The MC12 Ministerial Outcome Document and the work on WTO reform

MC12 set in motion a ‘WTO reform’ process that could fundamentally reshape the organisation – but will it be for the better or worse?

Kinda Mohamadieh

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THE Ministerial Outcome Document (what is also referred to as Ministerial Declaration) embodies a political mandate adopted by the highest decision-making body of the WTO that provides guidance for the negotiations and the future work of the organisation. The latest Ministerial Declaration before MC12 was that delivered at MC10, held in Nairobi in 2015, given that MC11 in Buenos Aires in 2017 did not result in a Ministerial Declaration. The document resulting from MC12 replaces the Nairobi Ministerial Declaration in being the latest guidance by the Membership for the future work of the WTO.

The most striking features of the MC12 Ministerial Outcome Document

One of the most striking features of the MC12 Ministerial Outcome Document is the lack of any reference to the Doha mandate and its development agenda.¹  This is unlike the Nairobi Ministerial Declaration, which included several references to development and the Doha mandate. Since the Doha Ministerial Conference in 2001, subsequent Ministerial Declarations and General Council Decisions had reaffirmed the Doha mandate. In the run-up to the Nairobi Ministerial conference, developing countries had taken a consistent position calling for the reaffirmation of the Doha Development Agenda. The Nairobi Declaration provided, for example, that ‘there remains a strong commitment of all Members to advance negotiations on the remaining Doha issues…’ and that ‘any decision to launch negotiations multilaterally on … [new] issues would need to be agreed by all Members’.² 

Those who want to argue that the Doha mandate has lapsed might see in the lack of references to development and the Doha mandate in the MC12 Ministerial Outcome Document a point to support their arguments.³ That would require the attention of developing countries, which would need to exert more political and negotiating effort to reconfirm the commitment of the WTO to issues and mandates of concern to them that stem from the 2001 Doha negotiations mandate.

Developing countries and least developed countries (LDCs) did however succeed in defending a paragraph in the MC12 Ministerial Outcome Document that reaffirms ‘the provisions of special and differential treatment for developing country Members and LDCs as an integral part of the WTO and its agreements’ and that captures wording from the Doha mandate that requires that ‘special and differential treatment in WTO agreements should be precise, effective and operational’.⁴ 

Special and differential treatment (S&DT) is a fundamental pillar of the international trade rules and an integral part of all WTO agreements. It was central to the original bargain that enabled the establishment of the WTO. The COVID-19-induced crises further highlighted that S&DT is essential for developing countries if they are to retain policy space to develop key sectors and industries and deal with the current and future crises.

Since 2001, developing countries have tried tirelessly to fulfil the Doha mandate pertaining to reviewing S&DT provisions to make them precise, effective and operational.⁵  Organised in the Group of 90, which is comprised of the Organisation of African, Caribbean and Pacific States, the African Group and the group of LDCs, they had submitted and resubmitted their proposal to strengthen selected S&DT provisions in various WTO agreements, which include elements related to transfer of technology, trade-related investment measures, technical barriers to trade, sanitary and phytosanitary measures, customs valuation, subsidies and countervailing measures, and the accession of LDCs to the WTO. However, this process has been continually undermined by developed countries, either by not engaging in the negotiations or through watering down the proposed language to the point that it would be of no value and certainly would not fulfil the Doha mandate. 

The MC12 Ministerial Outcome Document further rolls down any possible deliverables on this mandate. The agreed language ‘instruct[s] officials to continue to work on improving the application of special and differential treatment in the CTD SS [WTO Committee on Trade and Development meeting in special session] and other relevant venues in the WTO, as agreed and report on progress to the General Council before MC13’.⁶ Thus, even MC13 might be limited to mere reporting, rather than taking an operational decision, regarding the S&DT rules.

