MC13 Charting The Course Of Global Trade

The 13th Ministerial Conference (MC13) coincided with the WTO's 30th anniversary where ministers resolved to strengthen the multilateral trading system and emphasized the importance of resilient global supply chains.

Overview of the 13th Ministerial Conference

Ministerial Conferences serve as the primary decision-making authority within the World Trade Organization (WTO) and typically gather biennially. They bring together all WTO members, which include countries or customs unions. With the authority to address any issue covered by the various multilateral trade agreements, the Ministerial Conference plays a pivotal role in shaping the organization’s agenda and decisions.¹

From February 26th to March 2nd, 2024, members of WTO gathered in Abu Dhabi for the 13th Ministerial Conference (MC13). During the session, which coincided with the WTO’s 30th anniversary, ministers resolved to strengthen the multilateral trading system and emphasized the importance of resilient global supply chains.²

MC13 also reiterated the significance of integrating developing members, including least-developed countries (LDCs), into the trading system and committed to supporting their needs.³ Other priorities included women’s economic empowerment, support for small and medium-sized enterprises (MSMEs), and facilitating trade in services.

Ministers at MC13 also officially sanctioned the WTO membership terms for Comoros⁴ and Timor-Leste,⁵ marking the first additions to the membership roster in nearly eight years.

India at MC-13

India’s imperative was to oppose China’s investment facilitation proposal and prioritize finding solutions for public grain stockholding and fisheries protection, among other issues.

We have captured certain crucial issues of importance in the Indian context -

1. Fisheries Subsidies - One of the longstanding issues on the agenda was fisheries subsidies. The WTO Agreement on Fisheries Subsidies, adopted at the 12th Ministerial Conference in June 2022, marked a significant step towards responsible and sustainable trade practices in the fishing industry.⁶ The agreement aimed to curb harmful subsidies that contribute to overfishing and depletion of marine resources. While several countries, including Canada, Seychelles, Singapore, Switzerland, and the United States, formally accepted the agreement,⁷ India emerged as a vocal proponent for a 25-year moratorium on subsidies for distant water fishing. India’s stance emphasized the importance of safeguarding the livelihoods of domestic fishermen who rely on sustainable fishing practices.⁸ Furthermore, India emphasized the principles of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) and advocated for the incorporation of Special and Differential Treatment (S&DT) provisions in any comprehensive fisheries agreement.⁹

Consensus could not be reached due to the firm stance of developing nations, emphasizing the importance of safeguarding their fishermen. Nonetheless, there is a growing momentum supporting the Fisheries Subsidies Agreement, with 71 members having now ratified the agreement.¹⁰

2. Agricultural Negotiations - Agricultural negotiations centred on finding a permanent solution to the issue of Public Stockholding (PSH) for food security. Developing countries, led by India, highlighted the critical role of PSH programs in ensuring food security and safeguarding the livelihoods of millions of small-scale farmers.¹¹

India underscored the need for a level playing field in international agricultural trade, citing disparities in domestic support between developed and developing nations. The discussions also touched upon the interim peace clause agreed upon at the WTO’s Bali Ministerial Conference in 2013, with developing countries seeking a permanent solution to address existing gaps and ambiguities in the interpretation of the clause.¹² However, MC13 concluded with consensus still elusive on this issue.¹³

3. E-commerce - The debate on e-commerce revolved around the extension of the moratorium on customs duties on electronic transmissions. Since its inception in 1998, the moratorium has played a crucial role in facilitating cross-border digital trade. However, concerns were raised regarding its impact on the digital divide between developed and developing countries.¹⁴

India advocated for policy flexibility to promote digital industrialization in developing nations, stressing the need to address disparities in digital infrastructure and capabilities. Developing countries emphasized the importance of exploring all policy options, including the imposition of customs duties, to support domestic digital industries and bridge the digital gap.¹⁵

