June 22, 2022
Institute for New Economic Thinking
Last week’s WTO 12th Ministerial Conference (MC12) in Geneva concluded with pro-corporate, anti-worker, and anti-development outcomes on all major issues of access to medicines, agriculture, digital trade, and the future of the WTO itself. The spin of “unprecedented outcomes” of MC12 is a cynical ploy to paper over major differences to bolster the institution’s flailing reputation.
The agreements should herald a warning to all: rich country governments professing new commitments to sustainable and worker-centered trade are just as likely to push anti-development outcomes and cosmetic window-dressing when it comes to protecting Big Business profits above the public interest. Their version of WTO “reform” will facilitate the further deterioration of multilateralism and cement-in discredited pro-corporate rules on globalization.
MC12: Setting the Scenario
Developing countries made several key demands in advance of MC12: to put flexibility to address the global health crisis ahead of excessive protection of intellectual property rights for Big Pharma and deal with the ongoing food security crisis by adopting new flexibilities on harmful agricultural rules. Most of their interests were defensive, trying to deal with problems in existing WTO rules, as detailed in “Looking towards WTO MC12: What’s on the table for developing countries and LDCs [Least Developed Countries]?”
In advance of MC12, global union federations published a united statement: the WTO Reform “should focus on inclusion: put workers’ interests first, bring corporate power under democratic control, and deliver on the development mandate agreed upon in Doha.” (It failed on all accounts.)
Leading into MC12, the Our World Is Not for Sale (OWINFS) global network of civil society organizations (CSOs) held a press briefing to help journalists understand the real issues on agriculture and fish subsidies to access to medicines, development, and WTO reform that were being glossed over in the WTO’s official statements.
On the opening day of MC12, CSOs received a rude shock with the unprecedented act of being banned from the premises during a ministerial. Fortunately, they had organized a press conference including a dozen activists from around the world to testify to the importance of the broad range of issues on the table. The briefing garnered some of the only press coverage for little-known issues like WTO reform during the ministerial meeting.
Civil society participants in Geneva for the MC12 later held a demonstration at the Place des Nations. Some activists were then harassed by the police for holding banners or wearing t-shirts that called for a genuine response to Covid-19 and action to stop big fishing fleets from decimating fish stocks, even when they were standing outside of the 200-meter perimeter around the WTO.
Anticipating a hard week of talks and few potential benefits for workers, farmers, or the public interest in any country, activists with the global Our World Is Not for Sale network staged a lively “mic check” protest the first day they were allowed inside. Using a “call and response” format they called for positive outcomes on development, access to medicines, agriculture, and fisheries, while denouncing the corporate agenda of continuing Big Pharma monopolies, fake WTO reform, and other issues.
Waiver or Non-Waiver
The most devastating outcome of MC12 for the world is the failure of WTO members to remove obstacles created by the WTO to help resolve the pandemic by adopting a comprehensive waiver of intellectual property (IP) restrictions on vaccines, treatments, and tests related to Covid-19 within the WTO’s Trade-Related Aspects of Intellectual Property (TRIPS) agreement.
The WTO’s IP rules are the opposite of free trade – they restrict trade by protecting monopolies, eliminating competition, and driving up prices. South Africa and India, along with 60 co-sponsors and supported by over 100 developing countries, proposed a waiver on these invented protections so that countries in the global South can manufacture their own vaccines, treatments, and tests. Groups across developing and developed countries like the People’s Vaccine Alliance have mobilized a massive campaign on this issue for nearly two years.
The EU, Switzerland, and the UK worked diligently throughout the Ministerial to include even more restrictions and limitations in the agreement. They violently oppose any recognition that IP rules have posed any challenges during the pandemic, even though only a fraction of people in poor countries have access to Covid-19 vaccines, let alone treatments or tests.
Civil society organizations denounced the (in)action of the EU, UK, US, and Switzerland for stalling any effective action in the WTO during the entire Covid-19 pandemic by staging a first-ever “die-in” in the WTO. One by one, activists symbolically “died” as they explained how these four members prioritized patents over vaccines, leading to millions of deaths around the world. CSOs in countries like South Africa and Indonesia lobbied their governments heavily to stay strong while those in countries like the UK, Switzerland, Australia, the US, and across Europe pressured governments to put lives over profit.
Other geopolitical factors complicated the issue. Negotiations were extended into the night so the U.S. and China could find a landing zone on eligibility to use any IP flexibilities, as the US demanded clear language that excluded China.
