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No. 239, 18 December 2018

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Development Perspectives on WTO Reform

H.E. Mr. Alexandre Parola, Ambassador of the Permanent Mission of Brazil to the World Trade Organization (WTO), emphasizes that in order for discussions on WTO reform to succeed, they need to be inclusive and reflect a balanced agenda comprising issues of interest of developing countries and least developed countries (LDCs). Below is his statement at the Third South-South Dialogue on LDCs and Development held in Geneva on 7 December 2018.

Selon Alexandre Parola, représentant permanent du Brésil auprès de l'Organisation mondiale du commerce (OMC), pour aboutir, les négociations sur la réforme de l’OMC doivent être inclusives et se fonder sur un programme de travail équilibré qui contienne des sujets présentant un intérêt pour les pays en développement et les pays les moins avancés (PMA). Nous présentons ci-dessous la déclaration qu’il a faite à l’occasion du troisième Dialogue Sud-Sud sur les PMA et le développement à Genève, le 7 décembre 2018.
Para Alexandre Parola, representante de la Misión Permanente del Brasil ante la Organización Mundial del Comercio (OMC), el éxito de las discusiones sobre la reforma de la OMC depende de que estas sean inclusivas y se basen en un programa equilibrado que abarque las cuestiones importantes para los países en desarrollo y para los países menos adelantados (PMA).
A continuación publicamos su declaración en el marco del tercer Diálogo Sur-Sur sobre los PMA y el desarrollo que tuvo lugar en Ginebra (Suiza) el 7 de diciembre de 2018.

This event is very timely because discussions on “WTO reform” have been gaining momentum.  Brazil has been engaged in some of these conversations but we have insisted that, for these discussions to have a chance of succeeding, they need to be inclusive and reflect a balanced agenda comprising issues of interest of the wider membership, in particular developing countries and LDCs.
In the different groups and fora where “WTO reform” is being addressed, the driving force has been the effort to modernize WTO rules (“level the playing field”), to improve the functioning of the Organization (more flexible approaches to negotiations, including plurilaterals, transparency and the work of regular committees), and, at least for the majority of Members (and certainly for Brazil), to safeguard and to strengthen the dispute settlement system (DSS). I would go as far as to say that without a well-functioning Appellate Body, new rules would lose much of their effectiveness and value. Discussions on development issues have been less critical in the process.
This is not particularly surprising given the breakdown of the Doha Development Agenda (DDA) negotiations and the significant divergence of views among WTO Members regarding the treatment of trade and development in existing and future WTO rules.
Up to the Eleventh WTO Ministerial Conference (MC 11), the reasons for the deadlock in discussions were readily apparent:
On the issue of Special and Differential Treatment (S&DT), developed countries argued for a more restrictive approach to the special rules and benefits for developing countries under the WTO and demanded a new vision to address this topic.
LDCs and a number of developing countries, however, wanted to expand S&DT provisions, on the understanding that current rules would be hampering their industrialization and development. They understand that flexibilities and assistance are needed to meet their development goals, which means being exempted to a greater degree from liberalization obligations agreed under the WTO.
The current escalation of trade tensions between major trading partners adds a layer of complexity to an already challenging scenario.For developing countries, the main risk is that reform of the WTO focuses on a limited range of seemingly pressing issues instead of addressing challenges faced by the WTO and all Members on a collective basis.
Brazil is ready to engage in conversations on ways to improve the WTO -- with an open mind, as always. For us, in order to preserve and further strengthen the development dimension of the multilateral trading system (MTS), it is essential to address core pending issues - particularly agriculture and LDCs topics, as well as fisheries subsidies. For Brazil, a reform of agricultural disciplines would be a major contribution to development, given its central role in most developing economies.
We are of course open to discuss new issues. During MC11, for instance, we argued for agriculture but at the same time, we supported the ministerial decisions that were adopted (Fisheries Subsidies, Electronic Commerce, Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and Small Economies) and also decided to join the four joint ministerial statements on Investment Facilitation, Micro, Small and Medium Enterprises (MSMEs), Domestic Regulation in Services and E-commerce.
A precondition for achieving results in any area, including those of interest to developing countries, is to reinvigorate the WTO negotiating arm. Ruling out new issues as long as the Doha Round is not concluded has led us to a deadlock. In the end, neither the DDA nor the new issues are addressed - or at least they are not addressed multilaterally, as would be our preference.
In this context, we believe that developed Members should show greater flexibility on topics that are crucial for developing countries, such as agriculture, sanitary and phytosanitary (SPS) measures and the implementation agenda focused on LDCs. Concrete actions on these issues should be part of any proposal on the WTO reform.
As I mentioned before, some developed Members tend to consider that our negotiating agenda will remain blocked as long as there isn't a common/new vision to address development issues; however, it would be misleading to think that this is the main gateway issue that has been blocking our negotiating agenda for the past two decades.
Whatever the direction of discussions, it is crucial to draw a line between "old" and "new" S&DT. S&DT "as is", incorporated in the Uruguay Round agreements, reflects a balance of concessions, including the space for S&DT in agriculture for developed Members. Implementation issues should remain a priority. Other than that, however, revisiting the Uruguay Round package would be extremely complex, to say the least. Developing countries inevitably would also wish to reconsider some of our main concessions.
With regard to "new" S&DT, Brazil is open to participate in a focused, pragmatic and flexible discussion on the scope of S&DT rules in new agreements/rules. Negotiating horizontal, one-size-fits-all rules might not be possible. The more appropriate way would be to consider rules on a case-by-case situation, or according to the capacity of Members to contribute, depending on the topic under negotiation and/or the Members affected. A concrete example involving my country is the negotiations in fisheries, in which Brazil needs to retain policy spaces. 
For any possible discussion on "development" to have legitimacy, the main focus should be on how to respond to the concerns and demands of many LDCs. LDCs seem to feel alienated by the system, a fact which seriously undermines the legitimacy of the WTO. Brazil is flexible to consider new approaches regarding "new" S&D rules in the understanding that these new approaches would pave the way for more generous forms of S&DT in favour of LDCs.
An issue that worries us is an inversion in perspective regarding  development - if, in 2001, the concern was to ensure that trade negotiations contribute to development, some current approaches on the topic reveal a wish to limit S&DT for "emerging countries". We believe that this change of focus has the potential to deepen divides between developed and developing countries that we have been facing since the Uruguay Round.
In our view, there is a limited timeframe for action in light of the significant strains on the multilateral trading system. If we fail to act, this could have far-reaching implications. We need to be constructive and show our support for the necessary reforms while also safeguarding the core values of the MTS and our vital development interests. Brazil is ready to contribute to these efforts.


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