EU Statement at the General Council, 06-07 March 2023

2. FOLLOW-UP TO OUTCOMES OF MINISTERIAL CONFERENCES

A. MC12

(I) WTO REFORM – STATEMENT BY THE CHAIR

REINFORCING THE DELIBERATIVE FUNCTION OF THE WTO TO RESPOND TO GLOBAL TRADE POLICY CHALLENGES – COMMUNICATION FROM THE EUROPEAN UNION (WT/GC/W/864)

Let me now introduce the European Union’s Communication on ‘Reinforcing the Deliberative Function of the WTO to respond to Global Trade Policy Challenges” contained in WT/GC/864. The document was circulated to Members on 22 February.

The paper by the European Union is one contribution to feed the ongoing WTO reform efforts. We are happy to see momentum building up on the reform process with a number of papers tabled by Members recently including at todays’ meeting.

The background to the paper is the recognition that the WTO’s effectiveness has been eroded over the past decade across its three pillars, with a paralysed dispute settlement system, limited progress in multilateral rule making and a deliberating function that is not being used to its full potential to engage each other on the trading system’s most pressing challenges. The WTO, however, remains a vital institution to safeguard rules-based trade and counter increasing economic fragmentation.

As we have said on several occasions, the European Union’s first priority is the restoring of a fully-functioning dispute settlement.

The EU paper today focuses on the deliberative function, as the third essential pillar of WTO reform. If the organisation is to maintain relevance, it needs to re-establish itself as a forum for more meaningful deliberation in areas that impact global trade policy making. A deeper level of engagement is required for the Members to better understand and develop convergence on key topics and for the WTO to be able to formulate responses to the challenges that we all face. The European Union proposes reinforced deliberation in the following three areas of systemic importance: 1) trade policy and state intervention in support of industrial sectors; 2) global environmental challenges; and 3) trade and inclusiveness.

State intervention in industrial sectors

State intervention in industrial sectors, including subsidies, has for several years now been a growing concern of Members, as it can generate negative spill-overs that unlevel the global playing field and reduce fair conditions of competition. This can over time undermine confidence in the balance of benefits of countries participating in the trading system, and even erode the goodwill of the Organisation itself.

At the same time, certain forms of government support are generally considered necessary and legitimate policy responses to meet certain objectives, including recently the urgent need to drive the climate and environmental transitions. But even these measures should be well designed to minimise negative spill-overs, including on other Members.

Current rules in the WTO, however, are not sufficiently effective in tackling the negative external spillovers of state interventions in the economy. Through the deliberative function, the WTO can be the place for discussions that could provide the basis for establishing an international consensus on acceptable parameters for such interventions.

The aim would be to provide more transparency on support schemes and other forms of state intervention and consider the design of measures that minimise the negative spill-overs paying attention to the positive and negative impacts of industrial subsidies including the development dimension.

In terms of process, we propose to engage without delay on these issues, and to also establish at MC13 a Member-driven dedicated space to conduct these talks in a form to be decided by the WTO. A report and recommendations would then be presented to MC14 where a decision on the appreciate follow-up would be taken.

Global environmental challenge

As we heard in the retreat on WTO reform, there is an increasing interest of Members for environment and climate to figure more prominently on the WTO agenda given the urgency of the climate and environmental challenges. We welcome the renewed interest showed by many Members.

The European Union proposes to reinforce deliberation on global environmental challenges in the Committee on Trade and Environment (CTE). The objectives would be enhanced transparency, coordination and policy dialogue on trade-related environmental measures. We suggest early information exchanges on measures and discussions on the design of measures that maximise climate and environmental benefits while minimising trade-restrictive impacts.

More thematic deliberations in the CTE could also be considered. The paper makes some suggestions, but the list is by no means exhaustive, and it will be up to Members in the CTE to agree on the topics. Given the interlinkage between development and environmental challenges, it would also be important to reinforce the capacity of developing countries in terms of their participation, but also identify means to support them in the challenges faced in complying with trade-related climate and environmental measures. We also see room for closer committee coordination between the CTE and other relevant bodies (e.g. TBT, SPS, SCM and Agriculture).

The European Union fully appreciates the complex nature of these debates, but we believe it is a discussion that the WTO cannot avoid.

Inclusiveness

This area responds to calls by a number of WTO Members for a more inclusive multilateral trading system. As part of inclusiveness, we see the need to ensure the centrality of the development dimension across the three core functions of the WTO. The CTD’s role should be the forum for reinforced deliberation on the current development challenges, while preserving also the role and responsibility of other WTO bodies. We see from this perspective a link and some common ground to India’s recent paper on development and the role of the CTD.