What was agreed was not a real waiver, due to EU, US, UK, and Swiss determination to protect Big Pharma’s profits. The agreement only grants a limited flexibility on one provision; excludes all forms of IP except patents; excludes treatments and tests; and requires far more intrusive monitoring and reporting than the existing rules (among other excessive restrictions), resulting in a “TRIPS-plus” agreement rather than a real waiver. The final text on this issue even states that “developing countries with existing capacity to manufacture Covid-19 vaccines are encouraged to make a binding commitment not to avail themselves of this agreement.” So, any country with the capacity to manufacture is supposed to agree not to use the agreement?
The Medicines sans Frontières (MSF) headline best summarized the outcome: “Inability to agree a real pandemic intellectual property Waiver at WTO is a devastating global failure for people the world over.” The agreement “does not adequately waive intellectual rights on all essential COVID-19 medical tools, and it does not apply to all countries. The measures outlined in the decision will not address pharmaceutical monopolies or ensure affordable access to lifesaving medical tools and will set a negative precedent for future global health crises and pandemics,” according to MSF.
A second Covid-related declaration on the “WTO response to the Covid-19 pandemic and preparedness for future pandemics” was designed as a fig leaf for the utter failure of the WTO to remove its own obstacles to resolving the pandemic and will not save one human life from Covid-19.
Instead of addressing WTO constraints to the pandemic, the declaration presents a false narrative that current WTO rules supported rather than hindered the response to the pandemic. It actually promotes further liberalization as a “solution” to pandemics and suggests that unilateral liberalization and regulations should be locked at a standstill as a way to address pandemics; fortunately, the false solutions indicated do not appear to be enforceable.
That’s why already around 300 labor, health, and other organizations have condemned the lack of a real waiver at the WTO, criticized those responsible, and urged governments to take action outside of the WTO, whether they promise not to endorse IP rules (in developed countries) or for all countries to work harder to save lives, including by using existing flexibilities, circumventing rules or defying them when needed. CSOs in South Africa have already put forward a clear path of how this can be implemented on the national level.
The final package of deals this week was only possible because the majority of WTO members were excluded from the decision-making process. Rather than conduct the negotiations according to the rules and procedures of the WTO, the Director-General (DG) convened exclusive “Green Rooms” in which certain delegations were invited to negotiate, with the majority excluded. In these green rooms, developed countries are present individually whereas the vast majority of developing countries are only present through group coordinators, such as the Africa-Caribbean-Pacific (ACP) group or the LDC group. This configuration leaves out the majority of Latin American and Asian countries, and consigns nearly 50 members to one voice, with only a few other developing countries in the room to face off to an often-unified front of rich country obstinance. At some points even entire groups were excluded: the LDC coordinator was not in the negotiations on the Ministerial Outcome Declaration; India was excluded from some of the green room talks on fisheries negotiations.
Civil society representatives at the ministerial also heard delegations repeatedly complain about the WTO Director General’s extensive bullying and intimidation tactics. In the case of at least one African country resisting on a particular issue, the DG actually called the president of his country! In another, the DG came off the podium (where she was not supposed to be presiding) and verbally dressed down a delegate representing his country’s position in front of the entire room. There have been many complaints about bullying at previous WTO ministerial conferences, but the number of complaints heard by CSOs from developing countries that the DG had harassed their delegation into conforming was totally without precedent.
Civil society groups highlighted the exclusion issue in their action on the second day by creating a visual representation of the Green Room with developed countries inside negotiating. Those representing excluded developing countries chanted “Let us in! Let us in!” to which rich countries retorted “you are not invited,” repeated by security guards.
The DG and other Chairs of negotiations orchestrating the ministerial used several other exclusion tactics. Members received four of the texts that had been negotiated by small groups in “Green Rooms” only in English, at 1:30 in the morning. After multiple postponements, the Heads of Delegations (HODs) meeting, with all members, was convened but postponed again at 3:22 AM for another half hour. After many delays, by 4:59 AM messages were sent that everything had been agreed upon. Delegates received the other three texts (the TRIPS non-waiver, fisheries subsidies, and the e-commerce moratorium) only hours later, after they had been gaveled through by the Chair in front of ministers representing perhaps half of the membership.
There are good reasons to doubt the legality of these procedures under the WTO’s rules. The “exclusionary unrepresentative processes behind the celebrated MC12 ‘Package’ should be taken up at the WTO by members. Unfortunately, the new DG is now celebrating her machinations as effective deal-making. Evidently, if breaking the rules and procedures of the institution is required for its expansion, she is ready and able to take on that role.
WTO members were mandated in the Sustainable Development Goals (SDGs) to agree to reduce fishing subsidies that have resulted in a collapse of fish stocks worldwide. This mandate also includes an affirmation that developing countries need flexibilities, called special and differential treatment in the WTO, to continue fishing for sustenance and livelihoods.
