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Info Service on WTO and Trade Issues (Dec25/19) Geneva, 15 Dec (D. Ravi Kanth) — The facilitator overseeing the discussions on the reform of the World Trade Organization on 12 December conceded that by focusing on three issues – “decision-making, development and S&DT, and level playing field issues”, several key issues seemingly remain untouched, said people familiar with the development. The issues that are excluded from the larger scoping work comprise: “MFN erosion, tariffs, reciprocity, overcapacity, system fragmentation, unilateral actions, the role of the WTO today, agriculture and food security” and “dispute settlement reform.” Ahead of the senior officials’ meeting in Geneva on 15 December and the General Council (GC) meeting on 16-17 December, the facilitator, Ambassador Petter Olberg of Norway, issued his final report on 12 December. The 15-page report, issued as a restricted document (Job/GC/483) and seen by the SUNS, contains his assessment following consultations in small groups on three issues: decision-making (or changing the consensus principle) – a core element of the Marrakesh Agreement; changing the self-designated special and differential treatment (S&DT) by introducing differentiation among developing countries; and “level playing field” issues. The facilitator noted that the report is issued under his own responsibility. However, several members said the report appears one-sided and does not represent the views of a large majority of members, according to people familiar with the development. The report, which stemmed from many small group meetings of select countries as well as a few open-ended plenary sessions since June, “reflected my own reflections as Facilitator, informed by the views I gathered from the consultations I conducted.” The facilitator admitted that his report is not a “consensus document,” saying that “they were intended to support more focused discussions, without prejudice to Member-driven proposals or agreed mandates.” Ambassador Olberg said, “while not every Member agreed with all elements of the one-pagers, I was encouraged that they were widely seen as a helpful foundation for discussion.” This assessment was challenged by many members during the closed-door and plenary meetings, said people familiar with the development. The facilitator’s seemingly convoluted remarks appear to conceal the degree of opposition to why he chose the three issues but not the real issues – like unilateral reciprocal tariffs or the collapse of the two-tier binding dispute settlement system – and several other current global challenges in the face of an assault on the multilateral trading system by the world’s largest economy, said several persons familiar with the discussions. CONSENSUS PRINCIPLE The facilitator acknowledged that “decision-making by consensus remains foundational to the WTO’s legitimacy, inclusivity, equity, and to ensuring that all voices are heard and carry weight.” Without naming any specific country, the facilitator said that “many have noted that consensus does not require unanimity” – a view largely expressed by the “Friends of the System” group, in which Norway is a key member, said a trade envoy who asked not to be quoted. It is well known that the “Friends of the System” group, a coalition of more than a dozen middle-income countries as well as some major industrialized countries, has expressed in past meetings its “frustration over the Organization’s inability to arrive at decisions.” However, these countries do not constitute “many.” It is acknowledged that the delay in decisions “has contributed to slow progress in updating rules which has resulted in concerns about the WTO’s responsiveness and relevance.” At issue is how to incorporate non-mandated Joint Statement Initiatives into Annex 4 of the WTO Agreement dealing with plurilateral agreements. For any incorporation of the JSIs into the Annex 4 list, a prior multilateral ministerial consensus is imperative, said people familiar with the development. Therefore, the “frustration” is largely due to the alleged violation of the rules rather than the consensus principle itself, they added. The facilitator said “the discussions have focused not on replacing consensus, but how to make it function more effectively and make the Organization more outcome-oriented.” Ambassador Olberg noted that “views diverge on the reasons for gridlock,” saying that “for some, the current interpretation and application of consensus has contributed to paralysis.” While seemingly devaluing the importance of the rules in a rules-based organization, the facilitator said some members “point to instances of strategic misuse by a few Members who have withheld consensus even when proposals enjoy near-universal support and impose little or no economic cost on objecting Members.” He said, “others argue that the root causes do not lie in consensus itself, but weakened trust, unfulfilled mandates, lack of progress on substantive issues, in particular on issues of interest to developing Members, lack of inclusivity in processes, and insufficient implementation of S&DT.” Some members “caution that procedural changes alone, without addressing these