But inclusiveness also has other dimensions beyond development.

First, we propose to improve the understanding of how to achieve inclusive policy outcomes of trade liberalisation to spread the gains from trade more widely. To this end, we propose that the WTO undertake joint analysis with the World Bank and the ILO on the distributional impacts of trade. Work should also look at improving the integration of developing countries into global and sustainable supply chains as well as addressing the gender dimension.

In terms of forum, we are open to suggestions from Members. The General Council could discuss certain issues of a horizontal nature. The TPRB and specific Committees could also play a role. Second, we propose to look at making the policy-making process itself more inclusive by addressing the capacity constraints by developing countries in their participation in the WTO. We also suggest enhancing engagement with external stakeholders to bring in broader perspectives in informal seminars and workshops. This is in any case already happening in a number of areas and bodies in the WTO. A standing WTO consultative committee with balanced representation could also be considered. Our suggestions also link up with the Director-General’s recent idea on broadening stakeholder engagement and proposals by other Members on WTO reform.

To conclude, the areas proposed for deliberation in the paper are by no means exhaustive. We now look forward to hearing Members’ views on the paper and discussing on how to take the reform process forward.

(I) WTO REFORM

COMMITTEE ON TRADE AND DEVELOPMENT MANDATE: FOCAL POINT FOR CONSIDERATION AND COORDINATION OF WORK ON DEVELOPMENT IN THE WTO – COMMUNICATION FROM INDIA (WT/GC/W/865)

The European Union thanks India for its recent Communication (WT/GC/W/865), which provides a useful compilation of existing CTD mandates.

The European Union “believes that an important objective should be to reinforce the role of the CTD as a forum to deliberate on current development challenges as well as to more effectively mainstream development-related issues in the work of different WTO committees.” (WT/GC/W/864).

The European Union welcomes the comment in the Indian submission that the mandate of CTD… is not to replace but to complement the work of other bodies on development … through coordination and consultation with these WTO bodies.” This recognition tallies with the European Union’s understanding of the CTD’s mandate, but also of our views on the better functioning of WTO committees.

While the Indian submission suggests the General Council take decision on a significant number of institutional mechanisms to strengthen the role of the CTD, the European Union finds that reinforced deliberation at the CTD around a number of key topics is already possible. What we need is for us all to engage openly and pragmatically - which requires changing our mindset - rather than additional institutional discussions. 

CONCLUDING REMARKS under (I) WTO REFORM

We thank the Members for their comments on the EU Communication and have listened to them carefully and with great interest. 

We are happy to note that there seems to be an overall interest in reinvigorating the deliberative function.

In particular, there seems to be considerable interest in enhanced deliberation in the Committee on Trade and Environment (CTE) and the Committee on Trade and Development (CTD).

A number of Members have also expressed interest to deepen our engagement on the issues on state intervention and inclusiveness even if of course we have taken due note of the variety of views expressed. As a number of Members are still reviewing the submission, we will not comment on the various views expressed today but would like to clarify a few points. We are not seeking to negotiate rules; as set out clearly in our paper, we propose to deliberate on the three areas identified. The European Union has no intention to put aside discussions on agricultural subsidies; the European Union has actually been contributing constructively to the latter discussions. There is therefore no need to read in between the lines - just read the lines.

At this stage, we would like to share a few thoughts on process and fora for deliberation in the three thematic areas. We will continue outreach and discussions with Members. We will discuss with the new Chair of the GC how to organise the further process. If considered useful, we would be willing to participate in informal consultations on this between now and the next General Council meeting. We see the various papers submitted to the GC have certain commonalities and we will study them in more detail.

As for the development and environment tracks, the CTD and CTE should have a central role in enhanced deliberations. As to the topics for these deliberations, the EU has made some suggestions and we will start contributing at the upcoming committee meetings. We also encourage Members to start feeding these committees with topics for deliberation. The incoming CTD and CTE Chairs could also hold consultations.  

On state intervention in industrial policies, the proposed ‘dedicated space’ does not yet exist, but discussions could continue in the next General Council. We are open to engaging on how dedicated discussions on the topic could be organised. There could also be discussions in the Subsidies Committee and CTE where appropriate.

On inclusiveness, we have proposed discussions in the General Council and the CTD. The General Council in May could, for example, come back on how to take the work on distributional impacts of trade forward.

We have taken due note that a number of Members are still considering our Communication. We look forward to engaging with them and all other Members. But we thought it would be useful to already share where our thinking is in terms of possible way forward, which we are also ready to further discuss. 

