Updated March 31, 2021
WTO: Ministerial Delay, COVID-19, and Ongoing Issues
Overview
virtually. An informal ministerial was held virtually in
Due to the Coronavirus Disease 2019 (COVID-19)
January 2021 and members, including the United States,
pandemic, the World Trade Organization (WTO) postponed
expressed an urgent need to move forward with finalizing
its 12th Ministerial Conference (MC12) until November
the new DG selection and postponed MC12.
2021. The biennial meeting, which usually involves active
Select Ongoing Negotiations of U.S. Interest
U.S. participation, was widely anticipated as an action-
Fisheries. Members had committed to finish negotiations
forcing event for the WTO amid serious challenges facing
on fisheries subsidies by MC12, an achievement many view
the global trading system. Some members had hoped key
as critical to upholding the WTO’s legitimacy. The chair
results for ongoing negotiations could help bolster the
WTO’s relevance. In addition, a dispute settlement crisis
has continued talks virtually and issued revised
consolidated negotiated text for members to review and
continues, with the Appellate Body ceasing to operate in
debate. The United States had supported equal obligations
December 2019, and no consensus on solutions. Broader
across members to limit subsidies that contribute to
reforms of the institution also remain under active
overcapacity and overfishing, with minimal flexibilities that
discussion, including some U.S. proposals. While MC12
some developing countries have been demanding. The
and other meetings were suspended, members have
Biden Administration has not yet taken an official position.
attempted to continue some WTO operations virtually. The
new WTO Director-General (DG) is also getting settled into
E-commerce. Members extended the moratorium on
her new role. The post had been vacant since fall 2020,
customs duties on electronic transmissions until MC12, but
after the Trump Administration objected to Nigeria’s Ngozi
it is unclear if the extension will be sustained thereafter,
Okonjo-Iweala, the candidate who had received the
given some developing countries’ opposition. Separately,
majority of WTO member support. The Biden
the United States and over 80 members are negotiating a
Administration supported her candidacy, removing a major
plurilateral initiative on e-commerce. The co-conveners
obstacle to her official appointment on February 15, 2021.
noted progress on multiple issues and aim to deliver “clean”
text proposals on ten areas before summer. The United
The WTO can play a unique role in coordinating global
States seeks an ambitious, high-standard agreement.
trade responses, which could be critical in mitigating the
global economic and trade downturn in the wake of
Agriculture. Some observers warned that MC12 would be
COVID-19. The WTO has committed to work with other
deemed a failure without some deal on agricultural issues.
international organizations to minimize disruptions to cross-
Talks have stalled in recent years, but members continue to
border trade and global supply chains—in particular those
exchange views on issues, including public stockholding
central to combatting the virus—while safeguarding public
and special safeguard mechanisms for developing countries.
health concerns. It has sought to inform members of the
Given renewed attention to lack of compliance with WTO
impacts of the pandemic on trade and encouraged them to
notification requirements (e.g., on domestic support, export
notify the WTO of any trade-related measures taken in
subsidies), some experts see a transparency agreement as a
response to COVID-19. The number of trade restrictions,
feasible outcome for MC12. Members are also discussing
including curbs on exports, increased significantly during
exempting World Food Programme purchases for
2020, raising debate about the policies’ economic impacts
humanitarian purposes from export restrictions.
and consistency with WTO rules . At the same time, other
countries have since lifted the temporary restrictions and
COVID-19 and WTO Reactions
committed to trade openness.
In the wake of COVID-19, the WTO DG emphasized,
“Maintaining open trade and investment flows will be
Some Members of Congress have expressed support for
critical to protect jobs, prevent supply chain breakdown,
ongoing WTO reform efforts, sought clarification on the
and ensure that vital products do not become unaffordable
positions of the Administration, and proposed trade-related
for consumers.” The WTO’s latest forecast estimates an 8%
legislation in response to COVID-19.
rebound in global merchandise trade in 2021, after falling
MC12 Delay and Implications
5% in 2020—a smaller decline than earlier estimates. While
After the declaration of COVID-19 as a pandemic,
prospects for the recovery in global trade have improved,
Kazakhstan, the host for the WTO’s MC12, cancelled the
the pandemic continues to pose the greatest threat to the
outlook.
planned June 2020 meetings. Following mixed results from
the last ministerial in 2017, the United States and other
WTO Agreements and Trade in Medical Products
WTO members look to MC12 as a turning point to
Several WTO agreements are relevant to health-related
conclude some negotiations and announce significant
policy, such as technical barriers to trade, sanitary and
progress on multiple initiatives, demonstrating the value of
phytosanitary measures, services, and intellectual property
the WTO. The delayed MC12 may serve as a critical forum
rights (IPR). Others guide implementation of policies,
for taking stock of various WTO reform proposals (see
including the WTO’s core principle of nondiscrimination
below). Some WTO activities and negotiations continue
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WTO: Ministerial Delay, COVID-19, and Ongoing Issues
and rules on subsidies. Specific commitments contributed to
licenses are authorized under certain conditions under the
liberalized trade in medical products: (1) tariff negotiations
WTO’s Agreement on Trade-related Aspects of Intellectual
during the Uruguay Round; (2) a plurilateral Agreement on
Property Rights (TRIPS). A proposal by India and South
Pharmaceutical Products, updated in 2011; and (3) the
Africa for a temporary waiver of IPR for all coronavirus-
expanded Information Technology Agreement in 2015.
