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TWN
Info Service on WTO and Trade Issues (Feb26/20)
WTO: Developing countries protest facilitator’s “top-down”
break-out strategy Geneva, 20 Feb (D. Ravi Kanth) — The Norwegian facilitator overseeing the discussions on the reform of the World Trade Organization (WTO) has presented a “top-down” agenda – including a “revised draft ministerial statement” and “suggested questions” – ahead of break-out sessions beginning on 20 February. The move has caused an uproar among many developing countries on grounds that the facilitator appears to be prejudging the outcomes of the issues in an allegedly biased manner, according to people familiar with the development. Instead of discussing the WTO reform issues in an open plenary session, the facilitator, Ambassador Petter Olberg of Norway, is holding “break-out” sessions with 166 members, divided into four groups, to confound the discussions, several trade envoys alleged. “It is easy to manufacture decisions by holding break-out sessions, which will not be possible in an open-house, member-driven framework,” said trade envoys. Further, reducing the proposed three reform issues – changing the practice of consensus-based decision-making, differentiation among developing countries for availing of special and differential treatment (S&DT), and level-playing field issues – into a one-page template hides the real intentions aimed at radically changing the multilateral trade organization established under the Marrakesh Agreement, said people familiar with the development. The reform proposals are seemingly aimed at transforming the multilateral trade organization into a plurilateral body that would enable major industrialized countries – such as the United States, the European Union, and the so-called middle-income group of countries known as the “Friends of the System” – to exclude all other developing and least-developed countries. In an email sent to members on 17 February on the “Draft Ministerial Statement”, seen by the SUNS, the facilitator appears to be deciding the outcome under his own responsibility without negotiating through a “bottom-up” process, said trade envoys who asked not to be quoted. Draft Ministerial Statement The draft ministerial statement begins by expressing “commitment to advancing reform of the WTO,” while acknowledging in passing “our commitment at MC12 and MC13.” While MC12, held in Geneva in June 2022, called on members to “address the challenges that the WTO is facing, and ensure the WTO’s proper functioning,” it also urged members to “commit to work towards necessary reform of the WTO. While reaffirming the foundational principles of the WTO, we envision reforms to improve all its functions. The work shall be Member-driven, open, transparent, inclusive, and must address the interests of all Members, including development issues.” In a similar vein, the MC13 ministerial declaration on 2 March 2024 reaffirmed “our commitment made at our Twelfth Session to work towards necessary reform of the WTO to improve all its functions and acknowledge the progress made in this regard. We note and value the work done to date to improve the daily functioning of WTO Councils, Committees and Negotiating Groups with a view to enhancing the WTO’s efficiency, effectiveness, and facilitation of Members’ participation in WTO work.” Yet, during the last two years of work on WTO reforms, the facilitator appears to have “hijacked” the discussions toward the three issues to allegedly appease the US, despite its imposition of unilateral reciprocal tariffs and other alleged violations that have almost upended the rules-based global trade body, said trade envoys who asked not to be quoted. The latest draft ministerial statement merely states that members “express commitment to advancing reform of the WTO. We acknowledge our commitment at MC12 and MC13. We take note of the work carried out thus far including written submissions by Members. The exchanges have highlighted a range of issues and perspectives that Members have identified as warranting further exploration with the expectation that additional areas will continue to emerge through ongoing discussions.” However, the perspectives offered by members are not clearly reflected in the one-page note the facilitator sent to members. The draft ministerial statement states that members “value the constructive nature of the discussions and instruct officials to continue work with a sense of urgency, guided by the Work Plan. We further instruct that a progress report, including recommendations for action, be provided to Ministers at our next session. Ministers will conduct a midway review ahead of MC15.” However, the facilitator’s statement above appears to be misleading, as serious questions are being raised by several members, including Paraguay and even China, about the thrust of the issues being foisted onto members, said people familiar with the development. WTO Reform Work Plan The facilitator, under his own responsibility, has framed the issues that do not appear to reflect the sentiments of all the members. He cites “Decision-Making, Development and Level Playing Field Issues – as a starting point.” Ambassador Olberg laid out his views on the three issues under his own responsibility. On “Decision-making,” the facilitator framed three issues: (i) Rebuild trust and alignment in decision-making through a clearer understanding of the factors contributing to recurring delays in reaching consensus; (ii) Improve efficiency, flexibility and outcome orientation in decision-making; and (iii) Clarify how plurilateral outcomes can be integrated into the Marrakesh Agreement. On development, the facilitator listed three issues that were hardly echoed by developing countries. If anything, they reflect the issues raised by the US, the European Union, and other industrialized countries. The three issues listed by the facilitator are: (i) Clarify and operationalize development-oriented