Paragraph 3 of the MC12 Ministerial Declaration on WTO reform

Paragraph 3 of the Ministerial Outcome Document sets a mandate to ‘work towards necessary reform of the WTO … to improve all its functions’. It was agreed that ‘[t]he General Council and its subsidiary bodies will conduct the work, review progress, and consider decisions, as appropriate, to be submitted to the next Ministerial Conference’. It was also agreed that ‘[t]he work shall be Member-driven, open, transparent, inclusive, and must address the interests of all Members, including development issues’.⁷  Paragraph 3 is complemented by another paragraph, under which Ministers ‘commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024’ (paragraph 4 of the Ministerial Outcome Document).

The negotiations on paragraph 3 were mainly held in a small-group configuration before and during the days of the Ministerial Conference. This meant that most of the WTO Members were not present and did not take part in these negotiations. The main contention in the negotiations was over where the WTO reform process was to be undertaken. In the run-up towards MC12, the way of handling this contentious paragraph was problematic, because the Chair of the General Council had presented his own formulation of this paragraph a few days before the conference, which sidelined propositions that several developing countries had put forward. Upon the objection of a number of developing countries, particularly India, the Chair adjusted his approach and raised to the Ministerial a paragraph that included two brackets (indicating lack of agreement) that read ‘[The General Council will oversee the work] [The General Council and its subsidiary bodies will conduct the work]’.

Developing countries were insisting that this process, important as it is, should be undertaken in the General Council, which would allow for a democratic and inclusive process in which each and every Member will have the chance to participate. Some developed countries suggested that the process should be undertaken in different configurations besides the General Council and its subsidiary bodies.

The paragraph that was eventually adopted emphasises the centrality of the General Council’s role in conducting this mandate, by providing that ‘[t]he General Council and its subsidiary bodies will conduct the work, review progress, and consider decisions, as appropriate, to be submitted to the next Ministerial Conference’.⁸  However, the ways to operationalise this mandate are not yet clear. The post-MC12 period will be crucial in determining the procedural steps to handle this mandate, the direction in which the debate on WTO reform will unfold, and what it will potentially mean for the future of the WTO. The collective inputs from developing countries and LDCs in this regard will be crucial.

The safeguards mentioned in paragraph 3, including that the reform process should be Member-driven, open, transparent, inclusive, and must address the interests of all Members, ought to be further substantiated and clarified. The process ought to allow developing countries and LDCs the opportunity to keep a comprehensive understanding on how the different elements to be considered under ‘WTO reform’ will be evolving. Furthermore, the scope of the ‘reforms’ to be addressed ought to be clarified. Paragraph 3 provides that WTO Members ‘commit to work towards necessary reform of the WTO’ (emphasis added), which requires Members to identify and agree to what reforms are necessary, thus filtering out those on which there is no consensus among all Members on their necessity.

The contention over ‘WTO reform’ and what it could mean for the future of the WTO

‘WTO reform’ was one of the most contentious issues in the run-up towards MC12 and remained so throughout the deliberations that were undertaken during the days of the ministerial meeting. It is contentious because of its systemic implications on the future of the WTO and because of the significant divergences between what developed-country Members are proposing and what developing countries understand reform should encompass.

Developed countries, among which the US and the EU are most vocal, have repeatedly pushed under the guise of ‘WTO reform’ new approaches on special and differential treatment that will eventually limit the availability of these flexibilities to developing countries and LDCs. They have also been pushing new approaches to decision-making pertaining to launching negotiations and accepting the outcomes of negotiations at the WTO; these approaches seek to normalise plurilateral negotiating arrangements (which involve only a subset of the Membership) rather than strengthen the WTO as a body for multilateral negotiations. They also seek to inject into the WTO agenda new issues, such as rules on industrial subsidies, that will further constrain the policy tools available to developing countries. Further, developed countries seek to extend the WTO monitoring mechanisms in a way that would put further pressure on developing countries in implementing their trade policies, and to open up more space for big business in the WTO under the umbrella of ‘multi-stakeholderism’.

