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TWN
Info Service on WTO and Trade Issues (Jul25/18) Geneva, 15 Jul (D. Ravi Kanth) — The facilitator overseeing the discussions on “WTO reform” has urged members to decide on controversial issues including the principle of decision-making by consensus, plurilateral trade agreements and “differentiation” among developing countries for availing of special and differential treatment (S&DT), which could upend the Marrakesh Agreement that established the World Trade Organization in 1995, said people familiar with the development. While the WTO’s Director-General, Ms Ngozi Okonjo-Iweala, has remained somewhat silent on United States President Donald Trump’s latest round of tariff letters sent to some 20 countries, the controversial facilitator for “WTO reform”, Ambassador Petter Olberg of Norway, appears to be using the grave crisis in the global trading system to force sweeping changes that seem to be primarily directed against developing countries, said people, who preferred not to be quoted. In his latest email sent to Heads of Delegations (HoDs) on 10 July, seen by the SUNS, the facilitator said: “It is clear there is a broad and shared willingness to pursue deep reforms of the WTO. The sense of urgency is palpable, and there is widespread recognition that there is no viable alternative to reform. Importantly, there is significant overlap on the key issues that need to be addressed.” The above assertion by the facilitator seems to have little or no material evidence, and it appears to be his subjective assessment, said people familiar with the ongoing WTO reform discussions. More disturbingly, the facilitator appears determined to take the discussions in a direction aimed at “appeasing” the US, particularly to convey to a US Congressional delegation scheduled to visit the WTO on 6 August that the WTO reform discussions could accomplish Washington’s controversial goals, said people, who asked not to be identified. In the email sent to members, the facilitator said: “Building on this foundation and in order to advance our discussions, I propose that we take steps to clarify both the “what” and the “how” of moving forward. This requires all of us to challenge conventional thinking and to think outside the box. To deliver results, we need to be flexible and be willing to move beyond old positions.” However, according to several members who asked not to be quoted, the facilitator appears to be forcing members to provide “black or white” answers, knowing full well that there is no prior ministerial mandate for such “top-down” reforms, either at the WTO’s 12th ministerial conference (MC12) in Geneva, in June 2022, or even at the WTO’s 13th ministerial conference (MC13) in Abu Dhabi in March 2024. Moreover, the trade ministers never agreed in any previous ministerial conference to upend the Marrakesh Agreement, which contains clear provisions on consensus-based decision-making and how to treat plurilateral agreements among others, trade envoys said, preferring not to be quoted. In his email, the facilitator has called for “behavioural change” in the positions adopted by members. “We are at our best when we are trying to collectively resolve problems. But to do so effectively – and to get to results – we will also need a behavioural change: one that encourages flexibility, openness, and a willingness to move beyond entrenched positions. We must be bold in our thinking, while also showing flexibility in our approaches.” However, trade negotiations at the WTO were never conducted through “behavioural” changes but on each country’s core trade interests on a “give-and-take” basis, with specific rights and obligations as set out in the Marrakesh Agreement. In his email, the facilitator said that “based on what I heard in my consultations, to organize our work effectively, I propose structuring our efforts around three separate “tracks”, each likely to require different approaches and timelines, allowing for the necessary flexibility. This will not be a “single undertaking” but rather a process that draws elements from each track.” According to trade envoys, who asked not to be identified, the chair’s above remark appears to be inconsistent with all previous mandates, which were either on the basis of the “Single Undertaking” as is the case with the Uruguay Round of trade negotiations or the Doha Development Agenda (DDA), which still remains on the table, or sectoral agreements like the Information Technology Agreement (ITA). The facilitator seems to be unaware of the institutional history of the Uruguay Round of trade negotiations or the unfinished Doha Round of trade negotiations, said trade envoys who asked not to be quoted. The facilitator also issued a list of issues, saying that the list is only “indicative, not exhaustive or final.” He wrote in his email: “Please note that this list is indicative, not exhaustive or final. We should avoid a “Christmas tree” approach where all issues are prioritized equally. Instead, we need to agree on what to address first and what can be tackled later, while