Tue | Nov 12, 2019

Elizabeth Morgan | WTO: Divisive development status debate

Published:Wednesday | October 23, 2019 | 12:09 AM

The General Council (GC) of the World Trade Organization (WTO), the highest body outside of the Ministerial Conference, met October 15-16. This was the first opportunity to consider the US Presidential Memorandum on reforming developing country status in the WTO issued in July.

Issues related to WTO reform, development status (access to special and differential treatment (S&DT) provisions, differentiation and graduation) and dispute settlement, among others, continue to unfold with minimal notice in the Caribbean to their importance outside of government circles.

There is increasing concern about low growth in CARICOM countries, such as Jamaica. I maintain that not enough attention is being paid to international trade, critical to achieving that growth, and the crisis brewing at the multilateral level.

Between August and September, I wrote a series of articles outlining the WTO development status issues. I ended by looking at the implications for the Caribbean Community (CARICOM) WTO members. You will recall that WTO developing country members are currently able to self-select their development status according to the custom existing at the United Nations (UN).

The only formal category of UN countries is the Least Developed Countries (LDCs) of which Haiti is only one in CARICOM and the western hemisphere. All other CARICOM countries have self-selected as developing, but are classified by the World Bank as high and upper middle income countries.

Several CARICOM countries attended the October 10 Commonwealth Trade Ministers Meeting in London. I noted that their declaration on multilateral trade addressed WTO reform recognising the importance of the multilateral trading system and the need to urgently address reform considering the views of all members. The Commonwealth, which has WTO members but is not a recognised group in that forum, did not directly address differentiation/graduation.

The debate on the reform issues unfolded in the WTO GC, as would be expected. The US ambassador outlined the presidential directive, emphasising that it would apply to current and future negotiations. For his administration, WTO negotiations could not advance without this reform.

BATTLE LINES ARE BEING DRAWN

I noted that the European Union (EU) also favours differentiation/graduation, stating that the current distinction between developed and developing countries no longer reflected the reality of some countries’ rapid economic growth. For the EU, there is a strong need to reform S&DT which must meet the needs and capacities of individual countries. Currently in negotiations with the EU, I think the Caribbean should take note of their statement.

We know that this differentiation/graduation issue targets specific countries, such as China and India. In a statement, these countries, joined by others, made it abundantly clear that they did not support the US position. The Chinese ambassador stated that S&DT is not a free lunch, nor does it provide a shield to prevent contributing to the multilateral trading system, but it addresses real development gaps and capacity constraints in these countries, which are developing economies.

CARICOM members, like others, are concerned about the collateral damage that their economies could sustain in this stand-off between developed countries and the so-called “emerging economies”. CARICOM, as a group, expressed their concern about the divisiveness of these S&DT discussions.

They pointed out that the WTO Agreements recognise the need for positive S&DT to ensure that developing countries, such as the small vulnerable economies, secure a share in the growth of international trade to advance their economic development.

They emphasised that countries, like those in CARICOM, still face serious difficulties participating in international trade compared to developed countries. Thus S&DT remains important and any attempt to roll it back would be inconsistent with WTO rules.

So, we wait for the US’s action to implement its presidential directive. Battle lines are being drawn as preparations for the 12th WTO Ministerial Conference in June 2020 commence. We in the Caribbean must be clear about our positions and alliances.

Elizabeth Morgan is a specialist in international trade policy and international politics. Email feedback to columns@gleanerjm.com