Updated May 15, 2020
WTO: Ministerial Delay, COVID-19, and Ongoing Issues
Overview
May. Members are currently evaluating how negotiations
Due to the coronavirus pandemic (COVID-19), the World
and committee meetings should proceed virtually or in
Trade Organization (WTO) canceled its 12th Ministerial
person, and when and how to hold MC12.
Conference (MC12) planned for June 2020. The biennial
Select Ongoing Negotiations of U.S. Interest
meeting, which usually involves active U.S. participation,
Fisheries. Members had committed to finish negotiations
was widely anticipated as an action-forcing event for the
on fisheries subsidies at MC12, an achievement many view
WTO amid serious challenges facing the multilateral
as critical to upholding the WTO’s legitimacy. The chair
trading system. Some members had hoped key results for
attempted to continue talks to limit subsidies that contribute
ongoing negotiations could help bolster the WTO’s
to overcapacity and overfishing, but halted them after some
relevance. In addition, a dispute settlement (DS) crisis
parties voiced concerns about the virtual participation. The
continues, with the Appellate Body ceasing to operate in
U.S. has supported equal obligations across members, with
December 2019, and no consensus on solutions. Broader
minimal flexibilities for developing countries. A new U.S.
reforms of the institution also remain under active
executive order aims to increase enforcement and resources
discussion, including some U.S. proposals. While MC12
to combat illegal, unreported, and unregulated fishing and
and other meetings were suspended, members are
promote domestic seafood production.
attempting to continue some WTO operations virtually.
Members will also face selecting new leadership, as WTO
E-commerce. Members had extended the moratorium on
Director-General Azevêdo announced plans to step down in
customs duties on electronic transmissions until MC12, but
fall 2020, a year before his term’s end.
it is unclear if the extension will be sustained, given the
opposition of some developing countries. Separately, the
The WTO can play a unique role in coordinating global
United States and over 75 members are actively negotiating
trade responses, which could be critical in mitigating the
a plurilateral initiative on e-commerce. The United States
grim global economic and trade outlook in the wake of
seeks an ambitious, high standard digital trade agreement.
COVID-19. The WTO has committed to work with other
The parties had hoped to publish a consolidated text at
international organizations to minimize disruptions to cross-
MC12, but are instead holding webinars on specific digital
border trade and global supply chains—in particular those
issues to educate members and attract new participants.
central to combatting the virus—while safeguarding public
health concerns. It has sought to inform members of the
Agriculture. Some observers warned that MC12 would be
impacts on trade and encouraged them to notify the WTO
deemed a failure without some agreement on agricultural
of any trade-related measures taken in response to COVID-
issues. Talks have stalled in recent years, but members
19. The number of countries imposing trade restrictions,
continue to exchange views in writing on issues, including
including curbs on exports, has increased significantly since
public stockholding and special safeguard mechanisms for
the beginning of 2020, raising debate among analysts about
developing countries. Given renewed attention to lack of
the economic and policy rationales and impacts, plus
compliance with WTO notification requirements (e.g., on
questions about consistency with WTO rules. At the same
domestic support and export subsidies), some experts saw a
time, other countries have committed to trade openness.
transparency agreement as a feasible outcome for MC12.
Members of Congress have expressed support for ongoing
COVID-19 and WTO Reactions
WTO reform effort, sought clarification on the positions of
In the wake of COVID-19, the WTO Director-General
the Administration, and proposed trade-related legislation
emphasized, “Maintaining open trade and investment flows
in response to COVID-19. In May, some Members
will be critical to protect jobs, prevent supply chain
introduced joint resolutions to withdraw from the WTO.
breakdown, and ensure that vital products do not become
MC12 Delay and Implications
unaffordable for consumers.” In early April, the WTO
issued its trade forecast, estimating a plunge in global trade
After the declaration of COVID-19 as a pandemic,
in 2020, ranging from 13% to 32%. A recovery is expected
Kazakhstan, the host for the WTO’s MC12, cancelled the
in 2021, but the extent depends on the duration of the
planned meetings, offering to host them in June 2021.
pandemic and countries’ policy choices. For the latter, the
Following mixed results from the last ministerial in 2017,
WTO has emphasized the importance of transparency; to
the United States and other WTO members had hoped
date, many members have failed to notify new measures.
MC12 would mark a turning point to conclude some
negotiations. They also hoped to announce significant
WTO Agreements and Trade in Medical Products
progress on multiple initiatives, demonstrating the value of
Several WTO agreements are relevant to health-related
the WTO. MC12 was to serve as a critical forum for taking
policy, such as technical barriers to trade, sanitary and
stock of various WTO reform proposals (see below). Some
phytosanitary measures, services, and intellectual property
WTO activities continue virtually, including General
rights. Others guide implementation of policies, including
Council meetings, and some staff returned to offices in mid-
the WTO’s core principle of nondiscrimination and rules on
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WTO: Ministerial Delay, COVID-19, and Ongoing Issues
subsidies. Specific commitments have contributed to
Ongoing Developments
liberalized trade in medical products: (1) tariff negotiations
In addition to addressing the current crisis, WTO reform
during the Uruguay Round; (2) a plurilateral Agreement on
remains a key issue for the United States and other
Pharmaceutical Products, updated in 2011; and (3) the
members concerned with its institutional viability.
expanded Information Technology Agreement in 2015.
