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Info Service on WTO and Trade Issues Geneva, 15 Jun (D. Ravi Kanth) -- The chair of the World Trade Organization’s Dispute Settlement Body (DSB), Ambassador Guilherme de Aguiar Patriota of Brazil, will be convening an “in-person only” meeting on 23 June to relaunch the negotiations on reform of the dispute settlement system (DSS) - stalled for two years - by posing a set of strategically targeted questions designed to generate traction, said people familiar with the development. In a message to Heads of Delegation on 12 June, seen by the SUNS, the chair said that he “would like to draw Members’ attention” to his statement to the DSB meeting last month, in which he outlined his intention to revive the DSS negotiations. The underlying rationale of the upcoming 23 June meeting, the chair explained, is to “invite Members to share their current views on the technical work done so far and what basis further technical work could proceed.” He referenced the lack of consensus over the progress report (JOB/GC/DSR/5) issued in December 2024 by the former chair of the WTO’s General Council (GC), Ambassador Petter Olberg of Norway. According to several trade envoys speaking on condition of anonymity, the GC chair’s report deliberately conflated issues across three areas - “accessibility”, “appeal/review mechanism”, and “work done thus far” - apparently to appease one powerful member. That member, they said, had previously wrecked the Appellate Body and rendered the WTO’s most critical enforcement mechanism nearly redundant. Although a majority of members called for restoring the two-tier DSS - with the Appellate Body as the final arbiter issuing binding rulings - trade envoys said the former facilitators appeared to have watered down the real issues within the appeal/review mechanism. Against this backdrop, the new DSB chair invited members “to reflect on certain elements emerging from the technical work carried out in 2024, as contained in the document JOB/GC/DSR/5, where discussions on some areas appeared to identify possible avenues for convergence.” The chair then posed several questions in areas where there is particular convergence, including: 1. “To what extent do Members consider that recent technical discussions have identified avenues for convergence in specific DS reform areas? How do Members view the role of existing draft texts and technical outputs in relation to further work? 2. What are Members’ view on the overall direction of DS reform in the area of appeal/review? 3. How do Members assess the usefulness and desirability of introducing “material impact on implementation” (MII)? How do Members support giving panels greater opportunity at the interim stage to address factual or legal issues before the final reports are circulated? 4. How do Members assess current challenges faced by developing and least-developed country Members in participating effectively in dispute settlement? What are Members’ views on strengthening capacity-building and technical assistance initiatives in the context of dispute settlement? 5. What are the main issues that were not sufficiently discussed in previous DS reform processes that will require further work?” Since much of the discussion on the DSB chair’s questions will center on the report (JOB/GC/DSR/5) issued by the allegedly controversial former GC chair, one trade envoy who requested anonymity said that it is important to recap the contents of that document. SUMMARY In his summary, the former GC chair claimed that significant progress was made in the DS reform discussions through the end of December 2024. Although “accessibility” was the first topic in his document (JOB/GC/DSR/5), Ambassador Olberg maintained that “on Appeal/Review, we now have draft negotiating text on potential reforms.” The proposed reforms in the Appeal/Review mechanism would include: 1. “Narrow the claims reviewable on appeal/review to those that would have a material impact on the respondent's implementation obligations; 2. Clarify adjudicators' role with respect to reviewing the panel's objective assessment of the facts of the case; 3. Make changes to the existing interim review stage of the panel process such that it provides a more meaningful opportunity for the panel to correct factual or legal errors; and 4. Clarify Members' expectations with respect to adherence to timeframes. That is a significant step forward.” An African trade envoy, speaking on condition of anonymity, said the above summary by the previous GC chair seemingly fails to reflect the concrete reforms needed in the appeal/review mechanism. If anything, the envoy added, it pushes members toward agreeing to a material devaluation of the binding enforcement function. Ambassador Olberg, however, claimed that “progress in some areas is positive but I encourage Members to find a pathway towards reconciling their different interests and concerns on core issues, including the form that an appeal/review mechanism should take and what its role should be.” Without specifying the core issues or the need for reconciliation in the appeal/review mechanism, Ambassador Olberg did admit that “on these matters in particular, the majority of Members have indicated that their interests are best-served by the key features of the current system without fundamental changes to them.” Trade envoys speaking anonymously said that this admission implies that a large number of countries seemingly pressed for continuing with the two-tier dispute settlement system. ACCESSIBILITY In his summary “on accessibility”, the former GC chair said that “first and foremost, we now have a substantive, near-final draft of a chapter relating to the two areas of “Capacity Building” and “Technical Assistance”.” Ambassador Olberg stated, “While there are some minor outstanding points to deal with, the drafting has been based on months of discussions explicitly shaped by and for the proponents, together with well-attended drafting groups and plenary sessions.” He claimed that “experts have produced a text that positively captures the proponents' interests while taking on board the concerns of others.” “Amongst other things,” said Ambassador Olberg, “the text: (1) recognises the special needs of developing country and LDC Members; (2) instructs the Secretariat to undertake additional tailored activities and support; (3) establishes a dialogue between Members and the Secretariat; and (4) establishes a review and reporting mechanism to the DSB.” According to the former GC chair, “in addition, a detailed Annex lays out Members' current needs and considerations as articulated by the proponents themselves.” He said that “this text (JOB/GC/DSR/5) is a significant achievement, and I thank proponents and non-proponents alike for their constructive and collaborative approach in finding these