Switzerland: The WTO delivers at its 12th Ministerial Conference in Geneva

Multilateralism moves incrementally

In brief

In the early hours of 17 June 2022, the Ministerial Conference of the World Trade Organization (WTO) adopted a package of decisions after five days and nights of intense negotiations that appeared to be teetering on the brink of collapse. With the WTO's credibility on the line, trade ministers were able to compromise and reach consensus at the last minute, reaffirming the WTO's capacity to deliver multilateral trade rules and provide trade-related responses to some of the most pressing global issues. The "Geneva Package" includes decisions on: (i) fisheries subsidies; (ii) a partial waiver of patent protections under the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS Agreement") in relation to COVID-19 vaccines; (iii) a moratorium on customs duties on electronic transmissions; and (iv) WTO reform. A first-glance description of these decisions follows.


Agreement on Fisheries Subsidies

The Agreement on Fisheries Subsidies is meant to respond to the problem of depleting fish stocks due to overexploitation fueled by government subsidies.[1] Substantively, the agreement establishes disciplines on: (i) subsidies contributing to illegal, unreported and unregulated (IUU) fishing; (ii) subsidies regarding overfished stocks; and (iii) other subsidies. Article 3 prohibits subsidies to any vessels or operators engaged in IUU fishing or fishing-related activities in support of IUU fishing. Article 4 prohibits subsidies for fishing or fishing-related activities regarding an overfished stock, while permitting subsidies to rebuild fish stocks to a biologically sustainable level. Regarding "other subsidies," Article 5 prohibits subsidies in respect of fishing or fishing-related activities outside of the jurisdiction of a coastal member or a coastal non-member, and outside the competence of a relevant regional fisheries management organization or arrangement (RFMO/A).[2]

The agreed text is a pared back version of the draft text initially put before WTO members. Comprehensive curbs on subsidies contributing to overfishing and overcapacity were dropped from the text of the final agreement. As a trade-off, however, WTO members committed to continue negotiations on these types of subsidies with a view to making recommendations to the 13th Ministerial Conference to be held no later than December 2023. In this respect, Article 13 of the Agreement on Fisheries Subsidies expressly provides that if "comprehensive disciplines are not adopted within four years of the entry into force" of the agreement, it will stand immediately terminated unless otherwise decided by the WTO's General Council.

Partial waiver of patent protection for COVID-19 vaccines

WTO members also adopted a decision permitting "eligible Members" — defined as all developing country members[3] — to authorize, without the consent of the patent holder,[4] the use of the subject matter of a patent including ingredients and processes necessary for the manufacture of COVID-19 vaccines.[5] China had previously objected to an earlier proposal to define "eligible Members" to exclude developing countries that had exported more than 10% of the global exports of COVID-19 vaccine doses in 2021. The criterion of export share has been dropped in an apparent compromise to bring China on board. The decision, however, "encourage[s]" developing countries with capacity to manufacture COVID-19 vaccines to "make a binding commitment" not to make use of the decision,[6] something that China had indicated in advance that it was willing to do. 

Decision on electronic commerce

At the WTO's second Ministerial Conference in May 1998, WTO members adopted a Declaration on Global Electronic Commerce, agreeing to establish a comprehensive work program to examine all trade-related issues arising from e-commerce, and to continue their practice of not imposing customs duties on electronic transmissions until the next session of the Ministerial Conference. Known as the "moratorium on electronic transmissions," WTO members, at every Ministerial Conference since then, have agreed to extend the moratorium until the next session of the Ministerial Conference normally held every two years. The moratorium on e-commerce was last renewed in December 2019, until the 12th Ministerial Conference.

Absent a further renewal, the moratorium would have lapsed, paving the way for WTO members to levy customs duties on electronic transmissions — a gray area that could potentially include everything from messaging apps, video calls and data flows. In the final analysis, WTO members adopted a decision to reinvigorate the work under the work program, intensify discussion on the moratorium and maintain the current practice of not imposing customs duties on electronic transmissions until the 13th Ministerial Conference of the WTO to be held by 31 December 2023.[7]

Decision on WTO reform

WTO members also adopted a declaration in which they agreed on a process for addressing long-standing calls for WTO reform. The declaration reiterates the commitment of members toward developing a common understanding of the institutional challenges in relation to the dispute settlement, negotiating and monitoring and implementation functions of the WTO.[8] The declaration calls for the commencement of a review in the General Council to identify these institutional challenges based on written submissions by members. While reference to the current crisis facing the WTO's Appellate Body is not made in the declaration on WTO reform itself, the outcome document of the 12th Ministerial Conference commits members to conducting discussions with a view to having a fully and well-functioning dispute settlement system by 2024.[9]

Conclusion

At a time when the WTO's credibility and relevance was being questioned, the successful conclusion of the 12th Ministerial Conference signals that the WTO retains the capacity to conclude multilateral trade rules by consensus, despite the disparate and competing interests of its 164 members. Nevertheless, there still remains much work to be done, including but not limited to the issue of WTO reform and, in particular, the full restoration of the WTO's dispute settlement function.

If you have any questions regarding the above or need any assistance regarding the next steps forward, please do not hesitate to contact us.

 

[1] The agreement applies to subsidies as defined in Article 1.1 of the WTO's Agreement on Subsidies and Countervailing Measures ("SCM Agreement")[1] that are "specific," within the meaning of Article 2 of the SCM Agreement, to marine wild capture fishing and fishing-related activities at sea.

[2] Members are further required to take special care and exercise due restraint when granting subsidies to vessels not flying that member's flag, and also when granting subsidies to fishing or fishing related activities in respect of stocks the status of which is unknown.

[3] Fn.1, Ministerial Decision on the TRIPS Agreement, WT/MIN(22)/W/15/Rev.2.

[4] Paragraph 1, Ministerial Decision on the TRIPS Agreement, WT/MIN(22)/W/15/Rev.2.

[5] While the decision is currently limited in scope to COVID-19 vaccines, WTO members have committed to deciding on an extension of the terms of the decision to cover the production and supply of COVID-19 diagnostics and therapeutics no later than six months from the date of the decision. The decision has initially been adopted for five years, although the WTO's General Council may extend this period taking into consideration the exceptional circumstances of the COVID-19 pandemic (paragraph 6, Ministerial Decision on the TRIPS Agreement, WT/MIN(22)/W/15/Rev.2).

[6] Fn. 1, Ministerial Decision on the TRIPS Agreement, WT/MIN(22)/W/15/Rev.2.

[7] Work Programme on Electronic Commerce, WT/MIN(22)/W/23.

[8] Paragraph 2, Ministerial Statement on WTO Reform, WT/MIN(22)/18.

[9] Paragraph 4, MC12 Outcome Document, WT/MIN(22)/W/16/Rev.1.


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