related medical products, vaccines, and treatments has yet
to achieve consensus among WTO members, being opposed
WTO negotiations and agreements have improved market
by members with research oriented pharmaceutical
access for medical products, but barriers remain. An April
industries, to date including the United States. While
2020 report by the WTO estimated $597 billion in annual
individual countries may resort to issuing compulsory
trade in critical medical products with limited availability
licenses, successful reproduction of novel and complex
during the COVID-19 pandemic. For these products, the
generic vaccines may be difficult.
average applied most favored nation tariff is 4.8% (Figure
1). For others, tariffs remain quite high (e.g., the average
Ongoing Developments
tariff on hand soap is 17% and for some countries as high as
In addition to addressing the current crisis, WTO reform
65%). Tariffs on protective medical products range to 27%.
remains a key issue for the United States and other
Figure 1. Average Applied Tariff on Medical Goods
members concerned with its institutional viability.
Appellate Body (AB) Reforms
On December 10, 2019, the AB lost its quorum to hear new
cases, following the U.S. blocking of new AB members and
the term expiration of the last members, effectively limiting
enforcement of first level DS panel decisions. Successive
U.S. administrations and some Members of Congress have
taken issue with AB decisions and practices. This stems
from a view that the AB exceeds its mandate by creating
new obligations not specifically negotiated, ignoring
mandatory deadlines for disposition of cases, making
impermissible findings of fact, treating prior AB decisions
as precedent, and opining on unrelated issues in decisions,
among other issues. In the meantime, 22 WTO members,
Source: WTO, Trade in Medical Goods in the Context of Tackling
including the EU and China, initiated an interim appellate
COVID-19, April 3, 2020.
mechanism to hear appeals among themselves.
Countries have also reacted to the crisis with new trade
Institutional Reforms
measures. According to Global Trade Alert, as of late 2020,
Proposals for reform of other WTO policies and procedures
more than 100 export restrictions on medical goods and
have garnered intensive debate. Some solutions have gained
medicines remained in force. At the same time, more than
support, while others remain controversial among members.
100 countries implemented reforms to ease imports of such
Key Trump Administration priorities included
goods. Broadly, WTO agreements are flexible in permitting
Reform of special and differential treatment (SDT).
emergency measures related to national security or health,
The United States seeks to have more advanced
but require that they be targeted, temporary, and
developing or emerging members forego the use of
transparent, and not “unnecessarily restrict trade.” In May
SDT. Brazil, Singapore, and South Korea committed to
2020, the G-20 Trade Ministers committed to these same
relinquish SDT; China and India continue to claim it.
values in a ministerial statement. Seven countries, led by
New Zealand and Singapore committed to “maintaining
Notification requirements. The United States has
open and connected supply chains.”
proposed that members who do not provide required
42 WTO members also
transparent notification of key decisions, such as
pledged to remove emergency measures expeditiously. The
subsidies, be subject to punitive measures.
WTO has emphasized use of WTO-consistent tools to
Nonmarket economies. Since 2018, the United States,
address critical shortages, such as unilaterally eliminating
EU, and Japan had been engaged in intermittent talks
tariffs, expediting customs procedures, and subsidizing
to push for expanded WTO disciplines on subsidies
production. It has cautioned against the long-term costs and
and to address practices of nonmarket economies.
ripple effects of export curbs, as most major countries are
both exporters and importers of medical supplies.
The Biden Administration has yet to weigh in on specific
proposals, but has pledged to reengage and be a leader in
Many analysts view more coordination in trade policy as
the WTO, and work constructively towards reforms. For
critical. Some countries are considering principles for a
more analysis, see CRS Report R45417, World Trade
COVID-19 trade response and advocate for a plurilateral
Organization: Overview and Future Direction.
agreement on medical goods. In December 2020, the
Ottawa Group of 13 WTO members introduced a “trade and
Cathleen D. Cimino-Isaacs, Analyst in International Trade
health” initiative calling for cooperation among WTO
and Finance
members and a range of actions relating to exports, trade
Rachel F. Fefer, Analyst in International Trade and
facilitation, technical regulations, tariffs, and transparency.
Finance
Delay in production and distribution of COVID-19 vaccines
Ian F. Fergusson, Specialist in International Trade and
has led to calls by some countries to issue compulsory
Finance
licenses to manufacture generic versions. Compulsory
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WTO: Ministerial Delay, COVID-19, and Ongoing Issues
IF11513
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