ensuring progress across all tracks continues in parallel.” However, in trade negotiations, issues are discussed and determined either on the basis of the Single Undertaking or as stand-alone agreements, where members weigh their gains and losses to decide on their positions in accordance with the rules and flexibilities as set out in the Marrakesh Agreement and various other agreements, said people, preferring not to be quoted. REFORM TRACKS In his email, the facilitator proposed three “reform” tracks, the first being on governance (institutional issues), namely, decision-making, including consensus; negotiating instruments; existing negotiations and agreements; and dispute settlement. As regards “decision-making, including consensus”, the first sentence of paragraph 1 of Article IX of the Marrakesh Agreement on “decision-making” states: “The WTO shall continue the practice of decision-making by consensus followed under GATT 1947.” Further, the second sentence of paragraph 1 of Article IX states, “Except as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting”. The facilitator, who is a key member of the “Friends of the System” group, had earlier pushed for the notion of “responsible consensus” among others. Therefore, his move to highlight the issue of “consensus” is again an alleged attempt to move away from the Marrakesh Agreement’s consensus principle, which can only be amended by trade ministers, said people familiar with the development. As regards “existing negotiations and agreements”, the Marrakesh Agreement, in Article IX, provides for the process of arriving at decisions and how they should be listed in the different annexes, trade envoys said, suggesting that there are clear rules that must be followed. On the most important issue of the reform of the dispute settlement system, the facilitator appears to have simply “washed his hands off” by insisting that “dispute settlement reform (DSR) has been raised but it falls outside my mandate.” Without knowing whether the two-tier dispute settlement system will be fully restored with its binding powers remaining intact, it will be difficult for members to agree to the WTO reforms that could upend the Marrakesh Agreement, said people, who asked not to be quoted. Also, by separating dispute settlement reform from the proposed WTO reform, the facilitator appears to be encouraging gross impunity in the absence of a robust WTO enforcement function, as members are facing unilateral US reciprocal tariffs at this juncture, said several trade envoys, who asked not to be quoted. In his email, the facilitator, in the second track, has suggested several issues concerning “transparency”, “development”, “special and differential treatment (SDT)”, “market access – tariffs, reciprocity and NTBs [non-tariff barriers]”, and “subsidies, unfair practices, non-level playing field issues.” The issues raised under the “non-level playing field issues” appear to be primarily targeted at China and other developing countries, at the insistence of the US, the European Union and Japan, among others, said people familiar with the development. As regards “special and differential treatment (SDT)”, the facilitator appears to be advancing the demands of the US and other industrialized countries for bringing about “differentiation” among developing countries for availing of SDT, said people who asked not to be quoted. By mentioning the issue of “market access – tariffs, reciprocity and NTBs”, the facilitator appears to have taken a cue from the structure of the US reciprocal tariff regime, said people familiar with the development. In his email, the facilitator also listed several issues under what he referred to as “Future (Issues of our time)”, strangely at a time when the very survival of the WTO appears to hang in the balance. The issues listed for the “Future (Issues of our time)” are: “Supply chain resilience”; “Economic security”; “Climate change”; and “Digital trade and AI.” Before the next round of consultations, to be held in groups on 16-18 July, the chair has posed the following questions – one for each track. The questions are: 1. “On Track 1 (“Governance”): How can we improve decision-making and negotiation processes to rebuild trust and to better deliver outcomes? 2. On Track 2 (“Fairness”): What should be our priority for making the WTO fairer and how? 3. On Track 3 (“Future”): Some of these issues are already being discussed in the WTO and have a longer perspective. Which ones, if any, should we address within the reform process and how?” Further, the facilitator underscored the need “to define clear stop points or cut-off points, ideally between July 2025, December 2025 and culminating in the 14th Ministerial Conference (MC14).” Although there is no clarity yet on the likely “deliverables” for MC14, the facilitator concluded by suggesting that “at MC14, our aim should be to present a coherent package for ministers, which could take different forms depending on the issue – such as decisions, options for ministerial guidance.” +
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