Members however agreed to extend the moratorium on imposing customs duties on electronic transmissions by another two years. This moratorium will remain in effect until either MC14 or 31 March 2026, whichever is earlier.¹⁶

4. WTO Reform - The ongoing Appellate Body crisis emerged as a major point of contention. The absence of a functional Appellate Body since 2019 has undermined the dispute settlement mechanism, raising concerns among WTO members about the effectiveness and predictability of the multilateral trading system.¹⁷ India reiterated its support for the WTO dispute settlement system and called for prioritizing the reinstatement of the Appellate Body as part of broader reform efforts, immediately.¹⁸

At MC13 Members adopted a Ministerial Decision that acknowledges the strides taken towards a fully functioning, efficient dispute settlement system accessible to all members by 2024. Ministers directed officials to expedite discussions, leverage existing progress, and address remaining issues in the pursuit of this goal.¹⁹

5. Plurilateral Agreements –

a. Investment Facilitation - India expressed reservations about plurilateral agreements within the WTO framework, particularly the China-led Investment Facilitation for Development Agreement (IFD). India, along with South Africa, voiced concerns about the potential dilution of multilateralism and the implications of such agreements on developing countries’ interests.²⁰

Regardless, ministers from 123 WTO member nations released a Joint Ministerial Declaration, signalling the completion of the Investment Facilitation for Development (IFD) Agreement and shared it with the public. The participating nations account for three-quarters of the WTO membership, encompassing nearly 90 developing economies and 26 least-developed economies.²¹

b. Services - During MC13, new disciplines on services domestic regulation came into effect, with the potential to reduce global trade costs by more than USD 125 billion. This collaborative effort, backed by 72 WTO members, aims to enhance the ease of services trade by simplifying and streamlining regulatory processes. Notably, it incorporates a groundbreaking commitment within a WTO agreement, ensuring non-discrimination based on gender when individuals, apply for permits to provide services.²²

The disciplines are integrated as “additional commitments” into GATS schedules pursuant to GATS Article XVIII. The disciplines only supplement existing specific commitments undertaken in GATS schedules. The disciplines are binding only on those WTO members who inscribe them into their GATS schedules. However, these disciplines will be applied on a most-favoured nation basis, ensuring that services suppliers from all WTO members can equally reap the benefits of their implementation.

6. Special & Differential Treatment – Ministers took a significant step by adopting a Ministerial Decision that addresses a longstanding 23-year-old mandate to review special and differential treatment (S&DT) provisions for developing and least developed countries (LDCs). The aim is to enhance the precision, effectiveness, and operational aspects of these provisions.²³

Looking ahead

MC13 faced formidable challenges, with political constraints from upcoming elections in key member countries like India, the United States, Mexico, and Indonesia. Limited success was achieved due to entrenched positions on critical issues such as agriculture, fisheries subsidies, and dispute settlement reform. India’s stance on agricultural subsidies and fisheries protection, along with the US’s resistance to Appellate Body reforms, impeded progress.

Despite attempts by WTO Director-General Ngozi Okonjo-Iweala to highlight positive outcomes, like Comoros’ and Timor-Leste’s accession, and the agreement on Domestic Regulation in Services – major issues remain unresolved.

The lack of consensus at MC13 highlighted the difficulty in finding common ground among members, revealing the significant interest in pursuing plurilateral negotiations. Looking ahead, uncertainties loom over the WTO’s future, including unresolved systemic issues like national security exemptions and China’s developing economy status.

MC13 showcased diverse interests and priorities among members, emphasizing the shared recognition of fostering sustainable and inclusive trade practices. Addressing MC13’s challenges demands sustained collaboration, innovative solutions, and recalibrating the WTO to serve all members better. It underscores the WTO’s enduring relevance as a beacon of global cooperation, necessitating inclusive decision-making processes to shape a more equitable and prosperous global trading system.

Disclaimer – The views expressed in this article are the personal views of the authors and are purely informative in nature.