Trade envoys participating in a one-day retreat on Monday expressed mixed views on issues of transparency, inclusion and small green room meetings, while unable to reach any convergence on the core issue of finding innovative approaches to replace the consensus-based decision-making at the World Trade Organization, said people familiar with the developments.
During the retreat, trade envoys apparently held frank discussions on a raft of issues based on the questions circulated by the chair of the WTO’s General Council, Ambassador Petter Olberg of Norway.
The questions circulated in a restricted document Job/GC/399 on June 28 centered on how to improve the decision-making processes at the WTO.
As reported earlier, Ambassador Olberg asked members to ponder over five questions for the retreat. The questions were:
1. “In your view, how can the WTO improve its decision-making processes to ensure inclusive and transparent outcomes? What specific actions can we take to build necessary trust and unlock Members' concerns prior to proposing and taking decisions?”;
2. “How can the WTO and its Members balance the need for consensus with the urgency to achieve timely and effective results? How can we balance the desire to protect national interests with the need to deliver for the common good? What tools and actions do we have when we are unable to agree?”;
3. “Given the experiences from past Ministerial Conferences, and the most recent experience in Abu Dhabi, what needs to be improved in Geneva in the run-up to the next Ministerial Conference? What should be the objectives of Ministerial Conferences?”;
4. “How can the outcomes of past Ministerial Conferences be effectively implemented to ensure continuous progress and accountability within the WTO? Are existing monitoring mechanisms sufficient? How do we assess past commitments in light of changing circumstances?” and
5. “How can we translate these suggestions into actionable ideas for change? Are these realistic expectations?”
During the plenary session at the retreat, many trade envoys broadly echoed their views supporting transparency and inclusion in the daily processes at the WTO, said people familiar with the discussions.
It appears US trade envoy Maria Pagan did not make any statement during the plenary session, though in the past, it was the United States that called for changing the negotiating function while encouraging the non-mandated plurilateral outcomes like the Joint Statement Initiatives, said people familiar with the US positions.
It is, however, unclear what Washington might have said in the group meeting of more than ten trade envoys, said people familiar with the discussions.
China appears to have proactively echoed its responses at the plenary meeting, said people familiar with the developments. Two days before the meeting, China submitted an unofficial room document (RD/GC/31) titled, “Revisiting the Marrakesh Agreement To Improve WTO Decision-Making: A Pareto Improvement Perspective”.
The overall mood during the plenary session on issues such as green room meetings, transparency and inclusion seemed positive, said people familiar with the discussions.
During the afternoon session, trade envoys were split into six groups with different coordinators. The coordinators are Ambassador Matthew Wilson of Barbados for the first group; Ambassador Athaliah Lesiba Molokomme of Botswana for the second group; Ambassador Mazlizah PG Mahalee of Brunei Darussalam for the third group; Ambassador Sofia Boza Martínez of Chile for the fourth group; Ambassador Muhammadou Kah of Gambia for the fifth group and Ambassador Simon Manley of the United Kingdom for the sixth group.
Some of the above coordinators seem to represent specific interests, including supporting a change in the consensus-based decision-making process as set out in Article IX of the Marrakesh Agreement, said people familiar with the discussions.
The discussion on consensus-based decision-making appears to be sharply divided with many members adhering to their earlier positions embracing Article IX of the Marrakesh Agreement, said people familiar with the developments.
As per paragraph one of Article IX on decision making of the Marrakesh Agreement, “the WTO shall continue the practice of decision-making by consensus followed under GATT 1947. Except as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting. At meetings of the Ministerial Conference and the General Council, each Member of the WTO shall have one vote. Where the European Communities exercise their right to vote, they shall have a number of votes equal to the number of their member States which are Members of the WTO. Decisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast, unless otherwise provided in this Agreement or in the relevant Multilateral Trade Agreement.”
One member at the meeting alluded to using the voting option in case of irreconcilable differences and disagreements, but the idea did not get much support, said people who asked not to be identified.
“The discussion on consensus-building is neither here nor there and it is a waste of an effort,” said a participant who asked not to be quoted.
Moves to consider new approaches such as responsible consensus or constructive consensus or a Pareto Perspective made little progress during the frank discussions, said people familiar with the discussions.
Questions were raised on limiting the green room meetings to select countries and the utility of small group meetings that are invariably submerged in opacity during the afternoon session, said people familiar with the discussions.
At the retreat, discussions on the issue of the time frames for implementing mandated decisions revealed several divergences, said people familiar with the discussions.
Several trade envoys highlighted the problem of a trust deficit preventing the organization from making any headway in reaching timely decisions.
However, members appear to have opposed constant goal-shifting on mandated issues by some members, with some challenging the sanctity of mandated decisions under dynamic conditions, said people familiar with the discussions.
On the issue of trust-building, the main concern seemed to be whether it can be addressed without tackling the mandated issues based on ministerial consensus, said people familiar with the discussions.
