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TWN Info Service
on WTO and Trade Issues (Feb26/14) Geneva, 12 Feb (D. Ravi Kanth) — The Director-General of the World Trade Organisation has defended the three controversial reform issues – amending the consensus-based decision-making process, revising special and differential treatment for developing countries based on a self-designation framework, and introducing level- playing field issues – while remaining conspicuously silent on the core reform issue of restoring the two-tier dispute settlement system, as well as addressing the unresolved mandated issues. Ahead of the WTO’s 14th Ministerial Conference (MC14) beginning in Yaounde, Cameroon, on 26 March, the DG, Ms Ngozi Okonjo-Iweala, told reporters at a press conference on 11 February: “We will be looking for ministers to endorse a programme of work on reforms. They will have honest conversations on these reforms and on the challenges confronting the organisation, and we hope that will result in their endorsing work on the reforms post-MC14.” Elaborating on the reform work being carried out by the Norwegian facilitator, Ambassador Petter Olberg of Norway, the DG said, “You know, the discussions and engagement on, basically, I think, the three broad areas that the reform facilitator Ambassador Olberg has laid out” include “decision making, how we make decisions.” She said the facilitator “laid out discussions on development issues which are very important to our members” and “he laid out discussions on level playing field issues, (and) fairness issues.” When asked about the foundational issues, the DG said: “I think that one should never be afraid to engage on the issues of the day, including foundational principles. Especially at a time when you’re trying to, in a world of uncertainty and geopolitics, you should have a conversation. I believe ministers should have a conversation that looks at these key issues and you know allows members to see how these issues, these principles work for us. You should never be afraid to have questions and to have good exchanges on founding foundational issues. That’s my view.” Explaining further on the foundational issues, she asked rhetorically, “What does it mean? I’m sure that you see the evidence before us is that most members are trading on MFN principles. So as I, as we, as I keep telling everyone, 72% of world global merchandise trade is still on MFN. So it speaks for itself. It speaks to the strength and the resilience of the organization and the principles on which it was brought. But does that mean you should never speak about it or have a conversation about it? I think it’s good.” However, as reported in the SUNS and according to several countries, particularly Paraguay, the three proposed reform issues appear to be inconsistent with Paragraph 3 of the Outcome Document from the WTO’s 12th ministerial conference (MC12), held in Geneva in June 2022, which specifically stated: “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.” Furthermore, a footnote attached to the above paragraph also stated 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.” The DG praised the functioning of the WTO’s committee system, particularly the committees on sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT) – “where members can exchange concerns, you know, prior to dispute settlement.” To recall, even before the establishment of the WTO, there was a non-binding dispute settlement system in the GATT where parties were able to block the findings of the panels. However, following the Uruguay Round of trade negotiations, a binding dispute settlement system, with the Appellate Body as the final adjudicating arm, was created in 1995. In Paragraph 4 of the MC12 Outcome Document, trade ministers acknowledged “the challenges and concerns with respect to the dispute settlement system including those related to the Appellate Body, recognize the importance and urgency of addressing those challenges and concerns, and commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024.” Without identifying the source of the ongoing trade tensions and “threat of fragmentation,” Ms Okonjo-Iweala maintained that “you need fora like the WTO, where you can come together, whether on specialized issues like trade or more generally to try to handle these problems.” On consensus-based decision-making, the DG presented it as universally valued and merely in need of being made “faster” and “nimbler.” Yet, as Paraguay pointed out in a recent communication (WT/GC/W/987), the reform track that the DG supports explicitly explores differentiated thresholds, alternatives to Article IX of the Marrakesh Agreement (on decision- making), and flexible formats that would, in practice, reduce the protective force of consensus for smaller Members. The DG’s comments on “decision making” and “level playing field issues” as frontline reform pillars, while treating development as one workstream among others, seem to underplay the Marrakesh Agreement commitment that development concerns and implementation of existing mandates, particularly on agriculture and S&DT, are core purposes of the system rather than optional add-ons. At the press conference, the DG said that despite geopolitical and geostrategic tensions, she has continually cited the continued dominance of MFN trade and the absence of tariff wars as evidence of the WTO’s “resilience.” She appears to conflate traders’ reliance on bound tariffs and transparency with satisfaction about the rule- making record, and glosses over longstanding imbalances in areas such as agriculture, TRIPS, and industrial tariffs that many developing Members regard as unresolved. Further, the treatment meted out to dispute settlement reform tends to fold the current paralysis into a general story of “resilience” and institutional evolution, which obscures the fact that the Dispute Settlement Understanding was designed as a qualitative break from the GATT’s blockable, positive consensus model, said a trade envoy, who asked not to be quoted. For the past several years, around 130 members have repeatedly called for filling all seven vacancies at the WTO’s Appellate Body but the United States has continually blocked the initiative on seemingly extraneous considerations. The DG, in her comments on the US positions, particularly its new trade envoy, said at the press conference: “Whilst you may not like the unilateral actions of the United States, but agree, I mean, I agree, let me say that with a lot of the criticisms … And it’s across several administrations that the US has been critical of certain things not working in the way they would like to see it. And I share those criticisms.” Her praise for the “constructive engagement” by the US on WTO reform does not grapple with the asymmetry that one Member has both repeatedly blocked the full restoration of the dispute settlement system and pushed for a redesign of the rules and procedures that aligns closely with its own concerns about subsidies, industrial policy, and state capitalism, including through convergence with other major players. Notably, the US did not engage in the WTO reform consultations held on 9 February, with many Members alleging that they are not happy with the facilitator’s process, said a trade envoy, who asked not to be quoted. Ms Okonjo-Iweala said: “But it’s not just the US. Developing countries have been criticizing because they feel that the system is not working well enough, especially the least developed, to integrate them faster into the system.” When asked about framing rules for digital trade and artificial intelligence (AI), the DG expressed excitement. “Digital trade is so exciting, and we need to reform to be able to make decisions or rules that can help members. Green trade is exciting. Services … so there are really exciting things in trade, and that’s why I’m very animated. I want us to reform to seize those opportunities.” The DG’s emphasis on “issues of the time” such as digital trade, green trade, AI, and level playing field issues is not matched by a comparable insistence on resolving the longstanding development mandates, which risks reorienting the WTO’s agenda toward new disciplines on industrial and technological policies while leaving unimplemented commitments that matter most to the majority of the Members. She framed the upcoming MC14 primarily as an occasion to endorse a process-heavy, open-ended reform work programme. Instead of taking substantive corrective steps on enforcement, agriculture, and development, the DG’s comments “risk locking in a post-MC14 architecture in which small group formats, senior officials’ oversight, and flexible decision-making experiments gradually reshape how the WTO operates, without an explicit political choice by the full Membership on those systemic shifts,” said a trade envoy, who asked not to be quoted. +
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