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TWN
Info Service on WTO and Trade Issues (Oct26/14) WTO:
US pressed on MFN "re-think", un-notified deals at reform
meet Geneva, 13 Oct (D. Ravi Kanth) -- Several countries seemingly questioned the United States, China, and the United Kingdom over their respective proposals at an informal meeting on the "foundational" issues track of World Trade Organization reform, with Washington having apparently justified its stance on rethinking the most-favored-nation (MFN) principle and its link with reciprocity, said people familiar with the development. At an informal meeting on "foundational" issues convened on 12 October by the facilitator, Ambassador Sumathi Balakrishnan of Malaysia, the general tone and tenor of the exchanges appeared somewhat conversational, said a trade envoy, who asked not to be quoted. The discussions on the WTO reform tracks concerning "foundational" issues, "decision-making", "level-playing- field" issues and "development" seem to be increasingly proving to be an alleged attempt to push plurilateral negotiations by whittling away the principle of consensus-based decision-making as enshrined in Article IX:1 of the Marrakesh Agreement that established the WTO in 1995. It is in this context that the US trade envoy, Ambassador Joseph Barloon, who was reportedly absent during the first meeting last month on "foundational" issues, answered several questions about the basis of the US demands, according to people present at the meeting. Briefly, the US proposal centred on several themes that range from: * transparency and notification requirements to changing the development architecture, particularly doing away with the self-designation framework for availing of special and differential treatment (S&DT) by developing countries; * bringing a "more flexible pathway to incorporate plurilateral agreements into the WTO architecture" 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"; and * examining the role of the Secretariat to fortifying essential security that could severely undermine the enforcement function. In its presentation, the US seemingly went into the first round of the General Agreement on Tariffs and Trade (GATT) in 1947 while returning back to today's realities. QUESTIONS Brazil apparently sought to know how Washington would visualize changes to MFN treatment, the bedrock of the multilateral non-discriminatory principle. In response, it appears that the US trade envoy gave a philosophical reply, saying that it was a good question which required a longer examination. Ambassador Barloon, in the same tone, is understood to have said that the US did not have a set or preordained outcome in mind, said people familiar with the development. Brazil apparently sought clarity on the deals that the US has signed with numerous countries under the stated objective of fair and reciprocal trade since April 2025, which have not been notified to the WTO till now, according to the participant who took part in the meeting. The Brazilian trade envoy Ambassador Guilherme de Aguiar Patriota apparently asked whether the reciprocal trade deals signed with members will ever be notified and in particular, their tariffs and how they would apply - if on an MFN basis or in another manner, said participants, who asked not to be identified. However, the US apparently remained silent, and it appears the issue was not discussed during the session. Somewhat paradoxically, the US trade envoy appears to have said the important aspect for now would be what members want, before they can discuss how to change MFN. The US trade envoy apparently cited US Trade Representative Ambassador Jamieson Greer's statement to the effect that the US wants to produce more of what it consumes and to keep a manufacturing base, an issue that has all along been justified on grounds of the trade deficits that the US had suffered over the years, said participants, who asked not to be quoted. The Brazilian trade envoy seemingly conveyed to his US counterpart that most members would want to adopt the same approach, namely, to produce more of what their nationals consume and to preserve or, in some cases develop, a manufacturing base, said an Asian participant, who asked not to be quoted. Further, Ambassador Patriota appears to have commented that imbalances in trade based on the trade deficit should not be examined only quantitatively, as is often the case by pointing to total values of deficits or surpluses, but should be considered also qualitatively, because a member may have a surplus based on export commodities with low value-added, but may have a deficit in manufactured goods of high value-added, the Asian official said. Several members also severely questioned the US on its positions on MFN and S&DT, but the US trade envoy was apparently able to provide reasoned and rational justifications, said participants, who asked not to be quoted. Some of the WTO reform proponents seem to have maintained that MFN is now a glue keeping members from increasing trade and deepening market opening agreements in a balanced and reciprocal manner. On the controversial role of the WTO Secretariat that seemingly exposed the lack of neutrality and impartiality, several members apparently agreed with the US stance about the Secretariat, said participants, who asked not to be quoted. However, some of the WTO reform proponents, particularly members of the "Friends of the System" group, supported providing more latitude to the Secretariat than the US seemed ready to concede, said participants, who asked not to be quoted. +
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