The outcomes of MC12

On this podcast episode, Kellie interviews Inu Manak and they talk about the main outcomes of the WTO 12th Ministerial Conference.

Kellie Kemock: Hello and welcome to this TradeExperettes Podcast episode. My name is Kelly Kemock and in today's episode, we have an interview with Inu Manak, who is also a director of the TradeExperettes organization. Dr. Inu Manak is a fellow for trade policy at the council on foreign relations. At CFR, she researches and writes on policy issues relevant to U.S. trade policy, including topics such as global trade flows and regional and global trade arrangements. An expert in international political economy, Dr. Manak's research focuses on U.S. Trade policy and the law and politics of the World Trade Organization. Thank you Inu for joining us today, we're so excited to have you on the podcast. Thank you. 

Inu Manak: Thanks so much for having me. 

Kellie Kemock: So, this week, the TradeExperettes members had the privilege to listen to you and Ignacio Garcia Becerro talk about the main outcomes of the WTO 12th ministerial conference. So, due to an apparent lack of political will, as Cecilia Malmström described it in a recent TradeExperettes blog, it didn't seem like we were gonna have many outcomes this June, but in fact, there were some results. Can you kind of give us your thoughts on the MC12. 

Inu Manak: Absolutely. You know, there are ways to see and analyze what came out of this, but before we get there, I would say, this is the first ministerial conference the WTO has held in five years. The pandemic obviously had a role to play in that delay, but the failure to achieve substantive outcomes at the 2017 meeting at Buenos Aires, MC11, also weighed fairly heavily on the organization. At that meeting, if you recall, the customary conference concluding declaration could not even be agreed to, and I think at that time it led many people to ask whether MC11 was the beginning of the end of the WTO. Exacerbating all of that was the fact that there was a lack of leadership from the United States; not surprising, given president Trump's vocal criticism of the organization and his trade representative, Robert Lightheiser, focused his opening remarks at MC11 on the serious challenges that exist for the WTO. Now his successor, Katherine Tai, struck a more optimistic note going into MC12, but also called for an honest conversation about the WTOs role in addressing current challenges, including development, inequality, workers' rights and climate change. I would say that for a look at how we went into MC12, after years of deadlock frustration, WTO observers, including myself prepared, I guess, for failure, we were not expecting very much, and I don't think this is because the lack of belief in the WTO and what it can accomplish. I think it's important to remember that it's the lack of faith that many had in the membership itself to use the organization as a forum to discuss our most pressing trade challenges, instead of using it as a place for political grandstanding. If you look at the Director General's opening remarks, she said: will the road to deliver MC12 be smooth? Absolutely not. Expect a rocky, bumpy road with a few landmines along the way. And I think we saw plenty of landmines last week. That said, I would say that as Friday morning broke, as you know, this went into a six day marathon session of negotiations, there were three major outcomes: we have the waiver of patents on COVID-19 vaccines, the continuation of the moratorium among customs duties for e-commerce, and the historic agreement on fisheries subsidies. This did more than just break the deadlock, and it showed what can happen when members rally to deliver. It's also a testament to the years of work put in by negotiating shares, like Ambassador Santiago Wills, who led the fisheries talks and the WTO Secretariat, which have worked tirelessly through the pandemic. So I would say that, at the end of the day, MC12 was a success, and there'll be some people who will focus on the negatives in retrospect, but if you actually look at the outcomes, it's amazing what was achieved, given the context everyone was negotiating these current rules in. 

Kellie Kemock: So you mentioned three big topics and we'll touch on each of them. So to begin, you mentioned the override of COVID-19 vaccine patents. What would you say the main implications of this decision will be? 

Inu Manak: Yeah. You know, the waiver for parts of the TRIPS agreement was undertaken with the aim of facilitating vaccine production worldwide. Proponents of the TRIPS waiver have suggested that the intellectual property rules prevent poor countries from manufacturing vaccines, while the opponents have argued that this is not the main obstacle. I think this has been hotly debated ever since these discussions kicked off and some have suggested that the real issue has been actually a lack of effective public health campaigns in developing countries just to get shots in the arms. Now, we'll soon find out, when this is implemented, whether or not it's gonna change anything. I would say that it's unlikely it's gonna change a lot for the current pandemic. It may have implications for future crises, and that we will have to see as this plays out. Now, I would say it does set precedent for how things like this will be handled in the future. So that's important. And also I think that it's just fascinating that members were able to strike a deal on this. There was a lot of contention going in about whether or not this would even make it out in the final outcomes. And one really interesting thing is that China agreed, through a very creative footnote, to not avail itself of developing country status. And I think that's a major achievement to show that you can have agreements where you differentiate between developing countries. So I think that's also a significant and notable outcome of the TRIPS waiver.

