Info Service on WTO and Trade Issues (Sept18/04)
13 September 2018
Third World Network
WTO DG, EU and Canada propose comprehensive WTO reform
Published in SUNS #8749 dated 11 September 2018
Geneva, 10 Sep (D. Ravi Kanth) - The World Trade Organization director-general
Roberto Azevedo along with the European Union and Canada have prepared
comprehensive reform proposals involving substantial changes in the
"WTO monitoring function," the dispute settlement system,
and the negotiating function to bring "trade rules for the twenty-first
century," trade envoys told SUNS.
Close on the heels of the European Union's informal WTO reform proposal
last month, which has been further fine-tuned by the DG, the EU trade
commissioner Cecilia Malmstrom will present the ideas for reforming
the three limbs of the WTO to the US Trade Representative Ambassador
Robert Lighthizer in Brussels today (10 September).
Azevedo, according to a report in Politico on 5 September, had sent
his chef de cabinet Tim Yeend to Brussels to discuss the reform proposals
floated by the EU and Canada.
Subsequently, Canada has announced that it will hold a ministerial
meeting of thirteen select countries - the EU, Japan, Canada, Switzerland,
Norway, Australia, New Zealand, Singapore, Korea, Brazil, Chile, Mexico,
and Kenya - in Ottawa on 24-25 October.
Ahead of the Ottawa meeting, Canada has issued a nine-page draft discussion
paper called "Strengthening and Modernizing the WTO".
It argues that the structural transformation of the global economy
has resulted in "insecurity and inequality."
It says benefits from the liberal international trading system "have
not been shared fairly and that the existing rules no longer reflect
a fair balance of rights and obligations."
But, most of the rules were framed in the Uruguay Round (UR) which
was largely an agreement between the old Quad countries comprising
the US, the EU, Japan, and Canada.
Many developing countries, particularly India and South Africa among
others, repeatedly pointed to the "asymmetries" in rights
and obligations arising from the UR commitments.
The developing countries had raised both implementation issues as
well as gross asymmetrical commitments arising from the UR.
Without addressing the asymmetrical rules stemming from the UR, Canada
now says that "the vast majority of trade continues to take place
in a secure and predictable environment" but "the combination
of disruption and paralysis has begun to erode respect for rules-based
trade, and the institutions that govern it, paving the way for trade-distorting
Consequently, "all three main functions of the WTO are currently
affected: the monitoring of existing commitments appears unable to
contain escalating trade tensions; beset by the increasing complexity
of disputes, the dispute settlement system struggles to cope with
demand; and longstanding negotiations to update the trade rules [to]
reflect modern economic realities have delivered only modest results,"
Canada has argued.
Without mentioning the United States, which is singularly contributing
to the lawlessness in the global trading regime with its crowbar trade
measures in all areas, Canada has called for "action to restore
confidence in the multilateral trading system and discourage protectionist
measures and counter-measures."
"In the absence of a single WTO member with the capacity, willingness
or credibility to lead, an alliance of members who share a commitment
to the multilateral trading system can engage in a deliberate and
transparent process to develop a progressively broader consensus on
how to strengthen the WTO and modernize the trade rules," Canada
Hence, the formation of a new "alliance" of thirteen countries
in which Brazil, the champion of 20th century issues in agriculture
and the founder of the G-20 group of developing countries, and Kenya
from Africa, are the new entrants. The rest are known for their 21st
century issues as well as for their traditional alliance with the
It has become an imperative to "restore confidence in the multilateral
trading system and discourage protectionist measures", Ottawa
"The structural transformation of the global economy, combined
with technological change, has disrupted national economies and societies,
some more so than others," Canada has maintained.
Canada has suggested actions and measures that it says would improve
all the three arms of the WTO. The proposed measures cover (1) improving
the efficiency and effectiveness of the monitoring function, (2) safeguarding
and strengthening the dispute settlement system, and (3) laying the
foundation for modernizing the substantive trade rules when the time
As part of improvements for streamlining the monitoring system, Canada
has suggested (a) improving notification and transparency of domestic
measures [particularly in countries like China], (b) improving the
capacity and opportunity for deliberating on domestic trade measures,
including reports from the WTO Secretariat, and (c) improving the
opportunities and mechanisms to address specific trade concerns.
For strengthening "the notification and transparency of domestic
measures," Canada has suggested that "counter-notifications
from other members and independent information gathering by the Secretariat"
needs to be pursued.
Recently, the US had issued a controversial counter notification against
India's notification of domestic support payments. India had dismissed
the US counter notification as baseless.
As part of the WTO monitoring system, Canada has called for improving
"the capacity and opportunity for deliberation" as well
as "new and innovative approaches to multilateral dialogue on
trade" from diverse sources.
Further, Canada has called for a "robust mechanism" in all
regular bodies “for sharing information about specific concerns between
relevant bodies, and providing for referral to confidential third-party
mediation and conciliation when appropriate."
Canada's proposals for "safeguarding and strengthening the Dispute
Settlement System" underscore the need for "the availability
of compulsory, binding and impartial dispute settlement" system.
It has suggested three major issues for safeguarding and strengthening
the WTO dispute settlement system.
