TWN Info Service on WTO and Trade Issues (Jul25/08)
11 July 2025
Third World Network

WTO: Facilitator uses US unilateral actions to bring about sweeping reforms
Published in SUNS #10257 dated 9 July 2025

Geneva, 8 Jul (D. Ravi Kanth) — The newly appointed facilitator overseeing the “WTO reform” process has suggested two broad options – “continue with “business as usual,” risking WTO stagnation amid unilateral actions, or pursue meaningful reform to modernize and making it better fit for 21st century challenges” – in his consultations with members towards the end of last month, according to a restricted document issued on 4 July.

The facilitator, Ambassador Petter Olberg of Norway, who oversaw the controversial selection process for the reappointment of the WTO Director-General, Ms Ngozi Okonjo-Iweala, whose second term commences on 1 September, has made the seemingly subjective claim that “while both involve risks, many saw the latter option as a more constructive path forward.”

Several trade envoys who participated in the consultations said the facilitator, whose country is also a member of the “Friends of the System” group, merely echoed the group’s longstanding demands as well as the WTO DG’s repeated statements on making the WTO fit for 21st century challenges.

One trade envoy said that the facilitator seems to be seeking WTO reforms to move away from the unaddressed mandated issues while putting a gloss on the real challenges of the very survival of the WTO due to the Trump administration’s continued assault on the organization, in preference to unilateral measures over the multilateral trade rules.

“There is no guarantee that the US administration will give up its sovereign actions despite reforms,” the envoy said, preferring not to be identified.

REFORM PROCESS

The restricted  document (Job/GC/445) issued by the facilitator on 4 July, seen by the SUNS, suggested that the discussion on the WTO reform process “is not driven by pre-set answers but requires collective input.”

The facilitator posed three guiding questions for ostensibly arriving at “a shared vision”. The questions include:

1. Can we reaffirm our common purpose as set out in the preamble to the Marrakesh Agreement Establishing the WTO?

2. What aspects of the WTO are functioning well and should be preserved?

3. What areas are not functioning well and require reform?

The facilitator argued that “although dispute settlement reform was raised, this issue falls outside my mandate,” as the General Council chairperson, Ambassador Saqer Abdullah Almoqbel of Saudi Arabia, excluded discussion on the dispute settlement reform from the overall discussions on the reforms on grounds that they would be dealt with by the Chair of the WTO’s Dispute Settlement Body, Ambassador Clare Kelly of New Zealand.

Several members said that without knowing whether there will be a binding two-stage dispute settlement system, which remains paralyzed since 19 December 2019, it would be difficult to take any realistic positions on the WTO reforms.

The facilitator said the overall engagement was pretty high, “open, candid, and insightful, with many participants speaking from the heart rather than relying on prepared statements.”

Ambassador Olberg noted that the first round of discussions “signalled a strong collective interest in reform, and I urge Members to sustain this momentum.”

The report outlined several key takeaways, such as a “strong commitment to meaningful WTO reform.”

“While recognizing current challenges,” the facilitator said, “many view reform as essential to maintaining the WTO’s central role and credibility – underscoring the need for deep structural changes to meet evolving global realities.”

Despite the initiation of discussions prior to the WTO’s 12th ministerial conference (held in Geneva in June 2022) and 13th ministerial conference (which concluded in Abu Dhabi on 2 March 2024), “substantive progress has been limited.”

“There is a shared recognition that the stakes are higher now, and reform must evolve into a broader, big-picture endeavour,” and members acknowledged “the current environment is more complex than ever, and that reform – however difficult – is both urgent and necessary,” the facilitator noted.

The facilitator admitted that “WTO reform holds different meanings for different members”, while noting that there is “broad recognition of the risks inherent in undertaking profound reform.”

According to the facilitator, “there are concerns about uneven levels of commitment with some Members voicing scepticism rooted in past inaction and a tendency toward a “reform-by-doing” approach that avoids difficult decisions.”

The above observation of the facilitator was primarily voiced by the United States and not by “some Members,” said one trade envoy, who asked not to be identified.

Despite strong engagement, the facilitator said that “caution persists for some especially in sensitive areas like dispute settlement and consensus decision-making.”

“Nonetheless, there is hope that Members will demonstrate the resolve to take bold, forward-looking action,” the facilitator said, emphasizing that “at this stage, everything is on the table; nothing is off limits.”

Many developing and least-developed countries appear to have underscored the need for “a Member-led, inclusive, and transparent process that reflects the development needs of all, especially in agenda-setting.”

“Trust emerged as a central concern – viewed by some as essential for progress, while others highlighted a lack of constructive engagement from certain Members,” the facilitator said, without indicating how many members are not constructively engaging at this juncture.

The facilitator said “concerns were also raised about potential obstacles to the process and the need for effective mechanisms to overcome deadlocks,” while “several Members emphasized the importance of establishing clear rules of engagement and mutual expectations regarding behaviour.”

The central goal of the current reform process “is to tease out the critical reforms to be pursued so [that] a package of proposals can be put forward for Ministers to debate at MC14.”

