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Info Service on WTO and Trade Issues (Nov22/03) Geneva, 4 Nov (D. Ravi Kanth) — The chair of the World Trade Organization’s General Council, Ambassador Didier Chambovey of Switzerland, has scheduled an informal meeting on “WTO reforms” on 10 November, in what appears to be “Davos-type” anomalous discussions that could further confound the issues to be addressed, said people familiar with the development. In a restricted proposal circulated on 2 November, the General Council (GC) chair informed members that he intends to host a one-day informal meeting on “WTO Reform” to provide “a frank and open exchange – including articulating interests and expectations about the reform process and the direction for this work.” The proposal, under the sub-title of “modalities”, seeks to know from members on what “should be accomplished to take advantage of available opportunities, address the challenges that the WTO is facing, and ensure the WTO’s proper functioning”. It says that “based on Members’ reform interests and expectations, Members will need to structure the reform work.” The GC chair says that the exercise would entail “a consideration of how to effectively plan the work, and whether different work streams should be set up.” Further, the chair seeks to know from members how the discussions should be structured so as to reach “realistic and meaningful outcomes.” From the tone and tenor of the GC chair’s proposal, it appears pretty clear that the process to be adopted through facilitator-led discussions could prove to confound the issues, said a member, who asked not to be quoted. Also, in departing from adopting a “bottom-up” process, wherein discussions are carried out on the basis of concrete proposals in the presence of all members, the facilitator-led discussions in which the WTO Secretariat prepares summaries may not reflect members’ views properly, the member said. The GC chair says that “the expected outcome from this session is a common understanding on how to approach work ahead and main work streams.” Ambassador Chambovey says that “this will also be a trust-building exercise which enables Members to start on a good footing.” He says that “the informal meeting will be structured with a view to ensuring full participation, inclusivity, and transparency.” The five facilitators who will conduct the discussions in five different groups include Ambassador Kazuyuki Yamazaki of Japan; Ambassador Manuel Teehankee of the Philippines; Ambassador Ms Zhanar Aitzhanova of Kazakhstan; Ambassador Kokou Yackoley Johnson of Togo; and Ambassador Ms Ana Patricia Benedetti Zelaya of El Salvador. Interestingly, eventhough the GC chair emphasizes on an inclusive process during the WTO reform discussions, recent developments during a retreat on agriculture and a meeting on Aid for Trade do not bode well, as members are apparently being curbed in reading out their statements. The WTO Director-General Ms Ngozi Okonjo-Iweala and the chair of the Committee on Trade and Development, Ambassador Usha Cannabady of Mauritius, told delegates to make short statements and not read out their prepared statements, said several members, who asked not to be quoted. MC12 MANDATE ON WTO REFORMS Paragraph three of the Outcome Document adopted by trade ministers at the WTO’s 12th Ministerial Conference (MC12) on 17 June, states: “We acknowledge the need to take advantage of available opportunities, address the challenges that the WTO is facing, and ensure the WTO’s proper functioning. We commit to work towards necessary reform of the WTO. While reaffirming the foundational principles of the WTO, we envision reforms to improve all its functions. The work shall be Member-driven, open, transparent, inclusive, and must address the interests of all Members, including development issues. The 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.” More importantly, the footnote attached to paragraph three of the Outcome Document says that: “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.” Essentially, the footnote apparently opens the door for bringing in proposals discussed by a group of countries in plurilateral settings without discussing them at the formal GC meetings, said an analyst, who asked not to be quoted. It could legitimize a process to “parachute proposals by stealth”, the analyst said. Up until now, negotiations at the WTO on any subject are invariably carried out on the basis of concrete proposals from members or coalitions laying the ground for the improvements/changes sought by them in any area. Beginning from the Doha Round trade negotiations in 2001, whose unfinished elements are still on the table, it is members who have to decide on what needs to be reformed at the WTO and how it should be carried out, said a person, who asked not to be quoted. While developing countries have submitted concrete WTO reform proposals, the major