TWN Info Service on WTO and Trade Issues (Sep25/05)
9 September 2026
Third World Network

WTO: US, EU, China set out rival visions as foundational talks resume
Published in SUNS #10509 dated 9 September 2026

Geneva, 8 Sep (D. Ravi Kanth) -- The facilitator overseeing the discussions/negotiations on reform of the World Trade Organisation under the "foundational issues" track is expected to convene an informal plenary session on 18 September, in an apparent move to force a "regime change" in the fundamental WTO rules, such as the most- favoured-nation (MFN) principle, said people familiar with the development.

Although the WTO reform discussions were not formally approved at the WTO's 14th ministerial conference (MC14), held in Yaounde, Cameroon, earlier this year, the chair of the WTO's General Council, Ambassador Clare Kelly of New Zealand, has been conducting discussions based on the MC14 chair's report - which is rather unheard of in the history of the WTO negotiations since 1995, said a trade envoy who asked not to be quoted.

The "WTO reform" discussions seem to lack legitimacy and appear to set new precedents in a rules-based, member-driven, and intergovernmental organization, the envoy said.

Against this backdrop, the facilitator on "foundational issues", Ambassador Sumathi Balakrishnan of Malaysia, sent an email (ICN/GC/Reform/5) to members on 7 September, informing them that during the next meeting, "we will continue our consideration of Members' submissions."

In the latest communication, the facilitator suggested "resuming our discussion of the United States' communications (WT/GC/W/984 and WT/GC/W/998), providing the United States with an opportunity to present its perspectives and Members with an opportunity to engage in an interactive exchange."

Subsequently, the floor will be open for the European Union to present its submissions, "contained in documents WT/GC/W/986 and WT/GC/REFORM/W/6, followed by China's submission in document WT/GC/W/989."

The facilitator noted that "time permitting, we will proceed to the presentation and consideration of other Members' submissions, following the order used in July, which is reflected in document ICN/REFORM/1."

The other submissions to be addressed include:

* WTO reform: Development-centred priorities for a balanced WTO - Communication from the African Group (WT/GC/W/992);

* More relevant, more flexible, more accessible - Communication from the United Kingdom on WTO reform (WT/GC/W/993);

* LDC submission on WTO reform - Communication from The Gambia on behalf of the LDC Group (WT/MIN(26)/17, WT/GC/W/991/Rev.1);

* Designing together a fairer and more dynamic system - Communication from Japan (WT/GC/Reform/W/8); and

* Fundamentals for WTO reform - Communication from the ACP Group (WT/GC/W/975).

The facilitator noted that "each proponent will be given a maximum of 10 minutes to present its submission, followed by an interactive exchange with Members."

Members' interventions "during the interactive exchange, including to seek clarification, explore the proposal further or better understand its underlying rationale, should be limited to a maximum of three minutes."

SUBMISSIONS

In its submission (WT/GC/W/998), the United States called on Members "to rethink how the MFN principle functions in its current form and embark on a frank discussion of the link between MFN and reciprocity, which itself is a bedrock WTO founding principle."

However, the US assertion about the link between the MFN principle and reciprocity appears to have arisen after it announced unilateral "fair and reciprocal" tariffs in April 2025, which suffered several legal setbacks in the US courts.

Moreover, any change in the MFN principle would be tantamount to dismantling the current rules-based architecture underpinning the WTO, said a trade envoy who asked not to be identified.

The US insisted that "members have long recognized that transparency is a fundamental component of fair play and therefore vital to a level playing field, and that fulfilling notification obligations is critical to the negotiating and monitoring functions of the WTO."

Washington maintained that "transparency is a precondition for trust and for negotiating "reciprocal and mutually advantageous arrangements" envisioned in the WTO's founding documents."

It underscored the need to rethink unconditional MFN, claiming: "Perhaps the worst kept secret in Geneva is that MFN as a core principle of the global trading system is largely honoured in the breach."

Arguing that unconditional MFN "was designed for an era of deepening convergence" that no longer exists, the US traces MFN's evolution from conditional US practice (1778-1923) through GATT exceptions to widespread avoidance today.

It asserts that the principle "fails to promote reciprocity and balance" and has become "a straitjacket that cements the status quo and enables free-riding."

In its proposal (WT/GC/W/986) and later in document WT/GC/W/Reform/6, the European Union called for a fundamental reform of the WTO, arguing that the system established in 1995 is no longer fit for purpose.

In the EU's view, at MC14, trade ministers formally recognized the need to address these "foundational issues," making it a primary focus for the upcoming General Council negotiations.

However, it remains unclear how many trade ministers called for discussing the "foundational issues" and how many members fiercely objected to doing so, said several trade envoys who asked not to be quoted.

The EU contends that three major shifts have broken the WTO's original balance: massive state interventions causing industrial overcapacity; new vulnerabilities like economic coercion and supply chain "weaponization"; and a dramatic shift in global trade shares that remains unreflected in members' outdated obligations.

