Next week sees the World Trade Organization (WTO) hold its 13th Ministerial Conference. Widely known as MC13, the meeting is the highest-level decision-making body of the WTO and is meant to meet every other year. This was interrupted by the Covid pandemic. Now back on its regular timetable, this year’s meeting takes place in Abu Dhabi from 26 to 29 February and will see delegations from all member states as well as a select few non-governmental organisations (NGOs) from across the global trade community.
The Institute of Export & International Trade is one of those select NGOs with a presence at MC13. One of IOE&IT’s delegation will be head of policy, Hemita Bhatti. So, ahead of her flying to Abu Dhabi, the Daily Update sat down with her to ask what trade watchers should be looking out for next week and what key outcomes are likely to be.
DU: This MC seems like it could be a big moment for the WTO and its role in global trade?
HB: There is a lot of cynicism ahead of this MC. Critics are saying that the WTO’s effectiveness has been diminished by the slowing down of progress on negotiations and the difficulties in addressing the rise in protectionism. Countries appear to be taking back ownership of rules and regulations and not adhering to a multilateral system.
Within that context, getting consensus among all these countries with differing positions will always be difficult. And it’s happening in the wider context of the WTO being seen as no longer serving its core purpose. Countries are ignoring the WTO and doing what they want without repercussion. This creates a two-tier system, where there’ll be those who want to reinforce free trade and the liberalisation of trade and those who take advantage ofthe diminishing authority of the WTO.
DU: Assuming there will be some business as usual, what are the key areas to look for?
HB: In terms of important policy developments, extending the e-commerce moratorium is a key one. The moratorium prevents duties being charged on digital trade and services, and has been in place since 1998. It’s up for review this year and if it’s not extended there could be customs duties placed on exporting electronic transmissions. That means anything to do with digital trade or services could be liable for duties, because the moratorium will no longer cover them.
It's likely to be extended, but this will be the last time. It will be extended for two years. But the negotiations are in the air and there’s no guarantee it’s going to be extended.
DU: Who doesn’t want to see it extended?
HB: Developing countries and, in particular, India. But also, Indonesia, Sri Lanka and South Africa are against extending it. They believe it creates a digital divide between developed and developing countries. They’re challenging the extension vocally, which is why it’s been difficult to get agreement on it. The US has also softened its position on an extension. They’ve always supported extensions when they’ve come up. This time, they’ve said ‘for now, we’re happy to support an extension’. That ‘for now’ terminology suggests they may not be as supportive of it in the future.
There’s a geopolitical context to this with the main debate being between India and developed countries. There are elections coming in a lot of these countries, which puts an additional pressure on their positions. India will be more protectionist and closed off coming into these negotiations, because Modi’s up for a third term. The elections are imminent. He will try his best to not rock the boat and to protect India’s economic interests.
DU: Might it be enough to look tough, but then concede?
HB: That might happen. They might also use the e-commerce moratorium to gain further concessions in other negotiations. Countries often agree to something in one area in exchange for concessions elsewhere.
There are concessions being looked for on agriculture and development, so they might use the moratorium as a bargaining chip for that. There’s going to be a lot of horse trading at this MC in particular. There is a lot of pressure domestically for countries to have a stronger stance on these negotiations, especially for countries like India, which is developing its own economy and technologies. They want to ensure they are protected against competitors.
Biden's administration has kind of been wary of supporting the moratorium indefinitely, because they want to create the kind of policy space for domestic regulations for big tech. But if they don't support an extension, it won't land well with the EU, the UK and Canada who are pushing for the extension so they’re not stuck with customs duties.
DU: What next if it doesn’t get extended?
HB: If it doesn’t get agreed at the multilateral level, you could see certain countries agreeing to the removal of customs duties on a bilateral level. If there’s isn’t an existing trade deal in place that includes digital services, they may need to do an e-commerce agreement of some kind. Otherwise, they could be slammed with customs duties on everything related to electronic transmissions, which is pretty much everything on services. This is why it’s a big deal, especially for the UK, given our economy is basically all about services. The services sector is 72% of the UK’s GDP.
DU: And what about agreements on intellectual property?
HB: That is also interesting and up for discussion. It is one of the more controversial areas because of the moral angle to it. The TRIPS waiver was essentially put in place off the back of Covid, to ensure countries weren't discriminated against based on the IP of medicines and medical products. Through the pandemic this waiver meant other countries could get the vaccines and treatments they needed without having to pay hefty extra prices.
The temporary suspension on TRIPS was supported by over 60 developing countries, because they needed it. Now South Africa and India want an extension to that waiver.
I don't think they’re going to get it, because before ministerial negotiations happen, the General Council and the WTO negotiate all these topics. When they were negotiating the topics, they decided to drop the TRIPS waiver extension. If they couldn’t agree at Council level, it’s unlikely to be agreed at a ministerial level.
DU: Will the MC address the issue of WTO reform?
HB: Yes, WTO reform is something brought up at MC, in the sense that the WTO’s current position is under threat. As I said, there is a perception it is losing its grasp and authority over the multilateral trading system and over its members. There is a specific area of negotiations dedicated to WTO reform, looking at the structures of the WTO and seeing if it needs modernising for the economy we are in now. It is outdated and there are barriers for industry involvement. There could be reform to allow better accessibility for industry to inform the WTO policy and the rules and regulations. There’s also a wider question about the dispute settlement mechanism and the appellate body, which is a separate negotiation. That’s something the US is not agreeing to and that's proving to be a challenge for the WTO.
DU: What is the IOE&IT doing at MC13?
HB: IOE&IT is attending as an accredited NGO for MC13 and we will be in the main NGO tent with access to the key events. There’ll be various sessions on relevant topics discussed at ministerial level, run by organisations such as the ICC, ITC and World Economic Forum.
While we obviously can’t sit in on the ministerial negotiations, we’ll get briefings from the WTO at the end of each day and I’ll be using those briefings to inform members and feedback via the Daily Update next week. As you’d expect we are also arranging lots of meetings with all kinds of senior stakeholders and we’ll also be at the World Economic Forum’s Trade Tech Forum, which is a conference on how technology plays a role in trade.
