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TWN
Info Service on WTO and Trade Issues (Jul25/07) Geneva, 8 Jul (D. Ravi Kanth) — The facilitator appointed to oversee the “WTO reform” process appears to have suggested some fundamental changes in the World Trade Organization’s decision-making based on the principle of consensus, as well as in the WTO’s negotiating function, two areas of crucial interest to the United States for which the developing countries will likely have to pay a price, said people familiar with the development. Though the facilitator, Ambassador Petter Olberg of Norway, stated that many members pressed for respecting the consensus principle for arriving at decisions as well as robust special and differential treatment (S&DT), he suggested changes in these two areas based on the views expressed by other members. In his restricted “Report on the WTO Reform” (Job/GC/445) issued on 4 July, seen by the SUNS, the facilitator, Ambassador Olberg, said that “consensus remains a foundational principle of the WTO, but many Members have voiced concern over its misuse as a tool to block progress.” Without naming the “many Members” nor quantifying the number of countries that would be part of this group, the facilitator said, “To make consensus more effective, several pragmatic approaches have been proposed – such as Pareto improvements, opt-outs, and structured plurilaterals – which aim to enable progress while maintaining inclusivity.” Further, he said, “some Members also recalled the built-in fallback mechanism provided by the Marrakesh Agreement: the possibility of voting.” “In parallel, a shift in negotiating mindset – from rigid, zero-sum positions to more flexible, cooperative engagement – is widely seen as essential to unlocking progress.” To recall, the Trump administration, in its first term, brought to the forefront the issue of differentiation among developing countries for availing of S&DT, suggesting that countries that are members of the Paris-based Organization for Economic Co-operation and Development (OECD) or the G20 group of industrialized and developing countries ought to opt out of the self-designated and treaty-bound S&DT. However, the proposal was fiercely opposed by China, India and many other developing countries. Following the Trump administration’s move, the subsequent Biden administration also vigorously pursued the issue, including forcing China to opt out of S&DT in the TRIPS Agreement at the WTO’s 12th ministerial conference (MC12) in Geneva in June 2022, and brought language into the Agreement on Fisheries Subsidies, said people familiar with the development. The current facilitator for WTO reform, as the outgoing chair of the WTO’s General Council, advanced these controversial ideas on consensus-based decision-making and differentiation among developing countries for availing of S&DT earlier this year at a retreat in Geneva, said people familiar with the development. To seemingly appease the developing countries, the facilitator, in his report, said that, “Additionally, Members underscored the importance of respecting and fulfilling past agreements, decisions, and longstanding mandates.” The facilitator, known for his controversial role in securing a second term for the incumbent Director-General, allegedly in contravention of the WTO rules, stated that “discussions also highlighted the need for clearer frameworks around negotiating instruments.” The facilitator’s report on “WTO reform” appears to have been written in typical “Orwellian double-speak,” advancing the concerns of the US and the “Friends of the System” group by stating that “some called for greater clarity on the treatment of plurilateral agreements, including the possibility of establishing separate dispute resolution mechanisms for them.” While the enforcement function of the WTO has been seemingly paralyzed, the possibility of separate dispute resolution mechanisms suggests that the demand for a binding Appellate Body might never materialize, said people familiar with the development. S&DT The facilitator, echoing the US concern over S&DT and the need for “differentiation”, said that “S&DT was reaffirmed as a treaty-embedded right, but reform is needed to reflect diverse development realities.” Reflecting the US demand for limiting S&DT to the least-developed countries and some other members like the European Union, the facilitator said that “several Members supported tailored approaches for LDCs, SIDS, and LLDCs to respond to their needs in a more targeted manner.” The facilitator also suggested that “in addition, voluntary opt-out by more advanced developing Members was encouraged,” a signal for differentiation among developing countries for availing of S&DT. On one hand, the facilitator said that “maintaining policy space for industrialization and diversification was said to be vital,” while on the other, he maintained that “self-designation remains contentious, [and] there were calls for pragmatic evidence-based approaches and flexibility.” Incidentally, both the US and the EU succeeded in bringing the so-called “pragmatic evidence-based approaches and flexibility” into the Agreement on Fisheries Subsidies while securing carve-outs, said people familiar with the development. The facilitator noted that “there were strong views that the WTO must strengthen its capacity to address emerging global challenges such as digital trade, AI, climate change, supply chain resilience, and industrial policy.” On “Technical Assistance”, the facilitator said that budget cuts to Technical Assistance and Capacity Building (TACB) raised concerns. Members called for increased and protected funding for TACB, especially for LDCs and smaller Members that need support. NEXT STEPS According to the facilitator, the second round of consultations are scheduled to take place from 16 to 18 July, with further details to be shared soon. “Following these discussions,” the facilitator said, “I will report back to the GC in July, which will act as our immediate checkpoint and may also provide an opportunity to outline possible next steps for the fall.” +
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