Insight into the 13th WTO Ministerial Conference

Commentary by Thibault Denamiel, Matthew Schleich, andWilliam Alan Reinsch

Published March 8, 2024

Last week, 166 trade ministers and their respective delegations traveled to Abu Dhabi for the 13th Ministerial Conference of the World Trade Organization (WTO)-otherwise known as MC13. Despite cautious optimism from observers and delegates, MC13 failed to close out several lines of negotiations. Even as members extended the close of negotiations, once-promising deals on fisheries and agriculture were ultimately not closed as the delegations left Abu Dhabi on Friday. Additionally, work on dispute settlement produced underwhelming results. While negotiations yielded some accomplishments, such as the extension of the e-commerce moratorium, the grinding difficulties of negotiations have highlighted the dysfunction inherent to recent WTO proceedings.

Failures

In the run-up to MC13, a further agreement on fisheries subsidies seemed to have the most momentum toward an agreement. MC12, which took place in 2022, saw WTO members agree to an important but limited deal regarding fisheries subsidies. Since then, delegates at the working level have pushed for a stronger multilateral deal that focused on preventing overfishing and curbing subsidies that contributed to illegal, unreported, and unregulated (IUU) fishing. The four working weeks before MC13 were dubbed "Fish Month" by the WTO, and the effort teed up a final draft deal for ministerial negotiations.

This new draft built on the previous fisheries deal struck at MC12. The first deal called for subsidy restrictions only for cases of "overfished" stocks rather than focusing on the act of "overfishing" itself. The distinction between the two is critical. The first deal-which solely prevents subsidies for overfished stocks-allows for fisheries to undergo extended periods of subsidy-enabled overfishing before the stock is deemed overfished.

The new fisheries deal was the main focus of MC13 negotiations until the end of the ministerial. The major barrier to a deal was disagreement over the mechanism that leveled the playing field for developing countries. Known as special and differential treatment (SDT) provisions, these policy mechanisms are meant to ease the burden of compliance with WTO agreements. India, in particular, took issue with several SDT-related issues. Reports suggested that the Indian delegation led the effort against the fisheries text. They eventually stated that the deal would not support the interests and welfare of the fishing community.

Notably, a coalition of Pacific islands opposed a late draft deal for not going far enough. The nations (which do not have the financial capacity of larger states) argued that the text did not address the island nations' demands to put a hard cap on subsidies.

The U.S. negotiators worked to include a forced labor provision into the fisheries negotiations, but the effort eventually died with the rest of the deal.

In the end, delegates left MC13 with no progress on fisheries beyond the MC12 deal. A slate of issues will continue to plague global fishing, particularly the lack of subsidy bans on active overfishing.

A deal on agriculture, which came in with lower expectations than fisheries, was considered dead before the closing day of MC13. Agriculture negotiations have been ongoing for years without any progress. In fact, according to the WTO director-general, simply having a single negotiating text for a ministerial conference is a "huge achievement" in and of itself.

The major roadblock in the negotiations was public stockholding for food security purposes. Public stockholding permits states to purchase, stockpile, and distribute agricultural goods in order to retain a supply of food for people in need. These programs can distort trade when the government purchases food from farmers at fixed prices.

At MC9, which took place in 2013, ministers agreed in the short term to not challenge public stockholding programs in developing countries. This was agreed to under the presumption that a permanent solution would be found in the future.

During MC13 last week, the G33 (a group of developing nations) pushed for the long sought-after permanent solution to public stockholding. The G33 solution opens the door to greater stockholding flexibility, meaning that WTO public stockholding restrictions-particularly ones that regulate government purchasing at administered prices-would be weakened. India, a key voice within the G33, made strong statements demanding that a deal on public stockholding be reached at MC13, solidifying the agreement made at MC9 not to challenge public stockholding programs. Other developing countries and the United States refused to accept the permanent solution outright.

Linkages between different agricultural issues also prevented a deal from being reached at MC13. Many nations, including Brazil and some within the Cairnes Group coalition, demanded progress on unrelated market access negotiations in order to move forward with a larger WTO agriculture deal. The European Union was staunchly opposed to such linkages, further complicating negotiations.

In all, an agriculture deal did not come close to finalization at MC13. Some negotiations continued through the final day, but many agricultural negotiators had left Abu Dhabi the day prior, all but sinking any hopes of agreement.

