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Info Service on WTO and Trade Issues (Apr26/04) Geneva, 7 Apr (D. Ravi Kanth) — The Norwegian Foreign Minister who chaired the discussions on reform of the World Trade Organization at the failed WTO’s 14th ministerial conference (MC14) in Yaounde, Cameroon, has acknowledged that “despite divergences, the importance placed on advancing WTO reform work was evident.” The Minister-Facilitator led talks in four areas: foundational issues and WTO principles; decision-making and past mandates; development; and level playing field issues. In his report (WT/MIN(26)/39) issued on 2 April, the Norwegian Minister-Facilitator, Mr. Espen Barth Eide, states: “Members recognized the value of the WTO, noting that it promotes trade and economic development, enhances predictability, and that several of its core functions are operating effectively, particularly its councils and committees, including in trade monitoring and addressing trade concerns in the SPS and TBT committees.” In the same vein, Mr. Barth Eide argues: “At the same time, some noted that the WTO cannot solve all issues, including imbalances, overcapacity and overconcentration of production and economic security, and that this should be recognized not as a failure of the system but as an acknowledgement of the limitations of the WTO’s functioning.” He notes: “It was also mentioned that the WTO Secretariat should focus on its administrative role of serving the Members and refrain from driving policy” – an issue repeatedly raised by the United States before and during MC14. According to trade envoys familiar with the report, the Norwegian minister – like his trade envoy, Ambassador Petter Olberg, who conducted the WTO reform discussions that sparked major controversies and claims of lack of credibility – presented a rather vague account without quantifying how many members underscored the need for reforms or how many countries said that the WTO should not venture into “all issues.” The envoys, speaking on condition of anonymity, also raised serious complaints about how the Minister- Facilitator ran the small-group meetings, including excluding some major members without explanation at MC14. FOUNDATIONAL ISSUES On most-favoured-nation (MFN) treatment, the Norwegian Minister-Facilitator said: “Members expressed appreciation for the MFN as a cornerstone of the multilateral trading system, with some emphasizing its role in ensuring predictable and stable market access, particularly for smaller and export dependent economies.” He did not specify how many countries referred to MFN treatment, which stipulates non-discriminatory trade as enshrined in Article I of the GATT (1994). He further states: “Several Members also underscored the importance of maintaining and strengthening MFN as an effective tool for reducing inequality and safeguarding against power-based trade relations.” According to the Minister-Facilitator, “there was broad recognition that the WTO’s foundational principles, including the MFN, remain indispensable to global trade, but are not functioning as originally intended.” Without naming the United States and the European Union, the Minister-Facilitator maintains that “some Members highlighted that, for the WTO to remain relevant, some of its rules, including the MFN, need to be adapted to reflect current economic realities.” Without naming China, he adds: “It was pointed out that some Members [China] have industrialized successfully while under-complying with state aid and transparency requirements, creating advantages the system did not intend to provide.” Citing unilateral measures, without naming the United States, which has upended MFN-based trade with its unilateral reciprocal tariffs, the Minister-Facilitator notes: “Moreover. it was highlighted that the selective application of the MFN principle in the context of unilateral measures, along with the increased use of the national security exception, has contributed to weakening trust in the system.” Attempting to link MFN and level playing field issues, he said this relationship warrants “closer scrutiny as to whether stronger disciplines, such as more rigorous transparency and compliance with regard to state intervention and other sources of trade distortion, can safeguard MFN while addressing fairness concerns.” He said that “the scope and parameters of security and domestic policy related measures under GATT Articles XX and XXI require clarification, given their increased invocation,” adding that “several called for a good faith effort to delineate what falls inside or outside the intended ambit of these exceptions.” According to the Minister-Facilitator, “the issue of policy space – particularly the use of industrial policy – must be addressed directly,” and that “many economies, developed and developing alike, are deploying strategic measures.” Mr. Barth Eide said: “The challenge is to reconcile these practices with non-discrimination, predictability and development needs while acknowledging the diversity of the Membership including their domestic interests and economies.” In a seemingly confused interpretation of the discussions, the Minister-Facilitator appears to have made observations such as “it was likewise noted that the Membership needs to address the challenges in the Organization’s functioning.” Without revealing the number of countries, he states: “There were those who urged progress through inclusive plurilateral approaches that avoid blockage while remaining anchored in WTO principles and preserving the multilateral character of outcomes.” Trade envoys who asked not to be quoted said that, in short, the Norwegian Minister-Facilitator seems to indicate a need to move away from Articles IX and X of the Marrakesh Agreement, which clearly set out multilateral processes for reaching consensus on plurilateral initiatives. Without naming China and the United States, the Minister-Facilitator says: “Persistent notification gaps, the proliferation of unilateral measures, and an expansive reliance on exceptions [special and differential treatment] have strained confidence that the existing rules are being respected.” The Minister-Facilitator adds: “Several Members stressed that the core problem often lies not in the text of the rules but in compliance with them, warning that ongoing bilateralism and the lack of enforcement have contributed to a de facto reform of rulemaking, implementation