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TWN
Info Service on WTO and Trade Issues (Feb26/07) Geneva, 6 Feb (D. Ravi Kanth) — Framed under the title “Reform Ministerial”, the Norwegian facilitator overseeing the reform of the World Trade Organisation outlined “key activities” in his confidential draft ministerial text on three controversial issues – “Decision-making, Development and S&DT, and Level Playing Field issues”- to be adopted at the WTO’s 14th Ministerial Conference (MC14) in Yaounde, Cameroon, on 26-29 March 2026. The confidential draft ministerial text, seen by the SUNS, was issued to members on 3 February. Interestingly, the facilitator’s draft text resembles a corporate blueprint prepared by McKinsey & Company, a management consultancy, which was earlier engaged in reforming the WTO Secretariat at a cost of around $1 million, because the terms used do not seem to have originated from give-and-take negotiations between countries, said trade envoys familiar with the development. “WTO negotiations have all along been based on the principle of payment in terms of what a country must secure on its issues for accepting issues that are not part of the agenda – like the introduction of TRIPS or services in the Uruguay Round, and trade facilitation in the unfinished Doha trade negotiations,” said a former chair of the WTO’s General Council from Africa. “But in the facilitator’s reform discussions, there is no such payment, as developing countries are being asked to pay without any return in resolving their specific mandated issues in agriculture and other areas,” the chair said, preferring not to be quoted. “Simplifying the reforms to be carried out in the WTO’s rulebook in a corporate framework raises issues of integrity and credibility,” said one trade envoy, who asked not to be quoted. Under “decision-making”, the facilitator and his developed-country supporters, particularly the so-called “Friends of the System” group, appear determined to fracture the practice of decision-making by consensus enshrined in the Marrakesh Agreement. The first sentence of Article IX of the Marrakesh Agreement that established the WTO in 1995 states explicitly: “The WTO shall continue the practice of decision-making by consensus followed under GATT 1947.” Further, the primary goal of fracturing the practice of decision-making by consensus is to legitimize plurilateral negotiations, which are otherwise not permitted without prior multilateral consensus. The “Objectives,” “Diagnosis Phase,” “Exploration Phase,” and “Convergence and Results Phase” in the confidential draft ministerial document issued on 3 February appear to be palatable. They seem designed to trap trade ministers of developing and least-developed countries at MC14 to approve them with grand promises, somewhat akin to what happened at the launch of the Uruguay Round of trade negotiations in 1986 and the Doha Development Agenda in 2001, said several trade envoys, who preferred not to be identified. “It has become a familiar tactic to promise grand outcomes for developing countries and later leave them in the lurch, as is the case with the unfinished Doha Round,” said trade ministers, who asked not to be quoted. But the unstated objectives, based on the discussions on the three reform issues, are anything but fair and beneficial to developing countries. In reality, the three reform issues appear to contradict the mandated issues, trade envoys said. Decision-making In the confidential draft text, under the title of “decision-making”, the facilitator, Ambassador Petter Olberg of Norway, said the objectives include: 1. “Rebuild trust and alignment in decision-making through a clearer understanding of the factors contributing to recurring delays in reaching consensus. 2. Improve efficiency and outcome orientation in decision-making by exploring flexible approaches and clarifying when and how flexibility tools may be applied through practical guidance. 3. Facilitate the integration of plurilateral outcomes with guidelines with defined parameters to maintain confidence.” Significantly, the facilitator does not mention decision-making by consensus, while introducing terms like “responsible consensus” and “flexible consensus” to “facilitate the integration of plurilateral outcomes.” Developing countries could suffer greatly if the organization turns from a multilateral to a plurilateral one, as is happening with a few countries concluding plurilateral agreements on critical raw minerals in Washington in apparent disregard of the Marrakesh Agreement, said people familiar with the development. The issue in adopting plurilateral agreements, where developing countries will only be takers of commitments without any role in deciding on them, could result in the burial of the multilateral trading system, said trade envoys familiar with the argument. According to the draft confidential text, the facilitator suggested a “Diagnosis Phase.” That phase, seemingly designed