TWN Info Service on WTO and Trade Issues (Sep26/18)
28 September 2026
Third World Network

WTO: Sharp divides over "level playing field", reform proposals
Published in SUNS #10521 dated 28 September 2026

Geneva, 25 Sep (D. Ravi Kanth) -- Several developing and least-developed countries, including Brazil and China,  have apparently voiced sharp concerns over attempts by the United States and other proponents of the "level playing field" (LPF) issues to impose burdensome transparency and notification requirements during the discussions on the World Trade Organization reform track on LPF issues on 24 September, said people familiar with the development.

The US has apparently said that it sharply disagrees with China's proposal on WTO reform, which called for adopting a "constructive approach" to exploring "ways to update the rules while upholding the WTO's fundamental principles."

This stance was conveyed during a meeting on 24 September on the "level playing field (LPF)" issues track of WTO reform.

The five-page Chinese proposal (WT/GC/Reform/W/12), titled "Further reflections and suggestions on WTO reform," reasserts what Beijing regards as the WTO's core principles: "multilateralism, non-discrimination, predictability and transparency."

It also emphasizes the preservation of basic institutional arrangements, including consensus-based decision- making, binding dispute settlement, and special and differential treatment (S&DT).

China criticized "some members" for making most-favoured-nation (MFN) treatment conditional, while cautioning against reviving "power-based trade relations in the name of reciprocity."

The meeting on LPF issues was dominated by discussions on the Chinese proposal, eliciting mixed views on its positive and negative aspects.

The proposal severely criticized calls for "re-balancing rights and obligations" or "promoting reciprocity" when these concepts are based on vague labels or predetermined outcomes rather than agreed rules.

"The central message of the Chinese proposal is clear: WTO reform must update the rules without allowing powerful members to rewrite them unilaterally," said a trade official who asked not to be quoted.

However, the US, which wants members to revisit the MFN principle among others, made known its disagreement with the Chinese proposal.

Washington insisted on transparency and notification requirements as the most important aspects of LPF commitments, according to people familiar with the discussions.

The controversial role played by the facilitator on LPF issues, who tried to project the issues of transparency and notification requirements as "entry points" for discussions on LPF issues, appears to be a means to get the US onboard, said an Asian delegate, who asked not to be quoted.

"Of course, this is not how one deals with the substantive nature of the level playing field question, which is deep and structural in nature," the Asian delegate said.

In response,  Brazil as well as a number of other members appeared to be of the view that the one clear cleavage in terms of LPF issues would be the obvious and long-running differentials between treatment of non-agricultural market access and agriculture, said another participant, who asked not to be quoted.

Brazil and several other countries pointed to "lower tariffs and barriers in the former and high tariffs, distorting support, and barriers in the latter."

For OECD members in general, the participant said, "the issue of LPF would focus on SOEs [state-owned enterprises], non-market practices, overcapacity in the industrial sector, and would basically amount to a discussion about China."

"Examining the ASCM (Agreement on Subsidies and Countervailing Measures) seems to be something China could go along with, but others are looking for more than that," the participant said.

The US, the European Union, and the "Friends of the System" group would "want to expand coverage of disciplines beyond what currently exists," while "developing countries, especially LDCs, mention the need for S&DT and flexibilities whatever happens, and a differentiated approach to notification obligations according to members' respective capacities," the participant said.

There was a great deal of back-and-forth on procedure as well, with many cautioning about the "snapshots", their selective nature and the attempt at prejudging or forcing guiding conclusions in certain directions, said another participant, who asked not to be quoted.

Brazil responded sharply to the issue of burdensome notification requirements, arguing that notifications were a matter of compliance and would not constitute part of the LPF issues, said a person who asked not to be quoted.

Brazil also appeared to argue that by emphasizing burdensome notification requirements, some members are diverting attention from the real issues that could be considered under the so-called LPF framework, the person added.

CHINA FOR PRAGMATIC REFORM

At the meeting, several members questioned China on its proposal.

Chinese trade envoy Ambassador Li Yongjie apparently stated that the questions were well received, adding that most questions were directed at the membership as a whole rather than specifically at China, said people familiar with the discussions.

China also indicated that it is willing to discuss LPF issues in order to move them forward in the coming months.

China remains fully open to jointly exploring updates to the Agreement on Subsidies and Countervailing Measures (ASCM), enhancing transparency, and improving coordination on industrial policies, according to the Chinese trade envoy.

Commenting on the substance of the LPF framework, China emphasized that "reform must begin with an accurate understanding of the real challenges facing the WTO."

Beijing noted that it is an economic reality that "all governments intervene in markets to varying degrees, using different policy tools, to achieve a diverse array of public policy objectives."

It said that "while these objectives and tools constantly evolve and undoubtedly impact international trade, this reality itself is not new."

The Chinese trade envoy drew historic parallels to the contexts of 1947 and 1995, noting that this backdrop "remains so today" as "it is the very context in which the WTO was established, has functioned, and must now evolve."

China clarified that, faced with the constant need to manage government interventions, "the rules of the multilateral trading system have never required all Members to adopt a single economic model to maintain fair competition, nor have they attributed [issues] to the existence of different economic systems or so-called "interface" challenges."

Furthermore, China argued that "the proven approach of this organization [the WTO] has been to focus on specific government policy tools that have concrete trade impacts."

It asserted that it is imperative to examine "specific problems on a case-specific basis" and to "design consistently applicable rules to resolve them."

On state-trading enterprises (STEs), with members of the "trilateral" coalition - the US, the EU, and Japan - focusing on disciplines for STEs, China reminded members that the "multilateral trading system does not rush to label STEs."

Instead, China stated that the Multilateral Trading System (MTS) "recognizes their existence, whether publicly or privately owned, and their potential impact on international trade," adding that "focus is placed on the government actions that grant them exclusive or special privileges."

