Key Takeaways from the 13th Ministerial Conference of the WTO

By Biswajit Dhar, Ranja Sengupta, and Abhijit Das | Commentary | March 11, 2024

The 13th Ministerial Conference (MC13) of the World Trade Organization ended in Abu Dhabi with minimal consensus. MC13 was scheduled to end on February 29 but was extended by a day as the WTO’s 166 members failed to reach consensus on several key issues, such as agriculture, fisheries subsidies, ending the moratorium on e-commerce trade, and dispute settlement reform.

Despite high hopes, MC13 failed to deliver positive results for the global trading system amid worsening geopolitical tensions and economic headwinds. Except for a last-minute deal to extend the moratorium on e-commerce trade for two years (until MC14), MC13 ended without a decision on a permanent solution for public stockholding of food or on curbing fisheries subsidies. On dispute settlement reform, the final outcome essentially reiterated the commitment made at MC12 to have a fully and well-functioning dispute settlement system accessible to all members by 2024. Members also did not agree to the request to incorporate the proposed Investment Facilitation for Development Agreement into the WTO rulebook. However, negotiations will soon resume at WTO headquarters in Geneva and will gain momentum in the coming months in all areas where convergence could not be achieved at MC13.

Madhyam invited three trade experts from India to assess the outcomes of the MC13 and the challenges ahead. The following are their comments:

MC13 was a Travesty of Multilateralism

By Biswajit Dhar, Distinguished Professor, Centre for Social Development, New Delhi

The 13th WTO Ministerial Conference was convened at a time when the multilateral trading system finds itself trapped in a series of contradictions caused by the intransigence of several major economic powers. The “jewel in the crown” of the WTO, the dispute settlement mechanism (DSM), without which the rules of this “rules based organisation” cannot be enforced, has been in complete disarray after President Donald Trump refused to allow the Appellate Body to function. The negotiating arm of the organisation, which is expected to consider issues through the involvement of the entire membership, now looks increasingly splintered.

The Doha Development Agenda (DDA), under which negotiations were conducted with the involvement of all members, was virtually abandoned in 2017, and almost on cue, several groups of countries issued joint statements to initiate negotiations on issues of their convenience.

More importantly, these so-called Joint Statement Initiatives (JSIs) cover issues such as investment facilitation and e-commerce, and their inclusion in the WTO was rejected by India, South Africa, and many other developing countries. It is, therefore, ironic that the WTO, in which decisions are taken by consensus, is now witnessing a complete rejection of the “consensus principles”. The DDA that was agreed upon by consensus has been summarily dismissed, while the JSIs on which there is no consensus among members to conduct negotiations are now holding the centre stage of the WTO’s functioning. Next month, the newest multilateral institution will complete three decades of existence, but what was witnessed in the Abu Dhabi Ministerial was really a travesty of multilateralism.

MC13 should have been an occasion to begin the process of remedying the systemic problems facing the WTO for without addressing them, the multilateral trading system would remain totally ineffective. However, it was clear even before the Ministers arrived in Abu Dhabi that the agenda of the dominant group of members was not to put the broken arms of the WTO, namely the negotiating arm and DSM, back on track. Unfortunately, they were ably aided by the Director-General Okonjo-Iweala, whose biases in favour of this group overshadowed the deliberations. Under such circumstances, developmental issues and concerns that were being addressed through the DDA have fallen off the list of priorities, an unfortunate augury given that the WTO has an important role in moving towards the realisation of the Sustainable Development Goals.

The short shrift given to development considerations needs no better example than the complete refusal by the United States and a few other countries to find a permanent solution for India’s system of public stockholding for food security purposes. Recently, the Indian government announced that over 810 million poor citizens will be provided with subsidised food grains by the end of 2028, and public stockholding is its enabling mechanism. However, this mechanism remains shrouded in uncertainty because of the agricultural subsidies’ discipline introduced by the Agreement on Agriculture militates against the interests of developing countries such as India.

For the past quarter of a century, these countries have argued that the level of price support should not be measured on the basis of international prices between 1986-88, but a more recent period. Unfortunately, decisions on agriculture in the WTO are taken by global agri-business companies, for whom the United States and other advanced countries act as proxies. Since these companies have refused to let India off the hook, the vexed issue of public stockholding does not find even a mention in the Abu Dhabi Ministerial Declaration.

As recessionary tendencies grip the global economy, protectionist tendencies are becoming even more stronger. This is where the importance of a rules-based WTO lies. But when the largest economy has decided to break the dispute settlement mechanism and prevent the enforcement of rules, it begs the question: Is the multilateral trading system passé?

MC13: A Deadlock on Agriculture and Fisheries Subsidies

By Ranja Sengupta, Senior Researcher, TWN Trust India, New Delhi

For MC13, agriculture and fisheries subsidies were two critical issues for developing countries and LDCs.

The agricultural negotiations have been contentious for several years. One of the key decisions pursued by developing countries and LDCs is the permanent solution to public stockholding (PSH), which would allow subsidies to be given through an administered price at which products are bought from farmers for running public food programs. This was mandated to be agreed upon by 2017, and has been blocked even in MC13. In fact, updating the outdated and fixed external reference price (ERP) of 1986-88, on which such subsidy estimates were based, was also refused. Such subsidies are essential policy tools for developing countries and LDCs to ensure livelihoods and procurement, which in turn meet the food security needs of these countries. A Special Safeguard Mechanism (SSM) to protect domestic farmers and farming against import surges also continued to be blocked, as was the disciplines on cotton subsidies given by Western countries which have destroyed livelihoods across Africa and Asia.