"Commitments and other rules that are not adapted to today's realities create a political legitimacy problem," the EU said, adding: "If the rules and commitments are no longer seen as fair and effective, the political buy-in decreases, leading to further erosion of the entire multilateral trading system."

A key focus of the EU's proposal is re-evaluating the MFN principle. While MFN remains a cornerstone of predictable trade, the EU notes that it is already highly qualified by existing exceptions.

The EU suggests that the system must adapt to allow members flexibility to address economic security and critical dependencies.

To operationalize this modernization, the EU proposes two preliminary pathways:

1. Reviewing existing MFN exceptions: ensuring they provide sufficient room to integrate economic security and supply chain resilience considerations;

2. Sectoral plurilateral agreements: creating pacts that combine liberalization with strict disciplines, where benefits are reserved only for participating members.

Ultimately, the EU asserts that the largest players in global trade must shoulder greater responsibility.

"It is especially the biggest players with a significant share in global trade ... that must assume their responsibility to contribute to a fairer global trading system, strengthening the political legitimacy of rules-based trade."

CHINA'S STAND

China reiterated its position as a "staunch supporter and active contributor to the multilateral trading system."

In its submission (WT/GC/W/989), China outlined its vision for reform amid global trade turbulence.

The Chinese proposal addresses governance, development, fairness, and dispute settlement while defending the core WTO principles against what it characterizes as unilateralist challenges.

Unlike the US and the EU, China has championed the continuation of economic globalization.

Contrasting with Washington and Brussels, China asserts that "The rules-based multilateral trading system remains critical to WTO members, especially the small and the vulnerable."

China affirmed that an "open, inclusive, transparent and non-discriminatory multilateral trading system serves the interests of all."

Even amid "heightened trade tensions and unprecedented uncertainties," the system has prevented a return to 1930s-style protectionism, with 72% of world goods trade still operating on MFN terms, China noted.

Without naming the US, China warned that "blatant violation of the MFN principle and abuse of security exceptions are eroding the foundation of the rules-based multilateral trading system," signaling "the return of power-based trade relations where the small and the vulnerable would be marginalized."

The WTO's chronic inability to update the rules and the Appellate Body paralysis have shifted rule-making outside the organization, reducing its relevance, China argued.

China states that "the fundamental question for WTO reform is what kind of globalization members want."

Reform, it argued, must reinforce global trade governance for "economic globalization that is universally beneficial and inclusive."

In contrast to the US and the EU, China insisted that the MFN principle shall remain the bedrock of the WTO and that development dimensions shall be put at the centre of WTO reform.

Reform should address longstanding issues while exploring future-oriented rules to enhance the system's "authority, efficacy and relevance."

On special and differential treatment (SDT), China argued that "SDT provisions should be implemented in a more precise and effective manner to better facilitate the full integration of developing members into the multilateral trading system."

China identifies SDT, policy space, capacity building, and Aid for Trade as essential tools for developing members.

MEETING IN JULY

The last meeting on "foundational issues" in July seemingly faced some "heavy weather" due to the facilitator's suggestion that only the first two or three proposals submitted by members would be taken up for discussion, said people familiar with the development.

In her report issued after the meeting, the facilitator suggested that "many Members have expressed a desire for a clearer understanding of what this track encompasses."

She observed that some members urged caution given the sensitivities involved, while others emphasized that the track "should not be left behind."

To resolve this, many members proposed undertaking a neutral scoping or mapping exercise to clarify the track's scope and objectives, while strongly emphasizing the need to distinguish this track from other reform tracks to avoid duplication.

According to the facilitator, many members emphasized that all contributions - whether oral or written - should receive equal consideration, and that any time-lines must account for capacity constraints faced by smaller delegations.

A suggestion was made that written questions be submitted to proponents in advance of plenary discussions, with written responses circulated beforehand.

However, many members favoured a more flexible approach, recognizing that "proposals differ in nature" and that progress could be achieved through multiple channels, including bilateral exchanges and informal consultations.

DIVERGENT VIEWS

For many members, the foundational issues comprise "the core principles embedded in the Marrakesh Agreement that underpin the legitimacy and functioning of the WTO."

These include MFN treatment and non-discrimination, transparency, predictability, consensus-based decision making, binding dispute settlement, development, special and differential treatment (S&DT), and the balance of rights and obligations reflected in the Marrakesh Agreement.

Also, many members seem to have described foundational issues as "treaty embedded principles that form the constitutional architecture of the multilateral trading system."

A significant division has seemingly emerged regarding the track's objectives, the facilitator noted.

"Many Members considered that the purpose of this track should be to reaffirm the WTO's foundational principles rather than to renegotiate or dilute them, arguing that many of the challenges facing the Organization arise from shortcomings in implementation rather than deficiencies in the principles themselves."

Conversely, a small group of industrialized countries seems to reckon that the foundational issues should provide an opportunity to examine "whether the existing foundational principles remain fully suited to contemporary realities." +