In effect, "concrete concerns are addressed through common rules on transparency, commercial considerations, and non-discriminatory treatment, supported by a dedicated committee to oversee implementation," China said.

"In doing so, the system does not compromise its core principles" but rather "reinforces them."

Reminding the proponents of STE disciplines and LPF issues that "this historical wisdom cannot be ignored in today's reform discussions," China emphasized that "the right approach is to focus on specific government actions that affect competitive conditions in trade."

China called for strengthening "rules-based multilateral governance by updating rules and improving the timeliness and effectiveness of policy coordination among Members."

It cautioned that the LPF discussions "should not be organized around broad labels such as "non-market economy", "overcapacity", or "over-concentration"."

Furthermore, China warned the proponents that "the WTO does not need, and should not attempt, to create generic labels of this kind and then try to develop rules around them," adding that "it would be impossible to define such labels in a way that is predictable and acceptable to all Members."

It warned that "such an approach would lead us in two highly problematic directions: First, it would prejudge desired outcomes by setting arbitrary targets for production capacity, market shares, or trade balances, thereby replacing fair competition with managed trade. Second, it would create broad space for trade-restrictive measures justified merely by allegations. Neither of these pathways is in the interest of the broad membership."

China affirmed that it is "committed to engaging constructively in discussion of Members' concrete proposals and will submit our more concrete proposal on specific LPF issues later."

Addressing the emphasis on "transparency, notification, and compliance," China described transparency as "an important element of the multilateral trading system, and a vital public good," arguing that "it allows Members to stay informed of each other's policies in a timely manner. It also provides a foundation for monitoring and dialogue."

However, China noted that "concerns about transparency, particularly with regard to compliance with notification obligations, have attracted considerable attention."

Beijing stated that it supports discussing transparency within the context of WTO reform among interested Members.

It pointed out that members must "recognize that transparency is a complex issue," adding that "realities on the ground vary significantly - across different agreements, different committees, and among individual Members."

China urged members to view issues such as insufficient or delayed notifications from the perspective of Members, taking into account "the diverse circumstances and practical challenges they may face, particularly those faced by developing Members."

According to China, the difficulties faced by developing countries include:

1. The practical conditions facing Members in fulfilling these obligations, including data availability, domestic coordination, and administrative capacity;

2. Different understandings of the underlying rules, including differing views on the scope of notification obligations, triggering conditions, and the level of detail required. This is particularly significant for the implementation of subsidy transparency obligations; and

3. The specific design and technical requirements of the notification obligations themselves, such as their format, procedures, and frequency.

In short, China noted that "because of this multidimensional nature, transparency cannot be simplistically reduced to an issue of "low notification rate"."

"Nor can its causes be exclusively blamed on a "lack of incentive" or "willingness", China said, adding that "it is inappropriate to prejudge the problems, their root causes, or to predetermine the direction of reform, in isolation from the specific circumstances and practical realities facing Members."

Lastly, China stated that "discussions on transparency reform must be Member-driven, problem-oriented, targeted, and comprehensive."

COLOMBIA

During the discussion on LPF issues, Colombia offered a novel perspective, suggesting that "leveling the playing field and reciprocity are intertwined and very broad concepts that should be assessed comprehensibly in a reform."

According to Colombia, "tariffs are good to discuss in a reciprocity discussion because they are easily quantifiable and comparable," saying that "a Level Playing Field is broader," while "any other trade measure tilts the playing field and in fairness should be reciprocal."

Colombia contended that "government support, SPS measures, export restrictions, etc, all of them tilt the playing field," an argument shared by several other countries.

According to Colombia, "in an ideal world, every trade measure should be "tariffied", that is, expressed in terms of a tariff," saying that, "at the end, from the perspective of a business who trades, any trade measure, [or] any subsidy, impacts the price of its product in the same way as a tariff does, and ideally should be levelled."

Explaining what it means by tariffication, Colombia said that it "did an exercise of tariffication of quotas in the Uruguay Round in agricultural negotiations" by converting "agricultural quotas and other non-tariff restrictions into ordinary customs duties."

Colombia stated that, based on a negotiating document, titled "Modalities for the Establishment of Specific Binding Commitments under the Reform Programme (MTN.GNG/MA/W/24, 20 December 1993)," it established "the method for calculating the "tariff equivalent" of each non-tariff measure: the difference between the domestic price and the world market reference price of the product."

Colombia said that the "process was highly successful during the negotiations, and got a proper lock-in legal obligation in Article 4 of the Agreement on Agriculture, Paragraph 2, which explicitly acknowledges this "conversion" and contains the prohibition on reversion of the tariffication process."

Further, Colombia said "in a level playing field, we should "tariffy" everything," adding that members then "go into reciprocity discussions."

"That may be hard in practice for some trade measures, but it is not that hard for government support."

Colombia argued that "the same method of calculating the difference between the domestic price with and without the intervention is feasible, and to express it in "tariff equivalent" percentages."

The EU appears to have proposed an "inventory of LPF ideas," Colombia said, adding that it suggested "with the help of the Secretariat, an exercise of "tariff equivalence" of government support, as a first doable step in these very difficult discussions."

In short, Colombia said it is not suggesting a discipline, "as subsidies can have useful policy objectives as was mentioned by many and as the definition of subsidy in the WTO is quite complicated, but an exercise for information and clearing what government support entails for competition and for the LPF from the perspective of a competing business."

More importantly, Colombia has "suggested the need for a new remedy based on market concentration, drawing from competition law."

Colombia said that "differences in technology un-level the playing field enormously, so a review of the impacts on industrial learning of the current TRIPS Agreement would be needed as part of reform." +