“What’s ahead for the WTO?”
Remarks by H.E. Ambassador LI Chenggang at the RSIS-WTO Virtual Parliamentarian Workshop
19 May 2021
Thank you Keith and RSIS, for having me today. Good morning, good afternoon and good evening, ladies and gentlemen. I would share my observations using four “Rs” to describe the way forward for the WTO: repair, response, rebalance, and relevance.
First, the WTO’s normal function needs to be repaired.
As known to all, rule-making, dispute settlement and trade policy monitoring are the three key pillars of the WTO. We have a Chinese saying: to repair the house before it rains. Unfortunately, the two main pillars, rule-making and dispute settlement, have been stuck for quite a period of time: the Organization has barely made new rules during the past 25 years, and people appeal to the paralyzed Appellate Body. However, there is also another Chinese saying that, to avoid further damages, it’s never too late to mend the sheepfold after some have been lost.
This year, a twenty-year-plus negotiation of fisheries subsidies provides us with an opportunity: an opportunity to demonstrate WTO’s negotiating function, an opportunity to demonstrate WTO’s credibility, and an opportunity to demonstrate WTO’s contribution to the sustainable development. The momentum in Geneva has been building. The DG rolled up her sleeves, and the negotiating Chair started intensive consultations. Though many gaps remain and some are quite controversial, we hope, through our joint efforts, we could have a relatively clean text for Ministers’ consideration in July, and bring the negotiation to a conclusion by MC12.
Another area I have to mention is the Appellate Body impasse. Without a functioning AB, the dispute settlement system of the WTO is basically only on paper. Like any other mechanism, AB is not perfect. But its imperfection cannot be used as the mere excuse to block the selection process of the AB members and paralyze the system. From the one-step mechanism in GATT time to the current two-tier dispute settlement system of the WTO, the world has witnessed the effectiveness of the AB. Over the past decades, more than 120 disputes have been effectively resolved through the Appellate Body, and we cannot simply overwrite its credit. Therefore, we should restore its function without further delay. Meanwhile, reforms on the whole dispute settlement system should be explored as well.
Second, the WTO should respond to the health crisis.
We are now suffering the COVID-19 pandemic. It is a public health challenge. But if we recalled the PPEs shortage last year, and see the accessibility and distribution of vaccines this year, it is clear that the WTO has its indispensable role to play in combating the public health crisis. To date, some initiatives are already on the table in the WTO, such as the reduction and elimination of export restrictions and prohibitions, best use of tariff and non-tariff measures, enhancement of transparency, and the continued supply and undisrupted flow of essential medical supplies and food. Most importantly for now, the WTO members are making great efforts in order to scale up vaccine production and distribution to save lives, such as TRIPs wavier proposal and the third way of expanding production through more licensing.
Third, the historical asymmetries should be rebalanced.
Agriculture has remained one of the most important issues in the history of GATT/WTO, especially for developing members. In the past so many years, developing members have been calling for correction of asymmetries and imbalances in the Agreement on Agriculture. For instance, the Agreement allows developed members to subsidize one single product without limitations. For most developing members however, they don’t have the entitlement of concentrated subsidies. Though the overall amount of subsidies increased with the increase of production, the subsidies to one single product is ceilinged by a certain percentage. Like cotton and sugar, in some developed countries, the subsidies are up to 70% of the value of production. But for most developing counties, the Agreement allows only 10%. So, there is an urgent need to rebalance the asymmetries to solve the rules deficits and level the playing field.
Another area that reflects huge rules deficits is Special and Differential Treatment(S&DT). We did a preliminary review on the current 155 S&DT provisions contained in the 16 WTO agreements, finding that at least 105 provisions are too vague to operate, accounting for 67.7%; for the remaining 50 provisions, at least half of them are related to transitional period or technical assistance. So, there are only 25 S&DT provisions in existing WTO agreements that are directly linked to individual members’ rights and obligations, accounting for 16.1% of the total. It is therefore fair to say, the overwhelming majority of current S&DT provisions are only pie in the sky. There has never been an almighty blank check.
Fourth, members should strive to make WTO relevant to the twenty-first century.
Sustainable development is the trendy needs of the world. The WTO should have a role to play. In this regard, there are several initiatives under discussion. For instance, according to UNCTAD’s statistics, trade in plastics in 2018 – in all its forms – amounted to more than 1 trillion dollars or 5% of global trade, almost 40% higher than previously estimated. And there is still some potential trade in plastics that we are simply not aware of. That is why some WTO members initiated the Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade. Several topics are included in the discussion, including: improving transparency; monitoring trade trends; promoting best practices; strengthening policy coherence; identifying the scope for collective approaches; assessing capacity and technical assistance needs; and cooperating with other international processes and efforts. Through this discussion, we hope to explore how the WTO can contribute to reduce plastics pollution and transition to a circular, more environmentally sustainable plastics trade.
There are also some other on-going Joint Statement Initiatives (JSIs) discussions within the WTO, such as the electronic commerce, Micro, small and medium-sized enterprises (MSMEs), and investment facilitation. We hope those JSIs could have substantial progress by MC12.
Lastly, I want to add two more “Rs”. The WTO is now going through the most difficult time, and the world economy is severely hit by the pandemic. We all have the responsibility to reform the WTO where necessary, making it become one of the most important tools of final solutions for recovery.
Thank you for your kind attention!