Digest Content
- Barometer points to services trade rebound in short run, long term outlook less clear
- Steady progress in the negotiations for an investment facilitation agreement
- Members discuss TRIPS waiver, LDC transition period and green tech role for small business
- Members of Informal Working Group on Trade and Gender agree on work plan for 2021
Barometer points to services trade rebound in short run, long term outlook less clear
After falling sharply during the global pandemic, world services trade appears to be in a recovery phase, according to the WTO’s Services Trade Barometer, which has recently risen firmly above trend. However, continued weakness in some sectors and an uneven distribution of COVID-19 vaccines cast some doubt on the durability of the recovery.
The services trade barometer is designed to highlight turning points and changing patterns in world services trade. The latest index reading of 104.7 is the strongest on record (in a series going back to 2000), well above the baseline value of 100 that denotes growth in line with recent trends. The new index reading is also significantly above the low point of 91.2 for the month of March 2020, at the peak of lockdown measures associated with the pandemic. The strength of the rebound suggests that growth in world services trade accelerated in the fourth quarter of 2020 after bottoming out in the second quarter and picking up only slightly in the third. Momentum may not be sustained in the first quarter of 2021, however, as lockdown measures in response to the second wave of COVID-19 infections have continued to weigh on growth and employment in major economies since the start of the year.
The impact of the second wave is reflected in the barometer’s component indices: persistent weakness in air transport (81.0) and a downturn in information and communications technology (ICT) services (93.7). International passenger flights, which will probably remain weak at least into the second quarter, could see a partial recovery in the third quarter if governments succeed in vaccinating large numbers of people against COVID-19. The dip in the ICT index may also turn out to be temporary, as it appears to have been driven by stricter lockdowns in the US weighing on some computer services, while telecom services have remained steady.
In contrast, other component indices have all risen above trend, including the global services Purchasing Managers’ Index (105.3), container shipping (104.3) and construction (106.3). The financial services index (119.9) had an especially strong showing, reflecting a rise in international financial transactions.
Steady progress in the negotiations for an investment facilitation agreement
The participants in the negotiations for an agreement on investment facilitation for development held another negotiating meeting on 8-9 March 2021, which saw steady progress and a high level of engagement in the discussions. The progress laid the ground for the coordinator, Ambassador Mathias Francke of Chile, to reiterate his intention to circulate around Easter time a streamlined text compiling all the revised draft inputs put forward during the previous rounds of negotiations as well as the different proposals submitted by WTO members.
Over two days of work, members continued the negotiations on the future agreement based on the latest version of the informal consolidated text, and discussed the new elements of the revised draft text circulated by the coordinator. The “firewall” provisions aimed at insulating the future agreement from international investment agreements were also addressed as well as the concept of “authorization”, which is relevant to different sections of the future agreement.
Participants discussed the establishment of a “business obstacle alert mechanism” to resolve problems faced by investors and addressed the issue of “responsible business conduct” based on text proposals from different members. In addition, the discussions addressed measures against corruption based on text proposals on this subject submitted by several members. It was highlighted that provisions to combat corruption would contribute to creating a transparent, efficient and predictable environment for facilitating foreign direct investment, and thus contribute to sustainable investment and development.
Moreover, participants engaged in a discussion on a revised proposal on domestic supplier databases, with proposals on general exceptions, security exceptions and financial exceptions also discussed. The coordinator will prepare a revised text taking into consideration members’ written proposals and detailed discussions at the meeting.
The discussion of the revised draft text focused on three newly added provisions regarding the single information portal, authorization fees applying to financial services, and focal points. On the “firewall” provisions, participants worked on the basis of the text contribution of the “Discussion group on scope”. Lastly, participants engaged in discussion on the concept of “authorization” based on a series of guiding questions.
Members discuss TRIPS waiver, LDC transition period and green tech role for small business
Members continued discussions on the role of intellectual property amid a pandemic and how the WTO and other stakeholders can engage to ensure secure and rapid access to vaccines and other medical products needed to combat COVID-19. At a meeting of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) on 10-11 March 2021, members also considered the continued exemption of least-developed countries (LDCs) from TRIPS obligations and broadened their debate on the relation between IP and innovation to cover small business and green technologies.