Progress

When it comes to investment facilitation for development, MC13 yielded a text, but no path forward yet on how to integrate it into the WTO rulebook. Many developing members view investment facilitation as a tool of development, though the WTO still needs to outline concrete procedural steps. India and South Africa blocked a full-fledged plurilateral Investment Facilitation for Development deal, frustrating other developing nations.

Talks around reforming the dispute settlement rules ended with an agreement to finalize a dispute settlement system by the end of 2024, extending the issue until the end of the year. Members confirmed their goal and instructed Geneva ambassadors to accelerate the work. While U.S. Trade Representative Katherine Tai asserted that fragmentation among BRICS economies would be to blame for a disappointing result, Inside U.S. Trade reported that an EU official pointed to the United States as a chief source of dysfunction: over 160 members wanted consensus on dispute settlement beyond the simple declaration, but that language was allegedly blocked due to U.S. pushback.

Successes

The main accomplishment of the conference was another two-year extension of the e-commerce moratorium, during which countries agree not to set taxes on digital trade. Members agreed to maintain the current practice of not imposing customs duties on electronic transmissions until MC14 or the March 31, 2026, whichever comes earlier, echoing language from the 12th ministerial conference. Reportedly, only a few members were opposed to the extension (namely, India and South Africa) with the majority of the conference supporting it. The moratorium is accompanied by a work program meant to enable developing countries to develop their capabilities in the digital commerce sector.

Despite broad agreement across the conference on the issue, the agreement to extend the e-commerce moratorium came at the last minute, with the Indian delegation again using its objection as a bargaining chip. Dr. Thani bin Ahmed Al Zeyoudi, the UAE minister of state and trade, was reportedly the instrumental point of contact in ensuring that India's objections would be lifted at the eleventh hour.

In another victory for the United States' position, the Trade-Related Aspects of Intellectual Property (TRIPS) waiver expansion, which would have expanded regular intellectual property rights waivers on Covid-19 vaccines to the production and supply of Covid-19 diagnostics and therapeutics, was rejected by opposition from the United States, Switzerland, and the United Kingdom. Nevertheless, 70 countries protested that "failure to deliver on a multilateral outcome to effectively address concerns on equitable and affordable access to health products including therapeutics and diagnostics, casts a dim light on the ability of the WTO to act in solidarity during an international emergency."

Finally, a plurilateral agreement on domestic services regulation is now entering into effect. While negotiations had concluded in 2021, members needed to agree on residual services schedules to move forward on the plurilateral initiative. Now, this new agreement among 70 countries accounting for over 90 percent of services trade-including the United States, China, and the European Union-aims to reduce unintended trade-restrictive consequences of measures relating to licensing requirements technical standards, and qualification requirements. The last holdouts lifted objections in exchange for written assurances that the agreement does not pose a precedent of supporting plurilateral agreements. The Organization for Economic Cooperation and Development recently estimated that this agreement would unlock $150 billion globally due to a reduction in red tape and increased transparency, with particularly important gains for financial, business, communications and transport services.

Conclusion

After the dust settled, WTO officials argued that the conference built on what members accomplished at MC12 and ensured that the WTO remains fit for purpose in a changing trade landscape. Two more members (Comoros and Timor-Leste) achieved accession, which the organization's leadership touted as a sign that membership was still sought after by nations wanting to expand their trade horizons. As part of the WTO's new push on environmental and sustainability issues, the question of industrial policy was brought into the ministerial's discussions, during which members considered whether new rules were needed given the potential consequences of spiraling subsidy races and developing nations' ability to grow in relevant sectors.

A significant negative takeaway from the ministerial conference, a familiar refrain, pertained to the organization's structure. Last week showed that a handful of countries, or even just one, has an outsized ability to hold negotiations hostage. The capacity for one member to poison the system is becoming an untenable feature of the WTO and is set to further derail substantive progress in upcoming talks.

However, perhaps the bleakest point was articulated by Costa Rican trade minister Manual Tovar, when he argued that "the best outcome is not to further erode the system." In other words, the trade ministers needed to ensure their presence itself would not undermine the institution bringing them together. That the WTO's dysfunction threatens to upend its purpose and existence altogether speaks to the urgency of reform.

Thibault Denamiel is an associate fellow with the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Matthew Schleich is a research assistant with the Scholl Chair in International Business at CSIS. William A. Reinsch holds the Scholl Chair in International Business at CSIS.

Programs & Projects