Canada has called for "diverting some disputes or issues from
adjudication" because "adjudication has taken on a more
prominent role in sustaining trade cooperation than originally envisaged,
in some cases substituting for negotiation[s]."
Therefore, "diverting certain disputes or issues from adjudication
can be accomplished through renewed commitment to self-restraint,
the improvement and use of alternative mechanisms such as mediation
to settle disputes or at least narrow their scope, and possibly even
formal exclusion of certain disputes or certain issues from the jurisdiction
of adjudication," Canada has
Further, the adjudicative proceedings need to be streamlined by including
"alternative procedures tailored to specific kinds of disputes,
supplementary procedures for specific features of existing proceedings
and a mechanism for more interaction between panel and appeal level
(i.e. remand)," Canada has argued.
Canada has also called for "updating and ensuring appellate review"
in the face of the "impasse over the appointment of Appellate
It has underscored the need for "addressing concerns raised about
the functioning of the Appellate Body and perhaps even about perceived
imbalances in the rights and obligations of members [a concern raised
by the United States]."
Therefore, it wants the participating ministers in the scheduled Ottawa
meeting next month "to acknowledge the concerns expressed by
some members and indicate a willingness to work with those members
to find mutually agreeable solutions."
"The first set of concerns relate to whether the Appellate Body
has, through its clarifications of WTO provisions, added to the rights
and obligations of WTO members," Canada has argued, pointing
out that "addressing concerns about specific obligations raised
in the past disputes may require agreement of members to override
those interpretations, which may [be] difficult."
In the meantime, Canada says, "mechanisms might be developed
that allow members more opportunity to provide binding and non-binding
guidance to adjudicative bodies on specific issues."
Such mechanism would enable "holding thematic discussions of
issues that arise in disputes, and developing a formal pathway for
some of these discussions to progress to the adoption, by consensus,
of "authoritative interpretations" (a decision-making option
already available in the WTO Agreement) of the WTO obligations in
In the face of considerable criticism against the functioning of the
WTO dispute settlement system, particularly from the US, Canada has
suggested several actions such as:
* Narrowing the scope for "advisory opinions" by clarifying
that the primary objective of the dispute settlement system is the
settlement of specific disputes and that only findings that are necessary
to achieve this objective are required;
* Focussing appellate review on legal issues by clarifying the standard
of review to be applied by the Appellate Body to panels, especially
with regard to factual findings and those related to the operation
of domestic law;
* Promoting a more robust adjudicative dialogue by allowing for the
express ion of minority views in panel and Appellate Body apply only
to the disputes in which they are adopted; and
* Developing guidance related to consultations with parties when the
Appellate Body is unable to meet its deadline.
To beef up the negotiating function for "modernizing the trade
rules for the twenty-first century," Canada wants discussions
on (1) continuing discussion on outstanding issues from the Doha Round
such as tariff escalation and peaks, agricultural support and development
issues, and especially those facing least developed countries; (2)
modernizing the rules for the modern economy and address the social
dimensions of globalization, such as digital trade, incl usive trade,
sustainable development, disciplines for micro, small, and medium
enterprises, investment and domestic regulation; and (3) addressing
more recent concerns about distortions of competitive conditions,
for example, through the market-distorting effects of SOEs [state-owned
enterprises], industrial subsidies, transfer of technology and trade
secrets, and transparency.
In the absence of a multilateral consensus for taking on new obligations,
countries must be free to move in various configurations in areas
where they are willing to undertake new disciplines through binding
plurilateral initiatives for eventual multilateralization.
"They could take on several forms, both inside and outside the
WTO legal framework," Canada has suggested.
For extending special and differential flexibilities for all developing
countries during the negotiations for new rules, Canada says a new
approach based on differentiation or what was done in the Trade Facilitation
Agreement must be adopted.
As part of "the formation of actions" needed urgently, Canada
says "the most realistic choice of instrument in the near term
will be likely needed to be plurilateral in participation", as
"new binding multilateral agreements or significant institutional
changes to the WTO are unlikely in the near term, alternative instruments
may still be feasible."
Canada has also called "for more operational actions, instruments
such as plurilateral codes of conduct of procedural agreements."
Further, new approaches must be adopted "where multilateral consensus
may be achievable on operational actions, but where treaty commitments
are still too ambitious," it has argued.
The new approaches suggested by Canada include WTO bodies adopting
"non-binding instruments (i.e., soft law) covering both the procedural
aspects of their work and incremental adjustments to existing commitments",
the General Council and the DSB to make greater use of formal decisions
to administer their work, and adopting "authoritative interpretations"
under Article IX.2 of the WTO Agreement to clarify certain existing
obligations for completing "previously incomplete negotiations,
fill[ing] gaps that existed or that have emerged through changes in
commercial practices, or override interpretations that have emerged
in past disputes."
In conclusion, the reforms suggested by Canada and the EU last month
fundamentally undermine the existing multilateral architecture of
consensus-based decision-making and the special and differential treatment
Both Canada and the EU have specifically targeted China for bringing
new disciplines in subsidies and state- owned enterprises while remaining
silent on the egregious violations committed by the US.
Clearly, there seems to be an opportunistic gang-up of the Northern
countries to undermine the consensus principle and the special and