A year after facilitating the informal discussions for reforming the World Trade Organization’s fractured dispute settlement body, the facilitator, Marco Molina from Guatemala appears to have been called by his government with immediate effect from Geneva, said people familiar with the development.
It remains to be seen who will replace Mr. Molina in the facilitator role or how his sudden departure will affect the negotiations.
Mr. Molina’s work in facilitating the reform discussions of the WTO’s Dispute Settlement System won praise, but also created considerable controversy over issues concerning transparency and lack of inclusivity, said people familiar with the discussions.
In three days, on 17 February, we will mark the first anniversary of the informal Dispute Settlement Reform Process that I have been facilitating.. We are also only 10 days from the start of the Ministerial Conference in Abu Dhabi.
This is a timely opportunity to brief Members and His Excellency, Minister Dr Thani bin Ahmed Al Zeyoudi, on the progress that we have achieved in the informal process on Dispute Settlement reform, including the presentation of the text that we have been working on, and to explore the necessary steps to successfully conclude the discussions.
I will start by providing an overview of the key aspects of the informal process. Specifically, I will outline our objectives and rationale for the actions taken so far and how these are reflected in the consolidated text. I will then address any remaining elements that require attention to fulfil our collective objective of having a well-functioning dispute settlement system accessible to all Members by 2024.
I would like to recall that the process that I am facilitating is not the traditional negotiations based on positions. The informal dispute settlement process follows a solution-oriented, interest-based, bottom-up approach.
The process is solution-oriented and builds up on the interests that Members identified in 2022, when the United States convened meetings to understand Members’ expectations regarding the operation of the dispute settlement system. From April 2022 to January 2023, Members identified and discussed over 230 different interests. We took those 230 interests that had already been identified by Members and classified them into different groups.
The informal process on dispute settlement reform started on 17 February 2023, when we transitioned to more focused and solution-oriented discussions, based on identified interests. Subsequently, I invited Members to propose ideas and conceptual approaches that could potentially address the interests identified by Members.
The response and commitment by Members were unprecedented. Members presented more than 70 proposals. In doing so, Members themselves, collectively, defined the scope of the informal process on dispute settlement reform. Based on these proposals, we started interest-based conversations. Please allow me to use an example to illustrate the interest-based concept:
Consider a scenario where two persons go to the market to buy a pumpkin, and there is only one left. In a position-based negotiation, they may pursue outcomes where one person wins and takes the pumpkin home, and the other person loses. Another outcome would require the two finding a “compromise” and split the pumpkin, leading to suboptimal results.
In contrast, an interest-based approach seeks to understand the underlying interests. For example, one person may be interested in using the pumpkin for decoration, while the other wants it for a soup. Through an interest-based approach, they can agree to purchase the pumpkin together, each can pay half of the price, and then divide the pumpkin according to their respective interests – one person could get the pulp for the soup and the other the shell for decoration. The result is that both parties are fully satisfied, and the pumpkin is optimally used. Interest-based negotiations are highly recommended by top think tanks and universities, as one of the ways to achieve the best possible results.
This is precisely the approach we have adopted in the informal process on dispute settlement reform since February 2023. We started open discussions with Members to uncover their interests and concerns behind their proposals, akin to understanding what purpose each Member wanted to achieve with the pumpkin. Subsequently, we deliberated on the implementation of a potential agreement, delineating the terms and conditions of the transaction (in the example, that would be the cost allocation of the pumpkin, division arrangements, and timing). Following this, we documented our potential agreement in writing, embodied in a text that reflects the discussed terms and conditions. Finally, we have meticulously reviewed the text, refined its language, and ensured its understanding among all Members. On certain occasions, we have recalibrated the terms and conditions to optimize results, striving to achieve the most favourable outcome possible.
An interest-based approach offers the key advantage of reducing power imbalances and fostering inclusive dynamics, allowing every Member to contribute meaningfully. By centering discussions around interests and concerns rather than leverage, this approach ensures fairness and equality for all Members, regardless of their size or status. This commitment to valuing every perspective equally ensures that our collective pursuit of optimal solutions remains untainted by external factors.
The outcome of our interest-based negotiations is a text devoid of square brackets, colour coding, attributions, or other markers typical of position-based negotiations. Through a collective effort to maximize outcomes, the text transcends individual national stances, embodying a shared pursuit of common goals. While the solutions presented may deviate from initial positions, they adeptly tackle the core interests and concerns underpinning those positions. Coming back to my example of the pumpkin, a Member may not have secured the entire pumpkin, but it acquired the part that what was essential or desired from the outcome to either prepare a soup or create a decoration.
During the informal process on dispute settlement reform, we have adhered to the principle that nothing is agreed until everything is agreed. Eventually, Members will have the opportunity to review the text as a comprehensive package to determine its overall acceptability.
I am confident that the text will gather acceptance as it effectively reconciles interests and concerns and provides optimal outcomes. However, it is still early for Members to consider the text as a whole because some crucial elements are yet to be incorporated into the text. The text represents the most optimal calibration achievable until today in most of the areas under consideration, but not in all of them.
In our work in the informal process on dispute settlement reform, we have also adopted a bottom-up approach led by dispute settlement experts based here in Geneva. This complements the interest-based approach integral to this process. Success hinges on engaging in substantive and dynamic discussions to grasp the underlying interests and concerns, and to propose and deliberate on innovative ideas to reconcile them.
The text that I am presenting today is the seventh iteration. I would like to be clear; this is not a text that I have prepared by myself. This text and its previous versions are the result of Members’ collective efforts. Delegates have actively contributed to drafting the text and all changes are discussed in plenary sessions.
