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TWN
Info Service on WTO and Trade Issues (Dec25/25) Geneva, 19 Dec (D. Ravi Kanth) – The year-end General Council (GC) meeting at the World Trade Organization (WTO) is set to kick the proverbial can down the road on two major controversial draft decisions concerning the incorporation of the Investment Facilitation for Development Agreement (IFDA) and Agreement on Electronic Commerce into Annex 4 of the WTO Agreement dealing with plurilateral agreements. In all likelihood, the upcoming WTO’s 14th ministerial conference (MC14), to be held in Yaounde, Cameroon on 26-29 March next year, will decide the fate of these two Joint Statement Initiatives (JSIs), said people familiar with the development. Besides, the three-day GC meeting (16-18 December), prepared with much gusto and fanfare, seemed like a disaster, particularly for some industrialized countries and the “Friends of the System” group who sought decisions on these two JSIs, said people familiar with the development. The WTO’s Director-General, Ms Ngozi Okonjo-Iweala, had insisted on a cut-off date for discussing or deciding on issues in Geneva that created a huge agenda, as nearly every member wanted its topic included on the agenda to avoid any potential problems, including for MC14, said people familiar with the development. In contrast, a senior trade official from a South American country, on a background basis, said the GC meeting “was not the pragmatic, clean, easy GC for a clean MC14 that the Director-General, Ms Ngozi Okonjo-Iweala, had envisaged.” JSIs ON IFDA & E-COM At the GC meeting on 17 December, India, which has blocked the incorporation of IFDA into Annex 4 of the WTO Agreement on grounds of alleged procedural and systemic violations of the rules, stuck to its position at the GC meeting, said people familiar with the development. India presented a detailed proposal as to why it is opposing the incorporation of IFDA into the Annex 4 schedule of plurilateral agreements. At the beginning of the GC meeting on 16 December, India actually blocked the adoption of the GC agenda on grounds that its submission on IFDA was pushed down the agenda while the proponents’ proposal for a decision to incorporate IFDA into Annex 4 was accorded higher status, said people familiar with the development. India’s submission came up for discussion on 18 December when the European Union, Japan, and Singapore among others severely opposed the arguments advanced by India, said people familiar with the development. Two other developing countries – South Africa and Turkiye – raised their specific concerns while not blocking the demand from more than 125 countries for incorporating IFDA into the Annex 4 list of plurilateral agreements. After receiving instructions from their capital, South Africa intervened on a later agenda item, reportedly stating that it won’t object to IFDA’s incorporation. Turkiye is understood to have recalled the meeting it had held with the European Union, while reiterating its concerns about IFDA, said people familiar with the development. However, the proponents, who submitted a draft decision (WT/GC/W/927/Rev.4) on 4 December, requested the General Council to adopt the draft decision “pursuant to paragraph 9 of Article X of the Marrakesh Agreement Establishing the World Trade Organization.” In this regard, the proponents said that they remain “committed to further discussions and consultations with all Members.” They also invited all WTO Members to review the Investment Facilitation for Development “Toolkit” – which contains useful information on the background, content and economic benefits of the IFD Agreement. However, the proponents did not explain how the IFDA can be incorporated into Annex 4 of the WTO Agreement, which laid out the condition that such an initiative required formal approval from a ministerial meeting – something that has not happened since the WTO’s 11th ministerial conference (MC11) in Buenos Aires, Argentina, in December 2017, said people familiar with the development. The proponents failed to explain how an initiative, which was never adopted at any previous ministerial meeting through consensus, can now be incorporated into Annex 4, as per Article X.9. The proponents never fulfilled this basic condition but went on to negotiate an agreement on an alleged illegal framework. It was agreed in a General Council meeting in 2015 that the JSIs will be negotiated outside the WTO as informal agreements. Consequently, there is no legal merit in the proposal to integrate the IFDA into the plurilateral schedule of Annex 4, but the proponents through brute majority chose to impose their demand in a rules-based organization, said people familiar with the development. The proponents of IFDA include Afghanistan; Albania; Angola; Antigua and Barbuda; Argentina; Armenia; Australia; Bahrain, Kingdom of; Barbados; Belize; Benin; Bolivia, Plurinational State of; Brazil; Burkina Faso; Burundi; Cabo Verde; Cambodia; Cameroon; Canada; Central African Republic; Chad; Chile; China; Congo; Costa Rica; Cote d’Ivoire; Democratic Republic of the Congo; Djibouti; Dominica; Dominican Republic; Ecuador; Egypt; El Salvador; European Union; Gabon; Gambia; Georgia; Grenada; Guatemala; Guinea; Guinea Bissau; Honduras; Hong Kong, China; Iceland; Indonesia; Japan; Kazakhstan; Korea, Republic of; Kuwait, the State of; Kyrgyz Republic; Lao People’s Democratic Republic; Liberia; Liechtenstein; Macao, China; Malawi; Malaysia; Maldives; Mali; Mauritania; Mauritius; Mexico; Moldova, Republic of; Mongolia; Montenegro; Morocco; Mozambique; Myanmar; New Zealand; Nicaragua; Niger; Nigeria; North Macedonia; Norway; Oman; Pakistan; Panama; Papua New Guinea; Paraguay; Peru; Philippines; Qatar; Russian Federation; Saudi Arabia, Kingdom of; Seychelles; Sierra Leone; Singapore; Solomon Islands; Suriname; Switzerland; Tajikistan; Thailand; Togo; Uganda; United Arab Emirates; United Kingdom; Uruguay; Vanuatu; Venezuela, Bolivarian Republic of; Yemen; Zambia; and Zimbabwe. Up until now, the US has never objected to