TWN Info Service on WTO and Trade Issues (Oct26/13)
13 October 2026
Third World Network

WTO: Members tackle "foundational" reform amid deep divisions
Published in SUNS #10532 dated 13 October 2026

Geneva, 12 Oct (D. Ravi Kanth) -- The facilitator tasked with overseeing the World Trade Organization reform track on "foundational" issues is holding discussions on 12 October, in an alleged attempt to advance what is being seen as an assault on the core provisions of the Marrakesh Agreement that established the multilateral, rules-based, and member-driven global trade body in 1995, said people familiar with the development.

The discussions on issues concerning the four tracks of WTO reform that include foundational issues, decision- making, "level playing field" issues, and development appear to be increasingly dividing the membership due to increasing fears of forcing a "regime change" in the rules to enable plurilateral negotiations by a select group of countries to trump over the mandated multilateral trade negotiations, said a trade envoy, who asked not to be quoted.

So far, the discussions during the past several months have seemingly brought the divisions among members to the fore, including at the recent General Council (GC) meeting last week, where the GC chair, Ambassador Clare Kelly of New Zealand, reportedly said the reform issues were not plucked out of a tree and that they were started by one of her predecessors, Ambassador Petter Olberg of Norway.

Even during the discussions on decision-making on 8 October, various proposals were subjected to many questions to the proponents that seemingly revealed divergent perspectives, said a participant, who asked not to be quoted.

Against this backdrop, it remains to be seen how members are going to respond to the "foundational" issues track on 12 October.

In her email (ICN/GC/REFORM/10) sent to members on 7 October, the facilitator, Ambassador Sumathi Balakrishnan of Malaysia, informed that the meeting will resume with the apparently unfinished discussions of the proposal tabled by the United States.

As previously reported, the US proposal seeks to bring about a radical rupture with the fundamental rules like decision-making by consensus, most-favoured-nation (MFN) treatment for conducting global trade, and a development architecture embodying the treaty-based special and differential treatment (S&DT) that is so vital for developing countries to address historical asymmetries and unequal development.

The facilitator noted that "the  aim will be to provide the United States with an opportunity to present the remaining elements of its papers and respond to questions raised by Members, including during the September plenary, followed by an interactive exchange."

She suggested that members "will then continue with the remaining submissions using the same interactive format, following the order used in July (see ICN/GC/REFORM/1):

* China's Position Paper on WTO Reform under the Current Circumstances - Communication from China (WT/GC/W/989) and Further Reflections and Suggestions on WTO Reform - Communication from China (WT/GC/REFORM/W/12)

* 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)

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

The facilitator appears to not have listed India's proposal on the "guiding principles for plurilateral initiatives and agreements at the WTO" that delves into several foundational issues while suggesting the need to develop guardrails for plurilateral initiatives, said people familiar with the development.

TIME LIMITS

Ambassador Balakrishnan informed members that "as in the previous session, each proponent will be given a maximum of ten minutes to present its submission, followed by an interactive exchange with Members."

The facilitator has limited to three minutes "interventions during the interactive exchange, including to seek clarification, explore the proposal further or better understand its underlying rationale".

It is doubtful whether members can fully relay their views within the time limit, including on the historical background of the evolution of the foundational issues from the first round of the GATT in 1947 to the Uruguay Round in 1986 which built and strengthened the foundational architecture with binding rules.

The US, which played a pivotal role in creating the Uruguay Round rules, wants to do away with several key foundational elements within a matter of 30 years, even though the US legal system continues to rest on a 250-year-old architecture, said a person, who asked not to be quoted.

Ambassador Balakrishnan urged members "to submit questions on the proposals at least three days before the meeting, that is, by Friday, 9 October."

She asked "all proponents to be prepared to present, as I intend to make as much progress as time permits."

"Completing our consideration of the papers would allow us to start reflecting on the next steps, including how best to use the Reform Month in November for focused discussions on specific issues," she said.

ORAL REPORT

In her oral report on the informal plenary session held on foundational issues on 18 September, the facilitator noted the "constructive engagement" among members, while she underscored the need to "maintain momentum, particularly as discussions under this track remain at an earlier stage than under the other tracks."

In the restricted report (JOB/GC/Reform/8) issued on 1 October, she said that "at the time of our meeting, we were still considering one element of the first paper presented by the United States in July."

To recapitulate, the US, in its proposal (WT/GC/W/998), relayed its views on the issues.

They include:

*The US said, "WTO Members can take a step toward leveling the playing field by significantly strengthening incentives to comply with existing obligations to submit notifications."

* Washington said that "Members should seek to restore the purpose of SDT [special and differential treatment] by agreeing to objective criteria [differentiation among developing countries for availing of S&DT, which is based on self-designation] for determining eligibility.

