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A WTO that’s ready to do Trump’s bidding

D Ravi Kanth | Updated on January 24, 2020 Published on January 24, 2020

Rather than question US’ intent to bend rules and paralyse the dispute settlement body, its boss has chosen to play along

It was an extraordinary spectacle to watch in Davos on Wednesday (January 22). Just as his impeachment proceedings went into top gear in Washington, President Donald Trump held a press conference in Davos at the annual World Economic Forum meeting. He introduced World Trade Organisation Director-General Roberto Azevedo and said: “Roberto and I have a tremendous relationship and we are going to do something that I think will be very dramatic,” Trump thundered. “He’ll be coming with a lot of his representatives to Washington sometime — may be next week or the week after — and we’ll start working on it,” he declared.

After showering praise on Azevedo, the President went to the heart of the issue: “China is treated as a developing country, India is a developing country and they get [the] tremendous advantage.” Why those special benefits are not available to the US? It is obvious that Trump is referring to what is known as the special and differential treatment or S&DT. The S&DT is accorded to developing countries on a self-designated basis. Under the S&DT framework, developing countries are allowed longer time periods for implementing WTO agreements and commitments, lower level of commitments or what are called less-than-full reciprocity. There is also a built-in non-reciprocity provision in the S&DT architecture to ensure that developing countries are not required to provide the same level of market access to developed countries. The Decision on Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing countries, which is referred to as the Enabling Clause, was adopted in 1979.

But the US wants to discontinue the S&DT to India, China, South Africa, and many more countries at the WTO. Last year, the US terminated the GSP (Generalised System of Preferences) benefits of more than $6 billion to Indian exporters, knowing well that it is a violation of the Enabling Clause.

Controversial proposals

Washington introduced two proposals last year at the WTO. It wants greater “differentiation” among developing countries with regard to S&DT in current and future negotiations. It has also called for enhanced transparency and notification requirements for complying with WTO agreements, including naming and shaming non-compliers.

Both these proposals of the US were fiercely opposed by India, South Africa, China and several other developing countries. These countries led by India, South Africa, and China offered proposals for reforming the WTO based on a developmental framework. That the US’ proposals go against the fundamental principles on which the WTO was built is well- established.

Against this backdrop, one would expect the custodian of the WTO — that is, the Director General of the trade body — to clarify to the knowledgeable US President whether such changes are permissible under the existing rules and, if so, what needs to be done.

He should have informed the President that his administration’s decision to spike the Appellate Body has already undermined the enforcement role of the WTO.

But, the DG remained silent on the atrophying of his organisation, which is celebrating its 25th year. Instead, he concurred with President Trump: “I think it is fair to say, and we [whom is Azevedo referring to] have been saying for quite some time that if the multilateral system, the WTO, is to deliver, it is in its performance role of today’s global economy, it has to be updated, it has to be changed, it has to be reformed.”

“This is an agenda that is squarely before members and I don’t think anybody in Geneva misses the point. I think they understand that the system has not been functioning properly in many areas, that is something we are trying to address,” Azevedo argued.“I am happy that in a conversation today with President Trump, he agreed that this is something that needs to happen, the WTO has to change…We are committed to effect those changes and this is something that we are serious about,” the DG maintained.

“I am going to be together with President Trump as soon as possible, discussing what needs to change, what needs to be effected in the WTO [and] we are committed to doing that,” the Director-General from Brazil declared proudly. “Of course, I will be talking to all other WTO members, making it sure that they all understand that this is serious.”

Has the DG gone beyond his mandate to make such astounding pronouncements in the presence of a leader whose administration has already wreaked havoc at the global trade body?

Article VI (paragraph 4) of the ‘Marrakesh Agreement Establishing the World Trade Organization’, says: “The responsibilities of the Director-General and of the staff of the Secretariat shall be exclusively international in character. In the discharge of their duties, the Director-General and the Secretariat shall not seek or accept instructions from any government any other authority external to the WTO. They shall refrain from any action which might adversely reflect on their position as international officials. The members of the WTO shall respect the international character of the responsibilities of the Director-General and of the staff of the Secretariat and shall not seek to influence them in the discharge of their duties.”

Published on January 24, 2020
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