Kellie Kemock: Excellent. And then another piece that you mentioned was the moratorium on tariffs on electronic transmissions that has been extended until 2024. So can you let us know the implications and how it differs from a previous decision on this topic? 

Inu Manak: So the moratorium has been in place for 24 years. It gets renewed every year. It prohibits the application of tariffs on electronic commerce, such as on emails, streaming services, software, all sorts of things like that. Some countries have argued that the moratorium prevents them from collecting revenue, though, if you look at the studies, they suggest that any tariff revenue would be offset by the economic losses from new restrictions on digital trade. So, India, Indonesia, South Africa, Pakistan and Sri Lanka led the charge against renewing the moratorium this year, but they relented after members agreed to a broader discussion on the moratorium in the future. So I think that discussion is something new, to really sit down and hash out what this means, whether we should continue this, how we should continue it, what we should be left out, and where there should be policy space. This is set to expire at the next ministerial meeting, 2023 or 2024 if the conference's postpone, this could happen because of COVID, obviously. But I think that it's good that we're gonna have a discussion on this, I think it is important for members to be open about it and to share the data and research on the effects of removing the moratorium, so that we can have an evidence based discussion on this issue. But I think it's one of those areas where we really dodged a bullet because MC12 could have been one of the first times that we raised barriers to trade instead of remove them, and the fact that we got this moratorium is a testament that members are committed to ensuring that trade is not facing greater obstacles, that we can avoid at this point. 

Kellie Kemock: And then finally you mentioned, after 21 years of negotiations, we have an agreement to end subsidies on the illegal, unreported and unregulated fishing. So could you let us know more about that, and how surprised were you for that one? 

Inu Manak: Well, I have to say going into this, I was really hopeful on the fishery subsidies, because of the leadership of Ambassador Wills in the talks. When he submitted the draft ahead of the meeting, it was one of the cleanest documents you can possibly imagine, very few bracketed texts, so that means there wasn't a lot that was left over for some sort of final discussion by the Ministers. So, that was great. I think this is the most important, single outcome of MC12. For the first time, in nearly a decade, we have a new multilateral treaty. It cannot be overstated at all that we achieved that. And beyond that, we have the first agreement negotiated at the WTO that has an explicit focus on sustainability. So, not only now do we have a new set of actionable subsidies and robust reporting requirements, but we also have a template for how to address trade issues at the intersection of trade and environment at the WTO. So, I think that's really impressive. 

What was agreed within this? There are two major categories of prohibitions on subsidies. There are the fishing vessels and operators that engage in illegal unreported and unregulated fishing, there's a prohibition on subsidies that support fishing of overfished stocks, and then there's actually some additional disciplines on other subsidies, for fishing related activities on the high seas, that's the international waters, which is a particular concern because biodiversity has been threatened there by a lot of unsustainable fishing practices that have gone unmonitored for a very long time. So one thing I will note though, is that this is a major treaty, but it's an incomplete deal because a whole group of subsidies was also left out and that's the overcapacity and overfishing pillar. So, the comprehensive rules are not there yet, but I would say that we can get there, and this is something where members will have to continue to work on discussions to figure out what to do next. Negotiations to expand the agreement to include more comprehensive rules are gonna continue for up to four years, and if the deal isn't reached by that time, there is a provision under which the whole agreement automatically terminates. Now, that should create some pressure for members to sit down and hammer out those final rules. There are gonna be challenges, particularly, in the development dimension. Lot of the talks got hung up over what are the appropriate exceptions and exemptions for developing countries, and I think that there really has to be a clear consensus on what to do going forward on that to ensure that the exemptions are not so far reaching that the subsidies rules become fairly useless to actually curtailing the harmful practices that we're trying to reign in.

So, I think there is gonna have to be a broader discussion about greater differentiation among developing countries and what that differentiation is gonna look like within the context of this agreement. 

Kellie Kemock: And then the last topic that I wanted to touch on was, so perhaps one of the most symbolic outcomes, was that the members reaffirmed their commitment with the multilateral trading system and agreed on an open and inclusive process to reform the WTO, including the deliberation and negotiation process. So, in this context, where are we in the discussions regarding the dispute settlement system? 

