- Office of the United States Trade Representative Statement on the Director General of the World Trade Organization
- Participants in domestic regulation negotiations for services commit to maintain momentum
- Investment decline in productive assets spells trouble for poorer nations
- WTO DDGs call for heightened cooperation on vaccine availability
The United States takes note of decision by the Republic of Korea’s Trade Minister Yoo Myung-hee to withdraw her candidacy for Director General of the WTO.
The Biden-Harris Administration is pleased to express its strong support for the candidacy of Dr. Ngozi Okonjo-Iweala as the next Director General of the WTO. Dr. Okonjo-Iweala brings a wealth of knowledge in economics and international diplomacy from her 25 years with the World Bank and two terms as Nigerian Finance Minister. She is widely respected for her effective leadership and has proven experience managing a large international organization with a diverse membership.
The Biden-Harris Administration also congratulates Minister Yoo Myung-hee on her strong campaign for this position. She is a trailblazer as the Republic of Korea’s first female trade minister and the first candidate from Korea to advance this far in the Director General selection process. The United States respects her decision to withdraw her candidacy from the Director General race to help facilitate a consensus decision at the WTO.
It is particularly important to underscore that two highly qualified women made it to the final round of consideration for the position of WTO Director General – the first time that any woman has made it to this stage in the history of the institution.
The United States stands ready to engage in the next phase of the WTO process for reaching a consensus decision on the WTO Director General. The Biden-Harris Administration looks forward to working with a new WTO Director General to find paths forward to achieve necessary substantive and procedural reform of the WTO.
Participants in the negotiations on services domestic regulation reaffirmed on 4 February their commitment to reaching a “meaningful” outcome by the 12th WTO Ministerial Conference (MC12) when they met for the first time in 2021. Noting participants’ intention to “maintain momentum”, the Chair, Jaime Coghi of Costa Rica, reported the shared view that an outcome by MC12, due to take place this year, was “viable”.
Kazakhstan said its draft schedule submitted earlier this year indicated how the proposed disciplines would be incorporated in its WTO commitments. In addition to playing an important role for services industries and businesses, Kazakhstan noted, the disciplines seek to create a predictable business climate and transparent procedures for trade in services. A total of 56 other participants have submitted draft schedules.
In an effort to streamline procedures required for services suppliers to operate, remove red tape and enhance transparency and predictability of regulatory frameworks, the negotiations aim to reduce the costs of doing business and facilitate businesses’ participation in international services trade.
The idea of holding an information exchange on the implementation of domestic regulation disciplines was widely welcomed at the meeting. Delegations’ experiences at both the national and regional levels could be explored.
A group of 63 WTO members — both developing and developed countries — is currently taking part in the negotiations, accounting for over 70% of world services trade. At the meeting, participants reiterated the importance of reaching out to other WTO members to expand the number of participants and secure wider coverage for the final outcome. Some delegations also called for engaging ministers by mid- 2021 to resolve outstanding issues and for defining a clear path to help conclude the negotiations by MC12.
A “far advanced” negotiating text was circulated by the Chair, Jaime Coghi Arias of Costa Rica, in December, capturing the progress made in 2020 in developing disciplines applying to licensing and qualification requirements and procedures, as well as technical standards for trade in services. The text contains flexibilities to help governments implement the measures domestically and regulate according to their national policy objectives.
Watch the video message the chair delivered after the meeting here.
Background information: Ministers from 59 WTO members launched negotiations at the 11th Ministerial Conference held in December 2017 in Buenos Aires. In May 2019, ministers meeting on the side lines of the Organization for Economic Cooperation and Development meetings confirmed their commitment to deliver a meaningful outcome by the 12th Ministerial Conference. The meetings are member-driven, transparent and open to all WTO members.
Although developing countries attracted a record share of global foreign direct investment in 2020, finance for infrastructure and productive sectors fell significantly, weakening their COVID-19 recovery prospects.
Foreign direct investment (FDI) flows to developing economies have shown relative resilience to the COVID-19 crisis, falling by just 12% in 2020 compared with the staggering 69% collapse recorded by richer economies.
Overall, developing countries attracted a record 72% of global FDI last year, according to an UNCTAD Investment Trends Monitor published on 24 January.
But the steep decline in greenfield announcements and international project finance in Africa, Asia and Latin America and the Caribbean is a cause for major concern.
“These investment types are crucial for productive capacity and infrastructure development and thus for sustainable recovery prospects,” says James Zhan, UNCTAD’s director of investment and enterprise development.
UNCTAD defines productive capacities as the productive resources, entrepreneurial capabilities and production linkages that together determine the capacity of a country to produce goods and services and enable it to grow and develop.
“Without investment in the productive sectors of the economy, developing countries will struggle to rebuild from the effects of the pandemic,” Mr. Zhan said.
Limited capacity to respond
Globally, announced greenfield projects – when a company plans to invest in new production facilities in a foreign country – declined by 35% in 2020 to an estimated $547 billion.
According to the report, the decline was even steeper in developing economies, dropping 63% in Africa and 51% in Latin America and the Caribbean. Even developing economies in Asia – the group that has weathered the coronavirus-induced FDI storm the best – saw a 38% drop in greenfield announcements.
Likewise, global cross-border project finance deals, an important source of investment in infrastructure like ports and dams, were weak up to the third quarter of 2020, before a flurry of new project announcements in the final months of the year helped dampen the overall decline to 2%.
But the report highlights that most of these projects were part of COVID-19 economic support packages in developed countries.
The far more limited capacity of poorer countries to roll out COVID-19 packages to stimulate investment in infrastructure means that the big drops in project finance deals were registered in developing economies.
In Africa, for example, such investment dropped by 40% in 2020. The continent is home to most of the world’s least developed countries.
The slide isn’t over
Even more worrying, the report says, is that the biggest drops in international project finance in developing economies occurred in the second half of the year, which is contrary to global trends.
“The data suggests that the slide in developing economies is not yet over,” Mr. Zhan says.
“It sends a worrying signal that project finance in 2021 will be skewed towards developed economies, and that any increase in FDI flows is more likely to come from cross-border mergers and acquisitions than from new investment in productive assets.”
According to the UNCTAD report, announced cross-border M&A deals dropped only by 10% in 2020, rebounding in the second half of the year thanks to technology and healthcare deals.
The WTO’s four Deputy Directors-General — Yonov Frederick Agah, Karl Brauner, Alan Wolff and Yi Xiaozhun — urged members on 1 February to step up cooperation in order to ensure worldwide access to vaccines to fight the COVID-19 pandemic. They issued the following statement:
“The pandemic is a global problem. This challenge calls for heightened international cooperation, including ensuring the global availability of vaccines. Recalling the joint statement by the Directors-General of the WHO and WTO on 20 April 2020, we call upon Members to work together towards making vaccines available to all. Moreover, the war against the pandemic can only be won when universal coverage in vaccination is achieved.”
The 20 April 2020 joint statement from the WHO and WTO Directors-General is available here: https://www.wto.org/english/news_e/news20_e/igo_14apr20_e.htm
The WTO maintains a dedicated page on the website to provide up-to-the-minute trade-related information with regards to COVID-19, including relevant notifications from WTO members, the impact the virus has had on exports and imports, and how WTO activities have been affected by the pandemic.