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TWN
Info Service on WTO and Trade Issues (Jul24/11) Geneva, 10 Jul (D. Ravi Kanth) — Trade envoys on 8 July seemingly expressed mixed views on the issues of transparency, inclusion, and small “green room” meetings, while unable to reach any convergence on the core issue of finding innovative approaches to replace the practice of consensus-based decision-making at the World Trade Organization, said people familiar with the development. During a one-day retreat at the Hotel Geneva Hilton on 8 July, trade envoys apparently held frank discussions on a raft of issues based on five questions circulated by the chair of the WTO’s General Council, Ambassador Petter Olberg of Norway. The questions, circulated in the restricted document Job/GC/399 on 28 June, centred on how to improve the decision-making processes at the WTO. As reported in the SUNS, Ambassador Olberg asked members to ponder over five questions for the retreat. The questions are as follows: 1.”In your view, how can the WTO improve its decision-making processes to ensure inclusive and transparent outcomes? What specific actions can we take to build necessary trust and unlock Members’ concerns prior to proposing and taking decisions?; 2. How can the WTO and its Members balance the need for consensus with the urgency to achieve timely and effective results? How can we balance the desire to protect national interests with the need to deliver for the common good? What tools and actions do we have when we are unable to agree?; 3. Given the experiences from past Ministerial Conferences, and the most recent experience in Abu Dhabi, what needs to be improved in Geneva in the run-up to the next Ministerial Conference? What should be the objectives of Ministerial Conferences?; 4. How can the outcomes of past Ministerial Conferences be effectively implemented to ensure continuous progress and accountability within the WTO? Are existing monitoring mechanisms sufficient? How do we assess past commitments in light of changing circumstances?; and 5. How can we translate these suggestions into actionable ideas for change? Are these realistic expectations?” During the plenary session at the retreat, many trade envoys appear to have broadly echoed their views, supporting the notion of transparency and inclusion in the daily processes at the WTO, said people familiar with the development. It appears that the US trade envoy Ambassador Maria Pagan did not make any statement during the plenary session, though in the past, it was the US that had called for changing the WTO’s negotiating function while encouraging non-mandated plurilateral processes like the controversial Joint Statement Initiatives (JSIs), said people familiar with the US position. However, it is unclear what the US would have said in the group meeting of more than ten trade envoys, said people familiar with the discussions. China appears to have pro-actively echoed its responses at the plenary meeting, said people familiar with the development. Two days before the meeting, China submitted an unofficial room document (RD/GC/31) titled, “Revisiting the Marrakesh Agreement to Improve WTO Decision-Making: A Pareto Improvement Perspective”, said people familiar with the development. The overall mood during the plenary session on issues such as “green room” meetings, transparency, and inclusion seemed positive, said people familiar with the discussions. During the afternoon session, trade envoys were split into six groups with different coordinators. The six coordinators were Ambassador Mr. Matthew Wilson (Barbados) for the first group; Ambassador Ms Athaliah Lesiba Molokomme (Botswana) for the second group; Ambassador Ms. Mazlizah PG Mahalee (Brunei Darussalam) for the third group; Ambassador Ms Sofia Boza Martinez (Chile) for the fourth group; Ambassador Mr. Muhammadou Kah (Gambia) for the fifth group; and Ambassador Mr. Simon Manley (United Kingdom) for the sixth group. Some of the above coordinators seemed to represent specific interests, including supporting a change in the consensus-based decision-making process as set out in Article IX of the Marrakesh Agreement, said people familiar with the development. SHARP DIVIDE The discussion on consensus-based decision-making appears to be sharply divided, with many members adhering to their earlier positions embracing Article IX of the Marrakesh Agreement, said people familiar with the development. Paragraph one of Article IX of the Marrakesh Agreement states: “The WTO shall continue the practice of decision-making by consensus followed under GATT 1947. Except as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting. At meetings of the Ministerial Conference and the General Council, each Member of the WTO shall have one vote. Where the European Communities exercise their right to vote, they shall have a number of votes equal to the number of their member States which are Members of the WTO. Decisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast, unless otherwise provided in this Agreement or in the relevant Multilateral Trade Agreement.” Significantly, one member at the meeting alluded to the possibility of using the voting option in case of irreconcilable differences and disagreements, but the idea did not get much support, said people who asked not to be identified. “The discussion on consensus-building is neither here nor there and it is a waste of an effort,” said a participant, who asked not to be quoted. Moves to consider new approaches such as “responsible consensus” or “constructive consensus” or a “Pareto” perspective made little progress during the frank discussions, said people familiar with the discussions. During the afternoon session, questions were raised on limiting the “green room” meetings to select countries and the utility of small-group meetings that are invariably submerged in opacity, said people familiar with the discussions. At the retreat, discussions on the issue of the time-frames for implementing the mandated decisions revealed several divergences, said people familiar with the discussions. Several trade envoys highlighted the issue of the trust deficit plaguing the organization, preventing it from making any headway on reaching timely decisions. However, members appear to have opposed the constant “shifting of the goal posts” by some members on the mandated issues, with some challenging the sanctity of the mandated decisions under dynamic conditions, said people familiar with the discussions. On the issue of trust-building, the main concern seemed to be whether it can be addressed without tackling the mandated issues based on ministerial consensus, said people familiar with the discussions. One trade envoy said that the retreat produced “positive outcomes” while emphasizing that consensus-based