by the facilitator, suggests: “Compile factual evidence and take stock of: Past mandates; tools/practices that have been used to facilitate decision-making in the WTO; and types of WTO decisions.” It is somewhat puzzling why the facilitator did not mention the word “consensus” in this “Diagnosis Phase,” said trade envoys familiar with the development. To seemingly confuse trade ministers, the facilitator included an “Exploration Phase” that states, “review the outcomes of the diagnostic phase and, drawing on Members’ discussions, determine needed reforms and develop options or recommendations for reforms.” Under the “Convergence and Results Phase,” Ambassador Olberg says, “build convergence on explored reform options or recommendations, seeking political guidance, and agree on outcomes.” The facilitator appears to confound the issues in such a way without revealing the intended goals, said trade envoys, preferring not to be quoted. Development and S&DT Under the rubric of “Development & S&DT” – a treaty right stated explicitly in the Enabling Clause of 1979 – the facilitator wants to bring about differentiation among developing countries for availing of S&DT, said trade envoys who asked not to be quoted. Ambassador Olberg said the objectives of “Development and S&DT” include: 1. “Clarify and operationalize development-oriented approaches for policy space for industrialization, structural transformation, and economic diversification.” 2. “Make S&DT precise, effective, operational, targeted and evidence-based.” 3. “Strengthen technical assistance and capacity-building, monitoring institutional coherence.” The objectives are seemingly aimed at doing away with treaty-based right of self-designation by developing countries in availing of S&DT and putting an end to the Enabling Clause of the Tokyo Round of the GATT contracting parties. According to the Enabling Clause: “Following negotiations within the framework of the Multilateral Trade Negotiations, the CONTRACTING PARTIES decide as follows: 1. Notwithstanding the provisions of Article I of the General Agreement, contracting parties may accord differential and more favourable treatment to developing countries, without according such treatment to other contracting parties. 2. The provisions of paragraph 1 apply to the following: (a) Preferential tariff treatment accorded by developed contracting parties to products originating in developing countries in accordance with the Generalized System of Preferences. (b) Differential and more favourable treatment with respect to the provisions of the General Agreement concerning non-tariff measures governed by the provisions of instruments multilaterally negotiated under the auspices of the GATT; (c) Regional or global arrangements entered into amongst less-developed contracting parties for the mutual reduction or elimination of tariffs and, in accordance with criteria or conditions which may be prescribed by the CONTRACTING PARTIES, for the mutual reduction or elimination of non-tariff measures, on products imported from one another; (d) Special treatment on the least developed among the developing countries in the context of any general or specific measures in favour of developing countries.” In the objectives stated for S&DT, the real intention of bringing about differentiation among developing countries for availing of S&DT was echoed by the US during the first term of President Donald Trump’s administration in 2019, said people familiar with the development. In the facilitator’s telling, differentiation is reflected in the phrase “operational, targeted and evidence-based,” which takes away the right of self-designation, said a legal analyst who asked not to be quoted. Under the “diagnosis phase”, the facilitator suggests the need to “compile and analyse information on – S&DT usage, beneficiaries, effectiveness, and gaps; WTO provisions relevant to industrial development; “Crisis- response tools”; and WTO technical assistance and capacity-building programs.” The underlying goal of the “diagnosis phase” on S&DT seems to be to gradually make S&DT available only to least-developed countries, as the US has demanded since 2019, the legal analyst said. In the “exploration phase,” the facilitator underscores the need to “review the outcomes of the diagnostic phase and, drawing on Members’ discussions, determine needed reforms and develop options or recommendations for reform.” In the proposed “Convergence and Results Phase,” the facilitator calls for “build(ing) convergence on explored reform options or recommendations [for differentiation among developing countries to avail of S&DT], seek political guidance, and agree on outcomes.” Level Playing Field Issues The genesis of the “Level Playing Field Issues” took place in the trilateral initiative of the United States, the European Union, and Japan, and is primarily aimed at China’s alleged subsidies to its state-owned enterprises. But now, under the aegis of the Norwegian