Appellate Body (AB) Reforms
On December 10, 2019, the AB lost its quorum to hear new
WTO negotiations and agreements have improved market
cases, following the U.S. blocking of new AB members and
access for medical products, but barriers remain. An April
the term expiration of two members, effectively limiting
2020 report by the WTO estimates $597 billion in annual
enforcement of decisions. Successive U.S. administrations
trade in critical medical products with limited availability
and some Members of Congress have long taken issue with
during the COVID-19 pandemic. For these products, the
AB decisions and practices. This stems from a view that the
average applied most favored nation tariff is 4.8% (Figure
AB exceeds its mandate by creating new obligations not
1). But for some, tariffs remain quite high, e.g., the average
specifically negotiated, ignoring mandatory deadlines for
tariff on hand soap is 17% and for some countries as high as
disposition of cases, making impermissible findings of fact,
65%. Tariffs on protective medical products range to 27%.
treating prior AB decisions as precedent, and opining on
Figure 1. Average Applied Tariff on Medical Goods
unrelated issues in its decisions, among other issues. Other
members have proposed various reforms, but the U.S. has
yet to specify the solutions that would resolve its concerns.
In May 2020, 16 WTO members, including the EU and
China, activated an ad hoc “multi-party interim appellate
appeals mechanism” as a temporary measure to arbitrate
disputes. This mechanism does not apply to cases involving
WTO members who have not joined, including the United
States, the largest complainant and respondent in WTO DS.
Institutional Reforms
Proposals for other reforms of WTO policies and
procedures have garnered intensive debate. Some solutions
appear to be gaining traction, while others remain
Source: WTO, Trade in Medical Goods in the Context of Tackling
controversial among members. Key U.S. priorities include:
COVID-19, April 3, 2020.
Reform of special and differential treatment (SDT).
The United States seeks to have more advanced
Countries have also reacted to the crisis with new trade
developing or emerging members forego the use of
measures, tracked by the WTO and Global Trade Alert. As
SDT. Brazil, Singapore, and South Korea committed to
of the end of April, 80 countries, including the U.S., have
relinquish SDT; China and India continue to claim it.
put temporary export restrictions on medical supplies,
Notification requirements. The United States has
equipment, and medicines. Some have restricted food
proposed that members who do not provide required
exports, despite no shortages. An April WTO report warned
transparent notification of key decisions, such as
of the policies’ long term costs in terms of lower supply and
subsidies, be subject to punitive measures (e.g.,
higher prices. Broadly, WTO agreements are flexible in
deeming violators “inactive members”).
permitting emergency measures related to national security
Nonmarket economies. Since May 2018, the United
or health, but require that they be targeted, temporary, and
transparent, and not “unnecessarily restrict trade.”
States, EU, and Japan have engaged in intermittent
discussions to push for expanded disciplines on
In May, the G-20 Trade Ministers committed to these same
subsidies and other practices of nonmarket economies.
values in a ministerial statement. Seven countries, led by
In January 2020, the three proposed to prohibit more
New Zealand and Singapore committed to “maintaining
types of industrial subsidies under the WTO Subsidies
open and connected supply chains.” 42 WTO members
Agreement and otherwise constrict use of subsidies.
pledged to remove emergency measures expeditiously. The
Recent Congressional Activity
WTO has emphasized use of WTO-consistent tools to
In May 2020, privileged resolutions to withdraw
address critical shortages, such as unilaterally eliminating
congressional approval for WTO participation were
tariffs or other taxes, expediting customs procedures, and
introduced in the House (H.J.Res. 89, Rep. DeFazio) and
using subsidies to generate production. It has urged careful
Senate (S.J.Res. 71, Sen. Hawley). The 1994 Uruguay
consideration of ripple effects of policies like export curbs,
Round Agreements Act provides for consideration of such a
as most major countries are both exporters and importers of
resolution every five years and may provide Members the
medical supplies. Many analysts point to more coordination
opportunity to debate the merits of continued WTO
in trade policy as critical. In the near term, like-minded
participation. In December 2019, the House Ways and
countries are considering principles for a COVID-19 trade
Means Committee reported H.Res. 746 (Rep. Kind) for the
response, and some advocate for a plurilateral agreement on
House to reaffirm its commitment to the WTO and press for
medical goods. New Zealand and Singapore recently agreed
reforms. For more, see CRS Report R45417, World Trade
to an “open plurilateral,” encouraging others to join.
Organization: Overview and Future Direction.
https://crsreports.congress.gov
WTO: Ministerial Delay, COVID-19, and Ongoing Issues
Rachel F. Fefer, Analyst in International Trade and
Finance
Cathleen D. Cimino-Isaacs, Analyst in International Trade
Ian F. Fergusson, Specialist in International Trade and
and Finance
Finance
IF11513
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