Unfortunately, the draft agreement that Ministers considered for the Ministerial was short on both counts. The Pacific Network on Globalization and TWN provided extensive research on the negative impacts of the potential fishing subsidies disciplines for small fisherfolk and developing countries. They revealed how the draft Ministerial text let the biggest subsidizers responsible for the collapse in fish stocks globally off the hook regarding subsidy reductions. At the same time, the draft agreement would have jeopardized small-scale fishers’ access to tiny subsidies that are critical for their livelihoods, and harm developing countries’ rights under international law to develop this sector for sustenance and livelihoods.
Over 80 civil society groups wrote a letter “calling on Ministers to make sure that any outcome on fisheries subsidies negotiations targets those who have the greatest historical responsibility for overfishing and stock depletion, excludes all small-scale fishers from any subsidy prohibitions, prevents the WTO from ruling on the validity of conservation and management measures of members, and upholds the sovereign rights of countries under UNCLOS [the UN Convention on the Law of the Sea].”
Indonesian CSOs also wrote a letter to their government urging them “not to approve the current fisheries subsidy text as it will jeopardize the livelihoods and food security of fisherfolks and the fisheries sector as a whole.” The Indian National Fishworkers’ Forum sent a similar letter calling on the government to reject the text on the table.
The US had introduced a provision on forced labor in the fishing industry, focused on China. Workers in seafood processing on ships are some of the most exploited in the world, according to the International Union of Foodworkers, which has long advocated in the International Labor Organization (ILO) for their protection against horrendous violations of their rights and lives.
Some developing countries do not agree with the introduction of labor rules in the WTO, as developed countries often use these as protectionist measures. In this case, it is particularly striking that the US has not signed the ILO convention on forced labor, because of the extensive use of forced labor in prisons, which is also a corporate subsidy. In the end, the issue was dropped, likely for some other trade-off.
Under what was agreed at MC12, there are new disciplines on subsidies for boats on the high seas in areas of common jurisdiction. But the final text is unbalanced overall, and major areas of the proposed agreement were set aside.
The fundamental flaw in the agreement is that large subsidizers, responsible for the collapse of stocks, are allowed to maintain subsidies provided the fishing is within the waters of any country’s jurisdiction. They are also able to subsidize fishing overfished stocks provided they can demonstrate that there are “sustainable” measures in place. Those countries with the most responsibility for overfishing that is causing the collapse in fish stocks will be let “off the hook,” as they not only have the financial resources to continue subsidizing but also have extensive monitoring and measurement capacities.
Most flexibilities for developing countries were removed, as explained in “Special and Differential Treatment takes a beating in the new Draft Fisheries Text submitted to Ministers for WTO MC12.” The provisions disciplining subsidies for Illegal, Unreported and Unregulated (IUU) fishing extend the flexibility for developing countries to 200 nautical miles (from the previous proposal of an insufficient 12) but only for a paltry two years. This is far less than needed for developing countries to build capacity for extensive burdensome monitoring requirements, especially when these subsidies do not contribute to collapsed stocks.
A strange new provision will keep the talks going: WTO members must continue to negotiate these aspects towards a comprehensive agreement in four years, otherwise the partial agreement ceases to be in force.
As PANG concluded in, “What does the WTO Fisheries Subsidies Agreement mean for sustainability and development? “The agreement remains fundamentally flawed and in favor of those countries with large capacity for subsidizing and reporting. Its failure to target those most historically responsible for overfishing is ensuring that the burdens of the agreement are being carried by those least responsible. The minimalist SDT only offers a brief peace clause, which fails the mandate of the SDG. Finally, the lack of commitments on technical assistance and capacity building represents a failure to ensure that developing countries and LDCs are able to meet the burdens of this text, instead, we will see resources being diverted from elsewhere. This text fails the mandate.”
Sustainability and fisherfolk advocates will need to ramp up their campaigning to improve the outcome in the coming negotiations.
Along with the TRIPS waiver, developing countries’ second key demand was to be able to invest more in their own domestic production to promote food security, for which they need flexibility from harmful WTO rules which place handcuffs on their ability to subsidize food production for the poor. Years ago, a coalition of developing countries won a conditional, temporary reprieve on public stockholding programs – and were promised a permanent solution by this Ministerial. OWINFS members in India provide further details: Agriculture and food security negotiations text at WTO MC12: Implications for developing countries.
A unified push by around 80 developing countries in advance of the ministerial should have resulted in a positive outcome for a permanent solution to allow them the freedom to engage in public stockholding practices, so these countries can increase production and feed their own poor.