Therefore, he said that “this presents the opportunity for positive rather than negative momentum.”

The facilitator said that “there is strong support for a balanced reform agenda, though many caution against overloading it or using it to advance unrelated priorities.”

Ambassador Olberg, however, did not clarify what would constitute pursuing “unrelated priorities”, said people familiar with the discussions and the facilitator’s report.

The facilitator observed that “some Members have proposed adopting a forward-looking agenda that includes global challenges such as climate change, food security, sustainability, and supply chain resilience – since these are critical issues currently confronting the global trading system”.

Incidentally, he echoed the priorities of the DG, who repeatedly raised the same issues while seemingly brushing aside the unresolved mandated issues, said people, preferring not to be identified.

In the same breath, the facilitator stated that “there is broad agreement that clear prioritization is essential to prevent gridlock and maintain focus.”

Without naming the countries, the facilitator said that “a few Members remain reluctant to see the WTO tackle emerging challenges, seeing these as outside the traditional trade remit.”

Despite readiness to engage “in difficult discussions,” the facilitator maintained that “there remains cautious optimism regarding achieving concrete deliverables before MC14. Many see the MC14 milestone as an opportunity to present clear reform options for political guidance, rather than to finalize agreements at that stage.”

Though “members emphasized the importance of a transparent and inclusive process to sustain engagement”, including “open dialogue across the membership in mixed groups,” attempts are underway to create “a smaller, representative group to help steer discussions, while ensuring that the broader Membership remains fully informed and involved,” said people familiar with the discussions.

Though the facilitator claimed that “members also look to the facilitator to manage the process effectively, building trust, maintaining transparency, and encouraging genuine engagement,” some members are not sure whether this is appropriate due to the facilitator’s past conduct in managing the DG’s reappointment process.

“Overall,” the facilitator said, “there is broad and strong support for reaffirming the WTO’s common purpose of enhancing living standards, helping create employment and supporting sustainable development as outlined in the Preamble to the Marrakesh Agreement.”

More importantly, he said that “Members continue to view the Preamble’s vision as relevant and remain firmly committed to the founding principles of the multilateral trading system,” despite the proliferation of unilateral measures by the US.

According to the facilitator, the shared commitment and reaffirmation of the Marrakesh Agreement, “reflects enduring values such as non-discrimination, trade liberalization, reciprocity, openness, transparency, fairness, inclusivity, and the integration of developing Members and LDCs, as well as the recognition of trade’s vital role in growth and development.”

“The more pressing question is how we have managed – and continue to manage – to uphold and advance these principles in practice,” the facilitator said, adding that “Members emphasized the importance of concrete actions rooted in the core tenets of the system, including market access, non-discrimination, and development integration.”

He said, “these principles are seen as essential tools for promoting economic growth, raising living standards, and achieving sustainable development, particularly through the application of Most-Favoured-Nation (MFN) and National Treatment obligations.”

“One Member”, perhaps the US, “stressed that while the objectives of the Marrakesh Agreement and Declaration remain relevant after thirty years, they are often interpreted differently and sometimes conflict.”

In an apparent attempt to target China, one member seems to have said that “the Preamble should be viewed in light of the Marrakesh Declaration’s original intent to promote open, market-oriented policies.”

That one member also “further stressed that the WTO has, in some respects, drifted from these principles – evidenced by some Members no longer adhering to open, market-oriented policies, and increasing demands for carve-outs from Uruguay Round commitments. In its view, this divergence has weakened the shared purpose and contributed to institutional paralysis.”

However, the facilitator noted that “Members stressed the need to translate its high-level goals into tangible outcomes, particularly development priorities for vulnerable economies, in trade facilitation, greater liberalization of goods, services and agriculture.”

S&DT

“While reciprocity remains important, many called for improvements to Special and Differential Treatment (S&DT) provisions, ensuring they address today’s development realities and provide meaningful support,” the facilitator’s report suggested.

“Differences persist in how development needs are interpreted, but there is recognition of the importance of maintaining flexibility for the most vulnerable and deepening dialogue,” the facilitator noted, subtly hinting at differentiation among developing countries for availing of S&DT.

In this context, he said “sustainability, food security, and systemic challenges – such as limited capacity, tariff peaks, and regulatory barriers – were also emphasized.”

Though everything in the report is attributed to “Members”, the views of certain powerful members are being packaged as “the views of the Members”, said one trade envoy, who asked not to be quoted.

For example, Members “have pointed out that bridging these gaps will require not simply existing tools, but new approaches and a shift in mindset,” which is the view of the “Friends of the System” group and the WTO DG, the envoy said.

“Nonetheless,” the facilitator said in his report, “there is strong consensus on the value of multilateralism, with many smaller economies emphasizing that they rely on a stable, multilateral rules-based system.”

“Members,” the facilitator said, “reaffirmed the WTO’s foundational role in global trade governance and expressed concern about rising unilateralism and protectionism.”

