this week said he hoped ministers would make a political commitment not to appeal disputes “into the void” -- appealing them to the non-functioning Appellate Body, thus preventing the adoption of the panel decision.
According to the second official, some WTO members are hoping for a commitment to use other dispute resolute mechanisms -- the Multi-Party Interim Appeal Arbitration Agreement, bilateral consultations or, perhaps, an agreement not to appeal panel decisions.
The U.S. has appealed several notable cases into the void -- decisions it lost on Section 301 tariffs against China and Section 232 tariffs on steel and aluminum. But the second official suggested that does not mean the U.S. is actively trying to frustrate rule enforcement.
“The U.S. has never said it doesn’t support effective rule enforcement and its whole objective is to restore what it sees as effective rule enforcement,” the official said. Many of the U.S. concerns relate to the Appellate Body and the U.S. wants fewer cases to be appealed and more resolved via alternative avenues, the official added.
E-commerce showdown
An agreement to extend the WTO’s moratorium on duties on electronic transmissions would be the ministerial’s most significant outcome, according to several industry sources. But a decision on the fate of the moratorium is not expected until the final day of the ministerial.
Several factors have complicated the decision this time around. The moratorium previously has been linked to another on dispute settlement cases for non-violation claims under the Agreement on Trade-Related Aspects of Intellectual Property Rights. The linkage was broken at MC12, as members readily agreed to extend that moratorium before a decision was taken on the e-commerce moratorium, the second official pointed out.
Other officials believe the two issues will again be linked at MC13. But the TRIPS non-violation moratorium does not hold the political weight it once did and might not be enough to convince India -- which traditionally holds up renewal of the e-commerce moratorium -- to acquiesce. Two officials questioned whether the TRIPS non-violation moratorium was still as important as its e-commerce counterpart. The question of bringing a case under the non-violation moratorium to date remains theoretical, the official said, as no member has ever prepared one.
Additionally, the non-functioning dispute settlement system would render a decision on a non-violations case unenforceable. “The malfunctioning of the dispute settlement procedure affects everything,” the official said.
The moratorium also could be linked to the extension of WTO’s work program on e-commerce, according to an industry source. The multilateral work program was established in 1998 via a declaration that included the moratorium. India, which at MC12 pushed for the work program to be revitalized, last month proposed a draft ministerial declaration for members to “build on the progress” made in the work program since MC12.
India’s proposal on the work program did not include the moratorium.
Many more developing countries have come out in favor of renewing the moratorium, the second official said; they include 62 members of the African, Caribbean and Pacific group. This increase in support from developing members has given proponents more confidence it will be renewed, according to the official.
But a major reason the MC12 decision to renew the moratorium came down to the wire was the U.S. did not push as hard for renewal as it has in prior years, the official continued. The U.S. is expected to take a similar approach at MC13.
The first official was not as optimistic about the moratorium’s renewal, suggesting that the “world must be ready for the possibility” that it lapses. The fourth official gave an extension of the moratorium “more than an even chance.” -- Brett Fortnam (bfortnam@iwpnews.com) with Hannah Monicken (hmonicken@iwpnews.com)