underlying issues, risk offering false solutions. They therefore call for a comprehensive, evidence-based stocktake of unfulfilled mandates and other structural factors as a first step.” In several ways, the facilitator appears to be suggesting changes “to fully operationalizing Article IX of the Marrakesh Agreement, including the alternative when consensus cannot be reached,” arguing that “others suggest examining tools such as opt-in/opt-out arrangements, reservations, review clauses, non-binding instruments, application of pareto and do-no-harm principles, and variable geometry approaches that allow willing Members to advance while leaving the possibility for others to join when ready.” Another observation of the facilitator is to side-step the consensus principle by “exploring deadlock-breaking mechanisms used in other institutions. Others point out that global trade continues to evolve rapidly, and the WTO now operates with a larger and more diverse Membership, with differing interests, ambitions, priorities and levels of development.” SUPPORT FOR PLURILATERALS The facilitator came out in support of plurilaterals, saying that, “Against this backdrop, plurilateral agreements are essential to maintaining a functioning negotiating arm.” For the first time, the US trade envoy Ambassador Joseph Barloon is understood to have called for pursuing plurilaterals in a multilateral trade organization, said people familiar with the development. But other countries called for “clearer guardrails and clarity on how such initiatives are launched, including introducing them first to the full Membership. There is also caution about the risks to MFN, transparency and coherence, as well as concerns that mandated areas could be neglected.” DISPUTE SETTLEMENT REFORM The facilitator said that “dispute settlement reform remains fundamental for all Members,” adding that “its importance is evident from how frequently it has emerged across all topics that we have discussed.” “Many Members have pointed out that deeper institutional reforms will have limited value without a fully functioning dispute settlement system,” the facilitator said. “In this regard, it is evident that many Members regard DS reform work as an integral part of the broader WTO reform,” he acknowledged. Given the indifferent attitude displayed towards the reform of the dispute settlement system (DSS), which has been de-linked from the WTO reform process, the facilitator said: “It is clear from the report [on DSS reform submitted by the chair of the DSB, Ambassador Clare Kelly of New Zealand] that, while there is broad recognition of the difficult context surrounding DS reform, many Members support the resumption of this work after MC14 when the time is right, and all Members are ready.” The facilitator noted that “many Members have stressed the importance of upholding and building on existing mandates, rather than replacing them with more tractable alternatives,” pointing out that “reform should not imply abandoning difficult issues, but recommitting to them through renewed political will, inclusive processes and a clearer understanding of differing perspectives.” According to the facilitator, “this is viewed as essential to rebuilding trust. Key points highlighted include: (i) fulfilling past mandates will restore confidence and support further outcomes; (ii) implementing development- related mandates can help address the challenges faced by developing Members and LDCs; and (iii) advancing agriculture is central to levelling the playing field.” On special and differential treatment, the facilitator said his “consultations reaffirmed that development is a central and cross-cutting theme of the WTO’s work.” He said, “some hold the view that development should be considered in terms of equitable distribution of trade outcomes. For some, it encompasses policy space for industrialization, structural transformation and economic diversification.” On “level playing field” issues, the facilitator said that “there is broad recognition that a level playing field is essential and central to WTO reform,” adding that “at the same time, nearly all Members acknowledge that this is the most complex reform workstream, given the depth of the issues and the diversity of views.” CONCLUSIONS In his conclusions, the facilitator said that in the period between the General Council and MC14, “it will be important to continue advancing work in a focused and structured way, including: a. Preparing the Ministerial discussion at MC14, with clear framing, key questions, and guidance to ensure a productive and high-level political conversation. b. Developing a draft of a balanced plan for WTO Reform work post-MC14, building on the concrete challenges and possible approaches while ensuring flexibility to accommodate further discussion. c. Defining modalities for follow-up and identifying check-points, responsibilities, and practical mechanisms to monitor progress, maintain transparency and accountability throughout the process.” The facilitator said “the aim is to have these elements transmitted at the last General Council meeting before MC14, providing Ministers with a clear, actionable framework.” +
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