The only good thing to come out of MC13 was that the stalemate on the above-mentioned issues, especially the permanent solution, resulted in the blocking of an outcome on agriculture. The way things were going, the outcome would have ensured a mandate on a clear and aggressive trade liberalisation agenda through the constraining of export restrictions even in the situation of a domestic food crisis; further opening of markets through proposed cuts in import duties; and a twisted approach to disciplines on domestic support. In fact, such proposals were being justified in the name of “food security” and “reform” and efforts were on to ensure the same deadlines as for issues such as the PSH, SSM and cotton subsidies.

It is clear that such issues will be consistently pushed in the days to come, but it is also becoming apparent that unless the WTO pays heed to farmers’ grievances worldwide, it will fail to move any constructive agenda on agriculture.

While agriculture was already almost at a deadlock before MC13, there was a considerable push to conclude Part 2 of the Agreement on Fisheries Subsidies (AFS) partially agreed in MC12 in 2022. However, the extremely unfair and unbalanced nature of the text that went into MC13 was not addressed until the extended last day of the Ministerial Conference and led to the failure to reach any conclusion.

A major bone of contention was the extremely weak and inadequate disciplines on industrial-scale fishing, accepted universally for being responsible for the state of the oceans today. It is good to remember that the mandate given to Sustainable Development Goal 14.6 was to discipline those responsible for the threat to marine resources today. The sustainability exemption clause offered the biggest escape route for big players, which was then compounded by the steadily deteriorating disciplines on distant-water-fishing. Interestingly, the sustainability exemption was hinged on the ability to monitor indicators, such as fish stocks, and to file notifications, which developed countries can do well, while developing countries and LDCs are weakest at.

However, at the same time, special and differential treatment (S&D) for developing countries was severely limited and, in effect, designed to transfer all the costs of the disciplines to them. LDCs and those with a share of global marine capture below 0.8% were exempted, ensuring that they did not grow their economies or fisheries sector. A general exemption for developing countries was time-bound and pitched at a meagre for eight years, which many developing countries considered grossly inadequate to do the necessary upgradation of infrastructure, monitoring mechanisms, and rebuilding fish stocks.

The most shocking, however, was the continued insistence to limit exemption for small-scale fishers who are clearly not the ones responsible for unsustainable fishing and depletion of marine resources. Even until the last moment, exemption for them came with a clause stating that they should not engage in “significantly commercial” activities which would restrict them from earning livelihoods out of fishing. This probably proved to be the last straw for many developing countries, and it was inevitable that the talks broke down.

The IF(fy) Agreement at Abu Dhabi

By Abhijit Das, International Trade Expert, New Delhi

By now, it is generally well known in trade circles that India formally objected to the inclusion of the Investment Facilitation Agreement (IFA) in the WTO. India highlighted that “given the lack of exclusive consensus, this is not a matter for the MC13 agenda”. India’s objection prevailed, as the IFA could have been added to the WTO “exclusively by consensus”. What has not generally been discussed is that additional legal grounds exist to support India’s stand on the IFA. What are some of these arguments?

First, only a trade agreement and not an agreement on non-trade issues, whether multilateral or plurilateral, can become a part of the WTO. The IFA fails to meet this threshold criterion. Undoubtedly, economists consider investment and trade to be complementary, but the substantive provisions of the IFA have almost nothing to do with international trade. Some could argue that the Agreement on Trade-Related Investment Measures (TRIMS Agreement) has already created a precedent for rules on investment issues to be a part of the WTO. However, this argument ignores the fact that the most substantive disciplines of the TRIMS Agreement are anchored in the provisions of the GATT, which are directly concerned with trade.

Second, who can request the addition of the IFA as a plurilateral trade agreement to the WTO? The Marrakesh Agreement, the foundational agreement of the WTO, provides an answer. According to Article X:9 of this agreement, ‘parties to a trade agreement’ can make such a request. Taking this argument further, who are the parties to an agreement? While the agreements at the WTO do not provide an answer, we get some guidance on this issue from the Vienna Convention on the Law of Treaties (VCLT), which provides rules on how treaties among countries are to be interpreted.

The VCLT defines ‘Party’ to mean “a State which has consented to be bound by the treaty and for which the treaty is in force”. When would the IFA enter into force? Article 45.1 of the IFA text specifies the following: “This Agreement shall enter into force, for those Members of the WTO which have accepted it, on the 30th day following the deposit of the 75th instrument of acceptance, and thereafter for each other Member on the 30th day following the deposit of its instrument of acceptance.” As the IFA has not yet entered into force even for a single party, the request at the recently concluded Abu Dhabi meeting to add it to the WTO was premature. Such a request can be made only after the IFA enters into force outside the WTO, and not before that.

Overall, India’s opposition to Chile and South Korea’s request to add the IFA to the WTO was based on a strong legal foundation. India’s reservation also appears to be grounded in the realisation that allowing the IFA to become a part of the WTO would open the floodgates for other plurilateral agreements on non-trade issues, such as environment, gender, and MSMEs, to enter the WTO. For the time being, India appears to have contained this risk. How this plays out in the future remains to be seen.

Image courtesy of the WTO