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The issue of fisheries subsidies will be discused at the 12th Ministerial Conference. Photo: EPA-EFE

Explainer | What is on the agenda at the WTO’s 12th Ministerial Conference in Geneva?

  • The World Trade Organization’s (WTO) four-day 12th Ministerial Conference (MC12) starts on Sunday in Geneva
  • Trade ministers will gather for the first time in four years after the conference was postponed twice due to the coronavirus
The future of the World Trade Organization (WTO) will face a test of credibility during the four-day 12th Ministerial Conference (MC12), which starts on Sunday in Geneva.
It takes place against the backdrop of the global coronavirus pandemic, rising food and energy prices, the protracted war in Ukraine, geopolitical tensions and the ongoing threat of climate change.

Trade ministers from member countries are set to gather for the first time in four years, after the conference – originally scheduled for June 2020 in Nur-Sultan, Kazakhstan- was postponed twice due to the coronavirus.

Any results from the conference will be seen as a vital answer to whether the multilateral institution can still be capable of agreeing on anything and whether consensus can be attained to reform its outdated laws and keep pace with global developments.

Why does MC12 matter?

The Ministerial Conference is the top decision-making body of the WTO, and has generally met every two years since 1996.

MC12 marks the first ministerial conference since the latest gathering four years ago in Buenos Aires, Argentina.

The war in Ukraine adds another layer of complication to the already dysfunctional WTO as multiple members have revoked Moscow’s trading privileges and refused to negotiate agreements with Russian delegates.

I am not saying that at MC12 there will not be some Russia-Ukraine tension. I’m sure there will be
Ngozi Okonjo-Iweala
“I am not saying that at MC12 there will not be some Russia-Ukraine tension. I’m sure there will be,” WTO director general Ngozi Okonjo-Iweala told the Post.

“But again, I think we will find ways to work it out. There has not been this sort of divisions into blocs, at least not within the WTO – we are fortunate that kind of regional blocs has not really happened.”

Okonjo-Iweala had earlier said that “MC12 should not simply be a talk shop”.

What can we expect from MC12?

1. Agreement on ending subsidies for fisheries?

Around 34 per cent of the world’s fishing stocks are overfished, according to the World Economic Forum, and negotiations have been ongoing since 2001 without any consensus on eradicating financial subsidies that contribute to the crisis.

According to insiders, a deal is set to be struck this time and a revised draft agreement exists for negotiation.

The agreement, if passed by member states, will prohibit all except low income countries from providing subsidies to overfished stocks and those that contribute to illegal and unregulated fishing and overfishing.

South China Sea, Xinjiang muddy the waters of WTO fishing subsidies debate

Developing countries may also be exempt from rules on subsidies that contribute to overfishing, provided they fulfil certain provisions.

China is the world’s largest subsidiser of fisheries, spending three times as much as the European Union, according to a 2019 paper in the Science Direct journal.

As a self-identified developing country, China could be allowed to continue using subsidies, but this could pose a problem in negotiations.

The deal may be further impacted by Western grievances on the alleged use of forced labour on Chinese fishing fleets.

The United States insists on including a clause in the agreement that would require members to declare granting subsidies to vessels that have been proven to use forced labour, whereas China is opposed to such a provision.

2. Vaccine patent waivers?

In March, the US, European Union, India and South Africa reached an agreement to provide a waiver on vaccine patents for three years.

If the agreement is accepted by the 164 WTO members, it would allow so-called developing countries to produce Covid-19 vaccines without being sued by the developers.

However, developing countries that have exported more than 10 per cent of the world’s Covid-19 vaccine are not eligible to be exempt from the patents, which includes China.

At end of the day it will require the ministers to close, and the political will to close, one or two remaining issues. But it’s within the possible
Ngozi Okonjo-Iweala
The agreement marks a compromise from the original proposal put forth in October 2020 by South Africa and India that asked for intellectual property rights to be waived for not only vaccines but also other related drugs and treatments for Covid-19.