Inu Manak: Great question! Nobody knows (giggles). I would say, so, it's great that members affirmed that they wanted to work towards resolving the crisis within the dispute settlement system that we've had over the last several years. On the Appellate Body, I am least optimistic of all the outcomes we saw in MC12. Though, because we have that pledge, basically, members pledge to having a fully and well functioned dispute settlement system, right? But they didn't say that the AB had to be part of that. So I think, you know, what's not included is just as important as what it is. The AB is mentioned in the separate paragraph from that; so, I think that that's a little telling about some of the differences of opinions on where members are gonna land on this. Now, I would say that there are some members that probably would be okay with no Appellate Body at all, and the majority of membership probably thinks that we need to have it, in order to have the dispute settlement system functioning well. We're gonna have to see how these discussions play out. I mean, they're gonna start, and by 2024 they said they need to have this online. There are some potential areas of friction in terms of the timeline there; we have the U.S. midterm elections later this year, a Presidential election in 2024, so there are other considerations beyond just the politics within the WTO that could impact how these negotiations unfold. I would say generally, on the whole issue of WTO reform, I'm a little bit more hopeful about that because I think there's a lot that members can do to improve transparency requirements, notifications, procedures, just so that everyone has a better sense of what everyone else is doing, so we can respond when there are challenges. As we found in the pandemic, I think the WTO did a great job of keeping track of what measures members were taking, and they did this on the fly. But if we have a procedure to do this a little bit better, if we use the committees more effectively, to enhance our notifications, I think that that's gonna be quite helpful for us to go forward. And, on the negotiation side, I have to say, the fact that we got the fisheries deal shows that the negotiating arm is actually working, and that we need to build on that success and use that as a template going forward for how to make negotiations continue to deliver results.

Kellie Kemock: Excellent. Well, we went through all the three big topics. Is there anything else that you wanted to go through or any other observations that you have from the MC12? 

Inu Manak: Yeah, I would say one other important outcome were the discussions on food security. Now, this is critical for the situation we're in right now, in terms of, you know, we have the pressures from the COVID-19 pandemic, in terms of the pressure on supply chains; we have the Russian war in Ukraine, which has exacerbated challenges on the commodity market side, and has created crisis in terms of getting people food and access to food. So, I think it was really critical that the WTO had a statement on food security, and I think there are probably two ways to see that statement. On the one hand, I think there were a lot of criticisms that the declaration is weak and doesn't commit members to do anything to address food security challenges, and, on the other hand, we have a declaration where members explicitly state that trade plays a vital role in improving global food security. So maybe I'm seeing the glass half full here, but I would say that given the current environment we've been facing, where members have imposed food export restrictions and turned further inwards in many other areas of trade, this is a positive step forward for them to acknowledge this. Yes, I agree that the commitments are best endeavors and non-binding, but it also creates the basis for future discussions on the issue and gives members something to refer to when holding each other to account for the measures that they take. So, for instance, the Declaration mentions that in taking emergency measures members should do so with a view towards minimizing trade distortions, and ensuring that the measures are temporary, targeted and transparent and implemented in accordance with WTO rules. Of course, there are disagreements on whether something or not is in accordance with WTO rules, but I think the general gist of it here is positive. And I think that paired with future WTO reform in improving notifications and transparency, we can establish strong notification disciplines that can help track and address trade distorting measures more rapidly than we do today, particularly in the area of food security. And aside from the Declaration on food insecurity, we did also get a binding decision to not curb exports to the United Nations World Food Program. Here, members pledge not to prohibit or restrict exports for purchases by the World Food Program to ensure the steady supply of humanitarian aid. Of course, there's an exception here for measures taken for domestic food security reasons, which was included to appease India and others, and some net food importing countries. But, overall, I would say it's an important signal to send when 30 countries have imposed these types of restrictions since the Russian war and Ukraine began. So, if anything, it sends a signal that members are committed to addressing the crisis that's been caused by this conflict and continuing to have a dialogue and how to improve food security through initiatives within the WTO. 

Kellie Kemock: So, at TradeExperettes we had a blog article by Simonetta Zarrilli, in regards to a draft declaration on trade and gender, I think it was back in November. Was there any discussions on that, or what happened with that particular declaration? 