Again, rich countries – who subsidize their farmers hundreds of times more per farmer than developing countries subsidize – blocked this outcome. There is no affirmation of the importance of resolving this mandated life or death issue in the outcome texts.
But the current food price crisis since the Russian invasion of Ukraine necessitated some response from the WTO. Instead of loosening WTO rules to promote more production, rich countries called for more restrictions on the domestic mechanism of export bans that some countries use during food crises. Export bans can be harmful, but are necessary in some countries to keep critical domestic food stocks from flowing out to the highest bidder.
In the end, the two decisions taken at MC12 – framed as addressing the crisis of food insecurity – fail to address the core issue, instead exhorting countries not to ban food exports. They ignore the fundamental problems driving price spirals in food trade due to speculation in food trading, and the over-use of grains for fuel and animal feed, both of which originate in rich countries and are problems they could solve without resorting to the WTO.
Farmers and workers in all countries are harmed by existing WTO rules, which must be transformed for the farmers and workers of tomorrow to grow up adequately nourished and with hopes of decent nutrition and livelihoods.
E-commerce duties moratorium
Early in the internet age, a few rich countries got a deal that normal customs duties on trade would not apply to the barely understood “electronic transmissions”. This agreement represents a loss of potential revenue of $48 billion USD for developing countries and $8 billion USD in Least Developed Countries (LDCs), roughly, since the last time it was extended in 2017. This is according to a recent study, “WTO moratorium on customs duties on electronic transmissions: How much tariff revenue have developing countries lost?” by an economist at the UN Conference on Trade and Development (UNCTAD). To put this in context, with a combined population of around one billion, LDCs needed approximately $4 billion USD to finance two shots of the cheapest Oxford-AstraZeneca vaccine.
“With no clarity on the definition of electronic transmissions, the continuation of the moratorium is not only depriving developing countries of their precious financial resources but is also taking away their regulatory power as unchecked imports of luxury items like video games, movies, and music are rising rapidly leading to an exponential rise in the profits of digital giants like the Apple and Amazon,” according to the author of the study.
But why should Netflix, Apple, and Amazon enjoy duty-free exports to Uganda or Bolivia or Indonesia, while most countries’ non-digitalized film, music, and booksellers have to pay normal import duties, which help fund public infrastructure and services to a far greater extent in developing countries? That’s why many developing countries, including Pakistan, South Africa, and Indonesia especially, fought to end the tax-free holiday for Big Tech. Countries hosting Big Tech firms are now attempting to stave off this resistance by redefining these transactions as ‘digital services’ which don’t attract tariffs in the way that goods do, as a backdoor way to expand the coverage of the moratorium manifold.
Big Tech yanked the chain of the EU (and likely the US) during MC12, conjuring up rich fantasies about e-commerce collapsing if it had to compete on a level playing field. In the end, it got its way, and the moratorium was extended. Developing countries including Pakistan, Sri Lanka, and Indonesia were able to secure expiration date of the next Ministerial or March 2024, unless it is extended. There is likely to be even more momentum towards its expiration next time.
U.S. Ambassador Tai’s tweet celebrating this outcome was striking. Why would an administration that is supposedly focused on reining in Big Tech toss them such a huge bone at the expense of workers? The administration did nothing at the Ministerial to concretely advance workers’ interests – but maintained strong stances on agriculture, fisheries, and development that consign millions of poor around the world to ignominious impoverishment.
In their respective pre-Ministerial Briefings, both the DG and the EU stated that Paragraph 3 of the Ministerial Outcome Document, on WTO reform, was their primary goal for MC12. They achieved it. The subtext of their agenda is a clear plan to weaken the structure of multilateral and consensus decision-making at the WTO in favor of increasing corporate participation and debilitating developing countries’ limited power.
When the WTO was founded in 1995, developing countries never would have agreed to allow its formation without flexibilities and promises to address many of its harmful rules which obviously favored rich countries and their corporations at the expense of their development. These flexibilities are called Special and Differential Treatment (SDT) in the WTO. Within the first few years, it became obvious that the flexibilities were inadequate and the promises were unfulfilled. After developing countries resisted a WTO-expansion at Seattle in 1999, members agreed in Doha in 2021 to include a development agenda to address these inequities and strengthen and operationalize SDT.
Even that Doha “development” agenda was a compromise. But it offered the possibility for developing countries to weaken WTO rules that constrain their ability to build domestic manufacturing or agricultural production, and to regulate and support local services. In more than 20 years since then, the US and the EU have blocked conclusion of these reform demands, and now even refuse to recognize the agenda.