Continuing their discussions held since October 2020, WTO members addressed the proposal (IP/C/W/669) submitted by South Africa and India calling for a waiver for all members of certain provisions of the TRIPS Agreement in relation to the “prevention, containment or treatment” of COVID-19. According to proponents, the objective is to avoid barriers to the timely access to affordable medical products, including vaccines and medicines, and to the scaling-up of manufacturing and supply of essential medical products.
They argued that existing vaccine manufacturing capacities in the developing world remained unutilized because of IP barriers, and hence insufficient amounts of vaccines were being produced to end the pandemic. In their view, the waiver proposal represents an open and expedited global solution to allow uninterrupted collaboration in the production and supply of health products and technologies required for an effective COVID-19 response.
Citing the role of IP as an incentive for innovation to fight the current and future pandemics, other delegations welcomed further engagement on the questions they had raised with regards to the proposal. They urged an evidence-based discussion on any concrete examples where IP would pose a barrier to manufacturing and access to vaccines that could not be addressed by existing TRIPS flexibilities.
LDC transition period
Members also discussed a request by the LDCs Group (IP/C/W/668) to once again extend the transition period for LDC members under Article 66.1 of the TRIPS Agreement. Under this provision, LDCs are given an extended transition period to apply provisions of the TRIPS Agreement in recognition of their special requirements, their economic, financial and administrative constraints. The transition period has been extended twice and is currently set to expire on 1 July 2021.
Delegations were in principle favourable to the extension. Some members expressed full support for the extension as requested, while others expressed a preference for extending the period for a limited number of years.
MSMEs and green technologies
Continuing the theme of IP and innovation regularly featuring on the TRIPS Council agenda since 2012, the Friends of IP and Innovation (Australia, Canada, Chile, the European Union, Japan, Singapore, Switzerland, Chinese Taipei, the United Kingdom and the United States) proposed to discuss the topic of “Making MSMEs competitive in green tech” (IP/C/W/675).
They underlined that MSMEs account for more than 50 per cent of employment and can constitute core engines of innovation and growth. Therefore, the role of IPRs to enhance their competitiveness should be looked at closely.
LDCs and developing countries agreed on the importance of discussing this issue, however, they also highlighted the lack of a viable technological base and stressed the need to benefit from more effective technology transfer.
Members of Informal Working Group on Trade and Gender agree on work plan for 2021
Members adopted a 2021 work plan to intensify efforts to increase women’s empowerment through trade at the 26 February meeting of the Informal Working Group on Trade and Gender. El Salvador Ambassador Ana Patricia Benedetti Zelaya was appointed as the third co-chair of the Informal Working Group at the meeting.
Members agreed to Canada’s proposal for the work plan, which outlines activities aligned with the four key elements that the Informal Working Group intends to focus on: reviewing gender-related analytical work; experience sharing on increasing the participation of women in trade; considering the concept and scope for a “gender lens” and how it could apply to the work of the WTO; and supporting the WTO Aid for Trade work programme.
The group was established in September 2020 (WT/L/1095/Rev.1) as the next phase of an initiative launched at the 11th Ministerial Conference in 2017 in Buenos Aires, where the “Joint Declaration on Trade and Women’s Economic Empowerment” was signed. Currently 127 members and observers support the Declaration.
A number of members at the meeting said time could be spent later in the year to draft a declaration on trade and gender for the 12th Ministerial Conference, which will take place in the week of 29 November in Geneva. Several members suggested additions to the work plan as well, which Canada said it will incorporate in a revised document.
Botswana Ambassador Athaliah Lesiba Molokomme, one of the Informal Working Group’s co-chairs, noted that the group has agreed to proceed on the basis of the work plan with the suggested improvements. Iceland Ambassador Harald Aspelund is also a co-chair along with Ambassador Benedetti Zelaya, who was appointed at the meeting.
At this meeting, members addressed one of the activities identified in the work plan by hearing and discussing a presentation by the WTO Secretariat and the World Bank of their joint report titled “Women and Trade: The role of trade in promoting gender equality.” Several members also gave presentations on their national experiences with trade and gender policies.