The facilitator overseeing the informal discussions concerning the reform of the World Trade Organization’s dispute settlement system is planning to issue a draft negotiating text next week after ongoing intense meetings in different groups focused on drafting, implementation and peer review among others, WTD has learned.
The intense discussions apparently began early this week. Based on ongoing discussions among members in different groups, the facilitator, Marco Molina, the deputy trade envoy of Guatemala, is expected to issue his draft text next week, said a person, who is familiar with the ongoing discussions.
The draft text, when presented to members next week, will indicate how far the US proposals are accommodated by the facilitator, said a participant who asked not to be quoted.
The draft text also will be judged on whether it reflects the seemingly weak language of the G20 Leaders Declaration on DSS reform. The G20 Declaration merely said “We reiterate the need to pursue WTO reform to improve all its functions through an inclusive member-driven process and remain committed to conducting discussions with a view to having a fully and well-functioning dispute settlement system accessible to all members by 2024. We commit to work constructively to ensure positive outcomes at the WTO’s Thirteenth Ministerial Conference (MC13).”
The G20 Declaration is silent on preserving the binding two-tier dispute settlement system with the AB being at the helm of resolving global trade disputes.
In an interview with The Times of India on the day when the G20 leaders meeting began in New Delhi on September 9, WTO Director General Ngozi Okonjo-Iweala downplayed DSS reform.
She told the newspaper, “Dispute Settlement System has been one problem and somehow WTO came to be defined by that. It took time to explain to people that it is not defined by that alone. Even now, the first level system (the panel process) is working.... only the Appellate Body is not working. We need to bring it up-to-date with things like digital trade.”
The expanded BRICS (Brazil, Russia, India, China, and South Africa) in its declaration issued on August called for “the restoration of a fully and well-functioning two-tier binding WTO dispute settlement system accessible to all members by 2024, and the selection of new Appellate Body Members without further delay.”
A weak dispute settlement system would imply that one critical pillar of the WTO, namely, the two-tier binding dispute settlement accessible to all members by 2024 is going to be permanently weakened, said people, who asked not to be quoted.
Against this backdrop, the prospects for a robust two-tier dispute settlement system with the Appellate Body being the final adjudicator, seem pretty grim at this juncture as attempts are underway to elevate the concerns of the United States to reduce the binding appellate review without any teeth, a former negotiator said.
The United States helped to create the two-tier dispute settlement system, but now, Washington seems to be engaged in “killing” the AB now, said people who asked not to be identified.
As reported in WTD, in his last report issued in July, the facilitator said there are “highly sensitive issues for which Members still hold different conceptual views about how to tackle them,” without explaining what these “conceptual views” are and who has raised them, said people familiar with the development.
Earlier, the African Group tabled a proposal calling for enhanced transparency and inclusiveness in the WTO's dispute settlement reform discussions.
Though several members with the necessary negotiating resources in the informal discussions like the United States, the European Union, China, Japan, Canada, Norway, Australia, New Zealand, India and a few other countries may be aware of the “highly sensitive issues” and the “conceptual views” surrounding them, as mentioned by the facilitator in his report to members on July 28, a large majority of members with limited or no negotiating resources are allegedly being kept in the dark, said several members, who preferred not to be quoted.
The facilitator, who has been praised for his efforts by the United States and other industrialized as well as some developing countries, seems to be adopting a “stealthy” approach that could further reinforce serious doubts as to whom he is working for, said a regular participant in the DS reform discussions who preferred not to be quoted.
Apparently, Washington is in favor of informal discussions rather than in a formal mode at the Dispute Settlement Body, the participant said.
The facilitator’s one-page report appears to be “ambiguous and unhelpful” for those countries that are unable to participate in the informal discussions, particularly those from Africa, as they are being forced to spread thin their negotiating resources in other areas of work that are simultaneously taking place at the WTO, said several participants who preferred not to be quoted.
Many members at last week’s WTO General Council meeting echoed their concerns about the paralyzed dispute settlement system and demanded the full restoration of the Appellate Body.
The manner in which the informal discussions started with the appointment of Mr. Molina as the facilitator five months ago was never clearly explained to members, said one member, suggesting that it seemed like a “surreptitious” process.
Nevertheless, the facilitator went about conducting the process in an informal mode and on an expeditious footing, by trying to narrow down differences on several issues, said another member, who preferred not to be quoted.
The facilitator has issued confidential reports at different stages during the last five months, with the latest being the one he circulated in July. It is not clear yet whether he has issued another report as everything about the process remains somewhat mysterious, the member said.
In his July report, the facilitator said he anticipates “a very intense process,” suggesting that, “Time is of the essence and circumstances oblige. Members have identified the reform of the dispute settlement system as the top priority and an expected outcome of the 13th Ministerial Conference.”
He maintained that “Before being considered by the Ministerial Conference, any outcome of this informal process should be introduced to a WTO body, most likely the DSB.”
“Considering that Members should have enough time to analyze the outcome of the informal process, that gives us only 3 to 4 months to conclude our work as part of the informal process,” he said. Mr. Molina acknowledged that “we are in the final stretch and there is still a lot of work to do.”
The facilitator emphasized that, “To strike the right balance between the intensity needed to achieve the objective of delivering by the Ministerial Conference; and the need to ensure meaningful participation of all, particularly, of small delegations, I will continue to take every possible measure to ensure that all delegates have plenty of opportunities to participate, express their views and see those reflected in the final outcome.”
Despite the facilitator’s seemingly reassuring words about the process, doubts continue to persist over the informal process and how a text is likely to be cobbled together informally.
There are also alleged fears that a text agreed informally could be foisted onto members at an appropriate stage as a “take-it-or-leave-it” text, said a former trade negotiator, who is well versed in the negotiating “pyrotechnics” of the earlier ministerial conferences, including MC12, at which several African members said they were excluded from the “green room” processes.
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