At the same time, Big Business has complained that the WTO’s rules on consensus and SDT have blocked the WTO’s development of disciplines on public interest regulation of investment and new services and digital sectors, among others. They tried to finesse the WTO’s processes with a Trade in Services Agreement and failed. At the last ministerial conference, a group of hyper-neoliberal countries launched so-called “Joint Statement Initiatives,” then set about negotiating new plurilateral agreements among themselves that they plan to globalize through the WTO. Developing countries that are convinced to participate have no influence in this process. The first agreement, to handcuff public interest regulation of services, aims to set a precedent for many more to come.
Other parts of the WTO have been deliberately collapsed, notably the US-enforced paralysis of the dispute settlement system.
Into this scenario, rich countries created new demands for “WTO reform.” Their intention was to legitimize non-consensus and non-multilateral methods of concluding agreements in the WTO to erode the possibility of developing countries resisting WTO expansion. This author previously argued that WTO “reform” was the most dangerous, and yet unknown, potential outcome of MC12. Developing countries, including the entire Africa Group, as well as India, Pakistan, and others, tried to include safeguards in paragraph 3, at least insisting that the work be carried out under the auspices of the General Council. At the same time, rich countries sought to legitimize formal corporate influence inside the WTO by creating official channels for “stakeholders.”
In the end, members agreed to launch a new process on WTO reform. The mandate does not abolish consensus and multilateralism per se but does not include enough of the safeguards demanded by developing countries to prevent against the erosion of these fundamental principles in the WTO.
And the agreement states that the work must “address the issues of all Members, including development issues.” But many rich countries slap the development moniker on any liberalization agenda they push. The “WTO reform” mandate fails to incorporate the development agenda, and instead merely instructs officials to continue working on it to “report on progress” (rather than conclude it) by the next ministerial conference, MC13.
This is a huge loss for developing countries, which will find the negotiating scenario even more difficult under this new mandate.
Throughout the ministerial, developed countries worked to create a media narrative to place the blame for the lack of consensus outcomes on developing countries, particularly India. But in reality, as one headline put it, it was the EU, “UK, Swiss and US positions likely to stymie WTO negotiations”.
After the Ministerial was extended for another day, activists dramatized the “blame game” by asking, “Who blocked a real TRIPS waiver? Who’s blocking fisherfolk protections? Who blocked REAL food security? Who blocked WTO transformation? EU, US, UK, Switzerland! Give them the blame award!” and handing over an award that those countries appeared to celebrate. Another CSO statement urged developing countries to stand firm in the face of unfair blame.
The key win for the outcome of MC12 for the WTO is the avalanche of corporate media coverage extolling the WTO’s renewed relevance and lauding the results of the DG’s bullying and rich country obstructionism towards pro-human, pro-development outcomes.
Don’t believe the hype. This was not multilateralism – countries working together to address common problems. The outcomes were the result of extreme bias of the DG in favor of developed countries, and bullying by rich countries and the DG of developing countries and their agendas. The conclusion opens the door to “WTO reform” through even more biased processes in the future, whether by undemocratic secretive “green rooms” that exclude the vast majority of countries, a pressure-cooker environment to accept whatever is on the table, or breakaway groups of developed countries launching negotiations on their wish-list and leaving development priorities behind.
Disgracefully, the outcome on vaccines will probably not save a single life from Covid, and the agriculture outcomes will not address the fundamental problems causing food insecurity. On each of the issues – flexibilities from harmful WTO rules on IP and agriculture – developing countries did not achieve their main outcome, and instead were left trying to mitigate the damage of developed countries’ demands to extend the free rides for Big Tech and Big Fish. The WTO failed to deliver what the world needed in each and every arena.
Now there is talk of setting the next Ministerial Conference, MC13, for the accelerated date of March of 2023. The United Arab Emirates has offered to host, in Abu Dhabi.
The struggle to transform the current trade system into one that serves people and the planet was set back last week in Geneva. In the aftermath, civil society must regroup and strengthen its resources to continue resisting WTO pro-corporate expansion, including expanding outreach to and participation of more affected communities. In the global North and South, public interest advocates must accelerate calls for a new system of rules, such as is detailed in the Turnaround: New Multilateral Trade Rules for People-Centered Shared Prosperity and Sustainable Development, to deliver food, jobs, access to medicines, and sustainable development.
Solidarity among developing countries will be even more crucial going forward. Developing countries have varied interests, sizes, and influence – as they always have – but it is clear that rich countries will divide and conquer if developing countries do not engage in a unified front.
The world surely needs a new Bretton Woods on trade. But we cannot possibly get there without stopping the expansion of corporate globalization in the WTO first.