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TWN
Info Service on WTO and Trade Issues (Oct26/25) WTO:
Foundational issues - competing diagnoses of WTO’s problems Geneva, 23 Oct (D. Ravi Kanth) -- The report issued on 22 October by the facilitator overseeing the foundational issues track of World Trade Organization reform, Ambassador Sumathi Balakrishnan of Malaysia, revealed sharply differing assessments of the global trading system’s shortcomings. At a meeting convened on 12 October, Ambassador Balakrishnan said members had “heard presentations of all papers submitted thus far - from the United States, China, the African Group, the United Kingdom, the LDC Group, Japan and the ACP Group.” She acknowledged that “members offered different perspectives on the challenges that the WTO reform process should address under this pillar.” The facilitator reported that “some” members argued that the anticipated convergence towards open, market- based economies at the WTO’s establishment in 1995 had not materialised and that rules based on this assumption should be reconsidered. This observation appears to be consistent with the US position on changing the WTO’s multilateral framework to advance its non-Most-Favoured-Nation (MFN) approach and reciprocal trade, said several trade envoys who asked not to be quoted. Ambassador Balakrishnan also reported that “others” maintained that globalization had failed to deliver sufficiently inclusive benefits and that WTO rules had not kept pace with technological change, evolving production structures and global supply chains. Many members, meanwhile, warned against predetermined reform outcomes, stressing that the trading system was not designed to harmonize economic models. A large majority of members, including developing and least-developed countries, emphasised that the development promises contained in the Marrakesh Agreement remained unfulfilled. They argued that reform should strengthen implementation of the negotiated balance rather than reopen the foundational principles. The facilitator also noted that “some” members pointed to non-market policies and practices, as well as excess capacity, as the root causes of the current challenges. These included the US, the European Union, Japan and several other industrialised countries, according to the positions described in the discussions. Members additionally highlighted “the growing concentration of trade flows, the qualitative profile of trade and unfulfilled mandates, including in agriculture.” An agriculture negotiator who asked not to be quoted said that the facilitator appeared to have downplayed the importance of agricultural reform as demanded by many developing countries. Non-market policies and practices, excess capacity, growing concentration of trade flows and outstanding mandates, particularly in agriculture, nevertheless featured prominently in the discussions. Ambassador Balakrishnan highlighted a recurring view that “diagnosis should precede prescription and should be grounded in evidence.” MFN treatment MFN treatment emerged as a major point of contention, particularly over the scope for exceptions and the implications for the predictability of the multilateral trading system. Some members suggested reviewing existing exceptions, including those relating to regional trade agreements, in light of supply-chain resilience and economic security. Others proposed clarifying existing exceptions, developing faster mechanisms for modifying concessions or exploring temporary waivers. Several favoured making more effective use of existing flexibilities. The report appears to understate the serious concerns expressed by many members about the US use of MFN exceptions. Ambassador Balakrishnan reported that “concerns were raised that expanding the MFN exceptions or introducing conditionality could lead to discretionary or unilateral discrimination and undermine predictability.” Members also raised questions about the criteria, safeguards, decision-making procedures and legal pathways for introducing new exceptions. Reciprocity The US has repeatedly invoked reciprocity in trade as a longstanding policy dating back to the establishment of the Republic. The debate over reciprocity exposed further divisions. Ambassador Balakrishnan reported that “some” members raised concerns about free-riding and persistent trade imbalances, while others cautioned against attaching conditions to MFN treatment in the name of reciprocity.
The report did not identify the countries holding these positions; the US, the EU and other industrialised countries were among those raising concerns about imbalances, according to the positions described in the discussions. Members also highlighted the importance of preserving least-developed-country treatment and S&DT while exploring targeted remedies for specific problems. The discussion underscored the links between MFN, development, the level playing field, decision-making and dispute settlement. Role of WTO Secretariat Members broadly praised the Secretariat’s professionalism but differed over how its work should be supervised. The US identified transparency, neutrality and oversight as areas for consideration. Some members sought clearer parameters for Secretariat publications, external representation and statements on issues where members had not reached consensus. Others defended the Secretariat’s technical and analytical autonomy, particularly because smaller delegations depend on its expertise to participate effectively. They warned against excessive prescription, micro-management or requiring members to approve reports. Proposals included clearer disclaimers for external engagement, better information on activities and resource allocation, and structured mechanisms for member requests based on agreed terms of reference.
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