The facilitator further said that “ultimately, reaffirming the Marrakesh Agreement’s purpose is seen as both a re-commitment to shared values and a call to modernize the WTO – ensuring trade supports a more inclusive, equitable, and sustainable global economy.”

WORKING WELL AT WTO

Even as certain things are working well, the WTO appears to be paralyzed due to its dysfunctional enforcement function, which is the supposed “jewel in the crown”.

Recently, the European Commission’s President, Ms Ursula von der Leyen, reportedly indicated that EU member states are considering a parallel WTO that could include the EU plus the 11-member CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), in an attempt to exclude China while keeping the door open for the US to join later.

In his report, the facilitator suggested the following areas that seem to be working well, though not perfectly.

The areas include:

1. Overall Effectiveness: Many have reflected on the WTO’s value and agree that the world is better off with it – even in its imperfect form. Members broadly acknowledged the WTO’s continued central role in the global trading system. Despite the challenges it faces, the organization remains essential for supporting economic growth and development, ensuring trade stability, and fostering international cooperation.

2. Core Principles and Institutional Strength: There was strong support for preserving the WTO’s foundational principles – Most Favoured Nation (MFN), National Treatment (NT), and Special and Differential Treatment (S&DT) – as essential for fairness, predictability, and inclusiveness. Members reaffirmed the importance of a Member-driven, consensus-based system, though concerns were raised about the misuse of consensus. Many supported plurilateral agreements, as long as they remain transparent, inclusive, and do not undermine the broader WTO framework.

3. Consensus and Inclusiveness: Consensus remains a cornerstone of the WTO’s legitimacy and commitment to equal participation. While Members emphasized the importance of preserving this model, they also acknowledged the need to enhance its effectiveness and safeguard against procedural blockages.

4. WTO Acquis and Subsidiary Bodies: Members praised the WTO’s existing binding rules and committee work – its “acquis” – as a practical foundation worth preserving and updating. Subsidiary bodies like the SPS, TBT, and Agriculture committees were recognized for their technical rigor and effectiveness in resolving issues constructively. The Trade Policy Review Mechanism (TPRM) was also valued for promoting transparency and peer accountability. While some Members raised concerns over notification compliance, there was broad agreement on improving transparency. The “reform by doing” work carried out through committees – including tools like e-ping and e-agenda – was supported and appreciated by the members.

5. Dispute Settlement: The dispute settlement system remains a cornerstone of the WTO. Although its reform is under a separate track, many stressed the importance of completing this work, whilst acknowledging that the system continues to function – albeit imperfectly – and Members continue to use it to bring disputes. Despite the paralysis of the Appellate Body, Members continue to see value in the system and make use of consultations, panels, good offices, and arbitration. They stressed the urgency of putting in place a dispute settlement mechanism that is acceptable to all Members.

6. Technical Assistance and Capacity Building (TACB): Members emphasized the importance of technical and legal support for developing Members and LDCs including A4T and EIF to ensure equitable participation. There was concern over budget cuts to these programs, with a strong call to preserve and strengthen TACB.

7. Multilateral Framework and Convening Power: Members emphasized the need to protect the rules-based multilateral trading system from fragmentation and unilateralism. They highlighted the WTO’s unique role as a forum for dialogue and structured cooperation – essential for balancing diverse interests and addressing trade issues. The WTO’s convening power remains a vital global asset, particularly amid growing uncertainty.

AREAS NEEDING REFORM

The facilitator listed concerns over areas that would need reform and improvements, which seem to be areas of interest to the US.

1. Non-Market Practices and Fair Competition: Members raised serious concerns over non-market practices, particularly: massive industrial subsidies, unclear rules on SOEs and overcapacity and over-concentration of productive capacity. It was noted that these practices distort competition and threaten the multilateral system. If unaddressed, some Members may resort to alternative mechanisms outside the WTO. In addition, the need to address tariffs and NTMs, including to ensure that the rules are still fit for the balance achieved in 1994 was raised. Clear, re-balanced rules and modernized commitments are needed to uphold fair competition and reciprocity.

2. Transparency, Monitoring, and Compliance: While vital, transparency mechanisms face burdensome demands and uneven compliance. Members called for: strengthened monitoring and surveillance, including of unilateral measures; enhanced communication and outreach to counter misinformation about the WTO and Secretariat analytical support, particularly for developing Members and LDCs. There was broad support for reinforcing multilateralism and countering fragmentation and unilateralism.

3. Dispute Settlement System: Members emphasized the urgency of putting in place a dispute settlement mechanism that is acceptable to all Members by completing ongoing reforms, recognizing the dispute settlement system as critical to maintaining trust and upholding WTO rules. The ongoing dysfunction of the Appellate Body has weakened the system’s authority. In response, some Members expressed support for expanding the Multi- Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution. However, one Member noted that it does not yet have full confidence that there is genuine willingness among Members to pursue meaningful reform of dispute settlement. Its hope is that others will show readiness to move forward, so that it too can engage constructively on that basis. +