IFDA, which has been largely pushed by China, suggesting that it will not come in the way of its incorporation into Annex 4 of the WTO Agreement, said people familiar with the development. Meanwhile, another JSI dealing with electronic commerce – which was pushed by the Trump administration during its first term – also met with the same fate as the IFDA at the GC meeting on 17 December, said people familiar with the development. Several countries – India, Indonesia, Pakistan, Brazil, Bangladesh, South Africa, and Turkiye – in varying levels of emphasis, opposed the request from many countries for the incorporation of the Agreement on Electronic Commerce into Annex 4 of the WTO Agreement, said people familiar with the development. The proponents of the JSI on e-commerce include: Albania, Argentina; Australia; Bahrain, Kingdom of; Benin; Brunei Darussalam; Burkina Faso; Cabo Verde; Canada; Chile; China; Costa Rica; European Union; The Gambia; Georgia; Hong Kong, China; Iceland; Israel; Japan; Kazakhstan; Kenya; Korea, Republic of; Kuwait, the State of; Kyrgyz Republic; Lao People’s Democratic Republic; Liechtenstein; Malaysia; Mauritius; Moldova, Republic of; Mongolia; Montenegro; Myanmar; New Zealand; North Macedonia; Norway; Oman; Paraguay; Peru; Philippines; Qatar; Saudi Arabia, Kingdom of; Singapore; Switzerland; Ukraine; United Arab Emirates; and the United Kingdom. Surprisingly, the US, which is the leading proponent of the JSI on digital trade, has not signed onto the request from the above countries. The proponents – coordinated by Australia, Japan, and Singapore – in their communication (WT/GC/W/963/ Rev.1) submitted on 3 December, requested “the General Council to adopt the attached draft decision, pursuant to paragraph 9 of Article X of the Marrakesh Agreement Establishing the World Trade Organization.” The proponents stated that they “recognise the importance of global electronic commerce and the opportunities it creates for inclusive trade and development, and the important role of the WTO in promoting open, transparent, non-discriminatory and predictable regulatory environments in facilitating electronic commerce.” Further, they argued that “the Agreement on Electronic Commerce is set to benefit consumers and businesses involved in digital trade, especially MSMEs, and that it will play a pivotal role in supporting digital transformation among participating Members.” The proponents invited “all WTO Members to review the Agreement on Electronic Commerce Information Package, which contains useful information on the background, content and economic benefits of the Agreement on Electronic Commerce. In this regard, we are committed to further discussions and consultations with all Members.” The proponents also underscored “the importance of supporting developing and least-developed country Members parties in implementing the Agreement on Electronic Commerce by addressing their individual and targeted development needs through implementation periods, technical assistance and capacity building as described in Article 20 of the Agreement on Electronic Commerce.” The JSI also called for the continuation of the moratorium on customs duties on electronic transmissions, which will be reviewed at the end of five years, said people familiar with the development. Earlier, the JSI contained several core proposals on cross-border data flows, location of computing facilities, and source code. But in a sudden move in October 2020, the US withdrew its demands on cross-border data flows, location of computing facilities, and source code, diluting the agreement from its original goals. At a meeting of the Joint Statement Initiative (JSI) group on digital trade on 25 October 2023, a US official announced that Washington is withdrawing its proposals on the three issues on public policy considerations as well as on privacy grounds, said participants, who asked not to be quoted. The US apparently indicated that the withdrawal of its proposals on cross-border data flows, location of computing facilities, and source code could act as a catalyst to finalize an agreement by the WTO’s 13th ministerial conference (MC13), which was held in Abu Dhabi in February 2024, said participants, preferring not to be quoted. Several JSI members seemed somewhat puzzled by the US announcement, as many industrialized countries, including the three coordinators of the JSI on digital trade – Singapore, Japan, and Australia – had thrown their weight behind the US proposals. Apparently, Canada and the United Kingdom among others expressed concern over Washington’s withdrawal of the three issues, while the EU seemed somewhat equivocal in its comments on the US action, said participants. However, it was China that asked for a detailed explanation from the US on its withdrawal of the three issues. Beijing had opposed several provisions concerning the three issues during the JSI e-commerce negotiations, said participants who preferred not to be quoted. In one stroke, the JSI e-commerce negotiations, which have been challenged as being allegedly WTO-illegal for failing to adhere to the provisions of the Marrakesh Agreement, have now centred on issues like “enabling electronic commerce”, which includes (1) facilitating electronic transactions, (2) electronic transaction frameworks, (3) electronic authentication and electronic signatures, (4) electronic contracts, and (5) digital trade facilitation and logistics, involving paperless trading and single window data exchange and system interoperability/unique consignment reference numbers. Interestingly, many of these issues seem to be largely China-driven, said a participant, who asked not to be quoted. Nevertheless, the shortened version of the Agreement on Electronic Commerce failed to see the light of day at MC13. In short, the latest rejection of the Agreement on Electronic Commerce at the GC meeting suggests that the road to its incorporation into Annex 4 of the WTO Agreement is strewn with hurdles, said people familiar with the development. +
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