Urgency of WTO reform

Urgency of WTO reform

Following the conclusion of the 12th WTO Ministerial Conference (MC12) in Geneva on June 17, the highest level meeting on global trade caused hardly any ripple. In the wake of the lingering impasse concerning WTO activities, there was not much to look up to the Conference to deliver in concrete terms, and so all one is left with is a package of well crafted statements-- of either recognising the commitments of earlier ministerials, or of agreeing to take moves in respect of topical issues such as fisheries subsidy, emergency response to food insecurity, COVID-19 pandemic and preparedness for future pandemics.  However, one issue apparently not directly related to trade but integral for ensuring a coherent trade discipline that came up for discussion is WTO Reform. No doubt an important issue in as much as the role of the global trade body is concerned, particularly in the context of its failure to prevail on circumstances calling for its intervention, the issue of WTO reform is indeed crucial.  

Reforming the WTO is a broad subject, encompassing many facets of the WTO's work. The debate over WTO reform is not new. Soon after the organisation's inception, members have been thinking about how the WTO could be improved in order to respond more effectively to the challenges facing the multilateral trading system. However, the push for WTO reform has gained momentum in recent years, reflecting the following general concerns: 

  1. The challenges WTO members face in initiating, negotiating and concluding trade agreements, both for outstanding issues as well as for fresh ones;
  2. The need to strengthen the work of the WTO's regular bodies and committees as well as strengthen notification and transparency disciplines under existing agreements;
  3. The question of whether, and to what extent, the WTO's more advanced emerging economies should take on greater obligations under the WTO agreements, and whether existing special and differential treatment provisions for developing and least developed countries are sufficient or effective;
  4. Improvements in the functioning of the WTO's dispute settlement system and overcoming the four-year impasse on the appointment of new Appellate Body members.

More than 30 submissions have been made by WTO members individually or in groups on specific topics. One of the early proponents for WTO reform was the Group of 20 leading economies. At their Buenos Aires summit in late 2018, G20 leaders issued a statement acknowledging that the system "is currently falling short of its objectives and there is room for improvement". In subsequent summits, G20 leaders reaffirmed their support for reform of the WTO to improve its functions and pledged to work constructively with other WTO members on the matter, including in the lead-up to the MC12. Submissions on WTO reform have been discussed in the regular meetings of the General Council as well as within the various councils and committees where issue-specific proposals were presented. 

The main focus of the WTO reform has been dispute settlement, prompted by the crisis over the future of the Appellate Body. In August 2017, the United States said it would not agree to the launch of selection processes to fill vacancies on the Appellate Body until its systemic concerns regarding the WTO's dispute settlement system were addressed. 

At meetings of the WTO's Dispute Settlement Body, more than 120 members issued a joint call for the selection process to be started forthwith. Many of these members have warned that the continued impasse on the appointment of new Appellate Body members not only undermines the WTO's dispute settlement system as a whole and the credibility of the WTO itself, but also denies all WTO members their legal right to a binding, two-stage dispute settlement process which is a fundamental pillar of the WTO system. 

As a result of the US hold on Appellate Body appointment and reappointment procedures and the expiry of the terms of the Appellate Body members, the Appellate Body, since December 2019, is no longer able to review new or pending appeals. To date, more than 20 panel rulings have been appealed "into the void", meaning that a resolution of these dispute proceedings is not possible until new Appellate Body members are appointed. All future panel rulings also face the risk of being appealed "into the void" unless a solution is found to the impasse. 

At the MC12, members reaffirmed the foundational principles of the WTO and committed to an open and inclusive process to reform all its functions-- from deliberation to negotiation to monitoring. Notably, they committed to work towards having a well-functioning dispute settlement system accessible to all members by 2024. 

The Ministerial Declaration says: "We acknowledge the need to take advantage of available opportunities, address the challenges that the WTO is facing, and ensure WTO's proper functioning. We commit to work towards necessary reform of the WTO. While reaffirming the foundational principles of the WTO, we envision reforms to improve all its functions. The work shall be Member-driven, open, transparent, inclusive, and must address the interests of all Members, including development issues." The Declaration also adds: "We acknowledge the challenges and concerns with respect to the dispute settlement system including those related to the Appellate Body, recognise the importance and urgency of addressing those challenges and concerns, and commit to conduct discussions with the view to having a fully and well-functioning dispute settlement system accessible to all Members by 2024." 

Can we hope that the WTO General Council, in line with the Ministerial Declaration, will soon be able to formulate reform plans acceptable to all parties? Let's hope the world trade body gains the strength it requires to function as mandated.   

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