As I reported to the Dispute Settlement Body, I personally invited all WTO Members to participate in the drafting exercise. Fifty-two delegates volunteered to work on the drafting exercise to prepare the draft chapters.
Each iteration of the text reflects feedback received from the plenary sessions, to which all Members are invited to participate. The changes introduced into each iteration resulted from conversations and understandings reached during those plenary sessions. Each new re-calibration of elements reflected in the text responds to ideas discussed in plenary sessions and seeks to balance different views expressed by Members.
Transparency has been a cornerstone of this process, with the plenary informed of every small-group meeting. No change has been introduced to the text without prior discussion in the plenary session. All Members are fully informed of each step taken and changes to the text are shown with tracked changes.
It is important to note that Members are not leaving anything to improvisation. What you see in the text is the result of discussions that have taken place since 2022. We have explored every possible angle of each question. Members have participated in frank and substantive discussions that have resulted in practical and innovative solutions to reconcile interests and concerns.
More importantly, we are not rushing any decisions. If delegates are unsure about certain aspects of the text or they need to consult with their Capitals, we leave the discussion and revisit issues at the following plenary session. When recalibration of interests and concerns is needed, this is reflected in the next iteration of the text.
Furthermore, this process has provided all Members with ample opportunities to participate and express their views. Since 17 February 2023, I have convened more than 350 meetings, including 110 plenary sessions open to all WTO Members, as well as numerous small-group and bilateral meetings. Members have had ample opportunities to share their views.
Further, I have responded positively to each request for bilateral meetings, resulting in more than 45 in-person and virtual meetings with Capital- and Geneva-based Officials. And this does not include the spontaneous conversations in WTO corridors or receptions. Additionally, numerous meetings have taken place among delegations to discuss specific topics.
Dispute settlement delegates should be commended for the admirable amount of energy, creativity and time invested into this process, which proves the unwavering commitment of Members to achieve a fully functional dispute settlement system.
During the last year, over 145 Members, representing all regions, legal systems and stages of development, have participated in the meetings. The active participation, including long nights and weekends shows the importance that Members attribute to the dispute settlement system.
In terms of substance, significant progress has been achieved. The seventh revision of the text, spanning more than 50 pages, reflects Members' collective understandings and expectations regarding the system's operation. The text is organized into eleven Titles, each addressing different aspects of the dispute settlement mechanism. While currently proposed as a Ministerial Decision, the final form will be decided by Members based on the document's substantive content.
The text is self-explanatory, and I would like to note that Members focused on providing incentives and disincentives to influence behaviours and foster efficiency of the dispute settlement process.
Members also developed alternative dispute resolution mechanisms to broaden the range of tools available for resolving disputes without the need for litigation.
Moreover, there is a concerted effort to enhance the efficiency and effectiveness of litigation, offering incentives for disputing parties and adjudicators to focus on what is necessary to resolve the disputes, promptly and effectively.
]The text further includes clear statements by Members outlining their expectations for the system's operation and provides guidance for adjudicators and the Secretariat in fulfilling their respective roles. The text also will mark a significant development as it will represent, for the first time, Members’ expression of their preferences for how the system should operate.
Furthermore, we are exploring mechanisms to guarantee the system functions as envisioned and to streamline corrective measures when required. The text consistently emphasizes addressing the capacity constraints faced by developing and least developed Members, with accessibility being a core focus in each chapter. Several flexibilities have been integrated to ensure that developing and least-developed Members can meaningfully participate, encompassing aspects such as mediation, conciliation, good offices, arbitration, and panel proceedings. Flexibilities extend to word and time limits, as well as the process for updating the indicative list of panelists, among other considerations.
Members are also exploring avenues to enhance accessibility through tailor-made technical assistance, capacity building, and specific legal advice, by seeking synergies with other organizations, such as the Advisory Centre on WTO Law, and exploring viable and sustainable financing mechanisms for these activities.
I would like to note that one key aspect that is not yet addressed in the text is the appeal or review mechanism, for which there is a placeholder in the text. Members have approached this issue with the same interest-driven methodology that has been used for the rest of the text.
Ongoing discussions are aimed at identifying viable solutions, and significant progress has been made. We all recognize that there are conceptual differences among Members regarding the operation of the system, and, therefore, we prioritized concluding other elements of the text to measure how effectively interests and concerns of Members would be addressed through other reforms.
The discussions on appeal or review mechanism are not intended to single-handedly resolve all the interests and concerns identified by Members. Many of these interests and concerns may already be addressed in the existing text.
We continue to work intensively to find a practical and viable solution on appeal or review mechanism that responds to Members concerns. This solution will be an integral part of a comprehensive dispute settlement reform package, where each reform contributes to addressing the interests and concerns that were identified by Members.
Let me be clear: Our commitment to deliver a solution on appeal or review mechanism as part of the reform package is strong. We will continue to work intensively to conclude these discussions as soon as possible, so that it can be incorporated into the consolidated text, and we can start its review in plenary sessions.
In conclusion, Madame Chair, I would like to outline the steps necessary to finalize the consolidated text:
First, Members need to conclude discussions on the appeal or review mechanism and incorporate the solution into the consolidated text;
Second, Members should continue reviewing each chapter, ensuring that all their interests and concerns are addressed. Any reservations expressed by Members should be clearly articulated as interests or concerns to facilitate appropriate recalibration of the respective provisions.
The goal remains to reconcile the interests and concerns of all Members and achieve the most optimal calibration possible; and
Finally, Members need to undertake an editorial review of the text, determine its final form, and finalize the preamble and transitional provisions.
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