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TWN
Info Service on WTO and Trade Issues (Nov25/07) WTO:
Reform facilitator faces allegations of "burying" development
agenda Geneva, 19 Nov (D. Ravi Kanth) -- A major industrialized country has reportedly instructed the facilitator overseeing the discussions on reform of the World Trade Organization not to prepare any chair's document for trade ministers at the WTO's upcoming 14th ministerial conference (MC14), given the seemingly unbridgeable differences on three targeted issues, according to people familiar with the development. During the reform discussions on the decision-making track, the United States seemingly stated sharply that it would not engage in line-by-line discussions on the one-page paper issued by the facilitator (see below) because there is no consensus on advancing the issue of decision-making, said a trade envoy who asked not to be quoted. The US also said that it would not allow this issue to go further. As the facilitator, Ambassador Petter Olberg of Norway, concluded discussions on 18 November on "Level Playing Field - Reflections on Exploring Reform", trade envoys expressed grave concern over his approach, said people who asked not to be quoted. They alleged that Ambassador Olberg pursued three issues advanced by industrialized countries while "burying" negotiations on the mandated issues, particularly the restoration of the binding two-tier dispute settlement system and other development-oriented reforms. Several countries reportedly expressed sharp concern that the facilitator held closed-door small-group discussions of around 19 countries focused only on the three issues. According to people familiar with the development, the three issues are: 1. Amending the binding consensus principle in the Marrakesh Agreement. 2. Attenuating special and differential treatment (S&DT) for developing countries to introduce "differentiation" among these countries for availing of S&DT on a self-designated framework. 3. Introducing changes in the Agreement on Subsidies and Countervailing Measures to deny subsidies for the developing countries, especially China. Complaints have been levelled against the facilitator in that he largely articulated his views in the one-page document on "level playing field" based on a 2020 proposal by the United States, the European Union, and Japan, which was vehemently opposed by a former Chinese trade envoy - now a WTO deputy director-general/interim Director of the Development Division - and several developing countries, said people familiar with the development. The one-page document on "level playing field" issues, seen by the SUNS, was issued on 17 November to select countries while the rest of the membership was kept in the dark, a non-participant complained bitterly. "The facilitator almost killed the WTO reform process by trying to appease the US, even though the multilateral trading system and the WTO are being decimated by the unilateral reciprocal tariffs," said a former chair of the WTO's General Council (GC), preferring anonymity. Ironically, the former GC chair said, the facilitator's alleged attempts are being spurned by the very country whose positions he used to frame the issues. TRANSPARENCY MEETING In a communication sent to Heads of Delegation (HoD) on 18 November, seen by the SUNS, the facilitator said that he would convene "a brief transparency session on Wednesday, 26 November, at 10 am" to "provide an update on my consultations in preparation for the reform week scheduled for 2-5 December." Ambassador Olberg said that the plenary meeting scheduled for 26 November was merely "to brief Members on the plans for the reform week - specifically, the structure and areas on which Members will be invited to focus". The facilitator also said that he does not intend to open the floor during this plenary session, a step that a trade official from a Mediterranean country, who preferred not to be quoted, said would be tantamount to a "my way or the highway" approach. "LEVEL PLAYING FIELD" PAPER In the introduction to the paper on "level playing field" issued on 17 November, the facilitator said that "calls for reform to promote a level playing field reflect concerns that parts of the WTO rulebook do not align with today's global trade realities - and that the commitment from Marrakesh to open, market-oriented policies has not been fully realized." Although the issues underlying the "level playing field" were raised by the US, the EU and Japan in 2020 to target allegedly state-led subsidies provided by China, the facilitator argued that the "existing rules, designed decades ago, do not accommodate the diverse membership and the growing role of state interventions, including subsidies." Successive US administrations have also provided subsidies worth hundreds of billions of dollars to the US industry in alleged violation of the Agreement on Subsidies and Countervailing Measures (ASCM), said people familiar with the development. In his paper, the facilitator maintained that "fragmentation, unilateralism, and preferential arrangements are increasingly challenging foundational principles." According to Ambassador Olberg, "addressing level playing field issues is seen as critical for the WTO's long-term viability" and that "some developing Members, particularly LDCs, see current disciplines as constraining industrialization, economic diversification, and their ability to compete on equitable terms." While the Doha mandate on ASCM-related measures has been pushed under the carpet, the facilitator said that "sectoral imbalances, especially in agriculture, reinforce perceptions of a more uneven playing field." The facilitator listed several issues in his one-page paper under "concrete challenges" and "examples