decision-making is important, said people familiar with the discussions. Egypt and the Russian Federation seemingly opposed any change in the practice of consensus-based decision- making. Egypt also highlighted the importance of concluding the reform of the Dispute Settlement Body based on the two-tier system, said people familiar with the discussions. During the discussions, members also discussed how decisions are taken in different United Nations bodies, said people familiar with the discussions. Trade envoys appear to have expressed mixed views on the issue of “political will”, with some members underscoring the need for demonstrating political will while others asked that if ministerial decisions are not implemented as per the mandates, how can they show political will, said people familiar with the discussions. CHINA’S ROOM DOCUMENT Two days before the retreat, China circulated a room document (namely, for discussion only and not an official position) on “Revisiting the Marrakesh Agreement to Improve WTO Decision-Making: A Pareto Improvement Perspective.” China argued that “the inability of the WTO to deliver negotiation outcomes diminishes the relevance of the multilateral trading system.” It underscored the need for “effective decision-making” as sine qua non for WTO reform. China emphasized that “for the purpose of WTO to function and deliver, the Marrakesh Agreement provides both consensus and voting as options for decision-making, while recognizing consensus is the preferred option unless otherwise stipulated.” According to China’s room document, there is a need for an affirmative call for action on matters with broad support. It said “depending on the matter at issue, different majorities are required, including simple majority, 2/3 and 3/4. The thresholds here indicate that the matter at issue with broad support does matter for the multilateral trading system.” China added that “multilateralism always goes together with diversity including differentiated obligations, implementation and treatment, and also less than full membership.” “History shows that consensus has never been a rigid practice and has provided flexibilities to address members’ concerns while ensuring that the multilateral trading system can move forward, and its inclusiveness,” it said. Moreover, according to China, “differentiation among the Membership has been a common tool to forge consensus, such as special and differential treatment provisions in WTO Agreements, critical-mass based trade liberalization binding a substantial subset of Membership with benefits accruing to all.” Further, China suggested that a “multilateral agreement does not mean implementation by the full membership though it is expected.” “Since its establishment, none of the new agreements or amendments entered into force in the WTO has been ratified by the full membership.” Interestingly, China ,which joined the WTO at the fourth ministerial conference in Doha, Qatar, in 2001, said that “Agreements by partial membership are an integral part of multilateral rule-making.” “In the history of the multilateral trading system,” China said, “disciplines negotiated by and applied to subsets of members paved the way for reaching the multilateral agreements. The current trade remedy agreements, SPS and TBT agreements, all evolved from the trade remedy codes, SPS and TBT codes, in the Tokyo Round”, which were later integrated into the Uruguay Round agreement. According to China, “the discussions during the May 2024 General Council confirmed once again that consensus is of fundamental importance to members.” However, China said that “in the meantime, members also recognized the end goal and the imperative is for the WTO to deliver.” “No member should be compelled by the majority to accept obligations they don’t want,” China said. “In turn, the majority, if they wish to move forward, should not be held back by a few,” it argued, adding that “the membership must collectively find creative ways, informed by the text of the WTO Agreement and past practices, to forge consensus and make the WTO deliver.” “PARETO” IMPROVEMENT In its room document, China listed the main factors undergirding the Pareto decision-making framework. It said, “Pareto Improvement in Rule-Making essentially means rule-making among a substantial subset but less than full membership, which could make at least part of the membership better off without making anyone else worse off.” Arguing the need for Pareto improvement, China said that “allowing a substantial part of WTO membership to proceed with rule-making that is open, transparent in process, beneficial for the participants, and does not harm the interests of non-participants would benefit the multilateral trading system and in the end, benefit all.” Lastly, it said, “For an agreement of Pareto Improvement nature that enjoys support of a substantial majority of the membership, for example, over the 2/3 or 3/4 thresholds as provided for in the voting procedures, Members should exercise restraint in blocking the consensus.” On the procedures to facilitate consensus when a decision with very broad support is blocked, China called for the following: * Enhanced Transparency: Clear and convincing reasons should be provided when blocking consensus. * Obligatory Engagement: Members should actively engage, with a view to finding solutions. * Mediation by an Appointed Third Party: Where there is an overwhelming majority in favour of a matter, a special consultative process should be set up to help bridge gaps and propose necessary solutions. In a rules-based, member-driven organization like the WTO, what happens if an agreement is systemically and procedurally flawed, said a former General Council chairperson, who asked not to be quoted. China also offered “possible solutions to address the concerns of the dissenting members” by suggesting the following: * “Differentiated Levels of Commitments. For example, carefully-calibrated arrangements catered to members with different level of development and capacity, including special and differential treatment; * Other Common Treaty-Making Tools. Such as provision of the options to opt-out or make a reservation.” It is not clear whether trade envoys discussed the Chinese non-paper at the retreat, said people familiar with the discussions. The General Council chair is expected to issue either a report or some main bullet points on the discussions that took place at the retreat in the coming days, said people who preferred not to be identified. In short, the rather costly one-day retreat, apparently incurring an expense of a minimum of CHF 50,000 (more than US$50,000), seemed like the proverbial idiom “making a mountain out of a molehill,” said people at the end of the retreat. +
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