A Pathway Forward: 3 Priorities for WTO Members Ahead of MC12

By Rachel Thrasher, Veronika Wirtz and Warren Kaplan

At the World Trade Organization’s (WTO) 12th Ministerial Conference from June 12-15 in Geneva, Switzerland, trade ministers and other senior officials will gather to discuss the future of the international trading system. Many members view this long-delayed conference as a sign of whether the WTO as an institution can maintain relevance amid a rapidly changing global economy and increasing polarization among its members.

In December 2021, a new report from the Boston University Global Development Center shed light on how WTO members can revitalize the WTO as an institution and promote its own goals of economic development and poverty alleviation during and after the COVID-19 pandemic. The report catalogs the trade policies implemented by six WTO member countries (the US, France, Germany, India, South Africa and China) during the first year and a half of the pandemic – from March 2020-August 2021. The study found that all six countries actively deployed policies to mitigate the health and economic effects of the pandemic, despite policies potentially conflicting with the rules of the global trading system. While India applied the most experimental policy approach, relying on the highest number of distinct types of policies, India, South Africa and China all used proportionally more policies targeting imports or exports directly. The remaining (high-income) countries – the US, France and Germany – on the other hand, tended to gravitate towards subsidies.

Interestingly, the US, France and Germany each implemented the highest number of policies in potential conflict with global trade rules. Yet, ahead of MC12, these same countries are pushing for the continuation of the WTO’s pre-pandemic agenda – increasing liberalization of trade in goods, services and investment, creating new rules for WTO member states and maintaining strict protection for intellectual property rights. This push is seemingly at odds with what the US and European countries do in their own policy backyard versus what they seek from the rest of the world.

Not only is there a mismatch between the actions and negotiating goals of high-income countries, but there is also a fundamental gap between the priorities of high-income and those of low- and middle-income WTO members countries. For example, South Africa and India have led the drive for a comprehensive waiver of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), as well as calling for continued access to special and different treatment (SDT) policy flexibilities, and prioritization of efforts to “review and rebalance” existing rules through traditional multilateral negotiating mechanisms. Each of these run counter to the push from high-income countries for further trade liberalization and new rules governing trade-related policy areas.

At MC12, how can the WTO navigate these competing interests and produce a “win” that will reassure members of the effectiveness of the institution? If WTO members can adopt a comprehensive TRIPS waiver, strengthen SDT flexibilities and eschew plurilateral negotiations in favor of multilateralism, they will be more able to move toward the original institutional goals of poverty alleviation and global development

Three steps to a “win” for the WTO

The first step toward an institutional “win,” and the lowest-hanging fruit for member countries, is to grant a comprehensive TRIPS waiver covering all related intellectual property rights for COVID-19 related products. The initial proposal, put forward by India and South Africa in October 2020, has languished for more than 18 months while the European Union has refused to engage with the original proposal in a significant way and the US has been unable or unwilling to accept a broad-scope waiver. In March 2022, a proposed draft text of a TRIPS waiver was leaked – one which was initially thought to have been put forward by India, South Africa, the US and the EU – a “quad” of interested parties in the waiver proposal. This waiver, however, is much closer to the original EU counter-proposal, essentially a “clarification” of the existing rules to make it seem like the agreement is fine as is; structured around the use of compulsory licenses and similar instruments to allow for broader manufacturing of essential products.

To continue to approach a TRIPS waiver through the restricted lens of business-as-usual, despite the pandemic realities of vast inequity in access to pharmaceutical and other health products undermines trust in the WTO as a whole. Indeed, many see a successful outcome to the TRIPS waiver as a bellwether for the future of the WTO.

Second, WTO members must seek to strengthen access to SDT policy flexibilities for low- and middle-income countries. SDT is a long-lived, albeit controversial, flexibility woven throughout WTO agreements, which allows self-described “developing countries” to increase access to high-income country markets without forcing an immediate reciprocal market opening. The idea behind SDT is that low- and middle-income countries need time and financial and technical support to build up competitive industries and bring their laws and institutions into compliance with WTO rules. In the wake of the global pandemic, where inequality has only intensified, countries outside of the US and Europe will need these flexibilities even more – both to build up domestic and regional health industries for increased health security – and to increase economic resilience in the face of future crises.

Third, WTO members must not abandon the core principle of multilateralism. A key component of the “reform” on the negotiating table, put forward by the US, EU and others, is to fundamentally alter the multilateral character of the institution by pursuing additional rulemaking through “plurilateral” negotiations. In a plurilateral negotiation, like-minded countries have come together to agree to new trade-related rules and even shape the overall negotiating agenda. Although these new rules do not bind countries outside of the negotiations, they put pressure on those countries to conform to the priorities of high-income countries, further exacerbating the polarization of the WTO. This undermines the WTO’s potential to preserve policy space for national development and protect a more equitable balance of power.

A pathway forward

Certainly, the WTO does not hold the only hope for ending the pandemic and preventing the next one. Individual countries have taken steps like constructing new pharmaceutical industries and supporting fledgling ones. Among the most recent developments, the US announced that the National Institutes of Health would be sharing key mRNA technology with the COVID-19 Technology Access Project (CTAP), which allows countries to use that information to develop their own mRNA products.

Nevertheless, the WTO, as the main trade-regulating institution, does have a role to play in the pandemic recovery. At MC12, rather than operating on a business-as-usual approach, members should seek to transform the WTO into an institution that prioritizes the long-term development interests of all its members. This requires a rapid, comprehensive conclusion to the TRIPS waiver, improved access to SDT policy flexibilities for countries re-building during and after the pandemic and a commitment to protect the multilateral character of institutional decision-making.

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