The MC14 WTO Ministerial: "Succes sage"

Steady progress, a few milestones, and a constructive respectful dialogue

(This post is a chapeau for a series that will follow assessing in detail MC14)

There is a well-known French expression, “succes fou,” which denotes an extraordinary perhaps unanticipated triumph. The WTO Ministerial, just ended in Cameroon, might be fittingly called a “succes sage.” The agenda was carefully prepared, ministers and delegations were generally well-briefed, including by the Secretariat, which also did a good job of communicating the state of play to NGOs and the larger public. Enhanced clarity was achieved on the differences as well the areas of common ground among Members on a number of issues. All, including the U.S., left Cameroon with a commitment to the future of the WTO.

The milestone of the entry into force of the Fisheries Subsides agreement was celebrated at MC14. It wasn’t the product of some magical breakthrough at the Ministerial itself-which according to neoliberal mythology is how Ministerials are supposed to work. Instead, this was an achievement representing the hard work over time of Members, the Secretariat and NGOs to push more and more states to ratify the accord agreement, which is an important step forward to protect the global commons even if it is incomplete in ways I’ll go into in a subsequent post in my MC14 series.

“Interim arrangements” may sound like the title of a West End play about rebound relationships. In fact it is the expression used for a governance innovation that did crystalize at MC14, the idea that-in the absence of agreement on entrenching the plurilateral E-Commerce accord in the WTO legal architecture-the Members who adhere to this pact will begin various implementation measures in their domestic legal and regulatory systems.

Like MC13, MC14 was witness to a theological dispute between those Members who see plurilateral agreements as a betrayal of the WTO multilateral ideal and (the many) others who think that for such agreements to be meaningful and effective they have to be fully anchored in the WTO legal system. In my view, both of these positions are flawed. Plurilateralism was part of the multilateral trading order even before the creation of the WTO (e.g. the Tokyo Round codes). The Uruguay Round “single undertaking” concept was a legal device for forcing all WTO Members to accept all multilateral agreements; this, along with a lot of bullying from Washington and Brussels, enabled pushing TRIPs on a range of countries that did not see its provisions as in accord with their interests. Allowing a variable architecture in the WTO permits broad coalitions of Members to make progress, while leaving others free to opt out-or opt in later, as they wish.

But do these pacts really need to be part of basic legal architecture of the WTO, its operating system, as it were, to be implemented effectively by the states parties? The WTO is an appropriate negotiating forum for such arrangements, given the range of states that are Members, the depth of institutional expertise, and the structure of regular interaction on trade issues between Members in a variety of settings (Committees, Councils etc.) But the results of the negotiations could be implemented as a sui generis treaty, through unilateral declarations of states that they will abide by part or all of the arrangement, or in the manner of “interim arrangements” simply going forward on the domestic plane to put in the place the key aspects of the accord.

Again, I’ll be elaborating on this in a later post, but this may well be the fate of the Investment Facilitation for Development (IFD) Agreement, another plurilateral accord that the states that are participants (and many others-India being the main holdout) would like to see as part of the WTO operating system, rather than a new app as it were. At MC 14, the WTO Members states parties agreed in a Declaration to continue work toward implementing in a timely manner the IFD Agreement, even in the absence of clarity with regard to its ultimate relationship to the WTO legal system; especially important is the assessment of developing country and LDC needs for implementing the agreement, including technical assistance-a process already in course.

Another innovative move at MC14 besides “interim arrangements” was to pave the way to some greater formal recognition or link of the Multi-Party Interim Appeal Arrangement (MPIA) to the WTO. The MPIA (to which an increasingly large subset of WTO Members adhere) is a substitute for the long-blocked WTO Appellate Body. Its members agree among themselves to appeal by way of arbitration. At MC14, the Director General of the WTO made a important address to a meeting of MPIA members on the sidelines, endorsing the mechanism as a bridge to dispute settlement reform.

In fact, I would call “interim arrangements” and the MPIA examples of WTO reform by doing. In the later case, the MPIA (I admit to being a skeptic at first) may pave the way to an understanding that appellate review may not be built any more into the WTO’s operating system, but it ought to be an available app for the Members that want it.

This brings us to the e-commerce moratorium. The US sought to make the moratorium on customs duties on digital transmissions permanent; consensus was not achieved to do so, with Brazil notably one of the Members opposed. I am against any e-commerce moratorium; I’ve stated the reasons in Substack posts around the previous MC13 Ministerial. A ban on tariffs on digitally transacted trade is economically irrational; why allow for tariffs when value is traded through movement of goods and not through digital means? Prioritizing or privileging digital means at the margin increasing the return to investments in that sector relative to investments needed for (re-) industrialization-making physical products (Something the Trump Administration has told us it favors) . Tech is already given a lot of advantages relative to industrial sectors (it profits a lot on monetizing data from individuals that it doesn’t pay for, a kind of exception from IP, often foisted on consumers by the standard-form contracts they accede to by using digital platforms).

There are further reasons for opposing the e-commerce moratorium this time round. While the previous moratorium was still in effect, President Trump had no hesitation to threaten 100% tariffs on imports of feature films (which would hardly be effective if they didn’t apply to digital transmissions). Now the Trump Administration has been trying to bind all WTO Members to a permanent moratorium. Do we really think that, if he gets up on a particular morning and decides that some country should be targeted by digital tariffs, the moratorium will hold back President Trump, despite the rest of the Membership having its hands tied legally?

The moratorium is in plain contradiction to the philosophy of commerce that the Trump Administration has so boldly been enacting in practice, as well as advocating in words in its own WTO reform document: the need for reciprocity and balancing of concessions. A permanent e-commerce moratorium would preempt any such negotiations in relation to digitally-transacted trade. American big tech would get a huge bounty, without others being able to bargain for balanced concessions.

In the past, one of the arguments of the proponents of the e-commerce moratorium was that WTO Members who were seeking a fair share of revenues from transnational digital transactions could use tax instruments, and did not need tariffs. But as we have seen, the Trump Administration has thrown a wrench in the works of the OECD global minimum tax, and threatened countries that are implementing domestic digital taxes (in the case of Canada, successfully-it withdrew the tax). In light of the Trump Administration’s unrelenting efforts to close the door to taxation instruments, it would be disingenuous for proponents of the e-commerce moratorium today to claim that taxation not tariffs is the optimal practical avenue to fiscal justice in relation to transnational digital trade.

So-MC14 a “succes sage”-even in terms of what was rejected there. Stay tuned for the series.