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Info Service on WTO and Trade Issues (Dec25/15) Geneva, 11 Dec (D. Ravi Kanth) — The facilitator overseeing the discussions on “WTO reform” has suggested that “there was not full agreement on every element” of reform and that “divergent views were expressed on several substantive matters,” following his transparency plenary session last week. In a restricted four-page report (Job/GC/474) circulated on 8 December, the facilitator, Ambassador Petter Olberg of Norway, appears to have made several conflated statements that tend to project that the “tone of the discussion was consistently positive.” However, privately, several trade envoys said that there was a lack of consensus on all three reform issues – “decision-making; development and S&DT; and the level playing field” – as they seemed to be inconsistent with the mandates of the WTO’s 12th Ministerial Conference (MC12) held in Geneva in June 2022 and the WTO’s 13th Ministerial Conference (MC13) held in Abu Dhabi in March 2024. Moreover, according to one trade envoy, the facilitator seemingly undermined reform issues concerning all WTO functions while focusing on the three issues, which were not explicitly mentioned in the previous two ministerial mandates, said people familiar with the development. Trade envoys also stated that the facilitator’s framing of the three issues did not stem from a bottom-up process or from an agreed-upon ministerial mandate. GENERAL OBSERVATIONS The facilitator’s report, issued under his own responsibility, appears to contain his own assessments based on input from a small coalition of the “Friends of the System” and other industrialized countries, while many countries expressed sharp concerns over the three issues, said people familiar with the report. The facilitator argued that members “have moved from initial conversations about reaffirming the Preamble and assessing what works and what does not, toward identifying specific areas of focus, defining concrete challenges, and considering possible approaches to address them,” even though many members were not engaged and discussions were largely limited to small groups, said people familiar with the development. The facilitator cited a remark made by Australian Ambassador James Baxter that “we have gone a lot further than we’ve ever been in addressing some of the issues that many of us feel have been holding back the organization”. In stark contrast, several members expressed strong opposition, suggesting that there was no forward movement on any of the three issues, according to people familiar with the development. Moreover, the Australian viewpoint does not in any way represent the scepticism expressed by many members, as it appears to be part of the narrative of the “Friends of the System” group, they said. The facilitator said that “although considerable work still lies ahead, I believe we now have a solid building block that will help us advance our efforts when we return in January,” a view not shared by several members, said people familiar with the discussions. DECISION-MAKING In his report, the facilitator said “at the risk of sounding like a broken record, I have heard no Member question the practice of decision-making by consensus” – which is a cardinal principle of the Marrakesh Agreement. He said there “was a shared frustration with the challenges Members face in reaching decisions.” However, Ambassador Olberg did not address the crucial question of whether decisions should be made even if they violate the rules, both procedurally and systemically, in a rules-based organization like the WTO, said people familiar with the development. The facilitator said, “these concerns range from difficulties in participating effectively in processes and hesitancy in joining consensus, to seemingly perpetual impasse in negotiations, limited outcomes, unfulfilled mandates, and enforcement challenges stemming from the situation in WTO dispute settlement.” “As many of you highlighted,” the facilitator said, “global trade continues to evolve rapidly, and we operate with 166 Members who have diverse interests and levels of ambition.” “This creates an additional source of frustration: plurilateral initiatives. For some, the concern lies in the difficulty of advancing issues of interest; for others, it is the perception that mandated areas are being neglected,” the facilitator said. In a multilateral trade organization, mandates are negotiated and agreed upon after considerable work and remain sacrosanct unless terminated by another General Council or Ministerial decision. To suggest that plurilateral initiatives, even if not multilaterally approved, seem to trump the established mandates could change the direction of the WTO, said a person familiar with the development. The above suggestion by the facilitator raises serious doubts about whether the multilateral essence of the WTO ought to be sacrificed in pursuing plurilateral initiatives, the person said. The facilitator said, “It is precisely these challenges that underline the need for reform in our decision-making processes – a point many of you acknowledged.” However, many members apparently conveyed their strong opposition to any change in the consensus principle, according to participants in the discussions. The facilitator also said that “let me simply note that many suggestions pointed toward ensuring effective participation by all Members and facilitating our ability to reach and implement decisions.” DEVELOPMENT AND S&DT In his remarks on “Development and S&DT,” the facilitator said “Members emphasized that development should not be equated solely with S&DT. While no Member challenged S&DT itself, views differed on the challenges and approaches: “First, aside from capacity-building and technical assistance, several Members noted that there are no other approaches addressing development directly, beyond S&DT. In this context, a suggestion was made to move policy space for industrial development from the level-playing-field (LPF) track to this workstream. I will return to this point when we discuss LPF. “Second, specifically on S&DT, discussions reflected a range of perspectives across three broad approaches: (i) making S&DT more precise, effective and operational, (ii) adopting targeted and needs-based approaches, and (iii) introducing eligibility criteria, differentiation mechanisms, or time-bound limitations. Several Members also questioned why attention is focused exclusively on S&DT and on limiting this exception, while other frequently invoked exceptions – such as GATT Articles XX and XXI – appear to receive less scrutiny. “Third, several Members also pointed out the need to take into account in the approaches, the vulnerabilities and priorities of LDCs, SVEs, LLDCs and SIDS, among others, and those of MSMEs and women.” The facilitator’s pronouncements and approaches are allegedly not only contrary to the MC12 and MC13 mandates but also fail to highlight the opposition to differentiation among developing countries for availing of S&DT, which is a treaty-based right for developing countries on a self-designated basis. The facilitator said he is “reflecting further on how best to incorporate these suggestions in my report.” “LEVEL PLAYING FIELD” Commenting on “the level playing field” track, the facilitator said that “nearly all Members agreed that this is the most complex reform workstream, given the depth of the issues and the divergences among them.” It is commonly understood that the “level-playing-field” issues have been raised by the US, the European Union, and Japan primarily targeting China, which has been alleged to provide a plethora of subsidies to its state-owned enterprises, said people familiar with the development. The facilitator said “it was unsurprising that all Members viewed this workstream as important yet challenging, each from markedly different perspectives.” “We managed to capture these viewpoints in a single page, though, as Ambassador (Joseph) Barloon (of the United States) reminded us, concise formatting can obscure substantial detail,” the facilitator said. “As Sung-yo (the Korean deputy trade envoy to the WTO) summed it up, this track includes transparency, trade and industrial policy, policy space for industrial development and agriculture,” he said. The facilitator’s citations of the Australian trade envoy, the US trade envoy, and the Korean deputy trade envoy to support his controversial views, while excluding comments made by developing country trade envoys, suggest a bias in favour of positions advanced by industrialized countries, said people familiar with the development. SUSTAINABLE DEVELOPMENT The facilitator said that he “heard that the element of sustainable development in its three dimensions – environmental, social and economic – should also feature.” Ambassador Olberg said he is “reflecting on how to incorporate the specific views expressed and the comments made on the challenges and possible approaches.” Reflecting on “the general views,” the facilitator said that he “heard [a desire] to hopefully structure how we proceed in this area.” “Concerns were, of course, raised, with some Members highlighting elements of the one-pager they did not agree with, and others noting areas that were not yet clear. This suggests that our immediate task on this track will be to find a way to focus and structure the discussion effectively.” The facilitator’s discussions appear to have raised serious concerns among members, leading to a crisis of confidence in the manner in which reforms are being advanced by a select group of industrialized countries, said people familiar with the development. +
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