industrialized countries are yet to submit concrete proposals covering all areas. For example, a group of developing countries comprising India, Cuba, members of the African Group, and Pakistan had submitted a proposal for “strengthening the WTO to promote development and inclusivity”. The proposal by India, Cuba, the African Group, and Pakistan (WT/GC/W/778/Rev.5) has laid out the WTO reforms in the three areas of the negotiating function; the enforcement function; and the monitoring function of the regular bodies. Later, another group of developing countries comprising Bolivia, Egypt, Indonesia, Pakistan, South Africa, Sri Lanka, Tunisia, Uganda, and Venezuela submitted a proposal (Job/GC/278/Rev.5) on what ought to be the WTO’s response “in light of the pandemic: trade rules that support resilience building, response and recovery to face domestic and global crises.” As reported in SUNS #9596 dated 16 June 2022, at MC12, many developing countries drawn from the African Group, as well as India, Pakistan, Sri Lanka, and Cuba issued a joint statement on 14 June on how the proposed WTO reforms must be conducted after MC12. The signatories of the joint statement include the African Group (Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cabo Verde, Central African Republic, Chad, Congo, Democratic Republic of the Congo, Cote 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, and Zimbabwe), India, Pakistan, Sri Lanka and Cuba. In their joint statement, the signatories said they “recognize the 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.” “We agree that these challenges need to be addressed in a systematic, transparent, and inclusive manner amongst all Members.” They said that “taking note of the calls for reforming the WTO, we reiterate our commitment towards developing a common understanding, through multilateral engagement, the institutional challenges that Members seek to address in the dispute settlement function, negotiating function, monitoring, and implementation.” In this regard, the signatories said, “we support the commencement of a review in the General Council to identify the institutional challenges facing the multilateral trading system on the basis of written submissions by Members.” “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 re-balance the inequitable trade rules from the Uruguay Round,” they argued. REFORMS BY “STEALTH” Eventhough the United States, which has been the principal proponent for taking up the issue of WTO reforms for some time now, is yet to submit a formal proposal laying out the changes to be made in the three core functions of the WTO, namely, the negotiating function, the enforcement function, and the monitoring and implementation function. Yet, statements made recently by senior officials of the Office of the US Trade Representative (USTR) suggest the manner in which Washington apparently wants to bypass the established processes, said a trade envoy, who asked not to be quoted. According to separate reports in the Washington Trade Daily and the International Economic Law and Policy (IELP) blog on 3 November, Ms Andrea Durkin, Assistant US Trade Representative, WTO and Multilateral Affairs, apparently said, “I want to be cautious in how I describe and label outcomes that we would, we would say are reform outcomes, because we’re not looking for a package for ministers to bless per se.” According to the USTR senior official, “our approach is actually to reform by doing, to reform with intention as we go along. That said, we are thinking about approaches to improve each of the core functions of the WTO.” “That is monitoring and implementation of agreements, negotiations, and the enforcement of rights and obligations. So let me take each of those briefly in turn,” she has apparently said. “On the monitoring side,” said Ms Durkin, “this is the day-to-day work of the WTO. And here, we and other members are conducting reviews for how to make improvements in each of the standing committees, whether it’s renovating agendas to make room for more practical technical work, or changing the committee structure themselves.” She said “these are standing bodies and committees that are an underperforming but vital asset of the WTO.” Lack of timely notifications, especially by China, has been a major source of problems, the USTR senior official said. “You can say in general that agreements have failed to restrain China’s use of subsidies due to its substantive limitations in the agreements.” She said China’s “failure to observe the most basic WTO transparency obligations inhibit further discussions that are necessary to further close those gaps in the rules”, adding that “China is not the only large economy that’s failing to offer Members transparency about their measures.” On the negotiating function, the USTR senior official maintained that “we are increasingly confronted with new trade practices, new technologies that