The compromise agreement has still not been signed by key stakeholders, such as the UK and Switzerland.

“At end of the day it will require the ministers to close, and the political will to close, one or two remaining issues. But it’s within the possible,” Okonjo-Iweala added.

3. WTO reform?

The US and the EU have repeatedly brought up the need to reform the WTO to contain the rise of China and keep pace with the current system of digital trade and commerce.

“[The WTO] needs to be dealing with issues related to the pandemic,” said John W.H. Denton, secretary general of the International Chamber of Commerce at a public forum in September.

“It has to deal with the digital agenda. It needs to join up climate and trade … we can’t have functioning businesses in a planet that is actually not functioning,” he added.

Reform has also become another battlefield between China and the US-led West. In 2019, the US paralysed the organisation’s appeals court- critical for settling disputes- by refusing to nominate new judges to protest what it saw as the organisation’s inability to deal with China’s economic model.

Is it the end of world trade as we know it?

The US insists that existing trade laws be altered or changed to remove ambiguities that contribute to China’s so-called unfair trading practices.

One such issue has to do with China’s provision of subsidies to domestic businesses through its state-owned enterprises.

According to the WTO Agreement on Subsidies and Countervailing Measures, discriminatory subsidies cannot be given by a government or public body.

However, it remains unclear whether state-owned enterprises are “public bodies” and whether the subsidies provided to domestic businesses by state-owned enterprises violate the law.

China’s accession to the WTO has not led to its transformation to a market economy and member-states contend that China has not provided access to its markets in a way that corresponds to its weight in the global economy.


US, China and the “doomsday scenario” for the global trading system

US, China and the “doomsday scenario” for the global trading system

Current WTO rules do not account for the influence of the Chinese state on its markets. Negotiating new rules and reaching consensus among 164 members to tackle China’s unique system and other issues such as digital trade and sustainability remains the biggest challenge.

China, for its part, has repeatedly denied breaking WTO rules, stating that it has fully delivered the accession commitments while upholding them.

Shu Jueting, a spokeswoman for China’s Ministry of Commerce, said on Thursday that China will “support the reform of the WTO in the right direction” and “support the inclusive development of the multilateral trading system”.

The crucial meeting also comes after a low profile celebration in China in December for its 20th anniversary of accession to the WTO, and it will present a challenge to Beijing on how the country tackles increasingly complex and tense relations with other major economies in the organisation, while pursuing a greater role in the global trade governance.


Ngozi Okonjo-Iweala becomes first African, first woman director general of WTO

Ngozi Okonjo-Iweala becomes first African, first woman director general of WTO

Both the US and the European Union appear inclined to work together to build new rules and clarify existing ones, to confront the issues posed by China’s unique economic system, according to the Atlantic Council.

But whereas the European Union has set up a joint working group with China to reform the WTO, the US is not similarly inclined to include China in negotiations.

For her part, Okonjo-Iweala has said that targeting China is unlikely to lead to reform.

“We need to find ways to engage China. Obviously, any member who feels particularly targeted will react in a manner that may not be constructive,” she said.

What else will be on the MC12 agenda?

Iceland, Botswana and El Salvador – co-chairs of an informal working group on trade and gender – will issue a statement reiterating the work done by participating members in designing and implementing gender-inclusive trade policies.

Established in September 2020, the informal working group aims to remove barriers to women’s participation in world trade.

Australia, Japan and Singapore – the co-conveners of negotiations on e-commerce – will issue a statement during MC12, reiterating their target of achieving an e-commerce agreement among member states and setting related targets for the upcoming year.

The agreement will contain rules on paperless trading, cybersecurity and customs duties on electronic transmissions, among other aspects of digital trade.

A total of 65 member states- representing over 90 per cent of the world trade- will also conclude negotiations to ensure that domestic regulations do not constrain trade in services.