One trade envoy said the retreat produced “positive outcomes” while emphasizing that consensus-based decision-making is important, said people familiar with the discussions.
Egypt and Russia seemingly opposed any change in the consensus-based decision-making, while Egypt also highlighted the importance of concluding the reform of the Dispute Settlement Body based on the two-tier system, said people familiar with the discussions.
During the discussions, members also talked about how decisions are taken in different United Nations bodies, said people familiar with the discussions.
Trade envoys appear to have expressed mixed views on “political will” with some members underscoring the need for demonstrating political will while others asked if ministerial decisions are not implemented as per the mandates how can they show political will, said people familiar with the discussions.
Two days before the retreat, China circulated a room document – for discussion only and not an official position – on “Revisiting The Marrakesh Agreement to Improve WTO Decision-Making”. China has argued that “the inability of the WTO to deliver negotiation outcomes diminishes the relevance of the multilateral trading system.”
It underscored the need for “effective decision-making” as sine qua non for WTO reform. China emphasized that “for the purpose of WTO to function and deliver, the Marrakesh
Agreement provides both consensus and voting as options for decision-making, while recognizing consensus is the preferred option unless otherwise stipulated.”
According to China’s room document, there is a need for an affirmative call for action on matters with broad support. It maintains that “depending on the matter at issue, different majorities are required, including simple majority, 2/3 and 3/4. The thresholds here indicate that the matter at issue with broad support does matter for the multilateral trading system.”
China says, “multilateralism always goes together with diversity including differentiated obligations, implementation and treatment, and also less than full membership.”
“History shows that consensus has never been a rigid practice and has provided flexibilities to address members' concerns while ensuring that multilateral trading system can move forward and its inclusiveness,” it added.
Moreover, according to China, “differentiation among the Membership has been a common tool to forge consensus, such as special and differential treatment provisions in WTO Agreements, critical-mass based trade liberalization binding a substantial subset of Membership with benefits accruing to all.”
Further, China has suggested that “(a) multilateral agreement does not mean the implementation by the full membership though it is expected. Since its establishment, none of the new agreement or amendment entered into force in the WTO has been ratified by the full membership.”
China which joined the WTO at the fourth ministerial conference in Doha, in 2001, maintains that “Agreements by partial membership are an integral part of multilateral rulemaking.”
“In the history of the multilateral trading system,” China says, “disciplines negotiated by and applied to subsets of members paved the way for reaching the multilateral agreements. The current trade remedy agreements, SPS and TBT agreements all evolved from the trade remedy codes, SPS and TBT codes in Tokyo Round”– which were later integrated into the Uruguay Round agreement.
According to China, “the discussions during the May 2024 General Council confirmed once again that consensus is of fundamental importance to members.”
However, “in the meantime,” according to China, “members also recognized the end goal and the imperative is for the WTO to deliver.” “No member should be compelled by the majority to accept obligations they don't want,” China said.
“In turn, the majority, if they wish to move forward, should not be held back by a few,” it argued, adding that “the membership must collectively find creative ways, informed by the text of the WTO Agreement and past practices, to forge consensus and make the WTO deliver.”
China listed the main factors undergirding the Pareto decision-making framework, which Beijing says “essentially means rule-making among a substantial subset but less than full membership, which could make at least part of the membership better off without making anyone else worse off.”
Arguing the need for Pareto improvement, Chas has maintained that “allowing a substantial part of WTO membership to proceed with rule-making that is open, transparent in process, beneficial for the participants, and does not harm the interests of non-participants would benefit the multilateral trading system and in the end, benefit all.”
Lastly, “For an agreement of Pareto Improvement nature that enjoys support of a substantial majority of the membership, for example over the 2/3 or 3/4 thresholds as provided for in the voting procedures, Members should exercise restraint in blocking the consensus.”
On procedures to facilitate consensus when a decision with very broad support is blocked, it called for following the procedures:
1.1. Enhanced Transparency. Clear and convincing reasons should be provided whenblocking consensus.
1.2. Obligatory Engagement. Members should actively engage, with a view to findingsolutions.
1.3. Mediation by an Appointed Third Party. Where there is an overwhelming majority in favor of a matter, a special consultative process should be set up to help bridge gaps and propose necessary solutions.
In a rules-based organization like the WTO, what if an agreement is systemically and procedurally flawed, said a former General Council chairperson, who asked not to be quoted.
China also offered “possible Solutions to Address the Concerns of the Dissenting Members” by suggesting the following procedures. They include:
1. “Differentiated Levels of Commitments. For example, carefully-calibrated arrangements catered to members with different level of development and capacity, including special and differential treatment”
2. “Other Common Treaty-Making Tools. Such as Provision of the options to opt-out or make reservation.”
It is not clear whether trade envoys discussed the Chinese non-paper at the retreat, said people familiar with the discussions. The GC chair is expected to issue either a report or main bullet points in the coming days, said people who preferred not to be identified.
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