(II) WORK PROGRAMME ON ELECTRONIC COMMERCE – STATEMENT BY THE FACILITATOR

The European Union welcomes the interest among Members to implement the MC12 decision on e-commerce and in particular intensifying engagement on the development- and digital trade- related issues.

The meetings so far have been constructive and allowed Members to share their valuable views on topics put forward by the Facilitator.

We would also wish to thank India for their communication (WT/GC/W/863) on the role of digital public infrastructure in promoting electronic commerce, and also the Organisation of Eastern Caribbean States for their input on e-commerce development challenges. These documents have facilitated our discussions within the Work Programme sessions so far and have therefore served as a valuable input.

In terms of the way forward, we would like to support the idea put forward by several Members to bring together relevant stakeholders to delve deeper into more specific elements of the topics discussed so far. In practical terms, we believe that workshops with the participation of intergovernmental organisations focused on specific issues (starting with consumer protection) would prove particularly useful.

Let me use this opportunity to thank the Ambassador Usha Dwarka-Canabady from Mauritius for her efforts in facilitating our Work Programme discussions. We look forward to further engagement based on facts and getting into specific discussions as soon as possible to identify a way forward on both the Work Programme and the extension of the multilateral e-commerce moratorium well ahead of MC13.

Equally, the European Union would also like to thank India for its other two communications: Role of Telemedicine Services in Response to the Pandemic and Building a Pool of Health Professionals to Respond Effectively to Pandemics/Natural Disasters. We note that the two communications propose further work and seminars in the framework of the Council of Trade in Services (CTS). The European Union is open to engage on the submissions by Members that contribute to enhancing the deliberative function of the WTO. However, as we discuss WTO Reform and how to make the work of the various bodies more efficient, we consider that these communications should be discussed at the appropriate WTO bodies. And we note that the two communications are on the agenda of the CTS that takes place later this week. We should avoid duplication of discussions.

3. WORK PROGRAMME ON SMALL ECONOMIES – REPORT BY THE CHAIR OF THE DEDICATED SESSION OF THE COMMITTEE ON TRADE AND DEVELOPMENT

We welcome the work of the WTO Secretariat in providing a very substantive background note on “Integrating Small Economies into the Post COVID-19 Economy.” We also thank the Chair of the Committee on Trade and Development’s Dedicated Session on Small Economies for guidance provided to the process.

We are still examining the analysis and findings with a view of substantive engagement at the next meeting of the Dedicated Session on Small Economies.

4. WTO ACCESSIONS: 2022 ANNUAL REPORT BY THE DIRECTOR-GENERAL (WT/ACC/43 – WT/GC/257) – STATEMENT BY the DIRECTOR-GENERAL

The European Union congratulates the advancement of the work on accessions for several countries during 2022 and welcomes the statement by the Director General. 

In 2023, we hope for further progress. We hope to see advanced progress this year in particular on the accessions on Comoros and Timor-Leste with a view of completing them.

I would like to announce that the bilateral market access negotiations with Timor-Leste will be signed later this month.

5. TRADE RELATED CHALLENGES OF THE LEAST-DEVELOPED COUNTRIES AND WAY FORWARD: PROPOSAL FOR WTO SMOOTH TRANSITION MEASURES IN FAVOUR OF COUNTRIES GRADUATED FROM THE LDC CATEGORY – COMMUNICATION FROM DJIBOUTI ON BEHALF OF THE LDC GROUP (WT/GC/W/807/REV.2)

Graduation is not, and should not be regarded as, punishment, but a step to be celebrated. The European Union is engaging with LDCs on the particular challenges that LDC graduation presents. We are ready to continue to engage, both on “preferences” in Annex 1 and on “specific measures” in Annex 2 of the proposal under consideration.

The European Union recognises the challenges of LDC graduation and the need for a specific response from the Membership, which we would be ready to work on with a view to outcomes by MC13.

The European Union considers that analytical work on Annex 2 of the proposal could preferably start as soon as possible in the LDC Subcommittee as requested by the LDC Group. The Subcommittee should analyse the measures, and coordinate with other relevant WTO bodies and stakeholders.

Each of the “specific measures” in Annex 2 of the LDC proposal will require a separate discussion in more detail.

The aim of the European Union is to focus on how to facilitate and enhance the capacity of countries to assume commitments that foster integration in the global economy. In our view that is the best way that the WTO can effectively contribute to sustainable development.