It is worth noting here that in the MC12 Ministerial Outcome Document, WTO Members ‘recognize the importance of strengthened collaboration and cooperation with other intergovernmental organizations and other relevant stakeholders that have responsibilities related to those of the WTO, in accordance with the rules and principles of the WTO...’ (paragraph 12 of Ministerial Outcome Document, emphasis added). The term ‘relevant stakeholders’ is new to WTO rules. It is not a term used in existing WTO agreements and so it is unclear what exactly it refers to. For example, Article V of the Marrakesh Agreement Establishing the WTO refers to cooperation with other ‘intergovernmental organizations’ and ‘non-governmental organizations concerned with matters related to those of the WTO’. It is crucial that these new terms do not create an opening to increase the influence of big business on WTO processes and decision-making, which could eventually come to undermine the Member-driven nature of the WTO. For these reasons, it is important that developing countries and LDCs seek to clarify the boundaries of this terminology pertaining to ‘stakeholders’ and what it reflects, and to stress safeguards against conflicts of interest that could emerge when businesses that have vested commercial interests in international trade come to deepen their influence on the WTO negotiations.

The WTO Secretariat released a brief note before MC12 stating that the general concerns covered under WTO reform are ‘the challenges WTO members face in initiating, negotiating and concluding trade agreements, both for outstanding issues as well as for new issues’, ‘the need to strengthen the work of the WTO's regular bodies and committees as well as strengthen notification and transparency disciplines under existing agreements’, ‘the question of whether, and to what extent, the WTO’s more advanced emerging economies should take on greater obligations under the WTO agreements, and whether existing special and differential treatment provisions for developing and least developed countries are sufficient or effective’ and ‘improvements in the functioning of the WTO’s dispute settlement system and overcoming the four-year impasse on the appointment of new Appellate Body members’.⁹   This summary seems inclined to capture the point of view of developed countries that are active in pushing a certain understanding of ‘WTO reform’ rather than being an objective summary that also captures the views of developing countries reiterated in multiple submissions to the WTO.

Developing countries have for long stressed that central to any reform agenda at the WTO is the need to review and rebalance existing WTO rules, in order to address the implementation challenges that developing countries and LDCs have been facing and to strengthen and improve operational special and differential treatment.¹⁰ 

A number of developing countries articulated a collective stand on WTO reform in their submission entitled ‘Strengthening the WTO to promote development and inclusivity’.¹¹  In this submission, they stressed the imbalances in the WTO rules that need to be corrected as part of WTO reform, and stressed that ‘“WTO reform” does not mean accepting either inherited inequities or new proposals that would worsen imbalances’.

In regard to the negotiating function of the WTO, they stressed that WTO negotiations are ‘negotiations concerning multilateral trade relations as decided by the Ministerial Conference’ and are underpinned by ‘the core principles of the Multilateral Trading System’, ‘the Special and Differential Treatment architecture’ and ‘the central role of development’. In regard to the crisis of the dispute settlement function of the WTO, the submission stressed that ‘[a]bandoning the AB [Appellate Body] will fragment the dispute settlement system and will have a negative impact on the balance of rights and obligations that have been carefully negotiated in the DSU [Dispute Settlement Understanding]’. The submission added that ‘a two-stage dispute settlement system is essential to ensure security and predictability of the multilateral trading system, including prompt, efficient and effective resolution of disputes to the benefit of all Members’ and that ‘[t]here is also a need to reflect on the structural imbalances underlying the dispute settlement system, and the challenges faced by developing countries in accessing the dispute settlement system’. In relation to the monitoring function of the WTO, the submission noted the importance of ‘[r]eaffirming existing commitments and not adding more obligations in the areas of transparency’ and stressed that ‘[t]he WTO must also allow for different economic models rather than push for one form or another’.

