Safdar Sohail

Safdar A. Sohail

WTO Ministerial Meeting in UAE

WTO

World Trade Organization held it 13th Ministerial Conference (MC13) in UAE/ Abu Dhabi from 26-29 February, 2024. Pakistan delegation comprised on Commerce Minister, Secretary Commerce and Pak Ambassador WTO, Geneva, represented Pakistan in the meeting. Some of the key subjects which came up for discussion and possible decision included the following:

1. Public Stock-holding [PSH]

2. E-Commerce Moratorium

3. Investment Facilitation for Development Agreement [IFD]

4. Fisheries subsidies

5. Trips Waiver extension to diagnostics and therapeutics

6. Trade and environment sustainability

7. Agreement on fisheries subsidies

8. WTO reforms including DSB reforms

9. Advanced work on plastics pollution

10. Fossil fuel subsidy reform

11. Plastic pollution

Before the meeting, it was felt that notwithstanding the importance of the issues such as Trade and Environment, DSB and Fisheries, nothing much was expected on these issues as the developing countries continue shirking trade and environment issues and there is no will on DSB, particularly with the Americans.

Eventually, when MC 13 ended, after it was extended into the fifth day on 1st March, 2024, there was no real breakthrough on the most anticipated issues such as Public Stockholding, Fisheries, Investment Facilitation Development Agreement, Dispute Settlement Body reform, Moratorium on electronic transmission. DG WTO, hoped that the advancements made in producing convergence in Abu Dhabi would produce better results in Geneva. Her disappointment was obvious as she had put in a lot of effort to make MC 13 into her individual legacy, placating the developed countries on many issues, seemingly compromising on mandates and procedures. She openly identified India as a potential threat to consensus on many issues. In a way you could say that no one got much except those countries who wanted the Moratorium on electronic transmissions to be made permanent as the Moratorium was extend for another time, perhaps for the last time; an issue on which Pakistan delegation was steadfast till the very end.

India pushed very hard on Public Stockholding and DSB and its stances is being labelled ‘blocker’. India in fact used the farmers protest back home to put more wind in their sails. India came clear on the role of US in paralyzing WTO’s Dispute Settlement Body voicing the concerns of a large number of countries as WTO is practically paralysed without a functional Dispute Settlement Body.

In the case of Pakistan, its main interest was to get the Moratorium on electronic transmissions end to gain the precious policy space. Pakistan pressed very hard for the end of the Moratorium, along with India, Brazil and Indonesia, but eventually there was an agreement to continue with the moratorium on imposing custom duties till 31st March 2026. In Pakistan, this would make happy those lobbies, which want the moratorium to be made permanent notwithstanding our official stance at WTO is to end the moratorium.

For SPRC, the way forward now is that, as suggested in the Ministerial Decision on Moratorium, we should produce our own empirical evidence on the merits of continuing with the moratorium or otherwise. Pro-moratorium lobbies contest the idea of the government earning revenue on electronic transmissions. If we scan the relevant literature, collecting more revenues is not the main reason for the imposition of customs duties. Brazil, India, South Africa, Indonesia, among many other countries, want the moratorium to go primarily to get back the ‘policy space’ which they surrendered in 1998, in a very different trade environment.

The Business and Government leaders in Pakistan need to think differently on the WTO Work Program on Electronic Commerce. They need to agree on the priority common causes that they should pursue in unison. It is with the help of quality empirical studies on the Moratorium and WTO Work Program on E-Commerce, that we can plan post-2026 scenario of our E-Commerce and prepare to benefit more from the opportunities which may arise after the moratorium goes, which appears now likely in 2026.

The scientific papers, which are being used respectively by the countries on both sides of the Moratorium, are now publicly available along with detailed commentaries. On the basis of these Papers, SPRC proposes that the Ministry of Commerce and Ministry of Information Technology and Telecom should initiate research on the key promises in case of the end of Moratorium like revenue gain, growth of local industry, strengthening of national communication frontiers etc. This would also help us un-pack the impression mainly projected by Pakistan Software Houses Association [PASHA] that many segments in the ICT industry do not want an end to the moratorium due the fear of the misuse policy space. The industry also is loath to cope with another layer of taxation, which may increase the cost of doing their business.

In our view, the days of totally free flow of information, data and services are over. Even, US and EU are gradually backing off from their zealous support of totally unencumbered flow of electronic transmissions. It is a seismic change that US now favours data localization and regulation of Big Tech. We need to be cognizant of the fact that in their case, as well as that of China, they know what was coming in and out of their Communication Borders. On 2nd March, a Resolution was tabled in our Senate to regulate our social media much more seriously. The introduction of custom duties would help us in at least knowing as to what was happening on our communication frontiers and stop undesirable flight of capital from Pakistan. SPRC however firmly believes that the government should not lean very heavily on the ICT sector for revenues. The best way forward is that we introduce VAT now on the importation of ITES. This would help us develop a coherent policy for the whole of IT, Telkom and Communication sectors under WTO’s Ecommerce Work Program.

MC 13 ended with a whimper. It could not even produce a face-saving outcome. Notwithstanding, DG WTO Ngozi Okonjo-Iweala hope that concrete pro-development developments would take place when the action moves back to Geneva, the global trade governance is under highly complex challenges. The US-China rivalry has starting playing out more visibly on such occasions. This brings along many unprecedented situations and predicaments for countries like Pakistan. US wants localism but China wants no disruption to supply chains. Pakistan and China moved a proposal seeking less disruptions of global supply chains last month. The US is not as eager on the Investment Facilitation for Development Agreement, which now China is pushing seriously, being a global investor itself. On the other related issues like data localization, US has significantly become more nationalist, with the latest version of Bidenomics and Homeland Economics.

The conference is a good occasion to know as to how different countries are redefining their own ‘policy space’ and industrial policy. On the issue of Public Stock-holding, we need to do a lot of soul searching. PSH is presented by India as a food security issue. India was spared from the kind of food insecurity which hit Pakistan after the Ukraine war. We also stockpile. But to what effect? The ‘policy space’ is not an objective in its own self. A country can meaningfully participate in the global trade architecture and governance, if they are following a long- term objective in the domestic markets consistently. We have allowed the wheat crop to be internationalized and financialised, with catastrophic results. Both the farmer and the end consumers are the biggest losers. Also, Pakistan’s support to IFDA should be more nuanced. Our FDI regime has perhaps done more damage to us than good. We need to balance the facilitation that we provide to FDI with the local value added that this FDI should bring to the country. Also, the monopolistic, coercive power which the investor has accumulated in Pakistan over the year needs to be checked by those organs of the state whose job is to curb the coercive power of the capital. MC 13 is a reminder that there was a need to develop a clear national perspective and we prepare for the possible trajectories that each of these issues will take going towards MC 14 in early 2026.

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