and enforcement outside the WTO’s ambit” – a seemingly pointed reference to the reciprocal tariff havoc created by the United States. Commenting on the dispute settlement system, the Minister-Facilitator observes: “Many Members highlighted the absence of a fully functioning dispute settlement system and stressed the need to restore it to ensure the effective implementation of rules.” He said that “a few members pointed to the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a viable and well functioning alternative mechanism for appeals.” Several trade envoys, speaking anonymously, said the Minister-Facilitator should have explained how many countries called for a fully functioning dispute settlement system, without which the WTO’s enforcement function remains fragmented. Mr. Barth Eide notes that there was “broad recognition that the WTO must continue to support the integration of developing and LDC Members into the multilateral trading system and the global economy,” and that “technology transfer, policy space for industrialization, and inclusive digital trade were highlighted as priorities.” It is well known that special and differential treatment (S&DT) is a treaty-based right anchored in the 1979 Enabling Clause. According to the Minister-Facilitator, many members “consider S&DT essential in this regard, emphasizing the need to focus on persistent development challenges and to improve the effectiveness of S&DT.” He further notes that “the principle of proportionality was articulated clearly: equal conditions do not imply identical obligations – responsibilities should reflect capacity to distort trade.” Even though developing countries may claim S&DT on a self-designated basis, several industrialised countries led by the United States consider that “S&DT should primarily protect the most vulnerable, expressing concern that it is sometimes used by stronger economies.” Highlighting the “Draft Ministerial Statement and the Work Plan,” the Minister-Facilitator states: “some voiced strong support while others described it as a most common denominator that could be built upon.” Some members “expressed that agreeing to processes is not the same as producing concrete proposals, with a preference for focusing on discussing substance based on Members’ proposals.” He said that “good process is the indispensable tool for achieving substantive outcomes, calling for a transparent, inclusive and Member-driven post-MC14 reform process under the auspices of the General Council, with a two year horizon geared towards yielding meaningful and necessary reforms.” DECISION-MAKING On decision-making and past mandates, the Minister-Facilitator admits that while “there was universal recognition that consensus is essential for inclusivity, legitimacy, and collective ownership of decisions and no Member suggested abandoning consensus-based decision-making,” many members “stressed the particular importance of consensus for developing and LDC Members as it ensures equality in decision-making regardless of Members’ size or economic power.” He adds somewhat ambiguously: “At the same time, support was expressed for a more flexible decision-making approach based in consensus that would enable to deliver more outcomes” – a demand of the “Friends of the System” group led by Switzerland, the United States, the EU, and China. On the issue of consensus, the Minister-Facilitator states: “Many Members emphasized that the challenges do not stem from consensus itself, but rather from shortcomings in transparency, lack of inclusive engagement, failure to honour past mandates, and an erosion of trust.” In their view, according to the Minister-Facilitator, “the priority, therefore, should be to preserve consensus while strengthening the processes that support it, such as ensuring early and open engagement, early sharing of information, improving transparency, and rebuilding trust.” He said that “some participants also noted that existing rules already provide mechanisms to move forward in the absence of consensus, including voting procedures.” In short, he said “they stressed the importance of making better use of these provisions, particularly those in Articles IX and X of the Marrakesh Agreement, rather than creating new approaches that would themselves require consensus to adopt.” The Minister-Facilitator appears to favour plurilateral agreements, stating: “plurilateral agreements were broadly recognized as a pragmatic means of allowing like-minded Members achieve outcomes where consensus on multilateral outcomes proves difficult.” He argues that “some Members noted that plurilateral agreements are already envisaged within the WTO rulebook and warned that preventing their incorporation risks rendering the WTO irrelevant.” (It may be recalled that at MC14 India blocked the incorporation of the Investment Facilitation for Development Agreement (IFDA) into Annex 4 of the WTO Agreement on procedural and systemic grounds, while around 130 countries called for its incorporation, seemingly ignoring Article X of the Marrakesh Agreement.) Mr. Barth Eide points out that “at the same time, Members stressed that plurilateral agreements must align with fundamental WTO principles” and that “plurilaterals should be transparent, open, inclusive, and not undermine multilateralism, but instead complement it.” Members underscored that “the need for appropriate guardrails to ensure that non-participants are not subject to unintended obligations was also highlighted, alongside the importance of allowing any Member to join at a later stage.” The Minister-Facilitator says, “there was a wide recognition of the need for flexibility, calibrated commitments, and transition periods that reflect differing levels of development as Members cannot all move at the same pace.” He argues that “there was broad recognition of the need to honour existing mandates, particularly in agriculture and special and differential treatment (S&DT).” He adds, “some Members emphasized the importance of stocktaking to assess what has been achieved and what remains outstanding.” Without naming countries, he said that “others drew a link between decision-making and past mandates, noting that unimplemented mandates fuel frustration and hinder progress.” He maintains that “a view was expressed that only Ministers have the authority to discontinue mandates, and that mandates cannot be re-read, altered through reinterpretation