facilitator on WTO reforms, level playing field (LPF) issues have become one of the major reforms to target China, said envoys familiar with the development. The stated objectives in the facilitator’s draft text include: 1. “Establish a shared understanding of LPF challenges, the WTO’s role, and priority areas for focused work”; 2. “Strengthen transparency, notification, and compliance”; 3. “Assess relevant rules and disciplines to determine if and how they can be made more effective in addressing level playing field concerns, including potential distortions, harm, and spillovers, while maintaining flexibility for development policy objectives.” “While the facilitator lays considerable emphasis on LPF issues, why is it that the same level of importance is not given to agricultural subsidies, in which Norway is a major subsidizer, and a prioritized area of focused work?” asked a trade envoy familiar with the negotiations. During the diagnosis phase, the facilitator identified the following issues concerning LPF: “Identify transparency and notification gaps”; “Map level-playing field concerns and identify priority areas for focused work”; and “Review and assess relevant rules and disciplines and explore if and how they can be made more effective in addressing identified level playing field concerns, while maintaining flexibility for development policy objectives.” According to the facilitator, in the exploratory phase of LPF issues, “review the outcomes of the diagnostic phase and, drawing on Members’ discussions, determine needed reforms and develop options or recommendations for reform.” In the convergence phase, the facilitator wants members to “build convergence on explored reform options or recommendations, seek political guidance, and agree on outcomes.” Dispute Settlement Reform Although the reform of the dispute settlement system, with its highest adjudicating arm, the Appellate Body, has been the core mandated reform issue since MC12 in Geneva in June 2022, it has been seemingly de-linked from the WTO reform discussions by the current General Council chair since last year, several envoys complained. In a seemingly secondary treatment of the paralyzed dispute settlement system, which ought to have been the main priority, the facilitator states: “Members acknowledge that fundamental concerns have been raised with respect to the WTO Dispute Settlement system. Members recognize that a well-functioning, reformed dispute settlement system is an important priority. Members agree that further consultations regarding dispute settlement reform, under the auspices of the DSB, should resume after MC14.” The question remains: why was this not done after MC13, and why was it de-linked from the proposed WTO reforms since 2022, asked one trade envoy. Other areas/Issues of our time Towards the end of the controversial confidential document, which includes recent concerns raised by the US and the EU like the discontinuation of MFN (most-favoured-nation) treatment, the facilitator states: “Members may raise additional issues for further work without prejudging outcomes. Some areas of interest mentioned by some Members include MFN, reciprocity, balance of rights and obligations, the use of GATT Articles XX (general) and XXI (essential security) exceptions, the role of the Secretariat and topics under the “Issues of Our Time” track in the Facilitator’s report, among others.” Timeline and checkpoints The facilitator wants the next two years after MC14 to be allotted for reform issues on an expeditious basis. Even though trade ministers agreed at the Hong Kong Ministerial Conference in 2005 to deal with the cotton issue “ambitiously, expeditiously, and specifically” to address the concerns raised by the Cotton-Four countries – Benin, Burkina Faso, Mali, and Chad – they are seemingly buried at the Centre William Rappard that houses the WTO, said a trade envoy who asked not to be quoted. The facilitator’s timelines to address the three reform issues include: “Commence the trust-building and diagnostic phase and identify any additional issues Members wish to raise: 2026 April to July”; “Continue trust-building and diagnosis and start exploration in areas where diagnosis is complete: 2026 September to December”; “Start or continue exploration phase, as appropriate: 2027 January to July”; “Review progress: 2027 July GC (General Council)”; “Commence convergence and results: 2027 September to December”; “Review progress: 2027 December GC”; “Finalize convergence and results phase and begin preparing progress report to ministers including recommendations for action: 2028 Lead up to MC15”; and “Finalize convergence results phase: 2028 A month before MC15.” The so-called “reform ministerial meeting” to be held in Yaounde seems more like a proverbial death warrant for the multilateral trading system (MTS) and the multilateral framework embodying the WTO, said trade envoys and analysts. +
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