Inu Manak: If we look at the declaration on trade gender, this was in November of last year, at the time, so when MC12 was supposed to happen last fall, TradeExperettes actually, went to Geneva, during the Public Forum, and presented our 10 Quick Wins for Trade and Gender Report. There was a lot of interesting discussion on this report, but also just within the working group, the informal Working Group on Trade and Gender, it seemed like they made a lot of progress, not only towards the key goals of establishing that group, but then also towards a declaration as well. 

Now, if we look at what happened in MC12, we didn't see the declaration on trade and gender being tabled to the final outcomes. So this was a bit of a disappointment, given how much progress was being made in the informal working group. What we're left with is a statement that summarizes three areas where work has progressed. The first were the thematic discussions on trade and gender, the second on improving inclusive policy making, and the third was the beginning of a work plan to address the intersection of trade and gender on four separate pillars. Those were gender responsive policy making, gender lenses applied to the WTO, research and analytical work, and aid for trade. Now, I would say, you know, that's with the declaration itself. If the work plan can be agreed by MC13, there may be something to build on here. 

One thing I will say is that there is a big challenge to addressing trade and gender issues, because of some of the lack of good data to support certain forms of action. And now that's been improving over time, but I think that the members have acknowledged that that's one of the key issues. In fact, if you look at a recent report by the Government Accountability Office in Washington, they stated that a lack of gender specific data has limited U.S. and global efforts to fully assess the effects of trade agreements and programs on women.

I think this is something the WTO can take on, improving data quality and collection that can guide evidence based policy making and something they can certainly work towards. I will note, however, that in the outcome document, we did get a mention of trade and gender, and that is very positive because it's the first time trade and gender is mentioned, in the main conference concluding outcome documents. There's a little bit of a silver lining there. Maybe that'll give a little bit of a push for the informal working group to continue to clear up what they want to do on this work plan and, and to flesh out those areas, those four pillars that they've identified, but I would say, overall, we were hoping for something more, we're hoping for the declaration, but the fact that we did get a mention at least of trade and gender within the MC12 outcomes document is a positive sign that we're moving in the right direction.

Kellie Kemock: Well, where do we go from here? What's next for the WTO? What to look out for? What should we be looking out for in the future? 

Inu Manak: You know, the next two years, well, I guess a year and some change is what they gave for MC13, so it's not a full two years, it's not gonna be easy, but we do have a lot of momentum now to build on. Members are gonna need to work on implementing the fisheries deal, they're gonna have to ensure compliance with commitments on the food export restrictions on the World Food Program, negotiate additional coverage for the TRIPS agreement for therapeutics, if necessary, in treatments as well, and on e-commerce we need to have a more substantial and permanent solution so that members can't hold everyone hostage on negotiations, in the future, on this issue. I would say, we have a lot of issues on the agenda, not least among them the big WTO reform agenda, so members are gonna have to roll up their sleeves, yet again, or maybe keep them rolled up from last week, to ensure that they are getting work done, that they can deliver on what they said they were going to deliver, and continue to press forward to ensure that the WTO remains at the center of global trade and relevant, to the current debates and challenges that everyone is facing.

I will say I was happy to see, as usual, the regular work of the WTO continue on Monday. I'm sure everyone was exhausted by the time they rolled back into the office on Monday morning. But it's important always to keep in mind, you know, the Ministerial Conference lasts a couple of days, Ministers get their photos at the end of it and then they celebrate what they've accomplished, but the hard work of actually getting those deals done is in the everyday work of the WTO, it's through committees, it's through negotiating chairs and groups, trying to find out how we can collect data to make negotiations better and really responsive to the needs of members. And I think that that work is going really, really well. So, aside from a bit of the drama that we saw last week, I would say the WTO is functioning pretty well, and that we now have marching orders in effect for how to proceed on WTO reform. So, I remain hopeful that we can get a lot done by MC13, and at least we have a little bit of wind in our sales at this moment to try to create some positive outcomes going forward.

Kellie Kemock: Excellent. Thank you so much Inu for giving us this very succinct summary of the MC12. We appreciate all your insight. And we look forward to seeing the rest of this unfold and looking forward to MC13. I'm sure we'll get your insights when that comes around. So, thank you so much for your time today, and we appreciate your insights.

Inu Manak: Thank you so much. It's great to be here.

Kellie Kemock: The TradeExperettes podcast is hosted by me, Kelly Kemock, and Belén Gracia is our executive producer. If you would like to know more about the TradeExperettes, you can find us online at tradeexperettes.org, at LinkedIn and on Twitter. 

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