WTO Ministerial Meeting: The Good, The Bad, And The Ugly

164 countries, in a desperate act, have pulled the World Trade Organization back from the brink of worthlessness by managing to cobble together a deal at the recently concluded 12th ministerial conference at Geneva. Another failure of a high-profile WTO ministerial meeting would have been an unmitigated disaster for the already moribund organisation. The deal – a package of agreements covering issues like fisheries subsidies, food security, Trade-Related Aspects of Intellectual Property Rights waiver (2022 TRIPS waiver) – provides a semblance of hope for trade multilateralism that, of late, has been battered and bruised by rising protectionism and countries entering into plurilateral trade agreements.

But one has to read the fine print to separate the grain from the chaff to discover the good, the bad, and the ugly of the Geneva ministerial.

The Good

The most promising outcome of the Geneva ministerial is the ‘agreement on fisheries subsidies', which will amend the Marrakesh agreement establishing the WTO. The fisheries agreement is a major step in the direction of conserving marine resources. Article 3.1 of the fisheries agreement obligates WTO member countries not to provide subsidies to a vessel or operator engaged in illegal, unreported, and unregulated fishing. Likewise, Article 4.1 prohibits subsidies for fishing or fishing-related activities regarding overfished stock. Developing countries have been granted exemption from cutting these subsidies within their exclusive economic zone for two years from the date the agreement comes into force.

The Bad

One of the major demands of developing countries like India for several years has been to find a permanent solution to the issue of public stockholding of food to protect India’s food security and provide support to farmers. India’s public stockholding policy is based on procuring food from farmers at a minimum support price. However, under extant WTO rules, this support is counted as a trade-distorting subsidy, and if given beyond the permissible limit, breaches the WTO law.

Paragraph 10 of the declaration on food security adopted at the Geneva ministerial states: “we recognize that adequate food stocks can contribute to the realization of Members' domestic food security objectives and encourage Members with available surplus stocks to release them on international markets consistently with WTO rules”.

Prima facie, this might show that concerns about India’s public stockholding issue have been taken on board. However, for India, the real issue is not about maintaining adequate food stocks, which WTO rules do not prohibit provided food is stocked by employing non-trade distorting instruments like providing income support to farmers (cash transfers independent of crop production). India’s concern is that it should be allowed to stock food using the policy instrument of price support i.e. MSP.

In other words, the status quo ante prevails. Due to the peace clause agreed at the Bali ministerial meeting in 2013, countries cannot bring legal claims challenging the trade-distorting subsidy for procuring existing crops for food security purposes.

Another major demand of India to review the temporary moratorium on customs duties on electronic transmissions has not been met and the existing moratorium has been extended till the next ministerial, which should take place by December 31, 2023. The moratorium will expire on March 31, 2024, unless it is extended further. The exponential growth of digital markets and the rise of additive manufacturing due to three-dimensional printing are disrupting the physical movement of goods across borders. This, in turn, is affecting the policy space of developing countries and also revenue generation through customs duties. It is of utmost importance that international law disciplines regulating digital trade be developed sooner rather than later.

The Ugly

One of the major issues before the WTO ministerial was to waive the intellectual property rights protected by the TRIPS agreement on Covid-19 medical products including vaccines, diagnostics, and therapeutics. While the WTO may bask in the glory of having delivered a waiver, the fact is that the declaration adopted is a classic case of too little, too late. The 2022 TRIPS waiver is restricted to Covid-19 vaccines and does not cover diagnostics and therapeutics. Moreover, only patent rights (not other IP rights) can be restricted.

The TRIPS declaration permits a waiver of Article 31(f) which requires countries to ensure that products produced under a compulsory license are predominantly for the domestic market. As per the 2022 TRIPS waiver, countries are permitted to export any proportion of vaccines to eligible countries. However, this waiver is subject to several notification requirements, which dent its efficacy. Eligible members are obligated to prevent the re-exportation of Covid-19 vaccines that they have imported. Only “in exceptional circumstances” can an eligible country allow the re-exportation of Covid-19 vaccines to another eligible country for humanitarian and not-for-profit purposes.

Furthermore, the eligible countries that issue a compulsory license for Covid-19 vaccines have to notify the WTO about the entity that has been authorised to produce the product, the quantities, duration, and the list of countries to which the vaccines are being exported. All these procedural requirements will increase the transaction costs and may deter countries from using the mechanism.

Another major flaw of the TRIPS waiver is the definition of ‘eligible members’ that can avail of the waiver. Footnote 1 of the 2022 TRIPS waiver states: “for the purpose of this Decision, all developing country Members are eligible Members. Developing country Members with existing capacity to manufacture Covid-19 vaccines are encouraged to make a binding commitment not to avail themselves of this Decision”. Unlike the 2003 TRIPS waiver where the eligibility restriction was only for importing countries, the 2022 TRIPS waiver restricts the eligibility to both exporting and importing countries.

Furthermore, developed world and pharmaceutical sector lobbies might put pressure on countries like India as well to opt out of the waiver since developing countries that have the existing capacity to manufacture Covid-19 vaccines are “encouraged” not to avail of the waiver. All this makes the 2022 TRIPS waiver completely hollow that will do precious little to fight the Covid-19 pandemic.

There are several other issues plaguing the WTO. A very important challenge is the crippling of the Appellate Body – a body that hears appeals from decisions given by the WTO panel – because the United States has been blocking the appointment of AB members. Thus, a lot of work remains to be done. The Geneva ministerial has achieved the bare minimum to give a much-needed face-saver to the WTO as a multilateral trade institution and thus keep it alive and kicking. The road ahead is long and arduous.

Prabhash Ranjan is Professor and Vice Dean, Jindal Global Law School, O P Jindal Global University. Views are personal.

The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team.