interests-based solutions. Indeed, one byproduct of this process is that Members have gained a much greater awareness of and appreciation for the existing training, capacity building, and legal assistance mechanisms available to them, while also bearing in mind that improvements and reform of the system can and should be made.” The former GC chair noted that “the more contentious area of “Costs and Funding” has also seen significant progress.” He praised “experts” for having engaged in detailed discussions through papers and workshops, obtaining a better understanding of the underlying interests in this area and the possible alternatives to meet such interests. Ambassador Olberg said: “A first draft table to capture those interests and concerns has now been produced, to facilitate more in-depth discussions in the future.” WORK DONE THUS FAR Reflecting on “work done thus far”, the former GC chair elaborated on how transparently the discussions were held, noting that “the work product includes the Informal Consolidated Text (JOB/GC/385), the Communications from certain Members during the informal process, and new proposals made during this formal process.” CONCERNS RAISED However, several developing countries raised sharp concerns about the overall discussions on DSS reform. Egypt, India, and South Africa, for example, listed specific objections to the informal negotiating process, arguing that it bypassed the crucial issues. In document JOB/DSB/7 circulated on 24 November 2023, the three countries reiterated the following “fundamental elements that shape our engagement in the reform process”: * “The foundational principles of the dispute settlement system as embodied in the Marrakesh Agreement represent a fine balance of the interests and concerns of the members of the WTO. This balance relates not only to the dispute settlement pillar itself, but to the preservation of an integrated, equitable, durable, and effective rule-based multilateral system. * Reform of the WTO dispute settlement system is central to providing security, stability and predictability to this system. Such reform should be seen as an opportunity for creating a more inclusive and equitable trading environment. * Developing countries have long-standing interests in reforming the dispute settlement system and addressing the structural defects that negatively affect the ability of many of them to resort to the dispute settlement system in order to safeguard their rights under the WTO rules. * A reformed dispute settlement system should recognize that developing countries including LDCs face challenges, such as capacity constraints, resource limitations, and limited access to legal expertise. As such, it should incorporate mechanisms that facilitate their effective participation in dispute settlement proceedings, and help to overcome their administrative, technical, and financial constraints. * The reform process and the changes it brings about, should not make the dispute settlement system more onerous, in practice, for developing countries including LDCs. * Dispute settlement reform should be addressed in a holistic manner. Reforms should be conceptualized and implemented as a comprehensive and balanced package, and address the concerns and interests of all Members, in particular developing countries and LDCs. * At the heart of the outcome on dispute settlement reform is the need to restore the functioning of the Appellate Body as an integral part of the two-tiered multilateral dispute settlement system.” More importantly, the three countries noted that “the outcomes of the current “informal discussions” have to be considered and evaluated in the context of its initiation and evolution.” They alleged that “the current informal discussions are a continuation of the US initiated and led informal delegate level discussions, which started in April 2022,” adding that “the informal process, which is now being voluntarily convened by a delegate, is based on the discussions during the US-led process.” The three countries argued that “the themes being discussed at present under the “informal discussions” were not intended to be a comprehensive listing of concerns of the whole membership,” noting that “they were a prioritization, for further discussion, of some of the interests that had been raised during the US-led process.” They also stated that “Special and Differential Treatment, which had been raised as an interest by several countries, was not listed as a theme for further discussion.” “It is crucial to acknowledge the challenges faced by developing countries, particularly LDCs, in actively participating in the ongoing informal process,” they said. Egypt, India, and South Africa noted that “the Informal meetings are organized in multiple configurations, including working groups and small group meetings. These informal meetings are often convened in parallel with or overlapping with formal WTO meetings and negotiations, for instance, the General Council, and the Fish Week.” Furthermore, they argued that “the informal and fragmented nature of the process, with its multiple meetings and lack of record-keeping, creates information asymmetry, particularly for capacity-constrained delegations. This places excessive reliance on the reporting by a volunteer convenor.” And more critically, “the discussion and drafting processes favour the participation of resource-rich delegations, who are able to follow the process through sustained in-person participation in Geneva,” the three members said, adding that “the informal discussions do not allow for the virtual participation of capital-based officials.” Also critically, they said that “the drafting process deviates substantially from the accepted practice at the WTO. The process hampers the ability of delegations that cannot actively participate in the process, from following the evolution of and contributing to the formulation of the consolidated zero text.” Even more disturbingly, they said “members cannot submit their own textual submissions on any aspect that is of importance to them.” The three countries demanded that “going forward, the full, effective and equal participation of the WTO membership has to be ensured through an inclusive, equitable and transparent process.” “A multilateral, member-driven and inclusive discussion under WTO formal bodies, preferably under the guidance of the Chair of the Dispute Settlement Body, is a prerequisite to meeting the mandates of paragraphs 3 and 4 of the MC12 Ministerial Declaration,” the three countries argued. In short, Ambassador Olberg - who appears to have been accused of “hijacking” the DSS reform negotiations and, in his new role, steering them toward the broader WTO reform discussions in 2025 on foundational issues - has seemingly ignored the central issues of DSS reform. +
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