* The US wants Members to "focus on finding a more flexible pathway to incorporate plurilateral agreements into the WTO architecture."

* The US asks 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."

* The US said, "Members should address the role of the Secretariat and consider issuing guidance or taking other actions to ensure the Secretariat serves the interests of the Members - and not of the institution or any abstract trading system."

* With regard to essential security, the US argues that  "Members should agree to an authoritative interpretation of Article XXI of the GATT 1994, Article XIV bis of the GATS, and Article 73 of the TRIPS Agreement, to clarify the understanding of the essential security exception."

Meanwhile, the facilitator wants members to continue "with the format of presentations by proponents, followed by Q&A, to deepen our understanding of Members' perspectives."

She said that "discussion of the US papers would continue, and in the absence of Ambassador Barloon and his wish to engage directly with Members upon his return, I invited Members to raise the questions and comments they wished to, with the understanding that an interactive discussion with the United States would take place in October."

On the issue of MFN, according to the facilitator, "members underlined that MFN and non-discrimination remain important principles of the system, providing stability and predictability for all Members, particularly for developing and LDC Members."

Ambassador Balakrishnan noted that "several Members stressed that reform should begin with a clear diagnosis, including a distinction between issues inherent in the principles and those relating to their implementation."

According to her note, "questions were raised about any conditional approach to MFN, including the criteria that might apply, who would apply them, and how unilateral measures could be avoided."

Many members raised concerns "regarding a self-judging interpretation of essential security."

Ambassador Balakrishnan observed that as regards the role of the Secretariat in the US proposal, she "heard Members recall that the WTO is Member-driven and stress(ed) the importance of neutrality and appropriate oversight, while noting the value of Secretariat contributions, particularly for smaller delegations."

However, some members, who are not named, apparently "questioned whether this issue (concerning the role of the Secretariat) should be considered foundational," the facilitator noted.

The above question assumes importance as the US severely criticized the role played by the WTO Director- General, Ms Ngozi Okonjo-Iweala, in agreeing to act as a depository for the plurilateral Agreement on Electronic Commerce (ECA), which was not formally adopted by members as per Article X:9 of the Marrakesh Agreement, said people familiar with the discussions.

Reviewing the discussion on special and differential treatment stemming from the US proposal, the facilitator noted that "Members also sought greater clarity on S&DT criteria and LDC preferences."

"More broadly, some Members called for reaffirmation of existing principles, while others encouraged reflection on what is truly foundational and on the purpose of a reformed WTO," according to Ambassador Balakrishnan.

The facilitator noted that the European Union presented its proposal, "clarifying that its objective was not to abandon MFN or national treatment, but to examine whether the system provides sufficient flexibility in light of developments since 1995, including changes in trade shares, state intervention, level-playing-field concerns and economic security."

Many members apparently questioned the EU to spell out "the objective basis of any re-balancing of rights and obligations, the preservation of development considerations, and safeguards to ensure that flexibility on economic security grounds does not legitimise unilateral measures."

In a similar vein, while many members remain sharply concerned about alleged attempts to ram through plurilaterals by changing the foundational rules, proponents like Singapore, New Zealand, Norway and other members of the "Friends of the System" group, as well as the US and China are known to be strong advocates for plurilaterals, said a trade envoy, who asked not to be quoted.

The facilitator noted that "some Members saw a role for them (plurilaterals), while [stressing] that they should be transparent, open and anchored in the WTO, with pathways for developing and LDC Member participation, and should not substitute for multilateralism."

Without quantifying or naming the members, the facilitator said that "others expressed reservations about the ability of closed plurilaterals to address foundational issues."

She observed that "members also highlighted links with the level-playing-field and decision-making tracks, as well as the importance of a fully functioning dispute settlement system."

NEXT STEPS

While noting that there are still "a number of proposals to take up during the October session," the facilitator said that "at our next informal plenary on 12 October, the aim would be to provide the opportunity to the United States to present the remaining elements of their papers and respond to the questions raised, including at the September plenary."

She assured the same format with the remaining papers submitted by China, the African Group, the United Kingdom, the LDC Group, Japan and the ACP Group.

She urged "all proponents to be prepared to present, as I intend to make as much progress as time permits."

According to Ambassador Balakrishnan, "completing the consideration of the papers will allow us to devote more time to think about the next steps including how best to use the Reform Month in November for focused discussions on specific issues."

The facilitator reiterated that "this remains a Member-driven process, and that how we advance this track will depend on Members."

She said that she will continue to engage with any interested parties, as "this workstream still has a substantial process ahead in shaping its framework and way forward."

"In particular," she concluded that she "would welcome Members' views on how we can respond to the request for more focused and thematic discussions, while ensuring that all Members have an effective opportunity to participate." +