ICRIER-KAS EXPERTS WEBINAR SERIES- WEBINAR # 4 - WTO 2.0 in the post-COVID World

Key Takeaways

The webinar discussion dwelt on:

• New areas such as e-commerce and digital trade;
• Pressing issues around environmental sustainability;
• The TRIPS Agreement and public health; and 
• The role of trade in promoting gender equality.

The speakers were Jörg Mayer, Senior Economist, UNCTAD; Prabhash Ranjan, Professor, Jindal Global Law School; R. V. Anuradha, Partner, Clarus Law Associates, New Delhi; and Anoush der Boghossian, Head of Trade and Gender Unit, WTO. The discussion was moderated by Amiti Sen, Senior Deputy Editor, The Hindu Business Line. The opening welcome remarks were delivered by Nisha Taneja, Professor, ICRIER, and Pankaj Madan, Deputy Head, India Office, KAS.

Following were the key takeaways from the discussion:

• The Doha Round of the WTO negotiations were launched in 2001 with the target of concluding, by January 2005, comprehensive reforms that would better address development considerations and help rectify the imbalances inherent in the Uruguay Round Agreements that established the Organization. However, the situation has remained unchanged and challenging. In stark contrast to the seemingly unalterable WTO rules, the world economy has changed a great deal, deep economic and geopolitical shifts are influencing production, power relations among WTO countries. Specifically, since the 2008 global financial crisis, populist protectionist measures have been on the rise and the problems have been exacerbated by the COVID 19 pandemic and the Russia-Ukraine war.   
• The international rules and national policies that govern the trade and markets need to be reformed to keep pace with the stark changes now being seen after the first industrial revolution. An important issue even for the rebuilding of the WTO rules is the “Intellectual Monopoly Capitalism.” Many interventions have been blocked due to this.
• Monopolies with regards to patents for COVID-19 vaccines are also restricting access to millions. An international body like the WTO can play a useful and constructive role in striking a balance between private and public knowledge.
• However, it is evident that positive change within the WTO is not possible without cooperation, collaboration and consensus.
• Data can be a critical economic asset and of a multi-dimensional nature, serving many economic issues including production, trade, finance and taxation and also non-economic areas such as health, environment, national security and human rights.
• The absence of national legal frameworks for storing and processing the data in the developing economies often leads to first mover advantages and ensuring monopoly powers in the global platforms, most of which are headquartered in the advanced economies.
• The restrictions on data flows should be treated like any other trade barrier and should be minimized. Such international legal framework has recently been part of regional trade agreements such as Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Regional Comprehensive Economic Partnership (RCEP) and African Continental Free Trade Area (AfCFTA).
• Digital economy is a reality that needs to be governed and nurtured, in order to influence international legal framework, one needs to participate in negotiations but the outcome of these frameworks depends solely on the perspective and inclusiveness, specifically in the case of developing countries. Therefore, the United Nations including UNCTADis a better place than the WTO for digital economy to be part of the Free Trade Agreements (FTAs).
• The WTO approach towards the digital economy and data issues stems from a very narrow trade angle, whereas the United Nations can adopt a more holistic approach taking into account implications of market structure, taxation, data access, and consumer protection.  The UN as the dialogue platform for these issues is also better placed to incorporate perspectives from government representatives as well as experts and representatives of civil society to deal with market structure, technological and anti-trust issues. Such a process would better match the multi-dimensional nature of proposals coming from the developing countries.
• Although environment has found a place in the WTO agreements from the beginning, in terms of sustainable development which incorporates three pillars - economics, environment and social, it is also an evolving concept that is increasingly linked to cultural aspects and health issues.
• At the same time developing countries have been wary of the link between trade and environment issues. The fear being environment issues could become proxy for protectionist trade measures.
• There are TBT and SPS at the WTO that allows countries to enact measures on grounds of plant and animal protection and related environment concerns. There are concerns related to the Carbon Border Adjustment Mechanism (CBAM) that the European Union has implemented and many other countries such as US and UK are replicating this measure.
• The Environmental Goods Agreement (EGA) is another such issue under which the developing countries are facing a revenue loss of US$15 billion. The reason being that top exporters of these goods are EU, US, China and Japan and the net importers are developing countries. It is hence debatable if the mandate for reducing tariff on a list of environment goods is justifiable or this revenue could be used for improving environment conditions within the country.
• While WTO can be a forum to discuss issues like carbon pricing, the negotiations currently taking place at the United Nations could be a better option to take the discussions forward. There could be a synergy between these two international organizations. Also, the WTO must not use trade measures to append or undermine the climate change issues.
• In the run-up to the 12th ministerial conference (MC-12) of the WTO, most of the attention in India has been focused on the issue of COVID vaccine patent waiver. Historically, the first waiver took place in 2003, during HIV AIDS crisis in Africa to increase the accessibility of medicines in countries that lack manufacturing capabilities.
• The proposal made by India and South Africa in 2020 was for a comprehensive waiver as intellectual property (IP) rights would act as an impediment to manufacturing of vaccine. However, this draft waiver:  

1. Has product restrictions including only vaccines and medicines of COVID-19.
2. Has procedural requirements that increase the transaction cost of developing countries.
3. Adds to a TRIP-plus obligation, i.e., compulsory licensing on product-by-product basis.
4. Is not universal, only those countries, that exported less than 10 per cent of world exports of COVID-19 vaccines in 2021 are covered for exportation and importation, if we apply this strictly then countries such as China will not be a part it.
5. Waives the obligation of a member to protect undisclosed information for claiming a market approval therefore being starkly silent to trade secrets.

• For the waiver to be effective, developing countries, specifically India and Africa should not adopt TRIPS-plus and should not accept the waiver as it does not solve the purpose – the waiver should be beyond vaccines covering other medicines and medical tools along with the trade secrets. If developing countries adopt the waiver, then it would just be a symbolic victory and not really fighting the pandemic.
• The issue of trade and gender was never discussed until 2016-17 at the WTO. The idea was that all the existing rules are already gender neutral in governing international trade.
• The Informal Working Group on Trade and Gender brings together WTO members and observers seeking to intensify efforts to increase women's participation in global trade. It was established on 23 September 2020 as a follow-up to an initiative launched at the Ministerial Conference in Buenos Aires in 2017, known as the Joint Declaration on Trade and Women's Economic Empowerment.
• However, even the "Joint Ministerial Declaration on Gender Equality and Women's Economic Empowerment within Trade" that is currently supported by 121 WTO Members only mentions about best practices, data collection and promoting collaboration on trade and gender between international and regional organizations.
• Policies targeting women entrepreneurs should give central importance to financial inclusion. This is important as trade can be costly for female entrepreneurs who have to meet with the labelling and packaging requirements and having a skilled labor force in their firms for better trading mechanism.
• Discussions on issues related to environment sustainability, e-commerce and gender, advanced as plurilateral initiatives at the WTO, will set the agenda for global negotiations and India must take these on board and not opt out of these initiatives.