Furthermore, a major group of developing countries including Members of the African Group, India, Pakistan and Sri Lanka released a ministerial statement during the days of MC12¹²  in which they underlined ‘institutional challenges that the WTO is facing, including the imbalances in the rules that have impacted Members, particularly developing countries, including least developed countries, from effectively shaping rules, or influencing decision-making in the WTO’.¹³  For this group of developing countries, ‘the review shall consider measures to facilitate the effective, full, and inclusive participation of developing countries, including least developed countries, in the multilateral trading system and its decision-making processes, and rebalance the inequitable trade rules from the Uruguay Round. It shall also safeguard the necessary policy space needed for developing countries for their structural transformation, industrialization and economic recovery’.¹⁴  The group also stressed that ‘the review shall be consistent with the principles and objectives of [the Marrakesh Agreement Establishing the World Trade Organization] and its multilateral trade agreements’.¹⁵

The way forward in deciphering WTO reform

It is important to read what was agreed in MC12 in light of, and together with, the developments since the earlier two Ministerial Conferences held in Nairobi in 2015 and in Buenos Aires in 2017. Back then, the developed countries succeeded in pushing back on the existing negotiation mandates of interest to developing countries, although they did not succeed in fully killing the Doha Round. They also commenced an intensive push towards illegally expanding plurilateral approaches to defining issues of negotiations and to changing WTO rules. Some developed countries have attempted an assault on special and differential treatment, which is a central pillar of the multilateral trading system and a right for developing countries and LDCs. What could unfold in the context of pursuing ‘WTO reform’ could further serve these attempts.

In light of the above, MC12 could go down in the history of the WTO as the ministerial meeting that opened the door to reshaping the multilateral trade institution and its functions. The mandate that WTO Members accepted through signing off on paragraph 3 of the MC12 Ministerial Outcome Document could be the basis for such a fundamental change. In effect, what WTO Members did through paragraph 3 is open the field for direct engagement over how the WTO will handle its functions in the future.

Developing countries and LDCs face the collective challenge of ensuring that this process does not circumscribe the fundamental rules of decision-making that the WTO was built around in order to remedy the major deficiencies that characterised the GATT (General Agreement on Tariffs and Trade) system that preceded it. Otherwise, this process of seeking ‘WTO reform’ could lead to reinventing the WTO as a power-based rather than rules-based organisation, the result of which will be to grab space away from developing countries and their development issues in order to facilitate a corporate power grab of the WTO.                   

Endnotes

1    https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm

2    https://www.wto.org/english/thewto_e/minist_e/mc10_e/mindecision_e.htm

3    See for example: Shawn Donnan (2015), ‘Trade talks lead to “death of Doha and birth of new WTO”’, Financial Times. Available at https://www.ft.com/content/97e8525e-a740-11e5-9700-2b669a5aeb83

4    See para. 2 of MC12 Ministerial Outcome Document (WTO document WT/MIN(22)/24 – WT/L/1135), available at https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN22/24.pdf&Open=True

5    See para. 44 of Doha Ministerial Declaration.

6    See para. 2 of WT/MIN(22)/24.

7    See para. 3 of WT/MIN(22)/24.

8    Para. 3 of WT/MIN(22)/24. Para. 3 also provides a footnote that reads as follows: ‘For greater certainty, in this context, this does not prevent groupings of WTO Members from meeting to discuss relevant matters or making submissions for consideration by the General Council or its subsidiary bodies.’

9    https://www.wto.org/english/thewto_e/minist_e/mc12_e/briefing_notes_e/bfwtoreform_e.htm

10  See a collective submission by the group of African States at the WTO, India and Cuba (WT/GC/W/778/Rev.3) of December 2020.

11  WT/GC/W/778/Rev.5, Communication from African Group, Cuba, India and Pakistan.

12  WT/MIN(22)/18 – WT/GC/250 (14 June 2022), Ministerial Statement on WTO Reform, circulated at the request of the African Group (Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cabo Verde, Central African Republic, Chad, Congo, Democratic Republic of the Congo, Côte d’Ivoire, Djibouti, Egypt, Eswatini, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Tanzania, Togo, Tunisia, Uganda, Zambia, Zimbabwe), India, Pakistan and Sri Lanka.

13  Para. 1 of WT/MIN(22)/18 – WT/GC/250.

14  Para. 3 of WT/MIN(22)/18 – WT/GC/250.

15  Para. 4 of WT/MIN(22)/18 – WT/GC/250.

*Third World Resurgence No. 351, 2022, pp 31-34