of possible options for Ministers/Post-MC14 work". The first issue is "Diverse interpretation of fairness and rules not fit for purpose". Highlighting the challenges under this issue, the facilitator seemingly conflated the issue by suggesting that "weak compliance with transparency and notification obligations, coupled with gaps and uncertainties with dispute settlement, undermine the effective application of existing rules." Further, according to Ambassador Olberg, "there is also the view that dispute settlement has weakened Members' ability to use WTO trade remedies to address some of these concerns." This argument is being seen as an attempt to undermine the dispute settlement system, said an African trade official. More disturbingly, the facilitator seemingly undermined the importance of a rules-based trading system when he argued that "Fairness ultimately depends on Members' behaviour and cooperation - not the rules alone," said an African trade official who asked not to be quoted. Under the first challenge on "Diverse interpretation of fairness and rules not fit for purpose," the facilitator listed the following: * Current rules are increasingly seen as insufficient for today's trade realities. * Some stress that trade-distorting state interventions undermine a level playing field, while others underline the role of targeted state support in achieving development and diversification. * Diverse interpretations of "fairness" complicate agreement on what constitutes fair competition and on how rules should be adapted. To address this, the facilitator proposed "examples of possible options for Ministers/Post-MC14 Work": Under "Recommit to WTO Rules and Principles": * Reaffirm Members' commitment to upholding WTO rules and disciplines, particularly in light of the increasing use of unilateral trade measures. * Reaffirm Members' commitment to open and market-oriented policies aimed at fostering market-oriented conditions essential to ensuring a level playing field. On the second challenge on "Policy Space and Development Needs", the facilitator listed the following: 1. Many developing Members and LDCs view current rules as too rigid to support structural transformation, industrialization and diversification; 2. The ASCM and related disciplines are seen by some as constraining policy tools even as others stress the need to prevent trade distortions. The facilitator's options for the second challenge, aimed at exploring "Rule Reform and Updating Mechanisms", without a ministerial mandate, include: * Explore updates to ASCM rules, including on SOEs [state-owned enterprises] and non-actionable subsidies. * Focus on harm caused by subsidies rather than narrow definitions. * Recast WTO rules to better support development objectives. Under the third challenge on "Subsidies, State Interventions and other Distortions," the facilitator listed the following: * SOE-related rules are viewed as outdated; non-actionable subsidy provisions are inactive. * Perceived gaps in the current framework for assessing harm caused by subsidies, both in terms of economic methodology and in how rules capture complex state support. * Developing economies face challenges to fair competition not only from state subsidies but also from broader sources of distortions such as dominant suppliers and anti-competitive practices. The facilitator's options to address the third challenge comprise: * Explore flexible policy tools to promote structural transformation, industrialization and economic diversification. * Address agricultural and sectoral imbalances. * Explore introducing a Development Review Mechanism to assess rule impacts. * Strengthen Aid for Trade to address industrial competitiveness infrastructure. * Explore the establishment of a joint task force to examine the trade-related implications of global markets concentration and its effects on developing economies. The facilitator's fourth challenge covers "Transparency and Compliance Concerns". His options are the following: * Ensure compliance with existing transparency obligations. * Strengthen notification including through more flexible timelines, simplified templates and targeted capacity- building. Under the fifth challenge on "Institutional and Forum Challenges", the facilitator listed the following: * Lack of cross-cutting avenue to discuss national policies and trade impacts. * Risks of duplicating or weakening existing structures - if have a horizontal forum. * Questions exist whether the WTO is suited to address current systemic/economic disparities. The facilitator's option on exploring "Horizontal and Institutional Platforms" suggests continuing "informal Member-led discussions while seeking to formalize it." Under the sixth challenge of "Inclusiveness and Development Orientation Challenges", the facilitator suggested two issues: * Fairness concerns span many areas which should be recognized (critical minerals, TRIPS, TRIMs, SDT, NTMs). * Structural disadvantages of developing Members and LDCs hinder full participation. The options proposed by the facilitator are: Ministerial Guidance for post-MC14 * Ministers could guide reflection on: (i) Which rules promote fair competition?; (ii) Which rules are insufficient?; (iii) How to strengthen compliance? Looking into Balanced, Inclusive, and Realistic Approaches * Avoid single benchmarks for fairness. * Focus on equitable participation, not full equalization. * Promote broad, inclusive dialogue across trade and development dimensions. In a nutshell, the facilitator's challenges on "level playing field" and the underlying "top-down" approach seem like the proverbial "dog's breakfast", which has little or no room for success, said a trade envoy who asked not to be quoted. +
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