are not covered by existing WTO rules.” However, under the rules prescribed in the Marrakesh Agreement, new issues shall be negotiated only after there is formal approval by trade ministers at the biennial trade ministerial meetings or by the General Council during the inter-ministerial meetings. Yet, without any formal approval at the WTO’s 11th ministerial conference (MC11) held in Buenos Aires, Argentina in December 2017, the US along with a group of countries seemed to have launched the allegedly WTO-illegal Joint Statement Initiative (JSI) plurilateral negotiations on digital trade. The other JSIs include investment facilitation, disciplines for MSMEs (micro, small, and medium enterprises), domestic regulation in services, and trade and gender. It is hardly surprising that the US is now touting the allegedly WTO-illegal JSI on digital trade by saying that “E-commerce is a good example of that.” At a time when the US is allegedly violating the WTO’s non-discrimination principle by targeting China, the USTR senior official said that “WTO members also struggle to address unfair trade practices by non-market economies.” “And just as with reforming the committees, there isn’t going to be one single solution to solve these problems,” the USTR senior official said. “DOUBLE STANDARDS” Without mentioning the plurilateral negotiations, the USTR senior official argued that “we need more flexibility in our approach to crafting new disciplines.” For the past five years since MC11 in Buenos Aires, the US and other industrialized countries have repeatedly flagged the need for “flexible” negotiating approaches. Little wonder that the USTR senior official says that, “in particular, there are a number of what we call Joint Statement Initiatives, or JSIs, that were launched in 2017 that are pointing us in the direction of more flexible negotiation approaches.” The USTR senior official said that “these two topics alone (monitoring function and negotiating function) speak to an important principle for this administration.” The US apparently wants to bring the issue of trade and labour into the WTO rule-book. The USTR, Ambassador Katherine Tai, “has consistently espoused making trade policy worker-centric,” and “in the WTO context, this means making good on our commitment in the preamble of the Marrakesh Agreement that established the WTO to raise living standards and ensure full employment.” The selective citing of the Marrakesh Agreement by the US has exposed the “double standards” that Washington allegedly adopts to serve its interests. For example, in bringing the issue of trade and labour into the WTO, the US cites the Marrakesh Agreement, while allegedly flouting the rules set out in the same agreement to advance the plurilateral negotiations on digital trade, as well as adopting “flexible” approaches, said a trade envoy, who asked not to be quoted. “JSIs are not the only way forward but by pursuing more approaches, and more flexible approaches, we can reform the way we work to tackle forward-looking trade challenges,” the USTR senior official said. According to the USTR senior official, “agriculture is another area where we need a fresh start to the negotiations.” The US appears to want to erase the Doha Round trade negotiations by saying that “we have to let go of what has not worked in the past.” On the enforcement function, which the US has successfully attenuated since late 2019, Ms Durkin said “there’s been a lot of attention given to the dispute settlement function of the WTO.” She said “as you know, there have been long-standing, bipartisan concerns with the way that the dispute settlement function has functioned… And in some cases, decisions by the Appellate Body have harmed the ability of the United States and other market economies to respond to non-market distortions that directly harm US workers and businesses.” The USTR senior official said that “a central feature of reform will be to revitalize the agency of WTO members themselves in pursuing and securing acceptable resolutions and ensuring that the WTO dispute settlement system does not impose new obligations or take away existing rights in a way that was not agreed to directly by the Members.” Without mentioning that it wants to bring about the “positive” consensus principle in resolving trade disputes under which any one country can block the DSB recommendations, Ms Durkin said the US has been holding discussions in Geneva to seek out common ground on how we do reform for dispute settlement. In conclusion, it appears that a “top-down” approach on WTO reforms without adhering to the core principles set out in the Marrakesh Agreement could be adopted by so-called “stealth” processes. Unless the developing countries remain united in resisting reforms by “stealth”, there is a great danger that the WTO will not serve their core development-oriented goals. +
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