Are Joint Statement Initiatives the World Trade Organization’s Future?
Fiama Angeles, Riya Roy, and Yulia Yarina are Masters’ students in International Affairs at the Graduate Institute in Geneva, Switzerland. This post is based on unpublished original research they undertook as part of their graduate studies. Please contact the authors if you would like to see their paper.
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The World Trade Organization (WTO) has faced severe criticism for its inability to conclude any major negotiations in over two decades. The lack of consensus among its diverse Membership, who differ considerably in terms of their economic, socio-political structures, and interests, has been at the centre of this impasse. In an attempt to navigate this decision-making deadlock, some like-minded Members proposed an innovative approach, the Joint Statement Initiatives (JSIs), during the 11th Ministerial Conference held in Buenos Aires in December 2017. However, this new approach remains hotly debated. But should WTO Members embrace JSIs as the way forward for negotiations, and what would that look like?
We argue that there are two options for inserting JSIs into the current WTO system. First, through Regional Trade Agreements (RTAs), preferred by some less developed countries; and second, through an amendment to the Members’ schedules, preferred by developed countries. In this sense, we find an inherent divide between these two groups concerning cutting-edge issues. Below, we provide a tentative concept for JSIs based on our original research, and delve into the two most feasible options WTO Members have for adopting this tool.
What are Joint Statement Initiatives?
JSIs can be broadly defined as a plurilateral negotiating tool initiated by a group of WTO Members who start negotiations on certain issues without adhering to the rule of consensus decision-making. These negotiations are primarily driven by like-minded developed country Members, although there is also some participation from developing countries. JSI Members seek to tap into opportunities in sectors with limited WTO jurisprudence (i.e., e-commerce, investment).
Overall, there seems to be an agreement on JSIs being open to the entire membership and used primarily as a negotiating tool. However, MFN treatment and market access are overarching issues of controversy. In the interviews we conducted with practitioners and officials from WTO missions, the majority of developed country Members reluctantly agreed that only JSIs which have conditional MFN would be advantageous in terms of future negotiations.
But what could these JSIs with conditional MFN look like? The first option is for Members of the JSI to be the only beneficiaries of its advantages. Therefore, the MFN granting condition here would be that the Member is a party to the JSI. The second option is for the JSI to extend some benefits to all WTO Members. However, for specific provisions or sectors within that particular JSI, the benefits would be extended only to the signatories of the JSI. The third option is to extend some benefits to the whole WTO Membership, while other benefits (i.e., specific provisions or sectors) would be extended only to WTO Members (either parties to the JSI or not) which meet certain conditions. Those conditions could, for instance, be of a regulatory nature, (i.e., free data flow or consumer protection).
The last option is the most restrictive form of conditional JSI and was brought up in discussions surrounding e-commerce negotiations during our interviews. The starting point here would be that benefits under this JSI will be granted only to the JSI signatories, similar to the first option. However, this option further divides the JSI into two parts: (i) the normal agreement; and (ii) something similar to a JSI+ section. Under the normal JSI section, benefits would be extended to all signatories of the JSI; whereas JSI+ benefits (the additional benefits), would only be available to those signatories who meet certain conditions. These four options are summarized in Figure 1.
Moving forward with JSIs
Given the abovementioned forms that JSIs can take, there are two simplified scenarios that are likely to guide the development of JSIs in the future: (i) whether all or some benefits derived from JSIs will be delivered on an MFN basis to the entire WTO Membership; or (ii) whether JSIs’ benefits will be kept within the group, similar to plurilateral agreements under Annex 4 in terms of MFN violation. The first scenario corresponds to cases 2 and 3, whilst the second scenario to cases 1 and 4 (Figure 1).
From a political perspective, even if MFN-compliant JSIs are more feasible as a result of the factual circumvention of the consensus rule, this does not mean that the option has no downsides. Indeed, one of our main findings is that there is still an additional layer of complexity to the discussion of JSIs besides MFN compliance, primarily driven by the general opposition towards JSIs within the WTO by a group of developing countries (led by India and South Africa), regardless of the form they take. This can produce obstacles to moving forward with negotiations.
Trade economist Peter Draper and trade policy analyst Memory Dube argue that the previous multilateralisation of the Tokyo Codes feeds the fears developing countries have over undertaking plurilateral agreements. If developing countries are left out of negotiations or lack the capacity to participate more meaningfully, then there is an understandable justification for developing countries to be concerned that the rules developed in JSIs will eventually be imposed upon the whole Membership without their input. In fact, developed countries often see JSIs as a “stepping stone” to multilateral rules, so apprehension on the part of developing countries is not unfounded. In addition, developing countries remain concerned about the fact that current JSIs do not build on topics from the Doha Development Round, but on issues that have less economic importance for them at this time.
Options for inserting JSIs into the WTO system
Given the divide in how the membership views JSIs, there appear to be two most feasible options (out of the seven identified in our research) on how to include JSIs into the WTO system.
First, a JSI could be formed under an RTA, as preferred by some developing countries and LDCs. This option, however, would have one major legal drawback. In order to form an RTA, Members would have to meet, among others, the legal condition of liberalising “substantially all the trade” under GATT Art. XXIV and the “substantial sectoral coverage” condition under GATS Art. V. While most of the current RTAs do not fulfil these requirements, it is unclear whether WTO Members would want to further take advantage of this discretion by introducing JSIs through GATT Art. XXIV and GATS Art. V. Furthermore, extended fragmentation remains a nontrivial concern for developed countries.
Second, JSIs’ benefits could be included via amendments to the GATS schedules of commitments, as preferred by many developed countries. With regards to JSIs on trade in services, this option could seem like a feasible approach since GATS schedules can be amended under GATS Art. XXI to include conditions of market access and national treatment. However, this would mean the introduction of a baseline within the WTO for future commitments, as feared by some developing countries.
In sum, some developing countries and LDCs prefer JSIs to take place under the framework of RTAs, even at the expense of not receiving the benefits. This is because these countries are less concerned about MFN treatment, and more interested in preserving their policy space in new trade issues. By contrast, developed countries argue for including JSIs rules via their schedules, which in practice does not need consensus. This would allow them to claim MFN compliance and to offset concerns about the fragmentation of trade rules.
What’s next?
JSIs seem to be the most feasible way forward to circumvent the existing negotiating deadlock at the WTO. In this sense, our research identifies two preferred options to insert JSIs into the current WTO system—through RTAs, preferred by developing countries and LDCs, or through an amendment of the Members schedules, most likely in the area of trade in services, preferred by developed countries. These two options, however, highlight the contradiction between the expectations of the two groups involved. Hence, there exists an inherent dichotomy in the approaches to dealing with cutting-edge issues between developed and developing country Members of the WTO.
As it stands now, the fears of some developing countries seem to be the desired goals of developed countries. For the time being, this contradiction is being ignored. In our opinion, developed countries should consider compromising on their multilateralisation goal in order to form JSIs and safeguard the trust of developing countries in the system.
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