EU Statement at the Informal General Council meeting, 15 May 2020
Geneva, 15/05/2020 - 00:00, UNIQUE ID: 200515_19
The pandemic is impacting citizens across all parts of the world and all sectors of the economy: demand has dropped, supply chains are disrupted, investments are put on hold.
There are certainly lessons to be learned from this unprecedented situation. But one thing is clear: COVID-19 has highlighted the interconnectedness of global economies and societies. It is a global problem that requires a global solution and part of that solution is a reinforced, open, rules-based multilateral trading system.
The pandemic does not strengthen the arguments of those who, pre-crisis, called for protectionism, local content/import substitution policies, economic nationalism, unfair and discriminatory state intervention and the weakening of international institutions.
It strengthens the case against them. Trade restrictive measures now would create a downward spiral that would be harmful to all of us when what we desperately need is that trade helps us escape from the deep economic trough into which we have fallen. Open trade, on the other hand, will broaden the impact of demand as it returns.
A stable, open, predictable trading system is also the foundation we need to address the other key challenge raised by the outbreak: building more resilient supply chains. The shortages of essential products linked to the pandemic have certainly revealed weaknesses.
As we address this however, we must acknowledge a simple truth: no country can secure the supply of all the products it needs on its own. This has never been the case in the history – or pre-history – of human economic activity. And it is certainly not the case in a world so deeply interconnected by transport and communications technologies as ours. A high degree of global economic integration is not a policy choice. It’s a fact of our lives. The only question is how we regulate it, together.
And in fact global, sustainable and resilient supply chains are a key element in effectively guaranteeing supplies in emergencies, since they allow access to a broad range of suppliers. They are also the most future proof, since we do not know what products will be essential in a future crisis, which will not be a simple repeat of the current pandemic. Furthermore, I know that others here will mention that the option of reshoring production is not open to the more vulnerable developing and least-developed countries.
Finally, mass reshoring would increase competition for scarce resources, drive up prices and deepen the international tensions which have hampered an effective global response to this crisis. It would be a lose-lose situation for the global community and be highly damaging to the smaller companies who have been hardest hit, as noted in the statement on MSMEs released yesterday, which the EU has signed. The fundamental lesson of COVID 19 is therefore that we need more stability and predictability based on WTO rules, not less.
What does this mean in practice? Different things at different times.
In the short term, the work must focus on transparency and health.
Firstly, the WTO has a vital role to play on transparency. As agreed at the G20, where the EU has been playing a leadership role, the WTO must become the focal point for transparency on the many Covid-19 trade-related measures that WTO Members are taking. For the EU, this should cover measures not only related to the direct health response but also to the many economic support measures. The EU is one of only a few members to have reported on both. We encourage others to join us in this.
The WTO is tracking this and this is very much welcomed. However, it must also confront us with our shortcomings if need be. We ask the WTO secretariat to report in full on the situation, and if necessary to "name and shame" those members not willing to engage in earnest in the transparency effort. The EU has made proposals to improve compliance with notification requirements. This work strand has become even more important in the current context and it is a priority for the EU moving forward to see progress in making the WTO’s monitoring function work properly. We should frontload this issue in the coming months.
Secondly, on health, the COVID-19 crisis has shown the importance of affordable access globally to healthcare products on a predictable and lasting basis, to which the WTO could contribute. The EU is therefore exploring how efforts could be deployed to facilitate trade, eliminate tariffs on medicines and protective equipment as well as address non-tariff restrictive measures, including on the export side.
Thirdly, the WTO can also encourage Members to work collaboratively to develop, test, and scale-up production of safe, effective, quality diagnostics, medicines and vaccines for the COVID-19 response, including through existing mechanisms for voluntary pooling of rights and licensing.
But our other short term priorities will be precisely to keep in our sights the medium and long term. Here, the WTO must be an essential tool in addressing the fall-out from the crisis. In the enormous effort that will be needed to ensure a global recovery and build resilience, we need global rules to maintain stability and predictability.
We must complete the fisheries subsidies negotiations within the 2020 deadline set by the UN Sustainable Development Goals;
Secondly, an updated multilateral rulebook is needed to ensure that value chains remain functional and open, notably through enhanced transparency, services and investment facilitation measures and new rules on digital trade. Digital trade has proven to be a critical issue in the current crisis and its development would contribute to building resilience and crisis response in the
future. International rulemaking through the WTO on e-commerce cannot wait any longer;
Thirdly, renewed rules to address level playing field issues would contribute to fighting against unfair competitionand contribute to the diversification of global value chains. We will need to step up cooperation on the significant state support measures being taken now to ensure a return to market-based operations based on resilience, openness and fairness during the recovery to growth;
Fourthly, the sustainability agenda must play a prominent role in our reform efforts. Eliminating barriers to the trade of goods and services that help mitigate climate change would contribute to sustainable development and a green recovery,including in developing members and LDCs. As would improving policy coherence between the WTO and other international organizations on the trade, health and sustainability agendas.
And of course, to ensure the necessary certainty and predictability that will be needed, now more than ever for our economies to recover from the crisis, it is of particular importance that the impasse concerning Appellate Body appointments be resolved, including necessary reforms, so that we can restore a dispute settlement system that works for, and applies to, all WTO Members.
The EU is conscious that this is a very broad agenda for an organisation that was already facing a deep crisis before the pandemic. But this is the hand we have been dealt. The pandemic has made preservation and reform of the rules-based multilateral trading system even more urgent and important than before. The EU therefore welcomes the ministerial statement circulated by Switzerland on behalf of the “Friends of the System” that passes this message.
We need to urgently pursue our work on reforming the WTO, to ensure that it remains the bedrock of open markets and free trade and contributes to the recovery effort post-crisis.
I welcome that G20 Trade Ministers urged yesterday to promote the necessary reform of the WTO and provided guidance on market opening efforts, by calling to explore COVID-19 related WTO initiatives to promote open and more resilient supply chains and taking note of plurilateral work on e-commerce.
But the first step is more basic even than that: the WTO must resume its work, virtually and safely, but also urgently. The EU welcomes very much the holding of this virtual session and commends the Chairs of committees and negotiating groups for their efforts to find solutions to allow other bodies to meet safely. Members must urgently find pragmatic solutions for meetings to take place virtually and decisions to be taken in another form. As we do so we must recognise that that some Members will have capacity constraints and so prioritise accordingly. Most urgent and important is the operation of the Dispute Settlement Body (DSB). We must innovate as has been done in other international organizations.