or allowed to lapse implicitly.” DEVELOPMENT On the issue of development, the Minister-Facilitator notes “the cross-cutting nature of development in WTO work,” saying that “there were those who said that they participated in the WTO because they view trade as a catalyst for growth, structural transformation and poverty reduction.” Highlighting the issue of policy space, according to the Minister-Facilitator, “there was wide recognition of the importance of preserving policy space for industrialization, digital transformation and economic resilience while safeguarding MFN and addressing negative spillovers from industrial subsidies and security-related measures.” However, he notes that “there were those who said that discussions on policy space should not be collapsed into broader industrial policy debates, arguing that the former are more advanced and should proceed on their own merits.” Members of the G90 coalition, which had tabled Agreement-specific proposals to strengthen the development disciplines, insisted that “self designation of development status remained a sovereign prerogative, and voluntary differentiation or opt out mechanisms may be pragmatic so long as they do not erode core WTO rights.” The G90 coalition told the Minister-Facilitator that “Special and Differential Treatment (S&DT) remained a treaty embedded, foundational pillar that should be preserved and made more effective” and “cautioned against narrowing S&DT through ex ante targeting or rigid criteria, such as per capita thresholds or categorical labels, that could weaken access for developing and LDC Members.” In contrast, the United States, the EU, and several other industrialised countries argued that “operationalizing the development objectives required targeted approaches that linked obligations directly to each Member’s capacity, making commitments fit for purpose.” “In this regard, S&DT should not be reduced to exemptions and flexibilities alone,” they said, underscoring the need to “make rules more usable and outcomes more development-enhancing including by ensuring that the provision of S&DT is targeted and needs based.” On agriculture, according to the Minister-Facilitator’s report, several South American countries highlighted agriculture reform “as integral to the development agenda in WTO work” “A comprehensive update under Article 20 of the Agreement on Agriculture – addressing trade-distorting support, improving market functioning and advancing food security – was noted as a tool to deliver meaningful development gains.” On technology transfer, the Minister-Facilitator says: “A view was expressed that WTO Reform should facilitate technology transfer, capacity building and deeper participation in global value chains.” LEVEL PLAYING FIELD ISSUES On level playing field issues, the Minister-Facilitator states: “Members noted that the global context has changed significantly since 1995, when the WTO was established amid growing economic integration, strong growth, and poverty reduction. By 2026, the environment has shifted markedly, with ongoing inequalities, greater geopolitical and socioeconomic tensions, increased state intervention, efforts to secure supply chains, and intensifying competition over critical technologies and resources.” While industrialised countries suggested “a credible level playing field as indispensable to restoring confidence in the multilateral trading system,” the Minister-Facilitator said that “some expressed the view that WTO should be forum to discuss LPF issues and resolve problems.” Others noted that the WTO has not been fully effective and questioned its capacity to address these issues, leading to reliance on unilateral trade measures and negotiations. These members emphasised the need for concrete actions rather than merely procedural steps, he said. The Minister-Facilitator states: “At the same time, there was broad recognition that the WTO can take certain actions, primarily by enhancing transparency. Many members observed that transparency deficits – marked by chronic under-notification and incomplete subsidy reporting undermined trust in and enforcement of WTO rules.” It was noted that reform discussions should address how to improve incentives and disincentives for fulfilling notification obligations. It was also suggested that the Secretariat could play a facilitating role by assisting Members, especially those with capacity constraints, in complying with their notification obligations. However, the Minister-Facilitator said it was noted that, while transparency is crucial, it is not sufficient to address level playing field issues. “There were those who saw that the current rules have not kept pace with the scale and form of state interventions, producing gaps that generated distortions and perceptions of unfairness. They suggested that reform should result in firmer disciplines on subsidies to deter distortions and tackle global overcapacity, including from non-market actors.” “They also emphasised the need for a WTO that equips members with effective instruments to restore balance, noting that current trade defence measures are cumbersome, slow, and often too delayed to be effective,” said the Minister-Facilitator. “Others said that calibrated policy space was needed in order for rules not to constrain responses to legitimate objectives, since the current ones leave underlying distortions unchecked.” “While some defended MFN as foundational, others noted that MFN could also impede levelling the playing field, particularly when confronting entrenched non-market practices. They pointed to unilateral measures, as well as bilateral and plurilateral negotiations, as necessary stopgaps amid their perception that the WTO has not been capable of addressing many of these issues.” In conclusion, the Minister-Facilitator reiterated that “overall, despite divergences, the importance placed on advancing WTO reform work was evident.” Mr. Barth Eide said the world in 2026 is “much different than back in 1995 when the WTO was established.” He said there are therefore certain questions that need some kind of response in order to keep the organization relevant. “Allowing renewed fragmentation of the world economy would impose costs on all Members – large and small – undermining economic growth, trust, and the legitimacy of the rules-based multilateral trading system,” he cautioned. +
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