approaches and examine how rules can more effectively enable integration into global value chains in a manner that supports growth, while ensuring appropriate policy space; (ii) Make S&DT precise, effective, operational and targeted [differentiation]; and (iii) Strengthen technical assistance and capacity building, monitoring and institutional coherence. On level-playing field issues (LPF), the facilitator framed the following three issues: (i) Establish a shared understanding of LPF challenges, the WTO’s role, and priority areas for focused work; (ii) Improve transparency, notification and compliance; and (iii) Determine if and how relevant rules and disciplines can be made more effective in addressing concerns, including distortions, while maintaining flexibility for development policy objectives. According to the facilitator, the key activities include: a. Decision-making: Compile factual evidence and take stock of (i) past mandates; (ii) tools/practices that have been used to facilitate decision-making in the WTO; and (iii) explore if and how different decision thresholds could apply to different types of WTO decisions (e.g., administrative matters, rulemaking). b. Development: Compile and analyse information on: (i) S&DT usage, beneficiaries, effectiveness, and gaps; (ii) WTO provisions relevant to industrial development; and (iii) WTO technical assistance and capacity-building programs. c. LPF issues: (i) Identify transparency and notification gaps and underlying reasons; (ii) map level-playing field concerns and identify priority areas for focused work; and (iii) review and assess if updated rules and disciplines are needed to address identified concerns while exploring flexibility for development policy objectives. d. Determine needed reforms and develop recommendations including options for action. Towards the end of the draft ministerial statement, the facilitator mentioned “dispute settlement” on a somewhat weak note. He says, “Members acknowledge that concerns have been raised with respect to the WTO Dispute Settlement System and that the system is not working well and needs to be reformed. This is an important priority for rules-based trade. Members agree that consultations on dispute settlement reform, under the auspices of the Dispute Settlement Body (DSB), should resume following MC14.” Modalities The draft ministerial statement also spelled out the modalities to be followed, including: * Authority: Work will be conducted under the authority of the General Council. The WTO Reform process should continue to be Member-driven, open, transparent, and inclusive, and address the interests of all Members. * Indicative Timelines/checkpoints: Work will resume in April 2026. The General Council will review progress at its meetings in July 2026, December 2026, July 2027, and December 2027, with senior officials participating as necessary. Ministers will conduct a midway review ahead of MC15. Responses Members appear to be alarmed over the facilitator’s draft ministerial statement on WTO reform issued on 17 February on grounds that Ambassador Olberg “is attempting to lock in a reform agenda and transmit it to Ministers at MC14 in Yaounde as a basis for action, despite the absence of anything approaching convergence,” said people familiar with the development. A growing number of countries appear to be frustrated and have criticized the “step-motherly” treatment accorded to the mandated issues, which have been excluded from the WTO reform discussions. “Development is invoked rhetorically – “making S&DT precise, effective, operational and targeted”, compiling data on “beneficiaries”, examining “integration into global value chains”,” said a trade envoy who asked not to be quoted. “This is the language of graduation and compliance, not economic transformation,” the trade envoy said, adding that “absent from the core text are agriculture, food security, industrialisation, technology transfer, and the paralysis of dispute settlement.” “Instead, the conversation gravitates toward decision-making efficiency, plurilateral integration into the Marrakesh Agreement, and new disciplines on state intervention under the banner of “level playing field”,” the envoy said. The text’s treatment of decision-making raises particular concerns. The Work Plan proposes to “explore if and how different decision thresholds could apply to different types of WTO decisions (e.g., administrative matters, rulemaking),” said people familiar with the development. In practical terms, this opens the door to voting or qualified-majority mechanisms that could override consensus – the principle that has historically given smaller and poorer members a voice in the system, said people familiar with the development. The level playing field section tasks members with assessing whether “updated rules and disciplines are needed to address identified concerns, including distortions” – language that effectively presupposes the outcome, said people familiar with the development. Members appear concerned that the issue of dispute settlement is being cordoned off entirely. It appears in a standalone paragraph, outside the three-pillar work programme, with nothing more than an agreement that “consultations … should resume following MC14.” The dispute settlement system has remained paralysed for eight years, yet the text treats the dysfunctional Appellate Body as a secondary concern – to be revisited only after the core business of rewriting the rules is underway. This sequencing means that developing countries are being asked to negotiate new obligations in a system that currently lacks a functioning enforcement mechanism. “Any new disciplines agreed without a restored appellate process would be effectively unenforceable against powerful Members, while smaller countries would face the full weight of first-instance panel rulings with no avenue for appeal,” said a former General Council chair from Africa. +
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