6. UNILATERAL TRADE-RESTRICTIVE MEASURES OF CERTAIN WTO MEMBERS – STATEMENT BY THE RUSSIAN FEDERATION

The European Union together with Australia, Canada, Iceland, Japan, Korea, Norway, New Zealand, Switzerland, United Kingdom and the United States joined the following statement:

This intervention does not warrant a response, except to remind Members of the gravity of Russia’s depredations against its neighbour Ukraine, a fellow Member of this organization.

Just over a year ago, Putin began his brutal and unprovoked full-scale invasion of Ukraine.  Russia continues to inflict death and destruction on Ukraine and on the Ukrainian people.

As the G7 Leaders recently noted, we condemn Russia’s illegal, unjustifiable, and unprovoked war, disregard for the Charter of the United Nations and indifference to the impacts that its war is having on people worldwide.

Russia’s actions also contravene the principles and values that are the foundation of the WTO, including other Members’ shared notions of fairness and openness.

We call upon all Members of this organization to condemn unequivocally Putin’s war of aggression, his reliance on force and indiscriminate violence to illegally seize the territory of another Member of this organization, and his contempt for the rule of law and humanitarian norms.

8. MC12 DECISION IMPLEMENTATION – RESPONSE TO THE PANDEMIC – REQUEST FROM INDIA

1. ROLE OF TELEMEDICINE SERVICES IN RESPONSE TO THE PANDEMIC – COMMUNICATION FROM INDIA (WT/GC/W/866 – S/C/W/426)
2. BUILDING A POOL OF HEALTH PROFESSIONALS TO RESPOND EFFECTIVELY TO PANDEMICS/NATURAL DISASTERS – COMMUNICATION FROM INDIA (WT/GC/W/867 – S/C/W/427)

See statement delivered under item 2 A (II).

9. POLICY SPACE FOR INDUSTRIAL DEVELOPMENT – A CASE FOR REBALANCING TRADE RULES TO PROMOTE INDUSTRIALIZATION AND TO ADDRESS EMERGING CHALLENGES SUCH AS CLIMATE CHANGE, CONCENTRATION OF PRODUCTION AND DIGITAL INDUSTRIALIZATION – REQUEST FROM SOUTH AFRICA

I would like to thank Cameroon for presenting this paper.

This communication in our view is another example that WTO today faces diverse set of global challenges and demands.

The European Union’s recent communication on reinforcing the deliberative function, presented yesterday, has a clear development dimension.

The paper from the African Group confirms that there is a shared interest among the Membership to stimulate more effective exchanges among Members on key issues for today’s world, such as the nexus between trade and industrial policies.

I can confirm that there is indeed an overlap between our papers.

We should aim to initiate policy discussions in these and other areas in the coming months in the appropriate WTO bodies.

We are ready to see what common ground can be established between this paper and the European Union’s submission on enhanced deliberation, notably on our ideas on how to take forward the question of state intervention in support of industrial sectors.

10. REVIEW OF THE EXEMPTION PROVIDED UNDER PARAGRAPH 3 OF THE GATT 1994 (WT/L/1165)

As we have stated in the past years, the EU supports this review process.

I must underline once again our strong concerns with this unjustified exemption. The European Union continues to view the Jones Act as a piece of legislation that restricts fair competition in the shipbuilding and shipping markets, and no longer serves a legitimate purpose in today’s global economy. Even more, new implementing rules show an increasingly protectionist interpretation of the Jones Act, going even further beyond its original intention.

The prevailing situation has negative economic consequences for the European Union's and other countries’ shipbuilding, logistics, dredging and energy industries. But the costs are also high for the US, which is faced with higher costs for off-shore energy production, coastal protection from flooding, adapting to climate change, and haulage services due to the closure of the US market for foreign built, serviced or operated ships. 

We sincerely hope that the 2023 review is consequential. It should not become simply a recurring point in our agenda but rather the starting point to look into how to remedy a situation that is neither justified nor satisfactory.

Since this is the last agenda item I will take the floor today, I would like to pay tribute to you, Didier[1], for the very effective and successful way that you have managed and guided our work over the last year.  It was not always easy and you also had to steer the preparations for MC12. We have all come to appreciate the special mix of talents you have brought to the task.

You are a man of culture with quintessential Swiss assets: the soaring overview of a mountain people, the precision of a clock maker, the good taste of a chocolatier, the discretion of a banker, the sportiness of the world’s best tennis player, the impartiality of the Red Cross, and the warmth of someone who grew up in the Valais. 

We have greatly benefitted from your sense of public service and deep commitment to our Organisation. Didier, we are in your debt and wish you very well.

[1] Didier Chambovey; Chairman of the General Council.